<PAGE>
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 Commission File Number
December 31, 1995 1-7107
LOUISIANA-PACIFIC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 93-0609074
(State of Incorporation) (I.R.S. Employer
Identification No.)
111 S.W. Fifth Avenue Registrant's telephone number
Portland, Oregon 97204 (including area code)
(Address of principal 503-221-0800
executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
-------------------------
Common Stock, $1 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
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 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. [X]
State the aggregate market value of the voting stock held by nonaffiliates of
the registrant: $2,506,065,138 as of March 14, 1996.
Indicate the number of shares outstanding of each of the registrant's classes
of common stock: 108,584,031 shares of Common Stock, $1 par value,
outstanding as of March 14, 1996.
Documents Incorporated by Reference
Definitive Proxy Statement for 1996 Annual Meeting: Part III
<PAGE>
PART I
ITEM 1. Business
General
Louisiana-Pacific Corporation, a Delaware corporation, is a major forest
products firm headquartered in Portland, Oregon. It manufactures lumber,
pulp, structural and other panel products, hardwood veneers, windows and
doors, and cellulose insulation. It operates 114 facilities throughout the
United States, Mexico, Canada, and Ireland. It has approximately
13,000 employees. It distributes its products primarily through distributors
and home centers, and to a minor extent through its own distribution centers.
The business of Louisiana-Pacific Corporation and its wholly owned
subsidiaries (except when the context otherwise requires, hereinafter referred
to collectively as "the registrant" or "L-P") is generally divided into two
industry segments: building products and pulp. For 1995, building products
accounted for approximately 88 percent of the registrant's gross sales
revenues, compared to approximately 12 percent for pulp.
Building Products
Panel Products. The registrant manufactures plywood and a variety of
reconstituted panel products, including oriented strand board ("OSB") and such
other panel products as industrial particleboard, medium density fiberboard,
and hardboard. In recent years, the registrant has emphasized development and
expansion of its reconstituted panel product lines. While such products
accounted for 15 percent of the registrant's sales in 1985, they comprised
34 percent of its sales in 1995.
The largest consumption of panel products is for structural uses in
building and remodeling such as subfloors, walls, and roofs. The total
structural panel market in the United States (plywood, OSB and other
waferboards) is approximately 27 billion square feet annually, of which
plywood currently constitutes about 18 billion square feet. In recent years,
environmental pressure on timber harvesting, especially in the West, has
resulted in reduced supplies and higher costs, causing many plywood mills to
close permanently. The lost volume from those closed mills has been replaced
by reconstituted structural panel products.
The registrant is the largest North American producer of OSB through
17 OSB plants with an aggregate annual capacity of approximately
3.7 billion square feet. The registrant plans to open three North American
and one overseas OSB plants in 1996. Approximately 40 percent of the
registrant's 1995 sales volume in this category came from higher margin
specialty products such as tongue and groove subflooring, siding, and soffit.
The registrant operates seven plywood plants in the South with a combined
annual capacity of 1.5 billion square feet.
The registrant's other reconstituted panel products--industrial
particleboard, medium density fiberboard, and hardboard--produced at a total
of seven plants, are used primarily in the manufacture of furniture and
cabinets.
Lumber. The registrant is among the largest producers of lumber in the
United States. The registrant has 14 Western (whitewood and redwood) sawmills
(plus one additional mill to open in 1996) with an annual production capacity
of 1.1 billion board feet ("BBF"), while its 18 Southern sawmills have an
annual production capacity of .6 BBF. Lumber represented 23 percent of the
registrant's sales revenue in 1995, down from 42 percent in 1985. The
registrant's sawmills produce a variety of standard U.S. dimension lumber as
well as specialty grades and sizes, primarily for the North American home
building market. A sawmill in Ketchikan, Alaska, produces lumber for export
in the traditional sizes used in the Japanese building industry, but has the
capability of switching to standard U.S. dimensions. The registrant also
operates three fingerjoint plants which produce dimension lumber from low
grade and short pieces of lumber.
Other Building Products. The registrant's fiber gypsum wallboard, known
as FiberBond(TM), is made from gypsum and waste paper and has improved
capabilities over standard gypsum wallboard. Other FiberBond(TM) products
include fire retardant sheathing and underlayment. The registrant's fiber
gypsum plant has a production capacity of 80 million square feet annually.
Seven plants in Ohio and one in California manufacture windows and doors.
The registrant produces various hardwood veneers at a plant in Wisconsin
with both rotary and sliced manufacturing processes. These veneers are sold
to customers who overlay the veneers on other materials for use in paneling,
furniture and cabinets. The registrant also operates a softwood veneer plant
in Canada pursuant to a joint venture agreement.
The registrant has three engineered I-joist plants located in California,
Nevada, and North Carolina. OSB is cut into sections and used as the web for
the I-joists.
The registrant also produces laminated veneer lumber ("LVL") in North
Carolina and Nevada. LVL is a high-grade structural product used where extra
strength is required. It is also used as the flange material in I-joists.
Two plants produce cellulose residential insulation from recycled
newspaper under the name Nature Guard(TM). This insulation has a higher
R-value than comparable thicknesses of conventional fiberglass insulation.
Pulp
The registrant has three pulp mills located in Ketchikan, Alaska, Samoa,
California, and Chetwynd, British Columbia, Canada, with a total annual
capacity of approximately 580 thousand short tons. The Chetwynd mill utilizes
a state-of-the-art mechanical pulping process and a zero effluent discharge
system to produce 100 percent aspen pulp. The Samoa mill produces bleached
and unbleached kraft pulp by a chlorine-free process, thereby eliminating
dioxins. The Ketchikan mill produces dissolving pulp used in a variety of
manufacturing processes.
Competition
The registrant competes internationally with several thousand forest
products firms, ranging from very large, fully integrated firms to smaller
firms that may manufacture only one or a few items. The registrant estimates
that approximately 25 forest products firms comprise its major competition.
The registrant also competes less directly with firms that manufacture
substitutes for wood building products. A majority of the products
manufactured by the registrant, including lumber, structural panels, and pulp,
are commodity products sold primarily on the basis of price in competition
with numerous other forest products companies.
The registrant has introduced a number of new value-enhanced products to
complement its traditional lumber and panel products, such as OSB panels,
siding, soffit, and flooring. These innovative products are made from
abundant smaller-diameter and affordably priced tree species, as well as
treetops and mill shavings. Such trees have generally not been the target of
environmentalist pressure, which has seriously restricted wood supplies for
much of the industry, especially in the West. Similarly, the registrant's new
fiber gypsum and cellulose insulation products utilize wood fiber from waste
paper. The registrant believes development of these products gives it a
competitive advantage through lower and more predictable supply costs,
resulting in higher profit margins.
Environmental Compliance
The registrant is subject to federal, state and local pollution control
laws and regulations in all areas in which it has operating facilities. The
registrant maintains an accounting reserve for environmental loss
contingencies. From time to time, the registrant undertakes construction
projects for environmental control facilities or incurs other environmental
costs that extend an asset's useful life, improve efficiency, or improve the
marketability of certain properties.
The registrant's policy is to comply fully with all applicable
environmental laws and regulations. In recent years, the registrant has
devoted increasing financial and management resources to achieving this goal.
As part of its efforts to ensure environmental compliance, the registrant
conducts regular internal environmental assessments. From time to time, the
registrant becomes aware of violations of applicable laws or regulations. In
those instances, the registrant's policy is to bring its operations promptly
into full compliance with applicable environmental laws and regulations. The
registrant is not aware of any instances in which its current operations are
not in compliance with applicable environmental laws and regulations that
would be expected to have a material adverse effect on the registrant.
Additional information concerning environmental compliance is set forth
under Item 3, Legal Proceedings and Item 8, Notes to Financial Statements.
Additional Statistical Information
Additional information regarding the business of the registrant,
including segment information, production volumes, and industry product price
trends, is presented in the following tables labeled "Sales and Operating
Profit by Major Product Group," "Summary of Production Volumes," "Industry
Product Price Trends," and "Logs by Source." Additional financial information
about industry segments is presented in the table labeled "Industry Segment
Information" located within Part II, Item 8, Notes to Financial Statements.
Reference is made to Item 2 for additional information as to sources and
availability of raw materials and the locations of the registrant's
manufacturing facilities.
<PAGE>
<TABLE>
<CAPTION>
Louisiana-Pacific Corporation and Subsidiaries
PRODUCT INFORMATION SUMMARY
SEE ADDITIONAL INFORMATION REGARDING INDUSTRY SEGMENTS IN NOTES TO FINANCIAL STATEMENTS.
YEAR ENDED DECEMBER 31 (DOLLAR AMOUNTS IN MILLIONS)
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SALES AND PROFIT BY MAJOR PRODUCT GROUP
- ---------------------------------------
Sales: Structural panel products $1,127 39% $1,208 40% $1,005 40% $ 888 41% $ 600 35%
Sales: Lumber 644 23 867 28 816 33 653 30 526 31
Industrial panel products 215 8 240 8 194 8 150 7 146 9
Other building products 523 18 505 17 411 16 309 14 260 15
------ ---- ------ --- ------ ---- ----- --- ------ ---
Building products 2,509 88 2,820 93 2,426 97 2,000 92 1,532 90
Pulp 334 12 220 7 85 3 185 8 170 10
------ ---- ------ --- ------ ---- ----- --- ------ ---
Total sales $2,843 100% $3,040 100% $2,511 100% $2,185 100% $1,702 100%
====== ==== ====== === ====== ==== ====== === ====== ===
Export sales (included above) $ 457 16% $ 371 12% $ 252 10% $ 339 16% $ 315 19%
====== ==== ====== === ====== ==== ====== === ====== ===
Profit: Building products $ 346 $ 636 $ 562 $ 364 $ 139
Pulp 44 (5) (59) (20) (3)
Settlement charge and other
unusual items, net(1) (367) --- --- --- ---
Unallocated expense, net (121) (72) (70) (47) (30)
Interest, net 3 1 (5) (14) (19)
------ ------ ------ ----- ------
Income (loss) before taxes(2),
minority interest and
accounting changes $ (95) $ 560 $ 428 $ 283 $ 87
====== ====== ====== ====== ======
SUMMARY OF PRODUCTION VOLUMES(3)
- --------------------------------
Inner-Seal/OSB, square feet 3/8" basis 3,445 94% 3,404 97% 3,100 100% 2,850 101% 2,481 81%
Softwood plywood, square feet 3/8"basis 1,466 90 1,604 106 1,507 105 1,405 80 1,318 75
Lumber 1,359 56 1,986 86 1,796 87 1,850 71 1,838 69
Particleboard, square feet 3/4" basis 339 94 371 106 359 106 335 93 324 91
Medium density fiberboard,
square feet 3/4" basis 208 93 234 106 206 93 160 97 164 99
Hardboard, square feet 1/8" basis 212 97 216 103 191 91 201 93 201 100
Hardwood veneer, square feet
surface measure 232 93 281 110 260 108 252 89 229 80
Pulp, short tons (thousands) 486 81 441 72 224 37 459 72 365 80
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INDUSTRY PRODUCT PRICE TRENDS(4)
- --------------------------------
OSB, MSF, 7/16" -- 24/16 span
rating (North Central price) $245 $265 $236 $217 $148
Southern pine plywood,
MSF, 1/2" CDX (3 ply) 303 302 282 248 191
Framing lumber, composite prices, MBF 337 405 394 287 236
Industrial particleboard, 3/4" basis, MSF 290 295 258 200 198
Bleached softwood sulfate pulp,
short ton(5) 761 515 418 509 519
LOGS BY SOURCE(6)
- -----------------
Fee owned lands 13% 11% 12% 14% 15%
Private cutting contracts 12 14 15 15 15
Government contracts 9 8 10 12 17
Purchased logs 66 67 63 59 53
Total log volume -- million board feet 2,818 3,138 2,940 2,856 2,641
__________________________
(1) In the third quarter of 1995, L-P recorded a charge of $366.6 million ($221.8 million after taxes or $2.07 per share)
related to class action settlements concerning the company's siding product, severance charges and asset write-downs.
This amount would be primarily allocated to building products.
(2) Does not include cumulative effects of accounting changes in 1993, extraordinary gains in 1988 and 1986 or
discontinued operations in 1986 through 1988.
(3) Volume amounts stated in millions (except pulp) and as a percent of normal capacity.
(4) Prices represent yearly averages stated in dollars per thousand board feet (MBF), thousand square feet (MSF) or short
ton.
(5) Discounting sometimes occurs from the published price.
(6) Stated as a percent of total log volume.
See additional information regarding industry segments in Notes to Financial Statements.
</TABLE>
<PAGE>
ITEM 2. Properties
The following tables list the principal facilities of the registrant and
its subsidiaries. Information on production capacities reflects normal
operating rates and normal production mixes under current market conditions,
taking into account known constraints such as log supply. Unless otherwise
noted, capacities are in millions of units.
PLANT CAPACITIES AT DECEMBER 31, 1995
-------------------------------------
SAWMILLS Metric 1) Normal 2)
(Board feet, 2 shifts, 5 days; *1 shift, 5 days) Capacities Capacities
WESTERN LUMBER (15 plants)
Annette, AK 112 70
Belgrade, MT 148 90
Big Lagoon, CA 33 20*
Chilco, ID 148 90
Deer Lodge, MT (3 shifts) 114 70
Fort Bragg, CA 114 70
Ketchikan, AK 98 60
Moyie Springs, ID 163 100
Pilot Rock, OR (3 shifts) 112 70
Samoa, CA 163 100
Sandpoint, ID (remanufacturing) --- ---
Saratoga, WY 148 90
Sundre, AB, Canada 106 65
Tacoma, WA 98 60
Ukiah, CA (1st Qtr. 96 start-up) 195 120
SOUTHERN LUMBER (18 plants)
Bernice, LA 57 35*
Bon Wier, TX 33 20*
Carthage, TX 73 45*
Cleveland, TX 65 40*
Eatonton, GA 49 30*
Evergreen, AL 49 30*
Hattiesburg, MS 57 35*
Henderson, NC 65 40*
Jasper, TX 82 50*
Kountze, TX 24 15*
Lockhart, AL 33 20*
Marianna, FL 41 25*
New Waverly, TX 147 90*
Philadelphia, MS 49 30*
Pittsboro, NC 16 10*
Statesboro, GA 41 25*
Trinity, TX 8 5*
Westbay, FL 41 25*
----- -----
Total Lumber Capacity (33 plants) 2,682 1,645
===== =====
<PAGE>
<TABLE>
<CAPTION>
PLANT CAPACITIES AT DECEMBER 31, 1995
-------------------------------------
<S> <C> <C>
PANEL PRODUCTS PLANTS Metric 1) Normal 2)
SOFTWOOD PLYWOOD PLANTS Capacities Capacities
(3/8-inch basis, square feet, 2 shifts, 5 days)
Bon Wier, TX 213 240
Cleveland, TX 231 260
Jasper, TX 133 150
Logansport, LA 195 220
Lufkin, TX 155 175
New Waverly, TX 222 250
Urania, LA 213 240
----- -----
Total Softwood Plywood Capacity (7 plants) 1,362 1,535
===== =====
ORIENTED STRAND BOARD PLANTS
(3/8-inch basis, square feet, 3 shifts,
7 days;* 2 shifts, 7 days)
Chilco, ID 133 150
Corrigan, TX 133 150
Dawson Creek, B.C. Canada 333 375
Dungannon, VA 111 125
Hanceville, AL 311 350
Hayward, WI (2 plants) 444 500
Houlton, ME 231 260
Jackson County, GA 289 325
Jasper, TX (3rd Qtr. 96 start-up) 333 375
Montrose, CO 129 145
Newberry, MI 111 125
New Waverly, TX 44 50*
Roxboro, NC (1st Qtr. 96 start-up) 333 375
Sagola, MI 311 350
Silsbee, TX 302 340
Swan Valley, MB, Canada (1st Qtr. 96 start-up) 400 450
Tomahawk, WI 133 150
Two Harbors, MN 120 135
Urania, LA 120 135*
Waterford, Ireland (1st Qtr. 96 start-up) 355 400
----- -----
Total OSB Capacity (21 plants) 4,676 5,265
===== =====
MEDIUM DENSITY FIBERBOARD PLANTS
(3/4-inch basis, square feet, 3 shifts, 7 days)
Eufaula, AL 229 130
Oroville, CA 88 50
Urania, LA 79 45
----- -----
Total Medium Density Fiberboard Capacity (3 plants) 396 225
===== =====
PARTICLEBOARD PLANTS
(3/4-inch basis, square feet, 3 shifts, 7 days)
Arcata, CA 221 125
Missoula, MT 274 155
Silsbee, TX 142 80
----- -----
Total Particleboard capacity (3 plants) 637 360
===== =====
HARDBOARD PLANT
(1/8-inch basis, square feet, 3 shifts, 7 days)
Oroville, CA 65 220
===== =====
</TABLE>
<PAGE>
PLANT CAPACITIES AT DECEMBER 31, 1995
-------------------------------------
OTHER BUILDING PRODUCTS
HARDWOOD VENEER PLANT Normal 2)
(Surface measure, square feet, 2 shifts, 5 days) Capacities
Mellen, WI (2 plants) 250
=====
SOFTWOOD VENEER PLANT
(Surface measure, square feet, 2 shifts, 5 days)
Strachan, AB, Canada 90
=====
WINDOW AND DOOR PLANTS (8 plants)
Norton, OH (windows and doors) 100,000
Norton, OH (2 plants) (aluminum extrusions in lbs.) 7,200,000
Orrville, OH (windows) 125,000
Ottawa, OH (windows and doors) 250,000
Sacramento, CA (windows) 45,000
Winesburg, OH (windows and doors) 180,000
Youngstown, OH (aluminum extrusions in lbs.) 5,000,000
I-JOIST PLANTS
(Linear feet; 1 shift, 5 days)
Fernley, NV 20
Wilmington, NC 20
Red Bluff, CA 20
-----
Total I-Joist Capacity (3 plants) 60
=====
LAMINATED VENEER LUMBER PLANTS
(Thousand cubic feet; 2 shifts, 7 days)
Fernley, NV 1,600
Wilmington, NC 2,300
-----
Total LVL Capacity (2 plants) 3,900
=====
FIBER GYPSUM PLANT
(1/2 inch basis, million sq. feet; 1 shift, 5 days)
Point Tupper, NS, Canada 80
=====
ENGINEERED WOOD PRODUCTS -- FINGERJOINT
(Board feet; 2 shifts, 5 days; *1 shift, 5 days)
Deer Lodge, MT 50
El Sauzal, Mexico 25
-----
Total Fingerjoint Capacity (2 plants) 75
=====
PULP MILLS Metric 1) Normal
2)
(Thousand Short Tons, 3 shifts, 7 days) Capacities
Capacities
Ketchikan, AK 165 180
Samoa, CA 210 230
Chetwynd, B.C. Canada 155 170
----- -----
Total Pulp Capacity (3 plants) 530 580
===== =====
OTHER MANUFACTURING FACILITIES (16 PLANTS)
Brick plant: El Sauzal, Mexico
Cellulose insulation plants: Bucyrus, Ohio
San Diego, California
Cement fiber shake: Red Bluff, CA
Chip mills: Cleveland and Moscow,
Texas
Insulated glass plant: Orrville, Ohio
Vinyl extrusion plant: Barberton, Ohio
Wood treating plants: Evergreen and Lockhart,
Alabama; Marianna,
Florida; Statesboro,
Georgia; New Waverly and
Silsbee, Texas; Ukiah,
California; Sundre, AB,
Canada
DISTRIBUTION CENTERS (8 LOCATIONS)
Calpella, California Dodge City, Kansas
Chino, California Rocklin, California
Conroe, Texas Salina, Kansas
Dallas, Texas Tulsa, Oklahoma
Total Facilities: 114
Note: The capacities above are based on normal operating rates and normal
production mixes. Market conditions, the availability of logs, and the
nature of current orders can cause actual production rates to vary
considerably from normal rates.
TIMBERLAND HOLDINGS
Hectares Acres
California: Whitewoods, Fir, Pine, Redwood 193,800 478,700
Idaho: Fir, Pine 16,600 41,000
Louisiana: Pine, Hardwoods 83,200 205,400
Minnesota: Hardwoods 12,200 30,100
North Carolina: Pine, Hardwoods 900 2,100
Oregon: Pine, Fir, Whitewoods 54,400 134,400
Texas: Pine, Hardwoods 282,700 698,200
Washington: Fir, Pine 200 400
Wisconsin: Hardwoods 900 2,100
Wyoming: Whitewoods 1,700 4,300
------- ---------
Total Fee 646,600 1,596,700
======= =========
__________________________
1) Metric capacities in thousand cubic meters
2) Normal capacities in millions of units unless otherwise noted.
In addition to its fee-owned timberlands, the registrant has timber
cutting rights, under long-term contracts (five years and over) on
approximately 119,700 acres and under contracts for shorter periods on
approximately 239,200 acres, on government and privately owned timberlands in
the vicinities of certain of its manufacturing facilities. Information
regarding the sources of the registrant's log requirements is located under
the table labeled "Logs by Source" in Item 1.
ITEM 3. Legal Proceedings
Environmental Proceedings
In March 1995, L-P's subsidiary Ketchikan Pulp Company (KPC) entered
into agreements with the federal government to resolve the issues related to
water and air compliance problems experienced at KPC's pulp mill during the
late 1980s and early 1990s. Under the agreements, KPC entered into a civil
consent decree and pled guilty to one felony and thirteen misdemeanor
violations of the Clean Water Act. The settlement required KPC to pay civil
and criminal penalties of $6.0 million, of which $1.75 million was suspended
in consideration of KPC's expenditures and ongoing efforts to improve its
operations. The penalties were substantially reserved for at December 31,
1994. KPC also agreed to undertake further expenditures, which are primarily
capital in nature, including certain remedial and pollution control related
measures, with an estimated cost of up to approximately $20 million. KPC has
also agreed to undertake a study of whether a clean-up of Ward Cove, the body
of water adjacent to the pulp mill, is needed. If the study determines that
such clean-up is needed, KPC may be required to spend up to $6 million on the
clean-up, including the cost of the study, as part of the overall $20 million
of expenditures. At this time, the company cannot estimate what portion, if
any, of the clean-up expenditures will be required.
The United States Department of Justice has stated its intention to seek
civil penalties from KPC based upon alleged violations of the Clean Air Act
involving a waste wood incinerator at KPC's Annette Island, Alaska, cant mill.
In March 1996, an information was filed in the United States District
Court for the Eastern District of Washington charging L-P with two misdemeanor
counts related to alleged record-keeping violations in connection with the
disposal by an independent contractor of transformers from a mill owned by
L-P.
See Notes to Financial Statements in Item 8 regarding reserves for
environmental loss contingencies.
Although L-P's policy is to comply with all applicable environmental
laws and regulations, the company has in the past been required to pay fines
for non-compliance and sometimes litigation has resulted from contested
environmental actions. Also, L-P is involved in other environmental actions
and proceedings which could result in fines or penalties. Management believes
that any fines, penalties or other losses resulting from the matters discussed
above in excess of the reserve for environmental loss contingencies will not
have a material adverse effect on the business, financial position or results
of operations of L-P. See "Colorado Criminal Proceedings" for further
discussion of an environmental action against the company.
Colorado Criminal Proceedings
L-P began an internal investigation at L-P's Montrose (Olathe),
Colorado, oriented strand board (OSB) plant of various matters, including
certain environmental matters, in the summer of 1992 and reported its initial
finding of irregularities to governmental authorities in September 1992.
Shortly thereafter, a federal grand jury commenced an investigation of L-P
concerning alleged environmental violations at that plant. In 1995, additional
subpoenas were issued requiring the production of evidence and testimony
relating to alleged fraud in connection with the submission of
unrepresentative OSB product samples to the APA-The Engineered Wood
Association (APA), an industry product certification agency, by L-P's Montrose
plant and certain of its other OSB plants. L-P then commenced an independent
investigation, which was concluded in 1995, under the direction of former
federal judge Charles B. Renfrew concerning irregularities in sampling and
quality assurance in its OSB operations. In June 1995, the grand jury returned
an indictment in the U.S. District Court in Denver, Colorado, against L-P, a
former manager of the Montrose mill, and a former superintendent at the mill.
L-P has been charged with 23 felony counts related to environmental matters at
the Montrose mill, including alleged conspiracy, tampering with opacity
monitoring equipment, and making false statements under the Clean Air Act. The
indictment also charges L-P with 25 felony counts of fraud relating to alleged
use of the APA trademark on OSB structural panel products produced by the
Montrose mill as a result of L-P's allegedly improper sampling practices in
connection with the APA quality assurance program.
In December 1995, L-P received a notice of suspension from the United
States Environmental Protection Agency ("EPA") stating that, because of
criminal proceedings pending against L-P in Colorado, agencies of the federal
government would be prohibited from purchasing from L-P's Northern Division.
Under recently revised regulations of the United States Department of
Agriculture, such action may also have the effect of prohibiting L-P's
Northern Division from purchasing timber from the United States Forest
Service. L-P is negotiating to have the EPA suspension lifted or modified
based on positive environmental programs actively underway. While
negotiations are continuing, the EPA has approved a preliminary agreement
limiting the prohibition to L-P's Montrose, Colorado, facility for a period of
six months in recognition of L-P's environmental compliance efforts.
At the present time, L-P cannot predict whether or to what extent these
circumstances will result in further civil litigation or investigation by
government authorities, or the potential financial impact of any such current
or future proceedings. However, the resolution of the above matters could have
a materially adverse impact on L-P.
OSB Siding Matters
L-P has been named as a defendant in at least 11 purported class actions
filed in various jurisdictions (most of which were filed in 1995), as well as
numerous non-class action proceedings, brought on behalf of various persons or
purported classes of persons (including nationwide classes) who own or have
purchased or used OSB siding manufactured by L-P, because of alleged unfair
business practices, breach of warranty, misrepresentation, conspiracy to
defraud, and other theories related to alleged defects, deterioration, or
failure of OSB siding products.
A settlement of one of the OSB siding class actions has been approved by
the Circuit Court for Lake County, Florida. Under the settlement, L-P has
established a claims procedure pursuant to which members of the settlement
class may report problems with L-P's OSB siding and have their properties
inspected by an independent adjuster, who will measure the amount of damage
and also determine the extent to which improper design, construction,
installation, finishing, painting, and maintenance may have contributed to any
damage. The maximum payment for damaged siding will be $3.40 per square foot
for lap siding and $2.82 per square foot for panel siding, subject to
reduction of up to 75 percent for damage resulting from improper design,
construction, installation, finishing, painting, or maintenance, and also
subject to reduction for age of siding more than three years old. L-P has
agreed with attorneys representing the class that if the national class
settlement described below is approved by the court in that case, then the age
deduction from the payment to a member of the Florida class will be not
greater than the age deduction computed for a similar claimant under the
national settlement agreement. Class members will be entitled to make claims
for up to five years after October 4, 1995.
On October 18, 1995, the United States District Court for the District
of Oregon gave preliminary approval to a settlement agreement between L-P and
attorneys representing a nationwide class composed of all persons who own, who
have owned, or who subsequently acquire property on which L-P's OSB siding is
installed prior to January 1, 1996, excluding persons who timely opt out of
the settlement and persons who are members of the settlement class in the
Florida litigation. Under the settlement agreement, an eligible claimant whose
claim is filed prior to January 1, 2003 (or earlier in certain cases), and is
approved by an independent claims administrator will be entitled to receive
from the settlement fund established under the agreement a payment equal to
the replacement cost (to be determined by a third-party construction cost
estimator) of damaged siding, reduced by a specific adjustment (of up to 65
percent) based on the age of the siding. Class members who have previously
submitted or resolved claims under any other warranty or claims program of L-P
may be entitled to receive the difference between the amount which would be
payable under the settlement agreement and the amount previously paid.
Independent adjusters will determine the extent of damage to OSB siding at
each claimant's property. There will be no adjustment to settlement payments
for improper maintenance or installation.
L-P will be required to pay $275 million into the settlement fund in
seven annual installments beginning in mid-1996: $100 million, $55 million,
$40 million, $30 million, $20 million, $15 million, and $15 million. If at any
time after the fourth year of the settlement period the amount of approved
claims (paid and pending) equals or exceeds $275 million, then the settlement
agreement will terminate as to all claims in excess of $275 million unless L-P
timely elects to provide additional funding within 12 months equal to the
lesser of (i) the excess of unfunded claims over $275 million or (ii)
$50 million and, if necessary to satisfy unfunded claims, a second payment
within 24 months equal to the lesser of (i) the remaining unfunded amount or
(ii) $50 million. If the total payments to the settlement fund are
insufficient to satisfy in full all approved claims filed prior to January 1,
2003, then L-P may elect to satisfy the unfunded claims by making additional
payments into the settlement fund at the end of each of the next two 12-month
periods or until all claims are paid in full, with each additional payment
being in an amount equal to the greater of (i) 50 percent of the aggregate sum
of all remaining unfunded approved claims or (ii) 100 percent of the aggregate
amount of unfunded approved claims, up to a maximum of $50 million. If L-P
fails to make any such additional payment, all class members whose claims
remain unsatisfied from the settlement fund may pursue any available legal
remedies against L-P without regard to the release of claims provided in the
settlement agreement. If L-P makes all payments required under the settlement
agreement, including all additional payments as specified above, class members
will be deemed to have released L-P from all claims for damaged OSB siding,
including without limitation, claims arising under their existing 25-year
limited warranty. In the event all claims filed prior to January 1, 2003, that
are approved have been paid without exhausting the settlement fund, any
amounts remaining in the settlement fund revert to L-P.
The settlement agreement is subject to final approval by the court at a
fairness hearing presently scheduled to be held in April 1996. Potential
members of the settlement class may elect to opt out of the settlement class
within specified times prior to the court's fairness hearing, subject to L-P's
right to withdraw from the settlement if there are excessive elections to opt
out.
During 1995, the Attorneys General of the states of Florida, Oregon, and
Washington initiated separate proceedings concerning production, testing,
marketing, and performance of L-P's OSB siding and other attorneys general
have also made inquiries concerning the same topics. In January 1996, L-P
entered into settlement agreements with the Attorneys General of the states of
Oregon and Washington. Under the settlement agreements, L-P did not admit any
wrongdoing, but agreed to pay $1 million to the Wood Materials and Engineering
Research Activities of Washington State University, $.5 million to the Oregon
Consumer Protection and Education Revolving Account, plus a civil penalty and
costs of $.4 million. The settlement agreements also obligate L-P to ensure
that marketing claims may be appropriately substantiated. L-P is also engaged
in settlement discussions with the Attorney General of the State of Florida.
L-P maintains reserves for these siding settlements. See Notes to
Financial Statements.
Other OSB Matters
In July 1995, an action entitled MacDonald v. Louisiana-Pacific
Corporation was filed in Superior Court for the State of California for the
County of San Diego, purporting to be a consumer action brought on behalf of
the general public in California. The action alleges that L-P violated the
California Unfair Business Practices Act through allegedly fraudulent APA
certification, quality sampling, advertising, and marketing of OSB products.
The complaint seeks, among other relief, restitution to members of the public
who purchased L-P's OSB products, return of moneys obtained by L-P from
allegedly fraudulent sales, imposition of an asset freeze and constructive
trust, and various forms of injunctive relief. A similar action, entitled
Carney v. Louisiana-Pacific Corporation, was filed in October 1995 in the
Superior Court of the State of California for the City and County of San
Francisco seeking restitution and injunctive relief.
In September 1995, a complaint entitled Agius v. Louisiana-Pacific
Corporation was filed in the United States District Court for the Northern
District of California naming L-P as a defendant in a purported class action
seeking damages and injunctive relief for violation of the Lanham Act, breach
of warranty, and violation of California consumer protection statutes, based
on alleged fraud and misrepresentation in connection with testing, APA
certification, and marketing of OSB products.
In January 1996, an action entitled Stewart v. Louisiana-Pacific
Corporation was instituted in the United States District Court for the
District of Colorado. Plaintiff seeks to represent a purported class
consisting generally of owners and purchasers of buildings in which L-P's OSB
panels are used for flooring, sheathing, or underlayment. The complaint seeks
damages in an unspecified amount and equitable relief by reason of alleged
fraud, misrepresentation, negligence, breach of warranty, and deceptive trade
practices related to alleged improprieties in testing, certification, and
marketing of OSB structure panels and alleged premature deterioration of OSB
panels.
In February 1996, an action entitled Mellett v. Louisiana-Pacific
Corporation was instituted in the United States District Court for the
District for Oregon. Plaintiff seeks to represent a purported class consisting
generally of purchasers and owners of structures in which L-P's OSB panels are
used for sheathing. The complaint seeks damages in an unspecified amount,
including punitive damages, by reason of alleged fraud, negligent
misrepresentation, negligence, breach of warranty, and deceptive trade
practices related to alleged improprieties in testing, certification, and
marketing of OSB structural panels.
At the present time, L-P cannot predict the potential financial impact
of the above actions. However, the resolution of the above matters could have
a materially adverse impact on L-P.
Stockholder Actions
L-P, certain of its executive officers and former executive officers,
and certain other executives have been named as defendants in numerous actions
brought on behalf of various purported classes of purchasers of L-P's common
stock. The actions, which have been consolidated in the United States District
Court for the District of Oregon, seek to recover damages under the securities
laws for alleged failures to disclose or improper disclosures generally
relating to the various legal proceedings described above and the matters that
are the subject of such proceedings. L-P is defending the actions vigorously,
but is unable to make any estimate of the possible outcome of the securities
class actions.
Five individual directors (Messrs. du Pont, Kayser, and Yeager, Ms. Hill
and Mrs. Neff) and three former directors of the registrant have been named as
defendants in ten stockholder derivative actions, which also name the
registrant as a nominal defendant. Eight of these actions were brought in the
Court of Chancery of the State of Delaware in and for New Castle County and
have been consolidated under the caption In re Louisiana-Pacific Corporation
Derivative Litigation, Civil Action No. 14322 (the "Delaware action"). One
action, captioned Silverman, et al. v. Merlo, et al., No. 9505-03630, was
brought in the Circuit Court of the State of Oregon for the County of
Multnomah (the "Oregon action"). The remaining action, captioned Rand v.
Merlo, et al., No. 95-Z-1511, was brought in the United States District Court
for the District of Colorado (the "Colorado action"). The actions seek to
recover damages from the directors on behalf of the corporation because of
alleged mismanagement and breaches of fiduciary duty generally related to the
various legal proceedings described above and the matters that are the subject
of such legal proceedings. The individual directors, former directors, the
registrant, and attorneys representing plaintiffs have entered into a
memorandum of understanding concerning a proposed settlement of the derivative
actions without payment by the directors or former directors or any admission
of liability. The settlement recognizes the recent management changes
effected by the registrant and certain other actions taken and to be taken by
the registrant with respect to quality control. The proposed settlement is
subject to confirmatory discovery by attorneys for plaintiffs and approval by
the courts.
Executive Employment Matter
In January 1996, an action entitled International Paper Company v. Mark
A. Suwyn and Louisiana-Pacific Corporation was instituted in the United States
District Court for the Southern District of New York claiming that Mr. Suwyn's
employment as chief executive officer of L-P violated the terms of a previous
employment agreement with the plaintiff. The complaint seeks an injunction
prohibiting Mr. Suwyn from continuing his employment with L-P for 18 months
and other relief. L-P believes there are meritorious defenses related to this
case and does not believe that there is any material liability related to this
case.
Other
L-P and its subsidiaries are parties to other legal proceedings.
Management believes that the outcome of such proceedings will not have a
material adverse effect on the business, financial position or results of
operations of L-P.
ITEM 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of the registrant's security holders
during the fourth quarter of 1995.
Executive Officers of the Registrant
The following table sets forth the name of each executive officer of the
registrant (including certain executives whose duties may cause them to be
classified as executive officers under applicable SEC rules), the age of the
officer, and all positions and offices held with the registrant as of
March 20, 1996:
Positions and Offices
Name Age Held With the Registrant
- --------------------- --- -----------------------------------
Mark A. Suwyn 53 Chairman and Chief Executive Officer
Stephen J. Grant 56 Senior Vice President - Compliance
William L. Hebert 45 Vice President, Treasurer and Controller
and Chief Financial Officer
Anton C. Kirchhof 50 General Counsel and Corporate Secretary
Thomas E. Dick 46 General Manager - Weather-Seal Division
James F. Ellisor 47 General Manager - North West Division
Alan J. Lawrence 49 General Manager - North Central Division
Ralph D. Lewis 54 President and General Manager - Ketchikan
Pulp Company
Keith Matheney 47 General Manager - Western Division
Gene Meyers 54 General Manager - Southern Division
Peter R. Wainer 50 General Manager - North East Division
Mr. Suwyn is also a director of the registrant.
All executive officers serve at the pleasure of the board of directors.
The terms of office for which they are elected run until the next annual
meeting of the board of directors, unless earlier removed.
Except as set forth below, all the executive officers have served in
their present capacities or other senior management positions with the
registrant and its subsidiaries for more than five years. Mark A. Suwyn
became Chairman and Chief Executive Officer of L-P, and was elected to fill a
vacancy on its Board of Directors effective January 2, 1996. Mr. Suwyn was
Executive Vice President of International Paper Company from 1992 through
1995. Previously, he was Senior Vice President of E.I. du Pont de Nemours &
Co. Mr. Grant became Senior Vice President-Compliance in August 1995. Prior
to that time, he was Senior Vice President of Morrison-Knudsen Corporation for
more than four years with responsibility for legal affairs and subsequently
for certain international operations.
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder
Matters
The common stock is listed on the New York Stock Exchange, the Dow-Jones
newspaper quotations symbol is "LaPac," and the ticker symbol is "LPX."
Information regarding market prices for the registrant's common stock is
included in the following table labeled "High and Low Stock Prices." Holders
of the registrant's common stock may automatically reinvest dividends toward
purchase of additional shares of the company's common stock. At March 14,
1996, L-P had approximately 24,500 stockholders of record.
<PAGE>
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE 1995 1994 +/- %
- ------------------------------------------------------------------------------------
ANNUAL DATA
- -----------
<S> <C> <C> <C>
Net sales $2,843.2 $3,039.5 -6.5%
Net income (loss) (51.7) 346.9 n.m.
Net income (loss) per share (.48) 3.15
Net cash provided by operating activities 334.6 595.9 -43.8%
Capital expenditures -- plants, logging
roads and timber 412.6 352.0 +17.2%
Working capital 170.0 377.1
Ratio of current assets to current liabilities 1.38 to 1 2.09 to 1
Total assets 2,805.4 2,743.7
Long-term debt, excluding current portion 201.3 209.8 -4.1%
Long-term debt as a percent of
total capitalization 10.8% 10.2%
Stockholders' equity 1,656.0 1,849.4 -10.5%
Per ending share of common stock 15.28 16.51
Number of employees 13,000 14,000
Number of stockholders of record 24,900 25,600
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER YEAR
- --------------------------------------------------------------------------------------
1995 QUARTERLY DATA
- -------------------
Net sales $686.8 $709.3 $776.8 $670.3 $2,843.2
Gross profit(1) 86.5 41.6 99.0 41.8 268.9
Income (loss) before taxes
and minority interest 87.3 41.9 (267.3)(2) 43.3 (94.8)
Net income (loss) 54.3 26.3 (159.1)(2) 26.8 (51.7)
Net income (loss) per share .50 .25 (1.48) .25 (.48)
Cash dividends per share .125 .14 .14 .14 .545
1994 QUARTERLY DATA
- -------------------
Net sales $698.0 $774.7 $818.4 $748.4 $3,039.5
Gross profit(1) 140.5 132.8 155.1 130.2 558.6
Income before taxes
and minority interest 139.8 132.2 155.4 132.2 559.6
Net income 85.2 81.9 95.1 84.7 346.9
Net income per share .77 .75 .86 .77 3.15
Cash dividends per share .11 .125 .125 .125 .485
HIGH AND LOW STOCK PRICES
- -------------------------
1995 High $30.50 $29.00 $29.00 $27.13 $30.50
Low 24.75 20.88 21.88 22.00 20.88
1994 High 48.00 36.13 35.88 33.63 48.00
Low 35.38 30.00 29.25 25.75 25.75
</TABLE>
__________________________
(1) Gross profit is income before settlement charge and other unusual items
(in 1995), taxes, minority interest and interest.
(2) In the third quarter of 1995, L-P recorded a charge of $366.6 million
($221.8 million after income taxes, or $2.07 per share) related to class
action settlements concerning the company's siding product, severance
charges and asset write-downs.
FORWARD LOOKING STATEMENTS
Statements under the headings "Management's Discussion and Analysis,"
and "Notes to Financial Statements," to the extent they are not based on
historical events, constitute forward-looking statements. Forward-looking
statements include, without limitation, statements regarding the outlook for
future operations, forecasts of future costs and expenditures, evaluation of
market conditions, the outcome of legal proceedings, the adequacy of reserves,
or plans for product development. Investors are cautioned that forward-looking
statements are subject to an inherent risk that actual results may vary
materially from those described herein. Factors that may result in such
variance, in addition to those set forth under the above captions, include
changes in interest rates, commodity prices, and other economic conditions;
actions by competitors; changing weather conditions and other natural
phenomena; actions by government authorities; uncertainties associated with
legal proceedings; technological developments; future decisions by management
in response to changing conditions; and misjudgments in the course of
preparing forward-looking statements.
<PAGE>
<TABLE>
<CAPTION>
ITEM 6. Selected Financial Data
YEAR ENDED DECEMBER 31 (DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE)
SUMMARY INCOME STATEMENT DATA 1995(4) 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net sales $ 2,843.2 $3,039.5 $2,511.3 $2,184.7 $1,702.1
Gross profit(1) 268.9 558.6 423.6 297.5 106.3
Interest, net 2.9 (1.0) 5.0 14.4 18.9
Provision (benefit) for income taxes (45.8) 209.8 173.2 106.2 31.5
Income (loss)(3) (51.7) 346.9 254.4 176.9 55.9
Income (loss) per share(3) (.48) 3.15 2.32 1.63 .52
Cash dividends per share .545 .485 .43 .39 .36
Average shares of common stock
outstanding (thousands) 107,040 110,140 109,670 108,500 107,980
SUMMARY BALANCE SHEETS
- ----------------------
Current assets $618.5 $721.9 $614.1 $539.1 $461.4
Timber and timberlands, at cost
less cost of timber harvested 689.6 693.5 673.5 531.2 532.7
Property, plant and equipment, net 1,452.3 1,273.2 1,145.9 1,070.3 1,066.1
Other assets 45.0 55.1 32.8 65.4 46.9
-------- -------- -------- -------- --------
Total assets $2,805.4 $2,743.7 $2,466.3 $2,206.0 $2,107.1
======== ======== ======== ======== ========
Current liabilities $ 448.5 $ 344.8 $ 317.2 $ 295.5 $ 259.5
Long-term debt, excluding current portion 201.3 209.8 288.6 386.3 492.7
Deferred income taxes and other 499.6 339.7 289.1 163.2 151.3
Stockholders' equity 1,656.0 1,849.4 1,571.4 1,361.0 1,203.6
-------- -------- -------- -------- --------
Total liabilities and
stockholders' equity $2,805.4 $2,743.7 $2,466.3 $2,206.0 $2,107.1
======== ======== ======== ======== ========
<PAGE>
KEY FINANCIAL TRENDS 1995(4) 1994 1993 1992 1991
Working capital $ 170.0 $ 377.1 $ 296.9 $ 243.6 $ 201.9
======== ======== ======== ======== ========
Plant and logging road additions $ 362.9 $ 286.0 $ 208.4 $ 161.4 $ 152.3
Timber additions, net 49.7 66.0 81.5 40.1 49.6
-------- -------- -------- -------- --------
Total capital additions $ 412.6 $ 352.0 $ 289.9 $ 201.5 $ 201.9
======== ======== ======== ======== ========
Long-term debt as a percent
of total capitalization 11% 10% 16% 22% 29%
Income as a percent of average equity(3) -3% 20% 17% 14% 5%
__________________________
(1) Gross profit is income before settlement charge and unusual items (in 1995), income taxes, minority
interest, and interest.
(2) All per share amounts and number of shares have been retroactively adjusted for a two-for-one stock
split in 1993 and a three-for-two stock split in 1992.
(3) Does not include cumulative effects of accounting changes in 1993.
(4) In the third quarter of 1995, L-P recorded a charge of $366.6 million ($221.8 million after taxes or
$2.07 per share) related to class action settlements concerning the company's siding product,
severance charges and asset write-downs.
</TABLE>
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
L-P's net loss in 1995 resulted from a third quarter pre-tax charge of
$366.6 million ($221.8 million after tax, or $2.07 per share) for settlements
of class action proceedings related to L-P's siding product (the nationwide
settlement remains subject to final court approval), severance charges and
asset write-downs. The charge was tax effected because all components are
deductible either currently or in future years. Continued oversupply of lumber
and high raw material costs caused a sharp decline in the profitability of the
building products segment in 1995 compared to the record results in 1994.
Higher pulp segment earnings in 1995 partially offset the decline in building
products earnings. The record results achieved in 1994 surpassed the previous
record set in 1993. Both 1994 and 1993 benefited from low interest rates and a
strong U.S. economy, offset to varying degrees by weak pulp markets.
Sales in 1995 were $2.84 billion, a 7 percent decline from 1994 record
sales of $3.04 billion. Sales in 1994 increased 21 percent over 1993 sales of
$2.51 billion. L-P incurred a net loss in 1995 of $51.7 million ($.48 per
share) compared to net income of $346.9 million ($3.15 per share) in 1994 and
$254.4 million ($2.32 per share) in 1993 before accounting changes. Earnings
in 1995 were $170.1 million ($1.59 per share) without the unusual charge
discussed above.
L-P operates in two major business segments: building products and pulp.
Building products is the most significant segment, accounting for more than
88 percent of net sales in each of the prior three years. The results of
operations are discussed below for each of these segments separately.
Additional information about the factors affecting L-P's segments is presented
in the "Selected Financial Data" in Item 6 and the "Product Information
Summary" in Item 1.
Building Products
INCREASE
YEAR ENDED DEC. 31, (DECREASE)
---------------------------------------------
1995 1994 1993 95-94 94-93
- ---------------------------------------------------------------------------
(DOLLAR AMOUNTS IN MILLIONS)
Sales:
Structural panel products $1,127 $1,208 $1,005 -7% +20%
Lumber 644 867 816 -26% +6%
Industrial panel products 215 240 194 -10% +24%
Other building products 523 505 411 +4% +23%
------ ------ ------
Total building products $2,509 $2,820 $2,426 -11% +16%
====== ====== ======
Profit $ 346 $ 636 $ 562 -46% +13%
====== ====== ======
Structural panel sales suffered in 1995 from relatively high interest
rates and poor weather in key areas of the country early in the year which
contributed to weak markets, especially in oriented strand board (OSB). OSB
pricing was also negatively impacted by new industry capacity. OSB siding
sales suffered from adverse publicity during the year related to class action
litigation (see "settlement charge and other unusual items, net" for further
discussion). Average structural panel sales prices in 1995 were approximately
4 percent lower than in 1994 due to OSB market price declines which were
offset by slightly higher plywood prices. Overall structural panel volume in
1995 declined by approximately 3 percent from 1994, due primarily to curtailed
plywood production early in 1995 as the mills ran short of logs due to wet
weather. Structural panel sales in 1994 were higher than 1993 due to increases
of approximately 10 percent in volume and average selling prices. Price
increases in 1994 resulted from strong demand and shrinking supplies as
numerous plywood mills shut down in the Northwest region of the country due to
log shortages and high costs. Volume increases in 1994 were due to strong
demand and new L-P plants.
Lumber sales were also negatively impacted in 1995 by higher interest
rates and poor weather. Lumber markets were also flooded with low priced
Canadian lumber, which resulted in depressed price levels throughout 1995.
These factors caused L-P sawmills to operate at lower capacity levels
(56 percent of capacity in 1995 compared to 86 percent in 1994) due to
closures, some of which were temporary, while others were permanent. Sales
volumes were off nearly 20 percent in 1995 reflecting the lower demand and a
significant increase in lumber exports from Canada to the U.S., which also
eroded prices. Average sales prices declined approximately 8 percent with
sharply higher redwood prices and lower whitewood prices. Lumber sales
increased in 1994 over 1993 due to an increase of 2 percent in average selling
prices and 4 percent in volume. Lumber prices in 1994 benefited from multiple
industry mill closures in the Northwest while our volumes increased due to
shifts added at certain mills and reduced downtime.
The decrease in industrial panel sales in 1995 compared to 1994 resulted
from lower volumes of nearly 10 percent and a decline in average selling
prices of approximately 4 percent. Demand for these products was lackluster in
1995 which caused L-P to temporarily shut down some plants. The increase in
sales in 1994 over 1993 was primarily price related on moderately higher
volumes.
Other building products sales increased in 1995 primarily due to higher
log sales from L-P's California fee lands. As L-P had curtailed sawmill
production, the log volumes harvested were sold on the open market. Sales from
facilities which operated for a full year in 1995 and only a partial year in
1994 also contributed to the increase. Offsetting the increases were decreases
in sales of engineered products, windows and doors and wood chips.
Building products profit decreased in 1995 due to the lower prices
discussed above combined with increased raw material costs and lower
production volumes. Log prices were higher in most areas of the country as
were wood chip prices (used in certain of L-P's panel products) because of
increased demand from pulp and paper mills.
L-P's building products are primarily sold as commodities and therefore
sales prices fluctuate based on market factors over which L-P has no control.
L-P cannot predict whether the prices of its building products will remain at
current levels, or will increase or decrease in the future because supply and
demand are influenced by many factors, only one of which is the cost and
availability of raw materials. L-P is not able to determine to what extent, if
any, it will be able to pass any future increases in the price of raw
materials on to customers through product price increases.
Pulp
INCREASE
YEAR ENDED DEC. 31, (DECREASE)
---------------------------------------------
1995 1994 1993 95-94 94-93
- ---------------------------------------------------------------------------
(DOLLAR AMOUNTS IN MILLIONS)
Pulp sales $334 $220 $ 85 +52% +159%
==== ==== ====
Profit $ 44 $ (5) $(59) n.m. n.m.
==== ==== ====
Pulp sales increased in 1995 over 1994 and 1993 due to a 59 percent
increase in average selling prices in 1995 and a 21 percent increase in 1994.
World-wide pulp markets rebounded strongly during the second half of 1994
which continued through the first nine months of 1995. Sales volume decreased
in 1995 by approximately 4 percent due to intermittent production problems at
the pulp mills and sharply lower demand in the fourth quarter of the year.
Sales volume increased in 1994 by 112 percent as increased demand allowed the
Company to take less downtime.
The pulp segment returned to profitability due to the increase in sales
in 1995 after incurring losses in 1994 and 1993. Raw material costs have
increased as prices for chips, the fiber raw material for pulp, increased over
1994.
L-P's pulp products are primarily sold as commodities and therefore
sales prices fluctuate based on market factors over which L-P has no control.
L-P cannot predict whether the prices of its pulp products will remain at
current levels, or will increase or decrease in the future because supply and
demand are influenced by many factors, only one of which is the cost and
availability of raw materials. Pulp markets showed signs of weakening further
in early 1996 as world inventories grew sharply. L-P is not able to determine
to what extent, if any, it will be able to pass any future increases in the
price of raw materials on to customers through product price increases.
L-P pulp products are sold primarily to export customers and are a major
factor in L-P's export sales. The increases in pulp sales discussed above are
the primary reason for L-P's increased export sales in 1994 and 1995 both in
amount and as a percent of total sales. Information regarding L-P's geographic
segments and export sales are provided in the notes to financial statements
under the caption "segment information."
Unallocated Expense, Net
Unallocated expense increased to $121 million in 1995 compared to
$72 million in 1994 and $70 million in 1993. The most significant factor in
the increase is higher expenses associated with litigation against the
company, including legal fees and increases in contingency reserves (it does
not, however, include the amount recorded in the third quarter for the
settlement of siding class action litigation discussed below). Refer to the
footnotes to the financial statements under the heading "Contingencies" for a
discussion of the settlements. Higher franchise taxes have also contributed to
the increase. Partially offsetting these increases, were lower compensation
expenses in 1995 because restricted stock plan awards, tied to the performance
of the company, were not issued.
Settlement Charge and Other Unusual
Items, Net
The charge of $367 million, which was recorded in the third quarter of
1995, includes estimated settlement costs of class action proceedings
regarding the company's siding product (the nationwide settlement remains
subject to final court approval) and other legal matters of $345 million
before tax, including attorney's fees and other expenses associated with the
settlements. Refer to the footnotes to the financial statements under the
heading "Contingencies" for a detailed discussion of these settlements. The
charge also included write-downs of certain properties to their net realizable
value in accordance with the criteria specified in Statement of Financial
Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of." A gain on the sale of a
non-productive asset was also included in this line item, as were severance
costs for executives and other employees who retired in conjunction with the
management changes during the year and the reorganization of certain corporate
functions.
Interest, Net
L-P's debt level has continued to decrease, resulting in lower interest
expense partially offset by higher interest rates on L-P's remaining variable
rate debt. Interest rate increases favorably impacted L-P's interest income,
but that increase was partially offset by lower cash and cash equivalents
balances associated with large capital expenditures and treasury stock
purchases. Interest expense capitalized, which also lowers interest expense,
has increased with the large capital expenditures.
Legal and Environmental Matters
For a discussion of legal and environmental matters involving L-P and
the potential effect on L-P, refer to the footnotes to the financial
statements under the heading "Contingencies."
Financial Position and Liquidity
Cash provided by operations decreased to $335 million in 1995 from
$596 million in 1994 and $439 million in 1993. These fluctuations primarily
correlate to the company's net income or loss after adjustments for non-cash
charges and changes in various working capital components. The largest working
capital change related to inventories. Log inventories increased $80 million
due to higher costs and higher volumes (1994 volumes were low due to primarily
weather-related factors). Pulp inventories increased due to the weak markets
discussed previously and other building products inventories increased
primarily due to the addition of a new distribution center.
Cash used in investing activities increased to $387 million in 1995 from
$350 million in 1994 and $254 million in 1993. Total capital expenditures have
increased in each of the last two years as L-P has invested heavily in new
plants for added production capacity. L-P has also spent significant amounts
on environmental projects (such as pollution control equipment), upgrades of
existing production facilities, timber to supply its operations and logging
roads.
Cash used for financing activities decreased to $188 million in 1995
from $191 million in 1994, which was an increase from the 1993 amount of
$151 million. Cash dividends are a major use of cash each year, as are debt
repayments. L-P purchased $120 million of treasury stock in 1995, compared to
$54 million in 1994 and $14 million in 1993. The company increased short-term
borrowings by a net $48 million in 1995 and its joint venture in Ireland
borrowed $30 million on a long-term basis toward financing the construction of
a new OSB plant. Borrowings were not significant in 1994 or 1993.
In February 1996, L-P signed a new revolving credit facility agreement
with a group of banks, which increased the borrowing limit from the current
$100 million to $300 million. At December 31, 1995, L-P had borrowed
$50 million against the existing $100 million agreement. The new agreement
significantly increases L-P's immediate borrowing capabilities to meet the
cash needs discussed below. L-P's short-term credit ratings are A-1 with
Standard & Poors and D-1 Plus with Duff & Phelps.
In 1995, L-P completed a program authorized by the board of directors to
repurchase 5 million L-P common shares. Upon completion of this program, the
board authorized the repurchase of an additional 10 million common shares at
management's discretion. L-P did not purchase any shares under this new
authorization. Future purchases under this new program will be prioritized,
taking into consideration other uses of the company's cash.
L-P is budgeting capital expenditures, including timber and logging road
additions, for 1996 of $250 million to $300 million. These expenditures are
primarily to complete new plants currently under construction, continue
environmental improvements to existing plants, upgrade production facilities
and provide timber to operations.
Contingency reserves, which represent an estimate of future cash needs
for various contingencies (principally payments for siding litigation
settlements), total $401 million, of which $150 million is estimated to be
payable within one year. As with all accounting estimates, there is inherent
uncertainty concerning the reliability and precision of such estimates. As
described in the notes to the financial statements under the heading
"Contingencies," L-P has been named as a defendant in other litigation for
which reserves have not been established.
L-P continues to be in a strong financial condition with $75 million in cash
and cash equivalents and a low ratio of long-term debt as a percent of total
capitalization. Although cash and cash equivalents decreased $241 million
during 1995 due to the reasons discussed above, existing cash and cash
equivalents combined with borrowings available under the $300 million
revolving credit facility and cash to be generated from operations are
expected to be sufficient to meet projected cash needs including the payments
related to the siding litigation settlement referred to above. The company
also believes that because of its conservative financial structure and
policies, it has substantial financial flexibility to generate additional
funds should the need arise.
Business Uncertainties
The two major segments in which L-P operates, building products and
market pulp, are subject to both seasonal factors as well as domestic and
global economic cycles. Also, the availability and cost of raw materials, the
availability and cost of competing products and additions or deletions of
production capacity can have a significant effect on L-P's performance.
In 1995, approximately 40 percent of L-P's sales and a significant
portion of building products operating profit were derived from structural
panel products. Approximately 65 percent of L-P's structural panel sales
resulted from sales of OSB products. L-P is the largest single producer of
OSB, accounting for approximately 30 percent of total North American OSB
production. L-P is also a major producer of plywood, which is interchangeable
with OSB for many building applications. L-P and its competitors are scheduled
to open numerous new OSB plants over the next two years, which will
significantly increase industry capacity by an estimated 30 percent to
40 percent. However, with significant capacity expansion over the next two
years, L-P believes that there will be an oversupply in the structural panel
markets which could have a significant detrimental impact on the sales prices
of all structural panels, including those sold by L-P. This will likely result
in reduced sales and profits for L-P's structural panels in the future. The
severity of the impact will be partially dependent upon future interest rate
trends and housing start activity, which also impact L-P's other building
product markets. L-P believes that the excess of supply will be at least
partially remedied through the permanent closures by L-P and its competitors
of numerous higher cost plywood plants as well as the development of new
export markets and value-added specialty products for OSB, plywood and veneer.
<PAGE>
ITEM 8. Financial Statements and Supplementary Data
The consolidated financial statements and accompanying notes to
financial statements together with the report of independent public
accountants are located on the following pages. Quarterly data for the
registrant's latest two fiscal years is located in the table labeled
"Quarterly Data" in Item 5.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31 (DOLLAR AMOUNTS IN MILLIONS) 1995 1994
ASSETS
Current Assets:
Cash and cash equivalents $75.4 $315.9
Accounts receivable, less reserves of $1.5 and $1.4 128.7 157.4
Inventories 317.7 213.8
Prepaid expenses 14.3 7.3
Deferred income taxes 82.4 27.5
------- -------
Total current assets 618.5 721.9
Timber and Timberlands, at cost less
cost of timber harvested 689.6 693.5
Property, Plant and Equipment, at cost:
Land, land improvements and logging roads,
net of road amortization 164.5 162.9
Buildings 227.8 221.3
Machinery and equipment 1,872.9 1,777.3
Construction in progress 327.3 196.7
------- -------
2,592.5 2,358.2
Less reserves for depreciation (1,140.2)
(1,085.0)
------- -------
Net property, plant and equipment 1,452.3 1,273.2
Other Assets 45.0 55.1
------- -------
Total Assets $2,805.4 $2,743.7
======= =======
<PAGE>
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
(DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE) 1995 1994
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Current portion of long-term debt $ 38.6 $ 81.9
Short-term notes payable 98.3 50.5
Accounts payable and accrued liabilities 161.6 166.8
Current portion of contingency reserves 150.0 26.7
Income taxes payable --- 18.9
------- -------
Total current liabilities 448.5 344.8
Long-term Debt, excluding current portion 201.3 209.8
Deferred Income Taxes 207.5 297.3
Contingency Reserves, excluding current portion 250.5 ---
Other Long-term Liabilities and Minority Interest 41.6 42.4
Stockholders' Equity:
Common stock, $1 par value,
200,000,000 shares authorized,
116,937,022 shares issued 117.0 117.0
Preferred stock, $1 par value, 15,000,000 shares
authorized, no shares issued --- ---
Additional paid-in capital 472.4 478.4
Retained earnings 1,400.8 1,510.7
Treasury stock, 8,588,427 shares
and 4,944,804 shares, at cost (192.7) (86.3)
Loans to Employee Stock Ownership Trusts (85.5) (114.0)
Other equity adjustments (56.0) (56.4)
-------- --------
Total stockholders' equity 1,656.0 1,849.4
-------- --------
Total Liabilities and Stockholders' Equity $2,805.4 $2,743.7
======== ========
See notes to financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31 (DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE)
1995 1994 1993
EARNINGS
- --------
Net Sales $2,843.2 $3,039.5 $2,511.3
-------- -------- --------
Costs and Expenses:
Cost of sales 2,250.3 2,158.4 1,779.9
Depreciation and amortization 152.0 143.8 133.0
Cost of timber harvested 50.6 53.5 50.2
Selling and administrative 121.4 125.2 115.6
Settlement charge and other
unusual items, net 366.6 --- ---
Interest expense, net of capitalized
interest of $10.9, $5.5 and $3.5 5.3 9.0 12.8
Interest income (8.2) (10.0) (7.8)
-------- -------- -------
Total costs and expenses 2,938.0 2,479.9 2,083.7
-------- -------- --------
Income (loss) before taxes, minority
interest and cumulative effects
of accounting changes (94.8) 559.6 427.6
Provision (benefit) for income taxes (45.8) 209.8 173.2
Minority interest in net income (loss)
of consolidated subsidiaries 2.7 2.9 ---
-------- -------- --------
Income (loss) before cumulative effects
of accounting changes (51.7) 346.9 254.4
Cumulative effects of accounting changes,
net of income taxes of $1.9 --- --- (10.4)
-------- -------- --------
Net Income (Loss) $(51.7) $346.9 $244.0
======== ======== ========
EARNINGS PER SHARE
- ------------------
Income (loss) before cumulative effects
of accounting changes $(.48) $3.15 $2.32
Cumulative effects of accounting changes --- --- (.09)
-------- -------- --------
Net Income (Loss) $(.48) $3.15 $2.23
======== ======== ========
Cash Dividends Per Share of Common Stock $.545 $.485 $.43
======== ======== ========
Average Shares of Common Stock (thousands)107,040 110,140 109,670
======== ======== ========
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31 (DOLLAR AMOUNTS IN MILLIONS)
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(51.7) $346.9 $244.0
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Cumulative effects of accounting changes --- --- 10.4
Depreciation, amortization and
cost of timber harvested 202.6 197.3 183.2
Accrued settlement charge, net of cash payments 331.4 --- ---
Other adjustments 48.5 23.6 29.1
Decrease (increase) in receivables 28.7 (41.6) 3.6
Decrease (increase) in inventories (103.9) 25.1 (39.7)
Decrease (increase) in prepaid expenses (7.0) (.2) (1.1)
Increase (decrease) in accounts payable
and accrued liabilities 38.2 39.4 1.5
Increase (decrease) in income taxes payable (7.5) .4 9.1
Increase (decrease) in deferred income taxes (144.7) 5.0 (1.6)
------ ------ ------
Net cash provided by operating activities 334.6 595.9 438.5
CASH FLOWS FROM INVESTING ACTIVITIES
Plant, equipment and logging road additions (362.9) (286.0) (208.4)
Timber and timberland additions, net (49.7) (66.0) (81.5)
Net book value of plant and equipment sold 23.5 4.2 4.1
Other investing activities, net 1.8 (2.5) 32.1
------ ------ ------
Net cash used in investing activities (387.3) (350.3) (253.7)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in short-term notes payable 47.8 5.8 .6
Long-term borrowings 30.0 --- ---
Repayment of long-term debt (82.0) (106.6) (105.3)
Cash dividends (58.2) (53.4) (47.3)
Purchase of treasury stock (120.2) (54.3) (13.8)
Loans to ESOTs --- (56.0) ---
Treasury stock sold to ESOTs --- 56.0 ---
Cash received from minority investors 1.7 6.5 ---
Other financing activities, net (6.9) 10.7 14.5
------ ------ ------
Net cash used for financing activities (187.8) (191.3) (151.3)
------ ------ ------
Net increase (decrease) in cash
and cash equivalents (240.5) 54.3 33.5
Cash and cash equivalents at beginning of year 315.9 261.6 228.1
------ ------ ------
Cash and cash equivalents at end of year $ 75.4 $315.9 $261.6
====== ====== ======
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
OTHER TOTAL
ADD'L LOANS EQUITY STOCK-
DOLLAR AMOUNTS IN MILLIONS COMMON STOCK TREASURY STOCK PAID-IN RETAINED TO ADJUST- HOLDERS'
EXCEPT PER SHARE SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS ESOTs MENTS EQUITY
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE
As of December 31, 199258,457,749 $58.53,848,800$(88.5) $422.5$1,079.3 $(87.0)$(23.8) $1,361.0
Net income --- --- --- --- --- 244.0 --- --- 244.0
Cash dividends, $.43 per share--- --- --- --- --- (47.3) --- --- (47.3)
Issuance of shares for employee
stock plans and for
other purposes 10,762 --- (916,937) 16.7 9.0 --- --- --- 25.7
Purchase of treasury stock --- --- 200,000 (13.8) --- --- --- --- (13.8)
Employee stock ownership
trust contribution --- --- --- --- --- --- 14.5 --- 14.5
Currency translation adjustment
and marketable securities
adjustment --- --- --- --- --- --- --- (12.4) (12.4)
Shares issued under 2-for-1
stock split 58,468,511 58.53,624,075 --- --- (58.8) --- --- (0.3)
----------- ------ --------- ------ ------ ------ ------ ------ ------
BALANCE
As of December 31, 1993116,937,022117.06,755,938 (85.6) 431.5 1,217.2 (72.5) (36.2) 1,571.4
Net income --- --- --- --- --- 346.9 --- --- 346.9
Cash dividends, $.485 per share--- --- --- --- --- (53.4) --- --- (53.4)
Issuance of shares for
employee stock plans and for
other purposes --- ---(1,697,713)26.5 18.0 --- --- --- 44.5
Additional loans to ESOTs and
sale of treasury stock to ESOTs------(1,843,621)27.1 28.9 --- (56.0) --- ---
Purchase of treasury stock --- ---1,730,200 (54.3) --- --- --- --- (54.3)
Employee stock ownership trust
contribution --- --- --- --- --- --- 14.5 --- 14.5
Currency translation adjustment--- --- --- --- --- --- --- (20.2) (20.2)
----------- ------ --------- ------ ------ ------ ------ ------ ------
BALANCE
As of December 31, 1994116,937,022117.04,944,804$(86.3) $478.4$1,510.7$(114.0)$(56.4) $1,849.4
Net income (loss) --- --- --- --- --- (51.7) --- --- (51.7)
Cash dividends, $.545 per share--- --- --- --- --- (58.2) --- --- (58.2)
Issuance of shares for employee
stock plans and for
other purposes --- --- (689,774) 13.8 (6.0) --- --- --- 7.8
Purchase of treasury stock --- ---4,333,397(120.2) --- --- --- --- (120.2)
Employee stock ownership
trust contribution --- --- --- --- --- --- 28.5 --- 28.5
Currency translation adjustment
and pension
liability adjustment, net --- --- --- --- --- --- --- .4 .4
----------- ------ --------- ------ ------ ------ ------ ------ ------
BALANCE
As of December 31, 1995116,937,022$117.08,588,427$(192.7)$472.4$1,400.8$(85.5)$(56.0) $1,656.0
=========== ====== ========= ====== ====== ======== ====== ====== ======
See notes to financial statements.
</TABLE>
<PAGE>
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Louisiana-Pacific Corporation is a U.S. based company principally
engaged in the manufacture of wood-based building products, and to a lesser
extent, wood-based pulp. Through its foreign subsidiaries, the Company also
maintains manufacturing facilities in Canada, Ireland and Mexico. The
principal customers for its building products are distributors, wholesalers
and retailers in North America with minor sales to Asia and Europe. The
principal customers for its pulp products are brokers in Asia and Europe, with
minor sales in North America. Refer to Management's Discussion and Analysis on
page 19 under the heading "Business Uncertainties" for a discussion of risks
related to L-P's concentration in the panel products market segment.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. See
discussion of specific estimates in footnotes entitled "Income Tax Policies,"
"Retirement Plans" and "Contingencies."
Principles of Presentation
The consolidated financial statements include the accounts of
Louisiana-Pacific Corporation and all of its subsidiaries (L-P), after
elimination of intercompany balances and transactions.
Earnings Per Share
Earnings per share have been computed based on the weighted average
number of shares of common stock outstanding during the periods. The effect of
common stock equivalents is not material. American Institute of Certified
Public Accountants Statement of Position No. 93-6, "Employers' Accounting for
Employee Stock Ownership Plans" (SOP 93-6) requires that shares held by L-P's
Employee Stock Ownership Trusts (ESOTs) which were acquired by the ESOTs on or
after January 1, 1994 and are not allocated to participants' accounts, are not
considered outstanding for purposes of computing earnings per share.
Unallocated shares held by the ESOTs which were acquired by the ESOTs prior to
January 1, 1994, and all allocated ESOT shares continue to be considered
outstanding for purposes of computing earnings per share.
Cash and Cash Equivalents
L-P considers all highly liquid securities with a maturity of three
months or less to be cash equivalents. Cash paid during 1995, 1994 and 1993
for interest (net of capitalized interest) was $4.6 million, $9.0 million and
$13.2 million. Cash paid during 1995, 1994 and 1993 for income taxes (net of
refunds received) was $109.0 million, $204.4 million and $161.1 million. At
December 31, 1995, Louisiana-Pacific Canada Ltd., a wholly-owned subsidiary of
L-P, had restricted cash balances of USD $20.7 million related to loan
agreements which require such balances based on changes in the Canadian dollar
relative to the U.S. dollar. These balances are interest-bearing to
Louisiana-Pacific Canada Ltd. at short-term interest rates. L-P invests its
excess cash with high quality financial institutions and, by policy, limits
the amount of credit exposure at any one financial institution. In addition,
L-P holds its cash investments until maturity and is therefore not subject to
significant market risk.
Inventory Valuation
Inventories are valued at the lower of cost or market. Inventory costs
include material, labor and operating overhead. The LIFO method is used for
most log and lumber inventories with remaining inventories valued at FIFO or
average cost. Inventory quantities are determined on the basis of physical
inventories, adjusted where necessary for intervening transactions from the
date of the physical inventory to the end of the year. The major types of
inventories are as follows:
DECEMBER 31 (IN MILLIONS) 1995 1994
Logs $176.9 $96.9
Lumber 58.3 93.1
Panel products 30.7 24.7
Other building products 70.5 42.6
Pulp 35.7 15.8
Other raw materials 27.7 23.3
Supplies 22.0 21.2
LIFO reserve (104.1) (103.8)
------ ------
Total $317.7 $213.8
====== ======
Timber
L-P follows an overall policy on fee timber that amortizes timber costs
over the total fiber available during the estimated growth cycle. Timber
carrying costs, such as reforestation and forest management, are expensed as
incurred. Cost of timber harvested includes not only the cost of fee timber
but also the amortization of the cost of long-term timber deeds.
Property, Plant, and Equipment
L-P uses the units of production method of depreciation for most
machinery and equipment which amortizes the cost of equipment over the
estimated units that will be produced during its useful life. Provisions for
depreciation of buildings and the remaining machinery and equipment have been
computed using straight-line rates based on the estimated service lives. The
effective straight-line rates for the principal classes of property range from
approximately 5 percent to 20 percent. Logging road construction costs are
capitalized and included in land and land improvements. These costs are
amortized as the timber volume adjacent to the road system is harvested. L-P
capitalizes interest on borrowed funds during construction periods.
Capitalized interest is charged to machinery and equipment accounts and
amortized over the lives of the related assets. Interest capitalized during
1995, 1994 and 1993 was $10.9 million, $5.5 million and $3.5 million. L-P
defers start-up costs on major construction projects during the start-up phase
and amortizes the deferral over seven years. Start-up costs deferred during
1995 and 1994 were $3.1 million and $.8 million. No start-up costs were
deferred during 1993. The Financial Accounting Standards Board has issued SFAS
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," which establishes criteria for measuring impairment
losses of long-lived assets and determining when such losses should be
recognized. L-P complied with the standards set forth in SFAS 121 and a charge
was included in the line item "Settlement Charge and Other Unusual Items, Net"
in the income statement related to write-downs on planned disposals by
mid-1996 of certain facilities, principally sawmills. The historical results
of these operations were not significant.
Income Tax Policies
During the first quarter of 1993, L-P adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (SFAS No. 109), which utilizes the liability method whereby deferred
income taxes are determined based on the estimated future tax effects of
differences between the financial statement and tax basis of assets and
liabilities using the tax rates applicable at the balance sheet date. Adoption
of this standard resulted in a one-time, after tax charge of $7.2 million or
six cents per share. The effect of adopting this standard did not have a
material impact on pretax income or income tax expense.
Income (loss) before taxes, minority interest and cumulative effects of
accounting changes for the years ended December 31, was taxed under the
following jurisdictions:
YEAR ENDED DECEMBER 31 (IN MILLIONS) 1995 1994 1993
Domestic $(123.0) $524.1 $416.2
Foreign 28.2 35.5 11.4
------- ------ ------
$ (94.8) $559.6 $427.6
======= ====== ======
Provision (benefit) for income taxes includes the following:
YEAR ENDED DECEMBER 31 (IN MILLIONS) 1995 1994 1993
Current tax provision:
U.S. federal $74.4 $171.8 $149.5
State and local 14.7 24.9 22.6
Foreign 6.1 8.1 2.7
------- ------ ------
Total current tax provision $95.2 $204.8 $174.8
======= ====== ======
Deferred tax provision (benefit):
U.S. federal $(129.2) $3.3 $(.2)
State and local (16.4) .4 .1
Foreign 4.6 1.3 (1.5)
------- ------ ------
Total deferred tax
provision (benefit) $(141.0) $5.0 $(1.6)
======= ====== ======
L-P increased its U.S. deferred tax liability in 1993 as a result of
legislation enacted during 1993 increasing the corporate tax rate from
34 percent to 35 percent effective January 1, 1993. Included in the deferred
tax provision is the effect of the 1 percent increase and other tax law
changes related to L-P's deferred income tax liability which resulted in a net
charge of $4.4 million, or $.04 per share.
The tax effects of significant temporary differences creating deferred
tax (assets) and liabilities at December 31, 1995 and 1994 were as follows:
YEAR ENDED DECEMBER 31 (IN MILLIONS) 1995 1994
Property, plant and equipment $174.9 $155.8
Timber and timberlands 147.3 146.7
Inventories (4.3) (1.9)
Accrued liabilities (2.3) 1.1
Contingency reserves (155.0) (10.3)
Benefit of foreign capital
loss and NOL carryover (9.3) (8.4)
Benefit of foreign ITC carryover (77.0) (64.3)
Other (4.4) (1.5)
Valuation allowance 55.2 52.6
------ ------
Net deferred tax liability 125.1 269.8
Less net current deferred tax assets (82.4) (27.5)
------ ------
Net noncurrent deferred tax liabilities $207.5 $297.3
====== ======
L-P's subsidiary, Louisiana-Pacific Canada Ltd. (LPC), has unrealized
foreign investment tax credits (ITC) of approximately C$105 million. These
credits can be carried forward to offset future tax of LPC. However, these
credits expire C$10 million in 1996, C$5 million in 1997, C$20 million in
1999, C$6 million in 2000, C$46 million in 2001, C$4 million in 2003, C$13
million in 2004 and C$1 million in 2005. LPC has a net operating loss
carryover of C$5 million which will expire in 1999. In addition, LPC has
capital loss carryovers of C$29 million available to offset capital gains in
future years. These capital loss carryovers will not expire. The following
table summarizes the differences between the statutory federal and effective
tax rate:
YEAR ENDED DECEMBER 31 1995 1994 1993
Federal tax rate (35)% 35% 35%
Tax-exempt investment income (2) -- (1)
State and local income taxes (4) 4 4
Fines -- -- 1
Exempt foreign sales corporation income (3) -- --
Other, net (4) (1) 1
---- ---- ----
(48)% 38% 40%
==== ==== ====
Derivative Financial Instruments
L-P has only limited involvement with derivative financial instruments,
in the form of infrequent transactions in lumber futures, and at December 31,
1995 had no material derivative financial instruments outstanding.
Foreign Currency Translation
Assets and liabilities denominated in foreign currencies are translated
to U.S. dollars at the exchange rate on the balance sheet date. Revenues,
costs, and expenses are translated at average rates of exchange prevailing
during the year. Translation adjustments resulting from this process are shown
in stockholders' equity.
Goodwill
At December 31, 1995 and 1994, L-P had approximately $17.8 million and
$19.9 million of goodwill, net of accumulated amortization, recorded in the
balance sheet under the caption "other assets." This goodwill resulted from
the purchase of a subsidiary in 1994 (which L-P acquired in exchange for the
issuance of treasury shares) and is being amortized on a straight-line basis
over ten years. The amortization period and recoverability of this goodwill
are periodically reviewed by the company.
Reclassifications
Certain prior year amounts have been reclassified to conform to the
current year presentation.
Other Notes to Financial Statements
Accounts Payable and Accrued Liabilities
DECEMBER 31 (IN MILLIONS) 1995 1994
Accounts payable $98.6 $105.5
Salaries and wages payable 19.8 20.4
Taxes other than income taxes 12.4 13.3
Workers' compensation 12.0 11.4
Other accrued liabilities 18.8 16.2
------ ------
$161.6 $166.8
====== ======
<PAGE>
<TABLE>
<CAPTION>
Long-Term Debt
INTEREST RATE DECEMBER 31,
(IN MILLIONS) AT 12/31/95 1995 1994
<S> <C> <C> <C> <C>
Project Bank Financings --
Chetwynd, B.C. pulpmill, balance due in 1996,
expected to be refinanced, interest rate variable 6.3% $80.0 $98.0
Nova Scotia fiber gypsum plant, payable in 1997
and 1998, interest rate variable 2.7 34.7 34.7
Sunpine Forest Products, payable through 2002,
Sundre, Alberta, interest rate variable 6.7 5.9 6.6
Waterford, Ireland, OSB plant, payable 1996-2001,
interest rate variable 6.8 30.0 --
Project Revenue Bond Financings --
Ketchikan, AK -- -- 10.7
Newberry, MI, payable in 2009,
interest rate variable 5.7 7.6 7.6
Two Harbors, MN, payable in 2004,
interest rate variable 5.7 8.0 8.0
Wilmington, NC, payable in 1999,
interest rate variable 6.1 10.0 10.0
Hanceville, AL payable 1996-2000,
interest rate fixed 7.2 .6 .7
Employee Stock Ownership Trust (ESOT) Loans --
Hourly ESOT, payable annually through 1999,
interest rate fixed 8.3 34.0 42.5
Salaried ESOT, payable annually through 1999,
interest rate variable 4.8 24.0 30.0
Santa Fe Industries, Inc. -- -- 36.2
Other installment notes and contracts, payable in
varying amounts, through 2000, interest rates vary 0.0-9.0 5.1 6.7
------ ------
239.9 291.7
Less current portion (38.6) (81.9)
------ ------
$201.3 $209.8
====== ======
</TABLE>
The carrying amounts of L-P's long-term debt approximates fair market
value since the debt is primarily variable rate debt.
Debt is generally unsecured except for the Sunpine Forest Products debt
which is secured by the assets of Sunpine and also guaranteed by L-P. The
debt represents 100 percent of Sunpine's obligations, however, L-P Canada Ltd.
is a 50 percent joint venture partner. Other installment notes and contracts
were incurred primarily through acquisitions of plants and timber.
Many of L-P's loan agreements contain lender's standard covenants and
restrictions. L-P was in compliance with all of the covenants and
restrictions of these agreements during 1994 and 1993.
L-P has a $100 million revolving credit facility with a group of banks
which expires in 2000. Interest on borrowings under the credit line is
computed on one of numerous variable interest rate formulas at L-P's option.
L-P pays a commitment fee on the unused credit line. There were no borrowings
in 1994 or 1993.
The weighted average interest rate for all debt at December 31, 1995 and
1994 was 5.9 percent and 5.7 percent. Required repayment of principal for
long-term debt is as follows:
YEAR ENDED DECEMBER 31 (IN MILLIONS)
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38.6
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.4
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.8
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.3
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69.5
2001 and after . . . . . . . . . . . . . . . . . . . . . . . . . . 21.3
------
$239.9
======
Retirement Plans
L-P maintains tax-qualified Employee Stock Ownership Trusts (ESOTs), for
salaried and certain hourly employees under which 10 percent of the eligible
employees' annual earnings are contributed to the plans. Prior to 1995, hourly
employees received contributions of 5 percent, supplemented by participation
in defined benefit pension plans. The defined benefit plans covering the
majority of hourly employees were frozen at the end of 1994. Approximately
11,500 L-P employees participate in the ESOTs.
Compensation expense for ESOT shares allocated to employees each year is
generally based on the ESOTs' cost of the shares. However, as required by
SOP 93-6, compensation expense for the 1,843,621 shares sold to the ESOTs in
1994 (of which 460,905 shares per year are allocable to participants' accounts
in 1995 through 1998) is based on the market value of the shares at the time
of allocation. L-P's ESOTs held a total of 13,936,298 shares at December 31,
1995 of which 8,442,369 were allocated to participants' accounts.
ESOT contributions were as follows:
YEAR ENDED DECEMBER 31 (IN MILLIONS) 1995 1994 1993
Compensation expense $28.9 $18.1 $18.0
Interest incurred on ESOT debt 4.3 4.8 5.6
Dividends paid on unallocated ESOT shares (2.8) (3.1) (3.5)
Market value adjustment (2.3) -- --
----- ----- -----
Total contribution $28.1 $19.8 $20.1
===== ===== =====
L-P also maintains other defined contribution pension plans covering
various groups of hourly and salaried employees in the U.S. and other
countries. Contributions to the plans are generally computed by one of three
methods: 1) L-P contribution required based upon a defined formula with no
employee contributions allowed; 2) L-P contribution required based upon a
defined formula with elective employee contributions; and 3) elective employee
contributions only with no L-P contribution allowed.
L-P also has a number of defined benefit pension plans covering its
hourly employees, most of which were frozen in 1994 as discussed above.
Contributions to these plans are based on actuarial calculations of amounts to
cover current pension and amortization of prior service costs over periods
ranging from 10 to 20 years. Contributions to multiemployer defined benefit
plans are specified in applicable collective bargaining agreements.
The status of L-P administered defined benefit pension plans is as
follows:
1995
-------------------------
Plans with Plans with
Assets in Accumulated
Excess of Benefits
Accumulated in Excess
DECEMBER 31 (IN MILLIONS) Benefits of Assets 1994
----------- ----------- ----
Accumulated benefit obligation
Vested portion $19.1 $88.9 $ 91.7
Non-vested portion .3 4.3 3.4
----- ----- -----
Total 19.4 93.2 95.1
Effect of future compensation -- .1 --
----- ----- -----
Projected benefit obligation 19.4 93.3 95.1
Plan assets 33.6 88.8 114.3
----- ----- -----
Net funded status 14.2 (4.5) 19.2
Unrecognized asset at transition (4.3) (9.6) (16.3)
Unrecognized prior service -- -- --
Unrecognized net loss 1.8 19.3 10.1
Adjustment to recognize minimum liability -- (9.6) --
----- ----- -----
Net prepaid (accrued) pension expense $11.7 $(4.4) $ 13.0
===== ===== =====
The actuarial assumptions used to determine pension expense and the
funded status of the plans for 1995 and 1994 were: a discount rate on benefit
obligations of 7.5 percent in 1995 and 8.5 percent in 1994, and an
8.75 percent expected long-term rate of return on plan assets in 1995 and
1994.
The assets of the plans at December 31, 1995 and 1994 consist mostly of
government obligations, and minor amounts in equity securities and cash and
cash equivalents.
Pension expense included the following components:
YEAR ENDED DECEMBER 31 (IN MILLIONS) 1995 1994 1993
Benefits earned by employees $ .4 $ 4.8 $ 3.9
Interest cost on projected benefit obligation 7.9 8.2 7.4
Return on plan assets (10.2) (10.1) (9.4)
Net amortization and deferral (2.4) (1.3) (2.4)
----- ----- -----
Net periodic pension expense (income) (4.3) 1.6 (.5)
Contributions to multiemployer and
defined contribution pension plans 2.0 1.8 1.5
Gain from curtailment of pension plan -- (5.2) --
----- ----- -----
Net pension expense (income) $ (2.3) $ (1.8) $ 1.0
===== ===== =====
During the first quarter of 1993, the Company adopted the Financial
Accounting Standards Board (FASB) Statement No. 106, "Employers' Accounting
for Post-retirement Benefits Other Than Pensions." The standard requires
employers to record the cost of non-pension retirement benefits during the
working years of the employee. Adoption of this standard resulted in a
one-time charge of $3.2 million or three cents per share, net of $1.9 million
in income taxes, to first quarter 1993 earnings. Net expense in 1995, 1994 and
1993 was $.6 million, $.8 million and $.8 million. L-P does not generally
provide post-employment benefits (as defined in FASB Statement No. 112), and
therefore adoption of this statement did not have a material effect on the
financial statements.
Stock Options and Plans
L-P grants options to key employees to purchase L-P common stock.
Options are granted at 85 to 100 percent of market price. The options become
exercisable 20 percent or 33 percent per year beginning one year after the
grant date and expire 5 or 10 years after the date of grant. Compensation
expense (income) recognized for stock options was $1.0 million in 1995,
$(.3) million in 1994 and $3.0 million in 1993. Shares available for grant at
December 31, 1995 were 766,200.
Changes in options outstanding and exercisable were as follows:
NUMBER OF SHARES
--------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------
Options outstanding at January 1 2,611,123 2,800,662 1,345,671
Adjustment for stock splits -- -- 1,539,881
Options granted 114,000 193,350 254,200
Options exercised (1,046,412) (209,809) (289,760)
Options canceled (308,301) (173,080) (49,330)
--------- --------- ---------
Options outstanding at December 31 1,370,410 2,611,123 2,800,662
========= ========= =========
Options exercisable at December 31 668,900 1,137,453 727,082
========= ========= =========
PRICE RANGE PER SHARE
------------------------------
1995 1994 1993
- -------------------------------------------------------------------------
Options granted $22 $28 $30
====== ====== ======
Options exercised $7-$20 $7-$30 $9-$19
====== ====== ======
Options outstanding $9-$30 $7-$30 $7-$30
====== ====== ======
L-P also grants awards under the Louisiana-Pacific Corporation Key
Employee Restricted Stock Plan. Shares are issued, at no cost to the employee,
only after certain annual performance criteria are met. The shares may be
issued either in the year concurrent with or subsequent to the performance
criteria being met, depending on several factors. However, the expense is
recorded in the year to which the performance criteria relates regardless of
the year in which the shares are actually issued. L-P did not meet the
performance criteria in 1995 and therefore recognized no compensation expense
for restricted stock awards. L-P met the performance criteria in 1994 and 1993
and recognized compensation expense for restricted stock awards of
$10.6 million in 1994 and $20.3 million in 1993. Shares available for grant at
December 31, 1995 were 2,744,917.
Changes in the Restricted Stock Awards outstanding were as follows:
NUMBER OF SHARES
-------------------------------
1995 1994 1993
- ------------------------------------------------------------------------------
Restricted awards outstanding at January 1 664,500 960,000 724,500
Adjustments for stock splits -- -- 500,250
Restricted awards granted 145,000 256,000 360,000
Restricted awards exercised (42,875) (412,500)
(564,750)
Restricted awards canceled (515,417) (139,000)
(60,000)
------- ------- -------
Restricted awards outstanding at December 31 251,208 664,500 960,000
======= ======= =======
L-P offers employee stock purchase plans to all employees. Under each
plan, employees may subscribe to purchase shares of L-P stock over 24 months
at 85 percent of the market price. At December 31, 1995, 1,034,535 shares and
225,923 shares were subscribed at $20.35 and $30.02 per share under the 1995
and 1994 Employee Stock Purchase Plans. During 1995, L-P issued 99,819 shares
to employees at an average price of $25.59 under all Employee Stock Purchase
Plans, including the completion of the purchase period for the 1992 Plan.
The Financial Accounting Standards Board has issued SFAS 123,
"Accounting for Stock-Based Compensation" which establishes a fair value
approach to measuring compensation expense related to employee stock plans. In
1996, L-P must either account for awards granted under employee stock plans
after January 1, 1995 under the provisions of SFAS 123 or provide detailed
disclosures in lieu of adoption. L-P plans to only adopt the disclosure
provisions of SFAS 123.
CONTINGENCIES
Environmental Proceedings
In March 1995, L-P's Ketchikan Pulp Company (KPC) entered into
agreements with the federal government to resolve the issues related to water
and air compliance problems experienced at KPC's pulp mill during the late
1980s and early 1990s. Under the agreements, KPC entered into a civil consent
decree and pled guilty to one felony and thirteen misdemeanor violations of
the Clean Water Act. The settlement required KPC to pay civil and criminal
penalties of $6.0 million, of which $1.75 million was suspended in
consideration of KPC's expenditures and ongoing efforts to improve its
operations. The penalties were substantially reserved for at December 31,
1994. KPC also agreed to undertake further expenditures, which are primarily
capital in nature, including certain remedial and pollution control related
measures, with an estimated cost of up to approximately $20 million. KPC has
also agreed to undertake a study of whether a clean-up of Ward Cove, the body
of water adjacent to the pulp mill, is needed. If the study determines that
such clean-up is needed, KPC may be required to spend up to $6 million on the
clean-up, including the cost of the study, as part of the overall $20 million
of expenditures. At this time, the company cannot estimate what portion, if
any, of the clean-up expenditures will be required.
Certain of L-P's plant sites have or are suspected of having substances
in the ground or in the groundwater that are considered pollutants.
Appropriate corrective action or plans for corrective action are underway.
Where the pollutants were caused by previous owners of the property, L-P is
vigorously pursuing those parties through legal channels and is vigorously
pursuing insurance coverage under all applicable policies.
L-P maintains a reserve for estimated environmental loss contingencies.
The balance of the reserve was $13.6 million and $13.2 million at December 31,
1995 and 1994. As with all accounting estimates, significant uncertainty
exists in the reliability and precision of the estimates because the facts and
circumstances surrounding each contingency vary from case to case. L-P
continually monitors its estimated exposure for environmental liabilities and
adjusts its accrual accordingly. As additional information about the
environmental contingencies becomes known, L-P's estimate of its liability for
environmental loss contingencies may change significantly, although no
estimate of the range of potential liability can be made at this time. L-P
cannot estimate the time frame over which these accrued amounts are likely to
be paid out. A portion of L-P's environmental reserve is related to
liabilities for clean-up of properties which are currently owned or have been
owned in the past by L-P. Certain of these sites are subject to cost sharing
arrangements with other parties who were also involved with the site. L-P does
not believe that any of these cost sharing arrangements will result in an
additional material liability to L-P due to non-performance by the other
party. L-P has not reduced its liability for any anticipated insurance
recoveries.
Although L-P's policy is to comply with all applicable environmental
laws and regulations, the company has in the past been required to pay fines
for non-compliance and sometimes litigation has resulted from contested
environmental actions. Also, L-P is involved in other environmental actions
and proceedings which could result in fines or penalties. Management believes
that any fines, penalties or other losses resulting from the matters discussed
above in excess of the reserve for environmental loss contingencies will not
have a material adverse effect on the business, financial position or results
of operations of L-P. See "Colorado Criminal Proceeding" for further
discussion of an environmental action against the company.
Colorado Criminal Proceeding
L-P began an internal investigation at L-P's Montrose (Olathe),
Colorado, oriented strand board (OSB) plant of various matters, including
certain environmental matters, in the summer of 1992 and reported its initial
finding of irregularities to governmental authorities in September 1992.
Shortly thereafter, a federal grand jury commenced an investigation of L-P
concerning alleged environmental violations at that plant. In 1995, additional
subpoenas were issued requiring the production of evidence and testimony
relating to alleged fraud in connection with the submission of
unrepresentative OSB product samples to the APA-The Engineered Wood
Association (APA), an industry product certification agency, by L-P's Montrose
plant and certain of its other OSB plants. L-P then commenced an independent
investigation, which was concluded in 1995, under the direction of former
federal judge Charles B. Renfrew concerning irregularities in sampling and
quality assurance in its OSB operations. In June 1995, the grand jury returned
an indictment in the U.S. District Court in Denver, Colorado, against L-P, a
former manager of the Montrose mill, and a former superintendent at the mill.
L-P has been charged with 23 felony counts related to environmental
matters at the Montrose mill, including alleged conspiracy, tampering with
opacity monitoring equipment, and making false statements under the Clean Air
Act. The indictment also charges L-P with 25 felony counts of fraud relating
to alleged use of the APA trademark on OSB structural panel products produced
by the Montrose mill as a result of L-P's allegedly improper sampling
practices in connection with the APA quality assurance program.
In December 1995, L-P received a notice of suspension from the United
States Environmental Protection Agency ("EPA") stating that, because of
criminal proceedings pending against L-P in Colorado, agencies of the federal
government would be prohibited from purchasing from L-P's Northern Division.
Under recently revised regulations of the United States Department of
Agriculture, such action may also have the effect of barring L-P's Northern
Division from purchasing timber from the United States Forest Service. L-P is
negotiating to have the EPA suspension lifted or modified based on positive
environmental programs actively underway.
At the present time, L-P cannot predict whether or to what extent these
circumstances will result in further civil litigation or investigation by
government authorities, or the potential financial impact of any such current
or future proceedings. However, the resolution of the above matters could have
a materially adverse impact on L-P.
OSB Siding Matters
Since 1985, L-P has sold approximately 2.8 billion square feet of
oriented strand board (OSB) exterior siding products. L-P has paid
approximately $53 million since 1985 to settle claims relating to siding
warranties and class action settlements described below, including
approximately $16 million in 1995, approximately $10 million in 1994 and
approximately $5 million in 1993.
L-P has been named as a defendant in at least 11 purported class actions
filed in various jurisdictions (most of which were filed in 1995), as well as
numerous non-class action proceedings, brought on behalf of various persons or
purported classes of persons (including nationwide classes) who own or have
purchased or used OSB siding manufactured by L-P, because of alleged unfair
business practices, breach of warranty, misrepresentation, conspiracy to
defraud, and other theories related to alleged defects, deterioration, or
failure of OSB siding products.
A settlement of one of the OSB siding class actions has been approved by
the Circuit Court for Lake County, Florida. Under the settlement, L-P has
established a claims procedure pursuant to which members of the settlement
class may report problems with L-P's OSB siding and have their properties
inspected by an independent adjuster, who will measure the amount of damage
and also determine the extent to which improper design, construction,
installation, finishing, painting, and maintenance may have contributed to any
damage. The maximum payment for damaged siding will be $3.40 per square foot
for lap siding and $2.82 per square foot for panel siding, subject to
reduction of up to 75 percent for damage resulting from improper design,
construction, installation, finishing, painting, or maintenance, and also
subject to reduction for age of siding more than three years old. L-P has
agreed with attorneys representing the class that if the national class
settlement described below is approved by the court in that case, then the age
deduction from the payment to a member of the Florida class will be not
greater than the age deduction computed for a similar claimant under the
national settlement agreement. Class members will be entitled to make claims
for up to five years after October 4, 1995.
On October 18, 1995, a federal court gave preliminary approval to a
settlement agreement between L-P and attorneys representing a nationwide class
composed of all persons who own, who have owned, or who subsequently acquire
property on which L-P's OSB siding is installed prior to January 1, 1996,
excluding persons who timely opt out of the settlement and persons who are
members of the settlement class in the Florida litigation. Under the
settlement agreement, an eligible claimant whose claim is filed prior to
January 1, 2003 (or earlier in certain cases), and is approved by an
independent claims administrator will be entitled to receive from the
settlement fund established under the agreement a payment equal to the
replacement cost (to be determined by a third-party construction cost
estimator) of damaged siding, reduced by a specific adjustment (of up to 65
percent) based on the age of the siding. Class members who have previously
submitted or resolved claims under any other warranty or claims program of L-P
may be entitled to receive the difference between the amount which would be
payable under the settlement agreement and the amount previously paid.
Independent adjusters will determine the extent of damage to OSB siding at
each claimant's property. There will be no adjustment to settlement payments
for improper maintenance or installation.
L-P will be required to pay $275 million into the settlement fund in
seven annual installments beginning in mid-1996: $100 million, $55 million,
$40 million, $30 million, $20 million, $15 million, and $15 million. If at any
time after the fourth year of the settlement period the amount of approved
claims (paid and pending) equals or exceeds $275 million, then the settlement
agreement will terminate as to all claims in excess of $275 million unless L-P
timely elects to provide additional funding within 12 months equal to the
lesser of (i) the excess of unfunded claims over $275 million or (ii) $50
million and, if necessary to satisfy unfunded claims, a second payment within
24 months equal to the lesser of (i) the remaining unfunded amount or (ii) $50
million. If the total payments to the settlement fund are insufficient to
satisfy in full all approved claims filed prior to January 1, 2003, then L-P
may elect to satisfy the unfunded claims by making additional payments into
the settlement fund at the end of each of the next two 12-month periods or
until all claims are paid in full, with each additional payment being in an
amount equal to the greater of (i) 50 percent of the aggregate sum of all
remaining unfunded approved claims or (ii) 100 percent of the aggregate amount
of unfunded approved claims, up to a maximum of $50 million. If L-P fails to
make any such additional payment, all class members whose claims remain
unsatisfied from the settlement fund may pursue any available legal remedies
against L-P without regard to the release of claims provided in the settlement
agreement. If L-P makes all payments required under the settlement agreement,
including all additional payments as specified above, class members will be
deemed to have released L-P from all claims for damaged OSB siding, including
without limitation, claims arising under their existing 25-year limited
warranty. In the event all claims filed prior to January 1, 2003, that are
approved have been paid without exhausting the settlement fund, any amounts
remaining in the settlement fund revert to L-P.
The settlement agreement is subject to final approval by the court at a
fairness hearing presently scheduled to be held in April 1996. Potential
members of the settlement class may elect to opt out of the settlement class
within specified times prior to the court's fairness hearing, subject to L-P's
right to withdraw from the settlement if there are excessive elections to opt
out.
During 1995, the Attorneys General of the states of Florida, Oregon, and
Washington initiated separate proceedings concerning production, testing,
marketing, and performance of L-P's OSB siding and other attorneys general
have also made inquiries concerning the same topics. In January 1996, L-P
entered into settlement agreements with the Attorneys General of the states of
Oregon and Washington. Under the settlement agreements, L-P did not admit any
wrongdoing, but agreed to pay $1 million to the Wood Materials and Engineering
Research Activities of Washington State University, $.5 million to the Oregon
Consumer Protection and Education Revolving Account, plus a civil penalty and
costs of $.4 million. The settlement agreements also obligate L-P to ensure
that marketing claims may be appropriately substantiated. L-P is also engaged
in settlement discussions with the Attorney General of the State of Florida.
L-P maintains reserves for these siding settlements. See "contingency
reserves" below.
Other OSB Matters
In July 1995, an action entitled MacDonald v. Louisiana-Pacific
Corporation was filed in Superior Court for the State of California for the
County of San Diego, purporting to be a consumer action brought on behalf of
the general public in California. The action alleges that L-P violated the
California Unfair Business Practices Act through allegedly fraudulent APA
certification, quality sampling, advertising, and marketing of OSB products.
The complaint seeks, among other relief, restitution to members of the public
who purchased L-P's OSB products, return of moneys obtained by L-P from
allegedly fraudulent sales, imposition of an asset freeze and constructive
trust, and various forms of injunctive relief. A similar action, entitled
Carney v. Louisiana-Pacific Corporation, was filed in October 1995 in the
Superior Court of the State of California for the City and County of San
Francisco seeking restitution and injunctive relief.
In September 1995, a complaint entitled Agius v. Louisiana-Pacific
Corporation was filed in the United States District Court for the Northern
District of California naming L-P as a defendant in a purported class action
seeking damages and injunctive relief for violation of the Lanham Act, breach
of warranty, and violation of California consumer protection statutes, based
on alleged fraud and misrepresentation in connection with testing, APA
certification, and marketing of OSB products.
In January 1996, an action entitled Stewart v. Louisiana-Pacific
Corporation was instituted in the United States District Court for the
District of Colorado. Plaintiff seeks to represent a purported class
consisting generally of owners and purchasers of buildings in which L-P's OSB
panels are used for flooring, sheathing, or underlayment. The complaint seeks
damages in an unspecified amount and equitable relief by reason of alleged
fraud, misrepresentation, negligence, breach of warranty, and deceptive trade
practices related to alleged improprieties in testing, certification, and
marketing of OSB structure panels and alleged premature deterioration of OSB
panels.
In February 1996, an action entitled Mellett v. Louisiana-Pacific
Corporation was instituted in the United States District Court of the District
for Oregon. Plaintiff seeks to represent a purported class consisting
generally of purchasers and owners of structures in which L-P's OSB panels are
used for sheathing. The complaint seeks damages in an unspecified amount,
including punitive damages, by reason of alleged fraud, negligent
misrepresentation, negligence, breach of warranty, and deceptive trade
practices related to alleged improprieties in testing, certification, and
marketing of OSB structural panels.
At the present time, L-P cannot predict the potential financial impact
of the above actions. However, the resolution of the above matters could have
a materially adverse impact on L-P.
Securities Actions
L-P, certain of its executive officers and former executive officers,
and certain other executives have been named as defendants in numerous actions
brought on behalf of various purported classes of purchasers of L-P's common
stock. The actions, which have been consolidated in the United States District
Court for the District of Oregon, seek to recover damages under the securities
laws for alleged failures to disclose or improper disclosures generally
relating to the various legal proceedings described above and the matters that
are the subject of such proceedings. L-P is defending the actions vigorously,
but is unable to make any estimate of the possible outcome of the securities
class actions.
Executive Employment Matter
In January 1996, an action entitled International Paper Company v. Mark
A. Suwyn and Louisiana-Pacific Corporation was instituted in the United States
District Court for the Southern District of New York claiming that Mr. Suwyn's
employment as chief executive officer of L-P violated the terms of a previous
employment agreement with the plaintiff. The complaint seeks an injunction
prohibiting Mr. Suwyn from continuing his employment with L-P for 18 months
and other relief. L-P believes there are meritorious defenses related to this
case and does not believe that there is any material liability related to this
case.
Other
L-P and its subsidiaries are parties to other legal proceedings.
Management believes that the outcome of such proceedings will not have a
material adverse effect on the business, financial position or results of
operations of L-P.
Contingency Reserves
L-P recorded a charge of $345 million in 1995 under the caption
"Settlement charge and other unusual items, net" for estimated claims to be
paid under the siding settlements and for other legal matters as well as
attorneys' fees and other costs associated with the settlements. This charge
was based on L-P's best estimates of the total amounts to be paid out under
these agreements and for certain other legal matters. The balance in the
reserves, exclusive of the environmental reserves discussed above, was $387
million and $14 million at December 31, 1995 and 1994. As L-P receives
additional information regarding actual claim rates and average claim amounts,
L-P will monitor its estimated exposure for these settlements and adjust its
accrual accordingly. In addition to the inherent difficulty of estimating
legal reserves because of uncertainties in the legal process, there is
additional uncertainty because of L-P's lack of experience with claims costs
under these settlements. The amounts ultimately paid under these settlements
and for other legal matters could differ materially from the amount currently
recorded, although no estimate of the timing or range of the potential
liability can be made at this time.
COMMITMENTS
L-P is obligated to purchase timber under cutting contracts, primarily
with the U.S. Forest Service, which extend to 2004. L-P's best estimate of its
commitment at current contract rates under these contracts is approximately
$421.2 million for 2.1 billion board feet of timber, the majority of which
expires in 2004.
Payments under all operating leases that were charged to rental expense
during 1995, 1994, and 1993 were $10.7 million, $7.6 million and $7.1 million.
L-P's future minimum rental payments under non-cancelable operating leases
total approximately $11.5 million.
During 1996, L-P plans expenditures of $250-$300 million for plant
additions and improvements, timber and logging roads.
SEGMENT INFORMATION
L-P operates in two major industry segments. The major products included
in each segment are detailed further on page 24. Intersegment sales are chips
transferred from company-owned building products plants to company-owned pulp
mills. All transfers are made at prevailing market prices. Timber and related
assets and capital expenditures for such assets have not been allocated to the
industry segments as these are a prime source of raw materials for both
segments. The cost of logs delivered to the plants and residual fibers are
included in the operating results of the segments.
Export sales were primarily to customers in the Far East and Europe.
Information about L-P's geographic segments is as follows:
YEAR ENDED DECEMBER 31 (IN MILLIONS) 1995 1994 1993
- ------------------------------------------------------------------------------
Total sales -- point of origin
U.S. $2,703 $2,937 $2,482
Canada and other 191 158 83
Intersegment sales to U.S. (51) (55) (54)
------ ------ ------
Total sales $2,843 $3,040 $2,511
====== ====== ======
Export sales (included above) $ 457 $ 371 $ 252
====== ====== ======
Profit (loss)
U.S. $ 353 $ 585 $ 479
Canada and other 37 46 24
Settlement charge and other unusual items, net (367) -- --
Unallocated expense and interest, net (118) (71) (75)
------ ------ ------
Income (loss) before taxes, minority
interest and accounting changes $ (95) $ 560 $ 428
====== ====== ======
Identifiable assets
U.S. $2,305 $2,325 $2,116
Canada 434 363 341
All other 66 28 9
------ ------ ------
Total assets $2,805 $2,716 $2,466
====== ====== ======
<PAGE>
<TABLE>
<CAPTION>
Information about L-P's industry segments is as follows:
YEAR ENDED DECEMBER 31 (IN MILLIONS) 1995 1994 1993
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Total sales
Building products $2,535 $2,831 $2,434
Pulp 334 220 85
Intersegment sales to pulp (26) (11) (8)
------ ------ ------
Total sales $2,843 $3,040 $2,511
====== ====== ======
Profit (loss)
Building products $ 346 $ 636 $ 562
Pulp 44 (5) (59)
Settlement charge and other unusual items, net(1) (367) -- --
Unallocated expense, net (121) (72) (70)
Interest, net 3 1 (5)
------ ------ ------
Income (loss) before taxes, minority interest
and accounting changes $ (95) $ 560 $ 428
====== ====== ======
Identifiable assets
Building products $1,389 $1,146 $1,040
Pulp 457 440 423
Timber, timberlands, logging equipment and roads 727 733 710
Unallocated assets 232 397 293
------ ------ ------
Total assets $2,805 $2,716 $2,466
====== ====== ======
Depreciation, amortization and cost of timber harvested
Building products $158 $162 $157
Pulp 36 29 21
Capital expenditures
Building products 286 228 144
Pulp 47 30 46
Timber, timberlands, logging equipment and roads 69 92 118
</TABLE>
__________________________
(1) In the third quarter of 1995, L-P recorded a charge of $366.6 million
($221.8 million after taxes or $2.07 per share) related to class action
settlements concerning the company's siding product, severance charges
and asset write-downs. This amount would be primarily allocated to
building products.
<PAGE>
REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS AND MANAGEMENT
Report of Independent Public Accountants
To the Stockholders and Board of Directors of Louisiana-Pacific
Corporation:
We have audited the accompanying consolidated balance sheets of
Louisiana-Pacific Corporation (a Delaware corporation) and subsidiaries as of
December 31, 1995 and 1994, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. 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 financial position of Louisiana-Pacific
Corporation and subsidiaries as of December 31, 1995 and 1994, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1995 in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Portland, Oregon
February 2, 1996
Report of Management
The management of Louisiana-Pacific Corporation has prepared the
consolidated financial statements and related financial data contained in this
Annual Financial Report. The financial statements were prepared in accordance
with generally accepted accounting principles appropriate in the circumstances
and by necessity include some amounts determined using management's best
judgments and estimates with appropriate consideration to materiality.
Management is responsible for the integrity and objectivity of the financial
statements and other financial data included in the report. To meet this
responsibility management maintains a system of internal accounting controls
to provide reasonable assurance that assets are safeguarded and that
accounting records are reliable. Management supports a program of internal
audits and internal accounting control reviews to provide assurance that the
system is operating effectively.
The Board of Directors pursues its responsibility for reported financial
information through its Audit Committee, composed of five outside directors.
The Audit Committee meets periodically with management, the internal auditors
and the independent public accountants to review the activities of each.
MARK A. SUWYN WILLIAM L. HEBERT
Chairman and Chief Executive Officer Vice President - Treasurer and
Controller
February 2, 1996
<PAGE>
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
Information regarding the directors of the registrant is incorporated
herein by reference to the material included under the caption "Item 1--
Election of Directors" and "General" in the definitive proxy statement filed
by the registrant for its 1996 annual meeting of stockholders (the "1996 Proxy
Statement"). Information regarding the executive officers of the registrant
is located in Part I of this report under the caption "Executive Officers of
the Registrant."
<PAGE>
ITEM 11. Executive Compensation
Information regarding executive compensation is incorporated herein by
reference to the material under the captions "Compensation Committee--
Interlocks and Insider Participation," "Summary Compensation Table,"
"Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Options/SAR Values," and "Director's Compensation," in the 1996 Proxy
Statement.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
Information regarding security ownership of certain beneficial owners
and management is incorporated herein by reference to the material under the
caption "Holders of Common Stock" in the 1996 Proxy Statement.
ITEM 13. Certain Relationships and Related Transactions
Information regarding management transactions is incorporated herein by
reference to the material under the captions "Compensation Committee--
Interlocks and Insider Participation" and "Management Transactions" in the
1996 Proxy Statement.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
A. Financial Statements and Financial Statement Schedules
The following financial statements are included in this report:
Consolidated Balance Sheets--December 31, 1995, and 1994.
Consolidated Statements of Income--years ended
December 31, 1995, 1994, and 1993.
Consolidated Statements of Cash Flows--years ended
December 31, 1995, 1994, and 1993.
Consolidated Statements of Stockholders' Equity--years
ended December 31, 1995, 1994, and 1993.
Notes to Financial Statements.
Report of Independent Public Accountants.
No financial statement schedules are required to be filed.
B. Reports on Form 8-K
During the quarter ended December 31, 1995, the registrant filed a
report on Form 8-K dated November 16, 1995, for the purpose of reporting an
amendment to its Rights Agreement.
C. Exhibits
The exhibits filed as part of this report or incorporated by reference
herein are listed in the accompanying exhibit index. Each management contract
or compensatory plan or arrangement is identified in the index.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Louisiana-Pacific Corporation, a Delaware corporation
(the "registrant"), has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: March 29, 1996 LOUISIANA-PACIFIC CORPORATION
(Registrant)
/s/ WILLIAM L. HEBERT
William L. Hebert
Vice President - Treasurer
________________________________________
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 and in the capacities and on the dates indicated.
Date Signature and Title
March 29, 1996 /s/ MARK A. SUWYN
Mark A. Suwyn
Chairman, Chief Executive Officer and
Director
(Principal Executive Officer)
March 29, 1996 /s/ WILLIAM L. HEBERT
William L. Hebert
Vice President - Treasurer
(Principal Financial & Accounting Officer)
<PAGE>
Date Signature and Title
March 29, 1996 /s/ PIERRE S. DU PONT IV
Pierre S. du Pont IV
Director
March 29, 1996 /s/ BONNIE GUITON HILL
Bonnie Guiton Hill
Director
March 29, 1996 /s/ DONALD R. KAYSER
Donald R. Kayser
Director
March 29, 1996 /s/ FRANCINE I. NEFF
Francine I. Neff
Director
March 29, 1996 /s/ LEE C. SIMPSON
Lee C. Simpson
Director
March 29, 1996 /s/ CHARLES E. YEAGER
Charles E. Yeager
Director
<PAGE>
EXHIBIT INDEX
On written request, the registrant will furnish to any record holder or
beneficial holder of the registrant's common stock any exhibit to this report
upon the payment of a fee equal to the registrant's costs of copying such
exhibit plus postage. Any such request should be sent to: Pamela A. Selis,
Director of Corporate Communications, Louisiana-Pacific Corporation,
111 S.W. Fifth Avenue, Portland, Oregon 97204.
Items identified with an asterisk (*) are management contracts or compensatory
plans or arrangements.
Exhibit Description of Exhibit
3.A Restated Certificate of Incorporation of the
registrant as amended to date. Incorporated by
reference to Exhibit 3(a) to the registrant's
Form 10-Q report for the quarter ended June 30,
1993.
3.B Bylaws of the registrant as amended to date.
4.A.1 Rights Agreement as Restated as of February 3,
1991, between the registrant and First Chicago
Trust Company of New York as Rights Agent.
Incorporated by reference to Exhibit 4 to the
registrant's Form 8-K report dated as of March 18,
1991.
4.A.2 Amendment No. 1 dated as of July 28, 1995, to
Rights Agreement, restated as of February 3, 1991,
between the registrant and First Chicago Trust
Company of New York. Incorporated by reference to
Exhibit 3 to the registrant's Form 8-A/A
(Amendment No. 2) dated August 3, 1995.
4.A.3 Amendment No. 2 dated as of October 30, 1995, to
Rights Agreement, restated as of February 3, 1991,
and amended as of July 28, 1995, between the
registrant and First Chicago Trust Company of
New York. Incorporated by reference to Exhibit 4
to the registrant's Form 8-K (Amendment No. 2)
dated October 29, 1995.
Pursuant to Item 601 (b)(4)(iii) of Regulation
S-K, the registrant is not filing certain
instruments with respect to its long-term debt
because the amount authorized under any such
instrument does not exceed 10 percent of the total
consolidated assets of the registrant at
December 31, 1995. The registrant agrees to
furnish a copy of any such instrument to the
Securities and Exchange Commission upon request.
4.A.4 Credit Agreement dated as of February 16, 1996,
among registrant and Bank of America National
Trust and Savings Association, as agent, and the
other financial institutions party thereto.
<PAGE>
10.A The registrant's 1984 Employee Stock Option Plan
as amended to date. Incorporated by reference
to Exhibit 10.B to the registrant's Form 10-K
report for 1989.*
10.B The registrant's 1991 Employee Stock Option Plan.
Incorporated by reference to Exhibit 10.B to the
registrant's Form 10-K report for 1990.*
10.C 1992 Non-Employee Director Stock Option Plan and
Related Form of Option Agreement. Incorporated by
reference to Exhibit 10.C to the registrant's
Form 10-K report for 1992.*
10.D Deferred cash bonus agreement dated May 5, 1986,
between the registrant and Harry A. Merlo; and
deferred cash bonus agreement dated February 2,
1987, between the registrant and Harry A.
Merlo. Incorporated by reference to Exhibit 10.D
to the registrant's Form 10-K report for 1986
(File No. 1-7107).*
10.E Louisiana-Pacific Corporation Directors'
Deferred Compensation Plan. Incorporated by
reference to Exhibit 10.F to the registrant's
Form 10-K report for 1986 (File No. 1-7107).*
10.H(1) The registrant's Key Employee Restricted Stock
Plan as amended. Incorporated by reference to
Exhibit 10.H(1) to the registrant's Form 10-K
report for 1990.*
10.H(2) Form of Restricted Stock Award Agreement under
Exhibit 10.H(1). Incorporated by reference to
Exhibit 10.H(2) to the registrant's Form 10-K
report for 1992.*
10.I Lease and Option to Purchase between the
registrant as Lessor and Harry A. Merlo as Lessee,
as amended. Incorporated by reference to Exhibit
10.I to the registrant's Form 10-K report for
1988.
10.K The registrant's Supplemental Benefits Plan.
Incorporated by reference to Exhibit 10.K to the
registrant's Form 10-K report for 1989.*
10.L Employment Agreement between the registrant and
Mark A. Suwyn dated January 2, 1996.*
<PAGE>
10.M Restricted Stock Award Agreement between the
registrant and Mark A. Suwyn dated January 31,
1996.*
10.N Employment Agreement between the registrant and
Donald R. Kayser dated July 28, 1995.*
10.O Employment Agreement between the registrant and
Lee C. Simpson dated July 28, 1995.*
10.P Employment Agreement between the registrant and
Stephen Grant dated August 1, 1995.*
10.Q Consulting Agreement between the registrant and
Donald R. Kayser dated January 29, 1996.*
10.R Consulting Agreement between the registrant and
James Eisses dated August 11, 1995.*
10.S Letter agreement between the registrant and
Harry A. Merlo dated August 4, 1995.*
10.T Letter agreement between the registrant and James
Eisses dated August 11, 1995.*
10.U Letter agreement between the registrant and
Ronald L. Paul dated August 17, 1995.
11 Louisiana-Pacific Corporation and Subsidiaries:
Calculation of Net Income Per Share for the Year
Ended December 31, 1995.
21 List of subsidiaries of the registrant.
23 Consent of Independent Public Accountants.
27 Financial data schedule.
<PAGE>
<PAGE>
EXHIBIT 3.B
BYLAWS OF
LOUISIANA-PACIFIC CORPORATION
ARTICLE I. STOCKHOLDERS' MEETINGS
Section 1. Annual Meeting. The annual meeting of the stockholders
shall be held on the first Friday in the month of May in each year at
10:30 a.m. or at such other time or date in April or May of each year as shall
be fixed by the Board of Directors, for the election of directors and the
transaction of such other business as may properly come before the meeting.
If the date fixed for the annual meeting shall be a legal holiday in the place
of the meeting, the meeting shall be held on the next succeeding business day.
Section 2. Special Meetings. Special meetings of the stockholders for
any proper purposes, unless otherwise provided by the law of Delaware, may be
called by the Chairman or pursuant to resolution of the Board of Directors and
shall be called by the Chairman at the request in writing of a majority of the
directors. Business transacted at a special meeting of stockholders shall be
confined to the purpose or purposes of the meeting as stated in the notice of
the meeting.
Section 3. Place of Meetings. Meetings of the stockholders may be held
at such places, within or without the State of Delaware, as the Board of
Directors or the officer calling the same shall specify in the notice of such
meeting.
Section 4. Notice of Meeting. Written notice stating the place, day
and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall, unless otherwise prescribed
by statute, be given not less than ten nor more than sixty days before the
date of the meeting, either personally or by mail, by or at the direction of
the Chairman, the President, the Secretary, or other persons calling the
meeting, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail, postage prepaid, directed to the stockholder at his address as it
appears on the records of the Corporation. When a meeting is adjourned to
another time or place, notice of the adjourned meeting need not be given
provided that the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken, the adjournment is
for no more than thirty days, and after the adjournment no new record date is
fixed for the adjourned meeting. Notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting if all the
conditions of the proviso in the preceding sentence are not met. At an
adjourned meeting the Corporation may transact any business which might have
been transacted at the original meeting.
Section 5. Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders except as otherwise provided
by statute or in the Certificate of Incorporation. If less than a majority of
the outstanding shares are represented at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The stockholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Section 6. Organization. At each meeting of the stockholders the
Chairman, or in his absence or inability to act, the President, or in the
absence or inability to act of the Chairman and the President, a
Vice-President, or in the absence of all the foregoing, any person chosen by a
majority of those stockholders present shall act as chairman of the meeting.
The Secretary, or, in his absence or inability to act, the Assistant Secretary
or any person appointed by the chairman of the meeting, shall act as secretary
of the meeting and keep the minutes thereof.
Section 7. Conduct of Business. The Board of Directors shall have
authority to determine from time to time the procedures governing, and the
rules of conduct applicable to, annual and special meetings of the
stockholders. Except as otherwise determined by the Board of Directors prior
to the meeting, the chairman of any stockholders meeting shall determine the
order of business and shall have authority in his discretion to adjourn such
meeting and to determine the procedures governing such meeting and to regulate
the conduct thereat, including, without limitation, imposing restrictions on
the persons (other than stockholders of the corporation or their duly
appointed proxies) who may attend any such stockholders meeting, determining
whether any stockholder or any proxy may be excluded from any stockholders
meeting based upon any determination by the chairman in his sole discretion
that any such person has unduly disrupted or is likely to disrupt the
proceedings thereat and specifying the circumstances in which any person may
make a statement or ask questions at any stockholders meetings.
Section 8. Voting. Except as otherwise provided by statute, the
Certificate of Incorporation, or any certificate duly filed pursuant to
Section 151 of the Delaware General Corporation Law, each stockholder shall be
entitled to one vote on each matter submitted to a vote at a meeting of
stockholders for each share of capital stock held of record by him on the date
fixed by the Board of Directors as the record date for the determination of
the stockholders who shall be entitled to notice of and to vote at such
meeting; or if such record date shall not have been so fixed, then at the
close of business on the day next preceding the day on which notice thereof
shall be given. Except as otherwise provided by statute, these Bylaws, or the
Certificate of Incorporation, any corporate action to be taken by vote of the
stockholders shall be authorized by a majority of the total votes, or when
stockholders are required to vote by class by a majority of the votes of the
appropriate class, cast at a meeting of stockholders by the holders of shares
present in person or represented by proxy and entitled to vote on such action.
Unless required by statute, or determined by the chairman of the meeting to be
advisable, the vote on any question need not be by written ballot and may be
by such other means as the chairman deems advisable under the circumstances.
On a vote by written ballot, each ballot shall be signed by the stockholder
voting, or by his proxy, if there be such proxy, and shall state the number of
shares voted.
Section 9. Proxies. Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him by a proxy
signed by such stockholder or his attorney-in-fact. No proxy shall be valid
after the expiration of three years from the date thereof, unless otherwise
provided in the proxy.
Section 10. List of Stockholders. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the
name of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 11. Inspectors. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If the inspectors shall not be so appointed or if
any of them shall fail to appear or act, the chairman of the meeting may
appoint inspectors. The inspectors shall determine the number of shares
outstanding and the voting power of each, the number of shares represented at
the meeting, the existence of a quorum, the validity and effect of proxies,
and shall receive votes or ballots, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes or ballots, determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all stockholders. On request of
the chairman of the meeting or any stockholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge, request or matter
determined by them and shall execute a certificate of any fact found by them.
No director or candidate for the office of director shall act as inspector of
an election of directors. Inspectors need not be stockholders.
Section 12. Denial of Action by Consent of Stockholders. No action
required to be taken or which may be taken at any annual or special meeting of
the stockholders of the Corporation may be taken without a meeting, and the
power of stockholders to consent in writing, without a meeting, to the taking
of any action is specifically denied.
Section 13. Nominations for Director. Nominations for election to the
Board of Directors may be made by the Board of Directors or by any stockholder
of record entitled to vote for the election of directors. Any stockholder
entitled to vote for the election of directors may nominate at a meeting
persons for election as directors only if written notice of such stockholder's
intent to make such nomination is given, either by personal delivery or by
certified mail, postage prepaid, addressed to the Chairman at the
Corporation's executive offices not later than (i) with respect to an election
to be held at an annual meeting of stockholders, 60 days prior to the date of
such meeting (provided that if such annual meeting of stockholders is held on
a date other than the first Friday in May, such written notice must be given
within 10 days after the first public disclosure of the date of the annual
meeting, including, without limitation, disclosure of the meeting date set
forth in any document or exhibit thereto filed by the Corporation with the
Securities and Exchange Commission), and (ii) with respect to an election to
be held at a special meeting of stockholders for the election of directors,
the close of business on the seventh day following the date on which notice of
such meeting is first given to stockholders. Each such notice shall set
forth: (a) the name and address, as they appear on the Corporation's stock
ledger, of the stockholder who intends to make the nomination and the name and
address of each person to be nominated; (b) a representation that such
stockholder is a holder of record of stock of the Corporation entitled to vote
at such meeting and intends to appear at the meeting in person or by proxy to
nominate the person or persons specified in the notice as directors; (c) a
description of all arrangements or understandings between such stockholder and
each proposed nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be made by
such stockholder; (d) such other information regarding each nominee proposed
by such stockholder as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission
were such nominee to be nominated by the Board of Directors; and (e) the
consent of each proposed nominee to serve as a director of the Corporation if
so elected. The chairman of any meeting of stockholders to elect directors
may refuse to permit the nomination of any person to be made without
compliance with the foregoing procedure.
Section 14. Notice of Stockholder Business. At any annual meeting of
the stockholders held after May 6, 1988, only such business shall be conducted
as shall have been brought before the meeting (a) by or at the direction of
the Board of Directors or (b) by any stockholder of record of the Corporation
who complies with the notice procedures set forth in this Section 14. For
business to be properly brought before an annual meeting by any such
stockholder, the stockholder must give written notice thereof to the Chairman,
either by personal delivery or by certified mail, postage prepaid, addressed
to the Chairman at the Corporation's executive offices not less than 60 nor
more than 90 days in advance of such meeting (provided that if such annual
meeting of stockholders is held on a date other than the first Friday in May,
such written notice must be given within 10 days after the first public
disclosure of the date of the annual meeting, including, without limitation,
disclosure of the meeting date set forth in any document or exhibit thereto
filed by the Corporation with the Securities and Exchange Commission). Each
such notice shall set forth as to each matter the stockholder proposes to
bring before the annual meeting (a) a brief description of the business
desired to be brought before the annual meeting and the reasons for conducting
such business at the annual meeting, (b) the name and address, as they appear
on the Corporation's stock ledger, of the stockholder proposing such business,
(c) a representation that such stockholder is a holder of record of stock of
the Corporation entitled to vote at such meeting and intends to appear at the
meeting in person or by proxy to propose such business, and (d) any material
interest of such stockholder in the proposed business. The chairman of an
annual meeting shall, if the facts warrant, determine and declare to the
meeting that any such business was not properly brought before the meeting and
in accordance with the provisions of this Section 14, and if he should so
determine, he shall so declare to the meeting and such business not properly
brought before the meeting shall not be transacted.
ARTICLE II. BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors.
Section 2. Number, Classification, Election and Qualification. The
number of directors of the Corporation shall be eight, but, by vote of a
majority of the entire Board of Directors or amendment of these Bylaws, the
number thereof may be increased or decreased to such greater or lesser number
(not less than three) as may be so provided. At the first election of
directors by the stockholders, the directors shall be divided into three
classes; the term of office of those of the first class to expire at the first
annual meeting thereafter; of the second class at the second annual meeting
thereafter; and of the third class at the third annual meeting thereafter. At
each annual election held after such classification and election, directors
shall be elected to succeed those whose terms expire, each such newly elected
director to hold office for a term of three years and until his successor is
elected or until his death, resignation, retirement or removal. Except as
otherwise provided by statute or these Bylaws, directors shall be elected at
the annual meeting of the stockholders, and the persons receiving a plurality
of the votes cast at such election shall be elected, provided that a quorum is
present at the meeting. Directors need not be stockholders.
Section 3. Place of Meetings. Meetings of the Board of Directors may
be held at such place, within or without the State of Delaware, as the Board
of Directors may from time to time determine or as shall be specified in the
notice or waiver of notice of such meeting.
Section 4. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately
after, and at the same place as, the annual meeting of stockholders for the
purpose of electing officers and the transaction of other business. The Board
of Directors may provide by resolution the time and place, either within or
without the State of Delaware, for holding of additional regular meetings
without other notice than such resolution.
Section 5. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman, President or any
two directors. The person or persons authorized to call special meetings of
the Board of Directors may fix any place, either within or without the State
of Delaware, as the place for holding any special meeting of the Board of
Directors called by them.
Section 6. Notice. Notice of any special meeting shall be given
personally or by telephone to each director at least twenty-four hours before
the time at which the meeting is to be held or shall be mailed to each
director, postage prepaid, at his residence or business address at least three
days before the day on which the meeting is to be held; provided that, in the
case of any special meeting to be held by conference telephone or similar
communications equipment, notice of such meeting may be given personally or by
telephone to each director not less than six hours before the time at which
the meeting is to be held. Except as otherwise specifically provided in these
Bylaws, neither the business to be transacted at, nor the purpose of any
regular or special meeting of the Board of Directors need be specified in the
notice of the meeting.
Section 7. Quorum and Manner of Acting. A majority of the entire Board
of Directors shall be present in person at any meeting of the Board of
Directors in order to constitute a quorum for the transaction of business at
such meeting, except that one-third of the entire Board of Directors present
in person at a meeting shall constitute a quorum if the Chairman is present at
the meeting. Except as otherwise specifically required by statute or the
Certificate of Incorporation, the vote of a majority of the directors present
at any meeting at which a quorum is present shall be the act of the Board of
Directors. In the absence of a quorum at any meeting of the Board of
Directors, a majority of the directors present or, if no director be present,
the Secretary, may adjourn such meeting to another time and place. At any
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called. Except
as provided in Article III of these Bylaws, the directors shall act only as a
board of directors and the individual directors shall have no power as such.
Section 8. Organization. At each meeting of the Board of Directors,
the Chairman (or, in his absence or inability to act, the President, or in his
absence or inability to act, another director chosen by a majority of the
directors present) shall act as chairman of the meeting. The Secretary (or,
in his absence or inability to act, any person appointed by the chairman)
shall act as secretary of the meeting and keep the minutes thereof.
Section 9. Resignations. Any director of the Corporation may resign at
any time by giving written notice of his resignation to the Board of Directors
or Chairman or the President or the Secretary. Any such resignation shall
take effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt; and,
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
Section 10. Vacancies and Newly Created Directorships. Vacancies and
newly created directorships resulting from any increase in the authorized
number of directors may be filled by a majority of the directors then in
office, though less than a quorum, or by a sole remaining director, and any
director so chosen shall hold office until the next election of the class for
which such director has been chosen and until his successor is elected and
qualified, or until his earlier resignation or removal. When one or more
directors shall resign from the Board of Directors, effective at a future
date, a majority of the directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective,
and each director so chosen shall hold office as provided in this section in
the filling of other vacancies.
Section 11. Removal of Directors. All or any number of the directors
may be removed at any time, but only for cause and only by the affirmative
vote of the holders of at least 75 percent of the outstanding Common Stock of
the Corporation at a meeting of the stockholders expressly called for that
purpose. A vacancy in the Board of Directors caused by any such removal may
be filled by such stockholders at such meeting, or if the stockholders shall
fail to fill such vacancy, as in these Bylaws provided.
Section 12. Compensation. The Board of Directors shall have authority
to fix the compensation, including fees and reimbursement of expenses, of
directors for services to the Corporation in any capacity, provided, no such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 13. Board and Committee Action Without Meeting. Any action
required or permitted to be taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a meeting if all members of the
Board of Directors or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
Section 14. Board and Committee Telephonic Meetings. A director or a
member of a committee designated by the Board of Directors may participate in
a meeting of the Board of Directors or such committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at the meeting.
ARTICLE III. EXECUTIVE AND OTHER COMMITTEES
Section 1. Executive and Other Committees. The Board of Directors may,
by resolution passed by a majority of the whole Board of Directors, designate
one or more committees, each committee to consist of two or more of the
directors of the Corporation. The Board of Directors may designate one or
more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. In addition,
in the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any
such absent or disqualified member. Any such committee, to the extent
provided in the resolution, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it; but no such committee shall
have the power or authority in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation, recommending
to the stockholders the sale, lease or exchange of all or substantially all of
the Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending,
these Bylaws; and, unless the resolution expressly so provides, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Each committee shall keep written minutes of
its proceedings and shall report such minutes to the Board of Directors when
required. All such proceedings shall be subject to revision or alteration by
the Board of Directors, provided, however, that third parties shall not be
prejudiced by such revision or alteration.
Section 2. General. A majority of any committee may determine its
action and establish the time, place and procedure for its meetings, unless
the Board of Directors shall otherwise provide. Notice of such meetings shall
be given to each member of the committee in the manner provided for in Article
II, Section 6 or as the Board of Directors may otherwise provide. The Board
of Directors shall have power at any time to fill vacancies in, to change the
membership of, or to dissolve any such committee. Nothing herein shall be
deemed to prevent the Board of Directors from appointing one or more
committees consisting in whole or in part of persons who are not directors of
the Corporation; provided, however, that no such committee shall have or may
exercise any authority of the Board of Directors.
ARTICLE IV. EXCEPTIONS TO NOTICE REQUIREMENTS
Section 1. Waiver of Notice. Whenever notice is required to be given
under these Bylaws, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
Section 2. Unlawful Notice. Whenever notice is required to be given
under these Bylaws to any person with whom communication is unlawful, the
giving of such notice to such person shall not be required and there shall be
no duty to apply to any governmental authority or agency for a license or
permit to give such notice to such person. Any action or meeting which shall
be taken or held without notice to any such person with whom communication is
unlawful shall have the same force and effect as if such notice has been duly
given.
ARTICLE V. OFFICERS
Section 1. Number, Election and Qualification. The elected officers of
the Corporation shall be a Chairman, a President, one or more Vice-Presidents
(one or more of whom may be designated Executive Vice President or Senior Vice
President), a Secretary, and a Treasurer. Such officers shall be elected from
time to time by the Board of Directors, each to hold office until the meeting
of the Board of Directors following the next annual meeting of the
stockholders and until his successor is elected and qualified, or until his
earlier resignation or removal. The Board of Directors may from time to time
appoint such other officers (including a Chairman of the Executive Committee,
a Controller and one or more Assistant Vice Presidents, Assistant Secretaries,
Assistant Treasurers and Assistant Controllers), and such agents, as may be
necessary or desirable for the business of the Corporation. Such other
officers and agents shall have such duties as may be prescribed by the Board
of Directors and shall hold office during the pleasure of the Board of
Directors. Any two or more offices may be held by the same person. From and
after the distribution by G-P of the stock it presently holds in the
Corporation, no person who is serving as an officer or director of G-P shall
concurrently serve as an officer of the Corporation.
Section 2. Resignations. Any officer of the Corporation may resign at
any time by giving written notice of his resignation to the Board of
Directors, the Chairman, the President or the Secretary. Any such resignation
shall take effect at the time specified therein or, if the time when it shall
become effective shall not be specified therein, immediately upon its receipt;
and unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 3. Removal. Any officer or agent of the Corporation may be
removed either with or without cause, at any time, by the Board of Directors,
except that a vote of a majority of the entire Board of Directors shall be
necessary for the removal of an elected officer. Such removal shall be
without prejudice to the contractual rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
Section 4. Vacancies. A vacancy in any office may be filled for the
unexpired portion of the term of the office which shall be vacant, in the
manner prescribed in these Bylaws for the regular election or appointment of
such office.
Section 5. Chairman. The Chairman shall be the chief executive officer
of the Corporation, and shall have general direction over the management of
its business, properties and affairs. The Chairman shall preside, when
present, at all meetings of the stockholders and of the Board of Directors
and, in the absence of the Chairman of the Executive Committee, at all
meetings of the Executive Committee. He shall have general power to execute
bonds, deeds and contracts in the name of the Corporation and to affix the
corporate seal; to sign stock certificates; and to remove or suspend such
employees or agents as shall not have been elected or appointed by the Board
of Directors. In the absence or disability of the Chairman, his duties shall
be performed and his powers shall be exercised by the President.
Section 6. President. The President shall be the chief operating
officer of the Corporation and, subject to the direction of the Board of
Directors and the Chairman, he shall have general direction over the
operations of the Corporation. He shall have general power to execute bonds,
deeds and contracts in the name of the Corporation and to affix the corporate
seal; and to sign stock certificates.
Section 7. Vice Presidents. The several Vice Presidents shall perform
all such duties and services as shall be assigned to or required of them from
time to time, by the Board of Directors or the President, respectively, and
unless their authority be expressly limited shall act in the order of their
election in the place of the President, exercising all his powers and
performing his duties, during his absence or disability. The Board of
Directors however, may from time to time designate the relative positions of
the Vice Presidents of the Corporation and assign to any one or more of them
such particular duties as the Board of Directors may think proper.
Section 8. Secretary. The Secretary shall attend to the giving of
notice of all meetings of stockholders and of the Board of Directors and shall
record all of the proceedings of such meetings in a book to be kept for that
purpose. He shall have charge of the corporate seal and have authority to
attest any and all instruments or writings to which the same may be affixed.
He shall keep and account for all books, documents, papers and records of the
Corporation, except those which are hereinafter directed to be in charge of
the Treasurer. He shall have authority to sign stock certificates and shall
generally perform all the duties usually appertaining to the office of
secretary of a corporation. In the absence of the Secretary, an Assistant
Secretary or Secretary pro tempore shall perform his duties.
Section 9. Treasurer. The Treasurer shall have the care and custody of
all moneys, funds and securities of the Corporation, and shall deposit or
cause to be deposited all funds of the Corporation in and with such
depositaries as shall, from time to time, be designated by the Board of
Directors or by such officers of the Corporation as may be authorized by the
Board of Directors to make such designation. He shall have power to sign
stock certificates; to indorse for deposit or collection, or otherwise, all
checks, drafts, notes, bills of exchange or other commercial paper payable to
the Corporation, and to give proper receipts or discharges therefor. He shall
keep all books of account relating to the business of the Corporation, and
shall render a statement of the Corporation's financial condition whenever
required so to do by the Board of Directors, the Chairman or the President.
In the absence of the Treasurer, the Board of Directors shall appoint an
Assistant Treasurer to perform his duties.
Section 10. Additional Powers and Duties. In addition to the foregoing
enumerated duties and powers, the several officers of the Corporation shall
perform such other duties and exercise such further powers as may be provided
by these Bylaws or as the Board of Directors may from time to time determine
or as may be assigned to them by any competent superior officer.
Section 11. Compensation. The compensation of the officers of the
Corporation for their services as such officers shall be fixed from time to
time by the Board of Directors. An officer of the Corporation shall not be
prevented from receiving compensation by reason of the fact that he is also a
director of the Corporation, but any such officer who shall also be a director
shall not have any vote in the determination of the amount of compensation
paid to him.
ARTICLE VI. INDEMNIFICATION
Section 1. General. The Corporation shall, to the full extent
permitted by Section 145 of the Delaware General Corporation Law, as amended
from time to time, indemnify all persons whom it may indemnify pursuant
thereto against all expenses (including, without limitation, attorney's fees),
judgments, fines (including excise taxes) and amounts paid in settlement
(collectively, "Losses") incurred in connection with any action, suit, or
proceeding, whether threatened, pending, or completed (collectively,
"Proceedings") to which such person was or is a party or is threatened to be
made a party by reason of the fact that such person 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;
provided, however, that the Corporation shall indemnify any such person
seeking indemnification in connection with a Proceeding initiated by such
person only if such Proceeding was authorized by the Board of Directors of the
Corporation.
Section 2. Employee Benefit or Welfare Plan Fiduciary Liability. In
addition to any indemnification pursuant to Section 1 of this Article, but
subject to the express exclusions set forth in Section 3 of this Article, the
Corporation shall indemnify any natural person who is or was serving at the
direction or request of the Corporation in a fiduciary capacity with respect
to an employee benefit or welfare plan covering one or more employees of the
Corporation or of an affiliate of the Corporation, or who is or was performing
any service or duty on behalf of the Corporation with respect to such a plan,
its participants or beneficiaries, against all Losses incurred by such person
in connection with any Proceeding arising out of or in any way connected with
such service or performance, to the extent such Losses are insurable under
applicable law but are not covered by collectible insurance or indemnified
pursuant to Section 1 of this Article. This Section is intended to provide a
right to indemnification as permitted by Section 145(f) of the Delaware
General Corporation Law.
Section 3. Persons Not to be Indemnified Under Section 2. No
indemnification shall be made under Section 2 of this Article to any person
(other than an employee of the Corporation or of an affiliate of the
Corporation) who was or is acting as a lawyer, accountant, actuary, investment
adviser or arbitrator with respect to an employee benefit or welfare plan
against any expense, judgment, fine or amount paid in settlement incurred by
such person in connection with any action, suit or proceeding arising out of
or in any way connected with his actions in such capacity. No indemnification
shall be made under Section 2 of this Article to any person determined (in the
manner prescribed by Section 145(d) of the Delaware General Corporation Law)
to have participated in, or to have had actual knowledge of and have failed to
take appropriate action with respect to, any violation of any of the
responsibilities, obligations or duties imposed upon fiduciaries by the
Employee Retirement Income Security Act of 1974 or amendments thereto or by
the common or statutory law of the United States of America or any state or
jurisdiction therein, knowing such in either case to have been a violation of
such responsibilities, obligations or duties.
Section 4. Advances of Expenses. Except as limited by the other
provisions of this Section, the Corporation shall pay promptly (and in any
event within 60 days of receipt of the written request of the person who may
be entitled to such payment) all expenses (including but not limited to
attorneys' fees) incurred in connection with any Proceeding by any person who
may be entitled to indemnification under Sections 1 or 2 of this Article in
advance of the final disposition of such Proceeding. Notwithstanding the
foregoing, any advance payment of expenses on behalf of a director or officer
of the Corporation shall be, and if the Board of Directors so elects, any
advance payment of expenses on behalf of any other person who may be entitled
to indemnification under Sections 1 or 2 of this Article may be, conditioned
upon the receipt by the Corporation of an undertaking by or on behalf of such
director, officer, or other person to repay the amount advanced in the event
that it is ultimately determined that such director, officer, or person is not
entitled to indemnification; provided that such advance payment of expenses
shall be made without regard to the ability to repay the amounts advanced.
Notwithstanding the foregoing, no advance payment of expenses shall be made by
the Corporation if a determination is reasonably and promptly made by a
majority vote of directors who are not parties to such Proceeding, even though
less than a quorum, or if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, that, based upon
the facts known to such directors or counsel at the time such determination is
made following due inquiry, (a) in the case of a person who may be entitled to
indemnification under Section 1, such person did not act in good faith and in
a manner that such person reasonably believed to be in or not opposed to the
best interests of the Corporation or, with respect to any criminal proceeding,
such person had reasonable cause to believe his conduct was unlawful, or
(b) in the case of a person who may be entitled to indemnification under
Section 2, such person is not entitled to indemnification under the standard
set forth in the second sentence of Section 3. Nothing in this Article VI
shall require any such determination to be made as a condition to making any
advance payment of expenses, unless the Board of Directors so elects.
Section 5. Mandatory Indemnification in Certain Circumstances. To the
extent that a director, officer, employee, or agent has been successful on the
merits or otherwise in the defense of any Proceeding referred to Section 1 or
Section 2 of this Article, or in the defense of any claim, issue, or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Section 6. Right to Indemnification upon Application; Procedure upon
Application. Any indemnification under Sections 1 or 2 shall be made
promptly, and in any event within 60 days of receipt of the written request of
the person who may be entitled thereto following the conclusion of such
person's participation in any Proceeding for which indemnity is sought, unless
with respect to such written request, a determination is reasonably and
promptly made by a majority vote of directors who are not parties to the
Proceeding, even though less than a quorum, or if there are no such directors,
or if such directors so direct, by independent legal counsel that, based upon
the facts known to such directors or counsel at the time such determination is
made following due inquiry, (a) in the case of a person who may be entitled to
indemnification under Section 1, such person did not act in good faith and in
a manner that such person reasonably believed to be in or not opposed to the
best interests of the Corporation or, with respect to any criminal proceeding,
such person had reasonable cause to believe his conduct was unlawful, or
(b) in the case of a person who may be entitled to indemnification under
Section 2, such person is not entitled to indemnification under the standard
set forth in the second sentence of Section 3.
Section 7. Enforcement of Rights. The right to indemnification or to
an advance of expenses as granted by this Article shall be enforceable by any
person entitled thereto in any court of competent jurisdiction, if the Board
of Directors or independent legal counsel denies the claim, in whole or in
part, or if no disposition of such claim is made within 100 days of receipt by
the Board of Directors of such person's written request for indemnification or
an advance of expenses. Such person's expenses (including but not limited to
attorneys' fees) incurred in connection with successfully establishing his
right to indemnification or an advance of expenses, in whole or in part, in
any such proceedings shall also be indemnified by the Corporation.
Section 8. Bylaws as Contract; Non-Exclusivity. All rights to
indemnification and advances of expenses under this Article shall be deemed to
be provided by a contract between the Corporation and each person entitled
thereto. Any repeal or modification of these bylaws shall not impair or
diminish any rights or obligations existing at the time of such repeal or
modification. The rights granted by this Article shall not be deemed
exclusive of any other rights to which any person seeking indemnification or
an advance of expenses may be entitled under any bylaws, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. The rights granted by this Article VI shall extend to the estate,
heirs or legal representatives of any person entitled to indemnification or an
advance of expenses hereunder who is deceased or incompetent.
ARTICLE VII. STOCK AND TRANSFER OF STOCK
Section 1. Stock Certificates. Every holder of stock in this
corporation shall be entitled to have a certificate, in such form as shall be
approved by the Board of Directors, certifying the number of shares of stock
of this corporation owned by him signed by or in the name of this corporation
by the Chairman, or the President or a Vice President, and by the Secretary or
an Assistant Secretary, or the Treasurer or an Assistant Treasurer. Any of or
all the signatures on the certificate may be facsimiles. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may nevertheless be
issued by the Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
Section 2. Transfers of Shares. Transfers of Shares of stock of the
Corporation shall be made on the stock records of the Corporation only upon
authorization by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary or
with a transfer agent, and on surrender of the certificate or certificates for
such shares properly indorsed or accompanied by a duly executed stock transfer
power and the payment of all taxes thereon. Except as otherwise provided by
law, the Corporation shall be entitled to recognize the exclusive right of a
person in whose name any share or shares stand on the record of stockholders
as the owner of such share or shares for all purposes, including, without
limitation, the rights to receive dividends or other distributions, and to
vote as such owner, and the Corporation may hold any such stockholder of
record liable for calls and assessments and the Corporation shall not be bound
to recognize any equitable or legal claim to or interest in any such share or
shares on the part of any other person whether or not it shall have express or
other notice thereof. Whenever any transfer of shares shall be made for
collateral security, and not absolutely, such fact shall be stated in the
entry of the transfer if, when the certificates are presented for transfer,
both the transferor and transferee request the Corporation to do so.
Section 3. Regulations, Transfer Agents and Registrars. The Board of
Directors may make such additional rules and regulations, not inconsistent
with these Bylaws, as it may deem expedient concerning the issue, transfer and
registration of certificates for shares of stock of the Corporation. It may
appoint and change from time to time one or more transfer agents and one or
more registrars and may require all certificates for shares of stock to bear
the signature or signatures of any of them.
Section 4. Replacement of Certificates. In the event of the loss,
theft, mutilation or destruction of any certificate for shares of stock of the
Corporation, a duplicate thereof may be issued and delivered to the owner
thereof, provided he makes a sufficient affidavit setting forth the material
facts surrounding the loss, theft, mutilation or destruction of the original
certificates and gives a bond to the Corporation, in such sum limited or
unlimited, and in such form and with such surety as the Board of Directors may
authorize indemnifying the Corporation, its officers and, if applicable, its
transfer agents and registrars, against any losses, costs and damages suffered
or incurred by reason of such loss, theft, mutilation or destruction of the
original certificate and replacement thereof.
Section 5. Fixing of Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty nor less than
ten days before the date of such meeting, nor more than sixty days prior to
any other action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
ARTICLE VIII. FISCAL YEAR
The fiscal year of the Corporation shall be the calendar year.
ARTICLE IX. SEAL
The Board of Directors shall provide a corporate seal, which shall be in
such form as the Board of Directors shall determine.
ARTICLE X. AMENDMENTS
These Bylaws may be amended or repealed, or new Bylaws may be adopted,
at any annual or special meeting of the stockholders, by the affirmative vote
of the holders of at least 75 percent of the outstanding Common Stock of the
Corporation; provided, however, that the notice of such meeting shall have
been given as provided in these Bylaws, which notice shall mention that
amendment or repeal of these Bylaws, or the adoption of new Bylaws, is one of
the purposes of such meeting. These Bylaws may also be amended or repealed or
new Bylaws may be adopted, by the Board of Directors by the vote of two-thirds
of the entire Board of Directors.
<PAGE>
EXHIBIT 4.A.4
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of February 16, 1996, among
Louisiana-Pacific Corporation, a corporation organized under the laws of the
State of Delaware (the "Company"), the several financial institutions from
time to time party to this Agreement (collectively, the "Banks"; individually,
a "Bank"), and Bank of America National Trust and Savings Association, as
agent for the Banks and the Designated Bidders.
WITNESSETH THAT:
WHEREAS, the Banks have agreed to make available to the Company a
revolving credit facility with a swingline subfacility upon the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. In addition to the terms defined elsewhere
in this Agreement, the following terms have the meanings indicated for
purposes of this Agreement:
"Absolute Rate" has the meaning specified in
subsection 2.06(c)(ii)(D).
"Absolute Rate Auction" means a solicitation of
Competitive Bids setting forth Absolute Rates pursuant to
Section 2.06.
"Absolute Rate Bid Loan" means a Bid Loan that bears
interest at a rate determined with reference to the Absolute
Rate.
"Agent" means BofA in its capacity as agent for the Banks
and the Designated Bidders hereunder, and any successor agent
arising under Section 9.09.
"Agent-Related Persons" means BofA in its capacity as
Agent and any successor agent arising under Section 9.09,
together with their respective affiliates (including, in the
case of BofA, the Arranger), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and
affiliates.
"Agent's Payment Office" means the address for payments
set forth on Schedule 10.02 in relation to the Agent, or such
other address as the Agent may from time to time specify.
"Agreement" means this Credit Agreement.
"Applicable Margin" means, in respect of all Committed
Loans outstanding on any date (A) for the period from the
Closing Date through March 31, 1996, 0.1700% for Offshore Rate
Committed Loans and 0.0000% for Base Rate Committed Loans and
Swingline Loans, and (B) from and after April 1, 1996, the
percentage specified below opposite the Interest Coverage Ratio
(which ratio shall be calculated for the relevant four fiscal
quarter period) calculated for the periods described below.
Interest Coverage Ratio
at End of Fiscal Quarter Applicable Margin
------------------------ ---------------------------
Offshore Base Rate
Rate and
-------- Swingline
---------
Greater than or equal to
5.00 to 1.00 0.1700% 0.0000%
Greater than 3.00 to 1.00 but
less than 5.00 to 1.00 0.2500% 0.0000%
Less than 3.00 to 1.00 0.3250% 0.0000%
The Applicable Margin for each fiscal quarter commencing on and
after April 1, 1996 shall be calculated in reliance on the
financial reports delivered pursuant to subsections 6.07(a) and
6.07(b) and the certificate delivered with respect thereto
pursuant to subsection 6.07(c) with respect to the fiscal
quarter ending immediately before the fiscal quarter in
question (e.g., March 31 financials determine the Applicable
Margin for the fiscal quarter beginning April 1). As such
financial reports and certificate are not required to be
delivered hereunder until 45 days (or 90 days in the case of
fiscal year-end financial reports) after the end of the
applicable fiscal quarter, the Applicable Margin for each
fiscal quarter shall be assumed for interim calculation and
collection purposes, until delivery of such financial reports
and certificate, to be the same as for the immediately
preceding fiscal quarter. The Applicable Margin shall be
adjusted automatically in accordance with the provisions of
Section 2.17 as to all Committed Loans then outstanding
(without regard to the timing of Interest Periods) as of the
effective date of any change in the Applicable Margin.
"Arranger" means BA Securities, Inc., a Delaware
corporation.
"Bank" has the meaning specified in the introductory
clause hereto. References to the "Banks" shall include BofA,
including in its capacity as the Swingline Bank; for purposes
of clarification only, to the extent that BofA may have any
rights or obligations in addition to those of the Banks due to
its status as the Swingline Bank, its status as such will be
specifically referenced.
"Base Rate" means, for any day, the higher of: (a) 0.50%
per annum above the latest Federal Funds Rate; and (b) the
rate of interest in effect for such day as publicly announced
from time to time by BofA in San Francisco, California, as its
"reference rate." (The "reference rate" is a rate set by BofA
based upon various factors including BofA's costs and desired
return, general economic conditions and other factors, and is
used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate.)
Any change in the reference rate announced by BofA shall
take effect at the opening of business on the day specified in
the public announcement of such change.
"Base Rate Committed Loan" means a Committed Loan that
bears interest based on the Base Rate.
"Bid Borrowing" means a Borrowing hereunder consisting of
one or more Bid Loans made to the Company on the same day by
one or more Banks or Designated Bidders.
"Bid Loan" means a Loan by a Bank or a Designated Bidder
to the Company under Section 2.05, which may be a LIBOR Bid
Loan or an Absolute Rate Bid Loan.
"Bid Loan Lender" means, in respect of any Bid Loan, the
Bank or Designated Bidder making such Bid Loan to the Company.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Borrowing" means a borrowing hereunder consisting of (i)
Committed Loans of the same Type made to the Company on the
same day by the Banks, (ii) Bid Loans made to the Company on
the same day by the Banks or Designated Bidders, or (iii) a
Swingline Loan or Loans made to the Company on the same day by
the Swingline Bank, in each case pursuant to Article II, and,
other than in the case of Base Rate Committed Loans and
Swingline Loans, having the same Interest Period.
"Borrowing Date" means any date on which a Borrowing
occurs under Section 2.03, Section 2.06, or Section 2.07, as
applicable.
"Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in New York City
or San Francisco are authorized or required by law to close
and, if the applicable Business Day relates to any Offshore
Rate Loan, means such a day on which dealings are carried on in
the applicable offshore dollar interbank market.
"Closing Date" means the date on which all conditions
precedent set forth in Section 4.01 are satisfied or waived by
all Banks (or, in the case of subsection 4.01(e), waived by the
Person entitled to receive such payment).
"Code" means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
"Commitment", as to each Bank, has the meaning specified
in subsection 2.01(a).
"Committed Borrowing" means a Borrowing hereunder
consisting of Committed Loans made on the same day by the Banks
ratably according to their respective Pro Rata Shares and, in
the case of Offshore Rate Committed Loans, having the same
Interest Periods.
"Committed Loan" means a Loan by a Bank to the Company
under Section 2.01, and may be an Offshore Rate Committed Loan
or a Base Rate Committed Loan (each, a "Type" of Committed
Loan).
"Competitive Bid" means an offer by a Bank or a
Designated Bidder to make a Bid Loan in accordance with
subsection 2.06(b).
"Competitive Bid Request" has the meaning specified in
subsection 2.06(a).
"Compliance Certificate" means a certificate
substantially in the form of Exhibit C.
"Conversion/Continuation Date" means any date on which,
under Section 2.04, the Company (a) converts Committed Loans of
one Type to another Type, or (b) continues as Committed Loans
of the same Type, but with a new Interest Period, Committed
Loans having Interest Periods expiring on such date.
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not
cured or otherwise remedied during such time) constitute an
Event of Default.
"Designated Bidder" means an affiliate of a Bank that is
an entity described in clause (i) or (ii) of the definition of
"Eligible Assignee" and that has become a party hereto pursuant
to Section 10.09.
"Designation Agreement" means a designation agreement
entered into by a Bank and a Designated Bidder and accepted by
the Agent, in substantially the form of Exhibit K.
"Dollars", "dollars", and "$" means dollars of the United
States of America.
"EBIT" means, for any period, for the Company and its
Subsidiaries on a consolidated basis, determined in accordance
with GAAP, the sum of (a) net income (or net loss) for such
period plus (b) all amounts treated as expenses for interest to
the extent included in the determination of such net income (or
loss), plus (c) all accrued taxes on or measured by income to
the extent included in the determination of such net income (or
loss); provided, however, that net income (or loss) shall be
computed for these purposes without giving effect to
extraordinary losses or extraordinary gains or the cumulative
effect of changes in accounting principles.
"Eligible Assignee" means (i) a commercial bank organized
under the laws of the United States, or any state thereof, and
having a combined capital and surplus of at least $250,000,000;
(ii) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political
subdivision of any such country, and having a combined capital
and surplus of at least $250,000,000, provided that such bank
is acting through a branch or agency located in the United
States; and (iii) a Person that is primarily engaged in the
business of commercial banking and that is (A) a Subsidiary of
a Bank, (B) a Subsidiary of a Person of which a Bank is a
Subsidiary, or (C) a Person of which a Bank is a Subsidiary.
"ERISA" means the Employee Retirement Income Security Act
of 1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or
not incorporated) under common control with the Company within
the meaning of Section 414(b) or (c) of the Code (and Sections
414(m) and (o) of the Code for purposes of provisions relating
to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect
to a Pension Plan; (b) a withdrawal by the Company or any ERISA
Affiliate from a Pension Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer (as
defined in Section 4001(a)(2) of ERISA) or a cessation of
operations which is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal
by the Company or any ERISA Affiliate from a Multiemployer Plan
or notification that a Multiemployer Plan is in reorganization;
(d) the filing of a notice of intent to terminate a Pension
Plan or Multiemployer Plan, the treatment of a Plan amendment
as a termination under Section 4041 or 4041A of ERISA, or the
commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which
might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability
under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Company or any
ERISA Affiliate.
"Eurodollar Reserve Percentage" has the meaning specified
in the definition of "Offshore Rate".
"Event of Default" means any event listed in
Section 8.01.
"Existing Agreement" has the meaning specified in
subsection 4.01(g).
"Facility Fee Percentage" means (A) for the period from
the Closing Date through March 31, 1996, 0.0800%, and (B) from
and after April 1, 1996, the percentage specified below
opposite the Interest Coverage Ratio (which ratio shall be
calculated for the relevant four fiscal quarter period)
calculated for the periods described below.
Interest Coverage Ratio Facility Fee
at End of Fiscal Quarter Percentage
-------------------------- ------------
Greater than or equal to
5.00 to 1.00 0.0800%
Greater than 3.00 to 1.00
but less than 5.00 to 1.00 0.1250%
Less than 3.00 to 1.00 0.1750%
The Facility Fee Percentage for each fiscal quarter commencing
on and after April 1, 1996 shall be calculated in reliance on
the financial reports delivered pursuant to subsections 6.07(a)
and 6.07(b) and the certificate delivered with respect thereto
pursuant to subsection 6.07(c) with respect to the fiscal
quarter ending immediately before the fiscal quarter in
question (e.g., March 31 financials determine the Facility Fee
Percentage for the fiscal quarter beginning April 1). As such
financial reports and certificate are not required to be
delivered hereunder until 45 days (or 90 days in the case of
fiscal year-end financial reports) after the end of the
applicable fiscal quarter, the Facility Fee Percentage for each
fiscal quarter shall be assumed for interim calculation and
collection purposes, until delivery of such financial reports
and certificate, to be the same as for the immediately
preceding fiscal quarter. The facility fee payable hereunder
shall be adjusted automatically in accordance with the
provisions of Section 2.17 as of the effective date of any
change in the Facility Fee Percentage.
"FDIC" means the Federal Deposit Insurance Corporation,
and any governmental authority succeeding to any of its
principal functions.
"Federal Funds Rate" means, for any day, the rate set
forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the
Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such
rate is not so published on any such preceding Business Day,
the rate for such day will be the arithmetic mean as determined
by the Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time)
on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
"Fee Letter" has the meaning specified in subsection
2.12(b).
"FRB" means the Board of Governors of the Federal Reserve
System, and any governmental authority succeeding to any of its
principal functions.
"Funded Debt" means indebtedness for borrowed money or
liability under a lease which is the primary source of payment
of industrial revenue or pollution control bonds. Funded Debt
also includes Purchase Money Indebtedness, prepayment deposits
in respect of sales contracts and unfunded reserves maintained
with respect to pending or threatened disputes or settlement
thereof.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements
of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within
the U.S. accounting profession), which are applicable to the
circumstances as of the date of determination.
"Indemnified Liabilities" has the meaning specified in
Section 10.05.
"Interest Coverage Ratio" means, as measured quarterly on
the last day of each fiscal quarter for the four fiscal quarter
period then ending, the ratio of (i) EBIT to (ii) an amount
equal to the consolidated interest expense (including
capitalized interest) of the Company and its Subsidiaries for
the four fiscal quarter period then ending calculated in
accordance with GAAP.
"Interest Payment Date" means, (a) as to any Offshore
Rate Committed Loan or Bid Loan, the last day of each Interest
Period applicable to such Loan, (b) as to any Base Rate
Committed Loan, the last Business Day of each calendar quarter
and each date such Base Rate Committed Loan is converted into
another Type of Committed Loan, and (c) as to any Swingline
Loan, the Business Day agreed upon by the Company and the
Swingline Bank, which will not be later than the fourteenth
Business Day following the Borrowing Date thereof or, if
sooner, the date set forth in clause (a) of the definition of
Revolving Termination Date; provided, however, that (i) if any
Interest Period for an Offshore Rate Committed Loan exceeds
three months, the date that falls three months after the
beginning of such Interest Period and after each Interest
Payment Date thereafter is also an Interest Payment Date, and
(ii) as to any Bid Loan, such intervening dates prior to the
maturity thereof as may be specified by the Company and agreed
to by the applicable Bid Loan Lender in the applicable
Competitive Bid shall also be Interest Payment Dates.
"Interest Period" means, (a) as to any Offshore Rate
Committed Loan, the period commencing on the Borrowing Date of
such Loan or on the Conversion/Continuation Date on which the
Loan is converted into or continued as an Offshore Rate
Committed Loan, and ending on the date one, two, three or six
months thereafter as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation, as the case may
be; (b) as to any LIBOR Bid Loan, a period of one to twelve
months as selected by the Company in the applicable Competitive
Bid Request; and (c) as to any Absolute Rate Bid Loan, a period
of not less than 7 days and not more than 365 days as selected
by the Company in the applicable Competitive Bid Request;
provided that:
(i) if any Interest Period would
otherwise end on a day that is not a Business
Day, that Interest Period shall be extended to
the following Business Day unless, in the case of
an Offshore Rate Loan, the result of such
extension would be to carry such Interest Period
into another calendar month, in which event such
Interest Period shall end on the preceding
Business Day;
(ii) any Interest Period pertaining to an
Offshore Rate Loan that begins on the last
Business Day of a calendar month (or on a day for
which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the
calendar month at the end of such Interest
Period; and
(iii) no Interest Period for any Loan
shall extend beyond February 16, 2001.
"Invitation for Competitive Bids" means a solicitation
for Competitive Bids, substantially in the form of Exhibit F.
"IRS" means the Internal Revenue Service, and any
governmental authority succeeding to any of its principal
functions under the Code.
"Lending Office" means, as to any Bank or Designated
Bidder, the office or offices of such Bank or Designated Bidder
specified as its "Lending Office" or "Domestic Lending Office"
or "Offshore Lending Office", as the case may be, on Schedule
10.02, or such other office or offices as such Bank or
Designated Bidder may from time to time notify the Company and
the Agent.
"LIBOR Rate" means, for any Interest Period with respect
to a LIBOR Bid Loan the rate of interest per annum determined
by the Agent to be the arithmetic mean (rounded upward to the
nearest 1/16th of 1%) of the rates of interest per annum
notified to the Agent by each Reference Bank as the rate of
interest at which dollar deposits in the approximate amount of
the LIBOR Bid Loans to be borrowed in such Bid Loan Borrowing
and having a maturity comparable to such Interest Period would
be offered to major banks in the London interbank market at
their request at approximately 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest
Period.
"LIBOR Auction" means a solicitation of Competitive Bids
setting forth a LIBOR Bid Margin pursuant to Section 2.06.
"LIBOR Bid Loan" means any Bid Loan that bears interest
at a rate based upon the LIBOR Rate.
"LIBOR Bid Margin" has the meaning specified in
subsection 2.06(c)(ii)(C).
"Loan" means an extension of credit by a Bank, the
Swingline Bank or a Designated Bidder, as the case may be, to
the Company under Article II, and may be a Committed Loan, a
Swingline Loan, or a Bid Loan.
"Majority Banks" means (a) at any time prior to the
Revolving Termination Date, or after the Revolving Termination
Date if no Loans are then outstanding, Banks then holding at
least 60% of the Commitments, and (b) otherwise, Banks then
holding at least 60% of the then aggregate unpaid principal
amount of the Loans. For purposes of this definition, each
Bank shall be deemed to hold all outstanding Bid Loans of such
Bank's Designated Bidders.
"Multiemployer Plan" means a "multiemployer plan", within
the meaning of Section 4001(a)(3) of ERISA, to which the
Company or any ERISA Affiliate makes, is making, or is
obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make,
contributions.
"Net Worth" means the total, determined on a consolidated
basis for the Company and its Subsidiaries, of (1) the capital
accounts as determined by GAAP and (2) debt which is
subordinated by the holders thereof to the Loans and other sums
now or hereafter owed by the Company or Subsidiaries to the
Agent, the Banks or the Designated Bidders with respect to the
Loans or otherwise under this Agreement or the Notes, by
arrangements or agreements in form and substance satisfactory
to the Majority Banks.
"Notes" has the meaning specified in subsection 2.02(b).
"Notice of Borrowing" means a notice in substantially the
form of Exhibit A.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.
"Offshore Rate" means, for any Interest Period, with
respect to Offshore Rate Committed Loans comprising part of the
same Borrowing, the rate of interest per annum (rounded upward
to the next 1/16th of 1%) determined by the Agent as follows:
Offshore Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed
as a decimal, rounded upward to the next 1/100th of 1%)
in effect on such day (whether or not applicable to any
Bank) under regulations issued from time to time by the
FRB for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities");
and
"LIBOR" means the rate of interest per annum determined by the
Agent to be the arithmetic mean (rounded upward to the next
1/16th of 1%) of the rates of interest per annum notified to
the Agent by each Reference Bank as the rate of interest at
which dollar deposits in the approximate amount of the amount
of the Loan to be made or continued as, or converted into, an
Offshore Rate Committed Loan by such Reference Bank and having
a maturity comparable to such Interest Period would be offered
to major banks in the London interbank market at their request
at approximately 11:00 a.m. (London time) two Business Days
prior to the commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as to
all Offshore Rate Loans then outstanding as of the effective
date of any change in the Eurodollar Reserve Percentage.
"Offshore Rate Committed Loan" means any Committed Loan
that bears interest based on the Offshore Rate.
"Offshore Rate Loan" means any LIBOR Bid Loan or any
Offshore Rate Committed Loan.
"Other Taxes" means any present or future stamp or
documentary taxes or any other excise or property taxes,
charges or similar levies (but not including such taxes
(including income taxes or franchise taxes) as are imposed on
or measured by each Bank's or Designated Bidder's net income)
which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other documents or
instruments given in connection herewith.
"PBGC" means the Pension Benefit Guaranty Corporation, or
any governmental authority succeeding to any of its principal
functions under ERISA.
"Pension Plan" means a pension plan (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA which the
Company sponsors or maintains, or to which it makes, is making,
or is obligated to make contributions, or in the case of a
multiple employer plan (as described in Section 4064(a) of
ERISA) has made contributions at any time during the
immediately preceding five (5) plan years.
"Permitted Swap Obligations" means all obligations
(contingent or otherwise) of the Company or any Subsidiary
existing or arising under Swap Contracts, provided that each of
the following criteria is satisfied: (a) such obligations are
(or were) entered into by such Person for the purpose of
directly mitigating risks associated with liabilities,
commitments or assets held or reasonably anticipated by such
Person, or changes in the value of securities issued by such
Person in conjunction with a securities repurchase program not
otherwise prohibited hereunder, and not for purposes of
speculation or taking a "market view;" and (b) such Swap
Contracts do not contain any provision ("walk-away" provision)
exonerating the non-defaulting party from its obligation to
make payments on outstanding transactions to the defaulting
party.
"Person" means any individual, association, joint
venture, partnership, joint stock company, corporation, trust,
business trust, government, governmental agency, governmental
subdivision or other entity.
"Plan" means an employee benefit plan (as defined in
Section 3(3) of ERISA) which the Company sponsors or maintains
or to which the Company makes, is making, or is obligated to
make contributions and includes any Pension Plan.
"Pro Rata Share" means, as to any Bank at any time, the
percentage equivalent (expressed as a decimal, rounded to the
ninth decimal place) at such time of such Bank's Commitment
divided by the combined Commitments of all Banks.
"Purchase Money Indebtedness" means indebtedness incurred
for the purchase of assets either by way of deferred payment of
the purchase price thereof or by borrowing in order to finance
such purchase.
"Reference Banks" means BofA and The Chase Manhattan
Bank, N.A.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other
than any such event for which the 30-day notice requirement
under ERISA has been waived in regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or
determination of an arbitrator or of a governmental authority,
in each case applicable to or binding upon the Person or any of
its property or to which the Person or any of its property is
subject.
"Revolving Termination Date" means the earlier to occur
of:
(a) February 16, 2001; and
(b) the date on which the Commitments terminate
in accordance with the provisions of this Agreement.
"Subsidiary" of a Person means any corporation,
association, partnership, joint venture or other business
entity of which more than 50% of the voting stock or other
equity interests (in the case of Persons other than
corporations) is owned or controlled directly or indirectly by
the Person, or one or more of the Subsidiaries of the Person,
or a combination thereof. Unless the context otherwise clearly
requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Company.
"Swap Contract" means any agreement, whether or not in
writing, relating to any transaction that is a rate swap, basis
swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap or option, bond, note or
bill option, interest rate option, forward foreign exchange
transaction, cap, collar or floor transaction, currency swap,
cross-currency rate swap, swaption, currency option or any
other, similar transaction (including any option to enter into
any of the foregoing) or any combination of the foregoing, and,
unless the context otherwise clearly requires, any master
agreement relating to or governing any or all of the foregoing.
"Swap Termination Value" means, in respect of any one or
more Swap Contracts, after taking into account the effect of
any legally enforceable netting agreement relating to such Swap
Contracts, (a) for any date on or after the date such Swap
Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s),
and (b) for any date prior to the date referenced in clause (a)
the amount(s) determined as the mark-to-market value(s) for
such Swap Contracts, as determined based upon one or more
mid-market or other readily available quotations provided by
any recognized dealer in such Swap Contracts (which may include
any Bank).
"Swingline Bank" means BofA.
"Swingline Borrowing" means a Borrowing hereunder
consisting of one or more Swingline Loans made to the Company
on the same day by the Swingline Bank.
"Swingline Clean-Up Day" has the meaning specified in
subsection 2.09(c).
"Swingline Commitment" has the meaning specified in
subsection 2.01(b).
"Swingline Loan" has the meaning specified in
subsection 2.01(b).
"Taxes" means any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of
each Bank, each Designated Bidder and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on
or measured by such Person's net income by the jurisdiction (or
any political subdivision thereof) under the laws of which such
Person is organized or maintains a lending office.
"Type" has the meaning specified in the definition of
"Committed Loan."
"Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over
the current value of that Plan's assets, determined in
accordance with the assumptions used for funding that Plan
pursuant to Section 412 of the Code for the applicable plan
year.
"United States" and "U.S." each means the United States
of America.
1.02 Accounting Principles. All financial computations required under
this Agreement shall be made, and all financial information required under
this Agreement shall be prepared, in accordance with GAAP, consistently
applied. References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments. (a) Each Bank severally
agrees, on the terms and conditions set forth herein, to make loans to the
Company from time to time on any Business Day during the period from the
Closing Date to the Revolving Termination Date in an aggregate amount not to
exceed at any time outstanding, together with such Bank's participation, if
any, in Swingline Loans then outstanding, the amount set forth on Schedule
2.01 (such amount, as the same may be reduced under Section 2.08 or as a
result of one or more assignments under Section 10.08, the Bank's
"Commitment"); provided, however, that, after giving effect to any Committed
Borrowing, the aggregate principal amount of all outstanding Loans shall not
at any time exceed the combined Commitments. Within the limits of each Bank's
Commitment, and subject to the other terms and conditions hereof, the Company
may borrow under this subsection 2.01(a), prepay under Section 2.09 and
reborrow under this subsection 2.01(a).
(b) The Swingline Bank agrees, on the terms and conditions set forth
herein, to make a portion of the combined Commitments of all the Banks
available to the Company by making swingline loans (each such loan a
"Swingline Loan") to the Company from time to time on any Business Day during
the period from the Closing Date to the Revolving Termination Date, in an
aggregate principal amount not to exceed at any time outstanding $25,000,000
(as such amount may be reduced under Section 2.08 or as a result of one or
more assignments under Section 10.08, the Swingline Bank's "Swingline
Commitment"), notwithstanding the fact that such Swingline Loans, when
aggregated with the Swingline Bank's outstanding Committed Loans, may exceed
the Swingline Bank's Commitment; provided, however, that, after giving effect
to any Borrowing of a Swingline Loan, the aggregate principal amount of all
outstanding Loans shall not at any time exceed the combined Commitments.
Within the foregoing limits, and subject to the other terms and conditions
hereof, the Company may borrow under this subsection 2.01(b), prepay under
Section 2.09 and reborrow under this subsection 2.01(b).
2.02 Loan Accounts.
(a) The Loans made by each Bank or Designated Bidder shall be
evidenced by one or more loan accounts or records maintained by such Bank or
Designated Bidder in the ordinary course of business. The loan accounts or
records maintained by the Agent and each Bank or Designated Bidder shall be
rebuttable presumptive evidence of the amount of the Loans made by the Banks
and Designated Bidders to the Company and the interest and payments thereon.
Any failure so to record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Company hereunder to pay any amount
owing with respect to the Loans.
(b) Upon the request of any Bank or Designated Bidder made through the
Agent, the Loans made by such Bank or Designated Bidder may be evidenced by
one or more notes in the form of Exhibit I or Exhibit J hereto, as applicable
(the "Notes"), instead of loan accounts. Each such Bank or Designated Bidder
shall endorse on the schedules annexed to its Note(s) the date, amount and
maturity of each Loan made by it and the amount of each payment of principal
made by the Company with respect thereto. Each such Bank and Designated
Bidder is irrevocably authorized by the Company to endorse its Note(s) and
each Bank's or Designated Bidder's notations on its Note(s) or other loan
accounts or records shall be rebuttable presumptive evidence of the amount of
the Loans made by such Bank or Designated Bidder to the Company and the
payments thereon; provided, however, that the failure of a Bank or Designated
Bidder to make, or an error in making, a notation on its Note(s) or other loan
accounts or records with respect to any Loan shall not limit or otherwise
affect the obligations of the Company hereunder or under any such Note to such
Bank or Designated Bidder.
2.03 Procedure for Committed Borrowing.
(a) Each Committed Borrowing shall be made upon the Company's
irrevocable written notice delivered to the Agent in the form of a Notice of
Borrowing (which notice must be received by the Agent prior to 9:00 a.m. (San
Francisco time)) (i) three Business Days prior to the requested Borrowing
Date, in the case of Offshore Rate Committed Loans, and (ii) one Business Day
prior to the requested Borrowing Date, in the case of Base Rate Committed
Loans, specifying:
(A) the amount of the Committed Borrowing, which shall
be in an aggregate minimum amount of $5,000,000 or any multiple
of $1,000,000 in excess thereof;
(B) the requested Borrowing Date, which shall be a
Business Day;
(C) the Type of Loans comprising the Committed
Borrowing; and
(D) the duration of the Interest Period applicable to
any Offshore Rate Committed Loans included in such notice. If
the Notice of Borrowing fails to specify the duration of the
Interest Period for any Committed Borrowing comprised of
Offshore Rate Loans, such Interest Period shall be three
months.
(b) The Agent will promptly notify each Bank of its receipt of any
Notice of Borrowing and of the amount of such Bank's Pro Rata Share of that
Committed Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each
Committed Borrowing available to the Agent for the account of the Company at
the Agent's Payment Office by 11:00 a.m. (San Francisco time) on the Borrowing
Date requested by the Company in funds immediately available to the Agent.
The proceeds of all such Committed Loans received in immediately available
funds by the Agent by 11:00 a.m. (San Francisco time) on such Borrowing Date
will then be made available to the Company by the Agent in immediately
available funds at such office by crediting by 1:00 p.m. (San Francisco time)
on such date the account of the Company on the books of BofA with the
aggregate of the amounts made available in immediately available funds to the
Agent by the Banks; provided, that, if on such Borrowing Date all or any
portion of the proceeds thereof shall then be required to be applied to the
repayment of any outstanding Swingline Loans pursuant to Section 2.07, such
proceeds or portion thereof shall be applied to the repayment of such
Swingline Loans. Subject to the proviso in the immediately preceding
sentence, any proceeds of such Committed Loans received in immediately
available funds by the Agent by 11:00 a.m. (San Francisco time) on such
Borrowing Date and not credited to the Company by 1:00 p.m. (San Francisco
time) on such date shall be deemed to have been disbursed on the following
Business Day and interest shall begin to accrue thereon on such following
Business Day.
(d) After giving effect to any Committed Borrowing, there may not be
more than seven different Interest Periods in effect in respect of all
Committed Loans and Bid Loans together then outstanding.
2.04 Conversion and Continuation Elections for Committed Borrowings.
(a) The Company may, upon irrevocable written notice to the Agent in
accordance with subsection 2.04(b):
(i) elect, as of any Business Day, in the case of Base
Rate Committed Loans, or as of the last day of the applicable
Interest Period, in the case of any other Type of Committed
Loans, to convert any such Committed Loans (or any part thereof
in an amount not less than $5,000,000, or that is in an
integral multiple of $1,000,000 in excess thereof) into
Committed Loans of any other Type; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any Committed Loans having
Interest Periods expiring on such day (or any part thereof in
an amount not less than $5,000,000, or that is in an integral
multiple of $1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of Offshore Rate Committed
Loans in respect of any Committed Borrowing is reduced, by payment,
prepayment, or conversion of part thereof to be less than $5,000,000, such
Offshore Rate Committed Loans shall automatically convert into Base Rate
Committed Loans, and on and after such date the right of the Company to
continue such Committed Loans as, and convert such Committed Loans into,
Offshore Rate Committed Loans shall terminate.
(b) The Company shall deliver a Notice of Conversion/
Continuation to be received by the Agent not later than 9:00 a.m. (San
Francisco time) at least (i) three Business Days in advance of the
Conversion/Continuation Date, if the Committed Loans are to be converted into
or continued as Offshore Rate Committed Loans and (ii) one Business Day in
advance of the Conversion/Continuation Date, if the Committed Loans are to be
converted into Base Rate Committed Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Committed Loans to be
converted or renewed;
(C) the Type of Committed Loans resulting from the
proposed conversion or continuation; and
(D) other than in the case of conversions into Base
Rate Committed Loans, the duration of the requested Interest
Period.
(c) If upon the expiration of any Interest Period
applicable to Offshore Rate Committed Loans, the Company has
failed to select timely a new Interest Period to be applicable
to such Offshore Rate Committed Loans, or if any Default or
Event of Default then exists, the Company shall be deemed to
have elected to convert such Offshore Rate Committed Loans into
Base Rate Committed Loans effective as of the expiration date
of such Interest Period.
(d) The Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no
timely notice is provided by the Company, the Agent will
promptly notify each Bank of the details of any automatic
conversion. All conversions and continuations shall be made
ratably according to the respective outstanding principal
amounts of the Committed Loans with respect to which the notice
was given held by each Bank.
(e) Unless the Majority Banks otherwise agree, during
the existence of a Default or Event of Default, the Company may
not elect to have a Committed Loan converted into or continued
as an Offshore Rate Committed Loan.
(f) After giving effect to any conversion or
continuation of Committed Loans, there may not be more than
seven different Interest Periods in effect in respect of all
Committed Loans and Bid Loans together then outstanding.
2.05 Bid Borrowings. In addition to Committed Borrowings pursuant to
Section 2.03, each Bank severally agrees that the Company may, as set forth in
Section 2.06, from time to time request the Banks and Designated Bidders prior
to the Revolving Termination Date to submit offers to make Bid Loans to the
Company; provided, however, that the Banks and Designated Bidders may, but
shall have no obligation to, submit such offers and the Company may, but shall
have no obligation to, accept any such offers, and any Bank may designate a
Designated Bidder to make such offers from time to time and, if such offers
are accepted by the Company, to make such Bid Loans; and provided, further,
that at no time shall (a) the outstanding aggregate principal amount of all
Bid Loans made by all Banks and Designated Bidders plus the outstanding
aggregate principal amount of all Committed Loans made by all Banks plus the
aggregate principal amount of all Swingline Loans then outstanding exceed the
combined Commitments or (b) the number of Interest Periods for Bid Loans then
outstanding plus the number of Interest Periods for Committed Loans then
outstanding exceed seven.
2.06 Procedure for Bid Borrowings.
(a) When the Company wishes to request the Banks and Designated
Bidders to submit offers to make Bid Loans hereunder, it shall transmit to the
Agent by telephone call followed promptly by facsimile transmission a notice
in substantially the form of Exhibit G (a "Competitive Bid Request") so as to
be received no later than 9:00 a.m. (San Francisco time) (x) four Business
Days prior to the date of a proposed Bid Borrowing in the case of a LIBOR
Auction, or (y) two Business Days prior to the date of a proposed Bid
Borrowing in the case of an Absolute Rate Auction, specifying:
(i) the date of such Bid Borrowing, which shall be a
Business Day;
(ii) the aggregate amount of such Bid Borrowing, which
shall be a minimum amount of $10,000,000 or in multiples of
$1,000,000 in excess thereof;
(iii) whether the Competitive Bids requested are to be
for LIBOR Bid Loans or Absolute Rate Bid Loans or both; and
(iv) the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of
"Interest Period" herein.
Subject to subsection 2.06(c), the Company may not request Competitive Bids
for more than three Interest Periods in a single Competitive Bid Request and
may not request Competitive Bids more than once in any period of five Business
Days.
(b) Upon receipt of a Competitive Bid Request, the Agent will promptly
send to the Banks and Designated Bidders by facsimile transmission an
Invitation for Competitive Bids, which shall constitute an invitation by the
Company to each Bank and Designated Bidder to submit Competitive Bids offering
to make the Bid Loans to which such Competitive Bid Request relates in
accordance with this Section 2.06.
(c) (i) Each Bank and Designated Bidder may at its discretion submit
a Competitive Bid containing an offer or offers to make Bid Loans in response
to any Invitation for Competitive Bids. Each Competitive Bid must comply with
the requirements of this subsection 2.06(c) and must be submitted to the Agent
by facsimile transmission at the Agent's office for notices set forth on
Schedule 10.02 (and immediately confirmed by a telephone call) not later than
(1) 6:30 a.m. (San Francisco time) three Business Days prior to the proposed
date of Borrowing, in the case of a LIBOR Auction or (2) 6:30 a.m. (San
Francisco time) on the proposed date of Borrowing, in the case of an Absolute
Rate Auction; provided that Competitive Bids submitted by the Agent (or any
affiliate of the Agent) in the capacity of a Bank or Designated Bidder may be
submitted, and may only be submitted, if the Agent or such affiliate notifies
the Company of the terms of the offer or offers contained therein not later
than (A) 6:15 a.m. (San Francisco time) three Business Days prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (B) 6:15 a.m.
(San Francisco time) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction.
(ii) Each Competitive Bid shall be in substantially the form of
Exhibit H, specifying therein:
(A) the proposed date of Borrowing;
(B) the principal amount of each Bid Loan for which
such Competitive Bid is being made, which principal amount
(x) may be equal to, greater than or less than the Commitment
of the quoting Bank, (y) must be $10,000,000 or in multiples of
$1,000,000 in excess thereof, and (z) may not exceed the
principal amount of Bid Loans for which Competitive Bids were
requested;
(C) in case the Company elects a LIBOR Auction, the
margin above or below LIBOR (the "LIBOR Bid Margin") offered
for each such Bid Loan, expressed in multiples of 1/100th of
one basis point to be added to or subtracted from the
applicable LIBOR and the Interest Period applicable thereto;
(D) in case the Company elects an Absolute Rate
Auction, the rate of interest per annum expressed in multiples
of 1/100th of one basis point (the "Absolute Rate") offered for
each such Bid Loan; and
(E) the identity of the quoting Bank or Designated
Bidder.
A Competitive Bid may contain up to three separate offers by
the quoting Bank or Designated Bidder with respect to each
Interest Period specified in the related Invitation for
Competitive Bids.
(iii) Any Competitive Bid shall be disregarded if it:
(A) is not substantially in conformity
with Exhibit H or does not specify all of the
information required by subsection (c)(ii) of
this Section;
(B) contains qualifying, conditional or
similar language;
(C) proposes terms other than or in
addition to those set forth in the applicable
Invitation for Competitive Bids; or
(D) arrives after the time set forth in
subsection (c)(i) of this Section.
(d) Promptly on receipt and not later than 7:00 a.m. (San Francisco
time) three Business Days prior to the proposed date of Borrowing, in the case
of a LIBOR Auction, or 7:00 a.m. (San Francisco time) on the proposed date of
Borrowing, in the case of an Absolute Rate Auction, the Agent will notify the
Company of the terms (i) of any Competitive Bid submitted by a Bank or
Designated Bidder that is in accordance with subsection 2.06(c), and (ii) of
any Competitive Bid that amends, modifies or is otherwise inconsistent with a
previous Competitive Bid submitted by such Bank or Designated Bidder with
respect to the same Competitive Bid Request. Any such subsequent Competitive
Bid shall be disregarded by the Agent unless such subsequent Competitive Bid
is submitted solely to correct a manifest error in such former Competitive Bid
and only if received within the times set forth in subsection 2.06(c). The
Agent's notice to the Company shall specify (1) the aggregate principal amount
of Bid Loans for which offers have been received for each Interest Period
specified in the related Competitive Bid Request; and (2) the respective
principal amounts and LIBOR Bid Margins or Absolute Rates, as the case may be,
so offered. Subject only to the provisions of Sections 3.02, 3.05 and 4.02
hereof and the provisions of this subsection (d), any Competitive Bid shall be
irrevocable except with the written consent of the Agent given on the written
instructions of the Company.
(e) Not later than 7:30 a.m. (San Francisco time) three Business Days
prior to the proposed date of Borrowing, in the case of a LIBOR Auction, or
7:30 a.m. (San Francisco time) on the proposed date of Borrowing, in the case
of an Absolute Rate Auction, the Company shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection 2.06(d). The Company shall be under no obligation to accept any
offer and may choose to reject all offers. In the case of acceptance, such
notice shall specify the aggregate principal amount of offers for each
Interest Period that is accepted. The Company may accept any Competitive Bid
in whole or in part; provided that:
(i) the aggregate principal amount of each Bid
Borrowing may not exceed the applicable amount set forth in the
related Competitive Bid Request;
(ii) the principal amount of each Bid Borrowing must be
$10,000,000 or in any multiple of $1,000,000 in excess thereof;
(iii) acceptance of offers may only be made on the basis
of ascending LIBOR Bid Margins or Absolute Rates within each
Interest Period, as the case may be; and
(iv) the Company may not accept any offer that is
described in subsection 2.06(c)(iii) or that otherwise fails to
comply with the requirements of this Agreement.
(f) If offers are made by two or more Banks or Designated Bidders with
the same LIBOR Bid Margins or Absolute Rates, as the case may be, for a
greater aggregate principal amount than the amount in respect of which such
offers are accepted for the related Interest Period, the principal amount of
Bid Loans in respect of which such offers are accepted shall be allocated by
the Agent among such Banks or Designated Bidders as nearly as possible (in
such multiples, not less than $1,000,000, as the Agent may deem appropriate)
in proportion to the aggregate principal amounts of such offers.
Determination by the Agent of the amounts of Bid Loans shall be conclusive in
the absence of manifest error.
(g) (i) The Agent will promptly notify each Bank or Designated
Bidder having submitted a Competitive Bid if its offer has been accepted and,
if its offer has been accepted, of the amount of the Bid Loan or Bid Loans to
be made by it on the date of the Bid Borrowing.
(ii) Each Bank or Designated Bidder, which has received notice pursuant
to subsection 2.06(g)(i) that its Competitive Bid has been accepted, shall
make the amounts of such Bid Loans available to the Agent for the account of
the Company at the Agent's Payment Office, by 11:00 a.m. (San Francisco time)
on such date of Bid Borrowing, in funds immediately available to the Agent for
the account of the Company at the Agent's Payment Office. The proceeds of all
such Bid Loans received in immediately available funds by the Agent by 11:00
a.m. (San Francisco time) on such date of Bid Borrowing will then be made
available to the Company by the Agent in immediately available funds at such
office by crediting by 1:00 p.m. (San Francisco time) on such date the account
of the Company on the books of BofA with the aggregate of the amounts made
available in immediately available funds to the Agent by the Banks. Any
proceeds of such Bid Loans received in immediately available funds by the
Agent by 11:00 a.m. (San Francisco time) on such date of Bid Borrowing and not
credited to the Company by 1:00 p.m. (San Francisco time) on such date shall
be deemed to have been disbursed on the following Business Day and interest
shall begin to accrue thereon on such following Business Day.
(iii) Promptly following each Bid Borrowing, the Agent shall notify each
Bank and Designated Bidder of the ranges of bids submitted and the highest and
lowest bids accepted for each Interest Period requested by the Company and the
aggregate amount borrowed pursuant to such Bid Borrowing and the Interest
Period applicable thereto.
(iv) From time to time, the Company and the Banks and Designated
Bidders shall furnish such information to the Agent as the Agent may request
relating to the making of Bid Loans, including the amounts, interest rates,
dates of borrowings and maturities thereof, for purposes of the allocation of
amounts received from the Company for payment of all amounts owing hereunder.
(h) If, on or prior to the proposed date of Borrowing, the Commitments
have not been terminated and if, on such proposed date of Borrowing all
applicable conditions to funding referenced in Sections 3.02, 3.05 and 4.02
hereof are satisfied, the Banks and Designated Bidders whose offers the
Company has accepted will fund each Bid Loan so accepted. Nothing in this
Section 2.06 shall be construed as a right of first offer in favor of the
Banks or Designated Bidders or to otherwise limit the ability of the Company
to request and accept credit facilities from any Person (including any of the
Banks or Designated Bidders), provided that no Default or Event of Default
would otherwise arise or exist as a result of the Company executing,
delivering or performing under such credit facilities.
2.07 Procedure for Swingline Loans. (a) Each Borrowing of a Swingline
Loan shall be made upon the Company's irrevocable written notice delivered to
the Agent (with a copy to the Swingline Bank) in the form of a Notice of
Borrowing (which notice must be received by the Agent and the Swingline Bank
prior to 11:00 a.m. (San Francisco time) on the requested Borrowing Date,
specifying: (i) the amount of such Swingline Loan; and (ii) the requested
Borrowing Date, which shall be a Business Day. Upon receipt of the Notice of
Borrowing, the Swingline Bank will immediately confirm with the Agent (by
telephone or in writing) that the Agent has received a copy of the Notice of
Borrowing from the Company and, if not, the Swingline Bank will provide the
Agent with a copy thereof.
(b) Unless the Swingline Bank has received notice prior to 2:00 p.m.
(San Francisco time) on the relevant Swingline Borrowing Date from the Agent
(including at the request of any Bank) (i) directing the Swingline Bank not to
make the requested Swingline Loan as a result of the limitation set forth in
the proviso set forth in Section 2.01(b), or (ii) that one or more conditions
specified in Article IV are not then satisfied; then, subject to the terms and
conditions hereof, the Swingline Bank will, not later than 3:00 p.m. (San
Francisco time) on the Borrowing Date specified in such Notice of Borrowing,
make the amount of the requested Swingline Loan available to the Agent for the
account of the Company at the Agent's Payment Office in immediately available
funds. The proceeds of such Swingline Loan received in immediately available
funds by the Agent by 3:00 p.m. (San Francisco time) on such Borrowing Date
will then be made available to the Company by the Agent in immediately
available funds by crediting the account of the Company on the books of BofA
with the amount made available in immediately available funds to the Agent by
the Swingline Bank. Each Swingline Borrowing pursuant to this Section shall
be in an aggregate principal amount equal to $1,000,000 or an integral
multiple of $100,000 in excess thereof, unless otherwise agreed by the
Swingline Bank.
(c) After giving effect to any Borrowing of a Swingline Loan, there
may not be more than three different Swingline Loans outstanding at any one
time.
(d) The Agent will notify the Banks of any Borrowing of a Swingline
Loan or repayment thereof promptly after any such Borrowing or repayment.
(e) If (i) any Swingline Loan shall remain outstanding at 9:00 a.m.
(San Francisco time) on the Business Day immediately prior to a Swingline
Clean-Up Day and by such time on such Business Day the Agent shall have
received neither (A) a Notice of Borrowing delivered pursuant to Section 2.03
requesting that Committed Loans be made pursuant to Section 2.01(a) on the
Swingline Clean-Up Day in an amount at least equal to the principal amount of
such Swingline Loan, nor (B) any other notice indicating the Company's intent
to repay such Swingline Loan with funds obtained from other sources, or (ii)
any Swingline Loans shall remain outstanding during the existence of a Default
or Event of Default and the Swingline Bank shall in its sole discretion notify
the Agent that the Swingline Bank desires that such Swingline Loans be
converted into Committed Loans; then, the Agent shall be deemed to have
received a Notice of Borrowing from the Company pursuant to Section 2.03
requesting that Base Rate Committed Loans be made pursuant to Section 2.01(a)
on such Swingline Clean-Up Day (in the case of the circumstances described in
clause (i) above) or on the first Business Day subsequent to the date of such
notice from the Swingline Bank (in the case of the circumstances described in
clause (ii) above) in an amount equal to the aggregate amount of such
Swingline Loans, and the procedures set forth in Sections 2.03(b) and 2.03(c)
shall be followed in making such Base Rate Committed Loans; provided, that
such Base Rate Committed Loans shall be made notwithstanding the Company's
failure to comply with the conditions specified in Section 4.02 and
notwithstanding that the aggregate amount of such Swingline Loans is less than
the minimum amount for borrowing set forth in Section 2.03(a); and provided,
further, that if a Borrowing of Committed Loans becomes legally impracticable
and if so required by the Swingline Bank at the time such Committed Loans are
required to be made by the Banks in accordance with this subsection 2.07(e),
each Bank agrees that in lieu of making Committed Loans as described above,
such Bank shall purchase a participation from the Swingline Bank in the
applicable Swingline Loans in an amount equal to such Bank's Pro Rata Share of
the aggregate principal amount of such Swingline Loans, and the procedures set
forth in Sections 2.03(b) and 2.03(c) shall be followed in connection with the
purchases of such participations. The proceeds of such Base Rate Committed
Loans or purchases of participations, as the case may be, shall be applied to
repay such Swingline Loans. A copy of each notice given by the Agent to the
Banks pursuant to this subsection 2.07(e) with respect to the making of
Committed Loans or the purchases of participations, as the case may be, shall
be promptly delivered by the Agent to the Company. Each Bank's obligation in
accordance with this Agreement to make the Committed Loans or purchase the
participations, as contemplated by this subsection 2.07(e), shall be absolute
and unconditional and shall not be affected by any circumstance (except the
Swingline Bank's funding of a Swingline Loan when it has received a notice
under subsection 2.07(b)(i) or (ii)), including (1) any set-off, counterclaim,
recoupment, defense or other right which such Bank may have against the
Swingline Bank, the Company or any other Person for any reason whatsoever; (2)
the occurrence or continuance of a Default or an Event of Default; or (3) any
other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing; provided, that, nothing in this Section 2.07 shall
require any Bank to fund a Committed Loan or purchase a participation to the
extent that such Committed Loan or participation interest, when aggregated
with such Bank's then-outstanding Committed Loans and participation interests,
would exceed such Bank's Commitment.
2.08 Voluntary Termination or Reduction of Commitments. The Company
may, upon not less than three Business Days' prior notice to the Agent,
terminate the Commitments, or permanently reduce the Commitments by an
aggregate minimum amount of $10,000,000 or any multiple of $1,000,000 in
excess thereof; unless, after giving effect thereto and to any prepayments of
Committed Loans or Swingline Loans made on the effective date thereof, (i) the
then-outstanding principal amount of the Loans would exceed the amount of the
combined Commitments then in effect, or (ii) the then-outstanding principal
amount of all Swingline Loans would exceed the amount of the Swingline
Commitment then in effect, as adjusted pursuant to the last sentence of this
Section 2.08. Once reduced in accordance with this Section, the Commitments
may not be increased. Any reduction of the Commitments shall be applied to
each Bank's Commitment according to its Pro Rata Share. All accrued facility
fees to, but not including the effective date of any reduction or termination
of Commitments, shall be paid on the effective date of such reduction or
termination. At no time shall the Swingline Commitment exceed the combined
Commitments or the Commitment of the Swingline Bank and any reduction of the
Commitments or the Commitment of the Swingline Bank which reduces the combined
Commitments or the Swingline Bank's Commitment, respectively, below the then-
current amount of the Swingline Commitment shall result in an automatic
corresponding reduction of the Swingline Commitment to the amount of the
combined Commitments or the Swingline Bank's Commitment, respectively, as so
reduced, without any action on the part of the Swingline Bank.
2.09 Prepayments. (a) Subject to Section 3.04, the Company may, at any
time or from time to time, upon not less than three Business Days' irrevocable
notice to the Agent, in the case of a prepayment of Offshore Rate Committed
Loans, one Business Day's irrevocable notice to the Agent, in the case of a
prepayment of Base Rate Committed Loans, or irrevocable notice to the Agent on
the Business Day of the proposed prepayment, in the case of a prepayment of
Swingline Loans, ratably prepay Committed Loans or Swingline Loans in whole or
in part, and, in the case of Committed Loans, in minimum amounts of $5,000,000
or any multiple of $1,000,000 in excess thereof. Such notice of prepayment
shall specify the date and amount of such prepayment, whether such prepayment
is of Committed Loans or Swingline Loans, or a combination thereof, and, if
applicable, the Type(s) of Committed Loans to be prepaid. The Agent will
promptly notify each Bank of its receipt of any such notice, and, if
applicable, of such Bank's Pro Rata Share of such prepayment. If such notice
is given by the Company, the Company shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest to such date on the amount
prepaid and any amounts required pursuant to Section 3.04.
(b) Bid Loans may not be voluntarily prepaid other than with the
consent of the applicable Bid Loan Lender, to be given or withheld in its sole
discretion.
(c) (i) If following any reduction of the Swingline Commitment
pursuant to Section 2.08 the aggregate outstanding principal amount of
Swingline Loans would exceed the Swingline Commitment as reduced, the Company
shall prepay without notice or demand on the reduction date of the Swingline
Commitment the outstanding principal amount of the Swingline Loans in an
amount equal to the excess of the Swingline Loans over the Swingline
Commitment as so reduced, and (ii) so that for one Business Day during each
successive two calendar week period the aggregate principal amount of
Swingline Loans shall be $0 (a "Swingline Clean-Up Day"), the Company shall
prepay without notice or demand on the Swingline Clean-Up Day the outstanding
principal amount of the Swingline Loans (which Swingline Loans may not be
reborrowed until such Swingline Clean-Up Day has ended).
2.10 Repayment.
(a) The Revolving Credit. The Company shall repay to the Banks on the
Revolving Termination Date the aggregate principal amount of Committed Loans
outstanding on such date.
(b) Bid Loans. The Company shall repay each Bid Loan on the
last day of the relevant Interest Period.
(c) Swingline. The Company shall repay to the Swingline Bank in
full on the Revolving Termination Date the aggregate principal amount of the
Swingline Loans outstanding on such date.
2.11 Interest.
(a) (i) Each Committed Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per
annum equal to the Offshore Rate or the Base Rate, as the case may be (and
subject to the Company's right to convert to other Types of Committed Loans
under Section 2.04), plus the Applicable Margin, (ii) each Swingline Loan
shall bear interest on the outstanding principal amount thereof from the
applicable Borrowing Date at a rate per annum equal to the Base Rate plus the
Applicable Margin or at such other rate not in excess of the Base Rate plus
the Applicable Margin agreed to by the Swingline Bank in its sole discretion
at the time of the applicable Swingline Borrowing, and (iii) each Bid Loan
shall bear interest on the outstanding principal amount thereof from the
applicable Borrowing Date at a rate per annum equal to the LIBOR Rate plus (or
minus) the LIBOR Bid Margin or at the Absolute Rate, as the case may be.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of
Committed Loans or Swingline Loans under Section 2.09 for the portion of the
Loans so prepaid and upon payment (including prepayment) in full thereof and,
during the existence of any Event of Default, interest shall be paid on demand
of the Agent at the request or with the consent of the Majority Banks.
(c) Notwithstanding subsection (a) of this Section, if any amount of
principal of or interest on any Loan or any other amount payable hereunder or
under any other document or instrument given in connection herewith is not
paid in full when due (whether at stated maturity, by acceleration, demand or
otherwise), the Company agrees to pay interest on such unpaid principal or
other amount, from the date such amount becomes due until the date such amount
is paid in full, and after as well as before any entry of judgment thereon to
the extent permitted by law, payable on demand, at a fluctuating rate per
annum equal to the Base Rate plus 1%.
(d) Anything herein to the contrary notwithstanding, the obligations
of the Company to any Bank or Designated Bidder hereunder shall be subject to
the limitation that payments of interest shall not be required for any period
for which interest is computed hereunder, to the extent (but only to the
extent) that contracting for or receiving such payment by such Bank or
Designated Bidder would be contrary to the provisions of any law applicable to
such Bank or Designated Bidder limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank or Designated
Bidder, and in such event the Company shall pay such Bank or Designated Bidder
interest at the highest rate permitted by applicable law.
2.12 Fees.
(a) Facility Fees. The Company shall pay to the Agent for the account
of each Bank a facility fee on the full amount of such Bank's Commitment
(regardless of usage), computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter, at a rate per annum equal to the
Facility Fee Percentage. Such facility fee shall accrue from the Closing Date
to the Revolving Termination Date and shall be due and payable quarterly in
arrears on the last Business Day of each calendar quarter commencing on March
31, 1996 through the Revolving Termination Date, with the final payment to be
made on the Revolving Termination Date; provided that, in connection with any
reduction or termination of Commitments under Section 2.08, the accrued
facility fee calculated for the period ending on such date shall also be paid
on the date of such reduction or termination, with the following quarterly
payment being calculated on the basis of the period from such reduction or
termination date to such quarterly payment date. The facility fees provided
in this subsection shall accrue at all times after the above-mentioned
commencement date, including at any time during which one or more conditions
in Article IV are not met.
(b) Arrangement, Agency, Bid Loan Fees. The Company shall pay an
arrangement fee to the Arranger for the Arranger's own account, and shall pay
an agency fee and Bid Loan fees to the Agent for the Agent's own account, as
required by the letter agreement ("Fee Letter") between the Company and the
Arranger and Agent dated December 18, 1995.
2.13 Computation of Fees and Interest.
(a) All computations of interest for Base Rate Committed Loans and
Swingline Loans bearing interest based on the Base Rate when the Base Rate is
determined by BofA's "reference rate" shall be made on the basis of a year of
365 or 366 days, as the case may be, and actual days elapsed. All other
computations of fees and interest shall be made on the basis of a 360-day year
and actual days elapsed (which results in more interest being paid than if
computed on the basis of a 365-day year). Interest and fees shall accrue
during each period during which interest or such fees are computed from the
first day thereof to the last day thereof. The Agent will provide to the
Company a statement of the amount of interest due on each Interest Payment
Date and such other dates that interest is due hereunder and a statement of
the amount of fees due on each date that fees are due hereunder; provided that
the failure of the Agent to provide any such statement shall not limit or
otherwise affect the Company's obligations hereunder or under any Note.
(b) Each determination of an interest rate by the Agent shall be
conclusive and binding on the Company, the Banks and Designated Bidders in the
absence of manifest error.
(c) If any Reference Bank's Commitment terminates (other than on
termination of all the Commitments), or for any reason whatsoever any
Reference Bank ceases to be a Bank hereunder, that Reference Bank shall
thereupon cease to be a Reference Bank. The Agent shall promptly appoint
another Bank (which Bank shall be approved by the Company) as a replacement
Reference Bank for the terminated Reference Bank. Until the appointment of
such replacement Reference Bank, the Offshore Rate and LIBOR Rate shall be
determined on the basis of the rates as notified by the remaining Reference
Bank.
(d) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Agent as contemplated hereby. If any of the
Reference Banks fails to supply such rates to the Agent upon its request, the
rate of interest shall be determined on the basis of the quotations of the
remaining Reference Bank.
2.14 Payments by the Company.
(a) All payments to be made by the Company shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Company shall be made to the Agent for the account
of the Banks and Designated Bidders at the Agent's Payment Office, and shall
be made in dollars and in immediately available funds, no later than 11:00
a.m. (San Francisco time) on the date specified herein. The Agent will
promptly distribute to each Bank (or Designated Bidder) its Pro Rata Share (or
other applicable share as expressly provided herein) of such payment in like
funds as received. Any payment received by the Agent later than 11:00 a.m.
(San Francisco time) shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business
Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Company prior to the
date on which any payment is due to the Banks or Designated Bidders that the
Company will not make such payment in full as and when required, the Agent may
assume that the Company has made such payment in full to the Agent on such
date in immediately available funds and the Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Bank or
Designated Bidder on such due date an amount equal to the amount then due such
Bank or Designated Bidder. If and to the extent the Company has not made such
payment in full to the Agent, each Bank or Designated Bidder shall repay to
the Agent on demand such amount distributed to such Bank or Designated Bidder,
together with interest thereon at the Federal Funds Rate for each day from the
date such amount is distributed to such Bank or Designated Bidder until the
date repaid.
2.15 Payments by the Banks to the Agent.
(a) Unless the Agent receives notice from a Bank on or prior to the
Closing Date or, with respect to any Borrowing after the Closing Date, at
least one Business Day prior to the date of such Borrowing, that such Bank
will not make available as and when required hereunder to the Agent for the
account of the Company the amount of that Bank's Pro Rata Share of the
Committed Borrowing, in the case of a Committed Borrowing, or the Swingline
Loan, in the case of a Swingline Borrowing, the Agent may assume that each
Bank, in the case of a Committed Borrowing, or the Swingline Bank, in the case
of a Swingline Borrowing, has made such amount available to the Agent in
immediately available funds on the Borrowing Date and the Agent may (but shall
not be so required), in reliance upon such assumption, make available to the
Company on such date a corresponding amount. If and to the extent any Bank
shall not have made its full amount available to the Agent in immediately
available funds and the Agent in such circumstances has made available to the
Company such amount, that Bank shall on the Business Day following such
Borrowing Date make such amount available to the Agent, together with interest
at the Federal Funds Rate for each day during the period from the Borrowing
Date to the date that Bank makes such amount available to the Agent. A notice
of the Agent submitted to any Bank with respect to amounts owing under this
subsection (a) shall be conclusive, absent manifest error. If such amount is
so made available, such payment to the Agent shall constitute such Bank's Loan
as of the date of Borrowing for all purposes of this Agreement. If such
amount is not made available to the Agent on the Business Day following the
Borrowing Date, the Agent will notify the Company of such failure to fund and,
upon demand by the Agent, the Company shall pay such amount to the Agent for
the Agent's account, together with interest thereon for each day elapsed since
the date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Committed Loan on any
Borrowing Date shall not relieve any other Bank of any obligation hereunder to
make a Committed Loan on such Borrowing Date, but no Bank shall be responsible
for the failure of any other Bank to make the Committed Loan to be made by
such other Bank on any Borrowing Date.
2.16 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Committed Loans made
by it any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its Pro Rata Share, such Bank
shall immediately (a) notify the Agent of such fact, and (b) purchase from the
other Banks such participations in the Committed Loans made by them as shall
be necessary to cause such purchasing Bank to share the excess payment pro
rata with each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from the purchasing Bank, such purchase
shall to that extent be rescinded and each other Bank shall repay to the
purchasing Bank the purchase price paid therefor, together with an amount
equal to such paying Bank's ratable share (according to the proportion of (i)
the amount of such paying Bank's required repayment to (ii) the total amount
so recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered.
The Company agrees that any Bank so purchasing a participation from another
Bank may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off, but subject to Section 10.11) with
respect to such participation as fully as if such Bank were the direct
creditor of the Company in the amount of such participation. The Agent will
keep records (which shall be conclusive and binding in the absence of manifest
error) of participations purchased under this Section and will in each case
notify the Banks following any such purchases or repayments. Any Bank having
outstanding both Committed Loans, Swingline Loans, and Bid Loans at any time a
right of set-off is exercised by such Bank and applying such setoff to the
Loans shall apply the proceeds of such set-off first to such Bank's Committed
Loans, until its Committed Loans are reduced to zero, thereafter to its
Swingline Loans, until reduced to zero, and thereafter to its Bid Loans.
2.17 Quarterly Adjustments.
(a) If the financial reports delivered pursuant to subsections 6.07(a)
and 6.07(b) and the certificate delivered pursuant to subsection 6.07(c) when
delivered with respect to any fiscal quarter indicate that the Applicable
Margin or Facility Fee Percentage for any period should have been higher than
the Applicable Margin or Facility Fee Percentage assumed for such period
pursuant to the definitions of such terms, and the interest or fee that would
have been collected hereunder based upon the actual Applicable Margin or
Facility Fee Percentage exceeds the interest or fee actually collected
hereunder, then the Company shall pay an amount equal to such excess to the
Agent for the account of the Banks. The Agent will provide a statement to the
Company of such amounts due within five Business Days of the Agent's receipt
of such financial reports and certificate, and the Company shall pay such
amounts within three Business Days of its receipt of such statement; provided
that the failure of the Agent to provide any such statement shall not limit or
otherwise affect the Company's obligations hereunder or under any Note.
(b) If (i) the financial reports delivered pursuant to subsections
6.07(a) and 6.07(b) and the certificate delivered pursuant to subsection
6.07(c) when delivered with respect to any fiscal quarter indicate that the
Applicable Margin or Facility Fee Percentage for any period should have been
lower than the Applicable Margin or Facility Fee Percentage assumed for such
period pursuant to the definitions of such terms, and (ii) the interest or fee
actually collected hereunder exceeds the interest or fee that would have been
collected hereunder based upon the actual Applicable Margin or Facility Fee
Percentage, then the Agent shall credit such excess to interest and fees owing
hereunder (including any interest owing under subsection 2.11(c)) during the
calendar quarter when such financial reports and certificate were received
and, if all such excess is not credited by the end of such calendar quarter,
upon request of the Company, each Bank, severally, if no Default or Event of
Default exists, shall refund to the Agent for distribution to the Company the
amount of such excess actually received and retained by such Bank.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes. (a) Any and all payments by the Company to each Bank or
Designated Bidder or the Agent under this Agreement and any other document or
instrument given in connection herewith shall be made free and clear of, and
without deduction or withholding for any Taxes. In addition, the Company
shall pay all Other Taxes.
(b) The Company agrees to indemnify and hold harmless each Bank and
Designated Bidder and the Agent for the full amount of Taxes or Other Taxes
imposed on any payments under this Agreement (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section) paid
by such Bank or Designated Bidder or the Agent and any liability (including
penalties, interest, additions to tax and expenses, unless arising from the
gross negligence or willful misconduct of such Bank or Designated Bidder or
the Agent) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date such Bank or
Designated Bidder or the Agent makes written demand therefor.
(c) If the Company shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Bank or Designated Bidder or the Agent, then:
(i) the sum payable shall be increased as necessary so
that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional
sums payable under this Section) such Bank or Designated Bidder
or the Agent, as the case may be, receives an amount equal to
the sum it would have received had no such deductions or
withholdings been made;
(ii) the Company shall make such deductions and
withholdings;
(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Company shall also pay to each Bank or
Designated Bidder or to the Agent for the account of such Bank
or Designated Bidder, at the time interest is paid, all
additional amounts which the respective Bank or Designated
Bidder specifies as necessary to preserve the after-tax yield
such Bank or Designated Bidder would have received if such
Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the Company of
Taxes or Other Taxes, the Company shall furnish the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(e) If the Company is required to pay additional amounts to any Bank
or Designated Bidder or the Agent for such Person's account pursuant to
subsection (c) of this Section, then such Bank or Designated Bidder shall use
reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Company which may thereafter accrue, if such change
in the judgment of such Bank or Designated Bidder is not otherwise
disadvantageous to such Bank or Designated Bidder, as the case may be.
3.02 Illegality.
(a) If any Bank reasonably determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other governmental authority has
asserted that it is unlawful, for any Bank or its applicable Lending Office,
or such Bank's Designated Bidders in the case of LIBOR Bid Loans, to make
Offshore Rate Loans, then, on notice thereof by the Bank to the Company
through the Agent, any obligation of that Bank or Designated Bidder to make
Offshore Rate Loans (including in respect of any LIBOR Bid Loan as to which
the Company has accepted such Bank's or Designated Bidder's Competitive Bid,
but as to which the Borrowing Date has not arrived) shall be suspended until
such Bank notifies the Agent and the Company that the circumstances giving
rise to such determination no longer exist.
(b) If a Bank reasonably determines that it is unlawful for such Bank
or such Bank's Designated Bidder to maintain any Offshore Rate Loan, the
Company shall, upon its receipt of notice of such fact and demand from such
Bank (with a copy to the Agent), prepay in full such Offshore Rate Loans of
that Bank or its Designated Bidder then outstanding, together with interest
accrued thereon and amounts required under Section 3.04, either on the last
day of the Interest Period thereof, if such Bank or its Designated Bidder may
lawfully continue to maintain such Offshore Rate Loans to such day, or
immediately, if such Bank or its Designated Bidder may not lawfully continue
to maintain such Offshore Rate Loans. If the Company is required to so prepay
any Offshore Rate Committed Loan, then concurrently with such prepayment, the
Company shall borrow from the affected Bank, in the amount of such repayment,
a Base Rate Committed Loan.
(c) If the obligation of any Bank to make or maintain Offshore Rate
Committed Loans has been so terminated or suspended, the Company may elect, by
giving notice to such Bank through the Agent that all Loans which would
otherwise be made by such Bank as Offshore Rate Committed Loans shall be
instead Base Rate Committed Loans.
3.03 Increased Costs and Reduction of Return.
(a) If any Bank determines that, due to either (i) the introduction of
or any change (other than any change by way of imposition of or increase in
reserve requirements included in the calculation of the Offshore Rate) in or
in the interpretation of any law or regulation or (ii) the compliance by that
Bank with any guideline or request from any central bank or other governmental
authority (whether or not having the force of law), there shall be any
increase in the cost to such Bank of agreeing to make or making, funding or
maintaining any Offshore Rate Committed Loans, then the Company shall be
liable for, and shall from time to time, upon demand (with a copy of such
demand to be sent to the Agent), pay to the Agent for the account of such
Bank, additional amounts as are sufficient to compensate such Bank for such
increased costs.
(b) If any Bank or, in the case of Bid Loans, such Bank's Designated
Bidder, shall have determined that (i) the introduction of any Capital
Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii)
any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other governmental authority charged with
the interpretation or administration thereof, or (iv) compliance by such Bank
or Designated Bidder (or the Lending Office of either) or any corporation
controlling such Bank or Designated Bidder with any Capital Adequacy
Regulation, affects or would affect the amount of capital required or expected
to be maintained by such Bank or Designated Bidder or any corporation
controlling such Bank or Designated Bidder and (taking into consideration such
Bank's or such Designated Bidder's or such corporation's policies with respect
to capital adequacy and such Bank's or such Designated Bidder's or such
corporation's desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitment, Swingline Commitment
(in the case of the Swingline Bank), loans, credits or obligations under this
Agreement, then, upon demand of such Bank or such Designated Bidder to the
Company through the Agent, the Company shall pay to such Bank or Designated
Bidder, as applicable, from time to time as specified by such Bank or such
Designated Bidder, additional amounts sufficient to compensate such Bank or
Designated Bidder for such increase. For purposes of this subsection,
"Capital Adequacy Regulation" means any guideline, request or directive of any
central bank or other governmental authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
3.04 Funding Losses. The Company shall reimburse each Bank and, in the
case of Bid Loans, each Bank's Designated Bidder, and hold each Bank and, in
the case of Bid Loans, each Bank's Designated Bidder, harmless from any loss
or expense which such Bank or Designated Bidder may sustain or incur as a
consequence of:
(a) the failure of the Company to make on a timely
basis any payment of principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or
convert a Committed Loan after the Company has given (or is
deemed to have given) a Notice of Borrowing or a Notice of
Conversion/Continuation;
(c) the failure of the Company to make any prepayment
of any Committed Loan in accordance with any notice delivered
under Section 2.09;
(d) the prepayment (including pursuant to Section 2.09)
or other payment (including after acceleration thereof) of any
Offshore Rate Loan or Absolute Rate Bid Loan on a day that is
not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.04 of any
Offshore Rate Committed Loan to a Base Rate Committed Loan on a
day that is not the last day of the relevant Interest Period;
including any such loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its Offshore Rate Loans or
from fees payable to terminate the deposits from which such funds were
obtained.
3.05 Inability to Determine Rates. If the Agent determines that for
any reason adequate and reasonable means do not exist for determining the
Offshore Rate or the LIBOR Rate for any requested Interest Period with respect
to a proposed Offshore Rate Loan, or that the Offshore Rate or the LIBOR Rate
applicable pursuant to subsection 2.11(a) for any requested Interest Period
with respect to a proposed Offshore Rate Loan does not adequately and fairly
reflect the cost to the Banks of funding such Loan, the Agent will promptly so
notify the Company and each Bank. Thereafter, the obligation of the Banks to
make or maintain Offshore Rate Loans, as the case may be, hereunder shall be
suspended until the Agent revokes such notice in writing. Upon receipt of
such notice, the Company may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Company does not revoke
such Notice of Borrowing, the Banks shall make, convert or continue the
Committed Loans, as proposed by the Company, in the amount specified in the
applicable notice submitted by the Company, but such Committed Loans shall be
made, converted or continued as Base Rate Committed Loans instead of Offshore
Rate Committed Loans.
3.06 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other obligations hereunder.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions of Initial Loans. The effectiveness of this Agreement,
the obligation of each Bank to make its initial Committed Loan hereunder and
to receive through the Agent the initial Competitive Bid Request, and the
obligation of the Swingline Bank to make its initial Swingline Loan hereunder,
is subject to the condition that the Agent have received on or before the
Closing Date all of the following, in form and substance satisfactory to the
Agent and each Bank, and in sufficient copies for each Bank:
(a) Credit Agreement and Notes. This Agreement and, if
requested by any Bank, the Note(s), executed by each party
thereto;
(b) Legal Opinions. (i) An opinion, dated the Closing
Date, of Miller, Nash, Wiener, Hager & Carlsen, counsel for the
Company, substantially in the form of Exhibit D-1 hereto, and
(ii) an opinion, dated the Closing Date, of Morrison &
Foerster, special California counsel to the Agent,
substantially in the form of Exhibit D-2 hereto;
(c) Resolutions. A copy of a resolution or resolutions
passed by the Board of Directors of the Company, certified by
the Secretary or an Assistant Secretary of the Company as being
in full force and effect on the Closing Date, authorizing the
Borrowings provided for herein and the execution, delivery and
performance of this Agreement and any instrument or agreement
required hereunder;
(d) Incumbency. A certificate, signed by the Secretary
or an Assistant Secretary of the Company and dated the Closing
Date, as to the incumbency, and containing the specimen
signature or signatures, of the person or persons authorized to
execute and deliver this Agreement and any instrument or
agreement required hereunder on behalf of the Company;
(e) Payment of Fees. Evidence of payment by the
Company of all accrued and unpaid fees, costs and expenses to
the extent then due and payable on the Closing Date, together
with attorney costs of BofA to the extent invoiced prior to or
on the Closing Date, plus such additional amounts of attorney
costs as shall constitute BofA's reasonable estimate of
attorney costs incurred or to be incurred by it through the
closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between the
Company and BofA with respect to such costs); including any
such costs, fees and expenses arising under or referenced in
Sections 2.12(b) and 10.04;
(f) Certificate. A certificate signed by a duly
authorized officer of the Company, dated as of the Closing
Date, stating that:
(i) the representations and warranties
contained in Article V are true and correct on
and as of such date, as though made on and as of
such date; and
(ii) no Default or Event of Default exists
or would result from the initial Borrowing;
(g) Termination of Existing Agreement . Evidence (i)
that all commitments to extend credit under the Credit
Agreement (the "Existing Agreement") dated as of January 31,
1995 between the Company, the financial institutions party
thereto, and BofA, as agent for such financial institutions,
have been terminated, and (ii) of payment or repayment by the
Company of (A) all facility fees accrued to the Closing Date
under subsection 2.11(a) of the Existing Agreement and (B) all
principal, accrued interest and any amounts payable under
Section 3.04 of the Existing Agreement; it being agreed by each
of the Banks which is party to the Existing Agreement (x) that,
upon satisfaction or waiver of all other conditions set forth
in this Section 4.01, its commitment to extend credit under the
Existing Agreement shall be deemed to be terminated,
notwithstanding the notice provisions of Section 2.07 of the
Existing Agreement, which each such Bank hereby waives, and the
condition set forth in clause (i) of this subsection 4.01(g)
shall be deemed to be satisfied, and (y) promptly after the
Closing Date, such Bank will return to the Agent for return to
the Company any promissory note given to it by the Company
under the Existing Agreement; and
(h) Other Documents. Certified copies of all
approvals, consents, exemptions and other actions by, and
notices to and filings with, any governmental authority and any
trustee or holder of any indebtedness or obligation of the
Company which, in any Bank's opinion, are required in
connection with any transaction contemplated hereby.
4.02 Conditions to All Borrowings. The obligation of each Bank to make
any Committed Loan to be made by it, the obligation of any Bank or Designated
Bidder to make any Bid Loan as to which the Company has accepted the relevant
Competitive Bid, and the obligation of the Swingline Bank to make any
Swingline Loan hereunder (including, in each case, its initial Loan), is
subject to the satisfaction of the following conditions precedent on the
relevant Borrowing Date:
(a) Notice of Borrowing. As to any Committed Loan, the
Agent shall have received (with, in the case of the initial
Loan only, a copy for each Bank) a Notice of Borrowing;
(b) Continuation of Representations and Warranties.
The representations and warranties in Article V (exclusive of
Section 5.13) shall be true and correct on and as of such
Borrowing Date with the same effect as if made on and as of
such Borrowing Date;
(c) Financial Statements. The financial statements
then most recently supplied to the Banks under both subsections
6.07(a) and 6.07(b) shall have been prepared in accordance with
the provisions of such subsections as of the dates and periods
therein specified, and since such dates and periods there shall
have been no change in the Company's consolidated financial
condition or results of operations sufficient to impair the
Company's ability to repay the Loans in accordance with the
terms hereof, and neither the Company nor any Subsidiary shall
have any contingent obligations, liabilities for taxes or other
outstanding financial obligations which are material in the
aggregate to the Company, except as shall have been disclosed
in such financial statements, or as shall have been otherwise
previously disclosed to the Banks in writing; and
(d) No Existing Default. No Default or Event of
Default shall exist or shall result from such Borrowing.
Each Notice of Borrowing and Competitive Bid Request submitted by the Company
hereunder shall constitute a representation and warranty by the Company
hereunder, as of the date of each such notice or request and as of each
Borrowing Date, that the conditions in this Section 4.02 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Bank that:
5.01 Corporate Existence. The Company is a corporation duly organized
and existing under the laws of Delaware, and is properly qualified as a
foreign corporation and in good standing in every jurisdiction in which the
Company is doing business of a nature that requires such qualification;
5.02 Subsidiaries. Each Subsidiary is duly organized and existing
under the laws of the jurisdiction of its formation, and is properly qualified
as a foreign corporation and in good standing in every jurisdiction in which
it is doing business of a nature that requires such qualification;
5.03 Corporate Authorization. The execution, delivery and performance
of this Agreement and any instrument or agreement required hereunder are
within the Company's powers, have been duly authorized, and are not in
conflict with the terms of any charter, bylaw or other organization papers of
the Company, or any instrument or agreement to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary is bound or
affected;
5.04 Governmental Authorization. No approval, consent, exemption or
other action by, or notice to or filing with, any governmental authority is
necessary in connection with the execution, delivery or performance by the
Company of this Agreement or any instrument or agreement required hereunder,
except as may have been obtained and certified copies of which have been
delivered to the Agent and each Bank;
5.05 No Contravention. There is no law, rule or regulation applicable
to the Company or any Subsidiary, nor is there any judgment, decree or order
of any court or governmental authority binding on the Company or any
Subsidiary, which would be contravened by the execution, delivery, performance
or enforcement of this Agreement or any instrument or agreement required
hereunder;
5.06 Binding Effect. This Agreement is a legal, valid and binding
agreement of the Company, enforceable against the Company in accordance with
its terms, and any instrument or agreement required hereunder, when executed
and delivered, will be similarly legal, valid, binding and enforceable;
5.07 Encumbrances. The properties and assets of the Company and
Subsidiaries are free and clear of all security interests, liens, encumbrances
or rights of others, except for security interests, liens and encumbrances
permitted under Section 7.04;
5.08 Compliance with Laws. The Company and each Subsidiary are in
compliance with all applicable federal, state and local laws, ordinances and
regulations relating to hazardous materials or wastes or hazardous or toxic
substances, except where failure to so comply would not have a material
adverse effect on the Company's consolidated financial condition or operations
or materially impair the Company's ability to perform its obligations
hereunder or under any instrument or agreement required hereunder;
5.09 Litigation. Except as disclosed in reports filed by the Company
with the Securities and Exchange Commission, copies of which have been
delivered to the Banks, or in Exhibit A to the legal opinion delivered under
subsection 4.01(b)(i), there are no suits, proceedings, claims or disputes
pending or, to the knowledge of the Company, threatened against or affecting
the Company or any Subsidiary or their respective properties, the adverse
determination of which might reasonably be expected to materially affect the
Company's consolidated financial condition or operations or materially impair
the Company's ability to perform its obligations hereunder or under any
instrument or agreement required hereunder;
5.10 No Default. No Default or Event of Default has occurred and is
continuing or would result from the incurring of obligations by the Company
under this Agreement;
5.11 Use of Proceeds; Margin Regulations. The proceeds of the Loans
are to be used solely for the purposes set forth in and permitted by
Section 6.01 and Section 7.05. Neither the Company nor any Subsidiary is
generally engaged in the business of purchasing or selling "margin stock" as
such term is defined in Regulation G, T, U or X of the FRB or extending
credit for the purpose of purchasing or carrying such margin stock;
5.12 Regulated Entities. None of the Company, any Person controlling
the Company, or any Subsidiary is an "Investment Company" within the meaning
of the Investment Company Act of 1940. The Company is not subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or
any other Federal or state statute or regulation limiting its ability to incur
indebtedness;
5.13 Financial Statements. All consolidated financial statements for
the year ended December 31, 1994, and subsequent periods, furnished by the
Company to the Agent and the Banks present fairly, in all material respects,
the consolidated financial position of the Company (unless otherwise therein
noted and any changes in accounting principles and practices are concurred
with by the accountants referred to in subsection 6.07(b)) and, together with
all other information and data furnished by the Company to the Agent and the
Banks, are complete and correct as of the dates and periods therein specified.
Since such dates there has been no change in the Company's consolidated
financial condition or results of operations sufficient to impair the
Company's ability to repay the Loans in accordance with the terms hereof.
Neither the Company nor any Subsidiary has any contingent obligations,
liabilities for taxes or other outstanding financial obligations which are
material in the aggregate, except as disclosed in such statements, information
and data;
5.14 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and, to the best
knowledge of the Company, nothing has occurred which would cause the loss of
such qualification. The Company and each ERISA Affiliate have made all
required contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan;
(b) There are no pending or, to the best knowledge of the Company,
threatened claims, actions or lawsuits, or action by any governmental
authority, with respect to any Plan which have resulted or could reasonably be
expected to result in a material adverse change in the Company's consolidated
financial condition or results of operations. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
material adverse change in the Company's consolidated financial condition or
results of operations; and
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) except as disclosed in Schedule 5.14(c), no Plan has any Unfunded
Pension Liability; (iii) neither the Company nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (iv) neither the Company nor any
ERISA Affiliate has incurred, or reasonably expects to incur, any liability
(and no event has occurred which, with the giving of notice under Section 4219
of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA
with respect to a Multiemployer Plan; and (v) neither the Company nor any
ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA; and
5.15 Swap Obligations. Neither the Company nor any of its Subsidiaries
has incurred any outstanding obligations under any Swap Contracts, other than
Permitted Swap Obligations.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, the Swingline
Bank shall have any Swingline Commitment hereunder, or any Loan or other
obligation hereunder shall remain unpaid or unsatisfied, the Company will and,
with respect to Sections 6.02, 6.03, 6.04, 6.05, 6.06 and 6.08, will cause
each Subsidiary to, unless the Majority Banks waive compliance in writing:
6.01 Use of Proceeds. Use the proceeds of the Loans for general
corporate purposes not in contravention of any Requirement of Law;
6.02 Preservation of Corporate Existence, Etc. Preserve all rights,
privileges and franchises useful or necessary for ordinary business operations
and keep all properties useful or necessary for ordinary business operations
in good working order and condition, and from time to time make all needful
repairs, renewals and replacements thereto and thereof so that the efficiency
of such property shall be fully maintained and preserved;
6.03 Notices. Promptly give notice in writing to the Agent and each
Bank of:
(a) all litigation when the aggregate amount of claims
pending is $50,000,000 or more and the litigation involves
$15,000,000 or more and the Company, or a Subsidiary, is a
defendant;
(b) any dispute which may exist between the Company or
any Subsidiary and any governmental regulatory body or any
threatened action by any governmental agency to acquire or
condemn any of the properties of the Company or any Subsidiary
where the amount involved is $30,000,000 or more;
(c) any strike involving 1,000 or more employees of the
Company or any Subsidiary which has continued for thirty (30)
days;
(d) any proceeding or order before any court or
administrative body requiring the Company or any Subsidiary to
comply with any statute or regulation regarding protection of
the environment if such compliance would require (i)
expenditures in the amount of $50,000,000 or more or (ii) if
such violation involves the possibility of the imposition of a
fine of $10,000,000 or more;
(e) the occurrence of any of the following events
affecting the Company or any ERISA Affiliate (but in no event
more than 10 days after such event), and deliver to the Agent
and each Bank a copy of any notice with respect to such event
that is filed with a governmental authority and any notice
delivered by a governmental authority to the Company or any
ERISA Affiliate with respect to such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded
Pension Liability of any Plan;
(iii) the adoption of, or the commencement
of contributions to, any Plan subject to
Section 412 of the Code by the Company or any
ERISA Affiliate; or
(iv) the adoption of any amendment to a
Plan subject to Section 412 of the Code, if such
amendment results in a material increase in
contributions or Unfunded Pension Liability; and
(f) any Default or Event of Default known to the
Company.
Each notice under this Section shall be accompanied by a written
statement by the chief financial officer of the Company setting forth details
of the occurrence referred to therein and stating what action the Company or
any affected Subsidiary proposes to take with respect thereto and at what
time. Each notice under subsection 6.03(f) shall describe with particularity
any and all clauses or provisions of this Agreement that have been breached or
violated;
6.04 Payment of Obligations. Promptly pay and discharge all
obligations, including tax claims, at maturity, except such as may be
contested in good faith or as to which a bona fide dispute may exist;
6.05 Insurance. Maintain such insurance as is usually maintained by
others in the business of the same nature as the business of the Company and
each Subsidiary, as the case may be, or maintain a program of self insurance,
with reserves, in accordance with sound business practices;
6.06 Inspection of Property and Books and Records. Maintain adequate
books, accounts and records in accordance with good accounting standards and
permit representatives of the Majority Banks or the Agent to inspect such
books and records and to visit the properties of the Company and Subsidiaries;
6.07 Financial Statements. From time to time as hereinafter set forth
promptly prepare, or cause to be prepared, and deliver to the Agent, with
sufficient copies for each Bank, in form and detail satisfactory to the
Majority Banks:
(a) On a consolidated basis summary balance sheets and
statements of income, shareholders' equity and cash flows for
the Company and Subsidiaries as of the end of each of the first
three quarterly accounting periods in each fiscal year of the
Company; such statements shall be delivered within 45 days from
the end of the period covered and shall be furnished with a
Compliance Certificate signed by a responsible officer of the
Company;
(b) On a consolidated basis summary balance sheets and
statements of income, shareholders' equity and cash flows for
the Company and Subsidiaries as of the end of each fiscal year
of the Company, certified by an independent certified public
accountant or accountants selected by the Company and
acceptable to Majority Banks; such independent certified public
accountant or accountants shall also certify to the effect that
in the course of making their audit they obtained no knowledge
of any existing unremedied Default or Event of Default by the
Company under this Agreement, or a statement disclosing any
such defaults if any are found; such statements shall be
delivered within 90 days from the end of the period covered and
shall be furnished with a Compliance Certificate signed by a
responsible officer of the Company;
(c) Within 45 days after the end of each of the first
three fiscal quarters of each fiscal year of the Company and
within 90 days after the end of each fiscal year of the
Company, a Compliance Certificate, with schedules containing
the information and calculations necessary to substantiate
compliance with Section 7.01 and the calculation of the
Interest Coverage Ratio, certified by a responsible officer of
the Company and, in the case of financial statements as of the
end of each fiscal year, reviewed by the Company's independent
certified public accountant or accountants as being true and
correct;
(d) Within 90 days after the end of each fiscal year of
the Company, a list of Subsidiaries;
(e) Within 15 days after filing with the Securities and
Exchange Commission, a copy of all public documents (with the
exception of Forms S-8) filed by the Company with the
Securities and Exchange Commission; and
(f) Such other financial statements, lists of property
and accounts, forecasts, legal opinions or reports as to the
Company or any Subsidiary, as any Bank may reasonably request
from time to time; and
6.08 ERISA Compliance. (a) Maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
federal or state law; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; and (c) make all
required contributions to any Plan subject to Section 412 of the Code, and
cause each of its ERISA Affiliates to do each of the foregoing.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, the Swingline
Bank shall have any Swingline Commitment hereunder, or any Loan or other
obligation hereunder shall remain unpaid or unsatisfied, the Company will not
and will not permit any Subsidiary to, unless the Majority Banks waive
compliance in writing:
7.01 Funded Debt to Net Worth. On a consolidated basis, permit the
Funded Debt to Net Worth ratio, measured as of the end of each fiscal quarter,
to be in excess of 1.00 to 1.00;
7.02 Disposition of Property. Sell, lease, sell and lease back,
exchange, transfer or otherwise dispose of:
(a) in a transaction, or a series of transactions, all
or substantially all of the property and assets of the Company
and its Subsidiaries on a consolidated basis;
(b) during any calendar year, any of its fixed or
capital assets with a fair market value exceeding on a
cumulative basis for such year for the Company and Subsidiaries
ten percent (10%) of the total consolidated assets of the
Company (determined as of the immediately preceding December
31); or
(c) any of its material assets, to the extent not
otherwise prohibited by this Section, except for full, fair and
reasonable consideration;
7.03 Mergers. Merge or consolidate with any other Person or liquidate
or dissolve; provided, however, that:
(a) the Company may merge or consolidate with any other
Person if the Company (or the resulting corporation in a
consolidation) will be the surviving corporation and the
Company (or such resulting corporation) will not be in default
under any of the terms of this Agreement immediately after the
merger or consolidation; and
(b) any Subsidiary may be merged with or dissolved into
the Company or with or into any other Subsidiary;
7.04 Encumbrances. Subject any property to any mortgage, deed of
trust, encumbrance, or voluntary lien; provided, however, that this
Section 7.04 shall not be deemed to prohibit the assumption of, or purchase
subject to, mortgages already existing upon property being acquired, or the
execution of purchase money mortgages, or the coming into being of other
encumbrances, including in support of industrial revenue or pollution control
bonds which are capitalized and treated as indebtedness by the Company
(provided that the maximum aggregate outstanding balance of indebtedness
secured by such mortgages, purchase money mortgages, or other encumbrances,
including such bonds, shall never be in excess of $100,000,000), liens for
taxes, or loggers' liens, or mechanics' liens, or other liens arising by law
out of the nature of the operations involved;
7.05 Use of Proceeds. (a) Use any portion of the Loan proceeds,
directly or indirectly, (i) to purchase or carry "margin stock" as such term
is defined in Regulation G, T, U or X of the FRB, (ii) to repay or otherwise
refinance indebtedness of the Company or others incurred to purchase or carry
such margin stock, (iii) to extend credit for the purpose of purchasing or
carrying any such margin stock, or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Securities and Exchange
Act of 1934, and regulations promulgated thereunder; or
(b) directly or indirectly, use any portion of the Loan proceeds (i)
knowingly to purchase Ineligible Securities from the Arranger during any
period in which the Arranger makes a market in such Ineligible Securities,
(ii) knowingly to purchase during the underwriting or placement period
Ineligible Securities being underwritten or privately placed by the Arranger,
or (iii) to make payments of principal or interest on Ineligible Securities
underwritten or privately placed by the Arranger and issued by or for the
benefit of the Company or any Affiliate of the Company. The Arranger is a
registered broker-dealer and permitted to underwrite and deal in certain
Ineligible Securities; and "Ineligible Securities" means securities which may
not be underwritten or dealt in by member banks of the Federal Reserve System
under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh),
as amended; or
7.06 ERISA. (a) engage in one or more prohibited transactions or
violations of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably expected to result in liability of the
Company in an aggregate amount in excess of $50,000,000; or (b) engage in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA, and the
Company shall not suffer or permit any of its ERISA Affiliates to do any of
the foregoing.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Events of Default. Any of the following shall constitute an
"Event of Default":
(a) The Company shall fail to pay, within five (5)
Business Days after the date when due, any installment of
interest or principal or any other sum due under this Agreement
in accordance with the terms hereof;
(b) Any representation or warranty herein or in any
agreement, instrument or certificate executed pursuant hereto
or in connection with any transaction contemplated hereby shall
prove to have been false or misleading in any material respect
when made or when deemed to have been made;
(c) A writ, execution or attachment, or any similar
process, shall be levied against all or any substantial portion
of the property of the Company or any Subsidiary or any
judgment shall be entered against the Company or any Subsidiary
in an amount in excess of $15,000,000 and such writ, execution,
attachment, process or judgment is not released, bonded,
satisfied, vacated or appealed from within 60 days after its
levy or entry, or the total of all judgments against the
Company and Subsidiaries outstanding at any time which have not
been released, bonded, satisfied, vacated or appealed from
within 60 days from the respective dates of entry thereof shall
exceed $45,000,000 in the aggregate;
(d) The Company or any Subsidiary shall fail to pay its
debts generally as they come due, or shall file any petition or
action for relief under any bankruptcy, reorganization,
insolvency or moratorium law, or any other law or laws for the
relief of, or relating to, debtors;
(e) An involuntary petition shall be filed under any
bankruptcy statute against the Company or any Subsidiary, or a
custodian, receiver, trustee, assignee for the benefit of
creditors (or other similar official) shall be appointed to
take possession, custody, or control of the properties of the
Company or any Subsidiary, unless such petition or appointment
is set aside or withdrawn or ceases to be in effect within 45
days from the date of said filing or appointment;
(f) (i) Any default shall occur under any other
agreement involving the borrowing of money or the extension of
credit under which the Company or any Subsidiary may be
obligated as borrower having an aggregate principal amount
(including undrawn committed or available amounts and including
amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than $25,000,000, if such default
consists of the failure to pay any such indebtedness when due
or if such default causes (or upon a lapse of time or notice or
both would cause) the acceleration of any such indebtedness or
the termination of any commitment to lend, or if such default
permits (or upon a lapse of time or notice or both would
permit) the holder or holders of such indebtedness or
beneficiary or beneficiaries of such indebtedness (or a trustee
or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to accelerate any indebtedness or to terminate
any commitment to lend, or (ii) there occurs under any Swap
Contract an Early Termination Date resulting from (1) any event
of default under such Swap Contract as to which the Company or
any Subsidiary is the Defaulting Party or (2) any Termination
Event as to which the Company or any Subsidiary is an Affected
Party, and, in either event, the Swap Termination Value owed by
the Company or such Subsidiary as a result thereof is greater
than $25,000,000; for purposes of this subsection (f), the
terms "Early Termination Date", "Defaulting Party",
"Termination Event", and "Affected Party" shall have the
meanings assigned to them in the relevant Swap Contract, it
being understood that such definitions contemplate Swap
Contracts documented on International Swaps and Derivatives
Association ("ISDA") standard forms; if such Swap Contract is
not documented on an ISDA standard form, such terms shall be
given similar or analogous meanings as used in such non-ISDA
standard agreements
(g) (i) Any one or more ERISA Events shall occur with
respect to one or more Pension Plans or Multiemployer Plans
which has or have resulted or could reasonably be expected to
result in liability of the Company under Title IV of ERISA to
the Pension Plan, Multiemployer Plan or the PBGC in an
aggregate amount in excess of $50,000,000; (ii) the aggregate
amount of Unfunded Pension Liability among all Pension Plans at
any time exceeds $50,000,000; or (iii) the Company or any ERISA
Affiliate shall fail to pay when due, after the expiration of
any applicable grace period, any installment payment or
payments with respect to its withdrawal liability under
Section 4201 of ERISA under any one or more Multiemployer
Plans, which payment or payments are in an aggregate amount in
excess of $50,000,000;
(h) The entering of a final order by any court or
administrative agency requiring the Company or any Subsidiary
to divest itself of such a substantial part of its assets that
the ability of the Company to pay, when due and payable, either
at the fixed maturity thereof or otherwise, the Loans or any
part thereof, or any installment of interest thereon, or the
principal of or interest on any other obligation for borrowed
money, will be or may reasonably be expected to be materially
adversely affected, which order is not subject to appeal or
review by any court or as to which order the right to appeal or
review has expired, and such order remains in effect for more
than 60 days;
(i) Any Person or related group of Persons (other than
employees of the Company or its Subsidiaries and any Plan for
the benefit of such employees) shall beneficially own or shall
control by proxy or otherwise, or shall enter into any
agreement to obtain any right to acquire, more than thirty
percent (30%) of the Company's voting securities; or
(j) The Company shall breach, or default under, any
covenant, term, condition, provision, representation or
warranty contained in this Agreement not specifically referred
to in this Article, and, except in the case of a breach or
default under Section 7.03, such breach or default shall
continue for thirty days after the earlier of its discovery by
any elected or appointed officer of the Company or written
notice thereof to the Company by the Agent or any Bank.
8.02 Remedies. If any Event of Default occurs, the Agent shall, at the
request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make
Committed Loans and the commitment of the Swingline Bank to
make Swingline Loans to be terminated, whereupon such
commitments shall be terminated;
(b) declare the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon, and
all other amounts owing or payable hereunder or under any other
document or instrument given in connection herewith to be
immediately due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby
expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks and
Designated Bidders all rights and remedies available to it and
the Banks and Designated Bidders under this Agreement, the
Notes, or applicable law;
provided, however, that upon the occurrence of any event specified in
subsection (d) or (e) of Section 8.01 (in the case of subsection (e) upon the
expiration of the 45-day period mentioned therein), the obligation of each
Bank to make Loans shall automatically terminate and the unpaid principal
amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable without further act of
the Agent or any Bank or Designated Bidder.
8.03 Rights Not Exclusive. The rights provided for in this Agreement
and the other documents or instruments given in connection herewith are
cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document
or agreement now existing or hereafter arising.
8.04 Notice of Default. The Agent shall give notice to the Company
under subsection 8.01(j) promptly upon being requested to do so by any Bank
and shall thereupon notify all the Banks thereof.
ARTICLE IX
THE AGENT
9.01 Appointment and Authorization; "Agent". Each Bank and Designated
Bidder hereby irrevocably (subject to Section 9.09) appoints, designates and
authorizes the Agent to take such action on its behalf under the provisions of
this Agreement and each other document or instrument given in connection
herewith and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any such document or
instrument, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any such document or instrument, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall
the Agent have or be deemed to have any fiduciary relationship with any Bank
or Designated Bidder, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or any
other document or instrument given in connection herewith or otherwise exist
against the Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" in this Agreement with reference to the Agent is
not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law. Instead,
such term is used merely as a matter of market custom and is intended to
create or reflect only an administrative relationship between independent
contracting parties.
9.02 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other document or instrument given in connection
herewith by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or misconduct
of any agent or attorney-in-fact that it selects with reasonable care.
9.03 Liability of Agent. None of the Agent-Related Persons shall (i)
be liable for any action taken or omitted to be taken by any of them under or
in connection with this Agreement or any other document or instrument given in
connection herewith or the transactions contemplated hereby (except for its
own gross negligence or willful misconduct), or (ii) be responsible in any
manner to any of the Banks or Designated Bidders for any recital, statement,
representation or warranty made by the Company or any Subsidiary or affiliate
of the Company, or any officer thereof, contained in this Agreement or in any
other such document or instrument, or in any certificate, report, statement or
other document referred to or provided for in, or received by the Agent under
or in connection with, this Agreement or any other document or instrument
given in connection herewith, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other such document or
instrument, or for any failure of the Company or any other party to any other
such document or instrument to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Bank
or Designated Bidder to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other such document or instrument, or to inspect the
properties, books or records of the Company or any of the Company's
Subsidiaries or affiliates.
9.04 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message, statement
or other document or conversation believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons, and upon
advice and statements of legal counsel (including counsel to the Company),
independent accountants and other experts selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other document or instrument given in connection herewith
unless it shall first receive such advice or concurrence of the Majority Banks
(or, when expressly required hereby, all of the Banks) as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by
the Banks against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. The Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement or any other Loan Document in accordance with a request or
consent of the Majority Banks (or, when expressly required hereby, all of the
Banks) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with,
each document or other matter either sent by the Agent to such Bank for
consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
9.05 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Banks or Designated
Bidders, unless the Agent shall have received written notice from a Bank or
the Company referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". The Agent will
notify the Banks of its receipt of any such notice. The Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Majority Banks in accordance with Article VIII; provided, however, that
unless and until the Agent has received any such request, the Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable or in the best interest of the Banks and Designated Bidders.
9.06 Credit Decision. Each Bank (which for purposes of this
Section 9.06 shall include each Designated Bidder) acknowledges that none of
the Agent-Related Persons has made any representation or warranty to it, and
that no act by the Agent hereinafter taken, including any review of the
affairs of the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Bank. Each Bank
represents to the Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Company
hereunder. Each Bank also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other documents or instruments given in connection
herewith, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and
other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by the Agent, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any of
the Agent-Related Persons.
9.07 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
that no Bank shall be liable for the payment to the Agent-Related Persons of
any portion of such Indemnified Liabilities resulting solely from such
Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Bank shall reimburse the Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including attorney costs)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect
of rights or responsibilities under, this Agreement, any other document or
instrument given in connection herewith, or any document contemplated by or
referred to herein, to the extent that the Agent is not reimbursed for such
expenses by or on behalf of the Company. The undertaking in this
Section shall survive the payment of all obligations hereunder and the
resignation or replacement of the Agent.
9.08 Agent in Individual Capacity. BofA (or any successor agent) and
its affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business
with the Company and its Subsidiaries and affiliates as though BofA (or such
successor agent) were not the Agent hereunder and without notice to or consent
of the Banks or Designated Bidders. The Banks and the Designated Bidders
acknowledge that, pursuant to such activities, BofA (or such successor agent)
or its affiliates may receive information regarding the Company or its
Subsidiaries or affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such Subsidiaries or
affiliates) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to its Loans, BofA (or such
successor) shall have the same rights and powers under this Agreement as any
other Bank and may exercise the same as though it were not the Agent, and the
terms "Bank" and "Banks" include BofA (or such successor) in its individual
capacity.
9.09 Successor Agent. The Agent may, and at the request of the
Majority Banks shall, resign as Agent upon 30 days' notice to the Company and
the Banks. If the Agent resigns under this Agreement, the Majority Banks
shall appoint from among the Banks a successor agent for the Banks. If no
successor agent is appointed prior to the effective date of the resignation of
the Agent, the Agent may appoint, after consulting with the Banks and the
Company, a successor agent from among the Banks. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed
to all the rights, powers and duties of the retiring Agent and the term
"Agent" shall mean such successor agent and the retiring Agent's appointment,
powers and duties as Agent shall be terminated. The Company may continue to
deal with the retiring Agent as Agent hereunder until it receives notice of
the appointment of such a successor agent. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article IX and Sections
10.04 and 10.05 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement. If no successor
agent has accepted appointment as Agent by the date which is 30 days following
a retiring Agent's notice of resignation, the retiring Agent's resignation
shall nevertheless thereupon become effective and the Banks shall perform all
of the duties of the Agent hereunder until such time, if any, as the Majority
Banks appoint a successor agent as provided for above. If the Company has not
received notice of the appointment of a successor agent within 30 days of the
retiring Agent's notice of resignation, the Company shall deal directly with
the Banks and Designated Bidders until it receives notice of the appointment
of a successor agent as provided above. Notwithstanding the foregoing,
however, BofA may not be removed as the Agent at the request of the Majority
Banks unless BofA shall also simultaneously be replaced as "Swingline Bank"
hereunder pursuant to documentation in form and substance reasonably
satisfactory to BofA.
9.10 Withholding Tax.
(a) If any Bank (which for purposes of this Section 9.10 shall include
any Designated Bidder) is a "foreign corporation, partnership or trust" within
the meaning of the Code and such Bank claims exemption from, or a reduction
of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such Bank
agrees with and in favor of the Agent, to deliver to the Agent:
(i) if such Bank claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty,
properly completed IRS Forms 1001 and W-8 before the payment of
any interest in the first calendar year and before the payment
of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because
it is effectively connected with a United States trade or
business of such Bank, two properly completed and executed
copies of IRS Form 4224 before the payment of any interest is
due in the first taxable year of such Bank and in each
succeeding taxable year of such Bank during which interest may
be paid under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under
the Code or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part
of the obligations of the Company hereunder to such Bank, such Bank agrees to
notify the Agent of the percentage amount in which it is no longer the
beneficial owner such obligations of the Company to such Bank. To the extent
of such percentage amount, the Agent will treat such Bank's IRS Form 1001 as
no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Agent sells, assigns, grants a participation
in, or otherwise transfers all or part of the obligations of the Company
hereunder to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Bank
an amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to the Agent, then the Agent
may withhold from any interest payment to such Bank not providing such forms
or other documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other governmental authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Bank (because the
appropriate form was not delivered, was not properly executed, or because such
Bank failed to notify the Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any
other reason) such Bank shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the
amounts payable to the Agent under this Section, together with all costs and
expenses (including attorney costs). The obligation of the Banks under this
subsection shall survive the payment of all obligations and the resignation or
replacement of the Agent.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other document or instrument given in connection
herewith, and no consent with respect to any departure by the Company
therefrom, shall be effective unless the same shall be in writing and signed
by the Majority Banks (or by the Agent at the written request of the Majority
Banks) and the Company and acknowledged by the Agent, and then any such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the Banks and
the Company and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Bank (or reinstate any
Commitment terminated pursuant to Section 8.02);
(b) postpone or delay any date fixed by this Agreement or any other
document or instrument given in connection herewith for any payment of
principal, interest, fees or other amounts due to the Banks or the Designated
Bidders (or any of them) hereunder or under any other such document or
instrument;
(c) reduce the principal of, or the rate of interest specified herein
on, any Loan or (subject to clause (iii) below) any fees or other amounts
payable hereunder or under any other document or instrument given in
connection herewith;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any of
them to take any action hereunder; or
(e) amend this Section, or Section 2.16, or any provision herein
providing for consent or other action by all Banks;
and, provided further, that (i) no amendment, waiver or consent shall, unless
in writing and signed by the Agent in addition to the Majority Banks or all
the Banks, as the case may be, affect the rights or duties of the Agent under
this Agreement or any other document or instrument given in connection
herewith, (ii) no amendment, waiver or consent shall, unless in writing and
signed by the Swingline Bank in addition to the Majority Banks or all the
Banks, as the case may be, affect the rights or duties of the Swingline Bank
under this Agreement or any other document or instrument given in connection
herewith, and (iii) the Fee Letter may be amended, or rights or privileges
thereunder waived, in a writing executed by the parties thereto.
10.02 Notices.
(a) All notices, requests and other communications shall be in writing
(including, unless the context expressly otherwise provides, by facsimile
transmission, provided that any matter transmitted by or to the Company by
facsimile (i) shall be immediately confirmed by a telephone call to the
recipient at the number specified on Schedule 10.02, and (ii) except in the
case of a Notice of Borrowing, Notice of Conversion/
Continuation, or Competitive Bid Request, in which case the facsimile copy
shall be deemed to be the operative original document, shall be followed
promptly by delivery of a hard copy original thereof) and mailed, faxed or
delivered, to the address or facsimile number specified for notices on
Schedule 10.02; or, if directed to the Company or the Agent, to such other
address as shall be designated by such party in a written notice to the other
parties, and if directed to any other party, at such other address as shall be
designated by such party in a written notice to the Company and the Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective upon the next
Business Day after delivery for overnight (next-day) delivery, or when
transmitted in legible form by facsimile machine, respectively, or if mailed,
upon the third Business Day after the date deposited into the U.S. mail, or if
delivered, upon delivery; except that notices pursuant to Article II or IX
shall not be effective until actually received by the Agent.
(c) Any agreement of the Agent and the Banks and Designated Bidders
herein to receive certain notices by facsimile is solely for the convenience
and at the request of the Company. The Agent and the Banks and Designated
Bidders shall be entitled to rely on the authority of any Person purporting to
be a Person authorized by the Company to give such notice and the Agent and
the Banks and Designated Bidders shall not have any liability to the Company
or other Person on account of any action taken or not taken by the Agent or
the Banks or Designated Bidders in reliance upon such facsimile notice. The
obligation of the Company to repay the Loans shall not be affected in any way
or to any extent by any failure by the Agent and the Banks and Designated
Bidders to receive written confirmation of any facsimile notice or the receipt
by the Agent and the Banks and Designated Bidders of a confirmation which is
at variance with the terms understood by the Agent and the Banks and
Designated Bidders to be contained in the facsimile notice.
10.03 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank or Designated
Bidder, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.
10.04 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Agent) within
five Business Days after demand (subject to subsection 4.01(e)) for all costs
and expenses incurred by BofA (including in its capacity as Agent) in
connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in
each case, whether or not consummated), this Agreement and any other documents
prepared in connection herewith, and the consummation of the transactions
contemplated hereby and thereby, including reasonable attorney costs incurred
by BofA (including in its capacity as Agent) with respect thereto; and
(b) pay or reimburse the Agent and each Bank and Designated Bidder
within five Business Days after demand (subject to subsection 4.01(e)) for all
costs and expenses (including attorney costs) incurred by them in connection
with the enforcement, attempted enforcement, or preservation of any rights or
remedies under this Agreement or any other document or instrument given in
connection herewith during the existence of an Event of Default or after
acceleration of the Loans (including in connection with any "workout" or
restructuring regarding the Loans, and including in any insolvency proceeding
or appellate proceeding).
10.05 Company Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify and hold the
Agent-Related Persons, and each Bank and Designated Bidder and each of their
respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including
attorney costs) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the termination,
resignation or replacement of the Agent or replacement of any Bank or
Designated Bidder) be imposed on, incurred by or asserted against any such
Person in any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein, or the transactions contemplated
hereby, or any action taken or omitted by any such Person under or in
connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any insolvency proceeding
or appellate proceeding) related to or arising out of this Agreement or the
Loans or the use of the proceeds thereof, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided, that the Company shall have no obligation hereunder
to any Indemnified Person with respect to (i) Indemnified Liabilities to the
extent resulting from the gross negligence or willful misconduct of such
Indemnified Person (ii) any violation of any banking law or regulation by such
Indemnified Person, (iii) any liability as between or among any Indemnified
Person or their respective shareholders and controlling persons, (iv) any
default hereunder by any Person other than the Company, or (v) any Taxes or
Other Taxes, except to the extent such Taxes or Other Taxes are indemnified
against by other provisions of this Agreement. The agreements in this
Section shall survive payment of all other obligations of the Company.
10.06 Payments Set Aside. To the extent that the Company makes a
payment to the Agent or the Banks or Designated Bidders, or the Agent or the
Banks or Designated Bidders exercise their right of set-off, and such payment
or the proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Agent or such Bank
or Designated Bidder in its discretion) to be repaid to a trustee, receiver or
any other party, in connection with any insolvency proceeding or otherwise,
then (a) to the extent of such recovery the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been made or such set-off had not
occurred, and (b) each Bank severally agrees to pay (and to cause any
Designated Bidder designated by it to pay) to the Agent upon demand its pro
rata share of any amount so recovered from or repaid by the Agent.
10.07 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Agent and each Bank.
10.08 Assignments, Participations, etc.
(a) Any Bank may, with the written consent of the Company at all times
other than during the existence of an Event of Default and the Agent, which
consents shall not be unreasonably withheld, at any time assign and delegate
to one or more Eligible Assignees (each an "Assignee") all, or any ratable (in
the case of Committed Loans) part of all, of the Loans, the Commitments and
the other rights and obligations of such Bank hereunder, in a minimum amount
of $10,000,000; provided, however, that the Company and the Agent may continue
to deal solely and directly with such Bank in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses and related information with respect to
the Assignee, shall have been given to the Company and the Agent by such Bank
and the Assignee; (ii) such Bank and its Assignee shall have delivered to the
Company and the Agent an Assignment and Acceptance substantially in the form
of Exhibit E ("Assignment and Acceptance") together with any Note or Notes
subject to such assignment and (iii) the assignor Bank or Assignee has paid to
the Agent a processing fee in the amount of $3,000. In connection with any
assignment by the Swingline Bank, its Swingline Commitment may be in whole or
in part included as part of the assignment transaction, and the Assignment and
Acceptance may be appropriately modified to include an assignment and
delegation of its Swingline Commitment and any outstanding Swingline Loans.
(b) From and after the date that the Agent notifies the assignor Bank
that it has received (and provided its consent with respect to) an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Bank
under this Agreement and the other documents or instruments given in
connection herewith, and (ii) the assignor Bank shall, to the extent that
rights and obligations hereunder and under such documents or instruments have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations hereunder and under such other
documents and instruments.
(c) Within five Business Days after its receipt of notice by the Agent
that it has received an executed Assignment and Acceptance and payment of the
processing fee (and provided that it consents to such assignment if required
under subsection 10.08(a)), the Company shall execute and deliver to the
Agent, new Notes evidencing such Assignee's assigned Loans and Commitment and,
if the assignor Bank has retained a portion of its Loans and its Commitment, a
replacement Note in the form of Exhibit I in the principal amount of the
Commitment retained by the assignor Bank (such Note to be in exchange for, but
not in payment of, the Note with respect to Committed Loans held by such Bank,
which shall be returned to the Company concurrently with the delivery by the
Company of the replacement Note). Immediately upon each Assignor's or
Assignee's making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce the Commitment of the assigning Bank
pro tanto.
(d) Any Bank or Designated Bidder may at any time sell to one or more
commercial banks or other Persons not affiliates of the Company (a
"Participant") participating interests in any Loans, the Commitment of that
Bank and the other interests of that Bank or Designated Bidder (the
"Originator") hereunder and under the other documents and instruments given in
connection herewith; provided, however, that (i) the Originator's obligations
under this Agreement shall remain unchanged, (ii) the Originator shall remain
solely responsible for the performance of such obligations, (iii) the Company
and the Agent shall continue to deal solely and directly with the Originator
in connection with the Originator's rights and obligations under this
Agreement and the other documents and instruments given in connection
herewith, and (iv) no Bank shall transfer or grant any participating interest
under which the Participant has rights to approve any amendment to, or any
consent or waiver with respect to, this Agreement or any other document or
instrument given in connection herewith, except to the extent such amendment,
consent or waiver would require unanimous consent of the Banks as described in
the first proviso to Section 10.01. In the case of any such participation, the
Participant shall not have any rights under this Agreement, or any of the
other documents or instruments given in connection herewith, and all amounts
payable by the Company hereunder shall be determined as if such Originator had
not sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Bank or
Designated Bidder (as the case may be) under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank or
Designated Bidder may at any time create a security interest in, or pledge,
all or any portion of its rights under and interest in this Agreement and the
Notes held by it in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and
such Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.
10.09 Designated Bidders. Any Bank from time to time may designate one
Designated Bidder to have a right to offer and make Bid Loans pursuant to
Section 2.06; provided, however, that (i) no such Bank may make more than 3
such designations, (ii) each such Bank making any such designation shall
retain the right to make Bid Loans, and (iii) the parties to each such
designation shall execute and deliver to the Agent a Designation Agreement.
Upon its receipt of an appropriately completed Designation Agreement executed
by a designating Bank and a designee representing that it is a Designated
Bidder, the Agent will accept such Designation Agreement and give prompt
notice thereof to the Company, whereupon such designation of such Designated
Bidder shall become effective and such designee shall become a party to this
Agreement as a "Designated Bidder."
10.10 Confidentiality. Each Bank and Designated Bidder agrees to take
and to cause its affiliates to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information provided
to it by the Company or any Subsidiary, or by the Agent on such Company's or
Subsidiary's behalf, under this Agreement or any other document or instrument
given in connection herewith, and neither it nor any of its affiliates shall
use any such information other than in connection with or in enforcement of
this Agreement and the other documents and instruments given in connection
herewith or in connection with other business now or hereafter existing or
contemplated with the Company or any Subsidiary, except to the extent such
information (i) was or becomes generally available to the public other than as
a result of disclosure by such Bank or Designated Bidder in breach of this
Section 10.10, or (ii) was or becomes available on a non-confidential basis
from a source other than the Company, provided that such source is not bound
by a confidentiality agreement with the Company known to such Bank or
Designated Bidder; provided, however, that any Bank or Designated Bidder may
disclose such information (A) at the request or pursuant to any requirement of
any governmental authority to which such Bank or Designated Bidder is subject
or in connection with an examination of such Bank or Designated Bidder by any
such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required in connection with
any litigation or proceeding to which the Agent, any Bank or Designated Bidder
or their respective affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other document or instrument given in connection herewith; (F) to such Bank's
or Designated Bidder's independent auditors and other professional advisors;
(G) to any Participant or Assignee, actual or potential, provided that such
Person agrees in writing to keep such information confidential to the same
extent required of the Banks hereunder; and (H) as to any Bank or Designated
Bidder or its affiliates, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Company or any
Subsidiary is party or is deemed party with such Bank or Designated Bidder or
such affiliate.
10.11 Set-off. In addition to any rights and remedies of the Banks and
Designated Bidders provided by law, if an Event of Default exists or the Loans
have been accelerated, each Bank and each Designated Bidder is authorized at
any time and from time to time, without prior notice to the Company, any such
notice being waived by the Company to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing by, such Bank or Designated Bidder to or for the credit or the account
of the Company against any and all obligations of the Company owing to such
Bank or Designated Bidder, now or hereafter existing, irrespective of whether
or not the Agent or such Bank or Designated Bidder shall have made demand
under this Agreement or any document or instrument given in connection
herewith and although such obligations may be contingent or unmatured. Each
Bank and each Designated Bidder agrees promptly to notify the Company and the
Agent after any such set-off and application made by such Bank or Designated
Bidder; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application.
10.12 Notification of Addresses, Lending Offices, Etc. Each Bank and
each Designated Bidder shall notify the Agent in writing of any changes in the
address to which notices to such Bank or Designated Bidder should be directed,
of addresses of any Lending Office, of payment instructions in respect of all
payments to be made to it hereunder and of such other administrative
information as the Agent shall reasonably request.
10.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
10.14 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not
in any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required
hereunder.
10.15 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Banks, the
Designated Bidders, the Agent-Related Persons, and their permitted successors
and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other documents or instruments
given in connection herewith.
10.16 Certain Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced; (ii) the term "including" is not limiting and means
"including but not limited to;" and (iii) in the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to but excluding",
and the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other modifications are
not prohibited by the terms of this Agreement, and (ii) references to any
statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other documents or instruments given in
connection herewith may use several different limitations, tests or
measurements to regulate the same or similar matters. All such limitations,
tests and measurements are cumulative and shall each be performed in
accordance with their terms.
(g) References to "attorney costs" in this Agreement or in the Notes
or any other document or instrument given in connection herewith means and
includes all fees and disbursements of any law firm or other external counsel,
the allocated cost of internal legal services and all disbursements of
internal counsel.
(i) This Agreement and the other documents and instruments given in
connection herewith are the result of negotiations among and have been
reviewed by counsel to the Agent, the Company and the other parties, and are
the products of all parties. Accordingly, they shall not be construed against
the Banks, the Designated Bidders, the Swingline Bank or the Agent merely
because of the Agent's, Banks', Designated Bidders' or Swingline Bank's
involvement in their preparation.
10.17 Governing Law. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED
THAT THE AGENT AND THE BANKS AND DESIGNATED BIDDERS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
10.18 Arbitration; Reference Proceeding.
(a) The Company, the Banks, the Designated Bidders and the Agent each
agree that any controversy or claim between or among the parties, including
but not limited to those arising out of or relating to this Agreement or any
other document or instrument given in connection herewith, and any claim based
on or arising from an alleged tort related hereto or thereto, shall at the
request of any party be determined by arbitration. The arbitration shall be
conducted in accordance with the United States Arbitration Act (Title 9,
U.S. Code), notwithstanding any choice of law provision in this Agreement, and
under the Commercial Rules of the American Arbitration Association ("AAA").
The arbitrators shall give effect to statutes of limitation in determining any
claim. Any controversy concerning whether an issue is arbitrable shall be
determined by the arbitrators. Judgment upon the arbitration award may be
entered in any court having jurisdiction. The institution and maintenance of
an action for judicial relief or pursuit of a provisional or ancillary remedy
shall not constitute a waiver of the right of any party, including the
plaintiff, to submit the controversy or claim to arbitration if any other
party contests such action for judicial relief.
(b) Notwithstanding the provisions of subsection (a), no controversy
or claim shall be submitted to arbitration without the consent of all parties
if, at the time of the proposed submission, such controversy or claim arises
from or relates to an obligation to the Agent or any Bank or Designated Bidder
which is secured by real property collateral located in California. If all
parties do not consent to submission of such a controversy or claim to
arbitration, the controversy or claim shall be determined as provided in
subsection (c).
(c) A controversy or claim which is not submitted to arbitration as
provided and limited in subsections (a) and (b) shall, at the request of any
party, be determined by a reference in accordance with California Code of
Civil Procedure Sections 638 et seq. If such an election is made, the parties
shall designate to the court a referee or referees selected under the auspices
of the AAA in the same manner as arbitrators are selected in AAA-sponsored
proceedings. The presiding referee of the panel, or the referee if there is a
single referee, shall be an active attorney or retired judge. Judgment upon
the award rendered by such referee or referees shall be entered in the court
in which such proceeding was commenced in accordance with California Code of
Civil Procedure Sections 644 and 645.
(d) No provision of this Section shall limit the right of any party to
this Agreement to exercise self-help remedies such as set-off, to foreclose
against or sell any real or personal property collateral or security or to
obtain provisional or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of either party
to resort to arbitration or reference. At the Majority Banks' option,
foreclosure under a deed of trust or mortgage may be accomplished either by
exercise of power of sale under the deed of trust or mortgage or by judicial
foreclosure.
10.19 Entire Agreement. This Agreement, together with the other
documents and instruments given in connection herewith, including the Notes
and the Fee Letter, embodies the entire agreement and understanding among the
Company, the Banks and the Agent, and supersedes all prior or contemporaneous
agreements and understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof.
<PAGE>
In Witness Whereof, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first above written.
LOUISIANA-PACIFIC CORPORATION
By:
Title: Chairman and Chief
Executive Officer
By:
Title: Vice President, Treasurer
and Controller
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By:
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By:
Title: Managing Director
ABN AMRO BANK N.V.
By: ABN AMRO
North America,
Inc., as its agent
By:
Title:
By:
Title:
FIRST INTERSTATE BANK OF
OREGON, N.A.
By:
Title:
ROYAL BANK OF CANADA
By:
Title:
SOCIETE GENERALE
By:
Title:
By:
Title:
THE BANK OF NOVA SCOTIA
By:
Title:
By:
Title:
THE CHASE MANHATTAN BANK, N.A.
By:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
Title:
<PAGE>
UNITED STATES NATIONAL BANK OF
OREGON
By:
Title:
By:
Title:
WACHOVIA BANK OF GEORGIA, N.A.
By:
Title:
WELLS FARGO BANK, N.A.
By:
Title:
<PAGE>
SCHEDULE 2.01
COMMITMENTS
AND PRO RATA SHARES
Pro Rata
Bank Commitment Share
- --------------------------------- ---------- ---------
Bank of America National
Trust and Savings Association $ 50,000,000 16.666666668%
ABN AMRO Bank N.V. 25,000,000 8.333333333
First Interstate Bank
of Oregon, N.A. 25,000,000 8.333333333
Royal Bank of Canada 25,000,000 8.333333333
Societe Generale 25,000,000 8.333333333
The Bank of Nova Scotia 25,000,000 8.333333333
The Chase Manhattan Bank, N.A. 35,000,000 11.666666667
The First National Bank
of Chicago 20,000,000 6.666666667
United States National
Bank of Oregon 25,000,000 8.333333333
Wachovia Bank of Georgia, N.A. 35,000,000 11.666666667
Wells Fargo Bank, N.A. 10,000,000 3.333333333
------------ ------------
TOTAL $300,000,000 100.000000000%
============ =============
<PAGE>
SCHEDULE 5.14(c)
The Company's subsidiary, Ketchikan Pulp Company ("KPC"), participates
in the Alaska Loggers Association Retirement Plan ("Plan"), a non-collectively
bargained, multiple employer, defined benefit plan which covers approximately
700 active, retired, and terminated hourly employees of KPC. Contributions to
the Plan are made by participating employers on a cents-per-hour basis, as
determined by the Plan's actuary. On an ongoing basis, it is estimated that
there is no unfunded liability for the Plan. If KPC were to terminate its
participation in the Plan currently, the Company estimates that the liability
to KPC would be approximately $2 million.
The Company maintains the Louisiana-Pacific Retirement Plan ("Plan")
covering its hourly employees. With the exception of certain hourly employees
at one small location of the Company, no employee whose employment commenced
after December 31, 1994, shall become a participant in the Plan and no further
benefits accrue to participants after said date. The Plan covers
approximately 13,900 active, terminated, and retired employees of the Company.
Contributions to the Plan are made in accordance with the requirements of
ERISA and the recommendations of the Plan's actuary. On an ongoing basis, it
is estimated that there is no unfunded liability for the Plan. If the Company
were to terminate the Plan, the estimated unfunded liability for the Plan
(based on current interest rates) would be approximately $29 million.
<PAGE>
SCHEDULE 10.02
OFFSHORE AND DOMESTIC LENDING OFFICES,
ADDRESSES FOR NOTICES
LOUISIANA-PACIFIC CORPORATION
Address for notices:
Louisiana-Pacific Corporation
111 S.W. Fifth Avenue
Portland, OR 97204
Attn: William L. Hebert
Treasurer and CFO
Telephone: 503/221-0800
Facsimile: 503/796-0319
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
Address for notices:
Bank of America National Trust
and Savings Association
Agency Management Services #5596
1455 Market Street, 12th Floor
San Francisco, California 94103
Attn: Ivo Bakovic
Vice President
Telephone: 415/436-2789
Facsimile: 415/436-2700
Address for payments:
Bank of America National Trust
and Savings Association
1850 Gateway Blvd.
Concord, CA 94520
ABA # 121-000-358 SF
Attn: Agency Management Services #5596
For credit to Bancontrol Account No. 12334-15135
Ref: Louisiana-Pacific Corporation
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Bank
Address for Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
Bank of America National Trust
and Savings Association
Credit Products #3838
555 California Street, 41st Floor
San Francisco, CA 94104
Attn: Michael J. Balok
Telephone: 415/622-2018
Facsimile: 415/622-4585
Domestic and Offshore Lending Office:
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
Attn: Terry Peach
Telephone: 510/675-7350
Facsimile: 510/675-7531
ABN AMRO BANK N.V.
Address for notices:
ABN AMRO Bank N.V.
600 University Street
Suite 2323
Seattle, WA 98101
Attn: David McGinnis
Telephone: 206/587-0342
Facsimile: 206/682-5641
Domestic and Offshore Lending Office:
600 University Street
Suite 2323
Seattle, WA 98101
Attn: Suzanne Smith
Telephone: 206/587-0281
Facsimile: 206/682-5641
FIRST INTERSTATE BANK OF OREGON, N.A.
Address for notices:
Oregon Corporate Division
1300 S.W. Fifth Avenue T-19
Portland, OR 97208
Attn: Marcia J. Janner
Vice President
Telephone: 503/220-4855
Telex: 360118 FIORE PLT
Facsimile: 503/225-3162
Domestic and Offshore Lending Office:
Oregon Corporate Division
1300 S.W. Fifth Avenue
Portland, OR 97201
Attn: Marcia J. Janner
Vice President
Telephone: 503/220-4855
Facsimile: 503/225-3162
ROYAL BANK OF CANADA
Address for notices:
Grand Cayman (North America No. 1) Branch
c/o New York Branch
Financial Square, 23rd Floor
New York, NY 10005-3531
Attn: Gail Zapata
Assistant Manager, Credit Administration
Telephone: 212/428-6321
Facsimile: 212/428-2372
with a copy to:
600 Wilshire Boulevard
Suite 800
Los Angeles, CA 90017
Attn: Brian W. Dixon
Senior Manager
Telephone: 213/955-5316
Facsimile: 213/955-5350
Domestic and Offshore Lending Office:
Grand Cayman (North America No. 1) Branch
c/o New York Branch
Financial Square, 23rd Floor
New York, NY 10005-3531
SOCIETE GENERALE
Address for notices:
1 Montgomery #3220
San Francisco, CA 94104
Attn: Alec Neville
Vice President
Telephone: 415/433-8400
Facsimile: 415/989-9922
Domestic and Offshore Lending Office:
2029 Century Park East #2900
Los Angeles, CA 90067
Attn: Tulinh Wu
Corporate Assistant
Telephone: 310/788-7117
Facsimile: 310/203-0539
THE BANK OF NOVA SCOTIA
Address for notices:
888 S.W. Fifth Avenue
Suite 750
Portland, OR 97204-2078
Attn: Sharon Bishop Bloch
Relationship Manager
Telephone: 503/222-3148
Facsimile: 503/222-5502
Domestic and Offshore Lending Office:
888 S.W. Fifth Avenue
Suite 750
Portland, OR 97204-2078
Attn: Sharon Bishop Bloch
Relationship Manager
Telephone: 503/222-3148
Facsimile: 503/222-5502
THE CHASE MANHATTAN BANK, N.A.
Address for notices:
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, NY 10081
Attn: Nancy A. Bridgman
Vice President
Telephone: 212/552-6193
Telex: 62910 CMB UW
Facsimile: 212/552-7773
Domestic and Offshore Lending Office:
2 Chase Manhattan Plaza, 5th Floor
New York, NY 10081
Attn: Patrice Sneed
Telephone: 212/552-5407
Facsimile: 212/552-4455
THE FIRST NATIONAL BANK OF CHICAGO
Address for notices:
777 South Figueroa Street, 4th Floor
Los Angeles, CA 90017-5800
Attn: Michael P. Gage
Vice President
Telephone: 213/683-4976
Facsimile: 213/683-4949
Domestic and Offshore Lending Office:
One First National Plaza
10th Floor, Suite 0634
Chicago, IL 60670
Attn: James Graham
Customer Service Officer
Telephone: 312/732-7112
Facsimile: 312/732-4840
UNITED STATES NATIONAL BANK OF OREGON
Address for notices:
555 S.W. Oak Street
(PL-4)
Portland, OR 97204
Attn: Janice T. Thede
Vice President
Telephone: 503/275-4942
Facsimile: 503/275-5428
Domestic and Offshore Lending Office:
555 S.W. Oak Street
(PL-7)
Portland, OR 97204
Attn: Loretta Frazier
Telephone: 503/275-6558
Facsimile: 503/275-4600
WACHOVIA BANK OF GEORGIA, N.A.
Address for notices:
First Wachovia Corporate Services
U.S. Corporate, MC0371
191 Peachtree Street, N.E.
Atlanta, CA 30303
Attn: Michael Kerner
Banking Officer
Telephone: 404/332-6756
Telex: 4611015
Facsimile: 404/332-6898
Domestic and Offshore Lending Office:
First Wachovia Corporate Services
U.S. Corporate, MC0371
191 Peachtree Street, N.E.
Atlanta, CA 30303
Attn: Karen Swain
Telephone: 404/332-6445
Facsimile: 404/332-6898
WELLS FARGO BANK, N.A.
Address for notices:
Corporate Banking Group
420 Montgomery Street, 9th Floor
San Francisco, CA 94163
Attn: John Huber
Vice President
Telephone: 415/396-2257
Telex: 184904 Wells UT
Facsimile: 415/421-1352
Domestic and Offshore Lending Office:
420 Montgomery Street, 9th Floor
San Francisco, CA 94163
Attn: Teresa Croce
Telephone: 415/396-3629
Facsimile: 415/989-4319
<PAGE>
EXHIBIT A
FORM OF NOTICE OF BORROWING
Date: ,
To: Bank of America National Trust and Savings Association as Agent
for the Banks and Designated Bidders parties to the Credit
Agreement dated as of February 16, 1996 (as extended, renewed,
supplemented, amended or restated from time to time, the
"Agreement") among Louisiana-Pacific Corporation, certain Banks
which are signatories thereto and Bank of America National Trust
and Savings Association, as agent for the Banks and Designated
Bidders (in such capacity, the "Agent")
Ladies and Gentlemen:
The undersigned, Louisiana-Pacific Corporation (the "Company"), refers
to the Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Sections [2.03]
[2.07] and 4.02 of the Agreement, of the Borrowing specified below:
1. The Business Day of the proposed Borrowing is
________________, _____.
2. The aggregate amount of the proposed Borrowing is $
.
[3. The Borrowing is to be comprised of $ of [Base
Rate] [Offshore Rate] Committed Loans.]
or
[3. The Borrowing is to be comprised of a Swingline Loan.]
4. [If applicable:] The duration of the Interest Period for the
Offshore Rate Committed Loans included in the Borrowing shall be _____
months.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Company contained
in Article V (exclusive of Section 5.13) of the Agreement are true and
correct as though made on and as of such date;
(b) the financial statements most recently supplied to the Banks
under both subsections 6.07(a) and 6.07(b) have been prepared in
accordance with the provisions of such subsections as of the dates and
periods therein specified, and since such dates and periods there has
been no change in the Company's consolidated financial condition or
results of operations sufficient to impair the Company's ability to
repay the Loans in accordance with the terms of the Agreement, and
neither the Company nor any Subsidiary has any contingent obligations,
liabilities for taxes or other outstanding financial obligations which
are material in the aggregate to the Company, except as have been
disclosed in such financial statements, or as have been otherwise
previously disclosed to the Banks in writing;
(c) no Default or Event of Default exists or would result from
such proposed Borrowing; and
(d) the proposed Borrowing will not cause (i) the aggregate
principal amount of all outstanding Loans to exceed the combined
Commitments of the Banks, or (ii) the aggregate principal amount of all
outstanding Swingline Loans to exceed the Swingline Commitment.
LOUISIANA-PACIFIC CORPORATION
By:
Title:
<PAGE>
EXHIBIT B
FORM OF NOTICE OF CONVERSION/CONTINUATION
Date: ,
To: Bank of America National Trust and Savings Association, as Agent for the
Banks and Designated Bidders parties to the Credit Agreement dated as of
February 16, 1996 (as extended, renewed, supplemented, amended or
restated from time to time, the "Agreement") among Louisiana-Pacific
Corporation, certain Banks which are signatories thereto and Bank of
America National Trust and Savings Association, as agent for the Banks
and Designated Bidders (in such capacity, the "Agent")
Ladies and Gentlemen:
The undersigned, Louisiana-Pacific Corporation (the "Company"), refers
to the Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 2.04 of
the Agreement, with respect to the [conversion] [continuation] of the
Committed Loans specified herein, that:
1. The Conversion/Continuation Date is , ______.
2. The aggregate amount of the Committed Loans to be [converted]
[continued] is $ .
3. The Committed Loans are to be [converted into] [continued as]
[Offshore Rate] [Base Rate] Committed Loans.
4. [If applicable:] The duration of the Interest Period for the
Committed Loans included in the [conversion] [continuation] shall be
months.
LOUISIANA-PACIFIC CORPORATION
By:
Title:
<PAGE>
EXHIBIT C
LOUISIANA-PACIFIC CORPORATION
FORM OF COMPLIANCE CERTIFICATE
Financial
Statement Date: , ____
Reference is made to that certain Credit Agreement dated as of February
16, 1996 (as extended, renewed, supplemented, amended or restated from time to
time, the "Agreement") among Louisiana-Pacific Corporation, a Delaware
corporation (the "Company"), the several financial institutions from time to
time parties to the Agreement (the "Banks") and Bank of America National Trust
and Savings Association, as agent for the Banks and Designated Bidders (in
such capacity, the "Agent"). Unless otherwise defined herein, capitalized
terms used herein have the respective meanings assigned to them in the
Agreement.
The undersigned responsible officer of Louisiana-Pacific Corporation
hereby certifies as of the date hereof that he/she is the
of the Company and that, as such, he/she is authorized to execute and deliver
this Certificate to the Banks and the Agent on the behalf of the Company and
its consolidated Subsidiaries, and that:
[Use the following paragraph if this Certificate is delivered in connection
with the financial statements required by subsection 6.07(a) of the
Agreement.]
1. Attached as Schedule 1 hereto are (a) a true and correct copy of
the unaudited consolidated summary balance sheets of the Company and its
Subsidiaries as of the end of the fiscal quarter ended __________, _____, and
(b) the related unaudited consolidated summary statements of income,
shareholders' equity, and cash flows for the period commencing on the first
day of such quarter and on the first day of the fiscal year and, in each case,
ending on the last day of such quarter. Such financial statements were
prepared in accordance with GAAP (subject only to ordinary, good faith year-
end audit adjustments, the summary nature of such statements, and the absence
of footnotes) and fairly present, in all material respects, the consolidated
financial position and results of operations of the Company and its
Subsidiaries.
or
[Use the following paragraph if this Certificate is delivered in connection
with the financial statements required by subsection 6.07(b) of the
Agreement.]
1. Attached as Schedule 1 hereto are (a) a true and correct copy of
the audited consolidated balance sheets of the Company and its Subsidiaries as
at the end of the fiscal year ended _______________, _____ and (b) the related
consolidated statements of income, shareholders' equity and cash flows for
such fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, and (i) accompanied by the opinion of an
independent public accountant or accountants selected by the Company and
acceptable to the Majority Banks (the "Independent Auditor") which report
states that such consolidated financial statements are complete and correct
and have been prepared in accordance with GAAP, without qualification arising
out of the scope of the audit, and fairly present, in all material respects,
the consolidated financial position of the Company and its Subsidiaries for
the periods indicated and on a basis consistent with prior periods; and (ii)
further accompanied by the Independent Auditor's certificate that in the
course of making their audit they obtained no knowledge of any existing
unremedied Default or Event of Default by the Company under the Agreement, or
a statement by the Independent Auditor disclosing any such defaults if any are
found. Such financial statements were prepared in accordance with GAAP and
fairly present, in all material respects, the consolidated financial position
and results of operations of the Company and its Subsidiaries.
2. The undersigned has reviewed and is familiar with the terms of the
Agreement and has made, or has caused to be made under his/her supervision, a
detailed review of the transactions and conditions (financial or otherwise) of
the Company during the accounting period covered by the attached financial
statements.
3. To the best of the undersigned's knowledge, the Company, during
such period, has observed, performed or satisfied all of its covenants and
other agreements, and satisfied every condition in the Agreement to be
observed, performed or satisfied by the Company, and the undersigned has no
knowledge of any Default or Event of Default.
4. The following financial covenant analyses and information set
forth on Schedule 2 attached hereto are true and accurate on and as of the
date of this Certificate. Attached hereto as Schedule 3 is a statement from
the Independent Auditor that it has reviewed such analyses and information and
that they are true and correct.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
, .
LOUISIANA-PACIFIC CORPORATION
By:
Title:
<PAGE>
<TABLE>
<CAPTION>
Sequential
Exhibit Description of Exhibit Page Number
- ------- ---------------------- -----------
Date:
-------------, -----
For the fiscal quarter/year
ended
-------------, -----
SCHEDULE 2
to the Compliance Certificate
($ in 000's)(1)
Actual Required/Permitted
<S> <C> <C>
1. Section 7.01 Funded Debt to Net Worth Ratio.
the ratio of:
A. the sum of:
(i) indebtedness for
borrowed monies
------------
(ii) lease obligations for
payment of industrial
revenue and pollution
control bonds
------------
(iii) Purchase Money
Indebtedness
------------
(iv) prepayment deposits
for sales contracts
------------
(v) unfunded litigation
reserves
------------
= (i) + (ii) + (iii) +
(iv) + (v) =
------------
- -----------------------
(1) All calculations on a consolidated basis and in accordance with GAAP.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Sequential
Exhibit Description of Exhibit Page Number
- ------- ---------------------- -----------
B. Net Worth:
the sum of:
(i) capital accounts
------------
(ii) debt subordinated to
the Loans and other
sums now or hereafter
owed to the Agent or
the Banks or
Designated Bidders
with respect to the
Loans or otherwise
under the Agreement or
the Notes by
arrangements or
agreements in form and
substance satisfactory
to the Majority Banks
------------
= (i) + (ii) + (iii) =
------------
= A = Not to exceed 1:00 to 1:00
B ------------
------------
2. Interest Coverage Ratio.
the ratio of:
A. the sum of:
(i) (a) net income (or net
loss) for the four
quarter fiscal period
then ended ------------
less
(b) extraordinary
losses or gains and
the cumulative effect
of changes in
accounting principles
------------
(a) - (b) =
------------
(ii) interest expense to
the extent included in
determining net income
(or net loss) for the
four quarter fiscal
period then ended
------------
= (i) + (ii) + (iii) =
------------
B. interest expense (including
capitalized interest) for
the four quarter fiscal
period then ended
------------
= A =
B
------------
------------
</TABLE>
<PAGE>
EXHIBIT D-1
February ____, 1996
To the Banks and the Agent referred to below
c/o Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, California 94103
Subject: Credit Agreement ("Agreement"), dated as of February 16,
1996, among Louisiana-Pacific Corporation ("Company"),
the banks named on the signature pages of the Agreement
("Banks"), and Bank of America National Trust and Savings
Association as agent for Banks ("Agent")
Ladies and Gentlemen:
We have acted as counsel for Company in connection with the
transactions contemplated by the Agreement. This opinion is being
delivered to you pursuant to Section 4.01(b) of the Agreement. All
capitalized terms used herein and not otherwise defined herein shall have
the same meanings as in the Agreement.
In connection with this opinion, we have examined and relied
upon the Agreement (as to factual matters) and such records, documents,
certificates of public officials and officers of Company (without
independent verification by us of the assertions made therein), made such
inquiries of officers of Company and considered such questions of law as
we have deemed necessary for the purpose of rendering the opinions set
forth herein. We have assumed the genuineness of all signatures, other
than those of Company on the Agreement, of all persons executing
agreements, instruments, or documents examined or relied upon by us. We
have assumed the authenticity of all documents submitted to us as
originals and the conformity to authentic original documents of all
documents submitted to us as certified, conformed, or photostatic copies.
We have assumed the due execution and delivery pursuant to due
authorization by Banks and Agent of the Agreement and all other
instruments and agreements required thereunder (collectively,
"Transaction Documents"), and that each of Banks and Agent have the power
to enter into and perform their respective obligations under the
Transaction Documents.
Whenever our opinion herein is indicated to be based on our
knowledge, it is intended to signify the actual knowledge after due
inquiry of the attorneys of Miller, Nash, Wiener, Hager & Carlsen who
have provided legal services in connection with the transactions
contemplated by the Agreement (specifically, John J. DeMott and Catherine
A. Shaw).
With respect to the opinions expressed herein, the rights and
obligations under the Transaction Documents and the enforceability
thereof are subject to:
(i) limitations imposed by bankruptcy, insolvency,
reorganization, and other similar laws and related court
decisions of general applicability relating to or affecting
creditors' rights generally;
(ii) limitations on the availability of equitable
remedies;
(iii) the effect of judicial decisions which have held
that certain provisions are unenforceable where the
enforcement would violate an implied covenant of good faith
and fair dealing or would be commercially unreasonable or
where the breach is not material;
(iv) limitations on the enforceability of provisions
expressly or by implication waiving broadly or vaguely stated
rights, or waiving rights granted by law where such waivers
are against public policy, or cannot be waived by consent;
(v) limitations on the enforceability of provisions
that rights or remedies are not exclusive, that every right or
remedy is cumulative, or that the election of a particular
remedy or remedies does not preclude recourse to one or more
other remedies;
(vi) limitations on the enforceability of provisions
providing that a Transaction Document may be amended or waived
only in writing to the extent that the parties have orally
agreed to modify provisions of a Transaction Document; and
(vii) limitations on the enforceability of provisions
providing for a party to be indemnified with respect to its
own unlawful conduct, negligence, recklessness, or willful
misconduct, or otherwise in a manner contrary to public
policy.
In rendering the opinions herein, we are acting only as
members of the Bar of the state of Oregon and are not expressing our
views as to the laws, rules, and regulations of any jurisdiction other
than the laws, rules, and regulations of the state of Oregon, the
corporate laws, rules, and regulations of the State of Delaware, and
United States federal law, rules, and regulations. Our opinion as to any
document or instrument governed by the laws of any other jurisdiction is
limited to the extent that such document or instrument would be governed
by the laws of the state of Oregon.
Based upon and subject to the foregoing and any other
qualifications stated herein, we are of the opinion that:
1. Company is a corporation duly organized and
existing under the laws of Delaware.
2. The execution, delivery, and performance by
Company of the Agreement and any instrument or agreement
required thereunder are within Company's powers, have
been duly authorized, and are not in conflict with the
terms of the certificate of incorporation or bylaws of
Company, or to our knowledge any material instrument or
agreement to which Company is a party or by which Company
is bound or affected.
3. No approval, consent, or other action by, or
notice to or filing with, any governmental authority is
necessary in connection with the execution, delivery, and
performance by Company of the Agreement or any instrument
or agreement required thereunder.
4. There is no law, rule, or regulation
applicable to Company nor, to our knowledge, is there any
judgment, decree or order of any court or governmental
authority binding on Company or any Subsidiary, which
would be contravened by the execution, delivery, or
performance by Company of the Agreement or any instrument
or agreement required thereunder.
5. The Agreement has been duly executed and
delivered by Company and is, and each of the Notes when
duly executed and delivered will be, a legal, valid, and
binding agreement of Company, enforceable against Company
in accordance with its terms.
6. Except as disclosed in reports filed by
Company with the Securities and Exchange Commission or as
set forth on Exhibit A attached hereto, to our knowledge,
there are no suits, proceedings, claims, or disputes
pending or threatened against or affecting Company or any
Subsidiary or their respective properties, the adverse
determination of which might materially adversely affect
Company's consolidated financial condition or operations
or materially impair Company's ability to perform its
obligations under the Agreement or under any instrument
or agreement required thereunder.
7. The execution, delivery, and performance of
the Agreement and any instrument or agreement required
thereunder will not conflict with or contravene any of
Regulations G, T, U and X promulgated by the Board of
Governors of the Federal Reserve System.
8. None of the Company, any Person controlling
the Company, or any Subsidiary, is an "investment
company" within the meaning of the Investment Company Act
of 1940.
The information set forth herein is as of the date hereof.
We assume no obligation to advise you of changes which may thereafter be
brought to our attention.
This opinion is solely for the use of Agent, Banks,
Designated Bidders, Assignees, and Participants in connection with the
transactions contemplated by the Agreement and may not be used or relied
upon for any other purpose.
Very truly yours,
MILLER, NASH, WIENER, HAGER & CARLSEN
<PAGE>
EXHIBIT A
Certain Litigation Matters
In January 1996, an action entitled International Paper
Company v. Mark A. Suwyn and Louisiana-Pacific Corporation was instituted
in the United States District Court for the Southern District of New York
claiming that Mr. Suwyn's employment as chief executive officer of the
Company violated the terms of a previous employment agreement with the
plaintiff. The complaint seeks an injunction prohibiting Mr. Suwyn from
continuing his employment with the Company for 18 months and other
relief.
In January 1996, the Company received a notice of suspension
from the United States Environmental Protection Agency ("EPA") stating
that, because of criminal proceedings pending against the Company in
Colorado, agencies of the federal government would be prohibited from
purchasing from the Company's Northern Division. Under recently revised
regulations of the United States Department of Agriculture, such action
may also have the effect of barring the Company's Northern Division from
purchasing timber from the United States Forest Service. The Company is
seeking to overturn or modify the EPA action.
In January 1996, an action entitled Stewart v. Louisiana-
Pacific Corporation was instituted in the United States District Court
for the District of Colorado. Plaintiff seeks to represent a purported
class consisting generally of owners and purchasers of buildings in which
the Company's OSB panels are used for flooring, subflooring, or
underlayment. The complaint seeks damages in an unspecified amount and
equitable relief by reason of alleged fraud, misrepresentation,
negligence, breach of warranty, and deceptive trade practices related to
alleged improprieties in testing, certification, and marketing of OSB
structure panels and alleged premature deterioration of OSB panels.
<PAGE>
EXHIBIT D-2
February 16, 1996
Bank of America National Trust and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Banks listed on Schedule A attached hereto
Re: Louisiana-Pacific Corporation Credit Agreement
Mesdames and Gentlemen:
We have acted as special California counsel for Bank of America National
Trust and Savings Association, as agent (the "Agent") under the Credit
Agreement (the "Agreement") dated as of February 16, 1996 among Louisiana-
Pacific Corporation (the "Company"), the Agent, and the Banks listed on
Schedule A attached hereto. This opinion is furnished to you pursuant to
Section 4.01(b)(ii) of the Agreement.
We have examined an original or a copy of the Agreement and the form of
the Notes (collectively, the "Documents"). Unless otherwise defined herein,
terms defined in the Agreement shall have the same meanings herein.
In addition, we have examined such records, documents, and certificates
of public officials and considered such questions of law as we have deemed
necessary for the purpose of rendering the opinions set forth herein.
We have assumed the genuineness of all signatures and the authenticity
of all items submitted to us as originals and the conformity with originals of
all items submitted to us as copies. In making our examination of the
Documents, we have assumed that each party to the Documents (including each
Assignee becoming a Bank or Designated Bidder hereafter) has the power and
authority to execute and deliver, and to perform and observe the provisions
of, the Documents and has duly authorized, executed and delivered the
Documents. We have also assumed that the Documents constitute the legal,
valid and binding obligation of each party to the Documents (including each
Assignee becoming a Bank or Designated Bidder hereafter) other than the
Company.
We have assumed that each of the Banks and Designated Bidders (including
each Assignee becoming a Bank or Designated Bidder hereafter) is an exempt
lender under the California usury law.
We call your attention to the arbitration provision of the Agreement and
to the existence of differences between the arbitral and judicial processes.
We have based our opinion upon an assessment of legal authorities which would
be applicable in judicial proceedings.
Based upon and subject to the exceptions and qualifications set forth
herein, we are of the opinion that the Agreement constitutes, and each Note
when duly executed and delivered by the Company will constitute, a valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms.
The opinion expressed herein is subject to the following further
qualifications and exceptions:
(1) The effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws
relating to or affecting the rights of creditors generally,
including, without limitation, laws relating to fraudulent
transfers or conveyances, preferences and equitable
subordination.
(2) Limitations imposed by general principles of equity
upon the availability of equitable remedies or the enforcement
of provisions of the Documents; and the effect of judicial
decisions which have held that certain provisions are
unenforceable where their enforcement would violate the implied
covenant of good faith and fair dealing, or would be
commercially unreasonable.
(3) We express no opinion as to the effect on the
opinions expressed herein of (a) the compliance or non-
compliance of any party to the Documents (including each
Assignee becoming a Bank or Designated Bidder hereafter) with
any laws or regulations applicable to it, or (b) the legal or
regulatory status or the nature of the business of any such
party.
(4) The enforceability of provisions of the Documents
providing for indemnification or contribution, to the extent
such indemnification or contribution is against public policy.
(5) The enforceability of provisions of the Documents
providing for arbitration of disputes to the extent that
arbitration of a particular dispute would be against public
policy.
(6) The enforceability of provisions of the Documents
which purport to establish evidentiary standards or to make
determinations conclusive.
(7) The enforceability of provisions of the Documents
that establish the circumstances under which rights of set-off
may be exercised.
(8) The effect of judicial decisions which may permit
the introduction of extrinsic evidence to modify the terms or
the interpretation of the Documents.
(9) The effect of California law which provides that
where a contract permits one party to the contract to recover
attorney's fees, the prevailing party in any action to enforce
any provision of the contract shall be entitled to recover its
reasonable attorney's fees notwithstanding the absence of a
written agreement to such effect.
(10) The enforceability of certain provisions of the
Documents expressly or by implication waiving broadly or
vaguely stated rights, or waiving rights granted by law where
such waivers are against public policy.
(11) The enforceability of provisions of the Documents
providing that rights or remedies are not exclusive, that every
right or remedy is cumulative, or that the election of a
particular remedy or remedies does not preclude recourse to one
or more other remedies.
(12) The enforceability of a requirement that provisions
of the documents may only be modified in writing to the extent
that an oral agreement has been executed modifying provisions
of the Documents.
(13) The enforceability of provisions of the Documents
imposing or which are construed as effectively imposing
penalties or forfeitures.
We express no opinion as to matters governed by any laws other than the
substantive laws of the State of California (without reference to its
choice-of-law rules).
This opinion is solely for your benefit and may not be relied upon by
any other person other than Assignees becoming Banks or Designated Bidders
hereafter, nor may copies be delivered to any person other than Participants,
Assignees, and your professional advisors and regulatory authorities, in each
case without our prior written consent.
Very truly yours,
Morrison & Foerster LLP
<PAGE>
SCHEDULE A
Bank of America National Trust and Savings Association
ABN AMRO Bank N.V.
First Interstate Bank of Oregon, N.A.
Royal Bank of Canada
Societe Generale
The Bank of Nova Scotia
The Chase Manhattan Bank, N.A.
The First National Bank of Chicago
United States National Bank of Oregon
Wachovia Bank of Georgia, N.A.
Wells Fargo Bank, N.A.
<PAGE>
EXHIBIT E
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT
(this "Assignment and Acceptance") dated as of __________, _____ is made
between ______________________________ (the "Assignor") and
__________________________ (the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that
certain Credit Agreement dated as of February 16, 1996 (as extended, renewed,
supplemented, amended or restated, the "Agreement") among Louisiana-Pacific
Corporation, a Delaware corporation (the "Company"), the several financial
institutions from time to time party thereto (including the Assignor, the
"Banks"), and Bank of America National Trust and Savings Association, as agent
for the Banks and the Designated Bidders (the "Agent"). Any terms defined in
the Agreement and not defined in this Assignment and Acceptance are used
herein as defined in the Agreement;
WHEREAS, as provided under the Agreement,
the Assignor has committed to making committed loans (the "Committed Loans")
to the Company in an aggregate amount not to exceed $__________ (the
"Commitment") and has agreed to offer to provide the Company with Bid Loans
from time to time in the Assignor's sole discretion;
WHEREAS, [the Assignor has made Committed
Loans in the aggregate principal amount of $__________ to the Company [, and
Bid Loans in the aggregate principal amount of $___________] to the Company]
[no Committed Loans are outstanding under the Agreement] [no Bid Loans are
outstanding under the Agreement]; and
WHEREAS, the Assignor wishes to assign to
the Assignee [part of the] [all] rights and obligations of the Assignor under
the Agreement in respect of [(i)] its Commitment [,together with a
corresponding portion of each of its outstanding Committed Loans,] in an
amount equal to $__________ (the "Assigned Amount"), [and (ii) its outstanding
Bid Loans in an amount equal to $_____________,] in each case on the terms and
subject to the conditions set forth herein and the Assignee wishes to accept
assignment of such rights and to assume such obligations from the Assignor on
such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the
foregoing and the mutual agreements contained herein, the parties hereto agree
as follows:
1.Assignment and Acceptance.
(a)Subject to the terms and conditions of
this Assignment and Acceptance, (i) the Assignor hereby sells, transfers and
assigns to the Assignee, and (ii) the Assignee hereby purchases, assumes and
undertakes from the Assignor, without recourse and without representation or
warranty (except as provided in this Assignment and Acceptance) __% (the
"Assignee's Percentage Share") of (A) the Commitment [and the Committed Loans]
of the Assignor, [and] (B) [$__________ in principal amount of outstanding Bid
Loans, and (C)] all related rights, benefits, obligations, liabilities and
indemnities of the Assignor under and in connection with the Agreement and the
documents and instruments given by the Company in connection therewith.
[If appropriate, add paragraph specifying
payment to Assignor by Assignee of outstanding principal of, accrued interest
on, and fees with respect to, Committed Loans and Bid Loans assigned.]
(b)With effect on and after the Effective
Date (as defined in Section 5 hereof), the Assignee shall be a party to the
Agreement and succeed to all of the rights and be obligated to perform all of
the obligations of a Bank under the Agreement, including the requirements
concerning confidentiality and the payment of indemnification, with a
Commitment in an amount equal to the Assigned Amount. The Assignee agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of the Agreement are required to be performed by it as a
Bank. It is the intent of the parties hereto that the Commitment of the
Assignor shall, as of the Effective Date, be reduced by an amount equal to the
Assigned Amount and the Assignor shall relinquish its rights and be released
from its obligations under the Agreement to the extent such obligations have
been assumed by the Assignee; provided, however, the Assignor shall not
relinquish its rights under Sections 10.04 and 10.05 of the Agreement to the
extent such rights relate to the time prior to the Effective Date.
(c)After giving effect to the assignment
and assumption set forth herein, on the Effective Date the Assignee's
Commitment will be $__________.
(d)After giving effect to the assignment
and assumption set forth herein, on the Effective Date the Assignor's
Commitment will be $__________.
2.Payments.
(a)As consideration for the sale,
assignment and transfer contemplated in Section 1 hereof, the Assignee shall
pay to the Assignor on the Effective Date in immediately available funds an
amount equal to $__________, in respect of the Assignee's Percentage Share of
the principal amount of all Committed Loans of the Assignor [and $___________
in respect of the principal amount of Bid Loans previously made, and currently
owed, by the Company to the Assignor under the Credit Agreement and
outstanding on the Effective Date].
(b)The [Assignor] [Assignee] further
agrees to pay to the Agent a processing fee in the amount specified in
subsection 10.08(a) of the Agreement.
3.Reallocation of Payments.
Any interest, fees and other payments
accrued to the Effective Date with respect to the Commitment[,] [Bid Loans,]
[and] Committed Loans of the Assignor shall be for the account of the
Assignor. Any interest, fees and other payments accrued on and after the
Effective Date with respect to the Assigned Amount [and Bid Loans assigned
hereunder] shall be for the account of the Assignee. Each of the Assignor and
the Assignee agrees that it will hold in trust for the other party any
interest, fees and other amounts which it may receive to which the other party
is entitled pursuant to the two preceding sentences and pay to the other party
any such amounts which it may receive promptly upon receipt.
4.Independent Credit Decision.
The Assignee (a) acknowledges that it has
received a copy of the Agreement and the Schedules and Exhibits thereto,
together with copies of the most recent financial statements referred to in
Section 6.07 of the Agreement, and such other documents and information as it
has deemed appropriate to make its own credit and legal analysis and decision
to enter into this Assignment and Acceptance; and (b) agrees that it will,
independently and without reliance upon the Assignor, the Agent or any other
Bank and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit and legal decisions in taking or
not taking action under the Agreement.
5.Effective Date; Notices.
(a)As between the Assignor and the
Assignee, the effective date for this Assignment and Acceptance shall be
__________, _____ (the "Effective Date"); provided that the following
conditions precedent have been satisfied on or before the Effective Date:
(i) this Assignment and Acceptance shall be executed and
delivered by the Assignor and the Assignee;
(ii) the consent of the Company and the Agent required for
an effective assignment of the Assigned Amount by the Assignor to the Assignee
under Section 10.08(a) of the Agreement shall have been duly obtained and
shall be in full force and effect as of the Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts due
to the Assignor under this Assignment and Acceptance;
(iv) the Assignee shall have complied with
subsection 9.10(a) of the Agreement (if applicable); and
(v) the processing fee referred to in Section 2(b) hereof
and in Section 10.08(a) of the Agreement shall have been paid to the Agent.
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Company and the Agent for
acknowledgment by the Agent, a Notice of Assignment in the form attached
hereto as Schedule 1.
6. Agent.
[(a)] The Assignee hereby appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under the
Agreement as are delegated to the Agent by the Banks pursuant to the terms of
the Agreement.
[INCLUDE ONLY IF ASSIGNOR IS AGENT: (b) The Assignee shall assume no duties
or obligations held by the Assignor in its capacity as Agent under the
Agreement.]
7. Withholding Tax.
The Assignee (a) represents and warrants to the Assignor, the Agent and
the Company that under applicable law and treaties no tax will be required to
be withheld by the Assignor with respect to any payments to be made to the
Assignee hereunder, (b) agrees to furnish (if it is organized under the laws
of any jurisdiction other than the United States or any State thereof) to the
Agent and the Company prior to the time that the Agent or the Company is
required to make any payment of principal, interest or fees hereunder,
duplicate executed originals of either U.S. Internal Revenue Service Form 4224
or U.S. Internal Revenue Service Form 1001 (wherein the Assignee claims
entitlement to the benefits of a tax treaty that provides for a complete
exemption from U.S. federal income withholding tax on all payments hereunder)
and agrees to provide new Forms 4224 or 1001 upon the expiration of any
previously delivered form or comparable statements in accordance with
applicable U.S. law and regulations and amendments thereto, duly executed and
completed by the Assignee, and (c) agrees to comply with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any Lien or other adverse claim;
(ii) it is duly organized and existing and it has the full power and authority
to take, and has taken, all action necessary to execute and deliver this
Assignment and Acceptance and any other documents required or permitted to be
executed or delivered by it in connection with this Assignment and Acceptance
and to fulfill its obligations hereunder; (iii) except for the notice required
by Section 5(b) hereof, no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or
obtained) for its due execution, delivery and performance of this Assignment
and Acceptance, and apart from any agreements or undertakings or filings
required by the Agreement, no further action by, or notice to, or filing with,
any Person is required of it for such execution, delivery or performance; and
(iv) this Assignment and Acceptance has been duly executed and delivered by it
and constitutes the legal, valid and binding obligation of the Assignor,
enforceable against the Assignor in accordance with the terms hereof, subject,
as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and
other laws of general application relating to or affecting creditors' rights
and to general equitable principles.
(b) The Assignor makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or
representations made in or in connection with the Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes
no responsibility with respect to, the solvency, financial condition or
statements of the Company, or the performance or observance by the Company of
any of its respective obligations under the Agreement or any other instrument
or document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) except for the notice required by
Section 5(b) hereof, no notices to, or consents, authorizations or approvals
of, any Person are required (other than any already given or obtained) for its
due execution, delivery and performance of this Assignment and Acceptance; and
apart from any agreements or undertakings or filings required by the
Agreement, no further action by, or notice to, or filing with, any Person is
required of it for such execution, delivery or performance; (iii) this
Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignee,
enforceable against the Assignee in accordance with the terms hereof, subject,
as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and
other laws of general application relating to or affecting creditors' rights
and to general equitable principles; and (iv) it is an Eligible Assignee.
9. Further Assurances.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Company or the Agent, which may be required in
connection with the assignment and assumption contemplated hereby.
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this Assignment
and Acceptance shall be in writing and signed by the parties hereto. No
failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any
breach of the provisions of this Assignment and Acceptance shall be without
prejudice to any rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any set-
off or counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs
and expenses incurred in connection with the negotiation, preparation,
execution and performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number
of counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF CALIFORNIA. The Assignor
and the Assignee each irrevocably submit to the non-exclusive jurisdiction of
any State or Federal court sitting in California over any suit, action or
proceeding arising out of or relating to this Assignment and Acceptance and
irrevocably agree that all claims in respect of such action or proceeding may
be heard and determined in such California State or Federal court. Each party
to this Assignment and Acceptance hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR
IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE AGREEMENT, ANY RELATED
DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR
STATEMENTS (WHETHER ORAL OR WRITTEN).
[Other provisions to be added as may be negotiated between the
Assignor and the Assignee, provided that such provisions are not inconsistent
with the Agreement.]
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly
authorized officers as of the date first above written.
[ASSIGNOR]
By:
Title:
By:
Title:
Address:
[ASSIGNEE]
By:
Title:
By:
Title:
Address:
<PAGE>
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_______________, _____
Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn: Agency Management Services #5596
Louisiana-Pacific Corporation
111 S.W. Fifth Avenue
Portland, OR 97204
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of February 16, 1996 (as
extended, renewed, supplemented, amended or restated from time to time, the
"Agreement") among Louisiana-Pacific Corporation (the "Company"), the Banks
referred to therein and Bank of America National Trust and Savings Association
and as agent for the Banks and the Designated Bidders (the "Agent"). Terms
defined in the Agreement are used herein as therein defined.
1. We hereby give you notice of, and request your consent to(1), the
assignment by __________________ (the "Assignor") to _______________ (the
"Assignee") of _____% of the right, title and interest of the Assignor in and
to the Agreement (including, without limitation, the right, title and interest
of the Assignor in and to the Commitment of the Assignor [and all outstanding
Committed Loans made by the Assignor]) [and $________ of outstanding Bid Loans
made by the Assignor thereunder], pursuant to the Assignment and Acceptance
Agreement attached hereto (the "Assignment and Acceptance"). Before giving
effect to such assignment the Assignor's Commitment is $ ___________ [, and
the aggregate amount of its outstanding Committed Loans is $_____________ [and
Bid Loans is $______________]]. After giving effect to such assignment the
Assignor's Commitment is $ ___________ [, and the aggregate amount of its
outstanding Committed Loans is $_____________ [and Bid Loans is
$______________]], and the Assignee's Commitment is $ ___________ [, and the
aggregate amount of its outstanding Committed Loans is $_____________ [and Bid
Loans is $______________]].
2. The Assignee agrees that, upon receiving the consent of the Agent
and, if applicable, the Company, to such assignment, the Assignee will be
bound by the terms of the Agreement as fully and to the same extent as if the
Assignee were the Bank originally holding such interest in the Agreement.
3. The following administrative details apply to the Assignee:
_____________________________
(1) See Section 10.08 of the Credit Agreement regarding circumstances under
which Company consent is required.
<PAGE>
(A) Notice Address:
Assignee name: __________________________
Address: _______________________________
_______________________________
_______________________________
Attention: _____________________________
Telephone: (___) _______________________
Telecopier: (___) ______________________
Telex (Answerback): ____________________
(B) Payment Instructions:
Account No.: ___________________________
At: ___________________________
___________________________
___________________________
Reference: ___________________________
Attention: ___________________________
4. You are entitled to rely upon the representations, warranties and
covenants of each of the Assignor and Assignee contained in the Assignment and
Acceptance.
<PAGE>
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:
Title:
By:
Title:
[NAME OF ASSIGNEE]
By:
Title:
By:
Title:
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
LOUISIANA-PACIFIC CORPORATION
By:
Title: __________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By: __________________________
Vice President
<PAGE>
EXHIBIT F
FORM OF INVITATION FOR COMPETITIVE BIDS
Via Facsimile
To the Banks [and Designated Bidders] Listed on Schedule A attached hereto:
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of February
16, 1996 (as extended, renewed, supplemented, amended or restated from time to
time, the "Agreement"), among Louisiana-Pacific Corporation (the "Company"),
the Banks party thereto, and Bank of America National Trust and Savings
Association, as Agent for the Banks and the Designated Bidders (the "Agent").
Capitalized terms used herein have the meanings specified in the Agreement.
Pursuant to subsection 2.06(b) of the Agreement, you are hereby invited
to submit offers to make Bid Loans to the Company based on the following
specifications:
1. The Business Day of the proposed Bid Borrowing is
_______________, ____.
2. The aggregate amount of the proposed Bid Borrowing is
$___________________.
3. The proposed Bid Borrowing to be made pursuant to Section 2.06
shall be comprised of [LIBOR] [Absolute Rate] Bid Loans.
4. The duration of the Interest Period[s] for the Bid Loans comprised
in the Borrowing shall be _____________, [_________________] [and
___________________].
5. [if applicable] The Interest Payment Date[s] for the Bid Loans
comprised in the Borrowing shall be _____________,
[_________________] [and ___________________].
All Competitive Bids must be in the form of Exhibit H to the Agreement
and must be received by the Agent no later than 6:30 a.m. (or, in the case of
a Competitive Bid by the Agent or an affiliate of the Agent in the capacity of
a Bank or Designated Bidder, 6:15 a.m.) (San Francisco time) on
______________, ____.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By: _____________________________
Vice President
<PAGE>
Schedule A
List of Banks [and Designated Bidders]
Bank of America National Trust
and Savings Association, as a Bank
Facsimile: (415) 622-____
[Bank]
Facsimile: (___) ___-____
[Bank]
Facsimile: (___) ___-____
[Bank]
Facsimile: (___) ___-____
[Bank]
Facsimile: (___) ___-____
<PAGE>
EXHIBIT G
FORM OF COMPETITIVE BID REQUEST
________________, ____
Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Agency Management Services #5596
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of February 16, 1996
(as extended, renewed, supplemented, amended or restated from time to time,
the "Agreement"), by and among Louisiana-Pacific Corporation (the "Company"),
the Banks party thereto, and Bank of America National Trust and Savings
Association, as Agent for the Banks and the Designated Bidders (the "Agent").
Capitalized terms used herein have the meanings specified in the Agreement.
This is a Competitive Bid Request for Bid Loans pursuant to Section 2.06
of the Agreement as follows:
(i) The Business Day of the proposed Bid Borrowing is ______________,
____.
(ii) The aggregate amount of the proposed Bid Borrowing is
$___________________.
(iii) The proposed Bid Borrowing to be made pursuant to Section 2.06
shall be comprised of [LIBOR] [Absolute Rate] Bid Loans.
(iv) The Interest Period[s] for the Bid Loans comprised in the
Borrowing shall be __________________, [____________________] and
[______________________].
(v) [if applicable] The Interest Payment Date[s] for the Bid Loans
comprised in the Borrowing shall be _____________, [_________________] [and
___________________].
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Company contained
in Article V (exclusive of Section 5.13) of the Agreement are true and
correct as though made on and as of such date;
(b) the financial statements most recently supplied to the Banks
under both subsections 6.07(a) and 6.07(b) have been prepared in
accordance with the provisions of such subsections as of the dates and
periods therein specified, and since such dates and periods there has
been no change in the Company's consolidated financial condition or
results of operations sufficient to impair the Company's ability to
repay the Loans in accordance with the terms of the Agreement, and
neither the Company nor any Subsidiary has any contingent obligations,
liabilities for taxes or other outstanding financial obligations which
are material in the aggregate to the Company, except as have been
disclosed in such financial statements, or as have been otherwise
previously disclosed to the Banks in writing;
(c) no Default or Event of Default exists or would result from
such proposed Borrowing; and
(d) the proposed Borrowing will not cause the aggregate principal
amount of all outstanding Loans to exceed the combined Commitments of
the Banks.
LOUISIANA-PACIFIC CORPORATION
By: _________________________
Title: ______________________
<PAGE>
EXHIBIT H
FORM OF COMPETITIVE BID
________________, ____
Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Agency Management Services #5596
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of February 16, 1996
(as amended from time to time, the "Agreement") by and among Louisiana-Pacific
Corporation (the "Company"), the Banks party thereto, and Bank of America
National Trust and Savings Association, as Agent for the Banks and the
Designated Bidders (the "Agent"). Capitalized terms used herein have the
meanings specified in the Agreement.
In response to the Competitive Bid Request of the Company dated
_____________, ____ and in accordance with subsection 2.06(c)(ii) of the
Agreement, the undersigned Bank offers to make [a] Bid Loan[s] thereunder in
the following principal amount[s] at the following interest rates for the
following Interest Period[s] [with the following Interest Payment Date[s]]:
Date of Borrowing:
---------------, ---
Principal [Principal [Principal
Amount $ Amount $ ] Amount $ ]
---------- ---------- ----------
Interest: Interest: Interest:
[Absolute [Absolute [Absolute
Rate %, %, %] Rate %, %, %] Rate %, %, %]
-- -- -- -- -- -- -- -- --
[Libor Bid Margin [Libor Bid Margin [Libor Bid Margin
+/- %, +/- %, +/- %, +/- %, +/- %, +/- %,
-- -- -- -- -- --
+/- %] +/- %] +/- %]
-- -- --
Interest Interest Interest
Period Period Period
---------- ---------- ----------
[Interest Payment [Interest Payment [Interest Payment
Date[s] ] Date[s] ] Date[s] ]
---------- ---------- ----------
[NAME OF BANK OR DESIGNATED BIDDER]
By:
-------------------------------
Title:
----------------------------
<PAGE>
EXHIBIT I
FORM OF COMMITTED LOAN NOTE
$ _____________, ____
San Francisco, California
FOR VALUE RECEIVED, the undersigned, Louisiana-Pacific
Corporation, a Delaware corporation (the "Company"), hereby promises to
pay to the order of (the "Bank") [(i)] the principal
sum of Dollars ($ ) or, if less, the aggregate
unpaid principal amount of all Committed Loans made by the Bank to the
Company pursuant to the Credit Agreement, dated as of February 16, 1996
(such Agreement, as it may be extended, renewed, supplemented, amended or
restated from time to time, being hereinafter called the "Agreement"),
among the Company, the Bank, the other banks parties thereto and Bank of
America National Trust and Savings Association, as Agent for the Banks
and the Designated Bidders [, together with (ii) the principal amount of
any outstanding Swingline Loans made by the Bank as Swingline Bank, in
each case(1)], on the dates and in the amounts provided in the Agreement.
The Company further promises to pay interest on the unpaid principal
amount of the Committed Loans [and Swingline Loans] evidenced hereby from
time to time at the rates, on the dates, and otherwise as provided in the
Agreement.
The Bank is authorized to endorse the amount and the date on
which each Committed Loan [or Swingline Loan] is made, the maturity date
therefor and each payment of principal with respect thereto on the
schedules annexed hereto and made a part hereof, or on continuations
thereof which shall be attached hereto and made a part hereof; provided,
that any failure to endorse such information on such schedule or
continuation thereof shall not in any manner affect any obligation of the
Company under the Agreement and this Committed Loan Note (the "Note").
This Note is one of the Notes referred to in, and is entitled
to the benefits of, the Agreement, which Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.
Terms defined in the Agreement are used herein with their
defined meanings therein unless otherwise defined herein. This Note
shall be governed by, and construed and interpreted in accordance with,
the laws of the State of California applicable to contracts made and to
be performed entirely within such State.
LOUISIANA-PACIFIC CORPORATION
By:
Title:
____________________________
<PAGE>
Schedule A to Note
BASE RATE COMMITTED LOANS AND REPAYMENT OF BASE
RATE COMMITTED LOANS [AND SWINGLINE LOANS]
(2) (3) (4)
Amount Maturity Amount of
of Base Date of Base Rate
Rate Com- Base Rate Committed
mitted Loan Committed Loan Loan [or
(1) [or Swing- [or Swing- Swingline Notation
Date line Loan ] line Loan] Loan] Repaid Made By
<PAGE>
Schedule B to Note
OFFSHORE RATE COMMITTED LOANS AND REPAYMENT OF
OFFSHORE RATE COMMITTED LOANS
(2) (3) (4)
Amount of Maturity Date Amount of
Offshore of Offshore Offshore Rate (5)
(1) Rate Commit- Rate Commit- Loan Commit- Notation
Date ted Loan ted Loan ted Repaid Made By
<PAGE>
EXHIBIT J
FORM OF BID LOAN NOTE
________________, ____ San Francisco, California
FOR VALUE RECEIVED, the undersigned, Louisiana-Pacific
Corporation, a Delaware corporation (the "Company"), hereby promises to
pay to the order of (the "Bid Loan Lender") the
aggregate unpaid principal amount of all Bid Loans made by the Bid Loan
Lender to the Company pursuant to the Credit Agreement, dated as of
February 16, 1996 (such Agreement, as it may be extended, renewed,
supplemented, amended or restated from time to time, being hereinafter
called the "Agreement"), among the Company, the Bid Loan Lender, the
other banks parties thereto and Bank of America National Trust and
Savings Association, as Agent for the Banks and the Designated Bidders,
on the dates and in the amounts provided in the Agreement. The Company
further promises to pay interest on the unpaid principal amount of the
Bid Loans evidenced hereby from time to time at the rates, on the dates,
and otherwise as provided in the Agreement.
The Bid Loan Lender is authorized to endorse the amount and
the date on which each Bid Loan is made, the maturity date therefor and
each payment of principal with respect thereto on the schedules annexed
hereto and made a part hereof, or on continuations thereof which shall be
attached hereto and made a part hereof; provided, that any failure to
endorse such information on such schedule or continuation thereof shall
not in any manner affect any obligation of the Company under the
Agreement and this Bid Loan Note (the "Note").
This Note is one of the Notes referred to in, and is entitled
to the benefits of, the Agreement, which Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.
Terms defined in the Agreement are used herein with their
defined meanings therein unless otherwise defined herein. This Note
shall be governed by, and construed and interpreted in accordance with,
the laws of the State of California applicable to contracts made and to
be performed entirely within such State.
LOUISIANA-PACIFIC CORPORATION
By:
Title:
<PAGE>
Schedule A to Note
ABSOLUTE RATE BID LOANS AND REPAYMENT OF
ABSOLUTE RATE BID LOANS
(2) (3) (4)
Amount of Maturity Date Amount of (5)
(1) Absolute Rate of Absolute Absolute Rate Notation
Date Bid Loan Rate Bid Loan Loan Bid Repaid Made By
<PAGE>
Schedule B to Note
LIBOR BID LOANS AND REPAYMENT OF
LIBOR BID LOANS
(2) (3) (4)
Amount of Maturity Date Amount of (5)
(1) LIBOR of LIBOR LIBOR Bid Notation
Date Bid Loan Bid Loan Loan Repaid Made By
<PAGE>
EXHIBIT K
DESIGNATION AGREEMENT
Date: ______________, ____
Reference is made to the Credit Agreement dated as of February
16, 1996 (as extended, renewed, supplemented, amended or restated from
time to time, the "Agreement") among Louisiana-Pacific Corporation, a
Delaware corporation (the Company"), the Banks (as such term is defined in
the Agreement) and Bank of America National Trust and Savings Association,
as Agent for the Banks and the Designated Bidders (the "Agent"). Terms
defined in the Agreement are used herein with the same meaning.
________________________________ (the "Designator") and
___________________ (the "Designee") hereby agree as follows:
1. The Designator hereby designates the Designee, and the
Designee hereby accepts such designation, to have a right to make Bid
Loans pursuant to Section 2.06 of the Agreement.
2. The Designator makes no representation or warranty and
assumes no responsibility with respect to (i) any statements, warranties
or representations made in or in connection with the Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Agreement or any other instrument or document furnished
pursuant thereto and (ii) the financial condition of the Company or the
performance or observance by the Company of any of its obligations under
the Agreement or any other instrument or document furnished pursuant
thereto.
3. The Designee (i) confirms that it has received a copy of
the Agreement, together with copies of the financial statements referred
to in Section [5.13] [6.07] thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Designation Agreement; (ii) agrees that it
will, independently and without reliance upon the Agent, the Designator or
any other Bank or Designated Bidder and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Agreement;
(iii) confirms that it is an entity qualified to be a Designated Bidder;
(iv) appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under the Agreement as are delegated to
the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (v) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of
the Agreement are required to be performed by it as a Designated Bidder;
and (vi) specifies as its Lending Office with respect to Bid Loans (and
address for notices) the office(s) set forth beneath its name on the
signature page hereof.
4. Following the execution of this Designation Agreement by
the Designator and its Designee, it will be delivered to the Agent for
acceptance by the Agent. The effective date of this Designation Agreement
shall be the date of acceptance thereof by the Agent, unless otherwise
specified on the signature page hereto (the "Effective Date").
5. Upon such acceptance and recording by the Agent, as of the
Effective Date, the Designee shall be a party to the Agreement as a
"Designated Bidder" with a right to make Bid Loans pursuant to Section
2.06 of the Agreement and the rights and obligations of a Designated
Bidder related thereto.
6. This Designation Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this
Designation Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above written.
Effective Date*:
________________, ____ [NAME OF DESIGNATOR]
By: _________________________
Title: ______________________
[NAME OF DESIGNEE]
By: _________________________
Title: ______________________
Lending Office (and
address for notices)
[Address]
Accepted this ___ day
of ____________, ____
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By: ___________________
Vice President
___________________
* This date should be no earlier than the date of acceptance by the
Agent.
<PAGE>
EXHIBIT 10.L
EMPLOYMENT AGREEMENT
THIS RESTATED EMPLOYMENT AGREEMENT ("Agreement") is entered into
effective as of the close of business on January 2, 1996 by
Louisiana-Pacific Corporation, a Delaware corporation, having its
principal offices at 111 S.W. Fifth Avenue, Portland, Oregon 97204 (the
"Company"), and Mark A. Suwyn, presently residing at 86 Clearview Lane,
New Canaan, Connecticut 06840 (the "Executive"). This Agreement is a
restatement of, and supersedes, the employment agreement previously
entered into by the Company and the Executive as of the same date.
RECITALS
A. The Company desires to obtain the services of the Executive as the
chairman and the chief executive officer of the Company; and
B. The Executive desires to provide his services to the Company on
the terms and conditions herein provided.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
(a) "Base Salary" means the salary provided for in section 4(a) below,
as such amount may be adjusted hereunder.
(b) "Board" means the Board of Directors of the Company or an
authorized committee thereof.
(c) "Cause" means that, prior to any termination pursuant to
Section 5(f), the Executive shall have:
(i) committed an act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment
with the Company or any Subsidiary (excluding good faith acts
relating to expense reimbursements and similar matters);
(ii) committed an act of willful misconduct having a
material adverse effect on the business or property of the
Company and its Subsidiaries;
(iii) continuing to fail to devote substantially the whole
of his business time to the business and affairs of the Company
and its Subsidiaries (excluding reasonable amounts of time
devoted to charitable purposes, passive investments and other
directorships and periods in which he is physically or mentally
ill or injured) after written notice (within the prior 90 days)
to the Executive of his failure to be doing so;
(iv) made any Unauthorized Disclosure; or
(v) engaged in any Competitive Activity.
Notwithstanding the foregoing, the Executive will not be deemed to have been
terminated for "Cause" hereunder unless and until there shall have been
delivered to the Executive a copy of a resolution finding Cause duly adopted
by the Board after reasonable notice to the Executive and an opportunity for
the Executive (together with his counsel if the Executive so chooses) to be
heard before the Board. In addition, no resolution finding Cause will be
valid unless the Board adopts such resolution within 90 days of the date on
which the Board becomes aware of the acts or events giving rise to such
finding. Nothing herein will limit the right of the Executive or his
beneficiaries to contest the validity or propriety of any finding of Cause.
(d) "Change in Control" means:
(i) The Company is merged, consolidated or reorganized
into or with another corporation or other legal person, and as a
result of such merger, consolidation or reorganization less than
a majority of the combined voting power of the then-outstanding
Voting Stock of such corporation or person immediately after such
transaction is held in the aggregate by the holders of Voting
Stock of the Company immediately prior to such transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other
legal person, and as a result of such sale or transfer less than
a majority of the combined voting power of the then-outstanding
Voting Stock of such corporation or person immediately after such
sale or transfer is held in the aggregate by the holders of
Voting Stock of the Company immediately prior to such sale or
transfer;
(iii) There is a report filed on Schedule 13D or
Schedule 14D-l (or any successor schedule, form or report), each
as promulgated pursuant to the Exchange Act, disclosing that any
person (as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become the beneficial
owner (as the term "beneficial owner" is defined under Rule 13d-3
or any successor rule or regulation promulgated under the
Exchange Act) of securities representing 25% or more of the
combined voting power of the then-outstanding Voting Stock of the
Company;
(iv) The Company files a report or proxy statement with
the Securities and Exchange Commission pursuant to the Exchange
Act disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) that a change
in control of the Company has occurred or will occur in the
future pursuant to any then-existing contract or transaction; or
(v) If, during any period of two consecutive years,
individuals who at the beginning of any such period constitute
the Board cease for any reason to constitute at least a majority
thereof; provided, however, that for purposes of this clause (v)
each member of the Board who is first elected, or first nominated
for election by the Company's stockholders, by a vote of at least
two-thirds of the Board (or a committee thereof) then still in
office who were members of the Board at the beginning of any such
period will be deemed to have been a member of the Board at the
beginning of such period.
Notwithstanding the foregoing, unless otherwise determined in a specific case
by the Board, a "Change in Control" shall not be deemed to have occurred for
purposes of this Agreement solely because (A) the Company, (B) a Subsidiary,
or (C) any Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company or any Subsidiary either files or becomes
obligated to file a report or a proxy statement under or in response to
Schedule 13D, Schedule 14D-l, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Exchange Act disclosing
beneficial ownership by it of shares of Voting Stock, whether in excess of 50%
or otherwise, or because the Company reports that a change in control of the
Company has occurred or will occur in the future by reason of such beneficial
ownership.
(e) "Competitive Activity" means the Executive's active participation,
without the written consent of the Company based on the approval of the Board,
in the management of any business enterprise if such enterprise engages in
substantial and direct competition with the Company and such enterprise's
sales of any product or service competitive with any product or service of the
Company amounted to 5% of such enterprise's net sales for its most recently
completely fiscal year and if the Company's net sales of said product or
service amounted to 5% of the Company's net sales for its most recently
completed fiscal year. "Competitive Activity" will not include (i) the mere
ownership of not more than 2.0% of any class of the securities of any such
enterprise and the exercise of rights appurtenant thereto or
(ii) participation in the management of any such enterprise other than
directly in connection with the competitive operations of such enterprise.
(f) "Disability" means the Executive's inability, as a result of mental
or physical illness, injury or disease, to perform substantially his material
duties and responsibilities under this Agreement for a period of 180
consecutive days within any 12-month period.
(g) "Employee Benefits" means the perquisites, benefits and service
credit for benefits as provided under any and all employee retirement income
and welfare benefit policies, plans, programs or arrangements in which
Executive is entitled to participate, including without limitation any stock
option, stock purchase, stock appreciation, savings, pension, supplemental
executive retirement, or other retirement income or welfare benefit, deferred
compensation, incentive compensation, group or other life, health,
medical/hospital or other insurance (whether funded by actual insurance or
self-insured by the Company), disability, salary continuation, expense
reimbursement and other employee benefit policies, plans, programs or
arrangements that may now exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the Company,
providing perquisites, benefits and service credit for benefits at least as
great in the aggregate as are payable thereunder on the date hereof.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Good Reason" means the occurrence of one or more of the following
events during the Term of Employment:
(i) Failure to elect or reelect or otherwise to maintain
the Executive in the office of chief executive officer and
chairman of the Board of the Company (or any successor thereto);
(ii) (A) A reduction in the Executive's Base Salary
received from the Company and any Subsidiary, or (B) the
termination or denial of the Executive's rights to any Employee
Benefits (other than employee stock options or similar
equity-based benefits) or a reduction in the scope or value
thereof, any of which is not remedied by the Company within
10 calendar days after receipt by the Company of written notice
from the Executive of such reduction or termination, as the case
may be;
(iii) The liquidation, dissolution, merger, consolidation
or reorganization of the Company or transfer of all or
substantially all of its business and/or assets, unless the
successor or successors (by liquidation, merger, consolidation,
reorganization, transfer or otherwise) to which all or
substantially all of its business and/or assets have been
transferred (directly or by operation of law) assumed all
obligations of the Company under this Agreement pursuant to
Section 9(a);
(iv) The Company relocates its principal executive
offices, or requires the Executive to have his principal location
of work changed, to any location that is in excess of 25 miles
from the location thereof on the date hereof (other than any
relocation recommended or approved by the Executive), or
requires the Executive to travel away from his office in the
course of discharging his responsibilities or duties hereunder at
least 20% more (in terms of aggregate days in any calendar year
or in any calendar quarter when annualized for purposes of
comparison to any prior year) than was required of Executive in
any of the three immediately preceding calendar years in either
case, his prior written consent; or
(v) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the Company
or any successor thereto which is not remedied by the Company (or
such successor) within 10 calendar days after receipt by the
Company of written notice from the Executive of such breach.
(i) "Subsidiary" means an entity in which the Company directly or
indirectly beneficially owns 50% or more of the outstanding Voting Stock.
(k) "Term of Employment" means the period specified in Section 2
hereof.
(l) "Unauthorized Disclosure" means the Executive's willful disclosure
in bad faith to any person or entity, other than an employee or other agent or
representative of the Company or any Subsidiary, or a person or entity to whom
disclosure is reasonably necessary or appropriate in response to legal
process, in accordance with applicable regulatory requirements or in
connection with the performance by the Executive of his duties hereunder,
without the prior approval of the Board, of any confidential information
obtained by the Executive while in the employ of the Company with respect to
the Company's business or any other business carried on by the Company or any
Subsidiary, the disclosure of which the Executive knows or reasonably should
know may be materially damaging to the Company and its Subsidiaries.
(m) "Voting Stock" means securities entitled to vote generally in the
election of directors.
2. Term of Employment. The Company hereby employs the Executive as
the chairman and the chief executive officer of the Company, and the Executive
hereby accepts such employment, effective as of the close of business on
January 2, 1996 and ending at the close of business on December 31, 1998;
provided that thereafter the Term of Employment will automatically be extended
for successive one-year periods unless either party gives written notice to
the other, not less than 90 calendar days prior to the otherwise scheduled
expiration of the Term of Employment, that it or he does not want the Term of
Employment to so extend. The Executive will devote substantially the whole of
his business time to the business and affairs of, and to advance the best
interests of, the Company and its Subsidiaries (excluding reasonable amounts
of time devoted to charitable purposes, passive investments and other
directorships and periods in which he is physically or mentally ill or
injured).
3. Duties and Responsibilities. During the Term of Employment, the
Executive will have and perform such duties and responsibilities commensurate
with his position as the chairman and the chief executive officer as are
customary for chairmen and chief executive officers of public companies,
including those as may from time to time be assigned by the Board, subject to
any terms or conditions of this Agreement which will restrict or limit such
duties and responsibilities. The Executive will report directly to the Board
with respect to such duties and responsibilities, and all other employees of
the Company will report through him to the Board. It is the intention of the
parties that the Executive will be elected to the position of, and serve as,
the chairman of the Board throughout the Term of Employment.
4. Compensation and Benefits. (a) Base Salary. During the Term of
Employment, the Executive will receive a Base Salary of $600,000 per year;
subject to annual review by the Board for increase (but not decrease) each
year during the Term of Employment commencing with 1997. Such Base Salary
will be payable by the Company in accordance with its regular compensation
practices and policies.
(b) Annual Performance Bonus. The Executive, upon satisfying
reasonable annual performance goals established by the Board or a committee
thereof, shall be entitled to an annual bonus, payable no later than the end
of the first quarter of the following fiscal year. Such bonus if the targeted
performance goals are achieved shall be not less than $400,000 for the 1996
fiscal year and 70 percent of Base Salary for each fiscal year thereafter
during the Term of Employment. Higher or lower bonuses may be paid upon
achievement of specified greater or lesser goals than the targeted goals. The
Board may, if it so elects, establish a bonus plan subject and pursuant to
Code Section 162(m) for purposes of fulfilling the aforesaid obligations. The
Executive agrees that if the Board so elects, the obligation to pay an annual
bonus as aforesaid shall be conditioned upon stockholder approval of such plan
in accordance with the requirements of Code Section 162(m). While such plan
may provide for committee discretion to reduce the bonus amounts specified if
the targeted performance goals are achieved, any reduction below the amounts
specified above if the targeted performance goals are achieved shall be deemed
a breach of the obligation of this Section 4(b). Any achieved bonus shall be
deemed earned and vested as of the end of the fiscal year for which it is
earned.
(c) Replacement Bonus for 1995. The Company will pay the Executive a
replacement bonus equal to $600,000 reduced (but not below zero) by the amount
of any annual performance bonus payable to the Executive by International
Paper Company ("IP") for 1995. Such replacement bonus will be payable by the
Company on or prior to February 15, 1996 in accordance with its regular
compensation practices and policies.
(d) Stock Options. The Executive will receive a grant under the
Company's 1991 Stock Option Plan (the "Option Plan") of options to purchase
200,000 shares of Common Stock of the Company. Such options will be granted
as of the close of business on January 2, 1996 and will have an exercise price
per share equal to the closing price per share of such Common Stock quoted on
the New York Stock Exchange on such date. Such options will become
cumulatively vested and exercisable as to 20% of the options on each of the
first five anniversaries of January 1, 1996 and will become 100% vested and
exercisable upon a Change in Control, a change of control as defined in the
Option Plan, the termination of the Term of Employment by the Company pursuant
to Section 2 or the Executive's death, Disability, termination by the
Executive for Good Reason or termination by the Company without Cause;
provided in each case that the Executive is employed by the Company on the
date of such event; and provided further that the vesting of such options will
cease upon the termination of the Term of Employment by the Executive pursuant
to Section 2 or the Executive's termination by the Executive without Good
Reason or termination by the Company for Cause. For purposes of the one year
employment requirement in Section 5(i) of the Option Plan, a termination of
employment by the Executive for Good Reason will be deemed a constructive
discharge by the Company and hence not a violation of such Section.
Notwithstanding the foregoing, such options will not be exercisable in any
event after the tenth anniversary of the date of grant.
(e) Restricted Stock. The Executive will receive from the Company
within 30 days a grant of 150,000 restricted shares of Common Stock of the
Company. The Executive's rights to 30,000 shares of such restricted stock
will become cumulatively vested and nonforfeitable on each of the first three
anniversaries of January 1, 1996 and will become 100% vested and
nonforfeitable upon a Change in Control, a change of control as defined in the
Option Plan, the termination of the Term of Employment by the Company pursuant
to Section 2 or the Executive's death, Disability, termination by the
Executive for Good Reason or termination by the Company without Cause;
provided in each case that the Executive is employed by the Company on the
date of such event; and provided further that the vesting of such restricted
stock will cease upon the termination of the Term of Employment by the
Executive pursuant to Section 2 or the Executive's termination by the
Executive without Good Reason or termination by the Company for Cause. The
Executive's rights to 60,000 shares of such restricted stock will become 100%
vested and nonforfeitable upon a Change in Control, a change of control as
defined in the Option Plan, the termination of the Term of Employment by the
Company pursuant to Section 2 or the Executive's attainment of age 62,
termination by the Executive for Good Reason or termination by the Company
without Cause; provided in each case that the Executive is employed by the
Company on the date of such event; and provided further that the vesting of
such restricted stock will cease upon the termination of the Term of
Employment by the Executive pursuant to Section 2 or the Executive's death,
Disability, termination by the Executive without Good Reason or termination by
the Company for Cause. The restricted stock agreement evidencing such grant
will provide for either registration rights of the Executive, a put by the
Executive to the Company or other means by which the Executive will be
reasonably able to sell the restricted stock upon its vesting at the then
market price without expenses other than brokerage commissions.
(f) Supplemental Executive Retirement Benefit. The Executive will be
entitled to receive a nonqualified supplemental executive retirement benefit
from the Company, which he shall be immediately vested in to the extent
accrued. The annual benefit payable to Executive (calculated as a single life
annuity on an unreduced basis starting at age 62 and actuarially reduced from
age 62 if commencing prior to age 62 or paid in a form other than a single
life annuity) will equal the greater of I and II, reduced by III, where I, II
and III are as follows:
I equals the lesser of (i) and (ii), reduced by (iii), where (i), (ii)
and (iii) are as follows:
(i) equals the product of (A) 3.25 percent of the
Executive's Compensation for the calendar year during the three
consecutive completed calendar years prior to termination of the
Executive's employment (the "Determination Date") in which the
Executive had the highest Compensation (the "Highest
Compensation") (where Compensation shall mean the Executive's
Base Salary and annual performance bonus paid for that calendar
year, including without limitation any of the above amounts
deferred pursuant to a salary reduction agreement pursuant to
Code Section 125 or 401(k) or electively pursuant to a
nonqualified deferred compensation arrangement and any portion of
the annual performance bonus earned for the calendar year non-
electively deferred, provided that for 1996 Compensation shall be
deemed not to be less than $1,000,000 and the 1996 calendar year
shall be deemed a completed prior calendar year), multiplied by
(B) the number of years (including fractions thereof) that the
Executive is employed by the Company and previously was employed
by IP (the "Benefit Servicer").
(ii) equals 50 percent of the Executive's Highest
Compensation.
(iii) equals the product of:
(A) 3.25 percent of the Executive's
Primary Social Security Benefit multiplied by the
number of years of Benefit Service projected to
age 65, subject to a maximum of 50 percent of the
Executive's Primary Social Security Benefit,
multiplied by
(B) the ratio of Benefit Service at
the Determination Date to Benefit Service projected
to age 65.
II equals 25 percent of the Executive's Highest Compensation.
III equals the sum of the single life annuity actuarial equivalent on the
Determination Date of the annual benefit payable to the Executive, if any,
under the primary qualified retirement plan maintained by the Company, the
primary qualified retirement plan maintained by IP and the Unfunded
Supplemental Retirement Plan for Senior Managers of IP.
Such benefit will be payable by the Company to the Executive or, in the
event of his death, his beneficiary (which unless he elects otherwise in
writing shall be his spouse, if married or, if not, his estate) commencing
30 days after the Executive's termination of employment with the Company and
all Subsidiaries in the form of a single life annuity, a joint and 50 percent
survivor annuity, installments over two to 15 years or a single lump sum
payment, as timely elected by the Executive in a manner established by the
Company that permits the Executive maximum flexibility but avoids constructive
receipt. If no election is made, such payment shall be payable in the form of
a lump sum. If the Executive dies prior to his termination of employment, his
beneficiary (as indicated above) shall receive in a single lump sum 30 days
after such death an amount equal to 50 percent of the lump sum the Executive
would have received if he received his benefits in a lump sum as of such date.
The actuarial assumptions to be used for this Section 4(f) shall be those in
effect for the Company's primary qualified retirement plan (or, if such plan
is not a defined benefit plan, the actuarial assumptions then promulgated by
the Pension Benefit Guaranty Corporation for calculating single lump sum
payments), provided that with regard to reductions pursuant to III above, the
actuarial equivalents, if any, in the plan being offset shall be utilized.
(g) Relocation Benefits. The Company will pay the Executive a
relocation bonus on or prior to February 15, 1996 in an amount such that,
after payment by the Executive of all income, employment, excise and other
applicable taxes on such bonus, the Executive will retain $100,000. The
Executive also will receive standard relocation benefits applicable to senior
executive officers of the Company, including payment or reimbursement of
reasonable temporary housing costs, closing costs, costs of moving household
belongings and automobiles and up to one year of storage costs. In addition,
if the Executive is unable to sell his current Connecticut residence after
three months of reasonable sales efforts (for a price net of all applicable
expenses and commissions of at least $2,400,000), the Company will engage a
relocation company to purchase such residence (net of all applicable expenses
and commissions) for not less than the Executive's invested cost up to
$2,400,000. Such relocation benefits will be payable by the Company in
accordance with its regular compensation practices and policies.
(h) Employee Benefit Plans and Perquisites. During the Term of
Employment, the Executive will be entitled (i) to participate in all employee
benefit plans, programs, policies and arrangements sponsored, maintained or
contributed to by the Company, subject to and in accordance with the terms and
conditions of such plans, programs, policies and arrangements as they relate
to senior executive officers of the Company, (ii) to participate in all equity
and long-term incentive plans sponsored or maintained by the Company at a
level commensurate with his position, and (iii) to receive all other benefits
and perquisites provided or made available by the Company to its senior
executive officers including long-term disability coverage providing benefits
of not less than 60% of current Base Salary from the onset of disability,
subject to and in accordance with the terms and conditions of such benefits
and perquisites as they relate to similarly situated senior executive officers
of the Company.
(i) Expenses. During the Term of Employment, the Executive will be
entitled to reimbursement of all documented reasonable travel and
entertainment expenses incurred by him on behalf of the Company in the course
of the performance of his duties hereunder in accordance with the expense
reimbursement policies applicable to senior executive officers of the Company.
(j) Vacation. During the Term of Employment, the Executive will be
entitled to not less than four weeks of vacation, in addition to paid public
holidays as observed by the Company from year to year, in accordance with its
regular compensation practices and policies applicable to senior executive
officers of the Company.
(k) Indemnification. During and after the Term of Employment, the
indemnification provisions of the Bylaws of the Company will not be amended in
any manner that would reduce or limit the Executive's rights to
indemnification thereunder for his actions or inactions as an officer or
director of the Company or any of its Subsidiaries, and legal fees will be
advanced as incurred under any such indemnity. In addition, at all times
during and after the Term of Employment, the Company will cause the Executive
to be covered for his actions and inactions as an officer and director of the
Company and its Subsidiaries by directors' and officers' liability insurance
in at least the same amount and on the same terms and conditions as maintained
for then current officers and directors of the Company.
5. Termination of Employment. (a) Termination by the Executive
Notice. Subject to Sections 5(b) (c), (d), (e) and (f), the Executive's
employment hereunder will be for the Term of Employment specified in
Section 2. If the Term of Employment is terminated following notice by the
Executive pursuant to Section 2, the Executive will only be entitled to the
compensation and benefits provided in Section 5(g).
(b) Termination for Cause. Subject to Section l(c), the Company may,
with or without notice, terminate the Executive's employment hereunder for
Cause. If the Executive's employment is terminated by the Company effective
during the Term of Employment for Cause, the Executive will only be entitled
to the compensation and benefits provided in Section 5(g).
(c) Termination without Cause, for Good Reason or by the Company by
Notice. If the Term of Employment is terminated following notice by the
Company pursuant to Section 2, or if the Executive's employment is terminated
effective during the Term of Employment by the Executive for Good Reason or by
the Company for any reason other than Cause or Disability:
(i) the Executive will be entitled to the compensation
and benefits provided in Section 5(g);
(ii) the Executive will receive his Base Salary, at the
rate in effect on the effective date of his termination of
employment, for the remainder of the Term of Employment or for a
period of 24 months from the date of such termination, whichever
is longer;
(iii) the Executive will be entitled to receive (within
10 days after the date of such termination) a bonus equal to the
targeted annual performance bonus, if any, payable pursuant to
Section 4(b) for the year of such termination multiplied by a
fraction, the numerator of which is the number of calendar days
during such year through the date of termination, and the
denominator of which is 365. Notwithstanding the foregoing, in
the event that the requirement of payment under the foregoing
portion of this subsection (iii) would cause the annual bonus in
a year in which the Executive's employment does not terminate to
be treated as not contingent upon achievement of performance
goals under Code Section 162(m), the following shall apply in
lieu of the foregoing: the Executive will receive at the time
bonuses are paid for the fiscal year of termination to other
executives (but in any event prior to the end of three months
after the end of such fiscal year), a pro rata bonus based on the
relative period of the year he worked to the full year and the
level of performance goals achieved during the full fiscal year
(provided that if the bonus is discretionary it shall be based
upon the target bonus level); and
(iv) the Company will pay the cost of any continuation
coverage (within.the meaning of Section 4980B of the Internal
Revenue Code of 1986, as amended (the "Code")) timely elected by
the Executive and any of his eligible dependents for the lesser
of 18 months or the period of time during which the Executive is
eligible to receive such coverage.
(d) Death or Disability. If the Executive's employment is terminated
effective during the Term of Employment as a result of his death or by the
Company as a result of his Disability:
(i) the Executive will be entitled to the compensation
and benefits provided in Section 5(g);
(ii) the Executive (or, in the event of his death, his
designated beneficiary) will be entitled to receive (within
10 days after the date of such termination) a bonus equal to the
targeted annual performance bonus, if any, payable pursuant to
Section 4(b) for the year of such termination; and
(iii) the Executive (in the event of his Disability) will
receive his Base Salary, at the rate in effect on his termination
of employment, for a period of 24 months from the date of such
termination, less any amounts paid to the Executive under any
long-term disability plan, program, policy or arrangement to the
extent paid for by the Company.
(e) Voluntary Termination. If the Executive's employment is terminated
by the Executive effective during the Term of Employment for any reason other
than Good Reason (which right the Executive will have), the Executive will
only be entitled to the compensation and benefits provided in Section 5(9).
(f) Termination following a Change in Control. If a Change in Control
occurs during the Term of Employment and the Executive's employment terminates
at any time during the 13-month period beginning on the date of the first
occurrence of such Change in Control for any reason other than Cause or the
Executive's death or Disability (including without limitation by the Executive
with or without Good Reason):
(i) the Executive will be entitled to the compensation
and benefits provided in Section 5(g);
(ii) the Executive will receive his Base Salary, at the
rate in effect on the effective date of his termination of
employment, for the remainder of the Term of Employment or for a
period of 24 months from the date of such termination, whichever
is longer;
(iii) the Executive will be entitled to receive (within
10 days after the date of such termination) a bonus equal to the
targeted annual performance bonus, if any, payable pursuant to
Section 4(b) for the year of such termination multiplied by a
fraction, the numerator of which is the number of calendar days
during such year through the date of termination, and the
denominator of which is 365;
(iv) the Executive will be entitled to receive a bonus
equal to two times the targeted annual performance bonus, if any,
payable pursuant to Section 4(b) for the year of such
termination, which will be payable in equal monthly installments
for a period of 24 months from the date of such termination; and
(v) for a period of 24 months following the date of such
termination, the Company will arrange to provide the Executive
with Employee Benefits that are welfare benefits (but not stock
option, stock purchase, stock appreciation or similar
compensatory benefits) substantially similar to those that the
Executive was receiving or entitled to receive immediately prior
to the date of such termination, except that the level of any
such Employee Benefits to be provided to the Executive may be
reduced in the event of a corresponding reduction generally
applicable to all recipients of or participants in such Employee
Benefits. In addition, the Executive will be credited with two
additional years of employment with the Company for purposes of
the nonqualified supplemental executive retirement benefit
described in Section 4(f).
(g) Compensation and Benefits on Termination. Except as otherwise
provided in Section 5(c), 5(d) or 5(f):
(i) all compensation and benefits payable to the
Executive pursuant to Section 4 hereof (other than compensation
and benefits previously earned and, if applicable, vested under
the terms of this Agreement or any other applicable employee
benefit plan, program, policy, arrangement or agreement,
including without limitation any achieved annual performance
bonus for a completed fiscal year (including without limitation
any amount due as a result of a breach of Section 4(b) for a
completed fiscal year), the replacement bonus described in
Section 4(c), the relocation bonus and benefits described in
Section 4(g) and the supplemental executive retirement benefit
payable pursuant to Section 4(f), all of which will be deemed
earned and vested) will terminate as of the effective date of the
Executive's termination of employment; and
(ii) the Executive will not be entitled to, and hereby
waives, any claims for compensation or benefits (other than
compensation and benefits previously earned and, if applicable,
vested under the terms of this Agreement or any other applicable
employee benefit plan, program, policy, arrangement or agreement)
payable after such effective date and for damages arising in
connection with his termination of employment pursuant to this
Agreement.
(h) No Mitigation. The Executive will not be obliged to seek out other
employment or otherwise to mitigate any damages arising in connection with his
termination of employment, and, except as expressly provided herein, no
amounts payable to the Executive under this Section 5 will be subject to
offset or reduction based on amounts payable to the Executive by or from any
other person or entity.
6. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event that this Agreement becomes operative and it is determined (as hereafter
provided) that any payment or distribution by the Company or any of its
affiliates to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan,
program or arrangement, including without limitation any stock option, stock
appreciation-right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code by reason of being considered "contingent on a change in ownership or
control" of the Company, within the meaning of Section 28OG of the Code (or
any successor provision thereto) or to any similar tax imposed by state or
local law, or any interest or penalties with respect to such tax (such tax or
taxes, together with any such interest and penalties, being hereafter
collectively referred to as the "Excise Tax"), then the Executive will be
entitled to receive an additional payment or payments (collectively, a
"Gross-Up Payment"); provided, however, that no Gross-up Payment will be made
with respect to the Excise Tax, if any, attributable to (i) any incentive
stock option, as defined by Section 422 of the Code ("ISO") granted prior to
the execution of this Agreement, or (ii) any stock appreciation or similar
right, whether or not limited, granted in tandem with any ISO described in
clause (i). The Gross-Up Payment will be in an amount such that, after
payment by the Executive of all income, employment, excise and other
applicable taxes (including any interest or penalties imposed with respect to
such taxes), including any Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payment.
(b) Subject to the provisions of Section 6(f), all determinations
required to be made under this Section 6, including whether an Excise Tax is
payable by the Executive and the amount of such Excise Tax and whether a
Gross-Up Payment is required to be paid by the Company to the Executive and
the amount of such Gross-Up Payment, if any, will be made by a nationally
recognized accounting firm (the "Accounting Firm") selected by the Executive
in his sole discretion. The Executive will direct the Accounting Firm to
submit its determination and detailed supporting calculations to both the
Company and the Executive within 30 calendar days after the Termination Date,
if applicable, and any such other time or times as may be requested by the
Company or the Executive. If the Accounting Firm determines that any Excise
Tax is payable by the Executive, the Company will pay the required Gross-Up
Payment to the Executive within five business days after receipt of such
determination and calculations with respect to any Payment to the Executive.
If the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall, at the same time as it makes such determination, furnish
the Company and the Executive an opinion that the Executive has substantial
authority not to report any Excise Tax on his federal, state or local income
or other tax return. As a result of the uncertainty in the application of
Section 4999 of the Code (or any successor provision thereto) and the
possibility of similar uncertainty regarding applicable state or local tax law
at the time of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made (an "Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts or
fails to pursue its remedies pursuant to Section 6(f) and the Executive
thereafter is required to make a payment of any Excise Tax, the Executive will
direct the Accounting Firm to determine the amount of the Underpayment that
has occurred and to submit its determination and detailed supporting
calculations to both the Company and the Executive as promptly as possible.
Any such Underpayment will be promptly paid by the Company to, or for the
benefit of, the Executive within five business days after receipt of such
determination and calculations.
(c) The Company and the Executive will each provide the Accounting Firm
access to and copies of any books, records and documents in the possession of
the Company or the Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the determinations and
calculations contemplated by Section 6(b). Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment will be binding upon
the Company and the Executive.
(d) The federal, state and local income or other tax returns filed by
the Executive will be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive will make proper payment of the amount of any
Excise Payment, and at the request of the Company, provide to the Company true
and correct copies (with any amendments) of his federal income tax return as
filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and such
other documents reasonably requested by the Company, evidencing such payment.
If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive will within five business days pay to the Company the amount of such
reduction.
(e) The reasonable fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated
by Section 6(b) will be borne by the Company. If such fees and expenses are
initially paid by the Executive, the Company will reimburse the Executive for
such fees and expenses within five business days after receipt from the
Executive of a statement therefor and reasonable evidence of his payment
thereof.
(f) The Executive will notify the Company in writing of any claim by
the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by the Company of a Gross-Up Payment.
Such notification will be given as promptly as practicable but no later than
10 business days after the Executive actually receives notice of such claim
and the Executive will further apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid (in each case, to the
extent known by the Executive). The Executive will not pay such claim prior
to the earlier of (i) the expiration of the 30-calendar-day period following
the date on which he gives such notice to the Company and (ii) the date that
any payment of amount with respect to such claim is due. If the Company
notifies the Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive will:
(i) provide the Company with any written records or
documents in his possession relating to such claim reasonably
requested by the Company;
(ii) take such action in connection with contesting such
claim as the Company may reasonably request in writing from time
to time, including without limitation accepting legal
representation with respect to such claim by an attorney
competent in respect of the subject matter and reasonably
selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company will
bear and pay directly all costs and expenses (including interest
and penalties) incurred in connection with such contest and will
indemnify and hold harmless the Executive, on an after-tax basis,
for and against any Excise Tax or income tax, including interest
and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without
limiting the foregoing provisions of this Section 6(f), the
Company will control all proceedings taken in connection with the
contest of any claim contemplated by this Section 6(f) and, at
its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim (provided, however, that the
Executive may participate therein at his own cost and expense)
and may, at its option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such
contest (at the Company's expense) to a determination before any
administrative tribunal, in a court of initial jurisdiction and
in one or more appellate courts, as the Company may determine;
provided, however, that if the Company directs the Executive to
pay the tax claimed and sue for a refund, the Company will
advance the amount of such payment to the Executive on an
interest-free basis and will indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income or
other tax, including interest or penalties with respect thereto,
imposed with respect to such advance; and provided further,
however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the
Executive with respect to which the contested amount is claimed
to be due is limited solely to such contested amount.
Furthermore, the Company's control of any such contested claim
will be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive will be
entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing
authority.
(g) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 6(f), the Executive receives any refund with
respect to such claim, the Executive will (subject to the Company's complying
with the requirements of Section 6(f)) promptly pay to the Company the amount
of such refund (together with any interest paid or credited thereon after any
taxes applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 6(f), a determination is
made that the Executive will not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial or refund prior to the expiration of 30 calendar
days after such determination, then such advance will be forgiven and will not
be required to be repaid and the amount of any such advance will offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid by the
Company to the Executive pursuant to this Section 6.
7. Competitive Activity. During the Term of Employment, the Executive
will not engage, directly or indirectly, in any Competitive Activity. During
any period after the Term of Employment with respect to which the Executive is
receiving severance payments or otherwise is continuing to receive payments
pursuant to Section 5(c)(ii), 5(c)(iv), 5(d)(iii), 5(f)(ii), 5(f)(iv) or
5(f)(v), the Executive will not engage, directly or indirectly, in any
Competitive Activity unless the Executive waives and releases his rights to
any such payments due for periods thereafter.
8. Unauthorized Disclosure. During the Term of Employment and
thereafter, the Executive will not make any Unauthorized Disclosure.
9. Successors and Binding Agreement. (a) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance reasonably
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. This Agreement
will be binding upon and inure to the benefit of the Company and any successor
to the Company, including without limitation any persons acquiring directly or
indirectly all or substantially all.of the business or assets of the Company
whether by purchase, merger, consolidation, reorganization or otherwise (and
such successor will thereafter be deemed the "Company" for the purposes of
this Agreement), but will not otherwise be assignable, transferable or
delegable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties
hereto will, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in Sections 9(a) and 9(b). Without limiting the generality or effect
of the foregoing, the Executive's right to receive payments hereunder will not
be assignable, transferable or delegable, whether by pledge, creation of a
security interest, or otherwise, other than by a transfer by Executive's will
or by the laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 9(c), the Company will have no
liability to pay any amount so attempted to be assigned, transferred or
delegated.
10. Additional Remedies.
(a) Notwithstanding any other remedy herein provided for or available,
if the Executive should be in breach of any of the provisions of Section 7 or
8, the company will be entitled to injunctive relief or specific performance,
without the necessity of proving damages, in addition to any other remedies it
may have.
(b) Notwithstanding the foregoing, in the event of any disputes
regarding the interpretation or application of this Agreement, either the
Executive or the Company, or both parties, may request in writing that such
dispute be resolved through final and binding arbitration. The parties will
jointly select the arbitrator who will hear such dispute. If the parties
cannot agree,on the selection of an arbitrator, the parties will request that
one be appointed by the American Arbitration Association. The arbitration
will be conducted in accordance with the rules of the American Arbitration
Association, and the arbitrator will be instructed to permit discovery by the
parties in accordance with the rules of the Federal courts. The decision of
the arbitrator may be entered in any court having jurisdiction. Each party
will pay its own legal fees, costs and expenses in connection with any such
dispute or procedure, except that the Company will promptly pay the reasonable
documented legal fees, costs and expenses of the Executive in connection with
any such dispute or procedure in which the Executive prevails as to any amount
being due him. In addition, the Company will pay the reasonable documented
legal fees (at regular hourly rates), costs and expenses of the Executive (not
to exceed $10,000) in connection with the negotiation and preparation of this
Agreement.
11. Each party represents and warrants that it is fully authorized and
empowered to enter into this Agreement and that the performance of its
obligations under this Agreement will not violate any agreement between it and
any other person or entity. The Company acknowledges that the Executive has
informed it that he has an agreement with IP not to solicit employees of IP
for a period of 18 months.
12. Severability. In the event that any provision or portion of this
Agreement is determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement will be
unaffected thereby and will remain in full force and effect to the fullest
extent permitted by law.
13. Notices. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals,
required or permitted to be given hereunder will be in writing and will be
deemed to have been duly given when hand delivered or dispatched by electronic
facsimile transmission (with receipt thereof orally confirmed), or five
business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight courier
service such as Federal Express or UPS, addressed to the Company (to the
attention of the Secretary of the Company) at its principal executive office
and to the Executive at his principal residence (with a copy to Michael S.
Sirkin of Proskauer, Rose, Goetz & Mendelsohn, 1585 Broadway, New York,
New York 10036 or any other counsel designated by the Executive), or to such
other addressed as any party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address will be
effective only upon receipt.
14. Modifications and Waivers. No provision of this Agreement may be
modified or discharged unless such modification or discharge is authorized by
the Board and is agreed to in writing, signed by the Executive and by an
officer of the Company duly authorized by the Board. No waiver by either
party hereto of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other party will be deemed
a waiver of similar or dissimilar provisions or conditions at the time or at
any prior or subsequent time.
15. Entire Agreement. This Agreement constitutes the entire
understanding of the parties hereto with respect to its subject matter, except
as such parties may otherwise agree in a writing which specifies that it is an
exception to the foregoing. This Agreement supersedes all prior agreements
between the parties hereto with respect to its subject matter and,
notwithstanding any other provision hereof, will become effective upon the
execution of this Agreement by the parties.
16. Governing Law. This Agreement will be governed by the laws of the
State of Delaware without regard for its conflict of laws rules.
17. Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which will be deemed to be an original but all
of which together will constitute one and the same instrument.
18. Headings, Etc. The section headings contained in this Agreement
are for convenience of reference only and will not be deemed to control or
affect the meaning or construction of any provision of this Agreement.
References to Sections are to Sections in this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
LOUISIANA-PACIFIC CORPORATION
By: /s/ LEE C. SIMPSON
President
EXECUTIVE
/s/ MARK A. SUWYN
<PAGE>
EXHIBIT 10.M
RESTRICTED STOCK AWARD AGREEMENT
This RESTRICTED STOCK AWARD AGREEMENT ("Award Agreement") is entered into
effective as of January 31, 1996, between Louisiana-Pacific Corporation, a
Delaware corporation ("Company"), and Mark A. Suwyn, Chairman and Chief
Executive Officer of the Company ("Executive").
WHEREAS, the Company and the Executive have entered into an Employment
Agreement dated as of January 2, 1996 ("Employment Agreement"), pursuant to
which the Executive became Chairman and Chief Executive Officer of the
Company; and
WHEREAS, the Employment Agreement provides, among other matters, that the
Executive will receive from the Company, within 30 days of the date of the
Employment Agreement, a grant of 150,000 restricted shares of common stock of
the Company; and
WHEREAS, the parties have entered into this Award Agreement in order to
evidence the grant and award of restricted shares pursuant to the Employment
Agreement;
NOW, THEREFORE, the parties agree as follows:
Section 1. Definitions.
"Certificate" means a stock certificate representing Restricted Shares.
"Common Stock" means shares of common stock, $1.00 par value, of the
Company.
"Restricted Shares" means the shares of Common Stock issued to Executive
pursuant to this Award Agreement and, unless the context otherwise requires,
includes any shares of Common Stock or other equity security of the Company
(or any successor issuer) issued in respect of the Restricted Shares as a
stock dividend, stock split, or similar distribution, or issued in exchange or
substitution therefore by reason of any reorganization, recapitalization,
merger, or other similar transaction.
"Securities Act" means the Securities Act of 1933, as amended.
"Vest," "Vested," or any similar word, means, with respect to the
Restricted Shares represented by any Certificate, the expiration or
termination of the period during which the Restricted Shares may be forfeited
pursuant to Section 3(d) hereof and during which transfer of the Restricted
Shares is restricted pursuant to Section 4(b) hereof.
Other capitalized terms used in this Award Agreement without definition
shall have the meanings ascribed thereto in the Employment Agreement.
Section 2. Award of Restricted Shares.
The Company has, effective the date of this Award Agreement, granted and
awarded to the Executive, subject to possible forfeiture as provided in
Section 3(d) hereof, 150,000 Restricted Shares initially represented by four
Certificates as follows:
Certificate Number of Shares Scheduled Date of Vesting
- ----------- ---------------- -------------------------
1 30,000 January 1, 1997
2 30,000 January 1, 1998
3 30,000 January 1, 1999
4 30,000 January 1, 2004
The Certificate numbers referred to above are used for convenient reference
only, it being understood that each Certificate shall bear a number assigned
by the Company's transfer agent.
Section 3. Vesting and Forfeiture.
(a) Unless sooner Vested or forfeited, the Restricted Shares evidenced
by each Certificate (including, without limitation, any Restricted Shares
issued in respect of the shares originally represented thereby) will become
Vested and non-forfeitable on the respective dates set forth in Section 2;
provided, in each case, that the Executive is employed by the Company on such
date.
(b) Unless sooner Vested or forfeited, the Restricted Shares evidenced
by Certificates 1, 2, and 3 (including, without limitation, any Restricted
Shares issued in respect of the shares originally represented thereby) will
become immediately Vested and non-forfeitable upon the occurrence of any one
of the following: a Change in Control, a "change of control" as defined in
the Option Plan, the termination of the Term of Employment by the Company
pursuant to Section 2 of the Employment Agreement, the Executive's death or
Disability, termination of employment by the Executive for Good Reason, or
termination of employment by the Company without Cause; provided, in each
case, that the Executive is employed by the Company on the date of such event.
(c) Unless sooner Vested or forfeited, the Restricted Shares evidenced
by Certificate 4 (including, without limitation, any Restricted Shares issued
in respect of the shares originally represented thereby) will become Vested
and non-forfeitable upon the occurrence of any of the following: a Change in
Control, a "change of control" as defined in the Option Plan, the termination
of the Term of Employment by the Company pursuant to Section 2 of the
Employment Agreement, termination of employment by the Executive for Good
Reason, or termination of employment by the Company without Cause; provided,
in each case, that the Executive is employed by the Company on the date of
such event.
(d) Upon the termination of Executive's employment with the Company,
the rights of the Executive with respect to any Restricted Shares which are
not Vested pursuant to paragraph (a), (b), or (c) above on or prior to the
date of such termination shall be forfeited and shall revert to the ownership
of the Company.
Section 4. Rights as Stockholder; Restrictions on Transfer.
(a) Except as expressly provided in this Award Agreement, the
Executive shall be entitled to all rights as a stockholder with respect to the
Restricted Shares, including the right to vote the Restricted Shares and to
receive any dividends and other distributions with respect to the Restricted
Shares; provided, however, that certain dividends and distributions, as
specified in Section 1 hereof, shall themselves constitute Restricted Shares,
subject to possible forfeiture as provided herein.
(b) None of the Restricted Shares, the Certificates representing
Restricted Shares, or the Executive's rights with respect thereto under this
Award Agreement may be sold, assigned, pledged, or otherwise transferred,
disposed of, or encumbered, voluntarily or involuntarily, until they have
become Vested. Any purported sale, assignment, pledge, or other transfer,
disposition, or encumbrance of Restricted Shares in violation of this Award
Agreement shall be null and void.
(c) Each Certificate for Restricted Shares shall be issued in the name
of the Executive and shall be held by the Company until the Restricted Shares
represented thereby have become Vested or until such Restricted Shares are
forfeited, as provided in this Award Agreement. The Executive shall execute
and deliver to the Company a stock transfer power with respect to the
Restricted Shares. All Certificates for Restricted Shares that have not
become Vested shall bear a legend in substantially the following form:
"The shares evidenced by this Certificate were issued as
Restricted Shares pursuant to a Restricted Stock Award
Agreement dated as of January 31, 1996, and are subject to
possible forfeiture and restrictions on transfer, disposition,
or encumbrance until [scheduled date of vesting] pursuant to
the terms of said agreement."
When any Restricted Shares become Vested, they shall no longer be subject to
possible forfeiture pursuant to Section 3(d), the transfer thereof shall no
longer be restricted by the provisions of Section 4(b), and the Company shall
promptly cause a new Certificate or Certificates representing such shares to
be issued in the name of the Executive, without the foregoing legend, and
shall deliver such Certificate or Certificates to the Executive.
Section 5. Income Taxes.
The Company shall have the right to withhold from any amounts payable to
the Executive, as compensation or otherwise, or to require the Executive to
make other provision satisfactory to the Company for payment of an amount
sufficient to satisfy all federal, state, and local withholding tax
requirements with respect to the award or the Vesting of the Restricted
Shares. The Company shall not be obligated to deliver any Certificates to the
Executive until any such withholding or payment requirement shall have been
satisfied. The Executive agrees to promptly notify the Company if the
Executive makes an election under Section 83(b) of the Internal Revenue Code
with respect to any of the Restricted Shares.
Section 6. Securities Law Restrictions.
(a) The Executive acknowledges that the Restricted Shares have not
been registered under the Securities Act or any applicable state securities
law, and that the Restricted Shares may not be sold or otherwise transferred
in the absence of an effective registration statement under the Securities Act
or an available exemption from such registration, and upon compliance with the
requirements of any applicable state securities law. The Executive further
acknowledges that transfer of shares owned by affiliates of the Company is
restricted under the Securities Act. The Executive represents that the
Restricted Shares are being acquired for his own account without any view to
the distribution thereof.
(b) All Certificates for the Restricted Shares shall bear the
following legend:
"The securities represented hereby have not been
registered under the Securities Act of 1933, and they may not
be sold or otherwise transferred in the absence of an
effective registration statement under the Securities Act of
1933 or an available exemption from such registration."
(c) At any time after the Vesting of Restricted Shares, upon the
written request of the Executive or, if he is deceased, his estate, the
Company shall prepare and file a registration statement under the Securities
Act covering an offering and sale of such number of Vested Restricted Shares
as shall have been requested by the Executive or his estate, and shall use its
reasonable efforts to cause such registration statement to become effective;
provided, however, that the Company shall not be required to prepare and file
more than four registration statements pursuant to this Award Agreement.
(d) Notwithstanding the provisions of paragraph (c), the Company shall
not be obligated to file a registration statement with respect to the sale of
Restricted Shares (i) if the Company shall deliver to the Executive (or to his
estate if he is deceased) an opinion of counsel to the effect that the
proposed sale of the Restricted Shares for which registration was requested
does not require registration under the Securities Act, or that such sale may
be effected immediately pursuant to the exemption from registration afforded
by Rule 144 or any similar exemption, or (ii) if the Company shall undertake
to purchase and purchases the Restricted Shares for which registration is
requested, on a date specified by the Company (not later than 30 days after
the date of the Executive's or his estate's request), at a price per share
equal to the reported closing price for a share of Common Stock (or any
successor security) on the New York Stock Exchange (or if not traded on the
New York Stock Exchange, on the principal market on which Common Stock (or any
successor security) is then traded) for the last day immediately preceding the
date of purchase on which Common Stock (or any successor security) is traded.
(e) Whenever Restricted Shares are to be registered hereunder:
(i) The parties shall cooperate in supplying one
another with all information and documents as may be
reasonably necessary in connection with such registration and
shall execute and deliver such representations, indemnity
agreements, underwriting agreements, and other undertakings as
are reasonable and customary in connection with similar
transactions.
(ii) The Company shall prepare and file a registration
statement and such exhibits, amendments, and supplements
thereto as may be necessary to cause such registration
statement to become effective as promptly as reasonably
practicable and to remain effective for a reasonable period of
time not exceeding 30 days; provided, however, that the
Company may, in its discretion, delay the filing or
effectiveness of a registration statement for a reasonable
time not exceeding 180 days if, in the good faith judgment of
its board of directors, the filing or effectiveness of such
registration statement would be unreasonably detrimental to
the interests of the Company.
(iii) The Company shall prepare such prospectuses and
other documents as may be reasonably required in connection
with such registration and shall register or qualify the
Restricted Shares covered by such registration statement under
such blue sky laws as may be reasonably necessary, and do such
other acts as may be reasonably necessary or advisable in
order to enable the Executive to consummate the sale of the
Restricted Shares.
(iv) The Company shall pay all expenses in connection
with the registration, other than underwriters' discounts,
brokers' commissions, or similar fees.
Section 7. Miscellaneous.
(a) Subject to the restrictions on transfer of the Restricted Shares
set forth herein, this Award Agreement shall be binding upon and benefit the
parties hereto and their respective successors and assigns.
(b) Any notices under this Award Agreement shall be in writing and
shall be effective if given as provided in the Employment Agreement.
(c) This Award Agreement will be governed by the laws of the state of
Delaware without regard to its conflict of laws rules.
(d) This Award Agreement (together with the Employment Agreement to
the extent referred to herein) constitutes the entire understanding of the
parties with respect to the subject matter hereof, and supersedes all prior
agreements between the parties hereto with respect to its subject matter.
This Award Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original, but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Award
Agreement as of the date first set forth above.
LOUISIANA-PACIFIC CORPORATION
By /s/ LEE C. SIMPSON
Title President
EXECUTIVE
/s/ MARK A. SUWYN
<PAGE>
EXHIBIT 10.N
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of July 28, 1995, between Louisiana-
Pacific Corporation, a Delaware corporation ("Employer") and Donald R. Kayser
("Employee").
W I T N E S E T H:
WHEREAS, Employer desires to retain the services of Employee on an
interim basis and Employee desires to be employed by Employer upon the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the agreements herein contained,
Employer and Employee hereby agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby
agrees to serve, as interim Chief Executive Officer ("CEO") of Employer and
Chairman of the Employer's Board of Directors (the "Board"), for the term
hereinafter set forth.
2. TERM. Employee shall be employed by and shall serve as Chairman
and CEO for the period commencing July 28, 1995 and ending on the earlier of
(a) January 29, 1996, or (b) the date Employer employs a new chief executive
officer (the "Term of Employment"). Extensions of the Term of Employment will
be negotiable.
3. SALARY. As compensation for Employee's services hereunder, during
the Term of Employment Employer shall pay Employee an annual base salary of
$600,000, payable pursuant to Employer's regular payroll practices. Should
the Term of Employment last less than six months, Employer shall pay Employee
a single sum equal to $300,000, less the aggregate of all base salary payments
made to Employee hereunder, no later than ten days after the end of the Term
of Employment.
4. PHANTOM STOCK DEFERRED PAYMENT BENEFIT. Employee shall be entitled
to receive phantom stock payments as follows:
(a) Employer shall pay Employee the "appreciation" (as
defined below) on 25,000 phantom shares of common stock of
Louisiana-Pacific Corporation ("L-P common stock"), on the
earlier of August 1, 1996, or the day after Employee ceases to be
CEO of Employer.
(b) Employer shall pay Employee the "appreciation" on
25,000 phantom shares of L-P common stock on August 1, 1997.
The "appreciation" in value of a phantom share shall be equal to the
excess, if any, of (i) the mean of the closing price per share for L-P common
stock on the New York Stock Exchange for the 20 trading days ending on the day
before the date of payment, over (ii) $24.625, the closing price for a share
of L-P common stock on July 31, 1995. In the event the amount in clause (i)
is equal to or less than the amount in clause (ii), no payment shall be made.
The number of shares for which phantom stock payments are made and the
formula for determining "appreciation" shall be appropriately adjusted to
reflect any stock dividend, stock split, recapitalization, etc.
In the event L-P common stock shall be converted into cash or other
securities by reason of a merger or other transaction or in the event there is
any extraordinary distribution of cash or securities in respect of L-P common
stock, then there shall be substituted for the amount referred to in
clause (i) above (in the case of any such conversion or any extraordinary
distribution following which L-P common stock does not remain outstanding in
the hands of its then existing stockholders) or there shall be added to the
amount in clause (i) (in the event of any extraordinary distribution following
which L-P common stock remains outstanding in the hands of its then existing
stockholders) the value of the cash or securities received by L-P stockholders
in respect of one share of L-P common stock on the date so received, plus
interest on such amount at the prime rate from the date so received until the
date on which payment of appreciation is to be made.
5. EMPLOYEE BENEFITS. During the Term of Employment, Employee shall
be entitled to coverage under Employer's customary employee benefits package
applicable to individuals who are both executive officers and board members of
Employer; provided, however, that key employee whole life insurance (Crown
Life Insurance) shall not be included.
6. VACATION. During the Term of Employment, Employee shall be
entitled to four weeks' paid vacation during Employer's May 1 through April 30
vacation year (or a pro rata portion thereof if the Term of Employment is less
than 12 months), pursuant to the terms of Employer's applicable vacation pay
policies.
7. HOUSING ALLOWANCE. During the Term of Employment, Employer shall
provide Employee with a monthly $2,500 housing allowance and Employer shall be
responsible for the cost of all related required deposits.
8. AUTOMOBILE. Employer shall, at Employer's option, lease or
purchase an automobile for Employee's use, pursuant to Employer's applicable
automobile policies, during the Term of Employment. Employer shall be
responsible for all operating costs and expenses associated with maintaining
said automobile during the Term of Employment.
8. REIMBURSEMENT OF EXPENSES. Employee shall be entitled to be
reimbursed for travel and other expenses incurred by Employee during the Term
of Employment in connection with Employee's services rendered pursuant to this
Agreement.
9. APPLICABLE LAW. Any dispute arising under this Agreement shall be
governed by the laws of the State of Oregon.
IN WITNESS WHEREOF, Employer and Employee have caused this Agreement to
be executed and entered into as of the date first set forth above.
LOUISIANA-PACIFIC CORPORATION
("EMPLOYER")
By /s/ WILLIAM L. HEBERT
Treasurer and
Chief Financial Officer
DONALD R. KAYSER
("EMPLOYEE")
/s/ DONALD R. KAYSER
<PAGE>
EXHIBIT 10.O
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of July 28, 1995, between Louisiana-
Pacific Corporation, a Delaware corporation ("Employer") and Lee C. Simpson
("Employee").
W I T N E S E T H:
WHEREAS, Employer desires to retain the services of Employee on an
interim basis and Employee desires to be employed by Employer upon the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the agreements herein contained,
Employer and Employee hereby agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby
agrees to serve, as interim President and Chief Operating Officer ("COO") of
Employer, for the term hereinafter set forth.
2. TERM. Employee shall be employed by and shall serve as President
and COO for the period commencing July 28, 1995 and ending on the earlier of
(a) January 29, 1996, or (b) the date a permanent chief executive officer of
Employer no longer requires Employee's services (the "Term of Employment").
Extensions of the Term of Employment will be negotiable.
3. SALARY. As compensation for Employee's services hereunder, during
the Term of Employment Employer shall pay Employee an annual base salary of
$540,000, payable pursuant to Employer's regular payroll practices. Should
the Term of Employment last less than six months, Employer shall pay Employee
a single sum equal to $270,000, less the aggregate of all base salary payments
made to Employee hereunder, no later than ten days after the end of the Term
of Employment.
4. PHANTOM STOCK DEFERRED PAYMENT BENEFIT. Employee shall be entitled
to receive phantom stock payments as follows:
(a) Employer shall pay Employee the "appreciation" (as
defined below) on 22,500 phantom shares of common stock of
Louisiana-Pacific Corporation ("L-P common stock"), on the
earlier of August 1, 1996, or the day after Employee ceases to be
President and COO of Employer.
(b) Employer shall pay Employee the "appreciation" on
22,500 phantom shares of L-P common stock on August 1, 1997.
The "appreciation" in value of a phantom share shall be equal to the
excess, if any, of (i) the mean of the closing price per share for L-P common
stock on the New York Stock Exchange for the 20 trading days ending on the day
before the date of payment, over (ii) $24.625, the closing price for a share
of L-P common stock on July 31, 1995. In the event the amount in clause (i)
is equal to or less than the amount in clause (ii), no payment shall be made.
The number of shares for which phantom stock payments are made and the
formula for determining "appreciation" shall be appropriately adjusted to
reflect any stock dividend, stock split, recapitalization, etc.
In the event L-P common stock shall be converted into cash or other
securities by reason of a merger or other transaction or in the event there is
any extraordinary distribution of cash or securities in respect of L-P common
stock, then there shall be substituted for the amount referred to in
clause (i) above (in the case of any such conversion or any extraordinary
distribution following which L-P common stock does not remain outstanding in
the hands of its then existing stockholders) or there shall be added to the
amount in clause (i) (in the event of any extraordinary distribution following
which L-P common stock remains outstanding in the hands of its then existing
stockholders) the value of the cash or securities received by L-P stockholders
in respect of one share of L-P common stock on the date so received, plus
interest on such amount at the prime rate from the date so received until the
date on which payment of appreciation is to be made.
5. EMPLOYEE BENEFITS. During the Term of Employment, Employee shall
be entitled to coverage under Employer's customary employee benefits package
applicable to individuals who are both executive officers and board members of
Employer; provided, however, that key employee whole life insurance (Crown
Life Insurance) shall not be included.
6. VACATION. During the Term of Employment, Employee shall be
entitled to four weeks' paid vacation during Employer's May 1 through April 30
vacation year (or a pro rata portion thereof if the Term of Employment is less
than 12 months), pursuant to the terms of Employer's applicable vacation pay
policies.
7. HOUSING ALLOWANCE. During the Term of Employment, Employer shall
provide Employee with a monthly $2,500 housing allowance and Employer shall be
responsible for the cost of all related required deposits.
8. AUTOMOBILE. Employer shall, at Employer's option, lease or
purchase an automobile for Employee's use, pursuant to Employer's applicable
automobile policies, during the Term of Employment. Employer shall be
responsible for all operating costs and expenses associated with maintaining
said automobile during the Term of Employment.
8. REIMBURSEMENT OF EXPENSES. Employee shall be entitled to be
reimbursed for travel and other expenses incurred by Employee during the Term
of Employment in connection with Employee's services rendered pursuant to this
Agreement.
9. APPLICABLE LAW. Any dispute arising under this Agreement shall be
governed by the laws of the State of Oregon.
IN WITNESS WHEREOF, Employer and Employee have caused this Agreement to
be executed and entered into as of the date first set forth above.
LOUISIANA-PACIFIC CORPORATION
("EMPLOYER")
By /s/ WILLIAM L. HEBERT
Treasurer and
Chief Financial Officer
LEE C. SIMPSON
("EMPLOYEE")
/s/ LEE C. SIMPSON
<PAGE>
EXHIBIT 10.P
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of August 1, 1995, between Louisiana-
Pacific Corporation, a Delaware corporation ("Employer") and Stephen Grant
("Employee").
W I T N E S E T H:
WHEREAS, Employer desires to retain the services of Employee and Employee
desires to be employed by Employer upon the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the agreements herein contained,
Employer and Employee hereby agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby
agrees to serve, as Senior Vice President - Compliance of Employer, for the
term hereinafter set forth.
2. TERM. Employee shall be employed by and shall serve as Senior Vice
President - Compliance for the period commencing August 1, 1995 and ending on
January 31, 1996 (the "Term of Employment"). The Term of Employment shall
thereafter be automatically extended to the earlier of the date a permanent
chief executive officer of Employer either (a) no longer requires Employee's
services, or (b) establishes a permanent position for Employee which is
acceptable to Employee.
3. SALARY. As compensation for Employee's services hereunder, during
the Term of Employment Employer shall pay Employee an annual base salary of
$375,000, payable pursuant to Employer's regular payroll practices. Should
the Term of Employment last less than six months, Employer shall pay Employee
a single sum equal to $187,500, less the aggregate of all base salary payments
made to Employee hereunder, no later than ten days after the end of the Term
of Employment.
4. PHANTOM STOCK DEFERRED PAYMENT BENEFIT. Employee shall be entitled
to receive phantom stock payments as follows:
(a) Employer shall pay Employee the "appreciation" (as
defined below) on 15,000 phantom shares of common stock of
Louisiana-Pacific Corporation ("L-P common stock"), on the
earlier of August 1, 1996, or the day after Employee ceases to be
Senior Vice President - Compliance of Employer.
(b) Employer shall pay Employee the "appreciation" on
15,000 phantom shares of L-P common stock on August 1, 1997.
The "appreciation" in value of a phantom share shall be equal to the
excess, if any, of (i) the mean of the closing price per share for L-P common
stock on the New York Stock Exchange for the 20 trading days ending on the day
before the date of payment, over (ii) $24.625, the closing price for a share
of L-P common stock on July 31, 1995. In the event the amount in clause (i)
is equal to or less than the amount in clause (ii), no payment shall be made.
The number of shares for which phantom stock payments are made and the
formula for determining "appreciation" shall be appropriately adjusted to
reflect any stock dividend, stock split, recapitalization, etc.
In the event L-P common stock shall be converted into cash or other
securities by reason of a merger or other transaction or in the event there is
any extraordinary distribution of cash or securities in respect of L-P common
stock, then there shall be substituted for the amount referred to in
clause (i) above (in the case of any such conversion or any extraordinary
distribution following which L-P common stock does not remain outstanding in
the hands of its then existing stockholders) or there shall be added to the
amount in clause (i) (in the event of any extraordinary distribution following
which L-P common stock remains outstanding in the hands of its then existing
stockholders) the value of the cash or securities received by L-P stockholders
in respect of one share of L-P common stock on the date so received, plus
interest on such amount at the prime rate from the date so received until the
date on which payment of appreciation is to be made.
5. EMPLOYEE BENEFITS. During the Term of Employment, Employee shall
be entitled to coverage under Employer's customary employee benefits package
applicable to individuals who are executive officers of Employer; provided,
however, that key employee whole life insurance (Crown Life Insurance) shall
not be included.
6. VACATION. During the Term of Employment, Employee shall be
entitled to four weeks' paid vacation during Employer's May 1 through April 30
vacation year (or a pro rata portion thereof if the Term of Employment is less
than 12 months), pursuant to the terms of Employer's applicable vacation pay
policies.
7. HOUSING ALLOWANCE. During the Term of Employment, Employer shall
provide Employee with a monthly $2,500 housing allowance and Employer shall be
responsible for the cost of all related required deposits.
8. AUTOMOBILE. Employer shall, at Employer's option, lease or
purchase an automobile for Employee's use, pursuant to Employer's applicable
automobile policies, during the Term of Employment. Employer shall be
responsible for all operating costs and expenses associated with maintaining
said automobile during the Term of Employment.
9. REIMBURSEMENT OF EXPENSES. Employee shall be entitled to be
reimbursed for travel and other expenses incurred by Employee during the Term
of Employment in connection with Employee's services rendered pursuant to this
Agreement.
10. APPLICABLE LAW. Any dispute arising under this Agreement shall be
governed by the laws of the State of Oregon.
IN WITNESS WHEREOF, Employer and Employee have caused this Agreement to
be executed and entered into as of the date first set forth above.
LOUISIANA-PACIFIC CORPORATION
("EMPLOYER")
By /s/ WILLIAM L. HEBERT
Treasurer and
Chief Financial Officer
STEPHEN GRANT
("EMPLOYEE")
/s/ STEPHEN GRANT
<PAGE>
EXHIBIT 10.Q
January 29, 1996
Mr. Donald R. Kayser
Louisiana-Pacific Corporation
111 S.W. Fifth Avenue
Portland, Oregon 97204
Re: Consulting Agreement
Dear Mr. Kayser:
1. Engagement. Louisiana-Pacific Corporation ("L-P") hereby agrees to
engage you as a consultant ("Consultant") to L-P pursuant to the terms of this
agreement ("Agreement"), and Consultant agrees to perform said consulting
services.
2. Term.
(a) This Agreement shall commence on January 30, 1996, and shall
remain in full force and effect until April 30, 1996.
(b) Upon the expiration of this Agreement, neither L-P nor
Consultant shall have any liability or obligation to the other, except for (i)
the obligation of L-P to pay Consultant any due and payable consulting fee
pursuant to Section 4 for his consulting services rendered to L-P prior to the
expiration of this Agreement, and (ii) the obligation of L-P to reimburse
expenses incurred by Consultant pursuant to Section 6, all of which shall
survive the expiration of this Agreement.
3. Consulting Services. Consultant shall provide consulting services
to L-P as requested by the Chairman and Chief Executive Officer which shall
include advice on transitional issues and other mutually agreeable projects.
As may be requested by L-P, Consultant shall provide L-P with monthly
statements setting forth in reasonable detail the consulting services that
Consultant provided to L-P during the prior month.
4. Compensation. L-P shall pay Consultant a retainer fee of $22,500
for consulting services during the term of this Agreement, payable at the rate
of one-third (1/3) of that amount on each of February 28, 1996, March 31,
1996, and April 30, 1996. Such retainer entitles L-P to consulting services
of five (5) days per month beginning February 1, 1996, or an aggregate of 15
days for the term of this Agreement. In the event that Consultant performs
more than 15 days of consulting services during the term of this Agreement at
the request of L-P, such additional services shall be paid at the rate of
$1,500 per day.
5. Nature of Relationship. Consultant shall perform his consulting
services hereunder in the capacity of an independent contractor and not as an
employee or agent of L-P. In the performance of his consulting services under
this Agreement, Consultant shall not be considered as being employed by L-P
for any purpose, including, without limitation, with respect to employee
benefits
<PAGE>
Mr. Donald R. Kayser
January 29, 1996
Page Two
generally applicable to L-P employees. L-P shall carry no workers
compensation insurance or health or accident insurance for Consultant. L-P
shall pay no amounts on account of Consultant for purposes of Social Security,
unemployment insurance or federal or state withholding taxes, and L-P shall
not provide any other contributions or benefits for Consultant which might be
expected in the context of an employer-employee relationship.
6. Expenses. During the term of this Agreement, L-P shall be
responsible for Consultant's reasonable expenses incurred in performing his
consulting services hereunder, including expenses for travel, telephone, mail
and similar items, and transportation expenses between Consultant's primary
office in Boise, Idaho and Portland, Oregon. In addition, during the term of
this Agreement, L-P shall provide to Consultant appropriate office space and
services at the corporate office of L-P in Portland, Oregon, the exclusive use
of the apartment leased by L-P at 1500 S.W. Fifth Avenue and exclusive use of
the Buick Park Avenue automobile leased by L-P (or a suitable substitute).
7. Parties Bound. The rights and obligations of L-P under this
Agreement shall inure to the benefit of and shall be binding upon its
successors and assigns.
8. Governing Law. Any dispute arising under this Agreement shall be
governed by the laws of the State of Oregon.
9. Limitation of Liability of Consultant. Consultant shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
L-P in connection with the matters to which this Agreement relates, except a
loss resulting from gross negligence or willful misconduct on Consultant's
part in the performance of his consulting services hereunder.
LOUISIANA-PACIFIC CORPORATION
/s/ MARK A. SUWYN
Chairman and Chief Executive Officer
AGREED AND ACCEPTED:
/s/ DONALD R. KAYSER
DATE: ______________________
<PAGE>
EXHIBIT 10.R
CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated as of the 11th day of August, 1995 (this
"Agreement"), by and among Louisiana-Pacific Corporation, a Delaware
corporation (the "Company"), and James Eisses (the "Consultant").
W I T N E S E T H:
WHEREAS, the Company desires the Consultant to render consulting services
to it; and
WHEREAS, the Consultant is willing to provide such consulting services to
the Company.
NOW, THEREFORE, in consideration of the premises, and on the terms and
conditions herein contained, the parties hereto agree as follows:
1. Engagement. The Company hereby engages the Consultant to provide
consulting services to the Company pursuant to the terms and conditions of
this Agreement and the Consultant hereby agrees to provide such services for
the Company.
2. Term.
(a) Unless sooner terminated pursuant to paragraph (b) or (c) of this
Section 2, this Agreement shall remain in full force and effect for the period
commencing on August 1, 1995, and
ending on December 31, 1997.
(b) The Company may terminate this Agreement only upon
gross negligence or willful misconduct by Consultant in performing services
under this Agreement.
(c) Upon the termination of this Agreement upon written notice pursuant
to this Section 2, neither the Company nor the Consultant shall have any
liability or obligation to the other, except for (i) the obligation of the
Company to pay the Consultant any due and payable consulting fee pursuant to
Section 5 for hi.s consulting services rendered for the Company prior to the
termination of this Agreement, (ii) the obligation of the Company to reimburse
expenses incurred by the Consultant pursuant to Section 6 and (iii) the
confidentiality obligation of the Consultant pursuant to Section 7, all of
which shall survive such termination.
3. Consulting Services.
(a) The Consultant shall provide consulting services to the Company as
requested thereby. Consultant shall not be required to devote more than 84
hours per month providing actual consulting services under this Agreement,
(b) As requested, Consultant shall provide the Company with quarterly
statements setting forth in reasonable detail the consulting services that the
Consultant provided to the Company hereunder during the prior quarter.
4. Nature of Relationship. The Consultant shall perform his
consulting services hereunder in the capacity of an independent contractor and
not as an employee or agent of the Company. Any provision to the contrary in
this Agreement notwithstanding, the Consultant shall have no power or
authority to execute or otherwise enter into any agreement on behalf of, or in
any way to bind, the Company. The Consultant shall not be considered as being
employed by the Company for any purpose, including without limitation, with
respect to employee benefits generally applicable to the Company's employees.
The Company shall carry no workers' compensation insurance or health or
accident insurance for the Consultant. The Company shall pay no amounts on
account of the Consultant for purposes of Social Security, unemployment
insurance or federal or state withholding taxes, and the Company shall not
provide any other contributions or benefits for the Consultant which might be
expected in the context of an employer-employee relationship.
5. Compensation. The Company shall pay the Consultant a consulting
retainer fee of $33,333.00 per month, payable on the first day of each month
beginning on August 1, 1995, and continuing thereafter until December 31,
1995, and thereafter at $11,111.00 per month until this Agreement shall be
terminated pursuant to Section 2; provided, however, that if a payment date
falls on a Saturday, Sunday or a day on which the Company's offices in
Portland, Oregon are closed, the consulting fee shall be paid on the next
succeeding business day of the Company. In the event of Consultant's death or
disability prior to December 31, 1997, all remaining consulting payments shall
be paid on a monthly basis to Consultant's estate or administrator.
6. Expenses. During the term of this Agreement, the Company shall be
responsible for Consultant's reasonable expenses incurred in performing his
consulting services hereunder, including expenses for travel, telephone, mail
and similar items.
7. Confidentiality and Non-Disclosure. The Consultant acknowledges
that during the course of performing his consulting services hereunder, he may
be exposed to and given confidential investment, financial, operational,
marketing and other information about the Company and certain of its
operations. The Consultant hereby agrees that he will not in any way, form or
manner disclose any such confidential information to any entity or person for
any reason, except that the Consultant may disclose any such information to
his associates, agents and representatives as necessary in order for the
Consultant to render the consulting services described herein. Any provision
of this Agreement to the contrary notwithstanding, the foregoing
confidentiality obligation shall not apply to:
(a) Information which is or becomes public information other than due
to the Consultant's breach of his duty of confidentiality hereunder;
(b) Information which has been or is obtained by the Consultant from
other persons or entities which to the best knowledge of the Consultant are
not thereby violating any duty of confidentiality to the Company; or
(c) Information required to be disclosed by the Consultant under
applicable law if the Consultant determines in-good faith that the Consultant
is required to disclose such information and the Consultant gives prior
written notice to the Company of such requirement prior to disclosing such
information.
8. Noncompetition.
(a) During the term of this Agreement, the Consultant shall not, within
any jurisdiction in which the Company or any of its affiliates is duly
qualified to do business, or within any marketing area, which shall in no
event be larger than a state, in which the Company or any of its affiliates is
doing a substantial amount of business, directly or indirectly own, manage,
operate, control, be employed by or participate in the ownership, management,
operation or control of, or be connected in any manner with, any business of
the type and character engaged in and competitive with that conducted by the
Company. The decision of the Company's Board of Directors as to what
constitutes a competing business shall be final and binding upon the
Consultant. For these purposes, the Consultant's ownership of securities of a
public company not in excess of one percent (it) of any class of such
securities shall not be considered to be competition with the Company.
(b) During the term of this Agreement, the Consultant agrees to refrain
from interfering with the employment relationship between the Company and its
employees by soliciting any of such individuals to participate in independent
business ventures and agrees to refrain from soliciting business from any
client or prospective client of the Company for the Consultant's benefit or
for any entity in which the Consultant has an interest or is employed.
(c) It is the desire and intent of the parties hereto that the
provisions of this Section 8 shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. The Consultant hereby agrees that upon his
actual or threatened breach or violation of the commitments and obligations
contained in this Section 8, the Company shall be entitled to seek both
preliminary and permanent injunctive relief, in any action or proceeding
brought in an appropriate court having jurisdiction over the Consultant, to
restrain him from committing any violation of said commitments and
obligations.
9. Non-Assignability. Except as provided in Paragraph 5 above,
neither the Consultant nor the Company shall have any right to anticipate,
alienate, sell, assign, transfer, pledge, encumber or otherwise dispose of any
right, interest, benefit or payment under this Agreement and any attempted
anticipation, alienation, sale, assignment, transfer, pledge, encumbrance or
other disposition of any of such rights, interest, benefits or payments
contrary to the provisions hereof shall be null and void and without effect.
All rights, interests, benefits and payments under this Agreement shall, to
the maximum extent permitted by law, be exempt from the claims of any creditor
or other person prior to the actual receipt thereof by the person entitled to
receive the same hereunder.
10. Entire Agreement. This Agreement constitutes and embodies the full
and complete understanding and agreement of the parties hereto with respect to
the subject matter hereof, supersedes all prior understandings and agreements,
oral or written, and cannot be changed or amended except by the written
agreement of the Consultant and the Company. This Agreement is not intended
to confer upon any person other than the parties hereto, and, solely for
purposes of Section 13, those persons described in Section 13, any rights or
remedies hereunder.
11. Parties Bound. The rights and obligations of the Company under
this Agreement shall inure to the benefit of and shall be binding upon its
successors and assigns.
12. Governing Law. Any dispute arising under this Agreement shall be
governed by the laws of the State of Idaho, and the situs of any action shall
be the Federal or State courts in Coeur d'Alene, Idaho.
13. Limitation of Liability of Consultant. Neither the Consultant nor
his associates, agents or representatives shall be liable for any error of
judgment or mistake of law or for any loss suffered by the Company in
connection with the matters to which this Agreement relates, except a loss
resulting from gross negligence or willful misconduct on the Consultant's part
in the performance of his consulting services hereunder.
14. Notices. All notices, statements, instructions or documents
required to be provided pursuant to this Agreement shall be in writing and
shall be given either personally or by mailing the same in a sealed envelope,
first-class mail, postage prepaid and either certified or registered, return
receipt requested, addressed to, or sent by telegram, telex, telecopy or
similar form of telecommunication (with a copy to follow by mail in the manner
described above):
If to the Company, at:
Louisiana-Pacific Corporation
111 S.W. 5th Avenue
Portland, Oregon 97204
Attention: General Counsel
Telecopy: (503) 796-0105
If to the Consultant, at:
Mr. James Eisses
E. 3060 Crestwood Court
Coeur d'Alene, Idaho 83814
Telecopy: (208) 772-1784
and:
Mr. Dan DeRuyter
Douglas Eden Phillips & DeRuyter
422 West Riverside, Suite 909
Spokane, Washington 99201
Telecopy: (509) 455-5348
Either party hereto may from time to time change its address for
communications under this Section 14 by giving written notice of such changed
address to the other party hereto, which change shall become effective for
purposes of this Section 14 seven (7) days following receipt of such notice.
15. Severability. If any provision of this Agreement (or part thereof)
shall be held to be invalid or unenforceable under applicable law, the
invalidity or unenforceability thereof shall not affect the validity or
enforceability of the remaining provisions hereof and each such other
provision (or the remainder of such provision) shall, to the full extent
consistent with applicable law, continue in full force and effect.
16. Books and Records. The Consultant hereby agrees that all books and
records relating in any manner to the business of the Company, and all other
files, books and records and other materials owned by the Company or used by
it in connection with the conduct of its business, whether prepared by the
Consultant or otherwise coming into the Consultant's possession, shall be the
exclusive property of the Company regardless of which party prepared the
original material, books or records. All such books, records and other
materials shall be returned immediately to the Company upon the termination of
the Consultant's services hereunder.
17. Headings. The headings of the Sections of this Agreement are
intended for convenience of reference only and not to constitute a part hereof
or otherwise to be indicative of the scope or content of the Sections of this
Agreement.
18. Execution of Agreement. This Agreement may be executed in
counterparts.
<PAGE>
IN WITNESS WHEREOF, the Company and the Consultant have caused this
Agreement to be executed and entered into as of the date first set forth
above.
LOUISIANA-PACIFIC CORPORATION
By __________________________
Its _________________________
JAMES EISSES - CONSULTANT
/s/ JAMES EISSES
<PAGE>
EXHIBIT 10.S
Louisiana-Pacific Corporation
Legal Department
111 S.W, Fifth Avenue
Portland, Oregon 97204
503/221-0800
Fax 503/796-0105
Anton C. Kirchhof/General Counsel
Christopher M. (Kit) Keyes/Assistant General Counsel
Bert P. Krages II
Christopher J. Biencourt
Douglas P. Anderson
Lauri A. Newton
Blaire Rose Rios
August 4, 1995
Mr. Harry A. Merlo
2141 S.W. Scholls Ferry Road
Portland, Oregon 97221
Dear Mr. Merlo:
This Agreement sets forth your agreement with Louisiana-Pacific
Corporation (the "Company") with respect to the termination of your employment
therefor and Director's status therewith:
1. Resignation. Effective July 28, 1995 at 4:00 p.m., Central
Standard Time, you have resigned from your positions as Chairman of the Board
of Directors of the Company (the "Board"), Board member and Employee, and any
position, including without limitation, Director, Officer, Employee, Agent, or
fiduciary of any affiliate of the Company or of any entity or trust for whom
you were serving as such at the request of the Company. Your pay through date
is September 15, 1995.
2. Special Retirement Benefit. The Company shall make a single sum
payment to you by check in the amount of $3.2 Million, plus an additional
amount representing your accrued and unused vacation, all amounts less
applicable tax withholdings, no later than August 4, 1995.
3. Stock Options and Employee Benefit Plans. You shall be deemed to
have terminated your employment with the Company as of the pay through date
for purposes of your participation in and entitlements under the Company's
employee stock purchase and stock option plans and group insurance plan. Your
Long Term Disability coverage terminated on July 28, 1995. You shall receive
your vested benefits earned as of the pay through date under your Supplemental
Benefits Plan Account and the Company's ESOT, each in accordance with the
terms thereof. In accordance with the terms of the Company's stock option
plans, all of your stock options which are not vested as of the pay through
date shall be forfeited. In accordance with the terms of the Company's
Restricted Stock Plan, you shall earn no benefit for 1995. You (or the
trustee or trustees of any applicable insurance trust) shall have the option
of assuming responsibility for payment of any and all premiums due with
respect to the CrownLife whole life insurance policy on your life,
surrendering such policy for its cash value or converting such policy to a
paid-up policy, all in accordance with the terms of such policy. The Company
will gift you its premium equity in such policy. Each of us shall be
responsible for compliance with the securities laws applicable to ourselves.
4. Office and Assistant. You shall vacate your office at the
Company's Portland, Oregon location no later than 5:00 p.m. Pacific Standard
Time, on August 11, 1995. You shall be permitted to remove art related to the
Merlo family from the Company's offices and from the Company's air terminal,
and all of your personal belongings wherever located. No later than August 4,
1995, the Company shall make a single sum payment to you by check in the
amount of $90,000, to be used by you for purposes of your arranging for and
entering into a lease for an office for you and one assistant, in a Class A
office building, other than the US Bancorp Tower, located in downtown
Portland, Oregon, which amount is intended to provide for the rent payments,
utilities costs and tenant improvements for said office through December 31,
1996. The Company shall pay the costs of providing suitable office furniture
and equipment for you and your assistant, in each case reasonably consistent
with the standards for office furniture and equipment at the Company's
headquarters in Portland, Oregon. Additionally, the Company shall pay the
reasonable salary of, and provide regular Company employee benefits to, your
assistant through December 31, 1996; provided, however, that the Company shall
not be required to pay more than $48,000 per annum in salary to your
assistant. After 1996, the Company shall continue to pay the salary of and
provide Company employee benefits, to the extent legally permissible under
applicable law, for your assistant; provided, however, that you shall fully
reimburse the Company for such salary payments and for the Company's costs
incurred in providing all such employee benefits.
5. Merlo Park. To the extent not impermissible under applicable law,
effective December 31, 1995, the Company shall cause the Louisiana-Pacific
Foundation to transfer to the Merlo Foundation title to that parcel of real
estate located in Sterling City, California, known as Merlo Park. The Merlo
Foundation shall assume all costs of operating and maintaining and all
liabilities with respect to said Merlo Park, as of said date.
6. Portland Trailblazers Tickets. Prior to the beginning of the
1995-1996 National Basketball Association season, the Company shall transfer
to you its entitlement to season tickets for two center court Portland
Trailblazers seats with all renewal rights. You shall be responsible for the
cost of the tickets for the 1995-1996 season (and you shall reimburse the
Company to the extent such costs or portion thereof have previously been paid)
and thereafter.
7. Residence and Vehicles. The lease agreement with the Company with
respect to your residence in Portland, Oregon shall be renewed at the current
rental rate through December 31, 1995. On January 1, 1996, you may exercise
your option to purchase such residence and its furnishings as provided in your
preexisting agreement with the Company. If you choose not to exercise your
option to purchase such residence, you shall vacate the premises no later than
December 31, 1995. Except as otherwise provided in your lease agreement with
the Company, effective immediately, the Company shall no longer provide you
with or reimburse you for the maintenance of the residence, the staff of the
residence or any capital expenditures associated with the residence. The
Company shall immediately sell your Company car to you as well as the vehicles
used in connection with your residence for their book value as of August 4,
1995, as carried on the Company's financial records and, effective
immediately, the Company shall cease to carry said Company car and vehicles
under its blanket insurance policy.
8. Paintings. The two "Commander" paintings in your residence, "The
Gentle Breeze" by Robert Clark and "Untitled" by Robert Rishell, shall be
appraised by a mutually agreed to third-party appraiser, at the Company's
expense. At your option, you shall pay to the Company, by check, the amount
of the so determined appraised value thereof or you shall return such
paintings to the Company. This option to purchase said paintings shall expire
on December 31, 1995.
9. Indemnification and Insurance.
From July 28, 1995 and until all applicable statutes of limitation have
expired and all claims have been resolved, to the extent permissible under
applicable law and the Company's Certificate of Incorporation and Bylaws, the
Company shall:
(a) Indemnify and hold you harmless and advance expenses,
all subject and pursuant to the provisions of Article VI of the
Company's Bylaws (as in effect on August 4, 1995), with respect
to claims and liabilities arising under or in connection with
your employment with the Company and your membership on the
Board; and
(b) Continue your coverage under the Company's Directors'
and Officers' insurance policy or policies ("D&O") to the extent
permitted by the issuer or issuers thereof and with policy limits
no less than the coverage in place on August 4, 1995. At no time
will your coverage be less than that provided for the then active
officers and members of the Board. The Company shall purchase
extended reporting period coverage (or provide coverage
equivalent to such coverage from another source) in the event the
Company changes its D&O carrier or carriers.
10. Confidentiality.
You shall not directly or indirectly disclose any of the provisions of
this Agreement, except to the extent publicly available, to any person or
entity other than (a) any legal or other professional advisor, (b) immediate
family members or (c) any governmental agency nor shall you copy this
Agreement except as necessary to provide a copy to any legal advisor or any
governmental agency.
11. Public Announcements. The Company shall provide you with a
reasonable opportunity for prior comment on any public announcement regarding
your retirement from the Company.
12. Applicable Law. Any dispute arising under this Agreement shall be
governed by the laws of the State of Oregon.
13. Remedies. You recognize and agree that the payment of damages
would not be an adequate remedy for a breach by you of the provisions of
Section 10. You further recognize that irreparable injury will result to the
Company, its business and its property in the event of any such breach and
therefore, you agree that the Company may, in addition to recovering damages,
proceed in equity to enjoin you from violating any of the provisions of
Section 10.
14. Complete Agreement. This Agreement embodies the complete
understanding and agreement of the parties hereto relating to the subject
matter hereof.
15. Severability. In the event that any provision hereof shall be
determined by any court of competent jurisdiction to be illegal or
unenforceable, such illegality or unenforceability shall not affect the
validity or enforceability of the other provisions hereof.
16. No Assignment. None of your benefits or payments to be provided
hereunder shall be assignable by you other than pursuant to the laws of
distribution and descent in connection with your death.
17. Successors and Assigns. The rights of the Company hereunder shall
inure to the benefit of any and all of its successors, assigns and affiliates
and their respective successors, assigns, representatives, agents, officers,
directors, attorneys and employees.
ATTEST LOUISIANA-PACIFIC CORPORATION
________________________ By /s/ ANTON C. KIRCHHOF
General Counsel and Secretary
ATTEST Acknowledged and Agreed to
by Harry A. Merlo
________________________ /s/ HARRY A. MERLO
<PAGE>
EXHIBIT 10.T
Louisiana-Pacific Corporation
Legal Department
P.O. Box 4000-98
N. 13455 Government Way
Hayden Lake, Idaho 83835
(208) 772-6011
Fax (208) 772-1712
Anton C. Kirchhof/General Counsel
Christopher M. (Kit) Keyes/Assistant General Counsel
Bert P. Krages II
Christopher J. Biencourt
Douglas P. Anderson
Lauri A. Newton
Blaire Rose Rios
August 11, 1995
Mr. James Eisses
East 3060 Crestwood Court
Coeur d'Alene ID 83814
Dear Mr. Eisses:
This Agreement sets forth your agreement with Louisiana-Pacific
Corporation (the "Company") with respect to your retirement from employment
with the Company and your Director's status therewith:
1. Retirement. Effective July 28, 1995 at 4:00 p.m., Central Standard
Time, you have elected to retire from your positions as Board member and
Employee, and any position, including without limitation, Director, Officer,
Employee, Agent, or fiduciary of any affiliate of the Company or of any entity
or trust for whom you were serving as such at the request of the Company.
Your pay through date is September 5, 1995.
2. Special Retirement Benefit. The Company shall make a single sum
payment to you by check in the amount of $800,000 plus an additional amount
representing your accrued and unused vacation, all amounts less applicable tax
withholdings, no later than August 11, 1995.
3. Consulting Agreement. You shall enter into a Consulting Agreement
with the Company pursuant to the terms of that Consulting Agreement attached
hereto as Exhibit A.
4. Stock Options and Employee Benefit Plans. You shall be deemed to
have terminated your employment with the Company as of the pay through date
for purposes of your participation in and entitlements under the Company's
employee stock purchase and stock option plans and group insurance plan. Your
Long Term Disability coverage terminated on July 28, 1995. You shall receive
your vested benefits earned as of the pay through date under your Supplemental
Benefits Plan Account and the Company's ESOT, each in accordance with the
terms thereof. In accordance with the terms of the Company's stock option
plans, all of your stock options which are not vested as of the pay through
date shall be forfeited. In accordance with the terms of the Company's
Restricted Stock Plan, you shall earn no benefit for 1995. You (or the
trustee or trustees of any applicable insurance trust) shall have the option
of assuming responsibility for payment of any and all premiums due with
respect to the CrownLife whole life insurance policy on your life,
surrendering such policy for its cash value or converting such policy to a
paid-up policy, all in accordance with the terms of such policy. The Company
will gift you its premium equity in such policy. You shall be solely
responsible for complying with applicable securities laws in connection with
any transaction by you involving your stock or interests under the Company's
stock plans.
5. Company Car. The Company shall immediately sell your Company car
to you at the car's net book value on the Company's financial records as of
August 11, 1995 and, effective immediately the Company shall cease to carry
such Company car under its blanket insurance policy. You will be responsible
for taxes related to any imputed income resulting from this sale.
6. Medical, Dental and Vision Insurance. Following the termination of
your present Company-paid coverages on September 30, 1995, you will be offered
the company-sponsored health plan (excluding any Health Maintenance
Organization or "HMO") which includes medical, vision and dental coverage for
you and your eligible dependent(s) on a self-pay basis for a premium equal to
L-P's composite monthly cost. Your monthly premiums must be received at L-P's
Corporate office by the first day of each covered month to maintain this
coverage without interruption. The plan of benefits will be the same Plan as
is provided to the active salaried employees, and any future benefit or
funding/cost changes will apply to you and your eligible dependent(s). All
coverage terminates for you and your eligible dependent(s) when you attain 65,
become eligible for Medicare if earlier, become covered under another group
health insurance plan, or upon your death. Any dependent coverage under this
paragraph will terminate if the dependent(s) is no longer an eligible
dependent as defined by the Plan, becomes eligible for Medicare, or becomes
covered under another group health insurance plan.
Under the Federal Consolidated Omnibus Reconciliation Act of 1986
(COBRA), if you have any eligible dependent(s) or if your spouse is under age
65 upon your death or at the time you become eligible for Medicare, your
spouse and any eligible dependent(s) may elect to self-pay the medical, vision
and dental coverages up to a maximum total of thirty-six (36) months, in
accordance with the COBRA guidelines.
7. Indemnification and Insurance.
From July 28, 1995 and until all applicable statutes of limitation have
expired and all claims have been resolved, to the extent permissible under
applicable law and the Company's Certificate of Incorporation and Bylaws, the
Company shall:
(a) Indemnify and hold you harmless and advance expenses,
all subject and pursuant to the provisions of the Company's
Certificate of Incorporation and Bylaws (as in effect on August
4, 1995), with respect to claims and liabilities arising under or
in connection with your positions as an employee and officer and
your membership on the Board; and
(b) Continue your coverage under the Company's Directors'
and officers' insurance policy or policies ("D&O") to the extent
permitted by the issuer or issuers thereof and with policy limits
no less than the coverage in place on August 4, 1995. At no time
will your coverage be less than that provided for the then active
officers and members of the Board. The Company shall purchase
extended reporting period coverage (or provide coverage
equivalent to such coverage from another source) in the event the
Company changes its D&O carrier or carriers.
8. Confidentiality.
You shall not directly or indirectly disclose any of the provisions of
this Agreement, except to the extent publicly available, to any person or
entity other than (a) any legal or other professional advisor, (b) immediate
family members or (c) any governmental agency nor shall you copy this
Agreement except as necessary to provide a copy to any legal advisor or any
governmental agency. Provided, however, that it shall not be a violation of
this Agreement for you to confirm your engagement as a consultant for the
Company.
9. Public Announcements. The Company shall provide you with a
reasonable opportunity for prior comment on any public announcement regarding
your retirement from the Company.
10. Applicable Law. Any dispute arising under this Agreement shall be
governed by the laws of the State of Idaho, and the situs of any action shall
be the Federal or State courts in Coeur d'Alene, Idaho.
11. Remedies. You recognize and agree that the payment of damages
would not be an adequate remedy for a breach by you of the provisions of
Section 8. You further recognize that irreparable injury will result to the
Company, its business and its property in the event of any such breach and
therefore, you agree that the Company may, in addition to recovering damages,
proceed in equity to enjoin you from violating any of the provisions of
Section 8.
12. Complete Agreement. This Agreement embodies the complete
understanding and agreement of the parties hereto relating to the subject
matter hereof; notwithstanding the foregoing, nothing in this Agreement
contravenes, the terms of applicable vested employee benefits plans, which
terms are incorporated herein by reference.
13. Severability. In the event that any provision hereof shall be
determined by any court of competent jurisdiction to be illegal or
unenforceable, such illegality or unenforceability shall not affect the
validity or enforceability of the other provisions hereof.
14. No Assignment. Except by assignments as a matter of law, or to a
relative or trust for purposes of administration of your estate, or for
purposes of estate planning, none of your benefits or payments to be provided
hereunder shall be assignable by you or any other person.
15. Successors and Assigns. The rights of the Company hereunder shall
inure to the benefit of any and all of its successors, assigns and affiliates
and their respective successors, assigns, representatives, agents, officers,
directors, attorneys and employees.
16. Execution of Agreement. This Agreement may be executed in
counterparts.
ATTEST LOUISIANA-PACIFIC CORPORATION
_________________________ By ________________________________
Its _______________________________
ATTEST
_________________________
<PAGE>
EXHIBIT 10.U
Louisiana-Pacific Corporation
Legal Department
111 S.W, Fifth Avenue
Portland, Oregon 97204
503/221-0800
Fax 503/796-0105
Anton C. Kirchhof/General Counsel
Christopher M. (Kit) Keyes/Assistant General Counsel
Bert P. Krages II
Christopher J. Biencourt
Douglas P. Anderson
Lauri A. Newton
Blaire Rose Rios
August 17, 1995
Mr. Ronald L. Paul
143 River Plantation
Conroe, Texas 77302
Dear Mr. Paul:
You have asserted claims against the Company for emotional distress,
humiliation and anguish arising from the request by the Company that you
resign as an officer and director of the Company and from the fact of the
resignation. You have also asserted that the Company's request for such
resignation was without good cause and that the psychological injuries you
have suffered were a direct result of the Company's wrongful conduct. The
Company denies all such assertions. However, in full satisfaction of all such
claims, as well as any other claim you may have against the Company or any of
its officers, directors, agents or attorneys, arising from your resignation or
the termination of your services as an officer and director of the Company,
the Company agrees as follows:
1. Pay Through Date. Your resignation will be effective July 28,
1995. Your pay through date will be September 5, 1995, and will be inclusive
of all unused and accrued vacation.
2. Settlement. The Company shall make a single sum payment to you by
check in the amount of $600,000. Such check shall be sent via expedited
delivery no later than August 17, 1995.
3. Medical Insurance. Your Company-provided health and welfare
insurance will lapse on September 30, 1995. To the extent that the Company
continues to maintain a medical plan for salaried employees, and subject to
any future benefit or funding cost changes which apply to active salaried
employees, you and your eligible dependents would be given the opportunity to
participate thereafter at your expense until the earlier of (i) your
participation in another employer's medical plan or (ii) your eligibility for
Medicare benefits.
4. Life Insurance. As provided in your CrownLife policy, you would
have the opportunity to leave your whole life insurance policy in place by
paying the quarterly premiums, to surrender the policy and receive any cash
surrender value, or to convert the policy to a lower face value paid up
policy.
5. Stock Options. You will have 90 days from your pay through date to
exercise any exercisable options.
6. ESOT. Supplement Plan and Restricted Stock. The benefits that
would have been accrued by you under the ESOT and the Supplemental Benefit
Plan for salary paid during 1995 would be paid to you in a lump sum cash
Payment. The fair market value (determined as of February 3, 1996) of shares
of Restricted Stock that would have been earned by you under the Restricted
Stock Plan for 1995 (i.e., based upon the Company's "return on equity") would
be determined on a pro rata basis (i.e., multiplied by 7/12 and the percentage
stipulations of the Plan) and would be paid to you in a lump sum cash payment.
7. Indemnification. The Company would indemnify you to the extent
permitted under its Bylaws and under applicable law. You will indemnify the
Company against any IRS tax liability (including penalties and interest)
arising from the forbearance of the Company to withhold federal income taxes
from the settlement amount stated in Paragraph 2, above. If either party
initiates action against the other to enforce the provisions of this indemnity
paragraph, the prevailing party in such action shall be entitled to recover
his or its costs, including reasonable attorneys' fees.
8. Employment Status. Notwithstanding the pay through date contained
in paragraph 1 and the continuation of benefits through such date, you will
not be an employee of the Company following the effective date of your
resignation for any purpose and you would have no access to Company facilities
or assets except pursuant to a prior written agreement entered into with the
Company.
9. Execution of Agreement. This agreement may be executed in
counterparts.
ATTEST LOUISIANA-PACIFIC CORPORATION
__________________________ By /s/ ANTON C. KIRCHHOF
General Counsel and Secretary
ATTEST Acknowledged and Agreed to by:
__________________________ /s/ RONALD L. PAUL
<PAGE>
EXHIBIT 11
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
CALCULATION OF NET INCOME PER SHARE
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number of Shares
-------------------------------------------
- --
Including Common Excluding Common
Stock Equivalents Stock Equivalents
(1)
----------------- -------------------
- --
<S> <C> <C>
Weighted average number of shares
of common stock outstanding 116,937,022 116,937,022
Weighted average number of shares sold to ESOTs
subsequent to January 1, 1994, not allocated
to participate accounts (2) (1,613,168) (1,613,168)
Weighted average number of shares of treasury
stock held during the period (8,286,544) (8,286,544)
Common stock equivalents:
Application of the "treasury stock" method
to stock option and purchase plans 157,622 ----
----------- -----------
Weighted average number of shares of common
stock and common stock equivalents 107,194,931 107,037,309
=========== ===========
Rounded to 107,190,000 107,040,000
=========== ===========
Net income (loss) $(51,700,000) $(51,700,000)
=========== ===========
Net income (loss) per share $(.48) $(.48)
=========== ===========
</TABLE>
(1) Accounting Principles Board Opinion No. 15, "Earnings Per Share,"
allows companies to disregard dilution of less than 3 percent in
the computation of earnings per share. Therefore, shares used in
computing earnings per share for financial reporting purposes is
107,040,000 shares.
(2) American Institute of Certified Public Accountants Statement of
Position No. 93-6, "Employers' Accounting for Employee Stock
Ownership Plans" requires that shares held by registrant's ESOTs
which were acquired by the ESOTs on or after January 1, 1994,
which are not allocated to participant's accounts, are not
considered outstanding for purposes of computing earnings per
share. Shares held by the ESOTs which were acquired by the ESOTs
prior to January 1, 1994, continue to be considered outstanding
(whether or not allocated to participant's accounts) for purposes
of computing earnings per share.
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
The following table lists the registrant and each of its
subsidiaries and the jurisdiction under the laws of which the registrant and
each subsidiary is incorporated. Each subsidiary is identified underneath its
immediate parent. Except as indicated, each subsidiary is 100 percent owned
by its parent.
Name Jurisdiction
- ---------------------- --------------------
Louisiana-Pacific Corporation Delaware
Domestic Subsidiaries
- ----------------------
Blue Skies Aviation, Inc. Oregon
Creative Point, Inc. California
Ketchikan Pulp Company Washington
Louisiana-Pacific Corporation (W. Va.) West Virginia
Louisiana-Pacific Foundation Oregon
Louisiana-Pacific Trucking Company Oregon
L-P Foreign Sales Corporation Guam
New Waverly Transportation, Inc. Texas
Foreign Subsidiaries
- ---------------------
Louisiana-Pacific Canada Ltd. British Columbia, Canada
Sunpine Forest Products Ltd. (50%) Alberta, Canada
Suneco Ltd. Alberta, Canada
Lodgepole Logging Co. Ltd. Alberta, Canada
Pinetree Construction Co. Ltd. Alberta, Canada
Louisiana-Pacific de Mexico, S.A. de C.V. Mexico
Louisiana-Pacific, S.A. de C.V. Mexico
Louisiana-Pacific de Venezuela, C. A. Venezuela
Louisiana-Pacific Coillte Ireland Limited Ireland
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 10-K into the registrant's previously filed
Registration Statement Nos. 2-97014, 33-42276, 33-50958, 33-60264, 33-62944,
33-54859, 33-55105, and 33-62317.
ARTHUR ANDERSEN LLP
Portland, Oregon
March 29, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary
financial information extracted from
Consolidated Financial Statements and
Notes included in this Form 10-K and
is qualified in its entirety by
reference to such financial
statements.
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<PERIOD-TYPE> 12-MOS
<S> <C>
<CASH> 75,400
<SECURITIES> 0
<RECEIVABLES> 128,700
<ALLOWANCES> (1,500)
<INVENTORY> 317,700
<CURRENT-ASSETS> 618,500
<PP&E> 2,592,500
<DEPRECIATION> (1,140,200)
<TOTAL-ASSETS> 2,805,400
<CURRENT-LIABILITIES> 448,500
<BONDS> 201,300
0
0
<COMMON> 117,000
<OTHER-SE> 1,539,000
<TOTAL-LIABILITY-AND-EQUITY> 2,805,400
<SALES> 2,843,200
<TOTAL-REVENUES> 2,250,300
<CGS> 2,940,900
<TOTAL-COSTS> 2,940,900
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,300,000
<INCOME-PRETAX> (94,800)
<INCOME-TAX> (45,800)
<INCOME-CONTINUING> (51,700)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (51,700)
<EPS-PRIMARY> (.48)
<EPS-DILUTED> 0
</TABLE>
