-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O+b+NLe+aeiBMC908PJI7wAdzQ33jAq7ESUnxRBbsuS5eNC7k8Hv+iLUOdR4GF+j wxSMVzHbAn1rIjksh1XlxQ== 0000106535-99-000018.txt : 19990802 0000106535-99-000018.hdr.sgml : 19990802 ACCESSION NUMBER: 0000106535-99-000018 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19990730 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEYERHAEUSER CO CENTRAL INDEX KEY: 0000106535 STANDARD INDUSTRIAL CLASSIFICATION: LUMBER & WOOD PRODUCTS (NO FURNITURE) [2400] IRS NUMBER: 910470860 STATE OF INCORPORATION: WA FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-84127 FILM NUMBER: 99674515 BUSINESS ADDRESS: STREET 1: 33663 WEYERHAEUSER WAY SOUTH CITY: FEDERAL WAY STATE: WA ZIP: 98003 BUSINESS PHONE: 2539242345 MAIL ADDRESS: STREET 1: 33663 WEYERHAEUSER WAY SOUTH CITY: FEDERAL WAY STATE: WA ZIP: 98003 S-3 1 As filed with the Securities and Exchange Commission on July 30, 1999 Registration No. 333-____ - -------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------- Weyerhaeuser Company (Exact name of registrant as specified in its charter) Washington 91-0470860 (State of Incorporation) (I.R.S. Employer Identification Number) ---------------------- P.O. Box 2999 Tacoma, Washington 98477 (253) 924-2345 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Sandy D. McDade Corporate Secretary Weyerhaeuser Company P.O. Box 2999 Tacoma, Washington 98477 (253) 924-2345 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Richard Hall Cravath, Swaine & Moore 825 Eighth Avenue New York, New York 10019 Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [x] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
Calculation of Registration Fee ========================================================================== Proposed maximum Proposed Title of each aggregate maximum class of Amount to offering aggregate Amount of securities to be price per offering registration be registered registered unit price fee (1) - -------------------------------------------------------------------------- Common Stock, 14,000,000 $65.375 $915,250,000 $254,440 par value Shares $1.25 ==========================================================================
(1) Calculated in accordance with Rule 457(c) based on the average of the high and low prices of the common stock reported in the consolidated reporting system on July 29, 1999. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. - -------------------------------------------------------------------------- [logo] Weyerhaeuser Company 14,000,000 Shares COMMON STOCK ---------------------- Weyerhaeuser Company may issue from time to time up to 14,000,000 shares of Common Stock in exchange for exchangeable shares (the "Exchangeable Shares") of a special purpose Weyerhaeuser subsidiary, Weyerhaeuser Exchangeco Limited ("Weysub"). Weysub will issue the Exchangeable Shares to shareholders of MacMillan Bloedel Limited who are Canadian residents and who choose to receive the Exchangeable Shares in connection with the acquisition by Weyerhaeuser of MacMillan Bloedel. If the holders of the MacMillan Bloedel's Adjustable Rate Convertible Subordinated Debentures (the "Debentures") approve amendments to the terms of the indenture under which the Debentures were issued, Weysub will also issue Exchangeable Shares to the holders of the Debentures when they are converted under the terms of supplemental indenture that we will enter into with MacMillan Bloedel and the Royal Trust Company, as Trustee. These shareholders may exchange the Exchangeable Shares for our Common Stock at any time. We will redeem any Exchangeable Shares that remain outstanding for Common Stock on December 31, 2007. We will redeem the Exchangeable Shares for Common Stock before December 31, 2007 if there are 1,000,000 or fewer Exchangeable Shares outstanding that are not owned by us or our affiliates. We also will redeem the Exchangeable Shares for Common Stock before December 31, 2007 if certain other events occur. Our Common Stock trades on the New York Stock Exchange, the Pacific Stock Exchange and the Chicago Stock Exchange under the symbol "WY". On July 29, 1999, the last reported sale price of the Common Stock on the New York Stock Exchange was $65.125 per share. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. ---------------------- This Prospectus is dated July 30, 1999. ---------------------- Table of Contents
Page ----- Where You Can Find More Information 3 Incorporation by Reference 3 The Company 4 Use of Proceeds 4 Market Prices and Dividend Policy 4 Description of Weyerhaeuser Capital Stock 5 The Exchangeable Shares 6 Plan of Distribution 6 Experts 6 Legal Matters 6
---------------------- You should rely only on the information contained in this prospectus or to which we have referred you. We have not authorized anyone to provide you with information that is different. This prospectus may only be used where it is legal to sell these securities. The information in this prospectus may only be accurate on the date of this prospectus. 2 WHERE YOU CAN FIND MORE INFORMATION We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith file reports and other information with the Securities and Exchange Commission (the "Commission"). We have filed with the Commission a Registration Statement on Form S-3 regarding this offering. This prospectus, which is part of the Registration Statement, does not contain all of the information set forth in the Registration Statement and you should refer to the Registration Statement and its exhibits and schedules to read that information. References in this prospectus to any contract or any other documents are not necessarily complete, and you should refer to the exhibits attached to the Registration Statement for copies of the actual contract or document. You may read and copy the Registration Statement, the related exhibits and schedules and the other materials we file with the Commission at the Commission's following locations: Public Reference New York Regional Chicago Regional Room Office Office Office 450 Fifth Street, N.W. Seven World Trade Center Citicorp Center Washington, DC 20549 Suite 1300 500 West Madison Street New York, NY 10048 Chicago, IL 60661-2511
You may also obtain copies of the Registration Statement by mail upon payment of a duplicating fee from the Public Reference Section of the Securities and Exchange Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, DC 20549 or by telephone at 1-800-SEC-0330. The Registration Statement is available to the public from commercial document retrieval services and at the Commission's World Wide Website located at http://www.sec.gov. You may also read our reports, proxy and information statements and other information at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York, at the office of the Chicago Stock Exchange, 440 South LaSalle Street, Chicago, Illinois, and at the offices of the Pacific Stock Exchange, 301 Pine Street, San Francisco, California or 233 South Beaudy Avenue, Los Angeles, California. INCORPORATION BY REFERENCE The Commission allows us to "incorporate by reference" in this prospectus other information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus; however, to the extent that there are any inconsistencies between information presented in this prospectus and information contained in incorporated documents filed with the Commission before the date of this prospectus, the information in this prospectus automatically updates and supersedes the earlier information. Information that we file with the Commission after the date of this prospectus will automatically update and supersede the information in this prospectus and any earlier filed or incorporated information. Specifically, we incorporate by reference our Annual Report on Form 10-K for the fiscal year ended December 27, 1998; our Quarterly Report on Form 10-Q for the fiscal quarter ended March 28, 1999; our Current Reports on Form 8-K dated January 7, 1999; January 21, 1999; April 14, 1999; June 22,1999; and July 16, 1999; our Proxy Statement on Schedule 14A dated March 9, 1999; the description of our Common Stock contained in the Registration Statement on Form S-3 dated April 14, 1983; and any future filings made with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until all the Exchangeable Shares have been exchanged for Common Stock. 3 We will provide without charge upon written or oral request, to each person to whom a copy of this prospectus is delivered, a copy of the material described above (not including exhibits to such documents unless such exhibits are specifically incorporated by reference into such documents). Requests should be directed to: Weyerhaeuser Company P.O. Box 2999 Tacoma, Washington 98477 Attention: Richard J. Taggart, Director of Investor Relations (253) 924-2345. THE COMPANY We were incorporated in the state of Washington in January 1900, as Weyerhaeuser Timber Company. We are principally engaged in the growing and harvesting of timber and the manufacture, distribution and sale of forest products and real estate and financial services. Our principal business segments include timberlands, wood products, and pulp, paper and packaging. Our principal executive office is located at 33663 Weyerhaeuser Way S, Federal Way, WA 98003, and its telephone number is (253) 924-5272. USE OF PROCEEDS Because the Common Stock will be issued upon exchange of the Exchangeable Shares, we will receive no cash proceeds from the offering. MARKET PRICES AND DIVIDEND POLICY Our Common Stock is listed and principally traded on the NYSE under the symbol "WY" and is also listed on the Chicago Stock Exchange and the Pacific Stock Exchange. There were approximately 201,166,800 shares of Common Stock held of record by approximately 18,400 stockholders as of July 28, 1999. The table below sets forth the high and low sales prices of the Common Stock as reported for NYSE Composite Transactions and the quarterly cash dividends declared per share of Common Stock during the periods indicated.
Cash Price Range Dividends -------------------- Low High Declared -------- ---------- --------- 1997 First Quarter $44 1/2 $50 5/8 $ 0.400 Second Quarter 42 5/8 55 1/4 0.400 Third Quarter 51 1/2 63 15/16 0.400 Fourth Quarter 46 1/16 60 3/4 0.400 1998 First Quarter $44 15/16 $57 15/16 $0.400 Second Quarter 44 9/16 62 0.400 Third Quarter 36 3/4 47 7/16 0.400 Fourth Quarter 41 3/4 51 11/16 0.400 1999 First Quarter $55 1/2 $62 $0.400 Second Quarter 55 9/16 73 15/16 0.400
See the cover page for the closing price for our Common Stock on the NYSE on July 29, 1999. We anticipate continuing to pay regular quarterly cash dividends; however, the declaration and payment of future dividends will be determined by our Board of Directors in its sole discretion and will depend upon the earnings, financial condition and capital needs of the Company and other factors that our Board of Directors may consider relevant. The terms of our Support Agreement relating to the Exchangeable Shares prohibit us from declaring or paying any dividend on our Common Stock unless (a) Weysub immediately thereafter declares or pays, as 4 the case may be, an equivalent dividend on the Exchangeable Shares and (b) Weysub has sufficient money or other assets or authorized but unissued securities available to enable the due declaration and the due and punctual payment of an equivalent dividend on the Exchangeable Shares. DESCRIPTION OF WEYERHAEUSER CAPITAL STOCK The following description sets forth the general terms of our Capital Stock. The descriptions set forth below do not purport to be complete and are subject to, and are qualified in their entirety by reference to, the Restated Articles of Incorporation, as amended, which are filed as an exhibit to the Registration Statement. General Our authorized capital stock consists of 400,000,000 shares of Common Stock, par value $1.25 per share, 7,000,000 shares of preferred stock, par value $1 per share, issuable in series ("Preferred Stock"), and 40,000,000 shares of preference stock, par value $1 per share ("Preference Stock"), issuable in series. As of July 28, 1999, there were 201,166,800 shares of our Common Stock outstanding and no shares of Preferred Stock or Preference Stock outstanding. Common Stock The Common Stock will be, when issued, fully paid and nonassessable. Our Common Stock does not carry any preemptive rights enabling a holder to subscribe for or receive any additional securities that may be issued from time to time by us. The rights of holders of Common Stock will be subject to the rights of holders of any Preferred Stock and any Preference Stock that may be issued in the future, which may adversely affect the rights of holders of Common Stock. Our Board of Directors may issue additional shares of Common Stock, Preferred Stock or Preference Stock to obtain additional financing, in connection with acquisitions, to officers, directors and employees of the Company and its subsidiaries pursuant to benefit plans or otherwise and for other proper corporate purposes. No preemptive rights, conversion rights, redemption rights or sinking fund provisions are applicable to our Common Stock, and there are no dividends in arrears or default. ChaseMellon Shareholder Services, L.L.C. is the principal transfer agent for our Common Stock. Dividends. The holders of our Common Stock are entitled to receive such dividends as may be declared by the Board of Directors of the Company out of funds legally available for distribution. The rights of holders of Common Stock are subject to the rights of the holders of any class of capital stock of the Company having any preference or priority over the Common Stock. Liquidation Rights. Upon any voluntary or involuntary liquidation, dissolution, or winding-up of the Company, the holders of Common Stock will be entitled to receive ratably, after payment of all of our debts and liabilities and of all sums to which holders of any Preferred Stock or Preference Stock may be entitled, all of the remaining assets of the Company. Voting Rights. The holders of Common Stock currently possess exclusive voting rights on all matters submitted to the Stockholders. However, in connection with the Plan of Arrangement, we expect to issue to a trustee for the benefit of the holders of the Exchangeable Shares a special voting share (described below) carrying voting rights equal to the number of then outstanding Exchangeable Shares not owned by us or our affiliates. Our Board of Directors may also specify voting rights with respect to any Preferred Stock or Preference Stock that may be issued in the future. Each holder of Common Stock is entitled to one vote per share with respect to all matters. There is no cumulative voting in the election of directors. Our Board of Directors is currently comprised of 10 directors, divided into three classes, the precise number of members to be fixed from time to time by the Board of Directors. The directors of the class elected at each annual election hold office for a term of three years, with the term of each class expiring at successive annual meetings of stockholders. An additional director, from the MacMillan Bloedel board of directors, will be appointed to our Board of Directors at or prior to consummation of the acquisition of MacMillan Bloedel, with a term expiring no earlier than 2002. 5 Special Voting Stock Our Board of Directors has designated a series of Preference Stock as "Special Voting Shares," and has authorized the issuance of one share of such series (the "Special Voting Stock"). The holder of the share of Special Voting Stock is entitled to cast a number of votes equal to the number of then outstanding Exchangeable Shares not owned by us or our affiliates. Under the terms of our Voting and Exchange Trust Agreement described below, the holder of the share of Special Voting Stock must receive timely notice from holders of the Exchangeable Shares in order to cast those votes corresponding to the Exchangeable Shares then outstanding. The holders of Common Stock and the holder of the share of Special Voting Stock WILL vote together as a single class on all matters, except as otherwise required by law. The Special Voting Stock, with respect to rights on liquidation, dissolution and winding-up, ranks senior to all classes of Common Stock and junior to any other class or series of Preferred Stock or Preference Stock. In the event of any liquidation, dissolution or winding-up of the Company, the holder of the share of Special Voting Stock will be entitled to receive, prior to any distributions to holders of Common Stock, $1.00 out of the assets of the Company available for distribution to its shareholders. No dividends are payable on the share of Special Voting Stock. The Special Voting Stock will be issued to a Canadian trustee (the "Trustee") under a Voting and Exchange Trust Agreement, which will be entered into by us, Weysub and the Trustee. The Special Voting Stock, and the Exchangeable Shares, may be redeemed on the earlier of, among other dates, December 31, 2007, or when there are 1,000,000 or fewer Exchangeable Shares outstanding not owned by us or our affiliates. THE EXCHANGEABLE SHARES The rights of holders of Exchangeable Shares, including exchange rights, are described in the terms of our Plan of Arrangement with MacMillan Bloedel, which is included as an exhibit to this Registration Statement. PLAN OF DISTRIBUTION The Common Stock offered in this Registration Statement will be issued in exchange for Exchangeable Shares, and no broker, dealer or underwriter has been engaged in connection with this offering. The Exchangeable Shares will be issued to: (1) shareholders of MacMillan Bloedel who are Canadian residents and choose to receive Exchangeable Shares in connection with the acquisition of MacMillan Bloedel by Weyerhaeuser, and (2) holders of the Debentures, if those holders vote in favor of amending the trust indenture governing the Debentures. In the event that the required vote of the holders of the Debentures is obtained, Weyerhaeuser, MacMillan Bloedel and the Royal Trust Company, as trustee, will enter into a supplemental indenture, pursuant to which holders of the Debentures will be entitled to convert their Debentures into Exchangeable Shares after the effective time of the acquisition of MacMillan Bloedel. The conversion of the Debentures into Exchangeable Shares would occur on the same basis as if they had converted their Debentures into shares of MacMillan Bloedel prior to the effective time of the acquisition and those shares of MacMillan Bloedel stock had been exchanged into Exchangeable Shares in connection with the acquisition. If the required vote of the holders of the Debentures is not obtained, MacMillan Bloedel will redeem the Debentures at Weyerhaeuser's request in accordance with the terms of the Debentures. EXPERTS The financial statements and schedules incorporated in this Registration Statement by reference to our Annual Report on Form 10-K for the year ended December 27, 1998 have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are incorporated herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. LEGAL MATTERS The validity of the Common Stock offered in this Registration Statement is being passed upon for us by Claire S. Grace, Esq., our Senior Legal Counsel. 6 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution.(1) Registration Fee $254,400 Legal Fees and Expenses 15,000 Accountants' Fees and Expenses 5,000 Printing and Engraving 0 Listing Fees 64,000 Miscellaneous 0 --------- Total $338,400 =========
- ---------------------------------- (1) All amounts, other than the registration fee, are estimated and are subject to future contingencies. Item 15. Indemnification. The Washington Business Corporation Act sets forth provisions pursuant to which officers and directors of the Registrant may be indemnified against liabilities that they may incur in their capacity as such. Article XII of the Registrant's Bylaws provides for the indemnification of directors and officers of the Registrant against certain liabilities under certain circumstances. Under insurance policies of the Registrant, directors and officers of the Registrant may be indemnified against certain losses arising from certain claims that may be made against such persons by reason of their being such directors or officers. Item 16. Exhibits and Financial Statement Schedules. (a) Exhibits The following exhibits are filed herewith or incorporated herein by reference. CAPTION> Exhibit Number Description - ------- 3.1 Restated Articles of Incorporation, as amended, of Registrant (incorporated by reference to 1997 Form 10-K filed with the Securities and Exchange Commission on March 13, 1998 - Commission File Number 1-4825) 3.2 Bylaws of Registrant (incorporated by reference to 1998 Form 10-K filed with the Securities and Exchange Commission on March 12, 1999 - Commission File Number 1-4825) 5* Opinion of Claire S. Grace, Esq., as to the legality of the Registrant's Common Stock being registered hereby 23.1* Consent of Claire S. Grace, Esq., with respect to the legality of securities being registered (contained in Exhibit 5) 23.2* Consent of Arthur Andersen, LLP, independent public accountants, with respect to financial statements of the Registrant 24* Power of Attorney (included on page II-3) 99* Merger Agreement dated June 20, 1999 among Weyerhaeuser Company and Weyerhaeuser Exchangeco Limited and MacMillan Bloedel Limited, including the Plan of Arrangement
*Filed herewith. II-1 Item 17. Undertakings. (a) The undersigned Registrant hereby undertakes: (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that the undertakings set forth in paragraphs (1)(i) and (1)(ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are incorporated by reference into the Registration Statement; (2) that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in such Act and is, therefore, unenforceable. In the event that such a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in such Act and will be governed by the final adjudication of such issue. II-2 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Federal Way, State of Washington, on this 29th day of July, 1999. WEYERHAEUSER COMPANY By /s/ Sandy D. McDade ---------------------- Sandy D. McDade Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Robert A. Dowdy, Sandy D. McDade and Claire S. Grace, and each of them, as true and lawful attorneys- in-fact, with full power of substitution and resubstitution, to execute in the name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as could be done in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date - -------------------------------------------------------------------------- /s/ Steven R. Rogel President July 29, 1999 - ----------------------------------- Chief Executive Steven R. Rogel Officer and Director /s/ William C. Stivers Executive Vice July 29, 1999 - ----------------------------------- President and Chief William C. Stivers Financial Officer /s/ Kenneth J. Stancato Vice President July 29, 1999 - ----------------------------------- and Controller Kenneth J. Stancato
II-3
Signature Title Date - -------------------------------------------------------------------------- /s/ W. John Driscoll Director July 29, 1999 - ----------------------------------- W. John Driscoll - ----------------------------------- Philip M. Hawley Director July 29, 1999 /s/ Martha R. Ingram Director July 29, 1999 - ----------------------------------- Martha R. Ingram /s/ John I. Kieckhefer Director July 29, 1999 - ----------------------------------- John I. Kieckhefer /s/ Rt. Hon. Donald F. Mazankowski Director July 29, 1999 - ----------------------------------- Rt. Hon. Donald F. Mazankowski /s/ William D. Ruckelshaus Director July 29, 1999 - ----------------------------------- William D. Ruckelshaus /s/ Richard H. Sinkfield Director July 29, 1999 - ----------------------------------- Richard H. Sinkfield /s/ James N. Sullivan Director July 29, 1999 - ----------------------------------- James N. Sullivan /s/ George H. Weyerhaeuser Director July 29, 1999 - ----------------------------------- George H. Weyerhaeuser
II-4 EXHIBIT INDEX CAPTION> Exhibit Number Description - ------- 3.1 Restated Articles of Incorporation, as amended, of Registrant (incorporated by reference to 1997 Form 10-K filed with the Securities and Exchange Commission on March 13, 1998 - Commission File Number 1-4825) 3.2 Bylaws of Registrant (incorporated by reference to 1998 Form 10-K filed with the Securities and Exchange Commission on March 12, 1999 - Commission File Number 1-4825) 5* Opinion of Claire S. Grace, Esq., as to the legality of the Registrant's Common Stock being registered hereby 23.1* Consent of Claire S. Grace, Esq., with respect to the legality of securities being registered (contained in Exhibit 5) 23.2* Consent of Arthur Andersen, LLP, independent public accountants, with respect to financial statements of the Registrant 24* Power of Attorney (included on page II-3) 99* Merger Agreement dated June 20, 1999 among Weyerhaeuser Company and Weyerhaeuser Exchangeco Limited and MacMillan Bloedel Limited, including the Plan of Arrangement
*Filed herewith. EXHIBIT 5 [Letterhead of Weyerhaeuser Company] July 30, 1999 Ladies and Gentlemen: Reference is made to the Registration Statement on Form S-3 pursuant to the Securities Act of 1933, as amended, which is being filed with the Securities and Exchange Commission by Weyerhaeuser Company, a Washington corporation ("Weyerhaeuser"), on or about July 30, 1999 (the "Registration Statement"), relating to 14,000,000 common shares of Weyerhaeuser Company, par value $1.25 per share (the "Common Stock"). The Common Stock is issuable pursuant to the terms of the Merger Agreement dated as of June 20, 1999 (the "Merger Agreement"), among Weyerhaeuser, Weyerhaeuser Exchangeco Limited ("Weysub"), an indirectly owned subsidiary of Weyerhaeuser, and MacMillan Bloedel Limited ("MB"), which provides for the acquisition of MB by Weyerhaeuser and certain other transactions related thereto. The shares of Common Stock are subject to issuance in connection with a plan of arrangement under Canadian law involving MB and its shareholders (the "Arrangement") pursuant to which each holder of common shares of MB who is a Canadian resident (other than holders who properly exercise their dissent rights) will be entitled to receive in connection with the acquisition, at the election of such holder, exchangeable shares of Weysub (the "Exchangeable Shares") or shares of the common stock of Weyerhaeuser. The Exchangeable Shares are subsequently exchangeable for shares of Common Stock covered by the Registration Statement. Shares of Common Stock are also subject to issuance upon the exchange (by way of purchase or redemption) of Exchangeable Shares in accordance with the Voting and Exchange Trust Agreement (the "Voting and Exchange Trust Agreement"), which will be entered into by Weyerhaeuser, Weysub and a Canadian trustee, as trustee. If the holders of MB's Adjustable Rate Convertible Subordinated Debentures (the "Debentures") approve certain amendments to the terms of the trust indenture under which the Debentures were issued, the holders of the Debentures will be entitled to receive Exchangeable Shares upon the conversion of the Debentures, and, subsequently, the Common Stock may also be issued upon the exchange of such Exchangeable Shares. In connection with the preparation and filing of the Registration Statement, I have examined and am familiar with, among other things, Weyerhaeuser's Restated Articles of Incorporation, as amended, the Bylaws of Weyerhaeuser and the corporate proceedings taken to date with respect to the issuance of the Common Stock. I am rendering this opinion as of the time the Registration Statement becomes effective. Based upon the foregoing, and having regard to legal considerations I deem relevant, I am of the opinion that: 1. Weyerhaeuser is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington; and 2. The Common Stock, when issued upon the exchange of Exchangeable Shares in accordance with the terms of the Voting and Exchange Trust Agreement, will be duly authorized, validly issued, fully paid and nonassessable. I hereby consent to the filing of this opinion as an Exhibit to the Registration Statement, and to the reference to my name under the heading "Legal Matters" in the Prospectus. Very truly yours, /s/ Claire S. Grace Claire S. Grace, Esq. Senior Legal Counsel EXHIBIT 23.2 Consent of Independent Public Accountants As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our reports dated February 10, 1999 included (or incorporated by reference) in Weyerhaeuser Company's Form 10-K for the year ended December 27, 1998 and to all references to our Firm included in this registration statement. ARTHUR ANDERSEN LLP Seattle, Washington July 30, 1999 EX-99 2 MERGER AGREEMENT MEMORANDUM OF AGREEMENT made the 20th day of June, 1999. BETWEEN: WEYERHAEUSER COMPANY a corporation existing under the laws of the State of Washington (hereinafter referred to as "Weyerhaeuser") - and - 586476 B.C. LTD. a company existing under the laws of the Province of British Columbia (hereinafter referred to as "Weysub") - and - MACMILLAN BLOEDEL LIMITED a corporation existing under the laws of Canada (hereinafter referred to as "MB") THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants and agreements herein contained, the parties hereto covenant and agree as follows: ARTICLE 1 INTERPRETATION 1.1 Definitions In this Agreement, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the following meanings respectively: "1933 Act" means the United States Securities Act of 1933, as amended; "Acquisition Proposal" means any bona fide proposal with respect to any merger, amalgamation, arrangement, take-over bid, sale of assets (excluding inventory sold in the ordinary course of business) representing more than 25% of the book value (on a consolidated basis) of MB's total assets (or any lease, long-term supply agreement or other arrangement having the same economic effect as a sale), any sale of more than 25% -1- of the MB Common Shares then outstanding or similar transactions involving MB or any Material Subsidiary, or a proposal to do so, excluding the Arrangement; "Affected Employees" has the meaning ascribed thereto in section 4.10; "Affected Retirees" has the meaning ascribed thereto in section 4.10; "affiliate" has the meaning ascribed thereto in the Securities Act, unless otherwise expressly stated herein; "Affiliate's Letter" means a letter, to be substantially in the form and content of Schedule A-1 or A-2 annexed hereto, as applicable; "Appropriate Regulatory Approvals" means those sanctions, rulings, consents, orders, exemptions, permits and other approvals (including the lapse, without objection, of a prescribed time under a statute or regulation that states that a transaction may be implemented if a prescribed time lapses following the giving of notice without an objection being made) of Governmental Entities, regulatory agencies or self-regulatory organizations, as set out in Schedule B hereto; "Arrangement" means an arrangement under section 192 of the CBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations thereto made in accordance with section 6.1 or Article 6 of the Plan of Arrangement or made at the direction of the Court in the Final Order; "Arrangement Resolution" means the special resolution of the MB Shareholders, to be substantially in the form and content of Schedule C annexed hereto; "Articles of Arrangement" means the articles of arrangement of MB in respect of the Arrangement that are required by the CBCA to be sent to the Director after the Final Order is made; "Business Day" means any day on which commercial banks are generally open for business in Seattle, Washington and Vancouver, British Columbia other than a Saturday, a Sunday or a day observed as a holiday in Seattle, Washington under the laws of the State of Washington or the federal laws of the United States of America or in Vancouver, British Columbia under the laws of the Province of British Columbia or the federal laws of Canada; "CBCA" means the Canada Business Corporations Act as now in effect and as it may be amended from time to time prior to the Effective Date; "Circular" means the notice of the MB Meeting and accompanying management information circular, including all schedules and exhibits thereto, to be sent to holders of MB Common Shares and MB Options in connection with the MB Meeting; "Code" has the meaning ascribed thereto in section 3.1(k)(ii); -2- "Confidentiality Agreement" means the confidentiality letter agreement dated May 21, 1999 between Weyerhaeuser and MB; "Court" means the Supreme Court of British Columbia; "Debenture Circular" means the notice of the Debenture Meeting and accompanying management information circular, including all exhibits and schedules thereto, to be sent to the holders of MB Convertible Debentures in connection with the Debenture Meeting; "Debenture Meeting" has the meaning ascribed thereto in section 2.1(b); "Director" means the Director appointed pursuant to section 260 of the CBCA; "Dissent Rights" means the rights of dissent in respect of the Arrangement described in section 3.1 of the Plan of Arrangement; "Dissenting Shareholder" has the meaning ascribed thereto in the Plan of Arrangement; "Drop Dead Date" means February 15, 2000, or such later date as may be mutually agreed by the parties to this Agreement; "Effective Date" means the date shown on the certificate of arrangement to be issued by the Director under the CBCA giving effect to the Arrangement provided that such date occurs on or prior to the Drop Dead Date; "Effective Time" has the meaning ascribed thereto in the Plan of Arrangement; "Election Deadline" means 5:00 p.m. (local time) at the place of deposit on the date which is two Business Days prior to the date of the MB Meeting; "Environmental Laws" means all applicable Laws, including applicable common law, relating to the protection of the environment and public health and safety; "Environmental Permits" has the meaning ascribed thereto in section 3.1(j)(ii); "ERISA" has the meaning ascribed thereto in section 3.1(l)(i); "Exchange Act" has the meaning ascribed thereto in section 2.6(d); "Exchange Ratio" has the meaning ascribed thereto in the Plan of Arrangement; "Exchangeable Elected Share" has the meaning ascribed thereto in the Plan of Arrangement; "Exchangeable Shares" means the non-voting exchangeable shares in the capital of Weysub, having substantially the rights, privileges, restrictions and conditions set out in Appendix I to the Plan of Arrangement; -3- "Final Order" means the final order of the Court approving the Arrangement as such order may be amended by the Court at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed; "Form S-3" has the meaning ascribed thereto in section 2.6(b); "Form S-8" has the meaning ascribed thereto in section 2.6(c); "Governmental Entity" means any (a) multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (b) any subdivision, agent, commission, board, or authority of any of the foregoing, or (c) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing; "Hazardous Substance" means any pollutant, contaminant, waste of any nature, hazardous substance, hazardous material, toxic substance, dangerous substance or dangerous good as defined or identified in or regulated by any Environmental Law; "including" means including without limitation; "Information" has the meaning ascribed thereto in section 4.7(b); "Interim Order" means the interim order of the Court, as the same may be amended, in respect of the Arrangement, as contemplated by section 2.3; "Laws" means all statutes, regulations, statutory rules, orders, and terms and conditions of any grant of approval, permission, authority or license of any court, Governmental Entity, statutory body (including The Toronto Stock Exchange) or self-regulatory authority, and the term "applicable" with respect to such Laws and in the context that refers to one or more Persons, means that such Laws apply to such Person or Persons or its or their business, undertaking, property or securities and emanate from a Governmental Entity having jurisdiction over the Person or Persons or its or their business, undertaking, property or securities; "Letter of Transmittal and Election Form" means the letter of transmittal and election form for use by holders of MB Common Shares, in the form accompanying the Circular; "Material Adverse Change", when used in connection with Weyerhaeuser or MB, means any change, effect, event or occurrence with respect to its condition (financial or otherwise), properties, assets, liabilities, obligations (whether absolute, accrued conditional or otherwise), businesses, operations or results of operations or those of its subsidiaries that is, or would reasonably be expected to be, material and adverse to the business, operations or financial condition of such party and its subsidiaries taken as a whole other than any change, effect, event or occurrence (i) relating to the Canadian or United States' economy or securities markets in general or (ii) affecting the Canadian or United States forest products industry in general; -4- "Material Adverse Effect" when used in connection with Weyerhaeuser or MB, means any effect that is, or would reasonably be expected to be, material and adverse to the business, operations or financial condition of such party and its subsidiaries taken as a whole; "Material Subsidiary" means each subsidiary of MB, the total assets of which constituted more than ten percent of the consolidated assets of MB or the total revenues of which constituted more than ten percent of the consolidated revenues of MB, in each case as set out in the financial statements of MB for the year ended December 31, 1998 and including each affiliate of MB that directly or indirectly holds an equity interest in each such subsidiary; "MB Common Shares" means the outstanding common shares in the capital of MB; "MB Convertible Debentures" means the debentures of MB convertible at the holder's option into MB Common Shares at a conversion price of $28.625 per MB Common Share or, at MB's option, redeemable for cash at any time or, upon maturity in 2007, for MB Common Shares; "MB Disclosure Letter" means that certain letter dated as of even date herewith and delivered by MB to the Weyerhaeuser Parties; "MB Dividend Reinvestment Plan" means the plan of MB existing on the date hereof pursuant to which holders of MB Common Shares may elect to receive dividends in equivalent value of MB Common Shares in lieu of cash; "MB Documents" has the meaning ascribed thereto in section 3.1(m); "MB Employee Share Purchase Plans" means the share purchase plan for MB employees in Canada and the share purchase plan for MB employees in the United States, in each case, as amended; "MB Meeting" means the special meeting of MB Shareholders, including any adjournment thereof, to be called and held in accordance with the Interim Order to consider the Arrangement; "MB Options" means the MB Common Share purchase options granted under MB Stock Option Plan, as amended, and under separate agreements with three senior officers of MB, and being outstanding and unexercised on the Effective Date; "MB Partially Owned Entity" means Trus Joist MacMillan a Limited Partnership, a joint venture in which MB has a 49% interest; "MB Plans" has the meaning ascribed thereto in section 3.1(l)(1); "MB Preferred Shares" means the Class B Preferred Shares, Series 8 and Series 10, in the capital of MB; -5- "MB Shareholders" means the holders of MB Common Shares, MB Options and MB Warrants, collectively; "MB Stock Option Plan" means MB's Senior Management Stock Option Plan instituted February 10, 1997; "MB Target Stock Units" means the units granted by MB to officers and senior managers employed in the Packaging Business in the United States pursuant to which the holders of such units may elect to receive the difference between the issue price and the calculated value of the units after holding them for a one-year period; "MB Warrants" means the bearer warrants of MB exercisable for MB Common Shares and being outstanding and unexercised on the Effective Date; "OSC" means the Ontario Securities Commission; "Packaging Business" means MB's business related to containerboard, linerboard, corrugated medium, corrugating and other packaging products, including the assets and operations in Sturgeon Falls, Ontario, the assets and operations of MacMillan Bloedel Pulp and Paper Sales Ltd., and the assets and operations of MacMillan Bloedel Packaging Inc. and its subsidiaries including associated timberlands and mills; "Person" includes any individual, firm, partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, Governmental Entity, syndicate or other entity, whether or not having legal status; "Plan of Arrangement" means the plan of arrangement substantially in the form and content of Schedule D annexed hereto and any amendments or variations thereto made in accordance with section 6.1 or Article 6 of the Plan of Arrangement or made at the direction of the Court in the Final Order; "Pre-Effective Date Period" shall mean the period from and including the date hereof to and including the Effective Time on the Effective Date; "Publicly Disclosed by MB" means disclosed by MB in a public filing made by it with the OSC from January 1, 1997 to and including March 31, 1999; "Publicly Disclosed by Weyerhaeuser" means disclosed by Weyerhaeuser in a public filing made by it with the SEC from January 1, 1997 to and including March 31, 1999; "Replacement Option" has the meaning ascribed thereto in section 2.4(c); "Representatives" has the meaning ascribed thereto in section 4.7(a); "SEC" means the United States Securities and Exchange Commission; -6- "Securities Act" means the Securities Act (Ontario) and the rules, regulations and policies made thereunder, as now in effect and as they may be amended from time to time prior to the Effective Date; "Special Voting Share" means the share of Weyerhaeuser Special Voting Preferred Stock having substantially the rights, privileges, restrictions and conditions described in the Voting and Exchange Trust Agreement; "Specified Weyerhaeuser Event" means the occurrence of a Material Adverse Change with respect to Weyerhaeuser, or a breach by a Weyerhaeuser Party of its obligations hereunder, if by reason thereof, and taking into account section 5.4, MB would be entitled to rely on the failure of a condition set forth in sections 5.3(a), 5.3(b) or 5.3(c) as a reason not to complete the Arrangement; "subsidiary" means, with respect to a specified body corporate, any body corporate of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the board of directors thereof (whether or not shares of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by such specified body corporate and shall include any body corporate, partnership, joint venture or other entity over which it exercises direction or control or which is in a like relation to a subsidiary; "Superior Proposal" means any bona fide proposal by a third party directly or indirectly, to acquire assets representing more than 50% of the book value (on a consolidated basis) of MB's total assets or more than 50% of the outstanding MB Common Shares, whether by way of merger, amalgamation, arrangement, take-over bid, sale of assets or otherwise, and that in the good faith determination of the Board of Directors of MB after consultation with financial advisors and outside counsel (a) is reasonably capable of being completed, taking into account all legal, financial, regulatory and other aspects of such proposal and the party making such proposal, and (b) would, if consummated in accordance with its terms, result in a transaction (x) more favourable to MB's Shareholders than the transaction contemplated by this Agreement and (y) having a blended value per MB Common Share greater than the per share value attributable thereto under the transaction contemplated by this Agreement; "Support Agreement" means an agreement to be made between Weyerhaeuser, Weyerhaeuser Newco and Weysub substantially in the form and content of Schedule E annexed hereto, with such changes thereto as the parties hereto, acting reasonably, may agree; "Tax" and "Taxes" have the respective meanings ascribed thereto in section 3.1(k) (iii); "Tax Returns" means all returns, declarations, reports, information returns and statements required to be filed with any taxing authority relating to Taxes; -7- "Trustee" means the trustee to be chosen by Weyerhaeuser and MB, acting reasonably, to act as trustee under the Voting and Exchange Trust Agreement, being a corporation organized and existing under the laws of Canada and authorized to carry on the business of a trust company in all the provinces of Canada, and any successor trustee appointed under the Voting and Exchange Trust Agreement; "Voting and Exchange Trust Agreement" means an agreement to be made between Weyerhaeuser, Weysub and the Trustee in connection with the Plan of Arrangement substantially in the form and content of Schedule F annexed hereto, with such changes thereto as the parties hereto, acting reasonably, may agree. "Weyerhaeuser Common Shares" means the shares of common stock in the capital of Weyerhaeuser; "Weyerhaeuser Elected Share" has the meaning ascribed thereto in the Plan of Arrangement; "Weyerhaeuser Material Subsidiary" means each subsidiary of Weyerhaeuser, the total assets of which constituted more than ten percent of the consolidated assets of Weyerhaeuser or the total revenues of which constituted more than ten percent of the consolidated revenues of Weyerhaeuser, in each case as set out in the financial statements of Weyerhaeuser for the year ended December 27, 1998 and including each affiliate of Weyerhaeuser that directly or indirectly holds an equity interest in each such subsidiary; "Weyerhaeuser Newco" means 586474 B.C. Ltd., a company existing under the laws of the Province of British Columbia and being a wholly-owned subsidiary of Weyerhaeuser; "Weyerhaeuser Parties" means Weyerhaeuser and Weysub; and "Year 2000 Compliant" has the meaning ascribed thereto in section 3.1(w)(ii). 1.2 Interpretation Not Affected by Headings, etc. The division of this Agreement into Articles, sections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof. Unless otherwise indicated, all references to an "Article" or "section" followed by a number and/or a letter refer to the specified Article or section of this Agreement. The terms "this Agreement", "hereof", "herein" and "hereunder" and similar expressions refer to this Agreement (including the Schedules hereto) and not to any particular Article, section or other portion hereof and include any agreement or instrument supplementary or ancillary hereto. 1.3 Currency Unless otherwise specifically indicated, all sums of money referred to in this Agreement are expressed in lawful money of Canada. -8- 1.4 Number, etc. Unless the context otherwise requires, words importing the singular shall include the plural and vice versa and words importing any gender shall include all genders. 1.5 Date For Any Action In the event that any date on which any action is required to be taken hereunder by any of the parties hereto is not a Business Day, such action shall be required to be taken on the next succeeding day which is a Business Day. 1.6 Entire Agreement This Agreement and the agreements and other documents herein referred to constitute the entire agreement between the parties hereto pertaining to the terms of the Arrangement and supersede all other prior agreements, understandings, negotiations and discussions, whether oral or written, between the parties hereto with respect to the terms of the Arrangement. 1.7 Schedules The following Schedules are annexed to this Agreement and are hereby incorporated by reference into this Agreement and form part hereof: Schedule A - Affiliate's Letter (A-1 and A-2) Schedule B - Appropriate Regulatory Approvals Schedule C - Arrangement Resolution Schedule D - Plan of Arrangement Schedule E - Support Agreement Schedule F - Voting and Exchange Trust Agreement 1.8 Accounting Matters Unless otherwise stated, all accounting terms used in this Agreement in respect of MB shall have the meanings attributable thereto under Canadian generally accepted accounting principles and all determinations of an accounting nature in respect of MB required to be made shall be made in a manner consistent with Canadian generally accepted accounting principles and past practice. Unless otherwise stated, all accounting terms used in this Agreement in respect of Weyerhaeuser shall have the meanings attributable thereto under United States generally accepted accounting principles and all determinations of an accounting nature required to be made in respect of Weyerhaeuser shall be made in a manner consistent with United States generally accepted accounting principles and past practice. 1.9 Knowledge Each reference herein to the knowledge of a party means, unless otherwise specified, the existing knowledge of such party without inquiry. -9- ARTICLE 2 THE ARRANGEMENT 2.1 Implementation Steps by MB MB covenants in favour of the Weyerhaeuser Parties that MB shall: (a) subject to section 2.5, as soon as reasonably practicable, apply in a manner acceptable to the Weyerhaeuser Parties, acting reasonably, under section 192 of the CBCA for an order approving the Arrangement and for the Interim Order, and thereafter proceed with and diligently seek the Interim Order; (b) subject to 2.5(b), convene and hold a meeting (the "Debenture Meeting") of holders of MB Convertible Debentures to consider and vote on a proposal to amend the trust indenture governing the MB Convertible Debentures to provide that from and after the Effective Time each $1,000 principal amount of MB Convertible Debentures may be converted by the holder thereof only into that number of Exchangeable Shares that such holder would have received if its MB Convertible Debentures had been validly converted into MB Common Shares immediately prior to the Effective Time, together with all necessary or desirable amendments arising as a result thereof; (c) subject to section 2.5(a), convene and hold the MB Meeting for the purpose of considering the Arrangement Resolution (and for any other proper purpose as may be set out in the notice for such meeting); (d) subject to obtaining the approvals as are required by the Interim Order, proceed with and diligently pursue the application to the Court for the Final Order; and (e) subject to obtaining the Final Order and the satisfaction or waiver of the other conditions herein contained in favour of each party, send to the Director, for endorsement and filing by the Director, the Articles of Arrangement and such other documents as may be required in connection therewith under the CBCA to give effect to the Arrangement. 2.2 Implementation Steps by Weyerhaeuser Parties The Weyerhaeuser Parties covenant in favour of MB that, on or prior to the Effective Date and subject to the satisfaction or waiver of the other conditions herein contained in favour of each such party: (a) Weyerhaeuser, Weyerhaeuser Newco and Weysub shall execute and deliver the Support Agreement; (b) Weyerhaeuser and Weysub shall execute and deliver the Voting and Exchange Trust Agreement; and -10- (c) Weyerhaeuser shall issue to the Trustee the Special Voting Share. 2.3 Interim Order The notice of motion for the application referred to in section 2.1 (a) shall request that the Interim Order provide: (a) for the class of Persons to whom notice is to be provided in respect of the Arrangement and the MB Meeting and for the manner in which such notice is to be provided; (b) that the requisite approval for the Arrangement Resolution shall be 66 2/3% of the votes cast on the Arrangement Resolution by MB Shareholders present in person or by proxy at the MB Meeting (such that each holder of MB Common Shares is entitled to one vote for each MB Common Share held, each holder of MB Options is entitled to one vote for each MB Common Share such holder would have received on a valid exercise of MB Options and each holder of MB Warrants is entitled to one vote for each MB Common Share such holder would have received on a valid exercise of MB Warrants); (c) that, in all other respects, the terms, restrictions and conditions of the by-laws and articles of MB, including quorum requirements and all other matters, shall apply in respect of the MB Meeting; and (d) for the grant of the Dissent Rights. 2.4 Articles of Arrangement The Articles of Arrangement shall, with such other matters as are necessary to effect the Arrangement, and all as subject to the provisions of the Plan of Arrangement, provide substantially as follows: (a) each outstanding MB Common Share that is not held by a holder who has exercised its Dissent Rights and is ultimately entitled to be paid the fair value of the MB Common Shares (other than MB Common Shares held by Weyerhaeuser or any subsidiary or affiliate thereof), will be transferred by the holder thereof to Weysub in exchange for, at the holder's election, that number of fully paid and non-assessable Weyerhaeuser Common Shares or Exchangeable Shares, as the case may be, equal to the Exchange Ratio, and the name of each such holder of MB Common Shares will be removed from the register of holders of MB Common Shares and added to the register of holders of Weyerhaeuser Common Shares or Exchangeable Shares, as the case may be, and Weysub will be recorded as the registered holder of such MB Common Shares so exchanged and will be deemed to be the legal and beneficial owner thereof; provided that, notwithstanding the foregoing, holders of MB Common Shares, who are not residents of Canada for the purposes of the Income Tax Act (Canada) will not be entitled to elect to receive Exchangeable Shares, and any such election otherwise -11- made by any such holder shall be and be deemed to be an election to receive Weyerhaeuser Common Shares; (b) each MB Common Share in respect of which no election has been made by the holder thereof, or in respect of which an effective election has not been made (other than (i) MB Common Shares held by Dissenting Shareholders who are ultimately entitled to be paid the fair value of the MB Common Shares held by them and (ii) MB Common Shares held by Weyerhaeuser or any subsidiary or affiliate thereof which shall not be exchanged under the Arrangement and shall remain outstanding as MB Common Shares held by Weyerhaeuser or any subsidiary or affiliate thereof) and each MB Warrant, as the case may be, will be deemed to be an Exchangeable Elected Share and will be transferred by the holder thereof, without any act or formality on its part, to Weysub in exchange for that number of fully paid and non-assessable Exchangeable Shares equal to the Exchange Ratio, and the name of each such holder of MB Common Shares will be removed from the register of holders of MB Common Shares and added to the register of holders of Exchangeable Shares and Weysub will be recorded as the registered holder of such MB Common Shares so exchanged and will be deemed to be the legal and beneficial owner of such MB Common Shares and MB Warrants; provided that, notwithstanding the foregoing, each MB Common Share in respect of which no election has been made, or in respect of which an effective election has not been made, held by a holder who is not (and in the case of each MB Warrant, each holder thereof shall be deemed to be not) a resident of Canada for the purposes of the Income Tax Act (Canada), as amended (other than (i) MB Common Shares held by Dissenting Shareholders who are ultimately entitled to be paid the fair value of the MB Common Shares held by them and (ii) MB Common Shares held by Weyerhaeuser or any subsidiary or affiliate thereof which shall not be exchanged under the Arrangement and shall remain outstanding as MB Common Shares held by Weyerhaeuser or any subsidiary or affiliate thereof) will be deemed to be a Weyerhaeuser Elected Share and will be transferred by the holder thereof, without any act or formality on his part, to Weysub in exchange for that number of fully paid and non-assessable Weyerhaeuser Common Shares equal to the Exchange Ratio, and the name of each such holder of MB Common Shares will be removed from the register of holders of MB Common Shares and added to the register of holders of Weyerhaeuser Common Shares and Weysub will be recorded as the registered holder of such MB Common Shares so exchanged and will be deemed to be the legal and beneficial owner thereof; and (c) each MB Option shall be exchanged for an option (a "Replacement Option") to purchase that number of Weyerhaeuser Common Shares equal to the number of MB Common Shares subject to such MB Option multiplied by the Exchange Ratio. -12- 2.5 MB Circulars (a) As promptly as practicable after the execution and delivery of this Agreement, Weyerhaeuser and MB shall prepare the Circular together with any other documents required by the Securities Act or other applicable Laws in connection with the Arrangement, and as promptly as practicable after the execution and delivery of this Agreement, and in any event, before September 30, 1999, MB shall cause the Circular and other documentation required in connection with the MB Meeting to be sent to each holder of MB Common Shares and MB Options and filed as required by the Interim Order and applicable Laws. (b) As promptly as practicable after the execution and delivery of this Agreement, Weyerhaeuser and MB shall prepare the Debenture Circular together with any documents required by the trust indenture governing the MB Convertible Debentures, the Securities Act or other applicable Laws in connection with the Debenture Meeting and, unless otherwise agreed by the parties, MB shall, concurrently with the sending of the Circular to the holders of MB Common Shares and MB Options, cause the Debenture Circular and other documentation required in connection with the Debenture Meeting to be sent to each holder of MB Convertible Debentures and filed as required by the trust indenture governing the MB Convertible Debentures and applicable Laws. 2.6 Securities Compliance (a) Weyerhaeuser shall use all reasonable efforts to obtain all orders required from the applicable Canadian securities authorities to permit the issuance and first resale of (a) the Exchangeable Shares and Weyerhaeuser Common Shares issued pursuant to the Arrangement, (b) the Weyerhaeuser Common Shares issued upon exchange of the Exchangeable Shares from time to time and (c) the Weyerhaeuser Common Shares issued from time to time upon the exercise of the Replacement Options, in each case without qualification with or approval of or the filing of any prospectus or similar document, or the taking of any proceeding with, or the obtaining of any further order, ruling or consent from, any Governmental Entity or regulatory authority under any Canadian federal, provincial or territorial securities or other Laws or pursuant to the rules and regulations of any regulatory authority administering such Laws, or the fulfillment of any other legal requirement in any such jurisdiction (other than, with respect to such first resales, any restrictions on transfer by reason of, among other things, a holder being a "control person" of Weyerhaeuser or MB for purposes of Canadian federal, provincial or territorial securities Laws). -13- (b) As promptly as practicable after the date hereof, Weyerhaeuser shall file a registration statement on Form S-3 (or other applicable form) (the "Form S-3") in order to register under the 1933 Act the Weyerhaeuser Common Shares to be issued from time to time after the Effective Time upon exchange of the Exchangeable Shares and shall use its reasonable efforts to cause the Form S-3 to become effective and to maintain the effectiveness of such registration for the period that such Exchangeable Shares remain outstanding. (c) As promptly as practicable after the Effective Date, Weyerhaeuser shall file a registration statement on Form S-8 (or other applicable form) ( the "Form S-8") in order to register under the 1933 Act those Weyerhaeuser Common Shares to be issued from time to time after the Effective Time upon the exercise of the Replacement Options. (d) MB and Weyerhaeuser shall take all such steps as may be required to cause the transactions contemplated by Article 2 and any other dispositions of MB equity securities and/or acquisitions of Weyerhaeuser equity securities (including, in each case derivative securities) in connection with this Agreement or the transactions contemplated hereby by any individual who is a director or officer of MB, to be exempt under Rule 16b-3 promulgated under the United States Securities Exchange Act of 1934, as amended (the "Exchange Act"). (e) The provisions of this section 2.6 shall apply, mutatis mutandis, in respect of the Debenture Circular and the matters referred to therein. 2.7 Preparation of Filings (a) Weyerhaeuser and MB shall cooperate in: (i) the preparation of any application for the orders and the preparation of any required registration statements and any other documents reasonably deemed by Weyerhaeuser or MB to be necessary to discharge their respective obligations under United States and Canadian federal, provincial, territorial or state securities Laws in connection with the Arrangement and the other transactions contemplated hereby; (ii) the taking of all such action as may be required under any applicable United States and Canadian federal, provincial, territorial or state securities Laws (including "blue sky laws") in connection with the issuance of the Exchangeable Shares and the Weyerhaeuser Common Shares in connection with the Arrangement or the exercise of the Replacement Options; provided, however, that with respect to the United States "blue sky" and Canadian provincial qualifications neither Weyerhaeuser nor MB shall be required to register or qualify as a foreign corporation or to take any action that would subject it to service of process in any jurisdiction where such entity is not now so subject, except as to -14- matters and transactions arising solely from the offer and sale of the Exchangeable Shares and the Weyerhaeuser Common Shares; and (iii) the taking of all such action as may be required under the CBCA in connection with the transactions contemplated by this Agreement and the Plan of Arrangement. (b) Each of Weyerhaeuser and MB shall furnish to the other all such information concerning it and its shareholders as may be required (and, in the case of its shareholders, available to it) for the effectuation of the actions described in sections 2.5 and 2.6 and the foregoing provisions of this section 2.7, and each covenants that no information furnished by it (to its knowledge in the case of information concerning its shareholders) in connection with such actions or otherwise in connection with the consummation of the Arrangement and the other transactions contemplated by this Agreement will contain any untrue statement of a material fact or omit to state a material fact required to be stated in any such document or necessary in order to make any information so furnished for use in any such document not misleading in the light of the circumstances in which it is furnished. (c) Weyerhaeuser and MB shall each promptly notify the other if at any time before or after the Effective Time it becomes aware that the Circular or an application for an order or a registration statement described in section 2.6 contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made, or that otherwise requires an amendment or supplement to the Circular or such application or registration statement. In any such event, Weyerhaeuser and MB shall cooperate in the preparation of a supplement or amendment to the Circular or such other document, as required and as the case may be, and, if required, shall cause the same to be distributed to shareholders of Weyerhaeuser or MB and/or filed with the relevant securities regulatory authorities. (d) MB shall ensure that the Circular complies with all applicable Laws and, without limiting the generality of the foregoing, that the Circular does 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 contained therein not misleading in light of the circumstances in which they are made (other than with respect to any information relating to and provided by the Weyerhaeuser Parties or any third party that is not an affiliate of MB). Without limiting the generality of the foregoing, MB shall ensure that the Circular provides holders of MB Common Shares with information in sufficient detail to permit them to form a reasoned judgment concerning the matters to be placed before them at the MB Meeting and Weyerhaeuser shall provide all information regarding it necessary to do so. -15- (e) Weyerhaeuser shall ensure that the Form S-3 and Form S-8 comply with all applicable Laws and, without limiting the generality of the foregoing, that such documents do 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 contained therein not misleading in light of the circumstances in which they are made (other than with respect to any information relating to and provided by MB or any third party that is not an affiliate of Weyerhaeuser) and MB shall provide all information regarding it necessary to do so. (f) The provisions of this section 2.7 shall apply, mutatis mutandis, in respect of the Debenture Meeting and the Debenture Circular. ARTICLE 3 REPRESENTATIONS AND WARRANTIES 3.1 Representations and Warranties of MB MB represents and warrants to and in favour of the Weyerhaeuser Parties as follows and acknowledges that the Weyerhaeuser Parties are relying upon such representations and warranties in connection with the matters contemplated by this Agreement: (a) Organization. (i) Each of MB and the Material Subsidiaries has been duly incorporated or formed under all applicable Laws, is validly subsisting and has full corporate or legal power and authority to own its properties and conduct its businesses as currently owned and conducted. All of the outstanding shares and other ownership interests of the Material Subsidiaries which are held directly or indirectly by MB are validly issued, fully paid and non-assessable and all such shares and other ownership interests are owned directly or indirectly by MB, free and clear of all material liens, claims or encumbrances, except as set forth in the MB Disclosure Letter or pursuant to restrictions on transfers contained in constating documents, and except as aforesaid there are no outstanding options, rights, entitlements, understandings or commitments (contingent or otherwise) regarding the right to acquire any such shares or other ownership interests in any of the Material Subsidiaries. MB has disclosed in the MB Disclosure Letter the names and jurisdictions of incorporation of each of the Material Subsidiaries. (ii) Other than MB's interest in the MB Partially Owned Entity, neither MB nor any Material Subsidiary has any minority interest in any other corporation or entity, which minority interest is material in relation to the consolidated financial position of MB. -16- (b) Capitalization. The authorized capital of MB consists of an unlimited number of Class B preferred shares, issuable in series, and an unlimited number of MB Common Shares. As of June 11, 1999 there were 972,369 Class B preferred shares, Series 8, issued and outstanding, 1,554,200 Class B preferred shares, Series 10, issued and outstanding and 120,296,710 MB Common Shares issued and outstanding, and 7,700,000 MB Common Shares were reserved, in the aggregate, for issuance in respect of the MB Options. As of June 11, 1999, MB had outstanding $149,943,000 in principal amount of MB Convertible Debentures. As of June 11, 1999, MB had outstanding MB Warrants entitling the holders thereof to acquire for no consideration 552 MB Common Shares in the aggregate. As of June 11, 1999, MB had outstanding options under the MB Stock Option Plan permitting the holders thereof to purchase 5,448,138 MB Common Shares in the aggregate. As of June 11, 1999, MB had granted phantom stock options representing the functional equivalent of 2,023,731 MB Common Shares in the aggregate. As of June 11, 1999, MB had granted MB Target Stock Units representing the functional equivalent of 1,664,191 MB Common Shares in the aggregate. From time to time MB Common Shares are issued in accordance with the MB Dividend Reinvestment Plan. Except as described in the preceding sentences of this section 3.1(b) and in section 3.1(a)(i), there are no options, warrants, conversion privileges or other rights, agreements, arrangements or commitments (pre-emptive, contingent or otherwise) obligating MB or any Material Subsidiary to issue or sell any shares of MB or any of the Material Subsidiaries or securities or obligations of any kind convertible into or exchangeable for any shares of MB, any Material Subsidiary or any other Person, nor is there outstanding any stock appreciation rights, phantom equity or similar rights, agreements, arrangements or commitments based upon the book value, income or any other attribute of MB or any subsidiary. Except as set forth in the MB Disclosure Letter, there have been no MB Common Shares issued or purchased for cancellation since December 31, 1998. All outstanding MB Common Shares have been duly authorized and are validly issued and outstanding as fully paid and non-assessable shares, free of pre-emptive rights. Except as described in the preceding sentences of this section 3.1(b), there are no outstanding bonds, debentures or other evidences of indebtedness of MB or any subsidiary having the right to vote (or that are convertible for or exercisable into securities having the right to vote) with the holders of the MB Common Shares on any matter. Except as set forth in the MB Disclosure Letter, there are no outstanding contractual obligations of MB or any of the Material Subsidiaries to repurchase, redeem or otherwise acquire any of its outstanding securities or with respect to the voting or disposition of any outstanding securities of any of the Material Subsidiaries. (c) Authority and No Violation. (i) MB has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by MB and the consummation by MB of the -17- transactions contemplated by this Agreement have been duly authorized by its Board of Directors and no other corporate proceedings on its part are necessary to authorize this Agreement, or the transactions contemplated hereby other than: (A) with respect to the Circular, the Debenture Circular and other matters relating solely thereto, including the implementation of the Arrangement, the approval of the Board of Directors of MB; (B) with respect to the completion of the Arrangement, the approval of the holders of the MB Common Shares; and (C) with respect to the amendments to the trust indenture governing the MB Convertible Debentures, the approval of the holders of MB Convertible Debentures. (ii) This Agreement has been duly executed and delivered by MB and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency and other applicable Laws affecting creditors' rights generally, and to general principles of equity and to the fact that the Currency Act (Canada) precludes a court in Canada from giving judgment in any currency other than Canadian currency. (iii) The Board of Directors of MB has (A) determined unanimously that the Arrangement is fair to the holders of the MB Common Shares and is in the best interests of MB, (B) received separate opinions from RBC Dominion Securities Inc., J.P. Morgan & Co. Incorporated and Salomon Smith Barney Inc. to the effect that, as of the date of this Agreement, the Exchange Ratio or the Arrangement is fair from a financial point of view to the holders of the MB Common Shares and (C) determined unanimously to recommend that the holders of the MB Common Shares vote in favour of the Arrangement. MB is not subject to a shareholder rights plan or "poison pill" or similar plan. (iv) The approval of this Agreement, the execution and delivery by MB of this Agreement and the performance by it of its obligations hereunder and the completion of the Arrangement and the transactions contemplated thereby, will not, except as disclosed in the MB Disclosure Letter: (A) result in a violation or breach of, require any consent to be obtained under or give rise to any termination, purchase or sale rights or payment obligation under any provision of: -18- (I) its or any Material Subsidiary's certificate of incorporation, articles, by-laws or other charter documents, including any unanimous shareholder agreement or any other agreement or understanding relating to ownership of shares or other interests or to corporate governance with any party holding an ownership interest in any Material Subsidiary; (II) subject to obtaining the Appropriate Regulatory Approvals relating to MB, any Laws, judgment or decree except to the extent that the violation or breach of, or failure to obtain any consent under, any Laws, judgment or decree would not, individually or in the aggregate, have a Material Adverse Effect on MB ; or (III) subject to obtaining the Appropriate Regulatory Approvals relating to MB and except as would not, individually or in the aggregate, have a Material Adverse Effect on MB, any material contract, agreement, license, franchise or permit to which MB or any Material Subsidiary is party or by which it is bound or subject or is the beneficiary; (B) give rise to any right of termination or acceleration of indebtedness of MB or any subsidiary, or cause any such indebtedness to come due before its stated maturity or cause any available credit of MB or any subsidiary to cease to be available other than as would not, individually or in the aggregate, have a Material Adverse Effect on MB; (C) except as would not, individually or in the aggregate, have a Material Adverse Effect on MB, result in the imposition of any encumbrance, charge or lien upon any of its assets or the assets of any Material Subsidiary, or restrict, hinder, impair or limit the ability of MB or any Material Subsidiary to carry on the business of MB or any Material Subsidiary as and where it is now being carried on; or (D) result in any payment (including severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any director or employee of MB or any subsidiary or increase any benefits otherwise payable under any MB Plan or result in the acceleration of time of payment or vesting of any such benefits, including the time of exercise of stock options. -19- No consent, approval, order or authorization of, or declaration or filing with, any Governmental Entity is required to be obtained by MB and its subsidiaries in connection with the execution and delivery of this Agreement or the consummation by MB of the transactions contemplated hereby other than (A) any approvals required by the Interim Order, (B) the Final Order, (C) filings with the Director under the CBCA, (D) the Appropriate Regulatory Approvals relating to MB and (E) any other consents, approvals, orders, authorizations, declarations or filings of or with a Governmental Entity which, if not obtained, would not, individually or in the aggregate, have a Material Adverse Effect on MB. (d) No Defaults. Subject to obtaining the Appropriate Regulatory Approvals relating to MB and except as disclosed in the MB Disclosure Letter, neither MB nor any of its subsidiaries is in default under, and there exists no event, condition or occurrence which, after notice or lapse of time or both, would constitute such a default under, any contract, agreement, license or franchise to which it is a party which would, if terminated due to such default, cause a Material Adverse Effect. (e) Absence of Certain Changes or Events. Except as disclosed in the MB Disclosure Letter or Publicly Disclosed by MB, from December 31, 1998 through to the date hereof each of MB and the Material Subsidiaries has conducted its business only in the ordinary and regular course of business consistent with past practice and there has not occurred: (i) a Material Adverse Change with respect to MB; (ii) any damage, destruction or loss, whether covered by insurance or not, that could reasonably be expected to have a Material Adverse Effect on MB; (iii) any redemption, repurchase or other acquisition of MB Common Shares or MB Preferred Shares by MB or any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to MB Common Shares or MB Preferred Shares, other than dividends and repurchases required by the terms of the MB Preferred Shares and other than regular quarterly dividends on the MB Common Shares and open market purchases of MB Common Shares under the MB Employee Share Purchase Plans, in each case, in the ordinary and regular course of business consistent with past practice; (iv) any material increase in or modification of the compensation payable or to become payable by it to any of its directors or officers, or any grant to any such director or officer of any increase in severance or termination pay; (v) any increase in or modification of any bonus, pension, insurance or benefit arrangement (including the granting of stock options, restricted stock awards or stock appreciation rights) made to, for or with any of its directors or officers; -20- (vi) any acquisition or sale of its property or assets aggregating 10% or more of MB's total consolidated property and assets as at December 31, 1998 other than in the ordinary and regular course of business consistent with past practice; (vii) any entering into, amendment of, relinquishment, termination or non-renewal by it of any material contract, agreement, license, franchise, lease transaction, commitment or other right or obligation, other than in the ordinary and regular course of business consistent with past practice; (viii) any resolution to approve a split, combination or reclassification of any of its outstanding shares; (ix) any change in its accounting methods, principles or practices; or (x) any agreement or arrangement to take any action which, if taken prior to the date hereof, would have made any representation or warranty set forth in this Agreement materially untrue or incorrect as of the date when made. (f) Employment Matters. (i) Except as set forth in the management information circular prepared in connection with the Annual Meeting of MB held on April 21, 1999 or the MB Disclosure Letter, neither MB nor any Material Subsidiary is a party to any written or oral policy, agreement, obligation or understanding providing for severance or termination payments to, or any employment agreement with, any director or officer. (ii) Except as set forth in the MB Disclosure Letter, neither MB nor any Material Subsidiary is a party to any collective bargaining agreement nor subject to any application for certification or, to the knowledge of MB, threatened or apparent union-organizing campaigns for employees not covered under a collective bargaining agreement nor are there any current, pending or, to the knowledge of MB, threatened strikes or lockouts at MB or any Material Subsidiary that would, individually or in the aggregate, have a Material Adverse Effect on MB. (iii) Neither MB nor any Material Subsidiary is subject to any claim for wrongful dismissal, constructive dismissal or any other tort claim, actual or, to the knowledge of MB, threatened, or any litigation, actual or, to the knowledge of MB, threatened, relating to employment or termination of employment of employees or independent contractors, other than those claims or such litigation as would, individually or in the aggregate, not have a Material Adverse Effect on MB. -21- (iv) MB and all Material Subsidiaries have operated in accordance with all applicable Laws with respect to employment and labour, including, but not limited to, employment and labour standards, occupational health and safety, employment equity, pay equity, workers' compensation, human rights and labour relations and there are no current, pending or, to the knowledge of MB, threatened proceedings before any board or tribunal with respect to any of the above areas, other than where the failure to so operate or such proceedings which, individually or in the aggregate, would not have a Material Adverse Effect on MB. (g) Financial Statements. The audited consolidated financial statements for MB as at and for each of the 12-month periods ended December 31, 1998, 1997 and 1996 and the unaudited consolidated financial statements for the 3-month period ended March 31, 1999 have been prepared in accordance with Canadian generally accepted accounting principles (subject, in the case of such unaudited financial statements, to the absence of notes and to year- end adjustments), the requirements of applicable Governmental Entities and applicable securities Laws; such financial statements present fairly, in all material respects, the consolidated financial position and results of operations of MB and its subsidiaries as of the respective dates thereof and for the respective periods covered thereby, subject, in the case of such unaudited financial statements, to year-end adjustments. (h) Books and Records. The books, records and accounts of MB and its subsidiaries, in all material respects, (i) have been maintained in accordance with good business practices on a basis consistent with prior years, (ii) are stated in reasonable detail and accurately and fairly reflect the transactions and dispositions of the assets of MB and its subsidiaries and (iii) accurately and fairly reflect the basis for the MB consolidated financial statements. MB has devised and maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization; and (ii) transactions are recorded as necessary (A) to permit preparation of financial statements in conformity with Canadian generally accepted accounting principles or any other criteria applicable to such statements and (B) to maintain accountability for assets. (i) Litigation, Etc. Except as set forth in the MB Disclosure Letter or Publicly Disclosed by MB, there is no claim, action, proceeding or investigation (including any native land claims) pending or, to the knowledge of MB, threatened against MB or any Material Subsidiary before any court or Governmental Entity that, if adversely determined, would reasonably be expected to have a Material Adverse Effect on MB, or prevent or materially delay consummation of the transactions contemplated by this Agreement or the Arrangement. Neither MB nor any Material Subsidiary, nor their respective assets and properties, is subject to any outstanding judgment, order, writ, injunction or decree that has had or is reasonably likely to have a Material Adverse Effect on MB or that would prevent -22- or materially delay consummation of the transactions contemplated by this Agreement or the Arrangement. (j) Environmental. Except for any matters that, individually or in the aggregate, would not have a Material Adverse Effect on MB: (i) all operations of MB and its Material Subsidiaries have been conducted, and are now, in compliance with all Environmental Laws; (ii) MB and its Material Subsidiaries are in possession of, and in compliance with, all permits, authorizations, certificates, registrations, approvals and consents necessary under Environmental Laws to own, lease and operate their properties and to conduct their respective businesses as they are now being conducted or as proposed to be conducted (collectively the "Environmental Permits"); and (iii) except as set forth in the MB Disclosure Letter, neither MB nor any Material Subsidiary is aware of, or is subject to: (A) any Environmental Laws which requires or may require any work, repairs, construction, change in business practices or operations, or expenditures, including capital expenditures for facility upgrades, environmental investigation and remediation expenditures, or any other such expenditures; (B) any written demand or written notice with respect to the breach of or liability under any Environmental Laws applicable to MB or any subsidiary, including any regulations respecting the use, storage, treatment, transportation or disposition (including disposal or arranging for disposal) of Hazardous Substances; (C) any written demand or written notice with respect to liability, by contract or operation of applicable Laws, under Environmental Laws applicable to MB or any current or former subsidiary or any of their respective predecessor entities, divisions or any formerly owned, leased or operated properties or assets of the foregoing, including liability with respect to the presence, release or discharge of Hazardous Substances; or (D) any changes in the terms or conditions of any Environmental Permits or any renewal, modification, revocation, reissuance, alteration, transfer or amendment of such Environmental Permits, or any review by, or approval of, any Governmental Entity of such Environmental Permits that are required in connection with the execution or delivery of this Agreement, the consummation of the -23- transactions contemplated hereby or the continuation of business of MB or any subsidiaries following such consummation. (k) Tax Matters. Except as set forth in the MB Disclosure Letter: (i) MB and each of its subsidiaries have filed, or caused to be filed, all material Tax Returns required to be filed by them (all of which returns were correct and complete in all material respects) and have paid, or caused to be paid, all material amounts of Taxes shown to be due and payable thereon, and MB's most recently published financial statements contain an adequate provision in accordance with generally accepted accounting principles for all material amounts of Taxes payable in respect of each period covered by such financial statements and all prior periods to the extent such Taxes have not been paid, whether or not due and whether or not shown as being due on any Tax Returns. MB and each of its subsidiaries have made adequate provision in accordance with generally accepted accounting principles in their books and records for any material amounts of Taxes accruing in respect of any accounting period which has ended subsequent to the period covered by such financial statements. (ii) Neither MB nor any subsidiary has received any written notification that any issues involving a material amount of Taxes have been raised (and are currently pending) by Revenue Canada, the United States Internal Revenue Service or any other taxing authority, including, without limitation, any sales tax authority, in connection with any of the Tax Returns referred to above and no waivers of statutes of limitations have been given or requested with respect to MB or any Material Subsidiary. All liability of MB and the Material Subsidiaries for income taxes has been assessed for all fiscal years up to and including the fiscal year ended December 31, 1993. To the best of the knowledge of MB, there are no proposed in writing (but unassessed) additional Taxes involving a material amount of Taxes and none has been asserted in writing. No Tax liens have been filed for material amounts of Taxes other than for Taxes not yet due and payable. Neither MB nor any of its subsidiaries (i) has made an election to be treated as a "consenting corporation" under Section 341(f) of the United States Internal Revenue Code (the "Code") or (ii) is a party to any Tax sharing or other similar agreement or arrangement of any nature with any other person (other than MB or any of its subsidiaries) pursuant to which MB or any of its subsidiaries has or could have any material liabilities in respect of Taxes, other than any liability arising under an agreement providing for the sale or other disposition of property by MB or any of its subsidiaries. MB has not made an election under Section 897(i) of the Code to be treated as a domestic corporation for purposes of Sections 897, 1445 and 6039C of the Code. With respect to the immediately preceding five-year period, MB has neither received nor -24- prepared any written reports analyzing the status of MacMillan Bloedel (U.S.A.) Inc. as a United States real property holding corporation within the meaning of Section 897 of the Code. With respect to the immediately preceding fiveyear period, MB has not undertaken a substantive analysis of MacMillan Bloedel (U.S.A.) Inc.'s status as a United States real property holding corporation within the meaning of Section 897 of the Code. (iii) "Tax" and "Taxes" means, with respect to any entity, all income taxes (including any tax on or based upon net income, gross income, income as specially defined, earnings, profits or selected items of income, earnings or profits) and all capital taxes, gross receipts taxes, environmental taxes, sales taxes, use taxes, ad valorem taxes, value added taxes, transfer taxes, franchise taxes, license taxes, withholding taxes, payroll taxes, employment taxes, Canada or Quebec Pension Plan premiums, excise, severance, social security premiums, workers' compensation premiums, unemployment insurance or compensation premiums, stamp taxes, occupation taxes, premium taxes, property taxes, windfall profits taxes, alternative or add-on minimum taxes, goods and services tax, customs duties or other taxes, fees, imports, assessments or charges of any kind whatsoever, together with any interest and any penalties or additional amounts imposed by any taxing authority (domestic or foreign) on such entity, and any interest, penalties, additional taxes and additions to tax imposed with respect to the foregoing. For purposes of this section 3.1(k), the term "material amount of Taxes" shall mean an amount of Taxes that is material to MB and its subsidiaries taken as a whole. (l) Pension and Employee Benefits. (i) MB has made available to Weyerhaeuser a list of all employee benefit, health, welfare, supplemental unemployment benefit, bonus, pension, profit sharing, deferred compensation, stock compensation, stock purchase, retirement, hospitalization insurance, medical, dental, legal, disability and similar plans or arrangements or practices, whether written or oral, which are maintained by MB and/or a Material Subsidiary (collectively referred to as the "MB Plans"). The MB Disclosure Letter states which of the MB Plans constitute "employee pension benefit plans" (as defined in section 3(2) of the United States Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or "employee welfare benefit plans" (as defined in section 3(1) of ERISA). (ii) No step has been taken, no event has occurred and no condition or circumstance exists that has resulted in or could reasonably be expected to result in any MB Plan being ordered or required to be terminated or wound up in whole or in part or having its registration under applicable Laws refused or revoked, or being placed under the administration of any -25- trustee or receiver or regulatory authority or being required to pay any material Taxes, fees, penalties or levies under applicable Laws. There are no actions, suits, claims (other than routine claims for payment of benefits in the ordinary course), trials, demands, investigations, arbitrations or other proceedings which are pending or threatened in respect of any of the MB Plans or their assets which individually or in the aggregate would have a Material Adverse Effect on MB. (iii) MB has made available to Weyerhaeuser true, correct and complete copies of all of the MB Plans as amended (or, in the case of any unwritten MB Plan, a description thereof) together with all related documentation including, without limitation, funding agreements, actuarial reports, funding and financial information returns and statements with respect to each MB Plan, and current plan summaries, booklets and personnel manuals. MB has made available to Weyerhaeuser a true and complete copy of the most recent annual report on Form 5500 filed with the United States Internal Revenue Service with respect to each MB Plan in respect of which such a report was required. (iv) Other than as disclosed in the MB Disclosure Letter, all of the MB Plans are and have been established, registered, qualified, invested and administered, in all material respects, in accordance with all applicable Laws, and in accordance with their terms and the terms of agreements between MB and/or a subsidiary, as the case may be, and their respective employees. To the knowledge of MB, no fact or circumstance exists that could adversely affect the existing tax status of a MB Plan. (v) All obligations of MB or a Material Subsidiary regarding the MB Plans have been satisfied in all material respects. All contributions or premiums required to be made by MB and/or a Material Subsidiary, as the case may be, under the terms of each MB Plan or by applicable Laws have been made in a timely fashion in accordance with applicable Laws and the terms of the MB Plans. (vi) Other than as set forth in the MB Disclosure Letter or Publicly Disclosed by MB, each MB Plan is fully insured or fully funded and in good standing with such regulatory authorities as may be applicable and, as of the date hereof, no notice of underfunding, noncompliance, failure to be in good standing or otherwise has been received by MB or its subsidiaries from any such regulatory authority. (vii) There have been no improper withdrawals, applications or transfers of assets from any MB Plan or the trusts or other funding media relating thereto that remain outstanding and unremedied, and neither MB, nor any Material Subsidiary, nor any of their respective agents has been in breach -26- of any fiduciary obligation with respect to the administration of the MB Plans or the trusts or other funding media relating thereto. (viii) No insurance policy or any other contract or agreement affecting any MB Plan requires or permits a retroactive increase in premiums or payments due thereunder. (ix) All MB Plans intended to be tax-qualified in the United States have been the subject of determination letters from the United States Internal Revenue Service to the effect that such MB Plans are qualified and exempt from United States Federal income taxes under sections 401(a) and 501(a), respectively, of the Code, and no such determination letter has been revoked nor, to the knowledge of MB, has revocation been threatened, nor has any such MB Plan been amended since the date of its most recent determination letter or application therefor in any respect that would adversely affect its qualification or materially increase its costs and, to the knowledge of MB, nothing has occurred since the date of such letter that could reasonably be expected to affect the qualified status of such plan. (x) Except as set forth in the MB Disclosure Letter, no amount that could be received (whether in cash or property or the vesting of property) as a result of the transactions contemplated by this Agreement or the Arrangement by any employee, officer or director of MB or any of its affiliates who is a "disqualified individual" (as such term is defined in proposed United States Treasury Regulation Section 1.280G-1) under any employment, severance or termination agreement, other compensation arrangement or MB Plan currently in effect will fail to be deductible for United States federal income tax purposes by virtue of Section 280G of the Code. (xi) Except as set forth in the MB Disclosure Letter, none of the MB Plans is a "multiemployer plan" within the meaning of section 4001(a)(3) of ERISA, nor has MB or any Material Subsidiary been obligated to contribute to any such multiemployer plan at any time within the past five years. (xii) Except as set forth in the MB Disclosure Letter, none of the MB Plans provides for payment of a benefit, the increase of a benefit amount, the payment of a contingent benefit or the acceleration of the payment or vesting of a benefit by reason of the execution of or the consummation of the transactions contemplated by this Agreement or the Arrangement. (m) Reports. MB has filed with the OSC and the SEC true and complete copies of all forms, reports, schedules, statements and other documents required to be filed by it since January 1, 1997 (such forms, reports, schedules, statements and other documents, including any financial statements or other documents, including any schedules included therein, are referred to as the "MB Documents"). The MB Documents at the time filed (i) did not contain any misrepresentation (as defined -27- in the Securities Act) and (ii) complied in all material respects with the requirements of applicable securities Laws. MB has not filed any confidential material change report with the OSC or any other securities authority or regulator or any stock exchange or other self-regulatory authority which at the date hereof remains confidential. (n) Compliance with Laws. Except as disclosed in the MB Disclosure Letter or Publicly Disclosed by MB, MB and the Material Subsidiaries have complied with and are not in violation of any applicable Laws, orders, judgments and decrees other than non-compliance or violations which would not, individually or in the aggregate, have a Material Adverse Effect on MB. Without limiting the generality of the foregoing, all securities of MB (including, all options, rights or other convertible or exchangeable securities) have been issued in compliance, in all material respects, with all applicable securities Laws and all securities to be issued upon exercise of any such options, rights and other convertible or exchangeable securities will be issued in compliance with all applicable securities Laws. (o) Restrictions on Business Activities. Except as set forth in the MB Disclosure Letter or Publicly Disclosed by MB, there is no agreement, judgment, injunction, order or decree binding upon MB or any Material Subsidiary that has or could reasonably be expected to have the effect of prohibiting, restricting or materially impairing any business practice of MB or any Material Subsidiary, any acquisition of property by MB or any Material Subsidiary or the conduct of business by MB or any Material Subsidiary as currently conducted other than such agreements, judgments, injunctions, orders or decrees which would not, individually or in the aggregate, have a Material Adverse Effect on MB. (p) Material Customers. There is no single customer of MB or its subsidiaries, the loss of which would have a Material Adverse Effect on MB. (q) Intellectual Property. Except as set forth in the MB Disclosure Letter, MB and its subsidiaries own, or are validly licensed or otherwise have the right to use, all patents, patent rights, trade- marks, trade names, service marks, copyrights, know how and other proprietary intellectual property rights that are material to the conduct of the business, as presently conducted, of MB and its subsidiaries taken as a whole. (r) Insurance. MB has policies of insurance in force as of the date hereof naming MB as an insured which, having regard to the nature of such risk and the relative cost of obtaining insurance, MB believes are reasonable. -28- (s) Property. Except as disclosed in the MB Disclosure Letter, MB and each Material Subsidiary have good and sufficient title to the real property interests including, fee simple estate of and in real property, leases, easements, rights of way, permits or licences from land owners or authorities permitting the use of land by MB or such Material Subsidiary, necessary to permit the operation of its businesses as presently owned and conducted except for such failure of title that would individually or in the aggregate not have a Material Adverse Effect on MB. (t) Licences, Etc. Except as disclosed in the MB Disclosure Letter, MB and each Material Subsidiary owns, possesses, or has obtained and is in compliance with, all licences, permits, certificates, orders, grants and other authorizations of or from any Governmental Entity necessary to conduct its businesses as now conducted or as proposed to be conducted except for such failure that would individually or in the aggregate not have a Material Adverse Effect on MB. (u) Registration Rights. No holder of securities issued by MB has any right to compel MB to register or otherwise qualify such securities for public sale in Canada or the United States. (v) Pooling. As at the date hereof, neither MB nor, to its knowledge, any of its "affiliates" (as defined in SEC Accounting Series Release 130 and 135 - Risk Sharing in Business Combinations Accounted for as Pooling of Interests (as codified in Financial Reporting Policy 201 and SEC Staff Accounting Bulletins 65 and 76)) has taken or agreed to take any action that would prevent Weyerhaeuser from accounting for the business combination to be effected by the Plan of Arrangement as a pooling-ofinterests under United States generally accepted accounting principles. (w) Year 2000 Compliance. (i) Except as set forth in the MB Disclosure Letter, MB expects the computer systems of MB and each of its Material Subsidiaries to be Year 2000 Compliant (as defined below) by July 1, 1999. The best current estimates of MB of required direct capital expenditures (not including internal costs and employee time and resources) to be Year 2000 Compliant are an amount not to exceed $15 million. To the knowledge of MB, any failure on the part of the customers of and suppliers to MB and the Material Subsidiaries to be Year 2000 Compliant by December 31, 1999, will not, individually or in the aggregate, have a Material Adverse Effect on MB. (ii) The term "Year 2000 Compliant", with respect to a computer system or software program, means that such computer system or program: (i) is capable of recognizing, processing, managing, representing, interpreting and manipulating correctly date- related data for dates earlier and later than January 1, 2000; (ii) has the ability to provide date recognition for any data element without limitation; (iii) has the ability to function -29- automatically into and beyond the year 2000 without human intervention and without any change in operations associated with the advent of the year 2000; (iv) has the ability to interpret data, dates and time correctly into and beyond the year 2000; (v) has the ability not to produce noncompliance in existing data, nor otherwise corrupt such data, into and beyond the year 2000; (vi) has the ability to process correctly after January 1, 2000, data containing dates before that date; and (vii) has the ability to recognize all "leap year" dates, including February 29, 2000. 3.2 Representations and Warranties of the Weyerhaeuser Parties The Weyerhaeuser Parties jointly and severally represent and warrant to and in favour of MB as follows and acknowledge that MB is relying upon such representations and warranties in connection with the matters contemplated by this Agreement: (a) Organization. Each of the Weyerhaeuser Parties and the Weyerhaeuser Material Subsidiaries has been duly incorporated or formed under all applicable Laws, is validly subsisting and has full corporate or legal power and authority to own its properties and conduct its businesses as currently owned and conducted. All of the outstanding shares of capital stock and other ownership interests of Weyerhaeuser's subsidiaries which are held directly or indirectly by Weyerhaeuser are validly issued, fully paid and non-assessable and all such shares and other ownership interests are owned directly or indirectly by Weyerhaeuser, free and clear of all material liens, claims or encumbrances except as disclosed by Weyerhaeuser to MB or pursuant to restrictions on transfer contained in constating documents, and there are no outstanding options, rights, entitlements, understandings or commitments (pre-emptive, contingent or otherwise) regarding the right to acquire any such shares of capital stock or other ownership interests in any of its subsidiaries. (b) Capitalization. The authorized capital of Weyerhaeuser consists of 7,000,000 shares of undesignated preferred stock, U.S.$1.00 par value per share, issuable in series, of which none were issued and outstanding at December 27, 1998, 40,000,000 shares of undesignated preference stock, U.S.$1.00 par value per share, issuable in series, of which none were issued and outstanding at December 27, 1998, and 400,000,000 Weyerhaeuser Common Shares. As of April 30, 1999, there were 200,605,977 Weyerhaeuser Common Shares issued and outstanding. Except for employee stock options pursuant to employee compensation plans, there are no options, warrants, conversion privileges or other rights, agreements, arrangements or commitments (contingent or otherwise) obligating Weyerhaeuser to issue or sell any shares or securities or obligations of any kind convertible into or exchangeable for any shares. All outstanding Weyerhaeuser Common Shares have been duly authorized and are validly issued and outstanding as fully paid and non-assessable shares, free of preemptive rights. There are no outstanding bonds, debentures or other evidences of indebtedness of Weyerhaeuser having the right to vote (or that are convertible for or exercisable into securities having the right to -30- vote) with the holders of the Weyerhaeuser Common Shares on any matter. Other than under employee stock option plans, there are no outstanding contractual obligations of Weyerhaeuser to repurchase, redeem or otherwise acquire any of its outstanding securities or with respect to the voting or disposition of any outstanding securities of any of its subsidiaries. (c) Authority and No Violation. (i) Each of the Weyerhaeuser Parties has the requisite corporate power and authority to enter into this Agreement, the Support Agreement and the Voting and Exchange Trust Agreement and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement, the Support Agreement and the Voting and Exchange Trust Agreement by each of the Weyerhaeuser Parties and the consummation by each of the Weyerhaeuser Parties of the transactions contemplated by this Agreement, the Support Agreement and the Voting and Exchange Trust Agreement have been duly authorized by its respective Board of Directors and no other corporate proceedings on its part are necessary to authorize this Agreement, the Support Agreement and the Voting and Exchange Trust Agreement or the transactions contemplated hereby or thereby. (ii) This Agreement has been duly executed and delivered by each of the Weyerhaeuser Parties and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency and other applicable Laws affecting creditors' rights generally, and to general principles of equity. Each of the Support Agreement and the Voting and Exchange Trust Agreement will be duly executed and delivered by each of the Weyerhaeuser Parties party thereto and, when so executed and delivered, will constitute its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency and other applicable Laws affecting creditors' rights generally, and to general principles of equity. (iii) The approval of this Agreement, the Support Agreement and the Voting and Exchange Trust Agreement, the execution and delivery by each of the Weyerhaeuser Parties of this Agreement, the Support Agreement and the Voting and Exchange Trust Agreement and the performance by it of its obligations hereunder and thereunder and the completion of the Arrangement and the transactions contemplated thereby, will not: (A) result in a violation or breach of, require any consent to be obtained under or give rise to any termination, purchase or sale rights or payment obligation under any provision of: (I) its or any Weyerhaeuser Material Subsidiary's certificate of incorporation, articles, by-laws or other charter -31- documents, including any unanimous shareholder agreement or any other agreement or understanding relating to ownership of shares or other interests or to corporate governance with any party holding an ownership interest in any Weyerhaeuser Material Subsidiary; (II) subject to obtaining the Appropriate Regulatory Approvals relating to the Weyerhaeuser Parties, any Laws, judgment or decree except to the extent that the violation or breach of, or failure to obtain any consent under, any Laws, judgment or decree would not, individually or in the aggregate, have a Material Adverse Effect on Weyerhaeuser; or (III) subject to obtaining the Appropriate Regulatory Approvals relating to the Weyerhaeuser Parties and except as would not, individually or in the aggregate, have a Material Adverse Effect on Weyerhaeuser, any material contract, agreement, license, franchise or permit to which it is party or by which it is bound or is subject or is the beneficiary; (B) give rise to any right of termination or acceleration of indebtedness of any Weyerhaeuser Party or any Weyerhaeuser Material Subsidiary, or cause such indebtedness to come due before its stated maturity or cause any available credit of any Weyerhaeuser Party or any Weyerhaeuser Material Subsidiary to cease to be available; or (C) except as would not, individually or in the aggregate, have a Material Adverse Effect on Weyerhaeuser, result in the imposition of any encumbrance, charge or lien upon any of its assets, or restrict, hinder, impair or limit its ability to carry on its business as and where it is now being carried on. No consent, approval, order or authorization of, or declaration or filing with, any Governmental Entity is required to be obtained by any of the Weyerhaeuser Parties or the Weyerhaeuser Material Subsidiaries in connection with the execution and delivery of this Agreement, the Support Agreement and the Voting and Exchange Trust Agreement or the consummation by any of the Weyerhaeuser Parties of the transactions contemplated hereby or thereby other than (A) the Appropriate Regulatory Approvals relating to the Weyerhaeuser Parties, (B) any filings required in connection with the creation and issue of the Special Voting Share, (C) any approval required in connection with the amendment of the articles of Weysub to create the Exchangeable Shares and (D) any other consents, -32- approvals, orders, authorizations, declarations or filings of or with a Governmental Entity which, if not obtained, would not, individually or in the aggregate, have a Material Adverse Effect on Weyerhaeuser. (d) Absence of Certain Changes or Events. Except as Publicly Disclosed by Weyerhaeuser, since December 31, 1998 through to the date hereof each of the Weyerhaeuser Parties and each Weyerhaeuser Material Subsidiary has conducted its business only in the ordinary and regular course of business consistent with past practice and there has not occurred: (i) a Material Adverse Change with respect to Weyerhaeuser; (ii) any agreement or arrangement to take any action which, if taken prior to the date hereof, would have made any representation or warranty set forth in this Agreement materially untrue or incorrect as of the date when made; (iii) any resolution to approve a split, combination or reclassification of the Weyerhaeuser Common Shares; or (iv) any material change in its accounting methods, principles or practices. (e) Financial Statements. The audited consolidated financial statements for Weyerhaeuser as at and for each of the 12-month periods ended on the last Sunday of December 1998, 1997 and 1996 and the unaudited consolidated financial statements for the thirteen weeks ended March 28, 1999 have been prepared in accordance with United States generally accepted accounting principles, the requirements of applicable Governmental Entities and applicable securities Laws; such financial statements present fairly, in all material respects, the consolidated financial position and results of operations of Weyerhaeuser and its subsidiaries as of the respective dates thereof and for the respective periods covered thereby. (f) Reports. Weyerhaeuser has filed with the SEC true and complete copies of all forms, reports, schedules, statements and other documents required to be filed by it since January 1, 1997, and such documents, at the time filed, (i) did not contain any misrepresentation (as defined in the 1933 Act) and (ii) complied in all material respects with the requirements of applicable securities Laws. Weyerhaeuser has not filed any confidential material change report with the SEC or any other securities authority or regulator or any stock exchange or other selfregulatory authority which at the date hereof remains confidential. (g) Pooling. As of the date hereof, none of the Weyerhaeuser Parties nor, to their respective knowledge, any of their respective "affiliates" (as defined in SEC Accounting Series Release 130 and 135 - Risk Sharing in Business Combinations Accounted for as Pooling of Interests (as codified in Financial Reporting Policy 201 and SEC Staff Accounting Bulletins 65 and 76)) has taken or agreed to take -33- any action that would prevent Weyerhaeuser from accounting for the business combination to be effected by the Plan of Arrangement as a pooling-of-interests under United States generally accepted accounting principles. (h) Exchangeable Shares. The Exchangeable Shares to be issued in connection with the Arrangement will be duly and validly issued by Weysub on the Effective Date as fully paid and nonassessable shares. (i) Weyerhaeuser Common Shares. The Weyerhaeuser Common Shares to be issued pursuant to the Arrangement or upon the exchange from time to time of the Exchangeable Shares or upon the exercise from time to time of the Replacement Options will, in all cases, be duly and validly issued by Weyerhaeuser on their respective dates of issue as fully paid and nonassessable shares. (j) Compliance with Laws. Except as disclosed in writing by Weyerhaeuser to MB or Publicly Disclosed by Weyerhaeuser, Weyerhaeuser and the Weyerhaeuser Material Subsidiaries have complied with and are not in violation of any applicable Laws, orders, judgments and decrees other than non-compliance or violations which would not, individually or in the aggregate, have a Material Adverse Effect on Weyerhaeuser. Without limiting the generality of the foregoing, all securities of Weyerhaeuser (including all options, rights or other convertible or exchangeable securities) have been issued in compliance in all material respects with all applicable securities Laws and all securities to be issued upon exercise of any such options, rights and other convertible or exchangeable securities will be issued in compliance with all applicable securities Laws. (k) Litigation, Etc. Except as disclosed in writing by Weyerhaeuser to MB or Publicly Disclosed by Weyerhaeuser, there is no claim, action, proceeding or investigation (including any native land claims) pending or, to the knowledge of Weyerhaeuser, threatened against Weyerhaeuser or any Weyerhaeuser Material Subsidiary before any court or Governmental Entity that, if adversely determined, would reasonably be expected to have a Material Adverse Effect on Weyerhaeuser, or prevent or materially delay consummation of the transactions contemplated by this Agreement or the Arrangement. Neither Weyerhaeuser nor any Weyerhaeuser Material Subsidiary, nor their respective assets and properties, is subject to any outstanding judgment, order, writ, injunction or decree that has had or is reasonably likely to have a Material Adverse Effect on Weyerhaeuser or that would prevent or materially delay consummation of the transactions contemplated by this Agreement or the Arrangement. (l) Tax Matters. Except as disclosed in writing by Weyerhaeuser to MB or Publicly Disclosed by Weyerhaeuser: (i) Weyerhaeuser and each of its subsidiaries have timely filed, or caused to be filed, all material Tax Returns required to be filed by them (all of which returns were correct and complete in all material respects) and have paid, -34- or caused to be paid, all material amounts of Taxes shown to be due and payable thereon, and Weyerhaeuser's most recently published financial statements contain an adequate provision in accordance with generally accepted accounting principles for all material amounts of Taxes payable in respect of each period covered by such financial statements and all prior periods to the extent such Taxes have not been paid, whether or not due and whether or not shown as being due on any Tax Returns. Weyerhaeuser and each of its subsidiaries have made adequate provision in accordance with generally accepted accounting principles in their respective books and records for any Taxes accruing in respect of any accounting period which has ended subsequent to the period covered by such financial statements. (ii) Neither Weyerhaeuser nor any subsidiary has received any written notification that any issues involving a material amount of Taxes have been raised (and are currently pending) by Revenue Canada, the United States Internal Revenue Service or any other taxing authority, including, without limitation, any sales tax authority, in connection with any of the Tax Returns referred to above and no waivers of statutes of limitations have been given or requested with respect to Weyerhaeuser or any subsidiary. All liability of Weyerhaeuser and the Weyerhaeuser Material Subsidiaries for income taxes has been assessed for all fiscal years up to and including the fiscal year ended December 31, 1993. To the best of the knowledge of Weyerhaeuser, there are no proposed (but unassessed) additional Taxes involving a material amount of Taxes and none has been asserted in writing. No Tax liens have been filed other than for Taxes not yet due and payable. Neither Weyerhaeuser nor any of its subsidiaries (i) has made an election to be treated as a "consenting corporation" under Section 341(f) of the Code or (ii) is a party to any Tax sharing or other similar agreement or arrangement of any nature with any other person (other than MB or any of its subsidiaries) pursuant to which Weyerhaeuser or any of its subsidiaries has or could have any material liabilities in respect of Taxes. Weyerhaeuser has not made an election under Section 897(i) of the Code to be treated as a domestic corporation for purposes of Sections 897, 1445 and 6039C of the Code. (m) Environmental. Except for matters that, individually or in the aggregate, would not have a Material Adverse Effect on Weyerhaeuser: (i) all operations of Weyerhaeuser and the Weyerhaeuser Material Subsidiaries have been conducted, and are now, in compliance with all Environmental Laws; and -35- (ii) Weyerhaeuser and the Weyerhaeuser Material Subsidiaries are in possession of, and in compliance with, all permits, authorizations, certificates, registrations, approvals and consents necessary under Environmental Laws to own, lease and operate their properties and conduct their respective businesses as they are now being conducted or as proposed to be conducted. (n) Year 2000 Compliance. Weyerhaeuser has conducted a comprehensive inventory to identify whether its information technology and manufacturing systems are Year 2000 Compliant. Weyerhaeuser currently estimates that the overall cost of making its internal systems Year 2000 Compliant, including costs to be capitalized, will not exceed US$100 million. 3.3 Survival For greater certainty, the representations and warranties of MB and each Weyerhaeuser Party contained herein shall survive the execution and delivery of this Agreement and shall terminate on the earlier of the termination of this Agreement in accordance with its terms and the Effective Time. Any investigation by a party hereto and its advisors shall not mitigate, diminish or affect the representations and warranties of another party to this Agreement. The parties hereto acknowledge and agree that no representation or warranty is made by MB with respect to (i) the effect of the transactions contemplated by this Agreement or any actions or circumstances in connection therewith on the MB Partially-Owned Entity or any existing agreements of MB or its affiliates relating to the MB Partially-Owned Entity or its affiliates or (ii) any actions taken or claims made by the MB Partially-Owned Entity or its affiliates resulting from or with respect to (x) the existence or performance of this Agreement or the transactions contemplated hereby or (y) the actions of the parties in connection herewith. ARTICLE 4 COVENANTS 4.1 Retention of Goodwill During the Pre-Effective Date Period, MB will, subject to the fact that a transaction involving its businesses is contemplated hereby, continue to carry on the business of MB and its subsidiaries in a manner consistent with prior practice, working to preserve the attendant goodwill of such entities and to contribute to retention of that goodwill to and after the Effective Date, but subject to the following provisions of this Article 4. The following provisions of this Article 4 are intended to be in furtherance of this general commitment. -36- 4.2 Material Commitments Subject to applicable Law and the other provisions of this Agreement, during the Pre-Effective Date Period, MB and its subsidiaries will consult on an ongoing basis with senior officers of Weyerhaeuser in order that the representatives of Weyerhaeuser will become more familiar with the philosophy and techniques of MB and its subsidiaries, as well as with their business and financial affairs and in order to provide experience as a basis for ongoing relationships following the Effective Date. 4.3 Covenants of MB (a) MB covenants and agrees that, until the Effective Date or the earlier termination of this Agreement in accordance with Article 6, except (i) with the consent of Weyerhaeuser on behalf of the Weyerhaeuser Parties to any deviation therefrom, which shall not be unreasonably withheld; (ii) with respect to any matters which were disclosed in the MB Disclosure Letter; or (iii) with respect to any matter contemplated by this Agreement or the Plan of Arrangement, including the transactions involving the businesses of MB and Weyerhaeuser contemplated hereby, MB will, and will cause its subsidiaries to: (i) carry on its business in, and only in, the ordinary and regular course in substantially the same manner as heretofore conducted and, to the extent consistent with such business, use all reasonable efforts to preserve intact its present business organization and keep available the services of its present officers and employees and others having business dealings with it to the end that its goodwill and business shall be maintained; (ii) not commence to undertake a substantial expansion of its business facilities or an expansion that is out of the ordinary and regular course of business consistent with prior practice in light of current market and economic conditions; (iii) not split, combine or reclassify any of the outstanding shares of MB nor declare, set aside or pay any dividends on or make any other distributions on or in respect of the outstanding shares of MB, other than normal and customary quarterly dividends on the MB Common Shares and the dividends required by the terms of the MB Preferred Shares; (iv) not amend the articles or by-laws of MB or materially amend the articles or by-laws of any subsidiary; (v) not sell, pledge, encumber, allot, reserve, set aside or issue, authorize or propose the sale, pledge, encumbrance, allotment, reservation, setting aside or issuance of, or purchase or redeem or propose the purchase or redemption of, any shares in its capital stock or of any subsidiary thereof or any class of securities convertible or exchangeable into, or rights, -37- warrants or options to acquire, any such shares or other convertible or exchangeable securities, except for (a) transactions between two or more wholly-owned MB subsidiaries or between a wholly-owned subsidiary of MB and MB, (b) the issuance of MB Common Shares pursuant to fully vested MB Options granted prior to the date hereof, (c) the issuance of MB Common Shares pursuant to the conversion by the holders of MB Convertible Debentures or the exercise of MB Warrants, (d) any purchase of MB Preferred Shares as required by the terms thereof, (e) any redemption of the MB Convertible Debentures requested by Weyerhaeuser in accordance with the terms of this Agreement, (f) the issuance of MB Common Shares pursuant to the MB Dividend Reinvestment Plan and (g) the issuance of additional options in the ordinary course of business consistent with past practice under the MB Stock Option Plan representing up to a maximum of 1,000,000 MB Common Shares and the issuance of MB Common Shares in respect thereof; (vi) not, whether through its Board of Directors or otherwise, accelerate the vesting of any unvested MB Options or accelerate the release of, or the expiry date of any hold period relating to, any MB Common Shares held in the MB Employee Share Purchase Plans, or otherwise amend, vary or modify such Plans or the MB Stock Option Plan; (vii) not reorganize, amalgamate or merge MB or any of its subsidiaries with any other Person, nor acquire or agree to acquire by amalgamating, merging or consolidating with, purchasing substantially all of the assets of or otherwise, any business of any corporation, partnership, association or other business organization or division thereof, which acquisition would be material to its business or financial condition on a consolidated basis (other than relating to transactions between two or more wholly-owned MB subsidiaries or between a whollyowned subsidiary of MB and MB); (viii) except with respect to the sale of assets of MB or any subsidiary in the ordinary and regular course of business consistent with past practice, not sell, pledge, encumber, lease or otherwise dispose of any material assets (other than relating to transactions between two or more wholly-owned MB subsidiaries or between a wholly-owned subsidiary of MB and MB); (ix) not guarantee the payment of material indebtedness or incur material indebtedness for money borrowed or issue or sell any debt securities except in the ordinary and regular course of business consistent with past practice; (x) carry out the terms of the Interim Order and the Final Order applicable to it and use its reasonable efforts to comply promptly with all requirements which applicable Laws may impose on MB or its subsidiaries with respect to the transactions contemplated hereby and by the Arrangement; -38- (xi) not, and cause each of its subsidiaries not: (A) other than in the usual, ordinary and regular course of business and consistent with past practice or pursuant to existing employment, pension, supplemental pension, termination, compensation arrangements or policies, enter into or materially modify any employment, severance, collective bargaining or similar agreements, policies or arrangements with, or grant any material bonuses, salary increases, stock options, pension or supplemental pension benefits, profit sharing, retirement allowances, deferred compensation, incentive compensation, severance or termination pay to, or make any loan to, any officers or directors of it; or (B) other than in the usual, ordinary and regular course of business and consistent with past practice or pursuant to existing employment, pension, supplemental pension, termination, compensation arrangements or policies, in the case of employees who are not officers or directors, take any action with respect to the entering into or modifying of any material employment, severance, collective bargaining or similar agreements, policies or arrangements or with respect to the grant of any material bonuses, salary increases, stock options, pension or supplemental pension benefits, profit sharing, retirement allowances, deferred compensation, incentive compensation, severance or termination pay or any other form of compensation or profit sharing or with respect to any increase of benefits payable; (xii) not, except in the usual, ordinary and regular course of business and consistent with past practice: (A) satisfy or settle any claims or liabilities prior to the same being due, except such as have been reserved against in the financial statements of MB and its subsidiaries or disclosed in the MB Disclosure Letter, which are, individually or in the aggregate, material; (B) grant any waiver, exercise any option or relinquish any contractual rights which are, individually or in the aggregate, material; or (C) enter into any interest rate, currency or commodity swaps, hedges or other similar financial instruments; (xiii) use its reasonable commercial efforts (or cause each of its subsidiaries to use reasonable commercial efforts) to cause its current insurance (or re-insurance) policies not to be cancelled or terminated or any of the coverage thereunder to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies underwritten by insurance and reinsurance companies of nationally recognized standing providing coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar premiums are in full force and effect; -39- (xiv) not, and will cause its subsidiaries not to, settle or compromise any claim brought by any present, former or purported holder of any of its securities in connection with the transactions contemplated by this Agreement or the Arrangement prior to the Effective Date; (xv) except in the usual, ordinary and regular course of business and consistent with past practice or as required by applicable Laws, not, and will cause its subsidiaries not to, enter into or modify in any material respect any contract, agreement, commitment or arrangement which new contract or series of related new contracts or modification to an existing contract or series of related existing contracts would have a Material Adverse Effect on MB; (xvi) incur or commit to capital expenditures prior to the Effective Date only in the ordinary course consistent with past practice and not, in any event, exceeding $20 million, individually or in the aggregate; (xvii) not make any changes to existing accounting practices relating to MB or any subsidiary except as required by Law or required by generally accepted accounting principles or make any material tax election inconsistent with past practice; and (xviii) promptly advise Weyerhaeuser orally and, if then requested, in writing: (A) of any event occurring subsequent to the date of this Agreement that would render any representation or warranty of MB contained in this Agreement (except any such representation or warranty which speaks as of a date prior to the occurrence of such event), if made on or as of the date of such event or the Effective Date, untrue or inaccurate in any material respect; (B) of any Material Adverse Change in respect of MB; and (C) of any material breach by MB of any covenant or agreement contained in this Agreement; (b) MB shall and shall cause its subsidiaries to perform all obligations required or desirable to be performed by MB or any of its subsidiaries under this Agreement, co-operate with Weyerhaeuser in connection therewith, and do all such other acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated in this Agreement and, without limiting the generality of the foregoing, MB shall and where appropriate shall cause its subsidiaries to: (i) use all reasonable efforts to obtain the approvals of holders of MB Common Shares to the Arrangement, subject, however, to the exercise by the Board of Directors of MB of its fiduciary duties as provided herein; -40- (ii) apply for and use all reasonable efforts to obtain all Appropriate Regulatory Approvals relating to MB or any of its subsidiaries and, in doing so, to keep Weyerhaeuser reasonably informed as to the status of the proceedings related to obtaining the Appropriate Regulatory Approvals, including, but not limited to, providing Weyerhaeuser with copies of all related applications and notifications, in draft form, in order for Weyerhaeuser to provide its reasonable comments; (iii) apply for and use all reasonable efforts to obtain the Interim Order and the Final Order; (iv) defend all lawsuits or other legal, regulatory or other proceedings challenging or affecting this Agreement or the consummation of the transactions contemplated hereby; (v) use its reasonable efforts to have lifted or rescinded any injunction or restraining order or other order which may adversely affect the ability of the parties to consummate the transactions contemplated hereby; (vi) effect all necessary registrations, filings and submissions of information required by Governmental Entities from MB or any of its subsidiaries; (vii) use its reasonable efforts to obtain all necessary waivers, consents and approvals required to be obtained by MB or a subsidiary from other parties to loan agreements, leases or other contracts; and (viii) use its reasonable efforts to ensure that MB's affiliates (for the purposes of Rule 145 under the 1933 Act) execute and deliver to Weyerhaeuser, on or prior to the date that is 30 days prior to the Effective Date, an Affiliate's Letter; and (c) MB shall not take or agree to take any action which would be reasonably expected to prevent the business combination to be effected by the Plan of Arrangement from qualifying for pooling-of-interest accounting treatment under United States generally accepted accounting principles. MB shall use its reasonable efforts to take such actions as may be necessary to permit the business combination to be effected by the Plan of Arrangement to qualify for pooling-of-interests accounting treatment under United States generally accepted accounting principles. 4.4 Covenants of the Weyerhaeuser Parties Each of the Weyerhaeuser Parties hereby jointly and severally covenants and agrees (and, if applicable, cause its subsidiaries): (a) to perform all obligations required or desirable to be performed by it under this Agreement, co-operate with MB in connection therewith, and to do all such other acts and things as may be necessary or desirable in order to consummate and -41- make effective, as soon as reasonably practicable, the transactions contemplated by this Agreement and, without limiting the generality of the foregoing, to: (i) apply for and use all reasonable efforts to obtain all Appropriate Regulatory Approvals relating to the Weyerhaeuser Parties, and, in doing so, to keep MB reasonably informed as to the status of the proceedings related to obtaining the Appropriate Regulatory Approvals, including, but not limited to, providing MB with copies of all related applications and notifications, in draft form, in order for MB to provide its reasonable comments; (ii) defend all lawsuits or other legal, regulatory or other proceedings to which it is a party challenging or affecting this Agreement or the consummation of the transactions contemplated hereby; (iii) use all reasonable efforts to have lifted or rescinded any injunction or restraining order or other order relating to the Weyerhaeuser Parties which may adversely affect the ability of the parties to consummate the transactions contemplated hereby; (iv) effect all necessary registrations, filings and submissions of information required by Governmental Entities from the Weyerhaeuser Parties or their subsidiaries; (v) cause the articles of Weysub to be amended to, among other things, create the Exchangeable Shares; and (vi) cause Weyerhaeuser to reserve a sufficient number of Weyerhaeuser Common Shares for issuance upon the completion of the Arrangement and the exchange from time to time of Exchangeable Shares and the exercise from time to time of Replacement Options; (b) to use all reasonable efforts to (i) cause the Exchangeable Shares to be listed and posted for trading on The Toronto Stock Exchange by the Effective Date and (ii) to ensure that Weysub remains a "public corporation" within the meaning of the Income Tax Act (Canada) for so long as there are Exchangeable Shares outstanding (other than those Exchangeable Shares held by Weyerhaeuser or any of its affiliates); (c) carry out the terms of the Interim Order and Final Order applicable to it and use its reasonable efforts to comply promptly with all requirements which applicable Laws may impose on Weyerhaeuser or its subsidiaries with respect to the transactions contemplated hereby and by the Arrangement; -42- (d) in connection with the consummation of the transactions contemplated hereby and by the Arrangement, use its reasonable efforts to obtain all necessary waivers, consents and approvals required to be obtained by Weyerhaeuser or a subsidiary of Weyerhaeuser from other parties to loan agreements, leases or other contracts; (e) use its reasonable efforts to ensure that Weyerhaeuser's affiliates (for the purposes of Rule 145 under the 1933 Act) execute and deliver to MB, on or prior to the date that is 30 days prior to the Effective Date, an Affiliate's Letter; (f) if the holders of MB Convertible Debentures approve the amendments to the terms of the trust indenture governing the MB Convertible Debentures as proposed in the Debenture Circular, to make the appropriate adjustments in accordance with the terms of the MB Convertible Debentures with respect to the shares, securities or other property that the holders of the MB Convertible Debentures will be entitled to receive upon conversion of the MB Convertible Debentures after the Effective Date such that after the Effective Date, the holders of the MB Convertible Debentures will be entitled to convert their MB Convertible Debentures into Exchangeable Shares on the same basis as if they had converted the MB Convertible Debentures into MB Common Shares prior to the Effective Date and each such MB Common Share had been exchanged for a number of Exchangeable Shares equal to the Exchange Ratio and Weyerhaeuser shall become a co-obligor with respect to, or fully and unconditionally guarantee the payment of all amounts due under, the MB Convertible Debentures; (g) at or prior to the Effective Time, Weyerhaeuser shall use its best efforts to cause one of the current directors of MB to become a director of Weyerhaeuser whose term expires no earlier than 2002; (h) until the Effective Date or the earlier termination of this Agreement in accordance with Article 6, except (i) with the consent of MB to any deviation therefrom, which shall not be unreasonably withheld; (ii) with respect to any matters which were disclosed by Weyerhaeuser to MB in writing; or (iii) with respect to any matter contemplated by this Agreement or the Plan of Arrangement, including the transactions involving the businesses of MB and Weyerhaeuser contemplated hereby, Weyerhaeuser will: (i) not split, combine or reclassify any of the outstanding shares of Weyerhaeuser nor declare, set aside or pay any dividends on or make any other distributions on or in respect of the outstanding shares of Weyerhaeuser, other than normal and customary quarterly dividend on Weyerhaeuser Common Shares; (ii) not make any changes to existing accounting practices related to Weyerhaeuser except as required by a change in United States generally accepted accounting practice or by applicable Law; -43- (iii) not reorganize, amalgamate or merge Weyerhaeuser with any other Person, nor acquire by amalgamating, merging or consolidating with, purchasing a majority of the voting securities or substantially all of the assets of or otherwise, any business or Person which acquisition would reasonably be expected to materially delay the transactions contemplated hereby; (iv) promptly advise MB orally and, if then requested, in writing: (A) of any event occurring subsequent to the date of this Agreement that would render any representation or warranty of Weyerhaeuser contained in this Agreement (except any such representation or warranty which speaks as of a date prior to the occurrence of such event), if made on or as of the date of such event or the Effective Date, untrue or inaccurate in any material respect; (B) of any Material Adverse Change in respect of Weyerhaeuser; and (C) of any material breach by Weyerhaeuser of any covenant or agreement contained in this Agreement; and (i) the Weyerhaeuser Parties shall not take any action which may jeopardize the exchange of the MB Common Shares by holders of the MB Common Shares resident in Canada for the purposes of the Income Tax Act (Canada) from being treated on a tax-free basis for holders who are otherwise eligible for such treatment. 4.5 Covenants Regarding Non-Solicitation (a) Subject to section 4.6, MB shall not, directly or indirectly, through any officer, director, employee, representative or agent of MB or any of its subsidiaries, (i) solicit, initiate or knowingly encourage (including by way of furnishing information or entering into any form of agreement, arrangement or understanding) the initiation of any inquiries or proposals regarding an Acquisition Proposal, (ii) participate in any discussions or negotiations regarding any Acquisition Proposal, (iii) withdraw or modify in a manner adverse to Weyerhaeuser the approval of the Board of Directors of MB of the transactions contemplated hereby, (iv) approve or recommend any Acquisition Proposal or (v) enter into any agreement, arrangement or understanding related to any Acquisition Proposal. Notwithstanding the preceding part of this section 4.5(a) and any other provision of this Agreement, nothing shall prevent the Board of Directors of MB prior to the issuance of the Final Order from considering, participating in any discussions or negotiations, or entering into a confidentiality agreement and providing information pursuant to section 4.5(c), regarding an unsolicited bona fide written Acquisition Proposal that did not otherwise result from a breach of this section 4.5 and that the Board of Directors of MB -44- determines in good faith, after consultation with financial advisors and outside counsel, is reasonably likely to result in a Superior Proposal; provided, however, that prior to taking such action, the Board of Directors must receive advice of outside counsel that it is appropriate that the Board of Directors of MB take such action in order to discharge properly its fiduciary duties. MB shall not consider, negotiate, accept, approve or recommend an Acquisition Proposal after the date of the issuance of the Final Order. MB shall, and shall cause the officers, directors, employees, representatives and agents of MB and its subsidiaries to, cease immediately all discussions and negotiations regarding any proposal that constitutes, or may reasonably be expected to lead to, an Acquisition Proposal. (b) MB shall promptly notify Weyerhaeuser, at first orally and then in writing, of any Acquisition Proposal and any inquiry that could lead to an Acquisition Proposal, or any amendments to the foregoing, or any request for non-public information relating to MB or any Material Subsidiary in connection with an Acquisition Proposal or for access to the properties, books or records of MB or any Material Subsidiary by any Person that informs MB or such Material Subsidiary that it is considering making, or has made, an Acquisition Proposal. Such notice shall include a description of the material terms and conditions of any proposal, the identity of the Person making such proposal, inquiry or contact and provide such other details of the proposal, inquiry or contact as Weyerhaeuser may reasonably request. MB shall (i) keep Weyerhaeuser fully informed of the status including any change to the material terms of any such Acquisition Proposal or inquiry and (ii) provide to Weyerhaeuser as soon as practicable after receipt or delivery thereof with copies of all correspondence and other written material sent or provided to MB or any Material Subsidiary from any Person in connection with any Acquisition Proposal sent or provided by MB to any Person in connection with any Acquisition Proposal. (c) If MB receives a request for material non-public information from a Person who has made an unsolicited bona fide written Acquisition Proposal and MB is permitted, as contemplated under the second sentence of Section 4.5(a), to negotiate the terms of such Acquisition Proposal, then, and only in such case, the Board of Directors of MB may, subject to the execution by such Person of a confidentiality agreement containing a standstill provision substantially similar to that contained in the confidentiality agreement then in effect between MB and Weyerhaeuser, provide such Person with access to information regarding MB; provided, however, that the Person making the Acquisition Proposal shall not be precluded under such confidentiality agreement from making the Acquisition Proposal (but not any material amendment thereto) and provided further that MB sends a copy of any such confidentiality agreement to Weyerhaeuser promptly upon its execution and Weyerhaeuser is provided with a list of or copies of the information provided to such Person and immediately provided with access to similar information to which such person was provided. -45- (d) MB shall ensure that its officers, directors and employees and its subsidiaries and their officers, directors and employees and any financial advisors or other advisors or representatives retained by it are aware of the provisions of this section 4.5, and it shall be responsible for any breach of this section 4.5 by its officers, directors, employees, financial advisors or other advisors or representatives. (e) Notwithstanding section 4.5(a)(iii), the Board of Directors of MB may withdraw or modify in a manner adverse to Weyerhaeuser the approval of the Board of Directors of MB of the transactions contemplated hereby if a Specified Weyerhaeuser Event has occurred and is continuing. 4.6 Notice by MB of Superior Proposal Determination Notwithstanding sections 4.5(a), (b), (d) and (e), MB may accept, approve, recommend or enter into any agreement, understanding or arrangement in respect of a Superior Proposal if, and only if, (i) it has provided Weyerhaeuser with a copy of the Superior Proposal document, (ii) five Business Days shall have elapsed from the later of the date Weyerhaeuser received written notice advising Weyerhaeuser that MB's Board of Directors has resolved, subject only to compliance with this section 4.6 and termination of this Agreement, to accept, approve, recommend or enter into an agreement in respect of such Superior Proposal, specifying the terms and conditions of such Superior Proposal and identifying the Person making such Superior Proposal, and the date Weyerhaeuser received a copy of such Superior Proposal and (iii) it has previously or concurrently will have (A) paid to Weyerhaeuser the break fee, if any, payable under section 6.4 and (B) terminated this Agreement pursuant to section 6.3. Any information provided by MB to Weyerhaeuser pursuant to this section 4.6 or pursuant to section 4.5 shall constitute "Information" under section 4.7(b). During such five Business Day period, MB agrees that Weyerhaeuser shall have the right, but not the obligation, to offer to amend the terms of this Agreement. The Board of Directors of MB will review any offer by Weyerhaeuser to amend the terms of this Agreement in good faith in order to determine, in its discretion in the exercise of its fiduciary duties, whether Weyerhaeuser's offer upon acceptance by MB would result in such Superior Proposal ceasing to be a Superior Proposal. If the Board of Directors of MB so determines, it will enter into an amended agreement with Weyerhaeuser reflecting Weyerhaeuser's amended proposal. If the Board of Directors of MB continues to believe, in good faith and after consultation with financial advisors and outside counsel, that such Superior Proposal remains a Superior Proposal and therefore rejects Weyerhaeuser's amended proposal, MB may terminate this Agreement pursuant to section 6.3(c)(iv); provided, however, that MB must concurrently pay to Weyerhaeuser the break fee payable, if any, to Weyerhaeuser under section 6.4 and must concurrently with termination enter into a definitive agreement with respect to such Acquisition Proposal. MB acknowledges and agrees that payment of the break fee, if any, payable under section 6.4 is a condition to valid termination of this Agreement under section 6.3(c)(iv) and this section 4.6. -46- MB also acknowledges and agrees that each successive modification of any Acquisition Proposal shall constitute a new Acquisition Proposal for purposes of the requirement under clause (ii) of this section 4.6 to initiate an additional five Business Day notice period. 4.7 Access to Information (a) Subject to sections 4.7(b) and (c) and applicable Laws, upon reasonable notice, MB shall (and shall cause each of its subsidiaries to) afford Weyerhaeuser's officers, employees, counsel, accountants and other authorized representatives and advisors ("Representatives") access, during normal business hours from the date hereof and until the earlier of the Effective Date or the termination of this Agreement, to its properties, books, contracts and records as well as to its management personnel, and, during such period, MB shall (and shall cause each of its subsidiaries to) furnish promptly to Weyerhaeuser all information concerning MB's business, properties and personnel as Weyerhaeuser may reasonably request. Nothing in the foregoing shall require MB to disclose information subject to a written confidentiality agreement with third parties or customer-specific or competitively sensitive information relating to areas or projects where Weyerhaeuser is in direct competition with MB. Subject to sections 4.7(b) and (c) and applicable laws, upon reasonable notice, Weyerhaeuser shall afford MB's Representatives access, upon reasonable notice and during normal business hours from the date hereof and until the earlier of the Effective Date or the termination of this Agreement, to such of Weyerhaeuser's management personnel as Weyerhaeuser may determine, acting reasonably, and, during such period, Weyerhaeuser shall furnish promptly to MB all information respecting material changes in Weyerhaeuser's business, properties and personnel as MB may reasonably request. (b) In accordance with the Confidentiality Agreement, each of Weyerhaeuser and MB acknowledges that certain information provided to it under section 4.7(a) above will be non-public and/or proprietary in nature (the "Information"). Except as permitted below, each of Weyerhaeuser and MB will keep Information confidential and will not, without the prior written consent of the other, disclose it, in any manner whatsoever, in whole or in part, to any other Person, and will not use it for any purpose other than to evaluate the transactions contemplated by this Agreement. Each of Weyerhaeuser and MB will make all reasonable, necessary and appropriate efforts to safeguard the Information from disclosure to anyone other than as permitted hereby and to control the copies, extracts or reproductions made of the Information. The Information may be provided to the Representatives of each of Weyerhaeuser and MB who require access to the same to assist it in proceeding in good faith with the transactions contemplated by this Agreement and whose assistance is required for such purposes, provided that it has first informed such Representatives to whom Information is provided that the Representative has the same obligations, including as to confidentiality, restricted use and otherwise, that it has with respect to such Information. This provision shall not apply to such portions of the Information that: (i) are or become -47- generally available to the public otherwise than as a result of disclosure by a party or its Representatives; or (ii) become available to a party on a non-confidential basis from a source other than, directly or indirectly, the other party or its Representatives, provided that such source is not to the knowledge of the first party, upon reasonable inquiry, prohibited from transmitting the Information by a contractual, legal or fiduciary obligation; (iii) were known to a party or were in its possession on a non-confidential basis prior to being disclosed to it by the other party or by someone on its behalf; or (iv) are required by applicable Laws or court order to be disclosed. The provisions of this section 4.7(b) shall survive the termination of this Agreement. (c) The parties acknowledge that certain Information may be competitively sensitive and that disclosure thereof shall be limited to that which is reasonably necessary for the purpose of (i) preparing submissions or applications in order to obtain the Appropriate Regulatory Approvals, (ii) preparing the Circular, (iii) avoiding conflicts and (iv) integrating the operations of Weyerhaeuser and MB. 4.8 Closing Matters Each of the Weyerhaeuser Parties and MB shall deliver, at the closing of the transactions contemplated hereby, such customary certificates, resolutions and other closing documents as may be required by the other parties hereto, acting reasonably. 4.9 Indemnification (a) Weyerhaeuser agrees that all rights to indemnification or exculpation now existing in favour of the directors or officers of MB or any subsidiary as provided in its articles of incorporation or by-laws in effect on the date hereof shall survive the Arrangement and shall continue in full force and effect for a period of not less than six years from the Effective Time and Weyerhaeuser hereby assumes, effective upon consummation of the Arrangement, all such liability with respect to any matters arising prior to the Effective Time. (b) There shall be maintained in effect, for not less than six years from the Effective Time, coverage equivalent to that in effect under the current policies of the directors' and officers' liability insurance maintained by MB or any of its subsidiaries, as the case may be, which is no less advantageous, and with no gaps or lapses in coverages with respect to matters occurring prior to the Effective Time. 4.10 Employment Agreements and Related Matters Weyerhaeuser covenants and agrees, and after the Effective Time will cause MB or any of its subsidiaries, as the case may be, and any successor to MB to agree, to: -48- (a) honour and comply with the terms of those existing employment and severance agreements of MB or any of its subsidiaries, as the case may be, which MB has disclosed in the MB Disclosure Letter; (b) for a period of one year it will deal with any employees of MB or any of its subsidiaries, as the case may be, whose employment may be terminated after the Effective Date in a fair and equitable manner consistent with the existing termination policies of MB or any of its subsidiaries, as the case may be, as disclosed in the MB Disclosure Letter; (c) for at least two years following the Effective Time, provide Affected Employees, taken as a whole, of MB and its subsidiaries, for as long as such Affected Employees remain employed during such two year period, employee benefits which, in the aggregate, are comparable to those offered (i) pursuant to MB or its subsidiaries' employee benefit plans, programs, policies and arrangements as provided to such Affected Employees immediately prior to the Effective Time and previously made available to Weyerhaeuser or (ii) pursuant to employee benefit plans, programs, policies or arrangements maintained by Weyerhaeuser or any subsidiary of Weyerhaeuser providing coverage and benefits which, in the aggregate, are no less favourable than those provided from time to time after the Effective Time to employees of Weyerhaeuser or its subsidiaries who are similarly situated, in terms of their positions and geographic locations to such Affected Employees; "Affected Employees" means individuals who are actively employed by MB or any of its subsidiaries as of the Effective Time who remain employed with Weyerhaeuser or any subsidiary of Weyerhaeuser. For at least two years following the Effective Time, Weyerhaeuser shall continue to provide to eligible Affected Retirees post retirement benefits (other than pensions) which, in the aggregate, are comparable to those offered (i) pursuant to MB Plans applicable to such Affected Retirees, taken as a whole, each as in effect on the date hereof and previously described to Weyerhaeuser, or (ii) pursuant to employee benefit plans, programs, polices or arrangements maintained by Weyerhaeuser or any subsidiary of Weyerhaeuser providing post retirement coverage and benefits (other than pensions) which, in the aggregate, are no less favourable than those provided to former employees of Weyerhaeuser or its subsidiaries who were similarly situated, in terms of their positions and geographic locations, to such Affected Retirees prior to their retirement; "Affected Retirees" means former employees of MB or its subsidiaries (and employees of MB or its subsidiaries whose employment terminates prior to the Effective Time); (d) give Affected Employees full credit for purposes of eligibility, vesting, benefit accrual (including benefit accrual under any defined benefit pension plans, provided that a participant's benefit under any such defined benefit pension plan may be offset by such participant's accrued benefit under the MB defined benefit pension plan) and determination of the level of benefits under any employee benefit plans or arrangements maintained by Weyerhaeuser or any subsidiary of Weyerhaeuser -49- in which such Affected Employees begin participation within two years after the Effective Time, for such Affected Employee's service with MB or any subsidiary of MB to the same extent recognized by MB immediately prior to the Effective Time and previously disclosed to Weyerhaeuser; provided, however, that in no event shall Weyerhaeuser be required to increase the benefit accrued by any Affected Employee as of the Effective Time with respect to their service for MB or its subsidiaries prior to the Effective Time in an amount which would be greater than the benefit that such Affected Employee would have accrued under the MB defined benefit pension plan (as in effect as of the date hereof) had they continued to participate thereunder following the Effective Time through their date of termination of employment; (e) waive all limitations as to preexisting conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to the Affected Employees under any welfare benefit plans that such employee may be eligible to participate within two years after the Effective Time, other than limitations or waiting periods that are already in effect with respect to such Affected Employees and that have not been satisfied as of the Effective Time under any welfare plan maintained for the Affected Employees immediately prior to the Effective Time and previously described to Weyerhaeuser; and (f) provide Affected Employees with credit for any co-payments and deductibles paid by such Affected Employees during the calendar year in which the Effective Time occurs in satisfying any applicable deductible or out-of-pocket requirements under any welfare plans that such Affected Employees are eligible to participate in after the Effective Time and previously described to Weyerhaeuser. Nothing herein shall be construed as (i) requiring Weyerhaeuser to continue the employment of any Affected Employee following the Effective Time, (ii) limiting Weyerhaeuser's ability to amend, modify or terminate any individual employee benefit plan or arrangement of MB, Weyerhaeuser or any of their respective subsidiaries, or (iii) requiring Weyerhaeuser to maintain any particular level of employee benefits for any individual employee following the Effective Time so long as clause (ii) of Section 4.10(c) is complied with. 4.11 Redemption of MB Convertible Debentures In the event of a failure to obtain the required vote from the holders of MB Convertible Debentures at the Debenture Meeting, Weyerhaeuser shall have the right to require MB to redeem the MB Convertible Debentures in accordance with their terms. Weyerhaeuser shall deliver a written notice to MB on the exercise of such right by Weyerhaeuser. Upon receipt of such notice by MB, MB covenants to deliver a redemption notice (specifying a 30- day redemption period) to and redeem the MB Convertible Debentures from the holders of the MB Convertible Debentures, provided that at the time of receipt of such written notice by MB a Specified Weyerhaeuser Event has not occurred and is continuing and MB and Weyerhaeuser agree, acting reasonably, that all of the conditions in Article 5 in this Agreement are capable of being satisfied prior to the Drop Dead Date. Notwithstanding any other provision of this Agreement, -50- any act by MB to redeem such MB Convertible Debentures as a result of the exercise of such right by Weyerhaeuser shall be deemed not to breach or violate or fail to satisfy any representation, warranty, covenant or condition contained in this Agreement. 4.12 Prohibition on Voluntary Liquidation The Weyerhaeuser Parties shall not, and agree to cause Weyerhaeuser Newco to not, take any action relating to a voluntary liquidation, dissolution or winding-up of Weysub or Weyerhaeuser Newco, as the case may be, prior to the Redemption Date (as defined in the Plan of Arrangement). 4.13 Non-Application of Covenants The parties hereto agree that no covenant of MB in this Agreement shall be deemed to have been breached as a result of any action taken or omitted to be taken by MB or its affiliates as may be required under any existing agreements of MB or its affiliates relating to the MB Partially- Owned Entity or its affiliates. ARTICLE 5 CONDITIONS 5.1 Mutual Conditions Precedent The respective obligations of the parties hereto to complete the transactions contemplated by this Agreement shall be subject to the satisfaction, on or before the Effective Date, of the following conditions precedent, each of which may only be waived by the mutual consent of Weyerhaeuser, on behalf of the Weyerhaeuser Parties, and MB: (a) the Arrangement shall have been approved at the MB Meeting by not less than two-thirds of the votes cast by the holders of MB Common Shares who are represented at the MB Meeting; (b) the Arrangement shall have been approved at the MB Meeting in accordance with any conditions in addition to those set out in section 5.1(a) which may be imposed by the Interim Order; (c) the Interim Order and the Final Order shall each have been obtained in form and terms satisfactory to each of MB and Weyerhaeuser, acting reasonably, and shall not have been set aside or modified in a manner unacceptable to such parties on appeal or otherwise; (d) the Form S-3 shall have become effective under the 1933 Act and shall not be the subject of any stop order or proceedings seeking a stop order, and Weyerhaeuser shall have received all United States state securities or "blue sky" authorizations necessary to issue the Weyerhaeuser Common Shares; -51- (e) there shall not be in force any order or decree restraining or enjoining the consummation of the transactions contemplated by this Agreement and there shall be no proceeding (other than an appeal made in connection with the Arrangement), of a judicial or administrative nature or otherwise, brought by a Governmental Entity in progress or threatened that relates to or results from the transactions contemplated by this Agreement that would, if successful, result in an order or ruling that would preclude completion of the transactions contemplated by this Agreement in accordance with the terms hereof or would otherwise be inconsistent with the Appropriate Regulatory Approvals which have been obtained; (f) this Agreement shall not have been terminated pursuant to Article 6; (g) the Exchangeable Shares issuable pursuant to the Arrangement shall have been conditionally approved for listing on The Toronto Stock Exchange, subject to the filing of required documentation, and the Weyerhaeuser Common Shares issuable pursuant to the Arrangement, upon exchange of the Exchangeable Shares from time to time and upon exercise of the Replacement Options from time to time shall have been approved for listing on The New York Stock Exchange, subject to notice of issuance; and (h) all consents, waivers, permits, orders and approvals of any Governmental Entity (including the Appropriate Regulatory Approvals), and the expiry of any waiting periods, in connection with, or required to permit, the consummation of the Arrangement, the failure of which to obtain or the non-expiry of which would constitute a criminal offense, or would have a Material Adverse Effect on Weyerhaeuser or MB, as the case may be, shall have been obtained or received on terms that will not have a Material Adverse Effect on Weyerhaeuser and/or MB; there shall not be pending or threatened any suit, action or proceeding by any Governmental Entity, in each case that has a reasonable likelihood of success, (i) seeking to prohibit or restrict the acquisition by Weyerhaeuser or any of its subsidiaries of any MB Common Shares, seeking to restrain or prohibit the consummation of the Plan of Arrangement or seeking to obtain from MB or Weyerhaeuser any damages that are material in relation to MB and its subsidiaries taken as a whole, (ii) seeking to prohibit or materially limit the ownership or operation by Weyerhaeuser or any of its subsidiaries of any material portion of the business or assets of MB or any of its subsidiaries or to compel Weyerhaeuser or any of its subsidiaries to dispose of or hold separate any material portion of the business or assets of MB or any of its subsidiaries, as a result of the Plan of Arrangement, (iii) seeking to impose limitations on the ability of Weyerhaeuser or any of its subsidiaries to acquire or hold, or exercise full rights of ownership of, any MB Common Shares, including the right to vote the MB Common Shares purchased by it on all matters properly presented to the shareholders of MB, (iv) seeking to prohibit Weyerhaeuser or any of its subsidiaries from effectively controlling in any material respect the business or operations of MB and its Material Subsidiaries or (v) which otherwise is reasonably likely to have a -52- Material Adverse Effect on MB or Weyerhaeuser; provided that a reduction of up to 5% of the allowable annual cut available under MB or its subsidiaries' Crown timber tenures, as provided in the Forest Act (British Columbia), directly resulting from the completion of the Arrangement shall be deemed not to have a Material Adverse Effect on Weyerhaeuser or MB or give rise to any other remedy under this Agreement. 5.2 Additional Conditions Precedent to the Obligations of the Weyerhaeuser Parties The obligations of the Weyerhaeuser Parties to complete the transactions contemplated by this Agreement shall also be subject to the fulfillment of each of the following conditions precedent (each of which is for the Weyerhaeuser Parties' exclusive benefit and may be waived by Weyerhaeuser on behalf of the Weyerhaeuser Parties): (a) all covenants of MB under this Agreement to be performed on or before the Effective Date shall have been duly performed by MB in all material respects; (b) the representations and warranties of MB shall be true and correct in all material respects as of the Effective Date as if made on and as of such date (except to the extent such representations and warranties speak as of an earlier date, in which event such representations and warranties shall be true and correct in all material respects as of such earlier date, or except as affected by transactions contemplated or permitted by this Agreement) and the Weyerhaeuser Parties shall have received a certificate of MB addressed to the Weyerhaeuser Parties and dated the Effective Date, signed on behalf of MB by two senior executive officers of MB, confirming the same as at the Effective Date; (c) between the date hereof and the Effective Date, there shall not have occurred a Material Adverse Change to MB; (d) the Board of Directors of MB shall have adopted all necessary resolutions, and all other necessary corporate action shall have been taken by MB and the subsidiaries to permit the consummation of the Arrangement; and (e) if Weyerhaeuser has delivered the notice referred to in section 4.11, the period set out in the redemption notice sent to holders of MB Convertible Debentures shall have expired. The Weyerhaeuser Parties may not rely on the failure to satisfy any of the above conditions precedent as a basis for non-compliance by the Weyerhaeuser Parties with their obligations under this Agreement if the condition precedent would have been satisfied but for a material default by the Weyerhaeuser Parties in complying with their obligations hereunder. -53- 5.3 Additional Conditions Precedent to the Obligations of MB The obligations of MB to complete the transactions contemplated by this Agreement shall also be subject to the following conditions precedent (each of which is for the exclusive benefit of MB and may be waived by MB): (a) all covenants of the Weyerhaeuser Parties under this Agreement to be performed on or before the Effective Date shall have been duly performed by the Weyerhaeuser Parties in all material respects; (b) all representations and warranties of the Weyerhaeuser Parties under this Agreement shall be true and correct in all material respects as of the Effective Date as if made on and as of such date (except to the extent such representations and warranties speak as of an earlier date, in which event such representations and warranties shall be true and correct in all material respects as of such earlier date, or except as affected by transactions contemplated or permitted by this Agreement) and MB shall have received a certificate of each of the Weyerhaeuser Parties addressed to MB and dated the Effective Date, signed on behalf of each of the Weyerhaeuser Parties by two senior executive officers of the relevant Weyerhaeuser Party, confirming the same as at the Effective Date; (c) between the date hereof and the Effective Date, there shall not have occurred a Material Adverse Change to Weyerhaeuser; and (d) the Boards of Directors of the Weyerhaeuser Parties shall have adopted all necessary resolutions, and all other necessary corporate action shall have been taken by the Weyerhaeuser Parties to permit the consummation of the Arrangement and the issue of the Exchangeable Shares contemplated thereby and the issue of Weyerhaeuser Common Shares pursuant to the Arrangement and upon the exchange from time to time of the Exchangeable Shares and the exercise from time to time of the Replacement Options. MB may not rely on the failure to satisfy any of the above conditions precedent as a basis for noncompliance by MB with its obligations under this Agreement if the condition precedent would have been satisfied but for a material default by MB in complying with its obligations hereunder. 5.4 Notice and Cure Provisions The Weyerhaeuser Parties and MB will give prompt notice to the other of the occurrence, or failure to occur, at any time from the date hereof until the Effective Date, of any event or state of facts which occurrence or failure would, or would be likely to: (a) cause any of the representations or warranties of the other party contained herein to be untrue or inaccurate in any material respect on the date hereof or on the Effective Date; or -54- (b) result in the failure in any material respect to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by the other hereunder prior to the Effective Date. Neither the Weyerhaeuser Parties nor MB may elect not to complete the transactions contemplated hereby pursuant to the conditions precedent contained in sections 5.1, 5.2 and 5.3, or exercise any termination right arising therefrom, unless forthwith and in any event prior to the filing of the Final Order for acceptance by the Director, the Weyerhaeuser Parties or MB, as the case may be, have delivered a written notice to the other specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which the Weyerhaeuser Parties or MB, as the case may be, are asserting as the basis for the non-fulfillment of the applicable condition precedent or the exercise of the termination right, as the case may be. If any such notice is delivered, provided that the Weyerhaeuser Parties or MB, as the case may be, are proceeding diligently to cure such matter, if such matter is susceptible to being cured, the other may not terminate this Agreement as a result thereof until the later of November 30, 1999 and the expiration of a period of 30 days from such notice. If such notice has been delivered prior to the date of the MB Meeting, such meeting shall be postponed until the expiry of such period. If such notice has been delivered prior to the making of the application for the Final Order or the filing of the Articles of Arrangement with the Director, such application and such filing shall be postponed until the expiry of such period. For greater certainty, in the event that such matter is cured within the time period referred to herein, this Agreement may not be terminated. 5.5 Satisfaction of Conditions The conditions precedent set out in sections 5.1, 5.2 and 5.3 shall be conclusively deemed to have been satisfied, waived or released when, with the agreement of Weyerhaeuser and MB, a certificate of arrangement in respect of the Arrangement is issued by the Director. The parties hereto agree that no condition to the obligation of the Weyerhaeuser Parties to complete the transactions contemplated by this Agreement set forth in Section 5.2(a), (b) or (c) shall be deemed not to have been satisfied as a result of any occurrence or circumstance directly or indirectly related to (i) the effect of the existence or performance of this Agreement or the transactions contemplated hereby on any existing agreements of MB or its affiliates relating to the MB Partially-Owned Entity or its affiliates or MB's relations with such persons or (ii) any action taken or claim made by the MB Partially-Owned Entity or its affiliates resulting from or with respect to (x) the existence or performance of this Agreement or the transactions contemplated hereby, or (y) the actions of the parties in connection herewith. -55- ARTICLE 6 AMENDMENT AND TERMINATION 6.1 Amendment This Agreement may, at any time and from time to time before or after the holding of the MB Meeting but not later than the Effective Date, be amended by mutual written agreement of the parties hereto, and any such amendment may, without limitation: (a) change the time for performance of any of the obligations or acts of the parties; (b) waive any inaccuracies or modify any representation contained herein or in any document delivered pursuant hereto; (c) waive compliance with or modify any of the covenants herein contained and waive or modify performance of any of the obligations of the parties; and (d) waive compliance with or modify any conditions precedent herein contained; provided, however, that any such change, waiver or modification does not invalidate any required security holder approval of the Arrangement. 6.2 Mutual Understanding Regarding Amendments (a) The parties will continue, from and after the date hereof and through and including the Effective Date, to use their respective reasonable efforts to maximize present and future financial and tax planning opportunities for the shareholders of MB, and for Weyerhaeuser and for MB as and to the extent that the same shall not prejudice any party or its security holders. The parties will ensure that such planning activities do not impede the progress of the Arrangement in any material way. (b) The parties agree that if the Weyerhaeuser Parties or MB, as the case may be, propose any amendment or amendments to this Agreement or to the Plan of Arrangement, the other will act reasonably in considering such amendment and if the other and its shareholders are not prejudiced by reason of any such amendment the other will co-operate in a reasonable fashion with the Weyerhaeuser Parties or MB, as the case may be, so that such amendment can be effected subject to applicable Laws and the rights of the security holders. 6.3 Termination (a) If any condition contained in sections 5.1 or 5.2 is not satisfied at or before the Effective Date to the satisfaction of the Weyerhaeuser Parties, then Weyerhaeuser on behalf of the Weyerhaeuser Parties may by notice to MB terminate this Agreement and the obligations of the parties hereunder except as otherwise herein provided, but without detracting from the rights of the Weyerhaeuser Parties -56- arising from any breach by MB but for which the condition would have been satisfied. (b) If any condition contained in sections 5.1 or 5.3 is not satisfied at or before the Effective Date to the satisfaction of MB, then MB may by notice to Weyerhaeuser on behalf of the Weyerhaeuser Parties terminate this Agreement and the obligations of the parties hereunder except as otherwise herein provided, but without detracting from the rights of MB arising from any breach by the Weyerhaeuser Parties but for which the condition would have been satisfied. (c) This Agreement may: (i) be terminated by the mutual agreement of MB and the Weyerhaeuser Parties (without further action on the part of MB's shareholders if terminated after the holding of the MB Meeting); (ii) be terminated by either MB or Weyerhaeuser, if there shall be passed any law or regulation that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or if any injunction, order or decree enjoining Weyerhaeuser or MB from consummating the transactions contemplated by this Agreement is entered and such injunction, order or decree shall become final and non-appealable; (iii) be terminated by Weyerhaeuser if (A) the Board of Directors of MB shall have failed to recommend or withdrawn or modified or changed in a manner adverse to Weyerhaeuser its approval or recommendation of this Agreement or the Arrangement or shall have recommended an Acquisition Proposal or (B) through the fault of MB (whether by commission or omission), this Arrangement is not, prior to 14 days prior to the Drop Dead Date, submitted for the approval of the MB Shareholders at the MB Meeting; (iv) be terminated by MB in order to enter into a definitive written agreement with respect to a Superior Proposal, subject to compliance with section 4.6 and the payment of any fee required to be paid pursuant to section 6.4(a); or (v) be terminated by MB or Weyerhaeuser if MB shareholder approval shall not have been obtained by reason of the failure to obtain the required vote at the MB Meeting; in each case, prior to the Effective Date. (d) If the Effective Date does not occur on or prior to the Drop Dead Date, then this Agreement shall terminate. -57- (e) If this Agreement is terminated in accordance with the foregoing provisions of this section 6.3, no party shall have any further liability to perform its obligations hereunder except as provided in section 6.4 and as otherwise contemplated hereby, and provided that, subject to section 6.5, neither the termination of this Agreement nor anything contained in this section 6.3(e) shall relieve any party from any liability for any breach by it of this Agreement, including from any inaccuracy in its representations and warranties and any non- performance by it of its covenants made herein. 6.4 Break Fee (a) If: (i) MB shall terminate this Agreement pursuant to section 6.3(c)(iv), unless at the time of such termination, a Specified Weyerhaeuser Event has occurred and is continuing; (ii) Weyerhaeuser shall terminate this Agreement pursuant to section 6.3(c)(iii), unless at the time of such failure to recommend, withdrawal or adverse modification or change, or recommendation of an Acquisition Proposal, a Specified Weyerhaeuser Event has occurred and is continuing; or (iii) either MB or Weyerhaeuser shall terminate this Agreement pursuant to section 6.3(c)(v) in circumstances where MB shareholder approval has not been obtained at the MB Meeting, and (x) a bona fide Acquisition Proposal has been made by any person other than a Weyerhaeuser Party prior to the MB Meeting and not withdrawn more than five days prior to the vote of the MB Shareholders and (y) MB enters into an agreement with respect to an Acquisition Proposal, or an Acquisition Proposal is consummated, after the date hereof and prior to the expiration of 18 months following termination of this Agreement, unless at the time of the MB Meeting a Specified Weyerhaeuser Event has occurred and is continuing; then in any such case MB shall pay to Weyerhaeuser US$92,000,000 in immediately available funds to an account designated by Weyerhaeuser. Such payment shall be due (A) in the case of a termination specified in clause (i), prior to the termination of this Agreement, (B) in the case of a termination specified in clause (ii), within five Business Days after written notice of termination by Weyerhaeuser or (C) in the case of a termination specified in clause (iii), at or prior to the earlier of the entering into of the agreement and the consummation of the transaction referred to therein. MB shall not be obligated to make more than one payment pursuant to this section 6.4(a). -58- (b) If the holders of the MB Common Shares shall fail to approve the Arrangement (unless a Specified Weyerhaeuser Event has occurred and is continuing) at the MB Meeting, then at 11:00 a.m., Seattle time, on the first Business Day following the MB Meeting, MB shall pay to Weyerhaeuser US$5,000,000 as payment in full of the Weyerhaeuser Parties' out-of-pocket costs and expenses in connection with the transaction contemplated by this Agreement in immediately available funds to an account designated by Weyerhaeuser. Any payment due under section 6.4(a) shall be reduced dollar-for-dollar by any payment previously made under this section 6.4(b). (c) Weyerhaeuser shall not be entitled to any break fee under Section 6.4(a)(iii) if (A) the Acquisition Proposal referred to in clause (x) thereof does not relate solely to the Packaging Business, (B) the Acquisition Proposal referred to in clause (y) thereof does relate solely to the Packaging Business and (C) the Acquisition Proposal referred to in clause (y) thereof was not made by the Person who made the Acquisition Proposal referred to in clause (x) thereof or any Person related to or acting in concert with such Person. 6.5 Effect of Break Fee Payment For greater certainty, the parties hereto agree that if MB pays to Weyerhaeuser amounts required by section 6.4(a) as a result of the occurrence of any of the events referenced in section 6.4(a), the Weyerhaeuser Parties shall have no other remedy for any breach of this Agreement by MB. 6.6 Remedies Subject to section 6.5, the parties hereto acknowledge and agree that an award of money damages would be inadequate for any breach of this Agreement by any party or its representatives and any such breach would cause the non-breaching party irreparable harm. Accordingly, the parties hereto agree that, in the event of any breach or threatened breach of this Agreement by one of the parties, the non-breaching party will also be entitled, without the requirement of posting a bond or other security, to equitable relief, including injunctive relief and specific performance. Such remedies will not be the exclusive remedies for any breach of this Agreement but will be in addition to all other remedies available at law or equity to each of the parties. ARTICLE 7 GENERAL 7.1 Notices All notices and other communications which may or are required to be given pursuant to any provision of this Agreement shall be given or made in writing and shall be deemed to be validly given if served personally or by telecopy, in each case addressed to the particular party at: -59- (a) If to MB, at: MacMillan Bloedel Limited 925 West Georgia Street Vancouver, BC V6C 3C2 Attention: Mr. Bruce Kulla, Vice President and General Counsel Telecopier No.: (604) 687-2314 with a copy to: Stikeman, Elliott Box 85, Commerce Court West 199 Bay Street, 53rd Floor Toronto, Ontario M5L 1B9 Attention: Mr. John Stransman Telecopier No.: (416) 947-0866 (b) If to a Weyerhaeuser Party, at: Weyerhaeuser Company 33663 Weyerhaeuser Way South Federal Way, WA 98003 Attention: Mr. Robert A. Dowdy, Vice President and General Counsel Telecopier No.: (253) 924-3253 with a copy to: Blake, Cassels & Graydon Box 25, Commerce Court West 199 Bay Street, 28th Floor Toronto, Ontario M5L 1A9 Attention: Mr. Alan Bell Telecopier No.: (416) 863-2653 or at such other address of which any party may, from time to time, advise the other parties by notice in writing given in accordance with the foregoing. The date of receipt of any such notice shall be deemed to be the date of delivery or telecopying thereof. -60- 7.2 Assignment No party hereto may assign its rights or obligations under this Agreement or the Arrangement. 7.3 Binding Effect This Agreement and the Arrangement shall be binding upon and shall enure to the benefit of the parties hereto and their respective successors and no third party shall have any rights hereunder. 7.4 Waiver and Modification MB and the Weyerhaeuser Parties may waive or consent to the modification of, in whole or in part, any inaccuracy of any representation or warranty made to them hereunder or in any document to be delivered pursuant hereto and may waive or consent to the modification of any of the covenants herein contained for their respective benefit or waive or consent to the modification of any of the obligations of the other parties hereto. Any waiver or consent to the modification of any of the provisions of this Agreement, to be effective, must be in writing executed by the party granting such waiver or consent. 7.5 No Personal Liability (a) No director or officer of any Weyerhaeuser Party shall have any personal liability whatsoever to MB under this Agreement, or any other document delivered in connection with the Arrangement on behalf of a Weyerhaeuser Party. (b) No director or officer of MB shall have any personal liability whatsoever to any Weyerhaeuser Party under this Agreement, or any other document delivered in connection with the Arrangement on behalf of MB. 7.6 Further Assurances Each party hereto shall, from time to time, and at all times hereafter, at the request of the other parties hereto, but without further consideration, do all such further acts and execute and deliver all such further documents and instruments as shall be reasonably required in order to fully perform and carry out the terms and intent hereof. 7.7 Expenses (a) Subject to section 6.4, the parties agree that all out-of-pocket expenses of the parties relating to the Arrangement and the transactions contemplated hereby, including legal fees, accounting fees, financial advisory fees, regulatory filing fees, all disbursements of advisors and printing and mailing costs, shall be paid by the party incurring such expenses. -61- (b) MB represents and warrants to the Weyerhaeuser Parties that, except for any amounts owing to RBC Dominion Securities Inc., J.P. Morgan & Co. Incorporated and Salomon Smith Barney Inc. by MB pursuant to and in accordance with the terms of written and executed agreements existing as at the date hereof and disclosed to the Weyerhaeuser Parties on or prior to the date hereof, no broker, finder or investment banker is or will be entitled to any brokerage, finder's or other fee or commission from MB or any subsidiary of MB in connection with the transactions contemplated hereby or by the Arrangement. 7.8 Consultation Weyerhaeuser and MB agree to consult with each other as to the general nature of any news releases or public statements with respect to this Agreement or the Arrangement, and to use their respective reasonable efforts not to issue any news releases or public statements inconsistent with the results of such consultations. Subject to applicable Laws, each party shall use its reasonable efforts to enable the other parties to review and comment on all such news releases prior to the release thereof. The parties agree to issue jointly a news release with respect to this Arrangement as soon as practicable following the execution of this Agreement. Weyerhaeuser and MB also agree to consult with each other in preparing and making any filings and communications in connection with any Appropriate Regulatory Approvals. 7.9 Governing Laws This Agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein and shall be treated in all respects as a British Columbia contract. Each party hereby irrevocably attorns to the jurisdiction of the courts of the Province of British Columbia in respect of all matters arising under or in relation to this Agreement. 7.10 Time of Essence Time shall be of the essence in this Agreement. -62- 7.11 Counterparts This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above. WEYERHAEUSER COMPANY By: /s/ Steven R. Rogel ------------------- Chairman, President & Chief Executive Officer By: ------------------- 586476 B.C. LTD. By: /s/ Steven R. Rogel ------------------- Director By: ------------------- MACMILLAN BLOEDEL LIMITED By: /s/ W. T. Stephens ------------------- By: ------------------- -63- SCHEDULE B APPROPRIATE REGULATORY APPROVALS Canada . expiration or earlier termination of the waiting period under Part IX of the Competition Act (Canada) and receipt of an advance ruling certificate ("ARC") pursuant to the Competition Act (Canada) or, in the alternative to an ARC, a no-action letter from the Commissioner of Competition . determination by the Minister responsible for Investment Canada under the Investment Canada Act that the Arrangement is of "net benefit to Canada" for purposes of such Act . exemption orders from the provincial securities regulators from the registration and prospectus requirements with respect to the Exchangeable Share structure . approval of the relevant Canadian stock exchange(s) regarding the conditional listing of the Exchangeable Shares . approvals in respect of all material tree farm licences, forest resource licences, forest resource processing facility licences, forest management agreements, timber permits and timber licences, including, without limitation, the consent of the Minister of Forests for British Columbia to the change of control of MB resulting from the completion of the Arrangement. United States and Other . expiration or earlier termination of the waiting period under the Hart- Scott-Rodino Antitrust Improvements Act of 1976 . effectiveness of the registration statement on Form S-3 regarding the Weyerhaeuser Common Shares . approval of The New York Stock Exchange regarding the listing of the Weyerhaeuser Common Shares subject to official notice of issuance . approvals in respect of all material tree farm licenses, timber permits and timber licenses. -1- EX-99 3 SCHEDULE D PLAN OF ARRANGEMENT UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT ARTICLE 1 INTERPRETATION 1.1 Definitions In this Plan of Arrangement, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings: "Arrangement" means an arrangement under section 192 of the CBCA on the terms and subject to the conditions set out in this Plan of Arrangement, subject to any amendments or variations thereto made in accordance with section 6.1 of the Merger Agreement or Article 6 or made at the direction of the Court in the Final Order; "Arrangement Resolution" means the special resolution of the MB Shareholders, to be substantially in the form and content of Schedule C annexed to the Merger Agreement; "Articles of Arrangement" means the articles of arrangement of MB in respect of the Arrangement that are required by the CBCA to be sent to the Director after the Final Order is made; "Business Day" means any day on which commercial banks are generally open for business in Seattle, Washington and Vancouver, British Columbia, other than a Saturday, a Sunday or a day observed as a holiday in Seattle, Washington under the laws of the State of Washington or the federal laws of the United States of America or in Vancouver, British Columbia under the laws of the Province of British Columbia or the federal laws of Canada; "CBCA" means the Canada Business Corporations Act as now in effect and as may be amended from time to time prior to the Effective Date; "Certificate" means the certificate of arrangement giving effect to the Arrangement, issued pursuant to subsection 192(7) of the CBCA after the Articles of Arrangement have been filed; "Circular" means the notice of the MB Meeting and accompanying management information circular, including all schedules and exhibits thereto, to be sent to holders of MB Common Shares and MB Options in connection with the MB Meeting; "Court" means the Supreme Court of British Columbia; D-1 "Current Market Price" has the meaning ascribed thereto in the Exchangeable Share Provisions; "Depositary" means at its offices set out in the Letter of Transmittal and Election Form; "Director" mean the Director appointed pursuant to section 260 of the CBCA; "Dissent Rights" has the meaning set out in section 3.1; "Dissenting Shareholder" means a holder of MB Common Shares who dissents in respect of the Arrangement in strict compliance with the Dissent Rights; "Dividend Amount" has the meaning ascribed thereto in section 5.1(a); "Drop Dead Date" means February 15, 2000, or such later date as may be mutually agreed by the parties to the Merger Agreement; "Effective Date" means the date shown on the Certificate, provided that such date occurs on or prior to the Drop Dead Date; "Effective Time" means 12:01 a.m. on the Effective Date; "Election Deadline" means 5:00 p.m. (local time) at the place of deposit on the date which is two Business Days prior to the date of the MB Meeting; "Exchange Ratio" means 0.28, subject to adjustment, if any, as provided herein; "Exchangeable Elected Share" means any MB Common Share that the holder shall have elected, in a duly completed Letter of Transmittal and Election Form deposited with the Depositary no later than the Election Deadline, to transfer to Weysub under the Arrangement for a fraction of an Exchangeable Share or that is deemed to be an Exchangeable Elected Share pursuant to section 2.2(c); "Exchangeable Shares" means the non-voting exchangeable shares in the capital of Weysub, having substantially the rights, privileges, restrictions and conditions set out in the Exchangeable Share Provisions; "Exchangeable Share Provisions" means the rights, privileges, restrictions and conditions attaching to the Exchangeable Shares, which rights, privileges, restrictions and conditions shall be substantially as set out in Appendix 1 hereto; "Final Order" means the final order of the Court approving the Arrangement as such order may be amended by the Court at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed; D-2 "Government Entity" means any (a) multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (b) any subdivision, agent, commission, board, or authority of any of the foregoing, or (c) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing; "Interim Order" means the interim order of the Court, as the same may be amended, in respect of the Arrangement, as contemplated by section 2.3 of the Merger Agreement; "ITA" means the Income Tax Act (Canada), as amended; "Letter of Transmittal and Election Form" means the letter of transmittal and election form for use by holders of MB Common Shares, in the form accompanying the Circular; "Liquidation Call Purchase Price" has the meaning ascribed thereto in section 5.1(a); "Liquidation Call Right" has the meaning ascribed thereto in section 5.1(a); "Liquidation Date" has the meaning ascribed thereto in the Exchangeable Share Provisions; "MB" means MacMillan Bloedel Limited, a corporation existing under the laws of Canada; "MB Common Shares" means the outstanding common shares in the capital of MB; "MB Meeting" means the special meeting of MB Shareholders, including any adjournment thereof, to be called and held in accordance with the Interim Order to consider the Arrangement; "MB Options" means the MB Common Share purchase options granted under MB Stock Option Plan, as amended, and under separate agreements with three senior officers of MB, and being outstanding and unexercised on the Effective Date; "MB Shareholders" means the holders of MB Common Shares, MB Options and MB Warrants, collectively; "MB Stock Option Plan" means MB's Senior Management Stock Option Plan instituted February 10, 1997; "MB Warrants" means the bearer warrants of MB exercisable for MB Common Share and being outstanding and unexercised on the Effective Date; "Meeting Date" means the date of the MB Meeting; D-3 "Merger Agreement" means the agreement made the 20th day of June, 1999 among Weyerhaeuser, Weysub and MB, as amended, supplemented and/or restated in accordance therewith prior to the Effective Date, providing for, among other things, the Arrangement; "NYSE" means the New York Stock Exchange, Inc.; "Person" includes any individual, firm, partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, Governmental Entity, syndicate or other entity, whether or not having legal status; "Redemption Call Purchase Price" has the meaning ascribed thereto in section 5.2(a); "Redemption Call Right" has the meaning ascribed thereto in section 5.2(a); "Redemption Date" has the meaning ascribed thereto in the Exchangeable Share Provisions; "Replacement Option" has the meaning ascribed thereto in section 2.2(d); "Special Voting Share" means the share of Weyerhaeuser Special Voting Preferred Stock having substantially the rights, privileges, restrictions and conditions described in the Voting and Exchange Trust Agreement; "Transfer Agent" has the meaning ascribed thereto in section 5.1(b); "Trustee" means the trustee to be chosen by Weyerhaeuser and MB, acting reasonably, to act as trustee under the Voting and Exchange Trust Agreement, being a corporation organized and existing under the laws of Canada and authorized to carry on the business of a trust company in all the provinces of Canada, and any successor trustee appointed under the Voting and Exchange Trust Agreement; "Voting and Exchange Trust Agreement" means an agreement to be made between Weyerhaeuser, Weysub and the Trustee in connection with the Plan of Arrangement substantially in the form and content of Schedule F annexed to the Merger Agreement, with such changes thereto as the parties to the Merger Agreement, acting reasonably, may agree; "Weyerhaeuser" means Weyerhaeuser Company, a corporation existing under the laws of the State of Washington; "Weyerhaeuser Common Shares" means the shares of common stock in the capital of Weyerhaeuser; D-4 "Weyerhaeuser Control Transaction" has the meaning ascribed thereto in the Exchangeable Share Provisions; "Weyerhaeuser Elected Share" means any MB Common Share that the holder shall have elected, in a duly completed Letter of Transmittal and Election Form deposited with the Depositary no later than the Election Deadline, to transfer to Weysub under the Arrangement for a fraction of a Weyerhaeuser Common Share, or that is deemed to be a Weyerhaeuser Elected Share pursuant to section 2.3(a); "Weyerhaeuser Newco" means 586474 B.C. Ltd., a company existing under the laws of the Province of British Columbia and being a wholly-owned subsidiary of Weyerhaeuser; and "Weysub" means 586476 B.C. Ltd., a company existing under the laws of the Province of British Columbia and being a subsidiary of Weyerhaeuser Newco. 1.2 Sections and Headings The division of this Plan of Arrangement into sections and the insertion of headings are for reference purposes only and shall not affect the interpretation of this Plan of Arrangement. Unless otherwise indicated, any reference in this Plan of Arrangement to a section or an exhibit refers to the specified section of or exhibit to this Plan of Arrangement. 1.3 Number, Gender and Persons In this Plan of Arrangement, unless the context otherwise requires, words importing the singular number include the plural and vice versa and words importing any gender include all genders. ARTICLE 2 ARRANGEMENT 2.1 Binding Effect This Plan of Arrangement will become effective at, and be binding at and after, the Effective Time on (i) MB, (ii) Weyerhaeuser, Weyerhaeuser Newco and Weysub, (iii) all holders of MB Common Shares, (iv) all holders of Exchangeable Shares, and (v) all holders of MB Warrants. 2.2 Arrangement Commencing at the Effective Time, the following shall occur and shall be deemed to occur in the following order without any further act or formality: (a) each Weyerhaeuser Elected Share will be transferred by the holder thereof, without any act or formality on its part, to Weysub in exchange for that number of fully paid and non-assessable Weyerhaeuser Common Shares equal to the D-5 Exchange Ratio, and the name of each such holder will be removed from the register of holders of MB Common Shares and added to the register of holders of Weyerhaeuser Common Shares and Weysub will be recorded as the registered holder of such MB Common Shares so exchanged and will be deemed to be the legal and beneficial owner thereof; (b) each Exchangeable Elected Share will be transferred by the holder thereof, without any act or formality on its part, to Weysub in exchange for that number of fully paid and non-assessable Exchangeable Shares equal to the Exchange Ratio, and the name of each such holder will be removed from the register of holders of MB Common Shares and added to the register of holders of Exchangeable Shares and Weysub will be recorded as the registered holder of such MB Common Shares so exchanged and will be deemed to be the legal and beneficial owner of such MB Common Shares and MB Warrants; (c) each MB Common Share in respect of which no election has been made by the holder thereof, or in respect of which an effective election has not been made, (other than (i) MB Common Shares held by Dissenting Shareholders who are ultimately entitled to be paid the fair value of the MB Common Shares held by them and (ii) MB Common Shares held by Weyerhaeuser or any subsidiary or affiliate thereof which shall not be exchanged under this Arrangement and shall remain outstanding as MB Common Shares held by Weyerhaeuser or any subsidiary or affiliate thereof) and each MB Warrant, as the case may be, will be deemed to be an Exchangeable Elected Share and will be transferred by the holder thereof, without any act or formality on its part, to Weysub in exchange for that number of fully paid and non-assessable Exchangeable Shares equal to the Exchange Ratio, and the name of each such holder of MB Common Shares will be removed from the register of holders of MB Common Shares and added to the register of holders of Exchangeable Shares and Weysub will be recorded as the registered holder of such MB Common Shares so exchanged and will be deemed to be the legal and beneficial owner of such MB Common Shares and MB Warrants; provided that, notwithstanding the foregoing, each MB Common Share in respect of which no election has been made, or in respect of which an effective election has not been made, held by a holder who is not a resident of Canada for the purposes of the ITA (other than (i) MB Common Shares held by Dissenting Shareholders who are ultimately entitled to be paid the fair value of the MB Common Shares held by them and (ii) MB Common Shares held by Weyerhaeuser or any subsidiary or affiliate thereof which shall not be exchanged under the Arrangement and shall remain outstanding as MB Common Shares held by Weyerhaeuser or any subsidiary or affiliate thereof) will be deemed to be a Weyerhaeuser Elected Share and will be transferred by the holder thereof, without any act or formality on his part, to Weysub in exchange for that number of fully paid and non-assessable Weyerhaeuser Common Shares equal to the Exchange Ratio, and the name of each such holder will be removed from the register of holders of MB Common Shares and added to the register of holders of Weyerhaeuser Common Shares and Weysub will be recorded as the registered D-6 holder of such MB Common Shares so exchanged and will be deemed to be the legal and beneficial owner thereof; (d) each MB Option shall be exchanged for an option (a "Replacement Option") to purchase a number of Weyerhaeuser Common Shares equal to the product of the Exchange Ratio multiplied by the number of MB Common Shares subject to such MB Option. Such Replacement Option shall provide for an exercise price per Weyerhaeuser Common Share equal to the exercise price per share of such MB Option immediately prior to the Effective Time divided by the Exchange Ratio. If the foregoing calculation results in a Replacement Option being exercisable for a fraction of a Weyerhaeuser Common Share, then the number of Weyerhaeuser Common Shares subject to such Replacement Option shall be rounded down to the next whole number of Weyerhaeuser Common Shares and the total exercise price for the Replacement Option will be reduced by the exercise price of the fractional Weyerhaeuser Common Share. Subject to Appendix 2 hereto, the term to expiry, conditions to and manner of exercising, vesting schedule, and all other terms and conditions of such Replacement Option will otherwise be unchanged, and any document or agreement previously evidencing an MB Option shall thereafter evidence and be deemed to evidence such Replacement Option; and (e) Weyerhaeuser shall issue to and deposit with the Trustee the Special Voting Share, in consideration of the payment to Weyerhaeuser of U.S. $1, to be thereafter held of record by the Trustee as trustee for and on behalf of, and for the use and benefit of, the holders of the Exchangeable Shares in accordance with the Voting and Exchange Trust Agreement. 2.3 Elections (a) Each Person who, at or prior to the Election Deadline, is a holder of record of MB Common Shares will be entitled, with respect to all or a portion of such shares, to make an election at or prior to the Election Deadline to receive Exchangeable Shares or Weyerhaeuser Common Shares, or a combination thereof, in exchange for such holder's MB Common Shares on the basis set forth herein and in the Letter of Transmittal and Election Form; provided that, notwithstanding anything to the contrary herein, holders of MB Common Shares who are not residents of Canada for the purposes of the ITA will not be entitled to elect to receive Exchangeable Shares, and any such election otherwise made by any such holder shall be and be deemed to be an election to receive a Weyerhaeuser Elected Share. (b) Holders of MB Common Shares who are residents of Canada for the purposes of the ITA, other than any such holder who is exempt from tax under the ITA, and who have elected to receive Exchangeable Shares shall be entitled to make an income tax election pursuant to subsection 85(l) of the ITA or, if the holder is a partnership, subsection 85(2) of the ITA (and in each case, where applicable, the D-7 analogous provisions of provincial income tax law) with respect to the transfer of their MB Common Shares to Weysub by providing two signed copies of the necessary prescribed election forms to the Depositary within 90 days following the Effective Date, duly completed with the details of the number of shares transferred and the applicable agreed amounts for the purposes of such elections. Thereafter, subject to the election forms being correct and complete and complying with the provisions of the ITA (or applicable provincial income tax law), the forms will be signed by Weysub and returned to such holders of MB Common Shares or MB Warrants, as the case may be, within 30 days after the receipt thereof by the Depositary for filing with Revenue Canada (or the applicable provincial taxing authority). Weysub will not be responsible for the proper completion of any election form and, except for Weysub's obligation to return duly completed election forms which are received by the Depositary within 90 days of the Effective Date, within 30 days after the receipt thereof by the Depositary, Weysub will not be responsible for any taxes, interest or penalties resulting from the failure by a holder of MB Common Shares or MB Warrants, as the case may be, to properly complete or file the election forms in the form and manner and within the time prescribed by the ITA (or any applicable provincial legislation). In its sole discretion, Weysub may choose to sign and return an election form received more than 90 days following the Effective Date, but Weysub will have no obligation to do so. 2.4 Adjustments to Exchange Ratio The Exchange Ratio shall be adjusted to reflect fully the effect of any stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into Weyerhaeuser Common Shares or MB Common Shares other than stock dividends paid in lieu of ordinary course dividends), reorganization, recapitalization or other like change with respect to Weyerhaeuser Common Shares or MB Common Shares occurring after the date of the Merger Agreement and prior to the Effective Time. ARTICLE 3 RIGHTS OF DISSENT 3.1 Rights of Dissent Holders of MB Common Shares may exercise rights of dissent with respect to such shares pursuant to and in the manner set forth in section 190 of the CBCA and this section 3.1 (the "Dissent Rights") in connection with the Arrangement; provided that, notwithstanding subsection 190(5) of the CBCA, the written objection to the Arrangement Resolution referred to in subsection 190(5) of the CBCA must be received by MB not later than 5:00 p.m. (Vancouver time) on the Business Day preceding the MB Meeting. Holders of MB Common Shares who duly exercise such rights of dissent and who: D-8 (a) are ultimately determined to be entitled to be paid fair value for their MB Common Shares shall be deemed to have transferred such MB Common Shares and to Weysub, to the extent the fair value therefor is paid by Weysub, and to MB, to the extent the fair value therefor is paid by MB, and, in the case of MB Common Shares so transferred to MB such shares shall be cancelled as of the Effective Date; or (b) are ultimately determined not to be entitled, for any reason, to be paid fair value for their MB Common Shares shall be deemed to have participated in the Arrangement on the same basis as a non- dissenting holder of MB Common Shares and shall receive Exchangeable Shares or Weyerhaeuser Common Shares on the basis determined in accordance with section 2.2(c), but in no case shall Weyerhaeuser, Weysub, Weyerhaeuser Newco, MB or any other Person be required to recognize such holders as holders of MB Common Shares after the Effective Time, and the names of such holders of MB Common Shares shall be deleted from the registers of holders of MB Common Shares at the Effective Time. ARTICLE 4 CERTIFICATES AND FRACTIONAL SHARES 4.1 Issuance of Certificates Representing Exchangeable Shares At or promptly after the Effective Time, Weysub shall deposit with the Depositary, for the benefit of the holders of MB Common Shares or MB Warrants who will receive Exchangeable Shares in connection with the Arrangement, certificates representing that number of whole Exchangeable Shares to be delivered pursuant to section 2.2 upon the exchange of MB Common Shares or MB Warrants. Upon surrender to the Depositary for cancellation of a certificate which immediately prior to the Effective Time represented one or more MB Common Shares or MB Warrants, as the case may be, that were exchanged for one or more Exchangeable Shares under the Arrangement, together with such other documents and instruments as would have been required to effect the transfer of the shares formerly represented by such certificate under the CBCA and the by-laws of MB and such additional documents and instruments as the Depositary may reasonably require, the holder of such surrendered certificate shall be entitled to receive in exchange therefor, and the Depositary shall deliver to such holder, a certificate representing that number (rounded down to the nearest whole number) of Exchangeable Shares which such holder has the right to receive (together with any dividends or distributions with respect thereto pursuant to section 4.3 and any cash in lieu of fractional Exchangeable Shares pursuant to section 4.4), and the certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of MB Common Shares that is not registered in the transfer records of MB, a certificate representing the proper number of Exchangeable Shares may be issued to the transferee if the certificate representing such MB Common Shares is presented to the Depositary, accompanied by all documents required to evidence and effect such transfer. Until surrendered as contemplated by this section 4.1, each certificate which immediately prior to the Effective Time represented MB Common Shares or MB Warrants, as the case may be, that were exchanged for Exchangeable Shares shall be deemed at all times after the Effective Time to D-9 represent only the right to receive upon such surrender (i) the certificate representing Exchangeable Shares as contemplated by this section 4.1, (ii) a cash payment in lieu of any fractional Exchangeable Shares as contemplated by section 4.4 and (iii) any dividends or distributions with a record date after the Effective Time theretofore paid or payable with respect to Exchangeable Shares as contemplated by section 4.3. 4.2 Exchange of Certificates for Weyerhaeuser Common Shares At or promptly after the Effective Time, Weysub shall deposit with the Depositary, for the benefit of the holders of MB Common Shares in connection with the Arrangement, certificates representing the Weyerhaeuser Common Shares delivered pursuant to section 2.2 in exchange for outstanding MB Common Shares. Upon surrender to the Depositary for cancellation of a certificate which immediately prior to the Effective Time represented outstanding MB Common Shares that were exchanged for Weyerhaeuser Common Shares, together with such other documents and instruments as would have been required to effect the transfer of the shares formerly represented by such certificate under the CBCA and the by-laws of MB and such additional documents and instruments as the Depositary may reasonably require, the holder of such surrendered certificate shall be entitled to receive in exchange therefor, and the Depositary shall deliver to such holder, a certificate representing that number (rounded down to the nearest whole number) of Weyerhaeuser Common Shares which such holder has the right to receive (together with any dividends or distributions with respect thereto pursuant to section 4.3 and any cash in lieu of fractional Weyerhaeuser Common Shares pursuant to section 4.4), and the certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of MB Common Shares which is not registered in the transfer records of MB, a certificate representing the proper number of Weyerhaeuser Common Shares may be issued to the transferee if the certificate representing such MB Common Shares is presented to the Depositary, accompanied by all documents required to evidence and effect such transfer. Until surrendered as contemplated by this section 4.2, each certificate which immediately prior to the Effective Time represented one or more outstanding MB Common Shares that were exchanged for Weyerhaeuser Common Shares shall be deemed at all times after the Effective Time to represent only the right to receive upon such surrender (i) the certificate representing Weyerhaeuser Common Shares as contemplated by this section 4.2, (ii) a cash payment in lieu of any fractional Weyerhaeuser Common Shares as contemplated by section 4.4 and (iii) any dividends or distributions with a record date after the Effective Time theretofore paid or payable with respect to Weyerhaeuser Common Shares as contemplated by section 4.3. 4.3 Distributions with Respect to Unsurrendered Certificates No dividends or other distributions declared or made after the Effective Time with respect to Exchangeable Shares or Weyerhaeuser Common Shares with a record date after the Effective Time shall be paid to the holder of any unsurrendered certificate which immediately prior to the Effective Time represented outstanding MB Common Shares or MB Warrants that were exchanged pursuant to section 2.2, and no cash payment in lieu of fractional shares shall be paid to any such holder pursuant to section 4.4 and no interest shall be earned or payable on these proceeds, unless and until the holder of record of such certificate shall surrender such certificate in accordance with section 4.1 or 4.2. Subject to applicable law, at the time of such D-10 surrender of any such certificate (or, in the case of clause (iii) below, at the appropriate payment date), there shall be paid to the record holder of the certificates representing whole MB Common Shares or MB Warrants, as the case may be, without interest, (i) the amount of any cash payable in lieu of a fractional Exchangeable Share or Weyerhaeuser Common Share to which such holder is entitled pursuant to section 4.4, (ii) the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole Exchangeable Share or Weyerhaeuser Common Share, s the case may be, and (iii) on the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a payment date subsequent to surrender payable with respect to such whole Exchangeable Share or Weyerhaeuser Common Share, as the case may be. 4.4 No Fractional Shares No certificates representing fractional Exchangeable Shares or fractional Weyerhaeuser Common Shares shall be issued upon the surrender for exchange of certificates pursuant to section 4.1 or 4.2 and no dividend, stock split or other change in the capital structure of Weysub shall relate to any such fractional security and such fractional interests shall not entitle the owner thereof to exercise any rights as a security holder of Weysub. In lieu of any such fractional securities: (a) each Person otherwise entitled to a fractional interest in an Exchangeable Share will receive a cash payment equal to such Person's pro rata portion of the net proceeds after expenses received by the Depositary upon the sale of whole shares representing an accumulation of all fractional interests in Exchangeable Shares to which all such Persons would otherwise be entitled. The Depositary will sell such Exchangeable Shares by private sale (including by way of sale through the facilities of any stock exchange upon which the Exchangeable Shares are then listed) as soon as reasonably practicable following the Effective Date. The aggregate net proceeds after expenses of such sale will be distributed by the Depositary, pro rata in relation to the respective fractions, among the Persons otherwise entitled to receive fractional interests in Exchangeable Shares; and (b) each Person otherwise entitled to a fractional interest in a Weyerhaeuser Common Share will receive a cash payment equal to such Person's pro rata portion of the net proceeds after expenses received by the Depositary upon the sale of whole shares representing an accumulation of all fractional interests in Weyerhaeuser Common Shares to which all such Persons would otherwise be entitled. The Depositary will sell such Weyerhaeuser Common Shares on the NYSE as soon as reasonably practicable following the Effective Date. The aggregate net proceeds after expenses of such sale will be distributed by the Depositary, pro rata in relation to the respective fractions, among the Persons otherwise entitled to receive fractional interests in Weyerhaeuser Common Shares. D-11 4.5 Lost Certificates In the event any certificate which immediately prior to the Effective Time represented one or more outstanding MB Common Shares or MB Warrants that were exchanged pursuant to section 2.2 shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen or destroyed, the Depositary will issue in exchange for such lost, stolen or destroyed certificate, cash and/or one or more certificates representing one or more Exchangeable Shares or Weyerhaeuser Common Shares (and any dividends or distributions with respect thereto and any cash pursuant to section 4.4) deliverable in accordance with such holder's Letter of Transmittal and Election Form. When authorizing such payment in exchange for any lost, stolen or destroyed certificate, the Person to whom certificates representing Exchangeable Shares or Weyerhaeuser Common Shares are to be issued shall, as a condition precedent to the issuance thereof, give a bond satisfactory to Weysub, Weyerhaeuser and their respective transfer agents in such sum as Weysub or Weyerhaeuser may direct or otherwise indemnify Weysub and Weyerhaeuser in a manner satisfactory to Weysub and Weyerhaeuser against any claim that may be made against Weysub or Weyerhaeuser with respect to the certificate alleged to have been lost, stolen or destroyed. 4.6 Extinction of Rights Any certificate which immediately prior to the Effective Time represented outstanding MB Common Shares or MB Warrants that were exchanged pursuant to section 2.2 that is not deposited with all other instruments required by section 4.1 or 4.2 on or prior to the date of the notice referred to in section 7.2 of the Exchangeable Share Provisions shall cease to represent a claim or interest of any kind or nature as a shareholder of Weysub or Weyerhaeuser. On such date, the Exchangeable Shares or Weyerhaeuser Common Shares (or cash in lieu of fractional interests therein, as provided in section 4.4) to which the former registered holder of the certificate referred to in the preceding sentence was ultimately entitled shall be deemed to have been surrendered for no consideration to Weysub or Weyerhaeuser, as the case may be, together with all entitlements to dividends, distributions and interest in respect thereof held for such former registered holder. None of Weyerhaeuser, Weysub, Weyerhaeuser Newco or the Depositary shall be liable to any person in respect of any Weyerhaeuser Common Shares or Exchangeable Shares (or dividends, distributions and interest in respect thereof) delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. 4.7 Withholding Rights Weysub, Weyerhaeuser Newco, Weyerhaeuser and the Depositary shall be entitled to deduct and withhold from any dividend or consideration otherwise payable to any holder of MB Common Shares, MB Warrants, Weyerhaeuser Common Shares or Exchangeable Shares such amounts as Weysub, Weyerhaeuser Newco, Weyerhaeuser or the Depositary is required or permitted to deduct and withhold with respect to such payment under the ITA, the United States Internal Revenue Code of 1986 or any provision of provincial, state, local or foreign tax law, in each case, as amended. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the holder of the shares in respect of which such deduction and withholding was made, provided that such D-12 withheld amounts are actually remitted to the appropriate taxing authority. To the extent that the amount so required or permitted to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, Weysub, Weyerhaeuser Newco, Weyerhaeuser and the Depositary are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to Weysub, Weyerhaeuser Newco, Weyerhaeuser or the Depositary, as the case may be, to enable it to comply with such deduction or withholding requirement and Weysub, Weyerhaeuser Newco, Weyerhaeuser or the Depositary shall notify the holder thereof and remit any unapplied balance of the net proceeds of such sale. ARTICLE 5 CERTAIN RIGHTS OF WEYERHAEUSER NEWCO TO ACQUIRE EXCHANGEABLE SHARES 5.1 Weyerhaeuser Newco Liquidation Call Right (a) Weyerhaeuser Newco shall have the overriding right (the "Liquidation Call Right"), in the event of and notwithstanding the proposed liquidation, dissolution or winding-up of Weysub pursuant to Article 5 of the Exchangeable Share Provisions, to purchase from all but not less than all of the holders of Exchangeable Shares (other than any holder of Exchangeable Shares which is an affiliate of Weyerhaeuser) on the Liquidation Date all but not less than all of the Exchangeable Shares held by each such holder on payment by Weyerhaeuser Newco of an amount per share (the "Liquidation Call Purchase Price") equal to the Current Market Price of a Weyerhaeuser Common Share on the last Business Day prior to the Liquidation Date, which shall be satisfied in full by Weyerhaeuser Newco causing to be delivered to such holder one Weyerhaeuser Common Share, plus, to the extent not paid by Weysub, an additional amount equivalent to the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the date of purchase by Weyerhaeuser Newco (the "Dividend Amount"). In the event of the exercise of the Liquidation Call Right by Weyerhaeuser Newco, each holder shall be obligated to sell all the Exchangeable Shares held by the holder to Weyerhaeuser Newco on the Liquidation Date on payment by Weyerhaeuser Newco to the holder of the Liquidation Call Purchase Price for each such share, and Weysub shall have no obligation to redeem such shares so purchased by Weyerhaeuser Newco. (b) To exercise the Liquidation Call Right, Weyerhaeuser Newco must notify Weysub's transfer agent (the "Transfer Agent"), as agent for the holders of Exchangeable Shares, and Weysub of Weyerhaeuser Newco's intention to exercise such right at least 45 days before the Liquidation Date in the case of a voluntary liquidation, dissolution or winding-up of Weysub and at least five Business Days before the Liquidation Date in the case of an involuntary liquidation, dissolution or winding-up of Weysub. The Transfer Agent will notify the holders of Exchangeable Shares as to whether or not Weyerhaeuser Newco D-13 has exercised the Liquidation Call Right forthwith after the expiry of the period during which the same may be exercised by Weyerhaeuser Newco. If Weyerhaeuser Newco exercises the Liquidation Call Right, then on the Liquidation Date Weyerhaeuser Newco will purchase and the holders will sell all of the Exchangeable Shares then outstanding for a price per share equal to the Liquidation Call Purchase Price. (c) For the purposes of completing the purchase of the Exchangeable Shares pursuant to the Liquidation Call Right, Weyerhaeuser Newco shall deposit with the Transfer Agent, on or before the Liquidation Date, certificates representing the aggregate number of Weyerhaeuser Common Shares deliverable by Weyerhaeuser Newco and a cheque or cheques of Weyerhaeuser Newco payable at par at any branch of the bankers of Weyerhaeuser Newco representing the aggregate Dividend Amount in payment of the total Liquidation Call Purchase Price, less any amounts withheld pursuant to section 4.7 hereof. Provided that Weyerhaeuser Newco has complied with the immediately preceding sentence, on and after the Liquidation Date the rights of each holder of Exchangeable Shares will be limited to receiving such holder's proportionate part of the total Liquidation Call Purchase Price payable by Weyerhaeuser Newco upon presentation and surrender by the holder of certificates representing the Exchangeable Shares held by such holder and the holder shall on and after the Liquidation Date be considered and deemed for all purposes to be the holder of the Weyerhaeuser Common Shares to which it is entitled. Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the Company Act (British Columbia) and the by-laws of Weysub and such additional documents and instruments as the Transfer Agent may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of Weyerhaeuser Newco shall deliver to such holder, certificates representing the Weyerhaeuser Common Shares to which the holder is entitled and a cheque or cheques of Weyerhaeuser Newco payable at par at any branch of the bankers of Weyerhaeuser Newco in payment of the remaining portion, if any, of the total Liquidation Call Purchase Price, less any amounts withheld pursuant to section 4.7 hereof. If Weyerhaeuser Newco does not exercise the Liquidation Call Right in the manner described above, on the Liquidation Date the holders of the Exchangeable Shares will be entitled to receive in exchange therefor the liquidation price otherwise payable by Weysub in connection with the liquidation, dissolution or winding-up of Weysub pursuant to Article 5 of the Exchangeable Share Provisions. 5.2 Weyerhaeuser Newco Redemption Call Right In addition to Weyerhaeuser Newco's rights contained in the Exchangeable Share Provisions, including, without limitation, the Retraction Call Right (as defined in the D-14 Exchangeable Share Provisions), Weyerhaeuser Newco shall have the following rights in respect of the Exchangeable Shares: (a) Weyerhaeuser Newco shall have the overriding right (the "Redemption Call Right"), notwithstanding the proposed redemption of the Exchangeable Shares by Weysub pursuant to Article 7 of the Exchangeable Share Provisions, to purchase from all but not less than all of the holders of Exchangeable Shares (other than any holder of Exchangeable Shares which is an affiliate of Weyerhaeuser) on the Redemption Date all but not less than all of the Exchangeable Shares held by each such holder on payment by Weyerhaeuser to each holder of an amount per Exchangeable Share (the "Redemption Call Purchase Price") equal to the Current Market Price of a Weyerhaeuser Common Share on the last Business Day prior to the Redemption Date, which shall be satisfied in full by Weyerhaeuser Newco causing to be delivered to such holder one Weyerhaeuser Common Share, plus the Dividend Amount. In the event of the exercise of the Redemption Call Right by Weyerhaeuser Newco, each holder shall be obligated to sell all the Exchangeable Shares held by the holder to Weyerhaeuser Newco on the Redemption Date on payment by Weyerhaeuser Newco to the holder of the Redemption Call Purchase Price for each such share, and Weysub shall have no obligation to redeem such shares so purchased by Weyerhaeuser Newco. (b) To exercise the Redemption Call Right, Weyerhaeuser Newco must notify the Transfer Agent, as agent for the holders of Exchangeable Shares, and Weysub of Weyerhaeuser Newco's intention to exercise such right at least 60 days before the Redemption Date, except in the case of a redemption occurring as a result of a Weyerhaeuser Control Transaction, an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event (each as defined in the Exchangeable Share Provisions), in which case Weyerhaeuser Newco shall so notify the Transfer Agent and Weysub on or before the Redemption Date. The Transfer Agent will notify the holders of the Exchangeable Shares as to whether or not Weyerhaeuser Newco has exercised the Redemption Call Right forthwith after the expiry of the period during which the same may be exercised by Weyerhaeuser Newco. If Weyerhaeuser Newco exercises the Redemption Call Right, on the Redemption Date Weyerhaeuser Newco will purchase and the holders will sell all of the Exchangeable Shares then outstanding for a price per share equal to the Redemption Call Purchase Price. (c) For the purposes of completing the purchase of the Exchangeable Shares pursuant to the Redemption Call Right, Weyerhaeuser Newco shall deposit with the Transfer Agent, on or before the Redemption Date, certificates representing the aggregate number of Weyerhaeuser Common Shares deliverable by Weyerhaeuser Newco and a cheque or cheques of Weyerhaeuser Newco payable at par at any branch of the bankers of Weyerhaeuser Newco representing the aggregate Dividend Amount in payment of the total Redemption Call Purchase Price, less any amounts withheld pursuant to section 4.7 hereof. Provided that Weyerhaeuser Newco has complied with the immediately preceding sentence, on D-15 and after the Redemption Date the rights of each holder of Exchangeable Shares will be limited to receiving such holder's proportionate part of the total Redemption Call Purchase Price payable by Weyerhaeuser Newco upon presentation and surrender by the holder of certificates representing the Exchangeable Shares held by such holder and the holder shall on and after the Redemption Date be considered and deemed for all purposes to be the holder of the Weyerhaeuser Common Shares to which it is entitled. Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the Company Act (British Columbia) and the by-laws of Weysub and such additional documents and instruments as the Transfer Agent may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of Weyerhaeuser Newco shall deliver to such holder, certificates representing the Weyerhaeuser Common Shares to which the holder is entitled and a cheque or cheques of Weyerhaeuser Newco payable at par at any branch of the bankers of Weyerhaeuser Newco in payment of the remaining portion, if any, of the total Redemption Call Purchase Price, less any amounts withheld pursuant to section 4.7 hereof. If Weyerhaeuser Newco does not exercise the Redemption Call Right in the manner described above, on the Redemption Date the holders of the Exchangeable Shares will be entitled to receive in exchange therefor the redemption price otherwise payable by Weysub in connection with the redemption of the Exchangeable Shares pursuant to Article 7 of the Exchangeable Share Provisions. ARTICLE 6 AMENDMENTS 6.1 Amendments to Plan of Arrangement MB reserves the right to amend, modify and/or supplement this Plan of Arrangement at any time and from time to time prior to the Effective Date, provided that each such amendment, modification and/or supplement must be (i) set out in writing, (ii) approved by Weyerhaeuser, (iii) filed with the Court and, if made following the MB Meeting, approved by the Court and (iv) communicated to holders of MB Common Shares and MB Warrants if and as required by the Court. Any amendment, modification or supplement to this Plan of Arrangement may be proposed by MB at any time prior to the MB Meeting (provided that Weyerhaeuser shall have consented thereto) with or without any other prior notice or communication, and if so proposed and accepted by the Persons voting at the MB Meeting (other than as may be required under the Interim Order), shall become part of this Plan of Arrangement for all purposes. Any amendment, modification or supplement to this Plan of Arrangement that is approved by the Court following the MB Meeting shall be effective only if (i) it is consented to D-16 by each of MB and Weyerhaeuser and (ii) if required by the Court, it is consented to by holders of the MB Common Shares or MB Warrants voting in the manner directed by the Court. Any amendment, modification or supplement to this Plan of Arrangement may be made following the Effective Date unilaterally by Weyerhaeuser, provided that it concerns a matter which, in the reasonable opinion of Weyerhaeuser, is of an administrative nature required to better give effect to the implementation of this Plan of Arrangement and is not adverse to the financial or economic interests of any holder of MB Common Shares or MB Warrants. ARTICLE 7 FURTHER ASSURANCES 7.1 Notwithstanding that the transactions and events set out herein shall occur and be deemed to occur in the order set out in this Plan of Arrangement without any further act or formality, each of the parties to the Merger Agreement shall make, do and execute, or cause to be made, done and executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required by any of them in order further to document or evidence any of the transactions or events set out herein. D-17 EX-99 4 APPENDIX 1 TO THE PLAN OF ARRANGEMENT PROVISIONS ATTACHING TO THE EXCHANGEABLE SHARES The Exchangeable Shares shall have the following rights, privileges, restrictions and conditions: ARTICLE 1 INTERPRETATION 1.1 For the purposes of these share provisions: "Act" means the Company Act (British Columbia), as amended; "affiliate" has the meaning ascribed thereto in the Securities Act; "Arrangement" means an arrangement under section 192 of the CBCA on the terms and subject to the conditions set out in the Plan of Arrangement, to which plan these share provisions are attached as Appendix 1 and which Plan of Arrangement (other than Appendix 1 thereto) is attached to these share provisions as Exhibit A, subject to any amendments or variations thereto made in accordance with Article 6 of the Plan of Arrangement or made at the direction of the Court in the Final Order; "Board of Directors" means the Board of Directors of the Company; "Business Day" means any day on which commercial banks are generally open for business in Seattle, Washington and Vancouver, British Columbia, other than a Saturday, a Sunday or a day observed as a holiday in Seattle, Washington under the laws of the State of Washington or the federal laws of the United States of America or in Vancouver, British Columbia under the laws of the Province of British Columbia or the federal laws of Canada; "CBCA" means Canada Business Corporations Act as now in effect and as may be amended from time to time prior to the Effective Date; "Canadian Dollar Equivalent" means in respect of an amount expressed in a currency other than Canadian dollars (the "Foreign Currency Amount") at any date the product obtained by multiplying: (a) the Foreign Currency Amount by, (b) the noon spot exchange rate on such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot D-18 exchange rate is not available, such spot exchange rate on such date for such foreign currency expressed in Canadian dollars as may be deemed by the Board of Directors to be appropriate for such purpose; "Common Shares" means the common shares in the capital of the Company; "Company" means 586476 B.C. Ltd., a company existing under the Company Act; "Current Market Price" means, in respect of a Weyerhaeuser Common Share on any date, the Canadian Dollar Equivalent of the average of the closing bid and asked prices of Weyerhaeuser Common Shares during a period of 20 consecutive trading days ending not more than three trading days before such date on the NYSE, or, if the Weyerhaeuser Common Shares are not then quoted on the NYSE, on such other stock exchange or automated quotation system on which the Weyerhaeuser Common Shares are listed or quoted, as the case may be, as may be selected by the Board of Directors for such purpose; provided, however, that if in the opinion of the Board of Directors the public distribution or trading activity of Weyerhaeuser Common Shares during such period does not create a market which reflects the fair market value of an Weyerhaeuser Common Share, then the Current Market Price of a Weyerhaeuser Common Share shall be determined by the Board of Directors, in good faith and in its sole discretion, and provided further that any such selection, opinion or determination by the Board of Directors shall be conclusive and binding; "Dividend Amount" has the meaning ascribed thereto in section 6.3 of these share provisions; "Director" means the Director appointed pursuant to section 260 of the CBCA; "Drop Dead Date" means February 15, 2000, or such later date as may be mutually agreed by the parties to the Merger Agreement; "Effective Date" means the date shown on the certificate of arrangement to be issued by the Director under the CBCA giving effect to the Arrangement provided that such date occurs on or prior to the Drop Dead Date; "Exchangeable Shares" mean the non-voting exchangeable shares in the capital of the Company, having the rights, privileges, restrictions and conditions set forth herein; "Exchangeable Share Voting Event" means any matter in respect of which holders of Exchangeable Shares are entitled to vote as members of the Company, other than an Exempt Exchangeable Share Voting Event, and, for greater certainty, excluding any matter in respect of which holders of Exchangeable Shares are entitled to vote (or instruct the Trustee to vote) in their capacity as Beneficiaries under (and as that term is defined in) the Voting and Exchange Trust Agreement; D-19 "Exempt Exchangeable Share Voting Event" means any matter in respect of which holders of Exchangeable Shares are entitled to vote as members of the Company in order to approve or disapprove, as applicable, any change to, or in the rights of the holders of, the Exchangeable Shares, where the approval or disapproval, as applicable, of such change would be required to maintain the equivalence of the Exchangeable Shares and the Weyerhaeuser Common Shares; "Governmental Entity" means any (a) multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (b) any subdivision, agent, commission, board, or authority of any of the foregoing, or (c) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing; "Liquidation Amount" has the meaning ascribed thereto in section 5.1 of these share provisions; "Liquidation Call Right" has the meaning ascribed thereto in the Plan of Arrangement; "Liquidation Date" has the meaning ascribed thereto in section 5.1 of these share provisions; "Merger Agreement" means the agreement made the 20th day of June, 1999 among Weyerhaeuser, the Company and MacMillan Bloedel Limited, as amended, supplemented and/or restated in accordance therewith prior to the Effective Date, providing for, among other things, the Arrangement; "NYSE" means the New York Stock Exchange, Inc.; "Person" includes any individual, firm, partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, Governmental Entity, syndicate or other entity, whether or not having legal status; "Plan of Arrangement" means the plan of arrangement substantially in the form and content of Schedule D annexed to the Merger Agreement and any amendments or variations thereto made in accordance with section 6.1 of the Merger Agreement or Article 6 of the Plan of Arrangement or made at the direction of the Court in the Final Order; "Purchase Price" has the meaning ascribed thereto in section 6.3 of these share provisions; D-20 "Redemption Call Purchase Price" has the meaning ascribed thereto in the Plan of Arrangement; "Redemption Call Right" has the meaning ascribed thereto in the Plan of Arrangement; "Redemption Date" means the date, if any, established by the Board of Directors for the redemption by the Company of all but not less than all of the outstanding Exchangeable Shares pursuant to Article 7 of these share provisions, which date shall be no earlier than December 31, 2007, unless: (a) there are fewer than 1,000,000 Exchangeable Shares outstanding (other than Exchangeable Shares held by Weyerhaeuser and its affiliates, and as such number of shares may be adjusted as deemed appropriate by the Board of Directors to give effect to any subdivision or consolidation of or stock dividend on the Exchangeable Shares, any issue or distribution of rights to acquire Exchangeable Shares or securities exchangeable for or convertible into Exchangeable Shares, any issue or distribution of other securities or rights or evidences of indebtedness or assets, or any other capital reorganization or other transaction affecting the Exchangeable Shares), in which case the Board of Directors may accelerate such redemption date to such date prior to December 31, 2007 as they may determine, upon at least 60 days' prior written notice to the registered holders of the Exchangeable Shares; (b) a Weyerhaeuser Control Transaction occurs, in which case, provided that the Board of Directors determines, in good faith and in its sole discretion, that it is not reasonably practicable to substantially replicate the terms and conditions of the Exchangeable Shares in connection with such Weyerhaeuser Control Transaction and that the redemption of all but not less than all of the outstanding Exchangeable Shares is necessary to enable the completion of such Weyerhaeuser Control Transaction in accordance with its terms, the Board of Directors may accelerate such redemption date to such date prior to December 31, 2007 as they may determine, upon such number of days' prior written notice to the registered holders of the Exchangeable Shares as the Board of Directors may determine to be reasonably practicable in such circumstances; (c) an Exchangeable Share Voting Event is proposed, in which case, provided that the Board of Directors has determined, in good faith and in its sole discretion, that it is not reasonably practicable to accomplish the business purpose intended by the Exchangeable Share Voting Event, which business purpose must be bona fide and not for the primary purpose of causing the occurrence of a Redemption Date, in any other commercially reasonable manner that does not result in an Exchangeable Share Voting Event, the redemption date shall be the Business Day prior to the record date for any meeting or vote of the holders of the Exchangeable Shares to consider the Exchangeable Share Voting Event and the Board of Directors shall give such number of days' prior written notice of such redemption to the registered holders of the Exchangeable Shares as the Board of Directors may determine to be reasonably practicable in such circumstances; or (d) an Exempt Exchange Share Voting Event is proposed and the holders of the Exchangeable Shares fail to take the necessary action at a meeting or other vote of holders of Exchangeable Shares, to approve or disapprove, as applicable, the Exempt Exchangeable Share Voting Event, in which case the redemption date shall be the Business Day following the day on which the holders of the Exchangeable Shares failed to take such action and the Board of Directors shall give such number of days' prior written notice of such redemption D-21 to the registered holders of the Exchangeable Shares as the Board of Directors may determine to be reasonably practicable in such circumstances, provided, however, that the accidental failure or omission to give any notice of redemption under clauses (a), (b), (c) or (d) above to less than 10% of such holders of Exchangeable Shares shall not affect the validity of any such redemption; "Redemption Price" has the meaning ascribed thereto in section 7.1 of these share provisions; "Retracted Shares" has the meaning ascribed thereto in section 6.1(a) of these share provisions; "Retraction Call Right" has the meaning ascribed thereto in section 6.1(c) of these share provisions; "Retraction Date" has the meaning ascribed thereto in section 6.1(b) of these share provisions; "Retraction Price" has the meaning ascribed thereto in section 6.1 of these share provisions; "Retraction Request" has the meaning ascribed thereto in section 6.1 of these share provisions; "Securities Act" means the Securities Act (Ontario) and the rules, regulations and policies made thereunder, as now in effect and as they may be amended from time to time prior to the Effective Date; "Support Agreement" means the agreement made between Weyerhaeuser, Weyerhaeuser Newco and the Company substantially in the form and content of Schedule E annexed to the Merger Agreement, with such changes thereto as the parties to the Support Agreement, acting reasonably, may agree, a copy of which is available at the records office of the Company; D-22 "Transfer Agent" means or such other Person as may from time to time be appointed by the Company as the registrar and transfer agent for the Exchangeable Shares; "Trustee" means the trustee chosen by Weyerhaeuser and MB, acting reasonably, to act as trustee under the Voting and Exchange Trust Agreement, being a corporation organized and existing under the laws of Canada and authorized to carry on the business of a trust company in all the provinces of Canada, and any successor trustee appointed under the Voting and Exchange Trust Agreement; "Voting and Exchange Trust Agreement" means the agreement made between Weyerhaeuser, the Company and the Trustee in connection with the Plan of Arrangement substantially in the form and content of Schedule F annexed to the Merger Agreement with such changes thereto as the parties to the Merger Agreement, acting reasonably, may agree; "Weyerhaeuser" means Weyerhaeuser Company, a corporation existing under the laws of the State of Washington; "Weyerhaeuser Common Shares" mean the shares of common stock in the capital of Weyerhaeuser and any other securities into which such shares may be changed; "Weyerhaeuser Control Transaction" means any merger, amalgamation, tender offer, material sale of shares or rights or interests therein or thereto or similar transactions involving Weyerhaeuser, or any proposal to do so; "Weyerhaeuser Dividend Declaration Date" means the date on which the Board of Directors of Weyerhaeuser declares any dividend on the Weyerhaeuser Common Shares; "Weyerhaeuser Newco" means 586474 B.C. Ltd. a company existing under the Company Act and being a wholly-owned subsidiary of Weyerhaeuser; and "Weyerhaeuser Newco Call Notice" has the meaning ascribed thereto in section 6.3 of these share provisions. D-23 ARTICLE 2 RANKING OF EXCHANGEABLE SHARES 2.1 The Exchangeable Shares shall be entitled to a preference over the Common Shares and the Preference Shares and any other shares ranking junior to the Exchangeable Shares with respect to the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any other distribution of the assets of the Company, among its members for the purpose of winding up its affairs. ARTICLE 3 DIVIDENDS 3.1 A holder of an Exchangeable Share shall be entitled to receive and the Board of Directors shall, subject to applicable law, on each Weyerhaeuser Dividend Declaration Date, declare a dividend on each Exchangeable Share: (a) in the case of a cash dividend declared on the Weyerhaeuser Common Shares, in an amount in cash for each Exchangeable Share in U.S. dollars, or the Canadian Dollar Equivalent thereof on the Weyerhaeuser Dividend Declaration Date, in each case, corresponding to the cash dividend declared on each Weyerhaeuser Common Share; (b) in the case of a stock dividend declared on the Weyerhaeuser Common Shares to be paid in Weyerhaeuser Common Shares by the issue by the Company of such number of Exchangeable Shares for each Exchangeable Share as is equal to the number of Weyerhaeuser Common Shares to be paid on each Weyerhaeuser Common Share; or (c) in the case of a dividend declared on the Weyerhaeuser Common Shares in property other than cash or Weyerhaeuser Common Shares, in such type and amount of property for each Exchangeable Share as is the same as or economically equivalent to (to be determined by the Board of Directors as contemplated by section 3.5 hereof) the type and amount of property declared as a dividend on each Weyerhaeuser Common Share. Such dividends shall be paid out of money, assets or property of the Company properly applicable to the payment of dividends, or out of authorized but unissued shares of the Company, as applicable. 3.2 Cheques of the Company payable at par at any branch of the bankers of the Company shall be issued in respect of any cash dividends contemplated by section 3.1 (a) hereof and the sending of such a cheque to each holder of an Exchangeable Share shall satisfy the cash dividend represented thereby unless the cheque is not paid on presentation. Certificates registered in the name of the registered holder of Exchangeable Shares shall be issued D-24 or transferred in respect of any stock dividends contemplated by section 3.1 (b) hereof and the sending of such a certificate to each holder of an Exchangeable Share shall satisfy the stock dividend represented thereby. Such other type and amount of property in respect of any dividends contemplated by section 3.1 (c) hereof shall be issued, distributed or transferred by the Company in such manner as it shall determine and the issuance, distribution or transfer thereof by the Company to each holder of an Exchangeable Share shall satisfy the dividend represented thereby. No holder of an Exchangeable Share shall be entitled to recover by action or other legal process against the Company any dividend that is represented by a cheque that has not been duly presented to the Company's bankers for payment or that otherwise remains unclaimed for a period of six years from the date on which such dividend was payable. 3.3 The record date for the determination of the holders of Exchangeable Shares entitled to receive payment of, and the payment date for, any dividend declared on the Exchangeable Shares under section 3.1 hereof shall be the same dates as the record date and payment date, respectively, for the corresponding dividend declared on the Weyerhaeuser Common Shares. 3.4 If on any payment date for any dividends declared on the Exchangeable Shares under section 3.1 hereof the dividends are not paid in full on all of the Exchangeable Shares then outstanding, any such dividends that remain unpaid shall be paid on a subsequent date or dates determined by the Board of Directors on which the Company shall have sufficient moneys, assets or property properly applicable to the payment of such dividends. 3.5 The Board of Directors shall determine, in good faith and in its sole discretion, economic equivalence for the purposes of section 3.1 hereof, and each such determination shall be conclusive and binding on the Company and its members. In making each such determination, the following factors shall, without excluding other factors determined by the Board of Directors to be relevant, be considered by the Board of Directors: (a) in the case of any stock dividend or other distribution payable in Weyerhaeuser Common Shares, the number of such shares issued in proportion to the number of Weyerhaeuser Common Shares previously outstanding; (b) in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase Weyerhaeuser Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire Weyerhaeuser Common Shares), the relationship between the exercise price of each such right, option or warrant and the Current Market Price; (c) in the case of the issuance or distribution of any other form of property (including without limitation any shares or securities of Weyerhaeuser of any class other than Weyerhaeuser Common Shares, any rights, options or warrants other than those referred to in section 3.5(b) above, any evidences of indebtedness of Weyerhaeuser or any assets of Weyerhaeuser) the relationship between the fair market value (as determined by the Board of Directors in the manner above D-25 contemplated) of such property to be issued or distributed with respect to each outstanding Weyerhaeuser Common Share and the Current Market Price; and (d) in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of Weyerhaeuser Common Shares as a result of differences between taxation laws of Canada and the United States (except for any differing consequences arising as a result of differing marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares). ARTICLE 4 CERTAIN RESTRICTIONS 4.1 So long as any of the Exchangeable Shares are outstanding, the Company shall not at any time without, but may at any time with, the approval of the holders of the Exchangeable Shares given as specified in section 10.2 of these share provisions: (a) pay any dividends on the Common Shares or the Preference Shares or any other shares ranking junior to the Exchangeable Shares, other than stock dividends payable in Common Shares or Preference Shares or any such other shares ranking junior to the Exchangeable Shares, as the case may be; (b) redeem or purchase or make any capital distribution in respect of Common Shares or Preference Shares or any other shares ranking junior to the Exchangeable Shares; (c) redeem or purchase any other shares of the Company ranking equally with the Exchangeable Shares with respect to the payment of dividends or on any liquidation distribution; or (d) issue any Exchangeable Shares or any other shares of the Company ranking equally with, or superior to, the Exchangeable Shares other than by way of stock dividends to the holders of such Exchangeable Shares. The restrictions in sections 4.1(a), (b), (c) and (d) above shall not apply if all dividends on the outstanding Exchangeable Shares corresponding to dividends declared and paid to date on the Weyerhaeuser Common Shares shall have been declared and paid on the Exchangeable Shares. ARTICLE 5 DISTRIBUTION ON LIQUIDATION 5.1 In the event of the liquidation, dissolution or winding-up of the Company or any other distribution of the assets of the Company among its members for the purpose of winding up D-26 its affairs, a holder of Exchangeable Shares shall be entitled, subject to applicable law, to receive from the assets of the Company in respect of each Exchangeable Share held by such holder on the effective date (the "Liquidation Date") of such liquidation, dissolution or winding-up, before any distribution of any part of the assets of the Company among the holders of the Common Shares or any other shares ranking junior to the Exchangeable Shares, an amount per share equal to the Current Market Price of a Weyerhaeuser Common Share on the last Business Day prior to the Liquidation Date (the "Liquidation Amount"), which shall be satisfied in full by the Company causing to be delivered to such holder one Weyerhaeuser Common Share, together with all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the Liquidation Date. 5.2 On or promptly after the Liquidation Date, and subject to the exercise by Weyerhaeuser Newco of the Liquidation Call Right, the Company shall cause to be delivered to the holders of the Exchangeable Shares the Liquidation Amount for each such Exchangeable Share upon presentation and surrender of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the Company Act and the Articles of the Company and such additional documents and instruments as the Transfer Agent may reasonably require, at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company by notice to the holders of the Exchangeable Shares. Payment of the total Liquidation Amount for such Exchangeable Shares shall be made by delivery to each holder, at the address of the holder recorded in the register of members of the Company for the Exchangeable Shares or by holding for pick-up by the holder at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company by notice to the holders of Exchangeable Shares, on behalf of the Company of certificates representing Weyerhaeuser Common Shares (which shares shall be duly issued as fully paid and non-assessable and shall be free and clear of any lien, claim or encumbrance) and a cheque of the Company payable at par at any branch of the bankers of the Company in respect of the remaining portion, if any, of the total Liquidation Amount (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom). On and after the Liquidation Date, the holders of the Exchangeable Shares shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof, other than the right to receive their proportionate part of the total Liquidation Amount, unless payment of the total Liquidation Amount for such Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the total Liquidation Amount has been paid in the manner hereinbefore provided. The Company shall have the right at any time after the Liquidation Date to deposit or cause to be deposited the total Liquidation Amount in respect of the Exchangeable Shares represented by certificates that have not at the Liquidation Date been surrendered by the holders thereof in a custodial account with any chartered bank or trust company in Canada. Upon such deposit being made, the rights of the holders of Exchangeable Shares after such deposit shall be limited to receiving their proportionate part of the total Liquidation Amount (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom) for such Exchangeable Shares so deposited, against D-27 presentation and surrender of the said certificates held by them, respectively, in accordance with the foregoing provisions. Upon such payment or deposit of the total Liquidation Amount, the holders of the Exchangeable Shares shall thereafter be considered and deemed for all purposes to be holders of the Weyerhaeuser Common Shares delivered to them or the custodian on their behalf. 5.3 After the Company has satisfied its obligations to pay the holders of the Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant to section 5.1 of these share provisions, such holders shall not be entitled to share in any further distribution of the assets of the Company. ARTICLE 6 RETRACTION OF EXCHANGEABLE SHARES BY HOLDER 6.1 A holder of Exchangeable Shares shall be entitled at any time, subject to the exercise by Weyerhaeuser Newco of the Retraction Call Right and otherwise upon compliance with the provisions of this Article 6, to require the Company to redeem any or all of the Exchangeable Shares registered in the name of such holder for an amount per share equal to the Current Market Price of a Weyerhaeuser Common Share on the last Business Day prior to the Retraction Date (the "Retraction Price"), which shall be satisfied in full by the Company causing to be delivered to such holder one Weyerhaeuser Common Share for each Exchangeable Share presented and surrendered by the holder, together with, on the payment date therefor, the full amount of all declared and unpaid dividends on any such Exchangeable Share held by such holder on any dividend record date which occurred prior to the Retraction Date. To effect such redemption, the holder shall present and surrender at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company by notice to the holders of Exchangeable Shares the certificate or certificates representing the Exchangeable Shares which the holder desires to have the Company redeem, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the Company Act and the Articles of the Company and such additional documents and instruments as the Transfer Agent may reasonably require, and together with a duly executed statement (the "Retraction Request") in the form of Schedule A hereto or in such other form as may be acceptable to the Company: (a) specifying that the holder desires to have all or any number specified therein of the Exchangeable Shares represented by such certificate or certificates (the "Retracted Shares") redeemed by the Company; (b) stating the Business Day on which the holder desires to have the Company redeem the Retracted Shares (the "Retraction Date"), provided that the Retraction Date shall be not less than 10 Business Days nor more than 15 Business Days after the date on which the Retraction Request is received by the Company and further provided that, in the event that no such Business Day is specified by the holder in the Retraction Request, the Retraction Date shall be D-28 deemed to be the 15th Business Day after the date on which the Retraction Request is received by the Company; and (c) acknowledging the overriding right (the "Retraction Call Right") of Weyerhaeuser Newco to purchase all but not less than all the Retracted Shares directly from the holder and that the Retraction Request shall be deemed to be a revocable offer by the holder to sell the Retracted Shares to Weyerhaeuser Newco in accordance with the Retraction Call Right on the terms and conditions set out in section 6.3 below. 6.2 Subject to the exercise by Weyerhaeuser Newco of the Retraction Call Right, upon receipt by the Company or the Transfer Agent in the manner specified in section 6.1 hereof of a certificate or certificates representing the number of Retracted Shares, together with a Retraction Request, and provided that the Retraction Request is not revoked by the holder in the manner specified in section 6.7, the Company shall redeem the Retracted Shares effective at the close of business on the Retraction Date and shall cause to be delivered to such holder the total Retraction Price with respect to such shares, provided that all declared and unpaid dividends for which the record date has occurred prior to the Retraction Date shall be paid on the payment date for such dividends. If only a part of the Exchangeable Shares represented by any certificate is redeemed (or purchased by Weyerhaeuser Newco pursuant to the Retraction Call Right), a new certificate for the balance of such Exchangeable Shares shall be issued to the holder at the expense of the Company. 6.3 Upon receipt by the Company of a Retraction Request, the Company shall immediately notify Weyerhaeuser Newco thereof and shall provide to Weyerhaeuser Newco a copy of the Retraction Notice. In order to exercise the Retraction Call Right, Weyerhaeuser Newco must notify the Company of its determination to do so (the "Weyerhaeuser Newco Call Notice") within five Business Days of notification to Weyerhaeuser Newco by the Company of the receipt by the Company of the Retraction Request. If Weyerhaeuser Newco does not so notify the Company within such five Business Day period, the Company will notify the holder as soon as possible thereafter that Weyerhaeuser Newco will not exercise the Retraction Call Right. If Weyerhaeuser Newco delivers the Weyerhaeuser Newco Call Notice within such five Business Day period, and provided that the Retraction Request is not revoked by the holder in the manner specified in section 6.7, the Retraction Request shall thereupon be considered only to be an offer by the holder to sell the Retracted Shares to Weyerhaeuser Newco in accordance with the Retraction Call Right. In such event, the Company shall not redeem the Retracted Shares and Weyerhaeuser Newco shall purchase from such holder and such holder shall sell to Weyerhaeuser Newco on the Retraction Date the Retracted Shares for a purchase price (the "Purchase Price") per share equal to the Retraction Price per share, plus, on the designated payment date therefor, to the extent not paid by the Company on the designated payment date therefor, an additional amount equivalent to the full amount of all declared and unpaid dividends on those Retracted Shares held by such holder on any dividend record date which occurred prior to the Retraction Date (the "Dividend Amount"). For the purposes of completing a purchase pursuant to the Retraction Call Right, Weyerhaeuser Newco shall deposit with the Transfer D-29 Agent, on or before the Retraction Date, certificates representing Weyerhaeuser Common Shares and a cheque or cheques of Weyerhaeuser Newco payable at par at any branch of the bankers of Weyerhaeuser Newco representing the aggregate Dividend Amount, less any amounts withheld on account of tax required to be deducted and withheld therefrom. Provided that Weyerhaeuser Newco has complied with the immediately preceding sentence, the closing of the purchase and sale of the Retracted Shares pursuant to the Retraction Call Right shall be deemed to have occurred as at the close of business on the Retraction Date and, for greater certainty, no redemption by the Company of such Retracted Shares shall take place on the Retraction Date. In the event that Weyerhaeuser Newco does not deliver a Weyerhaeuser Newco Call Notice within such five Business Day period, and provided that the Retraction Request is not revoked by the holder in the manner specified in section 6.7, the Company shall redeem the Retracted Shares on the Retraction Date and in the manner otherwise contemplated in this Article 6. 6.4 The Company or Weyerhaeuser Newco, as the case may be, shall deliver or cause the Transfer Agent to deliver to the relevant holder, at the address of the holder recorded in the register of members of the Company for the Exchangeable Shares or at the address specified in the holder's Retraction Request or by holding for pick-up by the holder at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company by notice to the holders of Exchangeable Shares, certificates representing the Weyerhaeuser Common Shares (which shares shall be duly issued as fully paid and non-assessable and shall be free and clear of any lien, claim or encumbrance) registered in the name of the holder or in such other name as the holder may request, and, if applicable and on or before the payment date therefor, a cheque payable at par at any branch of the bankers of the Company or Weyerhaeuser Newco, as applicable, representing the aggregate Dividend Amount, in payment of the total Retraction Price or the total Purchase Price, as the case may be, in each case, less any amounts withheld on account of tax required to be deducted and withheld therefrom, and such delivery of such certificates and cheques on behalf of the Company or by Weyerhaeuser Newco, as the case may be, or by the Transfer Agent shall be deemed to be payment of and shall satisfy and discharge all liability for the total Retraction Price or total Purchase Price, as the case may be, to the extent that the same is represented by such share certificates and cheques (plus any tax deducted and withheld therefrom and remitted to the proper tax authority). 6.5 On and after the close of business on the Retraction Date, the holder of the Retracted Shares shall cease to be a holder of such Retracted Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive his proportionate part of the total Retraction Price or total Purchase Price, as the case may be, unless upon presentation and surrender of certificates in accordance with the foregoing provisions, payment of the total Retraction Price or the total Purchase Price, as the case may be, shall not be made as provided in section 6.4, in which case the rights of such holder shall remain unaffected until the total Retraction Price or the total Purchase Price, as the case may be, has been paid in the manner hereinbefore provided. On and after the close of business on the Retraction Date, provided that presentation and surrender of certificates and payment of the total Retraction Price or the total Purchase Price, as the case may be, has been made in accordance with the foregoing provisions, the holder of the Retracted Shares so redeemed by the Company or purchased by D-30 Weyerhaeuser Newco shall thereafter be considered and deemed for all purposes to be a holder of the Weyerhaeuser Common Shares delivered to it. 6.6 Notwithstanding any other provision of this Article 6, the Company shall not be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent that such redemption of Retracted Shares would be contrary to solvency requirements or other provisions of applicable law. If the Company believes that on any Retraction Date it would not be permitted by any of such provisions to redeem the Retracted Shares tendered for redemption on such date, and provided that Weyerhaeuser Newco shall not have exercised the Retraction Call Right with respect to the Retracted Shares, the Company shall only be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent of the maximum number that may be so redeemed (rounded down to a whole number of shares) as would not be contrary to such provisions and shall notify the holder at least two Business Days prior to the Retraction Date as to the number of Retracted Shares which will not be redeemed by the Company. In any case in which the redemption by the Company of Retracted Shares would be contrary to solvency requirements or other provisions of applicable law, the Company shall redeem Retracted Shares in accordance with section 6.2 of these share provisions on a pro rata basis and shall issue to each holder of Retracted Shares a new certificate, at the expense of the Company, representing the Retracted Shares not redeemed by the Company pursuant to section 6.2 hereof. Provided that the Retraction Request is not revoked by the holder in the manner specified in section 6.7, the holder of any such Retracted Shares not redeemed by the Company pursuant to section 6.2 of these share provisions as a result of solvency requirements or other provisions of applicable law shall be deemed by giving the Retraction Request to require Weyerhaeuser to purchase such Retracted Shares from such holder on the Retraction Date or as soon as practicable thereafter on payment by Weyerhaeuser to such holder of the Purchase Price for each such Retracted Share, all as more specifically provided in the Voting and Exchange Trust Agreement. 6.7 A holder of Retracted Shares may, by notice in writing given by the holder to the Company before the close of business on the Business Day immediately preceding the Retraction Date, withdraw its Retraction Request, in which event such Retraction Request shall be null and void and, for greater certainty, the revocable offer constituted by the Retraction Request to sell the Retracted Shares to Weyerhaeuser Newco shall be deemed to have been revoked. D-31 ARTICLE 7 REDEMPTION OF EXCHANGEABLE SHARES BY THE COMPANY 7.1 Subject to applicable law, and provided Weyerhaeuser Newco has not exercised the Redemption Call Right, the Company shall on the Redemption Date redeem all but not less than all of the then outstanding Exchangeable Shares for an amount per share equal to the Current Market Price of a Weyerhaeuser Common Share on the last Business Day prior to the Redemption Date (the "Redemption Price"), which shall be satisfied in full by the Company causing to be delivered to each holder of Exchangeable Shares one Weyerhaeuser Common Share for each Exchangeable Share held by such holder, together with the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the Redemption Date. 7.2 In any case of a redemption of Exchangeable Shares under this Article 7, the Company shall, at least 60 days before the Redemption Date (other than a Redemption Date established in connection with a Weyerhaeuser Control Transaction, an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event), send or cause to be sent to each holder of Exchangeable Shares a notice in writing of the redemption by the Company or the purchase by Weyerhaeuser Newco under the Redemption Call Right, as the case may be, of the Exchangeable Shares held by such holder. In the case of a Redemption Date established in connection with a Weyerhaeuser Control Transaction, an Exchangeable Share Voting Event and an Exempt Exchangeable Share Voting Event, the written notice of redemption by the Company or the purchase by Weyerhaeuser Newco under the Redemption Call Right will be sent on or before the Redemption Date, on as many days prior written notice as may be determined by the Board of Directors of the Company to be reasonably practicable in the circumstances. In any such case, such notice shall set out the formula for determining the Redemption Price or the Redemption Call Purchase Price, as the case may be, the Redemption Date and, if applicable, particulars of the Redemption Call Right. 7.3 On or after the Redemption Date and subject to the exercise by Weyerhaeuser Newco of the Redemption Call Right, the Company shall cause to be delivered to the holders of the Exchangeable Shares to be redeemed the Redemption Price for each such Exchangeable Share, together with the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the Redemption Date, upon presentation and surrender at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company in such notice of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the Company Act and the Articles of the Company and such additional documents and instruments as the Transfer Agent may reasonably require. Payment of the total Redemption Price for such Exchangeable Shares, together with payment of such dividends, shall be made by delivery to each holder, at the address of the holder recorded in the register of members of the Company or by holding for pick-up by the holder at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company in such notice, on behalf of the D-32 Company of certificates representing Weyerhaeuser Common Shares (which shares shall be duly issued as fully paid and non-assessable and shall be free and clear of any lien, claim or encumbrance) and, if applicable, a cheque of the Company payable at par at any branch of the bankers of the Company in payment of any such dividends, in each case, less any amounts withheld on account of tax required to be deducted and withheld therefrom. On and after the Redemption Date, the holders of the Exchangeable Shares called for redemption shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof, other than the right to receive their proportionate part of the total Redemption Price and any such dividends, unless payment of the total Redemption Price and any such dividends for such Exchangeable Shares shall not be made upon presentation and surrender of certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the total Redemption Price and any such dividends have been paid in the manner hereinbefore provided. The Company shall have the right at any time after the sending of notice of its intention to redeem the Exchangeable Shares as aforesaid to deposit or cause to be deposited the total Redemption Price for and the full amount of such dividends on (except as provided in the preceding sentence) the Exchangeable Shares so called for redemption, or of such of the said Exchangeable Shares represented by certificates that have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, in a custodial account with any chartered bank or trust company in Canada named in such notice, less any amounts withheld on account of tax required to be deducted and withheld therefrom. Upon the later of such deposit being made and the Redemption Date, the Exchangeable Shares in respect whereof such deposit shall have been made shall be redeemed and the rights of the holders thereof after such deposit or Redemption Date, as the case may be, shall be limited to receiving their proportionate part of the total Redemption Price and such dividends for such Exchangeable Shares so deposited, against presentation and surrender of the said certificates held by them, respectively, in accordance with the foregoing provisions. Upon such payment or deposit of the total Redemption Price and the full amount of such dividends, the holders of the Exchangeable Shares shall thereafter be considered and deemed for all purposes to be holders of the Weyerhaeuser Common Shares delivered to them or the custodian on their behalf. ARTICLE 8 PURCHASE FOR CANCELLATION 8.1 Subject to applicable law, the Company may at any time and from time to time purchase for cancellation all or any part of the outstanding Exchangeable Shares at any price by tender to all the holders of record of Exchangeable Shares then outstanding or through the facilities of any stock exchange on which the Exchangeable Shares are listed or quoted at any price per share together with an amount equal to all declared and unpaid dividends thereon for which the record date has occurred prior to the date of purchase. If in response to an invitation for tenders under the provisions of this section 8.1, more Exchangeable Shares are tendered at a price or prices acceptable to the Company than the Company is prepared to purchase, the Exchangeable Shares to be purchased by the Company shall be purchased as nearly as may be pro rata according to the number of shares tendered by each holder who submits a tender to the D-33 Company, provided that when shares are tendered at different prices, the pro rating shall be effected (disregarding fractions) only with respect to the shares tendered at the price at which more shares were tendered than the Company is prepared to purchase after the Company has purchased all the shares tendered at lower prices. If part only of the Exchangeable Shares represented by any certificate shall be purchased, a new certificate for the balance of such shares shall be issued at the expense of the Company. ARTICLE 9 VOTING RIGHTS 9.1 Except as required by applicable law and by Article 10 hereof, the holders of the Exchangeable Shares shall not be entitled as such to receive notice of or to attend any meeting of the members of the Company or to vote at any such meeting. ARTICLE 10 AMENDMENT AND APPROVAL 10.1 The rights, privileges, restrictions and conditions attaching to the Exchangeable Shares may be added to, changed or removed but only with the approval of the holders of the Exchangeable Shares given as hereinafter specified. 10.2 Any approval given by the holders of the Exchangeable Shares to add to, change or remove any right, privilege, restriction or condition attaching to the Exchangeable Shares or any other matter requiring the approval or consent of the holders of the Exchangeable Shares shall be deemed to have been sufficiently given if it shall have been given in accordance with applicable law subject to a minimum requirement that such approval be evidenced by resolution passed by not less than three-fourths of the votes cast on such resolution at a meeting of holders of Exchangeable Shares duly called and held at which the holders of at least 25% of the outstanding Exchangeable Shares at that time are present or represented by proxy; provided that if at any such meeting the holders of at least 25% of the outstanding Exchangeable Shares at that time are not present or represented by proxy within one-half hour after the time appointed for such meeting, then the meeting shall be adjourned to such date not less than five days thereafter and to such time and place as may be designated by the Chairman of such meeting. At such adjourned meeting the holders of Exchangeable Shares present or represented by proxy thereat may transact the business for which the meeting was originally called and a resolution passed thereat by the affirmative vote of not less than three- fourths of the votes cast on such resolution at such meeting shall constitute the approval or consent of the holders of the Exchangeable Shares. ARTICLE 11 RECIPROCAL CHANGES, ETC. IN RESPECT OF WEYERHAEUSER COMMON SHARES 11.1 Each holder of an Exchangeable Share acknowledges that the Support Agreement provides, in part, that Weyerhaeuser will not without the prior approval of the Company D-34 and the prior approval of the holders of the Exchangeable Shares given in accordance with section 10.2 of these share provisions: (a) issue or distribute Weyerhaeuser Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire Weyerhaeuser Common Shares) to the holders of all or substantially all of the then outstanding Weyerhaeuser Common Shares by way of stock dividend or other distribution, other than an issue of Weyerhaeuser Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire Weyerhaeuser Common Shares) to holders of Weyerhaeuser Common Shares who exercise an option to receive dividends in Weyerhaeuser Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire Weyerhaeuser Common Shares) in lieu of receiving cash dividends; (b) issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding Weyerhaeuser Common Shares entitling them to subscribe for or to purchase Weyerhaeuser Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire Weyerhaeuser Common Shares); or (c) issue or distribute to the holders of all or substantially all of the then outstanding Weyerhaeuser Common Shares: (i) shares or securities of Weyerhaeuser of any class other than Weyerhaeuser Common Shares (other than shares convertible into or exchangeable for or carrying rights to acquire Weyerhaeuser Common Shares); (ii) rights, options or warrants other than those referred to in section 11.1(b) above; (iii) evidences of indebtedness of Weyerhaeuser; or (iv) assets of Weyerhaeuser, unless the economic equivalent on a per share basis of such rights, options, securities, shares, evidences of indebtedness or other assets is issued or distributed simultaneously to holders of the Exchangeable Shares. 11.2 Each holder of an Exchangeable Share acknowledges that the Support Agreement further provides, in part, that Weyerhaeuser will not without the prior approval of the Company and the prior approval of the holders of the Exchangeable Shares given in accordance with section 10.2 of these share provisions: (a) subdivide, redivide or change the then outstanding Weyerhaeuser Common Shares into a greater number of Weyerhaeuser Common Shares; D-35 (b) reduce, combine, consolidate or change the then outstanding Weyerhaeuser Common Shares into a lesser number of Weyerhaeuser Common Shares; or (c) reclassify or otherwise change the Weyerhaeuser Common Shares or effect an amalgamation, merger, reorganization or other transaction affecting the Weyerhaeuser Common Shares, unless the same or an economically equivalent change shall simultaneously be made to, or in, the rights of the holders of the Exchangeable Shares. The Support Agreement further provides, in part, that the aforesaid provisions of the Support Agreement shall not be changed without the approval of the holders of the Exchangeable Shares given in accordance with section 10.2 of these share provisions. ARTICLE 12 ACTIONS BY THE COMPANY UNDER SUPPORT AGREEMENT 12.1 The Company will take all such actions and do all such things as shall be necessary or advisable to perform and comply with and to ensure performance and compliance by Weyerhaeuser, Weyerhaeuser Newco and the Company with all provisions of the Support Agreement applicable to Weyerhaeuser, Weyerhaeuser Newco and the Company, respectively, in accordance with the terms thereof including, without limitation, taking all such actions and doing all such things as shall be necessary or advisable to enforce to the fullest extent possible for the direct benefit of the Company all rights and benefits in favour of the Company under or pursuant to such agreement. 12.2 The Company shall not propose, agree to or otherwise give effect to any amendment to, or waiver or forgiveness of its rights or obligations under, the Support Agreement without the approval of the holders of the Exchangeable Shares given in accordance with section 10.2 of these share provisions other than such amendments, waivers and/or forgiveness as may be necessary or advisable for the purposes of: (a) adding to the covenants of the other parties to such agreement for the protection of the Company or the holders of the Exchangeable Shares thereunder; (b) making such provisions or modifications not inconsistent with such agreement as may be necessary or desirable with respect to matters or questions arising thereunder which, in the good faith opinion of the Board of Directors, it may be expedient to make, provided that the Board of Directors shall be of the good faith opinion, after consultation with counsel, that such provisions and modifications will not be prejudicial to the interests of the holders of the Exchangeable Shares; or (c) making such changes in or corrections to such agreement which, on the advice of counsel to the Company, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or D-36 manifest error contained therein, provided that the Board of Directors shall be of the good faith opinion, after consultation with counsel, that such changes or corrections will not be prejudicial to the interests of the holders of the Exchangeable Shares. ARTICLE 13 LEGEND; CALL RIGHTS 13.1 The certificates evidencing the Exchangeable Shares shall contain or have affixed thereto a legend in form and on terms approved by the Board of Directors, with respect to the Support Agreement, the provisions of the Plan of Arrangement relating to the Liquidation Call Right and the Redemption Call Right, and the Voting and Exchange Trust Agreement (including the provisions with respect to the voting rights, exchange right and automatic exchange thereunder). 13.2 Each holder of an Exchangeable Share, whether of record or beneficial, by virtue of becoming and being such a holder shall be deemed to acknowledge each of the Liquidation Call Right, the Retraction Call Right and the Redemption Call Right, in each case, in favour of Weyerhaeuser Newco, and the overriding nature thereof in connection with the liquidation, dissolution or winding-up of the Company or the retraction or redemption of Exchangeable Shares, as the case may be, and to be bound thereby in favour of Weyerhaeuser Newco as therein provided. ARTICLE 14 NOTICES 14.1 Any notice, request or other communication to be given to the Company by a holder of Exchangeable Shares shall be in writing and shall be valid and effective if given by mail (postage prepaid) or by telecopy or by delivery to the registered office of the Company and addressed to the attention of the President of the Company. Any such notice, request or other communication, if given by mail, telecopy or delivery, shall only be deemed to have been given and received upon actual receipt thereof by the Company. 14.2 Any presentation and surrender by a holder of Exchangeable Shares to the Company or the Transfer Agent of certificates representing Exchangeable Shares in connection with the liquidation, dissolution or winding-up of the Company or the retraction or redemption of Exchangeable Shares shall be made by registered mail (postage prepaid) or by delivery to the registered office of the Company or to such office of the Transfer Agent as may be specified by the Company, in each case, addressed to the attention of the President of the Company. Any such presentation and surrender of certificates shall only be deemed to have been made and to be effective upon actual receipt thereof by the Company or the Transfer Agent, as the case may be. Any such presentation and surrender of certificates made by registered mail shall be at the sole risk of the holder mailing the same. D-37 14.3 Any notice, request or other communication to be given to a holder of Exchangeable Shares by or on behalf of the Company shall be in writing and shall be valid and effective if given by mail (postage prepaid) or by delivery to the address of the holder recorded in the register of members of the Company or, in the event of the address of any such holder not being so recorded, then at the last known address of such holder. Any such notice, request or other communication, if given by mail, shall be deemed to have been given and received on the third Business Day following the date of mailing and, if given by delivery, shall be deemed to have been given and received on the date of delivery. Accidental failure or omission to give any notice, request or other communication to one or more holders of Exchangeable Shares shall not invalidate or otherwise alter or affect any action or proceeding to be taken by the Company pursuant thereto. D-38 APPENDIX 2 TO THE PLAN OF ARRANGEMENT OPTIONS Vesting Schedule - ---------------- If the vesting schedule for an MB Option that has not vested on or prior to the Effective Time is a function of the closing price of MB Common Shares on The Toronto Stock Exchange, the vesting schedule for the Replacement Option in respect thereof shall be a function of the closing price of the Weyerhaeuser Common Shares on the NYSE and each specified dollar amount per share referred to in the vesting schedule for such MB Option shall be changed to an amount equal to such specified dollar amount divided by the Exchange Ratio and multiplied by the noon spot exchange rate on the Effective Date for Canadian dollars expressed in United States dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such spot exchange rate on such date for Canadian dollars expressed in United States dollars as may be deemed by the Board of Directors to be appropriate for such purpose. Stock Appreciating Rights - ------------------------- If an MB Option has a stock appreciation right granted pursuant to MB's Senior Management Phantom Stock Plan connected to it, each Replacement Option shall have a stock appreciation right connected to it, which shall entitle the holder thereof to receive cash in an amount equal to the excess of the closing price of the Weyerhaeuser Common Shares on the NYSE on the trading day immediately preceding the date of the exercise of the stock appreciation right over the option price provided in the related Replacement Option. D-39 EX-99 5 SCHEDULE F VOTING AND EXCHANGE TRUST AGREEMENT MEMORANDUM OF AGREEMENT made as of the day of , 1999. B E T W E E N: WEYERHAEUSER COMPANY, a corporation existing under the laws of the State of Washington (hereinafter referred to as "Weyerhaeuser"), OF THE FIRST PART, - and - 586476 B.C. LTD., a company existing under the laws of the Province of British Columbia (hereinafter referred to as "Weysub"), OF THE SECOND PART, - and - , a trust company incorporated under the laws of Canada (hereinafter referred to as "Trustee"), OF THE THIRD PART. WHEREAS in connection with a merger agreement (the "Merger Agreement") made June 20, 1999 among Weyerhaeuser, Weysub and MacMillan Bloedel Limited ("MB"), Weysub is to issue exchangeable shares (the "Exchangeable Shares") to certain holders of securities of MB pursuant to the plan of arrangement (the "Arrangement") and in certain other circumstances, all as contemplated by the Merger Agreement; AND WHEREAS pursuant to the Merger Agreement, Weyerhaeuser and Weysub have agreed to execute a voting and exchange trust agreement substantially in the form of this Agreement; NOW THEREFORE in consideration of the respective covenants and agreements provided in this Agreement and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto covenant and agree as follows: -F-1- ARTICLE 1 DEFINITIONS AND INTERPRETATION 1.1 Definitions In this Agreement, the following terms shall have the following meanings: "Act" means the Company Act (British Columbia), as amended. "Affiliate" of any person means any other person directly or indirectly controlled by, or under control of, that person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlled by" and "under common control of"), as applied to any person, means the possession by another person, directly or indirectly, of the power to direct or cause the direction of the management and policies of that first mentioned person, whether through the ownership of voting securities, by contract or otherwise. "Arrangement" means the arrangement under section 192 of the CBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations thereto made in accordance with Article 6 of the Plan of Arrangement or made at the direction of the Court. "Automatic Exchange Rights" means the benefit of the obligation of Weyerhaeuser to effect the automatic exchange of Weyerhaeuser Common Shares for Exchangeable Shares pursuant to section 5.12. "Beneficiaries" means the registered holders from time to time of Exchangeable Shares, other than Weyerhaeuser and its Affiliates. "Beneficiary Votes" has the meaning ascribed thereto in section 4.2. "Board of Directors" means the Board of Directors of Weysub. "Business Day" means any day on which commercial banks are generally open for business in Seattle, Washington and Vancouver, British Columbia, other than a Saturday, a Sunday or a day observed as a holiday in Seattle, Washington under the laws of the State of Washington or the federal laws of the United States of America or in Vancouver, British Columbia under the laws of the Province of British Columbia or the federal laws of Canada. "Canadian Dollar Equivalent" means, in respect of an amount expressed in a currency other than Canadian dollars (the "Foreign Currency Amount") at any date, the product obtained by multiplying (a) the Foreign Currency Amount by (b) the noon spot exchange rate on such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such F-2 exchange rate on such date for such foreign currency expressed in Canadian dollars as may be deemed by the Board of Directors to be appropriate for such purpose. "Current Market Price" means, in respect of a Weyerhaeuser Common Share on any date, the Canadian Dollar Equivalent of the average of the closing bid and asked prices of Weyerhaeuser Common Shares during a period of 20 consecutive trading days ending not more than three trading days before such date on the NYSE, or, if the Weyerhaeuser Common Shares are not then quoted on the NYSE, on such other stock exchange or automated quotation system on which the Weyerhaeuser Common Shares are listed or, quoted, as the case may be, as may be selected by the Board of Directors for such purpose; provided however, that if in the opinion of the Board of Directors the public distribution or trading activity of Weyerhaeuser Common Shares during such period does not create a market which reflects the fair market value of a Weyerhaeuser Common Share, then the Current Market Price of a Weyerhaeuser Common Share shall be determined by the Board of Directors, in good faith and in its sole discretion, and provided further that any such selection, opinion or determination by the Board of Directors shall be conclusive and binding. "Exchange Right" has the meaning ascribed thereto in section 5.1. "Exchangeable Shares" means a non-voting exchangeable share in the capital of Weysub, having substantially the rights, privileges, restrictions and conditions set out in Appendix I to the Plan of Arrangement. "Indemnified Parties" has the meaning ascribed thereto in section 9.1. "Insolvency Event" means the institution by Weysub of any proceeding to be adjudicated a bankrupt or insolvent or to be wound up, or the consent of Weysub to the institution of bankruptcy, insolvency or winding-up proceedings against it, or the filing of a petition, answer or consent seeking dissolution or winding-up under any bankruptcy, insolvency or analogous laws, including without limitation the Companies Creditors' Arrangement Act (Canada) and the Bankruptcy and Insolvency Act (Canada), and the failure by Weysub to contest in good faith any such proceedings commenced in respect of Weysub within 30 days of becoming aware thereof, or the consent by Weysub to the filing of any such petition or to the appointment of a receiver, or the making by Weysub of a general assignment for the benefit of creditors, or the admission in writing by Weysub of its inability to pay its debts generally as they become due, or Weysub not being permitted, pursuant to solvency requirements of applicable law, to redeem any Retracted Shares pursuant to section 6.6 of the Share Provisions. "Liquidation Call Right" has the meaning ascribed thereto in the Plan of Arrangement. "Liquidation Event" has the meaning ascribed thereto in section 5.12(b). F-3 "Liquidation Event Effective Date" has the meaning ascribed thereto in section 5.12(c). "List" has the meaning ascribed thereto in section 4.6. "Merger Agreement" means the agreement made June 20, 1999 among Weyerhaeuser, Weysub and MB, as amended, supplemented and/or restated in accordance therewith prior to the Effective Date, providing for, among other things, the Arrangement. "NYSE" means the New York Stock Exchange, Inc. "Officer's Certificate" means, with respect to Weyerhaeuser or Weysub, as the case may be, a certificate signed by any officer or director of Weyerhaeuser or Weysub, as the case may be. "person" includes any individual, firm, partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, government body, syndicate or other entity, whether or not having legal status. "Plan of Arrangement" means the plan of arrangement substantially in the form and content of Schedule D to the Merger Agreement and any amendments or variations thereto made in accordance with section 6.1 of the Merger Agreement or Article 6 of the Plan of Arrangement or made at the discretion of the Court. "Redemption Call Right" has the meaning ascribed thereto in the Plan of Arrangement. "Retracted Shares" has the meaning ascribed thereto in section 5.7. "Retraction Call Right" has the meaning ascribed thereto in the Share Provisions. "Share Provisions" means the rights, privileges, restrictions and conditions attaching to the Exchangeable Shares. "Support Agreement" means that certain support agreement made as of even date herewith between Weysub, Weyerhaeuser Newco and Weyerhaeuser substantially in the form and content of Schedule E to the Merger Agreement, with such changes thereto as the parties to the Merger Agreement, acting reasonably, may agree. "Trust" means the trust created by this Agreement. "Trust Estate" means the Weyerhaeuser Special Voting Share, any other securities, the Exchange Right, the Automatic Exchange Rights and any money or other property which may be held by the Trustee from time to time pursuant to this Agreement. F-4 "Trustee" means and, subject to the provisions of Article 10, includes any successor trustee. "Voting Rights" means the voting rights attached to the Weyerhaeuser Special Voting Share. "Weyerhaeuser Affiliates" means Affiliates of Weyerhaeuser. "Weyerhaeuser Common Share" means a share of common stock in the capital of Weyerhaeuser. "Weyerhaeuser Consent" has the meaning ascribed thereto in section 4.2. "Weyerhaeuser Meeting" has the meaning ascribed thereto in section 4.2. "Weyerhaeuser Newco" means 586474 B.C. Ltd., a company existing under the laws of the Province of British Columbia and being a wholly-owned subsidiary of Weyerhaeuser. "Weyerhaeuser Special Voting Share" means the one share of Special Voting Preferred Stock of Weyerhaeuser issued in its own series which entitles the holder of record to a number of votes at meetings of holders of Weyerhaeuser Common Shares equal to the number of Exchangeable Shares outstanding from time to time (other than Exchangeable Shares held by Weyerhaeuser and Weyerhaeuser Affiliates), which share is to be issued to, deposited with, and voted by, the Trustee as described herein. "Weyerhaeuser Successor" has the meaning ascribed thereto in section 11.1(a). 1.2 Interpretation Not Affected by Headings, etc. The division of this Agreement into Articles, sections and other portions and the insertion of headings are for convenience of reference only and should not affect the construction or interpretation of this Agreement. Unless otherwise indicated, all references to an "Article" or "section" followed by a number and/or a letter refer to the specified Article or section of this Agreement. The terms "this Agreement", "hereof", "herein" and "hereunder" and similar expressions refer to this Agreement and not to any particular Article, section or other portion hereof and include any agreement or instrument supplementary or ancillary hereto. 1.3 Number, Gender, etc. Words importing the singular number only shall include the plural and vice versa. Words importing any gender shall include all genders. F-5 1.4 Date for any Action If any date on which any action is required to be taken under this Agreement is not a Business Day, such action shall be required to be taken on the next succeeding Business Day. ARTICLE 2 PURPOSE OF AGREEMENT 2.1 Establishment of Trust The purpose of this Agreement is to create the Trust for the benefit of the Beneficiaries, as herein provided. The Trustee will hold the Weyerhaeuser Special Voting Share in order to enable the Trustee to execute the Voting Rights and will hold the Exchange Right and the Automatic Exchange Rights in order to enable the Trustee to exercise such rights, in each case as trustee for and on behalf of the Beneficiaries as provided in this Agreement. ARTICLE 3 WEYERHAEUSER SPECIAL VOTING SHARE 3.1 Issue and Ownership of the Weyerhaeuser Special Voting Share Weyerhaeuser hereby issues to and deposits with the Trustee, the Weyerhaeuser Special Voting Share to be hereafter held of record by the Trustee as trustee for and on behalf of, and for the use and benefit of, the Beneficiaries and in accordance with the provisions of this Agreement. Weyerhaeuser hereby acknowledges receipt from the Trustee as trustee for and on behalf of the Beneficiaries of good and valuable consideration (and the adequacy thereof) for the issuance of the Weyerhaeuser Special Voting Share by Weyerhaeuser to the Trustee. During the term of the Trust and subject to the terms and conditions of this Agreement, the Trustee shall possess and be vested with full legal ownership of the Weyerhaeuser Special Voting Share and shall be entitled to exercise all of the rights and powers of an owner with respect to the Weyerhaeuser Special Voting Share provided that the Trustee shall: (a) hold the Weyerhaeuser Special Voting Share and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this Agreement; and (b) except as specifically authorized by this Agreement, have no power or authority to sell, transfer, vote or otherwise deal in or with the Weyerhaeuser Special Voting Share and the Weyerhaeuser Special Voting Share shall not be used or disposed of by the Trustee for any purpose other than the purposes for which this Trust is created pursuant to this Agreement. F-6 3.2 Legended Share Certificates Weysub will cause each certificate representing Exchangeable Shares to bear an appropriate legend notifying the Beneficiaries of their right to instruct the Trustee with respect to the exercise of the Voting Rights in respect of the Exchangeable Shares of the Beneficiaries. 3.3 Safe Keeping of Certificate The certificate representing the Weyerhaeuser Special Voting Share shall at all times be held in safe keeping by the Trustee. ARTICLE 4 EXERCISE OF VOTING RIGHTS 4.1 Voting Rights The Trustee, as the holder of record of the Weyerhaeuser Special Voting Share, shall be entitled to all of the Voting Rights, including the right to vote in person or by proxy the Weyerhaeuser Special Voting Share on any matters, questions, proposals or propositions whatsoever that may properly come before the shareholders of Weyerhaeuser at a Weyerhaeuser Meeting or in connection with a Weyerhaeuser Consent. The Voting Rights shall be and remain vested in and exercised by the Trustee. Subject to section 7.15: (a) the Trustee shall exercise the Voting Rights only on the basis of instructions received pursuant to this Article 4 from Beneficiaries entitled to instruct the Trustee as to the voting thereof at the time at which the Weyerhaeuser Meeting is held; and (b) to the extent that no instructions are received from a Beneficiary with respect to the Voting Rights to which such Beneficiary is entitled, the Trustee shall not exercise or permit the exercise of such Voting Rights. 4.2 Number of Votes With respect to all meetings of shareholders of Weyerhaeuser at which holders of Weyerhaeuser Common Shares are entitled to vote (each, a "Weyerhaeuser Meeting") and with respect to all written consents sought by Weyerhaeuser from its shareholders including the holders of Weyerhaeuser Common Shares (each, a "Weyerhaeuser Consent"), each Beneficiary shall be entitled to instruct the Trustee to cast and exercise one of the votes comprised in the Voting Rights for each Exchangeable Share owned of record by such Beneficiary on the record date established by Weyerhaeuser or by applicable law for such Weyerhaeuser Meeting or Weyerhaeuser Consent, as the case may be (the "Beneficiary Votes"), in respect of each matter, question, proposal or proposition to be voted on at such Weyerhaeuser Meeting or in connection with such Weyerhaeuser Consent. F-7 4.3 Mailings to Shareholders With respect to each Weyerhaeuser Meeting and Weyerhaeuser Consent, the Trustee will mail or cause to be mailed (or otherwise communicate in the same manner as Weyerhaeuser utilizes in communications to holders of Weyerhaeuser Common Shares) to each of the Beneficiaries named in the List referred to in section 4.6, such mailing or communication to commence on the same day as the mailing or notice (or other communication) with respect thereto is commenced by Weyerhaeuser to its shareholders: (a) a copy of such notice, together with any related materials to be provided to shareholders of Weyerhaeuser; (b) a statement that such Beneficiary is entitled to instruct the Trustee as to the exercise of the Beneficiary Votes with respect to such Weyerhaeuser Meeting or Weyerhaeuser Consent or, pursuant to section 4.7, to attend such Weyerhaeuser Meeting and to exercise personally the Beneficiary Votes thereat; (c) a statement as to the manner in which such instructions may be given to the Trustee, including an express indication that instructions may be given to the Trustee to give: (i) a proxy to such Beneficiary or his designee to exercise personally the Beneficiary Votes; or (ii) a proxy to a designated agent or other representative of the management of Weyerhaeuser to exercise such Beneficiary Votes; (d) a statement that if no such instructions are received from the Beneficiary, the Beneficiary Votes to which such Beneficiary is entitled will not be exercised; (e) a form of direction whereby the Beneficiary may so direct and instruct the Trustee as contemplated herein; and (f) a statement of the time and date by which such instructions must be received by the Trustee in order to be binding upon it, which in the case of a Weyerhaeuser Meeting shall not be earlier than the close of business on the second Business Day prior to such meeting, and of the method for revoking or amending such instructions. For the purpose of determining Beneficiary Votes to which a Beneficiary is entitled in respect of any Weyerhaeuser Meeting or Weyerhaeuser Consent, the number of Exchangeable Shares owned of record by the Beneficiary shall be determined at the close of business on the record date established by Weyerhaeuser or by applicable law for purposes of determining shareholders entitled to vote at such Weyerhaeuser Meeting. Weyerhaeuser will notify the Trustee of any decision of the Board of Directors of Weyerhaeuser with respect to the F-8 calling of any Weyerhaeuser Meeting and shall provide all necessary information and materials to the Trustee in each case promptly and in any event in sufficient time to enable the Trustee to perform its obligations contemplated by this section 4.3. 4.4 Copies of Shareholder Information Weyerhaeuser will deliver to the Trustee copies of all proxy materials (including notices of Weyerhaeuser Meetings but excluding proxies to vote Weyerhaeuser Common Shares), information statements, reports (including without limitation, all interim and annual financial statements) and other written communications that, in each case, are to be distributed from time to time to holders of Weyerhaeuser Common Shares in sufficient quantities and in sufficient time so as to enable the Trustee to send those materials to each Beneficiary at the same time as such materials are first sent to holders of Weyerhaeuser Common Shares. The Trustee will mail or otherwise send to each Beneficiary, at the expense of Weyerhaeuser, copies of all such materials (and all materials specifically directed to the Beneficiaries or to the Trustee for the benefit of the Beneficiaries by Weyerhaeuser) received by the Trustee from Weyerhaeuser contemporaneously with the sending of such materials to holders of Weyerhaeuser Common Shares. The Trustee will also make available for inspection by any Beneficiary at the Trustee's principal corporate trust office in Vancouver all proxy materials, information statements, reports and other written communications that are: (a) received by the Trustee as the registered holder of the Weyerhaeuser Special Voting Share and made available by Weyerhaeuser generally to the holders of Weyerhaeuser Common Shares; or (b) specifically directed to the Beneficiaries or to the Trustee for the benefit of the Beneficiaries by Weyerhaeuser. 4.5 Other Materials As soon as reasonably practicable after receipt by Weyerhaeuser or shareholders of Weyerhaeuser (if such receipt is known by Weyerhaeuser) of any material sent or given by or on behalf of a third party to holders of Weyerhaeuser Common Shares generally, including without limitation, dissident proxy and information circulars (and related information and material) and tender and exchange offer circulars (and related information and material), Weyerhaeuser shall use its reasonable efforts to obtain and deliver to the Trustee copies thereof in sufficient quantities so as to enable the Trustee to forward such material (unless the same has been provided directly to Beneficiaries by such third party) to each Beneficiary as soon as possible thereafter. Immediately upon receipt thereof, the Trustee will mail or otherwise send to each Beneficiary, at the expense of Weyerhaeuser, copies of all such materials received by the Trustee from Weyerhaeuser. The Trustee will also make available for inspection by any Beneficiary at the Trustee's principal corporate trust office in Vancouver copies of all such materials. F-9 4.6 List of Persons Entitled to Vote Weysub shall, (a) prior to each annual, general and special Weyerhaeuser Meeting or the seeking of any Weyerhaeuser Consent and (b) forthwith upon each request made at any time by the Trustee in writing, prepare or cause to be prepared a list (a "List") of the names and addresses of the Beneficiaries arranged in alphabetical order and showing the number of Exchangeable Shares held of record by each such Beneficiary, in each case at the close of business on the date specified by the Trustee in such request or, in the case of a List prepared in connection with a Weyerhaeuser Meeting or an Weyerhaeuser Consent, at the close of business on the record date established by Weyerhaeuser or pursuant to applicable law for determining the holders of Weyerhaeuser Common Shares entitled to receive notice of and/or to vote at such Weyerhaeuser Meeting or to give consent in connection with such Weyerhaeuser Consent. Each such List shall be delivered to the Trustee promptly after receipt by Weysub of such request or the record date for such meeting or seeking of consent, as the case may be. Weyerhaeuser agrees to give Weysub notice (with a copy to the Trustee) of the calling of any Weyerhaeuser Meeting or the seeking of any Weyerhaeuser Consent, together with the record dates therefor, sufficiently prior to the date of the calling of such meeting or seeking of such consent so as to enable Weysub to perform its obligations under this section 4.6. 4.7 Entitlement to Direct Votes Any Beneficiary named in a List prepared in connection with any Weyerhaeuser Meeting or Weyerhaeuser Consent will be entitled (a) to instruct the Trustee in the manner described in section 4.3 with respect to the exercise of the Beneficiary Votes to which such Beneficiary is entitled or (b) to attend such meeting and personally exercise thereat, as the proxy of the Trustee, the Beneficiary Votes to which such Beneficiary is entitled. 4.8 Voting by Trustee, and Attendance of Trustee Representative at Meeting (a) In connection with each Weyerhaeuser Meeting and Weyerhaeuser Consent, the Trustee shall exercise, either in person or by proxy, in accordance with the instructions received from a Beneficiary pursuant to section 4.3, the Beneficiary Votes as to which such Beneficiary is entitled to direct the vote (or any lesser number thereof as may be set forth in the instructions); provided, however, that such written instructions are received by the Trustee from the Beneficiary prior to the time and date fixed by the Trustee for receipt of such instruction in the notice given by the Trustee to the Beneficiary pursuant to section 4.3. (b) The Trustee shall cause a representative who is empowered by it to sign and deliver, on behalf of the Trustee, proxies for Voting Rights to attend each Weyerhaeuser Meeting. Upon submission by a Beneficiary (or its designee) of identification satisfactory to the Trustee's representative, and at the Beneficiary's request, such representative shall sign and deliver to such Beneficiary (or its designee) a proxy to exercise personally the Beneficiary Votes as to which such Beneficiary is otherwise entitled hereunder to direct the vote, if such Beneficiary F-10 either (i) has not previously given the Trustee instructions pursuant to section 4.3 in respect of such meeting or (ii) submits to such representative written revocation of any such previous instructions. At such meeting, the Beneficiary exercising such Beneficiary Votes shall have the same rights as the Trustee to speak at the meeting in favour of any matter, question, proposal or proposition, to vote by way of ballot at the meeting in respect of any matter, question, proposal or proposition, and to vote at such meeting by way of a show of hands in respect of any matter, question or proposition. 4.9 Distribution of Written Materials Any written materials distributed by the Trustee pursuant to this Agreement shall be sent by mail (or otherwise communicated in the same manner as Weyerhaeuser utilizes in communications to holders of Weyerhaeuser Common Shares) to each Beneficiary at its address as shown on the books of Weysub. Weysub shall provide or cause to be provided to the Trustee for this purpose, on a timely basis and without charge or other expense: (a) a current List; and (b) upon the request of the Trustee, mailing labels to enable the Trustee to carry out its duties under this Agreement. 4.10 Termination of Voting Rights All of the rights of a Beneficiary with respect to the Beneficiary Votes exercisable in respect of the Exchangeable Shares held by such Beneficiary, including the right to instruct the Trustee as to the voting of or to vote personally such Beneficiary Votes, shall be deemed to be surrendered by the Beneficiary to Weyerhaeuser or Weyerhaeuser Newco, as the case may be, and such Beneficiary Votes and the Voting Rights represented thereby shall cease immediately upon the delivery by such holder to the Trustee of the certificates representing such Exchangeable Shares in connection with the exercise by the Beneficiary of the Exchange Right or the occurrence of the automatic exchange of Exchangeable Shares for Weyerhaeuser Common Shares, as specified in Article 5 (unless, in either case, Weyerhaeuser shall not have delivered the requisite Weyerhaeuser Common Shares issuable in exchange therefor to the Trustee for delivery to the Beneficiaries), or upon the redemption of Exchangeable Shares pursuant to Article 6 or 7 of the Share Provisions, or upon the effective date of the liquidation, dissolution or winding-up of Weysub pursuant to Article 5 of the Share Provisions, or upon the purchase of Exchangeable Shares from the holder thereof by Weyerhaeuser Newco pursuant to the exercise by Weyerhaeuser Newco of the Retraction Call Right, the Redemption Call Right or the Liquidation Call Right. F-11 ARTICLE 5 EXCHANGE RIGHT AND AUTOMATIC EXCHANGE 5.1 Grant and Ownership of the Exchange Right Weyerhaeuser hereby grants to the Trustee as trustee for and on behalf of, and for the use and benefit of, the Beneficiaries the right (the "Exchange Right"), upon the occurrence and during the continuance of an Insolvency Event, to require Weyerhaeuser to purchase from each or any Beneficiary all or any part of the Exchangeable Shares held by the Beneficiary and the Automatic Exchange Rights, all in accordance with the provisions of this Agreement. Weyerhaeuser hereby acknowledges receipt from the Trustee as trustee for and on behalf of the Beneficiaries of good and valuable consideration (and the adequacy thereof) for the grant of the Exchange Right and the Automatic Exchange Rights by Weyerhaeuser to the Trustee. During the term of the Trust and subject to the terms and conditions of this Agreement, the Trustee shall possess and be vested with full legal ownership of the Exchange Right and the Automatic Exchange Rights and shall be entitled to exercise all of the rights and powers of an owner with respect to the Exchange Right and the Automatic Exchange Rights, provided that the Trustee shall: (a) hold the Exchange Right and the Automatic Exchange Rights and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this Agreement; and (b) except as specifically authorized by this Agreement, have no power or authority to exercise or otherwise deal in or with the Exchange Right or the Automatic Exchange Rights, and the Trustee shall not exercise any such rights for any purpose other than the purposes for which the Trust is created pursuant to this Agreement. 5.2 Legended Share Certificates Weysub will cause each certificate representing Exchangeable Shares to bear an appropriate legend notifying the Beneficiaries of: (a) their right to instruct the Trustee with respect to the exercise of the Exchange Right in respect of the Exchangeable Shares held by a Beneficiary; and (b) the Automatic Exchange Rights. 5.3 General Exercise of Exchange Right The Exchange Right shall be and remain vested in and exercisable by the Trustee. Subject to section 7.15, the Trustee shall exercise the Exchange Right only on the basis of instructions received pursuant to this Article 5 from Beneficiaries entitled to instruct the Trustee as to the exercise thereof. To the extent that no instructions are received from a Beneficiary with F-12 respect to the Exchange Right, the Trustee shall not exercise or permit the exercise of the Exchange Right. 5.4 Purchase Price The purchase price payable by Weyerhaeuser for each Exchangeable Share to be purchased by Weyerhaeuser under the Exchange Right shall be an amount per share equal to (a) the Current Market Price of a Weyerhaeuser Common Share on the last Business Day prior to the day of closing of the purchase and sale of such Exchangeable Share under the Exchange Right, which shall be satisfied in full by Weyerhaeuser causing to be sent to such holder one Weyerhaeuser Common Share, plus (b) to the extent not paid by Weysub, an additional amount equivalent to the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the closing of the purchase and sale. The purchase price for each such Exchangeable Share so purchased may be satisfied only by Weyerhaeuser issuing and delivering or causing to be delivered to the Trustee, on behalf of the relevant Beneficiary, one Weyerhaeuser Common Share and on the applicable payment date a cheque for the balance, if any, of the purchase price without interest (but less any amounts withheld pursuant to section 5.13). 5.5 Exercise Instructions Subject to the terms and conditions herein set forth, a Beneficiary shall be entitled, upon the occurrence and during the continuance of an Insolvency Event, to instruct the Trustee to exercise the Exchange Right with respect to all or any part of the Exchangeable Shares registered in the name of such Beneficiary on the books of Weysub. To cause the exercise of the Exchange Right by the Trustee, the Beneficiary shall deliver to the Trustee, in person or by certified or registered mail, as its principal corporate trust office in Vancouver or at such other places in Canada as the Trustee may from time to time designate by written notice to the Beneficiaries, the certificates representing the Exchangeable Shares which such Beneficiary desires Weyerhaeuser to purchase, duly endorsed in blank for transfer, and accompanied by such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the Act and the by-laws of Weysub and such additional documents and instruments as the Trustee may reasonably require together with (a) a duly completed form of notice of exercise of the Exchange Right, contained on the reverse of or attached to the Exchangeable Share certificates, stating (i) that the Beneficiary thereby instructs the Trustee to exercise the Exchange Right so as to require Weyerhaeuser to purchase from the Beneficiary the number of Exchangeable Shares specified therein, (ii) that such Beneficiary has good title to and owns all such Exchangeable Shares to be acquired by Weyerhaeuser free and clear of all liens, claims and encumbrances, (iii) the names in which the certificates representing Weyerhaeuser Common Shares issuable in connection with the exercise of the Exchange Right are to be issued and (iv) the names and addresses of the persons to whom such new certificates should be delivered and (b) payment (or evidence satisfactory to the Trustee, Weysub and Weyerhaeuser of payment) of the taxes (if any) payable as contemplated by section 5.8 of this Agreement. If only a part of the Exchangeable Shares represented by any certificate or certificates delivered to the Trustee are to F-13 be purchased by Weyerhaeuser under the Exchange Right, a new certificate for the balance of such Exchangeable Shares shall be issued to the holder at the expense of Weysub. 5.6 Delivery of Weyerhaeuser Common Shares; Effect of Exercise Promptly after the receipt of the certificates representing the Exchangeable Shares which the Beneficiary desires Weyerhaeuser to purchase under the Exchange Right, together with such documents and instruments of transfer and a duly completed form of notice of exercise of the Exchange Right (and payment of taxes, if any payable as contemplated by section 5.8 or evidence thereof), duly endorsed for transfer to Weyerhaeuser, the Trustee shall notify Weyerhaeuser and Weysub of its receipt of the same, which notice to Weyerhaeuser and Weysub shall constitute exercise of the Exchange Right by the Trustee on behalf of the holder of such Exchangeable Shares, and Weyerhaeuser shall promptly thereafter deliver or cause to be delivered to the Trustee, for delivery to the Beneficiary of such Exchangeable Shares (or to such other persons, if any, properly designated by such Beneficiary) the number of Weyerhaeuser Common Shares issuable in connection with the exercise of the Exchange Right, and on the applicable payment date cheques for the balance, if any, of the total purchase price therefor without interest (but less any amounts withheld pursuant to section 5.13); provided, however, that no such delivery shall be made unless and until the Beneficiary requesting the same shall have paid (or provided evidence satisfactory to the Trustee, Weysub and Weyerhaeuser of the payment of) the taxes (if any) payable as contemplated by section 5.8 of this Agreement. Immediately upon the giving of notice by the Trustee to Weyerhaeuser and Weysub of the exercise of the Exchange Right as provided in this section 5.6, the closing of the transaction of purchase and sale contemplated by the Exchange Right shall be deemed to have occurred and the holder of such Exchangeable Shares shall be deemed to have transferred to Weyerhaeuser all of such holder's right, title and interest in and to such Exchangeable Shares and the related interest in the Trust Estate and shall cease to be a holder of such Exchangeable Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive his proportionate part of the total purchase price therefor, unless the requisite number of Weyerhaeuser Common Shares is not allotted, issued and delivered by Weyerhaeuser to the Trustee within five Business Days of the date of the giving of such notice by the Trustee, in which case the rights of the Beneficiary shall remain unaffected until such Weyerhaeuser Common Shares are so allotted, issued and delivered by Weyerhaeuser. Upon delivery by Weyerhaeuser to the Trustee of such Weyerhaeuser Common Shares, the Trustee shall deliver such Weyerhaeuser Common Shares to such Beneficiary (or to such other persons, if any, properly designated by such Beneficiary). Concurrently with such Beneficiary ceasing to be a holder of Exchangeable Shares, the Beneficiary shall be considered and deemed for all purposes to be the holder of the Weyerhaeuser Common Shares delivered to it pursuant to the Exchange Right. 5.7 Exercise of Exchange Right Subsequent to Retraction In the event that a Beneficiary has exercised its right under Article 6 of the Share Provisions to require Weysub to redeem any or all of the Exchangeable Shares held by F-14 the Beneficiary (the "Retracted Shares") and is notified by Weysub pursuant to section 6.6 of the Share Provisions that Weysub will not be permitted as a result of solvency requirements of applicable law to redeem all such Retracted Shares, and provided that Weyerhaeuser Newco shall not have exercised the Retraction Call Right with respect to the Retracted Shares and that the Beneficiary has not revoked the retraction request delivered by the Beneficiary to Weysub pursuant to section 6.1 of the Share Provisions, the retraction request will constitute and will be deemed to constitute notice from the Beneficiary to the Trustee instructing the Trustee to exercise the Exchange Right with respect to those Retracted Shares that Weysub is unable to redeem. In any such event, Weysub hereby agrees with the Trustee and in favour of the Beneficiary promptly to forward or cause to be forwarded to the Trustee all relevant materials delivered by the Beneficiary to Weysub or to the transfer agent of the Exchangeable Shares (including without limitation, a copy of the retraction request delivered pursuant to section 6.1 of the Share Provisions) in connection with such proposed redemption of the Retracted Shares and the Trustee will thereupon exercise the Exchange Right with respect to the Retracted Shares that Weysub is not permitted to redeem and will require Weyerhaeuser to purchase such shares in accordance with the provisions of this Article 5. 5.8 Stamp or Other Transfer Taxes Upon any sale of Exchangeable Shares to Weyerhaeuser pursuant to the Exchange Right or the Automatic Exchange Rights, the share certificate or certificates representing Weyerhaeuser Common Shares to be delivered in connection with the payment of the total purchase price therefor shall be issued in the name of the Beneficiary of the Exchangeable Shares so sold or in such names as such Beneficiary may otherwise direct in writing without charge to the holder of the Exchangeable Shares so sold; provided, however, that such Beneficiary (a) shall pay (and none of Weyerhaeuser, Weysub or the Trustee shall be required to pay) any documentary, stamp, transfer or other taxes that may be payable in respect of any transfer involved in the issuance or delivery of such shares to a person other than such Beneficiary or (b) shall have evidenced to the satisfaction of the Trustee, Weyerhaeuser and Weysub that such taxes, if any, have been paid. 5.9 Notice of Insolvency Event As soon as practicable following the occurrence of an Insolvency Event or any event that with the giving of notice or the passage of time or both would be an Insolvency Event, Weysub and Weyerhaeuser shall give written notice thereof to the Trustee. As soon as practicable following the receipt of notice from Weysub and Weyerhaeuser of the occurrence of an Insolvency Event, or upon the Trustee becoming aware of an Insolvency Event, the Trustee will mail to each Beneficiary, at the expense of Weyerhaeuser, a notice of such Insolvency Event, which notice shall contain a brief statement of the rights of the Beneficiaries with respect to the Exchange Right. F-15 5.10 Qualification of Weyerhaeuser Common Shares Weyerhaeuser covenants that if any Weyerhaeuser Common Shares to be issued and delivered pursuant to the Exchange Right or the Automatic Exchange Rights require registration or qualification with or approval of or the filing of any document, including any prospectus or similar document, or the taking of any proceeding with or the obtaining of any order, ruling or consent from any governmental or regulatory authority under any Canadian or United States federal, provincial or state law or regulation or pursuant to the rules and regulations of any regulatory authority or the fulfillment of any other Canadian or United States federal, provincial or state legal requirement before such shares may be issued and delivered by Weyerhaeuser to the initial holder thereof or in order that such shares may be freely traded thereafter (other than any restrictions of general application on transfer by reason of a holder being a "control person" of Weyerhaeuser for purposes of Canadian provincial securities law or an "affiliate" of Weyerhaeuser for purposes of United States federal or state securities law), Weyerhaeuser will in good faith expeditiously take all such actions and do all such things as are necessary or desirable to cause such Weyerhaeuser Common Shares to be and remain duly registered, qualified or approved. Weyerhaeuser will in good faith expeditiously take all such actions and do all such things as are reasonably necessary or desirable to cause all Weyerhaeuser Common Shares to be delivered pursuant to the Exchange Right or the Automatic Exchange Rights to be listed, quoted or posted for trading on all stock exchanges and quotation systems on which outstanding Weyerhaeuser Common Shares have been listed by Weyerhaeuser and remain listed and are quoted or posted for trading at such time. 5.11 Weyerhaeuser Common Shares Weyerhaeuser hereby represents, warrants and covenants that the Weyerhaeuser Common Shares issuable as described herein will be duly authorized and validly issued as fully paid and non-assessable and shall be free and clear of any lien, claim or encumbrance. 5.12 Automatic Exchange on Liquidation of Weyerhaeuser (a) Weyerhaeuser will give the Trustee notice of each of the following events at the time set forth below: (i) in the event of any determination by the Board of Directors of Weyerhaeuser to institute voluntary liquidation, dissolution or winding-up proceedings with respect to Weyerhaeuser or to effect any other distribution of assets of Weyerhaeuser among its shareholders for the purpose of winding up its affairs, at least 60 days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution; and (ii) as soon as practicable following the earlier of (A) receipt by Weyerhaeuser of notice of, and (B) Weyerhaeuser otherwise becoming aware of, any threatened or instituted claim, suit, petition or other F-16 proceedings with respect to the involuntary liquidation, dissolution or winding-up of Weyerhaeuser or to effect any other distribution of assets of Weyerhaeuser among its shareholders for the purpose of winding up its affairs, in each case where Weyerhaeuser has failed to contest in good faith any such proceeding commenced in respect of Weyerhaeuser within 30 days of becoming aware thereof. (b) As soon as practicable following receipt by the Trustee from Weyerhaeuser of notice of any event (a "Liquidation Event") contemplated by section 5.12 (a) (i) or 5.12 (a) (ii) above, the Trustee will give notice thereof to the Beneficiaries. Such notice shall include a brief description of the automatic exchange of Exchangeable Shares for Weyerhaeuser Common Shares provided for in section 5.12(c). (c) In order that the Beneficiaries will be able to participate on a pro rata basis with the holders of Weyerhaeuser Common Shares in the distribution of assets of Weyerhaeuser in connection with a Liquidation Event, on the fifth Business Day prior to the effective date (the "Liquidation Event Effective Date") of a Liquidation Event all of the then outstanding Exchangeable Shares shall be automatically exchanged for Weyerhaeuser Common Shares. To effect such automatic exchange, Weyerhaeuser shall purchase on the fifth Business Day prior to the Liquidation Event Effective Date each Exchangeable Share then outstanding and held by Beneficiaries, and each Beneficiary shall sell the Exchangeable Shares held by it at such time, for a purchase price per share equal to (a) the Current Market Price of a Weyerhaeuser Common Share on the fifth Business Day prior to the Liquidation Event Effective Date, which shall be satisfied in full by Weyerhaeuser issuing to the Beneficiary one Weyerhaeuser Common Share, and (b) to the extent not paid by Weysub, an additional amount equivalent to the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the date of the exchange. (d) On the fifth Business Day prior to the Liquidation Event Effective Date, the closing of the transaction of purchase and sale contemplated by the automatic exchange of Exchangeable Shares for Weyerhaeuser Common Shares shall be deemed to have occurred, and each Beneficiary shall be deemed to have transferred to Weyerhaeuser all of the Beneficiary's right, title and interest in and to such Beneficiary's Exchangeable Shares and the related interest in the Trust Estate and shall cease to be a holder of such Exchangeable Shares and Weyerhaeuser shall issue to the Beneficiary the Weyerhaeuser Common Shares issuable upon the automatic exchange of Exchangeable Shares for Weyerhaeuser Common Shares and on the applicable payment date shall deliver to the Trustee for delivery to the Beneficiary a cheque for the balance, if any, of the total purchase price for such Exchangeable Shares without interest but less any F-17 amounts withheld pursuant to section 5.13. Concurrently with such Beneficiary ceasing to be a holder of Exchangeable Shares, the Beneficiary shall be considered and deemed for all purposes to be the holder of the Weyerhaeuser Common Shares issued pursuant to the automatic exchange of Exchangeable Shares for Weyerhaeuser Common Shares and the certificates held by the Beneficiary previously representing the Exchangeable Shares exchanged by the Beneficiary with Weyerhaeuser pursuant to such automatic exchange shall thereafter be deemed to represent Weyerhaeuser Common Shares issued to the Beneficiary by Weyerhaeuser pursuant to such automatic exchange. Upon the request of a Beneficiary and the surrender by the Beneficiary of Exchangeable Share certificates deemed to represent Weyerhaeuser Common Shares, duly endorsed in blank and accompanied by such instruments of transfer as Weyerhaeuser may reasonably require, Weyerhaeuser shall deliver or cause to be delivered to the Beneficiary certificates representing Weyerhaeuser Common Shares of which the Beneficiary is the holder. 5.13 Withholding Rights Weyerhaeuser, Weysub and the Trustee shall be entitled to deduct and withhold from any consideration otherwise payable under this Agreement to any holder of Exchangeable Shares or Weyerhaeuser Common Shares such amounts as Weyerhaeuser, Weysub or the Trustee is required or permitted to deduct and withhold with respect to such payment under the Income Tax Act (Canada), the United States Internal Revenue Code of 1986 or any provision of provincial, state, local or foreign tax law, in each case as amended or succeeded. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes as having been paid to the holder of the shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority. To the extent that the amount so required or permitted to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, Weyerhaeuser, Weysub and the Trustee are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to Weyerhaeuser, Weysub or the Trustee, as the case may be, to enable it to comply with such deduction or withholding requirement and Weyerhaeuser, Weysub or the Trustee shall notify the holder thereof and remit to such holder any unapplied balance of the net proceeds of such sale. Weyerhaeuser represents and warrants that, based upon facts currently known to it, it has no current intention, as at the date of this Agreement, to deduct or withhold from any dividend paid to holders of Exchangeable Shares any amounts under the United States Internal Revenue Code of 1986. F-18 ARTICLE 6 RESTRICTIONS ON ISSUE OF WEYERHAEUSER SPECIAL VOTING STOCK 6.1 Issue of Additional Shares During the term of this Agreement, Weyerhaeuser will not, without the consent of the holders at the relevant time of Exchangeable Shares, given in accordance with section 10.2 of the Share Provisions, issue any shares of its Special Voting Stock in the same series as Weyerhaeuser Special Voting Share. ARTICLE 7 CONCERNING THE TRUSTEE 7.1 Powers and Duties of the Trustee The rights, powers, duties and authorities of the Trustee under this Agreement, in its capacity as Trustee of the Trust, shall include: (a) receipt and deposit of the Weyerhaeuser Special Voting Share from Weyerhaeuser as Trustee for and on behalf of the Beneficiaries in accordance with the provisions of this Agreement; (b) granting proxies and distributing materials to Beneficiaries as provided in this Agreement; (c) voting the Beneficiary Votes in accordance with the provisions of this Agreement; (d) receiving the grant of the Exchange Right and the Automatic Exchange Rights from Weyerhaeuser as Trustee for and on behalf of the Beneficiaries in accordance with the provisions of this Agreement; (e) exercising the Exchange Right and enforcing the benefit of the Automatic Exchange Rights, in each case in accordance with the provisions of this Agreement, and in connection therewith receiving from Beneficiaries Exchangeable Shares and other requisite documents and distributing to such Beneficiaries Weyerhaeuser Common Shares and cheques, if any, to which such Beneficiaries are entitled upon the exercise of the Exchange Right or pursuant to the Automatic Exchange Rights, as the case may be; (f) holding title to the Trust Estate; (g) investing any moneys forming, from time to time, a part of the Trust Estate as provided in this Agreement; F-19 (h) taking action on its own initiative or at the direction of a Beneficiary or Beneficiaries to enforce the obligations of Weyerhaeuser and Weysub under this Agreement; and (i) taking such other actions and doing such other things as are specifically provided in this Agreement. In the exercise of such rights, powers, duties and authorities the Trustee shall have (and is granted) such incidental and additional rights, powers, duties and authority not in conflict with any of the provisions of this Agreement as the Trustee, acting in good faith and in the reasonable exercise of its discretion, may deem necessary, appropriate or desirable to effect the purpose of the Trust. Any exercise of such discretionary rights, powers, duties and authorities by the Trustee shall be final, conclusive and binding upon all persons. The Trustee in exercising its rights, powers, duties and authorities hereunder shall act honestly and in good faith and with a view to the best interests of the Beneficiaries and shall exercise the care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances. 7.2 No Conflict of Interest The Trustee represents to Weyerhaeuser and Weysub that at the date of execution and delivery of this Agreement there exists no material conflict of interest in the role of the Trustee as a fiduciary hereunder and the role of the Trustee in any other capacity. The Trustee shall, within 90 days after it becomes aware that such material conflict of interest exists, either eliminate such material conflict of interest or resign in the manner and with the effect specified in Article 10. If, notwithstanding the foregoing provisions of this section 7.2, the Trustee has such a material conflict of interest, the validity and enforceability of this Agreement shall not be affected in any manner whatsoever by reason only of the existence of such material conflict of interest. If the Trustee contravenes the foregoing provisions of this section 7.2, any interested party may apply to the Supreme Court of British Columbia for an order that the Trustee be replaced as Trustee hereunder. 7.3 Dealings with Transfer Agents, Registrars, etc. Weyerhaeuser and Weysub irrevocably authorize the Trustee, from time to time, to: (a) consult, communicate and otherwise deal with the respective registrars and transfer agents, and with any such subsequent registrar or transfer agent, of the Exchangeable Shares and Weyerhaeuser Common Shares; and (b) requisition, from time to time, (i) from any such registrar or transfer agent any information readily available from the records maintained by it which the Trustee may reasonably require for the discharge of its duties and responsibilities under F-20 this Agreement and (ii) from the transfer agent of Weyerhaeuser Common Shares, and any subsequent transfer agent of such shares, the share certificates issuable upon the exercise from time to time of the Exchange Right and pursuant to the Automatic Exchange Rights. Weyerhaeuser and Weysub irrevocably authorize their respective registrars and transfer agents to comply with all such requests. Weyerhaeuser covenants that it will supply its transfer agent with duly executed share certificates for the purpose of completing the exercise from time to time of the Exchange Right and the Automatic Exchange Rights. 7.4 Books and Records The Trustee shall keep available for inspection by Weyerhaeuser and Weysub at the Trustee's principal corporate trust office in Vancouver correct and complete books and records of account relating to the Trust created by this Agreement, including without limitation, all relevant data relating to mailings and instructions to and from Beneficiaries and all transactions pursuant to the Exchange Right and the Automatic Exchange Rights. On or before , and on or before January 15th in every year thereafter, so long as the Weyerhaeuser Special Voting Share is on deposit with the Trustee, the Trustee shall transmit to Weyerhaeuser and Weysub a brief report, dated as of the preceding December 31st, with respect to: (a) the property and funds comprising the Trust Estate as of that date; (b) the number of exercises of the Exchange Right, if any, and the aggregate number of Exchangeable Shares received by the Trustee on behalf of Beneficiaries in consideration of the issuance by Weyerhaeuser of Weyerhaeuser Common Shares in connection with the Exchange Right, during the calendar year ended on such December 31st; and (c) any action taken by the Trustee in the performance of its duties under this Agreement which it had not previously reported and which, in the Trustee's opinion, materially affects the Trust Estate. 7.5 Income Tax Returns and Reports The Trustee shall, to the extent necessary, prepare and file on behalf of the Trust appropriate United States and Canadian income tax returns and any other returns or reports as may be required by applicable law or pursuant to the rules and regulations of any securities exchange or other trading system through which the Exchangeable Shares are traded. 7.6 Indemnification Prior to Certain Actions by Trustee The Trustee shall exercise any or all of the rights, duties, powers or authorities vested in it by this Agreement at the request, order or direction of any Beneficiary upon such Beneficiary furnishing to the Trustee reasonable security or indemnity against the costs, F-21 expenses and liabilities which may be incurred by the Trustee therein or thereby, provided that no Beneficiary shall be obligated to furnish to the Trustee any such security or indemnity in connection with the exercise by the Trustee of any of its rights, duties, powers and authorities with respect to the Weyerhaeuser Special Voting Share pursuant to Article 4, subject to section 7.15, and with respect to the Exchange Right pursuant to Article 5, subject to section 7.15, and with respect to the Automatic Exchange Rights pursuant to Article 5. None of the provisions contained in this Agreement shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the exercise of any of its rights, powers, duties, or authorities unless funded, given security and indemnified as aforesaid. 7.7 Action of Beneficiaries No Beneficiary shall have the right to institute any action, suit or proceeding or to exercise any other remedy authorized by this Agreement for the purpose of enforcing any of its rights or for the execution of any trust or power hereunder unless the Beneficiary has Trustee to take or institute such action, suit or proceeding and furnished the Trustee with the security or indemnity referred to in section 7.6 and the Trustee shall have failed to act within a reasonable time thereafter. In such case, but not otherwise, the Beneficiary shall be entitled to take proceedings in any court of competent jurisdiction such as the Trustee might have taken; it being understood and intended that no one or more Beneficiaries shall have any right in any manner whatsoever to affect, disturb or prejudice the rights hereby created by any such action, or to enforce any right hereunder or the Voting Rights, the Exchange Rights or the Automatic Exchange Rights except subject to the conditions and in the manner herein provided, and that all powers and trusts hereunder shall be exercised and all proceedings at law shall be instituted, had and maintained by the Trustee, except only as herein provided, and in any event for the equal benefit of all Beneficiaries. 7.8 Reliance Upon Declarations The Trustee shall not be considered to be in contravention of any its rights, powers, duties and authorities hereunder if, when required, it acts and relies in good faith upon statutory declarations, certificates, opinions or reports furnished pursuant to the provisions hereof or required by the Trustee to be furnished to it in the exercise of its rights, powers, duties and authorities hereunder if such statutory declarations, certificates, opinions or reports comply with the provisions of section 7.9, if applicable, and with any other applicable provisions of this Agreement. 7.9 Evidence and Authority to Trustee Weyerhaeuser and/or Weysub shall furnish to the Trustee evidence of compliance with the conditions provided for in this Agreement relating to any action or step required or permitted to be taken by Weyerhaeuser and/or Weysub or the Trustee under this Agreement or as a result of any obligation imposed under this Agreement, including, without limitation, in respect of the Voting Rights or the Exchange Right or the Automatic Exchange Rights and the taking of F-22 any other action to be taken by the Trustee at the request of or on the application of Weyerhaeuser and/or Weysub promptly if and when: (a) such evidence is required by any other section of this Agreement to be furnished to the Trustee in accordance with the terms of this section 7.9; or (b) the Trustee, in the exercise of its rights, powers, duties and authorities under this Agreement, gives Weyerhaeuser and/or Weysub written notice requiring it to furnish such evidence in relation to any particular action or obligation specified in such notice. Such evidence shall consist of an Officer's Certificate of Weyerhaeuser and/or Weysub or a statutory declaration or a certificate made by persons entitled to sign an Officer's Certificate stating that any such condition has been complied with in accordance with the terms of this Agreement. Whenever such evidence relates to a matter other than the Voting Rights or the Exchange Right or the Automatic Exchange Rights or the taking of any other action to be taken by the Trustee at the request or on the application of Weyerhaeuser and/or Weysub, and except as otherwise specifically provided herein, such evidence may consist of a report or opinion of any solicitor, attorney, auditor, accountant, appraiser, valuer, engineer or other expert or any other person whose qualifications give authority to a statement made by him, provided that if such report or opinion is furnished by a director, officer or employee of Weyerhaeuser and/or Weysub it shall be in the form of an Officer's Certificate or a statutory declaration. Each statutory declaration, Officer's Certificate, opinion or report furnished to the Trustee as evidence of compliance with a condition provided for in this Agreement shall include a statement by the person giving the evidence: (c) declaring that he has read and understands the provisions of this Agreement relating to the condition in question; (d) describing the nature and scope of the examination or investigation upon which he based the statutory declaration, certificate, statement or opinion; and (e) declaring that he has made such examination or investigation as he believes is necessary to enable him to make the statements or give the opinions contained or expressed therein. 7.10 Experts, Advisers and Agents The Trustee may: (a) in relation to these presents act and rely on the opinion or advice of or information obtained from any solicitor, attorney, auditor, accountant, appraiser, valuer, F-23 engineer or other expert, whether retained by the Trustee or by Weyerhaeuser and/or Weysub or otherwise, and may employ such assistants as may be necessary to the proper discharge of its powers and duties and determination of its rights hereunder and may pay proper and reasonable compensation for all such legal and other advice or assistance as aforesaid; and (b) employ such agents and other assistants as it may reasonably require for the proper discharge of its powers and duties hereunder, and may pay reasonable remuneration for all services performed for it (and shall be entitled to receive reasonable remuneration for all services performed by it) in the discharge of the trusts hereof and compensation for all disbursements, costs and expenses made or incurred by it in the discharge of its duties hereunder and in the management of the Trust. 7.11 Investment of Moneys Held by Trustee Unless otherwise provided in this Agreement, any moneys held by or on behalf of the Trustee which under the terms of this Agreement may or ought to be invested or which may be on deposit with the Trustee or which may be in the hands of the Trustee may be invested and reinvested in the name or under the control of the Trustee in securities in which, under the laws of the Province of Ontario, trustees are authorized to invest trust moneys, provided that such securities are stated to mature within two years after their purchase by the Trustee, and the Trustee shall so invest such moneys on the written direction of Weysub. Pending the investment of any moneys as hereinbefore provided, such moneys may be deposited in the name of the Trustee in any chartered bank in Canada or, with the consent of Weysub, in the deposit department of the Trustee or any other loan or trust company authorized to accept deposits under the laws of Canada or any province thereof at the rate of interest then current on similar deposits. 7.12 Trustee Not Required to Give Security The Trustee shall not be required to give any bond or security in respect of the execution of the trusts, rights, duties, powers and authorities of this Agreement or otherwise in respect of the premises. 7.13 Trustee Not Bound to Act on Request Except as in this Agreement otherwise specifically provided, the Trustee shall not be bound to act in accordance with any direction or request of Weyerhaeuser and/or Weysub or of the directors thereof until a duly authenticated copy of the instrument or resolution containing such direction or request shall have been delivered to the Trustee, and the Trustee shall be empowered to act upon any such copy purporting to be authenticated and believed by the Trustee to be genuine. F-24 7.14 Authority to Carry on Business The Trustee represents to Weyerhaeuser and Weysub that at the date of execution and delivery by it of this Agreement it is authorized to carry on the business of a trust company in each of the Provinces of Canada but if, notwithstanding the provisions of this section 7.14, it ceases to be so authorized to carry on business, the validity and enforceability of this Agreement and the Voting Rights, the Exchange Right and the Automatic Exchange Rights shall not be affected in any manner whatsoever by reason only of such event but the Trustee shall, within 90 days after ceasing to be authorized to carry on the business of a trust company in any Province of Canada, either become so authorized or resign in the manner and with the effect specified in Article 10. 7.15 Conflicting Claims If conflicting claims or demands are made or asserted with respect to any interest of any Beneficiary in any Exchangeable Shares, including any disagreement between the heirs, representatives, successors or assigns succeeding to all or any part of the interest of any Beneficiary in any Exchangeable Shares, resulting in conflicting claims or demands being made in connection with such interest, then the Trustee shall be entitled, at its sole discretion, to refuse to recognize or to comply with any such claims or demands. In so refusing, the Trustee may elect not to exercise any Voting Rights, Exchange Rights or Automatic Exchange Rights subject to such conflicting claims or demands and, in so doing, the Trustee shall not be or become liable to any person on account of such election or its failure or refusal to comply with any such conflicting claims or demands. The Trustee shall be entitled to continue to refrain from acting and to refuse to act until: (a) the rights of all adverse claimants with respect to the Voting Rights, Exchange Right or Automatic Exchange Rights subject to such conflicting claims or demands have been adjudicated by a final judgment of a court of competent jurisdiction; or (b) all differences with respect to the Voting Rights, Exchange Right or Automatic Exchange Rights subject to such conflicting claims or demands have been conclusively settled by a valid written agreement binding on all such adverse claimants, and the Trustee shall have been furnished with an executed copy of such agreement certified to be in full force and effect. If the Trustee elects to recognize any claim or comply with any demand made by any such adverse claimant, it may in its discretion require such claimant to furnish such surety bond or other security satisfactory to the Trustee as it shall deem appropriate to fully indemnify it as between all conflicting claims or demands. F-25 7.16 Acceptance of Trust The Trustee hereby accepts the Trust created and provided for by and in this Agreement and agrees to perform the same upon the terms and conditions herein set forth and to hold all rights, privileges and benefits conferred hereby and by law in trust for the various persons who shall from time to time be Beneficiaries, subject to all the terms and conditions herein set forth. ARTICLE 8 COMPENSATION 8.1 Fees and Expenses of the Trustee Weyerhaeuser and Weysub jointly and severally agree to pay the Trustee reasonable compensation for all of the services rendered by it under this Agreement and will reimburse the Trustee for all reasonable expenses (including taxes other than taxes based on the net income of the Trustee) and disbursements, including the cost and expense of any suit or litigation of any character and any proceedings before any governmental agency reasonably incurred by the Trustee in connection with its duties under this Agreement; provided that Weyerhaeuser and Weysub shall have no obligation to reimburse the Trustee for any expenses or disbursements paid, incurred or suffered by the Trustee in any suit or litigation in which the Trustee is determined to have acted in bad faith or with negligence, recklessness or wilful misconduct. ARTICLE 9 INDEMNIFICATION AND LIMITATION OF LIABILITY 9.1 Indemnification of the Trustee Weyerhaeuser and Weysub jointly and severally agree to indemnify and hold harmless the Trustee and each of its directors. officers and agents appointed and acting in accordance with this Agreement (collectively, the "Indemnified Parties") against all claims, losses, damages, reasonable costs, penalties, fines and reasonable expenses (including reasonable expenses of the Trustee's legal counsel) which, without fraud, negligence, recklessness, wilful misconduct or bad faith on the part of such Indemnified Party, may be paid, incurred or suffered by the Indemnified Party by reason or as a result of the Trustee's acceptance or administration of the Trust, its compliance with its duties set forth in this Agreement, or any written or oral instruction delivered to the Trustee by Weyerhaeuser or Weysub pursuant hereto. In no case shall Weyerhaeuser or Weysub be liable under this indemnity for any claim against any of the Indemnified Parties unless Weyerhaeuser and Weysub shall be notified by the Trustee of the written assertion of a claim or of any action commenced against the Indemnified Parties, promptly after any of the Indemnified Parties shall have received any such written assertion of a claim or shall have been served with a summons or other first legal process giving information as to the nature and basis of the claim. Subject to (ii) below, Weyerhaeuser F-26 and Weysub shall be entitled to participate at their own expense in the defence and, if Weyerhaeuser and Weysub so elect at any time after receipt of such notice, either of them may assume the defence of any suit brought to enforce any such claim. The Trustee shall have the right to employ separate counsel in any such suit and participate in the defence thereof, but the fees and expenses of such counsel shall be at the expense of the Trustee unless: (i) the employment of such counsel has been authorized by Weyerhaeuser or Weysub; or (ii) the named parties to any such suit include both the Trustee and Weyerhaeuser or Weysub and the Trustee shall have been advised by counsel acceptable to Weyerhaeuser or Weysub that there may be one or more legal defences available to the Trustee that are different from or in addition to those available to Weyerhaeuser or Weysub and that, in the judgment of such counsel, would present a conflict of interest were a joint representation to be undertaken (in which case Weyerhaeuser and Weysub shall not have the right to assume the defence of such suit on behalf of the Trustee but shall be liable to pay the reasonable fees and expenses of counsel for the Trustee). 9.2 Limitation of Liability The Trustee shall not be held liable for any loss which may occur by reason of depreciation of the value of any part of the Trust Estate or any loss incurred on any investment of funds pursuant to this Agreement, except to the extent that such loss is attributable to the fraud, negligence, recklessness, wilful misconduct or bad faith on the part of the Trustee. ARTICLE 10 CHANGE OF TRUSTEE 10.1 Resignation The Trustee, or any trustee hereafter appointed, may at any time resign by giving written notice of such resignation to Weyerhaeuser and Weysub specifying the date on which it desires to resign, provided that such notice shall not be given less than one month before such desired resignation date unless Weyerhaeuser and Weysub otherwise agree and provided further that such resignation shall not take effect until the date of the appointment of a successor trustee and the acceptance of such appointment by the successor trustee. Upon receiving such notice of resignation, Weyerhaeuser and Weysub shall promptly appoint a successor trustee, which shall be a corporation organized and existing under the laws of Canada and authorized to carry on the business of a trust company in all provinces of Canada, by written instrument in duplicate, one copy of which shall be delivered to the resigning trustee and one copy to the successor trustee. 10.2 Removal The Trustee, or any trustee hereafter appointed, may (provided a successor trustee is appointed) be removed at any time on not less than 30 days' prior notice by written instrument executed by Weyerhaeuser and Weysub, in duplicate, one copy of which shall be delivered to the trustee so removed and one copy to the successor trustee. F-27 10.3 Successor Trustee Any successor trustee appointed as provided under this Agreement shall execute, acknowledge and deliver to Weyerhaeuser and Weysub and to its predecessor trustee an instrument accepting such appointment. Thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor under this Agreement, with the like effect as if originally named as trustee in this Agreement. However, on the written request of Weyerhaeuser and Weysub or of the successor trustee, the trustee ceasing to act shall, upon payment of any amounts then due it pursuant to the provisions of this Agreement, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act. Upon the request of any such successor trustee, Weyerhaeuser, Weysub and such predecessor trustee shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. 10.4 Notice of Successor Trustee Upon acceptance of appointment by a successor trustee as provided herein, Weyerhaeuser and Weysub shall cause to be mailed notice of the succession of such trustee hereunder to each Beneficiary specified in a List. If Weyerhaeuser or Weysub shall fail to cause such notice to be mailed within 10 days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of Weyerhaeuser and Weysub. ARTICLE 11 WEYERHAEUSER SUCCESSORS 11.1 Certain Requirements in Respect of Combination, etc. Weyerhaeuser shall not consummate any transaction (whether by way of reconstruction, reorganization, consolidation, merger, transfer, sale, lease or otherwise) whereby all or substantially all of its undertaking, property and assets would become the property of any other person or, in the case of a merger, of the continuing corporation resulting therefrom unless, but may do so if: (a) such other person or continuing corporation (herein called the "Weyerhaeuser Successor"), by operation of law, becomes, without more, bound by the terms and provisions of this Agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction, a trust agreement supplemental hereto and such other instruments (if any) as are satisfactory to the Trustee, acting reasonably, and in the opinion of legal counsel to the Trustee are reasonably necessary or advisable to evidence the assumption by the Weyerhaeuser Successor of liability for all moneys payable and property deliverable hereunder and the covenant of such Weyerhaeuser Successor to pay F-28 and deliver or cause to be delivered the same and its agreement to observe and perform all the covenants and obligations of Weyerhaeuser under this Agreement; and (b) such transaction shall, to the satisfaction of the Trustee, acting reasonably, and in the opinion of legal counsel to the Trustee, be upon such terms and conditions as substantially to preserve and not to impair in any material respect any of the rights, duties, powers and authorities of the Trustee or of the Beneficiaries hereunder. 11.2 Vesting of Powers in Successor Whenever the conditions of section 11.1 have been duly observed and performed, the Trustee, Weyerhaeuser Successor and Weysub shall, if required by section 11.1, execute and deliver the supplemental trust agreement provided for in Article 12 and thereupon Weyerhaeuser Successor shall possess and from time to time may exercise each and every right and power of Weyerhaeuser under this Agreement in the name of Weyerhaeuser or otherwise and any act or proceeding by any provision of this Agreement required to be done or performed by the Board of Directors of Weyerhaeuser or any officers of Weyerhaeuser may be done and performed with like force and effect by the directors or officers of such Weyerhaeuser Successor. 11.3 Wholly-Owned Subsidiaries Subject to section 4.12 of the Merger Agreement, nothing herein shall be construed as preventing the amalgamation or merger of any wholly-owned direct or indirect subsidiary of Weyerhaeuser with or into Weyerhaeuser or the winding-up, liquidation or dissolution of any wholly-owned subsidiary of Weyerhaeuser provided that all of the assets of such subsidiary are transferred to Weyerhaeuser or another wholly-owned direct or indirect subsidiary of Weyerhaeuser and any such transactions are expressly permitted by this Article 11. ARTICLE 12 AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS 12.1 Amendments, Modifications, etc. This trust agreement may not be amended or modified except by an agreement in writing executed by Weyerhaeuser, Weysub and the Trustee and approved by the Beneficiaries in accordance with section 10.2 of the Share Provisions. 12.2 Ministerial Amendments Notwithstanding the provisions of section 12.1, the parties to this Agreement may in writing, at any time and from time to time, without the approval of the Beneficiaries, amend or modify this Agreement for the purposes of: F-29 (a) adding to the covenants of any or all parties hereto for the protection of the Beneficiaries hereunder provided that the Board of Directors of each of Weysub and Weyerhaeuser shall be of the good faith opinion that such additions will not be prejudicial to the rights or interests of the Beneficiaries; (b) making such amendments or modifications not inconsistent with this Agreement as may be necessary or desirable with respect to matters or questions which, in the good faith opinion of the Board of Directors of each of Weyerhaeuser and Weysub and in the opinion of the Trustee, having in mind the best interests of the Beneficiaries it may be expedient to make, provided that such Boards of Directors and the Trustee shall be of the opinion that such amendments and modifications will not be prejudicial to the interests of the Beneficiaries; or (c) making such changes or corrections which, on the advice of counsel to Weyerhaeuser, Weysub and the Trustee, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error, provided that the Trustee and the Board of Directors of each of Weyerhaeuser and Weysub shall be of the opinion that such changes or corrections will not be prejudicial to the rights and interests of the Beneficiaries. 12.3 Meeting to Consider Amendments Weysub, at the request of Weyerhaeuser, shall call a meeting or meetings of the Beneficiaries for the purpose of considering any proposed amendment or modification requiring approval pursuant hereto. Any such meeting or meetings shall be called and held in accordance with the by-laws of Weysub, the Share Provisions and all applicable laws. 12.4 Changes in Capital of Weyerhaeuser and Weysub At all times after the occurrence of any event contemplated pursuant to section 2.7 or 2.8 of the Support Agreement or otherwise, as a result of which either Weyerhaeuser Common Shares or the Exchangeable Shares or both are in any way changed, this Agreement shall forthwith be amended and modified as necessary in order that it shall apply with full force and effect, mutatis mutandis, to all new securities into which Weyerhaeuser Common Shares or the Exchangeable Shares or both are so changed and the parties hereto shall execute and deliver a supplemental trust agreement giving effect to and evidencing such necessary amendments and modifications. 12.5 Execution of Supplemental Trust Agreements No amendment to or modification or waiver of any of the provisions of this Agreement otherwise permitted hereunder shall be effective unless made in writing and signed by all of the parties hereto. From time to time Weysub (when authorized by a resolution of its Board of Directors), Weyerhaeuser (when authorized by a resolution of its Board of Directors) and the Trustee may, subject to the provisions of these presents, and they shall, when so directed F-30 by these presents, execute and deliver by their proper officers, trust agreements or other instruments supplemental hereto, which thereafter shall form part hereof, for any one or more of the following purposes: (a) evidencing the succession of Weyerhaeuser Successors and the covenants of and obligations assumed by each such Weyerhaeuser Successor in accordance with the provisions of Article 11 and the successors of any successor trustee in accordance with the provisions of Article 10; (b) making any additions to, deletions from or alterations of the provisions of this Agreement or the Voting Rights, the Exchange Right or the Automatic Exchange Rights which, in the opinion of the Trustee, will not be prejudicial to the interests of the Beneficiaries or are, in the opinion of counsel to the Trustee, necessary or advisable in order to incorporate, reflect or comply with any legislation the provisions of which apply to Weyerhaeuser, Weysub, the Trustee or this Agreement; and (c) for any other purposes not inconsistent with the provisions of this Agreement, including without limitation, to make or evidence any amendment or modification to this Agreement as contemplated hereby, provided that, in the opinion of the Trustee, the rights of the Trustee and Beneficiaries will not be prejudiced thereby. ARTICLE 13 TERMINATION 13.1 Term The Trust created by this Agreement shall continue until the earliest to occur of the following events: (a) no outstanding Exchangeable Shares are held by a Beneficiary; (b) each of Weyerhaeuser and Weysub elects in writing to terminate the Trust and such termination is approved by the Beneficiaries in accordance with section 10.2 of the Share Provisions; and (c) 21 years after the death of the last survivor of the descendants of His Majesty King George VI of Canada and the United Kingdom of Great Britain and Northern Ireland living on the date of the creation of the Trust. 13.2 Survival of Agreement This Agreement shall survive any termination of the Trust and shall continue until there are no Exchangeable Shares outstanding held by a Beneficiary; provided, however, that the provisions of Articles 8 and 9 shall survive any such termination of this Agreement. F-31 ARTICLE 14 GENERAL 14.1 Severability If any provision of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remainder of this Agreement shall not in any way be affected or impaired thereby and the agreement shall be carried out as nearly as possible in accordance with its original terms and conditions. 14.2 Enurement This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and permitted assigns and to the benefit of the Beneficiaries. 14.3 Notices to Parties All notices and other communications between the parties hereunder shall be in writing and shall be deemed to have been given if delivered personally or by confirmed telecopy to the parties at the following addresses (or at such other address for such party as shall be specified in like notice): (a) if to Weyerhaeuser or Weysub, at: Weyerhaeuser Company 33663 Weyerhaeuser Way South Federal Way, WA 98003 Attention: Mr. Robert A. Dowdy, Vice President and General Counsel Telecopier No.: (253) 924-3253 (b) if to the Trustee, at: Attention: Telecopier No.: Any notice or other communication given personally shall be deemed to have been given and received upon delivery thereof and if given by telecopy shall be deemed to have been given and received on the date of receipt thereof unless such day is not a Business Day in which case it shall be deemed to have been given and received upon the immediately following Business Day. F-32 14.4 Notice to Beneficiaries Any and all notices to be given and any documents to be sent to any Beneficiaries may be given or sent to the address of such Beneficiary shown on the register of holders of Exchangeable Shares in any manner permitted by the by-laws of Weysub from time to time in force in respect of notices to shareholders and shall be deemed to be received (if given or sent in such manner) at the time specified in such by-laws, the provisions of which by-laws shall apply mutatis mutandis to notices or documents as aforesaid sent to such Beneficiaries. 14.5 Counterparts This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. 14.6 Jurisdiction This Agreement shall be construed and enforced in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein. 14.7 Attornment Each of the Trustee, Weyerhaeuser and Weysub agrees that any action or proceeding arising out of or relating to this Agreement may be instituted in the courts of British Columbia, waives any objection which it may have now or hereafter to the venue of any such action or proceeding, irrevocably submits to the jurisdiction of the said courts in any such action or proceeding, agrees to be bound by any judgment of the said courts and not to seek, and hereby waives, any review of the merits of any such judgment by the courts of any other jurisdiction and Weyerhaeuser hereby appoints Weysub at its registered office in the Province of British Columbia as attorney for service of process. F-33 IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed as of the date first above written. WEYERHAEUSER COMPANY By: --------------------------- Name: Title: 586476 B.C. LTD. By: --------------------------- Name: Title: [TRUST COMPANY] By: --------------------------- Name: Title: By: --------------------------- Name: Title: F-34 -----END PRIVACY-ENHANCED MESSAGE-----