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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
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 number 1-8247
MANVILLE CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 84-0856796
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
717 17TH STREET, DENVER, COLORADO 80202
(Address of principal executive offices) (Zip Code)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (303) 978-2000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
Common Stock ($.01 par value) New York Stock Exchange, Inc.
Cumulative Preference Stock, Series B ($1.00 par value) New York Stock Exchange, Inc.
Warrants for the Purchase of Common Stock New York Stock Exchange, Inc.
9% Interest Deferred Sinking Fund Debentures New York Stock Exchange, Inc.
</TABLE>
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Indicate by check mark 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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Yes X No
--- ---
Based solely on the New York Stock Exchange, Inc. closing price as of March 15,
1995, the aggregate market value of the common stock held by non-affiliates of
the registrant was approximately $232,216,119.
As of March 15, 1995, there were 122,921,999 shares of the registrant's sole
class of common stock outstanding.
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Documents Incorporated by Reference.
The following documents or portions thereof filed with the Securities and
Exchange Commission are incorporated herein by reference:
The Selected Six-year Financial Data, Management's Discussion and
Analysis of Financial Condition and Results of Operations and Financial
Statements and Selected Quarterly Financial Data contained in
Supplementary Data of the Company's 1994 Annual Report as
securityholders are incorporated by reference into Parts II and IV of
this report.
The sections "Election of Directors," "Executive
Compensation--Compensation Summary, --Aggregated Option/SAR Exercises
in Last Fiscal Year and Year-End Option/SAR Values, --Long-Term
Incentive Plans-Awards in Last Fiscal Year, --Pension Plan,
--Employment Agreements and other Arrangements, and --Compensation
Committee Interlocks," and "Security Ownership of Certain Beneficial
Owners and Management" contained in the Company's 1995 Proxy Statement
to be filed pursuant to Regulation 14A are incorporated by reference
into Part III of this report.
The Annual Report to securityholders and Proxy Statement, except for portions
thereof that have been specifically incorporated by reference, shall not be
deemed filed as part of this Annual Report on Form 10-K.
(ii)
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TABLE OF CONTENTS TO FORM 10-K
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PART I
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ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Significant Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Riverwood International Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Schuller International Group, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Stillwater Mining Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Research and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Environmental Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Headquarters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Manufacturing and Development Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Timber Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Relationship With Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Plan of Reorganization and Related Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Environmental Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . 19
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
The "Company" when used in this Form 10-K refers to Manville Corporation,
incorporated in the State of Delaware in 1981, including, where applicable, its
consolidated subsidiaries. "Manville" refers solely to Manville Corporation,
excluding its subsidiaries. "Riverwood" when used in this Form 10-K refers to
Riverwood International Corporation, including, where applicable, its
consolidated subsidiaries. "Schuller" when used in this Form 10-K refers to
Schuller International Group, Inc., including, where applicable, its
consolidated subsidiaries.
(iii)
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PART I
ITEM 1. BUSINESS
INTRODUCTION
Manville Corporation is an international holding company with two
principal operating subsidiaries, Riverwood International Corporation and
Schuller International Group, Inc. Manville was incorporated in Delaware in
1981 to continue businesses begun by its predecessors in 1858.
Riverwood is an international paperboard, packaging and packaging
machinery company, with 1994 sales of approximately $1.3 billion. Riverwood
produces and markets coated unbleached kraft paperboard ("CUK Board"),
packaging products, such as beverage carriers and folding cartons,
containerboard, such as kraft paper and linerboard, corrugated containers,
lumber and plywood. Riverwood also designs, manufactures and installs
packaging machines for its customers. Manville owns approximately 81.5 percent
of Riverwood's outstanding capital stock. The operations of Riverwood are
organized into three business segments: Coated Board System, Containerboard
and U.S. Timberlands/Wood Products.
Schuller is a leading manufacturer of insulation and building
products, with 1994 sales of approximately $1.3 billion. Schuller produces and
markets insulation products for buildings and equipment, commercial roofing
systems, high efficiency air filtration media and fibers and nonwoven mats used
as reinforcements in building and industrial applications. Schuller is a
wholly owned subsidiary of Manville. The operations of Schuller are organized
into two principal business segments: Building Products and Engineered
Products.
In addition, Manville owns approximately 27 percent of the outstanding
capital stock of Stillwater Mining Company ("Stillwater"), which is engaged in
the exploration, development, mining and production of platinum, palladium and
associated metals in southern Montana.
SIGNIFICANT DEVELOPMENTS
EXCHANGE OF ROOFING BUSINESSES. In January 1994, Schuller acquired
the commercial and industrial roofing business of Owens-Corning Fiberglass
Corporation ("OCF") while simultaneously selling to OCF Schuller's residential
roofing business.
RIVERWOOD PUBLIC OFFERING OF NOTES. In June 1994, Riverwood completed
a public offering of $100 million of 10 3/8% Senior Subordinated Notes due June
30, 2004 (the "10 3/8% Notes") and entered into a bank credit facility that
provides for borrowings of up to $125 million at an initial variable interest
rate equal to 1.875 percent over LIBOR. Riverwood borrowed $100 million under
the bank credit facility and used such amount, together with the proceeds of
the 10 3/8% Notes, to prepay approximately $179 million principal amount of
notes payable to insurance companies and banks, to prepay related accrued
interest and to pay expenses of the refinancing. Borrowings under the bank
credit facility are collateralized by substantially all of the fixed assets of
Riverwood's Macon, Georgia mill, which were previously collateral for the notes
repaid.
MACON MILL CONVERSION. In the third quarter of 1994, Riverwood
completed the conversion of one of the two linerboard machines at its Macon,
Georgia mill to CUK Board production. Approximately 80,200 tons of CUK Board
were produced at Riverwood's Macon mill in 1994.
BONDS PREPAYMENT. In September 1994, the Company prepaid $343 million
of its bond obligations, including accrued interest thereon, to Manville
Personal Injury Settlement Trust (the "Trust") with the exchange of $379
million principal amount of 10 3/8% Senior Notes due 2004 ("Senior Notes") of
Schuller. The Senior Notes were issued by Schuller to Manville as part of a
$400 million dividend of Senior Notes.
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STILLWATER REDEMPTION. In September 1994, Stillwater, which was at
that time a 50 percent owned subsidiary of the Company, redeemed the 50 percent
ownership interest of Chevron U.S.A. Inc. ("Chevron"). The funding for the
redemption was raised in a private placement of shares of Stillwater's common
stock representing a 50 percent ownership interest in Stillwater and certain
subordinated notes.
SCHULLER INITIAL PUBLIC OFFERING OF NOTES. In December 1994, Schuller
completed a public offering of $400 million of the Senior Notes. In connection
with the offering, (i) the interest rates on the Senior Notes were reset to 10
7/8% to permit pricing of the Senior Notes at face amount, and (ii) as a result
of certain adjustments to reflect the reset and the payment of interim interest
on the Senior Notes, the aggregate principal amounts of the Senior Notes held
by the Trust and Manville were adjusted to approximately $377 million and $23
million, respectively. After such adjustments, the Trust and Manville sold the
Senior Notes in the offering.
STILLWATER INITIAL PUBLIC OFFERING. In December 1994, Stillwater
completed a public offering of 4,500,000 shares of its common stock. Manville
sold 2,112,500 shares of its Stillwater common stock in the public offering.
As a result, Manville's ownership of Stillwater's common stock was reduced to
approximately 27 percent.
RIVERWOOD SALE OF BRAZILIAN INTEREST. In December 1994, Riverwood
completed the sale of just under 50 percent (excluding packaging machinery
operations) of its Brazilian subsidiary, Igaras Papeis e Embalagens S.A.
("Igaras"), for approximately $100 million. The sale was made to a subsidiary
of Cia. Suzano de Papel e Celulose ("Suzano"). Riverwood and Suzano will
jointly oversee the Brazilian operations, which are primarily comprised of a
containerboard business, timberland assets and a packaging business. Because
Igaras' results of operations were consolidated with Riverwood's results of
operations throughout almost all of 1994, Igaras has been treated herein as a
consolidated subsidiary of Riverwood in connection with Riverwood's 1994
results of operations, but not for other purposes.
RIVERWOOD INTERNATIONAL CORPORATION
Riverwood is an international paperboard, packaging and packaging
machinery company with 1994 sales of $1.3 billion. Riverwood produces and
markets CUK Board, packaging products, such as beverage carriers and folding
cartons, containerboard, such as kraft paper and linerboard, corrugated
containers, lumber and plywood. Riverwood also designs, manufactures and
installs packaging machines for its customers. Riverwood's operations are
conducted through three principal business segments: Coated Board System,
Containerboard and U.S. Timberlands/Wood Products, as set forth in the
following table:
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1994 NET SALES PERCENTAGE OF
BUSINESS SEGMENT (1) (IN MILLIONS) (2) 1994 NET SALES (2) PRODUCTS
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Coated Board System $794.0 61.0% CUK Board; beverage cartons; folding cartons; coated recycled
paperboard; preprinted linerboard; packaging machinery
Containerboard $342.6 26.3% Kraft linerboard; kraft paper; corrugated containers;
corrugating medium
U.S. Timberlands/
Wood Products $164.9 12.7% Lumber; plywood
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(1) For additional business segment information and geographical data, see
Note 27 to the Company's Consolidated Financial Statements,
incorporated by reference herein.
(2) Before elimination of intersegment sales.
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COATED BOARD SYSTEM
Riverwood's Coated Board System segment, with 1994 net sales of $794.0
million, or 61.0 percent of Riverwood's total net sales (before elimination of
intersegment sales), consists of the production and sale of CUK Board for its
converting plants and external customers, the conversion of CUK Board to
beverage and folding cartons, and the design, manufacture and installation of
proprietary packaging machines.
PRODUCTS. CUK Board is a specialized grade of paperboard representing
approximately four percent of total U.S. paperboard tonnage in 1994. The
primary uses of CUK Board are as beverage cartons (also known as carrierboard)
for beer and soft drinks and as folding cartons (also known as cartonboard) for
confectionery, frozen food, dry goods and other consumer products. Riverwood
markets CUK Board under the names Aquakote(R) (carrierboard), Pearlkote(R)
(cartonboard) and Krafbrite(R) (pre-print linerboard).
CUK Board is well suited as secondary packaging for the beverage and
consumer products industries due to its strength, moisture resistance and
stiffness. The board surface is suitable for high-quality printing, allowing
customers to add high impact logos, pictures and promotional elements to their
packages. In addition, the production of CUK Board does not require a
bleaching process, thereby eliminating environmental concerns arising in
connection with chlorine bleached products.
COATED BOARD PRODUCTION. Riverwood produces CUK Board at its West
Monroe, Louisiana mill, which produced approximately 650,600 tons of CUK Board
during 1994, and at its Macon, Georgia mill, which, produced approximately
80,200 tons of CUK Board during 1994. As a result of the machine conversion
completed in the third quarter of 1994, the Macon mill will have an annual
capacity to produce approximately 300,000 tons of CUK Board by the end of 1996.
Riverwood anticipates that its additional CUK Board capacity will
eventually be directed to the beverage carton market, but believes it will
require several years of marketing activities to direct the full capacity of
the converted machine to this market. Pending such full utilization to meet
beverage carton demand, the remaining production from the West Monroe mill and
the Macon mill will also be directed into the folding carton and linerboard
markets. Riverwood's overall increase in CUK Board production in 1995 is
anticipated to be significantly less than 300,000 tons as the converted machine
continues its start-up operations.
In 1994, approximately 50 percent of Riverwood's CUK Board was used by
Riverwood's converting operations, and the remainder was sold to other
converters.
Riverwood produces coated recycled paperboard at its Norrkoping,
Sweden, mill, which produced approximately 129,800 tons of such board during
1994.
CONVERTING PROCESS. As of March 15, 1995, Riverwood owned 17
converting plants, 11 of which were located outside the United States and five
of which were recently acquired. The conversion of CUK Board into packaging
products begins with rolls of CUK Board which are printed and cut to customer
specifications on multi-color printing presses at Riverwood's converting
plants. In the case of beverage cartons, the CUK Board rolls are fed into
printing presses that, in one integrated process, print and cut the CUK Board
into beverage cartons to customer specifications. The printed cartons are
shipped to customers' plants where, in many cases, they are placed in packaging
machines. The packaging machines erect the beverage cartons, insert the
customers' products and close the package.
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Riverwood is in the process of increasing its carton converting
capacity. This expansion program includes the addition of new printing presses
and related converting equipment at four existing plants in the United States,
Europe and Australia. In addition, Riverwood recently acquired one converting
plant in the United States from Miller Brewing Company and four converting
plants in France in connection with its acquisition of approximately 70 percent
(with an obligation to purchase the remaining stock prior to 1998) of the
stock of the Lemaire Group, a French paperboard carton converter.
PACKAGING MACHINERY. Riverwood has a substantial number of
proprietary packaging machines installed at customer production sites
worldwide. The machines are designed to package bottles, cans and other
primary containers, using the CUK Board produced and converted by Riverwood or
its licensees. Riverwood leases substantially all of its packaging machinery
to its customers.
Riverwood also develops new packaging and designs new packaging
machines. Riverwood develops, tests and manufactures worldwide packaging
solutions at its Product Development Center near Atlanta, Georgia. At its
Koln, Germany, facility, Riverwood designs and develops packaging and related
packaging machines for its European customers.
In 1993, Riverwood was the first to introduce a double-layer multipack
concept, called Twin-Stack(R), for beverage packaging. The double layer design
of Twin-Stack cartons provides better portability and a more visible billboard
compared with conventional large volume multipacks. During 1993 and 1994, more
than 75 Twin-Stack machines were ordered or installed on five continents. In
1994, Riverwood introduced a wider range of Twin-Stack multipack machines.
Riverwood also introduced several upgrades of its Quikflex(TM) and Marksman(R)
lines of machines. In addition, Riverwood introduced an advanced, personal
computer-based interface on its Twin-Stack machine, available with a number of
upgrades, and two new packaging systems for bottles.
MARKETS AND DISTRIBUTION. Riverwood principally markets CUK
Board-based packaging products to large multinational brewers, soft drink
bottlers and food companies that use printed packaging for retail display,
multiple packaging and shipment of their products. Riverwood's major packaging
customers include Anheuser-Busch Companies, Inc.; Miller Brewing Company; The
Coca-Cola Company; Pepsico, Inc.; The Procter & Gamble Company; and Unilever
N.V. Riverwood continues to make gains in the U.S. soft drink market, where it
has historically held a lower market share compared to Riverwood's share of the
U.S. beer market. In 1994, carton shipments to the domestic soft drink market
increased by 60 percent compared to 1993.
Although the beverage carton market is an important focus, Riverwood's
CUK Board, through direct sales to customers and through third party
converters, has also found specific applications in the folding carton market,
including frozen and dry food, toy and hardware packaging. Major customers for
Riverwood's CUK Board in the folding carton market include M&M Mars (a division
of Mars, Inc.); Sara Lee Corporation; Mattel, Inc.; The Procter & Gamble
Company; and Unilever N.V. By working directly with customers to develop new
packaging applications and integrated solutions, Riverwood is attempting to
penetrate this market further.
Distribution of CUK Board products is primarily accomplished through
direct sales offices in Australia, Brazil, Canada, Cyprus, Denmark, France,
Germany, Holland, Hong Kong, Italy, Japan, Singapore, Spain, Sweden, the United
Kingdom and in several locations in the United States. Riverwood has entered
into a joint venture with Rengo Company Limited to market machinery-based
packaging systems in Japan. The joint venture covers CUK Board supply, carton
production and marketing and distribution of packaging systems. In December
1993, Riverwood entered into a joint venture with Danapak for the purpose of
marketing machinery-based packaging systems and cartons in Scandinavia. In
addition, the joint venture resulting from the sale of just under 50 percent of
Igaras to Suzano will produce and market cartons for machinery-based multiple
packaging customers in the Mercosur alliance of countries (Argentina, Brazil,
Paraguay and Uruguay), with packaging machines continuing to be supplied by
Riverwood.
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COMPETITION. In the beverage industry, bottles, cans and other
primary containers are packaged using several materials, such as CUK Board,
plastics and corrugating packaging. CUK-Board-based packaging offers
distribution advantages, high graphic capability and package design flexibility
to market beverages at the retail level. There are two major U.S. producers of
CUK Board for beverage carton applications: Riverwood and The Mead
Corporation. Riverwood estimates that during 1994 it represented approximately
50 percent of the beverage carton segment of the U.S. paperboard packaging
market.
In the folding carton market, CUK Board competes with recycled
clay-coated newsprint ("CCN") board, solid bleached sulphate ("SBS") board and
other box board. Cartonboard grades compete based on price and quality as
measured by strength and printability. In terms of price and quality, CUK
Board is positioned between CCN and SBS. Historically, CUK Board has been
priced higher than CCN and lower than SBS. CUK Board has better tear strength
characteristics than SBS and better tear strength and cross-direction stiffness
than CCN. There are a large number of producers of paperboard for folding
carton applications. Riverwood estimates that during 1994 it represented less
than three percent of the folding carton segment of the U.S. paperboard
packaging market.
CONTAINERBOARD
Riverwood's Containerboard segment, with 1994 net sales of $342.6
million, or 26.3 percent, of Riverwood's total net sales (before elimination of
intersegment sales), manufactures and markets unbleached kraft paper,
corrugated containers, corrugating medium, and kraft linerboard.
PRODUCTS. Kraft paper is used primarily to make grocery bags and
sacks. Corrugating medium and kraft linerboard are combined to make corrugated
containers.
CONTAINERBOARD PRODUCTION. In 1994, Riverwood produced approximately
390,100 tons of linerboard at the Macon mill (down from 447,600 tons in 1993
due to the conversion of one of the linerboard machines at the Macon mill to
CUK Board production). Riverwood also produced in 1994 approximately 144,900
tons of corrugating medium, 47,100 tons of linerboard and 39,000 tons of kraft
paper at its West Monroe, Louisiana mill. As a result of the Macon mill
conversion, Riverwood's linerboard production is expected to decline further as
additional CUK Board is produced.
MARKETS AND DISTRIBUTION. The primary customers for Riverwood's U.S.
Containerboard production are independent and integrated corrugated converters.
The Containerboard segment sells corrugating medium and linerboard
through direct sales offices in the United States. Outside of the United
States, linerboard is primarily distributed through independent sales
representatives. Kraft paper is sold to a third party pursuant to a
contractual arrangement.
COMPETITION. The Containerboard segment operates within a highly
fragmented industry. Many products within this industry are viewed as
commodities; consequently, selling prices tend to be cyclical, rising during
periods of strong economic activity and declining in periods of economic
weakness. After several years of significant declines in worldwide prices for
Containerboard, prices increased significantly in 1994. In 1994, Riverwood
represented less than two percent of each of the U.S. markets for linerboard,
corrugating medium and kraft paper.
IGARAS. In addition to Riverwood's U.S. Containerboard operations,
Riverwood owns just over 50 percent of Igaras, an integrated containerboard
producer located in Brazil, which was acquired by Riverwood's predecessor
companies in 1958. Igaras was a wholly owned subsidiary of Riverwood prior to
Riverwood's disposition of just under 50 percent (excluding packaging machinery
operations) of its interest in Igaras on December 29, 1994. In 1994, Igaras'
operations accounted for approximately 12.6 percent of Riverwood's consolidated
net sales and 20.8 percent of Riverwood's consolidated income from operations.
Igaras has approximately 2,500 employees. Igaras is Brazil's second largest
containerboard company and fourth largest corrugated container converter.
Igaras operates two mills
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and three corrugated box plants and owns and leases approximately 176,000 acres
of timberlands, which are used exclusively for wood chip and energy
requirements of the paper mills. Igaras' Otacilio Costa mill operates three
paper machines primarily for the production of linerboard and its Angatuba mill
operates one paper machine for the production of corrugating medium. Igaras'
total containerboard production in 1994 was approximately 365,400 tons. Igaras
focuses primarily on the export markets, from which it derived approximately 50
percent of its 1994 linerboard sales. Igaras sells linerboard and corrugating
medium through direct sales offices in Brazil. Outside of Brazil, Igaras
distributes linerboard primarily through independent sales representatives.
Riverwood intends to continue Igaras' containerboard production with Suzano,
which purchased just under 50 percent of Igaras in December 1994.
U.S. TIMBERLANDS/WOOD PRODUCTS
Riverwood's U.S. Timberlands/Wood Products segment, with 1994 net
sales of $164.9 million, or 12.7 percent of Riverwood's total net sales (before
elimination of intersegment sales), includes two U.S. lumber mills and a U.S.
plywood plant for manufacturing products from southern pine. Riverwood also
owns and leases approximately 540,000 acres of timberland in Arkansas,
Louisiana and Texas.
PRODUCTS. Riverwood's lumber products include dimensional lumber, and
its plywood products include sheathing and specialty grades. The residual
chips from these operations and pulpwood from the forest are shipped to the
West Monroe paperboard mill for processing into paper and paperboard.
Riverwood's timberlands supplied approximately 40 percent of the wood fiber
requirements for the West Monroe, Louisiana mill in 1994.
In October 1994, Riverwood completed the sale of certain oil and gas
mineral rights on its U.S. timberlands, which resulted in a pretax gain of $8.9
million.
In 1972, Riverwood initiated a forestry program to increase the yield
from its U.S. southern pine forests. Riverwood expects to complete its
transition from natural forests to pine plantations by approximately the year
2001.
Riverwood has recently terminated its discussions with respect to the
potential sale of its lumber and plywood operations in Louisiana, lumber
operations in Arkansas and approximately 150,000 acres of surrounding
timberlands.
MARKETS AND DISTRIBUTION. Riverwood distributes lumber and plywood
products by direct sales to retailers and wholesalers primarily in Southern and
Central U.S. markets.
RAW MATERIALS AVAILABILITY
From time to time, Riverwood has experienced difficulties in obtaining
sufficient quantities of certain raw materials used in the production of its
products. Although shortages exist from time to time in some raw materials
markets, Riverwood anticipates no shortages during 1995. While there can be no
assurance that adequate supplies of raw materials will be available in the
future, Riverwood believes that it has taken reasonable precautions for the
continued supply of critical raw materials.
SEASONALITY
Riverwood's cash flows from its operations are subject to moderate
seasonality, with demand usually increasing in the spring and summer of each
year.
OCCUPATIONAL HEALTH AND SAFETY ASPECTS OF RIVERWOOD PRODUCTS
The manufacture of lumber, plywood, pulp, and paper products and their
use may involve the generation of wood dust. The International Agency for
Research on Cancer (the "IARC") convened an expert working group in October
1994 to reevaluate the carcinogenicity of exposure to wood dust.
6
<PAGE> 10
Past evaluations in 1981 and 1987 by the IARC classified the hazards by
specific wood industries; however, at the 1994 evaluation, the IARC concluded
that there currently exists sufficient evidence to classify wood dust as a
human carcinogen for all wood industries.
The IARC classification is based on its evaluation of a number of
studies conducted over the last two decades that have indicated an association
between wood dust exposure and a rare form of nasal cancer referred to as nasal
adenocarcinoma. The working group was unable to evaluate separately hardwood
and softwood dusts due to the scarcity of studies in which exposures were
primarily to softwood dusts. The final publication of the IARC classification
(expected by the fall of 1995) is expected to contain a footnote drawing
attention to the fact that most of the studies contributing to the evaluation
involved exposure predominately to hardwood dusts. Two of the major industries
in which Riverwood is involved -- paper and wood products -- use predominantly
soft wood.
Since 1987, Riverwood has provided material safety data sheets
("MSDSs") and warning labels to its employees and customers stating that this
rare form of nasal cancer has been associated with the exposure of hard wood
dust in some industries. In addition, Riverwood published a brochure titled
"Health & Safety Aspects of Wood Dust" (revised in 1994) that provides further
information on potential health effects of wood dust. Riverwood intends to
update this brochure along with the MSDSs, warning labels and other related
documents in connection with the final publication of the IARC classification.
Furthermore, Riverwood has also scheduled additional industrial hygiene air
monitoring at all of its facilities that work with wood to reevaluate workplace
exposures to wood dust.
SCHULLER INTERNATIONAL GROUP, INC.
Schuller is a leading manufacturer of insulation and building
products, with 1994 net sales of approximately $1.3 billion. Schuller produces
and markets insulation products for buildings and equipment, commercial roofing
systems, high efficiency air filtration media and fibers and nonwoven mats used
as reinforcements in building and industrial applications. Schuller operates
35 manufacturing facilities in the United States, Canada and Germany and is
comprised of two principal business segments, as set forth in the following
table.
<TABLE>
<CAPTION>
BUSINESS SEGMENT (1) PRODUCTS AND APPLICATIONS
-------------------- -------------------------
<S> <C>
BUILDING PRODUCTS
Building Product Insulation Fiberglass wool insulation for walls and attics
Commercial Roofing Systems Roofing systems, including membranes, insulation, accessories and related
guarantees
Mechanical Insulations Pipe and duct insulation for various commercial applications
ENGINEERED PRODUCTS
Specialty Insulations and Filtration Thermal and acoustic insulation for aircraft, appliances, automobiles and
HVAC equipment
Air filtration media for buildings, microfibers for clean room air
filters and battery separators
Mats and Reinforcements Fibers and nonwoven mats for reinforcing roofing and flooring
--------------------
</TABLE>
(1) For additional business segment information and geographical
data, see Note 27 to the Company's Consolidated Financial
Statements, incorporated by reference herein.
7
<PAGE> 11
BUILDING PRODUCTS
Schuller's Building Products segment, with 1994 net sales of $744.0
million, or 57.1 percent of Schuller's total net sales (before elimination of
intersegment sales), is comprised of the building insulation, commercial
roofing systems and mechanical insulations product groups.
BUILDING INSULATION
PRODUCTS. Schuller's building insulation business manufactures a
complete line of fiberglass wool insulation for walls and attics in residential
and commercial buildings. Schuller's building insulation products include
fiberglass batts, rolls, blowing wool and related products.
The business operates six manufacturing and two support facilities
throughout North America to serve regional population and construction centers.
This regional structure, which keeps most shipping distances within a 500-mile
radius, improves Schuller's customer service and reduces its total
transportation costs.
MARKETS AND DISTRIBUTION. Demand for Schuller's building insulation
products is driven primarily by North American housing starts. Schuller
estimates that, for 1994, 75 percent of its wall and attic insulation was sold
to residential markets and the remaining 25 percent was sold to commercial
markets. Demand for building insulation products has been enhanced by (i)
increased residential construction, (ii) the adoption in 17 states of the
Model Energy Code (which encourages the use of more insulation in new
construction) and (iii) the higher mix of single-family vs. multi-family
housing starts (single-family units use more insulation per unit than
multi-family units).
Building insulation products typically reach end users through
contractors, mass merchants and distributors. Schuller's marketing efforts are
normally directed toward insulation contractors and national mass merchants.
COMPETITION. Schuller's building insulation business competes
primarily with OCF and CertainTeed Corporation, the U.S. subsidiary of
Compagnie de Saint-Gobain ("CSG"). Schuller competes in the building
insulation business primarily on the basis of price, packaging/merchandising
and service.
COMMERCIAL ROOFING SYSTEMS
PRODUCTS. Schuller's roofing systems business is a full-line supplier
of commercial roofing systems and components for flat commercial and industrial
roofs. Approximately 40 percent of Schuller's commercial roofing sales for
1994 were of premium systems, which include a wide range of membranes,
insulations, accessories and roofing system guarantees.
Schuller's commercial roofing systems business operates seven
manufacturing facilities and three distribution facilities in North America.
In January 1994, Schuller substantially expanded this business by acquiring the
commercial and industrial roofing business of OCF while simultaneously selling
to OCF Schuller's residential roofing business.
MARKETS AND DISTRIBUTION. Demand for Schuller's roofing systems
products is driven primarily by commercial and industrial reroofing needs.
Schuller estimates that approximately 75 percent of its commercial and
industrial roofing sales for 1994 were attributable to reroofing, with the
balance attributable to new construction. While sales of roofing systems are
affected by levels of new construction and general economic conditions, sales
attributable to reroofing are less sensitive to these factors, thus mitigating
the adverse effect of recessionary periods.
Schuller targets architects and specifiers who generally recommend
premium roofing systems. About 80 percent of Schuller's commercial roofing
sales for 1994 were sold through wholesale distributors; the remainder was sold
through contractors.
8
<PAGE> 12
COMPETITION. The commercial roofing business is a highly fragmented
market. Competitors include several large, national participants, such as GAF
Corporation, Tamko Asphalt Products Inc., Bridgestone/Firestone, Inc., Carlisle
Companies Incorporated and The Celotex Corporation, and various smaller,
regional companies. Schuller competes in the commercial roofing business
primarily on the basis of price, breadth of product line, specifications, level
of guarantees and systems reliability.
MECHANICAL INSULATIONS
PRODUCTS. Schuller's mechanical insulations business produces pipe
and duct insulation for use in commercial buildings, factories, refineries and
other industrial applications. Recent industry attention to indoor
environmental quality prompted Schuller to introduce several new products,
including Permacote(R) and SuperDuct(TM) air handling products. Schuller's
EnviroSystem(TM), a group of products sold together aimed at indoor
environmental quality improvement, includes duct insulation with enhanced
thermal and acoustical properties and air filtration with an antimicrobial
agent for improved air quality.
Mechanical insulation products are manufactured at three facilities in
the United States.
MARKETS AND DISTRIBUTION. Demand for mechanical insulations is driven
primarily by commercial construction activity. Although industrywide
mechanical insulations contract awards declined annually from 1987 through
1992, Schuller was able to gain share during this downturn due to Schuller's
broad product line, enhanced by new product offerings and superior customer
service and distribution. Mechanical insulation products reach the market
through Schuller's network of distributors, contractors and fabricators.
COMPETITION. Schuller's mechanical insulations business primarily
competes with OCF, CertainTeed Corporation and Knauf Fiberglass USA. Schuller
competes in the mechanical insulations business primarily on the basis of
price, breadth of product line and strength of fabricator and distributor
networks.
ENGINEERED PRODUCTS
Schuller's Engineered Products segment, with 1994 net sales of $558.2
million, or 42.9 percent of Schuller's total net sales (before elimination of
intersegment sales), is comprised of the specialty insulations and filtration
and mats and reinforcements product groups.
SPECIALTY INSULATIONS AND FILTRATION
PRODUCTS. Schuller's specialty insulations and filtration businesses
produce thermal and acoustic insulation for aircraft, appliances, automobiles
and HVAC equipment; air filtration media for commercial and industrial
buildings; and microfibers for clean room air filters and battery separators.
Specialty insulations and filtration products generally require extremely fine
and uniform fibers to provide the required insulation and filtration
properties, and therefore command higher prices than other fiberglass products.
Specialty insulations and filtration products are manufactured at ten
of Schuller's U.S. facilities.
MARKETS AND DISTRIBUTION. Demand for Schuller's specialty insulations
and filtration products is driven primarily by commercial construction (HVAC
insulations), commercial building occupancy (air filter media), the
construction of clean rooms requiring dust-free environments which are
primarily used by the pharmaceutical and semiconductor industries
(microfibers), and the production of aircraft and automobiles (specialty
insulations). The growing public attention to indoor environmental quality
also stimulates filtration media demand.
Specialty insulations are typically sold to distributors and
fabricators who, in turn, sell to original equipment manufacturers. Air
filtration media products are sold to producers of air filtration systems for
use in commercial buildings. Microfibers are sold to specialty filtration
paper manufacturers.
9
<PAGE> 13
COMPETITION. Schuller's specialty insulations and filtration
businesses compete with a variety of large and small companies in its various
niche markets. Schuller competes in the specialty insulations and filtration
business primarily on the basis of quality and product customization.
MATS AND REINFORCEMENTS
PRODUCTS. Schuller's mats and reinforcements business manufactures
continuous filament fiberglass-based products (chopped fiber and fiberglass
mat) used for reinforcing roofing, flooring, wall covering and plastics.
Schuller is a worldwide supplier of nonwoven fiberglass mat products, which are
used as substrates in roofing and flooring. Schuller focuses on roofing and
flooring substrates rather than plastics reinforcements and electrical-grade
yarn.
The business operates four manufacturing plants and one support
facility in the United States. Schuller GmbH, Schuller's German subsidiary,
operates three plants in Germany. Schuller GmbH was the pioneer in wet
fiberglass mat technology and also developed the unique sliver fiberglass
process, which created the market for fiberglass wall coverings in Europe.
MARKETS AND DISTRIBUTION. Demand for Schuller's mats and
reinforcements products is driven primarily by the worldwide commercial
construction and retrofit markets, as well as by U.S. residential construction
and reroofing. These products are sold directly to roofing and flooring
manufacturers as well as to European textile weavers. Schuller's U.S. mats and
reinforcements business provides fiberglass mat to Schuller's commercial
roofing systems business for its fiberglass-based roofing products.
COMPETITION. Schuller's primary competitors in the worldwide mats and
reinforcements business are OCF and CSG. Schuller competes in the mats and
reinforcements business primarily on the basis of price and service.
MATERIALS
Fiberglass is the basic material in most of Schuller's products.
Schuller also provides nonfiberglass materials to satisfy the broader needs of
its customers. For example, calcium silicate pipe products and plastic
accessories complement Schuller's product offerings to commercial/industrial
insulation distributors. Polyimide foam is manufactured for marine insulation
and is used by the United States Navy in shipbuilding. Commercial roofing
systems use perlite insulation board and rubber membranes in addition to
fiberglass substrates. In order to further broaden its product lines, Schuller
is pursuing expansion into certain polymer fiber applications for filtration,
substrates, and equipment and apparel insulation.
The principal raw materials used to manufacture fiberglass products
include sand, soda ash, lime, borate minerals and aluminous materials.
Phenolic-formaldehyde, urea-formaldehyde and other resins are also used to bind
glass fibers into useful shapes. All of these materials are readily available
in sufficient quantities from various sources for Schuller to maintain and
expand its current production levels.
MANUFACTURING
Schuller manufactures two different types of fiberglass: (i) wool used
for insulation and filtration and (ii) continuous filament fiberglass and
sliver (string-like textile fibers) used in mats and reinforcements.
Schuller manufactures fiberglass wool using two different
technologies. Building insulation and certain duct insulation products are
produced using a patented rotary process. The rotary process, common in the
fiberglass industry, is the most cost-effective method of producing fiberglass
building and other insulations. In addition, for its pipe insulation,
specialty insulations and filtration products, Schuller primarily uses the pot
and marble process, which, while older and inherently higher in cost than
10
<PAGE> 14
the rotary process, produces glass fibers with the superior qualities (high
tensile strength and fine diameter) required in specialty applications. In the
last several years, Schuller has upgraded and modernized its pot and marble
equipment and intends to continue this program in order to serve the higher
value niche markets in which Schuller participates.
As a result of recently improved economic conditions, new product
introductions and market share gains in certain of its businesses, Schuller is
currently operating its fiberglass production facilities at or near capacity.
Accordingly, Schuller plans several capacity expansions which will be completed
incrementally over the next several years in order to provide additional
capacity for building insulation, mechanical and specialty insulations, and
continuous filament roofing fiber. Schuller periodically reevaluates its
capacity expansion plans based on current economic conditions and overall
industry capacity.
SEASONALITY
Schuller's quarterly results of operations are moderately seasonal due
to increases in construction activity that typically occur in the second and
third quarters of the calendar year, thereby increasing sales and gross profits
in those periods.
OCCUPATIONAL HEALTH AND SAFETY ASPECTS OF SCHULLER PRODUCTS
Schuller has an ongoing product stewardship program to facilitate
compliance with existing laws, and to protect the health and safety of
Schuller's employees, customers and the general public. This program is
implemented, in important part, through extensive research, a continuing
process of workplace and product evaluation and an extensive communications
program. National and international scientific authorities are involved on an
ongoing basis in the assessment of potential human health hazards. The results
of these evaluations are reported regularly to employees and customers as part
of Schuller's communications program.
Schuller manufactures, processes and sells products, and has in the
past manufactured, processed and sold products, that contain certain chemicals
or substances, including man-made vitreous fibers ("MMVF") such as fiberglass,
refractory ceramic fiber ("RCF") and mineral wools classified by the IARC as
possible human carcinogens. In 1987, the IARC evaluated the carcinogenicity of
MMVF. Fiberglass wool, RCF and mineral wool were classified as "possibly
carcinogenic to humans." The IARC concluded that continuous glass filament
(chopped strand) was "not classifiable as to human carcinogenicity."
Crystalline silica exists in trace amounts in Schuller's calcium silicate
insulation products and is a major constituent of the diatomaceous earth
products produced by a former subsidiary. In 1988, the IARC classified
crystalline silica as "probably carcinogenic to humans." Asphalt used by
Schuller's roofing operations presently is being evaluated by the National
Institute of Occupational Safety and Health to determine its carcinogenic
potential.
Although crystalline silica is a contaminant in one of the raw
materials used in Schuller's calcium silicate insulation products, the silica
content constitutes less than one percent of the finished product. Crystalline
silica exposures have been measured under conditions of foreseeable use and
found to be nondetectable. The IARC classification of crystalline silica was
based upon animal studies and "limited" evidence of cancer in human studies.
Hazard communication materials reflecting the potential cancer risk have been
developed and are used by Schuller to address the proper handling of these
products by employees and customers.
Schuller sold most of its RCF operations in 1990, and agreed to
indemnify the purchaser for pre-closing liabilities, including claims by
transferred employees arising out of pre-closing occupational exposures
incurred in the course of their employment with Schuller or its predecessors.
RCF products have been labeled as a possible cause of cancer since 1985.
Subsequently, RCF product labels were revised to warn of the additional
potential hazard associated with exposure to crystalline silica, which can be
formed after use of RCF products at high temperatures.
11
<PAGE> 15
For purposes of occupational exposure, the Occupational Safety and
Health Administration regulates all MMVF as nuisance dusts. Schuller believes
that it is in substantial compliance with all applicable workplace exposure
regulations and product "right-to-know" labeling requirements with respect to
MMVF. The language on these labels not only advises of the possible health
hazards, but includes proper handling and protective measures to be followed.
In 1987, the IARC reviewed epidemiological studies involving
occupational exposure to fiberglass wool, including a large U.S. and a large
European study of fiberglass manufacturing workers that had reported modest but
statistically significant increases of lung cancer deaths compared to national
mortality rates. The IARC concluded that evidence of cancer in humans from
such epidemiological studies was "inadequate" to permit a conclusion regarding
the presence or absence of a causal relationship with fiberglass exposure. The
IARC also concluded, however, that the evidence from animal studies was
"sufficient" to establish a causal relationship. That finding was based
entirely on positive laboratory results achieved through implantation or other
artificial techniques of exposing animals to fibrous materials. The relevance
of such implantation studies to the evaluation of risk to humans has been
questioned by many scientists, who believe that animal inhalation studies are
more appropriate than animal implantation studies to assess the potential risk
to humans. Substantially all reports that have interpreted results from animal
inhalation studies of fiberglass wool have concluded that no lung fibrosis,
mesothelioma or significant increase in lung tumors resulted.
In 1990, the authors of the large U.S. epidemiological study reviewed
by the IARC in 1987 noted a small, but statistically significant, excess in
respiratory cancer deaths of fiberglass manufacturing workers compared with
local mortality rates. However, as in the IARC assessment, the authors, after
looking at the cumulative evidence from the relevant factors that might support
a causal relationship, concluded that the evidence of an association between
exposure to fiberglass wool and respiratory cancer was actually "somewhat
weaker" than that at the time of the IARC assessment. The U.S. investigation
is continuing to determine if the small excess in lung cancer was associated
with lifestyle factors such as smoking or other work place exposures. The next
update is expected in 1995. Data contained in a recent draft report of an
update of the large European epidemiological study show mortality findings for
fiberglass wool similar to those from the large U.S. Study.
On June 24, 1994, the U.S. Department of Health and Human Services
("HHS") announced its decision to act on the recommendation of the National
Toxicology Program ("NTP") and list fiberglass wool and RCF in the Seventh
Annual Report on Carcinogens ("ARC") as substances which "may be reasonably
anticipated" to be a carcinogen. The NTP listing criteria provide that a
substance must be listed if there are two or more animal studies showing
carcinogenic effect, regardless of route of exposure and notwithstanding any
other evidence. As a result, the NTP concluded that the results of the
experimental animal implantation studies provided sufficient evidence to
support the listing. HHS explained that the NTP "reasonably anticipated"
category for fiberglass essentially corresponds to the IARC 1987 "possibly
carcinogenic" classification.
Labels and other hazard communication materials reflecting the
potential cancer risk have been developed and are used by Schuller to address
the proper handling of fiberglass wool products by employees and customers. In
addition, Schuller has agreed to indemnify certain purchasers, under certain
circumstances, for personal injury claims arising out of exposure to Schuller's
fiberglass wool products.
Since 1988, Schuller has funded, in conjunction with other companies
in the industry, several epidemiological and chronic animal inhalation studies
to assess the cancer-causing potential of MMVF. While there is some
disagreement within the scientific and medical community regarding the
interpretation of the studies, based upon its analysis to date, Schuller does
not believe that the IARC classification, the listing in the ARC, or any action
taken by federal and state regulatory agencies will have a material adverse
effect on Schuller. However, domestic and international regulatory and
scientific authorities are involved on an ongoing basis in the assessment of
potential human health hazards, and there can be no assurance that future
actions taken by such authorities or other developments relating to Schuller's
liability for its products will not have an adverse effect on the Company.
12
<PAGE> 16
STILLWATER MINING COMPANY
In the late 1960s, Manville geologists detected platinum and palladium
in the Stillwater complex in Montana. In 1979, Chevron and an affiliate of
Manville formed a partnership to develop platinum group metals at the
Stillwater complex from claims leased by Manville to the partnership.
Subsequently, Manville transferred to the partnership its interest in most of
the patented and unpatented mining claims along the approximate 28-mile
mineralized zone in the Stillwater Complex. In exchange for the transfer, the
partnership conveyed to Manville a 5 percent net smelter interest based on the
market value of metals produced from most of the claims. During 1993,
Manville and Chevron reorganized the partnership and a related partnership.
The assets of the two partnerships were transferred into a new corporation,
Stillwater. Until 1994, the shares of Stillwater were held by Manville and
Chevron, each owning one-half of the shares. In September 1994, Stillwater
redeemed the 50 percent ownership interest owned by Chevron. The funding for
the redemption was raised in a private placement of shares of Stillwater's
common stock representing a 50 percent ownership interest in Stillwater, and
certain subordinated notes. In December 1994, Stillwater completed a public
offering of 4,500,000 shares of its common stock. Concurrently, Manville sold
2,112,500 shares of its Stillwater common stock, reducing Manville's ownership
of the common stock of Stillwater to approximately 27 percent.
PATENTS
The Company presently owns, controls or holds licenses to
approximately 3,400 U.S. and foreign patents and patent applications.
RESEARCH AND DEVELOPMENT
The Company spent approximately $39.1 million in 1994, $36.7 million
in 1993 and $33.9 million in 1992 on Company-sponsored research, development
and engineering activities.
ENVIRONMENTAL REGULATIONS
All of the Company's domestic operations are subject to a variety of
federal, state and local environmental laws and regulations. These laws and
regulations regulate the discharge of materials into the air, land and water
and govern the use and disposal of hazardous substances. The most significant
of the federal laws are the Clean Air Act, the Clean Water Act, the Toxic
Substances Recovery Act, the Resource Conservation and Recovery Act ("RCRA")
and the Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"). These environmental regulatory programs are administered by
the U.S. Environmental Protection Agency (the "EPA"). In addition, states and
local jurisdictions have adopted equivalent or more stringent environmental
laws and regulations, or have enacted their own parallel environmental
programs, which are enforced through various state and local administrative
agencies. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources" and Note 13 to the
Company's Consolidated Financial Statements, incorporated by reference herein.
See, also "Legal Proceedings--Environmental Proceedings."
LABOR RELATIONS
At March 15, 1995, the Company employed approximately 13,600 persons
worldwide, of whom approximately 7,950 were covered by collective bargaining
agreements. The Company has experienced a long history of good working
relationships with its employees and labor unions.
13
<PAGE> 17
ITEM 2. PROPERTIES
HEADQUARTERS
Manville and Schuller are headquartered and lease approximately
150,000 square feet of office space at Manville Plaza, a downtown Denver,
Colorado office building. Riverwood is headquartered and leases approximately
75,000 square feet of office space in Atlanta, Georgia.
MANUFACTURING AND DEVELOPMENT FACILITIES
A listing of the major manufacturing and development plants and
properties owned, or leased, and operated by the Company's principal operating
subsidiaries is set forth below. Substantially all of the buildings are
adequate and suitable for the business of the Company, have been well
maintained and are in sound operating condition and in regular use.
The Company also leases certain facilities, warehouses and office
space throughout the United States and in foreign countries. Except for the
Lakewood, Colorado; Marietta, Georgia; Elkhart, Indiana; Clinton, Mississippi
(underlying real estate only); Edison, New Jersey; Saddlebrook, New Jersey;
Ennis, Texas; and Koln, Germany facilities, which are leased, all of the
following facilities are owned by the Company.
<TABLE>
<CAPTION>
LOCATION BUSINESS SEGMENT
-------- ----------------
<S> <C>
UNITED STATES AND CANADA
Innisfail, Alberta, Canada . . . . . . . . . . . . . . . . Building Products
Huttig, Arkansas . . . . . . . . . . . . . . . . . . . . . U.S. Timberlands/Wood Products
Tucson, Arizona . . . . . . . . . . . . . . . . . . . . . . Engineered and Building Products
Bakersfield, California . . . . . . . . . . . . . . . . . . Coated Board System
Corona, California . . . . . . . . . . . . . . . . . . . . Engineered Products
Pittsburg, California . . . . . . . . . . . . . . . . . . . Building Products
Willows, California . . . . . . . . . . . . . . . . . . . . Building Products
Lakewood, Colorado . . . . . . . . . . . . . . . . . . . . Building Products
Littleton, Colorado . . . . . . . . . . . . . . . . . . . . Engineered and Building Products
Macon, Georgia . . . . . . . . . . . . . . . . . . . . . . Coated Board System/Containerboard
Marietta, Georgia (2 properties) . . . . . . . . . . . . . Coated Board System
Winder, Georgia . . . . . . . . . . . . . . . . . . . . . . Building Products
Kankakee, Illinois . . . . . . . . . . . . . . . . . . . . Coated Board System
Rockdale, Illinois . . . . . . . . . . . . . . . . . . . . Building Products
Waukegan, Illinois . . . . . . . . . . . . . . . . . . . . Building Products
Bluffton, Indiana . . . . . . . . . . . . . . . . . . . . . Engineered Products
Elkhart, Indiana . . . . . . . . . . . . . . . . . . . . . Engineered Products
Greenfield, Indiana . . . . . . . . . . . . . . . . . . . . Engineered Products
Richmond, Indiana . . . . . . . . . . . . . . . . . . . . . Building Products
McPherson, Kansas . . . . . . . . . . . . . . . . . . . . . Building Products
Joyce, Louisiana . . . . . . . . . . . . . . . . . . . . . U.S. Timberlands/Wood Products
West Monroe, Louisiana (2 properties) . . . . . . . . . . . Coated Board System/Containerboard
Lewiston, Maine . . . . . . . . . . . . . . . . . . . . . . Building Products
Crosby, Minnesota . . . . . . . . . . . . . . . . . . . . . Coated Board System
Clinton, Mississippi . . . . . . . . . . . . . . . . . . . Coated Board System
Natchez, Mississippi . . . . . . . . . . . . . . . . . . . Building Products
Edison, New Jersey . . . . . . . . . . . . . . . . . . . . Building Products
Penbryn, New Jersey . . . . . . . . . . . . . . . . . . . . Building Products
Saddlebrook, New Jersey . . . . . . . . . . . . . . . . . . Coated Board System
Cincinnati, Ohio . . . . . . . . . . . . . . . . . . . . . Coated Board System
Defiance, Ohio . . . . . . . . . . . . . . . . . . . . . . Engineered and Building Products
Waterville, Ohio . . . . . . . . . . . . . . . . . . . . . Engineered Products
</TABLE>
14
<PAGE> 18
<TABLE>
<CAPTION>
LOCATION BUSINESS SEGMENT
-------- ----------------
<S> <C>
Oklahoma City, Oklahoma . . . . . . . . . . . . . . . . . . Building Products
Etowah, Tennessee . . . . . . . . . . . . . . . . . . . . . Engineered Products
Cleburne, Texas . . . . . . . . . . . . . . . . . . . . . . Engineered and Building Products
Ennis, Texas . . . . . . . . . . . . . . . . . . . . . . . Engineered Products
Ft. Worth, Texas . . . . . . . . . . . . . . . . . . . . . Building Products
Edinburg, Virginia . . . . . . . . . . . . . . . . . . . . Building Products
Richmond, Virginia . . . . . . . . . . . . . . . . . . . . Building Products
Parkersburg, West Virginia . . . . . . . . . . . . . . . . Engineered Products
Fort Atkinson, Wisconsin . . . . . . . . . . . . . . . . . Coated Board System
INTERNATIONAL
Dandenong, Victoria, Australia . . . . . . . . . . . . . . Coated Board System
Marsden, Queensland, Australia . . . . . . . . . . . . . . Coated Board System
Reservoir, Victoria, Australia . . . . . . . . . . . . . . Coated Board System
Smithfield, New South Wales, Australia . . . . . . . . . . Coated Board System
Woodville North, South Australia, Australia . . . . . . . . Coated Board System
Cambrai, France . . . . . . . . . . . . . . . . . . . . . . Coated Board System
Grenoble, France . . . . . . . . . . . . . . . . . . . . . Coated Board System
Montelimar, France . . . . . . . . . . . . . . . . . . . . Coated Board System
Montdidier, France . . . . . . . . . . . . . . . . . . . . Coated Board System
Karlstein (Main), Bavaria, Germany . . . . . . . . . . . . Engineered Products
Koln, Germany . . . . . . . . . . . . . . . . . . . . . . . Coated Board System
Steinach, Thuringen, Germany . . . . . . . . . . . . . . . Engineered Products
Wertheim (Main), Baden-Wuerttemberg, Germany . . . . . . . . Engineered Products
Igualada, Catalonia, Spain (2 properties) . . . . . . . . . Coated Board System
Norrkoping, Sweden . . . . . . . . . . . . . . . . . . . . Coated Board System
Bristol, Avon, United Kingdom . . . . . . . . . . . . . . . Coated Board System
Osasco, State of Seo Paulo, Brazil . . . . . . . . . . . . Coated Board System
</TABLE>
TIMBER RESOURCES
Riverwood owns approximately 534,000 acres of timberland in Arkansas,
Louisiana and Texas and holds long-term leases on approximately 6,000 acres of
timberland in Louisiana and Texas, all of which it manages as a raw material
base for its domestic paper and wood products operations. Riverwood operates
its southern pine forests on a sustained yield basis. In 1972, Riverwood
initiated a forestry program to increase the yield from its domestic pine
forests. For 1994, this program involved planting approximately 13,400 acres.
As a result of this program, it is expected that the cubic foot volume growth
of Riverwood's pine timberlands will more than double during a 30-year cycle.
15
<PAGE> 19
ITEM 3. LEGAL PROCEEDINGS
RELATIONSHIP WITH TRUST
The Trust owns approximately 78 percent of Manville's common stock.
The Trust is an irrevocable trust formed under the laws of the State of New
York pursuant to a trust agreement dated as of November 28, 1988, as amended,
to implement certain portions of the Manville Second Amended and Restated Plan
of Reorganization (the "Plan"), as modified, in particular those relating to
the settlement of asbestos health claims against Manville and certain of its
affiliates. The Trust, in its present capacity as a holder of more than 50
percent of Manville's common stock, has the power to nominate and elect
Manville directors as the trustees of the Trust determine. Three trustees of
the Trust currently serve as members of Manville's Board of Directors.
PLAN OF REORGANIZATION AND RELATED INJUNCTION
In 1982, Manville and its principal U.S. and Canadian subsidiaries
(collectively, the "Manville Group") filed petitions for reorganization under
Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"). The
filings were precipitated by contingent tort liabilities arising out of the
Manville Group's previous asbestos-related business operations. Manville has
provided detailed disclosures with respect to such matters in its earlier
reports filed with the Securities and Exchange Commission. Parties interested
in obtaining the earlier reports may contact Manville in care of Investor
Relations, P.O. Box 5108, Denver, CO 80217-5108, specifying the information
desired. In addition, the description below of the Plan, which was re-filed
with the Securities and Exchange Commission as an exhibit to Manville's Form
10-K for the fiscal year ended December 31, 1992, is qualified in its entirety
by reference to the Plan. Copies of the Plan are also available from Manville
upon request.
The Plan relieves Manville and the Manville Group of the burden of
defending thousands of asbestos lawsuits. This is accomplished through
independent trusts created to assume, administer, settle and pay claims. In
lieu of bringing actions against Manville and the Manville Group, asbestos
claimants may assert their claims only against the Trust or the Manville
Property Damage Settlement Trust, which are funded by Manville pursuant to the
Plan. The Plan, the injunction issued by the United State Bankruptcy Court for
the Southern District of New York (the "Bankruptcy Court") in connection with
the Plan (the "Injunction"), the Bankruptcy Code and the Act (as defined below)
together operate to prohibit any lawsuits against Manville or the Manville
Group with respect to any past, present or future asbestos-related liabilities
related to their discontinued mining, manufacturing and selling activities.
The Injunction is a unique feature of the Manville Group's Chapter 11
proceedings and could be challenged in future legal proceedings. The
Bankruptcy Court found that the Injunction was "essential to the viability of
the business operations of [the Manville Group] and to the successful
implementation of the Plan" and held that it had the authority to issue the
Injunction. Should any asbestos claimant attempt to vacate or to modify the
Injunction or to have the Injunction held inapplicable to such claimant, the
Company believes, based on decisions and results of various legal proceedings,
that the Injunction would be upheld and enforced against any such claimant.
On October 22, 1994, President Clinton signed into law the Bankruptcy
Reform Act of 1994 (the "Act"), which contains a new provision that is intended
to give the Injunction and similar permanent injunctions issued in
asbestos-related reorganization proceedings direct statutory protection from
challenges and modifications. The new provision (a) grants bankruptcy courts
express statutory authority, if certain conditions are met in asbestos-related
Chapter 11 proceedings under the Bankruptcy Code, to issue injunctions
prohibiting "present" and "future" asbestos claimants from suing the
reorganized debtor, and (b) provides that such injunctions, when they become
final and nonappealable, are permanent and not subject to modification by a
court. Pursuant to an Amended Memorandum, Order and Final Judgment dated
January 15, 1995 (the "Order"), the United States District Courts for the
Southern and Eastern Districts of New York jointly approved a settlement of the
Trust's class action
16
<PAGE> 20
litigation brought to restructure how the Trust settles and pays claims, and
concluded that the statutory requirements of the Act would be met when the
Trust began to pay claims. Several appeals of the Order have been filed, none
of which challenges such conclusion. The Trust commenced claims payments in
March 1995.
ENVIRONMENTAL PROCEEDINGS
Certain sites historically used by the Company have been reported to
be contaminated. Most of these were common industrial disposal sites, and were
neither owned nor operated by the Company. In 1991, a lawsuit was instituted
against the U.S. government in which a judgment was sought declaring that all
environmental liability for such disposals prior to confirmation of the Plan
was discharged as a part of the Plan. Recently a settlement of that litigation
was entered into with the U.S. government. The settlement agreement resolves
the Company's liability at all such historical sites where response costs and
natural resource damages under both CERCLA and RCRA are now known and
quantifiable. In satisfaction of its liabilities for all such known and
quantifiable costs and damages, the Company has paid $1.7 million. Under the
settlement agreement (which has no termination date), future liability at
non-Company owned or operated sites where the total response costs and natural
resource damages are not yet known and quantifiable will be based on a formula
which discounts the Company's maximum CERCLA and RCRA liability at each site by
45 percent. Additionally, the settlement agreement provides that the amount the
Company will be obligated to pay, in the aggregate, for such sites shall never
exceed $850,000 during any given year, with any excess plus interest being
carried forward to subsequent years, subject to the yearly limitation. The
settlement agreement also provides that all such obligations are limited to
cash payments.
In January 1988, Riverwood's plant in Cincinnati, Ohio discovered a
leak from an underground storage tank. In October 1988, there was an overflow
of toluene in the same area. Contaminated soils have been removed from the
site. A vapor and groundwater extraction system has also been installed to
recover the solvent and contaminated groundwater. To date, the bulk of the
materials has been recovered and Riverwood continues to operate the recovery
system. Riverwood's analysis suggests that the plume has been contained and
that there is a low permeability glacial tilt under the site. Riverwood
believes that costs for continued operation of the recovery system are not
material. The site was assessed by the Ohio Environmental Protection Agency
(the "Ohio EPA") in the fall of 1990 and included on the 1991 Ohio EPA Master
Sites List. Inclusion on the master site list does not represent a finding
that any response action is necessary. As of March 15, 1995, the plant site
has not been included on the EPA's National Priorities List ("NPL").
Schuller's landfill at its Waukegan, Illinois facility continues to be
included on the NPL pursuant to CERCLA. Remedial action began during the
fourth quarter of 1988 and was completed during the third quarter of 1991.
During the first quarter of 1993, the EPA issued a supplemental CERCLA decision
document, i.e., an Explanation of Significant Differences ("ESD"), to reflect
that, inter alia, remedial action was taken on site which was in addition to
that described in the Record of Decision and the Consent Decree. The EPA is
now seeking both a modification to the Consent Decree to incorporate the
additional remedial action described in the ESD, as well as appropriate deed
restrictions for the site. Schuller has been informed that the Consent Decree
modification and the deed restrictions should be approved in 1995. After these
approvals, Schuller will apply for the Certificate of Completion (the
"Certificate"), and Schuller has been informed that the EPA will likely issue
the Certificate in 1995. After the Certificate is issued, Schuller will seek
to have the site deleted from the NPL.
In 1989, Schuller disclosed to the State of West Virginia potential
noncompliance with respect to the emission of particulate matter from four of
the nine production lines (those involved in the manufacture of filtration
products) at Schuller's Parkersburg, West Virginia, plant. The particulate
matter emissions which are the subject of the potential noncompliance derive
primarily from the resin used by Schuller to bind glass fibers together. In
connection with these emissions, the Company has agreed to pay $100,000 to the
West Virginia Air Pollution Education and Environment Fund in lieu of a penalty
payment. Schuller is not aware of any penalties being considered by other
regulatory agencies.
17
<PAGE> 21
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of 1994, there were no matters submitted to
a vote of security holders.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company had approximately 15,527 common stockholders of record at
March 15, 1995. The Company's stock is listed and traded on the New York Stock
Exchange, Inc. (symbol MVL). The Company has scheduled the 1995 Annual Meeting
of Stockholders for June 2, 1995 in Atlanta, Georgia.
A two-year history of high and low sale prices for the Company's
common stock based on the sales transactions reported by the New York Stock
Exchange, Inc. is provided below. A dividend of $1.04 per share of the
Company's common stock was paid on June 24, 1993 to stockholders of record at
the close of business on June 14, 1993.
MARKET PRICES PER COMMON SHARE
<TABLE>
<CAPTION>
1993 1994
---- ----
Common Stock Common Stock
------------ ------------
For the Quarters Ended High Low High Low
---------------------- ---- --- ---- ---
<S> <C> <C> <C> <C>
March 31 9 3/4 8 10 8
June 30 9 3/8 7 3/8 8 1/2 7 1/4
September 30 8 6 7/8 8 7/8 7 1/4
December 31 8 3/4 6 1/2 9 5/8 8 1/4
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA
Information with respect to this item is incorporated by reference to
Selected Six-Year Financial Data in the Company's 1994 Annual Report to
securityholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information with respect to this item is incorporated by reference to
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the Company's 1994 Annual Report to securityholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information with respect to this item is incorporated by
reference to the Financial Statements and Selected Quarterly Financial Data in
the Company's 1994 Annual Report to securityholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no changes in the Company's accountants during the two most
recent fiscal years. There were also no disagreements with accountants on
accounting or financial disclosures during such period.
18
<PAGE> 22
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to this item is incorporated by reference to
the Company's 1995 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item is incorporated by reference to
the Company's 1995 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to this item is incorporated by reference to
the Company's 1995 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to this item is incorporated by
reference to the Company's 1995 Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
a. Financial statements, financial statement schedules and exhibits filed
in this report:
1. Information with respect to financial statements is
incorporated by reference to the Financial Statements and
Selected Quarterly Financial Data in the Company's 1994
Annual Report to securityholders.
2. The Company is filing herewith Schedule II - Valuation and
Qualifying Accounts.
b. No reports on Form 8-K were filed during the last quarter of 1994.
c. Exhibit Index to Manville Corporation Annual Report on Form 10-K for
Fiscal Year Ended December 31, 1994.
<TABLE>
<CAPTION>
DESCRIPTION CROSS REFERENCE OF PAGE NUMBER
----------- ------------------------------
<S> <C> <C>
2. (a) Second Amended and Restated Plan of Refiled as an exhibit to the Company's
Reorganization confirmed by the United States 1992 Annual Report on Form 10-K filed
Bankruptcy Court for the Southern District of March 30, 1993, and incorporated herein by
New York on December 22, 1986. reference.
3. (a) Restated Certificate of Incorporation. Refiled as an exhibit to the Company's
1992 Annual Report on Form 10-K filed
March 30, 1993, and incorporated herein by
reference.
</TABLE>
19
<PAGE> 23
<TABLE>
<CAPTION>
DESCRIPTION CROSS REFERENCE OR PAGE NUMBER
----------- ------------------------------
<S> <C>
(b) Bylaws, as amended on December 4, 1992. Filed as an exhibit to the Company's 1992
Annual Report on Form 10-K filed March 30,
1993, and incorporated herein by
reference.
10. (a) Schuller International Employees Filed as an exhibit hereto.
Retirement Plan.*
(b) Supplemental Pension Plan.* Refiled as an exhibit to the Company's
1992 Annual Report on Form 10-K filed
March 30, 1993, and incorporated herein by
reference.
(c) Key Man Supplemental Retirement Refiled as an exhibit to the Company's
Agreement.* 1992 Annual Report on Form 10-K filed
March 30, 1993, and incorporated herein by
reference.
(d) Annual Executive Incentive Compensation Refiled as an exhibit to the Company's
Plan.* 1992 Annual Report on Form 10-K filed
March 30, 1993, and incorporated herein by
reference.
(e) 1991 Long-Term Cash Incentive Refiled as an exhibit to the Company's
Compensation Plan.* 1992 Annual Report on Form 10-K filed
March 30, 1993, and incorporated herein by
reference.
(f) Amendment to 1991 Long-Term Cash Refiled as an exhibit to the Company's
Incentive Compensation Plan.* 1992 Annual Report on Form 10-K filed
March 30, 1993, and incorporated herein by
reference.
(g) Executive Long-Term Disability Plan.* Refiled as an exhibit to the Company's
1992 Annual Report on Form 10-K filed
March 30, 1993, and incorporated herein by
reference.
(h) Form of Employment Agreements with the Refiled as an exhibit to the Company's
Executive Officers of Manville.* 1992 Annual Report on Form 10-K filed
March 30, 1993, and incorporated herein by
reference.
(i) Stock Incentive Plan.* Refiled as an exhibit to the Company's
1992 Annual Report on Form 10-K filed
March 30, 1993, and incorporated herein by
reference.
(j) Amendment to Stock Incentive Plan.* Refiled as an exhibit to the Company's
1992 Annual Report on Form 10-K filed
March 30, 1993, and incorporated herein by
reference.
</TABLE>
20
<PAGE> 24
<TABLE>
<CAPTION>
DESCRIPTION CROSS REFERENCE OR PAGE NUMBER
----------- ------------------------------
<S> <C> <C>
(k) Intercompany Agreement between Riverwood Filed as an exhibit hereto.
and Manville, dated June 1, 1992.
(l) Treasury Management Agreement between Filed as an exhibit hereto.
Riverwood and Manville, dated
June 17, 1992.
(m) Tax Sharing Agreement between Riverwood Filed as an exhibit hereto.
and Manville, dated June 17, 1992.
(n) Corporate Agreement, between Riverwood Filed as an exhibit hereto.
and Manville, dated June 24, 1992.
(o) Intercompany Agreement between Manville Filed as an exhibit to the Company's Form
and Schuller, dated as of September 22, 10-Q for the quarter ended September 30,
1994. 1994, filed on November 14, 1994, and
incorporated herein by reference.
(p) Treasury Management Agreement between Filed as an exhibit to the Company's Form
Manville and Schuller, dated as of 10-Q for the quarter ended September 30,
September 22, 1994. 1994, filed on November 14, 1994, and
incorporated herein by reference.
(q) Tax Sharing Agreement between Manville Filed as an exhibit to the Company's Form
and Schuller, dated as of January 1, 10-Q for the quarter ended September 30,
1994. 1994, filed on November 14, 1994, and
incorporated herein by reference.
(r) Corporate Agreement between Manville and Filed as an exhibit to the Company's Form
Schuller, dated as of September 22, 1994. 10-Q for the quarter ended September 30,
1994, filed on November 14, 1994, and
incorporated herein by reference.
(s) Selling Securityholders' Agreement, Filed as an exhibit hereto.
between Manville and the Trust, dated as
of September 22, 1994.
</TABLE>
21
<PAGE> 25
<TABLE>
<CAPTION>
DESCRIPTION CROSS REFERENCE OR PAGE NUMBER
----------- ------------------------------
<S> <C> <C>
(t) Manville Personal Injury Settlement Trust Refiled as an exhibit to the Company's
Agreement between Registrant and the 1992 Annual Report on Form 10-K filed
persons listed therein as Trustees of the March 30, 1993, and incorporated herein by
Trust, dated November 28, 1988. reference.
(u) Amended and Restated Supplemental Filed as an exhibit to the Company's Form
Agreement between Manville and the Trust, 8-K filed November 23, 1990 and
dated as of November 15, 1990. incorporated herein by reference.
(v) First Amendment to the Amended and Filed as an exhibit to the Company's Form
Restated Supplemental Agreement between 8-K dated August 25, 1993 and filed
Manville and the Trust, dated as of September 2, 1993 and incorporated herein
August 25, 1993. by reference.
(w) Second Amendment to the Amended and Filed as an exhibit hereto.
Restated Supplemental Agreement between
Manville and the Trust, dated as of
September 22, 1994.
(x) Manville Property Damage Settlement Trust Refiled as an exhibit to the Company's
Agreement between Manville and the 1992 Annual Report on Form 10-K filed
persons listed therein as Trustees of the March 30, 1993, and incorporated herein by
Manville Property Damage Settlement Trust reference.
dated November 28, 1988.
(y) Amended and Restated Supplemental Filed as an exhibit to the Company's Form
Agreement between Manville, the Trust and 8-K filed November 23, 1990 and
the Manville Property Damage Settlement incorporated herein by reference.
Trust, dated as of November 15, 1990.
(z) Fourth Amendment, dated August 6, 1992, Filed as an exhibit to the Company's 1992
to the Manville Personal Injury Annual Report on Form 10-K filed March 30,
Settlement Trust Agreement among Johns- 1993, and incorporated herein by
Manville Corporation et al, as Trustors, reference.
Donald M. Blinken et al, as Former
Trustees and Christian E. Markey Jr. as
Trustee for the Manville Personal Injury
Settlement Trust.
(aa) Fifth Amendment, dated December 9, 1992, Filed as an exhibit to the Company's 1992
to the Manville Personal Injury Annual Report on Form 10-K filed March 30,
Settlement Trust Agreement among 1993, and incorporated herein by
Johns-Manville Corporation et al, as reference.
Trustors, Donald M. Blinken et al, as
Former Trustees and Christian E.
Markey Jr. as Trustee for the Trust.
</TABLE>
22
<PAGE> 26
<TABLE>
<CAPTION>
DESCRIPTION CROSS REFERENCE OR PAGE NUMBER
----------- ------------------------------
<S> <C> <C>
(ab) Sixth Amendment, dated as of November 5, Filed as an exhibit hereto.
1993, to the Manville Personal Injury
Settlement Trust Agreement among Johns-
Manville Corporation et al, as Trustors,
Donald M. Blinken et al, as Former
Trustees, and Christian E. Markey, Jr.,
as Trustee of the Trust.
(ac) Seventh Amendment, dated as of September Filed as an exhibit to the Company's Form
22, 1994, to the Manville Personal Injury 10-Q for the quarter ended September 30,
Settlement Trust Agreement amon Johns- 1994, filed on November 14, 1994, and
Manville Corporation et al, as Trustors, incorporated herein by reference.
Donald M. Blinken et al, as Former
Trustees, and Christian E. Markey, Jr.,
as Trustee of the Trust.
(ad) Agreement between Manville and the Trust, Filed as an exhibit hereto.
dated June 24, 1992.
(ae) Bonds Repurchase Agreement dated Filed as an exhibit the Company's Form 8-K
September 22, 1994, between Manville and dated September 22, 1994, filed October 5,
the Trust. 1994, and incorporated herein by
reference.
(af) Amendment and Agreement between Manville Filed as an exhibit hereto.
and the Trust, dated December 2, 1994.
(ag) Supplemental Retirement Agreement between Filed as an exhibit hereto.
W. Thomas Stephens and the Registrant,
effective as of November 4, 1994, with
related agreements*
(ah) Supplemental Retirement Agreement between Filed as an exhibit hereto.
Richard B. Von Wald and the Registrant,
effective as of November 4, 1994, with
related agreements.*
(ai) Schuller 1994 Long-Term Cash Incentive Filed as an exhibit hereto.
Compensation Plan.*
(aj) Amended and Restated Indenture between Filed as an exhibit hereto.
Schuller and The Bank of New York, as
Trustee, dated December 15, 1994.
13. 1994 Annual Report. Pages 8 through 78 of the Manville 1994
Annual Report are filed as an exhibit
hereto.
</TABLE>
23
<PAGE> 27
<TABLE>
<CAPTION>
DESCRIPTION CROSS REFERENCE OR PAGE NUMBER
----------- ------------------------------
<S> <C>
21. List of subsidiaries. Filed as an exhibit hereto.
23. Consent of Coopers & Lybrand L.L.P. Filed as an exhibit hereto.
24. Power of Attorney. Page 26.
27. Financial Data Schedule. Filed as an exhibit hereto.
</TABLE>
*Management contract or compensatory plan or arrangements.
24
<PAGE> 28
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the Company
hereby agrees to furnish a copy of each document set forth below upon request
of the Securities and Exchange Commission.
Indenture of Riverwood International Corporation for
$150 million of 10 3/4% Senior Notes Due 2000, dated June 24,
1992.
Indenture of Riverwood International Corporation for
$250 million of 11 1/4% Senior Subordinated Notes Due 2002,
dated June 24, 1992.
Indenture of Riverwood International Corporation for
$125 million of 6 3/4% Convertible Subordinated Notes Due
2003, dated September 15, 1993.
Indenture of Riverwood International Corporation for
$37.5 million of 10 3/4% Senior Notes II Due 2000, dated as of
June 24, 1992, as amended and restated on October 14, 1993.
Indenture of Riverwood International Corporation for
$62.5 million of 11 1/4% Senior Subordinated Notes II Due
2002, dated as of June 24, 1992, as amended and restated on
October 14, 1993.
Indenture of Riverwood International Corporation for
$100 million of 10 3/8% Senior Subordinated Notes Due 2004,
dated June 30, 1994.
Agreement amending and restating Note Agreements among
Riverwood International USA, Inc., as Borrower; Riverwood
International Corporation, as Guarantor; and The Prudential
Insurance Company of America, as Servicer of The Chase
Manhattan Bank, National Association, as Trustee for Private
Placement Trust Series 1984F, Metropolitan Life Insurance
Company, Aetna Life Insurance Company, The Mutual Life
Insurance Company of New York, MONY Life Insurance Company of
America, as Lenders, dated as of May 25, 1993.
$50 million Credit Agreement, among Riverwood
International Corporation; Riverwood International USA, Inc.;
various listed banks; and Morgan Guaranty Trust Company of New
York, dated December 10, 1992.
$100 million Amended and Restated Credit Agreement of
Riverwood International Georgia, Inc. with Midland Bank PLC,
New York Branch, as Agent, dated June 30, 1992.
$60 million (Australian Dollars) Secured Facility
Agreement between Multiboard Packaging Pty. Ltd. and Australia
and New Zealand Banking Group Limited, dated September 21,
1992.
$125 million Credit Agreement among Riverwood
International Corporation, the Banks listed therein, Morgan
Guaranty Trust Company of New York, an Agent, and Canadian
Imperial Bank of Commerce as Co-Agent and Security Agent.
Class 6 Interest Indenture between Manville and the Bank
of New York, formerly known as Irving Trust Company, Trustee,
dated November 28, 1988.
25
<PAGE> 29
POWER OF ATTORNEY
Know all men by these presents that each person whose
signature appears below does hereby constitute and appoint W. Thomas Stephens,
Robert E. Cole and Richard B. Von Wald, and each of them, with full power to
act without the other, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign all amendments to this report,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission granting unto
said attorney-in-fact and agent, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them, or his substitute or substitutes,
lawfully do or cause to be done by virtue hereof.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 as of the 30th day of
March, 1995.
MANVILLE CORPORATION
(Registrant)
By: /s/ W. Thomas Stephens
W. Thomas Stephens
Chairman of the Board, President,
Chief Executive Officer and a Director
26
<PAGE> 30
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities indicated as of March 30, 1995.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ W. Thomas Stephens Chairman of the Board, President,
----------------------------------------------------- Chief Executive Officer and Director
(W. Thomas Stephens) (Principal Executive Officer)
/s/ Robert E. Cole Senior Vice President, Chief Financial Officer
----------------------------------------------------- (Principal Accounting and Financial Officer)
(Robert E. Cole)
/s/ Bette B. Anderson Director
-----------------------------------------------------
(Bette B. Anderson)
/s/ John C. Burton Director
-----------------------------------------------------
(John C. Burton)
/s/ Ernest H. Drew Director
-----------------------------------------------------
(Ernest H. Drew)
/s/ Robert A. Falise Director
-----------------------------------------------------
(Robert A. Falise)
/s/ Robert E. Fowler, Jr. Director
-----------------------------------------------------
(Robert E. Fowler, Jr.)
/s/ Todd Goodwin Director
-----------------------------------------------------
(Todd Goodwin)
/s/ Michael N. Hammes Director
-----------------------------------------------------
(Michael N. Hammes)
/s/ John Nils Hanson Director
-----------------------------------------------------
(John Nils Hanson)
/s/ Louis Klein, Jr. Director
-----------------------------------------------------
(Louis Klein, Jr.)
/s/ Stanley J. Levy Director
-----------------------------------------------------
(Stanley J. Levy)
/s/ Christian E. Markey, Jr. Director
-----------------------------------------------------
(Christian E. Markey, Jr.)
/s/ Will M. Storey Director
-----------------------------------------------------
(Will M. Storey)
/s/ Raymond S. Troubh Director
-----------------------------------------------------
(Raymond S. Troubh)
</TABLE>
27
<PAGE> 31
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Directors of Manville Corporation:
Our report on the consolidated financial statements of Manville Corporation has
been incorporated by reference in this Form 10-K from page 71 of the 1994
Annual Report to Stockholders of Manville Corporation. In connection with our
audits of such financial statements, we have also audited the related financial
statement schedule listed in the Index to Financial Statement Schedule on page
29 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Denver, Colorado
February 6, 1995
28
<PAGE> 32
MANVILLE CORPORATION
INDEX TO FINANCIAL STATEMENT SCHEDULE
TO FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1994
Schedule Page
-------- ----
II - Valuation and qualifying accounts, for each of
the three years in the period ended
December 31, 1994.................................. 30
29
<PAGE> 33
MANVILLE CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Additions
---------------------------
Charged
Balance at Charged to to Other Balance at
Beginning Costs and Accounts Deductions End of
Classification of Year Expenses (a) (b) Year
-------------- ---------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1994
----
Allowances Reducing
the Assets in the
Balance Sheet:
Doubtful accounts
receivable $ 7,262 $ 1,688 $ 1,423 $ 7,527
Cash discounts 1,489 $14,590 14,542 1,537
Other allowances 13,815 28,637 26,687 15,765
Deferred tax
assets 94,795 1,654 96,449
-------- ------- ------- ------- --------
Total $117,361 $ 3,342 $43,227 $42,652 $121,278
======== ======= ======= ======= ========
1993
----
Allowances Reducing
the Assets in the
Balance Sheet:
Doubtful accounts
receivable $ 7,546 $ 2,604 $ 2,888 $ 7,262
Cash discounts 1,457 $15,119 15,087 1,489
Other allowances 13,094 26,323 25,602 13,815
Deferred tax
assets 87,795 7,000 94,795
-------- ------- ------- ------- --------
Total $109,892 $ 9,604 $41,442 $43,577 $117,361
======== ======= ======= ======= ========
1992
----
Allowances Reducing
the Assets in the
Balance Sheet:
Doubtful accounts
receivable $ 8,057 $ 2,494 $ 3,005 $ 7,546
Cash discounts 1,225 $14,685 14,453 1,457
Other allowances 7,566 30,998 25,470 13,094
Deferred tax
assets 68,663 16,283 2,849 87,795
-------- ------- ------- ------- --------
Total $ 85,511 $18,777 $48,532 $42,928 $109,892
======== ======= ======= ======= ========
</TABLE>
NOTES:
(a) Charged against sales, except for adjustments to deferred tax assets and
the related valuation allowance which were charged to income taxes.
(b) Principally charges for which reserves were provided, net of recoveries.
30
<PAGE> 34
ADDITIONAL INFORMATION
Individuals interested in receiving additional information may contact the
following:
<TABLE>
<S> <C>
FOR COMPANY INFORMATION FOR PRODUCT INFORMATION
Call (303) 978-2000 Call (303) 978-4900 or (800) 654-3103
or write to: or write to:
Manville Corporation Manville Corporation
Investor Relations Product Information
P. O. Box 5108 P. O. Box 5108
Denver, CO 80217-5108 Denver, CO 80217-5108
TRANSFER AGENT AND REGISTRAR INDEPENDENT ACCOUNTANTS
First Chicago Trust Company of New York Coopers & Lybrand L.L.P.
P. O. Box 2532, Suite 2532 370 Seventeenth Street, Suite 3300
Jersey City, NJ 07303-2532 Denver, CO 80202-5633
(send stockholder address
changes to the above address)
</TABLE>
31
<PAGE> 35
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Page
------- ----
<S> <C> <C>
10. (a) Schuller International Employees Retirement Plan.*
(k) Intercompany Agreement between Riverwood and Manville, dated June 1, 1992.
(l) Treasury Management Agreement between Riverwood and Manville, dated
June 17, 1992.
(m) Tax Sharing Agreement between Riverwood and Manville, dated June 17, 1992.
(n) Corporate Agreement, between Riverwood and Manville, dated June 24, 1992.
(s) Selling Securityholders' Agreement, between Manville and the Trust, dated as
of September 22, 1994.
(w) Second Amendment to the Amended and Restated Supplemental Agreement between
Manville and the Trust, dated as of September 22, 1994.
(ab) Sixth Amendment, dated as of November 5, 1993, to the Manville Personal Injury
Settlement Trust Agreement among Johns-Manville Corporation et al, as Trustors,
Donald M. Blinken et al, as Former Trustees, and Christian E. Markey, Jr.,
as Trustee of the Trust.
(ad) Agreement between Manville and the Trust, dated June 24, 1992.
(af) Amendment and Agreement between Manville and the Trust, dated December 2, 1994.
(ag) Supplemental Retirement Agreement between W. Thomas Stephens and the Registrant,
effective as of November 4, 1994, with related agreements*
(ah) Supplemental Retirement Agreement between Richard B. Von Wald and the Registrant,
effective as of November 4, 1994, with related agreements.*
(ai) Schuller 1994 Long-Term Cash Incentive Compensation Plan.*
(aj) Amended and Restated Indenture between Schuller and The Bank of New York, as
Trustee, dated December 15, 1994.
13. 1994 Annual Report.
21. List of subsidiaries.
23. Consent of Coopers & Lybrand L.L.P.
24. Power of Attorney.
27. Financial Data Schedule.
</TABLE>
*Management contract or compensatory plan or arrangements.
<PAGE> 1
Exhibit 10(a)
MANVILLE EMPLOYEES RETIREMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1989;
AND AS FURTHER AMENDED EFFECTIVE SEPTEMBER 1, 1991;
AND AS FURTHER AMENDED EFFECTIVE JANUARY 1, 1992)
October 8, 1992
<PAGE> 2
MANVILLE EMPLOYEES RETIREMENT PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2. MEMBERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.01 Membership Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.02 Events Affecting Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.03 Membership Upon Reemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 3. SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.01 Accumulated Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.02 Benefit Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.03 Restoration to Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.04 Special Provisions for Members With Service at Acquired Companies . . . . . . . . . . . . 17
ARTICLE 4. ELIGIBILITY FOR AND AMOUNT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.01 Normal Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.02 Late Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.03 Early Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.04 Deferred Vested Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.05 Disability Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.06 Spouse's Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.07 Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.08 Payments to Persons Retired Under the Prior Plan . . . . . . . . . . . . . . . . . . . . . 26
4.09 Thrift Plan Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.10 Maximum Benefit Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 5. PAYMENT OF PENSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.01 Normal Form of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.02 Optional Forms of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.03 Election of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.04 Commencement of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.05 Distribution Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 6. CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.01 Company's Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.02 Return of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.03 Member's Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 7. ADMINISTRATION OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.01 Retirement Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.02 Investment Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.03 Service in More Than One Fiduciary Capacity . . . . . . . . . . . . . . . . . . . . . . . 46
7.04 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.05 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 8. MANAGEMENT OF FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.01 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.02 Exclusive Benefit Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.03 Appointment of Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 9. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.01 Nonalienation and Qualified Domestic Relations Orders . . . . . . . . . . . . . . . . . . 48
9.02 Conditions of Employment Not Affected by Plan . . . . . . . . . . . . . . . . . . . . . . 48
9.03 Facility of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.04 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.05 Top-Heavy Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.06 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 10. AMENDMENT, MERGER AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.01 Amendment of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.02 Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.03 Additional Participating Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.04 Termination of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
10.05 Limitation Concerning 25 Highest Paid Employees . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 11. TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
11.01 Transfers To and From an Affiliated Employer . . . . . . . . . . . . . . . . . . . . . . . 57
11.02 Transfers To and From Hourly Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.03 Transfers To and From Riverwood Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
<PAGE> 4
ARTICLE 1. DEFINITIONS
1.01 "ACCRUED BENEFIT" means, as of any date of determination, the normal
retirement Pension determined under the Plan on the basis of the
Member's Average Final Salary and Benefit Service to that date of
determination.
1.02 "ACCUMULATED CONTRIBUTIONS" means the Member's total contributions, if
any, made to the Plan prior to January 2, 1986, increased by an amount
equal to the sum of (a) (b) and (c) below:
(a) if the Member elected under Section 5.01(b) of the Manville
Salaried Retirement Plan as in effect on July 1, 1968 to leave
on deposit all of the Member's Accumulated Contributions made
under the Retirement Plan of Johns-Manville Corporation and
subsidiaries as in effect on June 30, 1968, an amount equal to
the excess, if any, of those Accumulated Contributions over
the amount that would have been required if the Member's
election had been under Section 5.01(a) of the Manville
Salaried Retirement Plan as in effect on July 1, 1968; plus
(b) the supplemental contributions, if any, the Member elected to
make under Section 5.03 of the Manville Salaried Retirement
Plan as in effect on July 1, 1968, plus
(c) earnings credited on such contributions as of December 31,
1985.
1.03 "ACCUMULATED SERVICE" means service recognized for purposes of
determining eligibility for a vested Pension and retirement under the
Plan, as defined in Section 3.01.
1.04 "ADJUSTMENT FACTOR" means the cost of living adjustment factor
prescribed by the Secretary of the Treasury under Section 415(d) of
the Code and applied to such items and in such manner as the Secretary
shall provide.
1.05 "AFFILIATED EMPLOYER" means any company which is a member of a
controlled group of corporations (as defined in Section 414(b) of the
Code) which also includes as a member the Company; any trade or
business under common control (as defined in Section 414(c) of the
Code) with the Company; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in
Section 414(m) of the Code) which includes the Company; and any other
entity required to be aggregated with the Company pursuant to
regulations under Section 414(o) of the Code. Notwithstanding the
foregoing sentence, for purposes of Section 4.10, the definitions in
Sections 414(b) and (c) of the Code shall be modified as provided in
Section 415(h) of the Code.
<PAGE> 5
Page 2
1.06 "ANNUITY STARTING DATE" means the first day of the first period for
which an amount is paid as an annuity or any other form.
1.07 "APPENDIX A" means the list of non-union hourly locations,
subsidiaries and/or employee classifications authorized by the Company
to participate in the Plan.
1.08 "APPENDIX B" means the provisions for minimum benefits for Members of
the Plan as of December 31, 1988.
1.09 "AVERAGE FINAL SALARY" means the annual Pensionable Wages of a Member
paid during the five consecutive Plan Years in the last ten Plan Years
of the Member's Benefit Service affording the highest average, subject
to the following rules:
(a) If, in any period included in the computation of Average Final
Salary, a Member who is a Part-time Employee and has completed
less than the normal number of hours for a Full-time Employee
similarly employed, the Member's Pensionable Wages for that
period shall be adjusted to a full-time basis for the purpose
of that computation. The adjustment will be made by
multiplying the Member's Pensionable Wages by the ratio of the
hours worked by a similarly situated Full-time Employee to the
Member's hours worked in that period.
(b) If, in any period included in the computation of Average Final
Salary, a Member who has previous employment with the Company
as an hourly employee, was not covered during that period of
employment by this Plan, and who completed less than the
normal number of hours for a Full-time Employee similarly
employed, the Member's Pensionable Wages for that period shall
be adjusted to a full-time basis for the purpose of that
computation. The adjustment will be made by multiplying the
Member's Pensionable Wages by the ratio of the hours worked by
a similarly situated Full- time Employee to the Member's hours
worked in that period.
(c) If a period of military service is included in the last ten
Plan Years of a Member's Benefit Service, Pensionable Wages
shall include, for that period of military service, an amount
based on Pensionable Wages in effect immediately prior to the
period of military service.
<PAGE> 6
Page 3
(d) In the case of an Employee who is rehired, the Employee's
annual Pensionable Wages during the year in which termination
occurred and the year in which rehire occurred shall not be
included as one of the last ten calendar years of the Member's
Benefit Service, unless such Pensionable Wages are greater
than the Pensionable Wages in the calendar year preceding the
year in which termination occurred.
(e) If a Member completes less than five full Plan Years under the
Plan, the Member's Pensionable Wages for each portion of a
Plan Year worked will be annualized by the ratio of actual
hours worked to the hours worked by a Full- time Employee for
that Plan Year, and the Average Final Salary will be
determined by averaging the Pensionable Wages for all such
Plan Years.
(f) If using the Pensionable Wages paid to a Member in his final,
partial year of employment would produce an Average Final
Salary that is greater than the Average Final Salary
otherwise calculated, then his final, partial year of
employment shall be added to his last ten calendar years in
calculating his Average Final Salary.
1.10 "BENEFICIARY" means the person named by a Member by written
designation filed with the Retirement Committee to receive payments
after the Member's death, pursuant to Section 4.07.
1.11 "BENEFIT SERVICE" means service recognized for purposes of computing
the amount of any benefit, as provided in Section 3.02.
1.12 "BOARD OF DIRECTORS" or "BOARD" means the Board of Directors of
Manville Corporation.
1.13 "BREAK IN SERVICE" means a period which constitutes a break in an
Employee's Accumulated Service, as provided in Section 3.01.
1.14 "CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
1.15 "COMPANY" means Manville Corporation or any successor by merger,
purchase or otherwise with respect to its Employees; and any other
company participating in the Plan, as provided in Section 10.03, with
respect to its Employees.
<PAGE> 7
Page 4
1.16 "CONTINGENT ANNUITANT" means the person named by a Member by written
designation, filed with the Retirement Committee to receive payments
after the Member's death under an optional form of payment pursuant to
Section 5.02.
1.17 "COVERED COMPENSATION" means for any Plan Year, the average of the
taxable wage bases in effect under Section 230 of the Social Security
Act for each year in the 35-year period ending with the year prior to
the year in which the Member terminates. For purposes of this
definition, if a Member's date of termination precedes his attainment
of Social Security Retirement Age, he shall be deemed to attain his
Social Security Retirement Age in the year of termination. Covered
Compensation shall be frozen at Social Security Retirement Age, and
shall be frozen at the date of eligibility for the Company's long-term
disability plan.
1.18 "DISABLED EMPLOYEE" means a Member eligible to receive an immediate
disability retirement Pension under Section 4.05(a), or a deferred
disability retirement Pension under Section 4.05(b).
1.19 "EFFECTIVE DATE" means the effective date of this amended and restated
Plan which is January 1, 1989, unless otherwise indicated herein. The
initial effective date of the Plan is July 1, 1941.
1.20 "EMPLOYEE" is defined and limited as follows:
(a) Employee means:
(i) any person who is employed by Manville Corporation or
any subsidiary which has been approved for
participation by the Board of Directors and who is
classified as a salaried employee by the Company, or
is classified as an hourly employee by the Company
and is a member of a participating location as so
provided in Appendix A.
(ii) any person who is employed on a full-time basis
outside the continental limits of the United States
by a foreign branch or subsidiary or a domestic
subsidiary of Manville Corporation, with whom
Manville Corporation has entered into an agreement
concerning Social Security coverage under Section
3121(l) of the Internal Revenue Code, if that person
is:
(A) a citizen of the United States, and
<PAGE> 8
Page 5
(B) not a participant in a funded plan of
deferred compensation (whether or not a plan
described in Section 401(a), 403(a) or 405(a)
of the Internal Revenue Code) of any other
entity with respect to remuneration paid by
the subsidiary or foreign branch.
(b) No person shall be an Employee for purposes of the Plan who:
(i) is a Leased Employee,
(ii) is employed in a collective bargaining unit
represented by a collective bargaining agent which
does not have an agreement with the Company making
this Plan applicable to that unit, or
(iii) is accruing benefits under any other qualified
defined benefit pension plan of the Company, unless
otherwise provided by the Board of Directors.
1.21 "EMPLOYEE PROVIDED PORTION OF THE PENSION" means the Member's
Accumulated Contributions, adjusted for investment earnings realized
by the Fund through December 31, 1987, and increased by 120% of the
Federal Mid-Term Rate from January 1, 1988 to the date of
determination and, if such date is prior to his Normal Retirement
Date, increased with interest from the date of determination to his
Normal Retirement Date at the rate or rates (immediate or deferred, as
appropriate) used by the PBGC for determining lump sum payments upon
plan termination for single employer plans, and shall be converted
into an annuity of actuarially equivalent value, based on the PBGC
immediate interest rate above, taking the form of payment of such
annuity into account.
1.22 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.23 "FULL-TIME EMPLOYEE" means any Employee who, on the basis of the
Employee's regularly-stated work schedule, is classified as a
Full-time Employee by the Company.
1.24 "FUND(S)" means the funds of the Plan maintained by the Trustee in
accordance with the terms of the Trust Agreement.
<PAGE> 9
Page 6
1.25 "HOUR OF SERVICE" means, with respect to any applicable computation
period:
(a) each hour for which an Employee is paid or entitled to payment
for the performance of duties for the Company or an Affiliated
Employer,
(b) each hour for which an Employee is paid or entitled to payment
by the Company or an Affiliated Employer on account of a
period during which no duties are performed (whether or not
the employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence, but not more
than 501 hours for any single continuous period,
(c) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Company or an
Affiliated Employer, excluding any hour credited under (a) or
(b) above, which shall be credited to the computation period
or periods to which the award, agreement or payment pertains,
rather than to the computation period in which the award,
agreement or payment is made, and
(d) solely for purposes of determining whether an Employee has
incurred a Break in Service under the Plan, each hour for
which an Employee would normally be credited under paragraph
(a) or (b) above during a period of Parental Leave, but not
more than 501 hours for any single continuous period.
However, the number of hours credited to an Employee under
this paragraph (d) during the computation period in which the
Parental Leave began, when added to the hours credited to an
Employee under paragraphs (a) through (c) above during that
computation period, shall not exceed 501. If the number of
hours credited under this paragraph (d) for the computation
period in which the Parental Leave began is zero, the
provisions of this paragraph (d) shall apply as though the
Parental Leave began in the immediately following computation
period.
No hours shall be credited on account of any period during which the
Employee performs no duties and receives payment solely for the
purpose of complying with unemployment compensation, workers'
compensation or disability insurance laws subject to the provisions of
Sections 1.09, 3.01 and 3.02. The Hours of Service credited shall be
determined as required by Title 29 of the Code of Federal Regulations,
Section 2530.200b-2(b) and (c).
<PAGE> 10
Page 7
1.26 "HOURLY PLAN" shall mean the Manville Hourly Retirement Plan, the
Manville Canadian Consolidated Retirement Plan, the Manville Forest
Products Hourly Retirement Plan, the Manville Forest Products
Packaging Hourly Retirement Plan, and the Manville Forest Products
Paperboard Hourly Retirement Plan.
1.27 "INVESTMENT COMMITTEE" means the persons appointed by the Board of
Directors to oversee the funding policy and investment of the Funds of
the Plan as provided in Article 7.
1.28 "LEASED EMPLOYEE" means any person performing services for the Company
or an Affiliated Employer as a Leased Employee as defined in Section
414(n) of the Code. In the case of any person who is a Leased
Employee before or after a period of service as an Employee, the
entire period during which he has performed services as a Leased
Employee shall be counted as service as an Employee for all purposes
of the Plan, except that he shall not, by reasons of that status,
become a Member of the Plan.
1.29 "LIMITATION YEAR" means the calendar year.
1.30 "MEMBER" means any person included in the membership of the Plan, as
provided in Article 2.
1.31 "NORMAL RETIREMENT AGE" means an Employee's 65th birthday.
1.32 "NORMAL RETIREMENT DATE" means the first day of the calendar month
coinciding with or immediately following an Employee's attainment of
age 65.
1.33 "PART-TIME EMPLOYEE" means any Employee who, on the basis of the
Employee's regularly-stated work schedule, is classified as a
Part-time Employee or temporary Employee by the Company.
<PAGE> 11
Page 8
1.34 "PARENTAL LEAVE" means a period in which the Employee is absent from
work immediately following his active employment because of the
Employee's pregnancy, the birth of the Employee's child, or the
placement of a child with the Employee in connection with the adoption
of that child by the Employee, or for purposes of caring for that
child for a period beginning immediately following birth or placement.
1.35 "PENSION" means annual payments under the Plan, as provided in Article
5.
1.36 "PENSIONABLE WAGES" means the total cash remuneration paid to an
Employee for services rendered to the Company, during the Plan Year
determined prior to any contributions under a "qualified cash or
deferred arrangement" (as defined under Section 401(k) of the Code and
its applicable regulations), and prior to any contributions under a
"cafeteria plan" (as defined under Section 125 of the Code and its
applicable regulations), and including remuneration for items such as
overtime, commissions, annual bonuses, and amounts paid under the
Opportunity Pay Plan; but excluding remuneration for items such as any
one-time bonuses, all non-cash remuneration, living expenses,
severance pay, the Company's cost for any public or private employee
benefit plan, any remuneration received under the Company's Award for
Special Merit Plan, the Executive Long-Term Cash Incentive Plan, or
any flex credits paid in cash by the Company under the Manville Flex
Benefits Plan.
The Pensionable Wages for a period of absence which is counted as
Benefit Service shall be the Member's rate of Pensionable Wages in
effect immediately before the period of absence.
In the case of a Disabled Employee eligible for a deferred disability
retirement under Section 4.05(b), Pensionable Wages shall include, for
any period prior to the Employee's attainment of age 65 during which
benefits under a long-term disability plan of the Company are
received, an amount based on the greater of:
(a) Pensionable Wages received in the calendar year prior to the
calendar year in which the Member is placed on the Company's
long-term disability plan, or
<PAGE> 12
Page 9
(b) Pensionable Wages, excluding Pensionable Wages paid in lieu of
vacation, for the calendar year in which the Member is placed
on the Company's long-term disability plan, plus base
compensation that would have been paid from the date the
Member is placed on the Company's long-term disability plan
through the end of that Plan Year.
Pensionable Wages for Plan purposes shall not exceed $200,000 per
year, multiplied by the Adjustment Factor.
1.37 "PLAN" means the Manville Employees Retirement Plan as set forth in
this document or as amended from time to time. Immediately prior to
January 1, 1989 the Plan was known as the Manville Salaried Retirement
Plan.
1.38 "PRIOR PLAN" means the Manville Salaried Retirement Plan or the
Manville Forest Products Salaried Retirement Plan, whichever is
applicable, (including any predecessor plans thereto) in force and
effect for the period prior to January 1, 1989, the Plan hereby being
amended and restated. Any reference herein to the Prior Plan as of a
certain date or for a certain period shall be deemed a reference to
the Prior Plan as then in effect.
1.39 "PLAN YEAR" means the calendar year.
1.40 "QUALIFIED JOINT AND SURVIVOR ANNUITY" means an annuity described in
Section 5.01(b).
1.41 "RETIREMENT COMMITTEE" means the persons appointed by the Board of
Directors to administer and supervise the Plan as provided in Article
7.01.
1.42 "SEVERANCE DATE" means the earlier of (a) the date an Employee quits,
retires, is discharged or dies, or (b) the first anniversary of the
date on which an Employee is first absent from service, with or
without pay, for any other reason such as vacation, sickness,
disability, layoff or leave of absence.
<PAGE> 13
Page 10
1.43 "SOCIAL SECURITY RETIREMENT AGE" means age 65 with respect to a Member
who was born before January 1, 1938; age 66 with respect to a Member
who was born after December 31, 1937 and before January 1, 1955; and
age 67 with respect to a Member who was born after December 31, 1954.
1.44 "SPOUSAL CONSENT" means written consent given by a Member's spouse to
an election made by the Member which specifies the form of Pension and
the Contingent Annuitant designated by the Member. The form of
Pension or the specified Contingent Annuitant shall not be changed
unless further consent from the Member's spouse is given. Spousal
Consent shall be duly witnessed by a notary public and shall
acknowledge the effect on the spouse of the Member's election. The
requirement for Spousal Consent may be waived by the Retirement
Committee in accordance with applicable law. Spousal Consent shall be
applicable only to the particular spouse who provides such consent.
1.45 "SUSPENDIBLE MONTH" means:
(a) a month in which a Member who is a Full-time Employee receives
payment from the Company or an Affiliated Employer for a least
eight days of service during that month, or
(b) a four or five week payroll period ending in a month in which
the Member who is a Part-time Employee completes at least 40
Hours of Service with the Company.
1.46 "TRUSTEE" shall mean the Trustee or Trustees by whom the Funds of the
Plan are held, as provided in Article 8.
<PAGE> 14
Page 11
ARTICLE 2. MEMBERSHIP
2.01 MEMBERSHIP REQUIREMENTS
Every Employee of the Company on January 1, 1989 who was a Member of
the Plan on December 31, 1988 shall continue to be a Member. Every
other person in the employ of the Company shall become a Member of the
Plan as of the first day following the "Service Computation Year" in
which he completes 1000 Hours of Service, provided he is then an
Employee. For this purpose, "Service Computation Period" is the
12-month period beginning with the date of the Employee's first Hour
of Service, if he completes at least 1,000 Hours of Service during
such 12-month period, and (if he does not complete at least 1,000
Hours of Service during such 12-month period) is any Plan Year
following such date during which he completes at least 1,000 Hours of
Service. However, an Employee whose first day of employment was on or
after his 60th birthday and prior to January 1, 1988 shall be eligible
to become a Member on the later of January 1, 1988 or the date he
completes one year of Accumulated Service, provided he is then an
Employee.
2.02 EVENTS AFFECTING MEMBERSHIP
An Employee's membership in the Plan shall end when he is no longer
employed by the Company unless he is entitled to either an immediate
or a deferred Pension under the Plan. Membership shall continue while
on an approved leave of absence from service during which the Employee
is receiving benefits under the Company's long-term disability plan,
or during a period while he is not an Employee but is in the employ of
the Company or an Affiliated Employer; however, no Benefit Service
shall be counted for that period, except as specifically provided in
Article 3 and Article 11.
2.03 MEMBERSHIP UPON REEMPLOYMENT
If an Employee's membership in the Plan ends and he again becomes an
Employee, he shall again become a Member as of his date of restoration
to service as an Employee.
<PAGE> 15
Page 12
ARTICLE 3. SERVICE
3.01 ACCUMULATED SERVICE
(a) Accumulated Service, with respect to any Employee, shall mean
the period of employment with the Company, whether or not as
an Employee, beginning on the date the Employee first
completes one Hour of Service and ending on the Employee's
Severance Date. If an Employee's employment is terminated and
he is later reemployed within one year, the period between his
termination date and the date of his reemployment shall be
included in his Accumulated Service. A Break in Service shall
occur if an Employee is not reemployed within one year after
the Severance Date; provided, however, that if an Employee's
employment is terminated or if the Employee is otherwise
absent from work because of Parental Leave, a Break in Service
shall occur only if the Employee is not reemployed or does not
return to active service within two years of his Severance
Date. All periods of employment credited as Accumulated
Service shall be counted, regardless of any Break in Service;
provided, however, if an Employee who was a non- vested hourly
employee terminated employment prior to January 1, 1976,
incurred a Break in Service of one day or longer and is
re-employed by the Company, any service credited prior to
January 1, 1976 shall not be restored to such Employee.
(b) If an Employee shall have been absent from the service of the
Company because of service in the Armed Forces of the United
States, and if he shall have returned to the service of the
Company, having timely applied to return while his
reemployment rights were protected by law, that absence shall
not count as a Break in Service, but instead shall be counted
as Accumulated Service.
(c) In the case of a Disabled Employee who is eligible for a
deferred disability retirement under Section 4.05(b), any
period prior to the Employee's attainment of age 65 for which
the Employee is entitled to benefits under a group long-term
disability plan sponsored by the Company counts as Accumulated
Service.
(d) A period of layoff and a period during which an Employee is on
a leave of absence approved by the Company shall not be
considered Breaks in Service.
<PAGE> 16
Page 13
(e) For purposes of determining eligibility for vesting and
retirement, each of the following periods of service shall be
counted in a person's Accumulated Service to the extent that
it would be recognized under paragraphs (a) through (c) above
with respect to Employees:
(i) a period of service as an employee, but not an
Employee of the Company, and
(ii) a period of service as an employee of an Affiliated
Employer.
3.02 BENEFIT SERVICE
Benefit Service prior to January 1, 1989 shall be determined under the
provisions of the Prior Plan. For any year, Benefit Service shall not
exceed one full year less any Benefit Service granted to the Employee
for that year by any other defined benefit plan of the Company or an
Affiliated Employer. Benefit Service shall not be credited for any
period in which the Employee is not credited with Accumulated Service.
(a) Benefit Service shall include:
(i) With respect to any Member who is a Full-time
Employee, the period of employment with the Company
beginning on the date the Member first completes an
Hour of Service and ending on the Member's Severance
Date, subject to the rules contained in this Section
3.02.
(ii) Any Member who is a Part-time Employee must complete
at least 1,000 Hours of Service in a Plan Year in
order to receive credit for Benefit Service during
that Plan Year (except as noted below), and the
Benefit Service counted for any Plan Year shall be a
fraction, the numerator of which is the number of
Hours of Service as a Member which the Part-time
Employee completed during the Plan Year, and the
denominator is 2,080. Notwithstanding the above,
Benefit Service will be counted as provided above in
this paragraph for the first Plan Year of the
Part-time Employee's employment (regardless of the
number of Hours of Service the Part-time Employee
completes in his first Plan Year of employment) if
such Part-time Employee completes at least 1,000
Hours of Service in the 12-month period beginning
with the date of his first Hour of Service, provided
the Employee is an active Member of the Plan on or
after January 1, 1992. This provision shall also
apply in the first year of re-employment of a Member
who is
<PAGE> 17
Page 14
rehired as a Part-time Employee and whose previous
period(s) of employment was as a Full-time Employee.
In addition, the Part-time Employee shall not be
required to complete at least 1,000 Hours of Service
during the Plan Year in which he terminates
employment and Benefit Service will be counted as
provided above in this paragraph for such Plan Year.
(iii) Any period of absence from service with the Company
due to service in the Armed Forces of the United
States which is counted in a Member's Accumulated
Service, as provided in Section 3.01(c)
(iv) any period during which an Employee is on an approved
leave of absence, including Parental Leave and
layoff, up to one year. For a Part-time Employee,
such period of approved leave of absence shall be
credited with the number of hours the Part-time
Employee was regularly scheduled to work during the
same period of time in the immediately preceeding
12-month period.
(v) In the case of a Disabled Employee who is eligible
for a deferred disability retirement under Section
4.05(b), any period prior to the Employee's
attainment of age 65 for which the Disabled Employee
is entitled to benefits under a group long-term
disability plan sponsored by the Company counts as
Benefit Service.
(vi) Any period between a Severance Date and a
reemployment date which is counted as Accumulated
Service as provided in Section 3.01(a).
(vii) Any period credited as Benefit Service for
transferred Employees as provided in Article 11.
(b) Benefit Service shall exclude:
(i) Employment after an Employee's Normal Retirement Date
unless such Employee has at least one Hour of Service
on or after January 1, 1988.
(ii) All service with respect to any Employee hired after
attaining age 60, unless such Employee has at least
one Hour of Service on or after January 1, 1988.
(iii) Any period in which a Member is not an Employee,
except as may otherwise be provided in Article 11 or
Appendix A.
<PAGE> 18
Page 15
(iv) Any Benefit Service credited prior to January 1, 1976
for an Employee who was a nonvested hourly employee
who terminated employment prior to January 1, 1976
and who is rehired by the Company, if he incurred a
Break in Service of one day or longer.
(v) All part-time and temporary service prior to January
1, 1976.
3.03 RESTORATION TO SERVICE
(a) If a Member in receipt of a Pension is restored to service
with the Company or an Affiliated Employer as an Employee, the
following shall apply:
(i) The Pension payable to such Member shall cease
(unless the provisions of Section 5.04(b) are
applicable), and any election of an optional benefit
in effect shall be void. A benefit shall be paid to
the Member's surviving spouse in accordance with the
provisions of Section 4.06 if the Member should die
in active service based on the Member's accrued
Pension at death (including any additional Pension
such Member accrues after his restoration to
service).
(ii) Any Accumulated Service and Benefit Service to which
he was entitled when he retired or terminated service
shall be restored to him.
(iii) Upon subsequent retirement or termination of service,
the Member's Pension shall be based on the benefit
formula then in effect and on the Member's
Pensionable Wages and Benefit Service both before and
after the period during which such Member was not in
the service of the Company, reduced by an amount of
actuarial equivalent value of the Pension, if any,
the Member received both before the date of his
restoration to service and before his Normal
Retirement Date (computed on the basis of The UP-1984
Table and the interest rates used by the PBGC for
valuing benefits for single employer plans that
terminate on the date of rehire).
(iv) The Member's Pension upon subsequent retirement shall
never be less than the amount of the Member's
previous Pension but modified to reflect any change
in the option or a change in the Contingent Annuitant
in effect on subsequent retirement and further
modified to reflect any refund or transfer of
Accumulated Contributions as provided in Article 6.
<PAGE> 19
Page 16
(v) Upon later retirement of a Member in service after
Normal Retirement Date, payment of the Member's
Pension shall resume effective as of the first day of
the month following such retirement, payable no later
than the third month after the latest Suspendible
Month during the period of restoration, and shall be
adjusted, if necessary, in compliance with Title 29
of the Code of Federal Regulations, Section
2530.203-3, in a consistent and nondiscriminatory
manner.
(b) If a Member entitled to but not in receipt of a Pension or a
former Member who did not receive a lump sum settlement is
restored to service , his Accumulated Service and Benefit
Service shall be determined as provided in Section 3.01 and
3.02. If such former Member is restored to service as an
Employee, he shall again become a Member as of his date of
restoration to service.
(c) If a Member entitled to but not in receipt of a Pension is
restored to service with the Company after incurring a Break
in Service, or if a former Member who received a lump sum
settlement in lieu of a Pension is restored to service with
the Company, the following shall apply:
(i) Any Benefit Service to which the Member was entitled
at the time of his termination of service shall be
restored to him, and the value of the lump sum
settlement is disregarded in the subsequent
determination of his Pension, provided he repays
(within five years of the date he is restored to
service) the amount of the lump sum settlement, if
any, received upon his initial termination of service
together with interest on that amount to the date of
repayment at the rate prescribed by Section
411(a)(7)(C) of the Code. If the Member does not
repay the lump sum settlement, his Pension (payable
at age 65) upon subsequent termination of employment
will be reduced by his Pension payable at age 65 for
which he previously received a lump sum settlement.
(ii) Upon the later termination or retirement of a Member
whose previous Benefit Service has been restored
under this paragraph (c), his Pension shall be based
on the benefit formula then in effect and on his
Pensionable Wages and Benefit Service before and
after the period when he was not in the service of
the Company, but in no event shall it be less than
the Member's previous Pension modified to reflect any
option in effect on subsequent retirement and
<PAGE> 20
Page 17
further modified to reflect any refund or transfer
of Accumulated Contributions as provided in Article 6.
(d) Prior to September 1, 1991, if the Employee upon previous
termination had assets of this Plan representing the present
value of the Accrued Benefit (as described in Section 5.01(c))
transferred to another retirement plan, the monthly benefit
due shall be reduced by that Accrued Benefit prior to any
reduction for early retirement or options elected.
Effective September 1, 1991, in the event a Member of the Plan
ceases to be an employee of the Company due to the divestiture
of a subsidiary, division or Affiliated Employer, and such
Member's accrued normal retirement Pension at that date
becomes an obligation of a successor employer's retirement
plan due to a transfer of both Trust assets and Plan
liabilities to the successor employer's retirement plan and
trust, then upon rehire by the Company or an Affiliated
Employer, such Member's normal retirement Pension computed
under Section 4.01 of the Plan shall not include any Benefit
Service earned prior to the date of such divestiture.
3.04 SPECIAL PROVISIONS FOR MEMBERS WITH SERVICE AT ACQUIRED COMPANIES
(a) The Board of Directors shall determine the extent, if any, to
which Accumulated Service and Benefit Service shall count for
service rendered by any employee while in the employ of any
acquired company prior to its acquisition by the Company.
(b) Any Member whose pre-acquisition service is included as
Benefit Service under Section 3.02 shall have the retirement
allowance computed under Section 4.01 reduced by any accrued
Pension earned under any other qualified defined benefit
pension plan for the same period of service, provided no
assets were transferred to the Company for such benefits.
<PAGE> 21
Page 18
ARTICLE 4. ELIGIBILITY FOR AND AMOUNT OF BENEFITS
4.01 NORMAL RETIREMENT
Certain Accrued Benefits for Members of the Plan as of December 31,
1988 are minimum benefits under this Plan and are specified in
Appendix B.
(a) The right of a Member to receive his normal retirement Pension
shall be nonforfeitable as of his Normal Retirement Age. A
Member may retire from service on a normal retirement Pension
beginning on his Normal Retirement Date, or he may postpone
his retirement and remain in service after his Normal
Retirement Date, in which event the provisions of Section 4.02
shall be applicable.
Each Member's normal retirement Pension shall be computed in
accordance with the terms of this Section 4.01 and all other
applicable Plan provisions as in effect on the Member's
Annuity Starting Date.
However, the annual normal retirement Pension shall never be
less than the greatest annual amount of reduced early
retirement Pension which the Member could have received under
Section 4.03 (or Appendix B but without consideration of the
Offset Due to the Refund of Accumulated Contributions) before
his Normal Retirement Date.
(b) Subject to the provisions of Section 5.01, the annual normal
retirement Pension payable upon retirement on a Member's
Normal Retirement Date shall be equal to the sum of
4.01(b)(i), (ii) and (iii):
(i) 1.02% of Average Final Salary up to Covered
Compensation plus 1.40% of Average Final Salary in
excess of Covered Compensation multiplied by Benefit
Service up to 35 years,
(ii) 1.33% of Average Final Salary multiplied by Benefit
Service in excess of 35 years, and
(iii) 2.5% of the Employee's Accumulated Contributions, if
any, together with interest at the rate of 5% per
year compounded annually from January 1, 1986 to the
Annuity Starting Date.
<PAGE> 22
Page 19
(c) The minimum annual normal retirement Pension shall be $240
multiplied by the number of years of the Member's Benefit
Service, or the Employee Provided Portion of the Pension, if
greater.
4.02 LATE RETIREMENT
(a) If a Member postpones his retirement as provided in Section
4.01(a), he shall be retired from service on a late retirement
Pension on the first day of the calendar month after the
Retirement Committee receives his written application to
retire.
(b) The late retirement Pension shall be an immediate Pension
beginning on the Member's late retirement date and, subject to
Section 5.01, shall be equal to (i) the amount determined in
accordance with Section 4.01(b) based on the Member's Benefit
Service and Average Final Salary as of his late retirement
date, or, if greater, (ii) the amount of Pension to which the
Member would have been entitled under Section 4.01(b) if he
had retired on his Normal Retirement Date, increased by an
amount of equivalent actuarial value to the monthly payments
which would have been payable with respect to each month
during the postponement period which is not a Suspendible
Month. Any monthly payment amount determined under clause
(ii) above with respect to any month which is not a
Suspendible Month shall be computed as if the Member had
retired as of his Normal Retirement Date, and recomputed as of
the first day of each subsequent Plan Year during which
payment would have been made. For purposes of this Section,
equivalent actuarial value shall be computed on the basis of
The UP-1984 Table and an interest rate of five per cent per
year compounded annually.
(c) In the event a Member's Pension is required to begin under
Section 5.04(b) while the Member is in active service, such
required beginning date shall be the Member's Annuity Starting
Date for purposes of Article 5, and the Member shall receive a
late retirement Pension commencing on or before such required
beginning date in an amount determined as if he had retired on
such date. As of each succeeding January 1 prior to and
including the Member's actual late retirement date (and as of
his actual late retirement date), the Member's Pension shall
be recomputed to reflect additional accruals.
<PAGE> 23
Page 20
4.03 EARLY RETIREMENT
(a) A Member who has not reached his Normal Retirement Date but
who has (i) reached his 55th birthday and completed ten years
of Accumulated Service, or (ii), provided he was a Member of
the Plan as of June 30, 1984, attained age 60, shall be
retired from service on an early retirement Pension on the
first day of the calendar month after the Retirement Committee
receives his written application to retire.
(b) The early retirement Pension shall be a deferred Pension
beginning on the Member's Normal Retirement Date and, subject
to the provisions of Section 5.01, shall be equal to his
Accrued Benefit. However, the Member may elect to receive an
early retirement Pension beginning on the first day of any
calendar month before his Normal Retirement Date. In that
case, the Member's Pension shall be equal to the deferred
Pension reduced by 1/3 of 1% for each month by which the date
the Member's early retirement Pension precedes his Normal
Retirement Date; provided, however, if the Member shall have
25 years of Accumulated Service at his date of retirement, the
Member's Pension shall be equal to the deferred Pension
reduced by 1/3 of 1% for each month by which the date the
Member's early retirement Pension precedes the first day of
the calendar month coincident with or immediately following
the Member's 62nd birthday.
4.04 DEFERRED VESTED RETIREMENT
(a) A Member shall be 100 per cent vested in, and have a
nonforfeitable right to, his Accrued Benefit upon completion
of five years of Accumulated Service or the attainment of age
55. If the Member's employment with the Company is
subsequently terminated after being 100% vested, for reasons
other than retirement or death, he shall be eligible for a
vested Pension after the Retirement Committee receives his
written application for the Pension.
(b) The vested Pension shall begin on the Member's Normal
Retirement Date and, subject to the provisions of Section
5.01, shall be equal to his Accrued Benefit. However, the
Member may elect to have his vested Pension begin on the first
day of any calendar month following his 55th birthday (or, if
the Member was a Member prior to January 1, 1989, following
his 50th birthday) and before his Normal Retirement Date. In
that case, the Member's Pension shall be equal to the vested
<PAGE> 24
Page 21
Pension otherwise payable at his Normal Retirement Date
reduced as provided below. The reduced benefit payable shall
be equal to the Member's Accrued Benefit multiplied by the
appropriate percent from the following schedule:
<TABLE>
<CAPTION>
Age Pension Percent
Commences Payable
----------- -----------
<S> <C>
50 26%
51 28
52 30
53 33
54 36
55 39
56 42
57 46
58 50
59 55
60 61
61 67
62 74
63 81
64 90
</TABLE>
When the age at commencement is other than full years, the factors in
the above schedule shall be interpolated to four decimal places to
take into account the number of full months.
4.05 DISABILITY RETIREMENT
(a) Immediate Disability Retirement
(i) A Member who has not reached his Normal Retirement
Date but who has completed 10 years of Accumulated
Service shall be retired from service on an immediate
disability retirement Pension beginning on the first
day of the month immediately after the Retirement
Committee receives written application for the
Pension made by or for the Member, but only if the
Retirement Committee determines, on the basis of
medical evidence satisfactory to it that (A) the
Member is mentally or physically incapable of
satisfactory service, (B) the mental or physical
condition is likely to be permanent, (C) the Member
is not eligible for a deferred disability retirement
Pension under paragraph (b) below, and (D) the Member
is eligible for and continuously receiving disability
insurance benefits under the Social Security Act.
The phrase "incapable of satisfactory service" shall
mean physical or
<PAGE> 25
Page 22
mental inability to perform three-quarters of useful
employment. However, a Member shall not be eligible
for an immediate disability retirement Pension if the
disability is caused by or is a result from (A) war,
declared or undeclared, or any act of insurrection;
(B) service in the armed forces of any country; (C)
any attempt at suicide or intentionally
self-inflicted injury; or (D) commission of an
assault, battery or felony. The application for the
Pension referenced above must be received by the
Retirement Committee before the Employee's date of
termination of employment.
(ii) Subject to the provisions of Section 5.01, the
disability retirement Pension for a Member eligible
for an immediate disability retirement Pension under
this Section 4.05(a) shall be calculated as a normal
retirement Pension in accordance with Section 4.01(b)
as in effect on the date the Member's Pension
commences, based on his Average Final Salary at the
time he ceases employment on account of disability,
and on his Benefit Service under Section 3.02, but it
shall only be payable subject to continuance of his
disability as provided in subparagraph (iii) below.
(iii) No more frequently than once each year, as a
condition of his continuing to receive a disability
retirement Pension, the Retirement Committee may
require any Member receiving a disability retirement
Pension who has not reached his Normal Retirement
Date to undergo a medical examination by a physician
or physicians approved by the Retirement Committee.
If any Member refuses to submit to that medical
examination, the Member's disability retirement
pension shall be discontinued until the Member's
withdrawal of refusal. If the Member's refusal
continues for one year, all rights in and to the
disability retirement Pension shall cease. If the
Retirement Committee finds from such medical
examination or otherwise that the disability of a
Member receiving a disability retirement Pension who
has not reached Normal Retirement Date has been
removed, the Member's disability retirement Pension
shall be discontinued until the Member's Normal
Retirement Date. However, the Member shall be
entitled to have the original disability retirement
Pension restored prior to Normal Retirement Date if,
on the basis of a medical examination by an approved
physician or physicians,
<PAGE> 26
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the Retirement Committee finds that the Member has
again lost earning capacity due to the original
disability.
(b) Deferred Disability Retirement
(i) A Member who ceases to be employed by the Company on
account of disability before his Normal Retirement
Date shall be eligible for a deferred disability
retirement Pension, but only if the Member is
eligible for and continuously receiving disability
benefits under the Company's long-term disability
plan for the period of time from his disability, as
determined by the Retirement Committee under rules
uniformly applicable to all employees similarly
situated, until benefits under the Company's
long-term disability plan cease, on or after his 65th
birthday. Such disability retirement Pension shall
commence on such date as the Member may elect, which
shall be no earlier than his Normal Retirement Date
or the date he ceases to be eligible for payments
under the Company's long-term disability plan,
whichever is later.
(ii) Subject to the provisions of Section 5.01, the
disability retirement Pension for a Member eligible
for a deferred disability Pension under this Section
4.05(b) shall be calculated as a normal retirement
Pension in accordance with Section 4.01(b) as in
effect on the Member's Normal Retirement Date, based
on (i) his Pensionable Wages as provided in Section
1.36, and (ii) his Benefit Service as provided in
Section 3.02(a)(v).
(iii) If the Member ceases to be eligible for disability
benefits under the Company's long-term disability
plan prior to his Normal Retirement Date (or prior to
the date long-term disability benefits are scheduled
to cease, if after his Normal Retirement Date) and if
he is not eligible for an immediate disability
retirement Pension under paragraph (a) above or is
not restored to active service, he shall be entitled
to retire on an early retirement Pension as of the
first day of the calendar month immediately after his
long- term disability payments cease (if, as of the
date he ceases to be eligible for the Company's
long-term disability plan, he had completed the
eligibility requirements for such Pension), or he
shall be entitled to receive a vested Pension
beginning on his Normal Retirement Date (if, as of
the date he
<PAGE> 27
Page 24
became eligible for the Company's long-term
disability plan, he was eligible for a vested
Pension), or he shall be entitled to receive a Normal
Retirement Pension (if, as of the date he ceased to
be eligible for the Company's long-term disability
plan, he was eligible for a Normal Retirement
Pension). The Pension shall be computed as provided
in subparagraph (ii) above as if the date his
long-term disability plan benefits ceased was his
date of termination, and on the basis of the Plan
provisions in effect on the date he ceased to be
eligible for the Company's long-term disability plan.
4.06 SPOUSE'S PENSION
(a) In case of the death, before the Member's Annuity Starting
Date, of a married Member, including a Disabled Employee
eligible for a deferred disability retirement Pension under
Section 4.05(b) above, or of a former Member who terminated on
or after January 1, 1976 with entitlement to a vested Pension,
and then dies on or after August 23, 1984, there shall be
payable to the Member's surviving spouse for life a monthly
spouse's Pension. The Pension shall begin as of the Member's
Normal Retirement Date (or as of the first of the month
following the date of death of the Member, if later),
provided, however, that the Member's spouse may elect to
receive the spouse's pension commencing on the first day of
the month beginning with the month in which the Member's death
occurs, or, if later, the first day of any month following the
date the Member would have reached the earliest retirement age
under Section 4.03.
(b) The monthly installment shall be equal to:
(i) in the case of a married Member who dies after
completing the requirements for an early or normal
retirement allowance, the amount that the spouse
would have received if the Member had:
(A) retired on the first day of the month of
death on an early or normal retirement
Pension, whichever is applicable, and
(B) made an effective election under Section 5.02
specifying the 100% Option and designating
the spouse as the contingent annuitant; or
<PAGE> 28
Page 25
(ii) in the case of a married Member who dies in active
service having met the requirements for a vested
Pension, after terminating service with entitlement
to a vested Pension, or who is a Disabled Employee
eligible for a deferred disability retirement Pension
under Section 4.05(b) above, but in any case before
his Annuity Starting Date, the amount which would
have been payable to the spouse if the Member had:
(A) terminated employment on the date of death,
if the Member was then in active service,
(B) retired on the first day of the month of
death on a Normal Retirement Pension, or such
earlier date provided in Section 4.03 as is
elected by the surviving spouse,
(C) made an effective election under Section 5.02
specifying the 50% Option and designating the
spouse as the contingent annuitant, and
(D) then died on the following day.
4.07 DEATH
(a) Upon receipt of proof satisfactory to the Retirement Committee
that a retired Member died more than 31 days after normal or
early retirement, a special lump sum death benefit shall be
paid to the Member's designated beneficiary, or beneficiaries,
if living; otherwise, to such Member's legal representatives.
This death benefit shall be equal to the amount of the
post-retirement group life insurance carried by the Company
for the Member immediately prior to the date of the Member's
retirement, but shall not exceed $5,000.
(b) For purposes of the benefit provided in (a) above, a Member's
beneficiary, or beneficiaries, shall be designated by the
Member in writing, duly executed and filed with the Retirement
Committee. If a Member designates more than one beneficiary,
then each designated beneficiary living at the time of the
Member's death shall share in any amounts that become payable
as indicated in the beneficiary designation. If no such
beneficiary designation is in effect at the time of death of
the Member, or if no person, persons or entity so designated
shall survive the Member, the Member's surviving spouse, if
any, shall be deemed to be the Beneficiary; otherwise, the
Beneficiary shall be the estate of the Member.
<PAGE> 29
Page 26
4.08 PAYMENTS TO PERSONS RETIRED UNDER THE PRIOR PLAN
(a) Any person entitled to receive retirement income or another
allowance under the Prior Plan as in effect prior to January
2, 1986 shall be considered as a retired Member or former
Member of the Plan, as the case may be, and after January 1,
1986 shall continue to receive the retirement income or other
allowance under the Prior Plan. However, the retirement
income or other allowance shall be subject to all terms and
conditions of the Prior Plan as in effect at the time the
person retired or terminated employment.
(b) Any person entitled to receive retirement income or another
allowance under the Prior Plan as in effect prior to January
1, 1989 shall be considered as a retired Member or former
Member of the Plan, as the case may be, and after December 31,
1988 shall continue to receive the retirement income or other
allowance under the Plan. However, the retirement income or
other allowance shall be subject to all terms and conditions
of the Plan as in effect at the time the person retired or
terminated employment.
4.09 THRIFT PLAN BENEFIT
If a Member (to whom the provisions of Section 6.03(b) apply) fails to
make an election under Article 9 of the Manville Employees Thrift Plan
(the Thrift Plan) to not have the Retirement Plan Account of the
Thrift Plan be paid in the form of an annuity, the balance of such
account shall be transferred to this Plan and an equivalent additional
benefit shall be paid from this Plan. Such additional benefit will be
calculated based on The UP-1984 Mortality Table and the interest rate
used by the PBGC for valuing benefits for single employer plans that
terminate on the Member's Annuity Starting Date or calculated on the
date of transfer, if earlier.
4.10 MAXIMUM BENEFIT LIMITATION
(a) The maximum annual Pension payable to a Member under the Plan
in the form of a single life annuity, when added to any
pension attributable to contributions of the Company or an
Affiliated Employer provided to the Member under any other
qualified defined benefit plan, shall be equal to the lesser
of (1) $90,000 (as indexed), or (2) the Member's average
annual remuneration during the three consecutive calendar
years of his membership in the Plan affording the highest such
average, or
<PAGE> 30
Page 27
during all of the years in which he was a Member of the Plan
if less than three years, subject to the following
adjustments:
(i) If the Member has not been a Member of the Plan for
at least ten years, the maximum annual Pension in
clause (1) of paragraph (a) above shall be multiplied
by the ratio which the number of years of his
membership in the Plan bears to ten. This adjustment
shall be applied separately to the amount of the
Member's Pension resulting from each change in the
benefit structure of the Plan, with the number of the
years of membership in the Plan being measured from
the effective date of each such change.
(ii) If the Member has not completed ten years of
Accumulated Service, the maximum annual Pension in
clause (2) of paragraph (a) above shall be multiplied
by the ratio which the number of years of his
Accumulated Service bears to ten.
(iii) If the Pension begins before the Member's Social
Security Retirement Age but on or after his 62nd
birthday, the maximum Pension in clause (1) of
paragraph (a) above shall be reduced by 5/9 of one
per cent for each of the first 36 months plus 5/12 of
one per cent for each additional month by which the
Member is younger than the Social Security Retirement
Age at the date his Pension begins. If the Pension
begins before the Member's 62nd birthday, the maximum
Pension in clause (1) of paragraph (a) above shall be
of equivalent actuarial value to the maximum benefit
payable to age 62 as determined in accordance with
the preceding sentence. For purposes of this
Section, equivalent actuarial value shall be computed
on the basis of The UP-1984 Table and an interest
rate of five per cent per year compounded annually.
(iv) If the Pension begins after the Member's Social
Security Retirement Age, the maximum Pension in
clause (1) of paragraph (a) above shall be of
equivalent actuarial value (based on The UP-1984
Table and an interest rate of five per cent per year
compounded annually) to that maximum benefit payable
at the Social Security Retirement Age.
<PAGE> 31
Page 28
(v) If the Member's Pension is payable as a Qualified
Joint and Survivor Annuity with his spouse as the
Beneficiary, the modification of the Pension for that
form of payment shall be made before the application
of the maximum limitation, and, as so modified, shall
be subject to the limitation.
(b) In the case of a Member who is also a member of a defined
contribution plan of the Company or an Affiliated Employer,
his maximum benefit limitation shall not exceed an adjusted
limitation computed as follows:
(i) Determine the defined contribution fraction.
(ii) Subtract the result of (i) from one (1.0).
(iii) Multiply the dollar amount in clause (1) of paragraph
(a) above by 1.25.
(iv) Multiply the amount described in clause (2) of
paragraph (a) above by 1.4.
(v) Multiply the lesser of the result of (iii) or the
result of (iv) by the result of (ii) to determine the
adjusted maximum benefit limitation applicable to the
Member.
(c) For purposes of this Section:
(i) the defined contribution fraction for a Member who is
a member of one or more defined contribution plans of
the Company or an Affiliated Employer shall be a
fraction, the numerator of which is the sum of the
following (but reduced by any amount permitted by
regulations promulgated by the Commissioner of
Internal Revenue):
(A) the Company's or Affiliated Employer's
contributions credited to the Member's
accounts under the defined contribution plan
or plans,
(B) with respect to Limitation Years beginning
before 1987, the lesser of the part of the
Member's contributions in excess of six per
cent of his compensation or one-half of his
total contributions to such plan or plans;
and, with respect to Limitation Years
beginning after 1986, all of the Member's
contributions to such plan or plans, and
(C) any forfeitures allocated to his accounts
under such plan or plans;
and the denominator of which is the lesser of
the following amounts determined for each year of
the Member's Accumulated Service:
<PAGE> 32
Page 29
(D) 1.25 multiplied by the maximum dollar amount
allowed by law for that year, or
(E) 1.4 multiplied by 25% of the Member's
remuneration for that year.
At the direction of the Retirement Committee,
the portion of the denominator of that fraction with
respect to Limitation Years ending before 1983 shall
be computed as the denominator for the Limitation
Year ending in 1982, as determined under the law as
then in effect, multiplied by a fraction, the
numerator of which is the lesser of:
(F) $51,875, or
(G) 1.4 multiplied by 25% of the Member's
remuneration for the Limitation Year ending
in 1981;
and the denominator of which is the lesser of:
(H) $41,500, or
(I) 25% of the Member's remuneration for that
Limitation Year;
(ii) a defined contribution plan means a pension plan
which provides for an individual account for each
member and for benefits based solely upon the amount
contributed to the member's account, and upon any
income, expenses, gains and losses, and any
forfeitures of accounts of other members which may be
allocated to that member's account, subject to (iii)
below;
(iii) a defined benefit plan means any pension plan which
is not a defined contribution plan; however, in the
case of a defined benefit plan which provides a
benefit that is based partly on the balance of the
separate account of a member, that plan shall be
treated as a defined contribution plan to the extent
benefits are based on the separate account of a
member and as a defined benefit plan with respect to
the remaining portion of the benefits under the plan;
and
(iv) the term "remuneration" with respect to any Member
shall mean the wages, salaries and other amounts paid
in respect of such Member by the Company or an
Affiliated Employer for personal services actually
rendered, determined after any pre-tax contributions
under a "qualified cash or deferred arrangement" (as
defined under Section 401(k) of the Code and its
applicable regulations) or under a "cafeteria plan"
(as defined under Section 125 of the
<PAGE> 33
Page 30
Code and its applicable regulations), and shall
include, but not by way of limitation, bonuses,
overtime payments and commissions; and shall exclude
deferred compensation, stock options and other
distributions which receive special tax benefits
under the Code.
(d) Notwithstanding the preceding paragraphs of this Section, a
Member's annual Pension payable under this Plan, prior to any
reduction required by operation of paragraph (b) above, shall
in no event be less than:
(i) the benefit that the Member had accrued under the
Plan as of the end of the Plan Year beginning in
1982, with no changes in the terms and conditions of
the Plan on or after July 1, 1982 taken into account
in determining that benefit, or
(ii) the benefit that the Member had accrued under the
Plan as of the end of the Plan Year beginning in
1986, with no changes in the terms and conditions of
the Plan after May 5, 1986 taken into account in
determining that benefit.
<PAGE> 34
Page 31
ARTICLE 5. PAYMENT OF PENSIONS
5.01 NORMAL FORM OF PAYMENT
(a) If the Member is not married on his Annuity Starting Date, his
Pension shall be payable in monthly installments ending with
the last monthly payment for the month in which death occurs,
unless the Member has elected an optional benefit as provided
in Section 5.02. However, if the Member has retired due to
disability and is receiving an immediate disability retirement
Pension under Section 4.05(a), the provisions of Section 4.05
relating to continuance of disability shall apply.
(b) If the Member is married on his Annuity Starting Date, and if
he has not elected an optional form of benefit as provided in
Section 5.02, the Pension payable shall be in the form of a
50% Qualified Joint and Survivor Annuity. The Qualified Joint
and Survivor Annuity means Option 4 under Section 5.02, and is
a joint and survivor Pension of equivalent actuarial value to
the Pension otherwise payable, providing for a reduced Pension
payable to the Member during his life; and, after his death,
providing for a Pension at the rate of one-half the Pension
paid to the Member, payable to and during the life of the
spouse to whom he was married at his Annuity Starting Date.
Notwithstanding the preceding, if an option described in
Section 5.02 provides for payments continuing after the
Member's death for the life of a Contingent Annuitant at a
rate of at least 50% but not more than 100% of the Pension
payable for the life of the Member, and if such option, with
the spouse to whom the Member is married on his Annuity
Starting Date named as Contingent Annuitant, would be of
greater actuarial value than the joint and survivor annuity
described above, such option with such spouse as Contingent
Annuitant shall be the Qualified Joint and Survivor Annuity.
(c) Notwithstanding the above, a lump sum payment of equivalent
actuarial value shall be made in lieu of all benefits if the
present value of the Pension payable to or on the behalf of
the Member (such Pension determined as of the Member's Normal
Retirement Date or actual termination of service, if later)
amounts to $3,500 or less. In determining the present value
and the amount of a lump sum payment payable under this
paragraph, the interest rate(s) to be used shall be the
interest rate(s) which would be used by the Pension Benefit
Guaranty Corporation for valuing deferred pensions commencing
at Normal Retirement Date for single employer plans that
<PAGE> 35
Page 32
terminate on the date of determination, and The UP-1984 Table.
The lump sum payment shall be made as soon as administratively
practicable following the Member's termination of service or
death, but in any event, prior to the date his Pension
payments would have otherwise commenced. In the event a
Member is not entitled to any Pension upon his termination of
employment, he shall be deemed cashed-out under the provisions
of this paragraph (c) as of the date he terminated service.
5.02 OPTIONAL FORMS OF PAYMENT
Any Member may, subject to the provisions of Section 5.03, elect to
convert the Pension otherwise payable to him into one of the options
named below. A Member who retired on an immediate disability
retirement Pension as provided in Section 4.05(a) prior to his Normal
Retirement Date may elect an option (limited to Option 2 and Option 4)
to take effect immediately, which shall remain in effect on and after
his Normal Retirement Date.
Option 1. A Pension payable for the Member's life, with no
Pension payable after his death.
Option 2. A modified Pension payable during the Member's life,
and after his death payable at 100% of the rate of
his modified Pension to and during the life of the
contingent annuitant named by him when he elected the
option.
Option 3. A modified Pension payable during the Member's life,
and after his death payable at 75% of the rate of his
modified Pension to and during the life of the
contingent annuitant named by him when he elected the
option.
Option 4. A modified Pension payable during the Member's life,
and after his death payable at 50% of the rate of his
modified Pension to and during the life of the
contingent annuitant named by him when he elected the
option.
Option 5. A modified Pension payable during the Member's life,
and after his death payable at 25% of the rate of his
modified Pension to and during the life of the
Beneficiary named by him when he elected the option.
<PAGE> 36
Page 33
Under an election of Option 2, 3, 4 or 5, the Member's allowance is
determined by multiplying the Pension (which would otherwise be
payable for the life of the Member) by the "appropriate factor" set
forth below; and, after the Member's death, there shall be paid during
the life of, and to, the Member's contingent annuitant, the selected
percentage of the Member's reduced Pension.
The "appropriate factor," prior to July 1, 1990, is the appropriate
factor from the following schedule (the "Plan Defined" factor). If,
however, the contingent annuitant is more than five years younger than
the Member, the Member's Pension shall be further reduced by
multiplying the Pension by the "appropriate factor" below for each
full year in excess of five years by which the Member is older than
the contingent annuitant.
NON-DISABILITY PLAN DEFINED FACTORS
PRIOR TO JULY 1, 1990
<TABLE>
<CAPTION>
Column A Column B
---------------------- ------------------------------
Additional Reduction for Each
Full Year Over 5 by Which
Option Percentage to Contingent Reduction in Member's Member is Older Than
Annuitant Allowance Contingent Annuitant
------------------------------------ ---------------------- ------------------------------
<S> <C> <C>
Option 1 (Life Only Option) None None
Option 2 (100% Option) 21% .75%
Option 3 (75% Option) 17% .75%
Option 4 (50% Option) 11% .50%
Option 5 (25% Option) 5.5% .25%
</TABLE>
<PAGE> 37
Page 34
PLAN DEFINED IMMEDIATE DISABILITY RETIREMENT FACTORS
PRIOR TO JULY 1, 1990
<TABLE>
<CAPTION>
100% OPTION 50% OPTION
----------- -----------
<S> <C> <C>
Factor A For Member's Nearest Age
50 .705 .830
51 .701 .827
52 .697 .824
53 .693 .821
54 .689 .818
55 .685 .815
56 .681 .812
57 .677 .809
58 .673 .806
59 .669 .803
60 .665 .800
61 .661 .979
62 .657 .794
63 .653 .791
64 .649 .788
Factor B .007 .006
Maximum Allowable Factor .920 .950
</TABLE>
Factor A is (i) reduced by Factor B for each full year that the Member
is older than the contingent annuitant, or (ii) increased by Factor B
for each full year that the Member is younger than the contingent
annuitant.
<PAGE> 38
Page 35
On and after July 1, 1990, the "appropriate factor" shall be the
greater of the "Plan-defined" factor or the actuarial equivalent
factor. The actuarial equivalent factor shall be determined using an
8% interest rate and the following mortality rate assumptions:
(i) Non-disability benefits: The principal annuitant
determination shall use the 1989 Buck Mortality Table, with a
blending of the male and female rates at a ratio of 95% male
and 5% female. The contingent annuitant determination shall
use the 1989 Buck Mortality Table, with a blending of the male
and female rates at a ratio of 5% male and 95% female.
(ii) Disability benefits: The principal annuitant determination
shall use the 1972 U.S. Steel Disabled Mortality Table with a
blending of the male and female rates at a ratio of 95% male
(set forward five years) and 5% female (set back five years).
The contingent annuitant determination shall use the 1989 Buck
Mortality Table with a blending of the male and female rates
at a ratio of 5% male and 95% female.
However, if the contingent annuitant selected is not the Member's
spouse, the amount of the Pension payable to the Member under Option
2, 3, 4 or 5 shall be adjusted in accordance with Code Section
4.01(a)(9) and the regulations thereunder.
Notwithstanding the above, a Member retiring on an immediate
disability retirement Pension as provided in Section 4.05(a) shall be
limited to Option 2 (100% Option) and Option 4 (50% Option) only.
If a Member dies after Pension payments have commenced, any payments
continuing to be made to his spouse or contingent annuitant shall be
distributed at least as rapidly as under the method of distribution
being used as of the Member's date of death.
5.03 ELECTION OF OPTIONS
(a) A married Member's election of Option 1 or Option 5 shall only
be effective if Spousal Consent to the election is received by
the Retirement Committee.
(b) The Retirement Committee shall furnish to each Member, no less
than 30 days and no more than 90 days before his Annuity
Starting Date, a written explanation in nontechnical language
of the terms and conditions of the Pension payable to the
Member in the normal and optional forms of payment described
in Sections 5.01 and
<PAGE> 39
Page 36
5.02. Such explanation shall include a general description of
the eligibility conditions for, and the material features and
relative values of, the optional forms of Pensions under the
Plan, any rights the Member may have to defer commencement of
his Pension, the requirement for Spousal Consent as provided
in paragraph (a) above, and the right of the Member to make,
and to revoke, elections under Section 5.02. An election
under Section 5.02 shall be made on a form provided by the
Retirement Committee and may be made during the 90-day period
ending on the Member's Annuity Starting Date, but not prior to
the date the Member receives the written explanation described
in this paragraph (b).
(c) An election of an option under Section 5.02 may be revoked on
a form provided by the Retirement Committee, and subsequent
elections and revocations may be made at any time and from
time to time during the 90-day election period. An election
of an optional benefit shall be effective on the Member's
Annuity Starting Date and cannot thereafter be revoked or
changed. A revocation of any election during the 90-day
election period shall be effective when the completed form is
filed with the Retirement Committee. If an unmarried Member
who has elected an optional benefit dies within 30 days of the
Member's Annuity Starting Date, the option shall become
effective on the scheduled date of retirement and shall not be
revoked. If a married Member who has elected an optional
benefit dies before the Annuity Starting Date, the election
shall be revoked. If the contingent annuitant designated
under an option dies before the date the election of the
option becomes effective, the election shall be revoked.
5.04 COMMENCEMENT OF PAYMENTS
(a) Except as otherwise provided in Article 4 or this Article 5,
payment of a Member's Pension shall begin as soon as
administratively practicable following the latest of (i) the
Member's 65th birthday, (ii) the fifth anniversary of the date
on which he became a Member, or (iii) the date he terminates
service with the Company (but not more than 60 days after the
close of the Plan Year in which the latest of (i), (ii) or
(iii) occurs).
<PAGE> 40
Page 37
(b) Notwithstanding the preceding paragraph, payment of any
Member's Pension shall begin not later than the April 1 of the
calendar year following the calendar year in which he attains
age 70-1/2, provided that such commencement in active service
shall not be required with respect to a Member who attains age
70-1/2 prior to January 1, 1988 and who is not a five per cent
owner. A Member who attained age 70-1/2 in 1988, who did not
retire as of January 1, 1989, and who is not a five per cent
owner shall not be required to commence payment until April 1,
1990.
5.05 DISTRIBUTION LIMITATION
Notwithstanding any other provision of this Article 5, all
distributions from this Plan shall conform to the regulations issued
under Section 401(a)(9) of the Code, including the incidental death
benefit provisions of Section 401(a)(9)(G) of the Code. Further, such
regulations shall override any Plan provision that is inconsistent
with Section 401(a)(9) of the Code.
<PAGE> 41
Page 38
ARTICLE 6. CONTRIBUTIONS
6.01 COMPANY'S CONTRIBUTIONS
It is the intention of the Company to continue the Plan and make the
contributions that are necessary to maintain the Plan on a sound
actuarial basis, and to meet the minimum funding standards prescribed
by law. However, subject to the provisions of Article 10, the Company
may discontinue its contributions for any reason at any time. Any
forfeitures shall be used to reduce the Company's contributions
otherwise payable.
6.02 RETURN OF CONTRIBUTIONS
(a) Company contributions to the Plan are conditioned upon their
deductibility under Section 404 of the Code. If all or part
of the Company's deductions for contributions to the Plan are
disallowed by the Internal Revenue Service, the portion of the
contributions to which that disallowance applies shall be
returned to the Company without interest, but reduced by any
investment loss attributable to those contributions. The
return shall be made within one year after the date of the
disallowance of deduction.
(b) The Company may recover without interest the amount of its
contributions to the Plan made on account of a mistake-
of-fact, reduced by any investment loss attributable to those
contributions, provided recovery is made within one year after
the date of those contributions.
6.03 MEMBER'S CONTRIBUTIONS
(a) As of January 1, 1986, no Member shall contribute to this Plan.
(b) The Accumulated Contributions, if any, of a Member, other than
a retired or former Member, or a Member whose Normal
Retirement Date was on or prior to January 1, 1986, were
transferred (unless the Member made the election specified in
the next sentence) in one lump sum, on January 2, 1986, or as
soon as practicable thereafter, to the Manville Employees
Thrift Plan and are held in a Retirement Plan Account. If the
Member elected prior to November 1, 1985 to receive a refund
of his Accumulated Contributions and if the Member's spouse
consented to such election, then the Member's Accumulated
Contributions were paid to the Member, in one lump sum, on
January 2, 1986, or as soon as practicable thereafter.
<PAGE> 42
Page 39
(c) If a Member who was a retired or former Member on January 2,
1986 is reemployed after such date but before the Member's
Normal Retirement Date, the Accumulated Contributions, if any,
of such rehired Member (as determined in accordance with the
provisions of the Prior Plan, as if said Prior Plan were still
in effect) shall, unless the rehired Member makes the election
specified in the next sentence, be transferred in one lump
sum, as of the end of the 30-day period referred to in said
sentence, to the Manville Employees Thrift Plan and shall be
held in a Retirement Plan Account. If the rehired Member
elects within 30 days after rehire to receive a refund of his
Accumulated Contributions, or if a former Member receives a
refund of his Accumulated Contributions before his Normal
Retirement Date, and if such Member's spouse consents to such
election, then the rehired or former Member's Accumulated
Contributions shall be paid to such Member, in one lump sum,
as of the end of such 30-day period, or as soon as practicable
thereafter. The rehired Member's Pension upon subsequent
retirement (or former Member's Pension) shall not be less than
his accrued Pension as of his initial termination date,
reduced by an amount equal to the lesser of (i), (ii), or
(iii) below:
(i) the Member's Accumulated Contributions together with
interest at the rate of 5% per annum, compounded
annually, to the Member's Normal Retirement Date,
multiplied by the applicable percentage from the
following table:
<PAGE> 43
Page 40
<TABLE>
<CAPTION>
Completed Age at Benefit
Commencement Percentage
------------------------ ----------
<S> <C>
50 33%
51 35%
52 37%
53 39%
54 46%
55 49%
56 51%
57 54%
58 56%
59 59%
60 70%
61 74%
62 77%
63 81%
64 95%
65 100%
66 105%
67 121%
68 127%
69 145%
70 153%
71 160%
72 182%
73 192%
74 217%
75 228%
</TABLE>
(ii) or, the excess amount of the Member's Pension,
calculated without regard to (i) above, which exceeds
the Pension the Member would have been entitled to if
the Member had never contributed to the Prior Plan,
(iii) or, the Employee Provided Portion of the Pension.
(d) The Accumulated Contributions of any Member whose Normal
Retirement Date was on or before January 1, 1986, and who was
an Employee on January 2, 1986, shall remain in the Plan
unless the Member made either of the elections specified in
the next sentence. If the Member elected on or before
November 1, 1985 to receive a refund of the Member's
Accumulated Contributions and if the Member's spouse consented
to such election, then the Member's Accumulated Contributions
were paid to the Member, in one lump sum, on January 2, 1986,
or as soon as practicable thereafter; or, the Member may have
elected to transfer the Accumulated Contributions, in one lump
sum, on January 2, 1986, or as soon as practicable
<PAGE> 44
Page 41
thereafter, to the Manville Employees Thrift Plan where they
shall be held in a Retirement Plan Account.
<PAGE> 45
Page 42
ARTICLE 7. ADMINISTRATION OF PLAN
7.01 RETIREMENT COMMITTEE
(a) Membership
The general administration of the Plan and the responsibility
for carrying out the provisions of the Plan shall be with the
Board of Directors. At its discretion, the Board may delegate
such responsibility to a Retirement Committee of not less than
three nor more than seven persons appointed from time to time
by the Board of Directors to serve at the discretion of the
Board of Directors. Any person who is appointed a member of
the Retirement Committee shall signify his acceptance by
filing written acceptance with the Board of Directors and the
Secretary of the Retirement Committee. Any member of the
Retirement Committee may resign by delivering a written
resignation to the Secretary of the Retirement Committee
addressed to the Board of Directors. The Retirement Committee
shall be a "named fiduciary" within the meaning of Section
402(a) of ERISA and shall carry out the duties of the
"administrator" of the Plan as imposed by ERISA. In the
absence of the appointment of a Retirement Committee as
provided herein, the Board of Directors shall constitute the
Retirement Committee and any reference herein to the
Retirement Committee shall be deemed to be a reference to the
Board.
(b) Administration of Retirement Committee
The members of the Retirement Committee shall elect a Chairman
from their number and a Secretary who may be, but need not be,
one of the members of the Retirement Committee; may appoint
from their number such subcommittees with such powers as they
shall determine; may authorize one or more of their number or
any agent to execute or deliver any instrument or make any
payments on their behalf; may retain counsel, employ agents
and provide for such clerical, accounting, consulting and
actuarial services as they may require in carrying out the
provisions of the Plan.
(c) Meetings
The Retirement Committee shall hold meetings upon such notice,
at such place or places, and at such times as it may
determine.
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(d) Majority to Govern
Any act which the Plan authorizes or requires the Retirement
Committee to do may be done by a majority of its members. The
action of such majority expressed from time to time by a vote
at a meeting, or in writing without a meeting, shall
constitute the action of the Retirement Committee, and shall
have the same effect for all purposes as if assented to by all
members of the Retirement Committee serving at the time.
(e) Compensation and Bonding
No member of the Retirement Committee shall receive any
compensation from the Plan for his services as such. Except
as may otherwise be required by law, no bond or other security
need be required of any member in that capacity in any
jurisdiction.
(f) Authority of Retirement Committee
Subject to the limitations of the Plan, the Retirement
Committee shall establish rules for the administration of the
Plan and the transaction of its business. All actions of the
Retirement Committee shall be in accordance with the
Retirement Committee Charter enacted by the Board of
Directors. The Retirement Committee shall have discretionary
authority to determine eligibility for benefits and to
construe the terms of the Plan, which shall include, but not
be limited to: determination of (1) an individual's
eligibility for Plan participation, (2) the right to and
amount of any benefit payable under the Plan, and (3) the date
on which any individual ceases to be a Member. The Retirement
Committee shall have discretionary authority to decide
disputed claims in accordance with its interpretation of the
terms of the Plan. The determination of the Retirement
Committee as to any disputed question or claim shall be
conclusive and final.
(g) Duties of Retirement Committee
The Retirement Committee shall maintain such data as may be
necessary for actuarial valuations of the liabilities of the
Plan. At the request of the Board of Directors, the
Retirement Committee shall submit a report each year to the
Board of Directors, giving a brief account of the operation of
the Plan during the past year, and a copy of that report shall
be filed in the office of the Plan, where it shall be open to
inspection by any Member of the Plan.
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(h) Prudent Conduct
The members of the Retirement Committee shall use that degree
of care, skill, prudence and diligence that a prudent person
acting in a like capacity and familiar with such matters would
use in the conduct of a similar situation.
7.02 INVESTMENT COMMITTEE
(a) Membership
The investment of the Funds of the Plan and the responsibility
for setting the funding policy of the Plan shall be placed in
an Investment Committee of not less than three nor more than
seven persons appointed from time to time by the Finance
Committee of the Board of Directors to serve at the discretion
of the Finance Committee. Any member of the Investment
Committee may resign by delivering a written resignation to
the Finance Committee. The Investment Committee shall be a
"named fiduciary" within the meaning of Section 402(a) of
ERISA.
(b) Administration of Investment Committee
The members of the Investment Committee shall elect a Chairman
from their number and a Secretary who may be, but need not be,
one of the members of the Investment Committee; may authorize
one or more of their number or any agent to execute or deliver
any instrument or make any payments on their behalf, employ
agents, and provide for such clerical, accounting, consulting
and actuarial services as they may require in carrying out
their duties; may recommend to the Board of Directors the
appointment and removal of trustees, and may, from time to
time, appoint one or more investment managers to direct the
Trustee in the management of the assets of the Plan, provided
that any such appointment or removal of trustees or investment
managers shall be of no effect unless approved by the Board of
Directors. In the event of the appointment of an investment
manager(s), authority over and responsibility for the
management of the assets so designated shall be the sole
responsibility of the investment manager(s).
(c) Meetings
The Investment Committee shall hold meetings upon such notice,
at such place or places, and at such times as it may
determine.
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(d) Majority to Govern
Any act which the Plan authorizes or requires the Investment
Committee to do may be done by a majority of its members. The
action of such majority expressed from time to time by a vote
at a meeting, or in writing without a meeting, shall
constitute the action of the Investment Committee.
(e) Compensation and Bonding
No member of the Investment Committee shall receive any
compensation from the Plan for his services as such. Except
as may otherwise be required by law, no bond or security need
be required of any Member in that capacity in any
jurisdiction.
(f) Authority of Investment Committee
Subject to the limitations of the Plan, the Investment
Committee shall establish rules for the administration of the
assets of the Plan, and the funding policy of the Plan, and
the transaction of its business. All actions of the
Investment Committee are subject to approval or review by the
Finance Committee and shall be in accordance with the
Investment Committee Charter enacted by the Board of
Directors.
(g) Duties of the Investment Committee
As an aid to the Investment Committee in fixing the rates of
Company contributions payable to the Plan, the actuary
designated by the Company shall make annual actuarial
valuations of the assets and liabilities of the Plan and shall
submit to the Investment Committee such rates of Company
contributions as the actuary recommends for use. The
Investment Committee shall maintain accounts showing the
fiscal transactions of the Plan, and shall monitor investment
policy guidelines and their implementation as approved by the
Finance Committee. The Investment Committee shall recommend
to the Finance Committee investment policy guidelines to meet
the investment objectives of the Plan. The Investment
Committee shall also maintain data necessary for actuarial
valuation of the assets of the Plan, and shall adopt annuity,
mortality and other tables as may be necessary in actuarial
determination. The Investment Committee shall submit a report
periodically to the Finance Committee of the Board of
Directors, giving the status of the funds relative to the
satisfaction of the investment objectives, and a copy of such
reports shall be filed in the office of the plan, where it
shall be open to inspection by any Member of the Plan.
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(h) Prudent Conduct
The members of the Investment Committee shall use that degree
of care, skill, prudence and diligence that a prudent person
acting in a like capacity and familiar with such matters would
use in the conduct of a similar situation.
7.03 SERVICE IN MORE THAN ONE FIDUCIARY CAPACITY
Any individual, entity or group of persons may serve in more than one
fiduciary capacity with respect to the Plan and/or the Funds of the
Plan.
7.04 LIMITATION OF LIABILITY
The Company, the Directors of the Company, the members of the
Retirement Committee, the members of the Investment Committee, and any
officer, employee or agent of the Company shall not incur any
liability individually or on behalf of any other individuals or on
behalf of the Company for any act, or failure to act, made in good
faith in relation to the Plan or the Funds of the Plan. However, this
limitation shall not act to relieve any such individual or the Company
from a responsibility or liability for any fiduciary responsibility,
obligation or duty under Part 4, Title I of ERISA.
7.05 INDEMNIFICATION
The members of the Retirement Committee, the members of the
Investment Committee, the Board of Directors, and the officers,
employees and agents of the Company shall be indemnified against any
and all liabilities arising by reason of any act, or failure to act,
in relation to the Plan or the Funds of the Plan, including, without
limitation, expenses reasonably incurred in the defense of any claim
relating to the Plan or the Funds of the Plan, and any and all amounts
paid in any compromise or settlement relating to the Plan or the Funds
of the Plan, except for actions or failures to act made in bad faith.
The foregoing indemnification shall be made from the Funds of the Plan
to the extent of those Funds and to the extent permitted under
applicable law; otherwise, from the assets of the Company.
<PAGE> 50
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ARTICLE 8. MANAGEMENT OF FUNDS
8.01 TRUSTEE
All the Funds of the Plan shall be held by a Trustee, or Trustees,
appointed from time to time by the Board of Directors under a trust
instrument or instruments adopted, or as amended, by the Board of
Directors for use in providing the benefits of the Plan and paying its
expenses not paid directly by the Company. The Company shall have no
liability for the payment of benefits under the Plan or for the
administration of the Funds paid over to the Trustee or Trustees.
8.02 EXCLUSIVE BENEFIT RULE
Except as otherwise provided in the Plan, no part of the corpus or
income of the Funds of the Plan shall be used for, or diverted to,
purposes other than for the exclusive benefit of Members and other
persons entitled to benefits under the Plan, before the satisfaction
of all liabilities with respect to them. No person shall have any
interest in or right to any part of the earnings of the Funds of the
Plan, or any right in, or to, any part of the assets held under the
Plan, except as and to the extent expressly provided in the Plan.
8.03 APPOINTMENT OF INVESTMENT MANAGER
The Company may, at its discretion, appoint one or more investment
managers (within the meaning of Section 3(38) of ERISA) to manage
(including the power to acquire and dispose of) all or part of the
assets of the Plan, as the Company shall designate. In that event,
authority over and responsibility for the management of the assets so
designated shall be the sole responsibility of that investment
manager.
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ARTICLE 9. GENERAL PROVISIONS
9.01 NONALIENATION AND QUALIFIED DOMESTIC RELATIONS ORDERS
Except as required by any applicable law, no benefit under the Plan
shall in any manner be anticipated, assigned or alienated, and any
attempt to do so shall be void. However, payment shall be made in
accordance with the provisions of any judgment, decree, or order
which:
(a) creates for, or assigns to, a spouse, former spouse, child or
other dependent of a Member the right to receive all or a
portion of the Member's benefits under the Plan for the
purpose of providing child support, alimony payments or
marital property rights to that spouse, child or dependent,
(b) is made pursuant to a state domestic relations law,
(c) does not require the Plan to provide any type of benefit, or
any option, not otherwise provided under the Plan, and
(d) otherwise meets the requirements of Section 206(d) of ERISA,
as amended, as a "qualified domestic relations order," as
determined by the Retirement Committee.
If the present value of any series of payments meeting the criteria
set forth in paragraphs (a) through (d) above amounts to $3,500 or
less, a lump sum payment of "equivalent actuarial value," determined
in the manner described in Section 5.01(c), shall be made in lieu of
the series of payments. For purposes of calculating the present value
amount and the lump sum benefit, the interest rate to be used shall be
the interest rate(s) which would be used by the Pension Benefit
Guaranty Corporation for valuing deferred pensions for plans that
terminate on the date of distribution, and The UP-1984 Table.
9.02 CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN
The establishment of the Plan shall not confer any legal rights upon
any Employee or other person for a continuation of employment, nor
shall it interfere with the rights of the Company to discharge any
Employee or to treat him without regard to the effect which that
treatment might have upon him as a Member or potential Member of the
Plan.
<PAGE> 52
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9.03 FACILITY OF PAYMENT
If the Retirement Committee shall find that a Member or other person
entitled to a benefit is unable to care for his affairs because of
illness or accident or because he is a minor, the Retirement Committee
may direct that any benefit due him (unless claim shall have been made
for the benefit by a duly appointed legal representative) be paid to
his spouse, child, parent or other blood relative, or to a person with
whom he resides. Any payment so made shall be a complete discharge of
the liabilities of the Plan for that benefit.
9.04 INFORMATION
Each Member or other person entitled to a benefit, before any benefit
shall be payable to him or on his account under the Plan, shall file
with the Company the information that it shall require to establish
his rights and benefits under the Plan.
9.05 TOP-HEAVY PROVISIONS
(a) The following definitions apply to the terms used in this
Section:
(i) "applicable determination date" means the last day of
the preceding Plan Year;
(ii) "top-heavy ratio" means the ratio of (A) the present
value of the cumulative Accrued Benefits under the
Plan for key employees to (B) the present value of
the cumulative Accrued Benefits under the Plan for
all key employees and non-key employees; provided,
however, that if an individual has not performed
services for the Company at any time during the
five-year period ending on the applicable
determination date, any Accrued Benefit for such
individual (and the account of such individual) shall
not be taken into account;
(iii) "applicable valuation date" means the date within the
preceding Plan Year as of which annual Plan costs are
or would be computed for minimum funding purposes;
(iv) "key employee" means an employee who is in a category
of employees determined in accordance with the
provisions of Section 416(i)(1) and (5) of the Code
and any regulations thereunder, and, where
applicable, on the basis of the Employee's
remuneration (defined as set forth in Section
4.10(c)(iv)) from the Company or an Affiliated
Employer;
(v) "non-key employee" means any employee who is not a
key employee;
<PAGE> 53
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(vi) "average remuneration" means the average annual
remuneration of a Member for the five consecutive
years of his Accumulated Service after December 31,
1983 during which he received the greatest aggregate
remuneration from the Company or an Affiliated
Employer, excluding any remuneration for service
after the last Plan Year with respect to which the
Plan is top-heavy;
(vii) "required aggregation group" means each other
qualified plan of the Company or an Affiliated
Employer (including plans that terminated within the
five-year period ending on the determination date) in
which there are members who are key employees or
which enables the Plan to meet the requirements of
Section 401(a)(4) or 410 of the Code; and
(viii) "permissive aggregation group" means each plan in the
required aggregation group and any other qualified
plan(s) of the Company or an Affiliated Employer in
which all members are non-key employees, if the
resulting aggregation group continues to meet the
requirements of Sections 401(a)(4) and 410 of the
Code.
(b) For purposes of this Section, the Plan shall be top-heavy with
respect to any Plan Year beginning on or after January 1, 1984
if, as of the applicable determination date, the top-heavy
ratio exceeds 60 per cent. The top- heavy ratio shall be
determined as of the applicable valuation date in accordance
with Section 416(g)(3) and (4)(B) of the Code on the basis of
The UP-1984 Mortality Table and an interest rate of five per
cent per year compounded annually. For purposes of
determining whether the Plan is top-heavy, the present value
of Accrued Benefits under the Plan will be combined with the
present value of accrued benefits or account balances under
each other plan in the required aggregation group, and, in the
Company's discretion, may be combined with the present value
of accrued benefits or account balances under any other
qualified plan(s) in the permissive aggregation group. The
accrued benefit of a non-key employee under the Plan or any
other defined benefit plan in the aggregation group shall be
(i) determined under the method, if any, that uniformly
applies for accrual purposes under all plans maintained by the
Company or an Affiliated Employer, or (ii) if there is no such
method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional rule
described in Section 411(b)(1)(C) of the Code.
<PAGE> 54
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(c) The following provisions shall be applicable to Members for
any Plan Year with respect to which the Plan is top- heavy:
(i) In lieu of the vesting requirements specified in
Section 4.04, a Member shall be vested in, and have a
nonforfeitable right to, a percentage of his Accrued
Benefit determined in accordance with the provisions
of Section 1.01 and subparagraph (ii) below, as set
forth in the following vesting schedule:
<TABLE>
<CAPTION>
Years of Eligibility Service Percentage Vested
---------------------------- -----------------
<S> <C>
Less than 2 years 0%
2 years 20%
3 years 40%
4 years 60%
5 or more years 100%
</TABLE>
(ii) The Accrued Benefit of a Member who is a non-key
employee shall not be less than two per cent of his
average remuneration multiplied by the number of
years of his Accumulated Service, not in excess of
ten, during the Plan Years for which the Plan is
top-heavy. That minimum benefit shall be payable at
a Member's Normal Retirement Date. If payments
commence at a time other than the Member's Normal
Retirement Date, the minimum Accrued Benefit shall be
of equivalent actuarial value to that minimum
benefit. For purposes of this Section, equivalent
actuarial value shall be calculated on the basis of
The UP-1984 Table and an interest rate of five per
cent per year compounded annually.
(iii) With respect to benefits accruing during any Plan
Year beginning before 1989 for which the Plan is top-
heavy, Pensionable Wages taken into account under the
Plan may not exceed the first $200,000 of annual
remuneration paid to an Employee for services
rendered to the Company, as reported on Form W-2.
(iv) The multiplier "1.25" in Section 415(e)(2)(B)(i) and
(3)(B)(i) of the Code shall be reduced to "1.0," and
the dollar amount "$51,875" in Section
415(e)(6)(B)(i)(I) of the Code shall be reduced to
"$41,500."
<PAGE> 55
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(d) If the Plan is top-heavy with respect to a Plan Year and
ceases to be top-heavy for a subsequent Plan Year, the
following provisions shall be applicable:
(i) The Accrued Benefit in any such subsequent Plan Year
shall not be less than the minimum Accrued Benefit
provided in paragraph (c)(ii) above, computed as of
the end of the most recent Plan Year for which the
Plan was top-heavy.
(ii) If a Member has completed three years of Accumulated
Service on or before the last day of the most recent
Plan Year for which the Plan was top-heavy, the
vesting schedule set forth in paragraph (c)(i) above
shall continue to be applicable.
(iii) If a Member has completed at least two, but less than
three, years of Accumulated Service on or before the
last day of the most recent Plan Year for which the
Plan was top-heavy, the vesting provisions of Section
4.04 shall again be applicable; provided, however,
that in no event shall the vested percentage of a
Member's Accrued Benefit be less than the percentage
determined under paragraph (c)(i) above as of the
last day of the most recent Plan Year for which the
Plan was top-heavy.
9.06 CONSTRUCTION
(a) The Plan shall be construed, regulated and administered under
ERISA, as in effect from time to time, and the laws of
Colorado, except where ERISA controls.
(b) The masculine pronoun shall include the feminine.
(c) The titles and headings of the Articles and Sections in this
Plan are for convenience only. In case of ambiguity or
inconsistency, the text rather than the titles or headings
shall control.
<PAGE> 56
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ARTICLE 10. AMENDMENT, MERGER AND TERMINATION
10.01 AMENDMENT OF PLAN
The Board of Directors reserves the right at any time and from time to
time, and retroactively if deemed necessary or appropriate, to amend
in whole or in part any or all of the provisions of the Plan, and
reserves the right to delegate this authority to an officer or
officers of the Company as it deems appropriate. However, no
amendment shall make it possible for any part of the Funds of the Plan
to be used for, or diverted to, purposes other than for the exclusive
benefit of persons entitled to benefits under the Plan prior to the
satisfaction of all liabilities with respect to such persons. No
amendment shall be made which has the effect of decreasing the Accrued
Benefit of any Member or of reducing the nonforfeitable percentage of
the Accrued Benefit of a Member below the nonforfeitable percentage
computed under the Plan as in effect on the date on which the
amendment is adopted or, if later, the date on which the amendment
becomes effective.
10.02 MERGER OR CONSOLIDATION
The Plan may not be merged or consolidated with, and its assets or
liabilities may not be transferred to, any other plan unless each
person entitled to benefits under the Plan would, if the resulting
plan were then terminated, receive a benefit immediately after the
merger, consolidation, or transfer which is equal to or greater than
the benefit he would have been entitled to receive immediately before
the merger, consolidation, or transfer if the Plan had then
terminated.
10.03 ADDITIONAL PARTICIPATING COMPANIES
(a) If any company is now or becomes a subsidiary or associated
company of the Company, the Board of Directors may, at its
discretion and upon appropriate action, include the employees
of that company in the membership of the Plan upon appropriate
action by that company necessary to adopt the Plan. In that
event, or if any persons become Employees of the Company or an
Affiliated Employer as the result of merger or consolidation
or as the result of acquisition of all or part of the assets
or business of another company, the Board of Directors shall
determine to what extent, if any, credit and benefits shall be
granted for previous service with the
<PAGE> 57
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subsidiary, associated or other company, but subject to the
continued qualification of the trust for the Plan as
tax-exempt under the Code.
(b) Any subsidiary or associated company may terminate its
participation in the Plan upon appropriate action by it, in
which event the Funds of the Plan held on account of Members
in the employ of that company shall be determined by the
Retirement Committee and shall be applied as provided in
Section 10.04 if the Plan should be terminated, or shall be
segregated by the Trustee as a separate trust, pursuant to
certification to the Trustee by the Retirement Committee,
continuing the Plan as a separate plan for the employees of
that company, under which the board of directors of that
company shall succeed to all the powers and duties of the
Board of Directors, including the appointment of the members
of the Retirement Committee. Notwithstanding the above, the
Board of Directors may refuse to approve such a termination of
participation by a subsidiary or associated company if it
determines that such action could jeopardize the qualified
status of the Plan.
10.04 TERMINATION OF PLAN
The Board of Directors may terminate the Plan for any reason at any
time. In case of termination of the Plan, the rights of Members to
the benefits accrued under the Plan to the date of the termination, to
the extent then funded (or, if greater, protected by law), shall be
nonforfeitable. The Funds of the Plan shall be used for the exclusive
benefit of persons entitled to benefits under the Plan as of the date
of termination, except as provided in Section 6.02. However, any
Funds, not required to satisfy liabilities of the Plan for benefits,
that arise out of any variation between actual requirements and
expected actuarial requirements, shall be returned to the Company.
The Retirement Committee shall determine, on the basis of actuarial
valuation, the share of the Funds of the Plan allocable to each person
entitled to benefits under the Plan in accordance with Section 4044 of
ERISA or corresponding provision of any applicable law in effect at
the time. In the event of a partial termination of the Plan, the
provisions of this Section shall be applicable to the Members affected
by that partial termination.
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10.05 LIMITATION CONCERNING 25 HIGHEST PAID EMPLOYEES
(a) The provisions of this Section shall apply to any Member who
is one of the 25 highest paid Employees of the Company on any
"Commencement Date" and whose anticipated annual Pension
provided under the Plan at Normal Retirement Date exceeds
$1,500. "Commencement Date," for purposes of this Section,
shall mean the Effective Date of the Plan or the effective
date of any amendment to the Plan which increases the
benefits. If the Plan is terminated during the first ten
years after a "Commencement Date," the amount of the Pension
provided under the Plan for any one of the Members to whom
this Section applies shall not be greater than the amount of
Pension that can be provided by the largest of the following
amounts:
(i) The Company's contributions (or Funds attributable to
those contributions) which would have been applied to
provide the Pension if the Plan as in effect on the
date before that "Commencement Date" had been
continued without change;
(ii) $20,000;
(iii) The sum of (A) the Company's contributions (or Funds
attributable to those contributions) which would have
been applied to provide benefits for the Employee if
the Plan had been terminated on the day before that
"Commencement Date," plus (B) an amount computed by
multiplying the smaller of $10,000, or 20 per cent of
the average annual remuneration of that Employee
during the last five years of service, by the number
of years since that "Commencement Date"; or
(iv) The present value of the maximum benefit guaranteed
by the Pension Benefit Guaranty Corporation (PBGC),
as described in Section 4022(b)(3)(B) of ERISA,
determined on the basis of the actuarial assumptions
promulgated by the PBGC applicable as of the date of
termination of the Plan or the date Pension payments
commence, whichever is earlier.
(b) Any excess reserves arising by application of the provisions
of paragraph (a) above shall be used and applied as provided
in the Plan for the benefit of the other persons entitled to
benefits under the Plan. However, if sufficient Funds are
available to provide in full for the Pensions accrued for all
other persons entitled to benefits under the Plan to the date
of termination of the Plan, those excess reserves shall first
be
<PAGE> 59
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used and applied to provide the accrued Pensions of the
Members whose Pensions have been restricted by operation of
the provisions of this Section.
(c) If it should subsequently be determined by statute, court
decision acquiesced in by the Commissioner of Internal
Revenue, or ruling by the Commissioner of Internal Revenue
that the provisions of this Section are no longer necessary to
qualify the Plan under the Code, this Section shall be
ineffective without the necessity of further amendment to the
Plan.
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ARTICLE 11. TRANSFERS
11.01 TRANSFERS TO AND FROM AN AFFILIATED EMPLOYER
(a) Except as otherwise provided in Sections 11.02 and 11.03, if
an Employee (i) becomes employed by the Company in any
capacity other than as an Employee as defined in Section 1.20,
or (ii) becomes employed by an Affiliated Employer, he shall
retain his Accrued Benefit under the Plan on the date he
ceases to be an Employee. Upon his later retirement or
termination of employment with the Company or Affiliated
Employer (or upon benefit commencement in the case of a Leased
Employee), the Accrued Benefit to which the Employee is
entitled under the Plan shall be determined under the Plan
provisions in effect at that time, but in no event shall his
Accrued Benefit be less than his Accrued Benefit under the
Plan on the date he first ceased to be an Employee.
(b) Subject to the provisions of Article 3, in the case of a
person who (i) was originally employed by the Company in any
capacity other than as an Employee as defined in Section 1.20,
or (ii) was originally employed by an Affiliated Employer, or
(iii) was originally providing services to the Company as a
Leased Employee and thereafter becomes an Employee, upon his
later Severance Date, the benefits payable under the Plan
shall be computed under the Plan provisions in effect at that
time, and only on the basis of the Benefit Service accrued
while he is an Employee as defined in Section 1.20, except as
otherwise provided in Sections 11.02 and 11.03.
(c) All applicable remuneration with an Affiliated Employer for
employees described in 11.01(b) above, shall be deemed
Pensionable Wages for purposes of the Plan, taken at par of
exchange at the Employee's Severance Date for remuneration
paid in other than U.S. currency. Employment with an
Affiliated Employer shall be deemed Accumulated Service with
the Company for the purpose of determining eligibility for
benefits under the Plan, but the Pension payable under the
Plan shall be computed on the basis of Benefit Service as
defined in the Plan only; provided, however, that no death
benefit shall be payable under Section 4.07(a) on account of a
Member who, at the time of retirement, was not an Employee as
defined in Section 1.20.
(d) Transfer of employment of a Member from the Company to an
Affiliated Employer shall not terminate membership under the
Plan.
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11.02 TRANSFERS TO AND FROM HOURLY PLAN
(a) Notwithstanding any other provisions of the Plan, the
provisions of this Section 11.02 shall apply to (i) any member
of an Hourly Plan who ceases to be an employee as defined in
the Hourly Plan and at the same time becomes an Employee as
defined in Section 1.20, and (ii) any Member of the Plan who
ceases to be an Employee as defined in Section 1.20 and at the
same time becomes an employee as defined in the Hourly Plan.
(b) All applicable remuneration while a member of the Hourly Plan
shall be deemed Pensionable Wages for purposes of the Plan for
any Member described in (a) above. If such remuneration was
paid in foreign currency, it shall be taken at par of exchange
at the Member's Severance Date.
(c) Service credited to the Member as an employee under the Hourly
Plan shall be deemed service with the Company for purpose of
determining Accumulated Service under the Plan, but the
Pension payable under the Plan (except as otherwise specified
in paragraph (e) or (g) below) shall be computed on the basis
of Benefit Service earned as a Member under the Plan and the
provisions of the Plan as in effect on the date of the
Employee's Severance Date.
(d) No death benefit shall be payable under Section 4.07(a) on
account of a Member who, at the time of retirement, was not an
Employee as defined in the Plan.
(e) If an Employee described in clause (i) of paragraph (a) above
accrues at least five years of Benefit Service after June 30,
1968, an additional Pension shall be payable under the Plan,
calculated as follows. Any period of benefit service credited
under the Hourly Plan on account of service rendered prior to
the first day the Member is an Employee as defined in Section
1.20, shall be deemed Benefit Service under the Plan.
(f) Any Member whose service while employed by the collective
bargaining unit is counted as Benefit Service under Section
3.02, or any Member who receives a Pension under (e) above,
shall have the Pension computed under Article IV reduced by
any accrued benefit which the Member is entitled to receive
under the Hourly Plan or a multiemployer plan for the same
period of service.
<PAGE> 62
Page 59
(g) If an Employee described in clause (ii) of paragraph (a) above
is employed in a collective bargaining unit represented by a
collective bargaining agent which has an agreement with the
Company providing for a method of determining Accumulated
Service or of calculating the Pension payable under the Plan
in a manner other than as described in the Plan, then
Accumulated Service and the Pension shall be determined in the
manner prescribed in the agreement, and not as described in
the Plan.
(h) Notwithstanding the above, effective June 30, 1989, any and
all benefits payable under both the Plan and an Hourly Plan to
the persons specified below shall be paid solely from the
Plan. All liabilities for such benefit payments under an
Hourly Plan shall be transferred to the Plan and assets at
least sufficient to cover such liability shall be transferred
from the applicable Hourly Plan to the Plan. This Section
11.02(h) shall apply to anyone who at one time participated in
an Hourly Plan, transferred to the Plan and who:
(i) retires under the Plan prior to July 1, 1989; or
(ii) terminates employment with Manville Corporation prior
to July 1, 1989 with eligibility for a deferred
vested benefit under the Plan; or
(iii) is an active Member of the Plan as of June 30, 1989
and completes at least five years of Benefit Service
as a Member under the Plan by June 30, 1989.
11.03 TRANSFERS TO AND FROM RIVERWOOD PLAN
(a) Notwithstanding any other provisions of the Plan, the
provisions of this Section 11.03 shall apply to (i) any member
of the Riverwood International Employees Retirement Plan (the
"Riverwood Plan") who ceases to be an employee as defined in
the Riverwood Plan and at the same time becomes an Employee as
defined in Section 1.20 on or after January 1, 1992, and (ii)
any Member of the Plan on or after January 1, 1992 who ceases
to be an Employee as defined in Section 1.20 and at the same
time becomes an employee as defined in the Riverwood Plan.
(b) For persons described in clause (i) of paragraph (a),
(i) employment credited as accumulated service or benefit
service under the Riverwood Plan will be fully
recognized as Accumulated Service and Benefit Service
under this Plan.
<PAGE> 63
Page 60
(ii) All applicable remuneration while a member of the
Riverwood Plan will be deemed Pensionable Wages for
purposes of this Plan.
(iii) The individual's Accrued Benefit under the Riverwood
Plan at the date he ceases to be an employee as
defined in the Riverwood Plan will be a minimum
Accrued Benefit under this Plan.
(iv) The individual's Pension under this Plan shall be
based on the provisions of the Plan as in effect on
the Employee's Severance Date.
(v) Assets from the trust of the Riverwood Plan will be
transferred to the trust of the Plan in an amount
equal to the Accumulated Benefit Obligation (as that
term is defined in Financial Accounting Standards
Board Statement No. 87) of the accrued benefits of
the employee at the date of transfer, multiplied by a
"Plan Funding Ratio." The Accumulated Benefit
Obligation will be determined on the basis of the
actuarial assumptions used by Riverwood International
Corporation for financial reporting purposes as of
the December 31 preceding or coincident with the date
of the employee's change in employment status. The
Plan Funding Ratio will be determined on the December
31 coincident with or preceding the date of the
employee's change in employment status and will be
equal to:
Market Value of Riverwood Plan Trust Assets
Accumulated Benefit Obligation for Riverwood Plan
(vi) Such transfer of assets will be made by July 1 of
each year for all employees changing employment
status during the preceding calendar year (or at such
other frequency as agreed to by Riverwood
International Corporation and the Company) and will
include investment return for the delay in payment at
an annual rate equal to the discount rate used in
determining the Accumulated Benefit Obligation at the
December 31 coincident with or preceding the
transfer.
(vii) This transfer of assets and liabilities will be
carried out under the provisions of Section 414(l) of
the Code.
(viii) Upon completion of the transfer of assets and
liabilities for any affected individual, the Plan
will have the total and sole responsibility for the
Employee's Accrued Benefit under the Plan.
(c) For persons described in clause (ii) of paragraph (a):
<PAGE> 64
Page 61
(i) Employment credited as Accumulated Service or Benefit
Service under the Plan will be fully recognized as
accumulated service and benefit service in the
Riverwood Plan.
(ii) Pensionable Wages under this Plan will be recognized
as pensionable wages under the Riverwood Plan.
(iii) The individual's Accrued Benefit under the Plan as of
the date he ceases to be an Employee will be a
minimum accrued benefit under the Riverwood Plan.
(iv) The individual's pension under the Riverwood Plan
shall be based on the provisions of the Riverwood
Plan as in effect on the employee's severance date.
(v) Assets from the trust of the Plan will be transferred
to the trust of the Riverwood Plan in an amount equal
to the Accumulated Benefit Obligation (as that term
is defined in Financial Accounting Standards Board
Statement No. 87) of the Accrued Benefits of the
Employee at the date of transfer, multiplied by a
"Plan Funding Ratio." The Accumulated Benefit
Obligation will be determined on the basis of the
actuarial assumptions used by Manville Corporation
for financial reporting purposes as of the December
31 preceding or coincident with the date of the
employee's change in employment status. The Plan
Funding Ratio will be determined on the December 31
coincident with or preceding the date of the
employee's change in employment status and will be:
Market Value of Plan Trust Assets
Accumulated Benefit Obligation for Plan
(vi) Such transfer of assets will be made by July 1 of
each year for all employees changing employment
status during the preceding calendar year (or at such
other frequency as agreed to by Riverwood
International Corporation and the Company) and will
include investment return for the delay in payment at
an annual rate equal to the discount rate used in
determining the Accumulated Benefit Obligation at the
December 31 coincident with or preceding the
transfer.
(vii) This transfer of assets and liabilities will be
carried out under the provisions of Section 414(l) of
the Code.
<PAGE> 65
Page 62
(viii) Upon completion of the transfer of assets and
liabilities for any affected employee, the Riverwood
Plan will have the total and sole responsibility for
the individual's accrued benefit under the Riverwood
Plan.
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the
foregoing instrument comprising the Manville Employees Retirement Plan (As
Amended and Restated Effective January 1, 1989) (And As Further Amended
Effective September 1, 1991), the Company has caused its corporate seal to be
affixed hereto and these presents to be duly executed in its name and behalf by
its proper officers thereunto authorized this 27th day of May, 1993.
ATTEST: Manville Corporation
/s/ R. B. VonWald
_____________________________________
Secretary Name
/s/ Ann J. Henley
Title Chairman, Retirement
Committee
(CORPORATE SEAL)
<PAGE> 66
APPENDIX A
MANVILLE EMPLOYEES RETIREMENT PLAN
NON-UNION HOURLY PARTICIPATING LOCATIONS,
SUBSIDIARIES AND/OR EMPLOYEE CLASSIFICATIONS
Holophane
Utica, Ohio - divested July 1, 1989
Pataskala, Ohio - divested July 1, 1989
Forest Resources - divested January 1, 1992
Joyce, Louisiana - divested January 1, 1992
<PAGE> 67
APPENDIX B
MINIMUM BENEFITS FOR MEMBERS
OF THE PLAN AS OF DECEMBER 31, 1988
Members of the Plan on December 31, 1988 are entitled to minimum benefits under
this Plan based on the benefit formulas and provisions of the Plan in effect
prior to January 1, 1989 as outlined below. These minimum benefits are
"frozen" based on the Members's Benefit Service and Average Final Salary as of
December 31, 1988.
ACCRUED BENEFITS AS OF DECEMBER 31, 1988 PAYABLE AT AGE 65
1. CURRENT FORMULA (Benefit Formula in effect under the Plan for the
period January 2, 1986 through December 31, 1988)
Accrued Benefits as of December 31, 1988 under the benefit
formula in effect under the Plan on December 31, 1988.
2. (a) PRIOR FORMULA (applies only to Members of the Manville Salaried
Retirement Plan prior to January 1, 1986)
GREATER OF THE ALTERNATE OR GRANDFATHERED FORMULA
Alternate Formula (1985 Benefit Formula)
Accrued Benefits as of December 31, 1988 based on the
benefit formula in effect under the Plan on December
31, 1985.
Grandfathered Formula (1980 Benefit Formula)
Accrued Benefits as of December 31, 1988 based on the
benefit formula in effect under the Plan on December
31, 1980.
OFFSET DUE TO THE REFUND OF ACCUMULATED CONTRIBUTIONS
Accrued Benefits as of December 31, 1988 based on the refund
of Accumulated Contributions.
(b) PRIOR FORMULA (applies only to Members of the Manville Forest Products
Salaried Retirement Plan prior to January 1, 1986)
Accrued Benefits as of December 31, 1988 based on the benefit
formula in effect under the Plan on December 31, 1985. (1985
Benefit Formula)
MINIMUM BENEFITS BASED ON RETIREMENT AT AGE 65
A Member retiring at age 65 will be entitled to a minimum normal retirement
Pension under Section 4.01(b) of the Plan as follows:
The greater of (a) or (b) below:
(a) The Current Formula
<PAGE> 68
(b) The Prior Formula under (i) or (ii) as applicable as follows:
(i) Under the Manville Salaried Retirement Plan:
The greater of the Alternate Formula or the
Grandfathered Formula
Less
The Offset Due to the Refund of Accumulated
Contributions.
(ii) Prior Formula under the Manville Forest Products
Retirement Plan.
MINIMUM BENEFITS BASED ON EARLY RETIREMENT
A Member retiring before age 65 under early retirement after age 50 with 10
years of Accumulated Service and receiving benefits prior to age 65 will be
entitled to a minimum early retirement Pension as follows:
The greater of (a) or (b) below:
(a) The Current Formula reduced by 3% for each year and fraction
thereof that the benefit commencement date precedes the
Member's age 62.
(b) The Prior Formula under (i) or (ii) as applicable as follows:
(i) Under the Manville Salaried Retirement Plan:
The greater of the Alternate Formula or the
Grandfathered Formula reduced by 4% for each year and
fraction thereof that the benefit commencement date
precedes the Member's age 62 less the offset due to
the refund of Accumulated Contributions multiplied by
the applicable percentage as follows:
<TABLE>
<CAPTION>
Completed Age at Date Benefits
Commence Percentage
------------------------------- ----------
<S> <C>
65 100%
64 95%
63 81%
62 77%
61 74%
60 70%
59 59%
58 56%
57 54%
56 51%
55 49%
54 46%
53 39%
52 37%
51 35%
50 33%
</TABLE>
(ii) Under the Manville Forest Products Salaried
Retirement Plan:
<PAGE> 69
The Prior Formula reduced by 3% for each year and
fraction thereof that the benefit commencement date
precedes the Member's age 62, down to age 55, and
actuarially reduced for payment before age 55, down
to age 50, based on The UP-1984 Mortality Table and
an interes t rate of five percent (5%)
compounded annually).
MINIMUM BENEFITS BASED ON DEFERRED VESTED RETIREMENT
A Member retiring before age 65 under Deferred Vested Retirement and receiving
benefits prior to age 65 will be entitled to a minimum deferred vested
retirement Pension as follows:
The greater of (a) or (b) below:
(a) The Current Formula reduced by the appropriate factor from the
schedule in Section 4.04(b) of the Plan based on his age when
his Pension commences.
(b) The Prior Formula under (i) or (ii) as applicable as follows:
(i) Under the Manville Salaried Retirement Plan
The greater of the Alternate Formula or the
Grandfathered Formula reduced by the appropriate
factor from the schedule in Section 4.04(b) of the
Plan based on his age when his Pension commences less
the offset due to the refund of Accumulated
Contributions as outlined in clause (i) of Section
(b) under Minimum Benefits Based on Early Retirement
in this Appendix B.
(ii) Under the Manville Forest Products Salaried
Retirement Plan
The Prior Formula reduced by 3% for each year and
fraction thereof that the benefit commencement date
precedes the Member's age 62, down to age 55, and
actuarially reduced for payment before age 55, down
to age 50, based on The UP-1984 Mortality Table and
an interest rate of five percent (5%) compounded
annually.
<PAGE> 70
MINIMUM BENEFITS BASED ON LATE RETIREMENT
A Member retiring after age 65 will be entitled to a minimum late retirement
Pension under Section 4.02(b) of the Plan as defined above for Minimum Benefits
Based on Retirement at Age 65, with the exception that the Offset Due to the
Refund of Contributions shall be multiplied by the applicable percentage as
follows:
<TABLE>
<CAPTION>
Completed Age at Date Benefits
Commence Percentage
------------------------------ ----------
<S> <C>
65 100%
66 105%
67 121%
68 127%
69 145%
70 153%
71 160%
72 182%
73 192%
74 217%
75 228%
</TABLE>
MINIMUM BENEFITS BASED ON DISABILITY RETIREMENT OR
DEATH BEFORE THE MEMBER'S ANNUITY STARTING DATE
In the event a Member becomes entitled to an immediate disability retirement
Pension under Section 4.05(a) of the Plan, a deferred disability retirement
Pension under Section 4.05(b) of the Plan, or the surviving spouse of a Member
becomes entitled to a monthly spouse's Pension under Section 4.06(a) of the
Plan due to the death of a Member before the Member's Annuity Starting Date,
the minimum Pension payable under Section 4.05(a)(ii) or Section 4.05(b)(ii)
shall be calculated as under the Minimum Benefits Based on Retirement at Age
65. The minimum Pension payable under Section 4.06 shall be calculated as
under the Minimum Benefits Based on Retirement at Age 65 or the Minimum
Benefits Based on Early Retirement or Deferred Vested Retirement, whichever is
applicable, prior to the application of the reduction for the optional form of
payment election under Section 5.02.
<PAGE> 1
EXHIBIT 10(K)
INTERCOMPANY AGREEMENT
THIS INTERCOMPANY AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of June, 1992, by and between Riverwood
International Corporation, a Delaware corporation ("Riverwood") and Manville
Corporation, a Delaware corporation ("MVL").
R E C I T A L S
WHEREAS, prior to the effective date of this Agreement, MVL
provided to Riverwood and its U.S. subsidiaries (collectively, "RIC") with
certain services, insurance coverage and employee benefit plans; and
WHEREAS, the parties hereto wish to formalize the relationship
between MVL and RIC regarding such services, insurance coverage and employee
benefit plans; and
WHEREAS, MVL desires to provide to or obtain for RIC on a fee
basis (i) those services set forth in Exhibit A hereto (the "Services"), (ii)
the insurance coverage set forth in Exhibit B hereto (the "Insurance") and (iii)
the opportunity for RIC's employees to participate in those MVL sponsored
benefit plans set forth in Exhibit C hereto, as may be amended from time to
time (collectively, the "Plans"); and
WHEREAS, RIC desires to acquire the Services and Insurance and
provide its employees with the opportunity to participate in the Plans pursuant
to the terms and conditions set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Services. Beginning on June 1, 1992 (the "Effective Date"),
MVL shall provide to RIC all of the Services set forth in Exhibit A to this
Agreement. The cost of each of the Services to RIC shall be allocat-
<PAGE> 2
ed in a manner consistent with the parties' past practices. The Services may
be provided by (i) any affiliate or employee of MVL or its affiliates or (ii)
any third party at the sole discretion of MVL.
2. Charges for Services. By the 15th business day of each
calendar month, MVL shall submit to Riverwood invoices describing in reasonable
detail the Services performed by MVL during the prior month and the charges for
such Services. Riverwood shall remit payment to MVL in full for the invoiced
charges within 30 days of the date the invoice is received.
3. Termination of Services. Either Riverwood or MVL may
terminate all or any portion of the Services on 90 days' prior written notice
to the other party hereto; provided, however, that no termination of any of
such Services (or the termination of this Agreement) shall cause the
termination or disqualification of the Plans.
4. Insurance. MVL shall use its reasonable best efforts to
cause RIC to be covered under MVL insurance policies which will provide to RIC
the Insurance described in Exhibit B hereto. MVL shall not be responsible for
obtaining or maintaining any other insurance coverage for Riverwood other than
as set forth in Exhibit B hereto. Riverwood shall, within 30 days of its
receipt of an invoice from MVL, pay a portion of the premiums for the Insurance
attributable to the coverage provided to RIC. The portion of such premiums
payable by Riverwood shall be allocated in a manner consistent with the
parties' past practices. The Insurance shall be provided by insurance carriers
and be subject to such policies of insurance or self-insurance as MVL shall
determine.
5. Termination of Insurance. Either Riverwood or MVL may
terminate all, but not less than all, of the Insurance at any time on 90 days'
prior written notice to the other party hereto. If Riverwood terminates the
Insurance, Riverwood shall pay its share of the premiums for the RIC insurance
as set forth in Section 4 hereof for any policies in force on the date of the
termination notice until the earlier of (i) the date when such policies expire
or (ii) one year from the date of the termination notice, at which time all of
MVL's obligations hereunder regarding the Insurance shall automatically
terminate.
2
<PAGE> 3
6. Employee Benefit Plans. Prior to notification, in
writing, by Riverwood to MVL that it is covering the RIC employees under its
own employee welfare and/or qualified benefit plans, MVL shall allow employees
of RIC (other than those employees covered by collective bargaining agreements
which set forth MVL benefit plans in which such employees may participate) (the
"RIC Employees") to participate in such Plans. No RIC Employee who is covered
by any RIC benefit plan shall be entitled to coverage under any Plan providing
comparable benefits, regardless of whether the RIC benefit plan provides more
or less coverage than such Plan. Riverwood shall reimburse MVL for all of
MVL's costs and contributions (including, but not limited to, any costs related
to providing COBRA continuation coverage) relating to the RIC Employees'
participation in the Plans. The amount of such costs and contributions and the
timing and manner in which Riverwood is required to reimburse MVL for such
costs and contributions shall be determined in a manner consistent with the
parties' past practices.
7. Prior Payments. MVL and Riverwood hereby agree that
Riverwood has paid, in full, all amounts owed by Riverwood to MVL relating to
MVL provided services incurred by RIC prior to the Effective Date.
8. Limitation of Liability. Except as may be provided in
Section 9 below, MVL, its affiliates, directors, officers, employees, agents or
permitted assigns (each, a "MVL Party") shall not be liable to RIC or any of
RIC's affiliate, director, officer, employee, agent or permitted assign (each,
a "RIC Party") for any liabilities, claims, damages, losses or expenses,
including, but not limited to, any special, indirect, incidental or
consequential damages of a RIC Party arising in connection with this Agreement,
the Services, the Insurance or the Plans.
9. MVL Indemnification. MVL shall indemnify, defend and hold
harmless the RIC Parties from and against all liabilities, claims, damages,
losses and expenses (including, but not limited to, court costs and reasonable
attorneys' fees), of third parties unrelated to any RIC Party and, solely in
connection with the Plans, RIC Employees caused by or arising in connection
with MVL's gross negligence or willful misconduct in its performance of the
Services, or providing the Insurance or Plans; unless such gross negligence or
willful misconduct was
3
<PAGE> 4
caused by the acts or omissions of any RIC Party. Notwithstanding the
foregoing, MVL shall not be liable for any special, indirect, incidental or
consequential damages relating to such third party claims.
10. Riverwood Indemnification. Riverwood shall indemnify,
defend and hold harmless the MVL Parties from and against all liabilities,
claims, damages, losses and expenses (including, but not limited to, court
costs and reasonable attorneys' fees), of any kind or nature caused by or
arising in connection with RIC's failure to fulfill RIC's obligations
hereunder; unless such failure is caused by the acts or omissions of any MVL
Party. Notwithstanding the foregoing, Riverwood shall not be liable for any
special, indirect, incidental or consequential damages relating to such claims.
11. Information. Riverwood hereby covenants and agrees to
provide MVL with all information regarding RIC and other assistance required
by MVL for MVL to comply with all applicable federal, state, county and local
laws, ordinances, regulations and codes, including, but not limited to,
securities laws and regulations.
12. Confidential Information. Riverwood and MVL hereby
covenant and agree to hold in trust and maintain confidential all Confidential
Information relating to the other party or any of their subsidiaries.
Confidential Information shall mean all information disclosed by either party
to the other in connection with this Agreement whether orally, visually, in
writing or in any other tangible form, and includes, but is not limited to,
technical, economic and business data, know-how, flow sheets, drawings,
business plans, computer information data bases, and the like. Without
prejudice to the rights and remedies of any party to this Agreement, a party
disclosing any Confidential Information shall be entitled to equitable relief
by way of an injunction if any other party hereto breaches or threatens to
breach any provision of this Section 12.
13. Assignment. RIC shall not assign or transfer any of RIC's
rights or duties under this Agreement to any person or entity without the prior
written consent of MVL.
14. Notices. Any notice, instruction, direction or
demand under the terms of this Agreement required
4
<PAGE> 5
to be in writing will be duly given upon delivery, if delivered by hand or
intercompany mail, or five (5) days after posting if sent by certified mail,
return receipt requested to the following addresses:
MVL
Manville Corporation
P.O. Box 5108
Denver, Colorado 80217
Attention: Legal Department
and
Riverwood
Riverwood International Corporation
3350 Cumberland Circle, #1600
Atlanta, Georgia 30309
Attention: Legal Department
or to such other address as either party may have furnished to the other in
writing in accordance with this Section 14.
15. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware.
16. Suspension. The obligations of any party to perform any
acts hereunder may be suspended if such performance is prevented by fires,
strikes, embargoes, riot, invasion, governmental interference, inability to
secure goods or materials, or other circumstances outside the control of the
parties.
17. Severability. If any provision of this Agreement shall be
invalid or unenforceable, such invalidity or unenforceability shall not render
the entire Agreement invalid. Rather, the Agreement shall be construed as if
not containing the particular invalid or unenforceable provision, and the
rights and obligations of each party shall be construed and enforced
accordingly.
18. Rights Upon Orderly Termination. Upon termination or
expiration of this Agreement or any of the Services, Insurance or Plans
described herein, each party
5
<PAGE> 6
shall, upon request, forthwith return to the other party all reports, paper,
materials and other information required to be provided to the other party by
this Agreement. In addition, each party shall assist the other in the orderly
termination of this Agreement or any of the Services, Insurance or Plans
described herein.
19. Amendment. This Agreement may only be amended by a written
agreement executed by all of the parties hereto.
20. Entire Agreement. This Agreement, including any exhibits,
constitutes the entire agreement between the parties, and supersedes all prior
agreements, representations, negotiations, statements or proposals related to
the subject matter hereof.
21. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original and all of which, when
taken together, shall constitute one agreement.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have caused
this Agreement to be signed by their duly authorized
representatives.
RIVERWOOD INTERNATIONAL
CORPORATION, a Delaware
corporation
By: /s/ F.R. McCauley
Name: F.R. McCauley
Title: Senior Vice President,
Finance
MANVILLE CORPORATION, a
Delaware corporation
By: /s/ Richard B. VonWald
Name: Richard B. VonWald
Title: Senior Vice President
7
<PAGE> 8
EXHIBIT A
SERVICES
PUBLIC AFFAIRS
Public Affairs Services will include:
- State issues/legislation monitoring and related
intervention (except in Louisiana) as approved;
- National legislation and regulatory issue management for
RIC
- Coordinate programs with IPA and other associations
TELECOMMUNICATIONS
The telecommunications department will provide voice communication
network services as well as related monthly cost management information.
In addition consulting and installation services for local telephone
systems and equipment are available. If additional services are requested,
charges at fully-burdened cost will be agreed at that time.
TAX DEPARTMENT
MVL's tax department will provide tax services to RIC in the following
general areas:
- U.S. and Canadian federal, provincial, state and local
compliance for income, franchise and sales and use taxes
- worldwide tax planning
- mergers, acquisitions, and divestments
- audit negotiation and support
- special computations in connection with Tax Sharing
Agreement
8
<PAGE> 9
Charges for such services will be based on an estimate of the
time that tax department personnel devote to RIC activities.
CONTROL AND AUDIT
Services to be provided include:
Internal Audit - In accordance with audit schedule to be agreed
to by RIC in order to assure appropriate coverage.
External Audit - Invoices for separate audit work will be
submitted directly to and paid by RIC.
External Financial Reporting - Will assist as requested.
MVL will prepare the stand-alone RIC tax calculation for
financial reporting purposes. RIC will continue to provide the book/tax
temporary differences and maintain responsibility for oversight of the
calculations performed by the overseas subsidiaries. MVL will calculate the
current and deferred tax provisions and liabilities.
Operations Analysis, Corporate Planning, Policy Control and
Corporate Systems - No services expected. If RIC requests any such assistance,
charges at fully-burdened cost will be agreed at that time.
INSURANCE
MVL will continue to provide an insurance department that will
determine the amount and type of worldwide insurance coverage that is needed,
on substantially the same terms and conditions as provided to other
subsidiaries and divisions of MVL. This department will be responsible for
negotiating with underwriters to obtain that coverage. See Exhibit B for a
more definitive list of the types of coverage that will be included.
RIC shall be billed for insurance provided by MVL at
substantially the same rate and on substantially the same terms as internal
units of MVL, subject to adjustment due to differences in levels of coverage,
risk
9
<PAGE> 10
and deductibles, and except that in situations where MVL must pre-pay insurance
premiums RIC shall be billed on a pre-paid basis its allocated share.
Where it is MVL's policy to maintain a self-insurance program,
RIC will also be required to self-insure.
Insurance services include those services provided by the MVL
Risk and Insurance Management Department. This department performs all
customary risk insurance management functions, specifically:
- Determine amount and type of domestic and international
insurance coverage necessary,
- Negotiate with underwriters and brokers for insurance
coverage and services,
- Negotiate with claims adjusters for cost effective service,
- Set deductibles and self-insured retention amounts,
- Ensure compliance with loan covenants and agreements,
- Arrange and coordinate property loss prevention inspection
of facilities,
- Design insurance programs for special or new situations,
- Review insurance language in construction contract, joint
ventures, agreements, leases, etc.,
- Determine financial ability of insurance carriers for
loggers and other vendors,
- Advise the scope and breadth of coverage available,
- Arrange for certificates, ID cards and other proof of
insurance,
10
<PAGE> 11
- Prepare claims and Proof of Loss for submission to
insurers,
- Complete various filings with appropriate state agencies,
- Gather, compile and submit underwriting data to various
insurers/underwriters to obtain coverage,
- Handle requests for information
HEALTH, SAFETY & ENVIRONMENTAL MANAGEMENT
MVL will continue to provide HS&E assistance to
RIC. This will include:
- Environmental plant audits
- Oversight of compliance with government and corporate
requirements
- Education of new regulatory requirements
- Due diligence on acquisitions
- Representation before domestic and international regulatory
authorities and representation on various committees and at
scientific and trade meetings
- Filings with regulatory authorities
- Train coordinators, including division-specific programs
- Federal and corporate Occupational Health mandated programs
- Medical surveillance programs
- Program support for State regulatory initiatives
- HS&E presentations (internal, BOD, external)
- Corporate Science Advisory Group
11
<PAGE> 12
- Occupational exposure monitoring
- Assess potential toxicity of potential
replacement chemicals
- MSDS and labeling development and
maintenance
- OSHA and corporate safety standards
compliance
- Safety programs development
- Occupational and environmental
risk assessment
- Product evaluations and
stewardship programs
- Indoor Air Quality issues
- Maintain MVL's Environmental Safety
and Health Information
Stay abreast of pertinent
literature and research
EMPLOYEE RELATIONS
Corporate Employee Relations will provide advice and assistance
on benefit plan design and compliance. The types of plans include pension,
thrift, and health and welfare.
Corporate Employee Relations will provide assistance on employee
relocations.
Non-routine services will be contracted on an "as-requested"
basis with fees equal to fully-burdened costs being negotiated.
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LEGAL SERVICES
Services for the first year will include the following:
General counsel
Benefit plans
Securities law
Corporate secretary services
Product litigation
Corporate security
Environmental
Labor relations
Legal costs are based upon an estimate of the time devoted to
RIC specific areas.
Outside counsel costs attributable to RIC and the cost of the
internal RIC legal staff will be billed directly to RIC.
If additional services are requested, charges at fully-burdened
cost will be agreed at that time.
EMPLOYEE BENEFIT PLANS INVESTMENT DEPARTMENT
The Employee Benefit Plan Investment Department will provide
general actuarial services, investment, administration and custodial services
necessary to manage the assets of current employee benefit plans and any
successor plans operated or established in whole or in part for the benefit of
the employees. Any charges necessary in connection with a revision of the
design or administration of any plan shall be negotiated at the time the
service is requested on the basis of reimbursement of fully-burdened costs.
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PROCESS AUTOMATION
MVL presently provides consulting services that identify
computer manufacturing efficiencies using video imaging techniques. Service is
contracted at negotiated prices.
CREDIT
MVL's corporate credit department will continue to negotiate
with Dunn and Bradstreet for services. RIC will be charged based upon an
annual estimate of their usage.
AVIATION DEPARTMENT
The Corporate Aviation Department will provide an oversight role
to the RIC-based aviation group. RIC will be charged with the fully-burdened
cost of the RIC group. Use of the Corporate aircraft will be provided with
utilization charges of $2.00 per flight mile. This rate is also applicable for
time spent flying to departure points (deadhead time).
CORPORATE RELATIONS
The Corporate Relations department will provide public
relations, and investor, shareholder, and general and financial media relations
services for RIC. This would include:
- Arranging analysts meetings
- Answering shareholder and investor analyst questions
- Handling media inquiries and manage article
placement program on RIC
- Overseeing preparation of report to shareholders
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- Manage major presentation plan for RIC president
- Handling news releases
- Provide oversight and guidance to RIC director of corporate
communications on overall internal and external communications
and marketing communications support.
INFORMATION TECHNOLOGY
The Information Technology department will
provide data communication network services to RIC.
EXECUTIVE DEPARTMENT
A portion of MVL's corporate executive department will be
charged to RIC to cover the costs of the RIC chairman of the board.
Non-routine services will be contracted on an "as-requested"
basis with fees equal to fully-burdened cost being negotiated at time of
request.
TRAINING DEPARTMENT
MVL presently maintains a training department. Fully-burdened
costs for each course will be charged to attendees.
PRIVATE CARRIAGE
MVL maintains its own trucking department for hauling inbound
and outbound freight. RIC will be charged based upon usage.
Costs will be determined on actual miles hauled and/or cargo
weight consistent with past practice.
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TRANSPORTATION DEPARTMENT
MVL will continue to provide a program of leased cars. RIC will
be charged the direct lease cost plus an indirect amount to cover the
administrative costs.
In addition MVL will also provide additional moving services and
access to industry transportation data.
PROPERTY TAX DEPARTMENT
MVL will continue to provide service to RIC in the property tax
area including:
- Administering all tax filings
- Issuing payments to taxing authorities
- Providing RIC with tax estimates for accrual purposes
- Interfacing with local assessors to negotiate property values
and related tax payments
- Administering various information tracking programs
- Initiating and administering Jak-et-Pak and Marksman tax
filings and payments and provide RIC billing information for
customer reimbursable items
MASTER CAMP
MVL leases a small game hunting facility for customer
entertainment. Cost of accommodations are equally born by business units.
GENERAL ADMINISTRATIVE
MVL will charge RIC a portion of the cost of maintaining the
headquarters building.
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MANVILLE INTERNATIONAL B.V.
Manville International B.V. ("MIBV") will provide certain
financial and administrative services to RIC's European subsidiaries as
follows:
- Serve as general administrator for Riverwood International
B.V.
- Coordinate with tax, legal and financial advisors as necessary
to meet subsidiary statutory requirements
- Manage intercompany borrowing arrangements
- Provide other general finance and administrative services as
requested
Charges for such services will be based on an estimate of the
time that MIBV personnel devote to RIC activities.
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EXHIBIT B
INSURANCE
This schedule provides a brief description of the major insurance programs
under which RIC will be afforded coverages under MVL's policies. Recovery
under any of these policies is subject to the specific terms, conditions,
exclusions, limits, deductibles, etc. of the particular policy involved.
MVL shall have responsibility for negotiating insurance contracts, terms and
conditions, selection and administration of insurance brokers, underwriters,
claims handling services and all other aspects of insurance admin-
istration.
The premium charge is a reflection of RIC's percentage of the total premium
for each line of coverage. These policies are renewed on an annual basis and
premiums are subject to market conditions. In addition, if RIC terminates the
Insurance and RIC's loss experience has caused MVL's insurance premium to be
higher than it would have been without RIC's loss experience, RIC will be
obligated to pay its share of the increased premium until the RIC loss
experience is no longer involved in MVL's premium determination.
RIC's initial percentage of the estimated premium for
each coverage is shown with the coverage description.
CASUALTY - 27%
Provides coverage for damages which RIC shall become legally obligated to pay
because of personal injury and/or property damage. This coverage includes
automobile liability, advertiser's liability, and aviation liability.
PROPERTY DAMAGE - 57%
Provides coverage for all risks of direct physical loss or damage to RIC's
plant, personal property and equipment as a result of an occurrence (fire,
explosion, storm, etc.)
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CRIME - 28%
Provides reimbursement to RIC for loss due to the dishonest acts of an
employee(s).
DIRECTORS AND OFFICERS - 29%
To pay on behalf of RIC's Directors and Officers all losses which such
Directors and Officers shall become legally liable to pay as a result of a
wrongful act. Coverage will also reimburse MVL for any loss for which MVL
shall indemnify individual Directors and Officers resulting from a wrongful
act.
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EXHIBIT C
Riverwood International Benefits
Salaried & Hourly (Except Where Noted)
1. Manville Comprehensive Health Care Plan
2. HMO's
3. Manville Dental Plan
4. Manville Prepaid Prescription Drug Plan (Hourly)
5. Life Insurance
(a) Basic
(b) Supplemental (Salaried)
(c) Accident Insurance
(d) Business Travel
(e) Retiree (not all hourly employees)
6. Long Term Disability (Salaried and some West Monroe
hourly)
7. Retirement Plans (4)
8. Thrift Plans (3)
9. Retiree Medical - (Salaried and West Monroe hourly)
The degree of support received from Manville Corporation varies by plan.
This Agreement is not intended to confer any rights in any of the above plans
for any unit that is subject to collective bargaining. Parties acknowledge
that certain locations participate in the above plans to varying degrees.
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EXHIBIT 10(l)
TREASURY MANAGEMENT AGREEMENT
THIS TREASURY MANAGEMENT AGREEMENT (this
"Agreement") is made and entered into as of the 17th day
of June, 1992, by and between Manville Corporation, a Delaware corporation
("MVL"), and Rivervood International Corporation, a Delaware corporation
("Riverwood").
RECITALS
WHEREAS, prior to the effective date of this Agreement, MVL
provided to Rivervood and its U.S. subsidiaries ("RIC") certain treasury
management services; and
WHEREAS, the parties hereto wish to formalize the relationship
between MVL and RIC relating to the treasury management services; and
WHEREAS, MVL and Riverwood have agreed that, pursuant to the
terms of this Agreement, MVL will provide RIC with certain treasury management
services on a fee basis.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Services. In consideration for the payments described in
Section 6 below, MVL shall:
(i) subject to Section 3 below, provide RIC
with investment services (on substantially the same basis as provided
to all other affiliates of MVL) for all RIC cash;
(ii) provide RIC with monthly reports summarizing
RIC's cash transactions (the "Cash Management Report");
<PAGE> 2
(iii) provide RIC with banking services that coordinate all RIC
relationships with banks, including the establishment of bank accounts,
to insure that RIC obtains the same banking services that MVL receives;
(iv) subject to Section 5 below, provide RIC with foreign currency
exposure management services;
(v) prepare RIC's loan compliance packages for RIC's loans described
on Exhibit A hereto, as amended from time to time, obtain funding on
behalf of RIC through short-term credit lines or other credit
facilities, borrow funds for RIC under such credit facilities, make all
RIC debt payments as required and assist RIC in preparing all due
diligence packages for lenders; and
(vi) provide RIC with a monthly analysis detailing the direct banking
fees incurred by RIC.
The services described in this Section 1 may be provided by (i)
any affiliate or employees of MVL or its affiliates or (ii) any third party at
the sole discretion of MVL.
2. Covenants of RIC. In order for MVL to provide each of the
services described in Section 1 hereto, RIC hereby covenants and agrees to:
(i) collect all cash receipts payable to RIC through lockbox
services or other collection services provided by banks
approved by MVL and thereafter transfer such cash receipts and all other
amounts collected by RIC to the RIC concentration account established
on behalf of RIC by MVL;
(ii) make all required payments only through banks approved by MVL;
(iii) notify MVL of the settlement date, amount, payee bank, address,
routing and transit number, payee account number and payee name for all
payments made by electronic
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funds transfer, at least one day prior to such payment and authorize such
payment no later than 8:30 a.m. MT on the date of such transfer;
(iv) provide MVL with an annual plan for cash flow projections and
schedules and any additional reports requested by MVL;
(v) accurately account for all cash transactions relating to RIC's
operations;
(vi) reconcile, on a monthly basis, the activity shown on the
monthly statements received by RIC and its banks and the Cash Management
Report and report any such discrepancies to the banks or MVL, as
applicable;
(vii) provide MVL with quarterly reports, no later than 30 days
after the end of each calendar quarter, which detail all of RIC's petty
cash and local depository accounts described in Section 4 below,
including the bank name, address, services received, current balance of
accounts, maximum balance of accounts, dollar value of services and bank
contact officer; and
(viii) notify MVL of any default or potential default by RIC under
any financial or credit agreement or arrangement.
3. Investing. RIC's cumulative cash balance in all accounts,
other than those described in Section 4 below, shall be netted daily by MVL
against RIC's daily net cash activity (total cash receipts less total cash
disbursements). All excess RIC funds shall be invested by MVL in separate
accounts on behalf of RIC and shall not be commingled with any other funds
invested by MVL. All RIC funds shall be invested in money market instruments
approved by MVL in accordance with the investment policies established by MVL
management for investment of MVL funds.
4. Additional Accounts. RIC may establish petty cash
accounts and local depository accounts at local banks without MVL's approval
to ensure that funds are available to cover minor operating expenses. Such
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accounts, however, shall only be established with mutually agreeable capped
balances and operated as imprest accounts that are replenished solely to the
extent vouchers and receipts are presented.
5. Foreign Currency Exposure Management. In the event
that RIC has scheduled U.S. based foreign currency sales or purchases of a
"significant size," MVL may hedge such transactions with forward contracts,
firmly committed. A significant size is deemed to be greater than or equal to
U.S. $50,000.00 equivalent. Shipments to various customers or invoices from
various suppliers may be "bundled" into minimum material amounts for hedging
purposes. If the cost of hedging is deemed to be too expensive, or the currency
unacceptable, MVL will immediately notify RIC of the exception. At RIC's
request, MVL will buy or sell foreign currency on a spot basis, or issue or
collect foreign currency drafts.
6. Compensation for Services. On a monthly basis, MVL
shall bill Riverwood for (i) all bank service charges attributable to RIC and
(ii) all of MVL's direct costs of providing the treasury management services
attributable to RIC. In addition, Riverwood shall be billed for all of MVL's
indirect costs of providing the services described herein to RIC. Indirect
costs shall be allocated in a manner consistent with the parties' past
practices. Riverwood shall, within 30 days of the receipt of such bills, pay
to MVL all amounts set forth in such bills. MVL hereby acknowledges that
Riverwood has paid, in full, all amounts owed by Riverwood to MVL relating to
the treasury management services incurred by RIC prior to the effective date of
this Agreement.
7. Limitation of Liability. Except as may be provided
in Section 8 below, MVL, its affiliates, directors, officers, employees, agents
or permitted assigns (each a "MVL Party") shall not be liable to RIC or any of
RIC's affiliates, directors, officers, employees, agents or permitted assigns
(each a "RIC Party") for any liabilities, claims, damages, losses or expenses,
including, but not limited to, any special, indirect, incidental or
consequential damages of a RIC Party arising in connection with this Agreement.
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8. MVL Indemnification. MVL shall indemnify, defend and
save harmless the RIC Parties from and against all liabilities, claims, damages,
losses and expenses, including, but not limited to, court costs and reasonable
attorney's fees, of third parties unrelated to any RIC Party caused by or
arising in connection with the gross negligence or willful misconduct of MVL
hereunder; unless such gross negligence or willful misconduct is caused by the
acts or omissions of any RIC Party. Notwithstanding the foregoing, MVL shall
not be liable for any special, indirect, incidental or consequential damages
relating to such third party claims.
9. RIC Indemnification. Riverwood shall indemnify,
defend, and save harmless the MVL Parties from and against all liabilities,
claims, damages, losses and expenses, including, but not limited to, court
costs and reasonable attorney's fees, of any kind or nature, caused by or
arising in connection with RIC's failure to fulfill RIC's obligations
hereunder; unless such failure is caused by the acts or omissions of any MVL
Party. Notwithstanding the foregoing, Riverwood shall not be liable for any
special, indirect, incidental or consequential damages relating to such claims.
10. Term of Agreement. This Agreement is effective June
17, 1992, and shall continue in full force and effect until terminated by
mutual agreement or by either party upon 90 days' prior written notice to the
other.
11. Information. Riverwood hereby covenants and agrees to
provide MVL with all information regarding RIC and other assistance necessary
for MVL to comply with all applicable, federal, state, county and local laws,
ordinances, regulations and codes, including, but not limited to, securities
laws and regulations.
12. Confidential Information. Riverwood and MVL hereby
covenant and agree to hold in trust and maintain confidential all Confidential
Information relating to the other party or any of their subsidiaries.
Confidential Information shall mean all information disclosed by either party
to the other in connection with this Agreement whether orally, visually, in
writing or in any other tangible form, and includes, but is not limited to,
technical, economic and business data, know-how, flow sheets, drawings,
business plans, computer information
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data bases, and the like. Without prejudice to the rights and remedies
otherwise available to any party to this Agreement, a party disclosing any
Confidential Information shall be entitled to equitable relief by way of an
injunction if any other party hereto breaches or threatens to breach any
provision of this Section 12.
13. Assignment. RIC shall not assign or transfer any of
RIC's rights or duties under this Agreement to any person or entity without the
prior written consent of MVL.
14. Notices. Any notice, instruction, direction or
demand under the terms of this Agreement required to be in writing will be duly
given upon delivery, if delivered by hand or intercompany mail, or five (5)
days after posting if sent by certified mail, return receipt requested to the
following addresses:
MVL:
Manville Corporation
P.O. Box 5108
Denver, Colorado 80217
Attention: Banking and Financing
With a copy to:
Manville Corporation
P.O. Box 5108
Denver, Colorado 80217
Attention: Legal Department
Riverwood:
Riverwood International Corporation
3350 Cumberland Circle
Suite 1600
Atlanta, Georgia 30330
Attention: Senior Vice President-Finance
With a copy to:
Riverwood International Corporation
3350 Cumberland Circle
Suite 1600
Atlanta, Georgia 30330
Attention: Legal Department
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or to such other address as either party may have furnished to the other in
writing in accordance with this Section 14.
15. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware.
16. Suspension. The obligations of any party to perform
any acts hereunder may be suspended if such performance is prevented by fires,
strikes, embargoes, riot, invasion, governmental interference, inability to
secure goods or materials, or other circumstances outside the control of the
parties.
17. Severability. If any provision of this Agreement
shall be invalid or unenforceable, such invalidity or unenforceability shall
not render the entire Agreement invalid. Rather, the Agreement shall be
construed as if not containing the particular invalid or unenforceable
provision, and the rights and obligations of each party shall be construed and
enforced accordingly.
18. Rights Upon Orderly Termination. Upon termination or
expiration of this Agreement or any portion of the treasury management services
described herein, each party shall, upon request, forthwith return to the other
party all reports, paper, material and other information required to be
provided to the other party by this Agreement. In addition, each party will
assist the other in the orderly termination of this Agreement or any portion of
the treasury management services described herein.
19. Amendment. This Agreement may only be amended by a
written agreement executed by all of the parties hereto.
20. Entire Agreement. This Agreement, including any
exhibits, constitutes the entire agreement between the parties, and supersedes
all prior agreements, representations, negotiations, statements or proposals
related to the subject matter thereof.
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21. Counterparts. This Agreement may be executed in
separate counterparts, each of which shall be deemed to be an original and all
of which, when taken together, shall constitute one agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be signed by their duly authorized representatives.
MVL:
Manville Corporation, a Delaware
corporation
By: /s/ Richard B Von Wald
----------------------------------
Name: Richard B Von Wald
--------------------------------
Title: Senior Vice President
-------------------------------
Riverwood:
Riverwood International Corporation,
a Delaware corporation
By: /s/ F R McCauley
----------------------------------
Name: F R McCauley
--------------------------------
Title: Senior Vice President, Finance
-------------------------------
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EXHIBIT 10(m)
TAX SHARING AGREEMENT
THIS TAX SHARING AGREEMENT dated as of June 17, 1992 is made
and entered into by and between Manville Corporation, a Delaware corporation
("Manville"), and Riverwood International Corporation, a Delaware corporation
("Riverwood").
RECITALS
WHEREAS, Manville is the common parent corporation of an
affiliated group of corporations within the meaning of Section 1504(a) of the
Internal Revenue Code of 1986, as amended (the "Code") and Riverwood is a
member of such affiliated group; and
WHEREAS, The affiliated group of which Manville is the common
parent and Riverwood is a member (the "Combined Consolidated Group"), files a
consolidated federal income tax return as defined in Section 1501; and
WHEREAS, Manville and Riverwood desire to provide for the
allocation of liabilities, procedures to be followed, and other matters with
respect to certain taxes for tax years beginning after December 31, 1991, in
which Riverwood and its subsidiaries are included in a consolidated federal
income tax return filed for the Combined Consolidated Group.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I
DEFINITIONS
1. "The Code" shall mean the Internal Revenue Code of 1986,
as amended.
<PAGE> 2
2. "Combined Consolidated Group" shall mean the
Riverwood Consolidated Group together with the Manville Consolidated Group, and
any other corporations which may become members of either.
3. "Combined Consolidated Return" shall mean a
consolidated federal income tax return filed for the Combined Consolidated
Group.
4. "Estimated Tax Sharing Payments" shall mean the
periodic tax sharing payments required under Article III, Section 2 of this
Agreement.
5. "Estimated Tax Sharing Payment Date" shall mean the
date of the payment of the balance of the Estimated Tax Sharing Payments as
described in Article III, Section 2 of this Agreement.
6. "Federal Income Taxes" and "Federal Income Tax
Liability" shall mean the taxes imposed by sections 11, 55, 59A, and 1201(a) of
the Code, or any successor provisions to such sections and any other income
based U.S. federal taxes which are hereinafter imposed upon corporations.
7. "IRS" shall mean the Internal Revenue Service.
8. "Manville Consolidated Group" shall mean the
affiliated group of corporations of which Manville is the common parent, and
any other corporations which may become members of that affiliated group, but
excluding members of the Riverwood Consolidated Group.
9. "Pro Forma Riverwood Return" shall mean a pro forma
consolidated federal income tax return prepared pursuant to Article III,
Section 1 or 4.
10. "Regulations" shall mean the Treasury regulations as
in effect from time to time.
11. "Riverwood Consolidated Group" shall mean the
affiliated group of corporations of which Riverwood would be the common parent
if it were not a subsidiary of Manville, and any other corporations which may
become members of that affiliated group.
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<PAGE> 3
ARTICLE II
PROCEDURAL MATTERS
1. Manville shall have the sole and exclusive
responsibility for the preparation and filing of the consolidated U.S. federal
income tax return of the Combined Consolidated Group, including any amended
returns and any other returns, documents or statements required to be filed
with the IRS with respect to the determination of the Federal Income Tax
Liability of the Combined Consolidated Group. All returns shall be filed by
Manville on a timely basis, taking into account extensions of the due date for
the filings of such returns.
2. The Riverwood Consolidated Group shall continue to
join in filing a consolidated federal income tax return and consolidated or
combined state income tax returns with the Manville Consolidated Group for all
such taxable years for which the Riverwood Consolidated Group is eligible to do
so under the Code, the Regulations and applicable state statutes, unless
Manville shall request otherwise.
3. Manville shall make all Federal Income Tax payments,
including estimated payments, with respect to tax returns prepared on behalf of
all companies included in the Combined Consolidated Group, and Manville shall
have the right to exercise all powers of a common parent with respect to filing
the consolidated federal income tax returns as are conferred on it by the
Regulations and applicable state statutes.
4. Manville shall be the sole and exclusive agent of the
Riverwood Consolidated Group and any member of such group in any and all
matters relating to the U.S. Federal Income Tax Liability of the Combined
Consolidated Group for all consolidated return years. The same shall apply
with respect to any state income tax liability where the Riverwood Consolidated
Group files combined returns with the Manville Consolidated Group. In its sole
discretion, Manville shall have the right with respect to any Combined
Consolidated Returns which it files (a) to determine (i) the manner in which
such returns shall be prepared and filed, including, without limitation, the
manner in which any item of income, gain, loss, deduction or credit shall be
reported, (ii) whether any extensions may be requested and (iii) the elections
that
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will be made by any member of the Combined Consolidated Group, (b) to contest,
compromise or settle any adjustment or deficiency proposed, asserted or
assessed as a result of any audit of such returns by the IRS, (c) to file,
prosecute, compromise or settle any claim for refund and (d) to determine
whether any refunds, to which the Combined Consolidated Group may be entitled,
shall be paid by way of refund or credited against the tax liability of the
Combined Consolidated Group. Riverwood hereby irrevocably appoints Manville as
its agent and attorney-in-fact to take such action (including the execution of
documents) as Manville may deem appropriate to effect the foregoing.
5. Manville shall honor all reasonable requests by
Riverwood to participate in the audit process or any litigation relating to any
Combined Consolidated Returns. Manville shall indemnify Riverwood and hold
Riverwood harmless if Manville adjusts, compromises or settles without the
consent of Riverwood an issue affecting the liability of the Riverwood
Consolidated Group under this agreement and there is a substantial likelihood
that Riverwood would prevail.
6. Riverwood shall reimburse Manville for any outside
legal and accounting expenses incurred by Manville in the course of the
conduct of any audit or contest regarding the tax liability of the Combined
Consolidated Group, and for any other expenses incurred by Manville in the
course of any litigation relating thereto, to the extent such costs are
reasonably attributable to a Riverwood Consolidated Group issue.
7. Riverwood shall furnish to Manville in a timely
manner such information and documents as Manville may reasonably request for
purposes of preparing the returns referred to in Section 1 of this Article.
ARTICLE III
CALCULATION AND PAYMENT OF TAX SHARING PAYMENTS
1. For each taxable year for which Manville files a
Combined Consolidated Return, Manville shall prepare a Pro Forma Riverwood
Return taking into account elections, methods of accounting, and positions with
respect to specific items that are consistent with those
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made or used by Manville for purposes of the Combined Consolidated Return. The
Pro Forma Riverwood Return shall reflect any carryovers of net operating
losses, net capital losses, excess tax credits or other tax attributes from
prior years' Pro Forma Riverwood Returns (assuming that members of the
Riverwood Consolidated Group had not been in existence before January 1, 1992)
which could have been utilized by the Riverwood Consolidated Group if the
Riverwood Consolidated Group had never been included in the Combined
Consolidated Group. The Pro Forma Riverwood Return shall not, however, reflect
carryovers of any attributes from the Manville Consolidated Group. Any
provision of the Code that requires consolidated computations, such as Sections
861 and 1231, shall be applied separately to the Riverwood Consolidated Group
for purposes of preparing the Pro Forma Riverwood Return. Section 1.1502-13 of
the Regulations shall be applied as if the Riverwood Consolidated Group and the
Manville Consolidated Group were separate affiliated groups, except that the
Pro Forma Riverwood Return shall include all gains or losses recognized by the
Riverwood Consolidated Group on transactions between members of the Riverwood
Consolidated Group which are restored pursuant to Section 1.1502-13(f)(1)(iii)
of the Regulations and actually reflected on the Combined Consolidated Return
as a result of the Riverwood Consolidated Group ceasing to be included in the
Combined Consolidated Group.
The Pro Forma Riverwood Return shall be provided to Riverwood
no later than 30 days after the due date (including extensions) for the return
for the Combined Consolidated Group.
2. For each taxable year in which a Combined
Consolidated Return is filed, Riverwood shall make periodic payments
("Estimated Tax Sharing Payments") to Manville in such amounts as, and no later
than the dates on which, payments of estimated tax would be due from the
Riverwood Consolidated Group under Section 6655 of the Code if it were not
included in the Combined Consolidated Group. The balance, if any, of the
Estimated Tax Sharing Payments due for a taxable year shall be paid to Manville
no later than March 15 of the following year. Riverwood shall pay to Manville
no later than 60 days after the date on which a Combined Consolidated Return
for any taxable year is filed, an amount equal to the sum of (i) the Federal
Income Tax Liability shown on the Pro Forma Riverwood Return prepared for that
taxable year and (ii)
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the additions to tax, if any, under Section 6655 of the Code that would have
been imposed upon Riverwood (treating the amount due to Manville under (i)
above as Riverwood's Federal Income Tax Liability and treating any Estimated
Tax Sharing Payments as estimated tax payments with respect to such liability),
reduced by the sum of the Estimated Tax Sharing Payments and interest thereon
as determined pursuant to Article IV of this Agreement running from the
Estimated Tax Sharing Payment Date. If the Estimated Tax Sharing Payments paid
to Manville for any taxable year exceed the amount of the liability under the
preceding sentence, Manville shall refund such excess to Riverwood within 45
days after completion of the Pro Forma Riverwood Return, plus interest as
determined in Article IV of this Agreement running from the date on which the
consolidated federal income tax return of the Combined Consolidated Group is
due, without regard to extensions.
3. If a Pro Forma Riverwood Return reflects a net
operating loss, net capital loss, excess tax credit or other tax attribute,
then Manville shall pay to Riverwood within 90 days of the due date (including
extensions) for the Combined Consolidated Return the refund which the Riverwood
Consolidated Group would have received as a result of the carryback of such
attribute to a Pro Forma Riverwood Return for any taxable year or years in
which the Riverwood Consolidated Group is included in the Combined Consolidated
Group. The amount of refund will be determined as if the Riverwood
Consolidated Group had never been included in the Combined Consolidated Group,
Pro Forma Riverwood Returns had been actual returns and the members of the
Riverwood Consolidated Group had not been in existence before January 1, 1992.
All calculations of actual and deemed refunds pursuant to Section 3 of this
Article shall include interest computed as if Riverwood had filed a claim for
refund or an application for a tentative carryback adjustment pursuant to
Section 6411(a) of the Code on the date on which the consolidated federal
income tax return of the Combined Consolidated Group is due, without regard to
extensions.
4. If, in any year after the Riverwood Consolidated
Group ceases to be a member of the Combined Consolidated Group, a Riverwood
federal income tax return reflects a net operating loss, net capital loss,
excess credit or any other tax attribute, and such attribute can be carried
back to a Combined Consolidated Return, Man-
6
<PAGE> 7
ville upon Riverwood's written request, shall file a claim for a refund
electing such carryback, and Manville shall pay to Riverwood the amount of any
refund, credit or offset of tax liability (including interest thereon) which
Manville, as common parent for the former Combined Consolidated Group, actually
receives as a result of the carryback of such attribute; provided, however,
that the amount of any such refund paid to Riverwood (excluding interest
thereon) shall not exceed the amount of the payments made by Riverwood to
Manville in accordance with this Agreement for the taxable years of the
Combined Consolidated Group to which the Riverwood tax attributes resulting in
the refund could be carried. Manville shall pay the amount of any such refund
to Riverwood within 30 days after receipt thereof.
5. To the extent that any audit, litigation, claim or
refund with respect to a Combined Consolidated Return results in an increase or
decrease in taxable income relating to the treatment of a Riverwood
Consolidated Group issue, a corresponding adjustment shall be made to such item
and to Riverwood's tax liability reflected on the applicable Pro Forma
Riverwood Return. Within 10 days after any such adjustment is finally
determined, Riverwood shall make additional tax sharing payments (plus
interest), including any penalties consistent with such adjustment, to
Manville, or Manville shall refund to Riverwood any amounts received by
Manville in connection with such audit, litigation, claim or refund, plus
interest pursuant to Article IV of this Agreement.
6. All calculations required to be made by Manville
under this Agreement shall be binding upon the parties hereto absent manifest
error.
ARTICLE IV
INTEREST
Interest required to be paid by or to Riverwood pursuant to
this Agreement shall, unless otherwise specified, be computed at the rate and
in the manner provided in the Code for interest on underpayments and
overpayments, respectively, of federal income tax for the relevant period.
7
<PAGE> 8
ARTICLE V
STATE & LOCAL INCOME AND FRANCHISE TAXES
1. The principles expressed with respect to the Combined
Consolidated Group federal income tax matters in Articles I-III shall apply
with equal force to state and local income and franchise tax matters, including
the preparation and filing of state and local income tax and franchise tax
returns by the Combined Consolidated Group.
2. Any interest charge required to be paid by or to
Riverwood pursuant to this Agreement with respect to any state or local income
tax or franchise tax return shall be computed at the rate and in the manner as
provided under the applicable state or local statute for interest on
underpayments and overpayments of such tax for the relevant period.
ARTICLE VI
MISCELLANEOUS PROVISIONS
1. Manville and Riverwood agree that any information
furnished one another pursuant to this Agreement is confidential and, except
as, and to the extent, required during the course of an audit or litigation or
otherwise required by law, shall not be disclosed to another person or entity.
2. This Agreement shall be binding upon and inure to the
benefit of any successor to any of the parties, by merger, acquisition of
assets or otherwise, to the same extent as if the successor had been an
original party to this Agreement.
3. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
conflicts of law principles thereof.
4. This Agreement may be executed simultaneously in two
or more counterparts, each of which will be deemed an original, but all of
which when taken together shall constitute one and the same instrument.
8
<PAGE> 9
5. The headings in this Agreement are for convenience
only and shall not be deemed for any purpose to constitute a part or to affect
the interpretation of this Agreement.
6. This Agreement may be amended from time to time by
agreement in writing executed by all the parties hereto or all of the parties
then bound thereby. This Agreement constitutes the entire agreement with
respect to the subject matter hereof and supersedes all prior written and oral
understandings with respect thereto.
7. Any notice, request or other communication required
or permitted in this Agreement shall be in writing and shall be sufficiently
given if personally delivered or if sent by registered or certified mail,
postage prepaid, addressed as follows:
TO RIVERWOOD: Riverwood International Corporation
3350 Cumberland Circle Suite 1600
Atlanta, Georgia 30339
Attn: Sr. Vice President Finance
TO MANVILLE: Manville Corporation
P.O. Box 17086
Denver, Colorado 80217
Attn: Senior Director of Taxes
or to such other address as set forth in writing by either party to the other
in accordance with this section.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their authorized representatives.
MANVILLE CORPORATION, a Delaware
corporation
By: /s/ Richard B. Von Wald
----------------------------------
Name: Richard B. Von Wald
--------------------------------
Title: Senior Vice President
-------------------------------
9
<PAGE> 10
RIVERWOOD INTERNATIONAL
CORPORATION, a Delaware
corporation
By: /s/ F.R. McCauley
---------------------------------
Name: F.R. McCauley
-------------------------------
Title: Senior Vice President, Finance
------------------------------
10
<PAGE> 1
EXHIBIT 10(n)
CORPORATE AGREEMENT
THIS CORPORATE AGREEMENT (this "Agreement") is made and entered
into as of the 24th day of June, 1992, by and between Manville Corporation, a
Delaware corporation ("MVL"), and Riverwood International Corporation, a
Delaware corporation ("RVW").
RECITALS
WHEREAS, MVL is the common parent corporation of an affiliated
group of corporations (the "Combined Consolidated Group") within the meaning of
Section 1504(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and RVW is a member of the Combined Consolidated Group; and
WHEREAS, the Combined Consolidated Group, of which RVW is a part,
files a consolidated income tax return as defined in Section 1501 of the Code;
and
WHEREAS, RVW is contemplating concurrent initial public offerings
of its common stock and certain senior and subordinated debt securities
(collectively, the "IPO"); and
WHEREAS, MVL and RVW desire that RVW remain a member of the
Combined Consolidated Group and that certain actions not be taken, and certain
transactions not be entered into, by RVW without MVL's prior consent.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Restrictions on Preferred Stock Issuance. During the term
of this Agreement, RVW hereby covenants and agrees not to issue any shares of
RVW's preferred stock or any rights, warrants or options (including any
instrument which is or could be treated as an option in accordance with the
Treasury Regulations promulgated
<PAGE> 2
pursuant to Section 1504(a)(5)(A) and (B) of the Code) to acquire RVW's
preferred stock.
2. Restrictions on Common Stock Issuance. RVW hereby
covenants and agrees, during the term of this Agreement, not to issue any
shares of RVW's common stock or any rights, warrants or options (including any
instrument which is or could be treated as an option in accordance with the
Treasury Regulations promulgated pursuant to Section 1504(a)(5)(A) and (B) of
the Code) to acquire RVW's common stock (collectively, the "Common Stock") if,
immediately after such Common Stock issuance RVW would not be a member of the
Combined Consolidated Group. In the event that RVW wishes to issue any Common
Stock, RVW covenants and agrees to notify MVL in writing (addressed to the
Secretary of MVL) of the proposed issuance, setting forth all relevant
information regarding such proposed issuance, at least 30 days prior to the
proposed date of issuance of such Common Stock.
3. Directors. RVW covenants and agrees to propose, at each
election of directors, a slate of directors, or in the case of vacancies,
individual directors, for election so that at all times during the term of this
Agreement, RVW's board of directors includes at least two persons designated by
the Manville Personal Injury Settlement Trust (the "PI Trust"), each of whom
may or may not be a Trustee of the PI Trust, or by the Trust's direct or
indirect assignees under the agreement of even date herewith between MVL and
the PI Trust regarding certain matters referred to in or relating to this
Agreement.
4. Amendment to Charter and Bylaws. RVW hereby covenants and
agrees (i) to amend its Amended and Restated Bylaws in the manner (and only in
the manner) set forth in Schedule A hereto prior to the consummation of the IPO
and (ii) not to further amend, supplement, restate, cancel, modify or alter its
Restated Certificate of Incorporation or Amended and Restated Bylaws in any
manner whatsoever without the prior written consent of MVL.
2
<PAGE> 3
5. Registration of Notes. Upon request of the Manville
Personal Injury Settlement Trust (the "Trust") to MVL in accordance with the
terms of the Second Bond Exchange Agreement, dated as of June 17, 1992 (the
"Second Bond Exchange Agreement"), between MVL and the Trust, RVW hereby
covenants and agrees (i) to the extent permitted by law, to use its best
efforts to register the $37.5 million aggregate principal amount of 10 3/4%
Senior Notes due 2000 of RVW and the $62.5 million aggregate principal amount
of 11 1/4% Senior Subordinated Notes due 2002 of RVW (together, the "Exchange
Notes") under a shelf indenture pursuant to Rule 415 (a "Shelf Registration")
under the Securities Act of 1933, as amended (the "Securities Act"), as
provided in Section 7.02(a) of the Second Bond Exchange Agreement and in
accordance with the registration procedures set forth in Section 7.02(c)
thereof, and (ii) at any time a Shelf Registration is not in effect, to use its
best efforts to effect the registration of the Exchange Notes which MVL has
requested the Company to register (but no more than twice) on an appropriate
form under the Securities Act, as provided in Section 7.02(b) of the Second
Bond Exchange Agreement and in accordance with the registration procedures set
forth in Section 7.02(c) thereof.
Related Matters. RVW hereby agrees with MVL to indemnify
the Trust in accordance with Section 7.02(e) of the Second Bond Exchange
Agreement and to qualify the Exchange Notes under the Trust Indenture Act of
1939, as amended from time to time, or any successor statute thereto, in
accordance with Section 7.02(f) of the Second Bond Exchange Agreement, and
further agrees to the "blackout" periods set forth in Section 7.03 of the
Second Bond Exchange Agreement.
6. Term of Agreement. This Agreement shall automatically
terminate on the earlier of (i) the date on which MVL no longer owns a majority
of RVW's issued and outstanding common stock or (ii) the date on which a
majority of MVL's issued and outstanding common stock is no longer owned by
either the PI Trust or any other person or entity.
7. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware.
3
<PAGE> 4
8. Amendment. This Agreement may only be amended by a
written agreement executed by both of the parties hereto.
9. Assignment. Neither party may assign any rights, duties
or obligations hereunder without the prior written consent of the other.
10. Entire Agreement. This Agreement constitutes the entire
agreement between the parties, and supersedes all prior agreements,
representations, negotiations, statements or proposals related to the subject
matter hereof.
11. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall constitute an original, and all of which when
taken together, shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereof have executed this
Agreement as of the date first above written.
MANVILLE CORPORATION, a
Delaware corporation
By: /s/ Richard B. Von Wald
Name: Richard B. Von Wald
Title: Senior Vice President
RIVERWOOD INTERNATIONAL
CORPORATION, a
Delaware corporation
By: /s/ F.R. McCauley
Name: F.R. McCauley
Title: Senior Vice President, Finance
4
<PAGE> 1
EXHIBIT 10(s)
AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of the
22nd day of September, 1994, by and between Manville Personal Injury Settlement
Trust (the "Trust") and Manville Corporation, a Delaware corporation ("MVL").
RECITALS
WHEREAS, MVL owns 100% of the issued and outstanding common stock of
Schuller International Group, Inc., a Delaware corporation ("Schuller"); and
WHEREAS, MVL and Schuller have, contemporaneously with the execution
of this Agreement, executed an agreement, dated the date hereof (the "Corporate
Agreement"), pursuant to which, inter alia, Schuller has agreed to certain
restrictions on its ability to issue capital stock or amend its Certificate of
Incorporation or Bylaws; and
WHEREAS, MVL and Schuller have executed an agreement, dated as of
January 1, 1994 (the "Tax Sharing Agreement"), with respect to certain tax
matters; and
WHEREAS, the Trust owns over a majority of the issued and outstanding
shares of common stock of MVL; and
WHEREAS, MVL and the Trust desire to set forth their agreement
regarding certain matters relating to the Corporate Agreement and the Tax
Sharing Agreement and certain other matters.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Covenants of MVL. During the term of this Agreement, MVL shall:
(i) not waive, amend, modify or alter any provision of the
Corporate Agreement, or supple-
<PAGE> 2
ment, cancel or terminate the Corporate Agreement, without the prior written
consent of the Trust;
(ii) not vote in favor of or consent to (or cause or permit Schuller
to make) any amendment, supplement, restatement, cancellation, modification or
alteration of Schuller's Certificate of Incorporation or Bylaws, except in the
form attached hereto as Exhibit A, without the prior written consent of the
Trust;
(iii) not waive, amend, modify or alter any provision of the Tax
Sharing Agreement in any manner that would have an adverse effect on MVL or
cancel or terminate such Tax Sharing Agreement, without the prior written
consent of the Trust;
(iv) without the Trust's prior written consent, not sell, issue or
otherwise dispose of any shares of Schuller's preferred stock or common stock,
or any rights, warrants or options (including any instrument which is or could
be treated as an option in accordance with the Treasury Regulations promulgated
pursuant to Section 1504 (a) (5) (A) and (B) of the Internal Revenue Code of
1986, as amended (the "Code")) for the purchase of Schuller's preferred stock
or common stock (collectively, the "Stock"), if immediately after such sale,
issuance or disposition (and taking into consideration any contemporaneous
sale, issuance, or other disposition of Stock by Schuller or any other person
or entity), Schuller would not be a member of the affiliated group of
corporations (within the meaning of Section 1504(a) of the Code) of which MVL
is the common parent;
(v) not sell, issue or otherwise dispose of any Stock without the
approval of MVL's board of directors;
(vi) at such time and for as long as less than 100% but more than 50%
of Schuller's issued and outstanding common stock is owned directly or
indirectly by MVL and at least a majority of MVL's issued and outstanding
common stock is owned directly or indirectly by the Trust or by the Trust's
direct or indirect assignee hereunder in
2
<PAGE> 3
accordance with Section 7 hereof (the "Assignee"), to vote all of its shares
of Schuller common stock (and any other securities MVL may now own or hereafter
acquire that are entitled to be voted in any election of Schuller directors)
and to take or cause to be taken such other reasonable steps such as the
calling of a special stockholders meeting to increase the number of directors
(if necessary) and to elect additional directors at such meeting) as shall be
appropriate to cause there to be elected at such time and at each subsequent
election of directors of Schuller in favor of a slate of directors or, in the
case of vacancies, individual directors, so that the Schuller board of
directors includes at least two persons designated by the Trust or the Assignee
(provided that, in the event that the Trust designates two persons who are not
trustees of the Trust, such persons are reasonably acceptable to MVL ); and
(vii) at such time and for as long as any holders of Schuller's
preferred stock are entitled to elect one or more persons to Schuller's board
of directors as a result of their holding of preferred stock (unless such right
is not then exercisable), to vote all of its shares of Schuller common stock
(and any other securities MVL may now own or hereafter acquire that are
entitled to be voted in any election of Schuller directors) and to take or
cause to be taken such other reasonable steps such as the calling of a special
stockholders meeting to increase the number of directors (if necessary) and to
elect additional directors at such meeting) as shall be appropriate to cause
there to be elected at such time and at each subsequent election of directors
of Schuller a slate of directors or, in the case of vacancies, individual
directors, so that the Schuller board of directors includes at least the same
number of persons designated by the Trust (each of whom may or may not be a
trustee of the Trust) or by the Assignee as the aggregate number of persons
which all classes of preferred stock are then entitled to elect to Schuller's
board of directors; it being understood that any persons designated by the
Trust or the Assignee who are then serving on Schuller's board of directors
pursuant to the terms of Section 1 (vi)
3
<PAGE> 4
above shall be included in determining the number of persons that the
Trust or the Assignee is entitled to designate pursuant to this Section 1
(vii) and provided that if the Trust designates two persons who are not
trustees of the Trust, such persons are reasonably acceptable to MVL.
2. Notification. MVL shall promptly notify the Trust of any request by
Schuller for MVL to vote in favor of or consent to any of the actions,
transactions or matters referred to in Section 1.
3. Application to Schuller's Subsidiaries. The terms of Sections 1 and
2 hereof shall apply to Schuller and to the following entities (each, a
"Schuller Subsidiary"): any direct or indirect Subsidiary (as defined below) of
MVL which directly or indirectly owns, or to which is transferred direct or
indirect ownership of, at least a substantial portion (i.e., more than 50%) of
the consolidated assets of Schuller and its Subsidiaries. "Subsidiary" of a
person means any corporation or other entity of which securities or other
ownership interest having ordinary voting power to elect a majority of the
board of directors (or other persons performing similar functions) are directly
or indirectly owned by such person. The term "Schuller" as used in Sections 1,
2 and 3 hereof shall be understood to refer to and is hereby defined to include
Schuller and each Schuller Subsidiary.
4. Term of Agreement. This Agreement shall automatically terminate on
the earlier of (i) the date on which MVL owns a majority of neither Schuller's
nor any Schuller Subsidiary's issued and outstanding common stock or (ii) the
date on which a majority of MVL's issued and outstanding common stock is no
longer owned, by the Trust or the Assignee.
5. Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Delaware, without regard to its
conflicts of law principles.
6. Amendment. This Agreement may only be amended by a written
agreement executed by both of the parties hereto.
4
<PAGE> 5
7. Assignment. Neither party may assign any rights, duties or
obligations hereunder without the prior written consent of the other, provided,
however, that the Trust's rights hereunder may be assigned by the Trust (and
any direct or indirect assignee of the Trust) to any person in connection with
the transfer of a majority of the issued and outstanding common stock of MVL
to such person.
8. Entire Agreement. This Agreement constitutes the entire agreement
between the parties related to the subject matter hereof, and supersedes all
prior agreements, representations, negotiations, statements or proposals
related to the subject matter hereof.
9. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall constitute an original, and all of which when
taken together shall constitute one and the same agreement.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MANVILLE CORPORATION,
a Delaware corporation
By: /s/ Richard B. Von Wald
Name: Richard B. Von Wald
Title: Senior Vice President,
General Counsel and Secretary
MANVILLE PERSONAL INJURY
SETTLEMENT TRUST
By: /s/ David T. Austern
Name: David T. Austern
Title: General Counsel and Secretary
6
<PAGE> 7
Exhibit A to Corporate Agreement
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SCHULLER INTERNATIONAL GROUP, INC.
ARTICLE I
NAME
The name of the corporation shall be Schuller International Group,
Inc. (the "Corporation").
ARTICLE II
PURPOSE
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be now or hereafter organized under the
Delaware General Corporation Law.
ARTICLE III
CAPITAL
The total number of shares of Common Stock which the Corporation shall
have authority to issue is [up to Seventy-Five Million (75,000,000)] shares of
Common Stock having a par value of [up to one dollar ($1.00)] per share. The
total number of shares of Preferred Stock which the Corporation shall have
authority to issue is Twenty-Five Million (25,000,000) shares having a par
value of [up to one dollar ($1.00)] per share.
The Board of Directors is authorized, subject to limitations
prescribed by law, to provide for the issuance of the shares of Preferred Stock
in series, and by filing a certificate pursuant to the applicable law of the
State of Delaware, to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers, preferences
and rights of the shares of each such series and the qualifications,
limitations or restrictions thereof. The authority of the Board of Directors
with respect to each series shall include, but not be limited to, determination
of the following:
(i) The number of shares constituting that series
and the distinctive designation of that series;
<PAGE> 8
(ii) The dividend rate on the shares of that series,
whether dividends shall be cumulative, and, if so, from which
date or dates, and the relative rights of priority, if any, of
payment of dividends on shares of that series;
(iii) Whether that series shall have voting rights,
in addition to the voting rights provided by law, and, if so,
the terms of such voting rights;
(iv) Whether that series shall have conversion or
exchange privileges, and, if so, the terms and conditions of
such conversion or exchange, including provision for
adjustment of the conversion or exchange rate in such events
as the Board of Directors shall determine;
(v) Whether or not the shares of that series shall
be redeemable, and, if so, the terms and conditions of such
redemption, including the manner of selecting shares for
redemption if less than all shares are to be redeemed, the
date or dates upon or after which they shall be redeemable,
and the amount per share payable in case of redemption, which
amount may vary under different conditions and at different
redemption dates;
(vi) Whether that series shall have a sinking fund
for the redemption or purchase of shares of that series, and,
if so, the terms and amount of such sinking fund;
(vii) The right of the shares of that series to the
benefit of conditions and restrictions upon the creation of
indebtedness of the Corporation or any subsidiary, upon the
issue of any additional stock (including additional shares of
such series or any other series) and upon the payment of
dividends or the making of other distributions on, and the
purchase, redemption or other acquisition by the Corporation
or any subsidiary of any outstanding stock of the Corporation;
(viii) The rights of the shares of that series in
the event of voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, and the relative rights of
priority, if any, of payment of shares of that series; and
(ix) Any other relative, participating, optional or
other special rights, qualifications, limitations or
restrictions of that series.
2
<PAGE> 9
ARTICLE IV
REGISTERED OFFICE AND AGENT
The initial registered office of the Corporation shall be at
___________________, and the name of the initial registered agent at such
address is _____________. Either the registered office or the registered agent
may be changed in the manner provided by law.
ARTICLE V
DIRECTOR LIABILITY AND INDEMNIFICATION
(1) A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director to the fullest extent permitted by the Delaware General
Corporation Law as the same exists or may hereafter be amended.
(2) (a) Each person (and the heirs, executors or administrators
of such person) who was or is a party or is threatened to be made a party to,
or is involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person is or was a director or officer of the Corporation
or is or was serving at the request of the Corporation as a director or officer
of another corporation, partnership, joint venture, trust or other enterprise,
shall be indemnified and held harmless by the Corporation to the fullest extent
permitted by applicable law as the same exists or may hereafter be amended.
The right to indemnification conferred in this Article shall also include the
right to be paid by the Corporation the expenses incurred in connection with
any such proceeding in advance of its final disposition to the fullest extent
authorized by applicable law as the same exists or may hereafter be amended.
The right to indemnification conferred in this Article shall be a contract
right.
(b) The Corporation may, by action of the Board of Directors,
provide indemnification to such of the officers, employees and agents of the
Corporation to such extent and to such effect as the Board of Directors shall
determine to be appropriate and authorized by applicable law as the same exists
or may hereafter be amended.
(3) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss incurred by such person in any such capacity or arising out
of his or her status as such, whether or not the
3
<PAGE> 10
Corporation would have the power to indemnify him or her against such liability
under applicable law as the same exists or may hereafter be amended.
(4) The rights and authority conferred in this Article shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of this Certificate of Incorporation or the bylaws
of the Corporation, agreement, vote of stockholders or disinterested directors
or otherwise.
(5) Neither the amendment nor repeal of this Article, nor the
adoption of any provision of this Certificate of Incorporation or the bylaws of
the Corporation, nor, to the fullest extent permitted by applicable law, any
modification of law, shall eliminate or reduce the effect of this Article in
respect of any acts or omissions occurring prior to such amendment or repeal or
such adoption of an inconsistent provision.
ARTICLE VI
DIRECTORS
The number of directors of the Corporation shall be as fixed from time
to time by or in the manner provided in the bylaws of the Corporation.
Election of directors need not be by ballot.
ARTICLE VII
BYLAWS
In furtherance and not in limitation of the powers conferred by law,
(a) the Board of Directors is expressly authorized to adopt, amend or repeal
the bylaws of the Corporation in any manner not inconsistent with the laws of
the State of Delaware or the Certificate of Incorporation of the Corporation,
subject to the power of the stockholders to adopt, amend or repeal the bylaws
or to limit or restrict the power of the Board of Directors to adopt, amend or
repeal the bylaws and (b) the Corporation may in its bylaws confer powers and
authorities upon its Board of Directors in addition to those conferred upon it
by statute.
ARTICLE VIII
CHANGES IN AUTHORIZED CAPITAL STOCK AND
AMENDMENTS TO CERTIFICATE OF INCORPORATION
The Corporation reserves the right to increase or decrease its
authorized capital stock, or any class or series thereof, or to reclassify the
same, and to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation or in any amendment thereof, in the manner now or
hereafter prescribed in this Certificate of
4
<PAGE> 11
Incorporation and by law, and all rights conferred upon stockholders in said
Certificate of Incorporation or any amendment thereto are granted subject to
this reservation.
ARTICLE IX
INCORPORATOR
The names and addresses of the incorporator are as follows:
[to come]
5
<PAGE> 1
EXHIBIT 10(w)
Second Amendment to the Amended
and Restated Supplemental Agreement
SECOND AMENDMENT TO AMENDED AND RESTATED SUPPLEMENTAL AGREEMENT dated
as of September 22, 1994 between Manville Corporation, a Delaware corporation
(the "Company"), and Manville Personal Injury Settlement Trust (the "Trust").
WHEREAS, the Company and the Trust are parties to an Amended and
Restated Supplemental Agreement dated as of November 15, 1990 as amended by the
First Amendment to the Amended and Restated Supplemental Agreement dated as of
August 25, 1993 (collectively, the "Supplemental Agreement");
WHEREAS, the Company and the Trust now wish to amend the Supplemental
Agreement, pursuant to Section 6.02 thereof; and
WHEREAS, contemporaneously with the execution and delivery of this
Second Amendment, the Company and the Trust are entering into the Bonds
Repurchase Agreement dated September 22, 1994 (the "Bonds Repurchase
Agreement"), and the execution and delivery of this Second Amendment is a
condition precedent to the obligations of each of the Company and the Trust on
the Repurchase Date (as defined in the Bonds Repurchase Agreement) under the
Bonds Repurchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Unless the context requires otherwise, all
capitalized terms used herein and not otherwise defined herein have the
meanings assigned to them in the Supplemental Agreement.
SECTION 2. Effectiveness; Counterparts. This Second Amendment shall
become effective as of the date first above written. As amended hereby, the
Supplemental Agreement is hereby ratified, confirmed and continued in all
respects. This Second Amendment may be signed in separate counterparts, each of
which shall be deemed for all purposes an original, but all such counterparts
shall constitute but one and the same instrument.
<PAGE> 2
SECTION 3. Amendments to the Supplemental Agreement.
(a) Amendment to Section 4.02(s). Section 4.02(s) of the
Supplemental Amendment is hereby amended by deleting the words "Prepayment Date
(as defined in the Bond Prepayment Agreement)". where they appear therein and
substituting therefor the words "date on which the Second Bond is paid, prepaid
or repurchased in full".
(b) Amendment To Section 4.02. Section 4.02 of the
Supplemental Agreement is hereby amended by inserting at the end thereof a
Section 4.02(t) which shall read in its entirety as follows:
"(t) Adjusted Consolidated Tangible Net Worth. Until the
date on which the Second Bond is paid, prepaid or repurchased in full,
the Company's Adjusted Consolidated Tangible Net Worth (as defined
below) at the end of each quarterly fiscal period of each Fiscal Year
shall not be less than $150 million. "Adjusted Consolidated Tangible Net
Worth" of the Company, at the end of a quarterly fiscal period of a
Fiscal Year, means total stockholders' equity of the Company and its
consolidated Subsidiaries as of such date determined on a consolidated
basis in accordance with generally accepted accounting principles, less
amounts (net of applicable deferred taxes relating to such amounts)
attributable to unamortized deferred charges, unamortized debt discount
and expense, goodwill, patents, trademarks, service marks, trade names,
copyrights, franchises, licenses and similar rights, organization,
reorganization or developmental expenses, increases in the book value of
any assets of the Company and its consolidated Subsidiaries as a result
of any revaluation of such assets (other than any such increases
resulting from regular periodic revaluations required under generally
accepted accounting principles) and other intangible items; it being
understood that (x) deferred net tax assets to the extent determined in
accordance with generally accepted accounting principles and included in
the Company's consolidated financial statements referred to in items (i)
and (ii) of Section 4.02(e) for such quarterly fiscal period, shall not
be deducted in determining Adjusted Consolidated Tangible Net Worth and
(y) assets relating to the Company's pension plans shall be deducted,
net of applicable deferred taxes relating to such assets, in determining
Adjusted Consolidated Tangible Net Worth."
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<PAGE> 3
(b) Amendment to Definition of "Debt". The definition of
"Debt" appearing in the Glossary to the Supplemental Agreement is hereby
amended by adding the words "or the Schuller Notes" before the words
"transferred to the Trust in payment of the Bond, the Original Bond or the
Second Bond in clause (b) thereof.
(c) Amendment to Definition of "Other Agreements". The
definition of "Other Agreements" appearing in the Glossary to the Supplemental
Agreement is hereby amended by adding the words "or the Bonds Repurchase
Agreement" immediately after the words "the Bond Prepayment Agreement."
(d) Amendment to Definition of "Profits". The definition of
"Profits" contained in the Glossary to the Supplemental Agreement is hereby
amended by:
(i) adding the words "the Bonds Repurchase
Agreement", after the words "Bond Prepayment Agreement," at
the first place that they appear in such definition;
(ii) adding the words "or Schuller Notes"
immediately before the words "transferred to the Trust in
payment of the Bond, the Second Bond or the Original Bond"
where they appear in such definition;
(iii) adding the words "or the Bonds Repurchase
Agreement" after the words "Bond Prepayment Agreement" at
the second place that they appear in such definition; and
(iv) in clause (g) thereof, adding the words "or
repurchase" immediately after the words "any prepayment" and
adding the words "or the Bonds Repurchase Agreement"
immediately after the words "Bond Prepayment Agreement."
(e) Additional Definitions. The following new
definitions are hereby added to the Glossary to the Supplemental Agreement:
"'Bonds Repurchase Agreement' means the Bonds Repurchase
Agreement dated September 22, 1994 between the Company and the
Trust, as amended from time to time in accordance with the
terms thereof."
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<PAGE> 4
"'Schuller Notes' means the Senior Notes due 2004 of Schuller
International Group, Inc. (or any successor obligor under such notes)
transferred by the Company to the Trust pursuant to the Bonds Repurchase
Agreement."
SECTION 4. Governing Law. This Second Amendment shall be governed
by and construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed by their respective authorized officers as of the
day and year first above written.
MANVILLE CORPORATION
By /s/ RICHARD B. VON WALD
Name: Richard B. Von Wald
Title: Senior Vice President,
General Counsel and Secretary
MANVILLE PERSONAL INJURY
SETTLEMENT TRUST
By /s/ DAVID T. AUSTERN
Name: David T. Austern
Title: General Counsel and SecreTary
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<PAGE> 1
EXHIBIT 10(ab)
SIXTH AMENDMENT TO MANVILLE PERSONAL
INJURY SETTLEMENT TRUST AGREEMENT
SIXTH AMENDMENT, dated as of November 5, 1993 (the "Sixth Amendment")
to the Trust Agreement, dated as of November 28, 1988 by and among
Johns-Manville Corporation, Manville Corporation (the "Company"), Manville
Sales Corporation. Manville Canada Inc., Manville Investment Corporation,
Ken-Caryl Ranch Corporation and SAL Contract & Supply, Inc. as Trustors
(collectively, the "Trustors") and Donald M. Blinken, Daniel Fogel, Francis H.
Hare, Jr., John C. Sawhill (the "Former Trustees" ) and Christian E. Markey,
Jr., as trustees for the Manville Personal Injury Settlement Trust (the
"Trust"), as amended by the First. Second and Third Amendments to the Trust
Agreement dated as of February 14, 1989, November 15, 1990, and December 6,
1991, respectively between the Company, Mr. Markey and the Former Trustees, and
as further amended by the Fourth Amendment to the Trust Agreement dated as of
August 6, 1992 (the "Fourth Amendment") and the Fifth Amendment to the Trust
Agreement dated as of December 9, 1992 (the "Fifth Amendment") between the
Company, Mr. Markey, Robert A, Falise, Louis Klein, Jr., and Frank J.
Macchiarola, the trustees of the Trust (the "Trustees") (the Trust Agreement
and all five prior Amendments being collectively referred to herein as the
"Trust Agreement").
WHEREAS, Section 6.03 (a) of the Trust Agreement provides for the
amendment of the Trust Agreement by the Company (as successor to the Trustors
for such purpose) and the Trustees after consultation with Selected Counsel for
the Beneficiaries (as defined in Exhibit A to the Second Amended and Restated
Plan of Reorganization of the Company and the other Debtors (as therein
defined)); and
WHEREAS, the Trust and Selected Counsel for the Beneficiaries have
entered into a certain Governance Rights Agreement dated as of July 20, 1993
with certain other parties named therein, which provides that this Sixth
Amendment will be entered into and in which Selected Counsel for the
Beneficiaries confirm that they have been consulted with respect to the terms
hereof and that they consent to such terms;
NOW, THEREFORE, the parties hereto agree to amend the Trust Agreement
as follows:
<PAGE> 2
1. Section 3.01(b)(xix) of the Trust Agreement, which was added to
the Trust Agreement by the Fourth Amendment and was modified by the Fifth
Amendment, is hereby amended to read in its entirety as follows:
"(xix) serve as a director of any corporation (including,
without limitation, the Company or any of its Affiliates) in which the
Trust directly or indirectly holds an equity or debt investment (a
"Portfolio Company"), including, without limitation, service on any
committees or subcommittees of the board of directors of any such
Portfolio Company; provided that, commencing on October 1, 1993, any
Trustee who also serves concurrently as a director of any Portfolio
Company at the request of the Trust (a "Trustee-Director") will
instruct such Portfolio Company to pay directly to the Trust all
meeting fees and annual retainers which such Trustee-Director is
entitled to receive in his or her capacity as a director or board
committee member of such Portfolio Company, so long as such Trustee
remains both a Trustee and a director of such Portfolio Company. For
the foregoing purposes, any person who is serving concurrently as a
Trustee of the Trust and a director of Manville Corporation. Riverwood
International Corporation or any other majority-owned subsidiary of
Manville Corporation (each, a "Manville Company") will, so long as the
Trust continues to own more than 50% of the outstanding common stock
of Manville Corporation, be conclusively presumed to be serving as a
director of such Manville Company at the request of the Trust."
2. Section 5.05 of the Trust Agreement is hereby amended to read in
its entirety as follows:
"5.05 Compensation and Expenses of Trustees. (a) Each of
the Trustees shall receive compensation for his or her services as
Trustee in the amount of $30,000 per annum (as increased in the case
of Trustee-Directors in the manner provided in the next sentence) plus
$1,000 per diem for each meeting of the Trustees or any committee or
subcommittee thereof attended by such Trustee or for special duties
performed by such Trustee on behalf of the Trust, and $1,000 for each
day of transcontinental travel in connection with attendance at any
such meeting or performance of any such special duties. Each
Trustee-Director shall receive from the
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<PAGE> 3
Trust the per-diem and travel allowances referred to in the
immediately preceding sentence for such Trustee-Director's attendance
at each board, committee and subcommittee meeting of each Portfolio
Company of which he or she serves as a director at the request of the
Trust; and commencing October 1, 1993 the annual retainer amount
referred to in the immediately preceding sentence shall be increased
in the case of a Trustee-Director by $18,750 for each Portfolio
Company directorship, and by $l,875 for each Portfolio Company
committee chairmanship, held by such Trustee-Director at the request of
the Trust. In addition, the Managing Trustee (if one is elected
pursuant to the Bylaws) shall receive, for his or her part-time
services on behalf of the Trust, the sum of $1,500 for each day on
which the services rendered by him or her in such capacity occupy a
majority of his or her time. All compensation amounts referred to
above shall be increased or decreased annually after November 28, 1988
(except the incremental annual amounts payable to Trustee-Directors in
respect of each Portfolio Company directorship and committee
chairmanship, which amounts shall be increased or decreased annually
after October 1, 1993) at the rate of the Consumer Price Index for
urban wage earners and clerical workers (U.S. City Average) unadjusted
for seasonal variation, published by the Bureau of Labor Statistics of
the United States Department of Labor, or otherwise by the Trustees
with the approval of the Court. In addition to and notwithstanding
the foregoing, any such compensation amounts may be increased by the
Trustees to such greater amounts as the Trustees may reasonably
determine from time to time to be appropriate to provide compensation
to the Trustees for their services at levels comparable to the
compensation paid to directors of major U.S. industrial corporations
and, in the case of Trustees who serve as directors or directors and
committee chairmen of Portfolio Companies, to provide compensation or
such additional services at levels comparable to the compensation paid
persons who serve as directors or directors and committee chairmen of
more than one major U.S. industrial corporation.
(b) All out-of-pocket costs and expenses incurred by the
Trustees in connection with the performance of their duties hereunder
(including, without limitation.
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<PAGE> 4
the performance by Trustee-Directors of their duties as directors and
committee and subcommittee members of Portfolio Companies) will be
promptly reimbursed to the Trustees by the Trust."
3. Section 5.06 of the Trust Agreement is hereby amended to add the
following sentence at the end thereof:
"Without limiting the generality of the foregoing, any person who is
serving or has served at the request of the Trust as a director of any
Portfolio Company while also serving as a Trustee of the Trust shall
be indemnified by the Trust in the same manner as he or she is
indemnified as a Trustee, to the fullest extent that a corporation
organized under Delaware law is from time to time entitled to
indemnify a person who is or was serving at the request of such
corporation as a director of another corporation, against any and all
liabilities, expenses, claims, damages or losses incurred by such
person as a result of or in connection with such person's service,
actions, omissions or capacity as a director of such Portfolio Company
(including, without limitation, as a member of a board or subcommittee
of such Portfolio Company) while such person was serving both a
Trustee and as a director of such Portfolio Company, except for any
such liability, expense, claim, damage or loss as to which such person
is liable under Section 5.04."
4. Except as specifically amended pursuant to Paragraphs 1, 2 and 3
above, the Trust Agreement shall remain in full force and effect and is
ratified and confirmed in all respects.
5. This Sixth Amendment shall be governed by and construed in
accordance with the laws of the State of New York and for all purposes shall be
governed by and construed in accordance with the laws of such State applicable
to contracts to be made and performed entirely within such State.
6. This Sixth Amendment may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument. Terms not defined herein
shall, unless the context otherwise requires, have the meanings assigned to
such terms in the Trust Agreement.
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<PAGE> 5
7. If any term, provision, covenant or restriction of this Sixth
Amendment is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Sixth Amendment, and of the Trust Agreement,
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
8. The terms of this Sixth Amendment shall be effective as of the
date first above written.
IN WITNESS WHEREOF, the Company, as successor to the Trustors, has
caused this Sixth Amendment to be executed by its duly authorized officer and
attested by another duly authorized officer and the Trustees have each executed
this Sixth Amendment, all as of the day and year first above written.
MANVILLE CORPORATION
By: /s/ RICHARD B. VON WALD
Name: Richard B. Von Wald
Title: Sr. VP, General Counsel
and Secretary
Attest:
/s/ DANIEL S. JAPHA
TRUSTEES
/s/ ROBERT A. FALISE, as Trustee
Robert A. Falise
/s/ LOUIS KLEIN, JR., as Trustee
Louis Klien, Jr.
/s/ FRANK J. MACCHIAROLA, as Trustee
Frank J. Macchiarola
/s/ CHRISTIAN E. MARKEY, JR., as Trustee
Christian E. Markey, Jr.
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<PAGE> 1
Exhibit 10(ad)
AGREEMENT
THIS AGREEMENT (this "Agreement" is made and entered into as of
the 24th day of June, 1992, by and between Manville Personal Injury Settlement
Trust (the "Trust") and Manville Corporation, a Delaware corporation ("MVL").
RECITALS
WHEREAS, MVL owns 100% of the issued and outstanding common stock
of Riverwood International Corporation, a Delaware corporation ("RVW"); and
WHEREAS, RVW is contemplating concurrent initial public offerings
of its common stock and certain senior and subordinated debt securities
(collectively, the "IPO"); and
WHEREAS, MVL and RVW have, contemporaneously with the execution
of this Agreement, executed an agreement (the "Corporate Agreement") pursuant
to which, inter alia, RVW has agreed (i) not to issue shares of capital stock
of RVW in certain circumstances, (ii) to propose nominees for election to the
RVW board of directors (the "RVW Board") so that at all times during the term
of the Corporate Agreement, the RVW Board includes at least two persons
designated by the Trust, and (iii) to amend its Amended and Restated Bylaws in
certain respects prior to consummation of the IPO and otherwise not to further
amend its Restated Certificate of Incorporation or Amended and Restated Bylaws
without MVL's prior consent; and
WHEREAS, the Trust owns approximately 50% of the issued and
outstanding shares of common stock of MVL; and
WHEREAS, MVL and the Trust desire to set forth their agreement
regarding certain matters referred to in or relating to the Corporate
Agreement.
<PAGE> 2
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Covenants of MVL. MVL hereby covenants and agrees:
(i) to vote all of its shares of RVW common
stock (and any other securities it may now or hereafter acquire that are
entitled to be voted in any election of RVW directors) at each election
of directors of RVW in favor of a slate of directors, or in the case of
vacancies, individual directors, so that at all times during the term of
this Agreement, the RVW Board includes at least two persons designated
by the Trust or the Trust's direct or indirect assignee hereunder in
accordance with Section 5 hereof (provided that, in the event that the
Trust designates two persons who are not trustees of the Trust, such
persons are reasonably acceptable to MVL);
(ii) not to waive, amend, modify or alter any
provision of the Corporate Agreement, or supplement, cancel or terminate
the Corporate Agreement, without the prior written consent of the Trust;
(iii) to cause RVW to amend its Amended and
Restated Bylaws in the manner (and only in the manner) set forth in
Schedule A hereto and not to vote in favor of or consent to any other
amendment, supplement, restatement, cancellation, modification or
alteration of RVW's Restated Certificate of Incorporation or Amended and
Restated Bylaws without the prior written consent of the Trust;
(iv) not to waive, amend, modify or alter any
provision of the Tax Sharing Agreement between MVL and RVW in any manner
which would have an adverse effect on Manville, or cancel or terminate
such Tax Sharing Agree-
2
<PAGE> 3
ment, without the prior written consent of the Trust;
(v) without the Trust's prior written consent,
not to sell, issue or otherwise dispose of (a) any shares of RVW's
common stock, or any rights, warrants or options (including any
instrument (an "Option Equivalent") which is or could be treated as an
option in accordance with the Treasury Regulations promulgated pursuant
to Section 1504(a)(5)(A) and B of the Internal Revenue Code of 1986, as
amended (the "Code")) for the purchase of RVW's common stock, if
immediately after such sale, issuance or disposition, RVW would not be a
member of the affiliated group of corporations (within the meaning of
Section 1504(a) of the Code) of which MVL is the common parent; or (b)
any shares of RVW's preferred stock, or any rights, warrants or options
(including Option Equivalents) for the purchase of RVW's preferred
stock; and
(vi) to notify the Trust of any request by RVW
for MVL to vote in favor of or consent to any of the actions,
transactions or matters referred to in clauses (i) through (iv) of this
Section 1.
2. Term of Agreement. This Agreement shall automatically
terminate on the earlier of (i) the date on which MVL no longer owns a majority
of RVW's issued and outstanding common stock or (ii) the date on which a
majority of MVL's issued and outstanding common stock is no longer owned by
either the Trust or any other person or entity.
3. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware.
4. Amendment. This Agreement may only be amended by a written
agreement executed by both of the parties hereto.
5. Assignment. Neither party may assign any rights, duties or
obligations hereunder without the prior written consent of the other, provided,
however, that the
3
<PAGE> 4
Trust's rights hereunder may be assigned by the Trust (and any direct or
indirect assignee of the Trust) to any party in connection with the transfer of
a majority of the issued and outstanding common stock of MVL to such party.
6. Entire Agreement. This Agreement constitutes the entire
agreement between the parties, and supersedes all prior agreements,
representations, negotiations, statements or proposals related to the subject
matter hereof.
7. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall constitute an original, and all of which when
taken together, shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereof have executed this
Agreement as of the date first above written.
MANVILLE CORPORATION, a Delaware
corporation
By: /s/ Richard B. Von Wald
Name: Richard B. Von Wald
Title: Senior Vice President
MANVILLE PERSONAL INJURY
SETTLEMENT TRUST
By: /s/ Robert A. Falise
Name: Robert A. Falise
Title: Chairman and Managing Trustee
4
<PAGE> 1
EXHIBIT 10(af)
AMENDMENT AND AGREEMENT
AMENDMENT AND AGREEMENT dated as of December 2, 1994 between Manville
Corporation, a Delaware corporation (the "Company"), and Manville Personal
Injury Settlement Trust (the "Trust").
WHEREAS, the Company and the Trust are parties to a Bonds Repurchase
Agreement dated September 22, 1994 (the "Bonds Repurchase Agreement;"
capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Bonds Repurchase Agreement); and
WHEREAS, pursuant to the Trust's exercise of certain demand
registration rights under the Bonds Repurchase Agreement, the Company has
caused Schuller to file a registration statement with the Commission relating
to a Securities Act registered, Firm-commitment underwritten secondary public
offering of Schuller Notes (the "Public Offering") by the Trust; and
WHEREAS, the Trust has notified the Company that it intends to
increase the principal amount of Schuller Repurchase Notes offered in the
Public Offering from $250 million to the entire aggregate principal amount of
Adjusted Schuller Notes that the Trust will hold after the transaction provided
for in Section 2.03(b)(vi) of the Bonds Repurchase Agreement; and
WHEREAS, in light of such increase in the principal amount of Schuller
Repurchase Notes being offered by the Trust, the Company wishes to include in
the Public Offering the Schuller Excess Notes that it will hold after the
transaction provided for in Section 2.03(b)(vi) of the Bonds Repurchase
Agreement and, as a result, wishes to modify its repurchase obligations with
respect to the Second Bond under the Bonds Repurchase Agreement to provide for
repurchase of the Second Bond with cash rather than with Schuller Notes; and
WHEREAS, the Trust is willing to provide for the matters referred to
in the immediately preceding paragraph, upon the terms and conditions set forth
hereinbelow;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Amendments to the Bonds Repurchase Agreement.
(a) Amendments to Section 1.01. Section 1.01 of the Bonds Repurchase
Agreement is hereby amended by deleting the definitions of the terms 'Second
Bond Repurchase Notes" and "Second Bond Reserve Amount."
(b) Amendments to Section 2.03C(b). Section 2.03(b) of the Bonds
Repurchase Agreement is hereby amended as follows:
<PAGE> 2
(i) In paragraph (ii) thereof, the second sentence is hereby
deleted; and
(ii) In paragraph (vii) thereof, the words "the sum of (A)"
and the words "and (B) the Second Bond Reserve Amount (if any), in each
case" are hereby deleted.
(c) Amendments to Section 2,04(c)(ii). Section 2.04(c)(ii) of the
Bonds Repurchase Agreement is hereby amended by deleting the second and third
sentences thereof and by inserting the following in lieu thereof:
"At any time and from time to time prior to the later of (i) the execution
and delivery of the underwriting agreement relating to the public offering
contemplated by such registration or (ii) the effectiveness of the
registration statement relating to such registration (or if, after the
execution and delivery of such underwriting agreement and the effectiveness
of such registration statement, the Underwriters do not proceed with the
purchase of all Schuller Notes contemplated in such underwriting agreement
on the date contemplated therein due to the nonsatisfaction or alleged
nonsatisfaction of any condition to the Underwriters' obligations
thereunder, then at any time prior to the consummation (if any) of such
public offering with respect to all such Schuller Notes), the Trust shall
have the further right, in its sole discretion to reduce the aggregate
principal amount of Schuller Notes to be included in such offering, and in
such event, without any reduction in the amount of Schuller Repurchase
Notes that the Trust proposes to offer or sell for its account in such
offering, the aggregate principal amount of Schuller Excess Notes to be
offered or sold for the account of the Company in such offering shall be
reduced dollar-for-dollar to the extent necessary to reduce the total
aggregate principal amount of Schuller Notes to be included in such offering
to the reduced amount decided by the Trust (it being understood that if the
amount of the reduction decided by the Trust equals or exceeds the
aggregate principal amount of Schuller Excess Notes requested by the
Company to be included in the offering, no Schuller Excess Notes shall be
included in such offering, notwithstanding the Company's exercise of its
rights pursuant to this Section 2.04(c)(i)).
(d) Amendments to Section 2,04(f)(ii). Section 2.04(f) of the Bonds
Repurchase Agreement is hereby amended by adding the following sentence at the
end of paragraph (ii) thereof:
"In each case of a registration of Schuller Excess Notes held by the
Company under the Securities Act pursuant to this Section 2.04, (A) the
Company shall cause Schuller to indemnify and hold harmless the Company,
its directors and officers and each Person who controls the Company within
the meaning of the Securities Act or the Exchange Act to the same extent as
the indemnity from Schuller to the Trust contained in paragraph (i) of this
Section 2.04(f); and (B) the Company will indemnify and hold harmless the
Trust, each Trustee, Schuller, each of Schuller's directors and Schuller's
officers who sign the registration statement and each other Person, if any,
who controls the Trust or Schuller, as the case may be (excluding the
Company in the case of Schuller), within the meaning of the Securities Act
or the Exchange Act, to the same extent as the indemnity contained
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<PAGE> 3
in paragraph (i) of this Section 2.04(f) from Schuller to the Trust, but
only with reference to information relating to the Company itself (and not
Schuller or any of its Subsidiaries) and furnished to Schuller in writing
by the Company expressly for use in the registration statement, any
prospectus or preliminary prospectus contained therein or any amendment or
supplement thereto."
(e) Amendment to Section 2.08. Section 2.08 of the Bonds Repurchase
Agreement is hereby mended by deleting the first Sentence thereof.
(f) Further Amendment to Article II. Article II of the Bonds
Repurchase Agreement is hereby further amended by adding at the end thereof a
new Section 2.10 which shall read as follows:
"SECTION 2.10. Contribution. (a) If the indemnification provided
for in Section 2.04(f) or 2.06(f) is unavailable to any Indemnified Party
or Indemnitee in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then the Indemnifying Party or Indemnitor, in
lieu of indemnifying such Indemnified Party or Indemnitee, shall contribute
to the amount paid or payable by such Indemnified Party or Indemnitee as a
result of such losses, claims, damages, liabilities or expenses in the
proportion provided by principles of contribution under applicable law, and
the Indemnified Party or Indemnitee shall retain and shall have the full
right to exercise all rights of contribution available under applicable law
as against all parties that are subject to contribution claims in respect
of such losses, claims, damages, liabilities or expenses under applicable
law; provided, however, that the amount paid or payable by the Indemnified
Party or Indemnitee as a result of such losses, claims, damages,
liabilities and expenses shall be deemed to include any fees or expenses of
counsel or other fees or expenses reasonably incurred by the Indemnified
Party or the Indemnitee in connection with investigating, preparing for or
defending any proceeding and in connection with recovering the contribution
to which it is entitled pursuant to this Section 2.10.
(b) The provisions of paragraph (a) above relating to contribution
shall not inure to the benefit of any Indemnified Party or Indemnitee if
indemnification would be unavailable to such Indemnified Party, or
Indemnitee by reason of the proviso contained in paragraph (i) of Section
2.04(f) (mutatis mutandis with respect to the indemnification provided for
in paragraph (ii) of Section 2.04(f)) or 2.06(f), as the case may be, and
in no event shall the obligation of the Indemnifying Party or Indemnitor to
contribute under this Section affect the amount that such party would have
been obligated to pay by way of indemnification if the indemnification
provided for under Section 2.04(f) or 2.06(f), as the case may be, had been
available in the circumstanCes.
(c) As among the Company, the Trust and Schuller, the terms of
this Section 2.10 shall supersede any provision or agreement relating to
contribution contained in any underwriting, placement agency or similar
agreement or arrangement that has been or may be entered into with respect
to the offer and/or sale of Schuller
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<PAGE> 4
Notes, unless each of such parties shall expressly agree to the contrary in
a writing that specifically refers to this Section 2.10."
(g) Amendments to Section 5.01. Section 5.01 of the Bonds Repurchase
Agreement is hereby amended as follows:
(i) In the title of said Section, the comma after the words
"Adjusted Repurchase and Interest Amount" is hereby replaced with the word
"and"; and the words "and Principal Amount of the Second Bond Repurchase
Notes" are hereby deleted;
(ii) In Section 5.01(a), the second sentence is hereby deleted;
and in the immediately succeeding sentence, the comma after the words '
Adjusted Repurchase and Interest Amount" is hereby replaced with the word
"or" and the words "or the principal amount of the Second Bond Repurchase
Notes" are hereby deleted;
(iii) In paragraph (1) of Section 5.01(c), the words "the
principal amount of the Second Bond Repurchase Notes would be $18,152,749,"
are hereby deleted; and
(iv) In paragraph (2) of Section 5.01 (c), the words "the
principal amount of the Second Bond Repurchase Notes would be $16,879,625,"
are hereby deleted.
(h) Amendment to Section 6.01. Section 6.01 of the Bonds Repurchase
Agreement is hereby amended to read in its entirety as follows:
"SECTION 6.01 Repurchase of Second Bond. (a) Subject to obtaining the
prior written consent, waiver or approval (in a form reasonably acceptable
to each of the Trust and the Company) of all Persons (other than the
parties to this Bonds Repurchase Agreement) whose consent is required, in
the reasonable judgment of either the Trust or the Company, under any
provision of applicable law, any judicial order or decree or any material
agreement or instrument binding upon the Company or any of its Subsidiaries
or upon the Trust, or to the elimination of such consent requirement(s)
with respect to the Second Bond, the Trust shall have the right to cause
the Company, at the Trust's option exercisable by notice to the Company
given at any time during the Adjustment Period, to repurchase the Second
Bond on April 10, 1995 (which date, in the event such notice is given by
the Trust, shall be the "Second Bond Repurchase Date") for cash in an
amount (the "Cash Payment Amount") equal to (i) the Second Bond Repurchase
Amount less (ii) the product of (A) the percentage underwriting discount
granted to the Underwriters in the Public Offering, multiplied by (B) the
Second Bond Repurchase Amount (or the aggregate principal amount of the
Schuller Excess Notes that shall actually have theretofore been sold by the
Company in the Public Offering, if such aggregate principal amount is less
than the Second Bond Repurchase Amount). The Cash Payment Amount shall be
payable in accordance with Section 6.01(b). The Trust's notice given
pursuant to this Section 6.01(a) shall also set forth the Second Bond
Repurchase Amount, the Cash Payment Amount and the name, address and number
of the bank account to which the Cash Payment Amount shall be paid.
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<PAGE> 5
(b) Subject to the Trust's compliance with Section 6.01(c), on the
Second Bond Repurchase Date, the Company shall pay to the Trust the Cash
Payment Amount by wire transfer of same-day funds to the bank account
specified by the Trust in its notice given pursuant to Section 6.01(a),
together with an Officer's Certificate from the Company dated the Second
Bond Repurchase Date to the effect that (i) the representations and
warranties of the Company contained in the Amendment and Agreement dated as
of December 2, 1994 between the Company and the Trust (the "Amendment and
Agreement") are true and correct in all material respects at and as of such
date and (ii) any consents required to be obtained by the Company or
Schuller necessary for the transactions contemplated by this Section 6.01
have been obtained.
(c) Subject to the Company's compliance with 6.01(b), on the Second
Bond Repurchase Date, the Trust shall deliver the Second Bond free and
clear of all Liens and adverse claims (other than Liens or claims created
by, or arising in favor of, the Company) to the Company for cancellation,
together with a certificate signed by an authorized executive officer of
the Trust and dated the Second Bond Repurchase Date to the effect that (i)
the representations and warranties of the Trust contained in the Amendment
and Agreement are true and correct in all material respects at and as of
such date, (ii) any consents required to be obtained by the Trust necessary
for the transactions contemplated by this Section 6.01 have been obtained,
and (iii) the Trust has good and valid title to the Second Bond, free and
clear of all Liens, other than any remainderman or reversionary interests
of the PD Trust or the Company therein and any Liens or claims created by
or arising in favor of the Company.
(i) Other References to "Second Bond Repurchase Notes" and "Second
Bond Reserve Amount". Any references in the Bonds Repurchase Agreement to the
terms "Second Bond Repurchase Notes" and "Second Bond Reserve Amount" that have
not been eliminated by the foregoing amendments shall be disregarded and shall
not be given any effect in the interpretation or enforcement of the Bonds
Repurchase Agreement as amended by this Amendment and Agreement.
SECTION 2. Effectiveness of Amendments. The amendments to the Bonds
Repurchase Agreement set forth in Section 1 hereof shall become effective as of
the date first above written. As amended by Section 1 hereof, the Bonds
Repurchase Agreement is hereby ratified, confirmed and continued in all
respects.
SECTION 3. Company's Request for Piggyback Registration of Schuller
Excess Notes. Pursuant to Section 2.04(c)(ii) of the Bonds Repurchase Agreement
(as amended hereby), the Company hereby requests that all Adjusted Schuller
Notes constituting Schuller Excess Notes after the transaction provided for in
Section 2.03(b)(vi) of the Bonds Repurchase Agreement be included in the Public
Offering. The Company hereby agrees that, in addition to the costs and expenses
for which it is responsible pursuant to the terms of the Bonds Repurchase
Agreement, it shall bear its own expenses as a selling securityholder in the
Public Offering, including, without limitation, its pro rata share (based on
the portion that the aggregate principal amount of Schuller Excess Notes sold
by the Company in the Public Offering
-5-
<PAGE> 6
represents of the total aggregate principal amount of Schuller Notes sold in
the Public Offering) of the underwriting commission negotiated by the Trust
with the Underwriters for the Public Offering.
SECTION 4. Trust's Waiver of Notice Period. The Trust hereby
waives the fifteen (15) day advance notice period required under Section
2.04(c)(ii) of the Bonds Repurchase Agreement in connection with the Company's
request contained in Section 3 hereof. It is hereby understood and agreed that
the Trust shall retain the right, in its sole discretion and without liability
or obligation to the Company or Schuller, to decide at any time and for any
reason not to proceed with the Public Offering, or to delay or reduce the size
of the Public Offering, and that the inclusion of Schuller Excess Notes in the
Public Offering shall be subject to the terms of Section 2.04(c)(ii) of the
Bonds Repurchase Agreement, as amended hereby.
SECTION 5. Uncommitted Cash Balance. The Company hereby agrees
to maintain, at all times from the date hereof until the eleventh day following
the end of the Adjustment Period, a balance of at least $20 million in cash and
cash equivalents consisting only of investments included in the definition of
"Permitted Investments" contained in the Indenture (except that such cash
equivalents shall in no event consist of any investments referred to in clauses
(xiv), (xv), (xvi) and (xviii) of said definition) which balance shall not in
any manner be reserved, pledged, encumbered, conditionally assigned, committed
or subject to any actual or contingent restriction (other than as provided in
this Section 5) on the present or future use or application thereof, whether in
the businesses of the Company or any of its subsidiaries, for payment to third
parties or otherwise; unless the Trust shall have expressly consented in
advance to the intended use or application of all or any portion of such
balance.
SECTION 6. Representations and Warranties Of the Company. The
Company represents and warrants to the Trust on the date hereof that:
(a) each of the Company and Schuller has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware;
(b) this Amendment and Agreement has been duly authorized, executed
and delivered by the Company and constitutes the valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
and the Undertaking of Schuller set forth at the foot of this Amendment and
Agreement (the "Undertaking") has been duly authorized, executed and delivered
by Schuller and constitutes the valid and binding obligation of Schuller,
enforceable against Schuller in accordance with its terms;
(c) neither (i) the execution and delivery by the Company of this
Amendment and Agreement, the consummation by the Company of the transactions
contemplated hereby and compliance by the Company with the terms and conditions
hereof, nor (ii) the execution and delivery by Schuller of the Undertaking and
compliance by Schuller with the terms and provisions thereof, will (1) conflict
with or result in a breach of, or constitute a default under, any of the terms,
obligations, covenants, conditions or provisions of (i) any indenture,
mortgage, deed of trust, pledge, bank loan or credit agreement, or other
agreement or instrument to which
-6-
<PAGE> 7
the Company or Schuller is a party or by which any of them or their respective
properties may be bound or affected or (ii) the certificate of incorporation or
by-laws (or similar constitutional documents) of the Company, Schuller or their
respective Subsidiaries; (2) conflict with or result in a breach of any of the
terms, conditions or provisions of any statute, judgment, order, writ,
injunction, decree, demand, rule or regulation of any Governmental Agency; or
(3) result in the creation or imposition of any Lien upon any property or asset
of the Company, Schuller or any of their respective Subsidiaries under the
terms or provisions of any of the foregoing; except, in the case of clause (1),
(2) and (3), for such conflict, breach, default or lien which would not (x) in
the case of the Company, have a material adverse effect on the Company and its
Subsidiaries taken as a whole or (y) in the case of Schuller, have a material
adverse effect on Schuller and its Subsidiaries taken as a whole;
(d) no event of default, or event or condition which would constitute
an event of default after notice or lapse of time or both, has occurred and is
continuing under the Second Bond; and
(e) there is no Event of Default, or event or condition which would
constitute an Event of Default after notice or lapse of time or both, under the
Indenture or the Schuller Notes.
SECTION 7. Representations and Warranties of the Trust. The
Trust represents and warrants to the Company on the date hereof that:
(a) the Trust has been duly organized and is validly existing as a
trust under the laws of the State of New York;
(b) this Amendment and Agreement has been duly authorized, executed
and delivered by the Trust and constitutes a valid and binding agreement of the
Trust, enforceable against the Trust in accordance with its terms; and
(c) neither the execution and delivery of this Amendment and
Agreement, the consummation of the transactions contemplated hereby, nor
compliance by the Trust with the terms and conditions hereof, will (1) conflict
with or result in a breach of, or constitute a default under, any of the terms,
obligations, covenants, conditions or provisions of (i) any indenture,
mortgage, deed of trust, pledge, bank loan or credit agreement, or other
agreement or instrument to which the Trust is now a party or by which it may be
bound or affected or (ii) the Trust Agreement (as amended through the date
hereof); or (2) conflict with or result in a breach of any of the terms,
conditions or provisions of any judgment, order, writ, injunction, decree or
demand of any Governmental Agency, except, in the case of clauses (1) and (2),
for such conflict, breach or default which would not have a material adverse
effect on the Trust.
SECTION 8. Opinions of Counsel. Simultaneously herewith, and as a
condition to the recipient's agreements and obligations hereunder:
(a) The Company shall deliver to the Trust an opinion of the General
Counsel of the Company and Schuller, dated the date hereof, to the effect that:
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<PAGE> 8
(i) The Company has the corporate power and authority to
execute and deliver the Amendment and Agreement and to perform the
terms thereof and the terms of the Bonds Repurchase Agreement as
amended thereby, and such execution, delivery and performance have
been authorized by requisite corporate action on the part of the
Company;
(ii) Schuller has the corporate power and authority to execute
and deliver the Undertaking and to perform the terms thereof, and such
execution, delivery and performance have been authorized by requisite
corporate action on the part of Schuller;
(iii) The Amendment and Agreement has been duly executed and
delivered by the Company and is a valid and binding obligation of the
Company enforceable in accordance with its terms, except to the extent
that (A) enforcement thereof may be limited by (1) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (2)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity) and (B) the rights to
indemnification and contribution thereunder may be limited by federal
or state securities laws or public policy related thereto;
(iv) The Undertaking has been duly executed and delivered by
Schuller and is a valid and binding obligation of Schuller enforceable
in accordance with its terms, except to the extent that (A)
enforcement thereof may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (2) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity) and (B) the rights to
indemnification and contribution thereunder may be limited by federal
or state securities laws or public policy related thereto;
(v) The execution, delivery and performance by the Company of
the Amendment and Agreement will not violate (A) any provision of
applicable law which, to such counsel's knowledge and experience, is
normally applicable to the actions contemplated thereby (other than
federal and state securities laws, as to which no opinion need be
expressed), (B) the Certificate of Incorporation or Bylaws of the
Company or (C) any material agreement or instrument binding upon the
Company (other than agreements to which the Trust is a party); and
(vi) The execution, delivery and performance by Schuller of
the Undertaking will not violate (A) any provision of applicable law
which, to such counsel's knowledge and experience, is normally
applicable to the actions contemplated thereby (other than federal and
state securities laws, as to which no opinion need be expressed), (B)
the Certificate of Incorporation or Bylaws of Schuller or (C) any
material agreement or instrument binding upon Schuller.
-8-
<PAGE> 9
Such opinion shall contain only the limitations, qualifications or assumptions
contained in such counsel's opinion set forth in Exhibit K to the Bonds
Repurchase Agreement. To the extent that the opinions set forth above relate to
matters under the laws of the State of New York, such counsel shall have the
right to rely on a written opinion (dated the date hereof and attached to his
opinion) of Skadden, Arps, Slate, Meagher & Flom, which opinion shall contain
only the limitations, qualifications or assumptions contained in the opinion of
such firm set forth in Exhibit K to the Bonds Repurchase Agreement.
(b) The Trust shall deliver to the Company an opinion of the General
Counsel of the Trust, dated the date hereof, to the effect that:
(i) To such counsel's knowledge, upon due inquiry, the
consummation of the repurchase of the Second Bond pursuant to the
Bonds Repurchase Agreement (as amended by the Amendment and
Agreement) is not subject to any consent or authorization of any
Governmental Agency that has not been obtained and has been duly
authorized by all necessary trust action by the Trustees of the Trust;
(ii) The execution, delivery and performance by the Trust of
the Amendment and Agreement will not violate (A) any provision of
applicable law which, to such counsel's knowledge and experience, is
normally applicable to the actions contemplated thereby (other than
federal and state securities laws, as to which no opinion need be
expressed), (B) the Trust Agreement or Bylaws of the Trust or (C) any
material agreement or instrument binding upon the Trust (other than
agreements to which the Company is a party), and are within the
Trust's power and authority; and
(iii) The Amendment and Agreement has been duly executed and
delivered by the Trust and is a valid and binding obligation of the
Trust enforceable in accordance with its terms, except to the extent
that (A) enforcement thereof may be limited by (1) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (2)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity) and (B) the rights to
indemnification and contribution thereunder may be limited by federal
or state securities laws or public policy related thereto.
Such opinion shall contain only the limitations, qualifications or assumptions
contained in such counsel's opinion set forth in Exhibit J to the Bonds
Repurchase Agreement.
SECTION 9. Governing law. This Amendment and Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to choice of law principles applicable in such jurisdiction.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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<PAGE> 10
SECTION 10. Counterparts. This Amendment and Agreement may be executed
in two or more counterparts, each of which shall be deemed for all purposes an
original, and all of which together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
MANVILLE PERSONAL INJURY MANVILLE CORPORATION
SETTLEMENT TRUST
By: /s/ MARK E. LEDERER By: /s/ RICHARD B. VON WALD
Name: Mark E. Lederer Name: Richard B. Von Wald
Title: Chief Financial Officer Title: Senior Vice President,
General Counsel and Secretary
UNDERTAKING
For good and valuable consideration, the adequacy and receipt of which are
hereby acknowledged, SCHULLER INTERNATIONAL GROUP, INC., a Delaware
corporation ("Schuller"), hereby undertakes and agrees with Manville
Corporation ("Manville") and Manville Personal Injury Settlement Trust (the
"Trust") to be bound by and to comply with all terms of the Bonds Repurchase
Agreement dated September 22, 1994 between Manville and the Trust, as amended
by the above Agreement and Amendment, that provide for Manville to cause
Schuller to take or forbear from taking action (including, without limitation,
to indemnify and make contribution to the Indemnified Parties and Indemnitees
as defined in, and in accordance with the terms of, said Bonds Repurchase
Agreement as amended by the above Amendment and Agreement).
IN WITNESS WHEREOF, the undersigned has caused this Undertaking to be
duly executed by its authorized officer as of the day and year first above
written in the aforementioned Amendment and Agreement.
SCHULLER INTERNATIONAL GROUP, INC.
BY: /s/ RICHARD B. VON WALD
NAME: Richard B. Von Wald
TITLE: Senior Vice President,
General Counsel and Secretary
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<PAGE> 1
EXHIBIT 10(ag)
Supplemental Retirement Agreement Between
W. Thomas Stephens and Manville Corporation
Effective as of November 4, 1994
This Agreement, made as of the date set forth below, sets
forth the terms of the supplemental retirement arrangement between Manville
Corporation (the "Company") and W. Thomas Stephens ("Stephens") and supersedes
and replaces both the Supplemental Retirement Agreement Between W. Thomas
Stephens and Manville Corporation, dated January 1, 1989 (the "Supplemental
Agreement") and the provisions of the Supplemental Plan for Participants in the
Schuller International Employees Retirement Plan (the "Supplemental Plan") as
such plan relates to Stephens.
In consideration of Stephens' past and future service with the
Company and Stephens' agreement to amend (i) the Employment Agreement, dated
April 10, 1992 by and between Manville Corporation and W. Thomas Stephens and
(ii) the Performance Share Agreement between Manville Corporation and W. Thomas
Stephens, entered into as of January 1, 1991 (the "Performance Share
Agreement"), as such amendments (the "Amendments") are set forth in Exhibits A
and B hereto, respectively, the Company wishes to provide Stephens with the
benefits described herein upon his termination of service with the Company;
<PAGE> 2
NOW THEREFORE, subject to the parties execution of the
Amendments, the Company and Stephens hereby agree to the following:
1. Definitions
The following terms shall have the meanings set forth below
for purposes of this Agreement:
"Acceleration Event" means (i) termination of Stephens'
employment by the Company without Cause, (ii) Stephens' termination of his
employment with the Company for Good Reason, (iii) termination of Stephens'
employment with Company by reason of his Disability or death or (iv) the
occurrence of a Change in Control.
"Applicable Tax Rate" means as of any date Stephens' effective
aggregate maximum marginal Federal, state and local tax rate applicable to
wages as in effect at such time.
"Benefit" means as of any date the amount payable to Stephens
pursuant to Section 2(a) or 2(b) hereof, as the case may be, giving effect to
the applicable offset described in Section 3 hereof, if Stephens terminated his
employment on such date.
"Buck" means Buck Consultants, Inc.
"Cause" has the meaning set forth in the Employment Agreement,
taking into account whether a "Change in Control", as defined in the Employment
Agreement, has occurred.
2
<PAGE> 3
"Change in Control" has the meaning set forth in the Stock
Incentive Plan.
"Committee" means the Compensation Committee of the Board of
Directors of the Company.
"Common Stock" means Company common stock, $.01 par value.
"Disability" has the meaning set forth in the Employment
Agreement.
"Employment Agreement" means the Employment Agreement dated as
of April 10, 1992 by and between Manville Corporation and W. Thomas Stephens,
as amended through the date hereof.
"Fair Market Value" means as of any given date (x) the closing
sales price, regular way, on such day or if no sale takes place on such day,
the average of the closing bid and asked prices on such day of (i) the Common
Stock reported on the New York Stock Exchange Composite Tape or (ii) any other
publicly traded security reported on any securities exchange or quoted by a
reputable quotation service or (y) if there is not such sales price or closing
bid and asked price of the Common Stock or other security for such date or the
property or other item being valued is not Common Stock or another publicly
traded security, the fair market value of the Common Stock, security, property
or other item as determined by the Committee in good faith.
3
<PAGE> 4
"Final Average Pay" means as of any date the highest average
of Stephens' base salary plus annual cash bonus for three consecutive years
during the preceding ten years.
"Good Reason" has the meaning set forth in the Employment
Agreement, taking into account whether a "Change in Control", as defined in the
Employment Agreement, has occurred.
"Offset" means as of any date the amount described in Section
3(a) or 3(b) hereof, as applicable.
"Present Value" means as of any date the actuarial present
value determined by applying a 6% discount rate and using all other relevant
actuarial assumptions used at that date by the actuaries for the Retirement
Plan.
"Restricted Stock Agreement" means the Restricted Stock
Agreement dated as of November 4, 1994 by and between the Company and Stephens.
"Retirement Plan" means the Schuller International Employees
Retirement Plan.
"Secular Trust" means Stephens' Account under the Manville
Corporation Benefit Trust Agreement and Declaration of Trust by and between the
Company and Harris Trust and Savings Bank.
"Share" means a share of Common Stock transferred to Stephens
pursuant to the Restricted Stock Agreement.
4
<PAGE> 5
"Stock Incentive Plan" means the Manville Corporation Stock
Incentive Plan, as amended to the date hereof.
2. Amount of Benefit
(a) Before Age 62 or the Occurrence of an Acceleration
Event. Upon Stephens' termination of employment with the Company prior to
either (i) attaining age 62 or (ii) the occurrence of an Acceleration Event
Stephens will be entitled to a benefit, reduced by the Offset described in
Section 3(a) hereof, equal to the Present Value of a single life annuity
commencing at the time of such termination providing annual payments to
Stephens equal to the applicable percentage shown below of Final Average Pay:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
If Stephens' attained
age at termination is: 52 53 54 55 56 57 or older
--------------------- -- -- -- -- -- -----------
The applicable
percentage is: 30% 36% 42% 48% 54% 60%
-------------
</TABLE>
(b) At or After Age 62 or the Occurrence of an
Acceleration Event. Upon Stephens' termination of employment with the Company
(i) at or after attaining age 62 or (ii) in conjunction with or following an
Acceleration Event, Stephens will be entitled to a benefit, reduced by the
Offset described in Section 3(b) hereof, equal to the
5
<PAGE> 6
amount which, after payment of taxes thereon at the Applicable Tax Rate at the
date of such termination, equals the Present Value of a single life annuity
commencing at the time of such termination of employment providing annual
payments to Stephens which, after payment of tax thereon at the Applicable Tax
Rate at the date of such termination (taking into account Stephens' notional
tax basis in such annuity), results in an annual after-tax income equal to the
product of (x) the excess of 60% of Final Average Pay over Stephens' annual
benefit under the Retirement Plan assuming such benefit were paid as a single
life annuity commencing at termination and (y) one minus the Applicable Tax
Rate at the date of such termination.
3. Offset to the Benefit Amount
(a) The offset to the benefit, if any, due under Section 2(a)
shall be the sum of the following:
(i) the Present Value (measured as of the date of
termination of Stephens' employment) of Stephens' benefit under the Retirement
Plan assuming such benefit were paid as a single life annuity commencing at
termination;
(ii) (A) if assets are held in the Secular Trust on the
date of termination of Stephens' employment with the Company, the sum of the
products of (x) each contribution to the Secular Trust and (y) the actual
investment experience of the Secular Trust expressed as a percentage (as
6
<PAGE> 7
determined by Buck or a successor recordkeeper) from the date of contribution
to the date of such termination or (B) if such assets have been distributed to
Stephens prior to termination of his employment with the Company, the sum of
(x) the sum of the products of (I) each contribution to the Secular Trust and
(II) the actual investment experience of the Secular Trust expressed as a
percentage (as determined by Buck or a successor recordkeeper) from the date of
contribution to the date of distribution and (y) interest on such sum at a rate
of 6% per annum compounded annually from the date of such distribution to the
date of such termination;
(iii) the aggregate cash amounts paid to Stephens under
this Agreement plus interest thereon at a rate of 6% per annum compounded
annually from the date of payment to the date of termination of Stephens'
employment;
(iv) the Fair Market Value on the date of termination of
Stephens' employment of vested Shares (including Shares which vest by reason of
or in conjunction with Stephens' termination), whether or not Stephens holds
such Shares as of the date of such termination;
(v) the aggregate cash dividends on vested Shares paid,
or the record date for which is, on or prior to the date of termination of
Stephens' employment, whether or not Stephens held or holds such Shares on the
payment or record dates with respect to such dividends, plus interest thereon
7
<PAGE> 8
at a rate of 6% interest per annum compounded annually from the date or dates
such dividends were paid, or if earlier, would have been paid but for
limitations in the Restricted Stock Agreement, to the date of termination of
Stephens' employment; and
(vi) the Fair Market Value on the date of termination of
Stephens' employment of any dividends in respect of vested Shares paid or
payable in-kind the record date for which is on or prior to the date of
termination of Stephens' employment, whether or not Stephens held or holds such
Shares on the payment or record dates with respect to such dividends and
whether or not Stephens continues to hold such dividends paid in-kind as of the
date of such termination.
(b) The offset to the benefit, if any, due under Section 2(b)
shall be the sum of the following:
(i) (A) if assets are held in the Secular Trust on the
date of termination of Stephens' employment with the Company, the sum of the
products of (x) the excess of each contribution to the Secular Trust over the
taxes thereon at the Applicable Tax Rate at the date of contribution and (y)
the actual investment experience of the Secular Trust expressed as a percentage
(as determined by Buck or a successor recordkeeper) from the date of
contribution to the date of termination or (B) if such assets have been
8
<PAGE> 9
distributed to Stephens prior to termination of Stephens' employment with the
Company, the sum of (x) the sum of the products of (I) the excess of each
contribution to the Secular Trust over the taxes thereon at the Applicable Tax
Rate at the date of contribution and (II) the actual investment experience of
the Secular Trust expressed as a percentage (as determined by Buck or a
successor recordkeeper) from the date of contribution to the date of
distribution and (y) interest on such sum at a rate of 6% per annum compounded
annually from the date of such distribution to the date of termination of
Stephens' employment;
(ii) the sum of (A) the excess of (x) each cash amount
paid to Stephens under this Agreement over (y) the taxes at the Applicable Tax
Rate on such amount on the date of such payment and (B) interest on such excess
at a rate of 6% per annum compounded annually from the date of payment to the
date of termination of Stephens' employment;
(iii) the Fair Market Value on the date of termination of
Stephens' employment of the number of shares of Common Stock equal to the
excess of (x) the number of Shares which vested prior to or in conjunction with
such termination, whether or not Stephens holds such Shares on the date of
termination, over (y) the sum of the number of shares of Common Stock having a
Fair Market Value on each vesting date equal to the taxes at the Applicable Tax
Rate
9
<PAGE> 10
on such vesting date owed in respect of the Shares vesting on such date;
(iv) the sum of (A) the excess of (x) the sum of the cash
dividends on vested Shares paid, or the record date for which is, on or prior
to the date of termination of Stephens' employment, whether or not Stephens
held or holds such Shares on the payment or record dates with respect to such
dividends over (y) the sum of the taxes at the Applicable Tax Rate on the date
of payment owed in respect of each such dividend and (B) interest on such
excess at the rate of 6% per annum compounded annually from the date such
dividend was paid or, if earlier, would have been paid but for limitations in
the Restricted Stock Agreement to the date of termination of Stephens'
employment; and
(v) the sum of the Fair Market Values on the date of
termination of Stephens' employment of the excess of the property constituting
dividends in respect of vested Shares paid or payable in-kind the record date
for which is on or prior to the date of termination of Stephens' employment
(the "in-kind property"), whether or not Stephens held or holds such Shares on
the payment or record dates with respect to such dividends, over the portion of
the in-kind property having a Fair Market Value on each respective dividend
payment date equal to the taxes at the Applicable Tax Rate on such payment date
owed in respect of such
10
<PAGE> 11
dividends, whether or not Stephens continues to hold such "in-kind property" as
of the date of such termination.
4. Payment Upon Execution of this Agreement.
Upon execution by the parties of this Agreement and the
Amendments, the Company shall pay Stephens in cash the amount of $1,300,000.
5. Payments In Certain Circumstances After 1996.
On each of July 1, 1997, July 1, 1998 and July 1, 1999 (each,
a "Measurement Date"), if Stephens continues to be employed by the Company on
such date and if the Offset under Section 3(b) hereof as of such date is less
than 70% of the benefit to which he would be entitled under Section 2(b) hereof
(without regard to such Offset) were Stephens to terminate his employment on
such Measurement Date, assuming for this purpose that an Acceleration Event has
occurred, the Company shall pay to Stephens in cash as soon as practicable
thereafter an amount which assuming the same amount were paid on such date and
each of the succeeding Measurement Dates (if any) would result in the Offset
under Section 3(b) hereof as of the last such date equalling 70% of the value
of such benefit on the date of such payment but in no event more than 100% of
the benefit to which Stephens would be entitled under Section 2 hereof as of
such date were he to terminate his employment on such date (without
11
<PAGE> 12
making any artificial assumption that an Acceleration Event has occurred).
6. Payments Upon Termination of Employment.
Subject to Section 10(b) of the Employment Agreement, upon
Stephens' termination of employment with the Company, the Company shall pay
Stephens in cash the Benefit, if any, to which he is entitled pursuant to
Section 2(a) or Section 2(b) hereof, as the case may be.
7. Excess Payments.
If at the time of the termination of Stephens' employment with
the Company the value of the Offset exceeds the benefit promised pursuant to
Section 2 prior to deducting the Offset, the Company shall have the right to
reduce the amount of cash or property due Stephens from the Company for any
reason by such excess. If such excess exceeds the amount of cash or property
withheld from Stephens pursuant to (i) the foregoing sentence, (ii) Section 7
of the Performance Share Agreement, as amended, and (iii) Section 10(a) of the
Employment Agreement (hereinafter the "shortfall") then Stephens shall pay such
shortfall to the Company upon termination of his employment.
12
<PAGE> 13
8. Miscellaneous.
a. Operation and Administration. This Agreement shall be
operated under the direction of the Committee.
b. Withholding Tax on Distributions. All distributions under
this Agreement shall be net of an amount sufficient to satisfy any and all
Federal, state and local taxes required to be withheld on such distributions as
of the date of such distribution.
c. No Assignment or Alienation. The respective rights of
Stephens and the Company under this Agreement shall not be transferable or
assignable or subject to alienation, anticipation or encumbrance or subject to
any garnishment, attachment or execution without prior consent of the Company.
Notwithstanding the foregoing, this Agreement shall be binding upon and shall
inure to the benefit of the spouse, personal representatives, heirs, legatees,
successors and assigns, as applicable, of the Company and Stephens.
d. No Rights to Continued Employment. This Agreement shall not
be construed as giving Stephens any right to continue in the employ of the
Company or any of its subsidiaries or affiliates, nor shall it be construed as
limiting any right of the Company or any of its subsidiaries to modify
Stephens' compensation.
e. Supplemental to Employment Contract. Except insofar as it
supersedes the Supplemental Agreement and the
13
<PAGE> 14
Supplemental Plan, this Agreement is supplemental to and not in replacement of
any rights or benefits of Stephens under any employment contract with the
Company.
f. Governing Law. The terms of this Agreement shall be governed
by the laws of the State of Colorado insofar as such laws do not contravene any
applicable Federal laws, rules or regulations.
g. Entire Agreement/Amendments/Effectiveness. This Agreement
shall supersede any and all existing agreements regarding supplemental
retirement benefits between Stephens and the Company or any of its affiliates
and contains the entire understanding of the parties with respect to such
subject matter. There are no restrictions, agreements, promises, warranties,
covenants or undertakings between the parties with respect to the subject
matter herein other than those expressly set forth herein. The effectiveness
of this Agreement is conditioned upon execution of the Amendments and upon
spousal consent to the terms of this Agreement in the form set forth on the
signature page hereof. The Company may not amend this Agreement at any time in
a manner which would adversely affect Stephens' rights to any benefits under
this Agreement as of the date of such action without his consent. THIS
AGREEMENT AND ANY AMENDMENT HERETO SHALL NOT BE EFFECTIVE UNLESS AND UNTIL
SIGNED BY THE CHAIRMAN OF THE COMPENSATION COMMITTEE OF THE BOARD OF
14
<PAGE> 15
DIRECTORS OF THE COMPANY AND ATTESTED TO BY THE GENERAL COUNSEL OF THE COMPANY.
h. Legal Fees. In the event of a dispute between Stephens and
the Company with respect to any of Stephens' rights or benefits under this
Agreement, the Company shall reimburse Stephens for any and all legal fees and
related expenses incurred by him in connection with enforcing such rights or
benefits, at the time such fees and related expenses are incurred; provided
that, if Stephens' claim is found by a court of competent jurisdiction to have
been frivolous, Stephens shall reimburse the Company for all amounts paid by it
under this provision.
i. Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
15
<PAGE> 16
IN WITNESS WHEREOF, the Company and Stephens have duly
executed and delivered this Agreement as of this 4th day of November, 1994.
MANVILLE CORPORATION
/s/ BETTE B. ANDERSON
Bette B. Anderson
Chairman of the Compensation
Committee of the Board of
Directors of Manville
Corporation
W. Thomas Stephens
/s/ W. THOMAS STEPHENS
Attest:
/s/ RICHARD B. VON WALD
Secretary and
General Counsel
The undersigned hereby consents to the termination of the Supplemental
Agreement and of W. Thomas Stephens' participation in the Supplemental Plan and
recognizes that her rights thereunder are canceled by reason of such
termination. In connection with the termination of the Supplemental Agreement
and W. Thomas Stephens' participation in the Supplemental Plan the undersigned
specifically consents to the termination of her right to a benefit in the form
of a qualified joint and survivor annuity or a qualified preretirement survivor
annuity and consents to payment of the benefit thereunder to W. Thomas Stephens
in the form of a lump sum.
/s/ ALICE STEPHENS
Alice Stephens
/s/ BARBARA SCHLAHT
Notary
Comm. Exp. - 4-15-97
16
<PAGE> 17
MANVILLE CORPORATION
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (the "Agreement") is made and
entered into as of November 4, 1994 between Manville Corporation, a Delaware
corporation (the "Company") and W. Thomas Stephens (the "Employee") pursuant to
the terms and conditions of the Manville Corporation Stock Incentive Plan, as
amended (the "Plan"). Capitalized terms not defined in this Agreement shall
have the meanings set forth in the Plan.
THE PARTIES AGREE AS FOLLOWS:
1. Award of Restricted Stock. Pursuant to the Plan the
Company hereby awards to Employee 340,000 shares of Company common stock, $.01
par value, subject to the terms and conditions set forth in this Agreement and
the Plan (the "Restricted Stock").
2. Vesting Schedule. Subject to the limitation set
forth in Section 6 hereof and subject to Employee being employed by the Company
on the applicable Vesting Date, the shares of Restricted Stock granted
hereunder shall vest in accordance with the following schedule: 68,000 shares
of Restricted Stock shall vest on September 2, 1995, an additional 68,000
shares of Restricted Stock shall vest on September 2, 1996, an additional
68,000 shares of Restricted Stock shall vest on September 2, 1997, an
additional 68,000 shares of Restricted Stock shall vest on September 2, 1998,
and the remaining 68,000 shares of Restricted Stock shall vest on September 2,
1999 (each such date and the date of any event described in Section 5 is
referred to hereinafter as a "Vesting Date"). Upon the vesting of shares of
Restricted Stock, the Transfer Restrictions thereon shall lapse.
3. Restrictions. In accordance with the Plan, prior to
vesting in accordance with Sections 2, 5 or 6 hereof, Employee shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber (the
"Transfer Restrictions") any shares of Restricted Stock granted hereunder.
Dividends, whether in cash or otherwise, declared on unvested shares of
Restricted Stock shall not be paid to Employee but shall be held in escrow by
the Company and, in the case of cash dividends, shall be credited with 6%
interest per annum compounded annually from the date such dividend would have
been
<PAGE> 18
payable until the date actually paid. Upon the vesting of shares of Restricted
Stock, any such dividends thereon so held in escrow, together with the stated
interest thereon (references herein to dividends shall be deemed to include
such interest, if any), shall be paid to Employee subject to the limitation set
forth in Section 6 hereof. Upon Employee's Termination, any shares of
Restricted Stock and any dividends which do not vest or become payable as of
such date shall be forfeited to the Company without payment of consideration of
any kind to Employee.
4. Forfeiture Upon a Termination of Employment. Except
to the extent otherwise provided in the Plan or in Section 5 hereof, in the
event of Employee's Termination, all shares of Restricted Stock then subject to
Transfer Restrictions shall be forfeited by Employee and shall be immediately
returned to the Company without payment of any consideration to Employee.
5. Acceleration of Vesting: Change in Control and Other
Significant Events.
(a) Subject to the limitation set forth in Section 6
hereof and subject to Section 10(b) of the Employment Agreement, in the event
of a Change in Control the provisions of Section 9 of the Plan shall apply.
(b) Subject to the limitation set forth in Section 6
hereof, in the event of (i) Employee's Termination without Cause, (ii)
Employee's Termination for Good Reason or (iii) Employee's Termination by
reason of death or Disability, Employee shall at the time of such Termination
vest in any unvested shares of Restricted Stock and all Transfer Restrictions
shall lapse.
6. Limitation on Vesting of Restricted Stock and Payment
of Dividends.
Notwithstanding anything in this Agreement to the contrary, if
on any Vesting Date or dividend payment date the amount of the benefit to which
Employee is entitled under Section 2 of the Supplemental Retirement Agreement
prior to any Offset as defined therein (the "Benefit Amount") is less than the
applicable Offset (measured as of such date as if Employee terminated his
employment on such date and taking into account any shares of Restricted Stock
that would vest and dividends that would be payable on such date), then (i)
shares of Restricted Stock and/or (ii) dividends on shares of Restricted Stock
that have previously vested the aggregate amount or value of which would cause
the Offset to exceed the Benefit Amount
2
<PAGE> 19
shall not vest and Transfer Restrictions thereon shall not lapse, in the case
of shares of Restricted Stock, or be payable to Employee, in the case of
dividends, until the next succeeding Vesting Date or Vesting Dates as of which
the Benefit Amount exceeds the Offset at which time or times such shares of
Restricted Stock shall vest and Transfer Restrictions thereon lapse and/or
dividends shall be payable to the greatest extent possible without resulting in
the Offset exceeding the Benefit Amount. Any dividend not payable by reason of
this Section shall be held in escrow by the Company and shall be credited with
6% interest per annum compounded annually from the date such dividend would
have been paid but for this Section until the date of payment. Upon Employee's
Termination, any shares of Restricted Stock and any such dividends which do not
vest or become payable as of such date shall be forfeited to the Company
without payment of consideration of any kind to Employee. In the event that as
of any dividend payment date Employee has transferred vested shares of
Restricted Stock in respect of which dividends would otherwise be withheld
pursuant to this Section, Employee shall deposit with the Company (to be so
held in escrow) the amount of dividends which would otherwise be so withheld,
pending repayment to Employee with interest if and to the extent provided
herein.
7. Definitions. For purposes of this Agreement:
(i) "Cause" shall have the meaning given in the
Employment Agreement taking into account whether a
"Change in Control", as defined in the Employment
Agreement has occurred;
(ii) "Employment Agreement" shall mean the Employment
Agreement dated as of April 10, 1992 by and between
Manville Corporation and W. Thomas Stephens, as
amended through the date hereof;
(iii) "Good Reason" shall have the meaning given in the
Employment Agreement taking into account whether a
"Change in Control", as defined in the Employment
Agreement has occurred;
(iv) "Disability" shall have the meaning set forth in the
Employment Agreement.
(v) "Supplemental Retirement Agreement" shall mean the
Supplemental Retirement Agreement between W. Thomas
Stephens and Manville Corporation, dated as of
November 4, 1994.
3
<PAGE> 20
8. Governing Law. This Agreement shall be governed by
the laws of the State of Delaware.
9. Entire Agreement. There are no restrictions,
agreements, promises, warranties covenants or undertakings between the parties
with respect to the subject matter herein other than those expressly set forth
herein.
10. Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original with the same effect as if the
signature thereof and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
MANVILLE CORPORATION
By: /s/ BETTE B. ANDERSON
Bette B. Anderson
Chairman of the
Compensation Committee
of the Board of Directors
of Manville Corporation
Employee hereby accepts and agrees to be bound by all of the
terms and conditions of this Agreement and the Plan.
/s/ W. THOMAS STEPHENS
W. Thomas Stephens
4
<PAGE> 21
Amendment No. 1
to the Employment Agreement dated April 10, 1992
by and between Manville Corporation (the "Company")
and W. Thomas Stephens (the "Executive")
WHEREAS, the Company and Executive have entered into the
Supplemental Retirement Agreement between W. Thomas Stephens and Manville
Corporation, dated as of November 4, 1994 (the "Supplemental Retirement
Agreement");
WHEREAS, a condition to the effectiveness of the Supplemental
Retirement Agreement is the amendment of the above-referenced employment
agreement (the "Employment Agreement") as set forth herein;
NOW THEREFORE, the parties agree as follows:
1. Section 7(e)(iii) of the Employment Agreement is hereby
amended and restated in its entirety to read as follows:
"(iii) the Company fails to pay Executive any amount
otherwise vested and due hereunder or under any plan or policy of the Company
(including without limitation any amount due under the Supplemental Retirement
Agreement between W. Thomas Stephens and the Company, dated as of November 4,
1994 (the "Supplemental Retirement Agreement"));".
<PAGE> 22
2. Section 8(d) of the Employment Agreement is hereby
amended and restated in its entirety to read as follows:
"(d) Without Cause by the Company or with Good Reason by
Executive. If Executive's employment is terminated by the Company
following a Change in Control without Cause (other than by reason of death or
Disability) or by Executive with "Good Reason" (which following a Change in
Control shall have the meaning set forth in Section 8(e) below), Executive
shall be entitled to receive the following benefits:
(i) The Company shall pay Executive at the time of such
termination in a lump sum a cash amount equal to two
times the sum of (A) his Base Salary in effect at the
time of such termination or, in the event of
termination by the Executive by reason of an event
described in Section 8(e)(iv) below, the Base Salary
as in effect prior to the reduction or reductions
referred to therein plus (B) the bonus the Executive
would have earned in respect of the year of
termination under the Manville annual incentive
compensation plan, if any, in effect at the date of
termination or in the event of a termination by
Executive by reason of an event described in Section
8(e)(v), the plan in effect immediately prior to the
reduction or reductions referred to therein,
determined as if the Executive had been employed by
the Company for the full year and without regard to
any right reserved by the Company to decrease or
eliminate such bonus, and assuming actual performance
had equaled 100% of the performance objective
established for such year pursuant to the terms of
such plan.
(ii) The Company shall pay Executive in a lump sum a cash
amount equal to a fraction of the annual bonus which
(absent such termination and without regard to any
right reserved by the Company to decrease or
eliminate such bonus) Executive would have earned
with respect to the year of termination under the
Manville annual executive incentive compensation
plan, if any, in effect at the date of termination
or, in the event of a
2
<PAGE> 23
termination by Executive by reason of an event
described in Section 8(e)(v), the plan in effect
prior to the reduction or reductions referred to
therein, assuming actual performance had equaled 100%
of the performance objective established for such
year pursuant to the terms of such plan, the
numerator of which fraction is the number of days in
such year during which the Executive was employed by
the Company and the denominator of which is 365.
Such payment shall be made at the time of Executive's
termination.
(iii) The Company shall pay Executive in a lump sum a cash
amount equal to the sum of the amounts Executive
would have received in respect of all Performance
Units (and other similar interests) granted to
Executive under the 1991 Long Term Cash Incentive
Compensation Plan (or any other Manville long-term
cash incentive plan adopted after the date hereof)
assuming Executive remained employed through the
applicable expiration or final payment date of such
Performance Units or other interests, less any amount
paid to Executive in respect of such Performance
Units and other interests prior to termination of his
employment. For purposes of calculating the sum to
which Executive is entitled it shall be assumed that
all "Scheduled Dividend Payments" (as such term is
defined in the 1991 Long Term Cash Incentive
Compensation Plan) not paid at or prior to
Executive's termination of employment will be paid in
full at their then estimated value, as determined by
the Company (without reduction or deferral). Such
payment shall be made at the time of Executive's
termination.
(iv) For a 36-month period following Executive's
termination, the Company shall pay Executive in
monthly installments the sum of the monthly costs to
Executive of purchasing life, accident, medical,
dental and prescription insurance benefits
substantially similar to such benefits elected and
received by Executive under the Company's "Flex
Benefit" program immediately prior to Executive's
termination or, if more generous, immediately prior
to the Change in Control
3
<PAGE> 24
("Continued Benefits") less the monthly payroll
deduction, if any, charged to Executive immediately
prior to Executive's termination, or, if applicable,
immediately prior to the Change in Control, for any
of such Continued Benefits; notwithstanding the
foregoing, if Executive begins to receive Retiree
Medical and Life Insurance Benefits at any time
during the 36-month period referred to above, once
such benefits begin, the monthly payment due
Executive under the preceding clause shall equal the
monthly costs to Executive of purchasing Continued
Benefits not provided by the Company to Executive as
Retiree Medical and Life Insurance Benefits.
(v) For a 24-month period after such termination, the
Company shall provide or cause Executive to be
provided with the perquisites listed on Schedule C,
attached hereto (which the Company may amend from
time to time prior to a Change in Control, without
Executive's consent), on the same terms and
conditions on which such perquisites were provided at
the time of Executive's termination or, if more
generous, immediately prior to such termination.
(vi) In addition to all other amounts payable to Executive
under this Section 8(d), Executive shall be entitled
to receive all benefits payable to Executive under
any other plan, policy or agreement relating to
retirement or other benefits, in accordance with the
terms of such plans, policies or agreements;
provided, however that, amounts paid pursuant to this
Section 8(d) shall be in lieu of any payments under
any Manville separation policy.
(vii) The Company shall provide Executive with outplacement
services from the firm of Executive's choice at a
cost to the Company not to exceed 20% of Executive's
Base Salary in effect at the time of such termination
or, in the event of termination by Executive by
reason of an event described in Section 8(e)(iv)
below, the Base Salary as in effect prior to the
reduction or reductions referred to therein."
4
<PAGE> 25
3. Section 8(e)(iii) of the Employment Agreement is
hereby amended and restated in its entirety to read as follows:
"(iii) the Company fails to pay Executive any amounts
otherwise vested and due hereunder or under any plan or policy of the Company
(including without limitation any amount due under the Supplemental Retirement
Agreement);".
4. Section 8(g) of the Employment Agreement is hereby
amended and restated in its entirety to read as follows:
"(g) Change in Control. For purposes of this
Agreement, the phrase "Change in Control" shall mean the following and shall be
deemed to have occurred if any of the following events shall have occurred:
(i) except for Manville, a subsidiary or an affiliate
thereof, an employee benefit plan (including any
trustee of such plan, acting as trustee) sponsored or
maintained by Manville or any subsidiary thereof or
the Manville Personal Injury Settlement Trust (the
"Trust"), any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended from time to time, and any
successor act (the "Exchange Act") is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly of
securities of Manville representing 30% or more of
the combined voting power of Manville's then
outstanding securities;
(ii) at least 40% of the directors of Manville constitute
persons who were not at the time of their first
election to the board, candidates proposed by a
majority of the Board in office prior to the time of
such first election;
(iii) (A) the dissolution of Manville; (B) a sale or other
disposition or the last sale or other disposition to
occur in a series of
5
<PAGE> 26
sales and/or other dispositions within any 18-month
period ("Serial Sales") by Manville and/or one or
more subsidiaries of Manville of assets (including
any sale through a public offering of shares of
voting stock of a Manville subsidiary by Manville or
by any subsidiary thereof) which, in the case of
Serial Sales, as of the beginning of such 18-month
period, account for (or, in the case of stock sold
through a public offering, which represents indirect
ownership on a proportionate basis of assets
accounting for) more than 40% of the consolidated
revenues of Manville and its subsidiaries, as
determined in accordance with generally accepted
accounting principles; provided, however, that no
sale or disposition of assets or stock shall be taken
into account to the extent that the proceeds of such
sale or disposition (whether in cash or in-kind) are
reinvested or are, in the case of proceeds received
in-kind, used in the ongoing conduct by Manville or
one or more of its subsidiaries of the business of
Manville and/or such subsidiary or subsidiaries,
provided further that such a reinvestment shall not
be deemed to have occurred unless made within 18
months of such sale or disposition and provided
further that, the term reinvestment shall exclude,
inter alia, the use of proceeds (x) to repay debt
owed to the Trust or debt incurred in connection with
the operation of the business in which the assets
sold or disposed of were used or (y) to pay
dividends; (C) a transaction to which Manville is a
party pursuant to which the holders of all of the
shares of Manville outstanding prior to such
transaction do not hold, directly or indirectly,
shares outstanding of the surviving corporation in
substantially the same proportions as those in which
they held the outstanding shares of Manville prior to
the transaction; or (D) any other event which the
Board determines, in its discretion, would materially
alter the structure of Manville or its ownership; or
(iv) a reduction in workforce, or the last to occur in a
series of reductions in workforce within any 24-month
period, of Manville, Schuller International Group,
Inc.
6
<PAGE> 27
("Schuller") or Riverwood International Corporation
("Riverwood"), as a result of which 80% of the
consolidated workforce of Manville, Schuller or
Riverwood, measured as of the date 24 months prior to
the last such reduction, is no longer employed by
Manville, Schuller or Riverwood, whichever is
applicable, excluding for these purposes any
reduction in the workforce of Manville attributable
to transfers of employees to either Schuller or
Riverwood or any reduction in the workforce of either
Schuller or Riverwood attributable to transfers of
employees to Manville."
5. A new Section 9 of the Employment Agreement is
hereby added as follows:
"9. Termination for Any Reason at Any Time. Upon a
termination of Executive's employment for any reason at any time Executive
shall be entitled to a distribution of any and all assets held in the Secular
Trust, as defined in the Supplemental Retirement Agreement, to the extent such
assets have not previously been distributed to or for the benefit of
Executive."
6. Sections 9, 10, 11, 12 and 13 of the Employment
Agreement are hereby renumbered 10, 11, 12, 13 and 14 respectively and as so
renumbered Section 10 is hereby amended and restated in its entirety to read as
follows:
"10. Reduction in Payments.
(a) Notwithstanding anything to the contrary in this
Agreement, if, as of the date of Executive's termination of employment, the
Offset under the Supplemental Retirement Agreement exceeds the benefit to which
Executive is entitled under Section 2 of the Supplemental Retirement Agreement
prior to any Offset, as defined therein, then the aggregate payments (including
perquisites and benefits) due to Executive, if any, under this Agreement shall
be reduced by such excess, except to the extent that such excess shall
otherwise be satisfied by the Company's canceling other compensation or other
amounts or property due to Executive.
(b) Notwithstanding any other provision of this Agreement or
any other agreement between Executive and the
7
<PAGE> 28
Company or any affiliate, if a reduction in the aggregate amount of payments
Executive otherwise would be entitled to receive from the Company or any
affiliate, which payments are deemed contingent on a change described in
Section 280G(b)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the
"Code"), (the "Contingent Payments") would result in a greater "Net After-Tax
Amount", as such term is defined below, then such payments, as Executive shall
designate, shall be reduced to provide the greatest Net After-Tax Amount. For
these purposes, the term "Net After-Tax Amount" shall mean the net amount of
the Contingent Payments after giving effect to all taxes which would be
applicable to such payments, including, but not limited to, any tax under
Section 4999 of the Code. The determination of whether any such payment
reduction shall be effected shall be made by a nationally recognized accounting
firm acceptable to Executive and the Company and such determination shall be
binding upon Executive and the Company."
7. Renumbered Section 14 (b) of the Employment Agreement
is hereby amended and restated in its entirety to read as follows:
"(b) Entire Agreement/Amendments/Effectiveness. This
Agreement shall supersede any and all existing employment, change-in-control or
severance agreements between Executive and the Company or any of it affiliates
and contains the entire understanding of the parties with respect to the
employment of Executive by the Company. There are no restrictions, agreements,
promises, warranties, covenants or undertakings between the parties with
respect to the subject matter herein other than those expressly set forth
herein. THIS AGREEMENT AND ANY AMENDMENT HERETO SHALL NOT BE EFFECTIVE UNLESS
AND UNTIL SIGNED BY THE CHAIRMAN OF THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS OF THE COMPANY AND ATTESTED TO BY THE GENERAL COUNSEL OF THE
COMPANY."
8. Counterparts. This Amendment may be signed in
counterpart, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
8
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the 4th day of November, 1994.
/s/ W. THOMAS STEPHENS
W. Thomas Stephens
MANVILLE CORPORATION
/s/ BETTE B. ANDERSON
By: Bette B. Anderson
Chairman of the
Compensation Committee
of the Board of Directors
ATTEST: /s/ RICHARD B. VON WALD
General Counsel
9
<PAGE> 30
Amendment No. 1
to the Manville Corporation
Performance Share Agreement, dated January 1, 1991
between W. Thomas Stephens ("Employee") and
Manville Corporation (the "Company")
WHEREAS, Employee and the Company have entered into the
Supplemental Retirement Agreement between W. Thomas Stephens and Manville
Corporation, dated as of November 4, 1994, a condition to the effectiveness of
which is the amendment of the above-referenced Performance Share Agreement (the
"Agreement") as set forth herein;
NOW THEREFORE, the parties agree as follows:
1. Section 6(a) of the Agreement is hereby amended and
restated in its entirety to read as follows:
"Subject to Section 10(b) of the Employment Agreement, in
the event of a Change in Control, the provisions of Section 9 of
the Plan shall apply."
2. Section 6(b) of the above-referenced Agreement is hereby
amended and restated in its entirety to read as follows:
"(b) In the event of Employee's Termination without
Cause or for Good Reason after the occurrence of a Reduction in
Workforce (all as hereinafter defined), Employee shall at the time
of such Termination vest in any unvested Performance Shares or
shares of Restricted Stock and all Transfer Restrictions shall
lapse."
3. Section 6(c) of the above-referenced Agreement is hereby
amended and restated in its entirety to read as follows:
"(c) For purposes of this Section 6,
(i) "Cause shall have the meaning given in the
Employment Agreement, taking into
<PAGE> 31
account whether a "Change in Control," as
defined in the Employment Agreement, has
occurred;
(ii) "Employment Agreement" shall mean the Employment
Agreement dated April 10, 1992 by and between
Manville Corporation and W. Thomas Stephens, as
amended through the date hereof;
(iii) "Good Reason" shall have the meaning given in
the Employment Agreement, taking into account
whether a "Change in Control," as defined in the
Employment Agreement, has occurred;
(iv) "Reduction in Workforce" shall mean a reduction
in workforce, or the last to occur in a series
of reductions in workforce within any 24-month
period, of the Company, Schuller International
Group, Inc. ("Schuller") or Riverwood
International Corporation ("Riverwood"), as a
result of which 80% of the consolidated
workforce of the Company, Schuller or Riverwood,
measured as of the date 24 months prior to the
last such reduction, is no longer employed by
the Company, Schuller or Riverwood, whichever is
applicable, excluding for these purposes any
reduction in the workforce of the Company
attributable to transfers of employees to either
Schuller or Riverwood or any reduction in the
workforce of either Schuller or Riverwood
attributable to transfers of employees to the
Company.
(v) "Measurement Date" shall have the meaning given
the term "Vesting Date" in the Restricted Stock
Agreement dated as of November 4, 1994 between
the Company and Employee.
(vi) "Supplemental Retirement Agreement" shall mean
the Supplemental Retirement Agreement between W.
Thomas Stephens and Manville Corporation dated
as of November 4, 1994."
2
<PAGE> 32
4. New Section 7 is hereby added to the Agreement as follows:
"7. Restriction on Vesting of Restricted Stock and
Payment of Dividends. Notwithstanding anything to the contrary in
this Agreement, if, as of the date of Employee's Termination or,
if applicable, as of the date of a Change in Control, the Offset
under the Supplemental Retirement Agreement exceeds the benefit to
which Employee is entitled under Section 2 of the Supplemental
Retirement Agreement prior to such Offset and if and to the extent
such excess is not satisfied by the Company's canceling or
deferring other compensation to Employee (at any date such
remaining excess, the "Excess") then (i) such number of shares of
Restricted Stock which would otherwise vest hereunder on such date
and which have a Fair Market Value equal to the Excess shall (A)
in the case of Employee's Termination be subject to cancellation
by the Company upon such event without consideration and (B) in
the case of a Change in Control be subject to a deferral by the
Company of vesting and lapse of Transfer Restrictions upon such
event until such Measurement Date or Dates as of which such Excess
has been eliminated at which Date or Dates such shares of
Restricted Stock shall vest and Transfer Restrictions thereon
shall lapse to the greatest extent possible without resulting in
any Excess and (ii) to the extent the deferral pursuant to (i)
shall be less than the Excess, in the case of a Change in Control,
dividends payable in connection with or following such Change in
Control on shares of Stock which have vested hereunder or on
unvested shares of Restricted Stock hereunder shall not be payable
to Employee until such Measurement Date or Dates as of which the
Excess has been eliminated at which Date or Dates such dividends
shall be payable to Employee to the greatest extent possible
without resulting in any Excess. Any dividend not payable
following a Change in Control by reason of this Section shall be
held in escrow by the Company and shall be credited with 6%
interest per annum compounded annually from the date such dividend
would have been paid but for this Section until the date of
payment. Upon Employee's Termination, any shares of Restricted
Stock and any such dividends which do not vest or become payable
hereunder as of such date shall be forfeited to the Company
without
3
<PAGE> 33
payment of consideration of any kind to Employee."
5. Existing Sections 7, 8 and 9 of the Agreement are hereby
renumbered 8, 9, and 10, respectively.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment to the Agreement as of the 4th day of November, 1994.
MANVILLE CORPORATION
By: /s/ BETTE B. ANDERSON
Bette B. Anderson
Chairman of
the Compensation Committee
of the Board of Directors of
Manville Corporation
/s/ W. THOMAS STEHPENS
W. Thomas Stephens
4
<PAGE> 1
EXHIBIT 10(ah)
Supplemental Retirement Agreement Between
Richard B. Von Wald and Manville Corporation
Effective as of November 4, 1994
This Agreement, made as of the date set forth below, sets
forth the terms of the supplemental retirement arrangement between Manville
Corporation (the "Company") and Richard B. Von Wald ("Von Wald ") and
supersedes and replaces both the Supplemental Retirement Agreement Between
Richard B. Von Wald and Manville Corporation, effective April 30, 1992 (the
"Supplemental Agreement") and the provisions of the Supplemental Plan for
Participants in the Schuller International Employees Retirement Plan (the
"Supplemental Plan") as such plan relates to Von Wald.
In consideration of Von Wald's past and future service with
the Company and Von Wald's agreement to amend (i) the Employment Agreement,
dated April 10, 1992 by and between Manville Corporation and Richard B. Von
Wald and (ii) the Performance Share Agreement between Manville Corporation and
Richard B. Von Wald, entered into as of January 1, 1991 (the "Performance Share
Agreement"), as such amendments (the "Amendments") are set forth in Exhibits A
and B hereto, respectively, the Company wishes to provide
<PAGE> 2
Von Wald with the benefits described herein upon his termination of service
with the Company;
NOW THEREFORE, subject to the parties execution of the
Amendments, the Company and Von Wald hereby agree to the following:
1. Definitions
The following terms shall have the meanings set forth below
for purposes of this Agreement:
"Acceleration Event" means (i) termination of Von Wald's
employment by the Company without Cause, (ii) Von Wald's termination of his
employment with the Company for Good Reason, (iii) termination of Von Wald's
employment with Company by reason of his Disability or death or (iv) the
occurrence of a Change in Control.
"Applicable Tax Rate" means as of any date Von Wald's
effective aggregate maximum marginal Federal, state and local tax rate
applicable to wages as in effect at such time.
"Benefit" means as of any date the amount payable to Von Wald
pursuant to Section 2(a) or 2(b) hereof, as the case may be, giving effect to
the applicable offset described in Section 3 hereof, if Von Wald terminated his
employment on such date.
2
<PAGE> 3
"Cause" has the meaning set forth in the Employment Agreement,
taking into account whether a "Change in Control", as defined in the Employment
Agreement, has occurred.
"Change in Control" has the meaning set forth in the Stock
Incentive Plan.
"Committee" means the Compensation Committee of the Board of
Directors of the Company.
"Common Stock" means Company common stock, $.01 par value.
"Disability" has the meaning set forth in the Employment
Agreement.
"Employment Agreement" means the Employment Agreement dated as
of April 10, 1992 by and between Manville Corporation and Richard B. Von Wald,
as amended through the date hereof.
"Fair Market Value" means as of any given date (x) the closing
sales price, regular way, on such day or if no sale takes place on such day,
the average of the closing bid and asked prices on such day of (i) the Common
Stock reported on the New York Stock Exchange Composite Tape or (ii) any other
publicly traded security reported on any securities exchange or quoted by a
reputable quotation service or (y) if there is not such sales price or closing
bid and asked price of the Common Stock or other security for such date or the
property or other item being valued is
3
<PAGE> 4
not Common Stock or another publicly traded security, the fair market value of
the Common Stock, security, property or other item as determined by the
Committee in good faith.
"Final Average Pay" means as of any date the highest average
of Von Wald's base salary plus annual cash bonus for three consecutive years
during the preceding ten years.
"Good Reason" has the meaning set forth in the Employment
Agreement, taking into account whether a "Change in Control", as defined in the
Employment Agreement, has occurred.
"Offset" means as of any date the amount described in Section
3(a) or 3(b) hereof, as applicable.
"Present Value" means as of any date the actuarial present
value determined by applying a 6% discount rate and using all other relevant
actuarial assumptions used at that date by the actuaries for the Retirement
Plan.
"Restricted Stock Agreement" means the Restricted Stock
Agreement dated as of November 4, 1994 by and between the Company and Von
Wald.
"Retirement Plan" means the Schuller International Employees
Retirement Plan.
"Share" means a share of Common Stock transferred to Von Wald
pursuant to the Restricted Stock Agreement.
4
<PAGE> 5
"Stock Incentive Plan" means the Manville Corporation Stock
Incentive Plan, as amended to the date hereof.
2. Amount of Benefit
(a) Before Age 62 or the Occurrence of an Acceleration
Event. Upon Von Wald's termination of employment with the Company prior to
either (i) attaining age 62 or (ii) the occurrence of an Acceleration Event Von
Wald will be entitled to a benefit, reduced by the Offset described in Section
3(a) hereof, equal to the Present Value of a single life annuity commencing at
the time of such termination providing annual payments to Von Wald equal to the
applicable percentage shown below of Final Average Pay:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
If Von Wald's attained
age at termination is: 52 53 54 55 56 57 or older
--------------------- -- -- -- -- -- -----------
The applicable
percentage is: 30% 36% 42% 48% 54% 60%
-------------
</TABLE>
(b) At or After Age 62 or the Occurrence of an
Acceleration Event. Upon Von Wald's termination of employment with the Company
(i) at or after attaining age 62 or (ii) in conjunction with or following an
Acceleration Event, Von Wald will be entitled to a benefit, reduced by the
Offset described in Section 3(b) hereof, equal to the amount which, after
payment of taxes thereon at the
5
<PAGE> 6
Applicable Tax Rate at the date of such termination, equals the Present Value
of a single life annuity commencing at the time of such termination of
employment providing annual payments to Von Wald which, after payment of tax
thereon at the Applicable Tax Rate at the date of such termination (taking into
account Von Wald's notional tax basis in such annuity), results in an annual
after-tax income equal to the product of (x) the excess of 60% of Final Average
Pay over Von Wald's annual benefit under the Retirement Plan assuming such
benefit were paid as a single life annuity commencing at termination and (y)
one minus the Applicable Tax Rate at the date of such termination.
3. Offset to the Benefit Amount
(a) The offset to the benefit, if any, due under Section 2(a)
shall be the sum of the following:
(i) the Present Value (measured as of the date of
termination of Von Wald's employment) of Von Wald's benefit under the
Retirement Plan assuming such benefit were paid as a single life annuity
commencing at termination;
(ii) the sum of (x) $250,000 (being the payment to Von
Wald in October, 1992 pursuant to the Supplemental Agreement) and (y) interest
thereon at a rate of 6% per annum compounded annually from the date of this
Agreement to the date of such termination;
6
<PAGE> 7
(iii) the aggregate cash amounts paid to Von Wald under
this Agreement plus interest thereon at a rate of 6% per annum compounded
annually from the date of payment to the date of termination of Von Wald's
employment;
(iv) the Fair Market Value on the date of termination of
Von Wald's employment of vested Shares (including Shares which vest by reason
of or in conjunction with Von Wald's termination), whether or not Von Wald
holds such Shares as of the date of such termination;
(v) the aggregate cash dividends on vested Shares paid,
or the record date for which is, on or prior to the date of termination of Von
Wald's employment, whether or not Von Wald held or holds such Shares on the
payment or record dates with respect to such dividends, plus interest thereon
at a rate of 6% interest per annum compounded annually from the date or dates
such dividends were paid, or if earlier, would have been paid but for
limitations in the Restricted Stock Agreement, to the date of termination of
Von Wald's employment; and
(vi) the Fair Market Value on the date of termination of
Von Wald's employment of any dividends in respect of vested Shares paid or
payable in-kind the record date for which is on or prior to the date of
termination of Von Wald's employment, whether or not Von Wald held or holds
such Shares on the payment or record dates with respect to such dividends and
whether or not Von Wald continues to hold
7
<PAGE> 8
such dividends paid in-kind as of the date of such termination.
(b) The offset to the benefit, if any, due under Section 2(b)
shall be the sum of the following:
(i) the sum of (x) the excess of $250,000 (being the
payment to Von Wald in October, 1992 pursuant to the Supplemental Agreement)
over the taxes thereon at the Applicable Tax Rate at the date of such payment
and (y) interest on such excess at a rate of 6% per annum compounded annually
from the date of this Agreement to the date of termination of Von Wald's
employment;
(ii) the sum of (A) the excess of (x) each cash amount
paid to Von Wald under this Agreement over (y) the taxes at the Applicable Tax
Rate on such amount on the date of such payment and (B) interest on such excess
at a rate of 6% per annum compounded annually from the date of payment to the
date of termination of Von Wald's employment;
(iii) the Fair Market Value on the date of termination of
Von Wald's employment of the number of shares of Common Stock equal to the
excess of (x) the number of Shares which vested prior to or in conjunction with
such termination, whether or not Von Wald holds such Shares on the date of
termination, over (y) the sum of the number of shares of Common Stock having a
Fair Market Value on each vesting date equal to the taxes at the Applicable Tax
Rate
8
<PAGE> 9
on such vesting date owed in respect of the Shares vesting on such date;
(iv) the sum of (A) the excess of (x) the sum of the cash
dividends on vested Shares paid, or the record date for which is, on or prior
to the date of termination of Von Wald's employment, whether or not Von Wald
held or holds such Shares on the payment or record dates with respect to such
dividends over (y) the sum of the taxes at the Applicable Tax Rate on the date
of payment owed in respect of each such dividend and (B) interest on such
excess at the rate of 6% per annum compounded annually from the date such
dividend was paid or, if earlier, would have been paid but for limitations in
the Restricted Stock Agreement to the date of termination of Von Wald's
employment; and
(v) the sum of the Fair Market Values on the date of
termination of Von Wald's employment of the excess of the property constituting
dividends in respect of vested Shares paid or payable in-kind the record date
for which is on or prior to the date of termination of Von Wald's employment
(the "in-kind property"), whether or not Von Wald held or holds such Shares on
the payment or record dates with respect to such dividends, over the portion of
the in-kind property having a Fair Market Value on each respective dividend
payment date equal to the taxes at the Applicable Tax Rate on such payment date
owed in respect of such
9
<PAGE> 10
dividends, whether or not Von Wald continues to hold such "in-kind property" as
of the date of such termination.
4. Payment Upon Execution of this Agreement.
Upon execution by the parties of this Agreement and the
Amendments, the Company shall pay Von Wald in cash the amount of $500,000.
5. Payments In Certain Circumstances After 1996.
On each of July 1, 1997, July 1, 1998 and July 1, 1999 (each,
a "Measurement Date"), if Von Wald continues to be employed by the Company on
such date and if the Offset under Section 3(b) hereof as of such date is less
than 70% of the benefit to which he would be entitled under Section 2(b) hereof
(without regard to such Offset) were Von Wald to terminate his employment on
such Measurement Date, assuming for this purpose that an Acceleration Event has
occurred, the Company shall pay to Von Wald in cash as soon as practicable
thereafter an amount which assuming the same amount were paid on such date and
each of the succeeding Measurement Dates (if any) would result in the Offset
under Section 3(b) hereof as of the last such date equalling 70% of the value
of such benefit on the date of such payment but in no event more than 100% of
the benefit to which Von Wald would be entitled under Section 2 hereof as of
such date were he to terminate his employment on such date (without
10
<PAGE> 11
making any artificial assumption that an Acceleration Event has occurred).
6. Payments Upon Termination of Employment.
Subject to Section 9(b) of the Employment Agreement, upon Von
Wald's termination of employment with the Company, the Company shall pay Von
Wald in cash the Benefit, if any, to which he is entitled pursuant to Section
2(a) or Section 2(b) hereof, as the case may be.
7. Excess Payments.
If at the time of the termination of Von Wald's employment
with the Company the value of the Offset exceeds the benefit promised pursuant
to Section 2 hereof prior to deducting the Offset, the Company shall have the
right to reduce the amount of cash or property due Von Wald from the Company
for any reason by such excess. If such excess exceeds the amount of cash or
property withheld from Von Wald pursuant to (i) the foregoing sentence, (ii)
Section 7 of the Performance Share Agreement, as amended, and (iii) Section
9(a) of the Employment Agreement, (hereinafter the "shortfall") then Von Wald
shall pay such shortfall to the Company upon termination of his employment.
11
<PAGE> 12
8. Miscellaneous.
a. Operation and Administration. This Agreement shall be
operated under the direction of the Committee.
b. Withholding Tax on Distributions. All distributions under
this Agreement shall be net of an amount sufficient to satisfy any and all
Federal, state and local taxes required to be withheld on such distributions as
of the date of such distribution.
c. No Assignment or Alienation. The respective rights of Von
Wald and the Company under this Agreement shall not be transferable or
assignable or subject to alienation, anticipation or encumbrance or subject to
any garnishment, attachment or execution without prior consent of the Company.
Notwithstanding the foregoing, this Agreement shall be binding upon and shall
inure to the benefit of the spouse, personal representatives, heirs, legatees,
successors and assigns, as applicable, of the Company and Von Wald.
d. No Rights to Continued Employment. This Agreement shall not
be construed as giving Von Wald any right to continue in the employ of the
Company or any of its subsidiaries or affiliates, nor shall it be construed as
limiting any right of the Company or any of its subsidiaries to modify Von
Wald's compensation.
e. Supplemental to Employment Contract. Except insofar as it
supersedes the Supplemental Agreement and the
12
<PAGE> 13
Supplemental Plan, this Agreement is supplemental to and not in replacement of
any rights or benefits of Von Wald under any employment contract with the
Company.
f. Governing Law. The terms of this Agreement shall be governed
by the laws of the State of Colorado insofar as such laws do not contravene any
applicable Federal laws, rules or regulations.
g. Entire Agreement/Amendments/Effectiveness. This Agreement
shall supersede any and all existing agreements regarding supplemental
retirement benefits between Von Wald and the Company or any of its affiliates
and contains the entire understanding of the parties with respect to such
subject matter. There are no restrictions, agreements, promises, warranties,
covenants or undertakings between the parties with respect to the subject
matter herein other than those expressly set forth herein. The effectiveness
of this Agreement is conditioned upon execution of the Amendments and upon
spousal consent to the terms of this Agreement in the form set forth on the
signature page hereof. The Company may not amend this Agreement at any time in
a manner which would adversely affect Von Wald's rights to any benefits under
this Agreement as of the date of such action without his consent. THIS
AGREEMENT AND ANY AMENDMENT HERETO SHALL NOT BE EFFECTIVE UNLESS AND UNTIL
SIGNED BY THE CHAIRMAN OF THE COMPENSATION COMMITTEE OF THE BOARD OF
13
<PAGE> 14
DIRECTORS OF THE COMPANY AND ATTESTED TO BY THE CHIEF EXECUTIVE OFFICER OF THE
COMPANY.
h. Legal Fees. In the event of a dispute between Von Wald and
the Company with respect to any of Von Wald's rights or benefits under this
Agreement, the Company shall reimburse Von Wald for any and all legal fees and
related expenses incurred by him in connection with enforcing such rights or
benefits, at the time such fees and related expenses are incurred; provided
that, if Von Wald's claim is found by a court of competent jurisdiction to have
been frivolous, Von Wald shall reimburse the Company for all amounts paid by it
under this provision.
i. Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
14
<PAGE> 15
IN WITNESS WHEREOF, the Company and Von Wald have duly
executed and delivered this Agreement as of this 4th day of November, 1994.
MANVILLE CORPORATION
/s/ BETTE B. ANDERSON
Bette B. Anderson
Chairman of the Compensation
Committee of the Board of
Directors of Manville
Corporation
Richard B. Von Wald
/s/ RICHARD B. VON WALD
Attest:
/s/ W. THOMAS STEPHENS
CHIEF EXECUTIVE OFFICER
The undersigned hereby consents to the termination of the Supplemental
Agreement and of Richard B. Von Wald's participation in the Supplemental Plan
and recognizes that her rights thereunder are canceled by reason of such
termination.
/s/ CHRISTINA K. BEARMAN
Christina K. Bearman
/s/ KAREN A. WEINS
Notary
15
<PAGE> 16
MANVILLE CORPORATION
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (the "Agreement") is made and
entered into as of November 4, 1994 between Manville Corporation, a Delaware
corporation (the "Company") and Richard B. Von Wald (the "Employee") pursuant
to the terms and conditions of the Manville Corporation Stock Incentive Plan,
as amended (the "Plan"). Capitalized terms not defined in this Agreement shall
have the meanings set forth in the Plan.
THE PARTIES AGREE AS FOLLOWS:
1. Award of Restricted Stock. Pursuant to the Plan the
Company hereby awards to Employee 150,000 shares of Company common stock, $.01
par value, subject to the terms and conditions set forth in this Agreement and
the Plan (the "Restricted Stock").
2. Vesting Schedule. Subject to the limitation set
forth in Section 6 hereof and subject to Employee being employed by the Company
on the applicable Vesting Date, the shares of Restricted Stock granted
hereunder shall vest in accordance with the following schedule: 30,000 shares
of Restricted Stock shall vest on July 17, 1995, an additional 30,000 shares of
Restricted Stock shall vest on July 17, 1996, an additional 30,000 shares of
Restricted Stock shall vest on July 17, 1997, an additional 30,000 shares of
Restricted Stock shall vest on July 17, 1998, and the remaining 30,000 shares
of Restricted Stock shall vest on July 17, 1999 (each such date and the date of
any event described in Section 5 is referred to hereinafter as a "Vesting
Date"). Upon the vesting of shares of Restricted Stock, the Transfer
Restrictions thereon shall lapse.
3. Restrictions. In accordance with the Plan, prior to
vesting in accordance with Sections 2, 5 or 6 hereof, Employee shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber (the
"Transfer Restrictions") any shares of Restricted Stock granted hereunder.
Dividends, whether in cash or otherwise, declared on unvested shares of
Restricted Stock shall not be paid to Employee but shall be held in escrow by
the Company and, in the case of cash dividends, shall be credited with 6%
interest per annum compounded annually from the date such dividend would have
been payable until the date actually paid. Upon the vesting of
<PAGE> 17
shares of Restricted Stock, any such dividends thereon so held in escrow,
together with the stated interest thereon (references herein to dividends shall
be deemed to include such interest, if any), shall be paid to Employee subject
to the limitation set forth in Section 6 hereof. Upon Employee's Termination,
any shares of Restricted Stock and any dividends which do not vest or become
payable as of such date shall be forfeited to the Company without payment of
consideration of any kind to Employee.
4. Forfeiture Upon a Termination of Employment. Except
to the extent otherwise provided in the Plan or in Section 5 hereof, in the
event of Employee's Termination, all shares of Restricted Stock then subject to
Transfer Restrictions shall be forfeited by Employee and shall be immediately
returned to the Company without payment of any consideration to Employee.
5. Acceleration of Vesting: Change in Control and Other
Significant Events.
(a) Subject to the limitation set forth in Section 6
hereof and subject to Section 9(b) of the Employment Agreement, in the event of
a Change in Control the provisions of Section 9 of the Plan shall apply.
(b) Subject to the limitation set forth in Section 6
hereof, in the event of (i) Employee's Termination without Cause, (ii)
Employee's Termination for Good Reason or (iii) Employee's Termination by
reason of death or Disability, Employee shall at the time of such Termination
vest in any unvested shares of Restricted Stock and all Transfer Restrictions
shall lapse.
6. Limitation on Vesting of Restricted Stock and
Payment of Dividends.
Notwithstanding anything in this Agreement to the contrary, if
on any Vesting Date or dividend payment date the amount of the benefit to which
Employee is entitled under Section 2 of the Supplemental Retirement Agreement
prior to any Offset as defined therein (the "Benefit Amount") is less than the
applicable Offset (measured as of such date as if Employee terminated his
employment on such date and taking into account any shares of Restricted Stock
that would vest and dividends that would be payable on such date), then (i)
shares of Restricted Stock and/or (ii) dividends on shares of Restricted Stock
that have previously vested the aggregate amount or value of which would cause
the Offset to exceed the Benefit Amount
2
<PAGE> 18
shall not vest and Transfer Restrictions thereon shall not lapse, in the case
of shares of Restricted Stock, or be payable to Employee, in the case of
dividends, until the next succeeding Vesting Date or Vesting Dates as of which
the Benefit Amount exceeds the Offset at which time or times such shares of
Restricted Stock shall vest and Transfer Restrictions thereon lapse and/or
dividends shall be payable to the greatest extent possible without resulting in
the Offset exceeding the Benefit Amount. Any dividend not payable by reason of
this Section shall be held in escrow by the Company and shall be credited with
6% interest per annum compounded annually from the date such dividend would
have been paid but for this Section until the date of payment. Upon Employee's
Termination, any shares of Restricted Stock and any such dividends which do not
vest or become payable as of such date shall be forfeited to the Company
without payment of consideration of any kind to Employee. In the event that as
of any dividend payment date Employee has transferred vested shares of
Restricted Stock in respect of which dividends would otherwise be withheld
pursuant to this Section, Employee shall deposit with the Company (to be so
held in escrow) the amount of dividends which would otherwise be so withheld,
pending repayment to Employee with interest if and to the extent provided
herein.
7. Definitions. For purposes of this Agreement:
(i) "Cause" shall have the meaning given in the
Employment Agreement taking into account whether a
"Change in Control", as defined in the Employment
Agreement has occurred;
(ii) "Employment Agreement" shall mean the Employment
Agreement dated as of April 10, 1992 by and between
Manville Corporation and Richard B. Von Wald, as
amended through the date hereof;
(iii) "Good Reason" shall have the meaning given in the
Employment Agreement taking into account whether a
"Change in Control", as defined in the Employment
Agreement has occurred;
(iv) "Disability" shall have the meaning set forth in the
Employment Agreement.
(v) "Supplemental Retirement Agreement" shall mean the
Supplemental Retirement Agreement between Richard B.
Von Wald and Manville Corporation, dated as of
November 4, 1994.
3
<PAGE> 19
8. Governing Law. This Agreement shall be governed by
the laws of the State of Delaware.
9. Entire Agreement. There are no restrictions,
agreements, promises, warranties covenants or undertakings between the parties
with respect to the subject matter herein other than those expressly set forth
herein.
10. Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original with the same effect as if the
signature thereof and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
MANVILLE CORPORATION
By: /s/ BETTE B. ANDERSON
Bette B. Anderson
Chairman of the Compensation
Committee of the Board of
Directors of Manville Corporation
Employee hereby accepts and agrees to be bound by all of the
terms and conditions of this Agreement and the Plan.
/s/ RICHARD B. VON WALD
Richard B. Von Wald
4
<PAGE> 20
Amendment No. 1
to the Employment Agreement dated April 10, 1992
by and between Manville Corporation (the "Company")
and Richard B. Von Wald (the "Executive")
WHEREAS, the Company and Executive have entered into the
Supplemental Retirement Agreement between Richard B. Von Wald and Manville
Corporation, dated as of November 4, 1994 (the "Supplemental Retirement
Agreement");
WHEREAS, a condition to the effectiveness of the Supplemental
Retirement Agreement is the amendment of the above-referenced employment
agreement (the "Employment Agreement") as set forth herein;
NOW THEREFORE, the parties agree as follows:
1. Section 7(e)(iii) of the Employment Agreement is hereby
amended and restated in its entirety to read as follows:
"(iii) the Company fails to pay Executive any amount
otherwise vested and due hereunder or under any plan or policy of the Company
(including without limitation any amount due under the Supplemental Retirement
Agreement between Richard B. Von Wald and the Company, dated as of November 4,
1994 (the "Supplemental Retirement Agreement"));".
<PAGE> 21
2. Section 8(d) of the Employment Agreement is hereby
amended and restated in its entirety to read as follows:
"(d) Without Cause by the Company or with Good Reason by
Executive. If Executive's employment is terminated by the Company
following a Change in Control without Cause (other than by reason of death or
Disability) or by Executive with "Good Reason" (which following a Change in
Control shall have the meaning set forth in Section 8(e) below), Executive
shall be entitled to receive the following benefits:
(i) The Company shall pay Executive at the time of such
termination in a lump sum a cash amount equal to two
times the sum of (A) his Base Salary in effect at the
time of such termination or, in the event of
termination by the Executive by reason of an event
described in Section 8(e)(iv) below, the Base Salary
as in effect prior to the reduction or reductions
referred to therein plus (B) the bonus the Executive
would have earned in respect of the year of
termination under the Manville annual incentive
compensation plan, if any, in effect at the date of
termination or in the event of a termination by
Executive by reason of an event described in Section
8(e)(v), the plan in effect immediately prior to the
reduction or reductions referred to therein,
determined as if the Executive had been employed by
the Company for the full year and without regard to
any right reserved by the Company to decrease or
eliminate such bonus, and assuming actual performance
had equaled 100% of the performance objective
established for such year pursuant to the terms of
such plan.
(ii) The Company shall pay Executive in a lump sum a cash
amount equal to a fraction of the annual bonus which
(absent such termination and without regard to any
right reserved by the Company to decrease or
eliminate such bonus) Executive would have earned
with respect to the year of termination under the
Manville annual executive incentive compensation
plan, if any, in effect at the date of termination
or, in the event of a
2
<PAGE> 22
termination by Executive by reason of an event
described in Section 8(e)(v), the plan in effect
prior to the reduction or reductions referred to
therein, assuming actual performance had equaled 100%
of the performance objective established for such
year pursuant to the terms of such plan, the
numerator of which fraction is the number of days in
such year during which the Executive was employed by
the Company and the denominator of which is 365.
Such payment shall be made at the time of Executive's
termination.
(iii) The Company shall pay Executive in a lump sum a cash
amount equal to the sum of the amounts Executive
would have received in respect of all Performance
Units (and other similar interests) granted to
Executive under the 1991 Long Term Cash Incentive
Compensation Plan (or any other Manville long-term
cash incentive plan adopted after the date hereof)
assuming Executive remained employed through the
applicable expiration or final payment date of such
Performance Units or other interests, less any amount
paid to Executive in respect of such Performance
Units and other interests prior to termination of his
employment. For purposes of calculating the sum to
which Executive is entitled it shall be assumed that
all "Scheduled Dividend Payments" (as such term is
defined in the 1991 Long Term Cash Incentive
Compensation Plan) not paid at or prior to
Executive's termination of employment will be paid in
full at their then estimated value, as determined by
the Company (without reduction or deferral). Such
payment shall be made at the time of Executive's
termination.
(iv) For a 36-month period following Executive's
termination, the Company shall pay Executive in
monthly installments the sum of the monthly costs to
Executive of purchasing life, accident, medical,
dental and prescription insurance benefits
substantially similar to such benefits elected and
received by Executive under the Company's "Flex
Benefit" program immediately prior to Executive's
termination or, if more generous, immediately prior
to the Change in Control
3
<PAGE> 23
("Continued Benefits") less the monthly payroll
deduction, if any, charged to Executive immediately
prior to Executive's termination, or, if applicable,
immediately prior to the Change in Control, for any
of such Continued Benefits; notwithstanding the
foregoing, if Executive begins to receive Retiree
Medical and Life Insurance Benefits at any time
during the 36-month period referred to above, once
such benefits begin, the monthly payment due
Executive under the preceding clause shall equal the
monthly costs to Executive of purchasing Continued
Benefits not provided by the Company to Executive as
Retiree Medical and Life Insurance Benefits.
(v) For a 24-month period after such termination, the
Company shall provide or cause Executive to be
provided with the perquisites listed on Schedule C,
attached hereto (which the Company may amend from
time to time prior to a Change in Control, without
Executive's consent), on the same terms and
conditions on which such perquisites were provided at
the time of Executive's termination or, if more
generous, immediately prior to such termination.
(vi) In addition to all other amounts payable to Executive
under this Section 8(d), Executive shall be entitled
to receive all benefits payable to Executive under
any other plan, policy or agreement relating to
retirement or other benefits, in accordance with the
terms of such plans, policies or agreements;
provided, however that, amounts paid pursuant to this
Section 8(d) shall be in lieu of any payments under
any Manville separation policy.
(vii) The Company shall provide Executive with outplacement
services from the firm of Executive's choice at a
cost to the Company not to exceed 20% of Executive's
Base Salary in effect at the time of such termination
or, in the event of termination by Executive by
reason of an event described in Section 8(e)(iv)
below, the Base Salary as in effect prior to the
reduction or reductions referred to therein."
4
<PAGE> 24
3. Section 8(e)(iii) of the Employment Agreement is
hereby amended and restated in its entirety to read as follows:
"(iii) the Company fails to pay Executive any amounts
otherwise vested and due hereunder or under any plan or policy of the Company
(including without limitation any amount due under the Supplemental Retirement
Agreement);".
4. Section 8(g) of the Employment Agreement is hereby
amended and restated in its entirety to read as follows:
"(g) Change in Control. For purposes of this
Agreement, the phrase "Change in Control" shall mean the following and shall be
deemed to have occurred if any of the following events shall have occurred:
(i) except for Manville, a subsidiary or an affiliate
thereof, an employee benefit plan (including any
trustee of such plan, acting as trustee) sponsored or
maintained by Manville or any subsidiary thereof or
the Manville Personal Injury Settlement Trust (the
"Trust"), any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended from time to time, and any
successor act (the "Exchange Act") is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly of
securities of Manville representing 30% or more of
the combined voting power of Manville's then
outstanding securities;
(ii) at least 40% of the directors of Manville constitute
persons who were not at the time of their first
election to the board, candidates proposed by a
majority of the Board in office prior to the time of
such first election;
(iii) (A) the dissolution of Manville; (B) a sale or other
disposition or the last sale or other disposition to
occur in a series of
5
<PAGE> 25
sales and/or other dispositions within any 18-month
period ("Serial Sales") by Manville and/or one or
more subsidiaries of Manville of assets (including
any sale through a public offering of shares of
voting stock of a Manville subsidiary by Manville or
by any subsidiary thereof) which, in the case of
Serial Sales, as of the beginning of such 18-month
period, account for (or, in the case of stock sold
through a public offering, which represents indirect
ownership on a proportionate basis of assets
accounting for) more than 40% of the consolidated
revenues of Manville and its subsidiaries, as
determined in accordance with generally accepted
accounting principles; provided, however, that no
sale or disposition of assets or stock shall be taken
into account to the extent that the proceeds of such
sale or disposition (whether in cash or in-kind) are
reinvested or are, in the case of proceeds received
in-kind, used in the ongoing conduct by Manville or
one or more of its subsidiaries of the business of
Manville and/or such subsidiary or subsidiaries,
provided further that such a reinvestment shall not
be deemed to have occurred unless made within 18
months of such sale or disposition and provided
further that, the term reinvestment shall exclude,
inter alia, the use of proceeds (x) to repay debt
owed to the Trust or debt incurred in connection with
the operation of the business in which the assets
sold or disposed of were used or (y) to pay
dividends; (C) a transaction to which Manville is a
party pursuant to which the holders of all of the
shares of Manville outstanding prior to such
transaction do not hold, directly or indirectly,
shares outstanding of the surviving corporation in
substantially the same proportions as those in which
they held the outstanding shares of Manville prior to
the transaction; or (D) any other event which the
Board determines, in its discretion, would materially
alter the structure of Manville or its ownership; or
(iv) a reduction in workforce, or the last to occur in a
series of reductions in workforce within any 24-month
period, of Manville, Schuller International Group,
Inc.
6
<PAGE> 26
("Schuller") or Riverwood International Corporation
("Riverwood"), as a result of which 80% of the
consolidated workforce of Manville, Schuller or
Riverwood, measured as of the date 24 months prior to
the last such reduction, is no longer employed by
Manville, Schuller or Riverwood, whichever is
applicable, excluding for these purposes any
reduction in the workforce of Manville attributable
to transfers of employees to either Schuller or
Riverwood or any reduction in the workforce of either
Schuller or Riverwood attributable to transfers of
employees to Manville."
5. Section 9 of the Employment Agreement is hereby
amended and restated in its entirety to read as follows:
"9. Reduction in Payments.
(a) Notwithstanding anything to the contrary in this
Agreement, if, as of the date of Executive's termination of employment, the
Offset under the Supplemental Retirement Agreement exceeds the benefit to which
Executive is entitled under Section 2 of the Supplemental Retirement Agreement
prior to any Offset, as defined therein, then the aggregate payments (including
perquisites and benefits) due to Executive, if any, under this Agreement shall
be reduced by such excess, except to the extent that such excess shall
otherwise be satisfied by the Company's canceling other compensation or other
amounts or property due to Executive.
(b) Notwithstanding any other provision of this Agreement or
any other agreement between Executive and the Company or any affiliate, if a
reduction in the aggregate amount of payments Executive otherwise would be
entitled to receive from the Company or any affiliate, which payments are
deemed contingent on a change described in Section 280G(b)(2)(A)(i) of the
Internal Revenue Code of 1986, as amended (the "Code"), (the "Contingent
Payments") would result in a greater "Net After-Tax Amount", as such term is
defined below, then such payments, as Executive shall designate, shall be
reduced to provide the greatest Net After-Tax Amount. For these purposes, the
term "Net After-Tax Amount" shall mean the net amount of the Contingent
Payments after giving effect to all taxes which would be applicable to such
payments, including, but not limited to,
7
<PAGE> 27
any tax under Section 4999 of the Code. The determination of whether any such
payment reduction shall be effected shall be made by a nationally recognized
accounting firm acceptable to Executive and the Company and such determination
shall be binding upon Executive and the Company."
6. Section 13(b) of the Employment Agreement is hereby
amended and restated in its entirety to read as follows:
"(b) Entire Agreement/Amendments/Effectiveness. This
Agreement shall supersede any and all existing employment, change-in-control or
severance agreements between Executive and the Company or any of it affiliates
and contains the entire understanding of the parties with respect to the
employment of Executive by the Company. There are no restrictions, agreements,
promises, warranties, covenants or undertakings between the parties with
respect to the subject matter herein other than those expressly set forth
herein. THIS AGREEMENT AND ANY AMENDMENT HERETO SHALL NOT BE EFFECTIVE UNLESS
AND UNTIL SIGNED BY THE CHAIRMAN OF THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS OF THE COMPANY AND ATTESTED TO BY THE CHIEF EXECUTIVE OFFICER OF THE
COMPANY."
7. Counterparts. This Amendment may be signed in
counterpart, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
8
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the 4th day of November, 1994.
/s/ RICHARD B. VON WALD
Richard B. Von Wald
MANVILLE CORPORATION
/s/ BETTE B. ANDERSON
By: Bette B. Anderson
Chairman of the
Compensation Committee
of the Board of Directors
/s/ W. THOMAS STEPHENS
By: Chief Executive Officer
ATTEST: /s/ W. THOMAS STEPHENS
Chief Executive Officer
ATTEST: /s/ RICHARD B. VON WALD
General Counsel
9
<PAGE> 29
Amendment No. 1
to the Manville Corporation
Performance Share Agreement, dated January 1, 1991
between W. Thomas Stephens ("Employee") and
Manville Corporation (the "Company")
WHEREAS, Employee and the Company have entered into the
Supplemental Retirement Agreement between W. Thomas Stephens and Manville
Corporation, dated as of November 4, 1994, a condition to the effectiveness of
which is the amendment of the above-referenced Performance Share Agreement (the
"Agreement") as set forth herein;
NOW THEREFORE, the parties agree as follows:
1. Section 6(a) of the Agreement is hereby amended and
restated in its entirety to read as follows:
"Subject to Section 10(b) of the Employment Agreement, in
the event of a Change in Control, the provisions of Section 9 of
the Plan shall apply."
2. Section 6(b) of the above-referenced Agreement is hereby
amended and restated in its entirety to read as follows:
"(b) In the event of Employee's Termination without
Cause or for Good Reason after the occurrence of a Reduction in
Workforce (all as hereinafter defined), Employee shall at the time
of such Termination vest in any unvested Performance Shares or
shares of Restricted Stock and all Transfer Restrictions shall
lapse."
3. Section 6(c) of the above-referenced Agreement is hereby
amended and restated in its entirety to read as follows:
"(c) For purposes of this Section 6,
(i) "Cause shall have the meaning given in the
Employment Agreement, taking into account
whether a "Change in Control," as defined in the
Employment Agreement, has occurred;
<PAGE> 30
(ii) "Employment Agreement" shall mean the Employment
Agreement dated April 10, 1992 by and between
Manville Corporation and W. Thomas Stephens, as
amended through the date hereof;
(iii) "Good Reason" shall have the meaning given in
the Employment Agreement, taking into account
whether a "Change in Control," as defined in the
Employment Agreement, has occurred;
(iv) "Reduction in Workforce" shall mean a reduction
in workforce, or the last to occur in a series
of reductions in workforce within any 24-month
period, of the Company, Schuller International
Group, Inc. ("Schuller") or Riverwood
International Corporation ("Riverwood"), as a
result of which 80% of the consolidated
workforce of the Company, Schuller or Riverwood,
measured as of the date 24 months prior to the
last such reduction, is no longer employed by
the Company, Schuller or Riverwood, whichever is
applicable, excluding for these purposes any
reduction in the workforce of the Company
attributable to transfers of employees to either
Schuller or Riverwood or any reduction in the
workforce of either Schuller or Riverwood
attributable to transfers of employees to the
Company.
(v) "Measurement Date" shall have the meaning given
the term "Vesting Date" in the Restricted Stock
Agreement dated as of November 4, 1994 between
the Company and Employee.
(vi) "Supplemental Retirement Agreement" shall mean
the Supplemental Retirement Agreement between W.
Thomas Stephens and Manville Corporation dated
as of November 4, 1994."
4. New Section 7 is hereby added to the Agreement as follows:
"7. Restriction on Vesting of Restricted Stock and Payment of
Dividends. Notwithstanding anything to the
<PAGE> 31
contrary in this Agreement, if, as of the date of Employee's Termination
or, if applicable, as of the date of a Change in Control, the Offset
under the Supplemental Retirement Agreement exceeds the benefit to which
Employee is entitled under Section 2 of the Supplemental Retirement
Agreement prior to such Offset and if and to the extent such excess is
not satisfied by the Company's canceling or deferring other compensation
to Employee (at any date such remaining excess, the "Excess") then (i)
such number of shares of Restricted Stock which would otherwise vest
hereunder on such date and which have a Fair Market Value equal to the
Excess shall (A) in the case of Employee's Termination be subject to
cancellation by the Company upon such event without consideration and (B)
in the case of a Change in Control be subject to a deferral by the
Company of vesting and lapse of Transfer Restrictions upon such event
until such Measurement Date or Dates as of which such Excess has been
eliminated at which Date or Dates such shares of Restricted Stock shall
vest and Transfer Restrictions thereon shall lapse to the greatest extent
possible without resulting in any Excess and (ii) to the extent the
deferral pursuant to (i) shall be less than the Excess, in the case of a
Change in Control, dividends payable in connection with or following such
Change in Control on shares of Stock which have vested hereunder or on
unvested shares of Restricted Stock hereunder shall not be payable to
Employee until such Measurement Date or Dates as of which the Excess has
been eliminated at which Date or Dates such dividends shall be payable to
Employee to the greatest extent possible without resulting in any Excess.
Any dividend not payable following a Change in Control by reason of this
Section shall be held in escrow by the Company and shall be credited with
6% interest per annum compounded annually from the date such dividend
would have been paid but for this Section until the date of payment.
Upon Employee's Termination, any shares of Restricted Stock and any such
dividends which do not vest or become payable hereunder as of such date
shall be forfeited to the Company without payment of consideration of any
kind to Employee."
5. Existing Sections 7, 8 and 9 of the Agreement are hereby
renumbered 8, 9, and 10, respectively.
3
<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment to the Agreement as of the 4th day of November, 1994.
MANVILLE CORPORATION
By: /s/ BETTE B. ANDERSON
Bette B. Anderson
Chairman of
the Compensation Committee
of the Board of Directors of
Manville Corporation
/s/ RICHARD B. VON WALD
Richard B. Von Wald
4
<PAGE> 1
EXHIBIT 10(ai)
1994 LONG-TERM CASH INCENTIVE COMPENSATION PLAN
FOR
SCHULLER INTERNATIONAL GROUP, INC.
1. Purpose of the Plan.
The purpose of this 1994 Long-Term Cash Incentive Compensation Plan
(hereinafter the "Long-Term Plan") for Schuller International Group,
Inc. (the "Company") is to provide incentive compensation to officers,
executives and key employees who contribute to the growth and success
of the Company; to attract and retain individuals of outstanding
ability; and to align the interests of those who hold positions of
major responsibility in the Company with the interests of the
Company's stockholders.
2. Definitions.
When used in this Long-Term Plan, the following words and phrases
shall have the meanings set forth below:
"Award Letter" means, with respect to each award of Performance Units,
the letter from the Company to the Participant setting forth the
amount of such award.
"Cause" means the Participant's willful and continued failure
substantially to perform his or her duties to the Company (other than
as a result of total or partial incapacity due to physical or mental
illness).
"Change in Control" means the occurrence of any of the following
events:
(a) except for Manville, a subsidiary or an affiliate thereof, any
employee benefit plan (including any trustee of such plan,
acting as trustee) sponsored or maintained by Manville, the
Company or any subsidiary of Manville or the Company, or
Manville Personal Injury Settlement Trust (the "Trust"), any
"person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly of securities of Manville (but only prior to or in
conjunction with a Manville Termination Event) or the Company
representing 30% or more of the combined voting power of
Manville's or the Company's, as applicable, then outstanding
securities;
<PAGE> 2
(b) prior to a Manville Termination Event, at least 40% of the
directors of Manville constitute persons who were not at the
time of their first election to the Manville Board candidates
proposed by a majority of the Manville Board in office prior
to the time of such first election;
(c) after a Manville Termination Event, at least 40% of the
directors of the Company constitute persons who were not at
the time of their first election to the Company Board,
candidates proposed by a majority of the Company Board in
office prior to the time of such first election;
(d) (i) the dissolution of the Company (but only after a Manville
Termination Event), or (ii) a sale or other disposition or the
last sale or other disposition to occur in a series of sales
and/or other dispositions within any 18-month period ("Serial
Sales") by the Company and/or one or more subsidiaries of the
Company of assets which, in the case of Serial Sales, as of
the beginning of such 18-month period, account for 40% of the
consolidated revenues of the Company and its subsidiaries, as
determined in accordance with generally accepted accounting
principles consistently applied; provided, however, that no
sale or disposition of assets shall be taken into account to
the extent that the proceeds of such sale or disposition
(whether in cash or in-kind) are reinvested or are, in the
case of proceeds received in-kind, used in the ongoing conduct
by the Company or one or more of its subsidiaries of the
business of the Company and/or such subsidiary or
subsidiaries, provided further that such a reinvestment shall
not be deemed to have occurred unless made within 18 months of
such sale or disposition and provided further that, the term
reinvestment shall exclude, inter alia, the use of proceeds
(x) to repay debt owed to the Trust or debt incurred in
connection with the operation of the business in which the
assets sold or disposed of were used or (y) to pay dividends;
(e) a sale of the business unit, division or group within which a
Participant is employed, other than to another entity which is
directly or indirectly controlled by the Company as a result
of which such Participant is no longer employed by an entity
which is directly or indirectly controlled by the Company (but
only with respect to such Participant);
(f) any other event which the Committee determines, in its
discretion, would materially alter the ownership of the
Company or prior to a Manville Termination Event, its
structure.
"Committee" means the Compensation Committee of the Manville Board or,
at such time as there exists a Compensation Committee of the Company
Board, the Compensation Committee of the Company Board.
2
<PAGE> 3
"Company" means Schuller International Group, Inc. and, where
appropriate, its subsidiaries, and, prior to a Change in Control, its
successors and assigns.
"Company Board" means the Board of Directors of the Company.
"EBITDA" means the Company's consolidated income from operations plus
depreciation and amortization, with such other adjustments as the
Committee deems appropriate.
"Effective Date" means January 1, 1994.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor Act.
"Manville" means Manville Corporation, a Delaware corporation and,
prior to a Change in Control, its successors and assigns.
"Manville Board" means the Board of Directors of Manville.
"Manville Termination Event" means any event by which Manville ceases
to own securities of the Company representing more than 30% of the
combined voting power of the Company's then outstanding securities.
"Participant" means any officer, executive or key employee of the
Company designated by the Committee or any other person designated by
the Committee as eligible to receive an award under the Long-Term
Plan.
"Performance Criteria" means the Company's cumulative EBITDA during
any Performance Period as reflected on Exhibit A hereto for the first
Performance Period. Such Performance Criteria may be changed for each
Performance Period by the Committee.
"Performance Period" means with respect to each Participant, a
three-year period commencing with the first fiscal year of the Company
during which a Performance Unit is granted to a Participant, and
including each of the next two succeeding fiscal years of the Company
thereafter in which a Participant remains eligible to continue
participating and continues to participate in the Long-Term Plan. The
first Performance Period of the Company shall be calendar years 1994,
1995 and 1996. Subsequent Performance Periods will overlap with prior
and subsequent Performance Periods. For example, the second
Performance Period of 1995 through 1997 will overlap with the first
Performance Period of 1994 through 1996 and with the third Performance
Period of 1996 through 1998, and so forth.
3
<PAGE> 4
"Performance Unit" means an award described in paragraph 4 hereof.
"Performance Unit Actual Value" means a dollar value per Performance
Unit at the end of a Performance Period which will vary based upon the
Performance Criteria and other factors determined by the Committee, as
set forth on Exhibit A for the first Performance Period and as shall
be set forth on additional Exhibits for subsequent Performance
Periods.
"Retirement" means termination of a Participant's employment initiated
by the Participant whereby the Participant is entitled to receive an
immediately payable benefit, including an early retirement benefit,
under the Company's retirement plan generally applicable to its
salaried employees or under any retirement arrangement established
with respect to the Participant with his or her consent, in either
case, whether or not the Participant commences to receive such benefit
at the time of such termination.
3. Administration of the Long-Term Plan.
The Long-Term Plan shall be administered by the Committee and, subject
to the provisions of the Long-Term Plan, the Committee shall have
exclusive authority to designate Participants in the Long-Term Plan
and the number of Performance Units to be granted to such
Participants. Prior to the grant of Performance Units to
Participants, the President of the Company will make recommendations
to the Committee with respect to Participants and the number of
Performance Units to be granted to such Participants.
The Committee may adopt, alter and repeal administrative rules,
policies, guidelines and practices governing the Long-Term Plan as it
from time to time shall deem advisable, interpret the terms and
provisions of the Long-Term Plan, any Performance Unit and any Award
Letter and otherwise supervise the administration of the Long-Term
Plan. Any determination made by the Committee pursuant to the
provisions of the Long-Term Plan with respect to any Performance Unit
shall be made in its sole discretion before or at the time of the
grant of the Performance Unit or, unless in contravention of any
express term of the Long-Term Plan or Performance Unit, at any later
time.
The Committee shall have discretionary authority to decide disputed
claims in accordance with its interpretation of the terms of the
Long-Term Plan. The determination of the Committee as to any disputed
question or claim shall be conclusive and final.
4
<PAGE> 5
4. Performance Units.
Except as otherwise determined by the Committee, a Participant shall
be entitled to receive a cash payment ("Cash Payment") at the end of a
Performance Period equal to the number of Performance Units held by
such holder at such time multiplied by the Performance Unit Actual
Value. Payment of a Cash Payment shall be made as soon as possible
after the end of the Performance Period but in no event later than 90
days after the end of a Performance Period (the date on which the
payment is made, the "Payment Date").
Upon a Change in Control of the Company, all Performance Periods then
in effect shall end, all Performance Units shall have a Performance
Unit Actual Value determined as if the Company had met the target
levels of the applicable Performance Criteria over the entire
Performance Period, and a cash payment in the amount of such value
shall be made to the Participant at the time of such Change in Control
or as soon thereafter as the Company becomes aware of such Change in
Control, without reduction of any such payment by reason of the
Performance Period ending prior to its scheduled ending date. For
example, if a Change of Control occurs on April 30, 1996, the first,
second and third Performance Periods would end, all Performance Units
granted in any of such periods would have Performance Unit Actual
Values determined as if the target levels for the entire duration of
each of such periods were met, even though the Performance Periods
ended prior to their scheduled ending dates and, with respect to the
third Performance Period, even though only four months of such
Performance Period had elapsed at the time of the Change of Control.
The target levels shall be set forth as part of the Performance
Criteria; for the first Performance Period, the target levels are $650
million of EBITDA resulting in a Performance Unit Actual Value of
$1,000.
5. Grants.
The Committee may grant Performance Units to a Participant at any time
and from time to time.
6. Form of Payment.
Except as otherwise determined by the Committee prior to a Change in
Control, all payments in respect of Performance Units granted under
the Long-Term Plan shall be paid in cash subject to such payroll taxes
and other withholding requirements as may be in effect at the time of
payment.
5
<PAGE> 6
7. Termination, Death or Disability.
Except as provided below, payments in respect of Performance Units
granted for a particular Performance Period shall be made to
Participants who are actually employed and on the payroll on and
through the last day of such Performance Period. A Participant whose
employment terminates prior to the end of a Performance Period shall
forfeit any and all awards from the Long-Term Plan if he or she:
- voluntarily terminates employment other than for
Retirement unless the Committee, in its discretion,
determines otherwise, or
- has his or her employment terminated by the Company
for Cause (as defined in such Participant's
employment agreement with the Company).
Each Participant whose employment is terminated by the Company without
Cause or who terminates employment due to Retirement, death or
disability shall be paid a prorated payment based on his or her date
of termination relative to the end of the Performance Period. Such
prorated payments shall be made at the time and in the form that all
other payments are normally made to all other Participants.
8. Miscellaneous.
No Participant shall have the right to anticipate, alienate, sell,
transfer, assign, pledge or encumber his or her right to receive
payment in respect of Performance Units granted under the Long-Term
Plan until such payments are payable to such Participant.
No Participant shall have any lien on any assets of the Company by
reason of any award made under the Long-Term Plan.
The adoption of the Long-Term Plan or any modification or amendment
hereof does not imply any commitment to continue to adopt the same
plan, or any modification thereof, or any other plan for incentive
compensation for any succeeding year. Neither the Long-Term Plan nor
any award made under the Long-Term Plan shall create any employment
contract or imply any relationship between the Company and any
Participant.
6
<PAGE> 7
9. Participation in other Manville or Company Incentive Plans.
It is understood that Participants in the Long-Term Plan may also
participate in other Manville or Company long-term incentive
compensation plans that are in existence or may be approved for use in
the future.
10. Governing Law.
The Long-Term Plan and all awards hereinafter shall be governed by and
construed in accordance with the laws of the State of Delaware.
11. Amendments.
The terms of the Long-Term Plan or any outstanding Award Letter under
the Long-Term Plan may be amended from time to time prior to a Change
in Control by the Committee in its discretion in any manner that it
deems appropriate (including, but not limited to, acceleration of the
date of exercise of any award and payments thereunder); provided that
no such amendment shall adversely affect in a material manner any
right of a Participant under the award without his or her written
consent.
7
<PAGE> 8
EXHIBIT A
PERFORMANCE CRITERIA
<TABLE>
<CAPTION>
First Performance
Period (1994-1996) Performance Unit
Cumulative EBITDA Actual Value
----------------- ----------------
<S> <C>
Less than $550MM $0
$550MM to $600MM $500 to $750
$600MM to $700MM $750 to $1,250
$700MM to $800MM $1,250 to $1,750
$800MM to $850MM $1,750 to $2,000
$850MM to $1,000MM $2,000 to $3,000
More than $1,000MM $3,000
</TABLE>
For the First Performance Period, the target EBITDA amount shall be
$650MM and the target value for each Performance Unit based on the
target EBITDA amount shall be $1,000. The target values are for
illustrative purposes only and there is no guarantee that the final
Performance Unit Actual Value shall be the same.
Intermediate Performance Unit Actual Values shall be interpolated on a
straight-line basis.
8
<PAGE> 1
EXHIBIT 10(aj)
--------------------------------------------------------------------------------
SCHULLER INTERNATIONAL GROUP, INC.
$400,000,000
10 7/8% Senior Notes due 2004
_________________
AMENDED AND RESTATED INDENTURE
Dated as of December 12, 1994
_________________
THE BANK OF NEW YORK, Trustee
--------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 1.03. Incorporation by Reference of Trust Indenture Act. . . . . . . . . . . . 16
SECTION 1.04. Rules of Construction. . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.02. Execution and Authentication. . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.03. Registrar and Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.04. Paying Agent to Hold Money in Trust. . . . . . . . . . . . . . . . . . . 19
SECTION 2.05. Securityholder Lists. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.06. Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.07. Replacement Securities. . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.08. Outstanding Securities. . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.09. Treasury Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.10. Temporary Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.11. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.12. Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.13. CUSIP Numbers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.02. Selection of Securities To Be Redeemed. . . . . . . . . . . . . . . . . . 22
SECTION 3.03. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.04. Effect of Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.05. Deposit of Redemption Price. . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.06. Securities Redeemed in Part. . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.02. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.03. Limitation on Transactions with Affiliates. . . . . . . . . . . . . . . . 24
SECTION 4.04. Limitation on Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 4.05. Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.06. Limitation on Asset Dispositions. . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.07. Limitation on Restricted Payments. . . . . . . . . . . . . . . . . . . . 28
SECTION 4.08. Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.09. Payment of Taxes and Other Claims. . . . . . . . . . . . . . . . . . . . 30
SECTION 4.10. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.11. Maintenance of Properties. . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.12. Compliance Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.13. SEC Reports; Financial Statements. . . . . . . . . . . . . . . . . . . . 31
SECTION 4.14. Waiver of Stay, Extension or Usury Laws. . . . . . . . . . . . . . . . . 32
SECTION 4.15. Change of Control Offer. . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.16. Limitation on Sale and Leaseback Transactions. . . . . . . . . . . . . . 33
SECTION 4.17. Limitation on Restricted Subsidiary Indebtedness. . . . . . . . . . . . . 34
SECTION 4.18. Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.19. Limitation on Certain Investments. . . . . . . . . . . . . . . . . . . . 35
SECTION 4.20. Limitation on Sale or Issuance of Stock of Restricted Subsidiaries. . . . 35
ARTICLE FIVE
MERGERS; SUCCESSOR CORPORATION
SECTION 5.01. Restriction on Mergers and Consolidations and
Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.02. Successor Corporation Substituted. . . . . . . . . . . . . . . . . . . . 37
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.02. Acceleration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.03. Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.04. Waiver of Past Default. . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.05. Control by Majority. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.06. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.07. Rights of Holders To Receive Payment. . . . . . . . . . . . . . . . . . . 42
SECTION 6.08. Collection Suit by Trustee. . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.09. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.10. Priorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.11. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.02. Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 7.03. Individual Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.04. Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.05. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.06. Reports by Trustee to Holders. . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.07. Compensation and Indemnity. . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.08. Replacement of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.09. Successor Trustee by Merger, etc. . . . . . . . . . . . . . . . . . . . . 48
SECTION 7.10. Eligibility; Disqualification. . . . . . . . . . . . . . . . . . . . . . 48
SECTION 7.11. Preferential Collection of Claims
Against Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations. . . . . . . . . . . . . . . . . . . 48
SECTION 8.02. Application of Trust Money. . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.03. Repayment to Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.04. Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.02. With Consent of Holders. . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.03. Compliance with Trust Indenture Act. . . . . . . . . . . . . . . . . . . 52
SECTION 9.04. Revocation and Effect of Consents. . . . . . . . . . . . . . . . . . . . 52
SECTION 9.05. Notation on or Exchange of Securities. . . . . . . . . . . . . . . . . . 53
SECTION 9.06. Trustee To Sign Amendments, etc. . . . . . . . . . . . . . . . . . . . . 53
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act Controls. . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.03. Communications by Holders with Other Holders. . . . . . . . . . . . . . . 55
SECTION 10.04. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . 55
SECTION 10.05. Statements Required in Certificate or Opinion. . . . . . . . . . . . . . 55
SECTION 10.06. Rules by Trustee, Paying Agent, Registrar. . . . . . . . . . . . . . . . 56
SECTION 10.07. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.08. No Recourse Against Others. . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.09. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.10. Counterpart Originals. . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.11. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.12. No Adverse Interpretation of Other Agreements. . . . . . . . . . . . . . 56
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
EXHIBIT A Form of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
--------------------
</TABLE>
NOTE: This Table of Contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-iv-
<PAGE> 6
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10; 10.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 10.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.13; 10.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 10.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
</TABLE>
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
--------------------------- ------------------
<S> <C> <C>
Section 316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.02; 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
</TABLE>
-v-
<PAGE> 7
<TABLE>
<S> <C> <C>
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.01
--------------------
</TABLE>
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be
deemed to be a part of the Indenture.
-vi-
<PAGE> 8
AMENDED AND RESTATED INDENTURE, dated as of December 12, 1994
between SCHULLER INTERNATIONAL GROUP, INC., a Delaware corporation (the
"Company"), and THE BANK OF NEW YORK, a New York banking corporation (the
"Trustee"), amending and restating that certain indenture, dated as of
September 22, 1994, between the Company and the Trustee.
Intending to be legally bound hereby, both parties agree as
follows for the benefit of the other and for the equal and ratable benefit of
the Holders of the Company's 10 7/8% Senior Notes due 2004 issued hereunder.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Affiliate" means, with respect to any specified Person, any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For the purposes
of this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-Registrar.
See Section 2.03.
"Asset Disposition" means any sale, transfer or other
disposition (including, without limitation, by way of merger, consolidation or
Sale and Leaseback Transaction) of (i) shares of capital stock of a Subsidiary
(other than directors' qualifying shares) or (ii) property or assets of the
Company or any Restricted Subsidiary; provided, however, that an Asset
Disposition shall not include (a) any sale, transfer or other disposition of
shares of capital stock of any Unrestricted Subsidiary, (b) any sale, transfer
or other disposition of shares of capital stock, property or assets by a
Restricted Subsidiary to the Company or to a wholly-owned Restricted
Subsidiary, (c) any sale, transfer or other disposition of defaulted
receivables for collection or any sale, transfer or other disposition of
property or assets in the ordinary course of business (including, without
limitation, sales of receivables under working capital facilities), (d) sales,
transfers and other dispositions of property or assets of the Company and its
Restricted Subsidiaries outside the ordinary course of business with a fair
market value of less than $50 million in the aggregate in any consecutive four
fiscal quarters, (e) any sale, transfer or other disposition of property or
assets of the Company and its Restricted Subsidiaries to one or more
wholly-owned Restricted Subsidiaries in connection with a transaction of the
type contemplated by Section 5.01(b) or (f) any sale, transfer or other
disposition of shares of capital stock of Schuller International Canada Inc. to
any wholly-owned Restricted Subsidiary. Notwithstanding the foregoing, an
Asset Disposition shall include any sale, transfer or other disposition by the
Company or a Restricted Subsidiary to an Unrestricted Subsidiary of the shares,
property or assets referred to in clauses (i) and (ii) above.
<PAGE> 9
"Board of Directors" means the Board of Directors of the
Company or any authorized committee of that Board.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in The City of New
York, New York are authorized or obligated by law, resolution or executive
order to close.
"Capital Lease Obligation" of any Person means any obligation
under any capital lease of real or personal property which, in accordance with
GAAP, has been recorded as a capitalized lease obligation.
"Capital Stock" means any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation or any and all equivalent ownership interests in a Person other
than a corporation.
"Change of Control" means such time as (i) a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange
Act), other than Manville or the Trust or any Affiliate of Manville or the
Trust, becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of more than 35% of the outstanding Voting Stock of the Company;
or (ii) during any period of two consecutive calendar years, individuals who at
the beginning of such period constituted the Board of Directors of the Company
(together with (A) any new directors whose election by the Board of Directors
of the Company or whose nomination for election was approved by a vote of at
least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved, and (B) any new directors designated for
election or whose election to the Board of Directors of the Company was
approved by Manville or the Trust or any Affiliate of Manville or the Trust)
cease for any reason to constitute a majority of the directors then in office.
"Change of Control Triggering Event" means the occurrence of
both a Change of Control and a Rating Decline.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Company" shall
mean such successor.
"Consolidated Amortization Expense" means, for any period, the
amortization expense of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Cash Flow Available for Interest Expense" means,
for any period, (a) the sum of the amounts for such period of (i) Consolidated
Net Income, (ii) Consolidated Interest Expense, (iii) Consolidated Income Tax
Expense, (iv) Consolidated Depreciation Expense, (v) Consolidated Amortization
Expense, (vi) cash proceeds received from roofing guaranties made by the
Company or a Restricted Subsidiary net of claims and expenses paid with
2
<PAGE> 10
respect thereto (without duplication of any amount included in Consolidated Net
Income), and (vii) other non-cash items reducing Consolidated Net Income, minus
(b) non-cash items increasing Consolidated Net Income, all as determined on a
consolidated basis for the Company and its Restricted Subsidiaries in
accordance with GAAP.
"Consolidated Depreciation Expense" means, for any period, the
depreciation expense of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Income Tax Expense" means, for any period, the
aggregate of the income tax expense of the Company and its Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Coverage Ratio" means, for any period,
the ratio of (i) Consolidated Cash Flow Available for Interest Expense plus
one-third of Consolidated Rental Expense to (ii) Consolidated Interest Expense
plus one-third of Consolidated Rental Expense.
"Consolidated Interest Expense" means, for any period, the
interest expense (including the interest component of all Capital Lease
Obligations and the earned discount or yield with respect to a sale of
receivables constituting Indebtedness) of the Company and its Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP, plus the aggregate amount of Preferred Dividends recognized by the
Company and its Restricted Subsidiaries, whether or not declared during such
period.
"Consolidated Net Assets" means, with respect to the Company
and its Restricted Subsidiaries, as at any date, the total amount of assets of
the Company and its Restricted Subsidiaries (less applicable reserves) after
deducting therefrom (i) all current liabilities (excluding any thereof which
are by their terms extendible or renewable at the option of the obligor thereon
to a time more than 12 months after the time as of which the amount thereof is
being computed and any current portion of long-term debt) and (ii) appropriate
adjustments on account of minority interests of other Persons holding shares of
Restricted Subsidiaries, all as set forth on the most recent consolidated
balance sheet of the Company and its Restricted Subsidiaries and computed in
accordance with GAAP.
"Consolidated Net Income" means, for any period, the net
income (or loss) of the Company and its Restricted Subsidiaries on a
consolidated basis for such period taken as a single accounting period,
determined in accordance with GAAP; provided, however, that there shall be
excluded therefrom: (i) the net income (or loss) of any Person which is not a
Restricted Subsidiary, except (A) to the extent of the amount of dividends or
other distributions actually received in cash or tangible property or tangible
assets (such property or assets to be valued at their fair market value, net of
any obligations secured thereby) by the Company or any of its Restricted
Subsidiaries from such Person during such period (subject, in the case of any
dividend or distribution received by a Restricted Subsidiary, to the
limitations imposed by clause (iii) below) and (B) without duplication of any
amount otherwise included in Consolidated Net
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<PAGE> 11
Income, cash realized by the Company or any of its Restricted Subsidiaries
(subject, in the case of a Restricted Subsidiary, to the limitations imposed by
clause (iii) below) during such period on account of dividends or distributions
paid in other than cash or tangible property, (ii) except to the extent
includible pursuant to the foregoing clause (i), the net income (or loss) of
any Person accrued prior to the date it becomes a Restricted Subsidiary or is
merged with or into or consolidated with the Company or any of its Restricted
Subsidiaries or the Person's property or assets are acquired by the Company or
any of its Restricted Subsidiaries, (iii) the net income of any Restricted
Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary, (iv) the excess (but not the
deficit), if any, of (x) any gain which must be treated as an extraordinary
item under GAAP or gain realized upon the sale or other disposition of any
asset that is not sold in the ordinary course of business or of any capital
stock of a Restricted Subsidiary over (y) any loss which must be treated as an
extraordinary item under GAAP or any loss realized upon the sale or other
disposition of any asset that is not sold in the ordinary course of business or
of any capital stock of a Restricted Subsidiary, (v) the recognition of the
cumulative effect of changes in accounting principles and (vi) any gain or loss
that would occur as the result of a settlement or curtailment of defined
benefit pension plans in accordance with GAAP.
"Consolidated Net Worth" means the amount which at any date of
determination, in accordance with GAAP, would be set forth under the caption
"stockholders' equity" (or any like caption) on the consolidated balance sheet
of the Company and its Restricted Subsidiaries, exclusive of amounts
attributable to Redeemable Stock.
"Consolidated Rental Expense" means, for any period, the
aggregate of the rental expense of the Company and its Restricted Subsidiaries
for such period, determined on a consolidated basis in accordance with GAAP.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 10.02 or such other address as the
Trustee may give notice to the Company.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Demand Note" means the note, dated September 22, 1994, issued
by the Company to Manville in the principal amount of $25 million.
"Domestic Restricted Subsidiary" means a Restricted Subsidiary
whose jurisdiction of incorporation is within the United States.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
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<PAGE> 12
"Excluded Tax Attributes" means any tax attribute of SII,
including, without limitation, (i) any deduction arising as the result of
payments made or to be made by Manville or the Trust and (ii) any item
described in or governed by Section 381 of the Internal Revenue Code of 1986,
as amended, or any successor provision thereto.
"Foreign Restricted Subsidiary" means a Restricted Subsidiary
whose jurisdiction of incorporation is outside the United States.
"Foreign Subsidiary" means a Subsidiary whose jurisdiction of
incorporation is outside the United States.
"GAAP" means generally accepted accounting principles,
consistently applied, as in effect from time to time in the United States of
America, set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as is approved by a significant
segment of the accounting profession.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the books of the Registrar or any co-Registrar.
"Indebtedness" means, with respect to any Person and without
duplication:
(a) any liability of such Person (1) for borrowed money,
or (2) for any letter of credit for the account of such Person
supporting other obligations of such Person included in this
definition, or (3) evidenced by a bond, note, debenture or similar
instrument (including any purchase money obligation) given in
connection with the acquisition of any businesses, properties or
assets of any kind (other than a trade payable or a current liability
arising in the ordinary course of business), or (4) for the payment of
money relating to a Capital Lease Obligation;
(b) all Redeemable Stock issued by such Person (the
amount of the Indebtedness represented by any Redeemable Stock shall
equal the greater of the voluntary or involuntary liquidation
preference plus accrued and unpaid dividends);
(c) if such Person is a Subsidiary, all Preferred Stock
issued by such Subsidiary (the amount of Indebtedness represented by
any such Preferred Stock shall equal the greater of the voluntary or
involuntary liquidation preference plus accrued and unpaid dividends);
(d) any liability of others described in the preceding
clauses (a), (b) or (c) that the Person has guaranteed or that is
otherwise its legal liability; and
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<PAGE> 13
(e) any amendment, supplement, modification, deferral,
renewal, extension, refinancing or refunding of any liability of the
types referred to in clauses (a), (b), (c) and (d) above.
For purposes of determining any particular amount of Indebtedness under this
definition, (x) guarantees of (or obligations with respect to letters of credit
supporting) Indebtedness otherwise included in the determination of such amount
and (y) any premium, interest, penalties, reimbursement or indemnification
amounts, fees or expenses with respect to any Indebtedness shall not be
included, provided that in determining compliance with Section 4.17, clause (x)
of this sentence shall not be given effect (other than with respect to
Indebtedness of a Restricted Subsidiary if otherwise included as Indebtedness
of the Restricted Subsidiaries). For the purpose of determining compliance
with Section 4.04, in the event that an item of Indebtedness meets the criteria
of more than one of the types of Indebtedness described in the above clauses or
more than one of the clauses of the definition of "Permitted Indebtedness," the
Company, in its sole discretion, shall not be required to include the amount
and type of such Indebtedness in more than one of such clauses, and the amount
of Indebtedness issued at a price that is less than the principal amount
thereof shall be equal to the amount of the liability in respect thereof
determined in accordance with GAAP.
"Indenture" means this Amended and Restated Indenture as
amended or supplemented from time to time.
"Intercompany Agreement" means the Intercompany Agreement,
dated as of September 22, 1994, between the Company and Manville.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Securities.
"Lien" means any mortgage, charge, pledge, lien, privilege,
security interest or other encumbrance upon or with respect to any property of
any kind of the Company or any of its Restricted Subsidiaries, real or
personal, movable or immovable, now owned or hereafter acquired.
"Manville" means Manville Corporation, a Delaware corporation.
"Maturity Date" means the date, which is set forth on the face
of the Securities, on which the Securities shall mature.
"Net Cash Proceeds" means, with respect to any Person, the
proceeds received in cash or cash equivalents (including any cash received by
way of deferred payment, monetization of a note or receivable or otherwise, but
only as and when received and excluding the portion of any such deferred
payment which in accordance with GAAP constitutes interest) by such Person from
any Asset Disposition, net of (i) the direct costs relating to such Asset
Disposition (including, without limitation, legal, accounting and investment
banking fees and sale
6
<PAGE> 14
commissions), (ii) taxes paid or payable, whether directly or under the Tax
Sharing Agreement (including, without limitation, income taxes reasonably
estimated to be actually payable as a result of such Asset Disposition within
two years of the date thereof) and (iii) any reserve for adjustment of the sale
price of such property, or other post closing adjustments, established in
accordance with GAAP.
"Obligations" means any principal, premiums, interest,
penalties, fees and other liabilities payable under the documentation governing
any Indebtedness.
"Officer" means the Chairman, the President, any Vice
President, the Chief Financial Officer, the Treasurer, or the Secretary of the
Company.
"Officers' Certificate" means a certificate signed by two
Officers or by an Officer and an Assistant Treasurer or Assistant Secretary of
the Company complying with Sections 10.04 and 10.05, provided that one of such
Officers shall be the principal executive, financial or accounting officer of
the Company.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company or the Trustee.
"Payment Restriction" has the meaning set forth under Section
4.18.
"Permitted Acquired Indebtedness" means (a) Indebtedness of
any Person (which may be assumed or guaranteed by, or may otherwise become the
legal liability of, the Company or any Restricted Subsidiary with or into which
such Person is merged or consolidated) existing at the time such Person becomes
a Restricted Subsidiary, or is merged with or into or consolidated with the
Company or one of its Restricted Subsidiaries, so long as such Indebtedness was
not created in anticipation of or as a result of such Person becoming a
Restricted Subsidiary or of such merger or consolidation, (b) Indebtedness of
any Person to which any property or assets acquired by the Company or any
Restricted Subsidiary as part of the acquisition of all or part of the business
operations of such Person were subject, existing at the time of, and which
continue to be subject immediately after, the acquisition thereof so long as
such Indebtedness was not created in anticipation of such acquisition, and (c)
any Indebtedness to the extent exchanged for, or the net proceeds of which are
used to refinance, redeem or defease Indebtedness described in (a) or (b) above
(or any extension, renewal or refinancing thereof), or to finance any costs
incurred in connection with such exchange, refinancing, redemption or
defeasance, provided, however, that the proceeds of such Indebtedness shall be
used to so refinance, redeem or defease the Indebtedness within 24 months of
the incurrence of such subsequent Indebtedness.
"Permitted Indebtedness" means:
(a) Indebtedness of the Company or of any Restricted
Subsidiary outstanding on September 22, 1994 as in effect on such
date, including, without limitation, the
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<PAGE> 15
Demand Note, but excluding any Indebtedness that is covered by clause
(d) of this definition;
(b) the Securities;
(c) Indebtedness with respect to obligations of the
Company or any of its Restricted Subsidiaries incurred in connection
with a Sale and Leaseback Transaction in compliance with the
provisions of Section 4.16;
(d) Indebtedness of the Company to any Restricted
Subsidiary or of a Restricted Subsidiary to the Company or another
Restricted Subsidiary for so long as held by the Company or a
Restricted Subsidiary;
(e) additional Indebtedness of the Company and Restricted
Subsidiaries for working capital purposes (including financing
arrangements involving the sale of receivables) in an aggregate
principal amount (including, in the case of receivables financing
arrangements, the proceeds obtained from such arrangements with
respect to receivables that remain uncollected) at any one time
outstanding not to exceed $125 million and any renewal, extension,
substitution, refinancing or replacement thereof;
(f) any renewals, extensions, substitutions, refinancings
or replacements (herein, a "refinancing" with "refinance" and
"refinanced" having correlative meanings) of any Indebtedness incurred
pursuant to clause (1) of Section 4.17, clause (2) of Section 4.04 or
clause (a) or (b) of this "Permitted Indebtedness" definition (in each
case assuming all available amounts were borrowed), including any
successive refinancings so long as in each case (i) the aggregate
amount of new Indebtedness does not exceed the sum of the amount of
Indebtedness refinanced, the amount of any premium required to be paid
under the terms of the instrument governing such Indebtedness and the
amount of reasonable expenses incurred by the Company or a Restricted
Subsidiary in connection with such refinancing, (ii) the average life
and the date such Indebtedness is scheduled to mature is not
shortened, (iii) the new Indebtedness is not senior in right of
payment to the Indebtedness that is being refinanced and is
subordinated to the Securities at least to the same extent and in the
same manner as the Indebtedness that is being refinanced, (iv) if the
Indebtedness being refinanced was incurred by the Company, then the
new Indebtedness shall be incurred by the Company and (v) if the
Indebtedness being refinanced was incurred by a Restricted Subsidiary,
then the new Indebtedness shall be incurred by a Restricted Subsidiary
or by the Company;
(g) Indebtedness of the Company or of any Restricted
Subsidiary in respect of trade letters of credit, accommodation
guarantees for the benefit of trade creditors of Restricted
Subsidiaries, standby letters of credit, performance bonds and surety
bonds, in each case, incurred in the ordinary course of business, but
excluding any such instruments that are equivalent to or issued in
support of any other obligation included in the definition of
"Indebtedness;"
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<PAGE> 16
(h) Indebtedness of the Company or any Restricted
Subsidiary represented by industrial revenue or development bonds
(including, without limitation, bonds incurred to finance capacity
expansion at the Company's McPherson, Kansas facility), provided that
the aggregate amount of Indebtedness incurred in reliance upon the
exception of this clause (h) shall not exceed at any one time an
aggregate principal amount outstanding of $75 million;
(i) Permitted Acquired Indebtedness, provided that after
giving effect on a pro forma basis to the incurrence of such Permitted
Acquired Indebtedness the Company could incur at least one additional
dollar of Indebtedness (not constituting Permitted Indebtedness) under
clause (2) of Section 4.04;
(j) Indebtedness of the Company or of any Restricted
Subsidiary to guarantee Indebtedness of IACP, Inc. and its
subsidiaries in an aggregate principal amount not to exceed $10
million at any one time outstanding;
(k) in addition to that described in clauses (a) through
(j) of this definition of "Permitted Indebtedness," Indebtedness of
the Company or any Restricted Subsidiary in an aggregate principal
amount at any one time outstanding not to exceed $25 million; and
(l) any indemnity agreement or arrangement by the
Restricted Subsidiary referred to in clause (i) of Section 5.01(b) in
favor of the Company for its joint liability in respect of the
principal of, premium, if any, on and interest on the Securities
described in the proviso of the first sentence of Section 5.02.
"Permitted Investments" means (i) U.S. Treasury and agency
securities, (ii) commercial paper rated the equivalent of P-1 or better at the
time of purchase by one or more nationally recognized statistical rating
organizations ("NRSROs"), (iii) bankers' acceptances issued by banks having a
long-term debt rating of A or better at the time of purchase by one or more
NRSROs, (iv) negotiable certificates of deposit, time deposits and Eurodollar
time deposits of banks having a long-term debt rating of A or better at the
time of deposit by one or more NRSROs, (v) repurchase agreements with banks or
government securities dealers having a long-term debt rating of A or better at
the time of the transaction by one or more NRSROs, (vi) master notes placed by
issuers having a long-term debt rating of A or better at the time of purchase
by one or more NRSROs, (vii) floating rate notes and medium-term notes rated
the equivalent of A or better at the time of purchase by one or more NRSROs,
(viii) deposit notes issued by banks having a long-term debt rating of A or
better at the time of purchase by one or more NRSROs, (ix) short-term
tax-exempt notes rated the equivalent of SP-1 or better at the time of purchase
by one or more NRSROs, (x) taxable and non-taxable money market funds that
invest principally in instruments identified in clauses (i) through (ix) above,
(xi) corporate bonds rated the equivalent of A or better at the time of
purchase by one or more NRSROs, (xii) municipal bonds rated the equivalent of
AA or better at the time of purchase by one or more NRSROs, (xiii)
mortgage-backed and asset-backed securities that are AAA rated at the time of
purchase by one or more
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<PAGE> 17
NRSROs, (xiv) exchange-traded fixed income options and futures, (xv) other
fixed income securities then commonly used by major U.S. industrial
corporations for managing corporate investments and approved by the Board of
Directors, (xvi) funds invested with external money managers having at least
$100,000,000 in assets under management, (xvii) short and intermediate-term
taxable and non-taxable bond funds that invest principally in securities
otherwise permitted pursuant to the foregoing clauses of this definition other
than clauses (xiv), (xv) and (xvi) above, and (xviii) funds invested at the
foreign subsidiary or affiliate level having characteristics comparable to the
U.S. guidelines above; provided, however, that in no case shall more than 30%
of the aggregate amount of Permitted Investments at any one time outstanding be
invested in obligations of any single issuer or debtor other than pursuant to
clauses (i), (x) and (xvii) above; and provided, further, that in no case shall
the aggregate principal amount of Permitted Investments made pursuant to
clauses (xiv), (xv), (xvi) and (xviii) exceed (X) $20 million in the aggregate
at any one time outstanding for the Company and its Restricted Subsidiaries
(excluding Rocky Mountain International Insurance Ltd.) or (Y) $13 million in
the aggregate at any one time outstanding for Rocky Mountain International
Insurance Ltd.
"Permitted Liens" means, as of any particular time, any one or
more of the following:
(a) Liens for taxes, rates and assessments not yet due
or, if due, the validity of which is being contested diligently and in
good faith by the Company or any of its Subsidiaries; and Liens for
the excess of the amount of any past due taxes for which a final
assessment has not been received over the amount of such taxes as
estimated and paid;
(b) the Lien of any judgment rendered which is being
contested diligently and in good faith by the Company or any of its
Subsidiaries and which does not have a material adverse effect on the
ability of the Company and its Subsidiaries to operate their business
or operations;
(c) other than in connection with Indebtedness, any Lien
arising in the ordinary course of business, such as (i) Liens to
secure payments of workers' compensation, unemployment insurance,
pension or other social security or retirement benefits, or to secure
the performance of bids, tenders, leases, progress payments or
contracts (other than for the payment of money), or to secure public
or statutory obligations of the Company or any Subsidiary or to secure
surety or appeal bonds to which the Company or any Subsidiary is a
party and (ii) any Lien imposed by law dealing with materialmen's,
mechanics', workmen's, repairmen's, warehousemen's, landlords',
vendors', or carriers' liens created by law, or deposits or pledges;
(d) servitudes, licenses, easements, encumbrances,
restrictions, rights-of-way and rights in the nature of easements or
similar charges which shall not in the aggregate materially adversely
impair the use of the subject property by the Company or a Subsidiary
as such property is used as of September 22, 1994 or in respect to
which the Company or
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<PAGE> 18
any of its Subsidiaries has made satisfactory arrangements for
relocation so that such use shall not in the aggregate be materially
and adversely impaired;
(e) zoning and building by-laws and ordinances, municipal
by-laws and regulations, and restrictive covenants, which do not
materially interfere with the use of the subject property by the
Company or a Subsidiary as such property is used as of September 22,
1994;
(f) Liens securing purchase money obligations incurred in
compliance with the provisions of this Indenture, limited to the
property acquired in the transaction in which the purchase money
obligation was incurred;
(g) any other Lien existing on September 22, 1994 as in
effect on such date;
(h) Liens on assets acquired by the Company or any
Subsidiary after September 22, 1994, whether by acquisition of shares,
assets or otherwise, provided that such Lien existed on the date such
asset was acquired and was not incurred in anticipation of such
acquisition and such Lien does not extend to or cover any other
property or assets of the Company or of its Subsidiaries;
(i) any interest in or title of a lessor to any property
subject to any Capital Lease Obligation or operating lease which, in
each case, is permitted under this Indenture;
(j) Liens incurred in connection with Indebtedness
represented by industrial revenue or development bonds permitted under
clause (h) of the definition of "Permitted Indebtedness;"
(k) Liens on inventory or receivables securing any
working capital financings permitted under clause (e) of the
definition of "Permitted Indebtedness;" or
(l) any extension, renewal, substitution or replacement
(or successive extensions, renewals, substitutions or replacements),
as a whole or in part, of any of the Liens referred to in clauses (a)
through (k) of this definition or the Indebtedness secured thereby,
provided that (1) such extension, renewal, substitution or replacement
Lien shall be limited to all or any part of the same property or
assets, owned on September 22, 1994 or thereafter acquired, that
secured the Lien extended, renewed, substituted or replaced (plus
improvements on such property or assets) and (2) the Indebtedness
secured by such Lien (assuming all available amounts were borrowed) at
such time is not increased.
"Permitted Payments" means:
(a) the payment of any dividend on share capital within
60 days after the date of declaration thereof, if at such declaration
date such declaration complied with the provisions of this Indenture;
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<PAGE> 19
(b) the prepayment, repurchase, redemption or other
acquisition or retirement of (i) any shares of any class of share
capital of the Company or (ii) any Indebtedness that is subordinate to
the Securities in exchange for (including any such exchange pursuant
to the exercise of a conversion right or privilege in connection with
which cash is paid in lieu of the issuance of fractional shares or
scrip), or out of the net cash proceeds of a substantially concurrent
issue and sale (other than to a Subsidiary) of, other shares of
capital stock of the Company other than Redeemable Stock;
(c) the prepayment, repurchase, redemption or other
acquisition or retirement of Indebtedness that is subordinate in right
of payment to the Securities from the proceeds of a refinancing that
complies with all of the conditions specified in clause (f) of the
definition of "Permitted Indebtedness;" and
(d) payments pursuant to the Intercompany Agreement, the
Treasury Management Agreement, the Tax Sharing Agreement and the
Demand Note, in each case on terms not less favorable to the Company
or the relevant Subsidiary than those in effect on September 22, 1994;
provided, that in the case of clause (a), no Default or Event of Default shall
have occurred and be continuing at the date of such payment.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or other agency or political subdivision thereof.
"Preferred Dividend" means, for any dividend payable by a
Person with regard to Redeemable Stock issued by it and, if such Person is a
Subsidiary, Preferred Stock issued by such Subsidiary (other than to the
Company or a wholly-owned Restricted Subsidiary), the quotient of the dividend
divided by the difference between one and the maximum statutory Federal income
tax rate (expressed as a decimal number between 1 and 0) then applicable to
such Person.
"Preferred Stock" means, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated)
of such Person's preferred or preference stock, whether outstanding on or
issued after September 22, 1994, and includes, without limitation, all classes
and series of preferred or preference stock.
"Public Equity Offering" means an underwritten primary public
offering of capital stock (other than Redeemable Stock) of the Company pursuant
to an effective registration statement under the Securities Act.
"Public Market" means any time after (x) a Public Equity
Offering has been consummated and (y) at least 15% of the total issued and
outstanding common stock of the
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<PAGE> 20
Company has been distributed by means of an effective registration statement
under the Securities Act or sales pursuant to Rule 144 under the Securities
Act.
"Rating Agencies" means (i) Standard & Poor's Corporation and
its successors ("S&P") and (ii) Moody's Investors Service, Inc. and its
successors ("Moody's") or (iii) if S&P or Moody's or both are not making
ratings of the Securities publicly available, a nationally recognized
securities rating agency or agencies, as the case may be, selected by the
Company, which shall be substituted for S&P or Moody's or both, as the case may
be.
"Rating Category" means (i) with respect to S&P, any of the
following categories: AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent
successor categories); (ii) with respect to Moody's, any of the following
categories: Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor
categories); and (iii) the equivalent of any such category of S&P or Moody's
used by another Rating Agency. In determining whether a rating of the
Securities has decreased by one or more gradations, gradations within Rating
Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or the equivalent
gradations for another Rating Agency) shall be taken into account (e.g., with
respect to S&P, a decline in a rating from BB+ to BB, as well as from BB- to
B+, shall constitute a decrease of one gradation).
"Rating Date" means the date which is 90 days prior to the
earlier of (i) a Change of Control and (ii) public notice of the occurrence of
a Change of Control or of the intention of the Company to effect a Change of
Control.
"Rating Decline" means the occurrence of the following on, or
within 90 days after, the date of public notice of the occurrence of a Change
of Control or of the intention by the Company to effect a Change of Control
(which period shall be extended so long as the rating of the Securities is
under publicly announced consideration for possible downgrade by either of the
Rating Agencies): the rating of the Securities by either Rating Agency shall
be decreased by (i) two or more gradations (including gradations within Rating
Categories as well as between Rating Categories) from the rating by such Rating
Agency in effect on the Rating Date, if the rating by such Rating Agency in
effect on the Rating Date is one or more gradations higher than the rating by
such Rating Agency in effect on December 12, 1994 or (ii) one gradation
(including a gradation within a Rating Category as well as between Rating
Categories) from the rating by such Rating Agency in effect on the Rating Date,
if the rating by such Rating Agency in effect on the Rating Date is equal to or
lower than the rating by such Rating Agency in effect on December 12, 1994;
unless, after the decrease referred to in either clause (i) or (ii), the
Securities continue to be rated in one of the four highest Rating Categories
used by such Rating Agency.
"Redeemable Stock" means any class or series of share capital
that by its terms or otherwise is required to be redeemed, in whole or in part,
prior to the Stated Maturity of the Securities, or is redeemable, in whole or
in part, at the option of the holder thereof at any time prior to the Stated
Maturity of the Securities.
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<PAGE> 21
"redemption date," when used with respect to any Security to
be redeemed, means the date fixed for such redemption pursuant to this
Indenture.
"redemption price," when used with respect to any Security to
be redeemed, means the price fixed for such redemption pursuant to this
Indenture as set forth in the form of Security annexed as Exhibit A.
"Restricted Subsidiary" means any Subsidiary other than an
Unrestricted Subsidiary.
"Rocky Mountain International Insurance Ltd." means the
insurance Subsidiary whose principal business is the provision of insurance
services to the Company and its Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Securities" means the 10 7/8% Senior Notes due 2004, as
amended or supplemented from time to time pursuant to the terms of this
Indenture, that are issued under this Indenture.
"Senior Indebtedness" means, at any date, (i) all Indebtedness
under the Securities, and all renewals, extensions, modifications, amendments
or refundings thereof and (ii) other Indebtedness of the Company for borrowed
money, unless the instrument under which such Indebtedness for borrowed money
is created, incurred, assumed or guaranteed expressly provides that such
Indebtedness for money borrowed is junior or subordinate in right of payment to
the Securities, and all renewals, extensions, modifications, amendments or
refinancings thereof. Senior Indebtedness shall not include Indebtedness which
is pursuant to its terms or any agreement relating thereto or by operation of
law subordinated or junior in right of payment or otherwise to any Indebtedness
of the Company.
"SII" means Schuller International, Inc., a Delaware
corporation, and a wholly-owned Subsidiary.
"Stated Maturity," when used with respect to any Security or
any installment of interest thereon, means the date specified in such Security
as the fixed date on which the principal of such Security or such installment
of interest is due and payable.
"subsidiary" means, with respect to any Person, (i) any
corporation of which at least a majority in interest of the outstanding capital
stock having by the terms thereof voting power under ordinary circumstances to
elect directors of such corporation, irrespective of whether or not at the time
stock of any other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency, is at the
time, directly or indirectly, owned or controlled by such Person, or by one or
more other corporations a majority in interest of such stock of which is
similarly owned or controlled, or by such Person and one or
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more other corporations a majority in interest of such stock of which is
similarly owned or controlled or (ii) any other Person (other than a
corporation) in which such Person, directly or indirectly, at the date of
determination thereof, has at least a majority equity ownership interest.
"Subsidiary" means any subsidiary of the Company.
"Tax Sharing Agreement" means the Tax Sharing Agreement dated
as of January 1, 1994 between the Company and Manville.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) as in effect on September 22, 1994 and the date the
Indenture is qualified under such Act, except as provided in Section 9.03.
"Treasury Management Agreement" means the Treasury Management
Agreement, dated as of September 22, 1994, between the Company and Manville.
"Trust" means the Manville Personal Injury Settlement Trust.
"Trust Officer" means any officer within the corporate trust
department (or any successor group of the Trustee), including any vice
president, assistant vice president, assistant secretary or any other officer
or assistant officer of the Trustee customarily performing functions similar to
those performed by the persons who at that time shall be such officers, and
also means, with respect to a particular corporate trust matter, any other
officer to whom such trust matter is referred because of his knowledge of and
familiarity with the particular subject.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
"Unrestricted Subsidiary" means (i) all Subsidiaries of the
Company organized under jurisdictions outside the United States and Canada,
(ii) IACP, Inc. and its subsidiaries, and (iii) any Subsidiary all of the
capital stock or assets of which are first acquired by the Company or another
Subsidiary after September 22, 1994 from any Person other than the Company or a
Restricted Subsidiary and all of the Indebtedness of which is without recourse
to the Company or any other Restricted Subsidiary, which Subsidiary has not
been designated a "Restricted Subsidiary" for purposes of this Indenture by the
Company.
"United States" or "U.S." means the United States of America
and its territories and possessions.
"Voting Stock" means, with respect to any Person, securities
of any class or classes of capital stock in such Person entitling the holders
thereof (whether at all times or only so long as no senior class of stock has
voting power by reason of any contingency) to vote in the election of members
of the board of directors of such Person.
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SECTION 1.02. Other Definitions.
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Asset Disposition Offer" 4.06
"Asset Disposition Offer Amount" 4.06
"Asset Disposition Payment Date" 4.06
"Bankruptcy Law" 6.01
"Change of Control Offer" 4.15
"Change of Control Payment Date" 4.15
"Change of Control Purchase Price" 4.15
"Custodian" 6.01
"Event of Default" 6.01
"Paying Agent" 2.03
"Registrar" 2.03
"Restricted Investment" 4.19
"Restricted Payment" 4.07
"Sale and Leaseback Transaction" 4.16
"United States Government Obligations" 8.01
</TABLE>
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company or any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by Commission
rule and not otherwise defined herein have the meanings assigned to them
therein.
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SECTION 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted accounting
principles in effect from time to time, and any other reference in this
Indenture to "generally accepted accounting principles" refers to GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words
in the plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section
or other subdivision.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
The Securities and the Trustee's certificates of
authentication shall be substantially in the form of Exhibit A. The Securities
may have notations, legends or endorsements required by law, stock exchange
rule or usage. Any notations, legends or endorsements not contained in the
form of Security contained in Exhibit A shall be delivered in writing to the
Trustee. The Company shall approve the form of the Securities and any
notation, legend or endorsement on them. Each Security shall be dated the date
of its authentication.
The terms and provisions contained in the form of the
Securities, annexed hereto as Exhibit A, shall constitute, and are hereby
expressly made, a part of this Indenture.
SECTION 2.02. Execution and Authentication.
Two Officers shall sign the Securities for the Company by, at
the option of the Company, manual or facsimile signature. The Company's seal
shall be reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
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A Security shall not be valid until the Trustee manually signs
the certificate of authentication on the Security. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate Securities for original issue
in the aggregate principal amount of up to $400,000,000 upon a written order of
the Company signed by two Officers or by an Officer and an Assistant Treasurer
or Assistant Secretary of the Company. The order shall specify the amount of
Securities to be authenticated and the date on which the Securities are to be
authenticated. The aggregate principal amount of Securities outstanding at any
time may not exceed $400,000,000 except as provided in Section 2.07.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities other than upon original issuance. The
Company shall pay all fees payable to the authenticating agent. Any
authenticating agent appointed hereunder shall be entitled to the benefits of
Section 7.07. Unless limited by the terms of such appointment, any
authenticating agent may authenticate Securities whenever the Trustee may do
so. Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as
an Agent to deal with the Company or its Affiliates as provided in Section
7.03.
The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 and any integral multiple
thereof. Interest shall be payable semiannually.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Securities may be presented for
payment ("Paying Agent"). The Company may have one or more co-Registrars and
one or more additional paying agents. The term "Paying Agent" includes any
additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture. The agreement shall implement
the provisions of this Indenture that relate to such Agent and shall, if
required, incorporate the provisions of the TIA. The Company shall notify the
Trustee of the name and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall
be entitled to appropriate compensation in accordance with the provisions of
Section 7.07.
The Company initially appoints the Trustee as Registrar and
Paying Agent. The Company shall give written notice to the Trustee in the
event that the Company decides to act or to appoint an Affiliate of the Company
to act as Registrar or Paying Agent.
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SECTION 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent to agree in
writing to hold in trust for the benefit of Securityholders or the Trustee all
money held by the Paying Agent for the payment of principal of, premium, if
any, on or interest on the Securities (whether such money has been paid to it
by the Company or any other obligor on the Securities), and the Company and the
Paying Agent shall each notify the Trustee of any default by the Company (or
any other obligor on the Securities) in making any such payment. If the
Company or an Affiliate of the Company acts as Paying Agent, it shall segregate
the money and hold it as a separate trust fund. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and account
for any funds disbursed and the Trustee may at any time during the continuance
of any payment default, upon written request to a Paying Agent, require such
Paying Agent to pay all money held by it to the Trustee and to account for any
funds disbursed. Upon making such payment, the Paying Agent shall have no
further liability for the money delivered to the Trustee.
SECTION 2.05. Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee at least five Business Days before each Interest
Payment Date and at such other times as the Trustee may request in writing a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange.
When Securities are presented to the Registrar or a
co-Registrar with a request to register the transfer or to exchange them for an
equal principal amount of Securities of other authorized denominations, the
Registrar shall register the transfer or make the exchange as requested if its
requirements for such transactions are met. To permit registrations of
transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Securities at the Registrar's request. The date of any Security
issued pursuant to this Section 2.06 shall be the date of such transfer or
exchange. No service charge shall be made to the Securityholder for any
registration of transfer or exchange, but the Company may require from the
Securityholder payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchanges pursuant
to Section 2.10, 3.06 or 9.05, in which event the Company shall be responsible
for the payment of such taxes).
SECTION 2.07. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if
the Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security if the Trustee's requirements are met. An indemnity bond
in an amount sufficient in the judgment of the Company and the Trustee to
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<PAGE> 27
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Security is replaced may be required by the Trustee or the
Company. The Company and the Trustee each may charge such Holder for its
expenses in replacing such Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all Securities that
have been authenticated by the Trustee except for those cancelled by it, those
delivered to it for cancellation and those described in this Section as not
outstanding. A Security does not cease to be outstanding because the Company
or one of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company or an Affiliate of
the Company) holds on a redemption date or Maturity Date money designated for
and sufficient to pay the principal of, premium, if any, on and interest on
Securities payable on that date, then on and after that date such Securities
cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or an Affiliate of the Company shall be
disregarded, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee actually knows are so owned shall be so
disregarded.
The Trustee may require an Officers' Certificate listing
securities owned by the Company or its Affiliates.
SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Company considers appropriate for
temporary Securities. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Securities in exchange for
temporary Securities. Until such exchange, temporary Securities shall be
entitled to the same rights, benefits and privileges as definitive Securities.
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SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for transfer, exchange or payment.
The Trustee and no one else shall cancel all Securities surrendered for
transfer, exchange, payment or cancellation. The Company may not issue new
Securities to replace, or reissue or resell, Securities which the Company has
redeemed, paid, purchased on the open market or otherwise, or otherwise
acquired or have been delivered to the Trustee by the Company for cancellation.
The Trustee (subject to the record-retention requirements of the Exchange Act)
may, but shall not be required to, destroy all cancelled Securities.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest, plus any interest payable on
the defaulted interest pursuant to Section 4.01, to the Persons who are
Securityholders on a subsequent special record date, and such term, as used in
this Section 2.12 with respect to the payment of any defaulted interest, shall
mean the fifteenth day next preceding the date fixed by the Company for the
payment of defaulted interest, whether or not such day is a Business Day. At
least 15 days before such special record date, the Company shall mail to each
Securityholder and to the Trustee a notice that states such special record
date, the payment date and the amount of defaulted interest to be paid.
SECTION 2.13. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use) and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders, provided that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company wants to redeem Securities pursuant to
paragraph 5 of the Securities at the applicable redemption price set forth
thereon, it shall notify the Trustee in writing of the redemption date and the
principal amount of Securities to be redeemed.
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The Company shall give the notice provided for in this Section
at least 45 days before the redemption date (unless a shorter notice shall be
agreed to by the Trustee in writing), together with an Officers' Certificate
stating that such redemption shall comply with the conditions contained herein.
SECTION 3.02. Selection of Securities To Be Redeemed.
If less than all of the Securities are to be redeemed pursuant
to paragraph 5 thereof, the Trustee shall select the Securities to be redeemed
by any method that complies with the requirements of the principal national
securities exchange, if any, on which the Securities being redeemed are listed,
at the discretion of the Trustee, or, if the Securities are not so listed, pro
rata or by lot or in such other manner as the Trustee shall deem appropriate
and fair. The Trustee shall make the selection from the Securities then
outstanding, subject to redemption and not previously called for redemption.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption
date, the Company shall mail a notice of redemption by first class mail to each
Holder at his or her registered address whose Securities are to be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the CUSIP number;
(4) the name and address of the Paying Agent to which the
Securities are to be surrendered for redemption;
(5) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making the
redemption payment, interest on Securities or portions thereof called for
redemption ceases to accrue on and after the redemption date and the only
remaining right of the Holders is to receive payment of the redemption price
upon surrender to the Paying Agent; and
(7) if any Security is being redeemed in part, the
portion of the principal amount of such Security to be redeemed and that, after
the redemption date, upon surrender of
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<PAGE> 30
such Security, a new Security or Securities in principal amount equal to the
unredeemed portion thereof shall be issued.
At the Company's request, the Trustee shall give the notice of
redemption on behalf of the Company, in the Company's name and at the Company's
expense.
SECTION 3.04. Effect of Notice of Redemption.
Once a notice of redemption is mailed, Securities called for
redemption become due and payable on the redemption date and at the redemption
price. Upon surrender to the Paying Agent, such Securities shall be paid at
the redemption price, plus accrued interest thereon to the redemption date, but
interest installments whose maturity is on or prior to such redemption date
shall be payable to the Holders of record at the close of business on the
relevant record dates referred to in the Securities. The Trustee shall not be
required to (i) issue, authenticate, register the transfer of or exchange any
Security during a period beginning 15 days before the date a notice of
redemption is mailed and ending at the close of business on the date the
redemption notice is mailed, or (ii) register the transfer or exchange of any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
SECTION 3.05. Deposit of Redemption Price.
At least one Business Day before the redemption date, the
Company shall deposit with the Paying Agent (or if the Company or an Affiliate
of the Company is the Paying Agent, shall, on or before the redemption date,
segregate and hold in trust) money designated for and sufficient to pay the
redemption price of and accrued interest on all Securities to be redeemed on
the redemption date other than Securities or portions thereof called for
redemption on the redemption date which have been delivered by the Company to
the Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the
Trustee shall authenticate for the Holder a new Security equal in principal
amount to the unredeemed portion of the Security surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
The Company shall pay the principal of, premium, if any, on
and interest on the Securities in the manner provided in the Securities. An
installment of principal, premium, if any, or interest shall be considered paid
on the date due if the Trustee or Paying Agent (other than the
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<PAGE> 31
Company or an Affiliate of the Company) holds on that date money designated for
and sufficient to pay the installment in full.
The Company shall pay interest on overdue principal at the
same rate per annum borne by the Securities. The Company shall pay interest on
overdue installments of premium, if any, or interest at the same rate per annum
borne by the Securities, to the extent lawful.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency where Securities may be surrendered for
registration of transfer or exchange or for presentation for payment and where
notices and demands to or upon the Company in respect of the Securities and
this Indenture may be served. The Company shall give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the address of the Trustee set forth in Section 10.02.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations, provided that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an office or agency in
the Borough of Manhattan, The City of New York, for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency.
SECTION 4.03. Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, make any loan, advance,
guaranty or capital contribution to, or for the benefit of, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or for the
benefit of, or purchase or lease any property or asset from, or enter into or
amend any contract, agreement or understanding with, or for the benefit of, any
Affiliate (other than between the Company and a wholly-owned Restricted
Subsidiary or between wholly-owned Restricted Subsidiaries) of the Company or
any of its Restricted Subsidiaries unless (i) such transaction or series of
transactions is on terms that are no less favorable to the Company or the
relevant Subsidiary, as the case may be, than those that reasonably could have
been obtained in a comparable transaction on an arm's length basis from a
Person that is not such an Affiliate, and (ii) (a) with respect to a
transaction or series of transactions with a fair market value of $5 million or
more and less than $10 million, the Company delivers an Officers' Certificate
to the Trustee certifying that such transaction or series of transactions
complies with clause (i) above or (b) with respect to a transaction or series
of transactions with a fair market value of $10 million or more, (1) the
transaction or series of transactions is approved by a majority of the Board of
Directors of the Company (including a majority of the directors, if any, who
are not officers or employees of, or otherwise interested in, the Company
(except as directors) or officers, employees or directors
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of, or otherwise interested in, such Affiliate) or (2) the Company or such
Subsidiary delivers to the Trustee a written opinion of a nationally recognized
investment banking firm stating that the transaction is fair to the Company or
such Subsidiary from a financial point of view; provided, however, that with
respect to any transaction or series of transactions that constitutes a
Restricted Investment but is permitted by Section 4.19, delivery of the
Officers' Certificate referred to in clause (a) above shall only be required if
the fair market value of such transaction or series of transactions is $10
million or more and less than $20 million, and approval by the Board of
Directors or delivery of the opinion of a nationally recognized investment
banking firm as described in clause (b) above shall only be required if the
fair market value of such transaction or series of transactions is $20 million
or more. Notwithstanding the foregoing, this restriction shall not apply to
(i) payments pursuant to the Demand Note, the Intercompany Agreement, the
Treasury Management Agreement or the Tax Sharing Agreement, in each case on
terms not less favorable to the Company or the relevant Subsidiary than those
as in effect on September 22, 1994; (ii) the payment of reasonable and
customary regular fees to directors of the Company and its Subsidiaries who are
not employees of the Company or its Subsidiaries; (iii) Restricted Payments
permitted by Section 4.07; (iv) payments pursuant to the Securities or this
Indenture and (v) transactions with Unrestricted Subsidiaries entered into in
the ordinary course of business consistent with prior practices; provided, that
the aggregate fair market value of all transactions described in and permitted
only by clause (v) of this Section 4.03 (excluding transactions with IACP, Inc.
and its subsidiaries) in any period of four consecutive fiscal quarters does
not exceed $10 million.
SECTION 4.04. Limitation on Indebtedness.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries (or any entity that shall become a Restricted
Subsidiary in a transaction in connection with which such Indebtedness is
incurred, created, assumed or guaranteed) to, incur, assume, create, guarantee
or in any other manner become directly or indirectly liable (including in a
transaction permitted by Section 5.01) with respect to or responsible for the
payment of any Indebtedness, except:
(1) Permitted Indebtedness; and
(2) Indebtedness of the Company or of any Restricted
Subsidiary if at the time thereof and after giving effect thereto the
Consolidated Interest Coverage Ratio of the Company, on a pro forma basis for
the four most recent quarters (for which financial information has been
published, or is filed with the SEC, or would be required to be filed with the
SEC if the Company's common stock had been registered under Section 12 of the
Exchange Act since the beginning of such four-quarter period), taken as a whole
(giving effect to such Indebtedness and the application of the proceeds
therefrom, and assuming that such Indebtedness had been incurred, created,
assumed or guaranteed on the first day of such four-quarter period) would be
greater than 2.25 to 1 for Indebtedness incurred, created, assumed or
guaranteed on or prior to September 30, 1996 and 2.50 to 1 for Indebtedness
incurred, created, assumed or guaranteed thereafter.
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SECTION 4.05. Limitation on Liens.
The Company shall not, and shall not permit any Restricted
Subsidiary to, create, incur, assume or suffer to exist any Lien of any kind
upon any of their respective assets or properties, now owned or hereafter
acquired, without making effective provision whereby all of the Securities
shall be directly secured equally and ratably with (or prior to) the obligation
or liability secured by such Lien for so long as such liability or obligation
is secured by such Lien, except (i) Permitted Liens and (ii) Liens securing an
aggregate principal amount of Indebtedness at any one time outstanding which,
when taken together with (a) Indebtedness that would be outstanding with
respect to Sale and Leaseback Transactions if all Sale and Leaseback
Transactions entered into by the Company and its Restricted Subsidiaries after
September 22, 1994 had been structured as mortgage loans (other than Sale and
Leaseback Transactions permitted by clause (iii) of Section 4.16) plus (b) all
Indebtedness then outstanding of Restricted Subsidiaries permitted only by
clause (1) of Section 4.17, would not exceed 10% of Consolidated Net Assets.
SECTION 4.06. Limitation on Asset Dispositions.
The Company shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Disposition unless (A) the Company or the
Restricted Subsidiary, as the case may be, receives consideration at the time
of such Asset Disposition at least equal to the fair market value of the assets
sold or otherwise disposed of (which shall be determined in good faith and (x)
in the case of dispositions of assets having a fair market value of $50 million
or more, by the Board of Directors of the Company, whose reasonable
determination shall be conclusive and evidenced by a resolution of the Board of
Directors, or (y) in the case of dispositions of assets having a fair market
value of less than $50 million but more than $25 million, by an Officer, whose
reasonable determination shall be conclusive and evidenced by an Officers'
Certificate) and at least 75% of the gross proceeds from such Asset Disposition
consists of cash or cash equivalents (other than with respect to an Asset
Disposition consisting solely of an exchange of assets pursuant to which the
Company or any Restricted Subsidiary receives assets to be used in the ordinary
course of business of the Company and its Restricted Subsidiaries), and (B) the
Company shall apply the aggregate Net Cash Proceeds received by the Company or
any Restricted Subsidiary from all Asset Dispositions occurring subsequent to
September 22, 1994 as follows: (a) to the payment within twelve months after
such Asset Disposition of any Senior Indebtedness of the Company secured by a
Lien on the assets that are the subject of such Asset Disposition if and to the
extent required by the terms of such Senior Indebtedness or, if the Asset
Disposition relates to assets of a Restricted Subsidiary, to the payment within
twelve months after such Asset Disposition of any Indebtedness of such
Restricted Subsidiary secured by a Lien on the assets that are the subject of
such Asset Disposition if and to the extent required by the terms of such
Indebtedness, or (b) to replace the properties and assets that were the subject
of such Asset Disposition with properties and assets that shall be used in the
business of the Company and its Restricted Subsidiaries as conducted on
September 22, 1994 or reasonably related thereto within twelve months after
such Asset Disposition or, if such replacement is with respect to a project to
be completed within a period greater than twelve months after such Asset
Disposition, then within the period of time necessary to complete such project;
provided, however, that (x) in the case of applications
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contemplated by clause (b), the Board of Directors has, within such
twelve-month period, adopted in good faith a resolution committing such Net
Cash Proceeds to such replacement and (y) if the amount of Net Cash Proceeds
not applied, used or invested as set forth above in clauses (a) and (b) (the
"Excess Proceeds") exceeds $50 million, the Company shall make an Asset
Disposition Offer in accordance with and subject to the following provisions of
this Section 4.06.
When the amount of Excess Proceeds exceeds $50 million, then
the Company shall make an offer to purchase up to an aggregate principal amount
(or accreted value, as the case may be) equal to such Excess Proceeds (the
"Asset Disposition Offer Amount") of the Securities and all other Senior
Indebtedness required by its terms to be prepaid with such Excess Proceeds,
treating all such Indebtedness as a single class, at 100% of principal amount
(or accreted value, as the case may be) plus accrued and unpaid interest to the
Asset Disposition Payment Date (as defined below). If after being applied in
accordance with the preceding sentence there remain Excess Proceeds, the
Company may apply such Excess Proceeds to the general corporate purposes of the
Company or any Restricted Subsidiary of the Company. An offer to purchase such
Senior Indebtedness required to be made pursuant to this Section is an "Asset
Disposition Offer" and the date on which the purchase of such Senior
Indebtedness relating to any such Asset Disposition Offer is to be made is an
"Asset Disposition Payment Date."
Notwithstanding the foregoing, to the extent the Company or
any of its Restricted Subsidiaries receives securities or other non-cash
property or assets as proceeds of an Asset Disposition, the Company shall not
be required to make any application required by the preceding paragraph until
it receives cash proceeds from a sale, repayment, exchange, redemption or
retirement of or extraordinary dividend or return of capital on such non-cash
property. Any amounts deferred pursuant to the preceding sentence shall be
applied in accordance with the preceding paragraph when cash proceeds are
thereafter received from a sale, repayment, exchange, redemption or retirement
of or extraordinary dividend or return of capital on such non-cash property.
Notice of an Asset Disposition Offer shall be mailed on behalf
of the Company by the Trustee to all Holders at their last registered addresses
not less than 30 days nor more than 60 days before the Asset Disposition
Payment Date, which shall be a date not more than 410 days after the Asset
Disposition giving rise to such Asset Disposition Offer or not more than 60
days after the Excess Proceeds exceed $50 million, whichever is later. The
Company shall provide the form of notice of an Asset Disposition Offer to the
Trustee at least two Business Days prior to such date of mailing. The Asset
Disposition Offer shall remain open from the time of the mailing of such notice
until not more than five Business Days before the Asset Disposition Payment
Date.
On the relevant Asset Disposition Payment Date, the Company
shall accept for payment the Senior Indebtedness or portions thereof tendered
to the Paying Agent (or such other agent or agents that the Company shall
appoint) pursuant to the Asset Disposition Offer in an aggregate principal
amount (or accreted value, as the case may be) equal to the Asset Disposition
Offer Amount or such lesser amount of Senior Indebtedness as shall have been
tendered, and the Company shall deposit with the Paying Agent (or such other
agent or agents that the Company
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shall appoint) money sufficient to pay the purchase price of all Senior
Indebtedness or portions thereof so accepted. If the aggregate principal
amount and accreted value of Senior Indebtedness validly tendered in the
relevant Asset Disposition Offer exceeds the Asset Disposition Offer Amount,
the Company shall select the Senior Indebtedness to be purchased on a pro rata
basis to the nearest $1,000 of principal amount (or accreted value, as the case
may be). The Paying Agent (or such other agent or agents that the Company
shall appoint) shall promptly mail or deliver to the Holders of the Securities
so accepted payment in an amount equal to the purchase price, and the Company
shall execute and the Trustee shall promptly authenticate and mail or make
available for delivery to such Holders new Securities equal in principal amount
to any unpurchased portion of the Securities so surrendered. The Company shall
publicly announce the results of the Asset Disposition Offer.
The Company shall not, and shall not permit any Subsidiary to,
create, permit to exist or become effective any restriction (other than
restrictions existing under Indebtedness as in effect on September 22, 1994 as
such Indebtedness may be refinanced from time to time, provided that such
restrictions are not less favorable to the Holders of the Securities than those
existing on September 22, 1994) that expressly or by its terms would materially
impair the ability of the Company to make an Asset Disposition Offer or, if
such Offer is made, to pay for the Securities tendered for purchase.
With respect to any Asset Disposition Offer, the Company shall
comply with the requirements of Section 14(e) and Rule 14e-1 under the Exchange
Act, if applicable.
SECTION 4.07. Limitation on Restricted Payments.
The Company (a) shall not, directly or indirectly, declare or
pay any dividend on, or make any distribution with respect to, any of its
capital stock (other than dividends or distributions payable solely in shares
of its capital stock or in options, warrants or other rights to purchase such
capital stock, but excluding dividends or distributions payable in Redeemable
Stock or in options, warrants or other rights to purchase Redeemable Stock) and
(b) shall not and shall not cause or permit any of its Restricted Subsidiaries
to (i) purchase, redeem or otherwise acquire or retire for value any capital
stock of the Company or of any of its Affiliates or any options, warrants or
other rights to acquire such capital stock unless all the proceeds thereof are
paid to the Company or, in the case of a purchase or redemption by a Restricted
Subsidiary, to the Company or to a wholly-owned Restricted Subsidiary, or (ii)
prepay, repurchase, redeem, defease or otherwise acquire or retire for value,
prior to any scheduled maturity, scheduled repayment or scheduled sinking fund
payment, any Indebtedness that is subordinate in right of payment to the
Securities (each of foregoing actions set forth in clauses (a) and (b) being
referred to as a "Restricted Payment"), unless, at the time of such Restricted
Payment and after giving effect thereto, (x) no Default or Event of Default
shall have occurred and be continuing and (y) the aggregate amount of all
Restricted Payments made after September 22, 1994 shall not exceed the sum of:
(a) 50% of the aggregate Consolidated Net Income (or, in the event Consolidated
Net Income is a deficit, minus 100% of such deficit) of the Company accrued on
a cumulative basis for the period (taken as one accounting period) beginning on
July 1, 1994 and ending on the last day of the most recent fiscal quarter
ending prior to the 30th day preceding the date of the
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proposed Restricted Payment (Consolidated Net Income to be calculated by
deducting therefrom 100% of any negative cash charges or negative cash
evaluations or adjustments not otherwise reflected in Consolidated Net Income
during such period), (b) the aggregate net cash proceeds received on or after
July 1, 1994 by the Company from the issuance or sale (other than to any of the
Subsidiaries) of capital stock (other than Redeemable Stock) of the Company or
warrants, options or other rights to purchase such capital stock (other than
Redeemable Stock), (c) subject to the next succeeding sentence, 50% of the
aggregate net cash proceeds received by the Company from the sale of all or
part of Schuller GmbH (without duplication of any amount included in
Consolidated Net Income), and (d) $100 million. In respect of any particular
Restricted Payment, no amount shall be included under clause (c) of the
immediately preceding sentence unless prior to such Restricted Payment the
Company could otherwise have made a Restricted Payment under this Section 4.07.
Nothing in this Section shall limit or restrict the making of
any Restricted Investment or any Permitted Payment, and if a Permitted Payment
described in clause (b), (c) or (d) of the definition thereof is made from the
proceeds of any sale of capital stock of the Company, such Permitted Payment,
to the extent made with such proceeds, shall not be treated as a Restricted
Payment for purposes of determining amounts available for other Restricted
Payments pursuant to the preceding paragraph, provided that proceeds from such
sale of capital stock shall not be included in the computation of aggregate net
cash proceeds received from the sale of capital stock under the preceding
paragraph. The aggregate of all Permitted Payments described in clause (a) of
the definition thereof made since September 22, 1994 shall reduce the amounts
available for other Restricted Payments pursuant to the preceding paragraph.
The amount of any Restricted Payment, if other than cash,
shall be determined by the Board of Directors, whose reasonable determination
shall be conclusive.
SECTION 4.08. Corporate Existence.
Subject to Article 5, the Company shall or shall cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each
Restricted Subsidiary in accordance with the respective organizational
documents of each such Restricted Subsidiary and the rights (charter and
statutory) and material franchises of the Company and the Restricted
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right or franchise, or the corporate existence of any
Restricted Subsidiary, if the Board of Directors of the Company shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and the Restricted Subsidiaries, taken as a whole, and
that the loss thereof is not, and shall not be, adverse in any material respect
to the Holders; provided further, however, that a determination of the Board of
Directors of the Company shall not be required in the event of (i) a merger of
one or more wholly-owned Restricted Subsidiaries with or into another
wholly-owned Restricted Subsidiary or another Person, if the surviving Person
is a wholly-owned Restricted Subsidiary organized under the laws of the United
States or a State thereof or (ii) a merger of one or more wholly-owned Foreign
Restricted Subsidiaries that are organized under the laws of the same
jurisdiction with or into another wholly-owned Foreign Subsidiary or another
Person, if the
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surviving Person is a wholly-owned Foreign Restricted Subsidiary organized
under the laws of the same jurisdiction under which the Foreign Restricted
Subsidiaries were organized prior to such merger.
SECTION 4.09. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all material taxes,
assessments and governmental charges levied or imposed upon the Company or any
Subsidiary or upon the income, profits or property of the Company or any
Subsidiary and (2) all lawful claims for labor, materials and supplies which,
in each case, if unpaid, might by law become a material liability, or Lien upon
the property, of the Company or any Restricted Subsidiary; provided, however,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which appropriate provision has been made.
SECTION 4.10. Notice of Defaults.
(1) In the event that any Indebtedness of the Company or
any of the Restricted Subsidiaries is declared due and payable before its
maturity because of the occurrence of any default (or any event which, with
notice or lapse of time, or both, would constitute such a default) under such
Indebtedness, the Company shall promptly give written notice to the Trustee of
such declaration, the status of such default or event and what action the
Company is taking or proposes to take with respect thereto.
(2) Upon becoming aware of any Default or Event of
Default, the Company shall promptly deliver an Officers' Certificate to the
Trustee specifying the Default or Event of Default.
SECTION 4.11. Maintenance of Properties.
The Company shall cause all material properties owned by or
leased to it or any Restricted Subsidiary and used or useful in the conduct of
its business or the business of any Restricted Subsidiary to be maintained and
kept in normal condition, repair and working order and supplied with all
necessary equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company or any
Restricted Subsidiary from discontinuing the use, operation or maintenance of
any of such properties, or disposing of any of them, if such discontinuance or
disposal is, in the judgment of the Board of Directors or of the board of
directors of the Restricted Subsidiary concerned, or of an officer (or other
agent employed by the Company or of any of its Restricted Subsidiaries) of the
Company or such Restricted Subsidiary having managerial responsibility for any
such property, desirable in the conduct of the business of
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the Company or any Restricted Subsidiary, and if such discontinuance or
disposal is not disadvantageous in any material respect to the Holders.
SECTION 4.12. Compliance Certificate.
The Company shall deliver to the Trustee within 55 days after
the end of each of the first three fiscal quarters and within 100 days after
the close of each fiscal year of the Company an Officers' Certificate stating
that a review of the activities of the Company has been made under the
supervision of the signing officers with a view to determining whether a
Default or Event of Default has occurred and whether or not the signers know of
any Default or Event of Default by the Company that occurred during such fiscal
quarter. If they do know of such a Default or Event of Default, the
certificate shall describe all such Defaults or Events of Default, their status
and the action the Company is taking or proposes to take with respect thereto.
The first certificate to be delivered by the Company pursuant to this Section
4.12 shall be for the fiscal year ending December 31, 1994.
SECTION 4.13. SEC Reports; Financial Statements.
So long as any Securities are outstanding and the Company is
required to file reports with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act, the Company shall (i) file with the Commission and, within 15
days after it files them with the Commission, file with the Trustee, copies of
the annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may by rules
and regulations prescribe) which the Company is required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act and (ii) mail or
cause to be mailed any annual and quarterly report filed with the Commission
pursuant to clause (i), within 15 days of such filing, to the Holders at their
addresses as set forth in the register of the Securities. In addition, the
Company shall cause its annual report to stockholders and any quarterly or
other financial reports furnished to its stockholders, in each case, to the
extent made available to stockholders of Manville, other than the Trust, or to
the Company's stockholders, other than Manville, to be filed with the Trustee
and shall cause such reports to stockholders so required to be furnished to the
Trustee to be mailed, no later than the date such materials are mailed or made
available to such stockholders of Manville or the Company, to the Holders at
their addresses as set forth in the register of the Securities.
At any time that the Company is not required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act, the Company shall prepare,
for the first three quarters of each fiscal year quarterly reports, and for
each fiscal year an annual report, containing information (including, but not
limited to, combined or consolidated financial statements which in the case of
annual reports shall be audited) substantially equivalent to that required to
be included in reports on Form 10-Q and on Form 10-K, respectively, under the
Exchange Act. All financial statements shall be prepared in accordance with
GAAP, except for changes with which the Company's independent public
accountants concur and except that quarterly statements may be subject to
year-end adjustments and shall be certified by the President, Senior Vice
President of Finance or Treasurer of the Company, and, in the case of the
annual financial statements, certified by the
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Company's independent public accountants. The Company shall cause, at the
Company's expense, a copy of the respective reports to be mailed to the Trustee
and each of the Holders of the Securities within 55 days after the close of
each of the first three quarters of each fiscal year and within 100 days after
the close of each fiscal year to, in the case of the Trustee, the address set
forth in Section 10.02 hereof or, in the case of each of the Holders, to such
Holder's address as set forth in the register of the Securities maintained by
the Registrar.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein
or determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.14. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law, which would prohibit or forgive the Company from
paying all or any portion of the principal of, premium, if any, on or interest
on the Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of
this Indenture; and (to the extent that it may lawfully do so) the Company
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not hinder, delay or impede the execution of any power herein
granted to the Trustee, but shall suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 4.15. Change of Control Offer.
(a) Within 30 days of the occurrence of a Change of
Control Triggering Event, the Company shall notify the Trustee in writing of
the occurrence of the Change of Control Triggering Event and make an offer to
purchase (the "Change of Control Offer") all of the Securities at a purchase
price equal to 100% of the principal amount thereof plus any accrued and unpaid
interest thereon to the Change of Control Payment Date (as hereinafter defined)
(the "Change of Control Purchase Price") in accordance with the procedures set
forth in subsection (b) of this Section 4.15.
(b) Within 30 days following the occurrence of a Change
of Control Triggering Event, the Company shall (i) cause a notice of the Change
of Control Offer to be sent at least once to the Dow Jones News Service or
similar business news service in the United States and (ii) send by first-class
mail, postage prepaid, to the Trustee and to each Holder of the Securities, at
his or her address appearing in the register maintained by the Registrar, a
notice stating: (a) that the Change of Control Offer is being made pursuant to
this Section 4.15 and that all of the Securities tendered shall be accepted for
payment; (b) the Change of Control Purchase Price and the purchase date (which
shall be a Business Day no earlier than 30 days nor later than 45 days from the
date such notice is mailed) (the "Change of Control Payment Date"); (c) that
any
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Securities not tendered shall continue to accrue interest; (d) that unless the
Company defaults in the payment of the Change of Control Purchase Price, any
Securities accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date; (e) that
Holders accepting the offer to have their Securities purchased pursuant to a
Change of Control Offer shall be required to surrender such Securities to the
Paying Agent at the address specified in the notice prior to the close of
business on the Business Day preceding the Change of Control Payment Date; (f)
that Holders shall be entitled to withdraw their acceptance if the Paying Agent
receives, not later than the close of business on the third Business Day
preceding the Change of Control Payment Date, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Securities delivered for purchase, and a statement that such Holder is
withdrawing his or her election to have such Securities purchased; (g) that
Holders whose Securities are being purchased only in part shall be issued new
Securities equal in principal amount to the unpurchased portion of the
Securities surrendered, provided that each Security purchased and each such new
Security issued shall be in an original principal amount of $1,000 or integral
multiples thereof; and (h) any other procedures that a Holder must follow to
accept a Change of Control Offer or to withdraw such acceptance.
(c) A third party may also make and consummate a Change
of Control Offer in the manner and at the times and otherwise in compliance
with this Section 4.15.
(d) The Company shall not, and shall not permit any
Subsidiary to, create or permit to exist or become effective any restriction
(other than restrictions existing under Indebtedness as in effect on September
22, 1994) that expressly or by its terms would materially impair the ability of
the Company to make a Change of Control Offer to purchase the Securities or, if
such Change of Control Offer is made, to pay for the Securities tendered for
purchase.
(e) The Company shall comply with all applicable tender
offer rules (including, without limitation, Rule 14e-1 under the Exchange Act)
in the event that the payment option is triggered under the circumstances
described herein.
SECTION 4.16. Limitation on Sale and Leaseback Transactions.
The Company shall not enter into, renew or extend, or permit
any Restricted Subsidiary to enter into, renew or extend, any transaction or
series of related transactions pursuant to which the Company or any such
Restricted Subsidiary sells or transfers any property or asset in connection
with the leasing, or the resale against installment payments, or as part of an
arrangement involving the leasing or the resale against installment payments,
of such property or asset to the seller or transferor ("Sale and Leaseback
Transaction") except (i) a Sale and Leaseback Transaction that (A) when
aggregated with the following clauses (I), (II) and (III) would not exceed 10%
of Consolidated Net Assets: (I) all Indebtedness then outstanding secured by
Liens permitted only by clause (ii) of Section 4.05, (II) all Indebtedness then
outstanding of Restricted Subsidiaries permitted only by clause (1) under
Section 4.17 and (III) all other Indebtedness that would be outstanding with
respect to Sale and Leaseback Transactions if all other Sale and Leaseback
Transactions entered into by the Company and its Restricted Subsidiaries after
September 22, 1994 had been structured as mortgage loans and (B) had such
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Sale and Leaseback Transaction been structured as a mortgage loan rather than
as a Sale and Leaseback Transaction, the Company would have been permitted to
enter into pursuant to the terms of the Sections 4.04 and 4.05; (ii) a Sale and
Leaseback Transaction entered into on or prior to September 22, 1994; and (iii)
any transaction described in clause (h) of the definition of "Permitted
Indebtedness."
SECTION 4.17. Limitation on Restricted Subsidiary
Indebtedness.
The Company shall not permit any Restricted Subsidiary to
incur, create, assume, guarantee or in any other manner become directly or
indirectly liable with respect to or responsible for the payment of any
Indebtedness except: (1) Indebtedness which, when aggregated with (A) all
Indebtedness then outstanding secured by Liens permitted only by clause (ii) of
Section 4.05, (B) all Indebtedness that would be outstanding with respect to
Sale and Leaseback Transactions if all Sale and Leaseback Transactions entered
into by the Company and its Restricted Subsidiaries after September 22, 1994
had been structured as mortgage loans (other than Sale and Leaseback
Transactions permitted by clause (iii) of Section 4.16), and (C) all other
Indebtedness of Restricted Subsidiaries incurred in compliance with this clause
(1), would not exceed 10% of Consolidated Net Assets and (2) Indebtedness
described in clauses (a), (c), (d), (e), (f), (g), (h), (i), (j), (k) and (l)
of the definition of "Permitted Indebtedness."
SECTION 4.18. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any Restricted Subsidiary to (a) pay dividends or make any
other distribution on its capital stock, (b) pay any Indebtedness owed to the
Company or to any Restricted Subsidiary, (c) make loans or advances to the
Company or to any Restricted Subsidiary or (d) transfer any of its property or
assets to the Company or to any Restricted Subsidiary (any such encumbrance or
restriction set forth in clause (a), (b), (c) or (d), a "Payment Restriction"),
except (i) any consensual encumbrances or restrictions in financing agreements
in effect as of September 22, 1994, (ii) any encumbrances or restrictions
imposed by applicable laws or regulations, (iii) any consensual encumbrances or
restrictions with respect to Indebtedness which do not expressly or by their
terms preclude the payment of dividends or the making of investments, loans or
advances to the Company and its Restricted Subsidiaries, (iv) any consensual
encumbrances or restrictions of the type described in this Section 4.18 created
by a Restricted Subsidiary, the sole business of which is to finance
receivables of the Company and its other Restricted Subsidiaries, and contained
in agreements relating to any receivables financing arrangement of such
Restricted Subsidiary permitted by clause (e) of the definition of "Permitted
Indebtedness," provided that the Company and such other Restricted Subsidiaries
shall have received fair value in cash for any receivables transferred to such
Restricted Subsidiary, and (v) any consensual encumbrances or restrictions of
the type described in this Section 4.18 contained in agreements refinancing any
of the agreements described in clause (i) that are not more restrictive than
those contained in the agreements being refinanced.
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SECTION 4.19. Limitation on Certain Investments.
The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, make, directly or indirectly, any advance, loan or
capital contribution to, purchase any shares, bonds, notes, debentures or other
securities of, acquire, by purchase or otherwise, all or a substantial part of
the business or assets or shares or other evidence of beneficial ownership of,
or, directly or indirectly, make any investment in or guarantee any
Indebtedness of, any Person (other than a Permitted Investment) (each, a
"Restricted Investment") unless, at the time of such proposed Restricted
Investment and immediately after giving effect thereto, (1) the aggregate
amount of all Restricted Investments then owned or outstanding that were made
after September 22, 1994 shall not exceed 7.5% of Consolidated Net Assets as
set forth on the most recent consolidated balance sheet of the Company and its
Restricted Subsidiaries prior to such proposed Restricted Investment; (2) no
Default or Event of Default shall have occurred or be continuing; and (3) the
Company could incur at least one additional dollar of Indebtedness (not
constituting Permitted Indebtedness) under clause (2) of Section 4.04;
provided, however, if the Restricted Investment is made for the purposes of
supporting any investment previously made by the Company or any Restricted
Subsidiary in any Unrestricted Subsidiary or business, then the requirement of
clause (3) shall not apply to such Restricted Investment, if, after giving
effect thereto, the aggregate of all such Restricted Investments then owned or
outstanding and made under this proviso shall not exceed $10 million. For
purposes of this Section 4.19 only, "Person" does not include (i) any direct or
indirect wholly-owned Restricted Subsidiary that is not subject to a Payment
Restriction or (ii) any Person that would become such a Restricted Subsidiary
that is not subject to a Payment Restriction after giving effect to such
proposed Restricted Investment.
SECTION 4.20. Limitation on Sale or Issuance
of Stock of Restricted Subsidiaries.
The Company shall not sell, and shall not permit any
Restricted Subsidiary to issue or sell, directly or indirectly, less than 100%
of the capital stock of a Restricted Subsidiary (other than to the Company or a
wholly-owned Restricted Subsidiary) together with all securities convertible
into or exchangeable into, or options, warrants, rights or any other interest
with respect to, such capital stock. Any issuance or sale permitted hereunder
shall be treated as an "Asset Disposition" for purposes of Section 4.06.
ARTICLE FIVE
MERGERS; SUCCESSOR CORPORATION
SECTION 5.01. Restriction on Mergers and Consolidations
and Sales of Assets.
(a) The Company shall not consolidate with, or merge with
or into, any other Person (whether or not the Company shall be the surviving
corporation), or sell, assign, transfer or lease all or substantially all of
its properties and assets as an entirety or substantially as an
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entirety to any other Person or group of affiliated Persons, in one transaction
or a series of related transactions, unless:
(1) either the Company shall be the surviving
Person or the Person (if other than the Company) formed by
such consolidation or with which or into which the Company is
merged or the Person (or each member of the group of
affiliated Persons) to which all or substantially all the
properties and assets of the Company are sold, assigned,
transferred or leased is a corporation organized under the
laws of the United States or any State thereof or the District
of Columbia and expressly assumes, by indentures supplemental
to this Indenture, all the obligations of the Company under
the Securities and this Indenture;
(2) immediately before and after giving effect to
such transaction, no Event of Default and no Default with
respect to the Securities shall have occurred and be
continuing;
(3) immediately after giving effect to such
transaction on a pro forma basis, but prior to any purchase
accounting adjustments resulting from the transaction, the
Consolidated Net Worth of the Person surviving such merger or
formed by such consolidation or the Person (or group of
affiliated Persons) to which such sale, assignment, transfer
or lease is made, treating such entity, if not the Company, as
the Company for purposes of determining Consolidated Net
Worth, shall be at least equal to the Consolidated Net Worth
of the Company immediately before such transaction;
(4) immediately after giving effect to such
transaction on a pro forma basis, the Person surviving such
merger or formed by such consolidation or the Person (or group
of affiliated Persons) to which such sale, assignment,
transfer or lease is made, treating such entity, if not the
Company, as the Company for purposes of making such
determination, would be permitted to incur an additional
dollar of Indebtedness (not constituting Permitted
Indebtedness) under clause (2) of Section 4.04; and
(5) the Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, sale,
assignment, transfer or lease and such supplemental indenture
comply with this Indenture.
(b) Notwithstanding the foregoing Section 5.01(a) and any
other provision of this Indenture, the Company and any one or more of its
Restricted Subsidiaries may sell, assign, transfer or otherwise dispose of all
or substantially all of their properties and assets as an entirety or
substantially as an entirety (excluding, at the option of the Company, Excluded
Tax Attributes and the Capital Stock of SII), directly or indirectly, through
one or more transactions, to one or more Restricted Subsidiaries, provided that
(i) one Restricted Subsidiary formed for the sole
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purpose of consummating such transaction or transactions that is a corporation
organized under the laws of the United States or any State thereof or the
District of Columbia, and that has less than $1,000 in assets and has not
transacted any business or operations prior to such transaction or transactions
(other than in connection with its organization), (1) directly or indirectly
owns, holds or controls all or substantially all of such properties and assets
so sold, assigned, transferred or disposed of (which properties and assets
shall include all properties and assets necessary to operate the business of
the Company and its Restricted Subsidiaries as existing immediately prior to
such transaction or transactions), at least to the same extent as such
properties and assets were owned, held or controlled immediately prior to such
transaction or transactions and (2) expressly assumes, by an indenture
supplemental to this Indenture, all the obligations of the Company under the
Securities and this Indenture; (ii) immediately before and after giving effect
to such transaction or transactions, no Event of Default and no Default with
respect to the Securities shall have occurred and be continuing; and (iii) the
Company shall have delivered to the Trustee an Officers' Certificate and
Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, transfer or disposition and such supplemental indenture comply with
this Indenture.
(c) If, upon any consolidation or merger, or upon any
sale, assignment, transfer, lease or disposition, as provided in Sections
5.01(a) and (b), any material property of the Company or any Restricted
Subsidiary or any shares of Capital Stock or Indebtedness of any Restricted
Subsidiary owned immediately prior thereto would thereupon become subject to
any Lien securing any indebtedness for borrowed money of, or guaranteed by,
such other corporation or Person (other than any Permitted Lien or a Lien
permitted under Section 4.05), the Company, prior to such consolidation,
merger, sale, assignment, transfer, lease or disposition, shall secure the due
and punctual payment of the principal of, premium, if any, on and interest on
the Securities then outstanding (together with, if the Company shall so
determine, any other Indebtedness of, or guaranteed by, the Company or any
Restricted Subsidiary then existing or thereafter created) equally and ratably
with (or, at the option of the Company, prior to) the Indebtedness secured by
such Lien.
SECTION 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease or disposition of all or substantially all of the properties or
assets of the Company in accordance with Section 5.01, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such sale, assignment, transfer, lease or disposition is made (which,
in the case of a transaction of the type contemplated by Section 5.01(b), shall
be the Restricted Subsidiary referred to in clause (i) of Section 5.01(b))
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture, with the same effect as if such
successor corporation had been named as the Company herein, and, except in the
case of a lease, the Company shall thereupon automatically be discharged from
all obligations and covenants under this Indenture and the Securities;
provided, however, that, in the case of a transaction or transactions of the
type contemplated by Section 5.01(b), even if such transaction or transactions
otherwise satisfies the requirements of Section 5.01(a), the Company shall not
be discharged from, but shall remain jointly liable with such successor
corporation for, the obligation to pay principal of, premium, if any, on and
interest on the Securities unless the Trustee receives
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an Opinion of Counsel to the effect that the Holders of the Securities shall
not recognize income, gain or loss for Federal income tax purposes as a result
of the Company being discharged from the obligation to pay such principal of,
premium, if any, on and interest on the Securities and shall be subject to the
Federal income tax on the same amount, in the same manner and at the same times
as would have been the case if such discharge of the Company had not occurred,
which Opinion of Counsel shall be based upon a ruling from the Internal Revenue
Service addressed to the Trustee to such effect or upon a change in the
applicable Federal tax law since September 22, 1994. In the event the Company
shall remain jointly liable with such successor corporation in accordance with
the proviso of the preceding sentence, then notwithstanding any other provision
of this Indenture, such successor corporation may enter into an indemnity
agreement or arrangement of the type described in clause (l) of the definition
of "Permitted Indebtedness."
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
An "Event of Default" occurs if:
(1) the Company fails to pay interest on any Securities
when the same becomes due and payable and the Default continues for a period of
30 days;
(2) the Company fails to pay the principal of or premium,
if any, on any Securities when the same becomes due and payable at maturity,
upon redemption, upon repurchase, pursuant to an Asset Disposition Offer as
described under Section 4.06 or pursuant to a Change of Control Offer as
described in Section 4.15 or otherwise;
(3) the Company fails to observe or perform any other
covenant, warranty or agreement contained in the Securities or this Indenture,
and the Default continues for the period and after the notice specified in the
last paragraph of this Section 6.01;
(4) there shall be (i) a default or defaults in payment
under Indebtedness of the Company or any Restricted Subsidiary (other than the
Securities) having an outstanding principal amount of $20 million or more in
the aggregate or (ii) a default or defaults under one or more mortgages, bonds,
debentures, notes or other evidences of indebtedness, or one or more indentures
or other agreements, relating to Indebtedness having an outstanding principal
amount of $20 million or more in the aggregate as a result of which default or
defaults payment of such Indebtedness shall have been accelerated or the
holders of such Indebtedness shall be entitled to accelerate payment, whether
such Indebtedness exists on September 22, 1994 or shall thereafter be created;
(5) there shall have been entered in courts of competent
jurisdiction judgments or decrees involving an aggregate liability of $20
million or more rendered against the Company and/or any of its Restricted
Subsidiaries, and such judgments or decrees are not vacated,
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discharged, satisfied or stayed within 60 days after the date of the entering
of such judgments or decrees;
(6) the Company or any Restricted Subsidiary pursuant to
or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order for relief
against it in an involuntary case or proceeding,
(C) consents to the appointment of a Custodian of
it or for all or substantially all of its property, or
(D) makes a general assignment for the benefit of
its creditors; or
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Restricted Subsidiary in an involuntary case or proceeding,
(B) appoints a Custodian of the Company or any
Restricted Subsidiary or for all or substantially all of its
property, or
(C) orders the liquidation of the Company or any
Restricted Subsidiary,
and in each case the order or decree remains unstayed and in effect for 30
days; provided, however, that if the entry of such order or decree is appealed
and dismissed on appeal, then the Event of Default hereunder by reason of the
entry of such order or decree shall be deemed to have been cured.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal, state or foreign law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or
similar official under any Bankruptcy Law.
The Trustee shall, within 90 days after the occurrence of any
Default or Event of Default, give the Holders of the Securities notice of all
uncured Defaults or Events of Default known to it (the term "Default" to
include the events specified above without grace or notice); provided, however,
that, except in the case of an Event of Default or a Default in payment, the
Trustee shall be protected in withholding such notice if and so long as the
directors or responsible officers of the Trustee in good faith determine that
the withholding of such notice is in the interest of the Holders of the
Securities.
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A Default under clause (3) is not an Event of Default until
the Trustee notifies the Company, or the Holders of at least 25% in aggregate
principal amount of the outstanding Securities notify the Company and the
Trustee, of the Default in writing and the Company does not cure the Default
within 30 days after receipt of the notice. The notice must specify the
Default, demand that it be remedied and state that the notice is a "Notice of
Default." Such notice shall be given by the Trustee if so requested by the
Holders of at least 25% in principal amount of the Securities then outstanding,
excluding Affiliates of the Company. When a Default is cured, it ceases.
SECTION 6.02. Acceleration.
If an Event of Default (other than an Event of Default
specified in clause (6) or (7) of Section 6.01) occurs and is continuing, the
Trustee or the Holders of at least 25% in aggregate principal amount of the
outstanding Securities by notice in writing to the Company (and to the Trustee
if given by the Holders) may declare the unpaid principal of, premium, if any,
on and accrued interest to the date of acceleration on all the outstanding
Securities to be due and payable immediately and, upon any such declaration,
such principal amount, premium, if any, on and accrued interest shall become
immediately due and payable.
If an Event of Default specified in clause (6) or (7) of
Section 6.01 occurs, all unpaid principal of, premium, if any, on and accrued
interest on the outstanding Securities shall ipso facto become immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder thereof.
Any such declaration may be annulled and past Events of
Default and Defaults (except, unless theretofore cured, an Event of Default or
a Default in payment of principal of, premium, if any on or interest on the
Securities) may be waived by the Holders of a majority of the principal amount
of the outstanding Securities in accordance with Section 6.04.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect
the payment of principal of, premium, if any, on or interest on the Securities
or to enforce the performance of any provision of the Securities or this
Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy maturing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.
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SECTION 6.04. Waiver of Past Default.
Subject to Sections 2.09, 6.07 and 9.02, the Holders of a
majority in aggregate principal amount of the outstanding Securities by written
notice to the Trustee may waive an existing Default or Event of Default and its
consequences, except a Default or Event of Default in the payment of principal
of, premium, if any, on or interest on any Security as specified in clauses (1)
and (2) of Section 6.01. The Company shall deliver to the Trustee an Officers'
Certificate stating that the requisite percentage of Holders have consented to
such waiver and attaching copies of such consents. When a Default or Event of
Default is so waived, it is cured.
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in
principal amount of the outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture, that the
Trustee determines may be unduly prejudicial to the rights of another
Securityholder, or that may involve the Trustee in personal liability, provided
that the Trustee may take any other action deemed proper by the Trustee which
is not inconsistent with such direction. In the event the Trustee takes any
action or follows any direction pursuant to this Indenture, the Trustee shall
be entitled to indemnification satisfactory to it in its sole discretion
against any loss or expense caused by taking such action or following such
direction.
SECTION 6.06. Limitation on Suits.
A Securityholder may not pursue any remedy with respect to
this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal amount of
the outstanding Securities make a written request to the Trustee to pursue a
remedy;
(3) such Holder or Holders offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(4) the Trustee does not comply with the request within
60 days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(5) during such 60 day period, the Holders of a majority
in principal amount of the outstanding Securities (excluding Affiliates of the
Company) do not give the Trustee a direction which, in the opinion of the
Trustee, is inconsistent with the request.
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A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
such other Securityholder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of principal of, premium, if any, on and
interest on the Security, on or after the respective due dates expressed in the
Security, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
the Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal, premium, if
any, or interest specified in Section 6.01(1) or (2) occurs and is continuing,
the Trustee may recover judgment in its own name and as trustee of an express
trust against the Company or any other obligor on the Securities for the whole
amount of principal, premium, if any, and accrued interest remaining unpaid,
together with interest on overdue principal and to the extent that payment of
such interest is lawful, interest on any overdue premium and installments of
interest, in each case at the rate per annum borne by the Securities and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee or its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Securityholders allowed in any judicial proceedings relative to the Company (or
any other obligor upon the Securities), its creditors or its property and shall
be entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same, and any
Custodian in any such judicial proceedings is hereby authorized by each
Securityholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent
and counsel, and any other amounts due the Trustee under Section 7.07. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Securityholder in any such proceeding.
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SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this
Article 6, it shall pay out the money or property in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Securities for principal, premium, if any, and interest, respectively; and
Third: to the Company.
The Trustee, upon prior written notice to the Company, may fix
a record date and payment date for any payment to Securityholders pursuant to
this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 shall not apply to a suit by the Trustee, a suit
by Holders of more than 10% in aggregate principal amount of the outstanding
Securities, or to any suit instituted by any Holder for the enforcement or the
payment of the principal of, premium, if any, on or interest on any Securities
on or after the respective due dates expressed in the Security.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default actually known to the Trustee
has occurred and is continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default
actually known to the Trustee:
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(1) The Trustee need perform only those duties as
are specifically set forth herein and no others and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
and such other documents delivered to it pursuant to Section 10.04 and
conforming to the requirements of this Indenture. However, in the case of any
such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section 7.01.
(2) The Trustee shall not be liable for any error
of judgment made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
(d) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or to take or omit
to take any action under this Indenture or take any action at the request or
direction of Holders if it shall have reasonable grounds for believing that
repayment of such funds is not assured to it or it does not receive an
indemnity satisfactory to it in its sole discretion against such risk,
liability, loss, fee or expense which might be incurred by it in compliance
with such request or direction.
(e) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b), (c) and (d) of this
Section 7.01.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
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SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely on any document believed by it
to be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate and an Opinion of Counsel, which shall
conform to the provisions of Section 10.05. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
certificate or opinion.
(c) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of any agent
(other than an agent who is an employee of the Trustee) appointed with due
care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
(e) The Trustee may consult with counsel of its selection
and the advice or opinion of such counsel as to matters of law shall be full
and complete authorization and protection from liability in respect of any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or
its Affiliates with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. However, the Trustee is subject to
Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the
Securities, it shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement of the
Company in this Indenture or any document issued in connection with the sale of
Securities or any statement in the Securities other than the Trustee's
certificate of authentication.
SECTION 7.05. Notice of Defaults.
If a Default or an Event of Default occurs and is continuing
and the Trustee receives actual notice of such event, the Trustee shall mail to
each Securityholder notice of the Default or Event of Default within 90 days
after receipt of such notice. Except in the case of a
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Default or an Event of Default in payment of principal of, premium, if any, on
or interest on any Security, the Trustee may withhold the notice if and so long
as the directors or responsible officers of such Trustee in good faith
determine that the withholding of such notice is in the interest of
Securityholders.
SECTION 7.06. Reports by Trustee to Holders.
If required by TIA Section 313(a), within 60 days after each
September 1 beginning with September 1, 1995, the Trustee shall mail to each
Securityholder a report dated as of such September 1 that complies with TIA
Section 313(a). The Trustee also shall comply with TIA Section 313(b), (c)
and (d).
A copy of each such report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange, if any, on
which the Securities are listed.
The Company shall promptly notify the Trustee in writing if
the Securities become listed on any stock exchange or of any delisting thereof.
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as shall be agreed to in writing between the Company and the
Trustee for its services. The Trustee's compensation shall not be limited by
any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances (including fees and expenses of counsel) incurred or made by it in
addition to the compensation for its services, except any such disbursements,
expenses and advances as may be attributable to the Trustee's negligence or bad
faith. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents, accountants, experts and counsel and any
taxes or other expenses incurred by a trust created pursuant to Section 8.01
hereof.
The Company shall indemnify the Trustee for, and hold it
harmless against, any and all loss, damage, claim, liability or expense,
including taxes (other than taxes based on the income of the Trustee), incurred
by the Trustee without negligence or bad faith on its part in connection with
the acceptance or administration of this Trust and its duties under this
Indenture, including the reasonable expenses and attorneys' fees and expenses
of defending itself against any claim of liability arising hereunder. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. However, the failure by the Trustee
to so notify the Company shall not relieve the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee shall cooperate
in the defense (and may employ its own counsel) at the Company's expense. The
Company need not pay for any settlement made without its written consent, which
consent shall not be unreasonably withheld.
To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a senior lien prior to the Securities against all
money or property held or collected by
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the Trustee, in its capacity as Trustee, except money or property held in trust
to pay principal of, premium, if any, on or interest on particular Securities.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(6) or (7) occurs, the expenses
(including the reasonable fees and expenses of its agents and counsel) and the
compensation for the services shall be preferred over the status of the Holders
in a proceeding under any Bankruptcy Law and are intended to constitute
expenses of administration under any Bankruptcy Law. The Company's obligations
under this Section 7.07 and any claim arising hereunder shall survive the
resignation or removal of any Trustee, the discharge of the Company's
obligations pursuant to Article Eight and any rejection or termination under
any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign at any time by so notifying the Company
in writing. The Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Trustee in writing and
may appoint a successor Trustee with the Company's consent. The Company may
remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of
the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after
that, the retiring Trustee shall transfer, after payment of all sums then owing
to the Trustee pursuant to Section 7.07, all property held by it as Trustee to
the successor Trustee, subject to the senior lien provided in Section 7.07, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have the rights, powers and duties of the Trustee under
this Indenture. A successor Trustee shall mail notice of its succession as
soon as practicable to each Securityholder.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in
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principal amount of the outstanding Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or banking corporation, the resulting, surviving or transferee
corporation or banking corporation without any further act shall be the
successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee which shall be
eligible to act as Trustee under TIA Sections 310(a)(1), 310(a)(2) and
310(a)(5). The Trustee shall have a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual report of
condition. If the Trustee has or shall acquire any "conflicting interest"
within the meaning of TIA Section 310(b), the Trustee and the Company shall
comply with the provisions of TIA Section 310(b). If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Trustee shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 7.11. Preferential Collection of Claims
Against Company.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations.
The Company may terminate its substantive obligations in
respect of the Securities by delivering all outstanding Securities to the
Trustee for cancellation and paying all sums payable by it on account of
principal of, premium, if any, on and interest on all Securities or otherwise.
In addition to the foregoing, the Company may terminate its substantive
obligations in respect of the
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Securities (except for its obligations to pay the principal of, premium, if
any, on and the interest on the Securities) by (i) depositing with the Trustee,
under the terms of an irrevocable trust agreement, money or direct non-callable
obligations of the United States of America, for the payment of which the full
faith and credit of the United States is pledged ("United States Government
Obligations") sufficient (without reinvestment) to pay all remaining
indebtedness on the Securities, (ii) delivering to the Trustee either an
Opinion of Counsel or a ruling directed to the Trustee from the Internal
Revenue Service to the effect that the Holders of the Securities shall not
recognize income, gain or loss for Federal income tax purposes as a result of
such deposit and termination of obligations and shall be subject to Federal
income tax on the same amount, in the same manner and at the same times as
would have been the case if such deposit and termination of obligations had not
occurred, (iii) delivering to the Trustee an Opinion of Counsel to the effect
that the Company's exercise of its option under this sentence shall not result
in any of the Company, the Trustee or the trust created by the Company's
deposit of funds pursuant to this provision becoming or being deemed to be an
"investment company" under the Investment Company Act of 1940, as amended, and
(iv) delivering to the Trustee an Officers' Certificate and Opinion of Counsel
each stating compliance with all conditions precedent provided for herein. In
addition, the Company may terminate all of its substantive obligations in
respect of the Securities (including its obligations to pay the principal of,
premium, if any, on and interest on the Securities) by (i) depositing with the
Trustee, under the terms of an irrevocable trust agreement, money or United
States Government Obligations sufficient (without reinvestment) to pay all
remaining indebtedness on the Securities, (ii) delivering to the Trustee either
a ruling directed to the Trustee from the Internal Revenue Service to the
effect that the Holders of the Securities shall not recognize income, gain or
loss for Federal income tax purposes as a result of such deposit and
termination of obligations and shall be subject to Federal income tax on the
same amount, in the same manner and at the same times as would have been the
case if such deposit and termination of obligations had not occurred or an
Opinion of Counsel based upon such a ruling addressed to the Trustee or a
change in the applicable Federal tax law since September 22, 1994 to such
effect, (iii) delivering to the Trustee an Opinion of Counsel to the effect
that the Company's exercise of its option under this sentence shall not result
in any of the Company, the Trustee, or the trust created by the Company's
deposit of funds pursuant to this provision becoming or being deemed to be an
"investment company" under the Investment Company Act of 1940, as amended, and
(iv) delivering to the Trustee an Officers' Certificate and Opinion of Counsel
each stating compliance with all conditions precedent provided for herein.
Notwithstanding the foregoing paragraph, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 4.01 (but not with
respect to termination of substantive obligations pursuant to the third
sentence of the foregoing paragraph), 4.02, 7.07, 7.08, 8.03 and 8.04 shall
survive until the Securities are no longer outstanding. Thereafter the
Company's obligations in Sections 7.07, 8.03 and 8.04 shall survive.
After such delivery or irrevocable deposit and delivery of an
Officers' Certificate and Opinion of Counsel, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Securities and this Indenture except for those surviving obligations specified
above.
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<PAGE> 57
SECTION 8.02. Application of Trust Money.
The Trustee shall hold in trust money or United States
Government Obligations deposited with it pursuant to Section 8.01, and shall
apply the deposited money and the money from United States Government
Obligations in accordance with this Indenture to the payment of principal of,
premium, if any, on and interest on the Securities.
SECTION 8.03. Repayment to Company.
Subject to Sections 7.07 and 8.01, the Trustee shall promptly
pay to the Company upon written request any excess money held by it at any
time. The Trustee shall pay to the Company upon written request any money held
by it for the payment of principal, premium, if any, or interest that remains
unclaimed for two years; provided, however, that the Trustee before being
required to make any payment may at the expense of the Company cause to be
published once in a newspaper of general circulation in The City of New York or
mail to each Holder entitled to such money notice that such money remains
unclaimed and that, after a date specified therein which shall be at least 30
days from the date of such publication or mailing, any unclaimed balance of
such money then remaining shall be repaid to the Company. After payment to the
Company, Securityholders entitled to money must look to the Company for payment
as general creditors unless an applicable abandoned property law designates
another person and all liability of the Trustee or Paying Agent with respect to
such money shall thereupon cease.
SECTION 8.04. Reinstatement.
If the Trustee is unable to apply any money or United States
Government Obligations in accordance with Section 8.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.01 until
such time as the Trustee is permitted to apply all such money or United States
Government Obligations in accordance with Section 8.01; provided, however, that
if the Company has made any payment of principal of, premium, if any, on or
interest on any Securities because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or United States Government Obligations
held by the Trustee.
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<PAGE> 58
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company, when authorized by a resolution of its Board of
Directors, and the Trustee may amend or supplement this Indenture or the
Securities without notice to or consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Article 5; or
(3) to make any change that does not materially and
adversely affect the rights of any Securityholder.
SECTION 9.02. With Consent of Holders.
Subject to Section 6.07, the Company and the Trustee may amend
or supplement this Indenture or the Securities with the written consent of the
Holders of at least a majority in principal amount of the outstanding
Securities. Subject to Section 6.07, the Holders of a majority in principal
amount of the outstanding Securities may waive compliance by the Company with
any provision of this Indenture or the Securities. However, without the
consent of each Securityholder affected, an amendment, supplement or waiver,
including a waiver pursuant to Section 6.04, may not:
(1) change the Stated Maturity of the principal of any
Security;
(2) reduce the rate or extend the time for payment of
interest on any Security;
(3) alter the optional redemption or repurchase
provisions of the Securities and this Indenture in a manner adverse to any
Holder of any Security;
(4) make any other modification in any scheduled payment
of principal of, premium, if any, on or interest on any Security;
(5) change the ranking of any Security;
(6) reduce the amount of Securities whose Holders must
consent to an amendment, modification or waiver of default in the payment of
the principal of, premium, if any, on, interest on, or redemption payment with
respect to the Securities;
(7) amend, change or modify the obligation of the Company
to make and consummate a Change of Control Offer in accordance with Section
4.15 or the obligation of the
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<PAGE> 59
Company to make or consummate an Asset Disposition Offer in accordance with
Section 4.06, including amending, changing or modifying any definitions with
respect thereto; or
(8) amend this Section 9.02.
The Holders of not less than a majority in principal amount of
the outstanding Securities may on behalf of the Holders of all of the
Securities waive any past Event of Default or Default, except an Event of
Default or a Default in the payment of the principal of, premium, if any, on or
any interest on the Securities, or in respect of a provision which under this
Indenture cannot be modified or amended without the consent of the Holder of
each outstanding Security affected thereby.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, waiver or
supplemental indenture.
SECTION 9.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of that Security or portion of that Security that evidences
the same debt as the consenting Holder's Security, even if notation of the
consent is not made on any Security. However, any such Holder or subsequent
Holder may revoke the consent as to his Security or portion of a Security.
Such revocation shall be effective only if the Trustee receives the notice of
revocation before the date the amendment, supplement or waiver becomes
effective.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then,
notwithstanding the last two sentences of the immediately preceding paragraph,
those persons who were Holders at such record date (or their duly designated
proxies), and only those persons, shall be entitled to consent to such
amendment, supplement or waiver or to revoke any consent previously given,
whether or not such persons continue to be Holders after such record date. No
such consent shall be valid or effective for more than 90 days after such
record date.
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<PAGE> 60
After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder, unless it makes a change described in any of
clauses (1) through (8) of Section 9.02. In that case, the amendment,
supplement or waiver shall bind each Holder of a Security who has consented to
it and every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security.
SECTION 9.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Security
about the changed terms and return it to the Holder. Alternatively, if the
Company or the Trustee so determines, the Company in exchange for the Security
shall issue and the Trustee shall authenticate a new Security that reflects the
changed terms. Failure to make the appropriate notation or issue a new
Security shall not affect the validity and effect of such amendment, supplement
or waiver.
SECTION 9.06. Trustee To Sign Amendments, etc.
The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article Nine is
authorized or permitted by this Indenture and that such amendment, supplement
or waiver constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms (subject to customary exceptions).
The Trustee may, but shall not be obligated to, execute any such amendment,
supplement or waiver which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise. In signing any amendment,
supplement or waiver, the Trustee shall be entitled to receive an indemnity
satisfactory to it in its sole discretion.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
SECTION 10.02. Notices.
Any notice or communication shall be sufficiently given if in
writing and delivered in person, by facsimile and confirmed by overnight
courier, or mailed by first-class mail addressed as follows:
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<PAGE> 61
if to the Company:
Schuller International Group, Inc.
717 17th Street
Denver, Colorado 80202
Attention: Kenneth L. Jensen
Senior Vice President-Finance
Facsimile: (303) 978-2381
Telephone: (303) 978-3250
with a copy to:
Manville Corporation
717 17th Street
Denver, Colorado 80202
Attention: Robert E. Cole
Senior Vice President - Finance
Facsimile: (303) 978-2108
Telephone: (303) 978-3487
if to the Trustee:
The Bank of New York
101 Barclay Street
Floor 21W
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
Facsimile: (212) 815-5915
Telephone: (212) 815-5736
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed, first class, postage
prepaid, to a Securityholder, including any notice delivered in connection with
TIA Section 310(b), TIA Section 313(c), TIA Section 314(a) and TIA Section
315(b), shall be mailed to him at his address as set forth on the registration
books of the Registrar and shall be sufficiently given to him if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. Except for a notice to the
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<PAGE> 62
Trustee, which is deemed given only when received, if a notice or communication
is mailed in the manner provided above, it is duly given, whether or not the
addressee receives it.
SECTION 10.03. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section
312(b) with other Securityholders with respect to their rights under this
Indenture or the Securities. The Company, the Trustee, the Registrar and any
other person shall have the protection of TIA Section 312(c).
SECTION 10.04. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the Trustee
to take or refrain from taking any action under this Indenture, the Company
shall furnish to the Trustee at the request of the Trustee:
(1) an Officers' Certificate in form and substance
satisfactory to the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance
satisfactory to the Trustee stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
SECTION 10.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel may rely on
an Officers' Certificate or certificates of public officials.
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<PAGE> 63
SECTION 10.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Paying Agent or Registrar may make reasonable
rules for its functions.
SECTION 10.07. Governing Law.
The laws of the State of New York shall govern this Indenture
and the Securities without regard to principles of conflicts of law thereof.
SECTION 10.08. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Securityholder by accepting
a Security waives and releases all such liability.
SECTION 10.09. Successors.
All agreements of the Company in this Indenture and the
Securities shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 10.10. Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 10.11. Severability.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, and a Holder shall have no claim therefor against any party
hereto.
SECTION 10.12. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or a Subsidiary. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
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<PAGE> 64
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the date first written above.
SCHULLER INTERNATIONAL
GROUP, INC.
[SEAL]
By: /s/ RICHARD B. VON WALD
Name: Richard B. Von Wald
Title: Senior Vice President,
General Counsel and Secretary
Attest: /s/ K. L. JENSEN
THE BANK OF NEW YORK, as Trustee
[SEAL]
By: /s/ ROBERT F. MCINTYRE
Name: Robert F. McIntyre
Title: Assistant Vice President
Attest: /s/ L. G.
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<PAGE> 65
Exhibit A
SCHULLER INTERNATIONAL GROUP, INC.
No._______ $_________
CUSIP No.________
10 7/8% SENIOR NOTES DUE 2004
Schuller International Group, Inc. promises to pay to
__________________ or registered assigns the principal sum of
$___________________ on the Maturity Date of December 15, 2004.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
IN WITNESS WHEREOF, SCHULLER INTERNATIONAL GROUP, INC. has
caused this instrument to be executed in its corporate name by a manual or
facsimile signature of its _________________ and its ___________________ and
has caused the facsimile of its corporate seal to be affixed hereunto or
imprinted hereon.
SCHULLER INTERNATIONAL
GROUP, INC.
By:________________________________
Name:
Title:
[SEAL]
By:________________________________
Name:
Title:
<PAGE> 66
Certificate of Authentication:
Dated:
This is one of the 10 7/8% Senior Notes due 2004 referred to
in the within-mentioned Indenture.
The Bank of New York,
as Trustee
By:___________________________
Authorized Signatory
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<PAGE> 67
(REVERSE OF SECURITY)
SCHULLER INTERNATIONAL GROUP, INC.
10 7/8% Senior Notes due 2004
1. Interest.
Schuller International Group, Inc., a Delaware corporation
(the "Company"), promises to pay interest at the rate of 10 7/8% per annum on
the principal amount of this Security semiannually on June 15 and December 15
of each year and at the Maturity Date until the principal hereof is paid or
made available for payment. Interest on the Securities shall accrue from and
including the most recent date to which interest has been paid or, with respect
to the June 15, 1995 Interest Payment Date, from and including December 12,
1994, to but excluding the date on which interest is paid. If an Interest
Payment Date falls on a day that is not a Business Day, the interest payment to
be made on such Interest Payment Date shall be made on the next succeeding
Business Day with the same force and effect as if made on such Interest Payment
Date, and no additional interest shall accrue as a result of such delayed
payment. Interest shall be computed on the basis of a 360-day year of twelve
30-day months.
2. Method of Payment.
The interest payable on this Security, and punctually paid or
duly provided for, on any Interest Payment Date shall, as provided in the
Indenture, be paid to the person in whose name this Security is registered at
the close of business on the regular record date, which shall be the June 1 or
December 1 (whether or not a Business Day) next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for, and any
interest payable on such defaulted interest (to the extent lawful), shall
forthwith cease to be payable to the Holder on such regular record date and
shall be paid to the person in whose name this Security is registered at the
close of business on a special record date for the payment of such defaulted
interest to be determined in accordance with the Indenture, notice of which
shall be given to Holders not less than 15 days prior to such special record
date. Payment of the principal of, premium, if any, on and interest on this
Security shall be made at the agency of the Company maintained for that purpose
in New York, New York and at any other office or agency maintained by the
Company for such purpose, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the person entitled
thereto as such address shall appear in the Security register.
3. Paying Agent and Registrar.
The Bank of New York (the "Trustee") shall act as Paying Agent
and Registrar. The Company may change any Paying Agent, Registrar or
co-Registrar without notice to the Holders of Securities. The Company or any
of its Affiliates may act as Registrar, co-Registrar or Paying Agent.
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<PAGE> 68
4. Indenture.
This Security is one of a duly authorized issue of Securities
of the Company, designated as its 10 7/8% Senior Notes due 2004 (the
"Securities"), limited in aggregate principal amount to $400,000,000 (except
for Securities issued in substitution for destroyed, lost or stolen Securities)
issuable under an Amended and Restated Indenture, dated as of December 12, 1994
(as further amended, supplemented or modified from time to time, the
"Indenture"), between the Company and the Trustee. The terms of the Securities
include those stated in the Indenture and those made part of the Indenture by
the Trust Indenture Act of 1939 (the "Act") (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date the Indenture is qualified under the
Act. The Securities are subject to all such terms, and Holders of Securities
are referred to the Indenture and the Act for a statement of them.
Capitalized terms contained in this Security to the extent not
defined herein shall have the meanings assigned to them in the Indenture.
5. Optional Redemption.
Except as provided in the next paragraph, the Securities are
not redeemable prior to December 15, 1999. On and after such date, the
Securities may be redeemed at any time, in whole or in part, at the option of
the Company, at the redemption prices (expressed as percentages of the
principal amount) set forth below, if redeemed during the 12-month period
beginning December 15 of the year indicated below, in each case together with
interest accrued to the redemption date:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1999 105.438%
2000 102.719%
2001 and
thereafter 100.000%
</TABLE>
In addition, at any time prior to December 12, 1997, the
Company may, at its option, redeem up to $132 million aggregate principal
amount of the Securities outstanding from the proceeds of one or more Public
Equity Offerings, at 110% of the principal amount thereof, plus accrued and
unpaid interest through the redemption date, provided that at least $75 million
in aggregate principal amount of the Securities remain outstanding immediately
after any such redemption.
6. Purchase upon Occurrence of a
Change of Control Triggering Event.
Within 30 days of the occurrence of a Change of Control
Triggering Event, the Company shall offer to purchase all of the Securities at
a purchase price equal to 100% of the principal amount thereof plus any accrued
and unpaid interest thereon.
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<PAGE> 69
7. Notice of Redemption.
Notice of redemption shall be mailed by first class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at his registered address. On and after
the redemption date, interest ceases to accrue on those Securities or portion
of them called for redemption (unless the Company defaults in making the
redemption payment).
8. Denominations; Transfer; Exchange.
The Securities are in registered form without coupons in
denominations of $1,000 and integral multiples of $1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not transfer or exchange
any Securities selected for redemption.
9. Persons Deemed Owners.
The registered Holder of a Security may be treated as the
owner of it for all purposes.
10. Unclaimed Funds.
If funds for the payment of principal, premium, if any, or
interest remain unclaimed for two years, the Trustee or Paying Agent shall
repay the funds to the Company at its request. After such repayment, Holders
of Securities entitled to such funds must look to the Company for payment
unless an abandoned property law designates another person.
11. Discharge Prior to Redemption or Maturity.
The Indenture shall be discharged and cancelled except for
certain Sections thereof, subject to the terms of the Indenture, upon the
payment of all the Securities or upon the irrevocable deposit with the Trustee
of funds or United States Government Obligations sufficient for such payment or
redemption.
12. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the outstanding Securities, and any past
default or compliance with any provision may be waived with the consent of the
Holders of a majority in principal amount of the outstanding Securities.
Without the consent of any Holder, the Company and the Trustee may amend or
supplement the Indenture or the Securities to (i) cure any ambiguity, defect or
inconsistency, (ii) make any change that does not materially and adversely
affect the rights of any Holder of Securities or (iii) comply with Article 5 of
the Indenture.
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<PAGE> 70
13. Restrictive Covenants.
The Securities are general obligations of the Company limited
to the aggregate principal amount of $400,000,000. The Indenture restricts the
ability of the Company or any of its Restricted Subsidiaries to permit any
Liens to be imposed on their assets other than certain Permitted Liens unless
the Securities are equally and ratably secured by such Liens, restricts the
ability of the Company or any of its Restricted Subsidiaries to make certain
payments and investments, limits the Indebtedness which the Company and its
Restricted Subsidiaries may incur and limits the terms on which the Company may
engage in Asset Dispositions. The Company is also obligated under certain
circumstances to make an offer to purchase Securities with the net cash
proceeds of certain Asset Dispositions. The Company must report quarterly to
the Trustee on compliance with certain covenants in the Indenture.
14. Successor Corporation.
Pursuant to the Indenture, the ability of the Company to
consolidate with, merge with or into or transfer its assets to another person
is conditioned upon certain requirements. Special provisions exist which
permit the Company to transfer all or substantially all of its assets to a
Restricted Subsidiary if certain conditions are met.
15. Defaults and Remedies.
An Event of Default consists of: a default for 30 days in
payment of interest on the Securities or default in payment of principal or
premium, if any, on the Securities due and payable at maturity, upon
redemption, upon repurchase, pursuant to an Asset Disposition Offer or a Change
of Control Offer or otherwise; failure by the Company to comply with any of its
other agreements in the Indenture or the Securities, in any such case 30 days
after written notice from the Trustee or the holders of at least 25% in
aggregate principal amount of the outstanding Securities; (i) a default or
defaults in payment under Indebtedness of the Company or any Restricted
Subsidiary (other than the Securities) having an outstanding principal amount
of $20 million or more in the aggregate or (ii) a default or defaults under one
or more mortgages, bonds, debentures, notes or other evidences of indebtedness,
or one or more indentures or other agreements, relating to Indebtedness having
an outstanding principal amount of $20 million or more in the aggregate as a
result of which default or defaults payment of such Indebtedness shall have
been accelerated or the holders of such Indebtedness shall be entitled to
accelerate payment, whether such Indebtedness exists on September 22, 1994 or
shall thereafter be created; the entering against the Company and/or any of its
Restricted Subsidiaries of judgments or decrees involving an aggregate
liability of $20 million or more if such judgments or decrees are not vacated,
discharged, satisfied or stayed within 60 days after the date of the entering
of such judgments or decrees; or certain events of bankruptcy, insolvency or
reorganization. If an Event of Default (except for certain events of
bankruptcy, insolvency or reorganization) occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the outstanding
Securities may declare all the outstanding Securities to be due and payable
immediately. In the case of certain events of bankruptcy, insolvency or
reorganization, all unpaid principal of, premium, if any, on and accrued
interest on the outstanding Securities shall ipso facto become immediately due
and payable without any declaration or other act on the part of the Trustee
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<PAGE> 71
or any Holder thereof. Holders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Securities. Subject
to certain limitations, Holders of a majority in principal amount of the
outstanding Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders notice of a continuing Default or
Event of Default (except a Default or Event of Default in payment) if it
determines that withholding notice is in their interests. The Company is
required to file periodic reports with the Trustee as to the absence of Default
and to notify the Trustee promptly after it becomes aware of any Default.
16. Trustee Dealings with Company.
The Trustee in its individual or any other capacity, may make
loans to, accept deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its Affiliates, as if it
were not the Trustee.
17. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
18. Authentication.
This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
19. Indenture.
Each Securityholder, by accepting a Security, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended or supplemented from time to time.
20. Abbreviations.
Customary abbreviations may be used in the name of the
Securityholder or an assignee, such as TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP
numbers to be printed on the Securities and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
-vii-
<PAGE> 72
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company shall furnish to any Holder of record of
Securities upon written request and without charge a copy of the Indenture.
-viii-
<PAGE> 73
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the
form below and have your signature guaranteed:
I or we assign and transfer this Security to:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint_______________________________________, agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
Dated: Signed:________________________________________
(Sign exactly as name appears on the
other side of this Security)
Signature Guarantee:____________________________________________________________
-ix-
<PAGE> 74
OPTION OF HOLDER TO ELECT PURCHASE
If you the Holder want to elect to have this Security purchased by the Company,
check the box: / /
If you want to elect to have only part of this Security purchased by the
Company, state the amount: $__________
Dated: Your Signature: _________________________________
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee:____________________________________________________________
-x-
<PAGE> 1
EXHIBIT 13
ITEM 6. SELECTED SIX-YEAR FINANCIAL DATA
Manville Corporation 1994 Annual Report
<TABLE>
<CAPTION>
(In thousands of dollars, except per share amounts)
-----------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME (LOSS)
Net Sales (Note A) $2,560,343 $2,278,204 $2,205,664 $2,011,276 $2,133,271 $2,086,239
Income from Operations (Note A) 296,486 135,948 202,216 70,817 227,805 303,856
Income (Loss) from Continuing
Operations (Note A) 65,855 61,071 50,579 (30,499) 88,298 157,492
Income (Loss) before Extraordinary
Item and Cumulative Effect
of Accounting Changes 65,416 60,772 47,465 (12,697) 110,718 196,825
Net Income (Notes B, C, D, and E) 36,996 47,782 35,949 34,700 110,718 196,825
FINANCIAL POSITION
(AS OF DECEMBER 31)
Total Assets $3,799,611 $3,620,307 $3,630,363 $3,002,545 $2,795,916 $2,644,839
Long-Term Debt, less current portion 1,423,995 1,390,988 1,191,061 822,632 870,289 802,306
Stockholders' Equity (Note B) 1,063,471 846,069 825,293 779,515 1,140,615 993,532
ADDITIONAL DATA
Additions to Property, Plant
and Equipment $ 323,055 $ 351,494 $ 411,087 $ 179,407 $ 344,464 $ 350,692
Research, Development and
Engineering (Note A) 39,094 36,743 33,873 35,988 40,791 38,866
PRIMARY EARNINGS (LOSS)
PER COMMON SHARE (NOTE F)
Income (Loss) from Continuing
Operations (Note A) $.33 $.31 $.25 $(.39) $.61 $1.16
Income (Loss) before Extraordinary
Item and Cumulative Effect
of Accounting Changes .33 .31 .22 (.24) .79 1.48
Net Income (Notes B, C, D, and E) .10 .21 .13 .15 .79 1.48
FULLY DILUTED EARNINGS (LOSS)
PER COMMON SHARE (NOTE F)
Income (Loss) from Continuing
Operations (Note A) $.33 $.31 $.25 $(.39) $.61 $1.09
Income (Loss) before Extraordinary
Item and Cumulative Effect
of Accounting Changes .33 .31 .22 (.24) .79 1.39
Net Income (Notes B, C, D, and E) .10 .21 .13 .15 .79 1.39
</TABLE>
Notes:
(A) Excludes the operating results of Celite Corporation, which was sold in
1991, and the Holophane lighting systems division and sealing components
businesses which were sold in 1989. Accordingly, the operating results of these
discontinued operations have been excluded from the determination of income
from continuing operations for all periods presented. Income (loss) from
continuing operations includes interest income, interest expense, profit
sharing expense and related income taxes.
(B) In September of 1993, the Manville holding company purchased an additional
3,448,276 shares of Riverwood's common stock, increasing the Manville holding
company's ownership percentage to approximately 81.5 percent from 80.5 percent.
On June 24, 1992, Riverwood completed an initial public offering of 12.1
million shares, or 19.5 percent of its common stock. As a result of these
transactions, the Company's December 31, 1993 Consolidated Balance Sheet and
Consolidated Statement
8
<PAGE> 2
SELECTED SIX-YEAR FINANCIAL DATA
Manville Corporation 1994 Annual Report
of Income reflect the minority stockholders' interest in Riverwood's net assets
and net earnings of $92.4 million and $0.3 million, respectively. The Company's
December 31, 1992 Consolidated Balance Sheet and Consolidated Statement of
Income reflect the minority stockholders' interest in Riverwood's net assets
and net earnings of $93.1 million and $3.1 million, or $0.03 per common share,
respectively.
(C) In the third and fourth quarters of 1994 the Company completed two debt
refinancings that resulted in an aggregate extraordinary loss on early
extinguishments of debt of $28.4 million, net of related income taxes of $13
million.
During the third quarter of 1993, the Company made a prepayment on its
outstanding bond obligations to the Manville Personal Injury Settlement Trust.
An extraordinary gain of $0.9 million, net of related income taxes of $0.5
million, was recorded in August 1993 to adjust the estimated extraordinary loss
recorded in 1992. In 1992, the Company recorded an estimated extraordinary loss
of $11.5 million, net of related income taxes of $5.9 million, in anticipation
of this prepayment.
(D) Effective January 1, 1993 the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits." As a result, the Company recorded a charge in the first quarter of
1993 of $13.9 million, net of taxes of $8.6 million, or $0.11 per common share,
against net income to reflect the accumulated postemployment benefit
obligation.
(E) Effective January 1, 1991, the Company changed its method of accounting for
employee postretirement benefits other than pensions to comply with the
provisions of Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." As a result, the
Company recorded a charge against net income in 1991 of $173.4 million, net of
tax of $91.4 million, or $1.44 per common share, to reflect the cumulative
effect on prior years of the accounting change. In accordance with the
provisions of that statement, postretirement benefit information for prior
periods has not been restated. Previously, retiree medical and life insurance
benefits were expensed as incurred. Also effective January 1, 1991, the Company
changed its method of accounting for income taxes to comply with the provisions
of Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." As a result, the Company recorded a credit in 1991 of $220.8 million,
or $1.83 per common share, to net income to reflect the cumulative effect on
prior years of the accounting change. Financial statements presented for 1989
through 1990 reflect income taxes using the method required at that time by
Statement of Financial Accounting Standards No. 96, "Accounting for Income
Taxes."
(F) Primary and fully diluted earnings (loss) per common share amounts are
based on the weighted average number of common and common equivalent shares
outstanding during each year assuming the conversion of the Series A
Convertible Preferred Stock. All earnings (loss) per share amounts presented in
the above table were calculated after the deduction for preference stock
dividends/accretion. Refer to Note 16 to the Consolidated Financial Statements
for a discussion of the earnings (loss) per common share computation.
The Company declared and paid special common stock dividends of $1.04 per share
in both 1993 and 1992.
9
<PAGE> 3
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Manville Corporation 1994 Annual Report
Manville Corporation is an international holding company with two principal
operating subsidiaries, Riverwood International Corporation ("Riverwood") and
Schuller International Group, Inc. ("Schuller"), collectively referred to as
"Manville" or the "Company." When referring to the holding company only,
Manville Corporation is defined as the "Manville holding company." The Manville
holding company owns 100 percent of Schuller and approximately 81.5 percent of
Riverwood. The Company reports the results of Riverwood's and Schuller's
operations in five business segments. For additional information on business
segments, see Note 27 to the Consolidated Financial Statements.
Riverwood reports its results in three business segments: Coated Board System,
Containerboard and U.S. Timberlands/ Wood Products. The Coated Board System
segment includes the production of coated board at paperboard mills in the
United States and Europe; converting facilities in the United States, Australia
and Europe; and worldwide packaging machinery operations related to the
production and sale of beverage and folding cartons. The Containerboard segment
includes timberlands and associated containerboard mills and corrugated box
plants in Brazil as well as linerboard, corrugating medium and kraft paper
production at two U.S. mills. On December 29, 1994, Riverwood sold just under
50 percent of its interest in the portion of this business segment based in
Brazil. Subsequent to December 29, 1994, Riverwood has the ability to exercise
significant influence, but not control, over the operating and financial
policies of its Brazilian operations. Accordingly, effective with the closing
of this transaction, Riverwood no longer consolidates its Brazilian operations,
but instead reports its investment in its Brazilian operations using the equity
method of accounting. The U.S. Timberlands/Wood Products segment includes
timberlands and operations engaged in the supply of pulpwood to the West
Monroe, Louisiana mill operations from Riverwood's U.S. timberlands, and the
manufacture of lumber and plywood.
Schuller manufactures and markets insulation for buildings and equipment,
commercial roofing systems, high efficiency air filtration media and fibers and
nonwoven mats used as reinforcements in building and industrial applications.
Schuller operates 35 manufacturing facilities in the United States, Canada and
Germany, and is comprised of two principal business segments: Building Products
and Engineered Products. The Building Products segment consists of Schuller's
building insulation business, which manufactures fiberglass wool insulation for
walls and attics in residential and commercial buildings; the commercial
roofing systems business, which supplies roofing membranes, insulations,
accessories and related guarantees; and the mechanical insulations business,
which manufactures pipe and duct insulation for use in commercial buildings,
factories, refineries and other industrial applications. The Engineered
Products segment consists of Schuller's specialty insulations and filtration
business, which manufactures thermal and acoustic insulation for aircraft,
appliances, automobiles and heating, ventilating and air conditioning
equipment; air filtration media for commercial and industrial buildings; and
microfibers for clean room air filters. The Engineered Products segment also
includes Schuller's mats and reinforcements business which manufactures
continuous filament fiberglass-based products used for reinforcing roofing,
flooring, wall covering and plastic products. The mats and reinforcements
business includes Schuller's German subsidiary, Schuller GmbH.
Financial results for the Manville holding company's oil and gas properties
(which were sold in the third quarter of 1993 and the second quarter of 1992)
and interest in Stillwater Mining Company ("Stillwater"), a company engaged in
the exploration, development, mining and production of palladium, platinum and
associated metals, are included in Manville Corporate and Eliminations for
business segment reporting purposes.
10
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Manville Corporation 1994 Annual Report
1994 VS 1993
------------
RIVERWOOD RESULTS OF OPERATIONS BY SEGMENT
Riverwood reported its results of operations in its 1994 Annual Report
substantially as presented below.
NET SALES
Net sales increased in 1994 by $162.4 million, or 14.5 percent, compared with
1993 due to higher sales in all segments of Riverwood. Net sales in the Coated
Board System segment increased by $47.9 million, or 6.4 percent, due
principally to increased volume in U.S. beverage markets, coated board open
markets and international beverage and folding carton markets. Competitive
pricing, particularly in coated board products in international markets,
partially offset these volume increases. In addition, generally stronger U.S.
dollar currency exchange rates in Europe and weaker U.S. dollar currency
exchange rates in the Asia-Pacific region combined to increase reported U.S.
dollar net sales by approximately $4.4 million. Net sales in the Containerboard
segment increased $96.2 million, or 39 percent, primarily due to selling price
increases worldwide. Strong volume gains in Brazil also contributed to this
increase. Net sales in the U.S. Timberlands/Wood Products segment increased by
$18.1 million, or 12.3 percent, due principally to selling price increases for
lumber and plywood.
GROSS PROFIT
Gross profit for 1994 increased $66.4 million, or 30 percent, from 1993. The
gross profit margin increased to 22.4 percent for 1994 from 19.7 percent for
1993. Gross profit in the Coated Board System segment decreased by $1.7
million, or one percent, while its gross profit margin decreased to 22.4
percent from 24.1 percent. These decreases in the Coated Board System segment
were due primarily to costs incurred to meet U.S. beverage market demand that
exceeded Riverwood's U.S. converting capacity. These costs totaled
approximately $10 million and resulted primarily from subcontracting carton
production, additional transportation and scheduling inefficiencies at
Riverwood's U.S. converting plants. Such costs more than offset the effects of
higher volume in coated board open markets and U.S. beverage markets. In
addition, the cost per ton of coated board produced at Riverwood's Macon mill
during the initial production period was higher than that of comparable coated
board produced at Riverwood's West Monroe mill. In the Containerboard segment,
gross profit increased $58 million to $52.9 million in 1994 from a loss in
1993, with a 1994 gross profit margin of 15.4 percent. The increase in gross
profit was due primarily to higher containerboard selling prices worldwide. In
addition to higher selling prices, improved gross profit at the Brazilian
operations, due to higher volume and productivity improvements, was partially
offset by increased fixed costs resulting from recent capital additions. Gross
profit in the U.S. Timberlands/Wood Products segment increased by $11.7
million, or 24.4 percent, and the gross profit margin increased to 36.1 percent
from 32.6 percent due principally to selling price increases for lumber and
plywood, which were partially offset by higher log costs. Fluctuations in U.S.
dollar currency exchange rates did not have a significant impact on the gross
profit of Riverwood or any of its business segments.
Total board mill shipments, including shipments to Riverwood's integrated
converting plants, for the years ended December 31 were as follows:
<TABLE>
<CAPTION>
(In thousands of tons)
------------------------
1994 1993
------- -------
<S> <C> <C>
Coated Board 860.6 765.3
Containerboard 986.5 950.5
------- -------
1,847.1 1,715.8
======= =======
</TABLE>
OPERATING EXPENSES
As a percent of net sales, selling, general and administrative expenses in 1994
decreased 0.9 of a percentage point to 10.3 percent, while selling, general and
administrative expenses increased $6.5 million, or 5.2 percent, compared with
1993. This increase in expense was due to increased selling and marketing
expenses to penetrate worldwide coated board markets, which were partially
offset by decreased administrative expenses.
11
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Manville Corporation 1994 Annual Report
This decrease in administrative expenses resulted from decreased administrative
expenses at Riverwood's U.S., European and Asia-Pacific operations, which were
partially offset by an increase at Riverwood's Brazilian operations. Research,
development and engineering expenses increased by $0.6 million, or 6.7 percent,
primarily due to a higher level of packaging machinery engineering costs
associated with expanding packaging machinery operations. Fluctuations in U.S.
dollar currency exchange rates did not have a significant impact on operating
expenses.
OTHER INCOME (LOSS), NET
Other income, net, increased $3.4 million to $8.4 million in 1994. This
increase was primarily due to an $8.9 million pretax gain on the sale of
certain oil and gas mineral rights on its U.S. timberlands, partially offset by
increased translation losses associated with Riverwood's Brazilian operations.
Other income, net, in 1993 consisted primarily of certain settlements relating
to previous acquisitions which did not recur in 1994.
RESTRUCTURING OF OPERATIONS
The restructuring of operations loss, net, of $8 million reported in the fourth
quarter of 1993 included a $25 million pretax charge for the writedown of
assets and provisions for severance, relocation and related costs of
restructuring and consolidating certain operations and infrastructure levels.
In recent years, Riverwood has experienced rapid growth primarily through
acquisitions. By 1993, this growth had created certain areas with overlapping
responsibilities and duplicated efforts. Accordingly, in 1993 Riverwood
implemented an ongoing restructuring plan designed to streamline operations,
increase efficiency and cost effectiveness and enhance worldwide customer
service capability. For 1993 business segment reporting purposes, of the $25
million restructuring charge, $18 million, $0.3 million and $0.4 million, were
included in the Coated Board System, Containerboard and U.S. Timberlands/Wood
Products business segments, respectively, with the remainder included in
Riverwood's Corporate and Eliminations section of income from operations.
Through December 31, 1994, approximately $15.6 million had been charged against
the restructuring reserve, of which approximately $12.7 million related to cash
expenditures. Approximately $8.8 million, $0.2 million and $0.3 million of the
total charges to the reserve related to the Coated Board System, Containerboard
and U.S. Timberlands/Wood Products business segments, respectively, and $6.3
million were of a corporate nature. Of the remaining reserve of $9.4 million at
December 31, 1994, Riverwood estimates that approximately $7 million will be
used for cash expenditures. By December 31, 1994, as a result of the ongoing
restructuring plan, Riverwood's salaried and hourly work force had been reduced
by an aggregate of 144 individuals, reducing annual payroll and benefit costs
by approximately $6.1 million. Also as a result of the ongoing restructuring
plan, Riverwood wrote down the book value of certain assets by $2.9 million.
These writedowns together with assets sold under the restructuring plan,
combined to reduce annual depreciation expense by approximately $1 million.
Additionally, other operating costs were reduced by approximately $2.7 million.
The $25 million restructuring charge in 1993 was partially offset by a $17
million pretax gain on the sale and assignment, for cash, of approximately
60,000 acres of nonstrategic timberlands located in Louisiana and Texas. The
$17 million gain was included in the U.S. Timberlands/Wood Products business
segment.
INCOME FROM OPERATIONS
Income from operations in 1994 increased by $70.7 million, or 84.7 percent,
compared with 1993. Excluding the $8.9 million pretax gain on the sale of
certain oil and gas mineral rights in 1994 and the restructuring of operations
loss, net, of $8 million in 1993, income from operations in 1994 increased by
$53.8 million, or 58.8 percent, compared with 1993, while operating margin as a
percent of net sales increased to 11.3 percent from 8.2 percent. The Coated
Board System segment's income from operations increased $8.9 million, or 11
percent, to $90.3 million in
12
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Manville Corporation 1994 Annual Report
1994. Excluding the $18 million of restructuring charges included in this
segment in 1993, income from operations in the Coated Board System segment
decreased $9.1 million, or 9.1 percent, and the operating margin decreased to
11.4 percent from 13.3 percent. Higher volume in coated board open markets and
U.S. beverage markets was more than offset by increased converting costs in
U.S. beverage markets and the effects of competitive pricing, particularly in
international coated board markets. Income from operations in the
Containerboard segment increased $56.1 million to $24 million in 1994 from a
loss in 1993, due principally to increased worldwide selling prices. Higher
volume and productivity improvements at the Brazilian operations, were offset
by higher operating expenses and increased fixed costs resulting from recent
capital additions. Income from operations in the U.S. Timberlands/Wood Products
segment increased $3.8 million to $67.7 million in 1994. Excluding the $8.9
million pretax gain on the sale of certain oil and gas mineral rights included
in this segment in 1994 and the $17 million pretax gain on the sale and
assignment of certain nonstrategic timberlands included in this segment in
1993, income from operations in the U.S. Timberlands/Wood Products segment
increased $11.9 million, or 25.4 percent, to $58.8 million in 1994, and
operating margin increased to 35.7 percent from 31.9 percent. These increases
were due principally to higher lumber and plywood selling prices offset
somewhat by higher log costs. Fluctuations in U.S. dollar currency exchange
rates did not have a significant impact on the income from operations of
Riverwood or any of its business segments.
SCHULLER RESULTS OF OPERATIONS BY SEGMENT
Schuller reported its results of operations in its 1994 Annual Report
substantially as presented below.
NET SALES
Net sales for 1994 increased $112 million, or 9.6 percent, from $1.2 billion in
1993 to $1.3 billion in 1994.
The Building Products segment's net sales for 1994 increased $77.1 million, or
11.6 percent, compared with 1993. This increase was primarily attributable to
the building insulation business, which benefited from increased selling prices
and higher sales volume, as the building insulation industry operated at full
capacity due to strong residential housing markets. Net sales of the roofing
systems business also increased in 1994 primarily due to higher sales volume.
In addition, sales increased in the mechanical insulations business due to
higher levels of commercial construction, as well as the introduction of new
products responding to market demand for products addressing indoor air quality
concerns.
The Engineered Products segment's net sales increased $31.2 million, or 5.9
percent, in 1994 compared with 1993. The majority of this increase was
attributable to Schuller's mats and reinforcements business, which experienced
increased sales volume and higher selling prices, reflecting higher levels of
U.S. and European construction activity, as well as the high utilization of
continuous filament glass capacity throughout the industry. Schuller's
specialty insulations and filtration business' sales increased moderately as
sales volume reflected stronger construction markets, growth in electronics and
pharmaceuticals markets and an expanding market for battery separators,
partially offset by a decline in the sales of Schuller's molded automotive
products and aerospace insulation.
GROSS PROFIT
Gross profit for 1994 increased $84.6 million, or 32.9 percent, compared with
1993.
Gross profit in 1993 was increased by the effect of a $6.4 million reversal of
costs accrued for the rebuild of Schuller's glass furnaces. Excluding the
effect of the $6.4 million reversal of rebuild costs, cost of sales increased
two percent over 1993 on a 9.6 percent increase in net sales, resulting in a
5.3 percentage point improvement in gross profit margin to 26.8 percent in 1994
from 21.5 percent in 1993. The gross profit improvement was due primarily
13
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Manville Corporation 1994 Annual Report
to higher 1994 sales volume, including higher volume of commercial roofing
products resulting from the acquisition of a commercial roofing business, and
related manufacturing efficiencies in most of Schuller's businesses, resulting
from increasing U.S. and European construction activity. In addition, gross
profit improved as a result of higher selling prices in building insulation and
mats and reinforcements.
During 1993, a furnace that was no longer needed to meet production demands was
dismantled and, accordingly, the $2.4 million rebuild allowance for this
furnace was reversed. In addition, 1993 gross profit increased due to a
$4 million reversal of a special reconstruction allowance for an unscheduled
rebuild of the channel of a glass furnace. The special reconstruction allowance
was initially established in 1991, after it was determined that the channel did
not meet performance specifications. Modifications and repairs made to the
channel during 1992 to stabilize its performance were successful in delaying
the need for a special reconstruction. In 1993, Schuller's engineers determined
that due to the success of the repairs, the channel could continue to operate
until the next scheduled rebuild for the entire furnace. Therefore, $4 million
of the special allowance for the channel reconstruction was reversed in 1993.
OPERATING EXPENSES
Operating expenses, which include selling, general, administrative, research,
development and engineering expenses, increased $10.9 million, or 7.3 percent,
in 1994 compared with the same period of 1993 due to higher product
development, environmental compliance and information systems development
expenses. These operating expenses decreased slightly as a percentage of net
sales to 12.6 percent in 1994 compared with 12.8 percent in 1993.
RESTRUCTURING OF OPERATIONS
During 1993, Schuller initiated restructuring programs resulting in charges
totaling $30.1 million for the year as explained below. During the second
quarter of 1993, Schuller recorded a restructuring loss of approximately $3.2
million principally for the settlement of litigation related to a former
business for which a previous estimate had not been reasonably possible.
During the fourth quarter of 1993, Schuller made the decision to exit its
residential roofing business and recorded a provision of $6.7 million, which
included $1.6 million for the separation of approximately 75 employees, $2.4
million for the writedown of assets and $2.7 million for other related costs.
In 1993, Schuller adopted a program for the separation of approximately 125
salaried employees, principally in its mats and reinforcements business in the
Engineered Products segment and, accordingly, recorded a $6.6 million charge
for such costs in addition to a $0.9 million charge for the separation of
certain salaried employees in the Building Products segment. This program was
precipitated by U.S. competitive pressures and weak European construction
markets.
Restructuring of operations in 1993 also included a $12.7 million charge
related to Schuller's former phenolic roofing insulation business which
consisted of: $15.6 million for estimated sampling, inspection and remediation
expenses; $2.5 million for estimated legal costs; $1 million for administration
of the sampling and inspection program; and $0.6 million for the writedown of
equipment; offset by $7 million of expected insurance recoveries. The accrual
for sampling, inspection, remediation and administration costs reflected
Schuller's decision to continue this voluntary program and was based on
information available at that time, including Schuller's previous experience in
sampling, inspecting and remediating roofs with phenolic insulation. The
accrual for legal costs reflected Schuller's decision to commence litigation
after initial attempts to negotiate settlements with the former owner of the
business and Schuller's insurance carrier failed. For additional information,
see Note 13 to the Consolidated Financial Statements.
14
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Manville Corporation 1994 Annual Report
The following table sets forth the activity in Schuller's restructuring
reserves for the years ended December 31:
<TABLE>
<CAPTION>
(In thousands of dollars)
-----------------------------------------------------------------
Employee
Separations Phenolic Other Total
----------- -------- ------- --------
<S> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1992 $ 5,744 $ 6,067 $11,640 $ 23,451
Restructuring of Operations Loss 9,167 12,707 8,242 30,116
Cash Payments (8,395) (6,280) (6,898) (21,573)
Writedown of Assets (601) (2,420) (3,021)
Insurance Receivable 7,000 7,000
------- ------- ------- --------
BALANCES AT DECEMBER 31, 1993 6,516 18,893 10,564 35,973
Cash Payments (5,147) (9,751) (4,006) (18,904)
Writedown of Assets (668) (668)
------- ------- ------- --------
BALANCES AT DECEMBER 31, 1994 $ 1,369 $ 9,142 $ 5,890 $ 16,401
======= ======= ======= ========
</TABLE>
During 1993, Schuller reduced its salaried workforce by approximately 130
employees, reducing annual payroll and benefit costs by approximately $7
million. In addition, Schuller estimates that the exit of the residential
roofing business, combined with the purchase of a commercial and industrial
roofing business, reduced annual fixed costs in the Building Products segment
by approximately $4 million.
During 1994, Schuller did not record any additional restructuring charges and
continued to implement plans initiated in previous years. During 1994,
Schuller's salaried workforce was reduced by an additional 60 individuals as a
result of the continuation of Schuller's rationalization program and its exit
from the residential roofing business, further reducing annual payroll and
benefit costs by approximately $3.2 million. Schuller has not incurred any
material incremental costs for increased subcontracting, replacement or
outsourcing services as a result of the restructuring activities described
above.
Management believes that its restructuring programs over the past several years
have successfully eliminated non-essential functions and excess costs, and,
based on current short and long-term forecasts of required manufacturing and
administrative support, that such cost reductions will benefit future
operations and enable Schuller to compete effectively throughout the full
business cycle. Management believes that Schuller's improved cost structure
positions it to capitalize on the continuing economic recovery in North America
and Europe. However, there can be no assurance that Schuller will be able to
capitalize on the economic recovery or that such recovery will continue, or
that Schuller will be able to maintain its current cost structure in the
future. Schuller does not foresee significant restructuring charges in the near
future.
OTHER INCOME (LOSS), NET
Other loss, net, increased $10.8 million from $11.4 million in 1993 to $22.2
million in 1994. The increase is primarily attributable to an $8.9 million
charge for additional legal costs incurred and anticipated in connection with
Schuller's litigation with its insurance carrier and the former owner of the
phenolic insulation business.
Beginning in the fourth quarter of 1994, Schuller recorded expenses previously
reported as restructuring of operations pursuant to the consensus of the
Emerging Issues Task Force reached in the fourth quarter of 1994 on Issue No.
94-3, "Liability Recognition for Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." Accordingly, adjustments to Schuller's
accruals related to its former phenolic roofing insulation business have been
reported as a component of other income (loss), net.
15
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Manville Corporation 1994 Annual Report
INCOME FROM OPERATIONS
Income from operations for 1994 increased $93 million from $66 million in 1993
to $159 million in 1994. Income from operations in 1993 included restructuring
charges of $30.1 million. Excluding the 1993 restructuring charges, 1994 income
from operations increased $62.9 million, or 65.4 percent, from $96.1 million in
1993. This increase is due primarily to increased sales volumes, improved
manufacturing efficiencies and increased selling prices experienced by certain
of Schuller's businesses during 1994.
TOTAL COMPANY RESULTS
In summary, total Company net sales in 1994 improved $282.1 million, or 12
percent, over 1993 due to increases at both Riverwood and Schuller. Income
from operations increased $160.5 million, or 118 percent, in 1994. Manville
corporate expense increased $3.1 million in part due to oil and gas income
included in 1993 but not included in 1994 due to the sale of the oil and gas
properties in the third quarter of 1993.
In addition to Riverwood's and Schuller's restructuring charges discussed
above, approximately $2.4 million of other restructuring charges in the
Manville holding company for 1993 primarily related to cash expenses associated
with former business operations and a loss on the sale of an oil and gas
property.
NONOPERATING INCOME AND EXPENSES
During 1994, the Company sold a portion of its equity investment in Stillwater
for net cash proceeds of approximately $25.5 million resulting in a pretax gain
on the sale of equity securities of $13.5 million.
Compared with 1993, interest income in 1994 decreased by $16.7 million, due
primarily to $13 million of interest income received in 1993 on the income tax
refund described below, as well as lower interest rates and lower average cash
balances.
Interest expense in 1994 decreased by $3 million primarily due to higher levels
of capitalized interest in 1994 over 1993. The increase in capitalized interest
in 1994 relates principally to expenditures for the coated board capacity
expansion program at Riverwood's Macon mill.
In 1994, the Company recorded $18.3 million of profit sharing expense to be
paid in 1995 to the Manville Personal Injury Settlement Trust (the "PI Trust"),
as required in connection with the Plan of Reorganization ("the Plan"). Profit
sharing expense for 1993 totaled $13 million and was paid in 1994.
INCOME TAXES
The 1994 income tax charge of $95.6 million includes approximately $27.5
million of income taxes related to Riverwood's sale of a portion of its
Brazilian operations. The gain on the sale was significantly higher for income
tax purposes than for financial reporting purposes resulting in the additional
income tax expense. In accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," the additional income taxes
were not recognized until the sale was apparent. The tax gain on the sale of
the Brazilian operations was sheltered by Manville's available tax deductions.
As a result, the Company did not incur any current U.S. federal income taxes
payable on this transaction.
Exclusive of the $27.5 million of income taxes related to Riverwood's sale of a
portion of its Brazilian operations, the 1994 effective tax rate on income from
operations was 42 percent. This is higher than the U.S. federal statutory tax
rate principally due to higher foreign effective tax rates and state taxes.
The 1993 income tax benefit of $54.7 million includes the effect of a number of
unusual items that are described in the 1993 versus 1992 total company results.
Exclusive of the unusual items, the 1993 tax rate on income from operations was
169 percent. This rate is substantially higher than the U.S. federal statutory
tax rate principally due to taxes on earnings derived from foreign operations
and taxes on expected repatriations of
16
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Manville Corporation 1994 Annual Report
undistributed foreign earnings, neither of which was totally offset by tax
benefits from losses in the United States.
The Company will need a cumulative total of approximately $900 million of U.S.
federal taxable income to realize all of its net U.S. deferred tax asset. Based
on the Company's historical earnings levels, projected future earnings and the
expected timing of the taxable deductions principally related to amounts paid
by the PI Trust or transferred to a specific settlement fund within the PI
Trust, the Company believes it will realize its net deferred tax asset. See
Note 22 to the Consolidated Financial Statements for further discussion of
income taxes.
EXTRAORDINARY GAIN (LOSS) ON EARLY EXTINGUISHMENTS OF DEBT
In the third and fourth quarters of 1994, the Company completed two debt
refinancings that resulted in an aggregate extraordinary loss on early
extinguishments of debt of $28.4 million, net of related income taxes of $13
million.
Riverwood completed a refinancing program in the third quarter of 1994 and
prepaid approximately $179 million principal of notes. The extraordinary charge
for this early retirement of debt was $7.9 million, net of income taxes of
approximately $5 million.
In conjunction with the 1994 prepayment of substantially all of its outstanding
bond obligations ("Trust Bonds") to the PI Trust, the Company recorded an
extraordinary loss of $26.8 million, net of related income taxes of $11.4
million, in the third quarter of 1994. In the fourth quarter of 1994 the
extraordinary loss on the Trust Bonds was reduced by $6.3 million, net of
related income taxes of $3.4 million, due to an agreed upon adjustment
contained in the prepayment agreement. This resulted in a total extraordinary
loss on the Trust Bonds prepayment in 1994 of $20.5 million, net of related
income taxes of $8 million.
In the third quarter of 1993 the Company recorded an extraordinary gain of $0.9
million, net of related income taxes of $0.5 million, to adjust an estimated
extraordinary loss previously recorded in 1992 on a partial prepayment of the
Trust Bonds.
CUMULATIVE EFFECT OF ACCOUNTING CHANGE
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" ("SFAS No. 112"). As a result, the Company recognized an accumulated
postemployment benefit obligation of $13.9 million, net of income taxes of $8.6
million. See Note 24 to the Consolidated Financial Statements.
EARNINGS PER COMMON SHARE
Primary and fully diluted earnings per common share for 1994 were $0.10
compared with the primary and fully diluted earnings per common share of $0.21
for 1993. The extraordinary net gain (loss) from the early extinguishments of
debt described above decreased primary and fully diluted earnings per common
share by $0.23 in 1994 and increased primary and fully diluted earnings per
common share by $0.01 in 1993. In addition, the net charge to recognize the
cumulative effect of the adoption of SFAS No. 112 in 1993 reduced primary and
fully diluted earnings per common share by $0.11.
Earnings per common share amounts are calculated after deducting preference
stock dividends/accretion on the Cumulative Preference Stock, Series B.
1993 VS 1992
------------
RIVERWOOD RESULTS OF OPERATIONS BY SEGMENT
Riverwood reported its results of operations in its 1994 Annual Report
substantially as presented below.
NET SALES
Net sales increased in 1993 by $2.1 million, or 0.2 percent, compared with 1992
due to an increase in sales in the Containerboard segment resulting from the
Macon mill acquisition in mid-1992 and an increase in sales in the U.S.
Timberlands/Wood Products segment, offset by lower net sales in the Coated
Board System segment. Net sales in the
17
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Manville Corporation 1994 Annual Report
Coated Board System segment decreased by $53.9 million, or 6.7 percent, in
1993. The effect of stronger U.S. dollar currency exchange rates in 1993
compared with 1992 resulted in approximately $41 million lower reported U.S.
dollar net sales from international operations. Net sales of paperboard used in
folding carton applications decreased due to weak worldwide demand, while
worldwide net sales of beverage cartons increased in 1993 compared with 1992
due mainly to volume increases. Net sales of beverage cartons sold in North
America increased 11.3 percent in 1993. Net sales increased $35.7 million, or
16.9 percent, in the Containerboard segment principally due to the acquisition
of the Macon mill on July 1, 1992, which reported Containerboard segment net
sales of $97.7 million in 1993 compared with $57.5 million for the six months
of 1992. This increase in Containerboard net sales was primarily due to
increased volume but was partially offset by a decrease in worldwide linerboard
prices. Additionally, volume growth in Brazil was offset by lower prices of
medium sold in the United States. Net sales in the U. S. Timberlands/Wood
Products segment increased by $21 million, or 16.7 percent, as a result of
increases in selling prices of lumber and plywood related primarily to a
stronger housing market and a decrease in supply of lumber and plywood.
GROSS PROFIT
Gross profit for 1993 decreased $38.1 million, or 14.7 percent, from 1992. The
gross profit margin decreased to 19.7 percent for 1993 from 23.2 percent in
1992 principally as a result of lower containerboard prices and a decline in
the Coated Board System segment's gross profit margin, offset in part by an
increase in the U.S. Timberlands/Wood Products segment's gross profit margin.
Without the results of the Macon mill, Riverwood's gross margin would have been
24 percent in 1993 and 24.8 percent in 1992. The Coated Board System segment's
gross profit margin decreased primarily due to weak markets worldwide for both
folding cartons and folding carton board in 1993 compared with 1992. Lower
prices in worldwide linerboard markets during 1993 adversely affected the gross
profit margin of the Containerboard segment. The U.S. Timberlands/Wood Products
segment reported improved margins as a result of improved selling prices.
Fluctuations in U.S. dollar currency exchange rates did not have a significant
impact on the gross profit of Riverwood or any of its business segments.
Total board mill shipments, including shipments to Riverwood's integrated
converting plants, for the years ended December 31 were as follows:
<TABLE>
<CAPTION>
(In thousands of tons)
------------------------
1993 1992
------- --------
<S> <C> <C>
Coated Board 765.3 755.8
Containerboard 950.5 716.6
------- -------
1,715.8 1,472.4
======= =======
</TABLE>
OPERATING EXPENSES
Selling, general and administrative expenses increased $17.1 million, or 15.7
percent, in 1993 compared with 1992, and as a percent of net sales, increased
by 1.5 percentage points to 11.2 percent. The increase was due principally to
expenses associated with additional infrastructure established to support
packaging machinery operations and the expansion into worldwide multiple
packaging markets, as well as the full-year impact of selling and
administrative expenses of the Macon mill acquired on July 1, 1992. Research,
development and engineering expenses increased by $3 million, or 51.9 percent,
primarily due to a higher level of packaging machinery engineering costs
associated with expanding packaging machinery operations. Fluctuations in U.S.
dollar currency exchange rates did not have a significant impact on operating
expenses.
RESTRUCTURING OF OPERATIONS
The restructuring of operations loss, net, of $8 million reported in the fourth
quarter of 1993 included a $25 million pretax charge for the writedown of
assets and provisions for severance, relocation and related costs of
restructuring and
18
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Manville Corporation 1994 Annual Report
consolidating certain operations and infrastructure levels. For 1993 business
segment reporting purposes, of the $25 million restructuring charge, $18
million, $0.3 million and $0.4 million, were included in the Coated Board
System, Containerboard and U.S. Timberlands/Wood Products business segments,
respectively, with the remainder included in Riverwood's Corporate and
Eliminations section of income from operations. Through December 31, 1993,
approximately $4.7 million had been charged against the restructuring reserve,
of which approximately $3.7 million related to cash expenditures. Approximately
$2.1 million of the total charges to the reserve related to the Coated Board
System business segment, and the remainder were of a corporate nature.
The 1993 restructuring charge was partially offset by a $17 million pretax gain
on the sale and assignment, for cash, of approximately 60,000 acres of
nonstrategic timberlands located in Louisiana and Texas. The $17 million pretax
gain was included in the U.S. Timberlands/Wood Products business segment.
OTHER INCOME (LOSS), NET
Other income, net, increased $3.5 million to $4.9 million in 1993 from $1.4
million in 1992. The change is primarily a result of $2.5 million in gains
recognized in 1993 on final purchase price settlements of previous
acquisitions.
INCOME FROM OPERATIONS
Income from operations in 1993 decreased by $62.6 million, or 42.8 percent,
compared with 1992. Excluding the restructuring of operations loss, net, of $8
million in 1993, income from operations in 1993 decreased by $54.6 million, or
37.4 percent, compared with 1992, as operating margins declined to 8.2 percent
from 13.1 percent of net sales. The operating income of the Containerboard
segment declined by $40.9 million due principally to weak containerboard prices
worldwide. In addition, income from operations of the Brazilian operations
declined by 16.4 percent from 1992. The Coated Board System segment's income
from operations decreased by $44.6 million. Excluding the $18 million of
restructuring charges included in this segment in 1993, the decrease in this
segment's operating earnings of $26.6 million resulted primarily from higher
marketing and packaging machinery product development expenditures, weak
worldwide folding carton markets and price declines resulting from new capacity
additions of competing paperboard grades for folding carton markets. Partially
offsetting these Coated Board System decreases was an increase in volume,
improved sales mix and favorable fixed cost variances for beverage carton
products. Income from operations in the U.S. Timberlands/Wood Products segment
increased by $33 million. Excluding the $17 million pretax gain on the sale and
assignment of certain nonstrategic timberlands included in this segment in
1993, income from operations increased by $16 million due to higher selling
prices for lumber and plywood products. Fluctuations in U.S. dollar currency
exchange rates did not have a significant impact on the income from operations
of Riverwood or any of its business segments.
SCHULLER RESULTS OF OPERATIONS BY SEGMENT
Schuller reported its results of operations in a prior public filing
substantially as presented below.
NET SALES
Net sales for the year ended December 31, 1993 increased $70.4 million, or 6.4
percent, from $1.1 billion in 1992 to $1.2 billion in 1993. The Building
Products segment's 1993 net sales increased $56.9 million, or 9.3 percent, over
1992 due to higher volume associated with improvements in the residential
construction market, increased roofing activity and improved pricing during the
period, particularly in the building insulation business. Net sales reported
for the Engineered Products segment increased $15 million, or 2.9 percent, in
1993 compared with 1992 due to improvements in both the price and volume
19
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Manville Corporation 1994 Annual Report
of fiber and roofing mat sold as the result of increased U.S. construction
activity during 1993, offset in part by weakness in European construction
markets.
GROSS PROFIT
Gross profit margin for the year ended December 31, 1993 increased to 22.1
percent from 19.7 percent in 1992. Gross profit in 1993 increased $41.9
million, or 19.5 percent, compared with 1992. The 1993 increase in gross profit
was primarily attributable to improvements in manufacturing efficiencies,
increased sales volume and, to a lesser extent, improved selling prices. Gross
profit was also increased by $4 million due to the reversal of a special
reserve for an unscheduled rebuild of a component of a glass furnace that was
no longer required due to continued performance of the furnace, and $2.4
million for a dismantled furnace.
OPERATING EXPENSES
Operating expenses increased slightly in 1993 compared with 1992. Combined,
these expenses decreased as a percent of net sales to 12.8 percent in 1993 from
13.6 percent in 1992.
RESTRUCTURING OF OPERATIONS
During 1993, Schuller initiated restructuring programs resulting in charges
totaling $30.1 million for the year as explained below.
During the second quarter of 1993, Schuller recorded a restructuring loss of
approximately $3.2 million principally for the settlement of litigation
related to a former business for which a previous estimate had not been
reasonably possible.
During the fourth quarter of 1993, Schuller made the decision to exit its
residential roofing business and recorded a provision of $6.7 million, which
included $1.6 million for the separation of approximately 75 employees, $2.4
million for the writedown of assets and $2.7 million for other related costs.
In 1993, Schuller adopted a program for the separation of approximately 125
salaried employees, principally in its mats and reinforcements business in the
Engineered Products segment, and accordingly recorded a $6.6 million charge for
such costs in addition to a $0.9 million charge for the separation of certain
salaried employees in the Building Products segment. This program was
precipitated by U.S. competitive pressures and weak European construction
markets.
Restructuring of operations in 1993 also included a $12.7 million charge
related to Schuller's former phenolic roofing insulation business, which
consisted of: $15.6 million for estimated sampling, inspection and remediation
expenses; $2.5 million for estimated legal costs; $1 million for administration
of the sampling and inspection program; and $0.6 million for the writedown of
equipment, offset by $7 million of expected insurance recoveries. The accrual
for sampling, inspection, remediation and administration costs reflected
Schuller's decision to continue this voluntary program and was based on
information available at that time, including Schuller's previous experience in
sampling, inspection and remediating roofs with phenolic insulation. The
accrual for legal costs reflected Schuller's decision to commence litigation
after initial attempts to negotiate settlements with the former owner of the
business and Schuller's insurance carrier failed. For additional information,
see Note 13 to the Consolidated Financial Statements.
Schuller recorded a net restructuring gain of approximately $2 million in 1992
which included:
A gain of $4.7 million on the settlement of an environmental liability related
to a business in the Engineered Products segment.
An adjustment of $2.5 million to reduce previously established separation
reserves, of which approximately $2 million related to the Building Products
segment and the remainder related to the Engineered Products segment. These
separation reserves were no longer considered necessary as Schuller completed
restructuring programs during 1992 that were initiated in previous years.
20
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Manville Corporation 1994 Annual Report
A $2 million gain on the sale of Schuller's 50 percent interest in a joint
venture not related to its core businesses.
A $7.8 million charge related to Schuller's former phenolic insulation business
in the Building Products segment. This charge included a $3.3 million loss on
the sale of phenolic-related assets, not previously anticipated due to a change
in market conditions. Schuller also recorded a $2.5 million charge for legal
costs, which arose as a result of Schuller's claims against the former owner of
the business and Schuller's insurer. Prior to 1992, it was not expected that
Schuller's insurer would deny coverage of Schuller's claim and Schuller had not
identified that it had a potential claim against the previous owner of the
business. In addition, Schuller recorded a $2 million adjustment to increase
reserves previously established for Schuller's voluntary sampling, inspection
and remediation program. This increase to the reserves reflected Schuller's
decision to continue this voluntary program and was based on information
obtained as a result of sampling, inspection and remediation performed in 1991.
Schuller's restructuring reserves at December 31, 1991 primarily related to
separations for a cost reduction program, costs associated with Schuller's
decision to exit its unprofitable phenolic insulation business and additional
costs related to the consolidation of operations and restructuring of
administrative functions.
The following table sets forth the activity in Schuller's restructuring
reserves for the years ended December 31:
<TABLE>
<CAPTION>
(In thousands of dollars)
-----------------------------------------------------------------
Employee
Separations Phenolic Other Total
----------- -------- ------- --------
<S> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1991 $15,389 $ 7,538 $20,145 $ 43,072
Restructuring of Operations (Gain) Loss (2,514) 7,764 (7,283) (2,033)
Cash Payments (7,131) (5,990) (1,222) (14,343)
Writedown of Assets (3,245) (3,245)
------- ------- ------- --------
BALANCES AT DECEMBER 31, 1992 5,744 6,067 11,640 23,451
Restructuring of Operations Loss 9,167 12,707 8,242 30,116
Cash Payments (8,395) (6,280) (6,898) (21,573)
Writedown of Assets (601) (2,420) (3,021)
Insurance Receivable 7,000 7,000
------- ------- ------- --------
BALANCES AT DECEMBER 31, 1993 $ 6,516 $18,893 $10,564 $ 35,973
======= ======= ======= ========
</TABLE>
OTHER INCOME (LOSS), NET
Other loss, net, increased $10.4 million from $1 million in 1992 to $11.4
million in 1993. The loss reported in 1992 was net of gains totaling
approximately $7.5 million recognized on the sale of fixed assets used in the
manufacturing process.
INCOME FROM OPERATIONS
Income from operations decreased $1.5 million, or 2.2 percent, from $67.5
million in 1992 to $66 million in 1993, primarily due to restructuring charges
recorded in 1993, partially offset by increased sales volume, improvements in
manufacturing efficiencies and improved selling prices.
TOTAL COMPANY RESULTS
In summary, total Company net sales improved $72.5 million, or three percent,
in 1993 over 1992 due to increases at both Riverwood and Schuller. Income from
operations decreased $66.3 million, or 33 percent, in 1993 primarily due to
declines in Riverwood's Coated Board System and Containerboard segments.
In addition to Riverwood's and Schuller's restructuring charges previously
discussed, approximately $2.4 million of other restructuring charges in the
Manville holding company for 1993
21
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Manville Corporation 1994 Annual Report
primarily related to cash expenses associated with former business operations
and a loss on the sale of an oil and gas property.
The Manville holding company restructuring charges of $1.3 million in 1992
included the sale of certain oil and gas properties at a loss of $7 million and
the sale of an investment in a joint venture at a gain of $5.7 million.
NONOPERATING INCOME AND EXPENSES
Compared with 1992, interest income in 1993 increased by $9.6 million, due
primarily to $13 million of interest income received on the income tax refund
described below, partially offset by lower interest rates and lower average
cash balances in 1993. Interest expense in 1993 increased by $13.9 million, or
11 percent, which represented interest expense incurred on Riverwood's public
debt issued during the third quarter of 1993 and the second quarter of 1992 and
on debt assumed in connection with Riverwood's acquisition of the Macon mill.
Partially offsetting these increases were higher levels of capitalized interest
in 1993 and lower interest expense due to a prepayment of a portion of the
Trust Bonds in 1993.
In 1993, the Company recorded $13 million of profit sharing expense which was
paid in 1994 to the PI Trust as required in connection with the Plan. Profit
sharing expense for 1992 totaled $12.1 million and was paid in 1993.
INCOME TAXES
The 1993 income tax benefit of $54.7 million includes the effect of a number of
unusual items that are described more fully below.
For income tax purposes, the Company is entitled to a tax benefit on the amount
of certain payments made to the PI Trust, including common stock dividends, in
the years in which amounts from such payments are transferred to a specific
settlement fund within the PI Trust or paid to claimants. For financial
reporting purposes, the Company records a tax benefit on the amount of common
dividends paid to the PI Trust at the time the dividends are paid.
Accordingly, the Company recognized a $34 million tax benefit in 1993 on the
portion of the $1.04 Common Stock dividend that was paid to the PI Trust,
partially offset by an additional deferred tax asset valuation allowance of $7
million. In accordance with Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes," the Company's valuation allowance on all
deferred tax assets is subject to change as forecasts of future years' earnings
and the estimated timing of the utilization of the Company's tax benefits are
revised.
In addition, during the first half of 1993, the Company received a U.S. income
tax refund of $32.1 million due to a retroactive change in U.S. income tax
regulations, which was recorded in 1993 as a reduction to income tax expense of
$18.7 million and an increase to interest income of $13.4 million. U.S. and
foreign tax rate changes also provided the Company a $20 million tax benefit in
1993.
Exclusive of the unusual items above, the 1993 tax rate on income from
continuing operations was 169 percent. This rate is substantially higher than
the U.S. federal statutory tax rate principally due to taxes on earnings
derived from overseas operations and taxes on expected repatriations of
undistributed foreign earnings, neither of which was totally offset by tax
benefits from losses in the United States.
The Company's 1992 effective tax rate on income from continuing operations of
35 percent primarily resulted from higher foreign effective income tax rates
and an increase in the deferred tax asset valuation allowance, offset in part
by an income tax benefit on that portion of a Common Stock dividend paid to the
PI Trust.
22
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Manville Corporation 1994 Annual Report
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY
On June 24, 1992, Riverwood completed an initial public offering of 12.1
million shares, or 19.5 percent, of its common stock. The Manville holding
company purchased approximately 3.4 million additional shares of Riverwood's
common stock at a price of $14.50 per share in September 1993. This increased
the Manville holding company's ownership percentage of Riverwood to
approximately 81.5 percent from 80.5 percent. The Manville holding company has
maintained at least an 80 percent ownership interest in Riverwood in order to
preserve the consolidated tax entity and take advantage of existing tax
benefits.
EXTRAORDINARY GAIN (LOSS) ON EARLY EXTINGUISHMENT OF DEBT
Pursuant to a bond prepayment agreement, on August 25, 1993, the Company made a
prepayment on the Trust Bonds. The prepayment consisted of $150 million of
cash, net of certain costs, and the assignment to the PI Trust of $100 million,
plus accrued interest, of outstanding Riverwood notes held by the Manville
holding company. An extraordinary gain of $0.9 million, net of related income
taxes of $0.5 million, was recorded in August 1993 to adjust the estimated
extraordinary loss previously recorded in 1992. In 1992, the Company recorded
an estimated extraordinary loss of $11.5 million, net of related income tax
benefit of $5.9 million, in anticipation of the prepayment and exchange of a
portion of the Trust Bonds.
CUMULATIVE EFFECT OF ACCOUNTING CHANGE
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" ("SFAS No. 112"). The Company recognized an accumulated
postemployment benefit obligation of $13.9 million, net of income taxes of $8.6
million. See Note 24 to the Consolidated Financial Statements.
EARNINGS PER COMMON SHARE
Primary and fully diluted earnings per common share for 1993 were $0.21 as
compared with the primary and fully diluted earnings per common share of $0.13
for 1992. The net charge to recognize the cumulative effect of the adoption of
SFAS No. 112 in 1993 reduced primary and fully diluted earnings per common
share by $0.11. In addition, the extraordinary net gain from the early
extinguishment of debt increased primary and fully diluted earnings per common
share by $0.01 in 1993 and the extraordinary net loss from the early
extinguishment of debt reduced primary and fully diluted earnings per common
share by $0.09 in 1992.
Earnings per common share amounts are calculated after deducting preference
stock accretion on the Cumulative Preference Stock, Series B. Each share of the
Manville holding company's Series A Convertible Preferred Stock was convertible
by its terms into 10 shares of Common Stock. On December 9, 1992, the PI Trust
converted all issued and outstanding Series A Convertible Preferred Stock into
72 million shares of Common Stock. All earnings (loss) per common share
computations assume that the Preferred Stock had been converted to Common Stock
and was outstanding as of the beginning of the earliest period presented.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company broadly defines liquidity as its ability to generate sufficient
cash flow to satisfy operating requirements, fund capital expenditures and meet
its existing obligations and commitments. In addition, liquidity includes the
ability to obtain appropriate debt and equity financing and to convert
23
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Manville Corporation 1994 Annual Report
into cash those assets that are no longer required to meet existing strategic
and financial objectives. Therefore, liquidity should not be considered
separately from capital resources, which consist of current or potentially
available funds for use in achieving long-range business objectives and meeting
debt service commitments. Additionally, the Company's relationship with the PI
Trust should be considered in analyzing liquidity.
As a result of the Riverwood public and private debt and equity offerings
commencing in 1992 and issuance of Schuller Senior Notes (defined on page 25)
in 1994, the Manville holding company no longer has unrestricted access to cash
flows generated by Riverwood and Schuller. As of December 31, 1994, the maximum
amounts available for dividends to be paid by Riverwood and Schuller under
their most restrictive debt covenants were approximately $31 million and $115
million, respectively. In addition, certain of the Company's subsidiaries may
be restricted in the amount of dividends that can be repatriated due to
governmental regulations, economic conditions or provisions contained in
financing and other agreements. The Manville holding company's ability to
generate sufficient cash in 1995 and beyond is dependent upon funds generated
from tax sharing agreements with Riverwood and Schuller, dividends declared by
Riverwood and Schuller, asset dispositions, and capital raised through external
sources, in addition to available cash at December 31, 1994.
Tax sharing agreements between the Manville holding company and Riverwood and
Schuller provide that their U.S. federal and state income taxes be calculated
as if they were independent entities and that such tax amounts be remitted to
the Manville holding company. The Company is able to apply its tax benefits to
reduce the consolidated domestic tax obligations, allowing the Manville holding
company to retain a large portion of the cash paid by Riverwood and Schuller.
The Manville holding company has maintained at least an 80 percent ownership
interest in Riverwood and Schuller in order to preserve the consolidated tax
entity and utilize existing tax benefits. Payments made to the Manville holding
company by Riverwood and Schuller for 1994 U.S. federal taxes totaled
approximately $5 million and $32 million, respectively.
Riverwood paid quarterly cash dividends of $0.04 per share on its common stock
during 1994 and 1993. As a result, the Manville holding company received
approximately $8.5 million in dividends from Riverwood in both 1994 and 1993.
Riverwood currently intends to continue paying quarterly dividends of $0.04 per
share on its common stock subject to a number of conditions, including
declaration by Riverwood's Board of Directors and compliance with covenants in
debt instruments and other agreements.
The Company's agreements with its lenders and other agreements with the PI
Trust and PD Trust (defined on page 29) contain a number of financial and
general covenants. These include, among other things, limitations on asset
dispositions; restrictions on borrowings, investments, stock issuances and
repurchases, dividends and other distributions; and restrictions on the
movement of cash from Riverwood and Schuller to the Manville holding company.
For example, the agreements governing Riverwood's senior indebtedness prohibit,
with certain exceptions, including but not limited to approximately $179
million of revolving credit facilities, additional indebtedness unless
Riverwood's pro forma consolidated interest coverage ratio is greater than 2 to
1 until April 1995, at which time the consolidated interest coverage ratio
test increases to 2.25 to 1. As of December 31, 1994, Riverwood's pro forma
consolidated interest coverage ratio was greater than 2.25 to 1. The indenture
for the Schuller Senior Notes requires that, with certain exceptions,
additional indebtedness may be incurred only if, after
24
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Manville Corporation 1994 Annual Report
giving effect to the incurrence thereof, Schuller's pro forma consolidated
interest coverage ratio is greater than 2.25 to 1 until October 1996, at which
time the pro forma consolidated interest coverage ratio test increases to 2.5
to 1. As of December 31, 1994, Schuller's pro forma interest coverage ratio was
greater than 2.5 to 1. Noncompliance with these or other covenants, or the
occurrence of any other event of default, could result in the termination of
existing agreements or the accelerated payment of substantially all currently
outstanding debt or other obligations.
Overall, the Company's debt increased during 1994 by $85.3 million, principally
as a result of the Company's third quarter 1994 refinancings.
In the third quarter of 1994, Riverwood completed a public offering of $100
million face value of 10.375 percent 10-year Senior Subordinated Notes due 2004
and entered into a bank credit facility that provides for borrowings of up to
$125 million at an initial variable interest rate equal to 1.875 percent over
the London Interbank Offer Rate ("LIBOR"). The bank credit facility provides
for borrowings on a revolving basis through June 1996, whereupon it converts to
a term loan facility with principal installments payable from 1998 through
2000. Upon obtaining this financing, Riverwood borrowed $100 million under the
bank credit facility and used such amount together with the proceeds of the
Senior Subordinated Notes to prepay approximately $179 million principal of
notes payable to insurance companies and banks, to pay approximately $3 million
of related accrued interest and to pay expenses of the refinancing. This early
retirement of debt resulted in an extraordinary charge to net earnings of
approximately $7.9 million, net of income taxes of approximately $5 million in
the third quarter of 1994. Borrowings under the bank credit facility are
collateralized by all of the fixed assets of the Macon mill which were
previously collateral for the notes repaid. At December 31, 1994, such
borrowings were $105 million, of which $43 million were paid in January 1995
with a portion of the proceeds from the sale of part of Riverwood's Brazilian
operations.
In September 1994, Manville prepaid $343 million of the Trust Bonds, including
accrued interest, to the PI Trust with $379 million aggregate principal amount
of 10.375 percent Schuller Senior Notes due 2004. The transaction resulted in
an extraordinary loss on the early extinguishment of debt of $26.8 million, net
of related income taxes of $11.4 million. The transaction also resulted in the
termination of the bond prepayment agreement between Manville and the PI Trust
which eliminated certain financial covenants applicable to the Company. In the
fourth quarter of 1994 the extraordinary loss on the Trust Bonds was reduced by
$6.3 million, net of related income taxes of $3.4 million. This reduction was
due to an adjustment in the interest rate on the Schuller Senior Notes to
10.875 percent (as so adjusted, the "Schuller Senior Notes") finalized in the
fourth quarter in accordance with the agreement related to the prepayment. This
resulted in a total extraordinary loss in 1994 on the Trust Bonds prepayment of
$20.5 million, net of related income taxes of $8 million. The PI Trust
subsequently sold its Schuller Senior Notes in the public markets. In
conjunction with the PI Trust's public offering, Manville also sold its
Schuller Senior Notes in the public markets, resulting in a total sale of $400
million of Schuller Senior Notes.
The Company's remaining bond obligation to the PI Trust may be prepaid at the
PI Trust's option, exercisable at any time on or prior to April 1, 1995. The
prepayment would be based on the discount rate used in the 1994 Trust Bond
prepayment and would result in approximately a $3.5 million pretax
extraordinary loss on the early extinguishment of the remaining Trust Bond.
25
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Manville Corporation 1994 Annual Report
At December 31, 1994, Riverwood and its U.S. and international subsidiaries had
approximately $204 million in revolving credit facilities, of which
approximately $73.6 million were available for borrowing. In addition,
Riverwood has arrangements with certain international banks for discounting
receivables. As of December 31, 1994, approximately $1.6 million of overseas
receivables were discounted. As part of its revolving credit facilities,
Riverwood has a $50 million U.S. credit facility with banks to be used for
working capital purposes through December 1995. This facility is
collateralized by certain U.S. inventories and receivables. As of December 31,
1994, $15 million had been borrowed under this facility. In January 1995,
Riverwood used a portion of the sales proceeds from the partial sale of
Riverwood's Brazilian operations to repay $58 million of borrowings that were
outstanding under Riverwood's revolving credit facilities at December 31, 1994,
including the $15 million borrowing under the U.S. credit facility.
At December 31, 1994, Schuller had a $100 million receivables sale facility
("the Receivables Facility") available for its domestic short-term working
capital requirements. There have been no borrowings under the Receivables
Facility through December 31, 1994. In addition, Schuller's foreign
subsidiaries had working capital facilities totaling $65 million available for
borrowing at December 31, 1994.
The Manville holding company had no credit facilities as of December 31, 1994.
However, as of December 31, 1994 the Manville holding company had $122.9
million of cash and marketable securities and had a total of $37.6 million of
intercompany notes receivable from Riverwood and Schuller. The Manville holding
company has no debt or other agreements that place significant restrictions on
its or its operating subsidiaries' ability to incur additional indebtedness.
Cash flow provided by operating activities during 1994 was $296.3 million, of
which $117.5 million was generated by Riverwood and $142.3 million was
generated by Schuller. Cash and marketable securities increased by $114.2
million in 1994, primarily as a result of cash generated from operations and
proceeds from the sale of assets, including Riverwood's sale of just under 50
percent of its Brazilian operations for approximately $100 million and the
Company's sale of a portion of its equity investment in Stillwater for $25.5
million. Riverwood also entered into a financing agreement structured as a sale
and leaseback transaction. Under terms of the agreement, Riverwood received
sales proceeds of $25 million. The assets sold have been leased back by
Riverwood under a one-year operating lease, which allows for four one-year
renewals for a maximum term of five years. In addition, the Company received
approximately $22 million from the public sale of its Schuller notes. Partially
offsetting these increases were cash used for capital expenditures, primarily
related to Riverwood's coated board capacity expansion project, and dividends
on the Company's Preference Stock.
Riverwood's ability to generate cash in 1995 and beyond is dependent upon funds
generated from operations, including the flow of funds from subsidiaries. Funds
from operations are dependent, in part, upon Riverwood's ability to
successfully produce and market the additional coated board capacity from its
Macon, Georgia mill at prices satisfactory to Riverwood, and Riverwood's
ability to continue to implement its reengineering and cost reduction programs.
Schuller's cash flows from operating activities are primarily influenced by
sales volume, sales pricing, manufacturing efficiencies and cost reduction
programs. Sales volume and sales pricing for Schuller's building products have
historically experienced cyclicality due to macroeconomic factors affecting
residential and commercial construction markets. Although 1995 U.S. housing
starts are expected to decline slightly, energy conservation trends, repair and
remodel activity
26
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Manville Corporation 1994 Annual Report
and growing commercial activity are expected to offset the effects of such
decline. Due to their specific market niches, some of Schuller's engineered
products, particularly filtration and specialty products are less sensitive to
business cycles and experience relatively stable demand and pricing. However,
other engineered products are affected by fluctuations in industrial
production. During 1994 most of Schuller's businesses benefited from higher
sales volume while Schuller's building insulation and mats and reinforcements
also benefited from higher pricing.
The Company had net working capital of $351.2 million, including cash and
marketable securities of $342.3 million, at December 31, 1994. Total cash and
marketable securities located outside of the United States and Canada were
approximately $33.2 million. Approximately $120.3 million of cash and
marketable securities are held by Riverwood and $99.1 million are held by
Schuller.
In 1994, the Company used approximately $327.2 million of cash for capital
expenditures, which included approximately $23.6 million of capitalized
interest and $20.8 million for an acquisition of an existing business. During
1994, Riverwood completed the conversion of one of the two linerboard machines
at the Macon mill to coated board production. In addition to the Macon mill
expansion, other capital expenditures incurred by Riverwood in 1994 included
the cost of packaging machinery placements, projects that will add worldwide
press and converting capacity, and costs for environmental compliance. With the
Macon mill paper machine conversion completed in 1994, Riverwood does not
expect to capitalize interest in 1995 at the same level experienced during
1994. As of December 31, 1994, outstanding commitments relating to Riverwood's
capital projects totaled approximately $7 million, which will be funded with
operating cash flow, existing cash and marketable securities balances and
available credit facilities.
Schuller is currently operating its fiberglass production facilities at or near
their capacity limits due to recently improved economic conditions, new product
introductions and share gains in certain of its businesses. Management
currently plans to increase capacity incrementally through technology and
productivity innovation and capital programs designed to increase the output of
existing plant facilities with minimal fixed cost growth. As of December 31,
1994, outstanding purchase commitments relating to Schuller's capital projects
totaled approximately $23 million.
In total, Manville's 1995 capital expenditures are expected to be approximately
$265 million to $295 million, exclusive of capitalized interest. Included in
Manville's total 1995 expected capital expenditures are approximately $165
million to $185 million of capital expenditures related to Riverwood and
approximately $100 million of capital expenditures related to Schuller.
Dividends on Manville's Cumulative Preference Stock, Series B, began being paid
quarterly in 1994 at an annual rate of $2.70 per share, but are payable only as
and when declared by Manville's Board of Directors after other funding
requirements under the Plan have been met. Manville paid cash dividends
totaling $22.8 million, or $2.475 per share, during 1994 to Cumulative
Preference Stock, Series B, stockholders. In February 1995, the Company
declared a dividend on its Cumulative Preference Stock, Series B, totaling $6.2
million, or $0.675 per share, payable March 1, 1995 to stockholders of record
on February 20, 1995.
At December 31, 1994, Schuller has $9.1 million accrued for sampling,
inspection, remediation and legal costs related to roof deck damage caused by
Schuller's phenolic roofing insulation. During 1995, Schuller expects to pay
approximately $4 million to $6 million for sampling, inspection, remediation
and legal costs related to its former phenolic roofing insulation business
exclusive of legal costs related to Schuller's claims against Beazer East, Inc.
See Note 13 to the Consolidated Financial Statements.
27
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Manville Corporation 1994 Annual Report
Schuller's program for the reduction of salaried employees was substantially
complete at December 31, 1994 and the remaining reserve for separations of $1.4
million will be paid in cash through the first half of 1995. Other Schuller
restructuring reserves of $5.9 million at December 31, 1994 related primarily
to product warranties for previously discontinued product lines and to
Schuller's exit of its residential roofing business. Reserves related to
product warranties for previously discontinued product lines will be paid out
in cash over the remaining warranty period, generally 15 to 20 years. Reserves
related to Schuller's exit of its residential roofing business are expected to
be paid out in cash during 1995.
The Company is engaged in environmental remediation projects for properties
currently owned or operated by the Company and properties divested by the
Company for which responsibility was retained for preexisting conditions. In
addition, the Company has been identified as a potentially responsible party at
a number of non-Company owned or operated sites under the federal Comprehensive
Environmental Response, Compensation and Liability Act or similar state
legislation, and as such could be jointly and severally liable for the costs of
remediating these sites. The Company's actual final costs in some instances
cannot be estimated until the remediation process is substantially completed.
During 1994 and 1993, the Company paid approximately $6 million and $2 million,
respectively, for environmental cleanup, almost entirely for properties owned
by the Company, and had reserves totaling approximately $33 million for
environmental remediation costs at December 31, 1994. The Company expects the
cash outlays related to these reserves to be made over the next 15 years.
Environmental law is dynamic, and as a result, costs that are unforeseeable at
this time may be incurred when new laws are enacted, and/or the environmental
agencies promulgate or revise regulations in furtherance of such legislation.
In response to the implementation of 1990 amendments to the federal Clean Air
Act and requirements of various state air emissions regulations, the Company
will be obligated to monitor and reduce air emissions at its manufacturing
sites. The regulations will likely require capital expenditures in the years
1995 to 2001, with most of the expenditures occurring in the latter part of
that time frame. Because many of the anticipated regulations have not yet been
proposed, neither the costs nor timing of compliance can be reasonably
estimated at this time. In addition, the federal Environmental Protection
Agency has issued new proposed regulations for the pulp and paper industry (the
"Proposed Regulations"). It is expected that the earliest time for industry
compliance with the Proposed Regulations should not be prior to the first
quarter of 2000. At this time, Riverwood estimates capital spending that may be
required to comply with the Proposed Regulations could be between $20 million
and $40 million to be spent over a three-year period beginning in 1997.
The Company periodically reviews and, as appropriate, revises its environmental
accruals. Based on current information and regulatory requirements, the Company
believes that to the extent additional costs may be incurred that might exceed
the accrued amounts, such amounts are not expected to have a material adverse
effect on the Company's financial condition, liquidity or results of
operations.
The Company believes that with its current cash position and existing credit
facilities, cash generated from operations, its access to private and public
capital markets, and proceeds from the sale of nonstrategic assets, it can
adequately fund normal debt service requirements, its planned capital spending
programs, environmental compliance and its other commitments.
28
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Manville Corporation 1994 Annual Report
PROFIT SHARING OBLIGATION
Beginning in 1992, the Company became obligated under the Plan to pay annually
to the PI Trust 20 percent of net earnings (adjusted as specified in the
definition of "Profits" in the Amended and Restated Supplemental Agreement
between the PI Trust and Manville Corporation). Payments are due each year
based on the prior year's net earnings. The profit sharing right of the PI
Trust is a right to annual payments if and when the Company has income and is
not a right or lien against the assets of the Company. The amount of the profit
sharing becomes probable and reasonably estimable only when the Company has
earnings. The profit sharing obligation is a period cost based on actual
results of the period in which earned. The profit sharing obligation will
continue for as long as the PI Trust is in existence and any asbestos personal
injury claims filed against the PI Trust remain unpaid. After termination of
the PI Trust, an independent profit sharing obligation on the same terms arises
in favor of the Manville Property Damage Settlement Trust (the "PD Trust").
Based upon a review of the existing and potential claims facing the two trusts,
the Company believes that the profit sharing, for all practical purposes, will
be payable in perpetuity unless the Company and the trusts agree to a
restructuring or modification of the profit sharing obligation at some future
date. This conclusion is supported by decisions of the United States District
Courts for the Southern and Eastern Districts of New York which have concluded
that the PI Trust's assets are "grossly inadequate" to pay existing and
potential claims. During 1994, the Company recorded $18.3 million of profit
sharing expense to be paid in 1995, as required by the Plan.
RELATIONSHIP OF MANVILLE TO THE PERSONAL INJURY TRUST
The PI Trust owns approximately 78 percent of Manville's Common Stock. The PI
Trust is an irrevocable trust formed under the laws of the State of New York,
pursuant to a trust agreement dated as of November 28, 1988, as amended (the
"Trust Agreement"), to implement certain portions of the Plan, in particular,
those relating to the settlement of asbestos health claims against Manville and
certain of its affiliates. As the owner of approximately 78 percent of
Manville's Common Stock, the PI Trust has effective voting control over the
Company, including the power to nominate and elect Manville directors as the
trustees of the PI Trust determine. Three trustees of the PI Trust currently
serve as members of Manville's Board of Directors.
In furtherance of its purposes under the Trust Agreement of enhancing and
preserving its trust estate and providing compensation to bona fide asbestos
health claimants, the PI Trust has an interest in maximizing the value of, and
at times increasing the liquidity of, its investment in the Company. The PI
Trust may from time to time consider and discuss with management various means
by which the Company might seek to maximize stockholder value and enhance
stockholder liquidity. The Company conducts all negotiations with the PI Trust
on an arm's-length basis, with both parties being represented by their own
legal and financial advisors. Significant transactions with the PI Trust are
reviewed by the Board of Directors, after consultation with appropriate
external advisors and experts, to determine that the transactions are fair. In
addition, the Audit Committee of the Board of Directors reviews the accounting
treatment for such transactions.
29
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Manville Corporation 1994 Annual Report
REVERSAL OF DIVIDENDS ACCRUED NOT DECLARED
At December 31, 1993, $102.9 million of Common Stock Dividends Accrued Not
Declared were reflected in the consolidated balance sheet. These special
dividends were previously accrued based upon a refinancing arrangement that had
been negotiated between the Company and the PI Trust, but that terminated in
accordance with its terms in August 1993. In the third quarter of 1994, when it
became apparent that the refinancing arrangement would not be renewed, the
Common Stock Dividends Accrued Not Declared were reversed. The consolidated
balance sheet also reflected Cumulative Preference Stock Dividends Accrued Not
Declared of $72.7 million at December 31, 1993, as part of the accounting for
the Common Stock dividend accrual. The Cumulative Preference Stock Dividends
Accrued Not Declared were also reversed in the third quarter of 1994. Future
dividends, if any, will be paid at the discretion of the Company's Board of
Directors.
IMPACT OF INFLATION
In the United States, where the inflation rate has averaged approximately three
percent in each of the last three years, 1994 U.S. net sales were $2 billion,
or approximately 78 percent of the Company's total net sales. Although
inflation is not a significant factor domestically, the Company takes steps to
maintain its profit margins through implementation of cost reduction and
productivity improvement programs and timely price increases within the
constraints of highly competitive markets. In addition, the Company's use of
the LIFO method of accounting for substantially all domestic inventories
results in reporting the costs of products sold at approximately current cost.
In foreign countries where the Company has manufacturing facilities, the
weighted average inflation rate was approximately three percent for both Europe
and Australia, while the inflation rate in Brazil averaged approximately 40
percent per month during the first half of the year and less than five percent
per month during the second half after the Brazilian government initiated an
economic stabilization program. Net sales from the overseas locations during
1994 amounted to $594.1 million, or approximately 23 percent, of the Company's
total net sales, including $161 million of sales from Brazilian operations.
Operations in Brazil are maintained in a highly inflationary economy; however,
as a result of the sale of just under a 50 percent interest in Riverwood's
investment in Brazil the Company's exposure has been reduced.
Inventories in foreign countries are primarily accounted for on the FIFO
method; thus, the charge to cost of sales does not necessarily reflect current
costs. However, the Company believes that if its foreign operations were
restated to reflect higher cost of sales based on inventories valued at current
cost, reported income would not be significantly decreased.
30
<PAGE> 24
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Manville Corporation 1994 Annual Report
<TABLE>
<S> <C>
Consolidated Balance Sheet, December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Consolidated Statement of Income, for each of the three years in the period ended December 31, 1994 . . . . . . 34
Consolidated Statement of Cash Flows, for each of the three years in the period ended December 31, 1994 . . . . 35
Consolidated Statement of Stockholders' Equity, for each of the three years in the period ended
December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Management's Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Supplementary Data :
Selected Quarterly Financial Data, for each of the two years in the period ended December 31, 1994
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Consolidating Balance Sheet, December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Consolidating Statement of Income, for the year ended December 31, 1994 . . . . . . . . . . . . . . . . . . . 76
Consolidating Statement of Cash Flows, for the year ended December 31, 1994 . . . . . . . . . . . . . . . . . 77
</TABLE>
31
<PAGE> 25
CONSOLIDATED BALANCE SHEET
Manville Corporation 1994 Annual Report
<TABLE>
<CAPTION>
December 31,
(In thousands of dollars)
------------------------------
ASSETS 1994 1993
---------- ----------
<S> <C> <C>
Current Assets
Cash and equivalents $ 322,003 $ 153,093
Marketable securities, at cost which approximates market 20,311 75,062
Receivables 335,772 304,114
Inventories 212,774 207,702
Prepaid expenses 28,015 27,978
Deferred tax assets 44,854 50,179
---------- ----------
Total Current Assets 963,729 818,128
---------- ----------
Property, Plant and Equipment, at cost
Land and improvements 93,833 116,024
Buildings 351,246 374,081
Machinery and equipment 2,341,645 2,337,401
---------- ----------
2,786,724 2,827,506
Less accumulated depreciation and depletion 963,603 1,017,178
---------- ----------
1,823,121 1,810,328
Timber and timberlands, less cost of timber harvested 240,436 303,301
---------- ----------
Property, Plant and Equipment, net 2,063,557 2,113,629
---------- ----------
Deferred Tax Assets 281,874 334,131
Other Assets 490,451 354,419
---------- ----------
Total Assets $3,799,611 $3,620,307
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
32
<PAGE> 26
CONSOLIDATED BALANCE SHEET
Manville Corporation 1994 Annual Report
<TABLE>
<CAPTION>
December 31,
(In thousands of dollars)
-----------------------------
LIABILITIES 1994 1993
---------- ----------
<S> <C> <C>
Current Liabilities
Short-term debt $ 94,654 $ 42,364
Accounts payable 200,856 165,704
Compensation and employee benefits 157,574 135,024
Income taxes 28,739 24,809
Accrued dividends - Cumulative Preference Stock, Series B (Note 4) 22,846
Other accrued liabilities 130,748 110,793
---------- ----------
Total Current Liabilities 612,571 501,540
Long-Term Debt, less current portion 1,423,995 1,390,988
Deferred Income Taxes 91,389 92,687
Postretirement Benefits Other Than Pensions 243,986 246,525
Other Noncurrent Liabilities 268,589 297,422
Common Stock Dividends Accrued Not Declared (Note 4) 102,856
Cumulative Preference Stock Dividends Accrued Not Declared (Note 4) 49,845
---------- ----------
Total Liabilities 2,640,530 2,681,863
---------- ----------
Profit Sharing Obligation (Note 3)
Commitments and Contingencies (Notes 2, 6 and 13)
Minority Interest in Consolidated Subsidiary 95,610 92,375
STOCKHOLDERS' EQUITY ---------- ----------
Cumulative Preference Stock, Series B, $1.00 par value, authorized
11,109,170 shares, issued and outstanding 9,230,583 shares in 1994
and 1993 (aggregate liquidation value - $230,765) 178,638 105,947
Common Stock, $.01 par value, authorized 175,000,000 shares;
issued 122,874,624 shares and outstanding 122,827,761 shares
in 1994 and issued and outstanding 122,335,722 shares in 1993 1,228 1,224
Treasury Stock, at cost (407)
Capital in Excess of Par Value 1,011,310 900,562
Unearned Restricted Stock Compensation (6,013) (2,663)
Accumulated Deficit (130,394) (142,467)
Pension Liability Adjustment (435) (4,345)
Cumulative Currency Translation Adjustment 9,544 (12,189)
---------- ----------
Total Stockholders' Equity 1,063,471 846,069
---------- ----------
Total Liabilities and Stockholders' Equity $3,799,611 $3,620,307
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
33
<PAGE> 27
CONSOLIDATED STATEMENT OF INCOME
Manville Corporation 1994 Annual Report
<TABLE>
<CAPTION>
For the Years Ended December 31,
(In thousands of dollars, except per share amounts)
---------------------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Net Sales $2,560,343 $2,278,204 $2,205,664
Cost of Sales 1,930,926 1,799,765 1,729,982
Selling, General and Administrative 281,172 260,247 242,101
Research, Development and Engineering 39,094 36,743 33,873
Restructuring of Operations Gain (Loss), net (40,539) 746
Other Income (Loss), net (12,665) (4,962) 1,762
---------- ---------- ----------
Income from Operations 296,486 135,948 202,216
Gain on Sale of Equity Investment 13,455
Interest Income 10,707 27,378 17,766
Interest Expense 140,984 143,980 130,054
Profit Sharing Expense (Note 3) 18,259 12,993 12,123
---------- ---------- ----------
Income before Income Taxes 161,405 6,353 77,805
Income Tax Expense (Benefit) 95,550 (54,718) 27,226
---------- ---------- ----------
Income before Minority Interest, Extraordinary Item
and Cumulative Effect of Accounting Change 65,855 61,071 50,579
Minority Interest in Consolidated Subsidiary (439) (299) (3,114)
---------- ---------- ----------
Income before Extraordinary Item and Cumulative Effect
of Accounting Change 65,416 60,772 47,465
Extraordinary Gain (Loss) on Early Extinguishments
of Debt, net of tax (28,420) 891 (11,516)
Cumulative Effect of a Change in Accounting for
Postemployment Benefits, net of tax (13,881)
---------- ---------- ----------
Net Income 36,996 47,782 35,949
Preference Stock Dividends/Accretion (24,923) (22,545) (19,982)
---------- ---------- ----------
Net Income Applicable to Common Stock $ 12,073 $ 25,237 $ 15,967
========== ========== ==========
Earnings (Loss) Per Common Share
(After Preference Stock Dividends/Accretion)
Primary and Fully Diluted:
Income before Extraordinary Item and Cumulative Effect
of Accounting Change $ .33 $ .31 $ .22
Extraordinary Gain (Loss) on Early Extinguishments
of Debt, net of tax (.23) .01 (.09)
Cumulative Effect of a Change in Accounting for
Postemployment Benefits, net of tax (.11)
----- ----- -----
Net Income Applicable to Common Stock $ .10 $ .21 $ .13
===== ===== =====
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
34
<PAGE> 28
CONSOLIDATED STATEMENT OF CASH FLOWS
Manville Corporation 1994 Annual Report
<TABLE>
<CAPTION>
For the Years Ended December 31,
(In thousands of dollars)
-------------------------------------------------
1994 1993 1992
-------- -------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (before Preference Stock Dividends/Accretion) $ 36,996 $ 47,782 $ 35,949
Non-cash items included in net income:
Depreciation, depletion and amortization 154,346 157,108 148,914
Deferred taxes 72,804 (76,341) 3,366
Roofing guarantee income 7,857 5,685 5,079
Provisions for furnace rebuilds 8,657 884 6,187
Pension and postretirement benefits expense 24,599 35,508 25,536
Restructuring of operations (gain) loss 33,614 (746)
Translation loss 7,609 13,050 6,756
Net gain on sale of assets (24,982) (715)
Interest expense 30,812 3,237 2,846
Profit sharing expense 18,259 12,993 12,123
Minority interest in net income of consolidated subsidiary 439 299 3,114
Extraordinary (gain) loss on early extinguishments of debt,
net of tax 20,548 (891) 11,516
Cumulative effect of accounting change 13,881
Other, net 5,647 9,996 1,368
Profit sharing paid (12,933) (12,123) (8,989)
Debt issuance cost (4,997) (5,601) (9,486)
Interest accretion paid (110,953) (4,472)
Premium paid on retirement of debt (9,566)
(Increase) decrease in current assets:
Receivables (54,481) (35,341) (58,040)
Inventories (8,941) (14,188) (2,279)
Prepaid expenses (368) (5,589) (12,894)
Increase (decrease) in current liabilities:
Accounts payable 58,352 34,036 30,060
Compensation and employee benefits 25,837 (3,001) 7,513
Income taxes (10,394) 21,104 (1,087)
Other accrued liabilities (444) (4,275) (27,959)
Decrease in postretirement benefits other than pensions (25,577) (24,505) (22,601)
Decrease in other noncurrent liabilities (33,347) (19,487) (23,775)
--------- --------- ---------
Net cash provided by operating activities 296,298 66,601 127,999
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (306,367) (341,283) (205,028)
Proceeds from sales of assets 167,467 73,143 38,110
Acquisitions (20,819) (6,496) (43,117)
Purchases of held-to-maturity marketable securities (93,147)
Proceeds from sales of held-to-maturity marketable securities 145,820
Proceeds from sale of available-for-sale marketable securities 2,077
Purchases of marketable securities (92,886) (60,869)
Proceeds from sales or maturities of marketable securities 68,558 18,274
Increase in other assets (27,132) (15,906) (9,163)
--------- --------- ---------
Net cash used in investing activities (132,101) (314,870) (261,793)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of debt 331,019 267,001 518,249
Payments on debt (303,319) (126,523) (151,723)
Proceeds from minority interest offering by subsidiary,
net of offering costs 159,965
Dividends on Preference Stock (22,845)
Dividends on Common Stock (127,496) (127,500)
Dividends to minority stockholders of consolidated subsidiary (1,937) (1,936) (484)
Other stock transactions 751 447 72
--------- --------- ---------
Net cash provided by financing activities 3,669 11,493 398,579
--------- --------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,044 (2,303) 379
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 168,910 (239,079) 265,164
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 153,093 392,172 127,008
--------- --------- ---------
CASH AND EQUIVALENTS AT END OF YEAR $ 322,003 $ 153,093 $ 392,172
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
35
<PAGE> 29
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Manville Corporation 1994 Annual Report
<TABLE>
<CAPTION> -----------------------------------------------
Series A Cumulative
Convertible Preference
Preferred Stock, Common Treasury
Stock Series B Stock Stock
----------- ---------- ------ --------
<S> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1991 $417,600 $ 99,839 $ 490
Net income for the year
Currency translation
Exercise of warrants for 378 shares of Common Stock
Initial public offering of Riverwood common shares
Conversion of Series A Convertible Preferred Stock
into Common Stock (417,600) 720
Incentive Stock Plan transactions 19
Accrual of and adjustment to dividends on Cumulative
Preference Stock, Series B, and on Common Stock (20,999)
Accretion on Preference Stock dividend accrual
Preference Stock accretion 13,844
Pension liability adjustment
-------- -------- ------ -----
BALANCES AT DECEMBER 31, 1992 92,684 1,229
Net income for the year
Currency translation
Incentive Stock Plan transactions (5)
Accrual of and adjustment to dividends on Common Stock
Accretion on Preference Stock dividend accrual
Preference Stock accretion 13,263
Pension liability adjustment
-------- -------- ------ -----
BALANCES AT DECEMBER 31, 1993 105,947 1,224
Net income for the year
Currency translation
Initial public offering of Stillwater common shares
Incentive Stock Plan transactions 4
Reversal of Dividends Accrued Not Declared 72,691
Preference Stock dividends
Pension liability adjustment
Purchase of Treasury Stock $(407)
-------- -------- ------ -----
BALANCES AT DECEMBER 31, 1994 $178,638 $1,228 $(407)
======== ======== ====== =====
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
36
<PAGE> 30
<TABLE>
<CAPTION>
For the Years Ended December 31,
(continued) (In thousands of dollars)
----------------------------------------------------------------------------
Unearned Cumulative
Capital in Restricted Pension Currency Total
Excess of Stock Accumulated Liability Translation Stockholders'
Par Value Compensation Deficit Adjustment Adjustment Equity
---------- ------------ ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1991 $ 410,428 $ (137) $(183,671) $ (1,631) $ 36,597 $ 779,515
Net income for the year 35,949 35,949
Currency translation (28,897) (28,897)
Exercise of warrants for 378 shares of Common Stock 4 4
Initial public offering of Riverwood common shares 65,092 65,092
Conversion of Series A Convertible Preferred Stock
into Common Stock 416,880
Incentive Stock Plan transactions 9,728 (6,651) 3,096
Accrual of and adjustment to dividends on Cumulative
Preference Stock, Series B, and on Common Stock 56 (20,943)
Accretion on Preference Stock dividend accrual (6,138) (6,138)
Preference Stock accretion (13,844)
Pension liability adjustment (2,385) (2,385)
---------- ------- --------- -------- -------- ----------
BALANCES AT DECEMBER 31, 1992 902,188 (6,788) (167,704) (4,016) 7,700 825,293
Net income for the year 47,782 47,782
Currency translation (19,889) (19,889)
Incentive Stock Plan transactions (2,314) 4,125 1,806
Accrual of and adjustment to dividends on Common Stock 688 688
Accretion on Preference Stock dividend accrual (9,282) (9,282)
Preference Stock accretion (13,263)
Pension liability adjustment (329) (329)
---------- ------- --------- -------- -------- ----------
BALANCES AT DECEMBER 31, 1993 900,562 (2,663) (142,467) (4,345) (12,189) 846,069
Net income for the year 36,996 36,996
Currency translation 21,733 21,733
Initial public offering of Stillwater common shares 3,144 3,144
Incentive Stock Plan transactions 4,842 (3,350) 1,496
Reversal of Dividends Accrued Not Declared 102,762 175,453
Preference Stock dividends (24,923) (24,923)
Pension liability adjustment 3,910 3,910
Purchase of Treasury Stock (407)
---------- ------- --------- -------- -------- ----------
BALANCES AT DECEMBER 31, 1994 $1,011,310 $(6,013) $(130,394) $ (435) $ 9,544 $1,063,471
========== ======= ========= ======== ======== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
37
<PAGE> 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Manville Corporation is an international holding company with two principal
operating subsidiaries, Riverwood International Corporation ("Riverwood") and
Schuller International Group, Inc. ("Schuller"), collectively referred to as
"Manville" or the "Company." When referring to the holding company only,
Manville Corporation is defined as the "Manville holding company." The Manville
holding company owns 100 percent of Schuller and approximately 81.5 percent of
Riverwood.
The Manville Personal Injury Settlement Trust (the "PI Trust") owns
approximately 78 percent of the Company's Common Stock. In addition, the
Company has a debt obligation to the PI Trust and an obligation to pay annually
20 percent of its net earnings, as adjusted, to the PI Trust (see Notes 3 and
11).
(A) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Manville
Corporation and its majority-owned subsidiaries. The Company accounts for
investments in which it has a 20 percent to 50 percent ownership interest and
corporate joint ventures using the equity method. All significant intercompany
transactions have been eliminated. Certain foreign subsidiaries are
consolidated on the basis of fiscal years ended November 30.
(B) CASH AND EQUIVALENTS
Cash and equivalents include time deposits, certificates of deposit and other
marketable securities with original maturities of three months or less.
(C) INVENTORIES
Inventories are stated at the lower of cost or market. Cost of U.S. inventories
is determined principally on the last-in, first-out basis ("LIFO"). In
addition, average and actual cost bases are used to determine the cost of
certain U.S. inventories. The first-in, first-out basis ("FIFO") is used to
determine the cost of inventories for foreign subsidiaries.
(D) PROPERTY, PLANT AND EQUIPMENT
Expenditures for replacements and betterments are capitalized, while
maintenance and repairs are charged against operations as incurred. Gains and
losses arising from abnormal dispositions are included in operations currently.
The carrying value of normal retirements of property, plant and equipment is
charged to accumulated depreciation, less any amounts realized from
disposition, and continues to be depreciated over the remaining book life.
Interest is capitalized on major projects when construction takes considerable
time and entails major expenditures. Interest cost capitalized during 1994,
1993 and 1992 totaled approximately $23.6 million, $18.8 million and $6.2
million, respectively. The higher levels of capitalized interest are primarily
due to the Macon mill conversion project at Riverwood.
(E) DEPRECIATION, DEPLETION AND AMORTIZATION
Depreciation and amortization are computed using the straight-line method based
on estimated useful lives of the related assets.
Cost of timber harvested is based on the unit cost rates calculated using the
total estimated yield of timber to be harvested and the unamortized timber
costs.
Goodwill represents the excess of cost over the fair value of identifiable
assets acquired and is amortized on a straight-line basis principally over 20
years.
(F) PROVISION FOR REBUILDING FURNACES
The Company's glass furnaces have an estimated useful life of approximately 30
years. During that time, the refractory components of the glass furnaces are
periodically rebuilt, typically every six to seven years. The timing of the
periodic rebuilds is dependent upon a number of variables including production
38
<PAGE> 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
volumes, product mix and the extent and timing of interim repair and
maintenance work performed.
The estimated cost to rebuild the refractory components of the Company's glass
furnaces is credited to an allowance and charged to operations on a
straight-line basis over the estimated period to the next rebuild date.
Unusual, nonrecurring adjustments to previously established allowances, if
required, are included in operating results.
(G) CAPITALIZATION AND AMORTIZATION OF CERTAIN COSTS
The Company incurs certain preoperating and start-up costs during the process
of bringing major projects into production. Such costs are deferred until the
project becomes commercially operational. These costs are then amortized over a
five-year period.
(H) ISSUANCE OF SUBSIDIARY'S STOCK
Gains or losses arising from issuances by a subsidiary of its stock are
recorded directly to stockholders' equity.
(I) REVENUE RECOGNITION
The Company recognizes revenue primarily when goods are shipped to customers.
The Company also sells extended roofing product guarantees. Revenues on these
guarantees are recognized on a straight-line basis or in proportion to the
costs incurred over the life of the guarantee.
(J) FOREIGN CURRENCY TRANSLATION
The functional currency for most of the Company's international subsidiaries is
the local currency of the country in which the subsidiaries own their primary
assets. The translation of the applicable currencies into U.S. dollars is
performed for balance sheet accounts using current exchange rates in effect at
the balance sheet date and for revenue and expense accounts using a weighted
average exchange rate during the period. Any related translation adjustments
are recorded directly to stockholders' equity.
The Company's Brazilian operations are in a highly inflationary economy and use
the U.S. dollar as the functional currency.
Therefore, in accordance with accounting standards, certain assets of this
entity are translated at historical exchange rates and all related translation
adjustments are reflected in the income statement.
(K) INCOME TAXES
Investment tax credits granted by various countries are accounted for as
reductions of income tax expense in the year in which the related expenditures
become eligible for investment benefit under applicable tax regulations.
(L) WORKERS' COMPENSATION
The Company self insures the majority of its workers' compensation claims and
accrues a liability, at present value, due to the fixed and determinable nature
of the claim payments, based upon an evaluation of historical claims data and
expected future claims. In addition, the Company records a long-term
receivable, at present value, for the portion of outstanding claims covered by
third-party insurers.
(M) RECLASSIFICATIONS
The Company has reclassified the presentation of certain prior year information
to conform with the current presentation format.
NOTE 2
PLAN OF REORGANIZATION AND RELATED INJUNCTION
In 1982, the Company and its principal U.S. and Canadian subsidiaries filed
petitions for reorganization under Chapter 11 of the United States Bankruptcy
Code. The filings were precipitated by contingent tort liabilities resulting
from litigation arising out of the Company's previous asbestos-related business
operations. In 1988, the Company's Second Amended and Restated Plan of
Reorganization (the "Plan") was consummated and the Company emerged from
bankruptcy.
39
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
The Plan relieves the Company of the burden of defending thousands of asbestos
lawsuits. This is accomplished through independent trusts created to assume,
administer, settle and pay claims. In lieu of bringing actions against the
Company, asbestos claimants may assert their claims only against the PI Trust
or the Manville Property Damage Settlement Trust (the "PD Trust"), which are
funded by the Company pursuant to the Plan. The Plan, the injunction issued by
the Bankruptcy Court in connection with the Plan (the "Injunction"), the
Bankruptcy Reform Act of 1994 (the "Act") and the United States Bankruptcy Code
together operate to prohibit any lawsuits against the Company with respect to
any past, present or future asbestos-related liabilities arising from its
discontinued mining, manufacturing and selling activities.
The Injunction is a unique feature of the Company's Chapter 11 proceedings and
could be challenged in future legal proceedings. The Bankruptcy Court found
that the Injunction was "essential to the viability of the business operations
of [the Company] and to the successful implementation of the Plan" and held
that it had the authority to issue the Injunction. The Company also believes
that the Injunction is essential to its ability to continue to operate its
business. Since the issuance of the Injunction in 1988, no proceeding has been
brought, and none is currently pending or threatened, to vacate or modify the
Injunction. While it is not possible for the Company to know the basis for any
such proceeding that might be brought in the future, the Company believes that
it is remote that any proceeding to modify or vacate the Injunction, if
brought, would be successful. This belief is based on, among other things,
decisions and results of various legal proceedings, including orders of the
United States District Courts for the Southern and Eastern Districts of New
York reaffirming the Injunction in July 1991 and January 1995, the Act, and the
absence of any such proceeding since 1988, even though the PI Trust's ability
to pay claims has been limited during such time.
NOTE 3
PROFIT SHARING OBLIGATION
Beginning in 1992, the Company became obligated under the Plan to pay annually
to the PI Trust 20 percent of net earnings (adjusted as specified in the
definition of "Profits" in the Amended and Restated Supplemental Agreement
between the PI Trust and Manville Corporation). Payments are due each year
based on the prior year's net earnings. The profit sharing right of the PI
Trust is a right to annual payments if and when the Company has income and is
not a right or lien against the assets of the Company. The amount of the profit
sharing becomes probable and reasonably estimable only when the Company has
earnings. The profit sharing obligation is a period cost based on actual
results of the period in which earned. The profit sharing obligation will
continue for as long as the PI Trust is in existence and any asbestos personal
injury claims filed against the PI Trust remain unpaid. After termination of
the PI Trust, an independent profit sharing obligation on the same terms arises
in favor of the PD Trust. Based upon a review of the existing and potential
claims facing the two trusts, the Company believes that profit sharing, for all
practical purposes, will be payable in perpetuity unless the Company and the
trusts agree to a restructuring or modification of the profit sharing
obligation at some future date. This conclusion is supported by decisions of
the United States Districts Courts for the Southern and Eastern Districts of
New York which have concluded that the PI Trust's assets are "grossly
inadequate" to pay existing and potential claims.
During 1994, the Company recorded $18.3 million of profit sharing expense to be
paid in 1995, as required in connection with the Plan. The corresponding
liability is included in other accrued liabilities at December 31, 1994.
40
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
NOTE 4
REVERSAL OF DIVIDENDS ACCRUED NOT DECLARED
At December 31, 1993, $102.9 million of Common Stock Dividends Accrued Not
Declared was reflected in the consolidated balance sheet. These special
dividends were previously accrued based upon a refinancing arrangement that had
been negotiated between the Company and the PI Trust, but that terminated in
accordance with its terms in August 1993. In the third quarter of 1994, when it
became apparent that the refinancing arrangement would not be renewed, the
Common Stock Dividends Accrued Not Declared were reversed. The consolidated
balance sheet also reflected Cumulative Preference Stock Dividends Accrued Not
Declared of $72.7 million at December 31, 1993, as part of the accounting for
the Common Stock dividend accrual. The Cumulative Preference Stock Dividends
Accrued Not Declared were also reversed in the third quarter of 1994. Future
dividends, if any, will be paid at the discretion of the Company's Board of
Directors.
NOTE 5
RECEIVABLES
The components of receivables are as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
-----------------------
1994 1993
-------- --------
<S> <C> <C>
Trade $330,856 $304,385
Less allowances 24,829 22,566
-------- --------
306,027 281,819
Other 29,745 22,295
-------- --------
$335,772 $304,114
======== ========
</TABLE>
Included in allowances are doubtful accounts of $7.5 million and $7.3 million
at December 31, 1994 and 1993, respectively. The Company generally requires no
collateral on receivables. The provision for doubtful accounts charged to costs
and expenses was $1.5 million for 1994, $2.6 million for 1993, and $2.5 million
for 1992.
NOTE 6
FINANCIAL INSTRUMENTS
The Company is a party to financial instruments with off-balance sheet risk in
the normal course of business. These financial instruments include foreign
currency forward exchange and option contracts, standby letters of credit, and
financial guarantees. These instruments involve, to varying degrees, elements
of market and credit risk in excess of the amount recognized in the
consolidated balance sheet.
The Company enters into forward exchange contracts to hedge accounts receivable
and accounts payable from certain transactions denominated in non-functional
currencies and for foreign subsidiary dividends declared but not yet paid. The
purpose of the forward exchange contracts is to protect the Company from the
risk that the eventual functional currency cash flows resulting from the hedged
transactions will be adversely affected by changes in exchange rates. At
December 31, 1994 and 1993, the Company had various forward exchange contracts,
with maturities ranging up to one year, to exchange non-functional currencies
for functional currencies. When aggregated and measured in U.S. dollars at
year- end exchange rates, these forward exchange contracts totaled
approximately $48.4 million and $48.3 million at December 31, 1994 and 1993,
respectively. Gains and losses resulting from these contracts are typically
recognized currently in the income statement, and approximately offset
corresponding gains and losses recognized on the hedged transactions.
During 1994, the Company entered into option contracts to hedge certain
anticipated foreign currency transactions and to hedge anticipated earnings of
certain foreign subsidiaries. The purpose of the option contracts is to protect
the Company from the risk that the eventual functional currency cash flows
resulting from anticipated foreign currency transactions and the eventual
translation of foreign subsidiary earnings into the functional currency will be
adversely affected by changes in exchange rates. At December 31, 1994, the
Company had various option contracts, with maturities ranging up to nine
months.
41
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
When aggregated and measured in U.S. dollars at year-end exchange rates, the
functional currencies to be received under these purchased option contracts
totaled approximately $70.8 million at December 31, 1994.
Option contract premiums are amortized over the term of the contract. Gains, if
any, related to these contracts are recognized in income when the hedged
transaction occurs. Total gains recognized on option contracts during 1994 were
not significant, and unrealized gains on these option contracts were not
significant at December 31, 1994. Also included as part of its option contracts
at December 31, 1994, the Company owned outstanding call spreads that operated
as an initial cost reduction device. When aggregated and measured in U.S.
dollars at year-end exchange rates, these call spreads totaled approximately
$26.4 million at December 31, 1994. Unrealized gains and losses resulting from
these call spreads are recognized currently in the income statement based on
quoted market prices. Net losses resulting from call spreads recognized during
1994 were not significant.
As of December 31, 1994, the Company had outstanding letters of credit totaling
$3.3 million and financial guarantees totaling $1.9 million. As of December 31,
1993, the Company had outstanding letters of credit totaling $4 million and
financial guarantees totaling $3.5 million. Generally, letters of credit are
collateralized by cash or are issued under revolving credit facilities.
The Company invests excess cash in a diversified portfolio of high-quality
money market instruments consistent with the preservation of capital and the
maintenance of liquidity. Primary investment constraints include restrictions
on maturity, credit quality and diversification. The Company has not
experienced any material losses related to these investments.
At December 31, 1994, the Company's investments in debt securities were
classified as held-to-maturity and carried at amortized cost in accordance with
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." These securities had an amortized
cost at December 31, 1994 of $324.2 million, which approximates fair value. The
classification of investments in debt securities on the balance sheet and the
amounts at December 31, 1994 were as follows: cash equivalents of $267.3
million, other assets of $36.6 million, and marketable securities of $20.3
million. Of these securities, $318 million have contractual maturities within
one year; the remainder mature in one to five years.
The carrying amount and estimated fair values of the Company's financial
instruments at December 31 are as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
------------------------
Carrying Fair
Amount Value
---------- ----------
<S> <C> <C>
1994
Cash and marketable securities $ 342,314 $ 342,314
Notes, loans and other nontrade receivables $ 33,245 $ 33,201
Long-term debt and short-term borrowings $1,514,315 $1,530,654
Forward exchange contracts $ 48,482 $ 48,590
Option contracts-notional amounts $ 97,222
---------- ----------
1993
Cash and marketable securities $ 228,155 $ 228,182
Notes, loans and other nontrade receivables $ 31,071 $ 31,079
Long-term debt and short-term borrowings $1,427,692 $1,507,120
Forward exchange contracts $ 48,325 $ 48,325
</TABLE>
42
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:
CASH AND MARKETABLE SECURITIES
Generally, the carrying value of these instruments approximates fair value due
to their short-term nature. Quoted market prices are used to determine fair
value for certain instruments.
NOTES, LOANS AND OTHER NONTRADE RECEIVABLES
The fair value of notes and loans receivable is estimated utilizing the
discounted cash flow method.
SHORT-TERM DEBT
The carrying amount of these instruments approximates fair value due to their
short-term nature.
BOND PAYABLE TO THE PI TRUST
The fair value of this instrument in 1994 was based on an option the PI Trust
currently has to require the Company to prepay the bond. In 1993, the fair
value of the bond was estimated in consultation with an investment banker.
UNSECURED SENIOR OR CONVERTIBLE NOTES
Quoted market prices for these notes payable are used to determine fair value.
OTHER LONG-TERM DEBT
The fair value of the Company's other long-term debt is an estimate based on
quoted market prices, when available, or the discounted cash flow method.
Floating-rate debt was valued at carrying value. The determination of the fair
value of a portion of the Company's long-term debt assumes the debt could be
paid off and reissued at current rates.
PROFIT SHARING OBLIGATION
The amount of the profit sharing obligation cannot be reasonably estimated for
future years. Therefore, it is not practicable to estimate the fair value of
those future payments.
FORWARD EXCHANGE AND OPTION CONTRACTS
The fair value of forward and call spread contracts are based on notional
amounts and adjusted for quoted market prices. For certain contracts the
accounting value assigned is considered a reasonable approximation of the fair
value due to the short-term nature of the contracts and stability of the
currencies being hedged. The fair value of owned option contracts are based on
notional amounts.
NOTE 7
INVENTORIES
The major classes of inventories are as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
-------------------------
1994 1993
-------- --------
<S> <C> <C>
Finished goods $ 83,922 $ 86,664
Work-in-process 28,517 19,703
Raw materials 56,934 55,883
Supplies 43,401 45,452
-------- --------
$212,774 $207,702
======== ========
</TABLE>
Inventories were principally valued using LIFO. However, inventories in the
amounts of $102 million and $92.2 million at December 31, 1994 and 1993,
respectively, were valued using FIFO, average or actual cost. The excess of
current values over amounts for financial reporting purposes was $79.6 million
at December 31, 1994 and 1993.
NOTE 8
INVESTMENTS IN AFFILIATES
At December 31, 1994, the Company has two primary investments, reflected in
other assets, which are accounted for under the equity method. These are
Riverwood's Brazilian operations, Igaras Papeis e Embalagens S.A. ("Igaras")
and the Company's investment in Stillwater Mining Company ("Stillwater"), a
company engaged in the exploration, development, mining and production of
palladium, platinum and associated metals. The Company's carrying value of
these investments was approximately $135 million at December 31, 1994.
43
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
On December 29, 1994, Riverwood sold just under 50 percent of its investment in
Igaras after first spinning off a wholly owned subsidiary to operate
Riverwood's packaging machinery operations in Brazil. Riverwood received cash
proceeds of approximately $100 million on the sale and recorded a pretax loss
of $0.6 million in other income (loss), net. Prior to that date, Riverwood
owned 100 percent of Igaras. The results of operations of Igaras are
consolidated with the Company's results of operations through the date of sale.
Subsequent to December 29, 1994, Riverwood has the ability to exercise
significant influence, but not control, over the operating and financial
policies of Igaras. Accordingly, effective with the closing of this
transaction, the Company no longer consolidates the operations of Igaras with
its own operations, but instead reports Riverwood's investment in Igaras under
the equity method of accounting.
During 1994, Manville sold 2.1 million shares of its investment in Stillwater
for net cash proceeds of approximately $25.5 million, resulting in a pretax
gain on the sale of equity securities of $13.5 million. In addition, Stillwater
completed an initial public offering of 4.5 million shares of its common stock
at $13 per share, which resulted in the Company recording an increase to
Capital in Excess of Par Value of $3.1 million, net of income taxes of $1.7
million. The sales reduced the Company's ownership percentage to approximately
27 percent from 50 percent. Based on quoted market prices from NASDAQ, at
December 30, 1994, the value of the Company's investment in Stillwater
approximated $73 million. The Company is prohibited from selling additional
shares of its investment in Stillwater until 1996.
The Company's equity in net income (loss) of Stillwater was $0.4 million in
1994, $(3.7) million in 1993 and $(3.0) million in 1992.
NOTE 9
SHORT-TERM DEBT AND CREDIT FACILITIES
Short-term debt consists of the following:
<TABLE>
<CAPTION>
(In thousands of dollars)
-------------------------
1994 1993
------- -------
<S> <C> <C>
Short-term borrowings $24,802 $26,598
Current portion of long-term debt 69,852 15,766
------- -------
$94,654 $42,364
======= =======
</TABLE>
At December 31, 1994, Riverwood and its U.S. and international subsidiaries had
approximately $204 million in revolving credit facilities, of which
approximately $73.6 million was available for borrowing. In addition, Riverwood
has arrangements with certain international banks for discounting receivables.
As of December 31, 1994, approximately $1.6 million of overseas receivables
were discounted. As part of its revolving credit facilities, Riverwood has a
$50 million U.S. credit facility with banks to be used for working capital
purposes through December 1995. This facility is collateralized by certain
U.S. inventories and receivables. As of December 31, 1994, $15 million had been
borrowed under this facility.
At December 31, 1994, Schuller had a $100 million receivables sale facility
("the Receivables Facility") available for its domestic short-term working
capital requirements. There have been no borrowings under the Receivables
Facility through December 31, 1994. In addition, Schuller's foreign
subsidiaries had working capital facilities totaling $65 million available for
borrowing at December 31, 1994.
The weighted average interest rate on short-term borrowings as of December 31,
1994 and 1993 was 7.1 percent and 7.7 percent, respectively.
NOTE 10
COMPENSATION AND EMPLOYEE BENEFITS
The Company has accruals for future compensated absences, principally
vacations, of $40 million and $41.7 million at December 31, 1994 and 1993,
respectively, which are included in its compensation and employee benefits
liability in the consolidated balance sheet.
44
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
NOTE 11
LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
(In thousands of dollars)
----------------------------
1994 1993
---------- ----------
<S> <C> <C>
UNSECURED
RIVERWOOD:
10.75 percent Senior Notes, due 2000 $ 150,000 $ 150,000
11.25 percent Senior Subordinated Notes, due 2002 250,000 250,000
10.75 percent Senior Notes II, due 2000 37,500 37,500
11.25 percent Senior Subordinated Notes II, due 2002 62,500 62,500
10.375 percent Senior Subordinated Notes, due 2004 100,000
6.75 percent Convertible Subordinated Notes, due 2003 125,000 125,000
SCHULLER:
10.875 percent Senior Notes, due 2004 400,000
MANVILLE HOLDING COMPANY:
9 percent Sinking Fund Debentures, due 1995-2003 26,385 27,895
Bonds payable to the PI Trust 13,646 322,751
Other 163
COLLATERALIZED
RIVERWOOD:
Notes payable to insurance companies and banks
with interest from 8.84 to 11.15 percent,
payable through 2000 179,859 366,852
Notes payable to banks with interest
at floating rates (7.625 percent and
7.75 percent at December 31, 1994),
payable through 2000 105,000
Foreign notes payable to a bank with interest at
the 90-day Australian bank bill market rate
plus a margin (8 percent at December 31, 1994),
payable in 1995 26,120 26,349
Notes payable by Igaras 17,286
Capitalized leases with interest from 9.05 to
16.9 percent, payable through 2002 5,103 5,629
Industrial revenue bonds with interest at
6.25 percent, payable through 2007 8,500 8,500
Other 252 409
SCHULLER:
Industrial revenue bonds with interest from
5.625 to 8.625 percent, payable through 2005 3,650 5,289
Other 332 631
---------- ----------
1,493,847 1,406,754
Less current portion 69,852 15,766
---------- ----------
$1,423,995 $1,390,988
========== ==========
</TABLE>
45
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
Long-term debt maturities as of December 31, 1994 are as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
-------------------------
<S> <C>
1995 $ 69,852
1996 43,879
1997 100,977
1998 55,799
1999 56,190
After 1999 1,280,227
----------
Total 1,606,924
Less interest accruing to principal 113,077
----------
$1,493,847
==========
</TABLE>
10.75 PERCENT SENIOR NOTES AND 11.25 PERCENT SENIOR SUBORDINATED NOTES
On June 24, 1992, Riverwood completed an offering of $150 million of 10.75
percent Senior Notes due 2000, and $250 million of 11.25 percent Senior
Subordinated Notes due 2002. Interest on these notes is payable semiannually.
These notes may be redeemed on or after June 15, 1997 at a specified redemption
price plus accrued interest.
10.75 PERCENT SENIOR NOTES II AND 11.25 PERCENT SENIOR SUBORDINATED NOTES II
On August 25, 1993, the Company made a prepayment on its outstanding bond
obligations to the PI Trust that included the assignment of $100 million of
Riverwood notes held by Manville. The PI Trust subsequently sold the Riverwood
notes. These notes may be redeemed on or after June 15, 1997, at a specified
redemption price plus accrued interest.
10.375 PERCENT SENIOR SUBORDINATED NOTES AND $125 MILLION BANK CREDIT FACILITY
On June 30, 1994, Riverwood completed a public offering of $100 million face
value of 10.375 percent 10-year Senior Subordinated Notes due 2004 and entered
into a bank credit facility that provides for borrowings of up to $125 million
at an initial variable interest rate equal to 1.875 percent over the London
Interbank Offer Rate. Riverwood borrowed $100 million under the bank credit
facility and used such amount together with the proceeds of the Senior
Subordinated Notes to prepay approximately $179 million principal of notes
payable to insurance companies and banks, to pay approximately $3 million of
related accrued interest and to pay expenses of the refinancing. Borrowings
under the bank credit facility are collateralized by substantially all of the
fixed assets of the Macon mill which were previously collateral for the notes
repaid.
The Senior Subordinated Notes due 2004 are redeemable by Riverwood in whole or
in part beginning in 1999 at redemption prices expressed as a percent of the
principal amount redeemed, which range from 104.611 percent in 1999 to 100
percent in 2003. Prior to June 30, 1997, up to 35 percent of the principal
amount can be redeemed under specified conditions at 110.375 percent plus
accrued and unpaid interest. Interest is payable semiannually. The $125 million
bank credit facility provides for borrowings on a revolving basis through June
1996, whereupon it converts to a term-loan facility with principal installments
payable from 1998 through 2000.
6.75 PERCENT CONVERTIBLE SUBORDINATED NOTES
The Convertible Notes mature on September 15, 2003, unless previously converted
or redeemed. The Convertible Notes are convertible at the holders' option into
shares of Riverwood's common stock at an initial conversion rate of 57.01
shares of common stock per $1,000 principal amount, subject to adjustment in
certain circumstances and subject to Riverwood's right to pay cash equal to the
market price of the shares of common stock otherwise deliverable upon
conversion. The Convertible Notes will be convertible on the earliest to occur
of: (i) September 15, 1996, (ii) a change in control, as defined, and (iii) a
tender offer for Riverwood's common stock under certain circumstances. The
Convertible Notes may not be redeemed prior to September 15, 1997, after which
they may be redeemed, at Riverwood's option at redemption prices ranging from
103.375 percent of principal amount in 1997 to 100 percent of principal amount
in 2001, plus accrued interest.
46
<PAGE> 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
10.875 PERCENT SENIOR NOTES
On December 12, 1994, Schuller issued $400 million of 10.875 percent Senior
Notes, due 2004. Interest on these notes is payable semiannually beginning June
15, 1995. These notes may be redeemed on or after December 15, 1999 at a
specified price plus accrued interest. In addition, at any time prior to
December 12, 1997, the Company may, at its option, under certain circumstances,
redeem up to $132 million principal amount of these notes, at 110 percent of
the principal amount plus accrued interest. These notes were issued by
Schuller in the form of a dividend to Manville. Manville then exchanged $379
million of these notes to the PI Trust in satisfaction of substantially all of
the Trust Bonds (defined below). The PI Trust subsequently sold its Schuller
Senior Notes in the public markets. In conjunction with the PI Trust's public
offering, Manville also sold its Schuller Senior Notes in the public markets
resulting in a total sale of $400 million of Schuller Senior Notes.
9 PERCENT SINKING FUND DEBENTURES
For financial reporting purposes, these debentures have an effective interest
rate of 12.6 percent. The interest debentures did not accumulate or pay
interest from 1988 to 1993. Beginning on January 1, 1994, the interest
debentures bear interest at a stated rate of nine percent and will be paid
semiannually in principal and interest through December 31, 2003.
BONDS PAYABLE TO THE PI TRUST
At consummation of the Plan, the PI Trust received noninterest-bearing bonds
(the "Trust Bonds") totaling $1.8 billion. The Trust Bonds consisted of a
series of fixed payments twice a year for 24 years, which began August 31,
1991. The balance outstanding on these bonds at December 31, 1993, discounted
at 13 percent, was approximately $323 million. During 1994, all but $13.6
million of the Trust Bonds were prepaid by exchanging $379 million of the
10.875 percent Senior Notes for Trust Bonds (see Note 23). At December 31,
1994, the remaining Trust Bond obligation of $13.6 million consists of a series
of fixed payments totaling $75 million per year in 2013 and 2014, discounted at
13 percent.
The notes payable to insurance companies and banks are collateralized
principally by the fixed assets of Riverwood's pulp and paper mills located in
Louisiana and Georgia. The notes payable to insurance companies require that a
specified minimum level of net worth be maintained by Riverwood.
The Company's agreements with its lenders and other agreements with the trusts
contain a number of financial and general covenants. These include, among other
things, limitations on asset dispositions, restrictions on borrowings,
investments, stock issuances and repurchases, dividends and other
distributions, and restrictions on the movement of cash from Schuller and
Riverwood to the Manville holding company. As of December 31, 1994, the maximum
amount available for dividends to be paid by Riverwood and Schuller under their
most restrictive debt covenants was approximately $31 million and $115 million,
respectively. Noncompliance with these or other covenants, or the occurrence of
any other event of default, could result in the termination of existing
agreements and the accelerated payment of substantially all currently
outstanding debt or other obligations.
The agreements governing Riverwood's senior indebtedness prohibit, with certain
exceptions, including but not limited to approximately $179 million of
revolving credit facilities, additional indebtedness unless Riverwood's pro
forma consolidated interest coverage ratio is greater than 2 to 1 until April
1995, at which time the consolidated interest coverage ratio test increases to
2.25 to 1. As of December 31, 1994, Riverwood's consolidated pro forma
interest coverage ratio was greater than 2.25 to 1.
The indenture for the Schuller Senior Notes requires that, with certain
exceptions, additional indebtedness may be incurred only if, after giving
effect to the incurrence thereof, Schuller's pro forma consolidated interest
coverage ratio is greater than 2.25 to 1 until October 1996, at which time the
pro forma consolidated interest coverage ratio test increases to 2.5 to 1. As
of December 31, 1994, Schuller's consolidated pro forma interest coverage ratio
exceeded 2.5 to 1.
47
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
NOTE 12
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY
On June 24, 1992, Riverwood completed an initial public offering of 12.1
million shares, or 19.5 percent, of its common stock. As a result of this
transaction, the Company recorded an increase to Capital in Excess of Par Value
of $65.1 million.
The Manville holding company purchased an additional 3,448,276 shares of
Riverwood's common stock at a price of $14.50 per share in September 1993. This
increased the Manville holding company's ownership percentage of Riverwood to
approximately 81.5 percent from 80.5 percent. The Manville holding company has
maintained at least an 80 percent ownership interest in Riverwood in order to
preserve the consolidated tax entity and take advantage of existing tax
benefits.
NOTE 13
COMMITMENTS AND CONTINGENCIES
Total rental expense was $27 million in 1994, $25.9 million in 1993 and $24.9
million in 1992.
At December 31, 1994, minimum rental commitments of the Company under
long-term, noncancelable operating leases are as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
-------------------------
<S> <C>
1995 $18,748
1996 16,666
1997 11,219
1998 10,370
1999 3,337
After 1999 7,265
-------
$67,605
=======
</TABLE>
Minimum rental commitments of the Company have not been reduced by anticipated
sublease income of approximately $3.9 million.
CONTINGENT PRODUCT LIABILITY
Between 1988 and 1992, the Company manufactured phenolic roofing insulation
which, the Company has learned, contributes to the corrosion of metal decks on
which it is installed. Subsequently, the Company exited the phenolic roofing
insulation business and embarked upon a voluntary sampling and inspection
program of such metal decks.
The Company estimates that approximately 63 million square feet of metal roof
deck are insulated with the Company's phenolic roof product, of which
approximately 46 percent had been inspected as of December 31, 1994. Based on
the statistics compiled from the inspection and sampling program and the
Company's claims experience through December 31, 1994 and assuming this
experience continues into the future, approximately 1.5 million square feet of
roof deck have been remediated or will require remediation. In most cases only
"spot remediation" has been required to address the damage to the roof decks.
However, the exact square footage of roof deck that will require remediation
and the actual cost of such remediation are dependent upon a number of
variables and cannot be determined at this time. Through December 31, 1994, the
cumulative cash expended by the Company for sampling, inspection, remediation
and claims settlement was $9.2 million.
At December 31, 1994, the Company's accrual for future sampling, inspection,
remediation and present and anticipated claims totaled $9.1 million. This
amount was computed by giving effect to information available from the
Company's inspection and sampling program conducted through December 31, 1994,
remediation experience, historical claims experience, the types of roofs on
which phenolic insulation has been installed and the average cost of
remediation, as well as the Company's assumption that its past remediation
experience will continue into the future. At December 31, 1994, the Company is
in the initial stages of litigation with respect to two phenolic-related
claims.
48
<PAGE> 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
The Company has insurance that applies to property damage resulting from metal
deck corrosion; however, at December 31, 1994, the Company was engaged in
litigation, commenced by the Company, over the extent of such coverage with
National Union Fire Insurance Company, its primary insurance carrier. In
addition, the Company is in the initial stages of a lawsuit commenced by the
Company against Beazer East, Inc., the former owner of the phenolic roofing
insulation business.
Subsequent to December 31, 1994, the Company and its insurance carrier reached
a settlement regarding the Company's lawsuit. Under the terms of a confidential
settlement agreement, the Company's insurance carrier will be responsible for a
portion of certain phenolic-related costs. The insurance carrier's portion of
costs under the settlement agreement are expected to more than satisfy the $7
million receivable previously recorded by the Company for future expected
recoveries.
Based upon the settlement agreement and the experience, information and
assumptions referred to above, in management's opinion the range of the
Company's portion of the ultimate gross loss with respect to sampling,
inspection, remediation and claims settlement in excess of amounts previously
accrued is between zero and $20 million.
ENVIRONMENTAL CONTINGENCIES
The Company is engaged in environmental remediation projects for properties
currently owned or operated by the Company and properties divested by the
Company for which responsibility was retained for preexisting conditions. In
addition, the Company has been identified as a potentially responsible party at
a number of non-Company owned or operated sites under the federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") or similar
state legislation, and as such could be jointly and severally liable for the
costs of remediating these sites.
During 1994, the U.S. Government agreed to limit the Company's future liability
under both CERCLA and the Resource Conservation and Recovery Act to 55 percent
of its share of site-wide response costs and natural resource damages for
disposals made by the Company prior to consummation of the Plan. Additionally,
the U.S. Government agreed that future amounts the Company will be obligated to
pay, in the aggregate, for such disposals shall never exceed $850,000 during
any given year, with any excess plus interest being carried forward to
subsequent years. In December 1994, the Company paid $1.7 million, pursuant to
the terms of the agreement, which resolved the Company's liability for 12
CERCLA sites. At December 31, 1994, the Company remains contingently liable at
ten additional CERCLA sites, seven of which are covered under the limitation
on future liability provisions of the agreement.
The Company's accrual for environmental cleanup costs at each individual CERCLA
site is based on, among other things, the extent of contamination, the nature
of the Company's disposals, its waste-in percentage, and the organization of,
and probable contribution from, financially viable, potentially responsible
parties, as well as the limitation on liability contained in the agreement with
respect to the sites covered thereby.
To address these contingent environmental costs, the Company has established
appropriate accruals where such costs are probable and can be reasonably
estimated. During 1994 and 1993, the Company paid approximately $6 million and
$2 million, respectively, for environmental cleanup, almost entirely for
properties owned by the Company, and had reserves totaling approximately $33
million and $39 million for environmental
49
<PAGE> 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
remediation costs at December 31, 1994, and 1993, respectively. The Company
expects the cash outlays related to these reserves to be made over the next 15
years.
Environmental law is dynamic rather than static. As a result, costs that are
unforeseeable at this time may be incurred when new laws are enacted, and/or
the environmental agencies promulgate or revise regulations in furtherance of
such legislation. In response to the implementation of the 1990 amendments to
the federal Clean Air Act and requirements of various state air emissions
regulations the Company will be obligated to monitor emissions at its
manufacturing sites. Because many of the anticipated regulations have not yet
been proposed, neither the costs nor timing of compliance can be reasonably
anticipated at this time. Provisions of the 1990 Amendments and the related
regulations will likely require capital expenditures in the years 1995 to 2001,
with most of the expenditures occurring in the latter part of that time frame.
In addition, the federal Environmental Protection Agency has issued new
proposed regulations for the pulp and paper industry, although it is expected
that the earliest time for industry compliance with these proposed regulations
should not be prior to the first quarter of 2000. At this time, Riverwood
estimates capital spending that may be required to comply with the pulp and
paper industry proposed regulations could be between $20 million and $40
million to be spent over a three-year period beginning in 1997.
The Company periodically reviews and, as appropriate, revises its environmental
accruals. Based on current information and regulatory requirements, the Company
believes that to the extent additional costs may be incurred that might exceed
the accrued amounts, such amounts are not expected to have a material adverse
effect on the Company's financial condition, liquidity or results of
operations.
NOTE 14
STOCKHOLDERS' EQUITY
WARRANTS TO PURCHASE COMMON STOCK, $0.01 PAR VALUE
Warrants to purchase seven million shares of the $0.01 par value Common Stock
are exercisable until June 6, 1996, at an exercise price of $9.40 per share.
SERIES A CONVERTIBLE PREFERRED STOCK, $1.00 PAR VALUE
The 7.2 million shares of Series A Convertible Preferred Stock issued to the PI
Trust were each convertible into ten shares of $0.01 par value Common Stock,
subject to certain antidilution provisions. On December 9, 1992, the PI Trust
converted all of its Series A Convertible Preferred Stock into 72 million
shares of Common Stock.
CUMULATIVE PREFERENCE STOCK, SERIES B, $1.00 PAR VALUE
Dividends on the Company's Cumulative Preference Stock, Series B, began being
paid quarterly in 1994 at an annual rate of $2.70 per share, but are payable
only as and when declared by Manville's Board of Directors after other funding
requirements under the Plan have been met. Four dividends have been declared
and paid in 1994 totaling $22.8 million. At December 31, 1994, there are no
dividends in arrears.
Through December 31, 1993, the carrying value of the Preference Stock was
increased periodically to reflect accretion based on the interest method, in
accordance with APB Opinion No. 21. Such accretion, which was deducted from net
income to arrive at net income applicable to common stockholders, amounted to
$22.5 million in 1993 and $20 million in 1992.
50
<PAGE> 44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
The following is a summary of shares outstanding:
<TABLE>
<CAPTION>
Series A Cumulative
Convertible Preference
Preferred Stock, Common
Stock Series B Stock
---------- ---------- -----------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1991 7,200,000 9,145,195 48,679,097
Conversion of old common and preferred stock to new Common
Stock and Cumulative Preference Stock, Series B 14,170 68,187
Issuance of Common Stock upon exercise of warrants 378
Issuance of Common Stock in connection with the Stock
Incentive Plan 1,856,003
Forfeiture of Common Stock issued in connection with
the Stock Incentive Plan (2,838)
Conversion of Series A Convertible Preferred Stock
into Common Stock (7,200,000) 72,000,000
---------- ---------- -----------
BALANCE AT DECEMBER 31, 1992 9,159,365 122,600,827
Conversion of old common and preferred stock to new Common
Stock and Cumulative Preference Stock, Series B 71,218 226,077
Issuance of Common Stock in connection with the Stock
Incentive Plan 121,581
Forfeiture of Common Stock issued in connection with
the Stock Incentive Plan (58,796)
Forfeiture of Common Stock in conjunction with the
formation of the Riverwood Stock Incentive Plan (553,967)
---------- -----------
BALANCE AT DECEMBER 31, 1993 9,230,583 122,335,722
Issuance of Common Stock in connection with the Stock
Incentive Plan and other employee plans 627,902
Forfeiture of Common Stock issued in connection with
the Stock Incentive Plan (89,000)
Treasury Stock acquired (46,863)
---------- ---------- -----------
BALANCE AT DECEMBER 31, 1994 9,230,583 122,827,761
========== ========== ===========
</TABLE>
51
<PAGE> 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
NOTE 15
STOCK INCENTIVE PLAN
The Company has registered and reserved 4.8 million shares of $0.01 par value
Common Stock for issuance under the Manville Corporation Stock Incentive Plan.
A summary of the stock incentive transactions for the three years ended
December 31, 1994 is as follows:
<TABLE>
<CAPTION>
Restricted Shares Stock
Common Stock Available Appreciation
Stock Options for Grant Rights
--------- ------- ---------- ---------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1991 458,006 686,500 3,655,494 1,366,400
Granted 1,846,003 (1,846,003)
Exercised (10,000) (10,000) (290,300)
Forfeited (2,838) (92,600) 95,438 (563,400)
--------- ------- ---------- ---------
BALANCE AT DECEMBER 31, 1992 2,301,171 583,900 1,894,929 512,700
Granted 49,581 (49,581)
Exercised (72,000) (72,000) (101,000)
Forfeited (612,763) (109,100) 721,863 (132,500)
--------- ------- ---------- ---------
BALANCE AT DECEMBER 31, 1993 1,737,989 402,800 2,495,211 279,200
Granted 522,386 (522,386)
Exercised (84,400) (84,400) (91,800)
Forfeited (89,000) 89,000
--------- ------- ---------- ---------
BALANCE AT DECEMBER 31, 1994 2,171,375 318,400 1,977,425 187,400
========= ======= ========== =========
</TABLE>
Included in the 1993 forfeitures are 553,967 shares of restricted common stock
held by Riverwood employees under the Manville Corporation Stock Incentive Plan
that were canceled upon receipt of awards by the Riverwood employees under a
Riverwood plan.
In December 1992, approximately 1.8 million shares of restricted common stock
were issued to Company employees at grant prices ranging from $4.50 per share
to $9.75 per share. In 1993, approximately 50,000 shares of restricted common
stock were issued to Company employees at grant prices ranging from $4.50 to
$9.63 per share. During 1994, approximately 522,000 shares of restricted
common stock were issued to Company employees at grant prices ranging from
$8.13 to $9.63 per share. The Company's compensation expense on restricted
stock is based on the fair market value of the Company's Common Stock at the
date of grant which is expensed over the vesting period.
The stock options were awarded at exercise prices ranging from $5.75 per share
to $10.50 per share. Options were exercised at prices ranging from $8.25 to
$9.63 per share in 1994, from $6.88 to $7.63 per share in 1993 and at $6.88 per
share in 1992. Each option outstanding at December 31, 1994, 1993 and 1992, is
exercisable for one share of the Company's Common Stock.
Stock appreciation rights have been awarded at prices ranging from $5.75 to
$10.50 per share. The stock appreciation rights were exercised at prices
ranging from $6.88 to $7.63 per share in 1994 and 1993 and from $5.75 to $7.63
per share in 1992. Compensation expense for the stock appreciation rights is
based on the difference between the fair market value of the Company's Common
Stock at the date of exercise and the fair market value at the date of grant.
52
<PAGE> 46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
NOTE 16
EARNINGS (LOSS) PER COMMON SHARE
On December 9, 1992, the PI Trust converted all issued and outstanding Series A
Convertible Preferred Stock into 72 million shares of Common Stock. All
earnings (loss) per common share computations assume that the Preferred Stock
had been converted to Common Stock and was outstanding as of the beginning of
the earliest period presented.
The Company has issued stock options and stock appreciation rights. In
addition, warrants issued upon consummation of the Plan became exercisable
during 1989. These common stock equivalents were considered in determining
earnings (loss) per common share amounts. Primary and fully diluted earnings
(loss) per common share amounts are based on the weighted average number of
common and common equivalent shares outstanding during the year. The fully
diluted earnings (loss) per common share computation further assumes that the
common stock equivalents were outstanding at the beginning of the year. The
1994, 1993 and 1992 primary and fully diluted earnings (loss) per common share
amounts are determined using the following common equivalent shares:
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------- -------------------------- --------------------------
Fully Fully Fully
Primary Diluted Primary Diluted Primary Diluted
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Common Stock outstanding 122,424,000 122,424,000 122,422,000 122,422,000 122,867,000 122,867,000
Warrants, stock options and stock
appreciation rights 68,000 87,000 58,000 82,000 181,000 181,000
Treasury Stock (46,000) (46,000)
----------- ----------- ----------- ----------- ----------- -----------
122,446,000 122,465,000 122,480,000 122,504,000 123,048,000 123,048,000
=========== =========== =========== =========== =========== ===========
</TABLE>
Earnings (loss) per common share amounts are calculated after the deduction for
preference stock dividends/accretion.
53
<PAGE> 47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
NOTE 17
PENSIONS
U.S. PENSION PLANS:
Substantially all of the Company's U.S. employees are covered by
noncontributory defined benefit pension plans. The pension expense (benefit) is
based primarily on years of service and the employee's compensation or pension
rate near retirement. The Company's funding policy is to contribute funds to a
trust as necessary to at least meet the minimum funding requirements of the
Internal Revenue Code. Plan assets are invested primarily in fixed income
securities and equities.
(A) PENSION EXPENSE (BENEFIT)
The pension expense (benefit) related to the U.S. defined benefit pension plans
for the years ended December 31 consists of the following:
<TABLE>
<CAPTION>
(In thousands of dollars)
----------------------------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Service cost - benefits earned during the year $ 14,413 $ 12,321 $ 12,536
Interest cost on projected benefit obligation 54,908 55,784 55,510
Estimated return on assets
- actual (gain) loss 35,427 (115,251) (36,633)
- deferred gain (loss) (101,137) 48,678 (31,239)
Net amortization and deferral (2,774) 5 (1,464)
--------- --------- --------
Total pension expense (benefit) $ 837 $ 1,537 $ (1,290)
========= ========= ========
</TABLE>
Certain assumptions used in determining the pension expense (benefit) for the
years ended December 31 are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------------ ----- -----
<S> <C> <C> <C>
Discount rates 7.00% 7.50% 7.50%
Rates of increase in future compensation levels 5.50% 5.75% 5.75%
Expected long-term rates of return on assets 8.00 - 9.00% 9.00% 9.00%
============ ===== =====
</TABLE>
(B) FUNDED STATUS
The funded status of the Company's defined benefit plans covering U.S.
employees in which assets exceed accumulated benefits as of December 31 is as
follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
-----------------------------
1994 1993
-------- --------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $631,594 $693,028
======== ========
Accumulated benefit obligation $650,990 $720,448
======== ========
Projected benefit obligation $684,796 $762,567
Plan assets at fair value 740,523 783,134
-------- --------
Plan assets in excess of projected benefit
obligation 55,727 20,567
Unrecognized net loss 101,392 135,477
Prior service costs 17,359 10,830
Unrecognized transition adjustment (47,026) (53,040)
-------- --------
Prepaid pension asset $127,452 $113,834
======== ========
</TABLE>
In addition, the funded status of the Company's defined benefit plans covering
U.S. employees in which accumulated benefits exceed assets as of December 31 is
as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
----------------------------
1994 1993
------- -------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $ 2,503 $46,094
======= =======
Accumulated benefit obligation $ 2,620 $46,542
======= =======
Projected benefit obligation $ 3,845 $48,010
Plan assets at fair value 40,378
------- -------
Plan assets less than projected
benefit obligation (3,845) (7,632)
Unrecognized net loss 64 8,278
Prior service costs 1,134 3,988
Unrecognized transition adjustment 781 (3,015)
Additional minimum liability (1,538) (7,168)
------- -------
Pension liability $(3,404) $(5,549)
======= =======
</TABLE>
54
<PAGE> 48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
The projected benefit obligations for the above plans were determined in 1994
and 1993 using a discount rate of nine percent and seven percent, respectively.
In addition, the rate of increase in future compensation levels for
salary-related plans ranged from 5.5 to 6.5 percent in 1994 and was 5.5 percent
in 1993. The vested benefit obligation is calculated on the benefits the
employees are entitled to receive if they were to separate immediately.
At December 31, 1994 and 1993, certain plans' accumulated benefits exceeded
their assets, resulting in a reduction to an amount previously charged of $4.4
million in 1994 and a charge of $0.3 million in 1993, prior to adjustment for
minority interest in consolidated subsidiary.
As of December 31, 1994 and 1993, accrued retirement contributions included in
compensation and employee benefits on the balance sheet were $13.2 million and
$11.3 million, respectively.
CANADIAN PENSION PLANS:
Canadian employees are covered by a defined contribution plan. Contributions to
this plan are based on each participant's monthly earnings. Company
contributions to the defined contribution plan were $0.6 million in 1994, $0.5
million in 1993 and $0.9 million in 1992.
Canadian employees previously participated in defined benefit plans. During
1988 and 1990, annuities were purchased by the defined benefit plans to settle
obligations to current pensioners. In addition, the defined benefit plans were
converted to defined contribution plans and active participants' benefit
balances were transferred to an existing Canadian defined contribution plan.
After settlement of the accumulated benefit obligations, the defined benefit
plans held surplus assets of approximately $37 million as of December 31, 1994.
The Company has recognized a prepaid pension asset related to these
discontinued Canadian defined benefit plans of $14.4 million and $15 million as
of December 31, 1994 and 1993, respectively.
OVERSEAS PENSION PLANS:
Certain overseas locations of the Company provide defined benefit plans. The
majority of these plans are noncontributory and unfunded or partially funded in
accordance with applicable local laws. Assets of the funded plans are invested
primarily in equities and fixed income securities. The pension or termination
benefits are based primarily on years of service and the employee's
compensation.
(A) PENSION EXPENSE
The pension expense related to the overseas plans for the years ended December
31 consists of the following:
<TABLE>
<CAPTION>
(In thousands of dollars)
--------------------------------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Service cost - benefits earned during the year $3,249 $3,242 $3,079
Interest cost on projected benefit obligation 6,315 5,409 4,767
Estimated return on assets
- actual (gain) loss 805 (10,837) (4,762)
- deferred gain (loss) (5,738) 7,151 1,333
Net amortization and deferral 238 239 234
------ ------ ------
Total pension expense $4,869 $5,204 $4,651
====== ====== ======
</TABLE>
Certain assumptions used in determining the pension expense for the years ended
December 31 are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- ---------
<S> <C> <C> <C>
Discount rates 5.0-8.0% 5.0-9.0% 5.0-9.0%
Rates of increase in future compensation levels 3.0-7.0% 4.0-7.5% 4.0-7.5%
Expected long-term rates of return on assets 5.0-9.0% 5.0-9.5% 5.0-10.0%
======== ======== =========
</TABLE>
Approximately 330 employees participated in a multiemployer pension plan that
provides defined benefits to employees under certain union-employer
organization agreements. Pension expense for this plan was $2.1 million in
1994, $2.2 million in 1993 and $3.2 million in 1992.
55
<PAGE> 49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
The Company's Australian subsidiary has defined contribution plans for eligible
salaried and hourly employees. Both groups of employees may contribute up to 44
percent of their compensation. The Company was required by law to contribute
five percent of all eligible employees' compensation in 1994 and 1993. In
addition, the Company matched up to 10 percent of all employees' contributions
in 1994 and 1993. Company contributions to these plans were $0.9 million in
1994, $1.1 million in 1993 and $0.9 million in 1992.
(B) FUNDED STATUS
The funded status of the Company's overseas plans in which assets exceed
accumulated benefits as of December 31 is as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
-------------------------
1994 1993
------- -------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $22,306 $23,464
======= =======
Accumulated benefit obligation $23,575 $25,791
======= =======
Projected benefit obligation $49,867 $51,576
Plan assets at fair value 51,959 52,277
------- -------
Plan assets in excess of
projected benefit obligation 2,092 701
Unrecognized net (gain) loss (1,773) (4,065)
Unrecognized transition adjustment 1,972
Prior service costs 56
------- -------
Prepaid pension asset (liability) $ 319 $(1,336)
======= =======
</TABLE>
In addition, the funded status of the Company's overseas plans in which
accumulated benefits exceed assets as of December 31 is as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
-------------------------
1994 1993
-------- --------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $ 22,011 $ 19,133
======== ========
Accumulated benefit obligation $ 23,274 $ 20,305
======== ========
Projected benefit obligation $ 25,517 $ 22,607
Plan assets at fair value
-------- --------
Plan assets less than projected
benefit obligation (25,517) (22,607)
Unrecognized net (gain) loss (2,379) (1,476)
Unrecognized transition adjustment 1,103 1,116
-------- --------
Pension liability $(26,793) $(22,967)
======== ========
</TABLE>
Projected benefit obligations were determined using discount rates ranging from
five to nine percent in 1994 and 1993. The rate of increase in future
compensation levels for salary-related plans ranged from four to 7.5 percent in
1994 and 1993. The vested benefit obligation is calculated on the benefits the
employees are entitled to receive if the employees were to separate
immediately.
On December 29, 1994, Riverwood sold just under 50 percent of its investment in
Igaras (see Note 8). Prior to that date, Riverwood owned 100 percent of Igaras.
Accordingly, the pension expense related to Igaras' pension plan was included
in the overseas plans pension expense for 1993 and 1994 through the date of the
sale. Subsequent to December 29, 1994, Riverwood no longer consolidates Igaras,
but instead reports its investment in Igaras under the equity method of
accounting. Therefore, the funded status of Igaras' pension plan is excluded
from the international plans' funded status as of December 31, 1994.
56
<PAGE> 50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
VOLUNTARY SAVINGS PLANS:
The Company also sponsors voluntary savings plans for eligible U.S. employees.
Employees may make contributions of up to 16 percent of their compensation. The
Company matches up to six percent of certain contributions at rates ranging
from 15 percent to 100 percent, depending on the Company's performance. Company
contributions paid to the savings plans were $5.4 million in 1994, $7.8 million
in 1993 and $4.8 million in 1992. The Company has also accrued an additional
savings plan contribution in 1994 of $4.8 million to be paid in 1995.
NOTE 18
OTHER POSTRETIREMENT BENEFITS
The Company sponsors defined benefit postretirement health care plans that
provide medical and life insurance coverage to salaried and certain hourly
retired U.S. and Canadian employees and their dependents.
The postretirement benefit expense for the years ended December 31 consisted of
the following:
<TABLE>
<CAPTION>
(In thousands of dollars)
-------------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Service cost-benefits earned
during the year $ 4,239 $ 4,100 $ 3,820
Interest cost on accumulated postretirement
benefit obligation 20,323 22,367 21,976
Net amortization and deferral 39 813 782
------- ------- -------
Total postretirement benefit expense $24,601 $27,280 $26,578
======= ======= =======
</TABLE>
The postretirement benefit expense was calculated using a discount rate of
seven percent in 1994 and 7.5 percent in both 1993 and 1992.
The Company's unfunded postretirement benefit obligation reconciled with the
amounts shown in the Company's consolidated balance sheet as of December 31 is
as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
-----------------------
1994 1993
-------- --------
<S> <C> <C>
Actuarial present value of the accumulated
postretirement benefit obligation:
Retirees $160,935 $223,717
Fully eligible plan participants 10,861 14,681
Other active plan participants 39,529 63,594
-------- --------
211,325 301,992
Unrecognized net gain (loss) 29,591 (30,789)
Prior service costs 29,306
-------- --------
Postretirement benefit obligation $270,222 $271,203
======== ========
</TABLE>
The current portions of $26.2 million and $24.7 million of the postretirement
benefit obligation are recorded in compensation and employee benefits as of
December 31, 1994 and 1993, respectively.
During 1994, the Company instituted changes in its postretirement medical and
life insurance plans for its future and certain current retirees that reduced
the accumulated postretirement benefit obligation by $28.8 million at December
31, 1994. These changes included capping annual medical benefits provided for
future retirees, introduction of cost-sharing features such as contributions by
certain retirees and their dependents and limiting the maximum amounts of life
insurance coverage provided. This unrecognized reduction in prior service costs
will be amortized from 1995 through 2011. In addition, no postretirement
medical benefits are offered to Riverwood employees who began employment after
December 31, 1993.
57
<PAGE> 51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
The accumulated postretirement benefit obligations were determined in 1994 and
1993 using discount rates of nine percent and seven percent, respectively. For
measurement purposes, a nine percent annual rate of increase in the per capita
cost of covered medical benefits was assumed for 1994; the rate was assumed to
decrease gradually to 5.5 percent in 2002 and remain at that level thereafter.
The health care cost trend rate assumption has a significant effect on the
amounts reported. To illustrate, increasing the assumed health care cost trend
rates by one percentage point in each year would increase the accumulated
benefit obligation as of December 31, 1994, by $11.1 million and the aggregate
of the service and interest cost components of the periodic cost for the year
then ended by $2.5 million.
NOTE 19
POSTEMPLOYMENT BENEFITS
The Company's postemployment benefit obligation includes workers' compensation
reserves. The present value of those reserves reflected in liabilities as of
December 31, 1994 and 1993, was $75.1 million and $76.6 million, respectively.
A discount rate ranging from seven percent to 8.2 percent in 1994 and seven
percent in 1993 was used in determining the present value. On a gross basis,
the reserves were $143.7 million at December 31, 1994, and $148.7 million at
December 31, 1993 (see Note 24).
NOTE 20
RESTRUCTURING OF OPERATIONS GAIN (LOSS)
During 1993 and 1992 the Company incurred restructuring gains (losses) totaling
$(40.5) million and $0.7 million, respectively, as described below.
RIVERWOOD
Riverwood reported a net restructuring of operations loss of $8 million in the
fourth quarter of 1993 which included a $25 million charge for the writedown of
assets and provisions for severance, relocation and related costs of
restructuring and consolidating certain operations and infrastructure levels.
In recent years, Riverwood has experienced rapid growth primarily through
acquisitions. By 1993, this had created certain areas with overlapping
responsibilities and duplicated efforts. Accordingly, in 1993 Riverwood
implemented an ongoing restructuring plan designed to streamline operations,
increase efficiency and cost effectiveness and enhance worldwide customer
service capability. For 1993 business segment reporting purposes, of the $25
million restructuring charge, $18 million, $0.3 million and $0.4 million were
included in the Coated Board System, Containerboard and U.S. Timberlands/Wood
Products business segments, respectively, with the remainder included in
Riverwood's Corporate and Eliminations section of income from operations.
Through December 31, 1994, approximately $15.6 million had been charged against
the restructuring reserve, of which approximately $12.7 million related to cash
expenditures. Approximately $8.8 million, $0.2 million, and $0.3 million of the
total charges to the reserve related to the Coated Board System, Containerboard
and U.S. Timberlands/ Wood Products business segments, respectively, and $6.3
million were of a corporate nature. Of the remaining reserve of $9.4 million
at December 31, 1994, Riverwood estimates that approximately $7 million will be
used for cash expenditures. By December 31, 1994, as a result of the ongoing
restructuring plan, Riverwood's salaried and hourly work force had been reduced
by an aggregate of 144 individuals, reducing annual payroll and benefit costs
by approximately $6.1 million. Also as a result of the ongoing restructuring
plan, Riverwood wrote down the book value of certain assets by $2.9 million.
These
58
<PAGE> 52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
asset write downs, together with assets sold under the restructuring plan,
combined to reduce annual depreciation expense by approximately $1 million.
Additionally, other operating costs were reduced by approximately $2.7 million.
The 1993 restructuring charge was partially offset by a $17 million gain on the
sale and assignment, for cash, of approximately 60,000 acres of nonstrategic
timberlands located in Louisiana and Texas. The $17 million gain was included
in the U.S. Timberlands/Wood Products business segment.
SCHULLER
During 1993, Schuller initiated restructuring programs resulting in charges
totaling $30.1 million for the year as explained below.
During the second quarter of 1993, Schuller recorded a restructuring loss of
approximately $3.2 million principally for the settlement of litigation related
to a former business for which a previous estimate had not been reasonably
possible.
During the fourth quarter of 1993, Schuller made the decision to exit its
residential roofing business and recorded a provision of $6.7 million, which
included $1.6 million for the separation of approximately 75 employees, $2.4
million for the writedown of assets and $2.7 million for other related costs.
In 1993, Schuller adopted a program for the separation of approximately 125
salaried employees, principally in its mats and reinforcements business in the
Engineered Products segment, and accordingly, recorded a $6.6 million charge
for such costs in addition to a $0.9 million charge for the separation of
certain salaried employees in the Building Products segment. This program was
precipitated by U.S. competitive pressures and weak European construction
markets.
Restructuring of operations in 1993 also included a $12.7 million charge
related to Schuller's former phenolic roofing insulation business which
consisted of: $15.6 million for estimated sampling, inspection and remediation
expenses; $2.5 million for estimated legal costs; $1 million for administration
of the sampling and inspection program; $0.6 million for the writedown of
equipment; offset by $7 million of expected insurance recoveries. The accrual
for sampling, inspection, remediation and administration costs reflected
Schuller's decision to continue its voluntary program and was based on
information available at that time, including Schuller's previous experience in
sampling, inspecting and remediating roofs with phenolic insulation. The
accrual for legal costs reflected Schuller's decision to commence litigation
after initial attempts to negotiate settlements, with the former owner of the
business and Schuller's insurance carrier failed.
During 1994, Schuller did not record any additional restructuring charges and
continued to implement plans initiated in previous years. During 1994 and
1993, Schuller's salaried workforce was reduced by approximately 60 employees
and 130 employees, respectively as a result of the continuation of Schuller's
rationalization program and its exit from the residential roofing business.
During 1992, Schuller recorded a net restructuring gain of $2 million. Schuller
reduced its salaried workforce by approximately 200 employees, reducing annual
payroll and benefit costs by approximately $11 million. The end of 1992 marked
the completion of restructuring programs initiated in late 1990. Accordingly,
Schuller recorded an adjustment of $2.5 million to reduce previously
established separation reserves that were no longer considered necessary.
Approximately $2 million of this adjustment related to the Building Products
segment and the remainder related to the Engineered Products segment.
59
<PAGE> 53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
Schuller's restructuring of operations in 1992 also included a gain of $4.7
million on the settlement of an environmental liability related to a business
in the Engineered Products segment and a $2 million gain on the sale of
Schuller's 50 percent interest in a joint venture not related to its core
businesses.
In addition, restructuring of operations included a $7.8 million charge related
to Schuller's former phenolic insulation business in the Building Products
segment. This charge included a $3.3 million loss on the sale of
phenolic-related assets, not previously anticipated due to a change in market
conditions. Schuller also recorded a $2.5 million charge for legal costs, which
arose as a result of Schuller's claims against Beazer East, Inc. and Schuller's
insurer. Prior to 1992, it was not expected that Schuller's insurer would deny
coverage of Schuller's claim and Schuller had not identified that it had a
potential claim against the previous owner of the business. In addition,
Schuller recorded a $2 million adjustment to increase reserves previously
established for Schuller's voluntary sampling, inspection and remediation
program. This increase to the reserves reflected Schuller's decision to
continue this voluntary program and was based on information obtained as a
result of sampling, inspection and remediation performed in 1991.
The following table sets forth the activity in Schuller's restructuring
reserves for the years ended December 31:
<TABLE>
<CAPTION>
(In thousands of dollars)
--------------------------------------------------------------------
Employee
Separations Phenolic Other Total
----------- --------- -------- ---------
<S> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1991 $15,389 $ 7,538 $20,145 $ 43,072
Restructuring of Operations Loss (2,514) 7,764 (7,283) (2,033)
Cash Payments (7,131) (5,990) (1,222) (14,343)
Writedown of Assets (3,245) (3,245)
------- ------- ------- --------
BALANCES AT DECEMBER 31, 1992 5,744 6,067 11,640 23,451
Restructuring of Operations Loss 9,167 12,707 8,242 30,116
Cash Payments (8,395) (6,280) (6,898) (21,573)
Writedown of Assets (601) (2,420) (3,021)
Insurance Receivable 7,000 7,000
------- ------- ------- --------
BALANCES AT DECEMBER 31, 1993 6,516 18,893 10,564 35,973
Cash Payments (5,147) (9,751) (4,006) (18,904)
Writedown of Asset (668) (668)
------- ------- ------- --------
BALANCES AT DECEMBER 31, 1994 $ 1,369 $ 9,142 $ 5,890 $ 16,401
======= ======= ======= ========
</TABLE>
MANVILLE HOLDING COMPANY
Other restructuring charges for the Manville holding company in 1993 totaled
approximately $2.4 million and primarily related to cash expenses associated
with former business operations and a loss on the sale of an oil and gas
property.
The Manville holding company restructuring loss of $1.3 million in 1992
included a loss on the sale of oil and gas properties of $7 million offset in
part by a $5.7 million gain on the sale of an investment in a joint venture.
60
<PAGE> 54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
NOTE 21
OTHER INCOME (LOSS), NET
Schuller recorded a charge of approximately $8.9 million in the fourth quarter
of 1994 primarily for legal costs incurred and anticipated in connection with
Schuller's litigation with its insurance carrier and the former owner of the
phenolic roofing insulation business. Pursuant to the adoption of Emerging
Issues Task Force Issue No. 94-3, "Liability Recognition for Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)," charges
related to the phenolic roofing insulation business have been classified as
part of other income.
Also included in other income for 1994 is an $8.9 million gain on Riverwood's
sale of certain oil and gas mineral rights on its U.S. timberlands.
Included in 1994, 1993 and 1992 other income were gains on the sale of assets
used in the fiberglass manufacturing process of $1.5 million, $0.1 million and
$7.6 million, respectively.
Net foreign currency transaction and translation gains (losses) included in
determining income from operations for 1994, 1993 and 1992 were $(7) million,
$(14.1) million and $(7.2) million, respectively, of which $(2.7) million,
$(1.4) million and $2.1 million were included in other income (loss) for 1994,
1993 and 1992, respectively.
NOTE 22
INCOME TAXES
Income taxes payable consist of the following:
<TABLE>
<CAPTION>
(In thousands of dollars)
----------------------------
1994 1993
------- -------
<S> <C> <C>
U.S. federal and foreign income taxes $13,889 $11,942
Deferred income taxes 12,640 10,347
State and local taxes 2,210 2,520
------- -------
$28,739 $24,809
======= =======
</TABLE>
The approximate tax effect of the temporary differences and carryforwards
giving rise to the net deferred tax asset is as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
-----------------------------
1994 1993
-------- --------
<S> <C> <C>
U.S. Deferred Tax Assets:
PI Trust deductions $359,242 $407,437
Net operating loss carryforward 135,912 75,431
Postretirement benefits other than pensions 93,846 94,117
Workers' compensation and postemployment
benefits 28,523 27,337
Foreign tax credit carryforward 26,521 26,521
General business credit carryforward 17,927 18,274
Warranty reserves 17,180 17,035
Credit for prior year minimum tax carryforward 16,405 16,405
Environmental reserves 11,471 13,456
Provision for major equipment overhaul 9,224 7,555
Vacation and holiday wages and salaries 9,043 9,393
Deferred state and local taxes 8,307 8,852
State and local net operating
loss carryforward 7,489 6,086
Other 55,618 58,580
-------- --------
796,708 786,479
-------- --------
Foreign Deferred Tax Assets:
Compensation and benefits 2,247 2,609
Brazilian inflationary profits 5,418
Brazil net operating loss carryforward 3,402
Other 5,079 4,855
-------- --------
7,326 16,284
-------- --------
Total Deferred Tax Assets 804,034 802,763
-------- --------
U.S. Deferred Tax Liabilities:
Property, plant and equipment 226,143 194,820
Timber 68,404 69,741
Prepaid pension cost 48,580 44,332
Other 37,459 14,421
-------- --------
380,586 323,314
-------- --------
Foreign Deferred Tax Liabilities 271 344
-------- --------
Total Deferred Tax Liabilities 380,857 323,658
-------- --------
Net Deferred Tax Asset, before
valuation allowances 423,177 479,105
Valuation Allowances (96,449) (94,795)
-------- --------
Net Deferred Tax Asset $326,728 $384,310
======== ========
</TABLE>
The current portion of the net deferred tax asset as of December 31, 1994 and
1993, was $44.9 million and $50.2 million, respectively.
61
<PAGE> 55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
The PI Trust deductions deferred tax asset primarily represents consummation
charges related to stock and bonds issued to the PI Trust, recorded in 1988 for
financial reporting purposes, and subsequent dividend and profit sharing
payments made to the PI Trust that are not yet deductible for income tax
purposes. The charge related to the bonds becomes deductible as principal and
interest payments are made to the PI Trust or when the bonds are sold by the PI
Trust and funds are distributed to claimants or deposited in a specific
settlement fund within the PI Trust. The PI Trust deductions deferred tax asset
includes $207.1 million generated from the issuance of preferred and common
stock to the PI Trust and is based on the market-related value of the stock at
consummation. If the PI Trust were to sell the stock at a price greater than
the value recorded at consummation, the Company may receive a tax benefit in
excess of the deferred tax asset reflected for financial reporting purposes.
Likewise, if the PI Trust were to sell the stock at a price lower than the
value recorded at consummation, the Company would receive a tax benefit less
than the deferred tax asset. At December 31, 1994, the trading price of the
Company's Common Stock exceeded the market-related value used to record the
stock issued at consummation. The charge related to the issuance of stock will
become deductible when the PI Trust converts its shares to cash and distributes
the proceeds to asbestos claimants or transfers the proceeds to the settlement
fund. The dividend and profit sharing payments to the PI Trust also represent a
future tax benefit to the Company (subject to the valuation allowance discussed
below) that will become a current deduction when paid to claimants or
transferred to the settlement fund.
The PI Trust transferred $234 million and $172 million in 1994 and 1993,
respectively, to the specific settlement fund within the PI Trust or to
claimants generating corresponding current ax deductions for the Company. This
was the primary reason for the net operating loss carryforward deferred tax
assets in 1994 and 1993. In addition, the monies transferred were adequate to
eliminate any alternative minimum tax liability.
The Company's U.S. deferred tax asset increased by approximately $12 million
due to an increase in 1993 in the U.S. federal tax rate to 35 percent from 34
percent.
The Company estimates, based upon its past earnings, forecasts of future
earnings and potential tax planning strategies, that as of December 31, 1994,
$96.4 million of the deferred tax asset will not be realized. This amount
primarily relates to foreign tax credits, general business credits and future
deductible amounts that the Company believes will expire unused. Accordingly, a
valuation allowance has been provided for these amounts. The Company recorded a
$2 million increase in valuation allowance due to additional deferred tax asset
generated from the Company's prepayment of a substantial amount of the Trust
Bonds in 1994. The $7 million increase in the valuation allowance in 1993
primarily relates to the additional tax benefit realized on the common
dividends paid to the PI Trust in 1993. In 1992, the Company recorded a $16.3
million increase in the valuation allowance to provide for credit carryforwards
previously recognized as assets. The increases to the valuation allowance in
both 1993 and 1992 resulted from the Company's expectation that the
aforementioned assets will not be fully realized.
In accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," the Company's valuation allowance on all
deferred tax assets is subject to change as forecasts of future years' earnings
and tax planning strategies are revised. Tax planning strategies include the
acceleration of taxable amounts to utilize expiring carryforwards, such as the
potential sale of assets, and changes in the timing of taxable deductions
principally related to amounts paid by the PI Trust or transferred to a
specific settlement fund within the PI Trust.
62
<PAGE> 56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
The approximate tax effect of the temporary differences giving rise to a
significant portion of the net deferred tax liability is as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
-----------------------------
1994 1993
-------- --------
<S> <C> <C>
Foreign Deferred Tax Assets:
Net operating loss carryforward $ 1,923 $ 861
Capital lease obligation 1,175 1,198
Other 2,572 1,591
-------- --------
Total Deferred Tax Assets 5,670 3,650
-------- --------
U.S. Deferred Tax Liabilities:
Deferred state and local taxes 38,724 29,638
Other 7,375
-------- --------
38,724 37,013
-------- --------
Foreign Deferred Tax Liabilities:
Property, plant and equipment 54,618 43,455
Brazilian inflationary profits and
other reserves 9,303
Pensions 5,360 5,879
Undistributed earnings of foreign subsidiaries 9,832 7,559
Precious metals 1,160
Other 1,165 2,315
-------- --------
70,975 69,671
-------- --------
Total Deferred Tax Liabilities 109,699 106,684
-------- --------
Net Deferred Tax Liability $104,029 $103,034
======== ========
</TABLE>
The current portion of the net deferred tax liability as of December 31, 1994
and 1993, was $12.6 million and $10.3 million, respectively.
The Company's deferred tax liability decreased by approximately $3 million due
to a reduction in German tax rates in 1993. In addition, the government of
Brazil enacted tax provisions that reduced the statutory federal tax rate to 35
percent from 40 percent and also allowed for the accelerated liquidation of
future tax liabilities on inflationary profits at reduced rates. As a result of
these changes to Brazilian tax law, Manville recognized a net deferred income
tax benefit of $5 million in 1993.
The U.S. and foreign components of income (loss) from continuing operations
before income taxes consist of the following:
<TABLE>
<CAPTION>
(In thousands of dollars)
----------------------------------------------------
1994 1993 1992
-------- -------- -------
<S> <C> <C> <C>
U.S. $102,943 $(26,591) $37,288
Foreign 58,462 32,944 40,517
-------- -------- -------
$161,405 $ 6,353 $77,805
======== ======== =======
</TABLE>
The provision for income tax expense (benefit) on continuing operations
consists of the following:
<TABLE>
<CAPTION>
(In thousands of dollars)
---------------------------------------------------
1994 1993 1992
------- -------- -------
<S> <C> <C> <C>
Current
U.S. state and local $ 4,054 $ 6,739 $ 4,407
Foreign 18,692 14,884 19,453
------- -------- -------
22,746 21,623 23,860
------- -------- -------
Deferred
U.S. 65,346 (71,556) (5,349)
Foreign 7,458 (4,785) 8,715
------- -------- -------
72,804 (76,341) 3,366
------- -------- -------
$95,550 $(54,718) $27,226
======= ======== =======
</TABLE>
As a result of a retroactive change in U.S. income tax regulations regarding
the payment of add-on minimum tax and the treatment of certain tax preference
items for the years 1977 through 1986, the Company was entitled to a federal
income tax refund plus accrued interest. During the first and second quarters
of 1993, the Company received a total of $32 million, which was recorded as a
reduction to income tax expense of $19 million and an increase to interest
income of $13 million.
63
<PAGE> 57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
The reported amount of income tax expense on consolidated pretax income from
continuing operations differs from the amount of income tax expense that would
result from applying domestic federal statutory tax rates to consolidated
pretax income from continuing operations for the following reasons:
<TABLE>
<CAPTION>
(In thousands of dollars)
-----------------------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
U.S. federal statutory expense $56,491 $ 2,224 $ 26,454
Increase (decrease) resulting from:
Tax gain on sale of Brazilian operations 27,522
Foreign income taxed at higher rates 9,923 14,903 18,738
Adjustment of estimated income tax (benefit) expense
for prior years (8,077) 5,280 (6,324)
U.S. state and local taxes, net of federal benefit 7,377 (999) 2,963
Change in income tax rates (817) (19,815) 4,071
Deduction for the Special Dividend paid to the
PI Trust (33,946) (33,946)
Tax refund (18,699)
Recognition of U.S. state and local deferred tax assets (9,102)
Increase in the deferred tax asset valuation allowance 7,000 16,283
Other, net 3,131 (1,564) (1,013)
------- -------- --------
$95,550 $(54,718) $ 27,226
======= ======== ========
</TABLE>
As of December 31, 1994, the Company had $388.3 million of U.S. federal regular
operating loss carryforwards. The operating loss carryforwards expire beginning
in 2007. The Company also had $26.5 million, $17.9 million and $16.4 million of
foreign tax credit carryforwards, general business credit carryforwards and a
U.S. federal credit for prior year minimum tax, respectively. Both the general
business credits and foreign tax credits expire at various dates beginning in
1995. There is no expiration date on the prior year minimum tax credit;
however, it can only be applied against regular tax.
Undistributed earnings intended to be reinvested indefinitely by the foreign
subsidiaries totaled $186 million at December 31, 1994. The determination of
the deferred tax liability related to these undistributed earnings is not
practicable. Accordingly, no U.S. deferred income tax has been recorded.
NOTE 23
EARLY EXTINGUISHMENTS OF DEBT
In the third and fourth quarters of 1994, the Company completed two debt
refinancings that resulted in an aggregate extraordinary loss on early
extinguishments of debt of $28.4 million, net of related income taxes of $13
million.
Riverwood completed a refinancing program in the third quarter of 1994 and
prepaid approximately $179 million principal of notes. The extraordinary charge
for this early retirement of debt was $7.9 million, net of income taxes of
approximately $5 million.
In September 1994, Manville prepaid $343 million of the Trust Bonds, including
accrued interest, to the PI Trust with $379 million aggregate principal amount
of 10.375 percent Senior Notes due 2004 of the Company's wholly owned
subsidiary, Schuller. The transaction resulted in an extraordinary loss on the
early extinguishment of debt of $26.8 million, net of related income taxes of
$11.4 million. The transaction also
64
<PAGE> 58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
resulted in the termination of the bond prepayment agreement between Manville
and the PI Trust which eliminated certain financial covenants applicable to the
Company. In the fourth quarter of 1994 the extraordinary loss on the Trust
Bonds was reduced by $6.3 million, net of related income taxes of $3.4 million.
This reduction was due to an adjustment in the interest rate on the Senior
Notes to 10.875 percent (as so adjusted, the "Schuller Senior Notes") finalized
in the fourth quarter in accordance with the agreement related to the
prepayment. This resulted in a total extraordinary loss in 1994 on the Trust
Bonds prepayment of $20.5 million, net of related income taxes of $8 million.
On August 25, 1993, Manville and the PI Trust entered into a bond prepayment
agreement. Pursuant to the agreement, on August 25, 1993, the Company made a
partial prepayment on the Trust Bonds. The prepayment consisted of $150 million
of cash, net of certain costs, and the assignment to the PI Trust of $100
million, plus accrued interest, of Riverwood intercompany notes ("Intercompany
Notes"). The assignment of the Intercompany Notes was pursuant to an option in
the agreement that the PI Trust exercised on August 25, 1993.
In conjunction with the bond prepayment, the Company recorded an extraordinary
gain of $0.9 million, net of related income taxes of $0.5 million, in August
1993 to adjust the estimated extraordinary loss previously recorded in 1992. In
1992, the Company recorded an estimated extraordinary loss of $11.5 million,
net of related income tax benefit of $5.9 million, in anticipation of the
prepayment of a portion of the bonds payable to the PI Trust.
NOTE 24
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR POSTEMPLOYMENT BENEFITS
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" ("SFAS No. 112"). SFAS No. 112 generally requires that in certain
circumstances postemployment benefit costs and obligations be recognized over
the active service lives of employees. These obligations include, but are not
limited to, benefits provided to former (but not yet retired) or inactive
employees and their dependents contingent upon disability, death, layoff or
other termination. As a result, in 1993, the Company recognized an accumulated
postemployment benefit obligation of $13.9 million, net of taxes of $8.6
million. This cumulative adjustment is primarily attributable to the accrual of
certain accumulated disability-related benefits, recognition of additional
workers' compensation expenses and the reduction of the discount rate used to
measure the present value of the Company's workers' compensation liabilities to
7.5 percent from approximately ten percent.
The Company will continue to recognize certain postemployment benefit expenses
at the time an employee is terminated or becomes inactive as such amounts
cannot be reasonably estimated before that time. Income before cumulative
effect of accounting changes after adopting SFAS No. 112 is not significantly
different from the amount the Company previously recognized.
NOTE 25
SUPPLEMENTAL CASH FLOW INFORMATION
Interest accreted on the Trust Bonds in prior years and subsequently paid in
1992 and 1993 has been reclassified on the consolidated statement of cash flows
to operating activities from financing activities. Cash paid for other interest
during 1994, 1993 and 1992 was $114.4 million, $140.1 million and $126.8
million, respectively. Cash paid for income taxes during 1994 was $24.5
million. Cash refunded for income taxes during 1993 was $4.6 million. Cash paid
for income taxes during 1992 was $38 million.
65
<PAGE> 59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
As discussed in Note 23, the Company made a prepayment on its outstanding bond
obligation to the PI Trust in 1994 that included the exchange of $379 million
of Schuller Senior Notes held by Manville in satisfaction of a portion of the
Trust Bonds.
As discussed in Note 23, the Company made a partial prepayment on the Trust
Bonds in 1993 to the PI Trust that included the assignment of $100 million of
Riverwood notes held by Manville.
NOTE 26
ACQUISITIONS
On July 1, 1992, Riverwood acquired substantially all of the assets of Macon
Kraft, Inc., including a linerboard mill located in Macon, Georgia. The
purchase price of the assets was approximately $219 million, of which $169
million represented indebtedness assumed by Riverwood. Immediately following
the acquisition, approximately $15 million of the assumed debt was prepaid. The
acquisition was accounted for using the purchase method of accounting. The
consolidated statement of income for the year ended December 31, 1992, includes
the operations of the linerboard mill for the period July 1, 1992 through
December 31.
NOTE 27
BUSINESS SEGMENTS AND GEOGRAPHIC AREA INFORMATION
The Company reports the results of Riverwood's and Schuller's operations in
five business segments. Riverwood's segments include Coated Board System,
Containerboard and U.S. Timberlands/Wood Products. The Coated Board System
segment includes the production of coated board at paperboard mills in the
United States and Europe; converting facilities in the United States, Australia
and Europe; and worldwide packaging machinery operations. The Containerboard
segment includes timberlands and associated containerboard mills and corrugated
box plants in Brazil, through the date of the sale of just under 50 percent of
Igaras (see Note 8), as well as kraft paper, linerboard and corrugated medium
production at two U.S. mills. The U.S. Timberlands/Wood Products segment
includes timberlands and operations engaged in the supply of pulpwood to the
West Monroe, Louisiana mill operations, and the manufacture of lumber and
plywood.
Schuller's segments include Building Products and Engineered Products. The
Building Products segment consists of building insulation, commercial roofing
systems and mechanical insulations. The Engineered Products segment consists of
specialty insulations, filtration and mats and reinforcements.
Financial results for the Manville holding company's oil and gas properties
(which were sold in the third quarter of 1993 and the second quarter of 1992)
and equity investment in Stillwater are included in Manville Corporate and
Eliminations for business segment reporting purposes.
66
<PAGE> 60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
<TABLE>
<CAPTION>
December 31,
(In thousands of dollars)
------------------------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Riverwood International:
Coated Board System $1,105,142 $ 890,679 $ 759,150
Containerboard (Note A) 385,757 647,574 568,605
U.S. Timberlands/Wood Products 287,690 296,244 333,101
Corporate 323,703 235,809 243,183
---------- ---------- ----------
2,102,292 2,070,306 1,904,039
---------- ---------- ---------
Schuller International:
Building Products 514,873 466,044 455,684
Engineered Products 532,159 539,295 519,671
Corporate 215,616 139,930 166,554
---------- ---------- ----------
1,262,648 1,145,269 1,141,909
--------- --------- ----------
Manville Corporate (Note B) 434,671 404,732 584,415
---------- ---------- ----------
Total $3,799,611 $3,620,307 $3,630,363
========== ========== ==========
Years Ended December 31,
------------------------------------------------------
DEPRECIATION, DEPLETION AND AMORTIZATION
Riverwood International:
Coated Board System $ 46,778 $ 45,729 $ 42,780
Containerboard (Note A) 33,073 31,548 24,297
U.S. Timberlands/Wood Products 13,062 14,887 16,337
Corporate 2,091 1,803 1,379
---------- --------- ---------
95,004 93,967 84,793
---------- --------- ---------
Schuller International:
Building Products 24,751 23,712 23,592
Engineered Products 28,642 29,540 27,002
Corporate 5,018 5,221 6,107
---------- ---------- ----------
58,411 58,473 56,701
---------- ---------- ----------
Manville Corporate 931 4,668 7,420
---------- ---------- ----------
Total $ 154,346 $ 157,108 $ 148,914
========== ========== ==========
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
Riverwood International:
Coated Board System $ 206,958 $ 188,598 $ 77,046
Containerboard 30,423 93,574 293,092
U.S. Timberlands/Wood Products 1,810 2,981 4,876
Corporate 1,031 3,698 3,578
---------- ---------- ----------
240,222 288,851 378,592
---------- ---------- ----------
Schuller International:
Building Products 53,621 20,520 12,328
Engineered Products 26,991 38,794 18,061
Corporate 2,038 1,970 730
---------- ---------- ----------
82,650 61,284 31,119
---------- ---------- ----------
Manville Corporate 183 1,359 1,376
---------- ---------- ----------
Total $ 323,055 $ 351,494 $ 411,087
========== ========== ==========
</TABLE>
See notes on page 69.
67
<PAGE> 61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
<TABLE>
<CAPTION>
Years Ended December 31,
(In thousands of dollars)
------------------------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
NET SALES (NOTE C)
Riverwood International:
Coated Board System $ 793,983 $ 746,102 $ 799,997
Containerboard 342,614 246,439 210,734
U.S. Timberlands/Wood Products 164,944 146,879 125,857
Corporate and Eliminations (18,753) (19,054) (18,361)
---------- ---------- ----------
1,282,788 1,120,366 1,118,227
---------- ---------- ----------
Schuller International:
Building Products 743,967 666,903 610,019
Engineered Products 558,244 527,066 512,078
Corporate and Eliminations (24,393) (28,159) (26,744)
---------- ---------- ----------
1,277,818 1,165,810 1,095,353
---------- ---------- ----------
Manville Corporate and Eliminations (263) (7,972) (7,916)
---------- ---------- ----------
Total Company Net Sales $2,560,343 $2,278,204 $2,205,664
========== ========== ==========
INCOME FROM OPERATIONS (NOTE D)
Riverwood International:
Coated Board System $ 90,279 $ 81,361 $ 126,010
Containerboard 23,975 (32,164) 8,693
U.S. Timberlands/Wood Products 67,726 63,913 30,867
Corporate and Eliminations (27,793) (29,613) (19,478)
---------- ---------- ----------
154,187 83,497 146,092
---------- ---------- ----------
Schuller International:
Building Products 109,933 47,343 31,102
Engineered Products 76,503 52,242 61,606
Corporate and Eliminations (27,478) (33,576) (25,187)
---------- ---------- ----------
158,958 66,009 67,521
---------- ---------- ----------
Manville Corporate and Eliminations (16,659) (13,558) (11,397)
---------- ---------- ----------
Total Company Income from Operations $ 296,486 $ 135,948 $ 202,216
========== ========== ==========
</TABLE>
See notes on page 69.
68
<PAGE> 62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Manville Corporation 1994 Annual Report
<TABLE>
<CAPTION>
Years Ended December 31,
(In thousands of dollars)
------------------------------------------------------
1994 1993 1992
---------- ---------- -----------
<S> <C> <C> <C>
NET SALES
United States $2,007,895 $1,824,489 $1,697,166
Brazil (Note A) 161,044 109,351 98,899
Other Foreign 433,015 397,284 450,929
Corporate and Eliminations (Note C) (41,611) (52,920) (41,330)
---------- ---------- ----------
Total Company Net Sales $2,560,343 $2,278,204 $2,205,664
========== ========== ==========
INCOME FROM OPERATIONS (NOTE D)
United States $ 284,787 $ 181,664 $ 184,282
Brazil (Note A) 32,138 8,998 10,998
Other Foreign 43,313 28,263 45,748
Corporate and Eliminations (63,752) (82,977) (38,812)
---------- ---------- ----------
Total Company Income from Operations $ 296,486 $ 135,948 $ 202,216
========== ========== ==========
December 31,
------------------------------------------------------
ASSETS
United States $2,330,200 $2,156,566 $1,980,648
Brazil (Note A) 5,632 256,798 228,197
Other Foreign 494,852 431,390 430,655
Corporate (Note B) 1,027,171 838,079 1,053,587
Eliminations and Adjustments (Note E) (58,244) (62,526) (62,724)
---------- ---------- ----------
Total $3,799,611 $3,620,307 $3,630,363
========== ========== ==========
</TABLE>
Notes to Business Segments and Geographic Area Information:
(A) On December 29, 1994, Riverwood sold just under 50 percent of its
investment in Igaras after first spinning off a wholly-owned subsidiary to
operate Riverwood's packaging machinery operations in Brazil (see Note 8).
Prior to that date, Riverwood owned 100 percent of Igaras. As a result of this
sale, Riverwood recorded a pretax loss of $0.6 million which is included in
Riverwood's Corporate and Eliminations section of income from operations. The
results of operations of Igaras are included in the Containerboard business
segment through the date of sale. Subsequent to December 29, 1994, Riverwood no
longer consolidates Igaras, but instead reports its investment in Igaras using
the equity method of accounting.
(B) Corporate assets are principally cash and equivalents and marketable
securities, prepaid income taxes, certain investments (including the Company's
equity investment in Stillwater), certain long-term receivables, a portion of
deferred tax assets, a portion of prepaid pension assets and a portion of
property, plant and equipment.
(C) Net sales included in Corporate and Eliminations relate primarily to the
elimination of intersegment and intergeographic sales (at prices approximating
market).
(D) Restructuring gains and losses are included in operations of the related
geographic areas and industry segments where they can be identified to a
specific segment. In the fourth quarter of 1993, Riverwood recorded a $25
million charge for restructuring of operations. This charge was offset in part
by a $17 million gain on the sale and assignment for cash of nonstrategic
timberlands. Business segment income from operations for 1993 has been
reclassified to reflect an allocation of the $25 million restructuring charge
to the business segments to which it relates. Of this charge, $18 million
relates to the Coated Board System segment, $0.3 million relates to the
Containerboard segment, $0.4 million to the U.S. Timberlands/Wood Products and
$6.3 million relates to Riverwood's Corporate and Eliminations. This
reclassification had no impact on consolidated income from operations. The $17
million gain on the sale of nonstrategic timberlands was reflected in income
from operations of the U.S. Timberlands/Wood Products business segment in 1993.
The Building Products segment includes restructuring charges of $20.4 million
and $5.8 million in 1993 and 1992, respectively. The Engineered Products
segment includes a restructuring charge of $6.1 million in 1993 and a
restructuring gain of $5.8 million in 1992. Schuller Corporate and Eliminations
reflects a restructuring charge of $3.6 million in 1993 and a restructuring
gain of $2 million in 1992. Manville Corporate and Eliminations reflects
restructuring charges of $2.4 million in 1993 and $1.3 million in 1992.
(E) Includes the elimination of intersegment and intergeographic inventory
profits and the adjustment of business segment and geographic inventories,
which are carried at standard costs, to the historical inventory bases used in
consolidation.
69
<PAGE> 63
MANAGEMENT'S REPORT
Manville Corporation 1994 Annual Report
The accompanying consolidated financial statements have been prepared by
Management in conformity with generally accepted accounting principles
appropriate under the circumstances. The representations in the financial
statements and the fairness and integrity of such statements are the
responsibility of Management. All of the other financial information in the
Annual Report and Form 10-K is consistent with that in the financial
statements.
The financial statements necessarily include some amounts that are based on
Management's best estimates and judgments. Management believes that the
financial statements reflect, in all material respects, the substance of
transactions that should be included and appropriately account for or disclose
all material uncertainties.
The consolidated financial statements prepared by Management have been audited
in accordance with generally accepted auditing standards by Coopers & Lybrand
L.L.P., Independent Accountants, whose report is also presented.
Manville maintains internal accounting control systems to provide reliable
financial information for the preparation of financial statements, to safeguard
assets against loss or unauthorized use and to ensure proper authorization and
accounting for all transactions. Management is responsible for maintenance of
these systems, which is accomplished through communication of established
written codes of conduct, systems, policies and procedures; employee training;
and appropriate delegation of authority and segregation of responsibilities.
To further ensure compliance with established standards and procedures, the
Company maintains a substantial program of internal audits.
In establishing and maintaining its internal accounting control systems,
Management considers the inherent limitations of the various control procedures
and weighs their cost against the benefits derived. Management believes that
existing internal accounting control systems are achieving their objectives and
that they provide reasonable assurance concerning the accuracy of the financial
statements.
Oversight of Management's financial reporting and internal accounting control
responsibilities is exercised by the Board of Directors, through an Audit
Committee that consists solely of outside directors. The Audit Committee meets
periodically with financial management, internal auditors and the independent
accountants to review how each is carrying out its responsibilities and to
discuss matters concerning auditing, internal accounting control and financial
reporting. The independent accountants and the Company's internal audit
department have free access to meet with the Audit Committee without
Management's presence.
/s/ W. T. Stephens /s/ R. E. Cole
W. T. Stephens R. E. Cole
President, CEO and Senior Vice President and
Chairman of the Board Chief Financial Officer
70
<PAGE> 64
REPORT OF INDEPENDENT ACCOUNTANTS
Manville Corporation 1994 Annual Report
To the Stockholders and Directors of Manville Corporation:
We have audited the accompanying consolidated balance sheet of Manville
Corporation as of December 31, 1994 and 1993 and the related consolidated
statements of income, cash flows and stockholders' equity for each of the three
years in the period ended December 31, 1994. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Manville
Corporation as of December 31, 1994 and 1993, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1994 in conformity with generally accepted accounting
principles.
As discussed in Note 24 to the consolidated financial statements, in 1993 the
Company changed its method of accounting for postemployment benefits in
accordance with Statement of Financial Accounting Standards No. 112.
/s/ Coopers & Lybrand L.L.P.
------------------------------
Coopers & Lybrand L.L.P.
Denver, Colorado
February 6, 1995
71
<PAGE> 65
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Manville Corporation 1994 Annual Report
<TABLE>
<CAPTION>
(In thousands of dollars, except per share amounts)
---------------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
Net Sales $531,778 $637,045 $682,102 $709,418 $2,560,343
Gross Profit 120,071 159,143 168,538 181,665 629,417
Income from Operations 44,947 77,230 87,489 86,820 296,486
Income (Loss) before Extraordinary Item and
Cumulative Effect of Accounting Change 7,386 20,661 28,982 8,387 65,416
Net Income (Loss) (Note A) 7,386 20,661 (5,725) 14,674 36,996
PRIMARY AND FULLY DILUTED EARNINGS
PER COMMON SHARE (NOTE D)
Income (Loss) before Extraordinary Item and
Cumulative Effect of Accounting Change $.01 $.12 $.18 $.02 $.33
Net Income (Loss) (Note A) .01 .12 (.10) .07 .10
YEAR ENDED DECEMBER 31, 1993
Net Sales $504,818 $587,987 $601,962 $583,437 $2,278,204
Gross Profit 106,589 128,118 123,760 119,972 478,439
Income from Operations (Note C) 35,858 49,948 44,855 5,287 135,948
Income (Loss) before Extraordinary Item and
Cumulative Effect of Accounting Change (Note C) 29,666 27,369 11,712 (7,975) 60,772
Net Income (Loss) (Notes A, B and C) 15,785 27,369 12,603 (7,975) 47,782
PRIMARY AND FULLY DILUTED EARNINGS
PER COMMON SHARE (NOTE D)
Income (Loss) before Extraordinary Item and
Cumulative Effect of Accounting Change (Note C) $.20 $.18 $.05 $(.11) $.31
Net Income (Loss) (Notes A, B and C) .08 .18 .06 (.11) .21
</TABLE>
(A) In the third and fourth quarters of 1994 the Company completed two debt
refinancings that resulted in an aggregate extraordinary loss on early
extinguishments of debt of $28.4 million, net of related income taxes of $13
million.
The third quarter included a Riverwood refinancing and a prepayment of the
Trust Bonds resulting in a total extraordinary loss on early extinguishments of
debt of $34.7 million, net of related income taxes of $16.4 million. The loss
on the Trust Bonds was subsequently adjusted in accordance with the agreement
related to the prepayment resulting in a fourth quarter gain on the early
extinguishment of debt of $6.3 million, net of related income taxes of $3.4
million.
During the third quarter of 1993, the Company made a prepayment on its
outstanding bond obligations to the Manville Personal Injury Settlement Trust.
An extraordinary gain of $0.9 million, net of related income taxes of $0.5
million, was recorded in August 1993 to adjust the estimated extraordinary loss
recorded in 1992.
(B) The Company adopted Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits," in the fourth quarter of
1993, effective January 1, 1993. As a result, the Company restated its results
for the first three quarters to reflect the cumulative effect of adoption of a
$13.9 million charge, net of taxes of $8.6 million, and the corresponding
effects on profit sharing and minority interest.
72
<PAGE> 66
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Manville Corporation 1994 Annual Report
(C) The fourth quarter 1993 income from operations includes a restructuring
charge of $30.7 million. This includes a $25 million charge by Riverwood for
the writedown of assets and provisions for severance, relocation and related
costs to restructure and consolidate certain operations and infrastructure
levels, partially offset by a $17 million gain on Riverwood's sale of
nonstrategic timberlands. In addition, Schuller recorded $22.4 million of
restructuring charges related to sampling, inspection and remediation expenses
associated with its former phenolic roofing insulation business, severance
costs, and costs associated with the disposition of Schuller's residential
roofing business.
(D) Earnings (loss) per share amounts were computed on a weighted average
number of shares outstanding basis and were calculated after the deduction for
preference stock dividends/accretion. Refer to Note 16 in the Consolidated
Financial Statements for discussion of the earnings (loss) per common share
computation.
73
<PAGE> 67
CONSOLIDATING BALANCE SHEET
Manville Corporation 1994 Annual Report
<TABLE>
<CAPTION>
December 31, 1994
(In thousands of dollars)
-------------------------------------------------------------
Riverwood Schuller Manville Consolidated
International International Holding Manville
ASSETS Corporation Group, Inc. Company Corporation
------------ ------------- -------- ------------
<S> <C> <C> <C> <C>
Current Assets
Cash and equivalents $ 117,712 $ 93,428 $110,863 $ 322,003
Marketable securities, at cost which
approximates market 2,630 5,652 12,029 20,311
Receivables 145,393 189,517 862 335,772
Inventories 156,180 56,594 212,774
Prepaid expenses 20,576 6,398 1,041 28,015
Deferred tax assets 13,845 29,416 1,593 44,854
Receivable from (payable to) affiliates 7,472 (7,472)
---------- ---------- -------- -----------
Total Current Assets 456,336 388,477 118,916 963,729
---------- ---------- -------- -----------
Property, Plant and Equipment, at cost
Land and improvements 52,121 40,813 899 93,833
Buildings 152,555 198,691 351,246
Machinery and equipment 1,359,193 979,859 2,593 2,341,645
---------- ---------- -------- -----------
1,563,869 1,219,363 3,492 2,786,724
Less accumulated depreciation and depletion 408,542 553,283 1,778 963,603
---------- ---------- -------- -----------
1,155,327 666,080 1,714 1,823,121
Timber and timberlands, less cost of
timber harvested 240,436 240,436
---------- ---------- -------- -----------
Property, Plant and Equipment, net 1,395,763 666,080 1,714 2,063,557
---------- ---------- -------- -----------
Deferred Tax Assets 3,782 7,843 270,249 281,874
Other Assets 246,411 184,650 59,390 490,451
Receivable from (Payable to) Affiliates 15,598 (15,598)
---------- ---------- -------- -----------
Total Assets $2,102,292 $1,262,648 $434,671 $3,799,611
========== ========== ======== ==========
</TABLE>
Note: Manville holding company includes consolidating and eliminating entries.
74
<PAGE> 68
CONSOLIDATING BALANCE SHEET
Manville Corporation 1994 Annual Report
<TABLE>
<CAPTION>
December 31, 1994
(In thousands of dollars)
----------------------------------------------------------------
Riverwood Schuller Manville Consolidated
International International Holding Manville
LIABILITIES Corporation Group, Inc. Company Corporation
------------- ------------- --------- ------------
<S> <C> <C> <C> <C>
Current Liabilities
Short-term debt $ 92,421 $ 525 $ 1,708 $ 94,654
Accounts payable 109,479 90,526 851 200,856
Compensation and employee benefits 53,321 96,762 7,491 157,574
Income taxes 17,598 9,717 1,424 28,739
Other accrued liabilities 50,558 60,342 19,848 130,748
Payable to (receivable from) affiliates 25,000 (25,000)
---------- ---------- --------- ----------
Total Current Liabilities 323,377 282,872 6,322 612,571
Long-Term Debt, less current portion 982,197 403,475 38,323 1,423,995
Long-Term Debt Payable to (Receivable from)
Affiliates 12,573 (12,573)
Deferred Income Taxes 211,656 35,688 (155,955) 91,389
Postretirement Benefits Other Than Pensions 34,383 208,293 1,310 243,986
Other Noncurrent Liabilities 21,855 224,380 22,354 268,589
---------- ---------- --------- ----------
Total Liabilities 1,586,041 1,154,708 (100,219) 2,640,530
---------- ---------- --------- ----------
Profit Sharing Obligation
Commitments and Contingencies
Minority Interest in Consolidated Subsidiary 95,610 95,610
STOCKHOLDERS' EQUITY ---------- ---------- --------- ----------
Cumulative Preference Stock, Series B 178,638 178,638
Common Stock 655 573 1,228
Treasury Stock (407) (407)
Capital in Excess of Par Value 523,830 57,082 430,398 1,011,310
Unearned Restricted Stock Compensation (6,013) (6,013)
Retained Earnings (Accumulated Deficit) 10,277 24,439 (165,110) (130,394)
Pension Liability Adjustment (435) (435)
Cumulative Currency Translation Adjustment (18,511) 26,419 1,636 9,544
---------- ---------- --------- ----------
Total Stockholders' Equity 516,251 107,940 439,280 1,063,471
---------- ---------- --------- ----------
Total Liabilities and Stockholders' Equity $2,102,292 $1,262,648 $ 434,671 $3,799,611
========== ========== ========= ==========
</TABLE>
Note: Manville holding company includes consolidating and eliminating entries.
75
<PAGE> 69
CONSOLIDATING STATEMENT OF INCOME
Manville Corporation 1994 Annual Report
<TABLE>
<CAPTION>
For the Year Ended December 31, 1994
(In thousands of dollars)
----------------------------------------------------------------
Riverwood Schuller Manville Consolidated
International International Holding Manville
Corporation Group, Inc. Company Corporation
------------- ------------- -------- ------------
<S> <C> <C> <C> <C>
Net Sales $1,282,788 $1,277,818 $ (263) $2,560,343
Cost of Sales 995,238 935,951 (263) 1,930,926
Selling, General and Administrative 132,375 131,068 17,729 281,172
Research, Development and Engineering 9,356 29,670 68 39,094
Other Income (Loss), net 8,368 (22,171) 1,138 (12,665)
---------- ---------- -------- ----------
Income (Loss) from Operations 154,187 158,958 (16,659) 296,486
Gain on Sale of Equity Investment 13,455 13,455
Interest Income 3,493 4,433 2,781 10,707
Interest Expense 93,243 19,585 28,156 140,984
Profit Sharing Expense 18,259 18,259
---------- ---------- -------- ----------
Income (Loss) before Income Taxes 64,437 143,806 (46,838) 161,405
Income Tax Expense (Benefit) 54,188 63,503 (22,141) 95,550
---------- ---------- -------- ----------
Income (Loss) before Minority Interest
and Extraordinary Item 10,249 80,303 (24,697) 65,855
Minority Interest in Consolidated Subsidiary (439) (439)
---------- ---------- -------- ----------
Income (Loss) before Extraordinary Item 10,249 80,303 (25,136) 65,416
Extraordinary Gain (Loss) on Early
Extinguishments of Debt, net of tax (7,872) (20,548) (28,420)
---------- ---------- -------- ----------
Net Income (Loss) 2,377 80,303 (45,684) 36,996
Preference Stock Dividends (24,923) (24,923)
---------- ---------- -------- ----------
Net Income (Loss) Applicable to Common Stock $ 2,377 $ 80,303 $(70,607) $ 12,073
========== ========== ======== ==========
</TABLE>
Note: Manville holding company includes consolidating and eliminating entries.
76
<PAGE> 70
CONSOLIDATING STATEMENT OF CASH FLOWS
Manville Corporation 1994 Annual Report
<TABLE>
<CAPTION>
For the Year Ended December 31, 1994
(In thousands of dollars)
----------------------------------------------------------------
Riverwood Schuller Manville Consolidated
International International Holding Manville
Corporation Group, Inc. Company Corporation
------------- ------------- -------- ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) (before Preference Stock
Dividends) $ 2,377 $ 80,303 $(45,684) $ 36,996
Non-cash items included in net income:
Depreciation, depletion and amortization 95,004 58,411 931 154,346
Deferred taxes 34,172 14,993 23,639 72,804
Roofing guarantee income 7,857 7,857
Provision for furnace rebuilds 8,657 8,657
Pension and postretirement benefits expense 1,952 21,274 1,373 24,599
Translation loss 7,609 7,609
Net gain on sale of assets (9,409) (15,573) (24,982)
Interest expense 30,812 30,812
Profit sharing expense 18,259 18,259
Minority interest in net income of
consolidated subsidiary 439 439
Extraordinary (gain) loss on early
extinguishments of debt, net of tax 20,548 20,548
Other, net 3,196 5,215 (2,764) 5,647
Profit sharing paid (12,933) (12,933)
Debt issuance cost (4,997) (4,997)
(Increase) decrease in current assets:
Receivables (31,353) (22,871) (257) (54,481)
Inventories (15,040) 6,099 (8,941)
Prepaid expenses (591) (1,079) 1,302 (368)
Increase (decrease) in current liabilities:
Accounts payable 20,822 15,645 21,885 58,352
Compensation and employee benefits 22,950 2,994 (107) 25,837
Income taxes 722 2,703 (13,819) (10,394)
Other accrued liabilities 787 (9,406) 8,175 (444)
Decrease in postretirement benefits other than
pensions (24,981) (596) (25,577)
Increase (decrease) in other noncurrent liabilities (10,749) (23,506) 908 (33,347)
--------- -------- -------- ---------
Net cash provided by operating activities 117,452 142,308 36,538 296,298
--------- -------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (232,472) (73,712) (183) (306,367)
Proceeds from sales of assets 134,180 7,745 25,542 167,467
Acquisitions (20,819) (20,819)
Purchases of held-to-maturity marketable securities (34,948) (5,514) (52,685) (93,147)
Proceeds from sale of held-to-maturity
marketable securities 90,147 7,934 47,739 145,820
Proceeds from sale of available-for-sale
marketable securities 2,077 2,077
(Increase) decrease in other assets (23,177) (17,543) 13,588 (27,132)
(Increase) decrease in receivables from
affiliates (2,332) 2,332
--------- -------- -------- ---------
Net cash provided by (used in) investing activities (87,089) (81,345) 36,333 (132,101)
--------- -------- -------- ---------
</TABLE>
Continued on page 78.
77
<PAGE> 71
CONSOLIDATING STATEMENT OF CASH FLOWS
Manville Corporation 1994 Annual Report
<TABLE>
<CAPTION>
For the Year Ended December 31, 1994
(In thousands of dollars)
----------------------------------------------------------------
Riverwood Schuller Manville Consolidated
International International Holding Manville
Corporation Group, Inc. Company Corporation
------------- ------------- -------- ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of debt - external $ 300,213 $ 8,707 $ 22,099 $ 331,019
Issuance of debt - affiliates 30,338 (30,338)
Payments on debt - external (290,369) (11,277) (1,673) (303,319)
Payments on debt - affiliates (20,000) 20,000
Dividends on Preference Stock (22,845) (22,845)
Dividends on Common Stock (10,481) 10,481
Dividends to minority stockholders of
consolidated subsidiary (1,937) (1,937)
Other stock transactions 619 132 751
--------- -------- -------- ---------
Net cash provided by (used in) financing activities (18) 7,768 (4,081) 3,669
--------- -------- -------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,364 (320) 1,044
--------- -------- -------- ---------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 31,709 68,411 68,790 168,910
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 86,003 25,017 42,073 153,093
--------- -------- -------- ---------
CASH AND EQUIVALENTS AT END OF YEAR $ 117,712 $ 93,428 $110,863 $ 322,003
========= ======== ======== =========
</TABLE>
Note: Manville holding company includes consolidating and eliminating entries.
78
<PAGE> 1
EXHIBIT 21.
SUBSIDIARIES OF THE REGISTRANT
Direct and indirect subsidiaries of Manville and the jurisdiction in
which each company was incorporated are listed below. Certain companies not
important to an understanding of Manville's businesses have been omitted and
which, if aggregated, would not constitute a significant subsidiary.
<TABLE>
<CAPTION>
JURISDICTION OF
SUBSIDIARY INCORPORATION
---------- ---------------
<S> <C>
AGROK AGRO-FLORESTAL LTDA. --Brazil
CREACOM S.A. --France
DANAPAK RIVERWOOD MULTIPACK A/S --Denmark
ENTERPRISE MAILLET S.A.R.L. --France
EUROPEAN OVERSEAS CORPORATION --Delaware
FADEC S.A.R.L. --France
FINANCIERE DE DEVELOPPEMENT S.A. --France
FISKEBY BOARD AB --Sweden
FISKEBY BOARD A/S --Denmark
FISKEBY BOARD LTD. --United Kingdom
GFE IMPORT-EXPORT G.m.b.H. --Germany
IACP, INC. --Delaware
IGARAS AGRO-FLORESTAL LTDA. --Brazil
IGARAS PAPEIS E EMBALAGENS S.A. --Brazil
IMPREMERIE GENERALE S.A. --France
JOHNS-MANVILLE INDIA LIMITED --Delaware
LEMAIRE S.A. --France
MANVILLE JAPAN K.K. --Japan
MANVILLE MEXICANA S.A. DE C.V. --Mexico
MANVILLE MINING COMPANY --Delaware
NEW MATERIALS LTD. --United Kingdom
OUACHITA MACHINE WORKS --United States
PAPELOK S.A. INDUSTRIA E COMERCIO --Brazil
PINE PIPELINE, INC. --Louisiana
RENGO RIVERWOOD PACKAGING LTD. --Japan
RIVERWOOD CARTONS PTY. LTD. --Australia
RIVERWOOD DO BRASIL LTDA. --Brazil
RIVERWOOD ENERGY RESOURCES, INC. --Delaware
RIVERWOOD ESPANA S.A. --Spain
RIVERWOOD INTERNATIONAL ASIA PTE LTD. --Singapore
RIVERWOOD INTERNATIONAL B.V. --Netherlands
RIVERWOOD INTERNATIONAL CANADA INC. --Canada
RIVERWOOD INTERNATIONAL CORPORATION --Delaware
RIVERWOOD INTERNATIONAL (CYPRUS) LIMITED --Cyprus
RIVERWOOD INTERNATIONAL ENTERPRISES, INC. --Delaware
RIVERWOOD INTERNATIONAL JAPAN K.K. --Japan
RIVERWOOD INTERNATIONAL LIMITED --United Kingdom
RIVERWOOD INTERNATIONAL MACHINERY, INC. --Delaware
RIVERWOOD INTERNATIONAL MEXICANA, S. DE R.L. DE C.V. --Mexico
RIVERWOOD INTERNATIONAL PACKAGING, ASIA PACIFIC, LIMITED --Hong Kong
RIVERWOOD INTERNATIONAL, S.A. --France
RIVERWOOD INTERNATIONAL S.p.A. --Italy
RIVERWOOD INTERNATIONAL USA, INC. --Delaware
RIVERWOOD MEHRSTCCKVERPACKUNG G.m.b.H. --Germany
RIVERWOOD PACKAGING SYSTEMS PTY LTD. --Australia
RIVERWOOD RENGO MACHINERY LIMITED --Japan
ROCKY MOUNTAIN INTERNATIONAL INSURANCE LTD. --Bermuda
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
JURISDICTION OF
SUBSIDIARY INCORPORATION
---------- ---------------
<S> <C>
SCHULLER FUNDING CORPORATION --Delaware
SCHULLER G.m.b.H. --Germany
SCHULLER INTERNATIONAL B.V. --Netherlands
SCHULLER INTERNATIONAL, INC. --Delaware
SCHULLER INTERNATIONAL GROUP, INC. --Delaware
SCHULLER INTERNATIONAL JAPAN Y.K. --Japan
SCHULLER U.K. LTD. --United Kingdom
SCHULLER INTERNATIONAL CANADA INC. --Canada
SEVENTEENTH STREET REALTY, INC. --Colorado
SLEVIN SOUTH COMPANY --Arkansas
TERMOACUSTICOS S.A. DE C.V. --Mexico
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Manville Corporation on Form S-8 (File No. 33-29389) and Form S-3 (File No.
33-43912) of our report dated February 6, 1995, on our audits of the
consolidated financials statements and financial statement schedules of
Manville Corporation as of December 31, 1994 and 1993, and for the years ended
December 31, 1994, 1993, and 1992, which report is included in this Annual
Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Denver, Colorado
March 30, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the December
31, 1994 Form 10-K of Manville Corporation and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 322,003
<SECURITIES> 20,311
<RECEIVABLES> 330,856
<ALLOWANCES> 7,527
<INVENTORY> 212,774
<CURRENT-ASSETS> 963,729
<PP&E> 2,786,724
<DEPRECIATION> 963,603
<TOTAL-ASSETS> 3,799,611
<CURRENT-LIABILITIES> 612,571
<BONDS> 1,423,995
<COMMON> 1,228
0
178,638
<OTHER-SE> 883,605
<TOTAL-LIABILITY-AND-EQUITY> 3,799,611
<SALES> 2,560,343
<TOTAL-REVENUES> 2,560,343
<CGS> 1,930,926
<TOTAL-COSTS> 1,930,926
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,500
<INTEREST-EXPENSE> 140,984
<INCOME-PRETAX> 161,405
<INCOME-TAX> 95,550
<INCOME-CONTINUING> 65,855
<DISCONTINUED> 0
<EXTRAORDINARY> (28,420)
<CHANGES> 0
<NET-INCOME> 36,996
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
