<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
\X\ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
\ \ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---- ----
Commission File No. 1-7852
POPE & TALBOT, INC.
Delaware 94-0777139
(State or other jurisdiction of I.R.S. Employer Identification
incorporation or organization) Number
1500 S.W. 1st Ave., Portland, Oregon 97201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 228-9161
NONE
Former name, former address and former fiscal year, if changed since last
report.
Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the latest practicable date.
Common stock, $1 par value - 13,363,779 shares as of May 6, 1996
<PAGE> 2
PART I. FINANCIAL INFORMATION
Page No.
--------
ITEM 1. Financial Statements:
Consolidated Condensed Balance Sheets -
March 31, 1996 and December 31, 1995 2
Consolidated Statements of Income -
Three Months Ended March 31, 1996 and 1995 3
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 1996 and 1995 4
Notes to Consolidated Condensed Financial Statements 5
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-8
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders 9
ITEM 6. Exhibits and Reports on Form 8-K 10-12
<PAGE> 3
PART I.
POPE & TALBOT, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---- ----
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,417 $ 13,826
Accounts receivable 48,415 52,931
Inventories:
Raw materials 44,113 40,458
Finished goods 28,743 28,252
--------- ---------
72,856 68,710
Prepaid expenses and other 24,234 15,616
Discontinued operations assets held for sale - 56,169
--------- ---------
Total current assets 148,922 207,252
Properties:
Plant and equipment 448,254 447,577
Accumulated depreciation (239,792) (232,199)
--------- ---------
208,462 215,378
Land and timber cutting rights 10,368 10,382
--------- ---------
Total properties 218,830 225,760
Other assets:
Deferred charges 16,974 18,655
Deferred income tax assets, net 16,540 16,531
Goodwill, net of amortization 3,988 4,029
--------- ---------
Total other assets 37,502 39,215
--------- ---------
$ 405,254 $ 472,227
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable $ 2,500 $ 43,000
Current portion of long-term debt 457 457
Accounts payable and accrued liabilities 55,135 66,007
Income taxes 243 4,031
--------- ---------
Total current liabilities 58,335 113,495
Noncurrent liabilities:
Reforestation 17,732 16,617
Postretirement benefits 13,008 13,909
Long-term debt, net of current portion 128,402 138,514
--------- ---------
Total noncurrent liabilities 159,142 169,040
Stockholders' equity:
Common stock 13,972 13,972
Additional paid-in capital 35,976 35,976
Retained earnings 154,616 156,810
Cumulative translation adjustments (5,676) (5,955)
Less treasury shares at cost (11,111) (11,111)
--------- ---------
Total stockholders' equity 187,777 189,692
--------- ---------
$ 405,254 $ 472,227
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
balance sheets.
2
<PAGE> 4
POPE & TALBOT, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1996 1995
---- ----
<S> <C> <C>
Revenues:
Wood products $ 54,047 $ 69,087
Pulp and paper products 56,635 64,750
------------ ------------
Total 110,682 133,837
Costs and expenses:
Cost of sales:
Wood products 49,904 64,742
Pulp and paper products 58,032 61,949
Selling, general and administrative 4,818 5,470
Interest, net 2,537 3,457
------------ ------------
Total 115,291 135,618
Loss before income taxes and discontinued operations (4,609) (1,781)
Income tax provision (benefit) (1,844) (730)
------------ ------------
Loss from continuing operations (2,765) (1,051)
Discontinued operations:
Loss from discontinued operations (net of tax benefit
of $127 for three months ended March 31, 1995) - (183)
Gain on disposal of discontinued operations
(Net of applicable income taxes of $2,074) 3,110 -
------------ ------------
Net income (loss) $ 345 $ (1,234)
============ ============
Income (loss) per common share:
Loss from continuing operations $ (.20) $ (.08)
Income (loss) from discontinued operations .23 (.01)
------------ ------------
Net income (loss) $ .03 $ (.09)
============ ============
Cash dividends per common share $ .19 $ .19
============ ============
Weighted average number of common shares outstanding 13,363,779 13,362,729
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
3
<PAGE> 5
POPE & TALBOT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) $ 345 $ (1,234)
Adjustments to reconcile net income (loss) to net
cash used for operating activities:
Depreciation and amortization 8,055 10,639
Gain on disposal of discontinued operations (5,184) -
Increase (decrease) in:
Accounts payable and accrued liabilities (13,283) (59)
Income taxes (3,788) (6,283)
Reforestation 1,049 1,161
Postretirement benefits 174 236
Decrease (increase) in:
Accounts receivable 4,366 (7,254)
Inventories (3,900) (2,362)
Deposits on timber purchase contracts (983) (1,902)
Prepaid expenses (626) 415
Deferred charges and other 348 (1,175)
-------- --------
Net cash used for operating activities (13,427) (7,818)
Cash flow from investing activities:
Proceeds from disposal of discontinued operations 50,500 -
Proceeds from sale of Paragon Trade Brands, Inc. common stock 4,819 -
Capital expenditures (677) (10,265)
Proceeds from sale of other properties 1,527 241
-------- --------
Net cash provided by (used for) investing activities 56,169 (10,024)
Cash flow from financing activities:
Net increase (decrease) in short-term borrowings (40,500) 16,500
Net reduction of long-term debt (10,112) (105)
Decrease in restricted bond funds - 2,221
Cash dividends (2,539) (2,539)
-------- --------
Net cash provided by (used for)
financing activities (53,151) 16,077
-------- --------
Decrease in cash and cash equivalents (10,409) (1,765)
Cash and cash equivalents at
beginning of period 13,826 6,847
-------- --------
Cash and cash equivalents at
end of period $ 3,417 $ 5,082
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
4
<PAGE> 6
POPE & TALBOT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1996 and 1995
(Unaudited)
1. General
The consolidated condensed interim financial statements have been
prepared by the Company without audit and are subject to normal
recurring year-end adjustments. Certain information and footnote
disclosure normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of the Company, the
accompanying unaudited consolidated condensed financial statements
contain all adjustments (all of which are of a normal recurring nature)
necessary to present fairly the financial position of the Company as of
March 31, 1996 and December 31, 1995, and the results of operations and
changes in cash flows for the three months ended March 31, 1996 and
1995. It is suggested that these interim statements be read in
conjunction with the financial statements and notes thereto contained
in the Company's 1995 report on Form 10-K. The results of operations
for the three months ended March 31, 1996 and 1995 are not necessarily
indicative of the results to be expected for the full year.
2. Income Taxes
The income tax provision is estimated on an interim basis using the
best available information for projected results for the entire year.
3. Earnings per Share
Per share information is based on the weighted average number of common
shares outstanding during each period.
Refer to Exhibit 11.1 of this filing for the computation of average
common shares outstanding and earnings per share.
4. Discontinued Operations
On December 11, 1995, the Company entered into a definitive agreement
to sell its disposable diaper business (the "business") to Paragon
Trade Brands, Inc. (Paragon). On February 8, 1996, the sale was
completed. The Company sold substantially all the operating assets of
the business, primarily properties and inventories, to Paragon for
$50.5 million in cash and shares of unregistered Paragon common stock
having a value at the time the transaction was closed of approximately
$13.0 million. In the first quarter, pursuant to a stockholders'
agreement between the Company and Paragon, Paragon exercised an option
to repurchase 227,719 shares from the Company resulting in proceeds to
the Company of $4.8 million. The Company's remaining investment in
Paragon common stock is valued at $8.2 million and is included in the
Consolidated Condensed Balance Sheets at March 31, 1996 as prepaid and
other. The pre-tax gain on disposition of the business of $5.2 million
has been accounted for as discontinued operations and includes closing
costs associated with the transaction and a provision of $0.4 million
for operating losses during the phase-out period. The prior year
consolidated statement of income has been restated to reflect the
discontinuation of the diaper business.
5
<PAGE> 7
POPE & TALBOT, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1996 AND 1995
(unaudited)
RESULTS OF OPERATIONS
First quarter 1996 net income of $345,000, or $.03 per share, included a loss
from continuing operations of $2,765,000, or $.20 per share, and a gain on the
disposal of the Company's discontinued disposable diaper business of $3,110,000,
or $.23 per share. The results for 1996 compare to a first quarter 1995 net loss
of $1,234,000, or $.09 per share, which included a loss from continuing
operations of $1,051,000, or $.08 per share, and a loss from discontinued
operations of $183,000, or $.01 per share. Revenues of $110,682,000 in the first
quarter 1996 were 17 percent below those in the 1995 first quarter reflecting
lower lumber and pulp revenues.
Wood products segment earnings of $3.0 million in the first quarter of 1996
compared to income of $2.9 million and $1.1 million in the first and fourth
quarters of 1995, respectively. This segment comprised 49 percent of 1996 first
quarter sales. Included in the 1996 first quarter results was a $2.1 million
gain related to the sale of sawmill equipment at Port Gamble. The Port Gamble
facility was permanently shut down in the fourth quarter of 1995 due to the
increasing difficulty in obtaining an adequate supply of acceptably priced logs.
Overall lumber prices were about 6 percent lower in the first quarter of 1996
than for the corresponding period of 1995. First quarter 1996 prices were only
marginally better than the fourth quarter of 1995 as difficult winter weather
across the U.S. limited the upward price movement. Lumber prices were better
late in the 1996 first quarter and have continued to improve early in the second
quarter. Although lumber prices have increased, the markets for the sawmill
residual wood chips in the Pacific Northwest and British Columbia have fallen
dramatically since the fourth quarter of 1995, reflecting weakened pulp markets.
The residual chip market moved up steadily during 1995 to peak levels in the
third and early fourth quarters, however, with the falling pulp markets, chip
prices haven fallen sharply since the peaks. First quarter 1996 chip prices were
about 15 percent below first quarter 1995 levels, but were more than 30 percent
below average fourth quarter 1995 levels. March 1996 prices were less than half
the levels obtained in the peak of the 1995 chip markets. The Company uses
residual chips in its pulp business which mitigates somewhat the impact of these
falling chip prices on the lumber business. However, the Company produces more
residual chips in its lumber business than it consumes in the pulp business, so
on balance, declining chip prices have a detrimental impact on the Company's
operating results.
Lumber sales volume of 130 million board feet in the first quarter of 1996
approximated the 1996 sawmill capacity and compared to shipments of 162 million
board feet in the first quarter of 1995. The year-to-year volume reduction
related mainly to the Port Gamble sawmill closure. During the first quarter of
1996, U.S. and Canadian trade negotiators reached an agreement in principle
establishing quotas on Canadian softwood lumber shipments to the U.S. The 5-year
agreement takes effect April 1, 1996. Although the final terms of the agreement
are not yet settled, based on preliminary terms, the Company believes this
agreement will not have a significant effect on the results of its Canadian
sawmill operations. Approximately 73 percent of the Company's 1996 lumber
capacity is located in British Columbia, Canada.
6
<PAGE> 8
The pulp and paper segment, which represented 51 percent of first quarter 1996
revenues, incurred a loss of $2.9 million in the first quarter of 1996 compared
to income of $1.2 million and $0.1 million in the first and fourth quarters of
1995, respectively. A rapidly declining pulp market caused significant pulp
losses which more than offset a small profit recognized in the Company's tissue
business. Segment revenues of $56.6 million were down 13 percent from the first
quarter of 1995 due mainly to lower pulp pricing.
In the Company's pulp business, which comprised approximately 22 percent of
first quarter 1996 revenues, consistent with the overall pulp industry first
quarter pulp pricing continued a rapid decline which began in the fourth quarter
of 1995. The recent price declines follow a period of continuously improving
prices which began in 1994. 1994 prices for the Company's pulp were 25 percent
higher than 1993 and 1995 prices averaged 70 percent higher than those in 1994.
The Company's first quarter 1996 prices were 13 percent below the corresponding
1995 period and were 26 percent lower than the 1995 fourth quarter prices. March
1996 pulp prices were nearly 40 percent below the peak prices obtained by the
Company during the fourth quarter of 1995. Market pulp prices remain weak early
in the second quarter of 1996. Although the Company's pulp prices have decreased
significantly, the reductions have not been as large as the declines in market
pulp prices due to the Company's pulp supply agreement with Grays Harbor Paper
Company. Sales of pulp to Grays Harbor represented about half of the Company's
first quarter 1996 pulp sales. The Company's agreement with Grays Harbor adjusts
pulp prices based on copy and business printing paper prices which have declined
at a slower rate than market pulp prices. Additionally, modest price increases
have been announced in the copy and business printing paper market which could
have a positive impact on the Company's pulp prices. As discussed for the
Company's Wood Products segment, residual wood chip prices declined dramatically
in the first quarter of 1996. These chip price reductions have helped somewhat
to offset the impact of the falling pulp sales prices. Approximately 45 percent
of the Company's first quarter 1996 pulp sales were produced from softwood
chips, while 45 percent was produced from sawdust and 10 percent from hardwood
chips. During the first quarter of 1996, the Halsey mill operated at
approximately 80 percent of capacity compared to capacity production in the 1995
first quarter. The below-capacity 1996 production related mainly to a market
induced 2-week shutdown taken at the end of the first quarter combined with a
3-day flood-caused shutdown in February.
The Company's tissue business, which represented about 29 percent of 1996 first
quarter revenues, generated a small profit in the first quarter of 1996 compared
to a significant loss in the corresponding 1995 period. This improved
profitability reflected higher tissue prices combined with significantly lower
wastepaper costs. Tissue pricing began to stabilize during 1994 after several
years of decline and, during 1995, the Company benefited from continuously
improving prices throughout the year. First quarter 1996 tissue prices were
essentially flat relative to the fourth quarter of 1995, but were 29 percent
higher than first quarter 1995 prices. Early in the second quarter of 1996,
Procter & Gamble and Kimberly-Clark announced 6 to 8 percent average tissue
price reductions and, as a result, the Company may need to reduce its tissue
prices during 1996. During 1995, wastepaper pricing was pushed to record levels
by a combination of strong pulp markets and shortages of certain wastepaper
grades caused by the start-up of new recycled fiber mills in the United States.
As a result of these pressures, wastepaper prices during 1995 doubled over 1994
pricing although by year-end 1995 wastepaper prices began to decline, consistent
with market pulp prices. This late 1995 decline accelerated into the first
quarter of 1996. First quarter 1996 wastepaper costs were 43 percent below those
in the first quarter 1995 and were 35 percent lower than
7
<PAGE> 9
fourth quarter 1995 prices. During the first quarter 1996, the tissue business
operated at approximately 75 percent of capacity compared to full capacity
operations during the 1995 period. This below-capacity first quarter 1996
production reflected the below-capacity operations of the Company's Ransom,
Pennsylvania tissue mill which represents 50 percent of the Company's tissue
capacity. Late in the fourth quarter of 1995 the Company settled a seven-month
labor strike at the Ransom facility. During the time since the strike
settlement, the Company has been rebuilding business that was lost as a result
of the strike. By the end of the first quarter, Ransom was operating at about 75
percent of capacity.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of 1996, operations used cash of $13.4 million. Income
before non-cash charges for depreciation and amortization generated $8.4 million
of cash. Reductions of accounts payable and accrued liabilities used cash of
$13.3 million. These reductions related mainly to payment of discontinued diaper
business liabilities combined with reductions due to payment timing on other
payables and accruals. Payment of the 1995 Canadian tax liability used $3.8
million cash. Increased inventories related mainly to the seasonal buildup of
Canadian log inventories used $3.9 million cash. Collections of accounts
receivables related primarily to the discontinued diaper operations more than
offset a $3.5 million receivable from the sale of the Port Gamble sawmill
equipment to generate cash of $4.4 million.
On December 11, 1995, the Company entered into a definitive agreement to sell
its disposable diaper business to Paragon Trade Brands, Inc. (Paragon). The sale
of the diaper business was completed on February 8, 1996. During the first
quarter of 1996, the Company received cash related to the sale of $55.3 million
and Paragon common stock valued at $8.2 million. The Company used the cash
received mainly to pay short- and long-term debt obligations. The Company's
investment in Paragon common stock is reflected in the prepaid and other line of
the Consolidated Condensed Balance Sheets.
The Company is presently limiting capital spending, mainly to those projects
required to sustain existing operations. Capital spending for the first quarter
of 1996 was unusually low at $0.7 million and was used for various small,
business-sustaining projects. The Company anticipates that approximately $2
million will be required to complete previously approved projects. It is
anticipated that the capital spending for the remainder of the year will be
financed from internally generated cash and, if necessary, from the Company's
line of credit.
The Company returned $2.5 million to shareholders in the form of dividends in
the first quarter of 1996. Concurrent with the diaper business sale in February
1996, the Company's amount available under its long-term revolving credit
agreement was reduced from $100 million to $75 million. At March 31, 1996, $22.5
million was outstanding under this revolving credit agreement.
8
<PAGE> 10
PART II.
ITEM 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on April 30,
1996. The following members were elected to the Company's Board of
Directors to hold office for three-year terms expiring in 1999.
<TABLE>
<CAPTION>
Nominee In Favor Withheld
------- -------- --------
<S> <C> <C>
Warren E. McCain 8,964,357 (91.5%) 833,961 (8.5%)
Robert Stevens Miller, Jr. 8,967,047 (91.5%) 831,271 (8.5%)
Hugo G. L. Powell 8,959,734 (91.4%) 838,584 (8.6%)
</TABLE>
Additionally, the following directors were elected in previous years
to three-year terms on the Company's Board of Directors and will
continue their terms of office: Gordon P. Andrews, Hamilton W. Budge,
Charles Crocker, Michael Flannery, Peter T. Pope, and Brooks Walker,
Jr.
Shareholders approved the 1996 Non-Employee Director Stock Option
Plan to permit annual stock option grants to non-employee Board
members from the existing authorized share reserve under the
Company's Stock Option and Appreciation Plan. The results of the
voting was as follows:
<TABLE>
<CAPTION>
In Favor Opposed Abstained
-------- ------- ---------
<S> <C> <C>
7,480,689 (88.1%) 940,265 (11.1%) 70,980 (0.8%)
</TABLE>
The results of the voting on the ratification of selection of Arthur
Andersen LLP as independent public accountants was as follows:
<TABLE>
<CAPTION>
In Favor Opposed Abstained
-------- ------- ---------
<S> <C> <C>
9,697,353 (99.0%) 44,387 (0.4%) 55,048 (0.6%)
</TABLE>
Shareholders did not approve a proposal recommending that the Company
adopt a policy of confidential shareholder voting.(1) The results of
voting was as follows:
<TABLE>
<CAPTION>
In Favor Opposed Abstained
-------- ------- ---------
<S> <C> <C>
42,277 (0.4%) 9,750,243 (99.5%) 5,795 (0.1%)
</TABLE>
(1)Proposal submitted by United Food and Commercial Workers
Local 99.
9
<PAGE> 11
ITEM 6. Exhibits and Reports on Form 8-K
Exhibits
--------
2.1 Asset Purchase Agreement by and among Paragon Trade Brands,
Inc., PTB Acquisition Sub, Inc., Pope & Talbot, Inc. and
Pope & Talbot, Wis., Inc. dated December 11, 1995.
(Incorporated herein by reference to Exhibit 2.1 to the
Company's Current Report on Form 8-K filed February 8,
1996.)
3.1 Certificate of Incorporation, as amended. (Incorporated
herein by reference to Exhibit 3(a) to the Company's
Annual Report on Form 10-K for the year ended December 31,
1992.)
3.2 Bylaws. (Incorporated herein by refecence to Exhibit 3(b)
to the Company's Annual Report on Form 10-K for the year
ended December 1992.)
4.1 Indenture, dated June 2, 1993, between the Company and
Chemical Trust Company of California as Trustee with
respect to the Company's 8-3/8% Debentures due 2013.
(Incorporated herein by reference to Exhibit 4.1 to the
Company's registration statement on Form S-3 filed April 6,
1993.)
4.2 Revolving Credit Agreement, dated May 6, 1992, among the
Company and United States National Bank of Oregon; CIBC,
Inc.; ABN AMRO Bank N.V.; Continental Bank N.A.; and
Wachovia Bank of Georgia, National Association.
(Incorporated herein by reference to Exhibit 4 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1992.)
4.3 Rights Agreement, dated as of April 13, 1988, between the
Company and The Bank of California, as rights agent.
(Incorporated herein by reference to Exhibit 4(e) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1992.)
4.4 Extension Agreement, dated as of June 30, 1994, to the
Revolving Credit Agreement, dated May 6, 1992, among the
Company and United States National Bank of Oregon; CIBC,
Inc.; ABN AMRO Bank N.V.; Continental Bank N.A.; and
Wachovia Bank of Georgia, National Association.
(Incorporated herein by reference to Exhibit 4.6 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994.)
4.5 Modification Agreement, dated as of October 31, 1994, to
the Revolving Credit Agreement, dated May 6, 1992, among
the Company and United States National Bank of Oregon;
CIBC, Inc.; ABN AMRO Bank N.V.; Continental Bank N.A.; and
Wachovia Bank of Georgia, National Association.
(Incorporated herein by reference to Exhibit 4.7 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994.)
4.6 Modification Agreement, dated as of December 31, 1994, to
the Revolving Credit Agreement, dated May 6, 1992, among
the Company and United States National Bank of Oregon;
CIBC, Inc.; ABN AMRO Bank N.V.; Continental Bank N.A.; and
Wachovia Bank of Georgia, National Association.
(Incorporated herein by reference to Exhibit 4.8 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994.)
4.7 Extension/Modification Agreement dated as of June 30, 1995,
to the Revolving Credit Agreement, dated May 6, 1992, among
the Company and United States National Bank of Oregon;
CIBC, Inc.; ABN AMRO Bank N.V.; Bank of America Illinois,
fka Continental Bank; and Wachovia Bank of Georgia,
National Association. (Incorporated herein by reference to
Exhibit 4.7 to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995.)
10
<PAGE> 12
4.8 Modification Agreement dated as of October 16, 1995, to the
Revolving Credit Agreement, dated May 6, 1992, among the
Company and United States National Bank of Oregon; CIBC,
Inc.; ABN AMRO Bank N.V.; Bank of America Illinois; and
Wachovia Bank of Georgia, National Association.
(Incorporated herein by reference to Exhibit 4.8 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995.)
4.9 Modification Agreement, dated as of January 22, 1996, to
the Revolving Credit Agreement, dated May 6, 1992, among
the Company and United States National Bank of Oregon; CIBC
Inc.; ABN AMRO Bank N.V.; Bank of America Illinois; and
Wachovia Bank of Georgia, National Association.
(Incorporated herein by reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K filed February 8,
1996.)
10.1 Executive Compensation Plans and Arrangements
---------------------------------------------
10.1.1 Stock Option and Appreciation Plan. (Incorporated herein by
reference to Exhibit 10(a) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992.)
10.1.2 Executive Incentive Plan. (Incorporated herein by reference
to Exhibit 10(b) to the Company's Annual Report on Form
10-K for the year ended December 31, 1992.)
10.1.3 Restricted Stock Bonus Plan. (Incorporated herein by
reference to Exhibit 10(c) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992.)
10.1.4 Deferral Election Plan. (Incorporated herein by reference
to Exhibit 10(d) to the Company's Annual Report on Form
10-K for the year ended December 31, 1992.)
10.1.5 Supplemental Executive Retirement Income Plan.
(Incorporated herein by reference to Exhibit 10(e) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1990.)
10.1.6 Form of Severance Pay Agreement among the Company and
certain of its executive officers. (Incorporated herein by
reference to Exhibit 10(f) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1990.)
10.1.7 1996 Non-Employee Director Stock Option Plan.
10.2 Lease agreement between the Company and Pope Resources,
dated December 20, 1985, for Port Gamble, Washington
sawmill site. (Incorporated herein by reference to Exhibit
10(g) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1990.)
10.3 Lease agreement between the Company and Shenandoah
Development Group, Ltd., dated March 14, 1988, for Atlanta
diaper mill site as amended September 1, 1988 and August
30, 1989. (Incorporated herein by reference to Exhibit
10(h) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1990.)
11
<PAGE> 13
10.4 Lease agreement between the Company and Shenandoah
Development Group, Ltd., dated July 31, 1989, for
additional facilities at Atlanta diaper mill as amended
August 30, 1989 and February 1990. (Incorporated herein by
reference to Exhibit 10(i) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1990.)
10.5 Grays Harbor Paper L.P. Amended and Restated Pulp Sales
Supply Contract, dated September 28, 1994 (with certain
confidential information deleted). (Incorporated herein by
reference to Exhibit 10(j) to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1994.)
11.1 Statement showing computation of per share earnings.
27.1 Financial Data Schedule.
The undersigned registrant hereby undertakes to file with the
Commission a copy of any agreement not filed under exhibit item (4)
above on the basis of the exemption set forth in the Commission's
rules and regulations.
Reports on Form 8-K
-------------------
A Current Report on Form 8-K was filed on February 8, 1996 reporting
the completion of the sale of the Company's disposable diaper
business to Paragon Trade Brands, Inc.
12
<PAGE> 14
POPE & TALBOT, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
POPE & TALBOT, INC.
-------------------
Registrant
Date: May 15, 1996 \s\ C. Lamadrid
------------------------
C. Lamadrid
Senior Vice President and
Chief Financial Officer
<PAGE> 1
Exhibit 10.1.7
POPE & TALBOT, INC.
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
I. PURPOSE OF THE PLAN
This 1996 Non-Employee Director Stock Option Plan (the "Plan")
is intended to promote the interests of Pope & Talbot, Inc., a Delaware
corporation (the "Corporation"), by providing the non-employee members of the
Corporation's Board of Directors with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Corporation
as an incentive for them to remain in the service of the Corporation.
II. DEFINITIONS
For purposes of the Plan, the following definitions shall be
in effect:
BOARD: the Corporation's Board of Directors.
CODE: the Internal Revenue Code of 1986, as amended.
COMMON STOCK: shares of the Corporation's common stock.
CORPORATE TRANSACTION: any of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which the Corporation
is not the surviving entity, except for a transaction the principal
purpose of which is to change the State in which the Corporation is
incorporated,
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation, or
(iii) any reverse merger in which the Corporation is
the surviving entity but in which securities possessing more than
fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to person or
persons different from the persons holding those securities
immediately prior to such merger.
DOMESTIC RELATIONS ORDER: any judgment, decree or order
(including approval of a property settlement agreement) which provides or
otherwise conveys, pursuant to applicable
<PAGE> 2
State domestic relations laws (including community property laws), marital
property rights to any spouse or former spouse of an Optionee.
EFFECTIVE DATE: The date of the 1996 Annual Stockholders
Meeting, provided the Plan is approved by the affirmative vote of a majority of
the outstanding shares of the Corporation's common stock present or represented
and entitled to vote at that Annual Meeting.
ELIGIBLE DIRECTORS: those individuals who are serving as
non-employee Board members on the Effective Date and those individuals who first
become non-employee Board members after such Effective Date, whether through
appointment by the Board or election by the Corporation's stockholders.
FAIR MARKET VALUE: the Fair Market Value per share of Common
Stock determined in accordance with the following provisions:
a. If the Common Stock is at the time listed or
admitted to trading on the New York Stock Exchange or on any other
national securities exchange, then the Fair Market Value shall be the
closing selling price per share on the date immediately prior to the
date in question on the exchange serving as the primary market for the
Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no reported sale of
Common Stock on such exchange on the date immediately prior to the
date in question, then the Fair Market Value shall be the closing
selling price on the exchange on the last preceding date for which
such quotation exists.
b. If the Common Stock is not at the time listed or
admitted to trading on any national securities exchange but is traded
on the Nasdaq National Market, the Fair Market Value shall be the
closing selling price per share on the date immediately prior to the
date in question, as such price is reported by the National
Association of Securities Dealers on the Nasdaq National Market or any
successor system. If there is no reported closing selling price for
the Common Stock on the date immediately prior to the date in
question, then the closing selling price on the last preceding date
for which such quotation exists shall be determinative of Fair Market
Value.
1934 ACT: the Securities Exchange Act of 1934, as amended.
1981 PLAN: the Corporation's 1981 Stock Option and
Appreciation Plan, as amended and restated from time to time.
OPTIONEE: any person to whom an option is granted under the
Plan.
2.
<PAGE> 3
QUALIFIED DOMESTIC RELATIONS ORDER: a Domestic Relations Order
which substantially complies with the requirements of Code Section 414(p).
III. ADMINISTRATION OF THE PLAN
The terms and conditions of each automatic option grant
(including the timing and pricing of the option grant) shall be determined by
the express terms and conditions of the Plan, and neither the Board nor any
committee of the Board shall exercise any discretionary functions with respect
to option grants made pursuant to the Plan.
IV. STOCK SUBJECT TO THE PLAN
A. Shares of the Corporation's Common Stock shall be available
for issuance under the Plan and shall be drawn from either the Corporation's
authorized but unissued shares of Common Stock or from reacquired shares of
Common Stock, including shares repurchased by the Corporation on the open
market. The maximum number of shares of Common Stock issuable under this Plan
and the 1981 Plan shall not exceed 1,700,000 shares(1) in the aggregate, subject
to adjustment from time to time in accordance with the provisions of this
Article IV.
B. Should one or more outstanding options under this Plan or
the 1981 Plan expire or terminate for any reason prior to exercise in full, then
the shares subject to the portion of each option not so exercised shall be
available for subsequent option grants under this Plan or the 1981 Plan.
However, should the exercise price of an outstanding option under the Plan be
paid with shares of Common Stock, then the number of shares of Common Stock
available for issuance under this Plan and the 1981 Plan shall be reduced by the
gross number of shares for which the option is exercised, and not by the net
number of shares of Common Stock actually issued to the holder of such option.
C. Should any change be made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, then the Board shall make appropriate adjustments to (i) the
maximum number and/or class of securities issuable in the aggregate under this
Plan and the 1981 Plan, (ii) the number and/or class of securities for which
automatic option grants are to be subsequently made per each newly-elected or
continuing non-employee Board member under the Plan, and (iii) the number and/or
class of securities and price per share in effect for each option outstanding
under the Plan. Such adjustments to the outstanding options are to be effected
in a
- --------
(1)The total number of shares of Common Stock available for issuance in the
aggregate under this Plan and the 1981 Plan after January 31, 1996 shall be
limited to _________ shares, subject to periodic adjustment under Section IV.C.
3.
<PAGE> 4
manner which shall preclude the enlargement or dilution of rights and benefits
under such options. The adjustments determined by the Board shall be final,
binding and conclusive.
V. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Date. Option grants shall be made on the dates
specified below:
1. Each individual who is serving as an Eligible Director
on the Effective Date shall automatically be granted on that date a
non-statutory option to purchase 2,000 shares of Common Stock,
provided such individual has not previously been in the employ of the
Corporation (or any subsidiary).
2. Each individual who first becomes an Eligible Director
after the Effective Date, whether through election by the
Corporation's stockholders or appointment by the Board, shall
automatically be granted, at the time of such initial election or
appointment, a non-statutory option to purchase 2,000 shares of Common
Stock, provided such individual has not previously been in the employ
of the Corporation (or any subsidiary corporation).
3. At every Annual Stockholders Meeting, beginning with the
1997 Annual Meeting, each individual who is to continue to serve as a
non-employee Board member, whether or not such individual is standing
for re-election as a Board member at that Annual Meeting, shall
automatically be granted a non-statutory option to purchase 1,000
shares of Common Stock, provided such individual has served as a
director for at least six (6) months. There shall be no limit on the
number of such 1,000-share option grants any one non-employee Board
member may receive over his or her period of Board service, and
non-employee Board members who have previously been in the employ of
the Corporation (or any subsidiary) shall be eligible to receive such
annual option grants.
B. Exercise Price. The exercise price per share of Common Stock
subject to each automatic option grant shall be equal to one hundred percent
(100%) of the Fair Market Value per share of Common Stock on the automatic grant
date.
C. Payment.
The exercise price shall become immediately due upon exercise
of the option and shall be payable in one or more of the forms specified below:
(i) cash or check made payable to the Corporation's order;
or
4.
<PAGE> 5
(ii) shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for
financial- reporting purposes and valued at Fair Market Value on the
Exercise Date (as such term is defined below); or
(iii) payment through a broker-dealer sale and remittance
procedure pursuant to which the non-employee Board member (I) shall
provide irrevocable written instructions to a Corporation-designated
brokerage firm to effect the immediate sale of the purchased shares
and remit to the Corporation, out of the sale proceeds available on
the settlement date, sufficient funds to cover the aggregate exercise
price payable for the purchased shares and (II) shall concurrently
provide written directives to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm
in order to complete the sale transaction.
For purposes of this Section V.C, the Exercise Date shall be the
date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure specified
above is utilized in connection with the exercise of the option, payment of the
option exercise price for the purchased shares must accompany the exercise
notice.
D. Option Term. Each automatic grant under the Plan shall have a
maximum term of ten (10) years measured from the automatic grant date.
E. Exercisability. Each automatic grant shall be immediately
exercisable for any or all of the option shares as fully vested shares.
F. Limited Transferability of Options. During Optionee's
lifetime, the option may be exercised only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death. However, an option may be assigned
in whole or in part pursuant to the terms of a Qualified Domestic Relations
Order. The assigned portion may only be exercised by the person or persons who
acquire a proprietary interest in the option pursuant to such order. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Corporation may deem appropriate.
G. Effect of Termination of Board Service.
1. Should the Optionee cease for any reason to serve as a
Board member while holding one or more automatic option grants under the Plan,
then such individual shall have a twelve (12)-month period following the date of
such cessation of Board service in
5.
<PAGE> 6
which to exercise each such option for any or all of the option shares at the
time subject to that option.
2. Should the Optionee die while in Board service or within
twelve (12) months after cessation of Board service, then any
automatic option grant held by the Optionee at the time of death may
subsequently be exercised, for any or all of the option shares at the
time subject to that option, by the personal representative of the
Optionee's estate or by the person or persons to whom the option is
transferred pursuant to the Optionee's will or in accordance with the
laws of descent and distribution. The right to exercise each such
option shall lapse upon the expiration of the twelve (12)-month period
measured from the date of the Optionee's cessation of Board service.
3. In no event shall any automatic grant remain
exercisable after the expiration date of the ten (10)-year option
term. Upon the expiration of the applicable post-service exercise
period under subparagraphs 1 through 3 above or (if earlier) upon the
expiration of the ten (10)-year option term, the automatic grant
shall terminate and cease to be outstanding with respect to all
remaining option shares.
H. Stockholder Rights. The holder of an automatic option grant
shall have no stockholder rights with respect to any shares subject to such
option until such individual shall have exercised the option and paid the
exercise price for the purchased shares.
I. Remaining Terms. The remaining terms and conditions of each
automatic option grant shall be as set forth in the form of Automatic Stock
Option Agreement attached as Exhibit A.
VI. CORPORATE TRANSACTION
A. Immediately following the consummation of any Corporate
Transaction, each automatic option grant under the Plan shall terminate and
cease to be outstanding, except to the extent such grant is assumed by the
successor entity or its parent corporation.
B. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in the consummation of such Corporate Transaction,
had the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same.
6.
<PAGE> 7
C. The automatic option grants outstanding under the Plan
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
VII. AMENDMENT OF THE PLAN AND AWARDS
The Board has complete and exclusive power and authority to
amend or modify the Plan in any or all respects whatsoever. However, (i) the
Plan, together with the option grants outstanding under the Plan, may not be
amended at intervals more frequently than once every six (6) months, other than
to the extent necessary to comply with applicable Federal income tax laws and
regulations, and (ii) no such amendment or modification shall adversely affect
rights and obligations with respect to options at the time outstanding under the
Plan, unless the affected Optionees consent to such amendment. In addition, the
Board may not, without the approval of the Corporation's stockholders, amend the
Plan to (i) materially increase the maximum number of shares issuable in the
aggregate under this Plan and the 1981 Plan or the number of shares issuable per
newly-elected or continuing non-employee Board member, except for permissible
adjustments under Section IV.B., (ii) materially modify the eligibility
requirements for plan participation or (iii) materially increase the benefits
accruing to plan participants.
VIII. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan shall be effective on the date of the 1996 Annual
Stockholders Meeting, provided the Plan is approved by the affirmative vote of a
majority of the outstanding shares of the Corporation's common stock present or
represented and entitled to vote at such Annual Meeting, and the initial
automatic option grants under the Plan shall be made on such date. If such
stockholder approval is not obtained, then the Plan shall terminate and no
options shall be granted under the Plan.
B. If the Plan is approved by the stockholders at the 1996
Annual Meeting, then the Plan shall remain in effect until the earlier of (i)
December 31, 2005 or (ii) the date on which all shares available for issuance
under this Plan and the 1981 Plan shall have been issued pursuant to the
exercise of outstanding options. If the date of plan termination is determined
under clause (i) above, then all option grants outstanding on such date shall
thereafter continue to have force and effect in accordance with the provisions
of the instruments evidencing those grants.
IX. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares pursuant to option grants or share issuances under the Plan shall be used
for general corporate purposes
7.
<PAGE> 8
X. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option
under the Plan and the issuance of Common Stock upon the exercise of the option
grants made hereunder shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options granted under it, and the Common Stock issued
pursuant to it.
B. No shares of Common Stock or other assets shall be issued
or delivered under this Plan unless and until there shall have been compliance
with all applicable requirements of Federal and state securities laws, including
the filing and effectiveness of the Form S-8 registration statement for the
shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any securities exchange on which the Common Stock is then listed
for trading.
XI. NO IMPAIRMENT OF RIGHTS
Neither the action of the Corporation in establishing the Plan
nor any provision of the Plan shall be construed or interpreted so as to affect
adversely or otherwise impair the right of the Corporation or the stockholders
to remove any individual from the Board at any time in accordance with the
provisions of applicable law.
XII. MISCELLANEOUS PROVISIONS
A. The right to acquire Common Stock or other assets under the
Plan may not be assigned, encumbered or otherwise transferred by any Optionee.
B. The provisions of the Plan relating to the exercise of the
outstanding options shall be governed by the laws of the State of Oregon, as
such laws are applied to contracts entered into and performed in such State.
C. The provisions of the Plan shall inure to the benefit of,
and be binding upon, the Corporation and its successors or assigns, and the
Optionees, the legal representatives of their respective estates, their
respective heirs or legatees and their permitted assignees.
8.
<PAGE> 9
EXHIBIT A
FORM OF AUTOMATIC STOCK OPTION AGREEMENT
<PAGE> 10
INITIAL GRANT
POPE & TALBOT, INC.
NOTICE OF GRANT OF NON-EMPLOYEE DIRECTOR
AUTOMATIC STOCK OPTION
Notice is hereby given of the following option grant (the
"Option") to purchase shares of the Common Stock of Pope & Talbot, Inc. (the
"Corporation"):
Optionee:
-------------------------------------------------------
Grant Date:
-----------------------------------------------------
Exercise Price: $ per share
-------------------
Number of Option Shares: 2,000 shares
Expiration Date:
------------------------------------------------
Type of Option: Non-Statutory Stock Option
Date Exercisable: Immediately Exercisable
Vesting Schedule: The Option Shares shall be fully vested upon
issuance.
Optionee understands and agrees that the Option is granted
subject to and in accordance with the terms of the automatic option grant
program under the Pope & Talbot, Inc. 1996 Non-Employee Director Stock Option
Plan (the "Plan"). Optionee further agrees to be bound by the terms of the Plan
and the terms of the Option as set forth in the Automatic Stock Option Agreement
attached hereto as Exhibit A.
Optionee hereby acknowledges receipt of a copy of the official
prospectus for the Plan in the form attached hereto as Exhibit B. A copy of the
Plan is available upon request made to the Corporate Secretary at the
Corporation's principal offices.
No Impairment of Rights. Nothing in this Notice or the attached
Automatic Stock Option Agreement or in the Plan shall interfere with or
otherwise restrict in any way the rights of the Corporation or the Corporation's
stockholders to remove Optionee from the Board at any time in accordance with
the provisions of applicable law.
<PAGE> 11
Definitions. All capitalized terms in this Notice shall have the
meaning assigned to them in this Notice or in the attached Automatic Stock
Option Agreement.
, 199
- ----------------------- --
Date
POPE & TALBOT, INC.
By:
--------------------------------
Title:
-----------------------------
------------------------------------
OPTIONEE
Address:
---------------------------
------------------------------------
ATTACHMENTS
EXHIBIT A - AUTOMATIC STOCK OPTION AGREEMENT
EXHIBIT B - PLAN SUMMARY AND PROSPECTUS
2.
<PAGE> 12
ANNUAL GRANT
POPE & TALBOT, INC.
NOTICE OF GRANT OF NON-EMPLOYEE DIRECTOR
AUTOMATIC STOCK OPTION
Notice is hereby given of the following option grant (the
"Option") to purchase shares of the Common Stock of Pope & Talbot, Inc. (the
"Corporation"):
Optionee:
-------------------------------------------------------
Grant Date:
-----------------------------------------------------
Exercise Price: $ per share
-------------------
Number of Option Shares: 1,000 shares
Expiration Date:
------------------------------------------------
Type of Option: Non-Statutory Stock Option
Date Exercisable: Immediately Exercisable
Vesting Schedule: The Option Shares shall be fully vested upon
issuance.
Optionee understands and agrees that the Option is granted
subject to and in accordance with the terms of the automatic option grant
program under the Pope & Talbot, Inc. 1996 Non-Employee Director Stock Option
Plan (the "Plan"). Optionee further agrees to be bound by the terms of the Plan
and the terms of the Option as set forth in the Automatic Stock Option Agreement
attached hereto as Exhibit A.
Optionee hereby acknowledges receipt of a copy of the official
prospectus for the Plan in the form attached hereto as Exhibit B. A copy of the
Plan is available upon request made to the Corporate Secretary at the
Corporation's principal offices.
No Impairment of Rights. Nothing in this Notice or the attached
Automatic Stock Option Agreement or in the Plan shall interfere with or
otherwise restrict in any way the rights of the Corporation or the Corporation's
stockholders to remove Optionee from the Board at any time in accordance with
the provisions of applicable law.
<PAGE> 13
Definitions. All capitalized terms in this Notice shall have the
meaning assigned to them in this Notice or in the attached Automatic Stock
Option Agreement.
, 199
- ----------------------- --
Date
POPE & TALBOT, INC.
By:
--------------------------------
Title:
-----------------------------
------------------------------------
OPTIONEE
Address:
---------------------------
------------------------------------
ATTACHMENTS
EXHIBIT A - AUTOMATIC STOCK OPTION AGREEMENT
EXHIBIT B - PLAN SUMMARY AND PROSPECTUS
2.
<PAGE> 14
POPE & TALBOT, INC.
AUTOMATIC STOCK OPTION AGREEMENT
RECITALS
A. The Corporation has implemented an automatic option grant
program under the Corporation's 1996 Non-Employee Director Stock Option Plan
(the "Plan") pursuant to which eligible non-employee members of the
Corporation's Board of Directors (the "Board") will automatically receive
special option grants at periodic intervals over their period of Board service
in order to provide such individuals with a meaningful incentive to continue to
serve as a member of the Board.
B. Optionee is an eligible non-employee Board member, and this
Agreement is executed pursuant to, and is intended to carry out the purposes of,
the Plan in connection with the automatic grant of a stock option to purchase
shares of the Corporation's common stock ("Common Stock") under the Plan.
C. The granted option is intended to be a non-statutory option
which does not meet the requirements of Section 422 of the Internal Revenue
Code.
D. All capitalized terms in this Agreement, to the extent not
otherwise defined in the Agreement, shall have the meaning assigned to them in
the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as
of the Grant Date, a Non-Statutory Option to purchase up to the number of Option
Shares specified in the Grant Notice. The Option Shares shall be purchasable
from time to time during the option term specified in Paragraph 2 at the
Exercise Price.
2. OPTION TERM. This option shall have a maximum term of ten (10)
years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. LIMITED TRANSFERABILITY. This option shall be neither
transferable nor assignable by Optionee, other than a transfer of this option
effected by will or by the laws of descent and distribution following Optionee's
death, and may be exercised, during Optionee's lifetime, only by Optionee.
However, this option may also be assigned in whole or in part during Optionee's
lifetime in accordance with the terms of a Qualified Domestic Relations
<PAGE> 15
Order. The assigned portion of the option shall be exercisable only by the
person or persons who acquire a proprietary interest in the option pursuant to
such Qualified Domestic Relations Order. The terms applicable to the assigned
portion shall be the same as those in effect for this option immediately prior
to such assignment and shall be set forth in such documents issued to the
assignee as the Corporation may deem appropriate.
4. EXERCISABILITY/VESTING. This option shall be immediately
exercisable for any or all of the Option Shares as fully-vested shares and shall
remain so exercisable until the Expiration Date or the sooner termination of the
option term under Paragraph 5 or 6.
5. CESSATION OF BOARD SERVICE. Should Optionee's service as a
Board member cease while this option remains outstanding, then the option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date in accordance with the following
provisions:
- Should Optionee cease to serve as a Board member for any reason
(other than death) while holding this option, then the period for
exercising this option shall be reduced to a twelve (12)-month period
commencing with the date of such cessation of Board service, but in no
event shall this option be exercisable at any time after the
Expiration Date.
- Should Optionee die while in Board service or during the twelve
(12)-month period following his or her cessation of Board service,
then the personal representative of Optionee's estate or the person or
persons to whom the option is transferred pursuant to Optionee's will
or in accordance with the laws of descent and distribution shall have
the right to exercise this option for any or all of the Option Shares
at the time subject to this option. Such right shall terminate, and
this option shall accordingly cease to be exercisable for such Option
Shares, upon the earlier of (A) the expiration of the twelve (12)-
month period measured from the date of Optionee's cessation of Board
service or (B) the specified Expiration Date of the option term.
6. CORPORATE TRANSACTION.
A. Immediately following the consummation of a Corporate
Transaction, this option shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation or its
parent company.
B. If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted,
immediately after such Corporate Transaction, to apply to the number
and class of securities which would have been issuable to Optionee in
consummation of such Corporate Transaction had the option been
exercised immediately prior to such Corporate Transaction, and
appropriate adjustments shall also be made to the Exercise Price,
provided the aggregate Exercise Price shall remain the same.
2.
<PAGE> 16
7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder; provided, however, that the aggregate Exercise Price shall
remain the same.
8. STOCKHOLDER RIGHTS. The holder of this option shall not have
any stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
9. MANNER OF EXERCISING OPTION.
A. In order to exercise this option for all or any part of the
Option Shares for which the option is at the time exercisable, Optionee (or in
the case of exercise after Optionee's death, Optionee's executor, administrator,
heir or legatee, as the case may be) must take the following actions:
(i) The Secretary of the Corporation shall be provided with
written notice of the option exercise (the "Exercise Notice"), in
substantially the form of Exhibit I attached hereto, in which there is
specified the number of Option Shares to be purchased under the
exercised option.
(ii) The aggregate Exercise Price for the purchased shares
shall be paid in one or more of the following alternative forms:
- payment in cash or check made payable to the
Corporation's order; or
- payment in shares of Common Stock held by Optionee (or
any other person or persons exercising the option) for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date; or
- payment effected through a broker-dealer sale and
remittance procedure pursuant to which Optionee shall provide
irrevocable written instructions (A) to a Corporation-designated
brokerage firm to effect the immediate sale of the shares purchased
under the option and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate Exercise Price payable for those shares plus the
applicable Federal, State and local income taxes required to be
withheld by the Corporation by reason of such exercise and (B) to the
Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale.
3.
<PAGE> 17
(iii) Appropriate documentation evidencing the right to
exercise this option shall be furnished the Corporation if the person
or persons exercising the option is other than the Optionee.
(iv) Appropriate arrangement must be made with the
Corporation for the satisfaction of all Federal, State and local
income tax withholding requirements applicable to the option exercise.
B. Except to the extent the sale and remittance procedure
specified above is utilized in connection with the exercise of the option for
vested shares, payment of the Exercise Price for the purchased shares must
accompany the Exercise Notice delivered to the Corporation in connection with
the option exercise.
C. As soon as practical after the Exercise Date, the Corporation
shall issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate or certificates representing the purchased
Option Shares.
D. In no event may this option be exercised for any fractional
shares.
10. NO IMPAIRMENT OF RIGHTS. This Agreement shall not in any way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets. Nor shall this Agreement in any way be construed or
interpreted so as to affect adversely or otherwise impair the right of the
Corporation or the stockholders to remove Optionee from the Board at any time in
accordance with the provisions of applicable law.
11. COMPLIANCE WITH LAWS AND REGULATIONS.
A. The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of the New York Stock Exchange.
B. The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
However, the Corporation shall use its best efforts to obtain all such
applicable approvals.
12. SUCCESSORS AND ASSIGNS. Except to the extent otherwise
provided in Paragraph 3 or 6, the provisions of this Agreement shall inure to
the benefit of, and be binding
4.
<PAGE> 18
upon, the Corporation and its successors and assigns and Optionee, Optionee's
assigns and the legal representatives, heirs and legatees of Optionee's estate.
13. CONSTRUCTION/GOVERNING LAW. This Agreement and the option
evidenced hereby are made and granted pursuant to the Plan and are in all
respects limited by and subject to the express terms and provisions of the Plan.
The interpretation, performance, and enforcement of this Agreement shall be
governed by the laws of the State of Oregon without resort to that State's
conflict-of-laws rules.
14. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
5.
<PAGE> 19
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Pope & Talbot, Inc. (the "Corporation") that I
elect to purchase _______ shares of the Corporation's Common Stock (the
"Purchased Shares") at the option exercise price of $ ______ per share (the
"Exercise Price") pursuant to that certain option (the "Option") granted to me
under the Corporation's 1996 Non-Employee Director Stock Option Plan on
_______________ , 199__.
Concurrently with the delivery of this Exercise Notice to the
Secretary of the Corporation, I shall hereby pay to the Corporation the Exercise
Price for the Purchased Shares in accordance with the provisions of my agreement
with the Corporation evidencing the Option and shall deliver whatever additional
documents may be required by such agreement as a condition for exercise.
Alternatively, I may utilize the special broker/dealer sale and remittance
procedure specified in my agreement to effect payment of the Exercise Price for
any Purchased Shares.
___________________________ _______________________________________
Date Optionee
Address: _______________________________________
_______________________________________
Print name in exact manner
it is to appear on the
stock certificate: _______________________________________
Address to which certificate
is to be sent, if different
from address above: _______________________________________
_______________________________________
Social Security Number: _______________________________________
<PAGE> 20
APPENDIX
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Automatic Stock Option Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
D. COMMON STOCK shall mean the Corporation's common stock.
E. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
- a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of
which is to change the State in which the Corporation is incorporated,
- the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution
of the Corporation, or
- any reverse merger in which the Corporation is the surviving
entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to person or persons different
from the persons holding those securities immediately prior to such
merger.
F. CORPORATION shall mean Pope & Talbot, Inc., a Delaware corporation.
G. DOMESTIC RELATIONS ORDER shall mean any judgment, decree or order
(including approval of a property settlement agreement) which provides or
otherwise conveys, pursuant to applicable State domestic relations laws
(including community property laws), marital property rights to any spouse or
former spouse of the Optionee.
H. EXERCISE DATE shall mean the date on which the option shall have
been exercised in accordance with Paragraph 10 of the Agreement.
I. EXERCISE PRICE shall mean the exercise price payable per share as
specified in the Grant Notice.
J. EXPIRATION DATE shall mean the date on which the option term
expires as specified in the Grant Notice.
A-1
<PAGE> 21
K. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be the closing selling price per share of Common Stock on the date
immediately preceding the date in question on the New York Stock Exchange, as
such price is officially quoted on the composite tape of transactions on such
exchange.
L. GRANT DATE shall mean the date of grant of the option as specified
in the Grant Notice.
M. GRANT NOTICE shall mean the Notice of Grant of Automatic Stock
Option accompanying the Agreement, pursuant to which Optionee has been informed
of the basic terms of the option evidenced hereby.
N. 1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.
O. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.
P. OPTION SHARES shall mean the number of shares of Common Stock
subject to the option.
Q. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.
R. PLAN shall mean the Corporation's 1996 Non-Employee Director Stock
Option Plan.
S. QUALIFIED DOMESTIC RELATIONS ORDER shall mean a Domestic Relations
Order which substantially complies with the requirements of Code Section 414(p).
The Plan Administrator shall have the sole discretion to determine whether a
Domestic Relations Order is a Qualified Domestic Relations Order.
A-2
<PAGE> 1
Exhibit 11.1
POPE & TALBOT, INC.
STATEMENT SHOWING CALCULATION OF AVERAGE
COMMON SHARES OUTSTANDING AND EARNINGS
PER AVERAGE COMMON SHARE
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1996 1995
---- ----
<S> <C> <C>
Weighted average number
of common shares
outstanding 13,363,779 13,362,729
Application of the "treasury
stock" method to the stock
option plan - 9,632
----------- -----------
Total common and common
equivalent shares,
assuming full dilution 13,363,779 13,372,361
=========== ===========
Net income (loss) $ 345,000 $(1,234,000)
=========== ===========
Net income (loss) per common share,
assuming full dilution $ .03 $ (.09)
=========== ===========
</TABLE>
The computation of primary net income (loss) per common share is not included
because the computation can be clearly determined from the material contained in
this report.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE POPE &
TALBOT, INC. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FOR THE QUARTERLY
PERIOD ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,417
<SECURITIES> 0
<RECEIVABLES> 44,626
<ALLOWANCES> 0
<INVENTORY> 72,856
<CURRENT-ASSETS> 148,922
<PP&E> 458,622
<DEPRECIATION> 239,792
<TOTAL-ASSETS> 405,254
<CURRENT-LIABILITIES> 58,335
<BONDS> 128,402
0
0
<COMMON> 13,972
<OTHER-SE> 173,805
<TOTAL-LIABILITY-AND-EQUITY> 405,254
<SALES> 110,682
<TOTAL-REVENUES> 110,682
<CGS> 107,936
<TOTAL-COSTS> 107,936
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,537
<INCOME-PRETAX> (4,609)
<INCOME-TAX> (1,844)
<INCOME-CONTINUING> (2,765)
<DISCONTINUED> 3,110
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 345
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
