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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
Lane Plywood, Inc.
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(Name of Registrant as Specified In Its Charter)
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
Common Stock
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2) Aggregate number of securities to which transaction applies:
204,662
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
$49
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
$2,005.69
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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L A N E P L Y W O O D, I N C.
65 N. BERTELSEN ROAD
EUGENE, OREGON 97402
(541) 342-5561
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SATURDAY, MARCH 30, 1996
To the Shareholders:
The Annual Meeting of Shareholders (the "Meeting") of Lane Plywood, Inc.
(the "Corporation") will be held in the O'Neill/Williams Room at the Eugene
Hilton Hotel, 66 East 6th Avenue, Eugene, Oregon, on Saturday, March 30, 1996,
at 1:30 p.m., local time, for the following purposes:
1. To approve the Agreement and Plan of Merger (the "Merger Agreement")
dated October 26, 1995 between the Corporation and Pioneer Merger, Inc. ("PMI")
and a wholly owned subsidiary of PMI, Lane Acquisition, Inc. ("LAI"). The
Merger Agreement provides for the Merger of LAI with and into the Corporation
with each shareholder of the Corporation being entitled to $49 per share in cash
(the "Merger"). Shareholders of the Corporation have the right to dissent from
the Merger and may obtain payment for their shares under the provisions of
Oregon Revised Statutes sections 60.551 through 60.594, a copy of which is set
forth in Appendix B to the Proxy Statement.
2. To elect directors.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Corporation's shareholders ("Lane Shareholders") of record at the close
of business on February 26, 1996 are entitled to notice of and to vote at the
Meeting and at any adjournment thereof.
By Order of the Board of Directors
Janis M. Johnson
Vice-President/Secretary-Treasurer
Eugene, Oregon
February 29, 1996
PLEASE VOTE. APPROVAL OF THE MERGER AGREEMENT REQUIRES THAT THE HOLDERS OF A
MAJORITY OF THE CORPORATION'S SHARES VOTE "YES". PLEASE FILL IN, DATE, AND SIGN
THE ENCLOSED PROXY, AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
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L A N E P L Y W O O D, I N C.
65 N. BERTELSEN ROAD
EUGENE, OREGON 97402
(541) 342-5561
PROXY STATEMENT FOR
MARCH 30, 1996 ANNUAL MEETING OF SHAREHOLDERS
SOLICITATION OF PROXIES
The enclosed form of proxy (the yellow colored page) is solicited on behalf
of the Board of Directors of the Corporation for use at the Annual Meeting of
the Shareholders ("Meeting") on March 30, 1996, and at any adjournment of the
Meeting. Please fill in, date and sign the proxy and return it to the Lane
Plywood, Inc. ("Corporation") prior to the meeting.
The proxy may be revoked at any time prior to the actual vote by delivering
to the secretary of the Corporation at the above address a written notice of
revocation or a duly executed proxy bearing a later date, or by attending the
meeting and voting in person.
The cost of preparing, assembling, and mailing material in connection with
this solicitation will be borne by the Corporation. In addition to the use of
the mails, proxies may be solicited personally or by telephone by individual
officers, directors and regular employees of the Corporation without additional
compensation.
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BE SURE TO VOTE. PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY IN
THE ACCOMPANYING ENVELOPE TODAY.
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The 1996 Annual Report to the Stockholders of Lane Plywood for the year
ended November 30, 1995 is included in the mailing with this proxy statement.
Please refer to it for the information it contains.
All information in this Proxy Statement concerning the Corporation or the
Agreement and Plan of Merger (the "Merger Agreement") has been furnished by the
Corporation and all information concerning Pioneer Merger, Inc. ("PMI") or Lane
Acquisition, Inc. ("LAI") has been furnished by PMI.
Approximate date of mailing:
February 29, 1996
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PROXY STATEMENT
TABLE OF CONTENTS
Page
SOLICITATION OF PROXIES . . . . . . . . . . . . . . . . . . . . . . . . 1
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Matters to be Considered at the Meeting. . . . . . . . . . . . . . 4
Voting at the Meeting. . . . . . . . . . . . . . . . . . . . . . . 4
Proxy Solicitation . . . . . . . . . . . . . . . . . . . . . . . . 4
VOTE ON THE MERGER AGREEMENT. . . . . . . . . . . . . . . . . . . . . . 5
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Factors Leading to the Merger. . . . . . . . . . . . . . . . . . . 6
General Background. . . . . . . . . . . . . . . . . . . . . . 6
Alternatives to, and Reasons for, the Merger. . . . . . . . . 7
History of Negotiations . . . . . . . . . . . . . . . . . . . 8
Provisions Regarding Operations . . . . . . . . . . . . . . . 9
Fairness of the Transaction. . . . . . . . . . . . . . . . . . . . 10
Appraisals Considered. . . . . . . . . . . . . . . . . . . . . . . 10
Timber Appraisal. . . . . . . . . . . . . . . . . . . . . . . 10
The Plywood Mill. . . . . . . . . . . . . . . . . . . . . . . 11
Other Value Components. . . . . . . . . . . . . . . . . . . . 13
Availability of Appraisals. . . . . . . . . . . . . . . . . . 13
Recommendation of the Directors. . . . . . . . . . . . . . . . . . 13
Recommendation of the Majority of Directors . . . . . . . . . 13
Discussion of Francis Bales' Vote Against the Merger
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Interests of Certain Persons in the Merger. . . . . . . . . . 14
Vote Required for Approval . . . . . . . . . . . . . . . . . . . . 15
Other Conditions With Respect to the Merger. . . . . . . . . . . . 15
Shareholder Approval. . . . . . . . . . . . . . . . . . . . . 15
Lack of Excessive Dissents. . . . . . . . . . . . . . . . . . 15
Litigation and Other Matters. . . . . . . . . . . . . . . . . 15
Other Actions by PMI. . . . . . . . . . . . . . . . . . . . . 15
Other Actions by the Corporation. . . . . . . . . . . . . . . 16
Payment for Shares . . . . . . . . . . . . . . . . . . . . . . . . 16
Rights of Dissenting Shareholders. . . . . . . . . . . . . . . . . 16
No Vote in Favor of the Merger. . . . . . . . . . . . . . . . 17
Written Notice of Intention to Demand Payment . . . . . . . . 17
Form for Demanding Payment. . . . . . . . . . . . . . . . . . 17
Remittance to Dissenting Shareholders . . . . . . . . . . . . 18
Demand for Payment of Deficiency. . . . . . . . . . . . . . . 18
Court Appraisal . . . . . . . . . . . . . . . . . . . . . . . 19
Consequences of Dissent on Approval of the Merger . . . . . . 19
Certain Federal Income Tax Consequences to Lane Shareholders . . . 19
Accounting Treatment of the Merger . . . . . . . . . . . . . . . . 21
Operation of Lane Plywood After the Merger . . . . . . . . . . . . 21
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SELECTED FINANCIAL DATA OF LANE PLYWOOD . . . . . . . . . . . . . . . . 23
INFORMATION ABOUT LANE PLYWOOD. . . . . . . . . . . . . . . . . . . . . 24
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Description of Business Operations . . . . . . . . . . . . . . . . 24
Tree Farms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Sources of Raw Material. . . . . . . . . . . . . . . . . . . . . . 25
Factors Affecting Revenues . . . . . . . . . . . . . . . . . . . . 25
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 27
Market for the Corporation's Stock; Dividend History . . . . . . . 27
INFORMATION ABOUT PMI AND LAI . . . . . . . . . . . . . . . . . . . . . 27
ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . 28
Nominees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Vote Required to Elect . . . . . . . . . . . . . . . . . . . . . . 28
Directors Whose Terms are Continuing . . . . . . . . . . . . . . . 29
MANAGEMENT AND COMPENSATION
OF DIRECTORS AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . . 30
Executive Officers of the Corporation. . . . . . . . . . . . . . . 30
Compensation Committee Interlocks and Insider Participation. . . . 31
Report on Executive Compensation . . . . . . . . . . . . . . . . . 31
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . 32
Director Compensation. . . . . . . . . . . . . . . . . . . . . . . 32
Incentive Profit Sharing Plan. . . . . . . . . . . . . . . . . . . 33
Group Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Stock Performance. . . . . . . . . . . . . . . . . . . . . . . . . 34
Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . 35
Certain Transactions With Management . . . . . . . . . . . . . . . 36
BENEFICIAL OWNERSHIP OF COMMON STOCK. . . . . . . . . . . . . . . . . . 36
COMPLIANCE WITH SECTION 16 FILING REQUIREMENTS. . . . . . . . . . . . . 38
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ANNUAL REPORT ON FORM 10-K. . . . . . . . . . . . . . . . . . . . . . . 39
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS. . . . . . . . . . . . 39
INCORPORATION BY REFERENCE. . . . . . . . . . . . . . . . . . . . . . . 39
1997 SHAREHOLDER PROPOSALS. . . . . . . . . . . . . . . . . . . . . . . 39
APPENDIX A: THE MERGER AGREEMENT
APPENDIX B: STATUTES GOVERNING THE RIGHTS OF DISSENTERS
APPENDIX C: PROXY
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GENERAL INFORMATION
MATTERS TO BE CONSIDERED AT THE MEETING.
At the Meeting, the Corporation's shareholders ("Lane Shareholders") are
being asked to consider and vote upon the proposal to approve the Merger
Agreement. The Merger Agreement provides for the merger of LAI with and into
the Corporation, with each shareholder of the Corporation, other than those who
exercise their dissenters' rights, being entitled to receive $49.00 per share in
cash. Shareholders who exercise their dissenters' rights may obtain payment for
their shares under the provisions of Oregon Revised Statutes (ORS) sections
60.557 through 60.594, a copy of which is set forth in Appendix B to this Proxy
Statement.
In addition, Lane Shareholders will, at the Meeting, be asked to elect
directors for two open positions on the Board of Directors. The Corporation
knows of no other matters which are to come before the Meeting.
VOTING AT THE MEETING.
The Board of Directors set the close of business on February 26, 1996 as
the record date (the "Record Date"). Only shareholders of record on the Record
Date will be entitled to notice of, and to vote at, the Meeting. As of the
Record Date, there were 204,662 shares of the Corporation's Common Stock ("Lane
Common Stock") outstanding, owned by approximately 400 shareholders of record.
Each Lane Shareholder of record on the Record Date will be entitled to one
vote for each share of Lane Common Stock owned of record on the Record Date on
each of the matters submitted to a vote of the shareholders at the Meeting.
Shares may be voted in person or by proxy. A majority of the outstanding
shares, represented in person or by proxy, must be present for a quorum to
exist. Without a quorum no business, other than adjournment of the Meeting to a
later date or time, can take place at the Meeting.
Under the Oregon Business Corporation Act, the affirmative vote of a
majority of the outstanding shares of Lane Common Stock is required for approval
of the Merger Agreement. The votes for each of the two open director positions
will be taken separately. In each case, the candidate receiving the highest
number of votes will be elected to that position. The Board of Directors
recommends that Lane Shareholders vote FOR approval of the Merger Agreement and
vote FOR the two candidates nominated by the Board of Directors.
PROXY SOLICITATION.
The enclosed Proxy is being solicited by and on behalf of the Board of
Directors of the Corporation. Lane Shareholders are requested to complete,
date, sign and promptly return this Proxy in the enclosed envelope. All shares
represented by properly executed
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unrevoked proxies received by the Corporation prior to, or at, the Meeting will
be voted in accordance with the instructions indicated by the shareholder on the
proxies. If no instructions are specified on an executed Proxy, the shares will
be voted for approval of the Merger Agreement and in favor of each of the two
candidates nominated by the Board of Directors.
Any Proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted: (i) by filing with the Secretary of
the Corporation written notice of such revocation, or (ii) by duly executing a
subsequent proxy bearing a later date and delivering such subsequent proxy to
the Secretary of the Corporation, or (iii) attending the Meeting and voting in
person (although attendance at the Meeting will not by itself revoke a proxy).
Any notice with respect to the revocation of a proxy should be in writing and
sent to or personally given to Janis M. Johnson, Secretary-Treasurer, Lane
Plywood, Inc., 65 North Bertelsen Road, Eugene, Oregon 97402.
This Proxy Statement is first being mailed to Lane Shareholders on or about
February 29, 1996. All expenses of this solicitation, including the cost of
preparing and mailing these proxy materials will be borne by the Corporation.
In addition to this Proxy Statement, directors, officers and employees of the
Corporation may solicit proxies by telephone or in person. Such persons will
not be additionally compensated for such activities but may be reimbursed for
out-of-pocket expense in connection with any such solicitations.
VOTE ON THE MERGER AGREEMENT
The Merger Agreement contains the detailed terms of and conditions to the
plan of merger (the "Merger"). A copy of the Merger Agreement is included as
Appendix A to this Proxy Statement. The following description of the material
terms of the Merger Agreement is qualified by, and made subject to, the text of
the Merger Agreement. The terms of the Merger Agreement were negotiated at
arms-length, and have been found to be fair by the directors of the Corporation.
OVERVIEW.
For purposes of the Merger, PMI created LAI as a wholly owned subsidiary.
LAI was organized solely for the purpose of merging with the Corporation. In
return for all the stock in LAI, PMI agreed to contribute to LAI the money
needed to effect the Merger. LAI will have no assets other than cash and cash
equivalents, and no liability other than its organizational expenses and its
obligations under the Merger Agreement. LAI has not, and will not, conduct any
business other than that necessary to effect the Merger.
If the Merger is approved by Lane Shareholders, on the date the Merger
becomes effective (the "Effective Date"), each outstanding share of the
Corporation's common stock ("Lane Common
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Stock"), except for the shares of dissenters, will be cancelled and converted
into the right to receive cash, in the amount of $49 per share (the "Purchase
Price"). However, shares of Lane Common Stock owned by Lane Shareholders who
exercise and perfect their right to dissent, as described in the Oregon Business
Corporation Act, will be exchanged for their "fair value", as determined by the
statutory procedure, as of the Effective Date. For a more complete discussion
of dissenters' rights, see "Rights of Dissenting Shareholders" below.
Upon consummation of the Merger, the Corporation will become a wholly owned
subsidiary of PMI, and LAI will cease to exist as a separate corporation. The
directors of the Corporation will then resign as directors so that PMI, as the
Corporation's sole shareholder, may elect its own directors of the Corporation.
Shortly after the Merger, the Corporation will be liquidated with all its assets
and liabilities being transferred to PMI. PMI will then change its corporate
name to "Lane Plywood, Inc."
The Merger is subject to several conditions. More detail about these
conditions is provided below. The Merger Agreement is binding upon both PMI and
the Corporation. Neither can terminate the agreement except upon a material
breach by the other or upon a failure of a condition to the Merger.
If the Merger Agreement is approved by the Lane Shareholders at the annual
meeting, management anticipates that the Effective Date will be April 3, 1996.
No federal or state regulatory approvals must be obtained to consummate the
Merger.
FACTORS LEADING TO THE MERGER.
The Merger Agreement presented with this Proxy Statement represents the
culmination of several years' work by the Board of Directors to realize the
value of the Corporation for the benefit of Lane Shareholders. Since many Lane
Shareholders are also employees of the Corporation, the Board of Directors also
considered the impact of any transaction on the continued operation of the
plywood mill.
GENERAL BACKGROUND. The forest products industry in the Northwest in
general, and in western Oregon in particular, has been hard hit by timber
shortages caused primarily by reductions in the federal timber harvest.
Increasing competition from other regions has kept prices for timber products
from rising with the shrinking supplies in the Northwest. As a result, timber
prices in the Northwest have risen and revenues for mills have dropped.
This squeeze has resulted in numerous such mills closing down. Since 1989,
when the current timber harvest restrictions first came into place, 261 mills
operating in the Pacific Northwest, including plywood, veneer and sawmills,
employing more than 22,000 workers, have shut down. In western Oregon alone,
100 mills, employing more than 9,500 workers, have closed.
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At the same time, the shortage of harvestable timber has increased the
value of private timber holdings. Because the Corporation invested in
timberland over the years, it has benefited from the increase in value of
timberlands, at the same time as its mill operations have been hurt. Despite
these problems, however, the Corporation has survived, and has been profitable
in three of the last four years.
The value of the Corporation's timberland now exceeds the value of the mill
and mill property. According to the Corporation's most recent appraisals, the
timberlands are worth between $11,000,000 and $13,900,000, and the mill and real
property on which it sits is worth approximately $4,600,000. See the discussion
on "Appraisals," below.
An additional factor considered by the Board of Directors is the aging of
Lane Shareholders. Many Lane Shareholders who were employees of the Corporation
have now retired. In addition, many of the employees who are Lane Shareholders
are nearing retirement age. These shareholders would like to realize the value
of their investment in the Corporation. However, the absence of any active
trading market for Lane Common Stock makes it very difficult for such
shareholders to do so.
ALTERNATIVES TO, AND REASONS FOR, THE MERGER. As the value of the
Corporation's timberlands has increased, so has the interest from other forest
products companies in purchasing those timberlands. The Board of Directors has
fielded many calls from persons interested in purchasing all or part of the
timberlands, or inquiring about buying the entire company, either in an asset
sale or a stock purchase.
The Board of Directors considered the possibility of the sale of some or
all of the timberlands followed by a dividend of the after-tax proceeds to Lane
Shareholders. Such a plan would have the advantage of allowing the Corporation
to continue operating the mill, and would help Lane Shareholders receive at
least some of the value for their shares. However, the Board of Directors
rejected this plan for several reasons. Among them were the high tax cost, both
to the Corporation from the sale of the timberlands, and to the individual Lane
Shareholders from the dividend. The Board of Directors was concerned that the
dividend to Lane Shareholders would be for substantially less than the value
that could be obtained through a sale of the Corporation. A sale of the
timberlands would leave the Corporation with a very limited ability to borrow
funds to pay for modernization, or to weather unprofitable operating periods.
The Board of Directors believes that a sale of the timberlands to generate
dividends would leave the Corporation in a weak operating position, and would
not be in the best interests of either Lane Shareholders or the Corporation's
employees.
The Board of Directors also considered continuing to operate the
Corporation, but selling the timberlands only as needed. The
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advantage to such a plan would be to provide a strong asset base for the
Corporation, to allow it to borrow, to make improvements, and to operate even
during periods of unprofitability. However, such a plan would leave Lane
Shareholders with no realistic opportunity to realize on the value of their
shares.
Since there is no trading market for shares in the Corporation, and since
transactions involving Lane Common Stock are rare, Lane Shareholders who wish to
sell their shares for a fair price, taking into account the value of the
Corporation's timberlands, have little or no opportunity to do so. For this
reason, the Board of Directors did not consider this alternative to be in the
best interests of Lane Shareholders.
HISTORY OF NEGOTIATIONS. Since June of 1993, the Board of Directors has
received written expressions of interest to purchase the Corporation, or all of
its assets, from at least 11 different parties. The Board of Directors had
discussions with several such parties to explore a potential purchase. On April
28, 1994, the Board of Directors entered into a memorandum of understanding with
an investment group that would have resulted in a purchase price of $24.50 per
share. The investment group eventually broke off negotiations.
On December 12, 1994, the Corporation and Tree Products Enterprises, Inc.
("Tree Products") entered into a memorandum of understanding which would have
resulting in a purchase price of $25.00 per share. In connection with that
proposal, the Corporation commissioned an appraisal of its timber holdings.
On January 16, 1995, the Board of Directors received a preliminary draft of
the timber cruise and appraisal. It estimated the value for the timber at
between $11,000,000 and $11,500,000. This was $3,000,000 more than the Board of
Directors had estimated at the time it entered into negotiations with Tree
Products.
As a result of this appraisal, the Board of Directors rejected the Tree
Products offer as too low.
The rejection of the Tree Products offer caused a group of shareholders to
try to elect two of their own members as directors, with the stated goal of
attempting to persuade the entire Board of Directors to accept the Tree Products
offer. At the annual meeting held April 22, 1995, Lane Shareholders rejected
this slate and elected the directors nominated by the Board of Directors.
However, as a result of the meeting, the Board of Directors determined that a
substantial number of Lane Shareholders wished to have the Board of Directors
negotiate a sale of the Corporation at a fair price.
Following the annual meeting, the Board of Directors solicited offers from
companies known to be interested. As a result of that solicitation the Board of
Directors received expressions of interest from five different parties. The
parties provided a variety of types of offers, each heavily restricted with
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conditions. On May 12, the Board of Directors considered the merits of these
offers and decided to request the parties to submit bids beginning at $50 per
share. By May 18, two of the parties said they were no longer interested, and
one responded that it was prepared to pay no more than $40 per share. This left
two potential bidders. The Board of Directors requested that each refine its
bid. In early July both submitted follow-up offers.
The offer from one group would have been a stock-for-stock transfer in
which Lane Shareholders would become shareholders of a new company ("NEWCO").
Each such shareholder would be offered the opportunity to redeem shares in NEWCO
for the price of $42.80. The investors making this offer proposed to pay for
the redemption by liquidating assets of NEWCO to pay for the stock redemptions,
rather than using the investors' own funds. The Board of Directors considered
this offer unacceptable.
As a result, the Board of Directors entered into a memorandum of
understanding with the investment group that formed PMI for the cash purchase of
all Lane Common Stock at $49 per share. After a period of negotiation over the
terms and conditions of the purchase, the parties agreed to the Merger
Agreement, which was signed October 26, 1995.
The majority of the Board of Directors believes that this Merger Agreement,
delivering $49 per share, is fair to, and in the best interests of, Lane
Shareholders, and recommends that all Lane Shareholders vote for approval of the
Merger Agreement.
One member of the Board of Directors, Francis Bales, voted against
recommending approval of the Merger Agreement. A discussion of his reasons for
voting against the Merger is provided in "Recommendation of the Directors -
Discussion of Francis Bales' Vote Against the Merger," below.
PROVISIONS REGARDING OPERATIONS. One of the concerns with respect to the
Merger, because of the large number of employee shareholders, is the effect of
the Merger on operations at the plywood mill and continued employment of the
current employees.
In negotiations with PMI, the Board of Directors requested, and PMI agreed
to, the inclusion of Paragraph 3.6 of the Merger Agreement which addresses
continuity of the business of the Corporation. That paragraph states PMI's
present intention to continue the ongoing business operations of the Corporation
after the Merger. However, the statement of intent by PMI is not a guaranty
that PMI will continue the business operations of the Corporation in the same
manner as those operations would have been conducted without the Merger, nor is
it a promise to maintain operations if economic conditions indicate to PMI's
directors that its financial interest is best served by closing the mill. For a
more detailed discussion of these matters see "Operation of Lane Plywood After
the Merger", below. The entire Merger Agreement is set forth in Appendix A to
this Proxy Statement.
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FAIRNESS OF THE TRANSACTION.
The majority of the Board of Directors believes the Merger offers a fair
price and is in the best interests of Lane Shareholders.
As described above, a majority of the Board of Directors believed, after
the 1995 annual meeting, that a substantial number of Lane Shareholders wanted
the Board of Directors to negotiate and bring to Lane Shareholders a purchase
offer. Following the meeting, the Board of Directors solicited offers from
parties it knew to be interested in acquiring the Corporation. Based on that
solicitation, the Board of Directors entered into preliminary negotiations with
five separate parties.
The Board of Directors evaluated the responses from these parties, to
determine not only which party offered the highest bid, but also which appeared
best able to pay the price discussed. The Board of Directors also considered
the willingness and ability of each party to continue operating the mill. Based
on its evaluation of all the criteria, including the factors discussed in
"Alternatives to, and Reasons for, the Merger" and in "History of Negotiations",
the Board of Directors entered into the Merger Agreement.
Independent of its negotiations with PMI, the Board of Directors reviewed
its own estimate of the value of the Corporation. Most directors believed a
purchase offer of between $41 and $58 per share would be reasonable. The Board
of Directors included in its analysis the appraisal of the timberlands conducted
in connection with the Tree Products offer, as discussed in more detail in
"Appraisals Considered - Timber Appraisals", below, as well as an update of the
appraisal of the mill and the property on which the mill is located. The update
is discussed in "Appraisals Considered - The Plywood Mill", below.
Based on the extensive negotiations with multiple parties following the
solicitation of offers, and on the Corporation's appraisals of the value of the
underlying assets, the Board of Directors determined that a separate appraisal
of the Corporation, or fairness opinion, was unnecessary.
The Merger Agreement has been negotiated at close to the middle of the
range of reasonable prices which the Board of Directors had identified. Based
on all the factors discussed, the majority of the Board of Directors believes
the Purchase Price to be fair to Lane Shareholders.
APPRAISALS CONSIDERED.
TIMBER APPRAISAL. The Corporation's timber is the largest component of its
value and the component whose value is most reliably obtained. There is a ready
market for comparable types of timber, and the prices paid for timber and
timberland are frequently reported.
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At the time the Board of Directors entered into negotiations with Tree
Products, it decided to have the Corporation's timberlands appraised.
Management hired Gary Thompson to conduct the appraisal. Mr. Thompson's crew
cruised the timber during December 1994 and January 1995, and reported on its
value by estimating the volume of timber available and its likely market price
as stumpage. He also compared the Corporation's timberland tracts to other
similarly situated tracts which had sold near the time of his appraisal.
For purposes of the appraisal, Mr. Thompson assumed there were no
impediments to logging the timber from lack of access or environmental
restrictions, other than the normal laws governing timber removal. Management
believes these are accurate assumptions. He ignored, for purposes of his
appraisal, any value for water rights, gas, oil or minerals which might exist on
the property. Management believes that such rights, if any, are a negligible
component to the value of the timberlands.
Mr. Thompson concluded that the value of the timberlands as of January 11,
1995 was between $11,700,000 and $11,900,000. However, he further concluded
that if all the tracts were sold together, the combined sale would be large
enough to command a premium in the market, making the timber worth $13,600,000
to $13,900,000.
Mr. Thompson is an experienced timber appraiser, having worked in the field
for 22 years. He has appraised timber for several Oregon timber companies, as
well as for banks, government agencies, bonding companies and other institutions
with an interest in determining timber values. He has no present or future
interest in the property, or in the outcome of the Merger negotiations. There
has been no material relationship between Mr. Thompson or any of his affiliates
and the Corporation or any affiliate of the Corporation, nor is such a
relationship contemplated in the future.
No limitations were placed on Mr. Thompson in preparing his appraisal. Mr.
Thompson appeared at the Corporation's 1995 annual meeting and explained his
appraisal methods and answered questions regarding the appraisal at that
time. Mr. Thompson was paid approximately $19,000 for his appraisal.
Management selected Mr. Thompson to conduct the appraisal, after seeking bids
from several qualified timber appraisers, based on his bid price and
availability to perform the appraisal.
Any estimate of the value of the timber has to take into account that any
sale of the timber by the Corporation would result in a capital gain to the
Corporation that would be subject to income tax at both the federal and state
level. For instance, if the timberland of the Corporation were marketed and
sold for the highest value in the appraisal, $13,900,000, the after-tax proceeds
to the Corporation, ignoring any costs of sale, would be approximately
$9,074,000.
THE PLYWOOD MILL. The plywood mill is more difficult to value because the
uncertainties of the plywood market mean the mill might
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attract few buyers. In addition, because of the many mill closures in the
Northwest since 1989, used mill equipment is readily available and generally
difficult to sell. However, if restrictions on the harvest of federal timber in
the Northwest are lifted, such equipment could have substantially greater value.
The plant was last appraised in September 1993. That appraisal, by Byron
Slack of the National Appraisal Company, Inc. ("National") concluded the plywood
mill had a fair market value as an operating plant of $6,783,000. If the
machinery were sold and the land and buildings liquidated, National concluded
that it would have a value of $3,147,000. National conducted a physical
inspection of the plant at the time of the appraisal. National compared the
value of the mill as an operating entity with prices paid for operating mills of
comparable size and market. National compared the value of the equipment and
land and buildings with sales of similar equipment and land and buildings sold
near the time of the appraisal.
In connection with its decision to seek purchase offers following the 1995
annual meeting, the Board of Directors asked National to update its appraisal.
That update, which was completed April 17, 1995, concluded that the liquidation
value for the mill's equipment and land and buildings was $4,639,000. National
did not update the appraisal as an operating mill.
The value reported in National's appraisal includes the value of the land
and buildings. However, the appraisal did not include a parcel owned by the
Corporation with possible environmental contamination. For purposes of the
appraisal, National assumed that the Corporation had good marketable title to
the land, buildings and equipment, and that there is no significant
environmental contamination on the portion of the mill site included in the
appraisal. Management believes these are accurate assumptions.
Mr. Slack has been president and owner of National since it was established
in 1980. National has performed appraisals for more than 60 Northwest
industrial timber products firms, including Bohemia, Inc., Champion
International, Inc., Louisiana Pacific Corp., and Weyerhauser Company. In
addition, National had conducted previous appraisals for the Corporation in
connection with property tax issues. Neither National nor Mr. Slack had an
interest in the property or in the outcome of the Merger. There has been no
material relationship between National or any of its affiliates and the
Corporation, nor is such a relationship contemplated in the future.
No limitations were placed on National in preparing the appraisal, except
the instruction not to include in the appraisal the portion of the property with
possible environmental contamination. National was paid approximately $15,000
for the 1993 appraisal and $5,000 for the update to that appraisal. Mr. Slack
appeared at the 1995 annual meeting of stockholders and explained the 1993
appraisal and answered questions with respect to
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that appraisal. Management selected National for the update because of
National's familiarity with the mill from the prior appraisals.
OTHER VALUE COMPONENTS. The Corporation's value is not just the sum of the
value of its two major components. The liabilities of the Corporation, and
other factors such as the unfunded health care commitments and potential
environmental liability reduce its total value. Value is also affected by the
tax impact of selling the underlying assets, and the willingness of a buyer to
assume the risks of operating a forest products company under current
conditions.
The accrued unfunded health care commitment liability, using generally
accepted accounting principles, is approximately $500,000. In accruing this
amount, management assumed a health care trend cost rate of 9% until 2001, and
5% thereafter. The actual amount of benefits paid under the plan in fiscal 1995
was $14,336.
The environmental liability, in particular, is difficult to measure. Based
on its analysis of the issue, management believes that a reasonable estimate of
likely liability is approximately $85,000, depending in part upon factors beyond
the Corporation's control. Management is aware of other areas of potential
environmental liability, but believes other parties should be responsible for
substantially all of the costs associated with any clean up of those areas.
However, there is no assurance that such other parties will be willing, or able,
to pay such costs, if a cleanup should be necessary.
The tax costs of selling major assets is substantial. As stated
previously, if the Corporation sold all its timberlands for the high appraised
value of $13,900,000, the net after tax proceeds would be only $9,074,000.
Any purchaser of the Corporation must also take into account such risk
factors as the uncertain supply of quality veneer, the increasing veneer prices
that have resulted from the reductions in the federal timber harvest, and the
competition from engineered panels and southern plywood mills.
AVAILABILITY OF APPRAISALS. Copies of the appraisals by Mr. Thompson and
National, as well as the update of the National appraisal, are available for
inspection and copying at the Corporation's principal executive offices during
the Corporation's regular business hours by any interested Lane Shareholder or
any representative of any Lane Shareholder, who has been so designated in
writing. Any copies will be made at the expense of the requesting shareholder.
RECOMMENDATION OF THE DIRECTORS.
RECOMMENDATION OF THE MAJORITY OF DIRECTORS. After considering all of the
factors described above, a majority of the
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Corporation's directors have determined that the Merger is in the best interest
of Lane Shareholders and recommend that Lane Shareholders vote for approval.
The majority of the Board of Directors believes the Purchase Price to be paid
for Lane Common Stock is a fair price.
DISCUSSION OF FRANCIS BALES' VOTE AGAINST THE MERGER AGREEMENT. Francis
Bales was the sole director to vote against the proposed Merger Agreement. Mr.
Bales said he voted against the proposed Merger Agreement because he believes
the value of the Corporation and its assets would sustain a program of paying
dividends to Lane Shareholders. He said he believes Lane Shareholders will be
better off with such a program than with the cash they will receive upon the
Merger.
Mr. Bales also said he believes the employees and the community will be
better off if ownership of the Corporation continues with the existing Lane
Shareholders, rather than PMI. Mr. Bales said he wants it made clear he has
nothing against PMI, but simply believes that existing Lane Shareholders,
employees and the community will be better off if the Merger does not occur.
Mr. Bales is an employee of the Corporation, working as a sander operator.
He has received a copy of this statement, which was written by the Corporation's
legal counsel. He agrees this adequately states his position. Mr. Bales does
not intend to submit for inclusion in this Proxy Statement a written statement
regarding his reasons for objecting to the Merger Agreement.
INTERESTS OF CERTAIN PERSONS IN THE MERGER. Several of the directors own
shares in the Corporation. They will benefit to the same extent, with respect
to their shares, as other Lane Shareholders. Several of the directors are also
employees of the Corporation and, as such, have an interest in assuring the
continued operation of the Corporation's business.
The Board of Directors, acting in executive session with Gary Jensen
excused, recommended to PMI that it pay bonuses to Gary Jensen, Carl Wiley and
Janis Johnson in the amounts of $30,000, $30,000, and $25,000, respectively,
following the close of the Merger, if they are still employed by the
Corporation. Any payment of this bonus would be by PMI. PMI is under no
obligation to pay such a bonus. At the date of this Proxy Statement, PMI has
indicated it will not make such a payment.
The Corporation's executive officers, Gary Jensen, Carl Wiley and Janis
Johnson have all had discussions with PMI concerning their continued employment
after the Merger. Management believes PMI will continue employing each through
calendar 1996 at their present salaries.
No director, nominee for director, executive officer of the Corporation, or
associate of any of them, will receive any other benefit, direct or indirect, by
security holdings or otherwise, from the Merger.
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VOTE REQUIRED FOR APPROVAL.
The affirmative vote of the holders of a majority of the outstanding shares
of Lane Common Stock is required to approve the Merger Agreement.
Abstentions and broker nonvotes will be treated as no votes in determining
whether the Merger Agreement is approved. As of the record date, there were
204,662 shares of Lane Common Stock outstanding. Therefore, at least 102,332
shares must be voted in favor of the Merger. In addition, PMI need not proceed
with the Merger if the number of dissenting shares exceeds 30% of the total
outstanding shares.
On the record date, the Corporation's directors, executive officers and
their affiliates owned 6.7% of the outstanding Lane Common Stock. See
"Beneficial Ownership of Common Stock", below. All of the Corporation's
directors except Francis Bales have stated their intent to vote their shares to
approve the Merger Agreement. Mr. Bales is the beneficial owner of 1,201
shares, or .6% of the outstanding shares of Lane Common Stock.
The majority of the Board of Directors recommend that Lane Shareholders
vote FOR approval of the Merger Agreement.
OTHER CONDITIONS WITH RESPECT TO THE MERGER.
Before the Merger Agreement can be completed, certain conditions spelled
out in the Merger Agreement must be satisfied. These conditions include the
following:
SHAREHOLDER APPROVAL. The Merger must be approved by an affirmative vote
of a majority of the outstanding shares of Lane Common Stock.
LACK OF EXCESSIVE DISSENTS. PMI is not required to consummate the Merger
if holders of more than 30% of the Lane Common Stock exercise dissenters'
rights.
LITIGATION AND OTHER MATTERS. The completion of the Merger is also
conditioned on the absence of any action, suit or proceeding, either pending or
threatened, before any court or administrative agency, if such action, suit or
proceeding could result in a ruling that would prevent consummation of, or
require rescission of, the Merger. In addition, the completion of the Merger is
conditioned on the absence of any action, suit or proceeding, either threatened
or pending, before any court or administrative agency, which could impose any
liability on any of the officers or directors of the Corporation on account of
the Merger.
OTHER ACTIONS BY PMI. The obligation of Lane to complete the Merger is
conditioned on PMI and LAI performing all the covenants of the Merger Agreement;
confirming that all the representations and warranties of PMI and LAI have been
fulfilled and are true; and
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providing the Corporation with an opinion of counsel to PMI and LAI as to
certain matters.
OTHER ACTIONS BY THE CORPORATION. The obligation of PMI and LAI to proceed
with the Merger is conditioned on the Corporation performing its covenants and
confirming that its representations are true; making no material adverse changes
in its assets, earnings, business operations, prospects or financial condition;
and having no changes in the required accounting principles which would effect
the transaction. The Corporation must also furnish PMI and LAI with an opinion
of the Corporation's counsel as to certain matters.
PAYMENT FOR SHARES.
The Purchase Price for each share of Lane Common Stock will be $49. The
Purchase Price does not depend on the Corporation's operating results during the
period between the execution of the Merger Agreement, which occurred on October
26, 1995, and the actual date of closing of the Merger. There are no
differences in the rights of Lane Shareholders with respect to their shares
under the Merger Agreement.
Payments to Lane Shareholders for their respective shares will be made
through Oregon Title Company ("Oregon Title"), acting as exchange agent. PMI
will deposit the Purchase Price for all the outstanding shares of Lane Common
Stock with Oregon Title. Oregon Title will send a notice to each Lane
Shareholder of record as soon as practical after the Effective Date. The notice
from Oregon Title will contain specific instructions as to how to turn in share
certificates and receive cash. Lane Shareholders who exercise and perfect their
dissenters' rights will be paid only in accordance with the statutory procedure
governing dissenters' rights. A discussion of that statutory procedure is
contained in "Rights of Dissenting Shareholders", below.
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PLEASE RETAIN YOUR SHARE CERTIFICATES UNTIL SUCH TIME AS YOU RECEIVE THE
EXCHANGE INSTRUCTIONS FROM OREGON TITLE. DO NOT BRING SHARE CERTIFICATES TO THE
MEETING.
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Receipt of the Purchase Price by Lane Shareholders in return for their Lane
Common Stock will be a taxable transaction. A general discussion of the tax
impact of the transaction is provided in "Certain Federal Income Tax
Consequences to Lane Shareholders," below.
RIGHTS OF DISSENTING SHAREHOLDERS.
Certain provisions of the Oregon Business Corporation Act entitle Lane
Shareholders to dissent from the Merger and receive the "fair value", as that
term is defined therein, of the shares in
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lieu of the Purchase Price payable under the Merger Agreement. The "fair value"
may be more or less than the Purchase Price. The statutory provisions
describing dissenters' rights are included as Appendix B to this Proxy
Statement.
MERELY VOTING AGAINST APPROVAL OF THE MERGER AGREEMENT IS NOT SUFFICIENT TO
ESTABLISH DISSENTERS' RIGHTS. FAILURE TO STRICTLY FOLLOW ANY OF THE PROCEDURES
SET FORTH IN THE STATUTES REPRODUCED IN APPENDIX B MAY RESULT IN LOSS OF
STATUTORY DISSENTERS' RIGHTS.
A shareholder may not dissent as to less than all of the shares registered
in his or her name, except that a recordholder of shares for the benefit of more
than one person may treat each such person as a separate shareholder for the
purpose of the election to dissent if the recordholder discloses to the
Corporation the name and address of each person on whose behalf the recordholder
dissents.
The following is a summary of steps that must be taken for the effective
exercise of dissenters' rights. However, the summary is not intended to be
complete and is qualified in its entirety by reference to the statutes set forth
in Appendix B. Lane Shareholders should look to the provisions of the Oregon
Business Corporation Act reproduced in Appendix B for a complete recitation of
the steps necessary to protect their rights.
NO VOTE IN FAVOR OF THE MERGER. A Lane Shareholder wishing to assert
dissenters' rights must not vote in favor of approving the Merger Agreement.
Delivery of a proxy that does not specify a choice will be voted in favor of
approving the Merger Agreement and will disqualify that Lane Shareholder from
exercising dissenters' rights. However, abstention is not a vote in favor of
approving the Merger Agreement.
WRITTEN NOTICE OF INTENTION TO DEMAND PAYMENT. A Lane Shareholder wishing
to assert dissenters' rights must also deliver to the Corporation, BEFORE the
vote on the Merger Agreement, written notice of his or her intention to demand
payment. A written notice delivered after that time will be ineffective to
preserve dissenters' rights. A vote against approval of the Merger Agreement
does not constitute written notice. The written notice may be in the form of a
letter and must be delivered to the Secretary of the Corporation at the address
indicated on the cover of this Proxy Statement, BEFORE the vote on the Merger
Agreement is taken.
FORM FOR DEMANDING PAYMENT. If the Merger Agreement is approved, either
the Corporation or PMI as its successor, will mail notice of the approval of the
Merger to any Lane Shareholder who gave the written notice of intention to
demand payment and who did not vote in favor of the Merger Agreement. This
notice will be sent to those dissenting Lane Shareholders no later than 10 days
after the Merger Agreement is approved.
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The notice will state where payment demand must be sent and where and when
the share certificates must be deposited. The notice will contain the form
required for demanding payment. The notice will also contain a time, not less
than 30 and not more than 60 days from the mailing of such notice, within which
the dissenting Lane Shareholder must return his or her payment demand form and
deposit the stock certificates.
A dissenting Lane Shareholder sent such notice must demand payment, certify
the date of acquisition of beneficial ownership of the shares, and deposit the
stock certificates in accordance with the notice. A dissenting shareholder who
does not demand payment or deposit the shareholder's certificates where
required, each by the date set forth in the notice, is not entitled to payment
for the shares as a dissenting shareholder. Neither a vote against approval of
the Merger Agreement nor a notice of intent to demand payment constitutes this
required payment demand form or deposit of stock certificate.
REMITTANCE TO DISSENTING SHAREHOLDERS. After receipt of the stock
certificate(s) and the payment demand form, and after consummation of the
Merger, the Corporation or PMI as its successor will remit to each dissenter who
has taken the steps described above, the amount the Corporation or PMI as its
successor estimates to be the fair value of the shares, with any accrued
interest. The dissenting shareholder shall also be sent: (1) the Corporation's
unaudited balance sheet and income statement at and for the period ended
February 29, 1996, (2) the latest available interim financial statements for the
Corporation, (3) an explanation of how the fair value of Lane Common Stock was
estimated, (4) an explanation of how any accrued interest was calculated, (5) a
statement of the dissenter's right to demand payment under ORS 60.587, and (6) a
copy of ORS 60.551 to 60.594. Interest will accrue from the Effective Date of
the Merger until the date of payment.
ORS 60.551(4) defines "fair value" to which any dissenting Lane Shareholder
is entitled as the value of the shares immediately before consummation of the
Merger, excluding any element of appreciation or depreciation in anticipation of
the Merger unless such exclusion would be inequitable. The amount determined to
be the fair value may be more than or less than the Purchase Price under the
Merger Agreement.
If the Merger is not consummated within 60 days after the date set for
demanding payment and depositing stock certificates, the deposited certificates
will be returned.
DEMAND FOR PAYMENT OF DEFICIENCY. If any dissenting Lane Shareholder, who
has otherwise properly exercised his or her dissenter's rights: (1) is not paid
within 60 days after the date set for demanding payment, or (2) believes that
the amount remitted is less than the fair value of his or her shares of Lane
Common Stock, or (3) believes that the interest is not correctly determined,
then the dissenter may, within 30 days after the remittance was mailed, send the
Corporation or PMI as its successor
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his or her own written estimate of the value of the shares or interest and
demand for the deficiency. If no such demand for payment of a deficiency is
made within 30 days after the remittance was mailed, the dissenter is entitled
to no more than the amount originally remitted.
COURT APPRAISAL. If any dissenting Lane Shareholder who has made a proper
demand for payment of a deficiency has not reached an agreement with the
Corporation or PMI as its successor as to the fair value of his or her shares
within 60 days after demand, the Corporation or PMI as its successor must either
petition a court of competent jurisdiction in Lane County, Oregon, to determine
the fair value of the shares and any accrued interest thereon, or pay the amount
demanded by the dissenting shareholder. The court may appoint one or more
persons as appraisers to receive evidence and recommend a decision on the fair
value. Dissenters who have not previously come to an agreement will be entitled
to judgment for any amount by which the court finds the fair value of their
shares of Lane Common Stock exceeds the amount paid, with interest.
The costs of the court appraisal proceeding, including reasonable
compensation and expenses of appraisers appointed by the court, will be assessed
against the Corporation or PMI as its successor unless the court finds that the
refusal of any dissenting shareholder to accept an offer for his or her shares
was arbitrary, vexatious or not in good faith, in which event such costs may be
apportioned as the court deems equitable. Fees and expenses of counsel and
experts may be assessed, in the court's discretion, against the Corporation or
PMI as its successor if the court finds it failed to comply substantially with
the provisions of the statutes with respect to dissenters' rights.
Additionally, the court may assess such fees and expenses against any party
acting arbitrarily, vexatiously or not in good faith with respect to such
rights.
CONSEQUENCES OF DISSENT ON APPROVAL OF THE MERGER. Under the Merger
Agreement, PMI need not proceed with the Merger if owners of 30% of the
outstanding shares of Lane Common Stock exercise their dissenters' rights. In
addition, an affirmative vote of a majority of the outstanding shares is
required to approve the Merger. As a result, a small number of dissenting
shareholders, coupled with nonvotes of other Lane Shareholders and votes against
the Merger by Lane Shareholders who do not exercise their right to dissent,
could cause the Merger to fail, even if the dissenting shares do not meet the
30% threshold, and even if a majority of the votes actually cast are voted in
favor of the Merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO LANE SHAREHOLDERS.
The following is a brief description of the anticipated federal income tax
consequences of the merger to Lane Shareholders. It is not intended as tax
advice, and is not intended to be a complete description of the federal income
tax consequences of the Merger. This discussion is based on the Internal
Revenue Code of 1986 ("Code"), as amended and as interpreted by regulation,
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administrative determinations, and court decisions. This discussion does not
reflect any changes in the Code or its interpretation which occurs after January
15, 1996.
Because of the complexity of federal, state and local income tax laws, each
Lane Shareholder should consult his or her own tax advisor concerning the
federal, state and local and other tax consequences from the Merger.
For purposes of this discussion, it is assumed that Lane Shareholders hold
their common stock as "capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Code. The tax consequences to any
particular Lane Shareholder may be affected by matters not discussed below. For
example, certain taxpayers, such as insurance companies, trusts and estates, non
U.S. Citizens, tax exempt organizations, and shareholders of PMI, may be subject
to special rules not addressed in this discussion. Such shareholders are
particularly cautioned to consult their tax advisors for a clear understanding
of the tax consequences of the merger.
Lane Shareholders will recognize gain or loss for federal income tax
purposes measured by the difference between the cash received for their shares
and the shareholders' tax basis in the shares exchanged. Such gain or loss will
be long-term capital gain or loss if the shareholder held or is considered to
have held the shares for more than one year. In general, capital gain is taxed
in the same manner as other income. However, as of the date of this writing,
the maximum tax rate for individuals on net capital gain (the excess of net
long-term capital gain over net short-term capital loss) is 28%.
A taxpayer's long-term capital gain is added to the taxpayer's other income
to determine whether the taxpayer's income level results in the phase-out of
certain tax benefits, such as personal exemptions, itemized deductions,
deduction of IRA contributions, exemption of social security benefits, the
earned income credit, the alternative minimum tax exemption, and the rental real
estate exemption from the limitation on use of passive losses and credits.
Therefore, the total additional federal income tax resulting from each dollar of
capital gain may be more than $.28.
For corporate taxpayers, net capital gains are taxed at regular tax rates.
Capital losses may be used to offset capital gains. For individuals, the
excess of capital losses over capital gains can be set off against $3,000 of
ordinary income in any one year, and unused capital losses may generally be
carried forward to subsequent years. Corporate taxpayers may not offset capital
losses against ordinary income. However, capital loss carry backs and
carryovers may be available.
Cash received by any shareholder who exercises his or her dissenter's
rights will be treated as a distribution in redemption
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of shares, and the shareholder will be taxed on the cash received in accordance
with Section 302 of the Code. In general, such payments will be treated as a
payment in exchange for stock, with the same tax results as described above for
nondissenting shareholders.
The cash payments due to Lane Shareholders, whether as the Purchase Price
paid in accordance with the Merger Agreement or as the "fair value" paid to Lane
Shareholders who comply with the requirements of dissenters' rights, will be
subject to "backup withholding" for federal income tax purposes unless certain
requirements are met. Under federal law, 20% of the cash payments due to any
Lane Shareholder must be withheld if the shareholder is subject to backup
withholding and the federal income tax liability of such shareholder would be
reduced by the amount so withheld. To avoid backup withholding, a Lane
Shareholder must supply Oregon Title with his or her taxpayer identification
number and complete a form in which he or she certifies that he or she has not
been notified by the Internal Revenue Service that he or she is subject to
backup withholding as a result of a failure to report interest or dividends.
The taxpayer identification number of an individual is his or her Social
Security number. The required Internal Revenue Service form will be provided
with the exchange instructions to be provided by Oregon Title to each Lane
Shareholder following consummation of the Merger.
No ruling has been or will be requested from the Internal Revenue Service
as to any of the tax consequences of the Merger and no opinion of counsel has
been or will be rendered to the Corporation or the Lane Shareholders with
respect to any of the tax consequences of the Merger.
ACCOUNTING TREATMENT OF THE MERGER.
For accounting purposes, the Merger will be treated as a purchase of the
Corporation by PMI. The parties anticipate that, at the corporate level, the
Merger and subsequent liquidation of the Corporation into PMI will be treated as
a tax-free reorganization, thus generating no income tax liability to the
Corporation, PMI or LAI.
OPERATION OF LANE PLYWOOD AFTER THE MERGER.
Following the Merger and the liquidation of the Corporation into PMI, PMI
has indicated that its present intention is to continue the ongoing business
operations of the Corporation, to continue employing a sufficient number of
employees of the Corporation that no notice under the WARN Act is required and
to honor all of the outstanding contractual and statutory obligations of the
Corporation. However, consistent with good business practices, PMI also intends
to continue to review and analyze the Corporation's operations and assets in
light of the plywood market and other relevant factors.
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PMI has indicated that it may consider a variety of alternatives including,
but not necessarily limited to, continuing the Corporation's business operations
as they have been conducted, expanding the capacity or otherwise making
improvements at the Corporation's plywood plant, leasing the Corporation's
plywood plant to some third party (which may be an entity including some or all
of PMI's shareholders) for operation by that third party, disposing of certain
of the Corporation's assets, or some combination of the foregoing. The
Corporation has been advised that no decisions have been made by PMI as to any
of these possible actions.
If PMI makes any decision regarding the ongoing operation of the plywood
plant prior to the Meeting, the Merger Agreement requires PMI to communicate
that decision to the Corporation so that it can be communicated to the
Corporation's shareholders. In particular, if PMI were to decide prior to the
completion of the Merger to lease the Corporation's plywood plant to a third
party, the Merger Agreement requires PMI to give notice to the Corporation's
Board of Directors and to give good faith consideration to any input which the
Corporation's Board of Directors may have as to the intended operator of the
plant if PMI determined it to be reasonably practicable under the circumstances
to do so. After the completion of the Merger, these decisions can be made by
PMI in its sole discretion without the need to notify any party.
PMI has indicated that it intends after the completion of the Merger to
conduct a complete review and analysis of the Corporation's wages, employment
policies and practices. Any new wage scale or employment policies and practices
adopted by PMI will be communicated to employees as soon as they are adopted.
However, the Merger Agreement requires PMI to exercise reasonable efforts to
preserve the portability feature of the Corporation's current medical insurance
(especially with respect to coverage for preexisting medical conditions) and to
maintain the Corporation's 401(k) plan, at least as to voluntary contributions
by employees. PMI has asked Carl R. Wiley, Gary R. Jensen and Janis M. Johnson
to stay on with the Corporation after the closing of the Merger (if the Merger
is approved by the Lane Shareholders) through the end of 1996. PMI has
acknowledged that the Corporation presently has an effective management team and
the Corporation has encouraged PMI to retain this management team to the extent
and on such terms and conditions as are consistent with PMI's goals and good
business practices.
22
<PAGE>
SELECTED FINANCIAL DATA OF LANE PLYWOOD
FIVE YEAR SUMMARY
<TABLE>
<CAPTION>
For the Years Ended November 30
---------------------------------------------------------------------
1995(a) 1994(b)(d) 1993(c)(d) 1992(c)(d) 1991
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net sales $39,621,899 $37,772,648 $36,776,328 $33,882,168 $27,202,211
Operating income (loss) 545,940 804,405 756,398 240,913 (411,269)
Income (loss) before
cumulative effect (335,382) 438,562 449,654 104,571 (389,207)
Cumulative effect on prior
years of change in
accounting principle
for income taxes 185,600
Net income (loss) (335,382) 624,162 449,654 104,571 (389,207)
- - - ------------------------------------------------------------------------------------------------------
PER SHARE DATA
Income (loss) before
cumulative effect $(1.64) $2.14 $2.20 $ .51 $(1.90)
Cumulative effect on prior
years of change in
accounting principle
for income taxes .91
Net income (loss) (1.64) 3.05 2.20 .51 (1.90)
Cash dividends declared
per share .25
- - - ------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Current assets $ 3,268,653 $ 4,305,444 $ 4,027,152 $ 3,911,464 $ 3,434,973
Current liabilities 1,664,412 2,562,649 2,613,508 2,748,302 1,910,675
Working capital 1,604,241 1,742,795 1,413,644 1,163,162 1,524,298
Total assets 6,258,732 7,530,039 7,449,220 7,217,906 6,169,672
Long-term debt, excludes
current portion 95,021 124,428 418,273 503,401 518,484
- - - ------------------------------------------------------------------------------------------------------
EQUITY
Shareholders' equity $ 4,286,971 $ 4,336,356 $ 3,314,590 $ 3,406,801 $ 3,495,130
Book value per share $20.95 $21.19 $16.20 $16.65 $17.08
Weighted average shares
outstanding 204,662 204,662 204,662 204,662 204,662
</TABLE>
(a) Includes loss on settlement of pension plan of $1,357,676 and gain on
sale of land of $319,557.
(b) Includes additional expense of $61,680 from application of SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions";
and the cumulative effect (income increase) of $185,600 from SFAS No.
109, "Accounting for Income Taxes". The cumulative amount of the effect
has been restated from the amount that was previously reported. See
footnote 4 to the financial statements.
(c) Operating income includes gain on sale of timber contracts of $200,515
in 1993 and $631,200 in 1992.
(d) Reflects the adoption of SFAS No. 87, "Employers Accounting for
Pensions". The impact was to reduce shareholders' equity by $192,900,
$734,767 and $285,997 in 1992, 1993 and 1994, respectively.
23
<PAGE>
INFORMATION ABOUT LANE PLYWOOD.
GENERAL.
The Corporation has its principal offices at 65 North Bertelsen Road,
Eugene, Oregon 97402, area code (541) 342-5561. The Corporation was founded in
1952, when a group of investors and workers formed the Corporation to purchase a
bankrupt plywood mill. Operations began in December 1952. Operations consisted
of a leased peeling plant and the plywood mill. In 1971, the Corporation
purchased the peeling plant and added a chipping operation. In 1975, the
Corporation acquired a sawmill, and another peeling plant and chipping
operation.
The sawmill operated for five years at limited levels and was dismantled in
1981. The small peeling plant and barker were sold in 1991. In 1992, the
Corporation shut down the large peeling plant. In 1994, Lane discontinued its
chipping operations. Shutting down these green end operations resulted in lay
offs of more than 200 employees. At November 30, 1995, the Corporation employed
208 workers.
DESCRIPTION OF BUSINESS OPERATIONS.
The Corporation produces softwood plywood at its 92 acre plant site in
Eugene, Oregon. Its business includes purchasing veneer to satisfy veneer
needs, manufacturing and selling plywood from the purchased veneer, selling
green or dry veneer, custom drying and composing veneer, selling plywood
manufacturing byproducts, and operating a plywood reload operation.
The principal product manufactured and sold by the Corporation is softwood
plywood. Other products include the byproducts and veneers described above.
Sales of dry veneer used in the laminated veneer lumber market accounted for 16%
of 1994 sales and 13% of 1995 sales. No other product contributed as much as
15% to revenue in any of the last three fiscal years. The Corporation's market
for plywood is scattered throughout the 48 contiguous states and Hawaii. Sales
are handled by a one-person sales staff from the Eugene mill. Customers include
brokers and large distribution warehouses. Except for minor local sales, sales
are made in rail carload or truckload lots, both of which are made from the
mill's shipping facility. The major manufacturing byproduct, ply trim, is sold
to a mill in Oregon.
Nearly all of the Corporation's plywood products are classified as
commodities and are manufactured to voluntary product standards administered by
the National Bureau of Standards. The Corporation has no material new products
in the development stage. However, the Corporation has been working to find
niche noncommodity markets. In 1995, it started to sell plywood blanks to
snowboard manufacturers to serve as the core for the snowboards. Sales in
fiscal 1995 of this product amounted to approximately $80,000.
24
<PAGE>
TREE FARMS.
The Corporation purchased its first tree farm in 1974, and has since added
additional timberland so that it now owns 2,105 acres of timberland. The
Corporation does not anticipate that it can satisfy its raw material needs from
these tree farms.
The tree farms consist of seven separate parcels, all located in Klamath,
Lane and Douglas counties in Oregon. They consist primarily of cut over areas
that have been or are being reforested. None of the timberland is presently
being used for production, although thinning operations have produced some
revenue. In fiscal 1995, the revenue from thinning was $47,800, in 1994, it was
$59,500, and in 1993 it was $662,794.
SOURCES OF RAW MATERIAL.
Like many other forest products companies in Oregon, the Corporation has
been highly dependent on the federal government for its raw material supply. As
environmental and wildlife concerns have caused reductions in federal timber
harvests, local supplies of veneer have been reduced and prices have risen. As
a consequence, the Corporation has expanded its number of suppliers and has
begun purchasing veneer from Canada, the South and South America. Other sources
of veneer are being investigated continuously.
FACTORS AFFECTING REVENUES.
The plywood industry is somewhat seasonal because of construction slowdowns
in some consuming areas caused by unfavorable weather. However, seasonal demand
is nearly offset by production curtailments resulting from unfavorable weather
in some of the producing areas. Housing starts impact the demand for plywood.
However, the Corporation has been moving its production to heavy sanded plywood,
used primarily for commercial building, to reduce the effect of changes in
housing starts on its production.
The Corporation does not carry inventories in order to meet delivery
requirements of customers. The Corporation does not maintain a material backlog
of orders. Its backlog seldom exceeds ten days' production. Manufacturing is
tied directly to orders, and panels are generally not constructed without
orders. Veneers are normally purchased based on projected weekly needs.
Manufacturing operations are curtailed if orders don't merit operations.
The Corporation does not give customers the right to return merchandise nor
does it provide extended payment terms. Customers are invoiced immediately
after the plywood has been shipped and all shipments require payment within ten
days. Although two customers of the Corporation purchase in excess of 10% of
the total production, the Corporation does not regard its sales as dependent on
those customers, because of the commodity nature of the sales.
25
<PAGE>
In the past 15 years, softwood plywood mills in the South have become major
competitors to the plywood mills in the Northwest. Those mills enjoy
substantially lower raw material and labor costs than the northwestern mills.
They are also closer to large midwestern and eastern markets that once were
dominated by northwestern mills. Although plywood produced from the Northwest's
Douglas Fir is still regarded as generally superior to the plywood produced from
southern tree species, price is the primary consideration in making a sale. In
addition, new engineered products such as wafer board and oriented strand board
were developed during the 1980s to be inexpensive substitutes for plywood. They
now are competing effectively with plywood in some applications.
In the late 1980s and 1990s, timber harvest restrictions on federal lands
raised raw material prices to northwestern mills. The combination of newer
mills in the South with access to lower cost raw materials, cheaper labor and
less expensive transportation and the introduction of engineered panels caused a
consolidation in the Northwest plywood industry. The Corporation has survived
these changes, and remains a competitive producer of plywood products.
Patents, trademarks, licenses, franchises and concessions are not important
in manufacturing or selling any of the Corporation's products. The Corporation
does not spend a material amount on research and development activities.
PROPERTIES.
In addition to the timberlands described above, the Corporation owns the 92
acre industrial site on which its plywood manufacturing and related plant
facilities are located.
In fiscal 1995, the Corporation sold more than seven acres of the site in
two sales. One sale was to the State of Oregon Department of Transportation, of
7.2 acres. The other was of a small strip of .4 acres to a neighboring owner
for an easement. The net gain to the Corporation from the two transactions was
$319,557.
The plant facilities include a plywood layup plant with production capacity
of approximately 630,000 3/8 feet of plywood per day. This facility includes
one 30 opening press, one 20 opening press, four veneer dryers, edge gluing
equipment, veneer patching equipment, a polyurethane panel patching line, a high
speed sander and sort system, and rail and truck shipping facilities.
Two boilers provide heat for the plywood presses, veneer dryers and
building heat. Bark, other wood waste and natural gas supply the fuel for the
boilers. In addition, the industrial facility includes various plant buildings,
storage warehouses, shops, office buildings, railroad sidings and paved areas
for veneer storage.
26
<PAGE>
As of November 30, 1995, all the machinery and equipment was encumbered to
secure a line of credit payable to a bank. One of the tree farms is secured by
the same bank for a second loan. The Corporation has not drawn on that loan.
LEGAL PROCEEDINGS.
Management knows of no legal proceedings, other than ordinary routine
litigation incidental to its business, pending against the Corporation. There
are no proceedings in which an executive officer, director, nominee for director
or associate of any such person is an adverse party to the Corporation.
MARKET FOR THE CORPORATION'S STOCK; DIVIDEND HISTORY.
There is no active trading market for Lane Common Stock. The Corporation
has approximately 400 shareholders and Lane Common Stock trades infrequently.
Management of the Corporation does not request or track information about the
price at which stock changes hands through private transactions. Therefore, the
Corporation is unable to report on historic prices of Lane Common Stock.
The Board of Directors paid a dividend of $.25 per share on January 15,
1995 to holders of Lane Common Stock of record as of November 30, 1994. No
other dividends have been declared or paid during the previous three fiscal
years. The Corporation's line of credit loan contains a covenant limiting
dividends in any fiscal year to no more than 25% of the Corporation's annual net
profits after taxes.
INFORMATION ABOUT PMI AND LAI
Pioneer Merger, Inc. ("PMI") is a corporation which was incorporated under
the laws of the State of Oregon on July 25, 1995 for the purpose of acquiring
the Corporation. Lane Acquisition, Inc. ("LAI") is a corporation which was
incorporated under the laws of the State of Oregon on October 25, 1995 solely
for the purpose of engaging in the Merger. LAI is a wholly-owned subsidiary of
PMI. The principal executive offices of PMI and LAI are located at P. O. Box
1042, Veneta, Oregon 97487. Their telephone numbers are (541) 935-5414.
All of the outstanding capital stock of PMI is currently owned by Melvin L.
McDougal, Norman N. McDougal, Greg Demers, Ed King and Rick Re. The Merger
Agreement provides that PMI shall not accept any other shareholder or investor
in PMI prior to the completion of the Merger without the Corporation's prior
written consent, which will not be unreasonably withheld. After completion of
the Merger, PMI may add other shareholders or investors but has indicated that
it has no agreements or understandings to do so.
Neither PMI nor LAI have any existing business activities. However, each
of the shareholders of PMI either own, operate or have interests in other forest
products companies.
27
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors consists of seven members, divided into three
classes. Either two or three directors are elected annually to serve three-year
terms. At the 1996 Annual Meeting, two directors in Class 3 will be elected for
three-year terms. The term of office of directors Francis D. Bales and Carl M.
Jensen will end upon the election of successor directors at the Annual Meeting.
Carl Jensen is retired and has declined to be nominated for another term as a
director.
NOMINEES.
The Corporation's nominees for the Board of Directors are Francis D. Bales
and Steven D. Barr. The proxy holders intend to vote all proxies received by
them for the Corporation's nominees, except to the extent a contrary intent is
indicated. As of the date of this proxy statement, the Board of Directors
believes both Francis D. Bales and Steven D. Barr are willing and able to serve
as directors. If either declines or is unable to serve as a director by the
time of the annual meeting, the proxies will be voted for a substitute nominee
designated by the present Board of Directors. The information concerning
nominees for director is based on information furnished by the respective
nominees.
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
NOMINEES FOR ELECTION AT 1996 ANNUAL MEETING
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
NAME AND ADDRESS PRINCIPAL OCCUPATION AND DIRECTOR SINCE
EMPLOYER
- - - --------------------------------------------------------------------------------
Francis D. Bales, Sander Operator 1987
age 58 Lane Plywood, Inc.
65 N. Bertelsen Road
Eugene, OR 97402
- - - --------------------------------------------------------------------------------
Steven D. Barr, Spreader leadperson N/A
age 40 Lane Plywood, Inc.
65 N. Bertelsen Road
Eugene, OR 97402
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
Francis Bales has been employed by the Corporation since April 1959. He
has worked as a glue mixer, and is now a sander operator.
Steve Barr has been employed by the Corporation since September 1974. He
is currently a spreader leadperson and before that worked for the Corporation as
a core layer and sheet turner.
VOTE REQUIRED TO ELECT.
The two director positions open for election are in Class 3, as defined in
Article 2, Section 2 of the bylaws. Under that provision, neither candidate for
Class 3 needs to be a non-employee of the Corporation. The votes for each open
position will be taken
28
<PAGE>
separately. The candidate for each position receiving the highest number of
votes will be elected. Abstentions and other nonvotes will not be counted for
purposes of determining the outcome of the election. Abstentions will be
counted for purposes of determining if a quorum is present.
DIRECTORS WHOSE TERMS ARE CONTINUING.
Information regarding the members of the Board of Directors whose terms
continue beyond this year's Annual Meeting, is set forth in the box below. The
information about each director has ben furnished by the respective directors.
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
DIRECTORS WHOSE TERMS EXTEND BEYOND THE 1996 ANNUAL MEETING
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
Current
Name, Age and Principal Occupation Director term
Address and Employer since expires
- - - --------------------------------------------------------------------------------
Paul F. Ehinger, Forest Industry 1986 1998
age 72 Consultant
Paul F. Ehinger & Associates
1200 High St., Suite 22
Eugene, OR 97401
- - - --------------------------------------------------------------------------------
James E. Gent, Veneer grader 1979 1997
age 66 Lane Plywood, Inc.
65 N. Bertelsen Road
Eugene, OR 97402
- - - --------------------------------------------------------------------------------
Gary R. Jensen, Resource Manager 1988 1998
age 49 Lane Plywood, Inc.
65 N. Bertelsen Road
Eugene, OR 97402
- - - --------------------------------------------------------------------------------
Paul W. Jensen, Retired 1991 1997
age 65 c/o Lane Plywood, Inc.
65 N. Bertelsen Road
Eugene, OR 97402
- - - --------------------------------------------------------------------------------
John W. Revell, Bank Administrator 1987 1997
age 42 Liberty Federal Bank, S.B.
899 Pearl Street
Eugene, OR 97401
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
Paul Ehinger has been self-employed as an independent forest products
consultant for 11 years and has more than 40 years' experience in the forest
products industry. Mr. Ehinger is elected to a position which requires that he
meet the qualification of having extensive business and executive experience,
but not be an employee of the Corporation. Mr. Ehinger meets that standard.
29
<PAGE>
James Gent is a veneer grader. He has worked for the Corporation since
April 1959 and worked as a sheet turner on a spreader crew laying up plywood for
19 years, prior to becoming a veneer grader.
Gary Jensen has been a human resource and timber manager of the Corporation
since 1977, and has been chairman of the Board of Directors since 1991.
Paul Jensen was employed as a quality controller and shift production
supervisor for the Corporation for more than five years prior to retiring in
1993.
John Revell is currently a construction and environmental risk
administrator for Liberty Federal Bank, S.B., and was formerly employed by
Pacific First Federal Savings and Loan for more than five years. Mr. Revell is
elected to a position which requires that he meet the qualification of having
extensive business and executive experience, but not be an employee of the
Corporation. Mr. Revell meets that standard.
None of the directors of the Corporation, or nominee, serves as a director
of any other company which is publicly traded. No director, nominee for
director or executive officer of the Corporation has any family relationship,
whether by blood, marriage or adoption, with any other director, nominee or
executive officer of the Corporation.
During the last fiscal year, the Board of Directors held 41 meetings. Each
director attended at least 75% of the meetings held during his term as director.
The Board of Directors does not have a nominating committee, audit committee, or
compensation committee.
If the Merger is approved by the Lane Shareholders, all of the directors,
including those elected at the Meeting will be asked to step down as directors
so that PMI, which will then be the Corporation's sole shareholder, may elect
its own directors for the Corporation.
MANAGEMENT AND COMPENSATION
OF DIRECTORS AND OFFICERS
EXECUTIVE OFFICERS OF THE CORPORATION.
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
EXECUTIVE OFFICERS
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
NAME POSITION OFFICER SINCE
- - - --------------------------------------------------------------------------------
Carl R. Wiley, age 65 President 1993
- - - --------------------------------------------------------------------------------
Janis M. Johnson, age 53 Vice President 1988
Secretary
Treasurer
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
30
<PAGE>
Carl Wiley was employed as Chief Executive Officer of Puget Sound Plywood
for more than five years prior to his employment with the Corporation. Puget
Sound Plywood is not an affiliate of the Corporation. Mr. Wiley joined Lane
Plywood, Inc. as President in January 1993. He is not a beneficial owner of any
of the Corporation's stock.
Janis Johnson is employed as an accounting manager for the Corporation.
She is not a beneficial owner of any of the Corporation's stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
The Corporation does not have a compensation committee. Compensation of
Carl Wiley, President of the Corporation, is determined in negotiations between
Mr. Wiley and the entire Board of Directors. Three of the seven board members,
James Gent, Francis Bales and Gary Jensen, are currently employed by the
Corporation. A fourth director, Carl Jensen, retired as a production employee
February 28, 1995. The Board of Directors does not directly determine the
compensation of any employee of the Corporation other than Carl Wiley.
REPORT ON EXECUTIVE COMPENSATION.
The Board of Directors does not use any specific performance based criteria
in determining Mr. Wiley's compensation. He receives no specific performance
related bonus, except to the extent that every employee of the Corporation
receives such a bonus under the Incentive Profit Sharing Plan. The Board of
Directors reviews Mr. Wiley's compensation annually.
In deciding on Mr. Wiley's compensation, individual directors rely on such
factors as their own subjective views of the President's performance, the wage
increases granted to production workers, the Corporation's operating earnings
and profitability, its potential growth, as well as any other factors they think
significant.
Lane Common Stock does not trade on any active or organized market. The
Corporation does not track the prices at which stock changes hands through
private transactions. Therefore, the Board of Directors does not relate Mr.
Wiley's compensation package to the performance of the stock.
As a company whose stock is largely owned by present and former employees,
the Corporation gives the same health and other benefit packages to its
president as is offered to other employees. Mr. Wiley and other officers
participate equally in these plans along with all other employees (salaried and
hourly).
31
<PAGE>
Your Board of Directors:
Gary R. Jensen, Chairman Carl M. Jensen
Francis D. Bales Paul W. Jensen
Paul F. Ehinger John W. Revell
James E. Gent
EXECUTIVE COMPENSATION.
<TABLE>
<CAPTION>
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
ANNUAL COMPENSATION
- - - --------------------------------------------------------------------------------
Other Long All
Annual Term Other
Name and Compen- Compen- Compen-
Principal Salary Bonus sation sation sation
Position Year ($) ($) ($) ($) ($)
- - - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Carl R. Wiley 1994-95 110,000 $0 $0 $0 $4,950
President and 1993-94 $109,999 $1,008 $0 $0 $4,950
CEO 1992-93 $100,833 $0 $0 $0 $0
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
</TABLE>
Mr. Wiley is the only officer who receives compensation, including salary
and bonuses, in excess of $100,000.
Mr. Wiley joined Lane Plywood, Inc. in January 1993. Therefore, the salary
figure shown for 1992-93 represents 11 months' salary. Mr. Wiley is not
eligible for any retirement benefit from the defined benefit plan.
The figure shown under "All Other Compensation" for Mr. Wiley for 1994-95
is a contribution to the combined profit sharing and 401(k) retirement plan,
based on 5% of straight-time earnings. The figure for 1993-94 is a contribution
to the Combined Profit Sharing and 401(k) Retirement Plan, based on 5% of 90
percent of straight time earnings, in the amount of $4,950. Mr. Wiley was not
eligible to participate in the plan in the 1992-93 fiscal year.
The Board of Directors has recommended to PMI that it pay to Carl Wiley a
bonus of $30,000 following the close of the Merger, if he is still employed by
the Corporation. PMI is under no obligation to do so. At the date of this
Proxy Statement, PMI has indicated it will not make such a payment.
There are no other compensatory plans or arrangements which would result
from a change in control of the Corporation or from the resignation, retirement
or change in duties of Carl Wiley.
The Corporation does not have any benefit plans involving stock options or
long term incentives.
DIRECTOR COMPENSATION.
During fiscal 1995, directors were paid on a per meeting basis until the
middle of June of 1995. During that period, payments per
32
<PAGE>
meeting were $300 to outside directors and $200 to employee directors, except
that meetings on Saturdays were paid at $150 per meeting to outside directors
and $50 per meeting to employee directors. Beginning in the middle of June 1995
and through the end of fiscal 1995, outside directors received $300 per month
plus $125 for extra meetings during the month and employee directors received
$200 per month plus $50 for extra meetings during the month.
As chairman of the Board of Directors, Gary Jensen received the same
payments as other employee directors, plus an additional $500 per month for
serving as chairman.
Total compensation paid to directors for their service as directors during
fiscal 1995 was $44,250. Total compensation paid to directors, including
director compensation and wages for employee directors, was $153,879.
INCENTIVE PROFIT SHARING PLAN.
The Corporation has an incentive profit sharing plan which provides for
bonus payments to eligible employees. The total bonus distribution to eligible
employees is based on 30% of income before income taxes, adjusted for the effect
of major gains and losses on dispositions of assets, if any, in excess of a base
provision equal to the sum of 5% of shareholders' equity and 10% of long-term
debt at the beginning of the fiscal year. See the distribution of the bonus in
paragraphs 1. and 2. below:
1. During the period from March 1, 1981 to July 31, 1983, wage and salary
rates were either reduced or restored, dependent upon the Corporation's
financial position. An accumulation of the net earnings reduction due to the
reduced wage and salary rates during this period was maintained for this group
of employees and, as provided in the incentive profit sharing plan, were to be
paid out of 20% of the future profits when realized and as defined in the
incentive profit sharing plan. There were no payments due under the plan for
1995. The amount of payments due for 1994 and 1995 under the terms of the plan
for this class of employees was $77,491, and $44,638, respectively. At November
30, 1995, the accumulated amount of earnings eligible for future payments,
contingent upon future profits as defined by the plan, totaled $868,262.
2. The remaining 10% of profits earned in accordance with the incentive
profit sharing plan is distributed to all eligible employees, independent of the
portion described in paragraph 1., above. Bonuses were paid in the amount of
- - - -0-, $38,745, and $22,319, for 1995, 1994, and 1993, respectively. Officers
participate in this bonus to the same extent as other eligible employees.
If the Corporation were, for any reason, to discontinue all business
operations, payments under the incentive profit sharing
33
<PAGE>
plan would cease as a result of how bonus payments are computed under the plan.
GROUP PLANS.
The Corporation pays the premiums on various group health and welfare
plans. Officers of the Corporation participate equally in these plans along with
all other employees (salaried and hourly).
STOCK PERFORMANCE.
There is no public market for the Corporation's stock. Shares trade
infrequently, and the Corporation does not keep track of the price at which
trades occur. Consequently, the Corporation cannot chart the actual performance
of the Corporation's stock over a period of time.
Rules promulgated by the Securities and Exchange Commission require that
the Corporation provide a chart which compares the performance of its stock, as
measured by the percentage in total stockholder return, with the performance of
the stock market in general. Because the Corporation does not track the prices
at which its shares are traded, the following chart uses a substitute measure of
performance. The line for Lane Plywood in the chart shows the change in book
value of the Corporation over the past five years, adjusted to remove the
effects of a change in accounting principles.
The Board of Directors declared a dividend November 17, 1994, of 25CENTS a
share. That dividend was paid January 15, 1995, to stockholders as of the
November 30, 1994, record date. The book value adjustment includes adding the
accrued dividend back into stockholder equity.
The comparison lines are for the performance of the S&P 500 and the S&P
Paper and Forest Products Index, assuming reinvestment of dividends. The S&P
500 is a weighted index of 500 large capitalization companies from four primary
groups: Industrial, Transportation, Utility, and Financial. The S&P Paper and
Forest Products Index is a weighted index of 14 large capitalization companies
which operate primarily in the paper and forest products industries. These 14
companies represent about 1.7% of the weighted capitalization of the S&P 500.
To make the comparison, all values were normalized at $100 as of the close
of the 1990 fiscal year.
Although the Corporation has a very low capitalization (less than $10
million), it is not easily compared with indexes of other low capitalization
companies, since many of those that are publicly traded are companies promoting
newly emerging technology, and/or have expectations of rapid expansion. Neither
description would apply to the Corporation.
34
<PAGE>
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
Performance Graph
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
S&P PAPER
AND PRODUCTS
LANE S&P 500 INDEX
- - - --------------------------------------------------------------------------------
November 30, 1990 100 100 100
- - - --------------------------------------------------------------------------------
November 30, 1991 90 123 122
- - - --------------------------------------------------------------------------------
November 30, 1992 88 144 148
- - - --------------------------------------------------------------------------------
November 30, 1993 85 160 152
- - - --------------------------------------------------------------------------------
November 30, 1994 113 160 156
- - - --------------------------------------------------------------------------------
November 30, 1995 112 216 183
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
Because the performance of the Corporation's stock is not known, the Board
of Directors does not tie the compensation of the executive officers to the
performance of such stock. The directors do consider the operating earnings of
the Corporation as one of the factors used to determine the compensation to be
paid to Mr. Wiley.
RETIREMENT PLANS.
At January 1, 1996, the Corporation maintained a Combined 401(k) and
Retirement Plan (401(k) Plan), a defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code ("Code"). The amount of profit
sharing contributions to be made to the 401(k) Plan for any calendar plan year
is determined each year by the Board of Directors. The Corporation is not
required to make a profit sharing contribution to the 401(k) Plan for any plan
year. Any profit sharing contribution so made under the 401(k) Plan for a plan
year is based on a percentage of compensation paid to the eligible participants
for the plan year. Each eligible participant is allocated the same percentage
of compensation. Subject to certain restrictions and limitations imposed under
the Code, participants may also elect to make contributions to the 401(k) Plan
on a tax-deferred, salary reduction basis. No matching contributions are made
under the 401(k) Plan.
The Corporation previously maintained a defined benefit pension plan
("Plan") qualified under Section 401 of the Code. The Plan, which was suspended
effective December 31, 1987, and all benefits frozen, provides for fixed
benefits in the event of retirement and the attainment of a specified age and
after the completion of a specified number of years of service. Only employees
who were covered under the Plan as of December 31, 1987 are eligible for a
benefit.
On January 5, 1995, the Board of Directors adopted a resolution to
terminate the Plan effective March 15, 1995. On March 9, 1995, the Board of
Directors adopted an amendment to the
35
<PAGE>
Plan to effectuate its termination. In April 1995, the Corporation entered into
an agreement with Transamerica Life Insurance and Annuities Company for that
insurance company to provide for the future payment and administration of
benefits under the Plan. The agreement constitutes an irrevocable commitment by
Transamerica to pay all the benefits under the Plan. The Corporation has paid
to Transamerica the full amount of Transamerica's estimated cost for its
assumption of this pension obligation.
The Corporation has secured the approval of the termination of the Plan
from the Pension Benefit Guaranty Corporation. In addition, an approval request
has been filed with the Internal Revenue Service. The termination of the Plan
does not affect any employee's rights or benefits under the 401(k) Plan.
The Corporation does not have any other special benefit plans such as stock
purchase, options, stock bonus, warrants, thrift, supplemental insurance or
income plans.
CERTAIN TRANSACTIONS WITH MANAGEMENT.
There were no material transactions between the officers, directors, or
nominee for director and the Corporation during the fiscal year ending November
30, 1995. No officer, director of the Corporation, nominee for director, or any
associate of any officer, director or nominee has any understanding with respect
to any future employment with the Corporation, except the expectation of
retaining any present employment.
PMI has discussed continued employment after the Merger with Carl Wiley,
Gary Jensen and Janis Johnson. They believe that PMI will continue employing
each through the end of calendar 1996 at their present salaries.
BENEFICIAL OWNERSHIP OF COMMON STOCK
There are 204,662 shares of Lane Common Stock outstanding as of the record
date. These shares are held of record by approximately 400 shareholders. The
following table sets forth the number of shares of Lane Common Stock
beneficially owned by each director, nominee for director, and by the officers,
nominees, and directors of the Corporation as a group, as of January 31, 1996.
36
<PAGE>
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
SECURITY OWNERSHIP OF MANAGEMENT
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
Number of
Shares Percentage of
Beneficially Outstanding
Name Owned Shares
- - - --------------------------------------------------------------------------------
Francis D. Bales 1,201(1) .6
- - - --------------------------------------------------------------------------------
Steven D. Barr 412(1) .2
- - - --------------------------------------------------------------------------------
Paul F. Ehinger 402(1) .2
- - - --------------------------------------------------------------------------------
James E. Gent 1,139(1) .6
- - - --------------------------------------------------------------------------------
Carl M. Jensen 3,750 1.8
- - - --------------------------------------------------------------------------------
Gary R. Jensen 806(1) .4
- - - --------------------------------------------------------------------------------
Paul W. Jensen 5,961(2) 2.9
- - - --------------------------------------------------------------------------------
John W. Revell 0 0.0
- - - --------------------------------------------------------------------------------
Carl R. Wiley, President 0 0.0
- - - --------------------------------------------------------------------------------
Janis M. Johnson, Vice 0 0.0
President
- - - --------------------------------------------------------------------------------
All officers and directors 13,671 6.7
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
The information as to beneficial ownership of stock is based on data
furnished by the named persons. Except as otherwise indicated, the persons
named in the table possess sole voting and investment power with respect to the
stock shown opposite their names. None of the directors or officers own any
stock of record that is not beneficially owned by them.
As of January 31, 1996, no officer or director beneficially owned more than
2.9% of the outstanding stock of the Corporation. Together, the officers and
directors of the Corporation beneficially owned 13,671 shares as of January 31,
1996 representing approximately 6.7% of the Corporation's outstanding stock.
No person is known to the Corporation to be the beneficial owner of more
than 5% of the stock of the Corporation.
- - - -------------------
(1) All of the stock reported as beneficially owned by this shareholder is
registered jointly in the names of the shareholder and the shareholder's spouse.
Therefore, the shareholder and the stockholder's spouse may be deemed to share
voting and investment power with respect to this stock.
(2) Includes 2,980 shares owned outright by Mr. Jensen's spouse.
37
<PAGE>
COMPLIANCE WITH SECTION 16 FILING REQUIREMENTS.
Management believes officers and directors of the Corporation were unaware
of the requirement that they file reports on stock transactions with the
Securities and Exchange Commission (the "SEC") pursuant to SEC Rule 16a-3(e).
After the directors and officers were informed of the reporting requirements,
each of the directors and officers filed reports with the SEC, and, as required
by SEC rules, provided a copy of each filed report to the Corporation. The
Corporation received copies of the following reports, required by SEC Rule 16a-
3(e), which were filed in the fiscal year ended November 30, 1995, by the named
directors and officers.
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(A)
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
NUMBER OF
NUMBER TRANSACTIONS
DIRECTOR OR OF LATE NOT TIMELY
OFFICER REPORTS LATE REPORTS REPORTED
- - - --------------------------------------------------------------------------------
Francis D. Bales 1 Form 3 0
- - - --------------------------------------------------------------------------------
Paul F. Ehinger 2 Form 3, Form 4 1
- - - --------------------------------------------------------------------------------
James E. Gent 1 Form 3 0
- - - --------------------------------------------------------------------------------
Carl M. Jensen 1 Form 3 0
- - - --------------------------------------------------------------------------------
Gary R. Jensen 3 Form 3, Form 4, 1
Form 5
- - - --------------------------------------------------------------------------------
Paul W. Jensen 2 Form 3, Form 5 0
- - - --------------------------------------------------------------------------------
Janis M. Johnson 1 Form 3 0
- - - --------------------------------------------------------------------------------
John W. Revell 1 Form 3 0
- - - --------------------------------------------------------------------------------
Carl J. Wiley 1 Form 3 0
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
The Corporation is not aware of any other failure by any officer or
director to file forms required by SEC Rule 16a-3(e) on a timely basis.
OTHER MATTERS
The Corporation knows of no matters to be brought before the meeting other
than the election of directors and the vote on the Merger Agreement. However,
should any other matter properly come before the meeting, the persons named in
the accompanying form of proxy will vote, or refrain from voting, thereon in
accordance with their judgment.
38
<PAGE>
ANNUAL REPORT ON FORM 10-K
Upon written request to Janis M. Johnson, treasurer of the Corporation, at
65 N. Bertelsen Road, Eugene, Oregon 97402 by any person whose proxy is
solicited by the proxy statement, the Corporation will provide without charge a
copy of its annual report on Form 10-K, including the financial statements and
schedules thereto.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Coopers & Lybrand L.L.P., independent
public accountants, to examine the financial statements of the Corporation for
the year 1996. Auditing services provided by Coopers & Lybrand L.L.P. include
the examination of annual financial statements, assistance in connection with
registration statements filed with the Securities and Exchange Commission and
consultation concerning various accounting matters. The full Board of Directors
appoints the independent certified public accountants. Representatives of
Coopers & Lybrand L.L.P., the independent public accountant for the Corporation
in fiscal 1995, are expected to be present at the Annual Stockholders Meeting,
and will have the opportunity to make a statement if they desire to do so. They
will also be available to answer questions.
INCORPORATION BY REFERENCE
The Annual Report to the Stockholders of Lane Plywood, Inc. For the Year
Ended November 30, 1994 (Annual Report) is mailed with this Proxy Statement.
The sections of the Annual Report entitled "Management's Discussion and
Analysis", and "Report of Independent Accountants", including the financial
statements and accompanying notes, are hereby incorporated by reference in this
Proxy Statement.
1997 SHAREHOLDER PROPOSALS
Proposals intended to be presented by Lane Shareholders at the 1997 Annual
Meeting of Shareholders must be received by the Corporation by October 8, 1996
in order to be included in the proxy materials relating to that meeting.
By Order of the Board of Directors
Janis M. Johnson
Vice-President/Secretary-Treasurer
65 North Bertelsen Road
Eugene, Oregon 97402
February 29, 1996
<PAGE>
AGREEMENT AND PLAN OF MERGER
between
LANE PLYWOOD, INC.,
an Oregon corporation
and
PIONEER MERGER, INC.,
an Oregon corporation
Page 1--Appendix A
<PAGE>
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
1. PLAN OF MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 THE MERGER.. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 EFFECT OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 ARTICLES OF INCORPORATION. . . . . . . . . . . . . . . . . . . . 2
1.5 BYLAWS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 CONVERSION OF LANE SHARES. . . . . . . . . . . . . . . . . . . . 3
1.8 PMI SHARES.. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 PROCEDURE FOR PAYMENT. . . . . . . . . . . . . . . . . . . . . . 3
1.10 CLOSING OF TRANSFER RECORDS. . . . . . . . . . . . . . . . . . . 4
2. REPRESENTATIONS AND WARRANTIES OF LANE. . . . . . . . . . . . . . . . 4
2.1 ORGANIZATION AND POWER.. . . . . . . . . . . . . . . . . . . . . 4
2.2 CAPITALIZATION.. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 AUTHORIZATION OF TRANSACTION.. . . . . . . . . . . . . . . . . . 4
2.4 NONCONTRAVENTION.. . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 FINANCIAL STATEMENTS.. . . . . . . . . . . . . . . . . . . . . . 4
2.6 ABSENCE OF MATERIAL CHANGES. . . . . . . . . . . . . . . . . . . 5
2.7 STATUS OF PLANT, EQUIPMENT AND OTHER PROPERTY. . . . . . . . . . 5
2.8 PATENTS, TRADEMARKS, TRADE NAMES.. . . . . . . . . . . . . . . . 6
2.9 LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . 6
2.10 TAX RETURNS. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.11 CONTRACTS AND COMMITMENTS. . . . . . . . . . . . . . . . . . . . 6
2.12 INVENTORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.13 CUSTOMERS AND SUPPLIERS. . . . . . . . . . . . . . . . . . . . . 7
2.14 EMPLOYMENT MATTERS.. . . . . . . . . . . . . . . . . . . . . . . 7
2.15 ERISA COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . 7
2.16 SECURITIES LAW COMPLIANCE. . . . . . . . . . . . . . . . . . . . 8
2.17 BROKERS' FEES. . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.18 DISCLOSURE.. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.19 DISCLAIMER . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3. REPRESENTATIONS AND WARRANTIES OF PMI.. . . . . . . . . . . . . . . . 8
3.1 ORGANIZATION.. . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 CAPITALIZATION AND OWNERSHIP.. . . . . . . . . . . . . . . . . . 8
3.3 AUTHORIZATION OF TRANSACTION.. . . . . . . . . . . . . . . . . . 9
3.4 NONCONTRAVENTION.. . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 BROKERS' FEES. . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 CONTINUITY OF BUSINESS ENTERPRISE. . . . . . . . . . . . . . . . 9
3.7 DISCLOSURE.. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.8 INVESTIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . 9
4. COVENANTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1 GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 REGULATORY AND THIRD PARTY APPROVALS.. . . . . . . . . . . . . . 10
4.3 FULL ACCESS, DISCLOSURE AND ENVIRONMENTAL AUDITS.. . . . . . . . 10
4.4 OPERATION OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . 11
4.5 NOTICE OF DEVELOPMENTS.. . . . . . . . . . . . . . . . . . . . . 12
4.6 EXCLUSIVITY. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.7 INSURANCE AND INDEMNIFICATION. . . . . . . . . . . . . . . . . . 13
i--TABLE OF CONTENTS
Page 2--APPENDIX A
<PAGE>
4.8 RECONVEYANCE OF FORMER COUNTY DUMPING FACILITY.. . . . . . . . . 13
5. OBLIGATION TO CLOSE.. . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1 CONDITIONS TO OBLIGATION OF PMI. . . . . . . . . . . . . . . . . 13
5.2 CONDITIONS TO THE OBLIGATIONS OF LANE. . . . . . . . . . . . . . 14
6. TERMINATION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 TERMINATION OF AGREEMENT.. . . . . . . . . . . . . . . . . . . . 15
6.2 EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . 15
7. MISCELLANEOUS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.1 SURVIVAL.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.2 PRESS RELEASE AND PUBLIC ANNOUNCEMENTS.. . . . . . . . . . . . . 16
7.3 NO THIRD-PARTY BENEFICIARIES.. . . . . . . . . . . . . . . . . . 16
7.4 ENTIRE AGREEMENT.. . . . . . . . . . . . . . . . . . . . . . . . 16
8. SUCCESSION AND ASSIGNMENT.. . . . . . . . . . . . . . . . . . . . . . 16
9. NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10. AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . 17
11. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
12. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13. FUTURE ASSURANCES.. . . . . . . . . . . . . . . . . . . . . . . . . . 17
14. COUNSEL.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15. LEGAL PROCEEDINGS.. . . . . . . . . . . . . . . . . . . . . . . . . . 18
ii--TABLE OF CONTENTS
Page 3--APPENDIX A
<PAGE>
AGREEMENT AND PLAN OF MERGER
PARTIES:
LANE PLYWOOD, INC., an Oregon corporation ("Lane")
PIONEER MERGER, INC., an Oregon corporation ("PMI")
LANE ACQUISITION, INC., an Oregon corporation ("LAI")
RECITALS:
A. Lane, incorporated in 1952 under the laws of the State of Oregon, has
been engaged in the business of manufacturing plywood at its plant in Eugene,
Oregon. Many shareholders would like to realize the value of their investment
in Lane and the board of directors of Lane has accordingly, on behalf of the
shareholders, entertained and considered proposals to acquire the business and
assets of Lane.
B. Lane and ATR Services, Inc. entered into a letter of intent dated July
6, 1995, regarding the acquisition of Lane shares ("Letter of Intent"). Upon
execution of the Letter of Intent, ATR deposited $50,000 with Oregon Title
Company to be held pursuant to the provisions of the Letter of Intent. ATR has
assigned to PMI all of ATR's right, title and interest in and to the Letter of
Intent and the deposit, and Lane has consented to the assignment from ATR to
PMI.
C. PMI has offered to acquire Lane in a merger transaction in which
shareholders of Lane will receive Forty-Nine Dollars ($49) cash for each share
of Lane's stock, on the terms, covenants, conditions and other provisions set
forth herein in this Agreement and Plan of Merger ("Agreement").
D. The merger of Lane and PMI shall take place pursuant to Internal
Revenue Code Section 338 and Treasury Regulation Section 1.338-2. Accordingly,
PMI has formed LAI as a wholly-owned subsidiary of PMI. LAI's sole purpose is to
acquire the stock of and merge into Lane, with Lane surviving. By reason of the
merger of LAI and Lane, Lane's shareholders will have received cash for their
shares, LAI will cease to exist, and Lane will be a wholly-owned subsidiary of
PMI. Immediately following the merger of LAI and Lane, Lane will be liquidated
into PMI. By reason of the liquidation of Lane into PMI, PMI shall be the
corporation ultimately surviving in the merger transaction.
E. A majority of the board of directors of Lane believes that the offer
of PMI is reasonable and should therefore be submitted to Lane's shareholders
for a vote and, if the offer is approved by the shareholders, that the offer
should be consummated under a plan of merger pursuant to this Agreement.
1--AGREEMENT AND PLAN OF MERGER
Page 4--APPENDIX A
<PAGE>
AGREEMENT:
1. PLAN OF MERGER.
1.1 THE MERGER. Pursuant and subject to the terms, covenants,
conditions and other provisions of this Agreement, Lane will merge with LAI at
the Effective Time (as defined below in Section 1.3), and thereupon Lane shall
immediately be liquidated into PMI. PMI shall be the corporation ultimately
surviving the merger of LAI into Lane and the liquidation of Lane into PMI
(sometimes referred to herein as the "Surviving Corporation"). References in
this Agreement to "the merger" shall be deemed to refer to the acquisition of
Lane by PMI as described above in recital D.
1.2 THE CLOSING. The closing of the merger shall take place at
Oregon Title Company, in Eugene, Oregon, at 10:00 a.m. on the date that is three
(3) business days after the meeting of Lane's shareholders referred to in
Section 4.1, but in no event later than May 1, 1996 ("Closing Deadline").
At the closing, Lane will deliver to PMI the certificate,
consents and opinion referred to in Section 5.1; PMI shall deliver to Lane the
certificate and opinion referred to in Section 5.2; the parties will cause
Articles of Merger and Articles of Dissolution in the forms attached hereto as
Exhibits A-1 and A-2 to be filed with the Secretary of State of the State of
Oregon; PMI shall deliver to Oregon Title Company, in the manner provided below,
Ten Million Twenty-Eight Thousand Four Hundred Thirty-Eight Dollars
($10,028,438) for payment to the shareholders of Lane in exchange for their
shares of Lane; and the parties shall execute and deliver closing and
disbursement instructions to Oregon Title Company.
1.3 EFFECT OF MERGER. The merger shall become effective at the time
the Articles of Merger of LAI into Lane and the Articles of Dissolution of Lane
are filed with the Oregon Secretary of State (the "Effective Time"). The merger
shall have the effect set forth in the Oregon Business Corporation Act. The
Surviving Corporation may, at any time after the Effective Time, take any action
in the name and on behalf of Lane, LAI or PMI to carry out and effectuate the
transaction contemplated by this Agreement.
1.4 ARTICLES OF INCORPORATION. The Articles of Incorporation of Lane
in effect as of the Effective Time will remain the Articles of Incorporation of
Lane immediately following the merger of LAI and Lane, without any modification
or amendment. The Articles of Incorporation of PMI in effect as of the
Effective Time will remain the Articles of Incorporation of the Surviving
Corporation immediately following the liquidation of Lane into PMI, without any
modification or amendment.
1.5 BYLAWS. The Bylaws of Lane in effect as of the Effective Time
will remain the Bylaws of Lane immediately following the merger of LAI and
Lane, without any modification or amendment. The Bylaws of PMI in effect as of
the Effective Time will remain the Bylaws of the Surviving Corporation
immediately following the liquidation of Lane into PMI, without any modification
or amendment.
1.6 OFFICERS, DIRECTORS AND FIDUCIARIES. The officers and directors
of Lane, and the Trustees and each other fiduciary of each of the employee
benefit plans described in Section 2.15, below (hereinafter, a "Section 2.15
Plan") shall each resign their respective positions effective as of the merger
of LAI into Lane and before the liquidation of Lane into PMI ("Resignation
Time"). The officers and directors of PMI in office as of the Effective Time
will remain the directors and officers of the Surviving Corporation immediately
following the liquidation of Lane into PMI and will retain their respective
positions and terms of office immediately following
2--AGREEMENT AND PLAN OF MERGER
Page 5--APPENDIX A
<PAGE>
the liquidation of Lane into PMI. The parties hereby waive all requirements of
prior notice of the resignations of the Trustees and fiduciaries of the Section
2.15 Plans. As of the Resignation Time, the resignations of the persons
currently serving as the Trustees and fiduciaries of the Section 2.15 Plans
shall become effective, PMI shall become the sponsor of each Section 2.15 Plan,
PMI designates Richard T. Re as the sole Trustee of the Lane Plywood, Inc.
Combined 401(k) and Retirement Plan and Trust and of the Trust Agreement under
the Retirement Plan for Employees of Lane Plywood, Inc. (if said plan has not
been fully terminated as of the Resignation Time) and as the Plan Administrator
of each Section 2.15 Plan, and Richard T. Re shall acknowledge in writing his
acceptance of his designation as Trustee and as Plan Administrator of the
Section 2.15 Plans.
1.7 CONVERSION OF LANE SHARES. At the Effective Time, each issued
and outstanding share of Lane stock shall cease to exist and shall be converted
into the right to receive Forty-Nine Dollars ($49) cash. After the Effective
Time, no share of Lane stock shall be deemed to be outstanding and no share of
Lane stock, other than any dissenting shares, shall be deemed to have any right
other than the right to receive cash as set forth above.
Within ten (10) days after the meeting at which the shareholders
of Lane approve the merger, the Surviving Corporation shall deliver a written
dissenters' notice, pursuant and conforming to the requirements of the Oregon
Business Corporation Act, to all Lane shareholders asserting dissenters' rights.
The amount payable to shareholders asserting dissenters' rights pursuant to the
Oregon Business Corporation Act shall be paid to those shareholders by and
through Oregon Title Company pursuant to Section 1.9, out of funds delivered by
PMI pursuant to Section 1.2, to the extent that such amount does not exceed
Forty-Nine Dollars ($49) per share. To the extent that the amount payable to
those shareholders exceeds Forty-Nine Dollars ($49) per share, the Surviving
Corporation shall pay such excess amount owing to the holders of such dissenting
shares out of funds of the Surviving Corporation other than those delivered
pursuant to Section 1.2 above.
1.8 PMI SHARES. Each PMI share issued and outstanding as of the
Effective Time will remain issued and outstanding immediately following the
Effective Time.
1.9 PROCEDURE FOR PAYMENT. Upon closing, PMI shall pay Ten Million
Twenty-Eight Thousand Four Hundred Thirty-Eight Dollars ($10,028,438) to Oregon
Title Company for payment to the holders of all the Lane shares and PMI shall
instruct Oregon Title Company promptly to submit the instructions and letter of
transmittal in the form attached hereto as Exhibit B to each record holder of
outstanding Lane shares to use in surrendering their Lane certificates for
payment of the merger consideration. No interest will accrue or be paid to the
holders of any Lane shares.
Oregon Title Company shall invest the cash payment fund in one or
more of the permitted investments set forth in Exhibit C attached hereto as
directed by PMI from time to time; provided, that the terms of the investments
shall be such as to permit Oregon Title Company to make prompt payment of the
merger consideration. PMI may cause Oregon Title Company to pay over to PMI any
net earnings with respect to the investments.
PMI may cause Oregon Title Company to pay over to it any portion
of the cash payment fund (including any earnings thereon) remaining two hundred
seventy (270) days after the Effective Time and thereafter all former Lane
stockholders shall be entitled to look to the Surviving Corporation (subject to
abandoned property and escheat laws), as general creditors of the Surviving
Corporation with respect to the cash payable upon surrender of their
certificates.
PMI shall pay the charges and expenses of Oregon Title Company.
3--AGREEMENT AND PLAN OF MERGER
Page 6--APPENDIX A
<PAGE>
1.10 CLOSING OF TRANSFER RECORDS. After the close of business on the
closing date, transfers of Lane shares outstanding as of the Effective Time
shall not be made on the stock transfer books of Lane or PMI.
2. REPRESENTATIONS AND WARRANTIES OF LANE. Lane represents and warrants
that each of the following statements is, to the best of its current, actual
knowledge, true, correct and complete as of the date of this Agreement and will
be true, correct and complete as of the date that is seventy-five (75) days from
the date of this Agreement (except as otherwise set forth below in Sections 2.1,
2.2, 2.3, 2.4, 2.6, 2.9, 2.17 and 2.18):
2.1 ORGANIZATION AND POWER. Lane is a corporation duly organized,
validly existing and in good standing under the laws of Oregon. Lane has full
corporate power and authority to carry on the business in which it is engaged
and to own, lease, possess and use its assets, and has duly qualified to do
business in any jurisdictions in which such qualification is necessary. The
representations and warranties of this Section 2.1 shall be true, correct and
complete at all times from the date of this Agreement through the Effective
Time.
2.2 CAPITALIZATION. The authorized capital stock of Lane consists
solely of two million (2,000,000) shares of common stock, of which two hundred
four thousand six hundred sixty-two (204,662) shares are issued and outstanding.
All of the issued and outstanding shares have been duly authorized and are
validly issued, and are fully paid and nonassessable. There are no outstanding
or authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights or other rights, agreements or commitments
that could require Lane to issue, sell, transfer from treasury or otherwise
cause to be outstanding any additional shares. There are no outstanding or
authorized stock appreciation, phantom stock or similar rights with respect to
Lane. There are no obligations to pay or make, and Lane will not declare, pay,
or make, any dividends or other distributions in respect of its shares, except
as permitted by Section 4.4(c). The representations and warranties of this
Section 2.2 shall be true, correct and complete at all times from the date of
this Agreement through the Effective Time.
2.3 AUTHORIZATION OF TRANSACTION. Lane has full power and authority
to execute and deliver this Agreement and to perform its obligations hereunder;
provided that Lane cannot consummate this merger unless its shareholders approve
the merger in the manner provided by law. This Agreement constitutes a valid
and legally binding obligation of Lane enforceable in accordance with its terms.
The representations and warranties of this Section 2.3 shall be true, correct
and complete at all times from the date of this Agreement through the Effective
Time.
2.4 NONCONTRAVENTION. Neither the execution and delivery of this
Agreement nor the consummation of the merger transaction contemplated hereby
will violate any restriction of any government, governmental agency or court to
which Lane is subject or any provision of the Articles of Incorporation or
Bylaws of Lane. Other than complying with the applicable provisions of the
Oregon Business Corporation Act and federal and state securities laws, Lane is
not required to give any notice to, make any filing with, or seek any
authorization, consent or approval of any government or governmental agency in
order to consummate the merger. The representations and warranties of this
Section 2.4 shall be true, correct and complete at all times from the date of
this Agreement through the Effective Time.
2.5 FINANCIAL STATEMENTS. Lane has filed an annual report on Form
10-K for its fiscal year ended November 30, 1994, and has filed quarterly
reports on Form 10-Q for its fiscal quarters ended February 28, May 31 and
August 31, 1995. Lane will furnish PMI with: (a) in-house financial
statements, immediately upon their timely completion, for
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Lane's fiscal quarter ended August 31, (b) audited financial statements,
immediately upon their timely completion, for Lane's year ended November 30,
1995 (c) in-house unaudited monthly financial statements immediately upon their
timely completion, and (d) immediately prior to closing, in-house unaudited
financial statements for the interim periods up to the closing date. The
financial statements included or incorporated by reference in the public
reports, including the related notes and schedules, and the financial statements
for the fiscal year ended November 30, 1995, and the interim period prior to
closing shall have been or be prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered thereby and present fairly the financial condition of Lane for the
indicated periods and are or will be correct and complete in all material
respects and consistent with the books and records of Lane.
2.6 ABSENCE OF MATERIAL CHANGES. Since the period for which the
financial results have been reported in the financial statements dated August
31, 1995, and except as disclosed in writing by Lane's counsel, Hershner Hunter
Moulton Andrews & Neill, to PMI's counsel, Gleaves Swearingen Larsen Potter
Scott & Smith: (a) there has not been any material adverse change outside the
ordinary course of business in the business or financial condition, assets,
operation or results of operation of Lane; (b) Lane has not incurred any
liabilities in excess of $15,000 singly or $25,000 in the aggregate, except in
the ordinary course of business and consistent with Lane's past practices, or
increased, or experienced any change in, any assumptions underlying or methods
of calculating any inventories, receivables, margins, contingencies or reserves;
(c) Lane has not paid, discharged or satisfied any liabilities in excess of
$15,000 singly or $25,000 in the aggregate, except in the ordinary course of
business and consistent with Lane's past practices; (d) Lane has not permitted
or allowed any of its assets to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge of any kind, except for
liens arising in the ordinary course of business and consistent with Lane's past
practice and liens for current taxes not yet due; (e) Lane has not canceled any
debts or waived any claims or rights of material value, or sold, transferred, or
otherwise disposed of any of its assets except in the ordinary course of
business and consistent with its past practice; (f) Lane has not disposed of or
permitted to lapse any material rights to use any patent, trademark, trade name
or other item of proprietary intellectual property possessed by Lane, or
disposed of or disclosed to any person any material trade secret, formula,
process or know-how not theretofore a matter of public knowledge; (g) Lane has
not granted any increase in the compensation of any of its officers or employees
or any increase in the compensation payable or to become payable to any officer
or employee; (h) Lane has not made any capital expenditure or commitment that
would have a material adverse effect on the business or financial condition,
assets, operation or results of operation of Lane; (i) Lane has not made any
change in any method of accounting or accounting practice; (j) Lane has not
paid, loaned or advanced any amount to, or sold, transferred or leased any of
its assets to, or entered into any agreement or arrangement with, any of its
officers or directors or any "affiliate" or "associate" of any of its officers
or directors; and (k) Lane has not agreed, in writing or otherwise, to take any
action described in this Section 2.6. The representations and warranties of
this Section 2.6 shall be true, correct and complete at all times from the date
of this Agreement through the Effective Time.
2.7 STATUS OF PLANT, EQUIPMENT AND OTHER PROPERTY. The current use
of the plant, structures and equipment is in substantial compliance with all
applicable building, zoning, land use, health or safety laws, ordinances,
orders, rules and regulations (including, without limitation, the Oregon Forest
Practices Act and the rules and regulations promulgated in connection
therewith), except as does not have a material adverse effect on Lane's business
or financial condition, assets, operations or results of operation. The "Audit
Documents" delivered to PMI by Lane pursuant to Section 4.3, below, represent
all written documents of that nature in Lane's possession, Lane does not have
current, actual knowledge of any environmental problems other than as described
in those Audit Documents, and Lane has not current, actual knowledge of any
environmental proceeding pending before any regulatory body, except as has been
disclosed in writing to PMI by Lane. Except as has been disclosed in writing to
PMI by Lane and except as does not have a material adverse effect on Lane's
business or financial condition,
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<PAGE>
assets, operations or results of operation, Lane does not have any current,
actual knowledge of the presence of protected or endangered species of plants or
animals on or at the plant facilities, any timberlands owned or possessed by
Lane (which for purposes of this Agreement includes timberlands the rights to
the timber on which are possessed by Lane), or any other properties of Lane.
Except as has been disclosed in writing to PMI by Lane, there are no rights of
third parties in any of the facilities and timberlands that would materially
impair the value of the facilities or timberlands, or that would prevent the use
thereof by Lane in the ordinary course of business.
2.8 PATENTS, TRADEMARKS, TRADE NAMES. Except for the use of the
words "Lane Ply" stamped on some panels prior to shipping, Lane does not own or
use, and the present conduct of the business of Lane does not require the
ownership or use of, any patents, trademarks, trade names, copyrights,
technology, know-how or other proprietary intellectual property rights of any
person. Lane has not made any trademark, tradename or other similar filings
with respect to the words "Lane Ply".
2.9 LEGAL PROCEEDINGS. There is no action, proceeding, claim, demand
or investigation (including, without limitation, any product liability claims)
pending or threatened against or involving Lane that singly or in the aggregate
would, if adversely determined, have a material adverse effect on Lane, or that
questions or challenges the validity of this Agreement or any action taken or to
be taken by Lane pursuant to this Agreement or in connection with the
transactions contemplated hereby; nor is there any valid basis for any such
action, proceeding, claim, demand or investigation. Lane is not subject to any
judgment, order or decree that has or may have a material adverse effect on
Lane. Lane has disclosed to PMI the completed purchase by the Oregon Department
of Transportation of part of Lane's plant property under threat of condemnation;
there are no pending special assessment, condemnation, environmental, zoning or
other land use regulation proceedings that would have a material adverse effect
on the business or financial condition, assets, operation or results of
operation of Lane, nor has Lane received notice of any of the foregoing
affecting its properties. The representations and warranties of this Section
2.9 shall be true, correct and complete at all times from the date of this
Agreement through the Effective Time.
2.10 TAX RETURNS. Lane has duly filed all tax reports and returns
required to be filed by it and has duly paid all taxes and other charges due or
claimed to be due from it by Federal, State, local or foreign taxing authorities
and there are no tax liens upon any property of Lane, and no state of facts
exists or has existed that would constitute grounds for the assessment of any
tax liability with respect Lane or its assets, or that would subject the Lane or
its assets to any tax lien (other than liens for current taxes not delinquent).
2.11 CONTRACTS AND COMMITMENTS. Except as has been disclosed by Lane
to PMI (which disclosure may be in writing or by providing PMI with access to
originals or copies of written documents evidencing the disclosed item), Lane
does not have any: (a) agreements, contracts, commitments or other restrictions
that are material to its business, operations or prospects or that involve
amounts that are in excess of the normal, ordinary and usual requirements of
Lane's business consistent with its past practices; (b) agreements, contracts,
commitments or other restrictions to which it is a party or by which it is bound
that are in material default; (c) outstanding agreements, contracts or
commitments with or to the officers, employees, agents, consultants, advisors,
salespersons, sales representatives, distributors or dealers of its products
that are not cancelable by it on notice and without liability, penalty or
premium; (d) agreements, contracts or commitments that are in material breach by
Lane or any other party, nor is there any basis for any valid claim of material
breach under any agreements, contracts or commitments made or obligation owed by
Lane; (e) agreements, contracts, commitments or other restrictions that restrict
it from carrying on its business; (f) any liabilities or obligations with
respect to the return of inventory or merchandise in the possession of
wholesalers, distributors or other customers of Lane that would, in the
aggregate, exceed $10,000; and (g) any persons (other than
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<PAGE>
Bank of America pursuant to documents evidencing Lane's loan obligation to such
Bank and other than powers of attorney for tax matters given to Hershner Hunter
Moulton Andrews & Neill, Coopers & Lybrand LLP, and Pension Planners Northwest)
who possess an existing or "springing" revocable or irrevocable power of
attorney to act on behalf of Lane for any purpose whatsoever. The aggregate of
all accepted and unfilled orders for the sale of Lane's products is between
$1,500,000 and $2,500,000, and the aggregate of all contracts and commitments
for the purchase of supplies and inventory does not exceed $3,000,000, all of
which orders, contracts and commitments were made in the ordinary course of
business.
2.12 INVENTORY. Lane's inventories (including inventories of
supplies, parts, raw materials and work in process) are at a level consistent
with Lane's past practices, and the present quantity of Lane's inventory is
reasonable in the present circumstances of its business.
2.13 CUSTOMERS AND SUPPLIERS. Since August 31, 1995, there has been
no adverse change in the business relationship of Lane with any customer or
supplier that is material to the successful operation of Lane's business.
2.14 EMPLOYMENT MATTERS. Lane is in substantial compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, health insurance continuation, and wages and hours,
and is not engaged in any unfair labor practice. There are no unfair labor
practice or similar complaints against Lane pending or threatened before the
National Labor Relations Board or any other authority. There are no charges or
claims pending or threatened before any governmental or regulatory agency or
authority relating to Lane's employees. There is no labor strike, dispute,
slowdown, stoppage or organizational activity actually pending or threatened
against or directly affecting Lane. No union or other collective bargaining
unit is currently certified or recognized by Lane as representing any of its
employees, and no union representation question exists respecting the employees
of Lane. There is no labor or employment agreement binding on Lane that
restricts it from relocating or closing any of its operations, and Lane has not
experienced any material stoppage or other material labor difficulty during the
past two years. Lane has no collective bargaining or union contracts or
agreements, and no employment agreement or any other agreement that contains any
severance or termination pay, liabilities or obligations. Lane does not have
any obligation to pay, and will not pay, any bonus or other extraordinary
compensation to any employee, officer, director, consultant, or other person.
2.15 ERISA COMPLIANCE. The only employee benefit plans within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") sponsored by Lane are: (a) the Retirement Plan for
Employees of Lane Plywood, Inc., a defined benefit pension plan (the "Retirement
Plan"); (b) the Lane Plywood, Inc. Combined 401(k) and Retirement Plan, a
defined contribution 401(k) plan ("401(k) plan"); (c) a welfare benefit plan
providing fully insured group health, dental and vision care benefits, group-
term life and dependent life coverage, and short-term disability benefits;
(d)and a Section 125 cafeteria plan providing for the payment of premiums only.
These plans are collectively called the "Benefit Plans." The Retirement Plan is
in the process of being terminated on the basis that all liabilities for
benefits payable under the Retirement Plan will be satisfied by one or more
single premium group annuity contracts issued or to be issued by Transamerica
Life Insurance and Annuities Company ("Transamerica"). Lane represents that the
premium for those contracts as tentatively assessed by Transamerica has been
paid. The actual premium amount is subject to a final accounting and valuation
by Transamerica. In the event that the actual premium cost differs from the
tentative premium previously remitted to Transamerica, Lane shall either be
obligated to pay or shall be entitled to a refund of such difference, as the
case may be. Lane also represents that there are no known liabilities, required
contributions, fines, taxes or penalties to be made or paid with respect to the
Benefit Plans (other than the normal insurance premium payments with respect to
the welfare benefits plans and the salary reduction contributions of
participants under the 401(k) plan). Lane further represents that there are no
known
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claims for benefits which will not be met from assets (including insurance
contracts) of the Benefit Plans. Lane further represents that there are no
known violations of federal pension laws, including but not limited to ERISA,
with respect to Lane, no known prohibited transactions entered into by any of
the Benefit Plans or Lane, and no known facts which would cause any of the
Benefit Plans to fail to qualify for favorable tax treatment under the Internal
Revenue Code of 1986, as amended.
2.16 SECURITIES LAW COMPLIANCE. Lane timely and properly filed with
the Securities and Exchange Commission ("SEC") proxy materials with respect to
Lane's 1995 annual meeting and Form 10-Q for the quarter ending May 31, 1995,
and all of the documents so filed complied with applicable securities laws and
regulations in all material respects. None of the documents filed, as of their
respective dates, contained any untrue statement of material fact or omitted to
state a material fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. Lane has
delivered to PMI a correct and complete copy of each public report filed with
the SEC (together with all exhibits and schedules thereto and as amended to
date) filed during the past three years. Lane has no knowledge of any pending
or threatened investigation, enforcement action or other proceeding by the SEC
under the Securities Act of 1933, under the Securities Exchange Act of 1934, or
otherwise against Lane.
2.17 BROKERS' FEES. Lane has no obligation to pay any fees or
commissions to any broker, finder or agent with respect to the merger. The
representations and warranties of this Section 2.17 shall be true, correct and
complete at all times from the date of this Agreement through the Effective
Time.
2.18 DISCLOSURE. The materials prepared for soliciting proxies to be
voted at the meeting of shareholders at which the merger will be considered,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they will be made, not misleading and will
comply with the Securities Exchange Act of 1934 in all material respects;
provided, that Lane makes no representation or warranty with respect to any
information supplied by PMI for use in the proxy materials. The representations
and warranties of this Section 2.18 shall be true, correct and complete at all
times from the date of this Agreement through the Effective Time.
2.19 DISCLAIMER. Except as specifically set forth in this Agreement,
PMI is acquiring all of the shares of Lane "AS IS" and with no representations
or warranties by any party whatsoever. Specifically, but not by way of
limitation, PMI is aware of, accepts and assumes Lane's "back wages" (as
commonly understood within Lane, and which do not in the aggregate represent a
liability in excess of $868,262), the arrangement with Transamerica described in
Section 2.15, Lane's subsidiary, Lane International Marketing, Inc. and its
various business activities, and Lane's lease of a portion of its site for a
portable chip operation. All information provided by Lane to PMI has been and
will be provided without warranty or guaranty whatsoever, and PMI is responsible
for the investigation of all facts and performance of PMI's own due diligence,
and PMI is relying solely upon the same in connection with this merger.
3. REPRESENTATIONS AND WARRANTIES OF PMI. PMI represents and warrants
that the following is correct and complete as of the date of this Agreement and
will be correct and complete as of the Effective Time.
3.1 ORGANIZATION. PMI is an Oregon corporation duly organized,
validly existing and in good standing under the laws of Oregon. PMI has full
power and authority to carry on its business and to own and use its assets.
3.2 CAPITALIZATION AND OWNERSHIP. All of the issued and outstanding
shares of PMI will be duly authorized, validly issued, fully paid and
nonassessable and owned by
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<PAGE>
Melvin L. McDougal, Norman N. McDougal, Greg Demers, Ed King and Rick Re. PMI
shall not accept any other shareholder or investor in PMI prior to the Effective
Time without Lane's prior written consent, which shall not be unreasonably
withheld.
3.3 AUTHORIZATION OF TRANSACTION. PMI has full power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement will constitute the valid and legally binding obligation of PMI,
enforceable in accordance with its terms.
3.4 NONCONTRAVENTION. Neither the execution nor delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
violate any restriction of any government, governmental agency or court to which
PMI is subject or any provision of the articles or Bylaws of PMI. Other than
complying with the applicable provisions of the Oregon Business Corporation Act,
PMI does not need to give any notice (including notification under the Hart-
Scott-Rodino Act) to, make any filing with, or obtain any authorization, consent
or approval of any government or governmental agency in order to consummate the
merger.
3.5 BROKERS' FEES. PMI has no obligation to pay any fees or
commissions to any broker, finder or agent with respect to the merger.
3.6 CONTINUITY OF BUSINESS ENTERPRISE. PMI's present intention is to
continue the ongoing business operations of Lane after the closing. PMI intends
to continue employing a sufficient number of employees of Lane for such a period
that Lane is not required to give notice under the WARN Act prior to the
closing, and intends to honor all of the outstanding contractual or statutory
obligations of Lane. Consistent with good business practices, PMI will continue
to review and analyze Lane's operations, both before and after closing, in light
of the plywood market and other relevant factors. If PMI has made any decisions
regarding the ongoing operations of the plant (which decisions may include,
without limitation, decisions regarding employment policies, terms or
conditions) in time for information regarding the decisions to be included in
the Lane proxy materials or supplementary proxy materials to be sent out to
shareholders prior to the meeting of Lane shareholders at which the merger shall
be voted upon, PMI shall inform Lane's Board of Directors of such decisions. If
PMI decides prior to the Effective Time to allow a third party to operate the
mill, PMI will give notice of PMI's decision to the board of Lane and will give
good faith consideration to any input such board may have as to the intended
operator of the mill, if PMI determines it to be reasonably practicable under
the circumstances to do so. Further, PMI shall exercise reasonable efforts to
preserve the portability feature of the medical insurance (especially with
respect to coverage for pre-existing medical conditions) and to maintain the
401(k) plan at least as to voluntary contributions by employees. PMI
acknowledges that Lane presently has an effective management team and that Lane
encourages PMI to retain such management team to the extent and on such terms
and conditions as are consistent with PMI's goals and good business practices.
3.7 DISCLOSURE. The information that PMI has supplied and will
supply for use in the Lane proxy materials will not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements made therein, in light of the circumstances under which they will
be made, not misleading.
3.8 INVESTIGATION. During the course of the negotiation of this
Agreement, PMI has reviewed all information provided to it by Lane and has had
the opportunity to ask questions of and receive answers from representatives of
Lane concerning Lane and its securities, and has obtained any additional
information PMI has requested.
3.9 LITIGATION. There is no action, proceeding, claim, demand or
investigation pending or threatened against or involving PMI or any of its
shareholders that singly or
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in the aggregate would, if adversely determined, have a material adverse effect
on PMI (including PMI's business or financial condition).
4. COVENANTS.
4.1 GENERAL. Upon the satisfaction or waiver of the conditions to
PMI's obligations set forth in Sections 5.1.2 and 5.1.7, Lane shall prepare
proxy materials and shall then promptly call a meeting of its shareholders to
vote upon the plan of merger. The proxy materials shall include information
regarding PMI's proposal for the ongoing operation of the plant if such
information is delivered to Lane pursuant to Section 3.6. The board of
directors of Lane shall solicit proxies to be voted in favor of approving the
merger and the proxy material will contain the affirmative recommendation of the
board of directors of Lane in favor of approving the merger; provided that no
director shall be required to violate any fiduciary duty or other requirement
imposed by law, any director opposed to the plan may set forth his opinion in
the proxy materials and otherwise, as permitted by law, and Lane may state the
reasons for any director's negative vote in the proxy if it deems doing so
appropriate under SEC rules and guidelines. Each of the parties will use best
efforts to take all other action and to do all other things necessary or
advisable in order to consummate the merger. The foregoing covenant shall
include, without limitation, an obligation on the part of Lane to permit
representatives of PMI with reasonable opportunities to communicate, in writing,
in person or otherwise, with Lane's employees regarding PMI's proposals for the
ongoing operations of the plant, upon request of PMI; provided, however, that:
(a) PMI shall have obtained the prior approval of either the President of Lane
or of the Chairman of Lane's Board of Directors regarding the matters to be
communicated by PMI to the Lane employees (which approval shall not be
unreasonably withheld); (b) any communications in person with the Lane employees
shall not occur during working hours and the Lane employees shall not be paid
for time spent in any such personal communications; and (c) to the extent that
such communications constitute a "solicitation" under SEC rules and regulations,
such communications shall be made only in accordance with SEC rules and
regulations and PMI shall file with the SEC any documents required by SEC rules
and regulations relating to such communications.
4.2 REGULATORY AND THIRD PARTY APPROVALS. Each of the parties will
give any notices to, make any filings with, and use best efforts to obtain any
authorizations, consents and approvals of governmental agencies in connection
with the matters referred to in Sections 2.4 and 3.4 above. Without limiting
the generality of the foregoing, Lane will prepare and file proxy materials with
the SEC relating to the meeting of Lane shareholders at which the merger will be
considered. The proxy materials shall be prepared and filed in accordance with
the Securities Exchange Act of 1934 and all applicable rules and regulations
thereunder, and in accordance with the Oregon Business Corporation Act. PMI
will cooperate with Lane in connection with the preparation of, and will provide
accurate information for inclusion in, the Lane proxy material. Each party is
responsible for complying with any securities laws applicable to such party and
shall indemnify and hold the other party harmless from any violations of those
laws caused by the indemnifying party.
Lane will give any notices to, make any filings with and obtain any
consents, authorizations or approvals of third parties that are necessary to
make the representations of Lane in Section 2 (except for the representations in
Sections 2.1, 2.2, 2.3, 2.4, 2.6, 2.9, 2.17 and 2.18) true, correct and complete
as of the date that is seventy-five (75) days from the date of this Agreement,
and to make the representations of Lane in Sections 2.1, 2.2, 2.3, 2.4, 2.6,
2.9, 2.17 and 2.18 true, correct and complete as of the Effective Time.
4.3 FULL ACCESS, DISCLOSURE AND ENVIRONMENTAL AUDITS. Lane will
permit representatives of PMI to have reasonable access to all of the premises,
property, personnel, books, records, contracts, documents of or pertaining to
Lane, so long as it does not unreasonably disrupt Lane's business. PMI will
have the right, at its sole expense, to make such
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investigations, site analyses and inspections, and to obtain such reports
(including without limitation, title reports) as PMI, in its sole discretion,
deems necessary. Upon reasonable advance notice, Lane shall grant to PMI and
its agents and consultants reasonable access to Lane's property, books and
records to facilitate any investigations or inspections or site analyses as PMI
may require, and will make available in connection with such investigations,
site analyses and inspections all documents, drawings, studies, records and
other documentation relevant thereto.
Lane shall deliver to PMI for its review and approval copies of any
and all reports, audits, assessments compilations of results, photographs,
diagrams and other documents or materials, including but not limited to
underground storage tank reports or studies and Level 1, 2 or 3 environmental
assessments ("Audit Documents") in connection with any inspections,
investigations, studies or other research relating to the Lane's facilities and
operations, and with respect to Hazardous Materials or Environmental Laws
("Environmental Audits"), and will identify any contracts or studies or other
Audit Documents by or in the possession of any regulatory agency.
PMI shall obtain any further Environmental Audits that it desires to
be performed as a part of its due diligence investigation, at PMI's sole cost
and expense. PMI's approval of the further Environmental Audits, on or before
the date that is seventy-five (75) days from the date of this Agreement, shall
be a condition precedent to the closing of the merger transaction. PMI shall be
entitled to retain sole possession of, and shall not be obligated to provide a
copy of or disclose to Lane or any other person, any contents of any further
Environmental Audit (or any Audit Documents pertaining to any further
Environmental Audits) obtained by PMI.
Each party will treat and hold confidential any proprietary
information it receives in the course of its review and will not use any of the
confidential information except in connection with this Agreement. If this
Agreement is terminated for any reason whatsoever, each party will return to the
other party all tangible embodiments and all copies of proprietary information
which are in its possession. The separate Confidentiality and Nondisclosure
Agreements signed by ATR Services, Inc., PMI and the individual shareholders of
PMI shall continue in full force and effect, are not modified by the provisions
of this Agreement, and will continue in full force and effect even if this
Agreement terminates without closing.
If requested by Lane prior to the Effective Time, PMI shall: (a)
execute an agreement, in form and substance reasonably acceptable to counsel for
Lane and PMI, to retain as strictly confidential, in the event that the merger
transaction does not close, all environmental information relating to Lane's
assets that is obtained by PMI from any source whatsoever (except as disclosure
is required by law, rule, regulation or order of any court or agency with
jurisdiction), and (b) shall obligate its employees and contractors (including,
without limitation, its environmental consultants) who have access to
environmental information relating to Lane's assets that is obtained by PMI from
any source whatsoever to execute a similar confidentiality agreement.
4.4 OPERATION OF BUSINESS. Lane will use its best efforts to conduct
its business in a reasonable and prudent manner in accordance with past
practices, to preserve its existing business organization and relationships with
employees, customers, suppliers and others with whom it has a business
relationship, preserve and protect its properties, and conduct its business in
compliance with all applicable laws and regulations. Lane will not engage in
any practice, take any action, or enter into any transaction outside the
ordinary course of business (which shall, for purposes of this Agreement, be
deemed to include within the meaning of "outside the ordinary course of
business" the entering into or the amendment, modification or extension of any
agreement for the purchase of raw materials from outside the State of Oregon
that is binding on Lane for a period of greater than one hundred twenty (120)
days from the date of the agreement, amendment, modification or extension),
except for matters already in process, disclosed in writing by Lane to PMI prior
to the date of this Agreement, or approved in advance by PMI's operations
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consultant (as set forth below). Without limiting the generality of the
foregoing, other than as is already in process or disclosed in writing by Lane
to PMI: (a) Lane will not authorize or effect any change in its articles or
Bylaws; (b) Lane will not grant any option, warrant or other right to purchase
or obtain any of its stock or issue, sell or otherwise dispose of any of its
stock; (c) Lane will not declare, set aside or pay any dividend or distribution
with respect to its stock except to the extent that dividends paid do not exceed
$2.00 per share in the aggregate and which shall cause a dollar-for-dollar (or
fraction thereof) reduction in the merger consideration of $49 per share payable
hereunder; (d) Lane will not issue any note, bond or other debt security or
create, incur, assume or guarantee any indebtedness for borrowed money or
capitalized lease obligations outside the ordinary course of business, except as
disclosed in this Agreement or in writing by Lane to PMI prior to the date of
this Agreement; (e) Lane will not sell or impose any security interest upon any
of its assets outside the ordinary course of business, except as disclosed in
this Agreement or in writing by Lane to PMI prior to the date of this Agreement;
(f) Lane will not make any capital investment in, make any loan to, or acquire
the securities or assets of any other person outside the ordinary course of
business, except as disclosed in this Agreement or in writing by Lane to PMI
prior to the date of this Agreement; (g) Lane will not make any material change
in employment terms for any of its directors, officers, employees, consultants
or other agents or representatives outside the ordinary course of business; and
(h) Lane will not commit to do any of the foregoing, without the prior consent
of PMI's operations consultant, which shall not be unreasonably withheld.
At all times prior to the Effective Time, Lane will keep PMI's
operations consultant, which shall be Rick Re unless and until PMI designates
another person to act as its operations consultant, advised of any material
developments or plans in connection with the operation of Lane's business and
will allow the operations consultant reasonable access to Lane's premises,
books, records and meetings for the purpose of keeping such operations
consultant advised of developments.
4.5 NOTICE OF DEVELOPMENTS. Each party will give prompt written
notice to the other of any material adverse development causing a breach of any
of its representations, warranties, or covenants. No such disclosure, however,
shall be deemed to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.
4.6 EXCLUSIVITY. Neither Lane nor any of its officers, directors,
principal shareholders, advisors or agents will, directly or indirectly: (a)
encourage, initiate or solicit any inquiries or the making of any proposal with
respect to any acquisition, business combination, purchase of all or any
significant portion of the assets of or any equity interest in Lane or the right
to vote shares of Lane's equity securities by any person or party other than PMI
or an existing Lane shareholder (a "Competing Transaction"), (b) engage in any
negotiations or discussions with respect to a Competing Transaction, (c) provide
any information or data (other than that which would otherwise be obtained from
public sources) with respect to Lane or its business or assets or (d) otherwise
cooperate in any way, assist or participate in, facilitate or encourage any
effort or attempt with respect to a Competing Transaction. Lane and its
officers, directors, principal shareholders, advisors or agents will immediately
terminate any existing activities, discussions or negotiations with any parties
as to a Competing Transaction heretofore conducted and, if they have not already
done so, will immediately, in writing, request that any such parties immediately
return to Lane all non-public information previously provided to such parties.
Lane will immediately notify PMI in writing of any inquiries or proposals which
are received or activities as to which Lane or its officers, directors,
principal shareholders, advisors or agents become aware with respect to a
Competing Transaction, including, to the extent known by Lane or its officers,
directors, principal shareholders, advisors or agents, the actions taken or
contemplated by such other person or party and the terms and conditions of any
such Competing Transaction, but excluding the identity of the person or party
initiating such Competing Transaction.
12--AGREEMENT AND PLAN OF MERGER
Page 15--APPENDIX A
<PAGE>
Notwithstanding the foregoing, Lane may, upon prior written notice to
PMI, provide information to a third party and the officers and directors of
Lane, acting on behalf of Lane, may enter into discussions or negotiations with
a person or party with respect to a Competing Transaction if the failure to
furnish such information or enter into such discussions or negotiations may be a
breach of the fiduciary obligations of directors of Lane in the written opinion
of Lane's legal counsel and then only to the extent that any such information to
be provided has previously been provided to PMI and such other person or party
enters into a nondisclosure agreement or confidentiality agreement on terms
substantially the same as entered into by ATR Services, Inc. and the
shareholders of PMI. Lane may not waive or release such other person or party
from the terms of such agreement(s) without the prior written consent of PMI
unless required by law to do so, in which event ATR Services, Inc. and the
shareholders of PMI will be similarly released from their respective
confidentiality obligations. In addition to the notices required to be given
pursuant to the previous paragraph and upon the invocation of this paragraph,
Lane will immediately notify and continue to advise PMI of any material
developments in the discussions or negotiations with any other person or party.
4.7 INSURANCE AND INDEMNIFICATION. Surviving Corporation will
provide or maintain extended reporting coverage under the directors and officers
liability insurance currently in effect for Lane for one (1) year from the
expiration or termination of such insurance, and under the fiduciaries liability
insurance currently in effect for Lane for ninety (90) days from the expiration
or termination of such insurance. This insurance shall be paid in full prior to
or upon the closing date, all in form and upon terms and conditions reasonably
acceptable to Lane. Surviving Corporation will also indemnify any individual
who served as a director, officer or fiduciary of Lane or any related entity,
plan or trust, to the fullest extent allowed by applicable law.
4.8 RECONVEYANCE OF FORMER COUNTY DUMPING FACILITY. Lane shall,
prior to the Effective Time, make reasonable efforts to convey to Lane County
(or make reasonable efforts to enter into a binding agreement on terms
reasonably satisfactory to PMI for the conveyance to Lane County of) certain
real property formerly used as a refuse and dumping facility. The conveyance
shall include the agreement of Lane County to hold harmless Lane with respect to
any conditions of or caused by such facility (including, but not limited to
conditions constituting a breach of any environmental, hazardous material or
health and safety law, rule, order or regulation).
5. OBLIGATION TO CLOSE.
5.1 CONDITIONS TO OBLIGATION OF PMI. The obligation of PMI to
consummate the merger at the closing is subject to each of the following
conditions precedent, each and any of which may be waived by PMI upon written
notice to Lane at or prior to the Effective Time (except for the condition set
forth below in Section 5.1.2, which may be waived by PMI upon written notice to
Lane at or prior to the date that is seventy-five (75) days from the date of
this Agreement):
5.1.1. The merger shall have been approved by Lane's
shareholders and the number of dissenting shares shall not exceed thirty percent
(30%) of the number of outstanding Lane shares;
5.1.2. PMI has determined to its reasonable satisfaction
that the representations and warranties of Lane set forth in Section 2 are
substantially true and correct in all material respects as of the date that is
seventy-five (75) days from the date of this Agreement;
5.1.3. PMI has determined to its reasonable satisfaction
that the representations and warranties of Lane set forth in Sections 2.1, 2.2,
2.3, 2.4, 2.6, 2.9, 2.17 and 2.18 are substantially true and correct in all
material respects as of the closing date;
13--AGREEMENT AND PLAN OF MERGER
Page 16--APPENDIX A
<PAGE>
5.1.4. Lane, and each of its officers and directors,
shall have performed and complied with all of their respective covenants
hereunder (including, without limitation, the covenants set forth in Section 4)
in all material respects through the closing;
5.1.5. No action, suit or proceeding shall be pending or
threatened before any court or administrative agency wherein an unfavorable
order or ruling would in effect prevent consummation or require rescission of
the transaction contemplated by this Agreement;
5.1.6. Lane shall have delivered to PMI a certificate to
the effect that each of the conditions specified in Sections 5.1.1 through 5.1.5
is satisfied in all material respects;
5.1.7. PMI has not given written notice to Lane, on or
before the date that is seventy-five (75) days from the date of this Agreement,
of disapproval of any Environmental Audit, Audit Document or other item of
environmental information provided to or obtained by PMI pursuant to Section
4.3; and
5.1.8. Lane has delivered to PMI an opinion of Lane's
counsel in form and substance reasonably acceptable to counsel for Lane and PMI.
5.2 CONDITIONS TO THE OBLIGATIONS OF LANE. The obligation of Lane to
consummate the merger at closing is subject to the following conditions, each
and any of which may be waived by Lane upon written notice to PMI at or prior to
closing:
5.2.1. The representations and warranties of PMI set
forth in Section 3 above shall be true and correct in all material respects as
of the closing date;
5.2.2. PMI shall have performed and complied with all of
its covenants hereunder in all material respects through the closing;
5.2.3. The merger shall have been approved by Lane's
shareholders;
5.2.4. No action, suit or proceeding shall be pending or
threatened before any court or administrative agency wherein an unfavorable
order or ruling would in effect prevent consummation or require rescission of
the transaction contemplated by this Agreement or impose liability on any of the
officers or directors of Lane on account of such transaction;
5.2.5. PMI shall have delivered to Lane a certificate to
the effect that each of the conditions specified in Sections 5.2.1 through 5.2.4
is satisfied in all material respects;
5.2.6. If required by law or if the SEC so requests or
requires, Lane receives a "fairness opinion" reasonably acceptable to Lane; and
5.2.7. PMI has delivered to Lane an opinion of PMI's
counsel in form and substance reasonably acceptable to counsel for Lane and PMI.
5.2.8. PMI has delivered to Lane, on or before the date
that is seventy-five (75) days from the date of this Agreement, evidence
reasonably satisfactory to Lane that PMI has the financial ability to enable it
to make the payments required of PMI pursuant to Sections 1.7 and 1.9, above
(which evidence may be in the form of a letter from an institutional lender
committing to lend the merger consideration to PMI).
14--AGREEMENT AND PLAN AND MERGER
Page 17--APPENDIX A
<PAGE>
6. TERMINATION.
6.1 TERMINATION OF AGREEMENT. The parties may terminate this
Agreement (whether before or after shareholder approval) as follows: (a) the
parties may terminate this Agreement by mutual written consent at any time prior
to the Effective Time; (b) PMI may (75 days from signing) terminate this
Agreement by giving written notice to Lane at any time prior to the date that is
seventy-five (75) days from the date of this Agreement, in the event Lane has
breached any material representation, warranty or covenant contained in Sections
2 (other than Sections 2.1 through 2.4, 2.6, 2.9, 2.17, 2.18) and 4 in any
material respect, or at any time prior to the Effective Time in the event Lane
has breached any material representation, warranty or covenant contained in
Sections 2.1 through 2.4, 2.6, 2.9, 2.17, 2.18 or 4 in any material respect, and
in either case PMI has notified Lane of the breach and the breach has continued
without cure for a period of thirty (30) days after the notice of breach; or at
any time prior to the Effective Time if the closing shall not have occurred by
the Closing Deadline (as defined in Section 1.2) by reason of the failure of any
condition precedent under Section 5.1 hereof (unless the failure results
primarily from PMI breaching any representation, warranty or covenant contained
in this Agreement); (c) Lane may terminate this Agreement by giving written
notice to PMI at any time prior to the Effective Time in the event PMI has
breached any material representation, warranty or covenant contained in this
Agreement in any material respect, Lane has notified PMI of the breach and the
breach has continued without cure for a period of thirty (30) days after notice
of breach; or if the closing shall not have occurred by the Closing Deadline (as
defined in Section 1.2) by reason of the failure of any condition precedent
under Section 5.2 (unless the failure results primarily from Lane breaching any
representation, warranty or covenant contained in this Agreement); (d) PMI may
terminate this Agreement by giving written notice of disapproval to Lane under
the provisions of Section 5.1.7; or (e) this Agreement shall terminate without
further action by either party in the event the Lane shareholders do not vote in
favor of the merger.
6.2 EFFECT OF TERMINATION; COSTS. The parties acknowledge that prior
to the execution of this Agreement ATR Services, Inc. deposited Fifty Thousand
Dollars ($50,000) with Oregon Title Company, which is presently being held as a
deposit against PMI's obligations pursuant to the provisions of this Agreement.
Upon the execution of this Agreement, PMI will deposit an additional Two Hundred
Fifty Thousand Dollars ($250,000) with Oregon Title Company to be held as a
deposit pursuant to the provisions of this Agreement. The Fifty Thousand
Dollars ($50,000) plus the Two Hundred Fifty Thousand Dollars ($250,000)
constitutes the "deposit" hereunder. PMI acknowledges that Lane has already
incurred significant costs and expenses in connection with ongoing negotiations
in connection with this proposed merger and will incur significant additional
costs and expenses moving forward with this Agreement, specifically including,
but not limited to, the cost and expense of preparing proxy solicitation
materials. If Lane terminates this Agreement because PMI has breached and
failed to cure the breach of any material representation, warranty or covenant
contained in this Agreement in any material respect, or if PMI terminates this
Agreement for any reason other than as set forth in clauses (a), (b), (d) or (e)
of Section 6.1, then PMI shall forfeit to Lane the Three Hundred Thousand Dollar
($300,000) deposit (together with any interest actually earned thereon) and by
this paragraph PMI authorizes Oregon Title Company to pay the same to Lane. If
PMI terminates this Agreement under the provisions of clause (d) of Section 6.1,
then Two Hundred Fifty Thousand Dollars ($250,000) of the deposit (together with
any interest actually earned thereon) shall be refunded to PMI and Fifty
Thousand Dollars ($50,000) of the deposit (together with any interest actually
earned thereon) shall be forfeited to Lane, and by this paragraph the parties
authorize Oregon Title Company to pay the deposit and interest in such
proportions to such parties. If this Agreement is terminated as a result of the
provisions of clauses (a), (b) or (e) of Section 6.1, the entire Three Hundred
Thousand Dollar ($300,000) deposit (together with any interest actually earned
thereon) shall be refunded to PMI and by this paragraph Lane authorizes Oregon
Title Company to so refund the same to PMI. If this
15--AGREEMENT AND PLAN OF MERGER
Page 18--APPENDIX A
<PAGE>
merger closes, upon closing the deposit (together with any interest actually
earned thereon) shall be refunded to PMI.
The parties agree that a failure or refusal of PMI to close under
such circumstances will cause damages to Lane and that, due to uncertainties,
those damages would be difficult or impossible to prove. Therefore, the parties
have agreed upon the forfeiture of all or a portion of the deposit (as set forth
above) as liquidated damages if PMI fails to close under the circumstances set
forth herein. This amount is agreed upon and intended as liquidated damages and
not as a penalty to ensure performance. The parties agree that this amount is
within the range of reasonable estimates of the actual loss Lane would suffer by
reason of PMI's failure to so close, considering, without limitation, the
expected amount of time required to sell a business of this kind, the time lost
between the signing of this Agreement and putting the business on the market,
the cost of continued ownership, the reasonable rate of return of funds that
would have been received upon closing, and the cost of proceeding prior to and
after this Agreement, specifically including, but not limited to, preparation of
proxy solicitation materials.
7. MISCELLANEOUS.
7.1 SURVIVAL. None of the representations, warranties and covenants
of the parties will survive the Effective Time, other than the following, which
shall survive closing: (a) the provisions of Section 1 regarding payment for
Lane shares, and (b) the provisions of Section 4.7 regarding indemnification and
insurance.
7.2 PRESS RELEASE AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to this Agreement without
the prior written approval of the other party; provided, however, that Lane may
make any public disclosure it in good faith believes is advisable or required by
applicable law concerning its publicly traded securities, in which case Lane
will use its best efforts to advise PMI prior to making any such disclosure.
Further, each party may fully disclose to its stockholders, advisers and
lenders. The parties shall cooperate to issue a joint press release forthwith
after the execution of this Agreement.
7.3 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any person other than the parties; provided,
however, that the provisions in Section 1 are intended for the benefit of Lane
shareholders and the provisions in Section 4.7 are intended for the benefit of
the individuals specified therein.
7.4 ENTIRE AGREEMENT. This Agreement, including the schedules and
exhibits attached hereto and the documents referred to herein, constitutes the
entire agreement between the parties and supersedes any prior understandings,
agreements or representations by or between the parties, written or oral, to the
extent they related in any way to the subject matter hereof.
8. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. No party may assign this Agreement or any of its rights,
interests or obligations hereunder without the prior written approval of the
other party.
9. NOTICES. All notices, requests, demands, claims or other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given two (2) business
days after it is sent by registered or certified mail, return receipt requested,
addressed to the intended recipient as set forth below:
16--AGREEMENT AND PLAN OF MERGER
Page 19--APPENDIX A
<PAGE>
If to Lane: Lane Plywood, Inc.
65 North Bertelsen Road
Eugene, Oregon 97402
Telecopy: (503) 343-8102
With a copy to: William R. Potter
Hershner, Hunter, Moulton, Andrews & Neill
P.O. Box 1475
Eugene, Oregon 97440
Telecopy: (503) 344-2025
If to PMI: Pioneer Merger, Inc.
P.O. Box 2187
Eugene, Oregon 97402
Telecopy: (503) 935-5414
With a copy to: Stan G. Potter
Gleaves Swearingen Larsen Potter Scott & Smith
P.O. Box 1147
Eugene, Oregon 97440
Telecopy: (503) 345-2034
Any communication sent other than by registered or certified mail, return
receipt requested, shall be deemed to have been given when it is actually
received by the intended recipient. Any party may change the address to which
notices and other communications hereunder are to he delivered by giving the
other party notice in the manner herein set forth.
10. AMENDMENTS AND WAIVERS. The parties may mutually amend any provision
of this Agreement at any time prior to Lane shareholder approval. No amendment
of any provision of this Agreement shall be valid unless the same shall be in
writing and signed by the parties. No waiver by any party of any default,
misrepresentation or breach hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation or breach
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
11. SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any situation shall not affect the validity or
enforceability of the remaining terms or provisions hereof or the validity or
enforceability of the offending term or provision in any other situation .
12. EXPENSES. Each of the parties will bear its own costs and expenses,
including legal fees, incurred in connection with this Agreement and the
transactions contemplated hereby, except as provided in Section 6.2.
13. FUTURE ASSURANCES. Each of the parties shall, upon request of any
other party, execute and deliver such additional documents as may be necessary
or reasonably requested for the purpose of evidencing or perfecting any rights
or interests arising under this Agreement.
17--AGREEMENT AND PLAN OF MERGER
Page 20--APPENDIX A
<PAGE>
14. COUNSEL. Each of the parties hereto acknowledges that each party has
been represented by counsel in connection with the preparation and execution of
this Agreement and that each party has thoroughly reviewed this Agreement with
that party's counsel. The rule of construction that a written agreement is
construed against the party preparing or drafting such agreement shall
specifically not be applicable to the interpretation of this Agreement.
15. LEGAL PROCEEDINGS. In the event any legal proceeding is commenced for
the purpose of interpreting or enforcing any provision of this Agreement, the
prevailing party in such proceeding shall be entitled to recover a reasonable
attorney's fee in such proceeding, or any appeal thereof, in addition to the
costs and disbursements allowed by law.
DATED this 26th day of October, 1995.
LANE PLYWOOD, INC.
By /s/ Gary Jensen
---------------------------------------------
Gary Jensen, Chair of the Board
PIONEER MERGER, INC.
By /s/ Greg Demers
---------------------------------------------
Greg Demers, President
By /s/ Richard T. Re
---------------------------------------------
Richard T. Re, Vice President
---------------------------------------------
LANE ACQUISITION, INC.
By /s/ Greg Demers
---------------------------------------------
Greg Demers, President
By /s/ Richard T. Re
---------------------------------------------
Richard T. Re, Vice President
EXHIBITS:
A-1 : Articles of Merger (Section 1.2)
A-2 : Articles of Dissolution (Section 1.2)
B : Instructions of Letter of Transmittal to Shareholder (Section 1.9)
C : Permitted Investments
18--AGREEMENT AND PLAN OF MERGER
Page 21--APPENDIX A
<PAGE>
Submit the original
and one true copy CORPORATION DIVISION - BUSINESS REGISTRY
$10.00 255 Capitol Street N.E.
Salem, Oregon 97310-1327
503-986-2200
SURVIVOR'S REGISTRY NUMBER:
-----------------
ARTICLES OF MERGER
BUSINESS AND/OR NONPROFIT CORPORATIONS
1. Names of the corporations proposing to merge:
A. Lane Acquisition, Inc.
B. Lane Plywood, Inc.
2. Name of the surviving corporation: Lane Plywood, Inc.
3. A copy of the plan of merger is attached.
4. Corporation A - check the appropriate statement:
/ / Shareholder/membership approval was not required. The plan was
approved by a sufficient vote of the board of directors.
/X/ Shareholder/membership approval was required. The vote was as
follows:
<TABLE>
<CAPTION>
- - - -----------------------------------------------------------------------------------------------
- - - -----------------------------------------------------------------------------------------------
Class or series Number of shares Number of votes Number of votes Number of votes
of shares outstanding entitled to be cast cast for cast against
- - - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- - - -----------------------------------------------------------------------------------------------
- - - -----------------------------------------------------------------------------------------------
</TABLE>
Corporation B - check the appropriate statement:
/ / Shareholder/membership approval was not required. The plan was
approved by a sufficient vote of the board of directors.
/X/ Shareholder/membership approval was required. The vote was as
follows:
<TABLE>
<CAPTION>
- - - -----------------------------------------------------------------------------------------------
- - - -----------------------------------------------------------------------------------------------
Class or series Number of shares Number of votes Number of votes Number of votes
of shares outstanding entitled to be cast cast for cast against
- - - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common 204,662 204,662
- - - -----------------------------------------------------------------------------------------------
- - - -----------------------------------------------------------------------------------------------
</TABLE>
Surviving Corporation:
----------------------------------
----------------------------------
Person to contact about this filing: Stan G. Potter
Telephone: 503-686-8833
EXHIBIT A-1 TO AGREEMENT AND PLAN OF MERGER
Page 22--APPENDIX A
<PAGE>
Submit the Original SECRETARY OF STATE
and One True Copy CORPORATION DIVISION
$10.00 BUSINESS REGISTRY
255 Capitol Street, N.E., Suite 151
Salem, OR 97310-1327
ARTICLES OF DISSOLUTION
BY SHAREHOLDERS
Registry Number:
---------
1. Name of the corporation: Lane Plywood, Inc.
2. Date of Incorporation: February 29, 1952.
3. All shareholders entitled to vote consented in writing to the dissolution.
Execution:
-------------------------------------------------------------------
Signature Printed Name Title
Person to contact about this filing: Stan G. Potter (503) 686-8833
-------------------------------------
Name Daytime Phone Number
EXHIBIT A-2 TO AGREEMENT AND PLAN OF MERGER
Page 23--APPENDIX A
<PAGE>
LETTER OF TRANSMITTAL
(To accompany certificate(s)
for Lane Plywood, Inc. Stock)
TO: Oregon Title Company
450 Country Club Road
Eugene, Oregon 97401
(503) 342-7451
Greetings:
The undersigned delivers to you, with this Letter of Transmittal, the
following described share certificates formerly representing stock of
Lane Plywood, Inc. ("Lane") in accordance with the terms of the merger
of Lane and Pioneer Merger, Inc. I understand that every share of
Lane stock which is surrendered with this letter shall be converted
into $49, and that Oregon Title Company, acting as the exchange agent,
will make the payment.
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
ITEM A.
DESCRIPTION OF STOCK PRESENTED
- - - --------------------------------------------------------------------------------
Name(s) and Address of Registered Holder(s) Certificates Submitted
- - - --------------------------------------------------------------------------------
NUMBER OF
CERTIFICATE NUMBER(S) SHARES
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
(Fill out the name(s) exactly as they -----------------------------------
appear on the share certificates(s). -----------------------------------
If the name(s) on any certificate are -----------------------------------
not identical to those on another -----------------------------------
certificate, use separate Letters of -----------------------------------
Transmittal. See Question 6.) -----------------------------------
-----------------------------------
-----------------------------------
TOTAL
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
Page 1 of 6 EXHIBIT B TO AGREEMENT AND PLAN OF MERGER
Page 24--APPENDIX A
<PAGE>
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
ITEM B. ITEM C.
SPECIAL DELIVERY INSTRUCTIONS SPECIAL PAYMENT INSTRUCTIONS
If a check is to be mailed to an If a check is to be issued in a name
address other than as indicated in other than as indicated in Item A on
Item A on page 1, fill in the space page 1, fill in the space below
below. (and see Question 5).
MAIL TO ISSUE TO
NAME: NAME:
-------------------------------- ----------------------------
TYPE OR PRINT TYPE OR PRINT
ADDRESS: ADDRESS:
-------------------------------- ----------------------------
- - - ---------------------------------------- ------------------------------------
CITY STATE ZIP CODE CITY STATE ZIP CODE
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
The signature(s) on this Letter of Transmittal must correspond exactly
with the name(s) of the: (1) registered owner(s) of the enclosed
certificate(s), or (2) person(s) to whom each such certificate has
been properly assigned and transferred, in which case evidence of
transfer must accompany this Letter of Transmittal. See Question 4.
SIGNATURE: Date:
------------------------------ ---------------
SIGNATURE: Date:
------------------------------ ---------------
DAYTIME TELEPHONE:
----------------------
Signature Guarantee
(If required, see Questions 4 and 5)
FIRM:
----------------------------------
BY:
----------------------------------
TITLE:
---------------------------------
ADDRESS:
-------------------------------
(Each Letter of Transmittal must be accompanied by the share certificates
described in Item A and a filled out and signed IRS W-9. Any Letter of
Transmittal which is not properly filled out and accompanied by the listed share
certificates cannot be processed. Failure to include a form W-9 may cause
backup withholding of 31 percent of the payment.)
Page 2 of 6 EXHIBIT B TO AGREEMENT AND PLAN OF MERGER
Page 25--APPENDIX A
<PAGE>
[Date]
Page 1
[OREGON TITLE COMPANY LETTERHEAD]
[Date]
Dear Lane Plywood Stockholder:
As you are aware, the merger of Lane Plywood, Inc. ("Lane") and Pioneer Merger,
Inc. ("Buyer") was completed on _______________, 199__.
As a result of the merger, each share of Lane stock ("Lane Stock") has been
converted into the right to receive $49. You may now exchange your Lane Stock
for cash. Accompanying this letter is a Letter of Transmittal which you must
use to forward your Lane Stock certificates to us for payment of the purchase
price. Also enclosed is an IRS Form W-9 which you must use to report your
Social Security number or employer identification number.
Please complete the Letter of Transmittal and the Form W-9 according to the
instructions in this letter, and deliver or mail the Letter of Transmittal, the
Form W-9 and your Lane Stock certificate(s) to us. For your convenience, we
have enclosed an addressed envelope. You may hand deliver your materials to us
at 450 Country Club Road, Eugene, Oregon. IF YOU MAIL THESE MATERIALS, WE
RECOMMEND REGISTERED MAIL PROPERLY INSURED BECAUSE THE RISK OF LOSS IS YOURS.
The balance of this letter answers questions about the process of turning in
your Lane Stock certificates for cash, and provides instructions for completing
the Letter of Transmittal.
1. WHAT WILL I RECEIVE FOR MY LANE STOCK?
You will receive $49 for each share of Lane Stock owned by you as of
_____________, 199__, the record date. For example, if you own 375 shares of
Lane Stock, you will receive $18,375.
2. WHAT ARE THE TAX CONSEQUENCES OF THE TRANSACTION?
The federal income tax consequences of this transaction were described in the
Proxy Statement that was sent to Lane stockholders in connection with the
special meeting held on __________, 199__. You are encouraged to review that
discussion and to consult with your individual tax advisor. PLEASE NOTE:
NEITHER OREGON TITLE COMPANY NOR BUYER HAS ANY INFORMATION ON THE COST BASIS OF
YOUR LANE STOCK.
Page 3 of 6 EXHIBIT B TO AGREEMENT AND PLAN OF MERGER
Page 26--APPENDIX A
<PAGE>
[Date]
Page 2
3. WHAT DO I NEED TO DO?
Send or deliver your Lane Stock certificate(s) to us using the Letter of
Transmittal form included in this mailing, accompanied by the Form W-9.
If you choose to send the certificate(s) by mail, we recommend that you use
insured, registered or certified mail. You may hand deliver the certificate(s)
to us at our office shown above.
Be sure to fill in Item A of the Letter of Transmittal with your name exactly as
it appears on your certificate(s), your address, the number of each certificate
you are enclosing and the number of shares represented by each certificate. The
number of each certificate is found on the face of the certificate. If you own
more than one certificate, and if your name is different on those certificates,
please refer to Question 6.
4. DO I NEED TO SIGN THE BACK OF THE CERTIFICATE(S)?
You do not need to sign the back of any certificate if you are the registered
owner of the shares, and you want your check to be issued in your name as it
appears on the face of the certificate.
If you are not a person whose name appears on the face of a certificate, the
certificate must be endorsed or accompanied by appropriate stock powers, in
either case signed by the registered owner or owners exactly as the name of the
registered owner or owners appears on the certificate. Signatures on
certificates or stock powers required by this instruction, and on the Letter of
Transmittal accompanying such certificates, must be guaranteed by an eligible
guarantor institution, such as a bank or stock brokerage firm, savings and loan
association or credit union, with an approved Signature Guarantee Medallion
Program pursuant to the Securities and Exchange Commission's Rule 17Ad-15.
Notaries Public cannot guarantee signatures. Any signatures requiring a
guarantee must be signed in the presence of the guarantor.
5. WHAT IF I WANT THE CHECK SENT TO ME AT A DIFFERENT ADDRESS OR TO A
DIFFERENT PERSON?
If a check is to be sent to an address other than that shown in Item A, please
fill out the special delivery instructions in Item B on the Letter of
Transmittal. If the check is to be made payable to someone other than the
registered owner, please fill out the special payment instructions in Item C,
and have the registered owner(s) signature guaranteed by an eligible guarantor
institution as described in Question 4., above.
6. IF I HAVE MORE THAN ONE CERTIFICATE, DO I NEED TO COMPLETE ADDITIONAL
LETTERS OF TRANSMITTAL?
If you have multiple certificates that are registered to you, and your name is
stated identically on each certificate, you only need to complete one Letter of
Transmittal. List each such certificate separately by certificate number in
Item A.
In some cases, you may be the only owner of the shares, but the name which
appears on different certificates is different (I.E., John Jones, John E. Jones
or J.E. Jones). If so, you will need a separate
Page 4 of 6 EXHIBIT B TO AGREEMENT AND PLAN OF MERGER
Page 27--APPENDIX A
<PAGE>
[Date]
Page 3
Letter of Transmittal for each variation of your name. Each separate Letter of
Transmittal will result in a separate check issued in the name shown on the
share certificate for that Letter of Transmittal.
7. HOW SHOULD I SIGN THE LETTER OF TRANSMITTAL?
You should sign each Letter of Transmittal exactly as your name appears on the
face of the stock certificate you are enclosing with the Letter of Transmittal.
If you are required to have your signature guaranteed as described in Questions
4 and 5, you must sign in the presence of the person at the bank, stock
brokerage, or other institution who will guarantee your signature.
8. WHAT IF THE SHARE CERTIFICATE HAS TWO OR MORE NAMES ON IT?
If any share certificate is owned of record by two or more joint owners, all
such owners must sign the Letter of Transmittal for that share certificate. If
all signatures must be guaranteed, as described in Questions 4 and 5, all
signers must sign in the presence of the guarantor.
9. WHAT IF I AM SIGNING THE LETTER OF TRANSMITTAL AS AN AGENT, TRUSTEE OR
OTHER FIDUCIARY?
If the Letter of Transmittal or any certificates or stock powers are to be
signed by trustees, personal representatives, executors, guardians,
conservators, attorneys-in-fact, officers of corporations, or others acting in a
fiduciary capacity, such persons should so indicate when signing, and provide
proper evidence to us of their authority to act. We will determine if the
evidence submitted is satisfactory to allow us to accept the representation of
fiduciary capacity.
10. WHAT IF I CANNOT FIND MY CERTIFICATE?
If you cannot locate your certificate for your Lane Stock certificate(s) after a
careful search, please contact ______________________ at our office, phone:
(503) 342-7451 for further instructions.
Assuming that no other party claims to be the owner of the lost or destroyed
certificate, we are prepared to issue a check to you upon: (1) receipt of
satisfactory evidence, in the form of an affidavit signed by the registered
owner, and/or such other evidence as may be reasonable under the circumstances,
demonstrating that you are the true owner of the lost or destroyed certificate;
and (2) your providing a bond sufficient to indemnify us from any loss,
liability or expense which we might incur as a result of honoring your request
with respect to the lost or destroyed certificate.
11. WHO MUST PROVIDE FORM W-9?
Every Letter of Transmittal must be accompanied by a Form W-9, filled out and
signed in the manner described in the instructions to the Form W-9. Failure to
provide the proper Form W-9 may result in backup withholding of 31 percent of
any payments.
Page 5 of 6 EXHIBIT B TO AGREEMENT AND PLAN OF MERGER
Page 28--APPENDIX A
<PAGE>
[Date]
Page 4
12. WHO CAN I CONTACT FOR MORE INFORMATION OR FORMS?
For more information or to get additional Letters of Transmittal, contact
________________ at our office, (503) 342-7451.
Oregon Title Company
By
---------------------------------
Its
---------------------------------
Page 6 of 6 EXHIBIT B TO AGREEMENT AND PLAN OF MERGER
Page 29-APPENDIX A
<PAGE>
EXHIBIT C
Checking, savings and Money Market accounts as approved by Lane (which approval
shall not be unreasonably withheld).
EXHIBIT C TO AGREEMENT AND PLAN OF MERGER
Page 30--APPENDIX A
<PAGE>
APPENDIX B
STATUTES GOVERNING THE RIGHTS OF DISSENTERS
(RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES)
60.551 DEFINITIONS FOR 60.551 TO 60.594. As used in ORS 60.551 to 60.594:
(1) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under ORS 60.554 and who exercises that right when and in the
manner required by ORS 60.561 to 60.587.
(4) "Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder [1987 c.52 Section 124; 1989 c.1040 Section 30]
60.554 RIGHT TO DISSENT. (1) Subject to subsection (2) of this section, a
shareholder is entitled to dissent from, and obtain payment of the fair value of
the shareholder's shares in the event of, any of the following corporate acts:
(a) Consummation of a plan of merger to which the corporation is a party if
shareholder approval is required for the merger by ORS 60.487 or the articles of
incorporation and the shareholder is entitled to vote on the merger or if the
Page 1--APPENDIX B
<PAGE>
corporation is a subsidiary that is merged with its parent under ORS 60.491;
(b) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired, if the shareholder is
entitled to vote on the plan;
(c) Consummation of a sale or exchange of all or substantially all of the
property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the shareholders within one
year after the date of sale;
(d) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preemptive right of the holder of the shares to
acquire shares or other securities; or
(B) Reduces the number of shares owned by the shareholder to a fraction of
a share if the fractional share so created is to be acquired for cash under ORS
60.141; or
(e) Any corporate action taken pursuant to a shareholder vote to the extent
the articles of incorporation, bylaws or a resolution of the board of directors
provides that voting or nonvoting shareholders are entitled to dissent and
obtain payment for their shares.
(2) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under ORS 60.551 to 60.594 may not challenge the corporate
action creating the shareholder's entitlement unless the action is unlawful or
fraudulent with respect to the shareholder or the corporation.
(3) Dissenters' rights shall not apply to the holders of shares of any
class or series if the shares of the class or series were registered on a
national securities exchange or quoted on the National Association of Securities
Dealers, Inc. Automated Quotation System as a National Market System issue on
the record date for the meeting of shareholders at which the corporate action
described in subsection (1) of this section is to be approved or on the date a
copy or summary of the plan of merger is mailed to shareholders under ORS
60.491, unless the articles of incorporation otherwise provide. [1987 c.52
Section 125; 1989 c.1040 Section 31; 1993 c.403 Section 9]
Page 2--APPENDIX B
<PAGE>
60.557 DISSENT BY NOMINEES AND BENEFICIAL OWNERS. (1) A record shareholder
may assert dissenters' rights as to fewer than all the shares registered in the
shareholder's name only if the shareholder dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf the shareholder asserts
dissenters' rights. The rights of a partial dissenter under this subsection are
determined as if the shares regarding which the shareholder dissents and the
shareholder's other shares were registered in the names of different
shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder does so with respect to all shares of which
such shareholder is the beneficial shareholder or over which such shareholder
has power to direct the vote. [1987 c.52 Section 126]
(PROCEDURE FOR EXERCISE OF RIGHTS)
60.561 NOTICE OF DISSENTERS' RIGHTS. (1) If proposed corporate action
creating dissenters' rights under ORS 60.554 is submitted to a vote at a
shareholders' meeting, the meeting notice must state that shareholders are or
may be entitled to assert dissenters' rights under ORS 60.551 to 60.594 and be
accompanied by a copy of ORS 60.551 to 60.594.
(2) If corporate action creating dissenters' rights under ORS 60.554 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send the shareholders entitled to assert dissenters' rights the dissenters'
notice described in ORS 60.567. [1987 c.52 Section 127]
60.564 NOTICE OF INTENT TO DEMAND PAYMENT. (1) If proposed corporate action
creating dissenters' rights under ORS 60.554 is submitted to a vote at a
shareholders' meeting, a shareholder who wishes to assert dissenters' rights
shall deliver to the corporation before the vote is taken written notice of the
shareholder's intent to demand payment for the shareholder's shares if the
proposed action is effectuated and shall not vote such shares in favor of the
proposed action.
Page 3--APPENDIX B
<PAGE>
(2) A shareholder who does not satisfy the requirements of subsection (1)
of this section is not entitled to payment for the shareholder's shares under
this chapter. [1987 c.52 Section 128]
60.567 DISSENTERS' NOTICE. (1) If proposed corporate action creating
dissenters' rights under ORS 60.554 is authorized at a shareholders' meeting,
the corporation shall deliver a written dissenters' notice to all shareholders
who satisfied the requirements of ORS 60.564.
(2) The dissenters' notice shall be sent no later than 10 days after the
corporate action was taken, and shall:
(a) State where the payment demand shall be sent and where and when
certificates for certificated shares shall be deposited;
(b) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(c) Supply a form for demanding payment that includes the date of the first
announcement of the terms of the proposed corporate action to news media or to
shareholders and requires that the person asserting dissenters' rights certify
whether or not the person acquired beneficial ownership of the shares before
that date;
(d) Set a date by which the corporation must receive the payment demand.
This date may not be fewer than 30 nor more than 60 days after the date the
subsection (1) of this section notice is delivered; and
(e) Be accompanied by a copy of ORS 60.551 to 60.594. [1987 c.52 Section
129]
60.571 DUTY TO DEMAND PAYMENT. (1) A shareholder sent a dissenters' notice
described in ORS 60.567 must demand payment, certify whether the shareholder
acquired beneficial ownership of the shares before the date required to be set
forth in the dissenters' notice pursuant to ORS 60.567 (2)(c), and deposit the
shareholder's certificates in accordance with the terms of the notice.
(2) The shareholder who demands payment and deposits the shareholder's
shares under subsection (1) of this section retains all other rights of a
shareholder until these rights are canceled or modified by the taking of the
proposed corporate action.
(3) A shareholder who does not demand payment or deposit the shareholder's
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for the shareholder's shares under this
chapter. [1987 c.52 Section 130]
Page 4--APPENDIX B
<PAGE>
60.574 SHARE RESTRICTIONS. (1) The corporation may restrict the transfer of
uncertificated shares from the date the demand for their payment is received
until the proposed corporate action is taken or the restrictions released under
ORS 60.581.
(2) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
[1987 c.52 Section 131]
60.577 PAYMENT. (1) Except as provided in ORS 60.584, as soon as the
proposed corporate action is taken, or upon receipt of a payment demand, the
corporation shall pay each dissenter who complied with ORS 60.571, the amount
the corporation estimates to be the fair value of the shareholder's shares, plus
accrued interest.
(2) The payment must be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal year ending
not more than 16 months before the date of payment, an income statement for that
year and the latest available interim financial statements, if any;
(b) A statement of the corporation's estimate of the fair value of the
shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under ORS
60.587; and
(e) A copy of ORS 60.551 to 60.594. [1987 c.52 Section 132; 1987 c.579
Section 4]
60.581 FAILURE TO TAKE ACTION. (1) If the corporation does not take the
proposed action within 60 days after the date set for demanding payment and
depositing share certificates, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under ORS 60.567 and repeat the payment demand procedure.
[1987 c.52 Section 133]
60.584 AFTER-ACQUIRED SHARES. (1) A corporation may elect to withhold
payment required by ORS 60.577 from a dissenter unless the dissenter was the
beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to shareholders of
the terms of the proposed corporate action.
Page 5--APPENDIX B
<PAGE>
(2) To the extent the corporation elects to withhold payment under
subsection (1) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares plus accrued interest and shall pay
this amount to each dissenter who agrees to accept it in full satisfaction of
such demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares an explanation of how the interest was
calculated and a statement of the dissenter's right to demand payment under ORS
60.587. [1987 c.52 Section 134]
60.587 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER. (1) A
dissenter may notify the corporation in writing of the dissenter's own estimate
of the fair value of the dissenter's shares and amount of interest due, and
demand payment of the dissenter's estimate, less any payment under ORS 60.577 or
reject the corporation's offer under ORS 60.584 and demand payment of the
dissenter's estimate of the fair value of the dissenter's shares and interest
due, if:
(a) The dissenter believes that the amount paid under ORS 60.577 or offered
under ORS 60.584 is less than the fair value of the dissenter's shares or that
the interest due is incorrectly calculated;
(b) The corporation fails to make payment under ORS 60.577 within 60 days
after the date set for demanding payment; or
(c) The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions imposed
on uncertificated shares within 60 days after the date set for demanding
payment.
(2) A dissenter waives the right to demand payment under this section
unless the dissenter notifies the corporation of the dissenter's demand in
writing under subsection (1) of this section within 30 days after the
corporation made or offered payment for the dissenter's shares. [1987 c.52
Section 135]
(JUDICIAL APPRAISAL OF SHARES)
60.591 COURT ACTION. (1) If a demand for payment under ORS 60.587 remains
unsettled, the corporation shall commence a proceeding within 60 days after
receiving the payment demand under ORS 60.587 and petition the court under
subsection (2) of this section to determine the fair value of the shares and
accrued interest. If the corporation does not commence the proceeding within the
60-day period, it shall pay each dissenter whose demand remains unsettled the
amount demanded.
(2) The corporation shall commence the proceeding in the circuit court of
the county where a corporation's principal office is located, or if the
principal office is not in this
Page 6--APPENDIX B
<PAGE>
state, where the corporation's registered office is located. If the corporation
is a foreign corporation without a registered office in this state, it shall
commence the proceeding in the county in this state where the registered office
of the domestic corporation merged with or whose shares were acquired by the
foreign corporation was located.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding as in an
action against their shares. All parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(4) The jurisdiction of the circuit court in which the proceeding is
commenced under subsection (2) of this section is plenary and exclusive. The
court may appoint one or more persons as appraisers to receive evidence and
recommend decision on the question of fair value. The appraisers have the powers
described in the court order appointing them, or in any amendment to the order.
The dissenters are entitled to the same discovery rights as parties in other
civil proceedings.
(5) Each dissenter made a party to the proceeding is entitled to judgment
for:
(a) The amount, if any, by which the court finds the fair value of the
dissenter's shares, plus interest, exceeds the amount paid by the corporation;
or
(b) The fair value, plus accrued interest, of the dissenter's
after-acquired shares for which the corporation elected to withhold payment
under ORS 60.584. [1987 c.52 Section 136]
60.594 COURT COSTS AND COUNSEL FEES. (1) The court in an appraisal
proceeding commenced under ORS 60.591 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding
payment under ORS 60.587.
(2) The court may also assess the fees and expenses of counsel and experts
of the respective parties in amounts the court finds equitable:
(a) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the requirements
of ORS 60.561 to 60.587; or
Page 7--APPENDIX B
<PAGE>
(b) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously or not in good faith with respect to the
rights provided by this chapter.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to counsel reasonable fees to be paid out of the amount awarded the
dissenters who were benefited. [1987 C.52 Section 137]
Page 8--APPENDIX B
<PAGE>
PROXY - SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF LANE PLYWOOD, INC.
The undersigned hereby revokes all prior proxies and appoints Gary R.
Jensen and Janis M. Johnson or any one of them, with the power of substitution
in each, proxies to vote all shares of Common Stock of the undersigned in Lane
Plywood, Inc. at the Annual Meeting of Stockholders to be held March 30, 1996,
and all adjournments thereof.
1. Election of Directors
FOR ALL NOMINEES LISTED BELOW ______ WITHHOLD AUTHORITY _____
(except as marked to the (to vote for all
contrary below) nominees below)
FRANCIS D. BALES STEVEN D. BARR
(INSTRUCTION: To withhold authority to vote for any individual nominee strike a
line through the nominee's name in the list above.)
If either named nominee declines or is unable to serve by the time of the annual
meeting, the proxies will be voted for a substitute nominee designated by the
Board of Directors.
2. Approval of the Agreement and Plan of Merger (Merger Agreement) dated
October 26, 1995 as more fully described in the accompanying Proxy Statement.
FOR AGAINST ABSTAIN
---- ---- ----
3. On any other business that may properly come before the meeting.
Shares will be voted as specified. IF NO SPECIFICATION IS MADE, THE PROXY WILL
BE VOTED FOR THE ELECTION OF EACH OF THE NOMINEES AND FOR APPROVAL OF THE MERGER
AGREEMENT. If other matters come before the meeting, the proxies or substitutes
may vote upon such matters according to their best judgment.
Please mark your vote, insert the date and sign, have any co-owner date and
sign, and return promptly.
DATED: _______________, 1996 ______________________________
SIGNATURE
DATED: _______________, 1996 ______________________________
SIGNATURE OF CO-OWNER
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
BE SURE YOUR VOTE IS COUNTED.
PLEASE MARK YOUR VOTE, DATE, SIGN AND RETURN THIS PROXY TODAY.
- - - --------------------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
APPENDIX C
