ASSET SALE, PURCHASE AND TRANSFER AGREEMENT
This Asset Sale, Purchase and Transfer Agreement (this "Agreement")
is made as of this 26th day of April, 1996, between Willamette Industries,
Inc., an Oregon corporation ("Seller") and John Hancock Mutual Life Insurance
Company, a Massachusetts corporation ("John Hancock").
RECITALS:
A. Seller and Hanson Natural Resources Company, a Delaware general
partnership ("Hanson"), Cavenham Energy Resources Inc., a Delaware corporation
("CERI"), and Cavenham Forest Industries Inc., a Delaware corporation ("CFII")
(Hanson, CERI and CFII are collectively called "Owner") have entered into an
agreement (the "Purchase Agreement") pursuant to which Owner has agreed to
sell and transfer and Seller has agreed to buy and accept from Owner
substantially all of the assets which are used in the conduct of Hanson's
timber, wood products and energy business located in Oregon, Washington,
Southwest Louisiana, and North Louisiana.
B. Seller has delivered to Buyer a copy of the Purchase Agreement without
Schedules.
C. Seller and Buyer desire to enter into this Agreement pursuant to which
Seller agrees to sell and transfer and Buyer agrees to buy and accept from
Seller certain timberland properties and related assets in the state of
Oregon.
D. Seller intends to sell certain other assets it acquires from Owner to
other purchasers ("Other Purchasers").
It is therefore agreed as follows:
Definitions. As used herein, the following terms shall have the
following meanings:
Affiliate of Owner - The term "Affiliate of Owner" shall mean (i)
any individual, partnership, corporation, or other entity or person which is
owned or controlled directly or indirectly by Hanson plc; (ii) any other
individual, partnership, corporation, or other entity or person which controls
or is controlled by or under common control with Owner; and (iii) any officer,
director, partner, or owner of 10 percent or greater equity or voting interest
in any such other corporation, partnership, or other entity or person.
Agreement - The term "Agreement" shall mean this instrument and all
Schedules and Exhibits attached hereto.
Assets - The term "Assets" shall mean the Timberland Properties,
Contracts, and other items and leases described in Sections 1.1 and 1.4, but
excluding the Excluded Assets.
Buyer - The term "Buyer" means John Hancock and/or any entity or
affiliate controlled by John Hancock to which any portion of John Hancock's
interest under this Agreement is assigned.
Closing - The term "Closing" or "Closing Date" shall mean the date
on which one or more Parcels are transferred to Buyer by one or more deeds to
be recorded immediately prior to delivery of the portion of the Purchase Price
allocated to such Parcel or Parcels.
Closing Date Payment - The term "Closing Date Payment" shall have
the meaning ascribed to it in Section 2.1(b).
Code - The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
Contracts - The term "Contracts" shall mean the contracts and
leases which are described in Sections 1.1 and 1.4.
Excluded Assets - The term "Excluded Assets" shall mean the assets
excluded in Section 1.5.
Initial Closing, Initial Closing Date - The terms "Initial Closing"
and "Initial Closing Date" shall mean the closing and date of closing the
transfer of Parcel 1 and related assets as more particularly described in
Section 3.1(a).
The terms "Subsequent Closing" and "Subsequent Closing Date" shall
have the meaning ascribed to it in Section 3.2(b).
Material Adverse Effect - The term "Material Adverse Effect" shall
mean events which have an adverse effect in the aggregate which, measured in
dollars, exceeds the sum of $15,000,000.
Material Contract - The term "Material Contract" shall have the
meaning ascribed to it in Section 6.3.
Parcel - The term "Parcel" means a portion of the Timberland
Properties described as a separate parcel on Schedule 1.1 (a) and that portion
of the other Assets directly related to such portion of the Timberland
Properties as determined by Seller in its reasonable judgment; provided that
Assets in Owner's Vernonia office will be included in the last Parcel
transferred.
Proration Date - The term "Proration Date" shall mean the specific
date set for Initial Closing in Section 3.1, or any subsequent date set for
Initial Closing, provided that the actual date of Initial Closing occurs
within five (5) business days after said date set for Initial Closing.
Timberland Properties - The term "Timberland Properties" shall mean
the real property and real property interests described in Section 1.1(a).
1. Sale, Purchase and Transfer of Assets.
Subject to the terms and conditions of this Agreement, Seller agrees to
sell, transfer and assign or cause to be sold, transferred and assigned, and
Buyer agrees to purchase and accept on the terms stated herein, all of
Seller's right, title and interest in and to the Assets, including, without
limitation, the following:
1.1 Real Property (Timberland Properties).
(a) Timberland. Those certain Parcels of real property each
consisting of one or more tracts, owned by Owner situated in the state of
Oregon and described on Schedule 1.1 (a), together with all timber of all
species, standing, dead or down, pulpwood, all felled and bucked logs, trees,
shrubs and reproduction thereon as of the Closing Date for each Parcel, the
("Timberland" or "Timberland Properties"), excepting therefrom changes therein
prior to Closing pursuant to Section 5.
(b) INTENTIONALLY OMITTED
(c) Buildings, Improvements and Easements. All buildings and
improvements, all roads, bridges, permits, servitudes, and easements, owned or
leased by Owner or which Owner has a right to use and on or appurtenant to the
Timberland Properties, including those described on Schedule 1.1 (c).
(d) Related Facilities. All sorting yards, log booms, offices,
and rock pits, owned or leased by Owner and associated with the Timberland
Properties, whether or not located on the Timberland Properties, including
those described on Schedule 1.1 (d).
(e) Other Rights. All other contracts and rights of Owner
specifically relating to the Timberland Properties and operations thereon
including, but not limited to, contracts, contract rights, leases, servitudes,
permits, licenses, notifications, approvals and authorizations of governmental
bodies, including those described on Schedule 1.1 (e), to the extent
assignable.
(f) Water Rights. All water rights owned by Owner relating to and
appurtenant to the Timberland Properties.
(g) Mineral Rights. All minerals, including without express or
implied limitation, oil, gas, and hydrocarbon and geothermal resources in
which Owner has an interest related to the Timberland Properties including
those Mineral Rights listed on Schedule 1.1 (g) (the "Mineral Rights").
Included in the Mineral Rights are mineral rights acquired from Owner and
related to lands not included in the Timberland Properties but situated in
Columbia County or Washington County, Oregon (the "Vagrant Mineral Rights").
(h) Wilson River Tract. Seller shall have the right, upon written
notice to Buyer delivered not later than December 15, 1996, to withdraw Parcel
6 (the Wilson River Tract) from the Timberland Properties subject to this
Agreement. In the event of a withdrawal, the Purchase Price shall be reduced
by the amount allocated to Parcel 6 on Schedule 1.1 (a). Notice of withdrawal
may be delivered to Buyer at any time prior to the Subsequent Closing with
respect to Parcel 6. If Seller elects to withdraw Parcel 6, Seller shall use
reasonable diligence to offer property of comparable value as a substitute.
1.2 INTENTIONALLY OMITTED
1.3 INTENTIONALLY OMITTED
1.4 Personal Property.
The following personal property related to the Timberland Properties:
(a) Records. Owner's land management and other records relating to
the Timberland Properties, Mineral Rights, and other Assets which, in the
reasonable judgment and discretion of Seller, are segregated or segregable by
Seller from the overall records to be acquired by Seller from Owner, including
but not limited to management unit maps, aerial photographs, timber cruises,
road and gate records, operational records and leases, computer records (but
not hardware or software except for hardware in the Vernonia office)
easements, deeds, licenses, survey and survey notes, information relating to
oil, gas, and mineral activities, permits, approvals and authorizations of
governmental agencies held by Owner in connection with the Timberland
Properties, Mineral Rights, and other Assets. The records shall also include
all files and documents relating to customers, suppliers and contractors
directly related to the Timberland Properties, Mineral Rights, and other
Assets which, in the reasonable judgment and discretion of Seller, are
segregated or segregable from all other business records, files, books and
documents of Seller.
(b) Mobile Equipment, Machinery and Equipment. The mobile
equipment, machinery, equipment, tools, fixtures and furniture used by Owner
exclusively in connection with the Timberland Properties including those
listed on Schedule 1.4 (b), as such items listed thereon may have been sold,
replaced, deleted or added in the ordinary course of business, together with
certificates of title for motor vehicles constituting part of such equipment
which are licensed and owned by Owner but excluding seed orchard equipment and
motor vehicles used by employees of Owner who will be employed by Seller.
(c) Office Supplies. The office supplies and forms, packaging
materials and similar miscellaneous tangible personal property used by Owner
exclusively in connection with the Timberland Properties except such supplies
which are marked or identifiable with the logo, mark or trademark of Owner or
Hanson's general partners.
(d) Contracts. All rights and obligations under those instruments
related to the operation of the Assets that are not related to real property,
including the contracts, leases, permits and licenses described on
Schedule 1.4 (d), to the extent the same are assignable, including sales
orders and commitments, purchase orders and commitments, agreements and
contracts of Owner which relate to work or services to be performed for or at
the Assets.
1.5 Excluded Assets. The parties to this Agreement expressly
understand and agree that the Seller is selling, assigning, transferring or
conveying or causing to be sold, assigned, transferred or conveyed to Buyer
only the Timberland Properties and the assets related thereto that Seller has
the right to acquire from Owner pursuant to the Purchase Agreement. Rights,
assets, and properties which are retained by Owner pursuant to the Purchase
Agreement shall be specifically excluded from the transactions contemplated by
this Agreement, notwithstanding anything to the contrary elsewhere in this
Agreement ("Excluded Assets").
1.6 Assignment of Contracts.
(a) Contracts Assignable Without Consent. Seller agrees to assign
or cause to be assigned to Buyer as of each Closing, all of the rights of
Seller and Owner under the Contracts related to operations on the Parcel or
Parcels being transferred at such Closing that are assignable without consent
of any third party and Buyer shall assume, as of such Closing, all obligations
of Seller and Owner thereunder which arise before, at or after such Closing.
The parties recognize that Contracts which by their terms do not require
consent to assignment may require consent to a partial assignment if the
Contract covers more than one Parcel.
(b) Seller to Use Reasonable Efforts. Anything in this Agreement
to the contrary notwithstanding, Seller shall not be obligated to sell,
assign, transfer or convey or cause to be sold, assigned, transferred or
conveyed to Buyer any of its rights in and to any of the Contracts without
first obtaining all necessary approvals, consents or waivers. Seller shall
use all reasonable efforts, and Buyer shall reasonably cooperate with Seller,
to obtain all necessary approvals, consents or waivers, or to resolve any
impracticalities of transfer necessary to assign or convey to Buyer each such
Contract as soon as practicable; provided, however, that neither Seller nor
Buyer shall be obligated to pay any consideration therefor except for filing
fees and other ordinary administrative charges which shall be paid by Seller
to the third party from whom such approval, consent or waiver is requested.
In the event Seller obtains consent to assignment of a Contract prior to a
Closing, Buyer shall assume, as of Closing, all obligations of Seller and
Owner thereunder which arise before, at or after the Closing, as though no
consent was required.
(c) If Waivers or Consents Cannot be Obtained. To the extent that
any of the approvals, consents or waivers referred to in Section 1.6(b) have
not been obtained by Seller as of the Closing, or until the impracticalities
of transfer are resolved, Seller shall, during the remaining term of such
Contracts, use all reasonable efforts to (i) obtain the consent of any such
third party with the filing fees and ordinary administrative charges payable
to such third party to be split equally by the parties; (ii) cooperate with
Buyer in any reasonable and lawful arrangements designed to provide the
benefits of such Contracts to Buyer so long as Buyer fully cooperates with
Seller and Owner in such arrangements; and (iii) enforce, or cause to be
enforced, at the request of Buyer and at the expense and for the account of
Buyer, any rights of Seller or Owner arising from such Contracts against such
issuer thereof or the other party or parties thereto (including the right to
elect to terminate any such Contracts in accordance with the terms thereof
upon the request of, and indemnification of Seller and Owner from, Buyer).
(d) Non-assignability. To the extent that any Contract or any
claim, right or benefit arising thereunder or resulting therefrom is not
capable of being sold, assigned, transferred or conveyed without the approval,
consent or waiver of the issuer thereof or the other party thereto, or any
third person (including a government or governmental unit), or if such sale,
assignment, transfer or conveyance or attempted assignment, transfer or
conveyance would constitute a breach thereof or a violation of any law,
decree, order, regulation or other governmental edict, this Agreement shall
not constitute a sale, assignment, transfer or conveyance thereof, or an
attempted assignment, transfer or conveyance thereof.
1.7 Transferring Permits and Licenses. Seller will assign, transfer or
convey, or cause to be assigned, transferred or conveyed to Buyer at each
Closing those permits and licenses, including those described in Schedules 1.1
(c) and (e), and 1.4 (d) which are held or used by Owner in connection with
the Assets being transferred at such Closing and which can be assigned without
having to obtain the consent of any third party with respect thereto. Seller
will cooperate with Buyer in obtaining any third party consents necessary to
the assignment or transfer of any other permits or licenses used or held by
Seller or Owner in connection with such Assets which are so assignable or
transferable; however, neither Seller nor Buyer shall be obligated to pay any
consideration therefor except for filing fees and other ordinary
administrative charges which shall be paid by Buyer to the third party from
whom such approval, consent or waiver is requested. Buyer shall assume, as of
the relevant Closing, all obligations of Seller and Owner arising prior to, at
or after the relevant Closing under those permits and licenses which can be
transferred without having to obtain the consent of any third party and those
permits and licenses for which consent to transfer is obtained prior to the
relevant Closing. Subsequent to the relevant Closing, to the extent permitted
by law, upon ninety (90) days prior written notice, Owner has the right to
cancel any permits or licenses or any bonds, guarantees, or undertakings by
Owner applicable to the Assets to the extent such are not so assigned or
transferred to Seller pursuant to Section 1.7 of the Purchase Agreement to
Buyer pursuant to this Section 1.7. Seller will not be required to transfer
any permits or licenses which affect more than one Parcel where the effect of
such transfer would be to invalidate such license or permit with respect to
one or more Parcels retained by Seller.
1.8 Liabilities Assumed by Buyer; Liabilities Not Assumed by Buyer.
(a) Assumed Liabilities. Except as expressly provided in
Subsection 1.8(b), Buyer shall, effective as of each Closing and without any
further responsibility or liability of or recourse to Seller, or its
directors, shareholders, officers, partners, employees, agents, consultants,
representatives, successors, transferees or assignees, absolutely and
irrevocably assume and shall be liable and responsible for the claims,
liabilities, and obligations of Seller arising pursuant to the Purchase
Agreement and Owner with respect to the Timberland Properties, Mineral Rights,
and other Assets being transferred at such Closing, whether or not disclosed
to Buyer, and whether or not occurring or arising prior to, at or after such
Closing, except as expressly set forth in Section 1.8(b) and except to the
extent to which Seller indemnifies Buyer as expressly set forth in Section
10.1(a); and nothing in this Section 1.8(a) shall diminish Buyer's rights in
Section 8.11.
Without limiting the foregoing, Buyer shall assume the following
related to the Assets being transferred at such Closing:
(i) Buyer shall assume all Contracts assigned to Buyer
pursuant to Section 1.6, and permits and licenses assigned to Buyer pursuant
to Section 1.7;
(ii) Buyer shall assume all matters disclosed to Buyer in
Schedules 6.3 through 6.6; and
(iii) INTENTIONALLY OMITTED
(iv) INTENTIONALLY OMITTED
(v) Buyer shall assume all undertakings of, and liabilities
and obligations assumed by, CFII, and all indemnity obligations of CFII, if
any, to Crown Zellerbach Corporation and its successors and assigns relating
to all environmental conditions arising from ownership, possession, use, or
conduct of business and operations of the Indemnification Properties being
transferred at such Closing (as defined in Section 6.7(e) of this Agreement),
which undertakings, liabilities, obligations, and indemnity obligations are
contemplated in that certain Transaction Agreement dated December 14, 1985, by
and between James River Corporation of Virginia and Crown Zellerbach
Corporation and are more specifically set forth in that certain Undertaking
dated as of May 2, 1986, by CFII in favor of Crown Zellerbach Corporation (the
Transaction Agreement and Undertaking are collectively referred to herein as
"Transaction Agreement/Undertaking").
At each Closing, the parties shall execute an Assignment,
Acceptance, and Assumption Agreement in the form attached hereto as Schedule
1.8 to evidence the foregoing matters to be assumed by Buyer, in addition to
the more specific instruments of assignment and assumption described in this
Agreement.
(b) Excluded Liabilities. Notwithstanding anything to the
contrary in this Agreement, the following liabilities and obligations
("Excluded Liabilities") shall not be assigned to Buyer nor assumed by Buyer:
(i) all liabilities and obligations related to the Excluded
Assets;
(ii) trade accounts payable for items purchased and
delivered as of the Closing Date, and all accrued expenses of the type set
forth on Schedule 1.8 (b)(ii) attached hereto which are, or under generally
accepted accounting principles should be, accrued at Closing;
(iii) all liabilities and obligations for taxes, except for
assessments and real estate taxes which shall be prorated on the Proration
Date as provided in this Agreement, and except for the deferred ad valorem
taxes because of classification of all or a portion of the Timberland
Properties as farmland, grazing land, or timberland;
(iv) all liabilities and obligations of Owner to any
Affiliate of Owner, except for any matters listed on Schedule 1.8 (b)(iv)
attached hereto;
(v) any liabilities or obligations to or with respect to
employees of Seller or Owner;
(vi) except as provided in Section 2.1(f), any obligations
for borrowed funds; the term "borrowed funds" shall not be construed to
include purchase money contracts and similar security interests for personal
property;
(vii) all bodily injury claims occurring on or in connection
with the Assets prior to Initial Closing and all product liability claims
arising from sale or operation of the Assets prior to Initial Closing;
(viii) any matters retained by Seller or Owner pursuant to
Section 8.2(c);
(ix) all undertakings of, and liabilities and obligations
assumed by, CFII, and all indemnity obligations of CFII, contemplated by or
set forth in the Transaction Agreement/Undertaking, except for the
undertakings, assumed liabilities and obligations, and indemnity obligations
described in Section 1.8(a)(v) of this Agreement; and
(x) liens and encumbrances to be satisfied by Owner as
provided in Section 3.6.
2. Purchase Price.
(a) Subject to adjustment in accordance with the provisions of
this Agreement, the purchase price for the Assets ("Purchase Price") shall be
Three Hundred Fifty Million Dollars ($350,000,000). The Purchase Price shall
be payable as provided in Section 2.1.
(b) The portion of the Purchase Price allocated to each Parcel is
set forth on Schedule 1.1(a).
2.1 Payment of Purchase Price.
(a) INTENTIONALLY OMITTED
(b) Buyer shall pay to Seller the portion of the Purchase Price
allocated to Parcel 1 in the amount of $99,401,430 (the "Closing Date
Payment"), by wire transfer of immediately available funds to the escrow trust
account established by Chicago Title Insurance Company (herein "Chicago Title"
or "Escrow Agent") at Chemical Bank, New York, New York ("Owner's Bank"),
which transfer shall have been received by Owner's Bank no later than 7 a.m.
PDT on the Initial Closing Date. Upon confirmation to Buyer by the Escrow
Agent that the deeds described in Section 3.4 have been recorded, the Escrow
Agent shall deliver the Closing Date Payment to Seller or to Seller's order.
(c) If Buyer is legally obligated to Close and if the Closing
Date Payment is not received by Owner's Bank by 7 a.m. PDT on the Initial
Closing Date, Seller may, at its option, either exercise the Seller's remedies
described in Section 9 by reason of Buyer's default, or may accept late
payment of the Closing Date Payment which shall, in such event, be accompanied
by payment of an amount determined by computing simple interest on the amount
of that payment at the rate of interest announced publicly by Chemical Bank in
New York, New York from time to time as its "Prime Rate" (on the basis of a
360-day year) from the Initial Closing Date to the date of payment. For
purposes of computing the amount payable, any amount received after 7 a.m.
shall be deemed to have been received on the next day. If the Closing Date
Payment is not received by Owner's Bank on the Initial Closing Date by 7 a.m.
PDT, and if Seller elects to accept a late payment, the Closing Date Payment
shall be transferred to an account to be designated by Seller.
(d) At each Subsequent Closing, Buyer shall pay to Seller the
portion of the Purchase Price allocated to the Parcel or Parcels being
transferred by wire transfer of immediately available funds to the escrow
trust account established by Escrow Agent at a bank to be designated by Seller
("Seller's Bank"), which transfer shall have been received by Seller's Bank no
later than 9 a.m. PDT on the Subsequent Closing Date. Upon confirmation to
Buyer by the Escrow Agent that the deeds described in Section 3.4 have been
recorded, the Escrow Agent shall deliver the payment to Seller or to Seller's
order.
(e) If Buyer is legally obligated to Close and if the payment is
not received by Seller's Bank by 9 a.m. PDT on the Subsequent Closing Date,
Seller may, at its option, either exercise the Seller's remedies described in
Section 9 by reason of Buyer's default, or may accept late payment of the
Closing Date Payment which shall, in such event, be accompanied by payment of
an amount determined by computing simple interest on the amount of that
payment at the rate of interest announced publicly by Chemical Bank in New
York, New York, from time to time as its "Prime Rate" (on the basis of a 360-
day year) from the Subsequent Closing Date to the date of payment.
(f) Additional Costs. The Purchase Price will include for each
Parcel, other than Parcel 1, an amount determined by Seller in its reasonable
judgment to reimburse Seller for financing and other costs related to the
acquisition and holding of each such Parcel until conveyance to Buyer,
including escrow fees, title insurance premiums, excise taxes related to
acquisition of such Parcel and management fees and operating costs advanced by
Seller to the extent not recovered by Seller pursuant to the provisions of the
Management Agreement referred to in Section 3.9. Such costs shall be added to
and become a part of the Purchase Price allocated to each Parcel other than
Parcel 1. At least three (3) business days prior to each Subsequent Closing
Date, Seller will provide to Buyer a statement setting forth in reasonable
detail the calculation of the additional costs to be allocated to the Parcel
being transferred.
(g) If, at any Closing, the parties have not resolved the Purchase
Price reduction as contemplated in Section 8.6, or the Price Adjustment Items
or Price Adjustment Notice as contemplated in Section 8.11, then the parties
shall proceed to Close as scheduled and the amount to be paid to Seller at the
Initial Closing shall be the Closing Date Payment and the amount to be paid at
any Subsequent Closing Date shall be the full amount of the Purchase Price
allocated to the Parcel or Parcels being transferred. Seller shall reimburse
Buyer for any overpayment in the Purchase Price within three (3) business days
of resolution of the amount of the Purchase Price reduction.
3. Closing.
3.1 Initial and Subsequent Closings.
(a) Date of Initial Closing. The Initial Closing shall take place
concurrently with the closing under the Purchase Agreement at the offices of
Ater Wynne Hewitt Dodson & Skerritt, 222 SW Columbia, Suite 1800, Portland,
Oregon, or at such other place as the parties may agree in writing, on May 15,
1996, unless another time and date are mutually designated by Seller and
Owner. The foregoing date is the date on which Owner's deed(s) to Buyer
conveying Parcel 1 are to be recorded immediately prior to the delivery of the
Closing Date Payment to Seller and is referred to in this Agreement as the
"Initial Closing" or "Initial Closing Date." Seller shall deliver possession
of the Assets related to Parcel 1 to Buyer on the Initial Closing Date.
Seller shall have no obligation to consummate the sale contemplated by this
Agreement if for any reason the Closing under the Purchase Agreement does not
occur.
(b) Dates of Subsequent Closings. Each Subsequent Closing shall
take place on a date designated by Buyer upon written notice to Seller at
least twenty (20) days prior to the Subsequent Closing Date. Each such notice
shall identify the Parcel or Parcels to be transferred on the designated
Subsequent Closing Date. Buyer shall have the right to designate the order in
which Parcels will be purchased except that the Wilson River Tract cannot be
purchased until all other Parcels have been purchased; and provided further
that the Wilson River Tract cannot be purchased prior to December 15, 1996.
Subsequent Closings shall take place at the offices of Seller in Portland,
Oregon, or at such other place as may be agreed upon in writing. The date so
designated is the date on which Seller's deed(s) to Buyer covering the
Timberland Properties included in the Parcel or Parcels being transferred are
to be recorded immediately prior to the delivery to Seller of the portion of
the Purchase Price allocated to such Parcel or Parcels and is referred to in
this Agreement as a "Subsequent Closing" or "Subsequent Closing Date." Seller
shall deliver possession of the Assets being transferred to Buyer on the
Subsequent Closing Date. Buyer's obligation to purchase Assets other than
Parcel 1 is contingent on its ability to secure client funding which Buyer
agrees it will make diligent and sustained efforts to obtain. Buyer will
purchase additional portions of the Assets if client funding commitments
become available; provided that Buyer's right to purchase additional portions
of the Assets will expire eighteen (18) months from the Initial Closing Date.
3.2 Hart-Scott Rodino Act. Buyer and Seller have prepared all necessary
documentation and performed all other necessary actions to complete all
necessary filings under the Hart-Scott Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"). Each party agrees to respond to any request
for additional information within twenty (20) days of receipt of the request.
In the event the waiting period (which term includes the extension period)
under the HSR Act has not expired by the Initial Closing Date set forth in
Section 3.1, the Initial Closing Date shall be delayed until five (5) business
days after expiration of the waiting period; provided that this Agreement is
automatically terminated if Owner terminates the Purchase Agreement pursuant
to Section 3.2 thereof, and Buyer, in its sole discretion, may terminate this
Agreement if the waiting period has not expired or been terminated within 180
calendar days of the date on which Buyer completes its initial filing. It is
understood that Buyer by filing under the HSR Act is not waiving its claim
that it is entitled to an exemption from filing.
3.3 Execution and Deposit of Documents Prior to Closing. At least five
(5) business days prior to each Closing Date, each of the parties, as
applicable, shall execute and deposit with the Escrow Agent all of the
documents listed in Section 3.4 below which are to be recorded or filed on the
Closing Date. Each of the parties, as applicable, shall execute and deliver
to the other party all remaining documents listed in Subsection 3.4 below on
each Closing Date. At least five (5) days prior to the Initial Closing Date,
Buyer shall deliver to the Escrow Agent a duly executed and acknowledged
memorandum of right of first offer with respect to all of the Timberland
Properties.
3.4 Documents to be Delivered by Seller. At or prior to each Closing,
Seller shall deliver, or cause to be delivered, the following with respect to
the portion of the Assets being transferred at such Closing:
(a) Documents of transfer, bills of sale, certificates of title
and other instruments of transfer, dated the Closing Date, transferring to
Buyer title to the Assets being transferred. With respect to Parcel 1 of the
Timberland described on Schedule 1.1(a) (including the buildings, improvements
and other appurtenant interests described in Section 1.1(c) and (d)) title
shall be transferred in the form of the deed(s) attached hereto as Schedule
3.4(a) directly from Owner to Buyer; with respect to the Mineral Rights
described in Schedule 1.1(g) related to Parcel 1, transfer shall be
accomplished through mineral quit claim deeds directly from Owner to Buyer and
other instruments of transfer without warranty; with respect to all personal
property, title shall be transferred by Bill of Sale in the form attached
hereto as Schedule 3.4(a)(a); provided that Parcels other than Parcel 1 will
be transferred by Seller to Buyer rather than directly from Owner and provided
further that Vagrant Mineral Rights will be transferred concurrently with the
transfer of the fifth Parcel to be transferred;
(b) Documents evidencing the assignment and assumption of the
Contracts to Buyer (together with any third-party consents required for such
transfers) and the assignment and assumption of any permits and licenses
(together with any third-party consents required for such transfers) not
transferred pursuant to Section 3.4(a), and the Assignment, Acceptance, and
Assumption Agreement described in Section 1.8;
(c) A copy of the resolutions of the board of directors of Seller
authorizing the execution, delivery and performance of this Agreement by
Seller and a certificate of the secretary or assistant secretary of Seller,
dated the Closing Date, that such resolutions were duly adopted and are in
full force and effect;
(d) The affidavits of Seller required by Section 1445 (b)(2) of
the Code and by local taxing authorities, and any other documents required of
Seller to transfer the Assets in accordance with this Agreement;
(e) Copies of any satisfactions, releases or terminations of the
liens and encumbrances referred to in Section 3.6 not previously delivered;
and
(f) Copies of documents delivered to Seller by Owner pursuant to
Sections 3.4(c) and (d) of the Purchase Agreement.
3.5 Documents to be Delivered by Buyer. At or prior to each Closing
Date, Buyer shall deliver the following:
(a) Documents evidencing, with respect to the Assets being
transferred, the assignment and assumption of all Contracts and the assignment
and assumption of all permits and licenses transferred by Seller to Buyer
pursuant to Section 3.4(a) and (b), and the Bill of Sale, and Assignment,
Acceptance, and Assumption Agreement described in Section 1.8;
(b) A copy of the resolutions of a duly empowered committee of
Buyer authorizing the execution, delivery and performance of this Agreement by
Buyer, together with a copy of a resolution of the board of directors of Buyer
empowering such committee to take the action reflected in the committee
resolutions and a certificate of its secretary or assistant secretary, dated
the Closing Date, that such committee and board resolutions were duly adopted
and are in full force and effect;
(c) The affidavits, if any, of Buyer required by local taxing
authorities, including the affidavits specified in Section 8.8(b), and any
other documents required of Buyer to transfer the Assets in accordance with
this Agreement.
3.6 Satisfaction of Liens and Encumbrances. At or prior to the Initial
Closing Date, Owner has agreed to pay in full all liens and encumbrances for
borrowed funds, income tax liens, and judgment liens on the Assets. At or
prior to the Initial Closing Date, Owner has agreed to pay all delinquent
property taxes on the Assets. Buyer shall assume sole responsibility, as of
each Closing relative to the Parcel being acquired at such Closing, for any ad
valorem taxes which are deferred because of farm or grazing or forest use or
classification.
3.7 Transfer Taxes; Prorations. Any recording fees, transfer taxes, or
sales taxes payable as a result of the sale of the Assets included in Parcel
1, shall be paid by Seller or Owner. Any recording fees, transfer taxes, or
sales taxes payable as a result of a Subsequent Closing shall be paid by Buyer
at such Closing. Any escrow fees related solely to the Initial Closing
between Seller and Buyer shall be split equally between the parties. At the
Initial Closing Buyer shall reimburse Seller for other escrow fees payable by
Seller pursuant to the Purchase Agreement, including fees in connection with
the Deposit under the Purchase Agreement, in the proportion that the Purchase
Price bears to One Billion Five Hundred Eighty Eight Million Dollars
($1,588,000,000). Real estate taxes, assessments for public improvements, and
all other fees and assessments related to the Assets shall be prorated at each
Closing as of the Proration Date.
3.8 Default Deeds. At least five (5) business days prior to the
Initial Closing Date, Buyer shall execute and deposit with Chicago Title, in
escrow, quitclaim deeds (the "Quitclaim Deeds") quitclaiming and releasing
unto Seller all of Buyer's right, title, and interest in and to Parcel 1 of
the Timberland Properties, including any and all after acquired title to the
Timberland Properties. If the closing under the Purchase Agreement occurs and
the Closing Date Payment is made to Owner's Bank by 9 a.m. PDT on the Initial
Closing Date, Chicago Title shall return the Quitclaim Deeds to Buyer. If the
closing under the Purchase Agreement occurs and Buyer fails to make the
Closing Date Payment by 9 a.m. PDT on the Initial Closing Date, regardless of
whether such failure is justified on account of any alleged default by Seller,
then Chicago Title shall release the Quitclaim Deeds to Seller which may
proceed to record them in the applicable real estate records.
3.9 Other Agreements. At the Initial Closing the parties will enter
into a Right of First Offer Agreement in the form of Schedule 3.9(a), a
Management Agreement in the form of Schedule 3.9(b), and a Timber Supply
Agreement in the form of Schedule 3.9(c).
4. Title Insurance. Seller has delivered to Buyer evidence of title in
the form of draft title reports and title commitments ("Title Reports"), as
appropriate, covering the Timberland Properties, copies of which are attached
hereto as Schedule 4; Seller and Buyer acknowledge that the Title Reports may
be revised, corrected, and supplemented by Chicago Title between the date of
this Agreement and the Initial Closing Date, as contemplated in Section 5(c)
and, as contemplated in the letters from Rosalee Merritt to Malcolm Newkirk,
copies of which are included in Schedule 4 as part of the Title Reports. In
the event that Chicago Title is not prepared to issue at each Closing to
Buyer, owner's policies of title insurance insuring title in Buyer in the
portion of the Timberland Properties being conveyed in Buyer, subject only to
the exceptions set forth in the Title Reports, as those Title Reports may have
been revised, corrected, and supplemented by Chicago Title as set forth above,
but with no reductions, in excess of five hundred (500) acres in the
aggregate, in the acreage vested in Owner, and subject to the printed
exceptions contained in such Title Reports, then Buyer shall have the rights
set forth in Section 8.11 with respect to the additional reductions in acreage
and additional material encumbrances to be added as exceptions to title. If
Chicago Title is not prepared to issue such owner's policies on any Closing
Date for reasons other than additional reductions in acreage or additional
exceptions to title, either Buyer or Seller may delay Closing until Chicago
Title or another title insurance company is prepared to issue such owner's
policies. Except as hereinafter provided, at each Closing Buyer shall
purchase, at its own expense, such owner's policies unless otherwise agreed to
by the parties. Buyer may at its option purchase at Initial Closing an
owner's policy of title insurance covering the Timberland Properties included
in Parcel 1 and a purchaser's policy of title insurance covering the remainder
of the Timberland Properties. In the event that Buyer purchases a purchaser's
policy of title insurance, it will not be a condition of any Subsequent
Closing that Chicago Title is prepared to issue its owner's policy of title
insurance.
5. Conduct Pending Closing.
(a) Between the date hereof and the Initial Closing Date, Owner
has agreed to continue to operate the Timberland Properties in the ordinary
course and in a manner reasonably consistent with its present operating plan
which establishes a maximum volume of harvest or stumpage sales for harvest
("Maximum Volume") through the Initial Closing Date ("Operating Plan"), a copy
of which is attached hereto as Schedule 5(a); provided, that Owner has agreed
that it will not enter into log export contracts that provide for delivery of
logs after Initial Closing in recognition of the fact that Seller will not
export logs, and this change of conduct by Owner may modify Owner's ordinary
course and Operating Plan but shall not affect the Maximum Volume set forth on
Schedule 5(a). Subject to the foregoing, Owner has agreed that it shall
continue to harvest, or sell stumpage for harvest, timber standing, lying, and
situated upon the Timberland Properties described in Schedule 1.1(a). Owner
has agreed that it shall continue its various silvicultural practices
consistent with its past practices, from the date hereof until the Initial
Closing Date.
(b) The Purchase Price shall be increased or decreased by the
difference between the actual harvest (including stumpage sales for harvest)
and the Maximum Volume pursuant to the formula ("Harvesting Formula") attached
hereto as Schedule 5(b), as of the date the Initial Closing actually occurs,
but such difference between actual harvest and the Maximum Volume shall not be
considered a breach by Seller of this Agreement. Adjustments, if any, to the
Purchase Price in this Subsection (b) shall be made within fifteen (15) days
of the date the Closing actually occurs, and each party agrees to pay to the
other the adjusted amount, as applicable, without interest within said fifteen
(15) days.
(c) Owner has agreed that it will not take any action, (i) the
result of which will be to create a Material Adverse Effect on the value of
the assets covered by the Purchase Agreement, or (ii) which is both not
reasonably consistent with its Operating Plan and not in the ordinary course
of business, except as otherwise set forth in this Section 5. Owner may, but
is not obligated, to continue, in the ordinary course of business, to grant
and obtain easements, rights of way and other similar rights to the Timberland
Properties, to grant options to or lease additional Mineral Rights, and to
purchase or sell or exchange additional real properties or interests therein
consistent with its present plan ("Real Estate Plan"), a copy of the relevant
portions of which is attached hereto as Schedule 5(c). In the event Owner
sells any portion of the Timberland Properties or interests therein or grants
options to or leases additional Mineral Rights, other than those identified in
the Real Estate Plan, the Purchase Price shall be reduced by an amount equal
to the proceeds of any such sales, options, or leases, but Seller will not be
deemed in breach of this Agreement. Seller shall promptly notify Buyer of any
notice received from Owner related to the granting or obtaining of any
easement, right of way or other similar right, any additional option to or
lease of Mineral Rights, and any such purchase, sale or exchange; and if the
transaction involves more than two hundred fifty thousand dollars
($250,000.00), Seller shall obtain Buyer's prior written consent to the
transaction, which consent shall not be unreasonably withheld. For purposes
of Section 4, the Title Reports shall be revised or deemed revised to reflect
such transactions.
(d) Notwithstanding the foregoing, the parties agree that, if the
Initial Closing Date is extended beyond May 15, 1996, Owner shall be deemed to
be operating the Timberland Properties in the ordinary course of business from
May 16, 1996, to the date the Closing actually occurs, with respect to the
activities described below if Owner:
(i) INTENTIONALLY OMITTED
(ii) continues its harvest of timber at a level that is
between fifty percent (50%) and one hundred percent (100%) of the level in the
Operating Plan; and
(iii) continues road maintenance and road construction as
necessary to prevent substantial deterioration from the condition of the roads
as of May 15, 1996, and as necessary to meet the needs of Owner's harvest
activities; and
(iv) continues silvicultural and reforestation activities in
Oregon as required by the Oregon Forest Practices Act.
(e) From the Initial Closing Date through the date of conveyance
of each Parcel or the expiration of eighteen (18) months from the Initial
Closing Date, whichever occurs first, the Timberland Properties which have not
been conveyed to Buyer will be managed in accordance with the Management
Agreement attached as Schedule 3.9(b).
(f) Any Purchase Price adjustment pursuant to Subsection (b) or
(c) shall be allocated among the Parcels on an equitable basis. If Owner's
operations as described in the Section 5 have a disproportionate impact on the
value of the various Parcels, there will be an equitable adjustment in the
allocation of the Purchase Price among the Parcels. If the parties are unable
to agree on any equitable adjustment pursuant to this Section 5, the equitable
adjustment shall be determined by arbitration pursuant to Section 9.2.
(g) During the period following the Initial Closing in which Buyer
has the right to purchase any Parcel or Parcels, Seller will not take any
action which would have a materially adverse impact on the value of any Parcel
except as contemplated in the Management Agreement (Schedule 3.9(b)). During
such period Buyer shall have a right of access to any Parcels not yet
purchased by it; provided that Buyer shall indemnify, defend, and hold
harmless Seller from and against any and all loss, cost, or damage arising out
of the exercise of such right of access.
6. Representations of Seller. Seller represents to Buyer that:
6.1 Organization, Standing and Authority. Seller is a corporation
organized, existing, and in good standing under the laws of the State of
Oregon. Seller has full power and authority to enter into and perform this
Agreement. Seller is not a "foreign person" within the meaning of Section 1445
of the Code.
6.2 Authorization of Agreement; Authority. The execution, delivery and
performance of this Agreement by Seller has been duly authorized by all
necessary corporate action of Seller, and this Agreement constitutes the valid
and binding obligation of Seller, enforceable against Seller in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights in general and subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The execution, delivery and
performance of this Agreement by Seller will not (a) violate or conflict with
Seller's corporate power and authority; (b) constitute a violation of any law,
regulation, order, writ, judgment, injunction or decree applicable to Seller;
or (c) subject to the receipt of appropriate consents as specified in this
Agreement as of the Closing Date and subject to the provisions of Section
1.6(d), conflict with, or result in the breach of the provisions of, or
constitute a default under, any agreement, license, permit or other instrument
to which Seller is a party or is bound or by which the Assets are bound.
Except as required by the HSR Act, no consent, approval or authorization of
any governmental authority is required on the part of Seller in connection
with the execution, delivery and performance of this Agreement.
6.3 Material Contracts. All of the Material Contracts which are to be
transferred to Buyer and which relate to the Timberland Properties are listed
on Schedule 6.3 or Schedule 4. Except as disclosed in Schedule 6.3 or
Schedule 4, the Material Contracts have not been further modified or amended;
and to the best of Owner's knowledge, neither Owner nor any party thereto is
in default of any material term in the Material Contracts and true and
complete copies, including applicable amendments, of the Material Contracts
have been made available to Buyer for review prior to execution of this
Agreement. A Material Contract shall mean a Contract which involves payments,
performance of services or delivery of goods by or to Owner after the Initial
Closing Date in an amount or value of two hundred fifty thousand dollars
($250,000.00) or more.
6.4 Litigation; Compliance with Laws. There are no judicial or
administrative actions, proceedings or investigations pending or, to the best
of Seller's knowledge, threatened, that question the validity of this
Agreement or any action taken or to be taken by Seller in connection with this
Agreement. Except as set forth on Schedule 6.4, there is no claim,
litigation, proceeding or governmental investigation pending or, to the best
of Owner's knowledge, threatened, or any order, injunction or decree
outstanding which, if decided unfavorably, would cause Buyer to incur loss or
damage in excess of one hundred thousand dollars ($100,000.00); except as
disclosed on Schedule 6.4, to the best of Owner's knowledge, Owner has
received no written notice from a governmental authority of a material
violation of law relating to the Timberland Properties which has not or will
not have been resolved prior to the Initial Closing.
6.5 Personal Property. Owner has, or will have on the Initial Closing
Date, good and marketable title (which includes leasehold title if applicable)
to the personal property to be transferred to Buyer pursuant to Section 1.4,
subject to equipment leases, purchase money contracts, and similar security
interests to be assumed by Buyer pursuant to Section 1.8.
6.6 Environmental Conditions. Except as disclosed on Schedule 6.6, to
the best of Owner's knowledge there are no environmental conditions on the
Indemnification Properties (as defined in Section 6.7(e)) that would cause
Buyer to incur more than one hundred thousand dollars ($100,000) in loss or
damage for each such environmental condition.
6.7 Disclaimer of Warranties and Representations From Seller; AS IS
Indemnity.
(a) Personal Property. Except as otherwise expressly set forth
in this Agreement, this Agreement is executed, and the personal property will
be transferred, without any warranty of title, either express or implied, and
without any express or implied warranty or representation as to the
merchantability or fitness for any purpose of any of the equipment or other
personal property included in the Assets, and without any other express or
implied warranty or representation whatsoever.
(b) Real Property. Except as otherwise expressly set forth in
this Agreement, this Agreement is executed, and the real property including
Timberland Properties, and Mineral Rights will be transferred, without any
warranty of title, either express or implied, except warranties (if any)
contained in the deed(s) conveying the real property included in the Assets,
and without any express or implied warranty or representation as to the
merchantability of any of the real property included in the Assets, acreage,
legal access, operations or encroachments or any other condition affecting the
Assets.
(c) Condition of Property. Except as otherwise expressly set
forth in this Agreement, Buyer agrees to purchase the Timberland Properties,
Mineral Rights, personal property, mobile equipment, machinery and equipment
and all other Assets "as is", "where is" and with all faults. The Buyer
certifies by execution hereof that it has had an opportunity to inspect the
Timberland Properties, and Mineral Rights and other Assets (including the
surface and subsurface of any real property) prior to executing this
Agreement; that Buyer either has inspected or waived its right to inspect the
Timberland Properties, and Mineral Rights and other Assets for all purposes
and satisfied itself as to its physical condition, both surface and
subsurface, including but not limited to conditions specifically related to
the presence, release or disposal of hazardous substances, but without
limiting Buyer's rights under Section 8.11; that it has not relied upon any
information delivered by Owner, Seller or their respective agents concerning
the Timberland Properties, and Mineral Rights and other Assets; and that it is
relying upon its own examination of the Timberland Properties, and Mineral
Rights and all other Assets in entering into and in consummating this
Agreement. Buyer further acknowledges and agrees that, except as otherwise
expressly set forth in this Agreement, neither Owner nor Seller nor any of
their respective agents have made any representations, warranties or covenants
whatsoever with respect to the quantity or quality of the timber, the acreage,
tax status, legal access, encroachment or physical condition of the Timberland
Properties, and Mineral Rights, nor, except as expressly set forth in this
Agreement, have they made any representations, warranties, or covenants
whatsoever concerning the presence, release or disposal of hazardous
substances thereon.
(d) Disclaimer. Except as otherwise expressly set forth in this
Agreement, the transaction contemplated hereby shall be without any express,
implied, statutory or other warranty or representation as to the condition,
quantity, quality, fitness for particular purpose, conformity to models or
samples of materials or merchantability of any of the Assets, their fitness
for any purpose, and without any other express, implied, statutory or other
warranty or representation whatsoever. In addition, except as otherwise
expressly set forth in this Agreement, Seller makes no warranty or
representation, express, implied, statutory or otherwise, as to the accuracy
or completeness of any data, reports, records, projections information or
materials now, heretofore or hereafter furnished or made available to the
Buyer in connection with this Agreement including, without limitation, any
description of the Assets, pricing assumptions, or the environmental condition
of the Assets or the portions affected by the Endangered Species Act or any
other materials furnished or made available to Buyer by Seller or its agents
or representatives; any and all such data, records, reports, projections,
information and other materials furnished by Seller or otherwise made
available to Buyer are provided to Buyer as a convenience, and shall not
create or give rise to any liability of or against Seller; and any reliance on
or use of the same shall be at Buyer's sole risk.
(e) Waiver of Claims and Indemnity. Without limiting the
generality of any other provision in this Section 6.7, except as otherwise
expressly set forth in this Agreement, Buyer assumes any and all liabilities,
past, present, or future, of Seller and "Owners" as defined below, relating to
hazardous substances or materials, wastes, toxics, pollutants, solid wastes,
or contaminants, including without limitation liabilities arising under any
current or future legal requirement pertaining thereto, which are based upon
the ownership or operation of the Assets. Except as otherwise expressly set
forth in this Agreement, Buyer assumes the risk that hazardous substances or
materials, wastes, toxics, pollutants, solid wastes, or contaminants may be
present in, on or under the Timberland Properties, Mineral Rights or other
Assets acquired by Buyer, and hereby waives, releases, and discharges forever
Owner, Hanson's general partners, Affiliates of Owner, Owner's successors and
assigns, and their respective shareholders, directors, officers, employees,
and agents (in this Section 6.7(e) collectively referred to as "Owners") and
Seller from any and all present or future claims or demands, and any and all
damages, loss, injury, liability, claims or costs, including fines, penalties
judgments, claims for contribution, and cost recovery actions, arising from or
in any way related to the condition, operation, or use of the Timberland
Properties, Mineral Rights or other Assets acquired by Buyer or the presence
of any hazardous substances or materials, wastes, toxics, pollutants, solid
wastes, or contaminants in, on or under the Timberland Properties, Mineral
Rights or other Assets acquired by Buyer; provided, however, that to the
extent such waiver, release, or discharge will prejudice Buyer's rights to
pursue third parties (not including Affiliates of Owner) who have indemnified
or insured Owner (or any of the three Owners) for some or all of the foregoing
matters, Buyer shall not, and shall not be deemed to, have waived, released,
or discharged "Owners" for the sole purpose of pursuing such third parties.
Except as otherwise expressly set forth in this Agreement, Buyer hereby
indemnifies, holds harmless, and agrees to defend Seller and "Owners" from and
against any and all present or future claims or demands, and any and all
damages, losses, liabilities, injuries, fines, penalties, judgments, claims
for contribution, and cost recovery actions, and consultant fees, expert
witness fees, costs and expenses (including attorney's fees incurred by Seller
or Owners in the case of matters involving third parties) arising from or in
any way related to the presence of any hazardous substances or materials,
wastes, toxics, pollutants, solid wastes, or contaminants in, on or under the
(i) Timberland, (ii) Mineral Rights, and (iii) any other real property
constituting a part of other Assets (collectively, but limited to Timberland,
Mineral Rights, and other Assets acquired by Buyer, the "Indemnification
Properties"). This indemnity specifically includes the obligation of Buyer to
remove, remediate, reimburse or take other actions required by law concerning
any hazardous substances or materials, wastes, toxics, pollutants, solid
wastes, or contaminants in, on or under the Indemnification Properties.
Nothing herein shall limit Buyer's right, in good faith, to contest any
action, request or requirement of any governmental agency provided that such
action is taken at Buyer's sole cost, risk and expense. The provisions of
this Section 6.7(e) shall not include, or create any obligation of Buyer with
respect to any contractual obligation of "Owners" or Owner's predecessors
except as provided in Section 1.8(a)(v) or as disclosed on any Schedule
attached to this Agreement, are solely for the benefit of Seller and "Owners"
and shall not be construed to be for the benefit of any third party or to
constitute a waiver or release of rights against any third party. Seller
hereby assigns to Buyer all rights and claims which Seller may now or
hereafter have against third parties relating to any matter for which Buyer
indemnifies Seller or "Owners." The provisions of this Section 6.7(e) and
Section 1.8(a)(v) are intended to exclusively set forth Buyer's obligations
under this Agreement with respect to assumption, waiver, release, discharge,
and indemnification of environmental matters, and the provisions of Section
10.1(b) and Section 1.8(a) (other than Section 1.8(a)(v)) shall not apply to
such obligations of Buyer.
7. Representations of Buyer. Buyer represents to Seller as follows:
7.1 Buyer's Organization. John Hancock is a corporation organized,
existing and in good standing under the laws of Massachusetts and has the full
corporate power and authority to enter into and to perform this Agreement.
Buyer is qualified to do business and is in good standing in the state of
Oregon.
7.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action of Buyer, and this Agreement constitutes the valid
and binding obligation of Buyer enforceable against it in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors'
rights in general and subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
7.3 Consents of Third Parties. The execution, delivery and performance
of this Agreement by Buyer will not (a) violate or conflict with the articles
of incorporation or bylaws of Buyer; or (b) constitute a violation of any law,
regulation, order, writ, judgment, injunction or decree applicable to Buyer.
Except as may be required by the HSR Act, no consent, approval or
authorization of any governmental authority is required on the part of Buyer
in connection with the execution, delivery and performance of this Agreement.
7.4 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to the best of Buyer's knowledge,
threatened, that question the validity of this Agreement or any action taken
or to be taken by Buyer in connection with this Agreement. There is no
litigation, proceeding or governmental investigation pending or, to the best
of Buyer's knowledge, threatened, or any order, injunction or decree
outstanding, against the Buyer that, if adversely determined, would have a
material effect upon Buyer's ability to perform its obligations under this
Agreement.
8. Further Agreements of the Parties.
8.1 Access to Information. Owner has agreed that Buyer (subject to
Section 8.7) shall have access to information in the possession of Owner, and
Seller will make available to Buyer information in its possession, relating to
the Timberland Properties, the Mineral Rights, and other Assets for due
diligence investigation purposes and to facilitate an orderly transition in
the management of those Assets in anticipation of Closing.
8.2 Notice of Changes and Events.
(a) Each party shall promptly notify the other party in writing,
and furnish to such party any information that such party may reasonably
request, with respect to the occurrence of any event or the existence of any
state of facts that would (i) result in the party's or Owner's representations
and warranties not being true if they were made at any time prior to or as of
each Closing Date, or (ii) impair the party's or Owner's ability to perform
its obligations under this Agreement.
(b) Subject to receipt of necessary information from Owner,
Seller agrees to update and bring current all Schedules attached to this
Agreement prior to the Initial Closing Date. Any such updated Schedule shall
be for informational purposes only and shall not affect the rights and
obligations of the parties as set forth in this Agreement.
(c) Notwithstanding anything to the contrary in this Agreement,
Owner or Seller shall have the right, in their respective sole discretion, to
retain any claim, obligation, or liability that may otherwise be transferred
to or assumed by Buyer in this Agreement. Owner or Seller may, without
limitation, exercise this right by omitting or deleting a claim, liability, or
obligation on one or more of the Schedules attached to this Agreement. If
Owner or Seller exercises this right, Seller shall provide written notice to
Buyer of the claim, liability, or obligation that Seller shall retain within
thirty-five (35) days of Seller's receipt of written notice of said claim,
liability, or obligation.
8.3 Expenses. Except as otherwise specifically provided in this
Agreement, Buyer and Seller shall bear their own respective expenses incurred
in connection with this Agreement and in connection with all obligations
required to be performed by each of them under this Agreement.
8.4 Publicity. Buyer and Seller shall consult with each other before
issuing any public announcement or press release concerning the transactions
contemplated by this Agreement and, except as may be required by applicable
law or regulation or rule of any stock exchange or organized securities market
on which the securities of Buyer or Seller are listed or traded, will not make
a public announcement or issue a press release prior to such consultation. If
Buyer or Seller are so required to make a public announcement or issue a press
release such party shall use its best efforts to inform the other party hereto
prior to making or issuing it.
8.5 Preservation of Records.
(a) Buyer agrees that, without expense to Seller, Buyer (i) shall
preserve and keep the records relating to the Timberland Properties, Mineral
Rights, and other Assets delivered to it by Seller for a period of six (6)
years from the Initial Closing, and (ii) shall give Seller and Owner
reasonable access to such records and to personnel during regular business
hours if needed for any bona fide purpose, provided such access shall be at
Seller's or Owner's cost and expense, including reimbursement of Buyer's
extraordinary costs, if any, of providing such access.
(b) Seller or Owner, without expense to Buyer, (i) shall preserve
and keep the records relating to the Timberland Properties, Mineral Rights,
and other Assets which were not transferred to Buyer pursuant to Section
1.4(a), and (ii) shall give Buyer reasonable access to such records and to
personnel during regular business hours if needed for any bona fide purpose,
provided such access shall be at Buyer's cost and expense, including
reimbursement of Seller's or Owner's extraordinary costs, if any, of providing
such access.
(c) Notwithstanding the expiration of the six (6) year period in
Subsection (a) above, Buyer agrees not to destroy the records described in
Subsection (a) without first giving Seller sixty-five (65) days advance
written notice and an opportunity to take custody of such records, at Seller's
cost and expense, including reimbursement of Buyer's extraordinary costs, if
any.
(d) Promptly following the expiration of eighteen (18) months
from the date of Initial Closing, Buyer shall return to Seller all records
related to Parcels not acquired by Buyer pursuant to this Agreement.
8.6 Casualty or Condemnation.
(a) In the event any uninsured loss or damage occurs to the
assets being acquired by Seller from Owner, including the Assets, after the
date of the Purchase Agreement, but before Initial Closing, which has an
adverse financial impact in excess of fifteen million dollars ($15,000,000) on
the value of such assets, Buyer shall be entitled to a reduction of the
Purchase Price. Buyer's share of any Purchase Price reduction as a result of
an uninsured loss shall be determined pursuant to Section 8.12. If the amount
of the Purchase Price reduction has not been determined by the date set for
Closing, the parties shall proceed to Close as scheduled and Subsection 2.1(d)
shall apply. In the event any insured loss, destruction, casualty or damage
occurs to the Assets after the date of this Agreement, but before Closing, or
in the event condemnation action is instituted on the Assets after the date of
this Agreement, but before Closing, then Seller shall assign to Buyer at
Closing with respect to the affected Parcel or Parcels all proceeds from such
policies or condemnation action, and there shall be no adjustment in the
Purchase Price.
(b) In the event any uninsured loss or damage occurs to portions
of the Assets after the date of Initial Closing but before the Subsequent
Closing with respect to such portion of the Assets, Buyer shall be entitled to
a reduction in the Purchase Price equal to the reduction in the value of such
Assets as a result of the uninsured loss or damage; provided that if the
reduction in value with respect to any Parcel exceeds 20 percent of the
portion of the Purchase Price allocated to such Parcel, Seller may withdraw
such Parcel from the Timberland Properties and this Agreement shall terminate
as to such Parcel or Buyer may terminate this Agreement as to such Parcel. If
the parties are unable to agree on the amount of the reduction, it shall be
determined by arbitration pursuant to Section 9.2 of this Agreement.
8.7 Confidentiality. Hanson and Buyer have previously executed a
Confidentiality Agreement in the form attached hereto as Schedule 8.7.
Notwithstanding anything to the contrary in the Confidentiality Agreement, the
parties hereto covenant and agree that the terms and provisions of this
Agreement and all information and data obtained in connection with this
Agreement shall be treated as Evaluation Material in the Confidentiality
Agreement. Buyer shall require any third party which has not already executed
the Confidentiality Agreement and to which it intends to disclose any
information supplied under the Confidentiality Agreement or this Agreement to
countersign and assume all of the obligations and covenants of the
Confidentiality Agreement and deliver a copy of the Confidentiality Agreement
to Seller and Owner prior to delivery of any information to such third party.
If this Agreement is terminated for any reason prior to the Initial Closing,
the foregoing covenant shall survive the termination; if this Agreement is not
so terminated, then the foregoing covenant shall be deemed terminated at
Initial Closing.
8.8 Allocation and Tax Matters.
(a) The Purchase Price shall be allocated among the Assets in
accordance with Schedule 8.8 attached hereto. Seller and Buyer agree to
complete IRS form 8594 consistently with the foregoing allocation and to
furnish each other with a copy of such form prepared in draft form within
forty five (45) days prior to the filing due date for such form. Within
fifty-five (55) days after the Closing, Buyer shall submit to Seller a
proposed detailed allocation schedule which is in all respects consistent with
Schedule 8.8. Thereafter, Buyer and Seller shall use their respective best
efforts to promptly agree to a final detailed schedule. Neither Seller nor
Buyer shall file any tax return or take a position with any taxing authority
that is inconsistent with the foregoing allocation.
(b) For purposes of computing the transfer tax in Washington
County, Oregon, the parties agree to use the market value assessment as
reflected on the county property tax rolls at the time of Closing. Buyer
agrees to indemnify, defend, and hold harmless Seller from any investigation,
claim, liability, fine, or penalty arising from the foregoing method of
computation.
8.9 Termination. This Agreement shall be terminated at any time prior
to the Closing:
(a) By mutual written agreement executed by Seller and Buyer; or
(b) By either party if applicable law (including but not limited
to the HSR Act) prohibits the consummation of the sale and purchase of the
Assets pursuant to this Agreement or if, at the Closing Date, any action,
proceeding or investigation shall have been instituted or threatened in
writing by any governmental agency seeking to enjoin, restrain, prohibit,
impose material conditions upon or obtain substantial damages in respect of,
the transactions contemplated by this Agreement;
(c) By either party as provided in Section 3.2; or
(d) By either party if the Purchase Agreement is terminated for
any reason.
(e) By Buyer upon written notice to Seller at any time prior to
fifteen (15) business days in advance of the Initial Closing if Buyer is not
satisfied with environmental conditions on the Timberland Properties or if
Buyer determines in its reasonable judgment that there is a material
discrepancy between Owner's records of timber volume on the Timberland
Properties and the actual volume of timber on the Timberland Properties;
provided that a notice of termination shall be accompanied by deeds in the
form of the Quit Claim Deeds described in Section 3.8 of this Agreement.
This Agreement shall automatically terminate upon the expiration of
eighteen (18) months following the Initial Closing Date as to any Parcels that
have not then been transferred to Buyer by that date.
Upon such termination, neither of the parties shall have any liability
or further obligation arising out of this Agreement except as expressly stated
in this Agreement.
8.10 Access Pending Closing. Owner has agreed that Buyer may, upon
reasonable notice to Owner, have access to the Timberland Properties, and
other Assets for purposes of conducting due diligence investigations and
preparing for transition of ownership, all in accordance with the terms and
conditions of the Access Agreement previously executed by Buyer, a copy of
which is attached hereto as Schedule 8.10.
8.11 Buyer's Due Diligence.
(a) Buyer may conduct due diligence examinations during a period
commencing on the date hereof and ending at the close of business on the day
prior to the Initial Closing Date (the "Due Diligence Period"). In the event
that Buyer makes a reasonable and objective determination that there are Price
Adjustment Items as defined in Section 8.11(d), Buyer will have the right, but
only during the Due Diligence Period, to notify Seller in writing, with
reasonable detail, of said Price Adjustment Items; provided, that no such
written notice given to Seller later than April 8, 1996, shall include a Price
Adjustment Item relating to environmental matters.
(b) In the event Buyer makes a reasonable and objective
determination that there are Price Adjustment Items as defined in Section
8.11(d) which will have an adverse financial impact in the Price Adjustment
Formula set forth in Section 8.11(e), Buyer will have the right to deliver to
Seller, but only during the Due Diligence Period, a notice that Buyer is
entitled to an adjustment in the Purchase Price (the "Price Adjustment
Notice"), provided that no Price Adjustment Notice given later than April 8,
1996, shall include a Price Adjustment Item relating to environmental matters.
The Price Adjustment Notice shall be accompanied by a schedule setting forth
in reasonable detail Buyer's computation of the dollar amount of the Price
Adjustment Items. Subject to the provisions of the Purchase Agreement, Seller
shall deliver the Price Adjustment Notice to Owner as one of Seller's Price
Adjustment Notices. Buyer hereby appoints Seller as its agent to pursue a
price reduction as specified in the Price Adjustment Notice. Subject to the
provisions of the Purchase Agreement, Seller agrees to use reasonable
diligence in pursuing a price reduction with respect to the matters referred
to in each such Price Adjustment Notice.
(c) If Buyer provides written notice of Price Adjustment Items as
provided in Subsection (a) above but does not deliver to Seller the Price
Adjustment Notice described in Subsection (b) above during the Due Diligence
Period, Buyer will have the right, within six (6) months after Initial
Closing, to deliver to Seller a notice (the "Post Closing Adjustment Notice").
The Post Closing Adjustment Notice shall be accompanied by a schedule setting
forth in reasonable detail Buyer's computation of the dollar amount of the
Price Adjustment Items that provide the basis for the Post Closing Adjustment
Notice; provided however, the Post Closing Adjustment Notice cannot allege an
adverse financial impact greater than fifteen million dollars ($15,000,000)
(the First Threshold). Seller shall deliver the Post Closing Adjustment
Notice to Owner as one of Seller's Post Closing Adjustment Notices and shall
pursue an adjustment in the First Threshold as contemplated by Section 10.4 of
the Purchase Agreement; provided that if the Post Closing Adjustment Notices
exceed Fifteen Million Dollars ($15,000,000) in the aggregate, each such
notice shall be reduced pro rata so that the total does not exceed Fifteen
Million Dollars ($15,000,000). The adjustment so determined shall not adjust
the Purchase Price, but shall be carried forward as a portion of the First
Threshold in making the calculations in Section 10.4(c) of the Purchase
Agreement.
(d) In determining the adverse financial impact for purposes of
Section 8.11(a), the following items shall be taken into account as Price
Adjustment Items:
(i) Failure of Owner to be vested in title in more than
five hundred (500) acres of the Timberland Properties described in the Title
Reports attached to this Agreement as Schedule 4, and the threshold provisions
of Section 8.11 and the allocation provisions of Section 8.12 shall not apply
to any such Price Adjustment Item (i.e., the Purchase Price shall be reduced
by the amount of the adverse financial impact of such Item), nor shall the
reduction in Purchase Price for such Item reduce the threshold provisions for
purposes of Section 10.4 of the Purchase Agreement. As used in this
Subsection (i), "vested in title" means that the applicable Title Report
states that Owner (or any of the three Owners) is vested in title (without
regard to exceptions or objections noted in such Title Report);
(ii) The existence of any exception to title on any portion
of the Timberland Properties: (a) which was not shown on Schedule 4, and (b)
which was not disclosed on any other Schedule attached to this Agreement, and
(c) which materially interferes with the use thereof for the production and
harvesting of timber; provided that the threshold provisions of Section 8.11
and the allocation provisions of Section 8.12 shall not apply to such Price
Adjustment Item if the exception to title was created by Owner after the date
of the applicable Title Report and was not either created in the ordinary
course or consented to by Buyer, nor shall the reduction in Purchase Price for
such Item reduce the threshold provisions for purposes of Section 10.4 of the
Purchase Agreement.
(iii) The presence of any hazardous substances or materials,
wastes, toxics, or contaminants in, on or under any of the Indemnification
Properties (but only until April 8, 1996, and only to the extent they were not
disclosed in Schedule 6.6).
(iv) Any breach of representations of Seller in Section 6
of this Agreement during the Due Diligence Period, but with respect to Section
6.6, only if included in a Price Adjustment Notice given not later than April
8, 1996; provided, that in determining the adverse financial impact for breach
of representations of Seller, any benefit to Buyer caused by such breaches of
representations of Seller and other breaches of representations of Seller
during the Due Diligence Period shall be offset or taken into account.
(e) Price Adjustment Formula. As used in this Section 8.11 (and
in Sections 10.4(b) and (c) of the Purchase Agreement), the term "First
Threshold" means fifteen million dollars ($15,000,000); the term "Second
Threshold" means twenty five million dollars ($25,000,000); the term "Third
Threshold" means thirty five million dollars ($35,000,000). Subject to the
provisions of Section 8.12, if the First Threshold, but not the Second
Threshold, is met, the purchase price under the Purchase Agreement shall be
reduced by fifty percent (50%) of the amount of the adverse financial impact
in excess of the First Threshold; and if the Second Threshold, but not the
Third Threshold, is met, the purchase price under the Purchase Agreement shall
be additionally reduced by two-thirds of the amount of the adverse financial
impact in excess of the Second Threshold; and if the Third Threshold is met,
the purchase price under the Purchase Agreement shall be additionally reduced
by one hundred percent (100%) of the amount of the adverse financial impact in
excess of the Third Threshold.
8.12 Allocation of Price Reduction.
No Purchase Price reduction will be allowed to Buyer under this
Agreement unless a purchase price reduction is allowed to Seller under the
Purchase Agreement. If a purchase price reduction is allowed to Seller under
the Purchase Agreement, except as expressly provided in Section 8.11(d), Buyer
will be entitled to a fraction of such reduction, the numerator of which shall
be Buyer's total allowed Purchase Price adjustment claims and the denominator
of which shall be the total purchase price adjustment claims submitted by
Seller to Owner pursuant to the Purchase Agreement and allowed. Buyer shall
be bound by any proceeding or agreement between Owner and Seller determining
the amount of any Purchase Price adjustment. Buyer's share of any allowed
Purchase Price adjustment shall be allocated among the Parcels on the basis of
a fraction, the numerator of which shall be Buyer's allowed Purchase Price
adjustment claims for the Parcel in question and the denominator of which
shall be Buyer's total allowed Purchase Price adjustment claims.
8.13 Enforcement of Seller's Rights. Seller agrees to use commercially
reasonable efforts as determined by Seller in its reasonable judgment to
enforce the obligations of Owner under Sections 3.6, 5(a), 5(c), 8.1, 11.3(b),
and 11.3(c) of the Purchase Agreement. Buyer shall reimburse Seller for
Seller's expenses related to such enforcement in accordance with the formula
for sharing of arbitration costs under the Purchase Agreement set forth in
Section 9.2 of this Agreement.
8.14 Seller's Knowledge. In the event that Seller obtains knowledge
prior to the Closing Date of any material fact which, if known to Owner, would
result in a breach of a representation or warranty of Owner under the Purchase
Agreement, Seller shall notify Owner so that Owner will have knowledge of such
fact.
8.15 Easements. To the extent reasonably required by Seller, Seller
shall have the right to reserve right-of-way easements across any Parcel to
provide access rights sufficient for timber harvest activity in accordance
with then current industry practices for Northwestern, Oregon, for portions of
the Timberland Properties retained by Seller. As reasonably required by
Buyer, Seller will grant to buyer right-of-way easements across portions of
the Timberland Properties retained by Seller to provide practical access
rights sufficient for timber harvest activity on Parcels being acquired by
Buyer in accordance with then current industry practices for Northwestern,
Oregon.
9. Default; Remedies; Arbitration.
9.1 Default; Remedies. Time is of the essence of this Agreement. If
either party fails or refuses to carry out this Agreement according to its
terms, the other party shall be entitled to the remedies set forth below.
(a) Buyer's Default. Except as otherwise provided in this
Agreement, in the event Buyer fails, without legal excuse, to complete the
purchase of the Assets pursuant to this Agreement, Seller shall be entitled to
terminate this Agreement and/or pursue any and all remedies available at law
or in equity by reason of Buyer's breach or default, including without
limitation, specific performance and damages for any failure by Buyer to
perform the obligations to be performed by it from and after the date of this
Agreement.
(b) Seller's Default. Except as otherwise provided in this
Agreement, in the event Seller fails or refuses to complete the purchase of
the Assets or is otherwise in breach or default of its obligations in this
Agreement, Buyer shall be entitled to terminate this Agreement and/or pursue
any and all remedies available at law or in equity by reason of Seller's
breach or default, including without limitation, specific performance and
damages for any failure by Seller to perform the obligations to be performed
by it from and after the date of this Agreement; provided, however, that
Buyer's sole remedy against Seller for Seller's breach of Section 6 and the
representations set forth therein shall be as set forth in Section 8.11 and
the indemnification by Seller of Buyer as set forth in Section 10.
(c) Owner Default. Notwithstanding the foregoing, Buyer shall
have no rights against Seller if Seller's failure to transfer the Assets to
Buyer results from a default by Owner under the Purchase Agreement. If Seller
elects to seek damages as a result of a default by Owner under the Purchase
Agreement and if any award to Seller includes any amount with respect to
damages suffered by Buyer, Seller shall pay such amount to Buyer minus Buyer's
share of expenses determined pursuant to the formula for allocation of
expenses of arbitration under the Purchase Agreement set forth in Section 9.2.
If Seller seeks specific performance of Owner's obligations under the Purchase
Agreement, Seller agrees that it will not terminate this Agreement pursuant to
Section 8.9(d) if Buyer agrees to be bound by the outcome of such specific
performance proceeding and if Buyer agrees to reimburse Seller for the costs
of such proceeding in the proportion that the Purchase Price bears to One
Billion Five Hundred Eighty Eight Million Dollars ($1,588,000,000). If
specific performance is ordered, the Initial Closing shall occur on the date
of the closing between Owner and Seller.
9.2 Arbitration. This Agreement shall not be subject to termination
except as specifically provided in this Agreement. Any question, controversy
or claim arising under or relating to this Agreement, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association and the provisions of the laws of the State of Washington relating
to arbitration, as said rules and laws are in effect on the date of this
Agreement. The arbitration shall be conducted in Vancouver, Washington, by
and before a single arbitrator, who is experienced in the problem or problems
in dispute, to be agreed upon by the Seller and Buyer, or if they are unable
to agree upon an arbitrator within ten (10) days after written demand by
either party for arbitration, then, at the written request of either party,
the arbitrator shall be appointed by the American Arbitration Association, or
failing such appointment, by the Superior Court in and for the County of
Clark, State of Washington. Proceedings to obtain a judgment with respect to
any award rendered hereunder shall be undertaken in accordance with the law of
the State of Washington including the conflicts of laws provisions thereof.
Each party shall pay one-half of the arbitrator's fees and expenses.
Upon application to the arbitrator, the parties shall be entitled to limited
discovery, including only exchange of documents and only depositions on such
terms as the arbitrator may allow for purposes of fairness and to reduce the
overall time and expense of the arbitration.
Buyer shall also reimburse Seller for the costs of any arbitration under
the Purchase Agreement, including arbitrator's fees and reasonable attorney's
fees, incurred by Seller in the proportion that the claims related to the
Assets bears to the total of all claims involved in the arbitration. In any
arbitration proceeding under the Purchase Agreement including any arbitration
related to a Purchase Price adjustment claim or indemnification claim which
relates to the Assets, Seller agrees to request of the arbitrator that Buyer
be allowed to participate in the arbitration. Buyer shall be allowed to
participate to the extent allowed by the arbitrator.
10. Indemnification and Related Matters.
10.1 Indemnification.
(a) Seller agrees to defend, indemnify and hold Buyer and its
parents, subsidiaries, affiliates, predecessors, successors and assigns (and
their respective officers, directors, employees and agents) harmless from and
against any and all loss, claims, liabilities, damages, costs and expenses,
including attorneys fees incurred with respect to third parties ("Damages")
resulting from, based upon, or arising out of:
(i) subject to Section 10.4(a), (b) and (c), all of the
Excluded Liabilities set forth in Section 1.8(b);
(ii) subject to Section 10.4, and taking into account any
adjustments made for such breach in Section 8.11, breaches of Seller's
representations set forth in Section 6;
(iii) subject to Section 10.4, claims of third parties that
are asserted after Initial Closing, to the extent the basis of such claims
arose prior to Initial Closing; provided, that this Subsection (iii) shall
only apply to a claim which will result in loss to Buyer in excess of
$100,000; and provided further, that the indemnity in this Subsection (iii)
shall not apply at all to matters disclosed on Schedule 6.4 or to matters
covered by Section 8.11 or to matters for which Buyer is indemnifying Seller
as provided in this Agreement;
(iv) subject to Section 10.4, permits, licenses, or Contracts
(which are not Material Contracts) assumed by Buyer pursuant to Section 1.8
but which were not disclosed to Buyer in any Schedule attached to this
Agreement; provided, that this Subsection (iv) shall only apply to a permit,
license, or Contract: (a) which will require Buyer to pay more than $100,000
in any twelve-month period, and (b) which will not expire and cannot be
terminated within twelve months of Initial Closing without penalty, liability,
or premium, and (c) which provides no material benefit to Buyer; and
(v) all actions, claims, suits, proceedings, demands,
assessments, judgments, costs and expenses, including attorneys' fees
(incurred with respect to third parties), with respect to the foregoing.
(b) Buyer agrees to save, defend, indemnify and hold Seller and
Owner and its general partners, parents, subsidiaries, affiliates,
predecessors, successors and assigns (and their respective officers,
directors, employees and agents) harmless from and against any loss, claims,
liabilities, damages, costs and expenses, including attorneys' fees incurred
with respect to third parties and related to one or more Parcels conveyed to
Buyer by Seller ("Damages") resulting from, based upon, or arising out of:
(i) any breaches, occurring before, at or after Initial
Closing, of Contracts, permits, licenses, and all other agreements and
obligations transferred or assigned to Buyer;
(ii) the operation, management or condition of the Assets,
whether arising before, at or after the Initial Closing, excluding only those
matters covered by Section 10.1(a)(i) above;
(iii) all matters assumed by the Buyer pursuant to any and
all provisions of this Agreement or any related agreement; and
(iv) all actions, claims, suits, proceedings, demands,
assessments, judgments, costs and expenses, including attorneys' fees
(incurred with respect to third parties), with respect to the foregoing.
Wherever this Agreement provides for Buyer's indemnification of Owner,
the term "Owner" shall mean each or all of CERI, CFII, and Hanson.
10.2 Determination of Damages; Claims. In calculating any amounts
payable to Buyer pursuant to Section 10.1(a) or payable to Seller pursuant to
Section 10.1(b), Seller or Buyer, as the case may be, shall receive credit for
(i) any reduction in tax liability as a result of the facts giving rise to the
claim for indemnification, and (ii) any insurance recoveries.
10.3 Defense of Claims by Third Parties. If any claim is made against
Buyer or Seller that, if sustained, would give rise to a liability of the
other under this Agreement, Buyer or Seller, as the case may be, shall
promptly cause notice of the claim to be delivered to the other and shall
afford the other and its counsel, at the other's sole expense, the opportunity
to defend, with counsel reasonably satisfactory to the party against which
such claim is made, or settle the claim. If either party takes said
opportunity to settle the claim, such party shall obtain a release of the
other party in any settlement agreement with the third party. In the event of
an indemnification claim by Buyer against Seller, Seller may cause Owner to
undertake the defense in which event Owner shall have the opportunity to
settle the claim as provided above.
10.4 Limitations on the Indemnification.
(a) With respect to Seller's indemnification of Buyer pursuant to
Sections 10.1(a), Buyer shall promptly inform Seller in writing of each such
matter, as and when Buyer becomes aware of such matter, and shall keep
complete and accurate records of actual damages incurred by Buyer as a result
thereof.
(b) Notwithstanding any other provision of this Agreement,
Seller's obligations for indemnification of Buyer and all Other Purchasers
shall not exceed the proceeds of indemnification recoveries by Seller from
Owner. Seller agrees to submit all of Buyer's indemnification claims to Owner
as Seller's indemnification claims. Buyer hereby appoints Seller as Buyer's
agent to pursue such indemnification claims. Seller agrees to use reasonable
diligence in the pursuit of such claims. Buyer shall be bound by the results
of any proceedings under the Purchase Agreement to determine the validity of
Seller's indemnification claims.
(c) Buyer shall be entitled to its pro rata share of total
recoveries by Seller for (i) Purchase Price adjustment claims subject to the
allocation provisions of Section 8.12, and (ii) indemnification claims
submitted by Seller to Owner under the Purchase Agreement. Amounts payable to
Buyer from indemnification claims recovered subsequent to payment of Purchase
Price adjustment claims shall be adjusted to reflect amounts paid with respect
to such Purchase Price adjustment claims. Buyer shall not be entitled to
receive any amount with respect to indemnification claims related to Parcels
until the latest to occur of the Subsequent Closing Date for the Parcel or
five (5) days following the date of recovery of the amount of the
indemnification claim.
(d) Notwithstanding anything to the contrary to this Agreement,
Seller shall not be obligated to indemnify Buyer on any claim for
indemnification submitted by Buyer to Seller after December 31, 1998, except
for matters arising under Section 10.1(a)(i).
11. INTENTIONALLY OMITTED
12. Miscellaneous.
12.1 Finders. Buyer and Seller respectively represent and warrant that
they have not employed or utilized the services of any broker or finder in
connection with this Agreement or the transactions contemplated by it. Seller
shall indemnify and hold Buyer harmless from and against any and all claims
for brokers' commissions made by any third party as a result of this Agreement
and the transaction contemplated hereunder to the extent that any such
commission was incurred, or alleged to have been incurred, by, through or
under Seller. Buyer shall indemnify and hold Seller harmless from and against
any and all claims for brokers' commissions made by any third party as a
result of this Agreement and transactions contemplated hereunder to the extent
that any such commission was incurred, or alleged to have been incurred, by,
through or under Buyer.
12.2 Entire Agreement. This Agreement (with its Schedules and
Exhibits) contains, and is intended as, a complete statement of all of the
terms of the arrangements between the parties with respect to the matters
provided for, supersedes any previous agreements and understandings between
the parties with respect to those matters, and cannot be changed or terminated
orally.
12.3 Governing Law. In order to provide consistency in interpretation
with the Purchase Agreement which is governed by Washington law, Seller and
Buyer agree that this Agreement shall generally be governed by Washington law
as hereinafter provided. Seller and Buyer each hereby consent to personal
jurisdiction in any action brought with respect to this Agreement and the
transactions contemplated hereunder in the State of Washington and to the
arbitration described in Section 9.2. Section 9.1 of this Agreement shall be
governed by and construed in accordance with the law of the State of
Washington generally, and RCW 64.04.005 specifically, without giving effect to
conflicts of law principles thereof. The balance of this Agreement shall be
governed by and construed in accordance with the laws of the State of
Washington, including the conflicts of laws principles thereof.
12.4 Tables of Contents and Headings. The table of contents and
section headings of this Agreement and titles given to Schedules to this
Agreement are for reference purposes only and are to be given no effect in the
construction or interpretation of this Agreement.
12.5 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by registered mail, return receipt requested, to the
parties at the following addresses (or to such address as a party may have
specified by notice given to the other party pursuant to this provision):
If to Seller to:
Willamette Industries, Inc.
1300 S.W. Fifth Avenue, Suite 3800
Portland, Oregon 97201
Attention: Chief Financial Officer
With a copy to:
Miller, Nash, Wiener, Hager & Carlsen
111 S.W. Fifth Avenue, Suite 3500
Portland, Oregon 97204
Attention: J. Franklin Cable
If to Buyer to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Post Office Box 111
Boston, Massachusetts 02117
Attention: Daniel P. Christensen
With a copy to:
Robert Golden, Counsel
John Hancock Plaza
200 Clarendon Street
Post Office Box 111
Boston, Massachusetts 02117
And with a copy to:
Stanley G. Renecker or John Gilleland
The Campbell Group
One S.W. Columbia
Suite 1720
Portland, Oregon 97258
12.6 Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement which shall remain in full force and effect.
12.7 Further Assurances and Assistance. Buyer and Seller agree that
each will execute and deliver to the other any and all documents, in addition
to those expressly provided for herein, that may be necessary or appropriate
to effectuate the provisions of this Agreement, whether before, at or after
the Initial Closing. Seller agrees that, at any time and from time to time
after the Initial Closing, it will execute and deliver to Buyer such further
assignments or other written assurances as Buyer may reasonably request to
perfect and protect Buyer's title to the Assets.
12.8 Survival. The terms, covenants, agreements, representations and
warranties contained in or made pursuant to this Agreement together with all
indemnities and undertakings contained herein shall survive the Closing,
subject to the time limits specified herein, if any, delivery of the Purchase
Price and delivery and/or recordation of the instruments of conveyances and
assignment, bills of sale, assignments of contract rights and other closing
documents, and shall not be deemed to have been merged in any of the documents
delivered at the Closing, irrespective of any investigation made by or on
behalf of any party.
12.9 Waiver. Any party may waive compliance by another with any of the
provisions of this Agreement. No waiver of any provision shall be construed
as a waiver of any other provision. Any waiver must be in writing and signed
by the party waiving such provision.
12.10 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Except as expressly set forth in Section 11.7, nothing in
this Agreement shall create or be deemed to create any third party beneficiary
rights in any person or entity not a party to this Agreement, including any
such person or entity asserting rights as a third party beneficiary with
respect to environmental matters. Except as expressly provided herein, no
assignment of this Agreement or of any rights or obligation hereunder may be
made by either party (by operation of law or otherwise) without the prior
written consent of the other and any attempted assignment without the required
consent shall be void. Seller shall have the right to assign its rights
hereunder to a wholly owned subsidiary. Such an assignment shall not
exonerate Seller from any liability to Buyer under this Agreement, and such
permitted assignee shall assume all obligations of Seller to Buyer under this
Agreement. John Hancock shall have the right to assign portions of its
interest to one or more entities or affiliates controlled by John Hancock (an
"Assignee"). No such assignment shall relieve John Hancock from liability for
performance of John Hancock's obligations under this Agreement. In the event
of any such assignment, John Hancock hereby expressly waives any notice given
to an Assignee in accordance with the provisions of this Agreement of any
default under this Agreement. John Hancock hereby agrees that neither the
waiver by Seller of any rights against an Assignee, arising out of any default
by an Assignee or otherwise, nor any modification or amendment of this
Agreement shall in any way modify or release the obligations of John Hancock
under this Agreement. Upon any default by an Assignee, John Hancock agrees to
pay to Seller the entire amount of any damages suffered by Seller as a result
of such default without any obligation on the part of Seller to endeavor to
collect such indebtedness from or to proceed against an Assignee.
12.11 Best Knowledge. As used in this Agreement (i) "to the best of
Owner's knowledge" shall mean the actual knowledge possessed, at the time the
Purchase Agreement was entered into, by William B. Freck, the Division General
Counsel for Owner, David E. Harris, the Division Chief Financial Officer of
Owner, Richard E. Dahlin, a Division Vice President for Owner, and Lee T.
Alford, a Division Vice President for Owner, all of whom are executive
officers of Owner, and any of the forest managers or the mill manager of
Owner; (ii) "to the best of Seller's knowledge" shall mean actual knowledge
possessed by Steven R. Rogel, President and Chief Executive Officer;
J. A. Parsons, Executive Vice President and Chief Financial Officer; and Duane
C. McDougall, Vice President-Building Materials Group; all of whom are
executive officers of Seller, and (iii) "to the best of Buyer's knowledge"
shall mean actual knowledge possessed by any executive officer of Buyer.
12.12 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but which together shall constitute one
and the same Agreement.
12.13 No Recordation. Neither this Agreement nor a memorandum hereof
shall be recorded in any jurisdiction or public record.
12.14 Transitional Services. At the request of Buyer, Seller will
continue to provide accounting, payroll, and general administration services
to Buyer for a reasonable period of time after the Closing on a basis
consistent with past practice.
12.15 INTENTIONALLY OMITTED
12.16 Notice of Reforestation Requirements. In accordance with ORS
527.665, Schedule 12.16 is notice to Buyer of Seller's reforestation
requirements pursuant to the Oregon Forest Practices Act.
12.17 INTENTIONALLY OMITTED
12.18 No Presumptions. This Agreement is a result of negotiations
between Seller and Buyer, both of whom are represented by counsel of their
choosing. No presumption shall exist in favor of either party concerning the
interpretation of the documents constituting this Agreement by reason of which
party drafted the documents.
12.19 Seeds and Seedings. Included in the Purchase Price are seeds and
seedlings at the Polk County Seed Farm designated for use on the Timberland
Properties provided that Buyer will pay all transportation costs and any cost
of caring for the seeds and seedlings after May 15, 1996. Seller agrees to
sell to Buyer additional seed and seedlings from the Polk County Seed Farm for
use on the Timberland Properties for a reasonable period of time.
12.20 Disclaimer Required by Oregon Statute. THE PROPERTY DESCRIBED IN
THIS INSTRUMENT MAY NOT BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING
STRUCTURES. THE PROPERTY IS SUBJECT TO LAND USE LAWS AND REGULATIONS, WHICH,
IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING OF A
RESIDENCE. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING
FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY
PLANNING DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF FIRE PROTECTION
FOR STRUCTURES.
SELLER: WILLAMETTE INDUSTRIES, INC., an Oregon
corporation
By:/s/Steven R. Rogel
Steven R. Rogel
President and Chief Executive Officer
BUYER: JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a
Massachusetts corporation
By: /s/ Paul A. Meissner, Jr.
Name: Paul A. Meissner, Jr.
Title: Assistant Treasurer
SCHEDULE INDEX
HANCOCK
Schedule 1.1(a) description of parcels of real property
(Timberland)
Schedule 1.1(c) buildings, improvements, roads, bridges,
permits, and easements on or appurtenant to real
property
Schedule 1.1(d) related facilities
Schedule 1.1(e) other rights related to real property
Schedule 1.1(g) description of Mineral Rights
Schedule 1.4(b) mobile equipment, machinery, equipment, tools,
fixtures and furniture
Schedule 1.4(d) contracts (including service contracts, sales
and purchase orders and commitments), leases,
permits and licenses not related to real
property
Schedule 1.8 form of Assignment, Acceptance, and Assumption
Agreement
Schedule 1.8(b)(ii) accrued expenses
Schedule 1.8(b)(iv) exceptions for Affiliates of Seller
Schedule 3.4(a) instruments of transfer to real property
Schedule 3.4(a)(a) form of bill of sale with indemnity
Schedule 3.9(a) form of Right of First Offer Agreement
Schedule 3.9(b) form of Management Agreement
Schedule 3.9(c) form of Timber Supply Agreement
Schedule 4 title reports and commitments
Schedule 5(a) operating plan
Schedule 5(b) harvesting formula
Schedule 5(c) real estate plan
Schedule 6.3 Material Contracts
Schedule 6.4 claims, litigation, proceedings, governmental
investigations
Schedule 6.6 environmental conditions
Schedule 8.7 confidentiality agreement
Schedule 8.8 allocation
Schedule 8.10 access agreement
Schedule 12.16 reforestation requirements
ADDENDUM NO. 1
TO
ASSET SALE, PURCHASE AND TRANSFER AGREEMENT
Addendum No. 1 to Asset Sale, Purchase and Transfer Agreement ("WI
Purchase Agreement") dated April 26, 1996, between Willamette Industries, Inc.
("WI") and John Hancock Mutual Life Insurance Co. ("JH").
RECITALS
A. All capitalized terms not otherwise defined herein shall have
the meanings given such terms in the WI Purchase Agreement.
B. The WI Purchase Agreement contemplates that, as a Designee of
WI, JH will pay for at Initial Closing (set for May 15, 1996) and receive
directly from Owner a deed for Parcel 1.
C. Subsequent to April 26, 1996, the parties have determined that
fee title to only a portion of Parcel 1 may be legally conveyed to JH at
Initial Closing, the legal conveyance to JH of the balance of Parcel 1 (said
balance being hereinafter referred to as the "Coates Partition Portions")
being dependant upon compliance with ORS Chapter 92 relative to real property
partitions.
D. As the time needed to comply with the relevant provisions of ORS
Chapter 92 will extend beyond Initial Closing, WI and JH have agreed, as
herein set forth, that WI will acquire at Initial Closing from Owner and will
hold, in the status of a contract vendor, fee title of record to the Coates
Partition Portions (as described on Exhibit A attached hereto) until such time
as JH and WI shall successfully complete any partitioning process needed to
enable WI to deed the Coates Partition Portions to JH without violating ORS
Chapter 92.
E. JH shall pay to WI at or before Initial Closing the full
purchase price for Parcel 1 as specified in the WI Purchase Agreement, but JH
shall remain obligated after Initial Closing to use every effort to promptly
initiate (with the cooperation of WI which will then own outright the other
segment of the property to be partitioned) and successfully conclude the
partition process and to pay all the costs and expenses of such process as
necessitated by ORS Chapter 92 and the Columbia County, Oregon, rules and
regulations adopted pursuant thereto as the sole condition precedent to JH's
entitlement to a fulfillment deed(s) to the Coates Partition Portions, such a
deed(s) to be held in escrow in the interim by Chicago Title Insurance Company
pursuant to escrow instructions in the form attached hereto as Exhibit B.
NOW, THEREFORE, WI and JH agree as follows:
1. Amendment to WI Purchase Agreement. To the extent that the
provisions of this Addendum No. 1 conflict with the provisions of the WI
Purchase Agreement, the provisions of this Addendum No. 1 shall control and
shall be deemed to be an amendment thereto.
2. Record Title to Partition Portions. Parcel 1 consists of two
segments delineated by JH as the Mist Parcel ("Mist") and the Coates Parcel
("Coates"). A legal description of Mist is attached hereto as Exhibit C. A
portion of Coates may be legally conveyed to JH without violating ORS
Chapter 92. Such portion is legally described on Exhibit D attached hereto.
The Coates Partition Portions are those portions of Coates that the parties
agree require successful partition applications before fee title may be
conveyed by WI to JH without a violation of ORS Chapter 92.
3. Partition Process. JH, as contract vendee of the Coates
Partition Portions, agrees, at its sole cost and expense, to prepare and to
file, as soon as feasible after Initial Closing, with the appropriate
authorities in Columbia County, Oregon, appropriate partition applications to
constitute the Coates Partition Portions as legal parcels and to diligently
pursue such applications until final decisions are rendered thereon by the
appropriate body or bodies having jurisdiction thereover.
WI shall, as contract vendor and record owner of the Coates Partition
Portions, consent to all such applications filed in accordance with this
Addendum No. 1 and as the beneficial and record owner of the other segment of
the property to be partitioned, shall execute such applications as a joint
applicant. Should JH request the participation of any WI personnel at any
partition hearings resulting therefrom or at any staff level meetings relative
thereto, WI shall use its best efforts to meet such request(s); provided that
JH shall bear all travel expenses involved, plus JH shall pay WI, measured on
an hourly basis, a reasonable fee for the use of such personnel. Should any
such application be rejected, dismissed or modified, JH agrees to refile,
appeal, modify or otherwise use its best efforts to cause fee title to all of
the Coates Partition Portions to be legally conveyed by WI to JH without a
violation of ORS Chapter 92 and of any applicable partitioning rules and
regulations of Columbia County, Oregon. WI agrees to reasonably cooperate
with JH in any such refiling, appeal or modification, including the execution
as joint applicant or appellant of any documentation therein involved.
Provided that all costs or expenses involved shall be for the account of JH.
Provided further that at any time should the acquisition by JH of property
adjacent to any of the Coates Partition Portions permit WI to legally convey
any or all of such Partition Portions to JH without a violation of ORS
Chapter 92, WI shall so do, in which even JH shall have no further obligations
hereunder with regard to any related partition application.
4. Responsibility of WI. After Initial Closing, WI shall bear no
responsibility whatsoever with regard to the Coates Partition Portions other
than the specific duties delineated in this Addendum No. 1. It shall bear no
risk of loss with regard to the Coates Partition Portions, shall have no
responsibility regarding any operations on the Coates Partition Portions and
shall have no possessory rights or obligations with regard to the Coates
Partition Portions (except for any specific obligations set forth herein).
5. Recording. This Addendum No. 1 or a Memorandum thereof in the
form attached as Exhibit E hereto shall be recorded, at the expense of JH, in
the Columbia County, Oregon, Records at Initial Closing.
6. Title Insurance. WI shall have no obligation to provide JH with
any title insurance or title reports on the Coates Partition Portions at or
after Initial Closing, except that at Initial Closing, WI shall obtain a
standard owner's policy of title insurance from Chicago Title Insurance
Company covering the Coates Partition Portions in the sum of $48,122,099. The
cost of such policy shall be paid by JH, which will simultaneously buy a
purchaser's standard title policy on the Coates Partition Portions. WI shall
use all reasonable efforts to cause the reinsurers under such owner's title
policy to satisfy JH's requirements for such reinsurance both as to identity
and amounts so reinsured.
7. Wilson River Tract. WI shall have the right upon written notice
to JH delivered not later than June 30, 1996, to withdraw Parcel 6 from the
Timberland Properties.
8. Allocation of Purchase Price. The revised allocation of the
Purchase Price for each parcel is set forth on Exhibit F attached hereto.
9. Order of Purchase. JH shall have the right to designate the
order in which parcels will be purchased except that JH shall not have the
right to designate the Wilson River Tract as the last Parcel to be purchased
and provided further that the Wilson River Tract cannot be purchased prior to
June 30, 1996.
10. Willamette Columbia. At Initial Closing, WI shall cause its
wholly-owned subsidiary, Willamette Columbia Timber Company, an Oregon
corporation ("WC"), to become the record owner of the Coates Partition
Portions. Consequent, WI hereby agrees that, as of Initial Closing, WC will
assume all of WI's obligations under this Addendum No. 1 relative to the
Coates Partition Portions.
IN WITNESS WHEREOF, this Addendum No. 1 has been executed by the
parties as of this 13th day of May, 1996.
WILLAMETTE INDUSTRIES, INC.
By: /s/ Steven R. Rogel
Name: Steven R. Rogel
Title: President and CEO
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By: /s/ Paul A. Meissner, Jr.
Name: Paul A. Meissner, Jr.
Title: Assistant Treasurer
Exhibits to Addendum No. 1 to
Asset Sale, Purchase and Transfer Agreement
Exhibit A Coates Partition Portions
Exhibit B Coates Partition Portions Escrow Instructions
Exhibit C Mist Legal Description
Exhibit D Portions of Coates Not Requiring Partitioning
Exhibit E Coates Partition Portions Memorandum of Asset Sales
Purchase and Transfer Agreement and Addendum No. 1 thereto.
Exhibit F Revised Purchase Price Allocation
Asset Sale, Purchase and Transfer Agreement - Willamette Industries Inc. and John Hancock Mutual Life Insurance Co.
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