EXHIBIT 1.4
14,500,000 SHARES
WEYERHAEUSER COMPANY
COMMON SHARES, PAR VALUE $1.25 PER SHARE
UNDERWRITING AGREEMENT
April 29, 2004
April 29, 2004
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
J.P. Morgan Securities Inc.
277 Park Avenue
New York, New York 10172
Dear Sirs and Mesdames:
Weyerhaeuser Company, a Washington corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "UNDERWRITERS") 14,500,000 shares of its Common Shares, par value
$1.25 per share (the "FIRM SHARES"). The Company also proposes to issue and sell
to the several Underwriters not more than an additional 2,175,000 shares of its
Common Shares, par value $1.25 per share (the "ADDITIONAL SHARES") if and to the
extent that you, as Managers of the offering, shall have determined to exercise,
on behalf of the Underwriters, the right to purchase such shares granted to the
Underwriters in Section 2 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "SHARES." The shares of Common
Shares, par value $1.25 per share, of the Company to be outstanding after giving
effect to the sales contemplated hereby are hereinafter referred to as the
"COMMON STOCK."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form S-3 (No. 333-104752), including a
prospectus, and has filed with, or transmitted for filing to, or shall promptly
hereafter file with or transmit for filing to, the Commission (i) a prospectus
supplement (the "PROSPECTUS SUPPLEMENT") specifically relating to the Shares
pursuant to Rule 424 under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and (ii) a related prospectus dated August 5, 2003 (the "BASE
PROSPECTUS") and the offering thereof from time to time in accordance with Rule
415 of the rules and regulations of the Commission under the Securities Act (the
"SECURITIES ACT REGULATIONS"). Such registration statement has been declared
effective by the Commission. Such registration statement, as amended to the date
hereof, is referred to herein as the "REGISTRATION STATEMENT;" and the Base
Prospectus and the Prospectus Supplement, in the form first used to confirm
sales of the Shares, are collectively referred to herein as the "PROSPECTUS;"
provided, however, that all references to the "REGISTRATION STATEMENT" and the
"PROSPECTUS" shall also be deemed to include all documents incorporated therein
by reference pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"). If the Company has filed an abbreviated registration statement
to register additional shares of Common Stock pursuant to Rule 462(b) under the
Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference
herein to the term "REGISTRATION STATEMENT" shall be deemed to include such Rule
462 Registration Statement.
1. Representations and Warranties. The Company represents and
warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no
stop order suspending the effectiveness of the Registration Statement
is in effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed
pursuant to the Exchange Act and incorporated by reference in the
Prospectus complied or will comply when so filed in all material
respects with the Exchange Act and the applicable rules and regulations
of the Commission thereunder, (ii) the Registration Statement, when it
became effective and when the Company's most recent Annual Report on
Form 10-K was filed with the Commission, did not contain and, as
amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (iii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable Securities
Act Regulations and (iv) the Prospectus does not contain and, as
amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations
and warranties set forth in this paragraph do not apply to statements
or omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing (or the local equivalent) in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(d) Certain direct and indirect subsidiaries of the
Company are identified on Exhibit C hereto (each a "KEY SUBSIDIARY" and
collectively, the "KEY SUBSIDIARIES"). Other than Weyerhaeuser Real
Estate Company, Weyerhaeuser International, Inc., Weyerhaeuser Company
Limited, Pardee Homes and Winchester Homes, Inc., the Company has no
subsidiary that would constitute a "significant subsidiary" as such
term is defined in Rule 1-02 of Regulation S-X. Each Key Subsidiary has
been duly incorporated, is validly existing as a corporation in good
standing (or the local equivalent) under the laws of the jurisdiction
of its incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus and
is duly qualified to transact business and is in good standing (or the
local equivalent) in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be
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so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole; all of
the issued shares of capital stock of each Key Subsidiary have been
duly and validly authorized and issued, are fully paid and
non-assessable and, except as set forth in the Registration Statement
and the Prospectus and except for the non-voting preference shares of
Weyerhaeuser Company Limited (which are owned by The Bank of Nova
Scotia), are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
(f) The authorized capital stock of the Company and the
exchangeable shares of Weyerhaeuser Company Limited, a company existing
under the laws of Canada ("WCL"), conform as to legal matters to the
description thereof contained in the Prospectus.
(g) The shares of Common Stock outstanding prior to the
issuance of the Shares and the single outstanding Special Voting Share
(as defined below) have been duly authorized and are validly issued,
fully paid and non-assessable. "Special Voting Shares" means the shares
of a series of Preference Shares, par value $1.00 per share, of the
Company designated as the "Special Voting Shares (A Series of
Preference Shares)."
(h) The Shares have been duly authorized and, when issued
and delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the restated
articles of incorporation or bylaws of the Company or any agreement or
other instrument binding upon the Company or any of its subsidiaries
that is material to the Company and its subsidiaries, taken as a whole,
or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or qualification with,
any governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares.
(j) There has not occurred any material adverse change,
or any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(k) There are no legal or governmental proceedings
pending or threatened to which the Company or any of its subsidiaries
is a party or to which any of the properties
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of the Company or any of its subsidiaries is subject that are required
to be described in the Registration Statement or the Prospectus and are
not so described or any statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(l) Each preliminary prospectus or preliminary prospectus
supplement filed as part of the registration statement as originally
filed or as part of any amendment thereto, or filed pursuant to Rule
424 under the Securities Act, complied when so filed in all material
respects with the Securities Act and the Securities Act Regulations.
(m) The Company is not, and after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus will not be, required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(n) The Company and its subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("ENVIRONMENTAL Laws"), (ii) have received
all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses
and (iii) are in compliance with all terms and conditions of any such
permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(o) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(p) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company or to
require the Company to include such securities with the Shares
registered pursuant to the Registration Statement.
(q) The Company and each of its subsidiaries (i) have all
necessary consents, authorizations, approvals, orders, certificates and
permits of and from, and have made all declarations and filings with,
all federal, state, local and other governmental, administrative or
regulatory authorities, all self-regulatory organizations and all
courts and other tribunals, to own, lease, license and use their
respective properties and assets and to conduct their respective
businesses in the manner described in the Prospectus,
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except to the extent that the failure to obtain such consents,
authorizations, approvals, orders, certificates and permits or make
such declarations and filings would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole, and (ii) have
not received any notice of proceedings relating to revocation or
modification of any such consent, authorization, approval, order,
certificate or permit which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(r) No material labor dispute exists with the employees
of the Company or any of its subsidiaries or, to the Company's
knowledge, is imminent; and, except as disclosed in the Prospectus
under the caption "Risk Factors--Volatile industry conditions, product
pricing and manufacturing costs have had and may continue to have an
adverse effect on our results of operations, cash flow and financial
condition" with respect to labor disturbances at various carriers used
by the Company, the Company is not aware of any existing, threatened or
imminent labor disturbance by the employees of any of its principal
suppliers, manufacturers or contractors that could have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(s) The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the Company and its subsidiaries, taken as a whole, in each
case free and clear of all liens, encumbrances and defects, except such
as (i) are described in the Prospectus, (ii) do not materially affect
the value of such property, (iii) do not interfere with the use made
and proposed to be made of such property by them or (iv) would not have
a material adverse effect on the Company and its subsidiaries, taken as
a whole; any real property and buildings held under lease or license by
them are held under valid, subsisting and enforceable leases or
licenses, as the case may be, with such exceptions as are not material
to the Company and its subsidiaries, taken as a whole, and do not
interfere with the use made and proposed to be made of such property
and buildings by them in a manner that would have a material adverse
effect on the Company and its subsidiaries, taken as a whole; and all
licenses to harvest timber granted by Canada or any province or
territory thereof to the Company or any of its subsidiaries are valid,
subsisting and enforceable, with such exceptions as are not material to
the Company and its subsidiaries, taken as a whole.
(t) Each of the Company and its subsidiaries own, possess
or can acquire on reasonable terms, adequate trademarks, trade names
and other rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property (collectively,
"INTELLECTUAL PROPERTY RIGHTS") necessary to conduct the business now
operated by them, or presently employed by them, and have not received
any notice of infringement of or conflict with asserted rights of
others with respect to any intellectual property rights that, if
determined adversely to the Company or any of its subsidiaries would
individually or in the aggregate reasonably be expected to have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(u) The financial statements and related notes included
in the Registration Statement and Prospectus present fairly the
financial position of the Company and its
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consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and such financial
statements and the notes thereto have been prepared in conformity with
generally accepted accounting principles in the United States applied
on a consistent basis except as disclosed therein.
(v) Attached hereto as Exhibit B is a list of all
directors of the Company and all shareholders and officers of the
Company who are subject to the filing requirements of Section 16(a) of
the Exchange Act.
(w) The Company and its subsidiaries maintain systems of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
(x) Except as disclosed in the Prospectus under the
heading "Risk Factors--We do not maintain insurance for losses to our
standing timber from natural disasters or other causes," the Company
and its subsidiaries have insurance covering their respective
properties, operations, personnel and businesses, including business
interruption insurance, which insurance is in amounts and insures
against such losses and risks as are adequate to protect the Company
and its subsidiaries and their respective businesses taken as a whole;
and neither the Company nor any of its subsidiaries has (i) received
notice from any insurer or agent of such insurer that capital
improvements or other expenditures are required or necessary to be made
in order to continue such insurance or (ii) any reason to believe that
it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage at reasonable
cost from similar insurers as may be necessary to continue its
business, except, in the case of both (i) and (ii), where the failure
to renew such coverage or to obtain similar coverage at reasonable cost
from similar insurers, individually or in the aggregate, would not have
a material adverse effect on the Company and its subsidiaries, taken as
a whole.
(y) There is and has been no failure on the part of the
Company or any of the Company's directors or officers, in their
capacities as such, to comply with Section 402 (related to loans) and
Sections 302 and 906 (related to certifications) of the Sarbanes-Oxley
Act of 2002 (the "SARBANES-OXLEY ACT") and the rules and regulations
promulgated in connection therewith (the "SARBANES-OXLEY REGULATIONS"),
nor, to the best knowledge of the Company, has there been any failure
on the part of the Company or any of the Company's directors or
officers, in their capacities as such, to comply with any other
provision of the Sarbanes-Oxley Act or the Sarbanes-Oxley Regulations.
2. Agreements to Sell and Purchase. The Company hereby agrees to
sell to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not
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jointly, to purchase from the Company the respective numbers of Firm Shares set
forth in Schedule I hereto opposite its name at $57.23 a share (the "PURCHASE
PRICE").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have the
right to purchase, severally and not jointly, up to 2,175,000 Additional Shares
at the Purchase Price; provided that the amount per share paid by the
Underwriters for any Additional Shares purchased on any Option Closing Date (as
defined below) shall be reduced by an amount per share equal to any dividends or
distributions paid or payable by the Company on the Firm Shares but not payable
on such Additional Shares. You may exercise this right on behalf of the
Underwriters in whole or from time to time in part by giving written notice of
each election to exercise the option not later than 30 days after the date of
this Agreement. Any exercise notice shall specify the number of Additional
Shares to be purchased by the Underwriters and the date on which such shares are
to be purchased. Each purchase date must be at least one business day after the
written notice is given and may not be earlier than the closing date for the
Firm Shares nor later than ten business days after the date of such notice.
Additional Shares may be purchased as provided in Section 4 hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. On each day, if any, that Additional Shares are to be purchased
(an "OPTION CLOSING DATE"), each Underwriter agrees, severally and not jointly,
to purchase the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as you may determine) that bears the same proportion
to the total number of Additional Shares to be purchased on such Option Closing
Date as the number of Firm Shares set forth in Schedule I hereto opposite the
name of such Underwriter bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written consent of
the Managers on behalf of the Underwriters, neither it nor any of its
subsidiaries will, during the period commencing on and including the date of
this Agreement and ending on and including the day that is 90 days after the
date of the Prospectus Supplement (the "LOCK-UP PERIOD"), (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or file any registration statement with the Commission relating
to the offering of any shares of Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Shares to be sold hereunder, (B) the
issuance by the Company of shares of Common Stock upon the exercise of an option
outstanding on the date hereof of which the Underwriters have been advised in
writing, (C) if any exchangeable shares of WCL that are outstanding on the date
of the Prospectus Supplement are surrendered for redemption at the option of the
holder, the issuance by the Company of a like number of shares of Common Stock
in payment of the redemption price of those exchangeable shares, or (D) the
filing by the Company with the Commission of a registration statement on Form
S-8 with respect to any currently existing equity-based compensation plan of the
Company or any of its subsidiaries for which shares of Common Stock are eligible
for registration on
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Form S-8, including the Weyerhaeuser Company 2004 Long-Term Incentive
Compensation Plan.
The Company hereby further agrees that, if the Company shall purchase
any shares of Common Stock from any of the persons listed on Exhibit B hereto
pursuant to a program instituted by the Company on April 13, 2004 for the
cashless exercise of stock options granted on or prior to April 19, 1999 and the
immediate repurchase by the Company of the shares of Common Stock issued upon
such cashless exercises, or if any such persons shall transfer any such stock
options to the Company, in each case during the Lock-Up Period, the Company will
not, without the prior written consent of the Managers on behalf of the
Underwriters, sell, transfer or otherwise dispose of any of the shares of Common
Stock sold to the Company as aforesaid or issuable upon the exercise of any
options transferred to the Company as aforesaid during the Lock-Up Period.
3. Terms of Public Offering. The Company is advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after this Agreement has become effective as in your
judgment is advisable. The Company is further advised by you that the Shares are
to be offered to the public initially at $59.00 a share (the "PUBLIC OFFERING
PRICE") and to certain dealers selected by you at a price that represents a
concession not in excess of $1.15 a share under the Public Offering Price.
4. Payment and Delivery. Payment for the Firm Shares shall be
made to the Company in Federal or other funds immediately available in New York
City against delivery of such Firm Shares for the respective accounts of the
several Underwriters at 10:00 a.m., New York City time, on May 5, 2004, or at
such other time on the same or such other date, not later than May 12, 2004, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
corresponding notice described in Section 2 or at such other time on the same or
on such other date, in any event not later than June 14, 2004, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "OPTION CLOSING DATE."
The Firm Shares and Additional Shares shall be registered in such names
and in such denominations as you shall request in writing not later than one
full business day prior to the Closing Date or the applicable Option Closing
Date, as the case may be. The Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or an Option Closing Date, as the case may
be, for the respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Shares to the Underwriters
duly paid, against payment of the Purchase Price therefor.
5. Conditions to the Underwriters' Obligations. The obligations
of the Company to sell the Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the condition that no stop order
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suspending the effectiveness of the Registration Statement shall have been
issued under the Securities Act or proceedings therefor initiated or threatened
by the Commission.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
(i) there shall not have occurred any
downgrading, nor shall any notice have been given of any
intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or
any development involving a prospective change, in the
condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing
Date a certificate, dated the Closing Date and signed by an executive
officer of the Company, to the effect set forth in Section 5(a)(i)
above and to the effect that the representations and warranties of the
Company contained in this Agreement are true and correct as of the
Closing Date and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing
Date an opinion of Perkins Coie LLP, outside counsel for the Company,
dated the Closing Date, to the effect that:
(i) the Company is validly existing as a
corporation in good standing under the laws of the State of
Washington;
(ii) the authorized capital stock of the Company
and the exchangeable shares of WCL conform as to legal matters
to the description thereof contained in the Prospectus (except
with respect to matters of Canadian law applicable to the
exchangeable shares of WCL, as to which such counsel need not
opine);
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(iii) the Shares have been duly authorized by the
Company and, when issued and delivered in accordance with the
terms of this Agreement against payment of the consideration
set forth in this Agreement, will be validly issued, fully
paid and non-assessable, and the issuance of such Shares will
not be subject to any preemptive or similar rights;
(iv) this Agreement has been duly authorized,
executed and delivered by the Company;
(v) the execution and delivery by the Company
of, and the performance by the Company of its obligations
under, this Agreement will not contravene any provision of the
federal laws of the United States or the laws of the State of
Washington or the restated articles of incorporation or bylaws
of the Company;
(vi) the statements relating to legal matters,
documents or proceedings included in (A) the Prospectus
Supplement under the captions "Prospectus Supplement
Summary--The Offering--Exchangeable Shares of Canadian
Subsidiary," "Description of Common Shares" and
"Underwriting," (B) the Base Prospectus under the captions
"Description of Preferred Shares" and "Description of
Preference Shares," and (C) the Registration Statement in Item
15, in each case fairly summarize in all material respects
such matters, documents or proceedings (except with respect to
matters of Canadian law applicable to the exchangeable shares
of WCL described under any of such captions, as to which such
counsel need not opine); and
(vii) the Company is not, and after giving effect
to the offering and sale of the Shares and the application of
the proceeds thereof as described in the Prospectus will not
be, required to register as an "investment company" as such
term is defined in the Investment Company Act of 1940, as
amended.
In addition, such counsel shall state that they have
participated in the preparation of the Registration Statement
and the Prospectus as amended or supplemented and participated
in conferences with representatives of the Company and its
independent auditors and your representatives and counsel, at
which the contents of the Registration Statement and the
Prospectus as amended or supplemented (including the documents
incorporated and deemed to be incorporated by reference in the
Registration Statement and the Prospectus) and related matters
were discussed. Such counsel shall further state that they did
not participate in the preparation of the documents
incorporated and deemed to be incorporated by reference in the
Registration Statement and Prospectus (but have, however,
reviewed such documents). Although such counsel is not passing
upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Prospectus as amended or
supplemented and has made no independent check or verification
thereof, except as set forth in the opinion in subsection (vi)
of this Section 5(c), no facts have come to the attention of
such counsel that cause such counsel to believe
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that (A) the Registration Statement or the Prospectus (except
for the financial statements and financial schedules and other
financial data (a) included therein and (b) included in the
documents incorporated by reference therein, as to which such
counsel need not express any opinion) do not comply as to form
in all material respects with the requirements of the
Securities Act and the applicable Securities Act Regulations;
(B) the Registration Statement or the prospectus included
therein (except for the financial statements and financial
schedules and other financial data included therein, as to
which such counsel need not express any opinion), at the time
of the filing with the Commission of the Company's most recent
Annual Report on Form 10-K, contained an untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading; or (C) the Prospectus (except for the
financial statements and financial schedules and other
financial data included therein, as to which such counsel need
not express any opinion) as of the date of the Prospectus
Supplement or as of the Closing Date, contained or contains an
untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.
The opinion of such counsel shall be limited to the
laws of the United States and the State of Washington, and may
rely as to factual matters on the certificate or certificates
to be delivered pursuant to Section 5(b) above to the extent
necessary to furnish such counsel's opinion. Such counsel may
also state that insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company and its
subsidiaries and certificates of public officials.
Such opinion shall also state that, in rendering
their opinion pursuant to Section 5(f), Sidley Austin Brown &
Wood LLP may rely on the opinion of Perkins Coie LLP with
respect to all matters of Washington law as if such opinion
were addressed to Sidley Austin Brown & Wood llp.
(d) The Underwriters shall have received on the Closing
Date an opinion of Lorrie D. Scott, Senior Legal Counsel of the
Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, has
the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing
(or the local equivalent thereof) in each jurisdiction in
which the conduct of its business or its ownership or leasing
of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole;
(ii) each of the Key Subsidiaries has been duly
incorporated, is validly existing as a corporation in good
standing (or the local equivalent) under the laws
11
of the jurisdiction of its incorporation, has the corporate
power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified
to transact business and is in good standing (or the local
equivalent) in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a
whole;
(iii) the shares of Common Stock outstanding prior
to the issuance of the Shares and the single outstanding
Special Voting Share have been duly authorized and are validly
issued, fully paid and non-assessable;
(iv) all of the issued shares of capital stock of
each of the Key Subsidiaries have been duly and validly
authorized and issued, are fully paid and non-assessable and,
except as set forth in the Registration Statement and the
Prospectus and except for the non-voting preference shares
issued by Weyerhaeuser Company Limited (which are owned by The
Bank of Nova Scotia), are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities
or claims;
(v) the Shares have been duly authorized by the
Company and, when issued and delivered in accordance with the
terms of the Underwriting Agreement against payment of the
consideration set forth therein, will be validly issued, fully
paid and non-assessable, and the issuance of such Shares will
not be subject to any preemptive or similar rights;
(vi) the execution and delivery by the Company
of, and the performance by the Company of its obligations
under, this Agreement will not contravene, to the best of such
counsel's knowledge, any agreement or other instrument binding
upon the Company or any of its subsidiaries that is material
to the Company and its subsidiaries, taken as a whole, or, to
the best of such counsel's knowledge, any judgment, order or
decree of any governmental body, agency or court having
jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the
performance by the Company of its obligations under this
Agreement, except such as may be required by the securities or
Blue Sky laws of the various states in connection with the
offer and sale of the Shares;
(vii) after due inquiry, such counsel does not
know of any legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is
a party or to which any of the properties of the Company or
any of its subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and
are not so described or of any statutes, regulations,
contracts or other documents that are required to be described
in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement that are not
described or filed as required;
12
(viii) such counsel has reviewed the statements (a)
included in the Prospectus Supplement under the captions "Risk
Factors--We do not currently expect to record a charge when
the court issues a decision on the plaintiff's claim for $675
million to $832 million in damages in the Paragon Trade Brands
adversary proceeding. We plan to appeal the liability decision
and any damage award to the U.S. District Court and, if
necessary, to the Court of Appeals for the 11th Circuit, but
may be required to record a charge to earnings and/or pay
damages in the future if we do not prevail on one or both
appeals," "Risk Factors--It is likely that we will not prevail
in a trial scheduled to commence on May 11, 2004 in one of a
series of lawsuits that have been filed against us relating to
alder logs following an adverse verdict in an initial alder
log lawsuit, and that damages will be assessed against us.
Although we intend to appeal any such adverse result in the
lawsuit scheduled for trial, such result may require us to
record a pre-tax charge to earnings of up to approximately $36
million in plaintiff's aggregate claims. We also expect
additional follow-on lawsuits to be filed and a purported
class action relating to finished alder lumber has recently
been filed against us," "Risk Factors--Approximately 165
members of the certified classes in our linerboard antitrust
cases have opted out of the settlement and filed separate
lawsuits against us," "Risk Factors--Although we have
established reserves for hardboard siding claims that we
believe are adequate, we are unable to estimate the amount of
additional charges, if any, that may be required in the future
for such claims," "Risk Factors--Our results of operations
have been and may continue to be negatively affected by
international trade disputes and tariffs", "Risk Factors--We
are subject to significant environmental regulation and
environmental compliance expenditures and liabilities," "Risk
Factors--In the United States, the Endangered Species Act and
similar state laws have restricted, and may continue to
restrict, our timber harvests," "Risk Factors--Our Canadian
operations are subject to additional Canadian environmental
regulations and standards that increase our operating costs,"
and "Risk Factors--Common law rights of the aboriginal peoples
of Canada may restrict our timber harvests in Canada," and (b)
included in the Company's Annual Report on Form 10-K for the
period ended December 28, 2003 (the "10-K") under the caption
"Part I, Item 3--Legal Proceedings," and incorporated in "Part
I, Item 1--Business" in the 10-K by reference to the Company's
2003 Annual Report to Shareholders (the "ANNUAL REPORT") under
the caption "Description of the Business of the
Company--Natural Resource and Environmental Matters," in "Part
II, Item 7--Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the 10-K by reference
to the Annual Report under the captions "Financial
Review--Environmental Matters, Legal Proceedings and Other
Contingencies" and "Financial Review--Accounting
Matters--Legal, Environmental and Product Liability Reserves,"
and in "Part II, Item 8--Financial Statements and
Supplementary Information" in the 10-K by reference to "Note
14. Legal Proceedings, Commitments and Contingencies" (other
than the statements under the subcaptions "--Guarantees," and
"--Warranties" appearing under such Note 14) in the notes to
the Company's consolidated financial statements included
13
in the Annual Report, and such statements, in each case to the
extent they constitute matters of law, summaries of legal or
regulatory proceedings or legal conclusions, are, in the case
of the statements in the Prospectus (including any amendment
or supplement thereto), correct as of the Closing Date and
were, in the case of the statements in the other documents
referred to above, correct as of the date the 10-K was filed
with the Commission;
(ix) the transactions contemplated by the
Prospectus and this Agreement, to the extent that any such
transaction may be considered a "Business Transaction" as
defined in Article X of the articles of incorporation of the
Company ("ARTICLE X"), have been duly approved as provided in
Section (2) of Article X; and
(x) nothing has come to the attention of such
counsel that causes such counsel to believe that (A) any
document filed by the Company pursuant to the Exchange Act and
incorporated or deemed to be incorporated by reference in the
Registration Statement or the Prospectus (except for the
financial statements and financial schedules and other
financial data included or incorporated by reference therein,
as to which such counsel need not express any belief) did not
comply as to form when so filed in all material respects with
the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder; (B) the
Registration Statement or the prospectus included therein
(except for the financial statements and financial schedules
and other financial data included or incorporated by reference
therein, as to which such counsel need not express any
belief), at the time of the filing of the Company's most
recent Annual Report on Form 10-K with the Commission,
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading; or
(C) the Prospectus (except for the financial statements and
financial schedules and other financial data included or
incorporated by reference therein, as to which such counsel
need not express any belief) as of the date of the Prospectus
Supplement or as of the Closing Date, contained or contains an
untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.
(e) The Underwriters shall have received on the Closing
Date an opinion of Alex Shorten, Vice President and General Counsel of
Weyerhaeuser Company Limited, dated the Closing Date, in substantially
the form attached hereto as Exhibit D.
(f) The Underwriters shall have received on the Closing
Date an opinion of Sidley Austin Brown & Wood LLP, counsel for the
Underwriters, dated the Closing Date, covering the matters referred to
in Sections 5(c)(iii), 5(c)(iv) and 5(c)(vi) (but only as to the
statements in the Prospectus Supplement under "Underwriting") and the
paragraph following 5(c)(vii) above.
With respect to Section 5(d)(x) above, Lorrie D. Scott, may
state that her beliefs are based upon her participation in the
preparation of the Registration Statement and
14
Prospectus and any amendments or supplements thereto and documents
incorporated by reference and review and discussion of the contents
thereof, but are without independent check or verification, except as
specified. In addition, in rendering her opinion pursuant to
subsections (ii), (iv), (vi) and (viii) of Section 5(d), Lorrie D.
Scott may rely on the opinion of Alex Shorten, Vice President and
General Counsel of Weyerhaeuser Company Limited, delivered pursuant to
Section 5(e) above, which opinion shall be addressed to the
Underwriters and shall state that Lorrie D. Scott may rely on such
opinion, as to all matters arising under or governed by the laws of
Canada or any province or territory thereof, as if such opinion were
addressed to her in rendering her opinion pursuant to this Agreement.
With respect to the paragraph following Section 5(c)(vii), Sidley
Austin Brown & Wood LLP may state that their beliefs are based upon
their participation in the preparation of the Registration Statement
and Prospectus and any amendments or supplements thereto (other than
documents incorporated by reference) and upon review and discussion of
the contents thereof (including documents incorporated by reference),
but are without independent check or verification except as specified.
The opinions of Perkins Coie LLP, Lorrie D. Scott and Alex
Shorten described in Sections 5(c), 5(d) and 5(e) above shall be
rendered to the Underwriters at the request of the Company and shall so
state therein.
(g) The Underwriters shall have received, on each of the
date hereof and the Closing Date, a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to
the Underwriters, from KPMG LLP, independent public accountants,
containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Registration Statement and the
Prospectus; provided that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(h) The "lock-up" agreements, each substantially in the
form of Exhibit A hereto, between you and the officers and directors of
the Company listed in Exhibit B hereto relating to sales and certain
other dispositions of shares of Common Stock or certain other
securities, delivered to you on or before the date hereof, shall be in
full force and effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents and opinions as you may reasonably request with
respect to the good standing of the Company, the due authorization and issuance
of the Additional Shares to be sold on such Option Closing Date and other
matters related to the issuance of such Additional Shares.
6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, three signed
copies of the Registration Statement (including exhibits thereto and
documents incorporated by reference) and for delivery to each other
Underwriter a conformed copy of the Registration Statement
15
(without exhibits thereto but including documents incorporated by
reference) and to furnish to you in New York City, without charge,
prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned
in Section 6(c) below, as many copies of the Prospectus, any documents
incorporated by reference, and any supplements and amendments thereto
or to the Registration Statement as you may reasonably request. The
terms "supplement" and "amendment" or "amend" as used in this Agreement
shall include all documents subsequently filed by the Company with the
Commission pursuant to the Exchange Act that are deemed to be
incorporated by reference in the Prospectus.
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file
with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus or prospectus supplement
required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the
public offering of the Shares as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall
occur or condition exist as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company)
to which Shares may have been sold by you on behalf of the Underwriters
and to any other dealers upon request, either amendments or supplements
to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances
when the Prospectus is delivered to a purchaser, be misleading or so
that the Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request.
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earning statement covering
the twelve-month period ending on or nearest to June 30, 2005 that
satisfies the provisions of Section 11(a) of the Securities Act and the
Securities Act Regulations.
(f) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in
connection with the preparation and filing
16
of the Registration Statement, any preliminary prospectus, the
Prospectus and amendments and supplements to any of the foregoing,
including all printing costs associated therewith, and the mailing and
delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related
to the transfer and delivery of the Shares to the Underwriters,
including any transfer or other taxes payable thereon, (iii) the cost
of printing or producing any Blue Sky or Legal Investment memorandum in
connection with the offer and sale of the Shares under state securities
laws and all expenses in connection with the qualification of the
Shares for offer and sale under state securities laws as provided in
Section 6(d) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and the reasonable fees and
disbursements of counsel to the Underwriters incurred in connection
with the review and qualification of the offering of the Shares by the
National Association of Securities Dealers, Inc., (v) all fees and
expenses in connection with the preparation and filing of the
registration statement on Form 8-A relating to the Common Stock and all
costs and expenses incident to listing the Shares on the NYSE, (vi) the
cost of printing certificates representing the Shares, (vii) the costs
and charges of any transfer agent, registrar or depositary, (viii) the
costs and expenses of the Company relating to investor presentations on
any "road show" undertaken in connection with the marketing of the
offering of the Shares, including, without limitation, expenses
associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged in connection with the road
show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and
any such consultants, and the cost of any aircraft chartered in
connection with the road show, (ix) the document production charges and
expenses associated with printing this Agreement and (x) all other
costs and expenses incident to the performance of the obligations of
the Company hereunder for which provision is not otherwise made in this
Section. It is understood, however, that except as provided in this
Section, Section 7 entitled "Indemnity and Contribution," and the last
paragraph of Section 9 below, the Underwriters will pay all of their
costs and expenses, including fees and disbursements of their counsel,
stock transfer taxes payable on resale of any of the Shares by them and
any advertising expenses connected with any offers they may make.
7. Indemnity and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, each person, if any, who controls
any Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or preliminary
prospectus supplement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue
17
statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus or
preliminary prospectus supplement, the Prospectus or any amendments or
supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 7(a) or 7(b), such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated and J.P. Morgan
Securities Inc., in the case of parties indemnified pursuant to Section 7(a),
and by the Company, in the case of parties indemnified pursuant to Section 7(b).
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in Section 7(a)
or 7(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such
18
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Shares or (ii) if the allocation provided by clause 7(d)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 7(d)(i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Shares shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Shares (before deducting expenses) received by
the Company and the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover of the
Prospectus Supplement, bear to the aggregate Public Offering Price of the
Shares. The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the respective number of
Shares they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be
just or equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 7(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 7 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter, any person controlling
any Underwriter or any affiliate of any Underwriter or by or on behalf of the
Company, its officers or directors or any person controlling the Company and
(iii) acceptance of and payment for any of the Shares.
19
8. Termination. The Underwriters may terminate this Agreement by
notice given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq National Market,
the Chicago Board of Options Exchange, the Chicago Mercantile Exchange, the
Chicago Board of Trade, the Chicago Stock Exchange, or (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a material disruption in securities settlement,
payment or clearance services in the United States shall have occurred, (iv) any
moratorium on commercial banking activities shall have been declared by Federal
or New York State authorities or (v) there shall have occurred any outbreak or
escalation of hostilities, or any change in financial markets, currency exchange
rates or controls or any calamity or crisis that, in your judgment, is material
and adverse and which, singly or together with any other event specified in this
clause (v), makes it, in your judgment, impracticable or inadvisable to proceed
with the offer, sale or delivery of the Shares on the terms and in the manner
contemplated in the Prospectus.
9. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares that
it has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule I bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 9 by an amount in excess of one-ninth of such
number of Shares without the written consent of such Underwriter. If, on the
Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase
Firm Shares and the aggregate number of Firm Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Firm Shares to
be purchased, and arrangements satisfactory to you and the Company for the
purchase of such Firm Shares are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case either you or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. If, on an Option Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased on such Option Closing Date, the non-defaulting Underwriters shall
have the option to (i) terminate their obligation hereunder to purchase the
Additional Shares to be sold on such Option Closing Date or (ii) purchase not
less than the number of Additional Shares that such non-defaulting Underwriters
would have been obligated to purchase in the absence of such default. Any action
20
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
10. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
11. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
21
12. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
Very truly yours,
WEYERHAEUSER COMPANY
By: /s/ Jeffrey W. Nitta
-----------------------------
Name: Jeffrey W. Nitta
Title: Vice President and
Treasurer
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
By: /s/ Kenneth G. Pott
-------------------------------------------------
Name: Kenneth G. Pott
Title: Managing Director
J.P. Morgan Securities Inc.
By: /s/ Juan Vogeler
-------------------------------------------------
Name: Juan Vogeler
Title: Vice President
Acting severally on behalf of themselves and the several Underwriters named in
Schedule I hereto.
22
SCHEDULE I
NUMBER OF FIRM SHARES TO BE
UNDERWRITER PURCHASED
- ------------------------------------------------ ----------------------------
Morgan Stanley & Co. Incorporated............... 5,075,000
J.P. Morgan Securities Inc...................... 5,075,000
Citigroup Global Markets Inc.................... 1,450,000
Deutsche Bank Securities Inc.................... 1,450,000
Banc of America Securities LLC.................. 725,000
Scotia Capital (USA) Inc........................ 145,000
RBC Capital Markets Corporation................. 145,000
CIBC World Markets Corp......................... 145,000
PNC Capital Markets, Inc........................ 145,000
Wachovia Capital Markets, LLC................... 145,000
----------
Total................................. 14,500,000
==========
EXHIBIT A
FORM OF LOCK-UP LETTER
April _____, 2004
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
J.P. Morgan Securities Inc.
277 Park Avenue
New York, New York 10172
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated and
J.P. Morgan Securities Inc. (the "Managers") propose to enter into an
Underwriting Agreement (the "Underwriting Agreement") with Weyerhaeuser Company,
a Washington corporation (the "Company"), providing for the public offering (the
"Public Offering") by the several underwriters to be named therein, including
the Managers (the "Underwriters"), of Common Shares, par value $1.25 per share,
of the Company (the "Common Stock").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of the
Managers on behalf of the Underwriters, it will not, during the period (the
"Lock-Up Period") commencing on and including the date hereof and ending on and
including the day that is 90 days after the date of the final prospectus
supplement relating to the Public Offering (the "Prospectus"), (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (a) transactions relating to shares of Common Stock or other securities
acquired in open market transactions after the completion of the Public
Offering, (b) transfers of shares of Common Stock as a bona fide gift or gifts,
(c) transfers of shares of Common Stock to any trust the beneficiaries of which
are exclusively the undersigned or members of the immediate family (as defined
below) of the undersigned, so long as any such transfer shall not involve a
disposition for value, and [THE FOLLOWING CLAUSE (d) IS TO BE OMITTED FROM THE
LOCK-UP AGREEMENTS SIGNED BY PERSONS DESIGNATED WITH AN ASTERISK ON EXHIBIT B TO
THE UNDERWRITING AGREEMENT--] (d) pursuant to a program instituted by the
Company on April 13, 2004 for the cashless exercise of stock options granted on
or prior to April 19, 1999 and the immediate repurchase by the Company of the
shares of Common Stock issued upon such cashless exercises, transfers of such
stock options to the Company to effect any such cashless exercise and the
immediate sale to the Company of the shares of Common Stock issued upon such
cashless exercise (provided that none of the shares of Common Stock sold to the
Company as aforesaid, and none of the shares of Common Stock issuable upon
exercise of any option transferred to the Company as aforesaid, are sold or
otherwise transferred by the Company; and provided, further, that the sum of the
total number of shares of Common Stock issuable upon the exercise of the stock
options transferred to the Company to effect such cashless exercises by the
undersigned and by all other officers and directors of the Company who have
entered into lock-up agreements similar to this agreement plus the total number
of shares of Common Stock issued upon such cashless exercises to the undersigned
and to all other officers and directors of the Company who have entered into
lock-up agreements similar to this agreement shall not exceed 566,314 shares in
the aggregate); provided that, in the case of any transfer pursuant to clause
(b) or (c) of this sentence, each transferee shall sign and deliver to the
Managers, prior to such transfer, a lock-up agreement in substantially the form
of this agreement and otherwise in form and substance reasonably satisfactory to
the Managers (it being understood that any reference to "immediate family" in
the lock-up agreement executed by such transferee shall expressly refer only to
the immediate family of the undersigned and not to the immediate family of the
transferee). As used in this agreement, the term "immediate family" means, with
respect to the undersigned, any relationship by blood, marriage or adoption not
more remote than a first cousin of the undersigned. In addition, the undersigned
agrees that, without the prior written consent of the Managers on behalf of the
Underwriters, it will not, during the Lock-Up Period, make any demand for or
exercise any right with respect to the registration of any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of the undersigned's shares of Common Stock except in compliance
with the foregoing restrictions.
The undersigned understands that the Company and the Underwriters are
relying upon this agreement in proceeding toward consummation of the Public
Offering. The undersigned further understands that this agreement is irrevocable
and shall be binding upon the undersigned's heirs, legal representatives,
successors and assigns.
2
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
______________________________________________
(Name)
______________________________________________
(Address)
3
EXHIBIT B
Marvin D. Cooper
William R. Corbin
Robert A Dowdy
Richard E. Hanson
Richard F. Haskayne*
Robert J. Herbold*
Steven J. Hillyard
Mack L. Hogans
Martha R. Ingram*
James R. Keller
John I. Kieckhefer*
Arnold G. Langbo*
Rt. Hon. Donald F. Mazankowski*
Sandy D. McDade
Susan M. Mersereau
Michael R. Onustock
Nicole W. Piasecki*
Edward P. Rogel
Steven R. Rogel
William D. Ruckelshaus*
Richard H. Sinkfield*
James N. Sullivan*
Richard J. Taggart
Jack P. Taylor
George H. Weyerhaeuser, Jr.
Clayton K. Yeutter*
- ----------------------
* Indicates a person whose lock-up agreement will omit clause (d) of the
second paragraph of Exhibit A to the Underwriting Agreement.
EXHIBIT C
Weyerhaeuser Real Estate Company
Weyerhaeuser International, Inc.
Weyerhaeuser Company Limited
Pardee Homes
Winchester Homes, Inc.
EXHIBIT D
FORM OF OPINION OF ALEX SHORTEN,
VICE PRESIDENT AND GENERAL COUNSEL OF WEYERHAEUSER COMPANY LIMITED
(i) Weyerhaeuser Company Limited is a corporation duly
amalgamated and existing under the laws of Canada and has all requisite
corporate power, authority and capacity to own, lease and operate its
property and assets and to carry out its business as described in the
Prospectus and has filed all annual returns which it is required to
file under the Canada Business Corporations Act and in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such filing, except to the extent that the
failure to make such filings would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole;
(ii) all of the issued shares of common stock of
Weyerhaeuser Company Limited have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims; all of the issued exchangeable shares and
non-voting preference shares of Weyerhaeuser Company Limited have been
duly and validly authorized and issued and are fully paid and
non-assessable and are owned by persons other than the Company or its
subsidiaries;
(iii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene, to the best of such counsel's knowledge, any
agreement or other instrument binding upon Weyerhaeuser Company Limited
or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or, to the best of such counsel's
knowledge, any judgment, order or decree of any governmental body,
agency or court having jurisdiction over Weyerhaeuser Company Limited
or any of its subsidiaries, and no consent, approval, authorization or
order of, or qualification with, any governmental body or agency of
Canada or any province or territory of Canada is required for the
performance by the Company of its obligations under this Agreement;
(iv) such counsel has reviewed the statements
(a) included in the Prospectus Supplement under the
caption "Risk Factors--Our Canadian operations are
subject to additional Canadian environmental
regulations and standards that increase our operating
costs," and "Risk Factors--Common law rights of the
aboriginal peoples of Canada may restrict our timber
harvests in Canada" and
(b) in the sixth, seventh, eighth, ninth, tenth,
eleventh, twelfth and thirteenth paragraphs under the
caption "Description of the
Business of the Company--Natural Resource and
Environmental Matters" included in the Company's 2003
Annual Report to Shareholders (the "Annual Report")
and incorporated in "Part I, Item 1-Business" in the
Company's Annual Report on Form 10-K (the "Form
10-K") for the period ended December 28, 2003,
and such statements, in each case to the extent they constitute matters of law,
summaries of legal or regulatory proceedings or legal conclusions, have been
reviewed by such counsel and are, in the case of the statements in the
Prospectus (including any amendment or supplement thereto), correct as of the
Closing Date and were, in the case of the statements in the other documents
referred to above, correct as of the date the 10-K was filed with the
Commission.
2