Document/Exhibit Description Pages Size
1: 8-K Current Report 4 31K
2: EX-2.1 Hanson Agreement Dated March 12, 1996 45± 176K
3: EX-2.2 Crown Pacific Agreement Dated April 11, 1996 37± 146K
4: EX-2.3 Exhibit 2.3 Temple 39± 150K
5: EX-2.4 Hancock Agreement 38± 147K
6: EX-2.5 Management Agreement Dated May 15, 1996 12± 48K
7: EX-2.6 Exhibit 2.6 Right of First Offer 3 15K
8: EX-2.7 Timber Supply Agreement Dated May 15, 1996 9± 36K
9: EX-4 Credit Agreement Dated May 10, 1996 109± 467K
EX-2.2 — Crown Pacific Agreement Dated April 11, 1996
Exhibit Table of Contents
Exhibit 2.2
ASSET SALE, PURCHASE AND TRANSFER AGREEMENT
This Asset Sale, Purchase and Transfer Agreement (this "Agreement")
is made as of this 11th day of April, 1996, between Willamette Industries,
Inc., an Oregon corporation ("Seller") and Crown Pacific Limited Partnership,
a Delaware limited partnership ("Buyer").
RECITALS:
A. Seller and Hanson Natural Resources Company, a Delaware general
partnership ("Hanson"), Cavenham Energy Resources Inc., a Delaware corporation
("CERI"), and Cavenham Forest Industries Inc., a Delaware corporation ("CFII")
(Hanson, CERI and CFII are collectively called "Owner") have entered into an
agreement (the "Purchase Agreement") pursuant to which Owner has agreed to
sell and transfer and Seller has agreed to buy and accept from Owner
substantially all of the assets which are used in the conduct of Hanson's
timber, wood products and energy business located in Oregon, Washington,
Southwest Louisiana, and North Louisiana.
B. Seller has delivered to Buyer a copy of the Purchase Agreement
without Schedules.
C. Seller and Buyer desire to enter into this Agreement pursuant to
which Seller agrees to sell and transfer and Buyer agrees to buy and accept
from Seller certain timberland properties and related assets in the states of
Oregon and Washington.
D. Seller intends to sell certain other assets it acquires from Owner
to other purchasers ("Other Purchasers").
It is therefore agreed as follows:
Definitions. As used herein, the following terms shall have the
following meanings:
Assets - The term "Assets" shall mean the Timberland Properties,
Contracts, and other items and leases described in Sections 1.1 and 1.4, but
excluding the Excluded Assets.
Contracts - The term "Contracts" shall mean the contracts and
leases which are described in Sections 1.1 and 1.4.
Closing - The term "Closing" or "Closing Date" shall have the
meaning ascribed to it in Section 3.1.
Closing Date Payment - The term "Closing Date Payment" shall have
the meaning ascribed to it in Section 2.1(b).
Excluded Assets - The term "Excluded Assets" shall mean the assets
excluded in Section 1.5.
Material Adverse Effect - The term "Material Adverse Effect" shall
mean events which have an adverse effect in the aggregate which, measured in
dollars, exceeds the sum of $15,000,000.
Material Contract - The term "Material Contract" shall have the
meaning ascribed to it in Section 6.3.
Proration Date - The term "Proration Date" shall mean the specific
date set for Closing in Section 3.1, or any subsequent date set for Closing,
provided that the actual date of Closing occurs within five (5) business days
after said date set for Closing.
Timberland Properties - The term "Timberland Properties" shall mean
the real property and real property interests described in Section 1.1(a).
Affiliate of Owner - The term "Affiliate of Owner" shall mean (i)
any individual, partnership, corporation, or other entity or person which is
owned or controlled directly or indirectly by Hanson plc; (ii) any other
individual, partnership, corporation, or other entity or person which controls
or is controlled by or under common control with Owner; and (iii) any officer,
director, partner, or owner of 10 percent or greater equity or voting interest
in any such other corporation, partnership, or other entity or person.
Code - The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
Agreement - The term "Agreement" shall mean this instrument and all
Schedules and Exhibits attached hereto.
1. Sale, Purchase and Transfer of Assets.
Subject to the terms and conditions of this Agreement, at the Closing
referred to herein, Seller agrees to sell, transfer and assign or cause to be
sold, transferred and assigned, and Buyer agrees to purchase and accept on the
terms stated herein, all of Seller's right, title and interest in and to the
Assets, including, without limitation, the following:
1.1 Real Property (Timberland Properties).
(a) Timberland. Those certain parcels of real property, owned by
Owner situated in the states of Oregon and Washington and described on
Schedule 1.1 (a), together with all timber of all species, standing, dead or
down, pulpwood, all felled and bucked logs, trees, shrubs and reproduction
thereon as of the Closing Date, the ("Timberland" or "Timberland Properties"),
excepting therefrom changes therein prior to Closing pursuant to Section 5.
(b) Log Inventory. The log inventory situated in Port Angeles,
Washington.
(c) Buildings, Improvements and Easements. All buildings and
improvements, all roads, bridges, permits, servitudes, and easements, owned or
leased by Owner or which Owner has a right to use and on or appurtenant to the
Timberland Properties, including those described on Schedule 1.1 (c).
(d) Related Facilities. All sorting yards, log booms, offices,
and rock pits, owned or leased by Owner and associated with the Timberland
Properties, whether or not located on the Timberland Properties, including
those described on Schedule 1.1 (d).
(e) Other Rights. All other contracts and rights of Owner
specifically relating to the Timberland Properties and operations thereon
including, but not limited to, contracts, contract rights, leases, servitudes,
permits, licenses, notifications, approvals and authorizations of governmental
bodies, including those described on Schedule 1.1 (e), to the extent
assignable.
(f) Water Rights. All water rights owned by Owner relating to and
appurtenant to the Timberland Properties.
(g) Mineral Rights. All minerals, including without express or
implied limitation, oil, gas, and hydrocarbon and geothermal resources in
which Owner has an interest related to the Timberland Properties including
those Mineral Rights listed on Schedule 1.1 (g) (the "Mineral Rights").
1.2 INTENTIONALLY OMITTED
1.3 INTENTIONALLY OMITTED
1.4 Personal Property.
The following personal property related to the Timberland Properties:
(a) Records. Owner's land management and other records relating to
the Timberland Properties, Mineral Rights, and other Assets which, in the
reasonable judgment and discretion of Seller, are segregated or segregable by
Seller from the overall records to be acquired by Seller from Owner, including
but not limited to management unit maps, aerial photographs, timber cruises,
road and gate records, operational records and leases, easements, deeds,
licenses, survey and survey notes, information relating to oil, gas, and
mineral activities, permits, approvals and authorizations of governmental
agencies held by Owner in connection with the Timberland Properties, Mineral
Rights, and other Assets. The records shall also include all files and
documents relating to customers, suppliers and contractors directly related to
the Timberland Properties, Mineral Rights, and other Assets which, in the
reasonable judgment and discretion of Seller, are segregated or segregable
from all other business records, files, books and documents of Seller.
(b) Mobile Equipment, Machinery and Equipment. The mobile
equipment, machinery, equipment, tools, fixtures and furniture used by Owner
exclusively in connection with the Timberland Properties including those
listed on Schedule 1.4 (b), as such items listed thereon may have been sold,
replaced, deleted or added in the ordinary course of business, together with
certificates of title for motor vehicles constituting part of such equipment
which are licensed and owned by Owner.
(c) Office Supplies. The office supplies and forms, packaging
materials and similar miscellaneous tangible personal property used by Owner
exclusively in connection with the Timberland Properties except such supplies
which are marked or identifiable with the logo, mark or trademark of Owner or
Hanson's general partners.
(d) Contracts. All rights and obligations under those instruments
related to the operation of the Assets that are not related to real property,
including the contracts, leases, permits and licenses described on
Schedule 1.4 (d), to the extent the same are assignable, including sales
orders and commitments, purchase orders and commitments, agreements and
contracts of Owner which relate to work or services to be performed for or at
the Assets.
1.5 Excluded Assets. The parties to this Agreement expressly
understand and agree that the Seller is selling, assigning, transferring or
conveying or causing to be sold, assigned, transferred or conveyed to Buyer
only the Timberland Properties and the assets related thereto that Seller has
the right to acquire from Owner pursuant to the Purchase Agreement. Rights,
assets, and properties which are retained by Owner pursuant to the Purchase
Agreement shall be specifically excluded from the transactions contemplated by
this Agreement, notwithstanding anything to the contrary elsewhere in this
Agreement ("Excluded Assets").
1.6 Assignment of Contracts.
(a) Contracts Assignable Without Consent. Seller agrees to assign
or cause to be assigned to Buyer as of the Closing, all of the rights of
Seller and Owner under the Contracts that are assignable without consent of
any third party and Buyer shall assume, as of the Closing, all obligations of
Seller and Owner thereunder which arise before, at or after Closing.
(b) Seller to Use Reasonable Efforts. Anything in this Agreement
to the contrary notwithstanding, Seller shall not be obligated to sell,
assign, transfer or convey or cause to be sold, assigned, transferred or
conveyed to Buyer any of its rights in and to any of the Contracts without
first obtaining all necessary approvals, consents or waivers. Seller shall
use all reasonable efforts, and Buyer shall reasonably cooperate with Seller,
to obtain all necessary approvals, consents or waivers, or to resolve any
impracticalities of transfer necessary to assign or convey to Buyer each such
Contract as soon as practicable; provided, however, that neither Seller nor
Buyer shall be obligated to pay any consideration therefor except for filing
fees and other ordinary administrative charges which shall be paid by Seller
to the third party from whom such approval, consent or waiver is requested.
In the event Seller obtains consent to assignment of a Contract prior to the
Closing, Buyer shall assume, as of Closing, all obligations of Seller and
Owner thereunder which arise before, at or after the Closing, as though no
consent was required.
(c) If Waivers or Consents Cannot be Obtained. To the extent that
any of the approvals, consents or waivers referred to in Section 1.6(b) have
not been obtained by Seller as of the Closing, or until the impracticalities
of transfer are resolved, Seller shall, during the remaining term of such
Contracts, use all reasonable efforts to (i) obtain the consent of any such
third party with the filing fees and ordinary administrative charges payable
to such third party to be split equally by the parties; (ii) cooperate with
Buyer in any reasonable and lawful arrangements designed to provide the
benefits of such Contracts to Buyer so long as Buyer fully cooperates with
Seller and Owner in such arrangements; and (iii) enforce, or cause to be
enforced, at the request of Buyer and at the expense and for the account of
Buyer, any rights of Seller or Owner arising from such Contracts against such
issuer thereof or the other party or parties thereto (including the right to
elect to terminate any such Contracts in accordance with the terms thereof
upon the request of, and indemnification of Seller and Owner from, Buyer).
(d) Non-assignability. To the extent that any Contract or any
claim, right or benefit arising thereunder or resulting therefrom is not
capable of being sold, assigned, transferred or conveyed without the approval,
consent or waiver of the issuer thereof or the other party thereto, or any
third person (including a government or governmental unit), or if such sale,
assignment, transfer or conveyance or attempted assignment, transfer or
conveyance would constitute a breach thereof or a violation of any law,
decree, order, regulation or other governmental edict, this Agreement shall
not constitute a sale, assignment, transfer or conveyance thereof, or an
attempted assignment, transfer or conveyance thereof.
1.7 Transferring Permits and Licenses. Seller will assign, transfer or
convey, or cause to be assigned, transferred or conveyed to Buyer at the
Closing those permits and licenses, including those described in Schedules 1.1
(c) and (e), and 1.4 (d) which are held or used by Owner in connection with
the Assets and which can be assigned without having to obtain the consent of
any third party with respect thereto. Seller will cooperate with Buyer in
obtaining any third party consents necessary to the assignment or transfer of
any other permits or licenses used or held by Seller or Owner in connection
with the Assets which are so assignable or transferable; however, neither
Seller nor Buyer shall be obligated to pay any consideration therefor except
for filing fees and other ordinary administrative charges which shall be paid
by Buyer to the third party from whom such approval, consent or waiver is
requested. Buyer shall assume, as of Closing, all obligations of Seller and
Owner arising prior to, at or after Closing under those permits and licenses
which can be transferred without having to obtain the consent of any third
party and those permits and licenses for which consent to transfer is obtained
prior to Closing. Subsequent to the Closing, to the extent permitted by law,
upon ninety (90) days prior written notice, Owner has the right to cancel any
permits or licenses or any bonds, guarantees or undertakings by Owner
applicable to the Assets to the extent such are not so assigned or transferred
to Seller pursuant to Section 1.7 of the Purchase Agreement to Buyer pursuant
to this Section 1.7.
1.8 Liabilities Assumed by Buyer; Liabilities Not Assumed by Buyer.
(a) Assumed Liabilities. Except as expressly provided in
Subsection 1.8(b), Buyer shall, effective as of the Closing and without any
further responsibility or liability of or recourse to Seller, or its
directors, shareholders, officers, partners, employees, agents, consultants,
representatives, successors, transferees or assignees, absolutely and
irrevocably assume and shall be liable and responsible for the claims,
liabilities, and obligations of Seller arising pursuant to the Purchase
Agreement and Owner with respect to the Timberland Properties, Mineral Rights,
and other Assets, whether or not disclosed to Buyer, and whether or not
occurring or arising prior to, at or after Closing, except as expressly set
forth in Section 1.8(b) and except to the extent to which Seller indemnifies
Buyer as expressly set forth in Section 10.1(a); and nothing in this Section
1.8(a) shall diminish Buyer's rights in Section 8.11.
Without limiting the foregoing, Buyer shall assume the following:
(i) Buyer shall assume all Contracts assigned to Buyer
pursuant to Section 1.6, and permits and licenses assigned to Buyer pursuant
to Section 1.7;
(ii) Buyer shall assume all matters disclosed to Buyer in
Schedules 6.3 through 6.6;
(iii) Buyer shall assume the employee matters that are set
forth in Section 11 as Buyer's responsibility; and
(iv) INTENTIONALLY OMITTED.
(v) Buyer shall assume all undertakings of, and liabilities
and obligations assumed by, CFII, and all indemnity obligations of CFII, if
any, to Crown Zellerbach Corporation and its successors and assigns relating
to all environmental conditions arising from ownership, possession, use, or
conduct of business and operations of the Indemnification Properties (as
defined in Section 6.7(e) of this Agreement), which undertakings, liabilities,
obligations, and indemnity obligations are contemplated in that certain
Transaction Agreement dated December 14, 1985, by and between James River
Corporation of Virginia and Crown Zellerbach Corporation and are more
specifically set forth in that certain Undertaking dated as of May 2, 1986, by
CFII in favor of Crown Zellerbach Corporation (the Transaction Agreement and
Undertaking are collectively referred to herein as "Transaction
Agreement/Undertaking").
At Closing, the parties shall execute an Assignment, Acceptance,
and Assumption Agreement in the form attached hereto as Schedule 1.8 to
evidence the foregoing matters to be assumed by Buyer, in addition to the more
specific instruments of assignment and assumption described in this Agreement.
(b) Excluded Liabilities. Notwithstanding anything to the
contrary in this Agreement, the following liabilities and obligations
("Excluded Liabilities") shall not be assigned to Buyer nor assumed by Buyer:
(i) all liabilities and obligations related to the Excluded
Assets;
(ii) trade accounts payable for items purchased and
delivered as of the Closing Date, and all accrued expenses of the type set
forth on Schedule 1.8 (b)(ii) attached hereto which are, or under generally
accepted accounting principles should be, accrued at Closing;
(iii) all liabilities and obligations for taxes, except for
assessments and real estate taxes which shall be prorated on the Proration
Date as provided in this Agreement, and except for the deferred ad valorem
taxes because of classification of all or a portion of the Timberland
Properties as farmland, grazing land, or timberland;
(iv) all liabilities and obligations of Owner to any
Affiliate of Owner, except for any matters listed on Schedule 1.8 (b)(iv)
attached hereto;
(v) any liabilities or obligations to or with respect to
employees of Seller or Owner, except for the obligations and liabilities to be
assumed by Buyer pursuant to Section 11;
(vi) any obligations for borrowed funds; the term "borrowed
funds" shall not be construed to include purchase money contracts and similar
security interests for personal property;
(vii) all bodily injury claims occurring on or in connection
with the Assets prior to Closing and all product liability claims arising from
sale or operation of the Assets prior to Closing;
(viii) any matters retained by Seller or Owner pursuant to
Section 8.2(c);
(ix) all undertakings of, and liabilities and obligations
assumed by, CFII, and all indemnity obligations of CFII, contemplated by or
set forth in the Transaction Agreement/Undertaking, except for the
undertakings, assumed liabilities and obligations, and indemnity obligations
described in Section 1.8(a)(v) of this Agreement; and
(x) liens and encumbrances to be satisfied by Owner as
provided in Section 3.6.
2. Purchase Price. Subject to adjustment in accordance with the
provisions of this Agreement, the purchase price for the Assets ("Purchase
Price") shall be Two Hundred Five Million Dollars ($205,000,000). The
Purchase Price shall be payable as provided in Section 2.1.
2.1 Payment of Purchase Price.
(a) INTENTIONALLY OMITTED.
(b) Buyer shall pay to Seller the entire Purchase Price (the
"Closing Date Payment"), by wire transfer of immediately available funds to
the escrow trust account established by Chicago Title Insurance Company
(herein "Chicago Title" or "Escrow Agent") at Chemical Bank, New York, New
York ("Owner's Bank"), which transfer shall have been received by Owner's Bank
no later than 8 a.m. PDT on the Closing Date. Upon confirmation to Buyer by
the Escrow Agent that the deeds described in Section 3.4 have been recorded,
the Escrow Agent shall deliver the Closing Date Payment to Seller or to
Seller's order.
(c) If Buyer is legally obligated to Close and if the Closing
Date Payment is not received by Owner's Bank by 8 a.m. PDT on the Closing
Date, Seller may, at its option, either exercise the Seller's remedies
described in Section 9 by reason of Buyer's default, or may accept late
payment of the Closing Date Payment which shall, in such event, be accompanied
by payment of an amount determined by computing simple interest on the amount
of that payment at the rate of interest announced publicly by Chemical Bank in
New York, New York from time to time as its "Prime Rate" (on the basis of a
360-day year) from the Closing Date to the date of payment. If the Closing
Date Payment is not received by Owner's Bank on the Closing Date by 8 a.m.
PDT, and if Seller elects to accept a late payment, the Closing Date Payment
shall be transferred to an account to be designated by Seller.
(d) If, at the Closing, the parties have not resolved the Purchase
Price reduction as contemplated in Section 8.6, or the Price Adjustment Items
or Price Adjustment Notice as contemplated in Section 8.11, then the parties
shall proceed to Close as scheduled and the amount to be paid to Seller at
Closing shall be the Closing Date Payment. Seller shall reimburse Buyer for
any overpayment in the Purchase Price within three (3) business days of
resolution of the amount of the Purchase Price reduction.
3. Closing.
3.1 Date of Closing. The Closing shall take place concurrently with the
closing under the Purchase Agreement at the offices of Ater Wynne Hewitt
Dodson & Skerritt, 222 SW Columbia, Suite 1800, Portland, Oregon, or at such
other place as the parties may agree in writing, on May 15, 1996, unless
another time and date are mutually designated by Seller and Owner. The
foregoing date is the date on which Owner's deed(s) to Buyer are to be
recorded immediately prior to the delivery of the Purchase Price to Seller and
is referred to in this Agreement as the "Closing" or "Closing Date". Seller
shall deliver possession of the Assets to Buyer on the Closing Date. Seller
shall have no obligation to consummate the Closing if for any reason the
closing under the Purchase Agreement does not occur.
3.2 Hart-Scott Rodino Act. Buyer and Seller have prepared all necessary
documentation and performed all other necessary actions to complete all
necessary filings under the Hart-Scott Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"). Each party agrees to respond to any request
for additional information within twenty (20) days of receipt of the request.
In the event the waiting period (which term includes the extension period)
under the HSR Act has not expired by the Closing Date set forth in Section
3.1, the Closing Date shall be delayed until five (5) business days after
expiration of the waiting period; provided, that Seller, in its sole
discretion, may terminate this Agreement (i) if the waiting period has not
expired or been terminated prior to the closing under the Purchase Agreement
within 115 calendar days following the date on which Seller completes its
initial filing, or (ii) if Owner terminates the Purchase Agreement pursuant to
Section 3.2 thereof, and Buyer, in its sole discretion, may terminate this
Agreement if the waiting period has not expired or been terminated within 180
calendar days of the date on which Buyer completes its initial filing.
3.3 Execution and Deposit of Documents Prior to Closing. At least five
(5) business days prior to the Closing Date, each of the parties, as
applicable, shall execute and deposit with the Escrow Agent all of the
documents listed in Section 3.4 below which are to be recorded or filed on the
Closing Date. Each of the parties, as applicable, shall execute and deliver
to the other party all remaining documents listed in Subsection 3.4 below on
the Closing Date.
3.4 Documents to be Delivered by Seller . At or prior to the Closing,
Seller shall deliver, or cause to be delivered, the following:
(a) Documents of transfer, bills of sale, certificates of title
and other instruments of transfer, dated the Closing Date, transferring to
Buyer title to the Assets. With respect to the Timberland described on
Schedule 1.1 (a) (including the buildings, improvements and other appurtenant
interests described in Section 1.1(c) and (d)) title shall be transferred in
the form of the deed(s) attached hereto as Schedule 3.4 (a) directly from
Owner to Buyer; with respect to the Mineral Rights described in Schedule 1.1
(g), transfer shall be accomplished through mineral quit claim deeds directly
from Owner to Buyer and other instruments of transfer without warranty; with
respect to all personal property, title shall be transferred by Bill of Sale
in the form attached hereto as Schedule 3.4 (a)(a);
(b) Documents evidencing the assignment and assumption of the
Contracts to Buyer (together with any third-party consents required for such
transfers) and the assignment and assumption of any permits and licenses
(together with any third-party consents required for such transfers) not
transferred pursuant to Section 3.4(a), and the Assignment, Acceptance, and
Assumption Agreement described in Section 1.8;
(c) A copy of the resolutions of the board of directors of Seller
authorizing the execution, delivery and performance of this Agreement by
Seller and a certificate of the secretary or assistant secretary of Seller,
dated the Closing Date, that such resolutions were duly adopted and are in
full force and effect;
(d) The affidavits of Seller required by Section 1445 (b)(2) of
the Code and by local taxing authorities, and any other documents required of
Seller to transfer the Assets in accordance with this Agreement;
(e) Copies of satisfactions, releases or terminations of the liens
and encumbrances referred to in Section 3.6; and
(f) Copies of documents delivered to Seller by Owner pursuant to
Sections 3.4(c) and (d) of the Purchase Agreement.
3.5 Documents to be Delivered by Buyer. At or prior to the Closing
Date, Buyer shall deliver the following:
(a) Documents evidencing the assignment and assumption of all
Contracts and the assignment and assumption of all permits and licenses
transferred by Seller to Buyer pursuant to Section 3.4(a) and (b), and the
Bill of Sale, and Assignment, Acceptance, and Assumption Agreement described
in Section 1.8;
(b) A copy of the resolutions of the management committee, board
of directors, or other appropriate body of Buyer vested with the authority to
manage Buyer authorizing the execution, delivery and performance of this
Agreement by Buyer, and a certificate of its secretary or assistant secretary,
dated the Closing Date, that such resolutions were duly adopted and are in
full force and effect;
(c) The affidavits, if any, of Buyer required by local taxing
authorities, including the affidavits specified in Section 8.8(b), and any
other documents required of Buyer to transfer the Assets in accordance with
this Agreement.
3.6 Satisfaction of Liens and Encumbrances. At or prior to the Closing
Date, Owner has agreed to pay in full all liens and encumbrances for borrowed
funds, income tax liens, and judgment liens on the Assets. At or prior to the
Closing Date, Owner has agreed to pay all delinquent property taxes on the
Assets. Buyer shall assume sole responsibility, as of Closing, for any ad
valorem taxes which are deferred because of farm or grazing or forest use or
classification.
3.7 Transfer Taxes; Prorations. Any recording fees, transfer taxes, or
sales taxes payable as a result of the sale of the Assets shall be paid by
Seller or Owner. Escrow fees pursuant to Section 3.8 shall be split equally
between the parties. Buyer shall reimburse Seller for other escrow fees
payable by Seller pursuant to the Purchase Agreement, including fees in
connection with the Deposit under the Purchase Agreement, in the proportion
that the Purchase Price bears to One Billion Five Hundred Eighty Eight Million
Dollars ($1,588,000,000). Real estate taxes, assessments for public
improvements, and all other fees and assessments related to the Assets shall
be prorated as of the Proration Date.
3.8 Default Deeds. At least five (5) business days prior to the
Closing Date, Buyer shall execute and deposit with Chicago Title, in escrow,
quitclaim deeds (the "Quitclaim Deeds") quitclaiming and releasing unto Seller
all of Buyer's right, title, and interest in and to the Timberland Properties,
including any and all after acquired title to the Timberland Properties. If
the closing under the Purchase Agreement occurs and the Closing Date Payment
is made to Owner's Bank by 9 a.m. PDT on the Closing Date, Chicago Title shall
return the Quitclaim Deeds to Buyer. If the closing under the Purchase
Agreement occurs and Buyer fails to make the Closing Date Payment by 9 a.m.
PDT on the Closing Date, regardless of whether such failure is justified on
account of any alleged default by Seller, then Chicago Title shall release the
Quitclaim Deeds to Seller which may proceed to record them in the applicable
real estate records.
4. Title Insurance. Seller has delivered to Buyer evidence of title in
the form of draft title reports and title commitments ("Title Reports"), as
appropriate, covering the Timberland Properties, copies of which are attached
hereto as Schedule 4; Seller and Buyer acknowledge that the Title Reports may
be revised, corrected, and supplemented by Chicago Title between the date of
this Agreement and the Closing Date, as contemplated in Section 5(c) and, as
contemplated in the letters from Rosalee Merritt to Malcolm Newkirk, copies of
which are included in Schedule 4 as part of the Title Reports. In the event
that Chicago Title is not prepared to issue at Closing to Buyer, owner's
policies of title insurance insuring title in the Timberland Properties in
Buyer, subject only to the exceptions set forth in the Title Reports, as those
Title Reports may have been revised, corrected, and supplemented by Chicago
Title as set forth above, but with no reductions, in excess of five hundred
(500) acres in the aggregate, in the acreage vested in Owner, and subject to
the printed exceptions contained in such Title Reports, then Buyer shall have
the rights set forth in Section 8.11 with respect to the additional reductions
in acreage and additional material encumbrances to be added as exceptions to
title. If Chicago Title is not prepared to issue such owner's policies on the
Closing Date for reasons other than additional reductions in acreage or
additional exceptions to title, either Buyer or Seller may delay Closing until
Chicago Title or another title insurance company is prepared to issue such
owner's policies. At Closing Buyer shall purchase, at its own expense, such
owner's policies unless otherwise agreed to by the parties.
5. Conduct Pending Closing.
(a) Between the date hereof and the Closing Date, Owner has agreed
to continue to operate the Timberland Properties in the ordinary course and in
a manner reasonably consistent with its present operating plan which
establishes a maximum volume of harvest or stumpage sales for harvest
("Maximum Volume") through the Closing Date ("Operating Plan"), a copy of
which is attached hereto as Schedule 5(a); provided, that Owner has agreed
that it will not enter into log export contracts that provide for delivery of
logs after Closing in recognition of the fact that Seller will not export
logs, and this change of conduct by Owner may modify Owner's ordinary course
and Operating Plan but shall not affect the Maximum Volume set forth on
Schedule 5(a). Subject to the foregoing, Owner has agreed that it shall
continue to harvest, or sell stumpage for harvest, timber standing, lying, and
situated upon the Timberland Properties described in Schedule 1.1 (a). Owner
has agreed that it shall continue its various silvicultural practices
consistent with its past practices, from the date hereof until the Closing
Date. The log inventory referred to in Section 1.1(b) as of the close of
business on the day preceding the date the Closing actually occurs shall have
a value of at least $400,000; such determination of value to be made on a
basis consistent with Owner's prior practice.
(b) The Purchase Price shall be increased or decreased by the
difference between the actual harvest (including stumpage sales for harvest)
and the Maximum Volume pursuant to the formula ("Harvesting Formula") attached
hereto as Schedule 5(b), as of the date the Closing actually occurs, but such
difference between actual harvest and the Maximum Volume shall not be
considered a breach by Seller of this Agreement. The Purchase Price shall
also be increased or decreased by the amount by which the value of the log
inventory referred to in Section 1.1(b), on hand as of the close of business
on the day preceding the date the Closing actually occurs; if such value is
more than $400,000, the Purchase Price shall be increased by the difference
and if such value is less than $400,000, the Purchase Price shall be decreased
by the difference. Any such shortfall or excess of inventories on hand shall
not be considered a breach by Seller of this Agreement. Adjustments, if any,
to the Purchase Price in this Subsection (b) shall be made within fifteen (15)
days of the date the Closing actually occurs, and each party agrees to pay to
the other the adjusted amount, as applicable, without interest within said
fifteen (15) days.
(c) Owner has agreed that it will not take any action, (i) the
result of which will be to create a Material Adverse Effect on the value of
the assets covered by the Purchase Agreement, or (ii) which is both not
reasonably consistent with its Operating Plan and not in the ordinary course
of business, except as otherwise set forth in this Section 5. Owner may, but
is not obligated, to continue, in the ordinary course of business, to grant
and obtain easements, rights of way and other similar rights to the Timberland
Properties, to grant options to or lease additional Mineral Rights, and to
purchase or sell or exchange additional real properties or interests therein
consistent with its present plan ("Real Estate Plan"), a copy of the relevant
portions of which is attached hereto as Schedule 5(c). In the event Owner
sells any portion of the Timberland Properties or interests therein or grants
options to or leases additional Mineral Rights, other than those identified in
the Real Estate Plan, the Purchase Price shall be reduced by an amount equal
to the proceeds of any such sales, options, or leases, but Seller will not be
deemed in breach of this Agreement. Seller shall promptly notify Buyer of any
notice received from Owner related to the granting or obtaining of any
easement, right of way or other similar right, any additional option to or
lease of Mineral Rights, and any such purchase, sale or exchange; and if the
transaction involves more than two hundred fifty thousand dollars
($250,000.00), Seller shall obtain Buyer's prior written consent to the
transaction, which consent shall not be unreasonably withheld. For purposes
of Section 4, the Title Reports shall be revised or deemed revised to reflect
such transactions.
(d) Notwithstanding the foregoing, the parties agree that, if the
Closing Date is extended beyond May 15, 1996, Owner shall be deemed to be
operating the Timberland Properties in the ordinary course of business from
May 16, 1996, to the date the Closing actually occurs, with respect to the
activities described below if Owner:
(i) meets its obligations under the "fiber supply agreements"
described in Section 1.8(a)(iv); and
(ii) continues its harvest of timber at a level that is
between fifty percent (50%) and one hundred percent (100%) of the level in the
Operating Plan; and
(iii) continues road maintenance and road construction as
necessary to prevent substantial deterioration from the condition of the roads
as of May 15, 1996, and as necessary to meet the needs of Owner's harvest
activities; and
(iv) continues silvicultural and reforestation activities in
Oregon and Washington as required by the forest practices acts of said states.
6. Representations of Seller. Seller represents to Buyer that:
6.1 Organization, Standing and Authority. Seller is a corporation
organized, existing, and in good standing under the laws of the State of
Oregon. Seller has full power and authority to enter into and perform this
Agreement. Seller is not a "foreign person" within the meaning of Section 1445
of the Code.
6.2 Authorization of Agreement; Authority. The execution, delivery and
performance of this Agreement by Seller has been duly authorized by all
necessary corporate action of Seller, and this Agreement constitutes the valid
and binding obligation of Seller, enforceable against Seller in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights in general and subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The execution, delivery and
performance of this Agreement by Seller will not (a) violate or conflict with
Seller's corporate power and authority; (b) constitute a violation of any law,
regulation, order, writ, judgment, injunction or decree applicable to Seller;
or (c) subject to the receipt of appropriate consents as specified in this
Agreement as of the Closing Date and subject to the provisions of Section
1.6(d), conflict with, or result in the breach of the provisions of, or
constitute a default under, any agreement, license, permit or other instrument
to which Seller is a party or is bound or by which the Assets are bound.
Except as required by the HSR Act, no consent, approval or authorization of
any governmental authority is required on the part of Seller in connection
with the execution, delivery and performance of this Agreement.
6.3 Material Contracts. All of the Material Contracts which are to be
transferred to Buyer at Closing and which relate to the Timberland Properties
are listed on Schedule 6.3 or Schedule 4. Except as disclosed in Schedule 6.3
or Schedule 4, the Material Contracts have not been further modified or
amended; and to the best of Owner's knowledge, neither Owner nor any party
thereto is in default of any material term in the Material Contracts and true
and complete copies, including applicable amendments, of the Material
Contracts have been made available to Buyer for review prior to execution of
this Agreement. A Material Contract shall mean a Contract which involves
payments, performance of services or delivery of goods by or to Owner after
the Closing Date in an amount or value of two hundred fifty thousand dollars
($250,000.00) or more.
6.4 Litigation; Compliance with Laws. There are no judicial or
administrative actions, proceedings or investigations pending or, to the best
of Seller's knowledge, threatened, that question the validity of this
Agreement or any action taken or to be taken by Seller in connection with this
Agreement. Except as set forth on Schedule 6.4, there is no claim,
litigation, proceeding or governmental investigation pending or, to the best
of Owner's knowledge, threatened, or any order, injunction or decree
outstanding which, if decided unfavorably, would cause Buyer to incur loss or
damage in excess of one hundred thousand dollars ($100,000.00); except as
disclosed on Schedule 6.4, to the best of Owner's knowledge, Owner has
received no written notice from a governmental authority of a material
violation of law relating to the Timberland Properties which has not or will
not have been resolved prior to Closing.
6.5 Personal Property. Owner has, or will have on the Closing Date,
good and marketable title (which includes leasehold title if applicable) to
the personal property to be transferred to Buyer on the Closing Date pursuant
to Section 1.4, subject to equipment leases, purchase money contracts, and
similar security interests to be assumed by Buyer pursuant to Section 1.8.
6.6 Environmental Conditions. Except as disclosed on Schedule 6.6, to
the best of Owner's knowledge there are no environmental conditions on the
Indemnification Properties (as defined in Section 6.7(e)) that would cause
Buyer to incur more than one hundred thousand dollars ($100,000) in loss or
damage for each such environmental condition.
6.7 Disclaimer of Warranties and Representations From Seller; AS IS;
Indemnity
(a) Personal Property. Except as otherwise expressly set forth
in this Agreement, this Agreement is executed, and the personal property will
be transferred, without any warranty of title, either express or implied, and
without any express or implied warranty or representation as to the
merchantability or fitness for any purpose of any of the equipment or other
personal property included in the Assets, and without any other express or
implied warranty or representation whatsoever.
(b) Real Property. Except as otherwise expressly set forth in
this Agreement, this Agreement is executed, and the real property including
Timberland Properties, and Mineral Rights will be transferred, without any
warranty of title, either express or implied, except warranties (if any)
contained in the deed(s) conveying the real property included in the Assets,
and without any express or implied warranty or representation as to the
merchantability of any of the real property included in the Assets, acreage,
legal access, operations or encroachments or any other condition affecting the
Assets.
(c) Condition of Property. Except as otherwise expressly set
forth in this Agreement, Buyer agrees to purchase the Timberland Properties,
Mineral Rights, personal property, mobile equipment, machinery and equipment
and all other Assets "as is", "where is" and with all faults. The Buyer
certifies by execution hereof that it has had an opportunity to inspect the
Timberland Properties, and Mineral Rights and other Assets (including the
surface and subsurface of any real property) prior to executing this
Agreement; that Buyer either has inspected or waived its right to inspect the
Timberland Properties, and Mineral Rights and other Assets for all purposes
and satisfied itself as to its physical condition, both surface and
subsurface, including but not limited to conditions specifically related to
the presence, release or disposal of hazardous substances, but without
limiting Buyer's rights under Section 8.11; that it has not relied upon any
information delivered by Owner, Seller or their respective agents concerning
the Timberland Properties, and Mineral Rights and other Assets; and that it is
relying upon its own examination of the Timberland Properties, and Mineral
Rights and all other Assets in entering into and in consummating this
Agreement. Buyer further acknowledges and agrees that, except as otherwise
expressly set forth in this Agreement, neither Owner nor Seller nor any of
their respective agents have made any representations, warranties or covenants
whatsoever with respect to the quantity or quality of the timber, the acreage,
tax status, legal access, encroachment or physical condition of the Timberland
Properties, and Mineral Rights, nor, except as expressly set forth in this
Agreement, have they made any representations, warranties, or covenants
whatsoever concerning the presence, release or disposal of hazardous
substances thereon.
(d) Disclaimer. Except as otherwise expressly set forth in this
Agreement, the transaction contemplated hereby shall be without any express,
implied, statutory or other warranty or representation as to the condition,
quantity, quality, fitness for particular purpose, conformity to models or
samples of materials or merchantability of any of the Assets, their fitness
for any purpose, and without any other express, implied, statutory or other
warranty or representation whatsoever. In addition, except as otherwise
expressly set forth in this Agreement, Seller makes no warranty or
representation, express, implied, statutory or otherwise, as to the accuracy
or completeness of any data, reports, records, projections information or
materials now, heretofore or hereafter furnished or made available to the
Buyer in connection with this Agreement including, without limitation, any
description of the Assets, pricing assumptions, or the environmental condition
of the Assets or the portions affected by the Endangered Species Act or any
other materials furnished or made available to Buyer by Seller or its agents
or representatives; any and all such data, records, reports, projections,
information and other materials furnished by Seller or otherwise made
available to Buyer are provided to Buyer as a convenience, and shall not
create or give rise to any liability of or against Seller; and any reliance on
or use of the same shall be at Buyer's sole risk.
(e) Waiver of Claims and Indemnity. Without limiting the
generality of any other provision in this Section 6.7, except as otherwise
expressly set forth in this Agreement, Buyer assumes any and all liabilities,
past, present, or future, of Seller and "Owners" as defined below, relating to
hazardous substances or materials, wastes, toxics, pollutants, solid wastes,
or contaminants, including without limitation liabilities arising under any
current or future legal requirement pertaining thereto, which are based upon
the ownership or operation of the Assets. Except as otherwise expressly set
forth in this Agreement, Buyer assumes the risk that hazardous substances or
materials, wastes, toxics, pollutants, solid wastes, or contaminants may be
present in, on or under the Timberland Properties, Mineral Rights or other
Assets, and hereby waives, releases, and discharges forever Owner, Hanson's
general partners, Affiliates of Owner, Owner's successors and assigns, and
their respective shareholders, directors, officers, employees, and agents (in
this Section 6.7(e) collectively referred to as "Owners") and Seller from any
and all present or future claims or demands, and any and all damages, loss,
injury, liability, claims or costs, including fines, penalties judgments,
claims for contribution, and cost recovery actions, arising from or in any way
related to the condition, operation, or use of the Timberland Properties,
Mineral Rights or other Assets or the presence of any hazardous substances or
materials, wastes, toxics, pollutants, solid wastes, or contaminants in, on or
under the Timberland Properties, Mineral Rights or other Assets; provided,
however, that to the extent such waiver, release, or discharge will prejudice
Buyer's rights to pursue third parties (not including Affiliates of Owner) who
have indemnified or insured Owner (or any of the three Owners) for some or all
of the foregoing matters, Buyer shall not, and shall not be deemed to, have
waived, released, or discharged "Owners" for the sole purpose of pursuing such
third parties. Except as otherwise expressly set forth in this Agreement,
Buyer hereby indemnifies, holds harmless, and agrees to defend Seller and
"Owners" from and against any and all present or future claims or demands, and
any and all damages, losses, liabilities, injuries, fines, penalties,
judgments, claims for contribution, and cost recovery actions, and consultant
fees, expert witness fees, costs and expenses (including attorney's fees
incurred by Seller or Owners in the case of matters involving third parties)
arising from or in any way related to the presence of any hazardous substances
or materials, wastes, toxics, pollutants, solid wastes, or contaminants in, on
or under the (i) Timberland, (ii) Mineral Rights, and (iii) any other real
property constituting a part of other Assets (collectively, the
Indemnification Properties"). This indemnity specifically includes the
obligation of Buyer to remove, remediate, reimburse or take other actions
required by law concerning any hazardous substances or materials, wastes,
toxics, pollutants, solid wastes, or contaminants in, on or under the
Indemnification Properties. Nothing herein shall limit Buyer's right, in good
faith, to contest any action, request or requirement of any governmental
agency provided that such action is taken at Buyer's sole cost, risk and
expense. The provisions of this Section 6.7(e) shall not include, or create
any obligation of Buyer with respect to any contractual obligation of "Owners"
or Owner's predecessors except as provided in Section 1.8(a)(v) or as
disclosed on any Schedule attached to this Agreement, are solely for the
benefit of Seller and "Owners" and shall not be construed to be for the
benefit of any third party or to constitute a waiver or release of rights
against any third party. Seller hereby assigns to Buyer all rights and claims
which Seller may now or hereafter have against third parties relating to any
matter for which Buyer indemnifies Seller or "Owners." The provisions of this
Section 6.7(e) and Section 1.8(a)(v) are intended to exclusively set forth
Buyer's obligations under this Agreement with respect to assumption, waiver,
release, discharge, and indemnification of environmental matters, and the
provisions of Section 10.1(b) and Section 1.8(a) (other than
Section 1.8(a)(v)) shall not apply to such obligations of Buyer.
7. Representations of Buyer. Buyer represents to Seller as follows:
7.1 Buyer's Organization. Buyer is a limited partnership organized,
existing and in good standing under the laws of Delaware and has the full
corporate power and authority to enter into and to perform this Agreement.
Buyer is qualified to do business and is in good standing in the states of
Washington and Oregon.
7.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary partnership action of Buyer, and this Agreement constitutes the
valid and binding obligation of Buyer enforceable against it in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights in general and subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
7.3 Consents of Third Parties. The execution, delivery and performance
of this Agreement by Buyer will not (a) violate or conflict with the
certificate of limited partnership or partnership agreement of Buyer; or (b)
constitute a violation of any law, regulation, order, writ, judgment,
injunction or decree applicable to Buyer. Except as required by the HSR Act,
no consent, approval or authorization of any governmental authority is
required on the part of Buyer in connection with the execution, delivery and
performance of this Agreement.
7.4 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to the best of Buyer's knowledge,
threatened, that question the validity of this Agreement or any action taken
or to be taken by Buyer in connection with this Agreement. There is no
litigation, proceeding or governmental investigation pending or, to the best
of Buyer's knowledge, threatened, or any order, injunction or decree
outstanding, against the Buyer that, if adversely determined, would have a
material effect upon Buyer's ability to perform its obligations under this
Agreement.
7.5 Financing. Buyer will have, on the Closing Date, all funds
necessary to pay the Purchase Price and related fees and expenses, and has, or
will have on the Closing Date, the financial capacity to perform all of its
other obligations under this Agreement.
8. Further Agreements of the Parties.
8.1 Access to Information. Owner has agreed that Buyer (subject to
Section 8.7) shall have access to information in the possession of Owner, and
Seller will make available to Buyer information in its possession, relating to
the Timberland Properties, the Mineral Rights, and other Assets for due
diligence investigation purposes and to facilitate an orderly transition in
the management of those Assets in anticipation of Closing. In addition, Owner
has agreed to make available to Buyer its financial statements and shall
cooperate and instruct Owner's independent auditors to cooperate, at Buyer's
expense, in preparing the financial statement related to the Timberland
Properties which Buyer may be required to file with the Securities Exchange
Commission.
8.2 Notice of Changes and Events.
(a) Each party shall promptly notify the other party in writing,
and furnish to such party any information that such party may reasonably
request, with respect to the occurrence of any event or the existence of any
state of facts that would (i) result in the party's or Owner's representations
and warranties not being true if they were made at any time prior to or as of
the Closing Date, or (ii) impair the party's or Owner's ability to perform its
obligations under this Agreement.
(b) Subject to receipt of necessary information from Owner,
Seller agrees to update and bring current all Schedules attached to this
Agreement prior to the Closing Date. Any such updated Schedule shall be for
informational purposes only and shall not affect the rights and obligations of
the parties as set forth in this Agreement.
(c) Notwithstanding anything to the contrary in this Agreement,
Owner or Seller shall have the right, in their respective sole discretion, to
retain any claim, obligation, or liability that may otherwise be transferred
to or assumed by Buyer in this Agreement. Owner or Seller may, without
limitation, exercise this right by omitting or deleting a claim, liability, or
obligation on one or more of the Schedules attached to this Agreement. If
Owner or Seller exercises this right, Seller shall provide written notice to
Buyer of the claim, liability, or obligation that Seller shall retain within
thirty-five (35) days of Seller's receipt of written notice of said claim,
liability, or obligation.
8.3 Expenses. Except as otherwise specifically provided in this
Agreement, Buyer and Seller shall bear their own respective expenses incurred
in connection with this Agreement and in connection with all obligations
required to be performed by each of them under this Agreement.
8.4 Publicity. Buyer and Seller shall consult with each other before
issuing any public announcement or press release concerning the transactions
contemplated by this Agreement and, except as may be required by applicable
law or regulation or rule of any stock exchange or organized securities market
on which the securities of Buyer or Seller are listed or traded, will not make
a public announcement or issue a press release prior to such consultation. If
Buyer or Seller are so required to make a public announcement or issue a press
release such party shall use its best efforts to inform the other party hereto
prior to making or issuing it.
8.5 Preservation of Records.
(a) Buyer agrees that, without expense to Seller, Buyer (i) shall
preserve and keep the records relating to the Timberland Properties, Mineral
Rights, and other Assets delivered to it by Seller for a period of six (6)
years from the Closing, and (ii) shall give Seller and Owner reasonable access
to such records and to personnel during regular business hours if needed for
any bona fide purpose, provided such access shall be at Seller's or Owner's
cost and expense, including reimbursement of Buyer's extraordinary costs, if
any, of providing such access.
(b) Seller or Owner, without expense to Buyer, (i) shall preserve
and keep the records relating to the Timberland Properties, Mineral Rights,
and other Assets which were not transferred to Buyer pursuant to Section
1.4(a), and (ii) shall give Buyer reasonable access to such records and to
personnel during regular business hours if needed for any bona fide purpose,
provided such access shall be at Buyer's cost and expense, including
reimbursement of Seller's or Owner's extraordinary costs, if any, of providing
such access.
(c) Notwithstanding the expiration of the six (6) year period in
Subsection (a) above, Buyer agrees not to destroy the records described in
Subsection (a) without first giving Seller sixty-five (65) days advance
written notice and an opportunity to take custody of such records, at Seller's
cost and expense, including reimbursement of Buyer's extraordinary costs, if
any.
8.6 Casualty or Condemnation. In the event any uninsured loss or damage
occurs to the assets being acquired by Seller from Owner, including the
Assets, after the date of the Purchase Agreement, but before Closing, which
has an adverse financial impact in excess of fifteen million dollars
($15,000,000) on the value of such assets, Buyer shall be entitled to a
reduction of the Purchase Price. Buyer's share of any Purchase Price
reduction as a result of an uninsured loss shall be determined pursuant to
Section 8.12. If the amount of the Purchase Price reduction has not been
determined by the date set for Closing, the parties shall proceed to Close as
scheduled and Subsection 2.1(d) shall apply. In the event any insured loss,
destruction, casualty or damage occurs to the Assets after the date of this
Agreement, but before Closing, or in the event condemnation action is
instituted on the Assets after the date of this Agreement, but before Closing,
then Seller shall assign to Buyer at Closing all proceeds from such policies
or condemnation action, and there shall be no adjustment in the Purchase
Price.
8.7 Confidentiality. Hanson and Buyer have previously executed a
Confidentiality Agreement in the form attached hereto as Schedule 8.7.
Notwithstanding anything to the contrary in the Confidentiality Agreement, the
parties hereto covenant and agree that the terms and provisions of this
Agreement and all information and data obtained in connection with this
Agreement shall be treated as Evaluation Material in the Confidentiality
Agreement. Buyer shall require any third party which has not already executed
the Confidentiality Agreement and to which it intends to disclose any
information supplied under the Confidentiality Agreement or this Agreement to
countersign and assume all of the obligations and covenants of the
Confidentiality Agreement and deliver a copy of the Confidentiality Agreement
to Seller and Owner prior to delivery of any information to such third party.
If this Agreement is terminated for any reason, the foregoing covenant shall
survive the termination; if this Agreement is not so terminated, then the
foregoing covenant shall be deemed terminated at Closing.
8.8 Allocation and Tax Matters.
(a) The Purchase Price shall be allocated among the Assets in
accordance with Schedule 8.8 attached hereto. Seller and Buyer agree to
complete IRS form 8594 consistently with the foregoing allocation and to
furnish each other with a copy of such form prepared in draft form within
forty five (45) days prior to the filing due date for such form. Within
fifty-five (55) days after the Closing, Buyer shall submit to Seller a
proposed detailed allocation schedule which is in all respects consistent with
Schedule 8.8. Thereafter, Buyer and Seller shall use their respective best
efforts to promptly agree to a final detailed schedule. Neither Seller nor
Buyer shall file any tax return or take a position with any taxing authority
that is inconsistent with the foregoing allocation.
(b) For purposes of preparing Washington Real Estate Excise Tax
affidavits provided for in RCW 82.45.150, the parties agree to use the market
value assessment as reflected on the county property tax rolls at the time of
Closing. The Buyer agrees to execute at Closing a Notice of Continuance,
incorporated in the Real Estate Excise Tax Affidavits provided for in RCW
82.45.150, continuing the forest land classification or designation of that
portion of the Timberland Properties in the State of Washington so classified
or designated as provided in RCW 84.33.140.
8.9 Termination. This Agreement shall be terminated at any time prior
to the Closing:
(a) By mutual written agreement executed by Seller and Buyer; or
(b) By either party if applicable law (including but not limited
to the HSR Act) prohibits the consummation of the sale and purchase of the
Assets pursuant to this Agreement or if, at the Closing Date, any action,
proceeding or investigation shall have been instituted or threatened in
writing by any governmental agency seeking to enjoin, restrain, prohibit,
impose material conditions upon or obtain substantial damages in respect of,
the transactions contemplated by this Agreement;
(c) By either party as provided in Section 3.2; or
(d) By either party if the Purchase Agreement is terminated for
any reason.
Upon such termination, neither of the parties shall have any liability
or further obligation arising out of this Agreement except as expressly stated
in this Agreement.
8.10 Access Pending Closing. Owner has agreed that Buyer may, upon
reasonable notice to Owner, have access to the Timberland Properties, and
other Assets for purposes of conducting due diligence investigations and
preparing for transition of ownership, all in accordance with the terms and
conditions of the Access Agreement previously executed by Buyer, a copy of
which is attached hereto as Schedule 8.10.
8.11 Buyer's Due Diligence.
(a) Buyer may conduct due diligence examinations during a period
commencing on the date hereof and ending at the close of business on the day
prior to the Closing Date (the "Due Diligence Period"). In the event that
Buyer makes a reasonable and objective determination that there are Price
Adjustment Items as defined in Section 8.11(d), Buyer will have the right, but
only during the Due Diligence Period, to notify Seller in writing, with
reasonable detail, of said Price Adjustment Items; provided, that no such
written notice given to Seller later than April 8, 1996, shall include a Price
Adjustment Item relating to environmental matters.
(b) In the event Buyer makes a reasonable and objective
determination that there are Price Adjustment Items as defined in Section
8.11(d) which will have an adverse financial impact in the Price Adjustment
Formula set forth in Section 8.11(e), Buyer will have the right to deliver to
Seller, but only during the Due Diligence Period, a notice that Buyer is
entitled to an adjustment in the Purchase Price (the "Price Adjustment
Notice"), provided that no Price Adjustment Notice given later than April 8,
1996, shall include a Price Adjustment Item relating to environmental matters.
The Price Adjustment Notice shall be accompanied by a schedule setting forth
in reasonable detail Buyer's computation of the dollar amount of the Price
Adjustment Items. Seller shall deliver the Price Adjustment Notice to Owner
as one of Seller's Price Adjustment Notices. Buyer hereby appoints Seller as
its agent to pursue a price reduction as specified in the Price Adjustment
Notice. Subject to the provisions of the Purchase Agreement, Seller agrees to
use reasonable diligence in pursuing a price reduction with respect to the
matters referred to in each such Price Adjustment Notice.
(c) If Buyer provides written notice of Price Adjustment Items as
provided in Subsection (a) above but does not deliver to Seller the Price
Adjustment Notice described in Subsection (b) above during the Due Diligence
Period, Buyer will have the right, within six (6) months after Closing, to
deliver to Seller a notice (the "Post Closing Adjustment Notice"). The Post
Closing Adjustment Notice shall be accompanied by a schedule setting forth in
reasonable detail Buyer's computation of the dollar amount of the Price
Adjustment Items that provide the basis for the Post Closing Adjustment
Notice; provided however, the Post Closing Adjustment Notice cannot allege an
adverse financial impact greater than fifteen million dollars ($15,000,000)
(the First Threshold). Seller shall deliver the Post Closing Adjustment
Notice to Owner as one of Seller's Post Closing Adjustment Notices and shall
pursue an adjustment in the First Threshold as contemplated by Section 10.4 of
the Purchase Agreement; provided that if the Post Closing Adjustment Notices
exceed Fifteen Million Dollars ($15,000,000) in the aggregate, each such
notice shall be reduced pro rata so that the total does not exceed Fifteen
Million Dollars ($15,000,000). The adjustment so determined shall not adjust
the Purchase Price, but shall be carried forward as a portion of the First
Threshold in making the calculations in Section 10.4(c) of the Purchase
Agreement.
(d) In determining the adverse financial impact for purposes of
Section 8.11(a), the following items shall be taken into account as Price
Adjustment Items:
(i) Failure of Owner to be vested in title in more than
five hundred (500) acres of the Timberland Properties described in the Title
Reports attached to this Agreement as Schedule 4, and the threshold provisions
of Section 8.11 and the allocation provisions of Section 8.12 shall not apply
to any such Price Adjustment Item (i.e., the Purchase Price shall be reduced
by the amount of the adverse financial impact of such Item), nor shall the
reduction in Purchase Price for such Item reduce the threshold provisions for
purposes of Section 10.4 of the Purchase Agreement. As used in this
Subsection (i), "vested in title" means that the applicable Title Report
states that Owner (or any of the three Owners) is vested in title (without
regard to exceptions or objections noted in such Title Report);
(ii) The existence of any exception to title on any portion
of the Timberland Properties: (a) which was not shown on Schedule 4, and (b)
which was not disclosed on any other Schedule attached to this Agreement, and
(c) which materially interferes with the use thereof for the production and
harvesting of timber; provided that the threshold provisions of Section 8.11
and the allocation provisions of Section 8.12 shall not apply to such Price
Adjustment Item if the exception to title was created by Owner after the date
of the applicable Title Report and was not either created in the ordinary
course or consented to by Buyer, nor shall the reduction in Purchase Price for
such Item reduce the threshold provisions for purposes of Section 10.4 of the
Purchase Agreement.
(iii) The presence of any hazardous substances or materials,
wastes, toxics, or contaminants in, on or under any of the Indemnification
Properties (but only until April 8, 1996, and only to the extent they were not
disclosed in Schedule 6.6).
(iv) Any breach of representations of Seller in Section 6
of this Agreement during the Due Diligence Period, but with respect to Section
6.6, only if included in a Price Adjustment Notice given not later than April
8, 1996; provided, that in determining the adverse financial impact for breach
of representations of Seller, any benefit to Buyer caused by such breaches of
representations of Seller and other breaches of representations of Seller
during the Due Diligence Period shall be offset or taken into account.
(e) Price Adjustment Formula. As used in this Section 8.11 (and
in Sections 10.4(b) and (c) of the Purchase Agreement), the term "First
Threshold" means fifteen million dollars ($15,000,000); the term "Second
Threshold" means twenty five million dollars ($25,000,000); the term "Third
Threshold" means thirty five million dollars ($35,000,000). Subject to the
provisions of Section 8.12, if the First Threshold, but not the Second
Threshold, is met, the purchase price under the Purchase Agreement shall be
reduced by fifty percent (50%) of the amount of the adverse financial impact
in excess of the First Threshold; and if the Second Threshold, but not the
Third Threshold, is met, the purchase price under the Purchase Agreement shall
be additionally reduced by two-thirds of the amount of the adverse financial
impact in excess of the Second Threshold; and if the Third Threshold is met,
the purchase price under the Purchase Agreement shall be additionally reduced
by one hundred percent (100%) of the amount of the adverse financial impact in
excess of the Third Threshold.
8.12 Allocation of Price Reduction.
No Purchase Price reduction will be allowed to Buyer under this
Agreement unless a purchase price reduction is allowed to Seller under the
Purchase Agreement. If a purchase price reduction is allowed to Seller under
the Purchase Agreement, except as expressly provided in Section 8.11(d), Buyer
will be entitled to a fraction of such reduction, the numerator of which shall
be Buyer's total allowed Purchase Price adjustment claims and the denominator
of which shall be the total purchase price adjustment claims submitted by
Seller to Owner pursuant to the Purchase Agreement and allowed. Buyer shall
be bound by any proceeding or agreement between Owner and Seller determining
the amount of any Purchase Price adjustment.
8.13 Enforcement of Seller's Rights. Seller agrees to use
commercially reasonable efforts as determined by Seller in its reasonable
judgment to enforce the obligations of Owner under Sections 3.6, 5(a), 5(c),
8.1, 11.3(b), and 11.3(c) of the Purchase Agreement. Buyer shall reimburse
Seller for Seller's expenses related to such enforcement in accordance with
the formula for sharing of arbitration costs under the Purchase Agreement set
forth in Section 9.2 of this Agreement.
8.14 Seller's Knowledge. In the event that Seller obtains knowledge
prior to the Closing Date of any material fact which, if known to Owner, would
result in a breach of a representation or warranty of Owner under the Purchase
Agreement, Seller shall notify Owner so that Owner will have knowledge of such
fact.
9. Default; Remedies; Arbitration.
9.1 Default; Remedies. Time is of the essence of this Agreement. If
either party fails or refuses to carry out this Agreement according to its
terms, the other party shall be entitled to the remedies set forth below.
(a) Buyer's Default. Except as otherwise provided in this
Agreement, in the event Buyer fails, without legal excuse, to complete the
purchase of the Assets pursuant to this Agreement, Seller shall be entitled to
terminate this Agreement and/or pursue any and all remedies available at law
or in equity by reason of Buyer's breach or default, including without
limitation, specific performance and damages for any failure by Buyer to
perform the obligations to be performed by it from and after the date of this
Agreement.
(b) Seller's Default. Except as otherwise provided in this
Agreement, in the event Seller fails or refuses to complete the purchase of
the Assets or is otherwise in breach or default of its obligations in this
Agreement, Buyer shall be entitled to terminate this Agreement and/or pursue
any and all remedies available at law or in equity by reason of Seller's
breach or default, including without limitation, specific performance and
damages for any failure by Seller to perform the obligations to be performed
by it from and after the date of this Agreement; provided, however, that
Buyer's sole remedy against Seller for Seller's breach of Section 6 and the
representations set forth therein shall be as set forth in Section 8.11 and
the indemnification by Seller of Buyer as set forth in Section 10.
(c) Owner Default. Notwithstanding the foregoing, Buyer shall
have no rights against Seller if Seller's failure to transfer the Assets to
Buyer results from a default by Owner under the Purchase Agreement. If Seller
elects to seek damages as a result of a default by Owner under the Purchase
Agreement and if any award to Seller includes any amount with respect to
damages suffered by Buyer, Seller shall pay such amount to Buyer minus Buyer's
share of expenses determined pursuant to the formula for allocation of
expenses of arbitration under the Purchase Agreement set forth in Section 9.2.
If Seller seeks specific performance of Owner's obligations under the Purchase
Agreement, Seller agrees that it will not terminate this Agreement pursuant to
Section 8.9(d) if Buyer agrees to be bound by the outcome of such specific
performance proceeding and if Buyer agrees to reimburse Seller for the costs
of such proceeding in the proportion that the Purchase Price bears to One
Billion Five Hundred Eighty Eight Million Dollars ($1,588,000,000).
9.2 Arbitration. This Agreement shall not be subject to termination
except as specifically provided in this Agreement. Any question, controversy
or claim arising under or relating to this Agreement, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association and the provisions of the laws of the State of Washington relating
to arbitration, as said rules and laws are in effect on the date of this
Agreement. The arbitration shall be conducted in Vancouver, Washington, by
and before a single arbitrator, who is experienced in the problem or problems
in dispute, to be agreed upon by the Seller and Buyer, or if they are unable
to agree upon an arbitrator within ten (10) days after written demand by
either party for arbitration, then, at the written request of either party,
the arbitrator shall be appointed by the American Arbitration Association, or
failing such appointment, by the Superior Court in and for the County of
Clark, State of Washington. Proceedings to obtain a judgment with respect to
any award rendered hereunder shall be undertaken in accordance with the law of
the State of Washington including the conflicts of laws provisions thereof.
Each party shall pay one-half of the arbitrator's fees and expenses.
Upon application to the arbitrator, the parties shall be entitled to limited
discovery, including only exchange of documents and only depositions on such
terms as the arbitrator may allow for purposes of fairness and to reduce the
overall time and expense of the arbitration.
Buyer shall also reimburse Seller for the costs of any arbitration under
the Purchase Agreement, including arbitrator's fees and reasonable attorney's
fees, incurred by Seller in the proportion that the claims related to the
Assets bears to the total of all claims involved in the arbitration. In any
arbitration proceeding under the Purchase Agreement including any arbitration
related to a Purchase Price adjustment claim or indemnification claim which
relates to the Assets, Seller agrees to request of the arbitrator that Buyer
be allowed to participate in the arbitration. Buyer shall be allowed to
participate to the extent allowed by the arbitrator.
10. Indemnification and Related Matters.
10.1 Indemnification.
(a) Seller agrees to defend, indemnify and hold Buyer and its
parents, subsidiaries, affiliates, predecessors, successors and assigns (and
their respective officers, directors, employees and agents) harmless from and
against any and all loss, claims, liabilities, damages, costs and expenses,
including attorneys fees incurred with respect to third parties ("Damages")
resulting from, based upon, or arising out of:
(i) subject to Section 10.4(a), (b) and (c), all of the
Excluded Liabilities set forth in Section 1.8(b);
(ii) subject to Section 10.4, and taking into account any
adjustments made for such breach in Section 8.11, breaches of Seller's
representations set forth in Section 6;
(iii) subject to Section 10.4, claims of third parties that
are asserted after Closing, to the extent the basis of such claims arose prior
to Closing; provided, that this Subsection (iii) shall only apply to a claim
which will result in loss to Buyer in excess of $100,000; and provided
further, that the indemnity in this Subsection (iii) shall not apply at all to
matters disclosed on Schedule 6.4 or to matters covered by Section 8.11 or to
matters for which Buyer is indemnifying Seller as provided in this Agreement;
(iv) subject to Section 10.4, permits, licenses, or Contracts
(which are not Material Contracts) assumed by Buyer pursuant to Section 1.8
but which were not disclosed to Buyer in any Schedule attached to this
Agreement; provided, that this Subsection (iv) shall only apply to a permit,
license, or Contract: (a) which will require Buyer to pay more than $100,000
in any twelve-month period, and (b) which will not expire and cannot be
terminated within twelve months of Closing without penalty, liability, or
premium, and (c) which provides no material benefit to Buyer; and
(v) all actions, claims, suits, proceedings, demands,
assessments, judgments, costs and expenses, including attorneys' fees
(incurred with respect to third parties), with respect to the foregoing.
(b) Buyer agrees to save, defend, indemnify and hold Seller and
Owner and its general partners, parents, subsidiaries, affiliates,
predecessors, successors and assigns (and their respective officers,
directors, employees and agents) harmless from and against any loss, claims,
liabilities, damages, costs and expenses, including attorneys' fees incurred
with respect to third parties ("Damages") resulting from, based upon, or
arising out of:
(i) any breaches, occurring before, at or after Closing, of
Contracts, permits, licenses, and all other agreements and obligations
transferred or assigned to Buyer;
(ii) the operation, management or condition of the Assets,
whether arising before, at or after the Closing, excluding only those matters
covered by Section 10.1(a)(i) above;
(iii) all matters assumed by the Buyer pursuant to any and
all provisions of this Agreement or any related agreement; and
(iv) all actions, claims, suits, proceedings, demands,
assessments, judgments, costs and expenses, including attorneys' fees
(incurred with respect to third parties), with respect to the foregoing.
Wherever this Agreement provides for Buyer's indemnification of Owner,
the term "Owner" shall mean each or all of CERI, CFII, and Hanson.
10.2 Determination of Damages; Claims. In calculating any amounts
payable to Buyer pursuant to Section 10.1(a) or payable to Seller pursuant to
Section 10.1(b), Seller or Buyer, as the case may be, shall receive credit for
(i) any reduction in tax liability as a result of the facts giving rise to the
claim for indemnification, and (ii) any insurance recoveries.
10.3 Defense of Claims by Third Parties. If any claim is made against
Buyer or Seller that, if sustained, would give rise to a liability of the
other under this Agreement, Buyer or Seller, as the case may be, shall
promptly cause notice of the claim to be delivered to the other and shall
afford the other and its counsel, at the other's sole expense, the opportunity
to defend, with counsel reasonably satisfactory to the party against which
such claim is made, or settle the claim. If either party takes said
opportunity to settle the claim, such party shall obtain a release of the
other party in any settlement agreement with the third party. In the event of
an indemnification claim by Buyer against Seller, Seller may cause Owner to
undertake the defense in which event Owner shall have the opportunity to
settle the claim as provided above.
10.4 Limitations on the Indemnification.
(a) With respect to Seller's indemnification of Buyer pursuant to
Sections 10.1(a), Buyer shall promptly inform Seller in writing of each such
matter, as and when Buyer becomes aware of such matter, and shall keep
complete and accurate records of actual damages incurred by Buyer as a result
thereof.
(b) Notwithstanding any other provision of this Agreement,
Seller's obligations for indemnification of Buyer and all Other Purchasers
shall not exceed the proceeds of indemnification recoveries by Seller from
Owner. Seller agrees to submit all of Buyer's indemnification claims to Owner
as Seller's indemnification claims. Buyer hereby appoints Seller as Buyer's
agent to pursue such indemnification claims. Seller agrees to use reasonable
diligence in the pursuit of such claims. Buyer shall be bound by the results
of any proceedings under the Purchase Agreement to determine the validity of
Seller's indemnification claims.
(c) Buyer shall be entitled to its pro rata share of total
recoveries by Seller for (i) Purchase Price adjustment claims subject to the
allocation provisions of Section 8.12, and (ii) indemnification claims
submitted by Seller to Owner under the Purchase Agreement. Amounts payable to
Buyer from indemnification claims recovered subsequent to payment of Purchase
Price adjustment claims shall be adjusted to reflect amounts paid with respect
to such Purchase Price adjustment claims.
(d) Notwithstanding anything to the contrary to this Agreement,
Seller shall not be obligated to indemnify Buyer on any claim for
indemnification submitted by Buyer to Seller after December 31, 1998, except
for matters arising under Section 10.1(a)(i).
11. Employee Matters.
11.1 Definitions.
(a) Employees. The term "Employees" shall mean all of the
persons actively employed by Owner exclusively in connection with the
Timberland Properties in daily operations in hourly or salaried status
immediately preceding the Closing, and those persons identified in Schedule
11.2(f) as employed by Owner in daily operations in connection with the
Timberland Properties who are either (a) on disability, or (b) on leave of
absence. This does not include persons listed in Schedule 11.1(a), which
lists executive officers of Owner.
(b) Transferring Employees. All Employees who apply for, are
offered, and who accept employment with Buyer on the Closing Date or within 90
days thereafter.
(c) INTENTIONALLY OMITTED.
(d) List of Employees. Schedule 11.1(d) sets forth a true and
correct list of all Employees, together with their respective job titles,
hourly rates or base salary, date of birth, Social Security number, and most
recent date of hire (or credited service), as of ten (10) days prior to the
date of this Agreement, and will be updated to be true and correct as of ten
(10) days prior to the Closing Date.
11.2 Applications/Hiring.
(a) Within ten (10) days after the date this Agreement is
signed, Seller will provide applications for employment to all Owner's
Employees, as defined in 11.1(d) above.
(b) Employees from whom applications will be solicited by Buyer
will also be provided with a document or documents setting forth the essential
terms and conditions of employment under which Buyer intends to operate the
Assets. Buyer will provide such information to Seller promptly following the
execution of this Agreement. Buyer will consider applications from all
Employees who apply for employment under such terms and conditions of
employment pursuant to its normal hiring procedure. If applications
acceptable to Buyer are received from Salaried Employees, offers of employment
shall be extended within fifteen (15) working days of application receipt or
as soon as reasonably practical thereafter. Offers to other Employees who
submit application and who are acceptable to Buyer will be extended on or
before the Closing Date.
(c) Salaried Terms and Conditions. Solicitations of salaried
Employees who submit applications for employment with Buyer will be made on
terms and conditions of employment consistent with and generally applicable to
Buyer's salaried work force in positions of like status and pay. However, in
order to minimize Owner's severance cost, Buyer agrees to offer employment to
at least eight (8) salaried Employees (or to such lesser number if such lesser
number of salaried Employees apply), and that those salaried Employees offered
employment will be hired at 96 percent or more of their Base pay with Owner as
listed in Schedule 11.1(d).
(d) Nonunion Hourly Terms and Conditions. Solicitations of
Owner's nonunion hourly Employees who submit applications for employment with
Buyer will be made as Buyer may determine on terms and conditions of
employment consistent with their existing terms and conditions or terms and
conditions consistent with and generally applicable to Buyer's nonunion hourly
work force in positions of like status and pay in similar type operations of
Buyer in the same region or geographic proximity.
(e) INTENTIONALLY OMITTED.
(f) Disabled Employees/Leave of Absences. Employees identified
in Schedule 11.2(f) who make application, are offered, and accept employment
must begin employment as evidenced by having worked at least one (1)
compensable day with Buyer no later than the first working day of the sixth
(6th) month following the month in which the Closing Date occurs unless
otherwise provided by law or extended by Buyer.
11.3 Employment Obligations of Seller and Buyer.
(a) Buyer's Obligations/Employment Claims.
(i) Subject to the provisions of Section 11.4 and Section
11.5, Buyer agrees to assume all employment-related obligations accruing on or
after the Closing Date pertaining to Transferring Employees including, without
limitation, compensation for services performed for Buyer (and related
employment and withholding taxes); benefits accrued under any Buyer-sponsored
employee welfare or pension benefit plan (as defined under ERISA Sections 3(1)
and 3(2), respectively); benefits accrued under any other employee benefit
plan or arrangement of Buyer covering the Transferring Employees; and workers'
compensation benefits with respect to claims relating to events occurring on
or after the Closing Date or filed more than one-hundred eighty (180) days
after the Closing Date, regardless of date of accident or illness.
(ii) Buyer will retain all liability for all claims,
losses, damages, and expenses (including, without limitation, reasonable
attorney's fees), and other liabilities and obligations relating to or arising
out of all unfair labor practice charges, wrongful termination litigation,
employment discrimination charges, severance claims, health and welfare
claims, retirement claims and any other claims related to employment and based
upon Buyer's conduct on or after the Closing Date which are filed within
applicable statutes of limitations.
(b) Seller's Obligation/Employment Claims.
(i) Subject to the provisions of Section 11.4 and 11.5,
Owner has agreed to assume all employment related obligations with respect to
all Employees accruing prior to the Closing Date including, without
limitation, compensation for services performed for Owner (and related
employment and withholding taxes); benefits accrued under any Owner sponsored
employee welfare or pension plan (as defined under ERISA Sections 3(1) and
3(2) respectively) covering the Employees or former Employees prior to or
after the Closing Date; benefits accrued under any other employee benefit plan
or arrangement of Owner covering the Employees or former Employees prior to or
after the Closing Date; and workers' compensation benefits with respect to
claims filed before the Closing Date or within one hundred eighty (180) days
after the Closing Date and relating to events occurring prior to the Closing
Date.
(ii) Owner has agreed to retain all liability for any and
all claims, losses, damages, and expenses (including, without limitation,
reasonable attorney's fees) and other liabilities and obligations relating to
or arising out of all unfair labor practice charges, wrongful termination
litigation, employment discrimination charges, severance claims, health and
welfare claims, asbestos claims, retirement claims, OSHA citations and any
other claims arising out of any employment and based upon Owner's conduct
occurring prior to the Closing Date including actions filed as of the Closing
Date or filed thereafter within applicable statutes of limitations.
(c) COBRA. Owner has agreed to be responsible for the health
care coverage of any Employees as may be required by COBRA under affected
Owner Welfare Plans. After the Closing Date, Owner has agreed that it shall
ensure that the option of continuing health care coverage under the Owner
Welfare Plans is extended to the Employees to the extent required by COBRA.
Buyer shall be responsible for providing health care continuation coverage as
required by COBRA to any Transferring Employees terminated by Buyer after the
Closing Date.
(d) Vacation Obligations/Transferring Employees.
(i) Vacation earned as of May 1, 1996 and to be taken in
1996 by Transferring Employees under Owner's vacation policy will be credited
to Transferring Employees on the Closing Date to the extent not then taken.
Buyer shall grant Transferring Employees time off with pay (vacation) for this
full credited amount, or pay in lieu of time off for any portion not taken by
December 31, 1996. Promptly following receipt of payment from Owner Seller
shall pay to Buyer the amount of such earned vacation pay payable by Buyer to
such Transferring Employees.
(ii) Vacation accruing in 1996 to be taken in 1997 by
Transferring Employees will be determined in accordance with Buyer's vacation
policy. In the application of Buyer's vacation policy, Buyer shall recognize
service of such Employees with Owner and its predecessors to the extent Owner
recognized such service under its vacation policy. Seller shall provide
Buyer, on or before the Closing Date, with a list of such recognized service
including the number of vacation weeks earned under Owner's Plan for all
Employees as of May 1, 1996. For those Transferring Employees who remain in
Buyer's employment until at least January 1, 1997, Buyer will accrue vacation
from January 1, 1996 notwithstanding the fact that the Transferring Employees
were not its Employees until after the Closing Date. For those who do not
remain in employment with Buyer until year end, vacation will accrue 1/12 pro
rata for each completed calendar month of employment between the Closing Date
and December 31, 1996.
(e) Severance Pay Obligations.
(i) Owner has assumed all severance pay obligations, if
any, for all Employees who are not hired by Buyer pursuant to Owner's
policies, plans, or agreements relating to severance from employment.
(ii) Any salaried Transferring Employee hired by Buyer who
is terminated during the first six (6) months following the month in which the
Closing Date occurs, for reasons other than cause or misconduct, shall receive
severance pay from Buyer equal to that which he or she would have received
under Owner's severance pay policies as written on January 1, 1996, generally
applicable to Owner's Employees in like positions and pay status in the same
amount which would have been payable had such salaried Transferring Employee
not been hired by Buyer. Seller shall provide Buyer with copies of Owner's
applicable policies as soon as reasonably practical after signing of this
Agreement.
(iii) Any salaried Transferring Employee hired by Buyer who
is terminated by Buyer after the six (6) month period in (ii) above or any
other Transferring Employee will receive severance pay, if any, in accordance
with Buyer's severance pay policies uniformly applicable to other Employees in
positions of similar status and pay. In the application of such policies,
Buyer shall recognize the Transferring Employee's service with Owner from his
or her most recent date of hire with Owner.
11.4 Employee Benefits.
(a) All Transferring Employees who accept employment with Buyer
and commence such employment immediately on the Closing Date will be, starting
on the Closing Date, covered by Buyer's existing employee benefit plans in
accordance with their terms and will be subject to Buyer's existing employment
policies, as applicable to Buyer's Employees who are similarly situated.
Transferring Employees shall be credited with their service with Owner from
their most recent date of hire for purposes of vesting, participation and
eligibility (but not benefit calculations, except as provided in Section
11.5(c) pertaining to certain Salaried Employees), under Buyer's plans and
policies, as though such service had been with Buyer.
(b) With respect to Buyer medical coverage, there shall be no
waiting period for participation by Transferring Employees or their covered
dependents and they shall be credited with any deductibles satisfied under
Owner's medical plans for claims incurred during calendar year 1996 in meeting
the deductible requirements of Buyer's plans. Buyer will also waive any
preexisting condition restrictions under the Buyer Welfare Plans with respect
to Transferring Employees or their dependents.
(c) Buyer will provide no benefit coverage to a Transferring
Employee or his or her dependents to the extent that such person has not
reported to work and continues to be eligible by reason of disability under
the Owner Welfare Plans in accordance with their terms as in effect
immediately prior to the Closing Date.
(d) In particular, but without limitation, (i) claims for
medical, hospital or other health care expenses incurred by Transferring
Employees or their dependents on or after the Closing Date shall be covered
under the Buyer Welfare Plans, subject to the limitations thereof and claims
for such expenses incurred by Transferring Employees or their dependents prior
to the Closing Date shall be covered, subject to the limitations thereof (but
in accordance with the terms of this Agreement), under Owner's Welfare Plans;
(ii) claims of Transferring Employees or their dependents for life insurance,
accidental death and dismemberment and disability benefits with respect to
death, disability or other injury occurring on or after the Closing Date shall
be covered under Buyer's Welfare Plans, and claim for such benefits with
respect to death, disability or injury occurring prior to the Closing Date
shall be covered under Owner's plans (as applicable). The amount and type of
benefits payable in any case shall be determined in accordance with the terms
of the applicable Welfare Plan. Seller and Buyer acknowledge that certain
Transferring Employees who will have attained age 65 or age 55 and 5 years of
service for purposes of Owner's retiree medical plan as of the Closing Date
will be eligible to elect retiree medical coverage under Owner's retiree
medical plan, but only if they do so immediately after the Closing Date; that
such coverage requires payment of contributions in an amount determined by
Owner pursuant to Owner's retiree medical plan with respect to all
participants in such retiree plans and is secondary to active coverage under
Buyer's medical plans while the Transferring Employees are participating in
any of Buyer's medical plans which may cover such Employees.
11.5 Retirement Plan Matters.
(a) Owner Retirement Plans. "Owner Retirement Plans" shall mean
the Cavenham Forest Industries Inc. Retirement Plan for Hourly Paid Employees
and Cavenham Forest Industries Inc. Retirement Plan for Salaried Employees.
(b) Vesting of Benefits. As of the Closing Date, all
Transferring Salaried Employees shall become fully vested in their accrued
benefits under the Owner Retirement Plans. Buyer will recognize past service
credited under the Owner's Retirement Plan for purposes of determining vesting
requirements under Buyer's Plan for Transferring Employees.
(c) Determination of Benefits/Payment of Supplement. Seller will
provide Buyer with a statement, within 180 days of Closing, listing credited
service and accrued benefits (expressed as a Single Life Annuity) through the
Closing Date as determined under Owner's Plan for Salaried Employees (the
"CSAB Statement"). Such accrued benefit amounts shall be listed in the CSAB
Statement for each Transferring Employee. The accrued benefit amount shall be
calculated by Owner's actuary, Hewitt Associates, in consultation with Seller,
using assumptions shown on the CSAB Statement in conjunction with Owner's
current retirement plan formula. Buyer shall provide each salaried
Transferring Employee, upon retirement, a supplemental retirement benefit
under its Salaried Retirement Plan, or under such other form of supplemental
plan or payment acceptable to Buyer, (a "Supplement") equal to:
(i) the age 62 Single Life Annuity amount, taking into
account the credited service listed in the CSAB Statement as applied to the
benefit formula of Buyer's Salaried Retirement Plan, using compensation with
Buyer at retirement, minus,
(ii) the amount of accrued benefit set forth in the CSAB
Statement for each such salaried Transferred Employee.
If the Supplement is provided under Buyer's Salaried Retirement Plan,
such Supplement shall be adjusted pursuant to any options elected by such
Employee pursuant to such plan. If provided outside of Buyer's Salaried
Retirement Plan, such Supplement will be calculated on an actuarial equivalent
basis, using assumptions no less favorable than the assumptions listed on
Schedule 11.5(c) which are used by Owner in determining the accrued benefit
amount. Such Supplement shall be in addition to any benefits earned by such
Employees as a participant in Buyer's Salaried Retirement Plan based upon
their credited service with Buyer and compensation from Buyer after the
Closing Date.
If Buyer does not have a defined benefit retirement plan, the Supplement
(for this purpose calculated by using Seller's retirement plan formula and the
actuarial assumptions set forth on Schedule 11.5(c)) shall be provided to the
Transferring Employee hired by Buyer through an alternative form (such as a
single-life annuity or a lump sum payment of the present value of such
Supplement).
At the time Seller provides the CSAB Statement to Buyer, Seller shall
pay to Buyer an amount equal to the present value of the Supplements to be
provided to the salaried Transferring Employees calculated for this purpose by
using Seller's retirement plan formula and the actuarial assumptions set forth
on Schedule 11.5(c).
(d) Hourly Retirement Plan. For hourly Transferring Employees,
Owner remains responsible for all liabilities of the Cavenham Forest
Industries Inc. Retirement Plan for Hourly Paid Employees for benefits accrued
as of the Closing Date. After the Closing Date, Buyer will provide an
appropriate Hourly Retirement Plan for all Transferring Employees consistent
with Buyer's existing retirement plans covering similarly situated Employee
throughout the country. Buyer will credit Transferring Employees with service
since their most recent date of hire with Owner for purposes of meeting the
vesting requirements of Buyer's plan covering such Employees.
11.6 Employee Payroll Information. Seller shall transfer to Buyer
copies of any records relating to withholding and payment of income and
unemployment taxes (federal, state and local) and FICA and FUTA taxes with
respect to wages paid to Employees hired by Buyer for the calendar year in
which the Closing occurs (including, without limitation, Forms W-4 and
Employee's Withholding Allowance Certificate). Buyer shall provide such
Employees with Forms W-2, Wage and Tax Statement, for the calendar year in
which the Closing occurs setting forth the wages paid and taxes withheld with
respect to such Employees for such calendar year by Owner and Buyer as
predecessor and successor Employees, respectively, as provided by Revenue
Procedure 84-77.
11.7 No Third-Party Beneficiary. This Agreement is being entered into
solely for the benefit of the parties hereto, and the parties do not intend
that any Employee or any other person shall be a third-party beneficiary of
the covenants by either Seller or Buyer contained in this Agreement; provided,
however, that any Transferring Salaried Employee shall have the right to
directly enforce the provisions of Section 11.5(c) against Buyer, and if legal
action is instituted in connection therewith, the prevailing party shall be
entitled to its reasonable attorney fees as set by the court or courts at
trial and on any appeal.
11.8 Labor Matters. As of the date hereof, but not as of the Closing
Date or any other date, except as set forth in Schedule 11.8, (i) within the
last two years Owner has not experienced any material work stoppage due to
labor disagreements with respect to the Timberland Properties; (ii) there is
no unfair labor practice, charge, or complaint against Owner relating the
Timberland Properties pending or, to the knowledge of Owner, threatened,
before the National Labor Relations Board or other similar local tribunal;
(iii) there is no labor strike, request for representation, slowdown or
stoppage actually pending, or to the knowledge of Owner, threatened against or
affecting Owner relating to the Timberland Properties; (iv) to the knowledge
of Owner, no question concerning representation as defined in the National
Labor Relations Act is pending or threatened against Owner respecting the
Timberland Properties; and (v) no arbitration proceeding arising out of or
under any collective bargaining agreement relating to the Timberland
Properties is pending or, to the knowledge of Owner, is threatened.
11.9 Indemnification. Anything in this Agreement to the contrary
notwithstanding, Buyer agrees to indemnify Seller against and hold Seller and
Owner harmless from any and all claims, losses, damages, expenses, obligations
and liabilities arising out of or otherwise in respect of any failure of Buyer
to discharge its obligation under this Section 11. Anything in this Agreement
to the contrary notwithstanding, Seller agrees to indemnify Buyer against and
hold Buyer harmless from any and all claims, losses, damages, expenses,
obligations and liabilities arising out of or otherwise in respect of any
failure of Seller to discharge its obligations under this Section 11. This
indemnity shall survive closing.
12. Miscellaneous.
12.1 Finders. Buyer and Seller respectively represent and warrant that
they have not employed or utilized the services of any broker or finder in
connection with this Agreement or the transactions contemplated by it. Seller
shall indemnify and hold Buyer harmless from and against any and all claims
for brokers' commissions made by any third party as a result of this Agreement
and the transaction contemplated hereunder to the extent that any such
commission was incurred, or alleged to have been incurred, by, through or
under Seller. Buyer shall indemnify and hold Seller harmless from and against
any and all claims for brokers' commissions made by any third party as a
result of this Agreement and transactions contemplated hereunder to the extent
that any such commission was incurred, or alleged to have been incurred, by,
through or under Buyer.
12.2 Entire Agreement. This Agreement (with its Schedules and
Exhibits) contains, and is intended as, a complete statement of all of the
terms of the arrangements between the parties with respect to the matters
provided for, supersedes any previous agreements and understandings between
the parties with respect to those matters, and cannot be changed or terminated
orally.
12.3 Governing Law. Seller and Buyer each hereby consent to personal
jurisdiction in any action brought with respect to this Agreement and the
transactions contemplated hereunder in the State of Washington and to the
arbitration described in Section 9.2. Section 9.1 of this Agreement shall be
governed by and construed in accordance with the law of the State of
Washington generally, and RCW 64.04.005 specifically, without giving effect to
conflicts of law principles thereof. The balance of this Agreement shall be
governed by and construed in accordance with the laws of the State of
Washington, including the conflicts of laws principles thereof.
12.4 Tables of Contents and Headings. The table of contents and
section headings of this Agreement and titles given to Schedules to this
Agreement are for reference purposes only and are to be given no effect in the
construction or interpretation of this Agreement.
12.5 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by registered mail, return receipt requested, to the
parties at the following addresses (or to such address as a party may have
specified by notice given to the other party pursuant to this provision):
If to Seller to:
Willamette Industries, Inc.
1300 S.W. Fifth Avenue, Suite 3800
Portland, Oregon 97201
Attention: Chief Financial Officer
With a copy to:
Miller, Nash, Wiener, Hager & Carlsen
111 S.W. Fifth Avenue, Suite 3500
Portland, Oregon 97204
Attention: J. Franklin Cable
If to Buyer to:
Crown Pacific Limited Partnership
121 S.W. Morrison Street
Suite 1500
Portland, Oregon 97204
Attention: Peter Stott, President
With a copy to:
Ball, Janik & Novack
One Main Place
101 S.W. Main Street, Suite 1100
Portland, Oregon 97204-3274
Attention: Robert S. Ball
12.6 Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement which shall remain in full force and effect.
12.7 Further Assurances and Assistance. Buyer and Seller agree that
each will execute and deliver to the other any and all documents, in addition
to those expressly provided for herein, that may be necessary or appropriate
to effectuate the provisions of this Agreement, whether before, at or after
the Closing. Seller agrees that, at any time and from time to time after the
Closing, it will execute and deliver to Buyer such further assignments or
other written assurances as Buyer may reasonably request to perfect and
protect Buyer's title to the Assets.
12.8 Survival. The terms, covenants, agreements, representations and
warranties contained in or made pursuant to this Agreement together with all
indemnities and undertakings contained herein shall survive the Closing,
subject to the time limits specified herein, if any, delivery of the Purchase
Price and delivery and/or recordation of the instruments of conveyances and
assignment, bills of sale, assignments of contract rights and other closing
documents, and shall not be deemed to have been merged in any of the documents
delivered at the Closing, irrespective of any investigation made by or on
behalf of any party.
12.9 Waiver. Any party may waive compliance by another with any of the
provisions of this Agreement. No waiver of any provision shall be construed
as a waiver of any other provision. Any waiver must be in writing and signed
by the party waiving such provision.
12.10 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Except as expressly set forth in Section 11.7, nothing in
this Agreement shall create or be deemed to create any third party beneficiary
rights in any person or entity not a party to this Agreement, including any
such person or entity asserting rights as a third party beneficiary with
respect to environmental matters. No assignment of this Agreement or of any
rights or obligation hereunder may be made by either party (by operation of
law or otherwise) without the prior written consent of the other and any
attempted assignment without the required consent shall be void.
12.11 Best Knowledge. As used in this Agreement (i) "to the best of
Owner's knowledge" shall mean the actual knowledge possessed, at the time the
Purchase Agreement was entered into, by William B. Freck, the Division General
Counsel for Owner, David E. Harris, the Division Chief Financial Officer of
Owner, Richard E. Dahlin, a Division Vice President for Owner, and Lee T.
Alford, a Division Vice President for Owner, all of whom are executive
officers of Owner, and any of the forest managers or the mill manager of
Owner; (ii) "to the best of Seller's knowledge" shall mean actual knowledge
possessed by Steven R. Rogel, President and Chief Executive Officer;
J. A. Parsons, Executive Vice President and Chief Financial Officer; and
Duane C. McDougall, Vice President-Building Materials Group; all of whom are
executive officers of Seller, and (iii) "to the best of Buyer's knowledge"
shall mean actual knowledge possessed by any executive officer of Buyer.
12.12 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but which together shall constitute one
and the same Agreement.
12.13 No Recordation. Neither this Agreement nor a memorandum hereof
shall be recorded in any jurisdiction or public record.
12.14 INTENTIONALLY OMITTED.
12.15 INTENTIONALLY OMITTED.
12.16 Notice of Reforestation Requirements. In accordance with ORS
527.665, Schedule 12.16 is notice to Buyer of Seller's reforestation
requirements pursuant to the Oregon Forest Practices Act.
12.17 INTENTIONALLY OMITTED.
12.18 No Presumptions. This Agreement is a result of negotiations
between Seller and Buyer, both of whom are represented by counsel of their
choosing. No presumption shall exist in favor of either party concerning the
interpretation of the documents constituting this Agreement by reason of which
party drafted the documents.
12.19 Disclaimer Required by Oregon Statute. THE PROPERTY DESCRIBED IN
THIS INSTRUMENT MAY NOT BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING
STRUCTURES. THE PROPERTY IS SUBJECT TO LAND USE LAWS AND REGULATIONS, WHICH,
IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING OF A
RESIDENCE. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING
FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY
PLANNING DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF FIRE PROTECTION
FOR STRUCTURES.
SELLER: WILLAMETTE INDUSTRIES, INC., an Oregon
corporation
By:/s/Jerry A. Parsons
Jerry A. Parsons
Executive Vice President and Chief
Financial Officer
BUYER: CROWN PACIFIC LIMITED PARTNERSHIP, a Delaware
limited partnership
By: Crown Pacific Management Limited
Partnership, its General Partner
By: HS Corp. of Oregon, an Oregon
corporation, a general partner
By:/s/Peter W. Stott
Peter W. Stott
President and Chief Executive
Officer
GUARANTY
IN CONSIDERATION of the granting of the forgoing Asset Sale,
Purchase and Transfer Agreement (the "Agreement"), Crown Pacific Partners,
L.P., a Delaware limited partnership ("Guarantor") hereby unconditionally and
irrevocably guarantees to Seller and to Seller's successors and assigns the
prompt payment by Buyer of the Purchase Price under the Agreement and the full
performance by Buyer of all of the terms and provisions of the Agreement on
Buyer's part to be performed. Guarantor hereby expressly waives (1) notice of
acceptance of this guaranty and (2) any other notice given to Buyer in
accordance with the provisions of the Agreement of any default under the
Agreement.
Guarantor hereby agrees that neither the waiver by Seller of any
rights against Buyer, arising out of any default by Buyer or otherwise, nor
any modification or amendment of the Agreement shall in any way modify or
release the obligations of Guarantor under this guaranty. Upon any default by
Buyer, Guarantor agrees to pay to Seller the entire amount of any damages
suffered by Seller as a result of such default without any obligation on the
part of Seller to endeavor to collect such indebtedness from or to proceed
against Buyer.
In the event any suit or action is instituted against Guarantor on
account of, in connection with, or based upon this guaranty, in addition to
the costs and disbursements provided by statute, such sum as the court may
adjudge reasonable as attorneys' fees in such suit or action or any appeal
therefrom.
CROWN PACIFIC PARTNERS, L.P., a Delaware limited
partnership
by CROWN PACIFIC MANAGEMENT LIMITED PARTNERSHIP,
Managing General Partner
By: HS Corp. of Oregon, an Oregon corporation
Title: General Partner
By: /s/Peter W. Stott
Name: Peter W. Stott
Title: President and CEO
SCHEDULE INDEX
CROWN PACIFIC
Schedule 1.1(a) description of parcels of real property
(Timberland)
Schedule 1.1(c) buildings, improvements, roads, bridges,
permits, and easements on or appurtenant to real
property
Schedule 1.1(d) related facilities
Schedule 1.1(e) other rights related to real property
Schedule 1.1(g) description of Mineral Rights
Schedule 1.4(b) mobile equipment, machinery, equipment, tools,
fixtures and furniture
Schedule 1.4(d) contracts (including service contracts, sales
and purchase orders and commitments), leases,
permits and licenses not related to real
property
Schedule 1.8(b)(ii) accrued expenses
Schedule 1.8(b)(iv) exceptions for Affiliates of Owner
Schedule 3.4(a) instruments of transfer to real property
Schedule 3.4(a)(a) form of bill of sale with indemnity
Schedule 4 title reports and commitments
Schedule 5(a) operating plan
Schedule 5(b) harvesting formula
Schedule 5(c) real estate plan
Schedule 6.3 Material Contracts
Schedule 6.4 claims, litigation, proceedings, governmental
investigations
Schedule 6.6 environmental conditions
Schedule 8.7 confidentiality agreement
Schedule 8.8 allocation
Schedule 8.10 access agreement
Schedule 11.1(a) list of executive officers
Schedule 11.1(d) list of all employees
Schedule 11.2(f) list of disabled employees/leave of absences
Schedule 11.5(c) actuarial assumptions
Schedule 11.8 labor matters
Schedule 12.16 reforestation requirements
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘8-K’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 12/31/98 | | 1 | | | | | 10-K |
| | 1/1/97 | | 1 |
| | 12/31/96 | | 1 | | | | | 10-K |
| Filed on: | | 5/30/96 |
| | 5/16/96 | | 1 |
| For Period End: | | 5/15/96 | | 1 | | | | | 8-K/A |
| | 5/1/96 | | 1 |
| | 4/8/96 | | 1 |
| | 1/1/96 | | 1 |
| List all Filings |
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