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, 1996 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: $2,181,885,464 as of March 13, 1997.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock: 109,381,671 shares of Common Stock, $1 par value, outstanding as
of March 13, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
Definitive Proxy Statement for 1997 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 107 facilities throughout the United States,
Canada, and Ireland. It has approximately 12,000 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 1996, building products
accounted for approximately 93 percent of the registrant's gross sales
revenues, compared to approximately 7 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
48 percent of its sales in 1996.
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 North America (plywood, OSB and other waferboards) is
approximately 36 billion square feet annually, of which plywood currently
constitutes about 21 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 16
OSB plants with an aggregate annual capacity of approximately 4.6 billion square
feet, plus one overseas plant. The registrant plans to open one additional North
American plant in 1997. The registrant operates seven plywood plants in the
South with a combined annual capacity of 1.6 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 a large producer of lumber. The registrant has
13 Western (whitewood and redwood) sawmills with an annual production capacity
of 1.0 billion board feet ("BBF"), while its 15 Southern sawmills have an annual
production capacity of .5 BBF. Lumber represented 25 percent of the registrant's
sales revenue in 1996, 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 a fingerjoint plant which produces
dimension lumber from low grade and short pieces of lumber.
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<PAGE>
Other Building Products. Eight plants in Ohio manufacture windows and
doors and their various components.
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 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. In
March 1997, the registrant acquired the assets of Tecton Laminates Corp.
("Tecton"), which will significantly increase LVL and I-joist capacity.
Nine plants produce cellulose residential insulation from recycled
newspaper. This insulation has a higher R-value than comparable thicknesses of
conventional fiberglass insulation. Other facilities operated by the registrant
include a fiber cement shake plant, two wood chip mills, two coatings and
chemical plants, a consumer electronics storage manufacturer, seven
wood-treating plants, and six building materials distribution centers.
Pulp
The registrant has two pulp mills located in Samoa, California, and
Chetwynd, British Columbia, Canada, with a total annual capacity of
approximately 390 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. A
third mill in Ketchikan, Alaska, produced a high-grade dissolving pulp, but was
permanently closed in March 1997. (See "Management's Discussion and Analysis of
Financial Condition and Results of Operations.")
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, flooring, and a radiant barrier product known as Kool-Ply(TM). 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. The
registrant's 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.
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
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<PAGE>
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.
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<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)
1996 1995 1994 1993 1992
-----------------------------------------------------------------------------------
SALES AND PROFIT BY MAJOR PRODUCT GROUP
- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SALES: Structural panel products $ 1,006 40% $ 1,127 39% $ 1,208 40% $ 1,005 40% $ 888 41%
Lumber 614 25 644 23 867 28 816 33 653 30
Industrial panel products 195 8 215 8 240 8 194 8 150 7
Other building products 494 20 523 18 505 17 411 16 309 14
------- --- ------- --- ------- ------- ------- ------- ------- -------
Building products 2,309 93 2,509 88 2,820 93 2,426 97 2,000 92
Pulp 177 7 334 12 220 7 85 3 185 8
------- --- ------- --- ------- ------- ------- ------- ------- -------
Total sales $ 2,486 100% $ 2,843 100% $ 3,040 100% $ 2,511 100% $ 2,185 100%
======= === ======= === ======= ======= ======= ======= ======= =======
Export sales (included above) $ 268 11% $ 457 16% $ 371 12% $ 252 10% $ 339 16%
======= === ======= === ======= ======= ======= ======= ======= =======
PROFIT: Building products $ 174 $ 346 $ 636 $ 562 $ 364
Pulp (91) 44 (5) (59) (20)
Settlement charges and other
unusual items, net(1) (350) (367) --- --- ---
Unallocated expense, net (52) (121) (72) (70) (47)
Interest, net (8) 3 1 (5) (14)
------- ------- ------ ------ ------
Income (loss) before taxes(2),
minority interest and
accounting changes $ (327) $ (95) $ 560 $ 428 $ 283
======= ======= ======= ======= =======
SUMMARY OF PRODUCTION VOLUMES(3)
- --------------------------------
OSB, square feet 3/8" basis 4,008 86% 3,445 94% 3,404 97% 3,100 100% 2,850 101%
Softwood plywood, square feet 3/8"basis 1,613 105 1,466 90 1,604 106 1,507 105 1,405 80
Lumber 1,201 73 1,359 56 1,986 86 1,796 87 1,850 71
Particleboard, square feet 3/4" basis 336 93 339 94 371 106 359 106 335 93
Medium density fiberboard,
square feet 3/4" basis 207 92 208 93 234 106 206 93 160 97
Hardboard, square feet 1/8" basis 220 100 212 97 216 103 191 91 201 93
Hardwood veneer, square feet
surface measure 209 84 232 93 281 110 260 108 252 89
Pulp, short tons (thousands) 439 76 486 81 441 72 224 37 459 72
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<PAGE>
1996 1995 1994 1993 1992
INDUSTRY PRODUCT PRICE TRENDS(4)
OSB, MSF, 7/16" -- 24/16 span
rating (North Central price) $ 184 $ 245 $ 265 $ 236 $217
Southern pine plywood,
MSF,1/2" CDX (3 ply) 258 303 302 282 248
Framing lumber, composite prices, MBF 398 337 405 394 287
Industrial particleboard, 3/4" basis, MSF 184 290 295 258 200
LOGS BY SOURCE(6)
- -----------------
Fee owned lands 16% 13% 11% 12% 14%
Private cutting contracts 14 12 14 15 15
Government contracts 6 9 8 10 12
Purchased logs 64 66 67 63 59
Total log volume -- million board feet 2,432 2,818 3,138 2,940 2,856
</TABLE>
- --------------------------
(1) In 1996, of the total $350 million charge, $171 million related to the
pulp segment and $134 related to the building products segment. In 1995,
the substantial majority of the $367 million charge related to class
action settlements concerning the company's siding product and
therefore would be primarily allocated to building products.
(2) Does not include cumulative effects of accounting changes in 1993.
(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.
- 6 -
<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.
MANUFACTURING FACILITIES AT DECEMBER 31, 1996
---------------------------------------------
SAWMILLS METRIC 1) NORMAL 2)
(BOARD FEET, 2 SHIFTS, 5 DAYS; *1 SHIFT, 5 DAYS) CAPACITIES CAPACITIES
WESTERN LUMBER (13 plants)
Annette, AK 112 70
Belgrade, MT 148 90
Big Lagoon, CA 33 20*
Chilco, ID 205 125
Deer Lodge, MT (3 shifts) 155 95
Fort Bragg, CA 114 70
Ketchikan, AK 98 60
Moyie Springs, ID 220 135
Samoa, CA 163 100
Sandpoint, ID (remanufacturing) --- ---
Saratoga, WY 82 50
Tacoma, WA 98 60
Ukiah, CA 163 100
SOUTHERN LUMBER (15 plants)
Bernice, LA 65 40*
Bon Wier, TX 33 20*
Cleveland, TX 65 40*
Eatonton, GA 50 30*
Evergreen, AL 65 40*
Hattiesburg, MS 65 40*
Henderson, NC 65 40*
Jasper, TX 90 55*
Kountze, TX 24 15*
Lockhart, AL 33 20*
Marianna, FL 50 30*
New Waverly, TX 25 15*
Philadelphia, MS 65 40*
Statesboro, GA 40 25*
West Bay, FL 50 30*
----- -----
Total Lumber Capacity (28 plants) 2,376 1,455
===== =====
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<PAGE>
MANUFACTURING FACILITIES AT DECEMBER 31, 1996
---------------------------------------------
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 230 260
Cleveland, TX 250 280
Jasper, TX 140 160
Logansport, LA 195 220
Lufkin, TX 165 185
New Waverly, TX 230 260
Urania, LA 220 250
----- -----
Total Softwood Plywood Capacity (7 plants) 1,430 1,615
===== =====
ORIENTED STRAND BOARD PLANTS
(3/8-INCH BASIS, SQUARE FEET, 3 SHIFTS,
7 DAYS)
Chilco, ID 125 140
Carthage, TX (Start-up 4th quarter 1997) 355 400
Corrigan, TX 135 150
Dawson Creek, B.C. Canada 335 375
Hanceville, AL 310 350
Hayward, WI (2 plants) 445 500
Houlton, ME 230 260
Jackson County, GA 295 335
Jasper, TX 355 400
Montrose, CO 130 145
Newberry, MI 115 130
Roxboro, NC 335 375
Sagola, MI 310 350
Silsbee, TX 310 350
Swan Valley, MB, Canada 400 450
Tomahawk, WI 135 150
Two Harbors, MN 125 140
Waterford, Ireland 355 400
----- -----
Total OSB Capacity (18 plants) 4,800 5,400
===== =====
MEDIUM DENSITY FIBERBOARD PLANTS
(3/4-INCH BASIS, SQUARE FEET, 3 SHIFTS, 7 DAYS)
Eufaula, AL 230 130
Oroville, CA 90 50
Urania, LA 90 50
----- -----
Total Medium Density Fiberboard Capacity (3 plants) 410 230
===== =====
PARTICLEBOARD PLANTS
(3/4-INCH BASIS, SQUARE FEET, 3 SHIFTS, 7 DAYS)
Arcata, CA 230 220
Missoula, MT 275 155
Silsbee, TX 140 80
----- -----
Total Particleboard Capacity (3 plants) 635 360
===== =====
HARDBOARD PLANT
(1/8-INCH BASIS, SQUARE FEET, 3 SHIFTS, 7 DAYS)
Oroville, CA 62 210
===== =====
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<PAGE>
MANUFACTURING FACILITIES AT DECEMBER 31, 1996
---------------------------------------------
OTHER BUILDING PRODUCTS
HARDWOOD VENEER PLANTS NORMAL 2)
(SURFACE MEASURE, SQUARE FEET, 2 SHIFTS, 5 DAYS) CAPACITIES
Mellen, WI (2 plants) 250
=====
WINDOW AND DOOR PLANTS (6 PLANTS)
Norton, OH (2 plants) (aluminum extrusions in lbs.) 7,200,000
Orrville, OH (windows) 125,000
Ottawa, OH (windows and doors) 250,000
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 25
Red Bluff, CA 30
-----
Total I-Joist Capacity (3 plants) 75
=====
LAMINATED VENEER LUMBER PLANTS
(THOUSAND CUBIC FEET; 2 SHIFTS, 7 DAYS)
Fernley, NV 2,500
Wilmington, NC 3,100
-----
Total LVL Capacity (2 plants) 5,600
=====
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
=====
PULP MILLS METRIC 1) NORMAL 2)
(THOUSAND SHORT TONS, 3 SHIFTS, 7 DAYS) CAPACITIES CAPACITIES
Samoa, CA 195 220
Chetwynd, B.C. Canada 155 170
----- -----
Total Pulp Capacity (2 plants) 350 390
===== =====
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<PAGE>
MANUFACTURING AND OTHER FACILITIES AT DECEMBER 31, 1996
-------------------------------------------------------
OTHER FACILITIES (24 PLANTS)
Cellulose insulation plants: Chandler, AZ; Sacramento and
San Diego, CA; Atlanta, GA;
Fort Wayne, IN; Norfolk, NE;
Bucyrus, OH; Portland, OR;
Elkwood, VA
Cement fiber shake: Red Bluff, CA
Chip mills: Cleveland and Moscow, TX
Coatings and chemicals: Portland, OR; Orangeburg, SC
Consumer electronics storage: Montgomery, IL
Insulated glass plant: Orrville, OH
Vinyl extrusion plant: Barberton, OH
Wood treating plants: Evergreen and Lockhart, AL;
Marianna, FL; Statesboro,
GA; New Waverly and
Silsbee, TX; Ukiah, CA
DISTRIBUTION CENTERS (6 LOCATIONS)
Calpella, CA Chino, CA
Rocklin, CA Dodge City, KS
Salina, KS Conroe, TX
TOTAL FACILITIES: 107
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 194,300 480,000
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
Texas: Pine, Hardwoods 284,000 701,500
Wisconsin: Hardwoods 600 1,500
Wyoming: Whitewoods 1,700 4,300
------- ---------
Total Fee 593,500 1,465,900
======= =========
- --------------------------
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 in the United States, under long-term contracts (five years and
over) on approximately 13,400 acres and under contracts for shorter periods on
approximately 282,900 acres, on government and privately owned timberlands in
the vicinities of certain of its manufacturing facilities. L-P's Canadian
subsidiary is a party to long-term timber license arrangements in Canada.
Information regarding the sources of the registrant's log requirements is
located under the table labeled "Logs by Source" in Item 1.
- 10 -
<PAGE>
ITEM 3. Legal Proceedings
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
beginning on page 39 under the heading "Contingencies" which is incorporated
herein by reference.
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 1996.
Executive Officers of the Registrant
The following 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,
1997:
Mark A. Suwyn, age 54, has served as Chairman and Chief Executive
Officer of L-P since January 1996. Before joining L-P, Mr. Suwyn was Executive
Vice President of International Paper Company from 1992 through 1995.
Previously, Mr. Suwyn was Senior Vice President of E.I. du Pont de Nemours & Co.
Mr. Suwyn is also a director of the registrant.
Michael D. Hanna, age 44, joined L-P in June 1996 as Executive Vice
President after serving as President of Associated Chemists, Inc., for more than
five years previous.
Stephen J. Grant, age 57, has served L-P as Senior Vice President,
Compliance since August 1995. Mr. Grant previously was Senior Vice President of
Morrison-Knudsen Corporation for more than four years, with responsibility for
legal affairs and subsequently for certain international operations.
William L. Hebert, age 46, has been Vice President, Treasurer and
Controller and Chief Financial Officer of L-P since August 1995 and previously
served as Treasurer from December 1993 to August 1995, and as Controller-Finance
for more than a year before that.
Anton C. Kirchhof, age 51, has served as the registrant's General
Counsel and Corporate Secretary for more than five years.
J. Keith Matheney, age 48, joined the registrant in March 1970 and
has served as Vice President, Sales and Marketing since January 26, 1997. Mr.
Matheney was General Manager--Western Division from February 1996 to January
1997 after serving as General Manager--Weather-Seal Division of the registrant
from May 1994 to February 1996, and as Director of Sales and Marketing for more
than five years previous.
Warren C. Easley, age 55, joined L-P as Vice President of Technology
and Quality in May 1996 after serving as Technical Manager--Nylon Division,
North America for E.I. du Pont de Nemours & Co. for more than five years
previous.
Richard B. Fethers, age 43, became Director--Pulp Division of the
registrant in May 1996. For more than five years previous, Mr. Fethers acted as
Consultant for E.I. du Pont de Nemours & Co.
Richard W. Frost, age 45, joined L-P in May 1996 as Vice President,
Timberlands. Before that, Mr. Frost worked for S.D. Warren Company as Director
of Timberlands prior to April 1992, as Vice President and Manager, Westbrook
Mill, from April 1992 to September 1995, and as Vice President and General
Manager, Somerset Operations for S.D. Warren Company from September 1995 to
1996.
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<PAGE>
Karen D. Lundquist, age 41, was named Vice President of
Manufacturing in January 1997. Before joining L-P, Ms. Lundquist was an
executive officer and director of Creative Breakthroughs, Inc., from the fall of
1993 to 1997, and served as its Chief Executive Officer from mid-1995 to 1997.
From September 1991 to October 1993, Ms. Lundquist was a plant manager with E.I.
du Pont Nemours & Co.
All executive officers serve at the pleasure of the board of
directors of L-P. Unless earlier removed by the board of directors, the
officers' terms of office run until the next annual meeting of the board of
directors.
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, 1997,
L-P had approximately 23,900 stockholders of record.
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<PAGE>
ITEM 6. Selected Financial Data
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE 1996 1995 +/- %
- ---------------------------------------------------------------------------------------
ANNUAL DATA
- -----------
<S> <C> <C> <C>
Net sales $2,486.0 $2,843.2 -12.6%
Net income (loss) (200.7) (51.7)
Net income (loss) per share (1.87) (.48)
Net cash provided by operating activities 22.8 334.6 -93.2%
Capital expenditures -- plants, logging
roads and timber (includes acquisitions) 266.0 412.6 -35.5%
Working capital 234.5 170.0
Ratio of current assets to current liabilities 1.68 to 1 1.38 to 1
Total assets 2,588.7 2,805.4
Long-term debt, excluding current portion 458.6 201.3 +127.8%
Long-term debt as a percent of
total capitalization 24.3% 10.8%
Stockholders' equity 1,427.6 1,656.0 -13.8%
Per ending share of common stock 13.13 15.28
Number of employees 12,000 13,000
Number of stockholders of record 23,900 24,900
</TABLE>
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER YEAR
- --------------------------------------------------------------------------------------
1996 QUARTERLY DATA
- -------------------
<S> <C> <C> <C> <C> <C>
Net sales $584.1 $658.3 $676.3 $567.3 $2,486.0
Gross profit (loss) (1) (5.0) 35.0 21.9 (20.9) 31.0
Income (loss) before taxes
and minority interest (5.0) 34.5 (332.0)(2) (24.3) (326.8)
Net income (loss) (3.6) 21.0 (203.4)(2) (14.7) (200.7)
Net income (loss) per share (.03) .19 (1.89) (.14) (1.87)
Cash dividends per share .14 .14 .14 .14 .56
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
HIGH AND LOW STOCK PRICES
- -------------------------
1996 High $26.25 $28.13 $23.75 $23.00 $28.13
Low 23.00 22.13 19.63 20.63 19.63
1995 High $30.50 $29.00 $29.00 $27.13 $30.50
Low 24.75 20.88 21.88 22.00 20.88
</TABLE>
- --------------------------
(1) Gross profit is income before settlement charges and other unusual items,
taxes, minority interest and interest.
(2) In the third quarter of 1996, L-P recorded a charge of $350.0 million
($215.0 million after income taxes, or $2.00 per share) related to the
closure of a subsidiary's pulp mill in Ketchikan, Alaska, the
settlement of all outstanding shareholder securities class action claims,
a reserve
- 13 -
<PAGE>
for other litigation and a reserve for the planned shutdown and other
costs related to certain other non-strategic facilities.
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 herein 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,
production capacities, forecasts of future costs and expenditures, evaluation of
market conditions, the outcome of legal proceedings, the adequacy of reserves,
or plans for product development, or construction of new facilities. 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.
- 14 -
<PAGE>
<TABLE>
<CAPTION>
FIVE-YEAR SUMMARY
YEAR ENDED DECEMBER 31 (DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE)(2)
SUMMARY INCOME STATEMENT DATA 1996(4) 1995(4) 1994 1993 1992
- ----------------------------- --------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net sales $ 2,486.0 $2,843.2 $3,039.5 $2,511.3 $2,184.7
Gross profit (1) 31.0 268.9 558.6 423.6 297.5
Interest, net (7.8) 2.9 1.0 5.0 14.4
Provision (benefit) for income taxes (125.6) (45.8) 209.8 173.2 106.2
Income (loss)(3) (200.7) (51.7) 346.9 254.4 176.9
Income (loss) per share(3) (1.87) (.48) 3.15 2.32 1.63
Cash dividends per share .56 .545 .485 .43 .39
Average shares of common stock
outstanding (thousands) 107,410 107,040 110,140 109,670 108,500
SUMMARY BALANCE SHEETS
- ----------------------
Current assets $ 579.2 $ 618.5 $ 721.9 $ 614.1 $ 539.1
Timber and timberlands, at cost
less cost of timber harvested 648.6 689.6 693.5 673.5 531.2
Property, plant and equipment, net 1,278.5 1,452.3 1,273.2 1,145.9 1,070.3
Other assets 82.4 45.0 55.1 32.8 65.4
-------- -------- -------- -------- --------
Total assets $2,588.7 $2,805.4 $2,743.7 $2,466.3 $2,206.0
======== ======== ======== ======== ========
Current liabilities $ 344.7 $ 448.5 $ 344.8 $ 317.2 $ 295.5
Long-term debt, excluding current portion 458.6 201.3 209.8 288.6 386.3
Deferred income taxes and other 357.8 499.6 339.7 289.1 163.2
Stockholders' equity 1,427.6 1,656.0 1,849.4 1,571.4 1,361.0
-------- -------- -------- -------- --------
Total liabilities and
stockholders' equity $2,588.7 $2,805.4 $2,743.7 $2,466.3 $2,206.0
======== ======== ======== ======== ========
</TABLE>
- 15 -
<PAGE>
<TABLE>
<CAPTION>
KEY FINANCIAL TRENDS 1996(4) 1995(4) 1994 1993 1992
- -------------------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Working capital $ 234.5 $ 170.0 $ 377.1 $ 296.9 $ 243.6
======== ======== ======== ======== ========
Plant and logging road additions (5) $ 244.0 $ 362.9 $ 286.0 $ 208.4 $ 161.4
Timber additions, net 22.0 49.7 66.0 81.5 40.1
-------- -------- -------- -------- --------
Total capital additions $ 266.0 $ 412.6 $ 352.0 $ 289.9 $ 201.5
======== ======== ======== ======== ========
Long-term debt as a percent
of total capitalization 24% 11% 10% 16% 22%
Income as a percent of average equity(3) -13% -3% 20% 17% 14%
</TABLE>
- --------------------------
(1) Gross profit is income before settlement charge and unusual items, 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 1996, L-P recorded a charge of $350.0 million
($215.0 million after income taxes, or $2.00 per share) related to the
closure of a subsidiary's pulp mill in Ketchikan, Alaska, the settlement
of all outstanding shareholder securities class action claims, a reserve
for other litigation and a reserve for the planned shutdown and other
costs related to certain other non-strategic facilities.
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.
(5) Includes cash paid in acquisitions.
- 16 -
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL
L-P's net losses in 1996 and 1995 primarily resulted from charges taken in
the third quarter of each year. The charge in 1996 of $350.0 million pre-tax
($215.0 million after tax, or $2.00 per share) was taken to reflect the shutdown
of Ketchikan Pulp Company's (wholly-owned L-P subsidiary) pulp mill, the
settlement of all outstanding shareholder securities class action claims, a
reserve for other litigation and a reserve for the shutdown and other costs
related to certain other non-strategic facilities. The charge in the third
quarter of 1995 of $366.6 million pre-tax ($221.8 million after tax, or $2.07
per share) reflected the settlements of class action proceedings related to
L-P's siding product, severance charges and asset write-downs. Both charges were
tax effected because all components are deductible either currently or in future
years. Prior to the charges, L-P earned $14.3 million in 1996 ($.13 per share),
$170.1 million in 1995 ($1.59 per share) and $346.9 million in 1994 ($3.15 per
share).
Both the building products and pulp segments suffered declines in sales
and profitability in 1996. An industry-wide oversupply of structural panel
products in North America was the primary cause of the decline in building
products. Pulp markets remained very weak throughout 1996 due to high world-wide
inventories. The Ketchikan Pulp Company contract issue (discussed further below)
also negatively impacted pulp segment results in 1996. An 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. Markets in 1994 benefited from low interest rates and a strong U.S.
economy.
Sales in 1996 were $2.49 billion, a 13 percent decline from 1995 sales of
$2.84 billion. Sales in 1995 represented a 7 percent decline from 1994 record
sales of $3.04 billion. L-P incurred a net loss in 1996 of $200.7 million ($1.87
per share) compared to a net loss of $51.7 million ($.48 per share) in 1995 and
net income in 1994 of $346.9 million ($3.15 per share).
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.
- 17 -
<PAGE>
BUILDING PRODUCTS
INCREASE
YEAR ENDED DEC. 31, (DECREASE)
---------------------------------------------
1996 1995 1994 96-95 95-94
- ---------------------------------------------------------------------------
(DOLLAR AMOUNTS IN MILLIONS)
Sales:
Structural panel products $1,006 $1,127 $1,208 -11% -7%
Lumber 614 644 867 -5% -26%
Industrial panel products 195 215 240 -9% -10%
Other building products 494 523 505 -6% +4%
------ ------ ------
Total building products $2,309 $2,509 $2,820 -8% -11%
====== ====== ======
Profit $ 174 $ 346 $ 636 -50% -46%
====== ====== ======
Sales of structural panel products (plywood and oriented strand board
(OSB)) suffered in 1996 from industry wide over-capacity. The over-capacity is
the result of new OSB plants built by the industry throughout North America
without a significant increase in demand. Average selling prices in 1996 fell
approximately 20 percent compared to 1995 (average OSB prices fell around 26
percent). Sales volumes increased approximately 14 percent due to new OSB plants
started-up in 1996, despite temporary market-related shut-downs in the fourth
quarter at L-P's OSB plants. In 1995, relatively high interest rates and poor
weather in key areas of the country early in the year contributed to weak
markets, especially in OSB. OSB pricing was also negatively impacted by the
beginnings of the excess capacity in the industry. OSB siding sales suffered
beginning in 1995 from adverse publicity related to class action litigation and
by a company-initiated reduction in siding production (see "settlement charges
and other unusual items, net" for further discussion) and L-P has reduced the
volume of OSB siding it manufactures. 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.
Lumber sales were lower in 1996 than 1995 as a result of sales volume,
which decreased approximately 12 percent. L-P has permanently closed a number of
unprofitable sawmills around the country over the last year. Average selling
prices rose about 9 percent in 1996 due to a strong U.S. economy, lower
production volumes industry wide and lower volumes of lumber imported from
Canada. In 1995, higher interest rates, poor weather and a flood of low priced
Canadian lumber resulted in depressed price levels throughout the year. These
factors caused L-P sawmills to operate at lower capacity levels (56 percent of
capacity in 1995 compared to 86 percent in 1994). 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 in 1995 declined approximately 8 percent from 1994 with sharply higher
redwood prices and lower whitewood prices.
Industrial panel sales volumes in 1996 showed slight increases compared to
1995 while prices fell approximately 11 percent. The industrial panel markets
have experienced an excess of capacity, particularly in medium density
fiberboard (MDF) as new plants have been brought on line. 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.
- 18 -
<PAGE>
Other building products sales decreased in 1996 due to lower wood chip
sales. L-P is producing less wood chips due to lower sawmill production and wood
chip prices weakened significantly, particularly on the West Coast. Sales of
other building products increased in 1995 primarily due to higher log sales from
L-P's California fee lands. L-P had curtailed sawmill production and 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.
Building products profit decreased in 1996 from 1995 due to the lower
prices discussed above for structural panel products and industrial panel
products. Raw material costs have generally been lower in 1996 than in 1995, but
not sufficiently to offset the lower sales prices. Building products profits in
1995 were lower than in 1994 due to lower lumber and structural panel sales
prices combined with increased raw material costs and lower production volumes.
Log prices were higher in most areas of the country in 1995 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)
---------------------------------------------
1996 1995 1994 96-95 95-94
- ---------------------------------------------------------------------------
(DOLLAR AMOUNTS IN MILLIONS)
Pulp sales $177 $334 $220 -47% +52%
==== ==== ====
Profit (loss) $(91) $ 44 $ (5) n.m. n.m.
==== ==== ====
Pulp sales plummeted in 1996 as sales prices fell an average of 44 percent
while volumes decreased about 5 percent. Large pulp inventories around the world
created very weak pulp markets throughout 1996. L-P took intermittent downtime
at the pulp mills during the year, which caused the volume decrease. Pulp sales
increased in 1995 over 1994 due to a 59 percent increase in average selling
prices in 1995. 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.
After one year of profits, the pulp mills returned to losses in 1996 due
to the downturn in the markets and problems experienced with the Ketchikan Pulp
Company contract (see further discussion below). The pulp segment briefly
returned to profitability due to the increase in sales in 1995 after incurring a
loss in 1994. Raw material costs decreased in 1996 after experiencing an
increase in 1995.
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 remained sluggish in early 1997. L-P is not able to
- 19 -
<PAGE>
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 the major
factor in L-P's export sales. Therefore, pulp sales are the primary reason for
L-P's decreased export sales in 1996 and the increased export sales in 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."
GENERAL CORPORATE EXPENSE, NET
General corporate expense was $52 million in 1996, after rising to an
unusually high amount of $121 million in 1995. This compared to $72 million in
1994. In 1996, a $10 million credit resulting from a gain on the sale of a
sawmill and related timberland was netted into this expense. The most
significant factor in the 1995 increase was higher expenses associated with
litigation against the company, including legal fees and increases in
contingency reserves (it did not, however, include amounts recorded in the on
the line item "Settlement Charges and Other Unusual Items, Net" which is
discussed below). Higher franchise taxes also contributed to the 1995 increase.
Partially offsetting the 1995 increases were lower compensation expenses in 1995
compared to 1994 because restricted stock plan awards, tied to the performance
of the company, were not issued in 1995 (or 1996).
SETTLEMENT CHARGES AND OTHER UNUSUAL
ITEMS, NET
In the third quarter of 1996, L-P recorded pre-tax charges of $350.0
million ($215.0 million after tax, or $2.00 per share) to reflect expected costs
to be incurred in the shut-down of the pulp mill owned and operated by L-P's
Ketchikan Pulp Company (KPC) subsidiary as well as the settlement of all
outstanding shareholder securities class action claims, a reserve for other
litigation and a reserve for the planned shut-down and other costs related to
certain other non-strategic facilities.
The charge for the shut-down of the Ketchikan Pulp mill includes the
Company's best estimates of all costs related to the closing of operations
including the write-down of property, plant and equipment to estimated salvage
value, severance costs, inventory write-downs, environmental and general
property clean- up and other costs. L-P and KPC believe the shut-down of this
mill was caused by changes in economic and operating conditions as a result of
modifications made to the long-term timber supply contract made by the U.S.
Forest Service (USFS). These changes were required by Congress as part of the
Tongass Timber Reform Act passed in 1990. KPC filed claims against the USFS
which were resolved subsequent to year-end. See the Note entitled "Subsequent
Events" for further information.
In 1996, as part of the implementation of current management's strategic
plan, L-P evaluated the viability of all its current operations and made plans
for the closure or sale of certain other manufacturing facilities including
several sawmills, structural panel products plants and other plants. The
facilities have been written down to their estimated salvage or sales value. The
total charge related to property and equipment write-downs, including the KPC
facilities was $191.1 million. The facilities covered by this charge incurred
operating losses of approximately $64 million through in 1996, of which
approximately $40 million related to pulp segment assets and $24 million related
to building products related assets.
L-P reached an agreement on behalf of all defendants to settle all
outstanding shareholder securities class action claims brought in 1995 against
the company and four former and current officers. The agreement received court
approval in February 1997 and is discussed further in the Note entitled
"Contingencies." The settlement required a payment of approximately $65 million,
of which approximately $20 million was covered by insurance. L-P also reserved
- 20 -
<PAGE>
additional amounts related to other outstanding litigation, including plaintiffs
who opted out of the siding class action settlements.
In the third quarter of 1995, L-P recorded a pre-tax charge of $366.6
million ($221.8 million after tax, or $2.07 per share). This charge included
$345.0 million for class action settlements related to the Company's siding
product, as well as write-downs on planned disposals by mid-1996 of certain
facilities, principally sawmills. The historical results of these operations
were not significant. A gain on the sale of a non-strategic asset was netted
against this charge.
INTEREST, NET
Net interest expense rose significantly in 1996 as L-P borrowed funds to
cover its settlement obligations and fund capital expenditures. Less interest
was capitalized in 1996 as construction projects were completed and interest
income was lower due to lower levels of cash available for investing. Interest
rates were also slightly higher in 1996 which contributed to the increase
because most of L-P's debt has variable interest rates. L-P's debt level in 1995
decreased, resulting in lower interest expense compared to 1994. This decrease
was partially offset by higher interest rates. 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 capitalized, which also lowers interest
expense, had increased with the large capital expenditures in 1995.
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, LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations decreased to $23 million in 1996 from $335
million in 1995 and $596 million 1994. 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. In 1996, L-P paid out more than
$263 million for obligation related to litigation settlements. In 1995, 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 and other building products inventories
increased primarily due to the addition of a new distribution center.
Cash used in investing activities decreased to $213 million in 1996 after
increasing to $387 million in 1995 from $350 million in 1994. Capital
expenditure peaked in 1995 with the addition of several new OSB plants and other
projects. 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.
L-P borrowed $263 million in 1996, resulting in net cash provided by
financing activities of $142 million. Cash used in financing activities
decreased to $188 million in 1995 from $191 million in 1994. The new borrowings
in 1996 were used to fund capital expenditures, other debt repayments and
dividends and to cover settlement obligations which operating cash did not
sufficiently cover. L-P did not purchase any treasury shares in 1996 after
purchasing $120 million of treasury stock in 1995 and $54 million in 1994. 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.
- 21 -
<PAGE>
In February 1997, L-P signed a new credit facility agreement with a group
of banks, which added a $125 million term loan facility for L-P Canada, Ltd. to
the existing $300 million revolving credit facility. The entire credit facility
expires in 2002. L-P Canada Ltd. also entered into a $30 million (Canadian)
short-term revolving credit agreement to fund its working capital needs. The new
agreement is expected to be sufficient to meet L-P's immediate cash needs
discussed below. L-P's short-term credit ratings are A-1 with Standard & Poors
and D-1 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 1997 of $150 million to $175 million. These expenditures are
primarily to complete a new OSB plant 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 $260 million, of which $100 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," the amounts
ultimately paid in settling all of the outstanding litigation could exceed the
current reserves by a material amount.
L-P continues to be in a strong financial condition with a relatively low
ratio of long-term debt as a percent of total capitalization. Although cash and
cash equivalents have decreased significantly over the past two years, existing
cash and cash equivalents combined with borrowings available under the credit
facility, expected income tax refunds, the cash expected from the settlement of
the KPC claims 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 OUTLOOK
STRUCTURAL PANELS
L-P derived approximately 40 percent of its revenues and a significant
portion of its building products operating profit from structural panels in
1996. After several years of predictions that significantly more structural
capacity was being planned and built in North America, the impact of that excess
capacity was felt with a vengeance in the fall of 1996. Prices fell over 40
percent and have stayed at that level since. These new market conditions have
led to several reactions. Older, less competitive OSB mills are being closed,
significant development efforts have been initiated aimed at expanding the use
of OSB panels that currently penetrate only 35 percent of the total structural
panel market and there has been a strong push to develop export markets. It is
difficult to predict the rate of market share growth and the rate of capacity
rationalization.
Plywood volume and prices, meanwhile, have held up better than expected.
Plywood offers some aesthetic and functional advantages that will retard the
rate of erosion of its share by OSB. As some of the newer, improved OSB products
are introduced, it will resume its market share gain versus plywood. L-P's
strategies are to improve efficiencies at several of our mills to ensure they
can compete for the long term.
- 22 -
<PAGE>
LUMBER
L-P derived approximately 25 percent of its revenues from lumber in 1996.
Lumber prices have held up well in the slow winter season because of a
relatively strong building market and the lower level of imports from Canadian
mills. The Canada-U.S. trade agreement has slowed the flow of Canadian wood into
the market. We have shut down nearly 20 out-of-date mills and concentrated our
management and some capital on our remaining sawmills. Earnings were up
significantly last year and we expect them to rise further in 1997.
SPECIALTY BUSINESS
The primary drivers of growth and earnings in this segment will be our
acquisitions - Associated Chemists (ACI), GreenStone Industries, Inc.
("GreenStone"), and, pending completion, Tecton. ACI supplies specialized
coatings to wood products and paper businesses and overall volume should be up
this year. Marketing arrangements completed late in 1996 will help our defoamer
business grow significantly.
GreenStone is in the cellulosic insulation business and demand is high for
their products. Capacity additions and acquisitions are planned to support the
growth. Tecton is a supplier of Engineered Wood Products and compliments our
already significant position in this market. Laminated Veneer Lumber and
I-Joists are growing rapidly as solid wood products become more difficult to
obtain.
PULP
Pulp prices continue to hover near historical lows and various
manufacturers taking selective downtime to reduce inventories. We expect this
process will continue during the first half of the year and are anticipating a
slow recovery starting during the second half. Meanwhile our mills are taking
cost via numerous improvement projects that promise very fast payback.
- 23 -
<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) 1996 1995
- ---------------------------------------- -------- --------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 27.8 $ 75.4
Accounts receivable, less reserves of $1.4 and $1.5 102.5 128.7
Inventories 264.3 317.7
Prepaid expenses 12.0 14.3
Income tax refunds receivable 99.5 ---
Deferred income taxes 73.1 82.4
------- -------
Total current assets 579.2 618.5
TIMBER AND TIMBERLANDS, at cost
less cost of timber harvested 648.6 689.6
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land, land improvements and logging roads,
net of road amortization 182.5 164.5
Buildings 269.5 227.8
Machinery and equipment 1,953.9 1,872.9
Construction in progress 80.1 327.3
------- -------
2,486.0 2,592.5
Less reserves for depreciation (1,207.5) (1,140.2)
------- -------
Net property, plant and equipment 1,278.5 1,452.3
Other Assets 82.4 45.0
------- -------
Total Assets $2,588.7 $2,805.4
======= =======
See notes to financial statements.
- 24 -
<PAGE>
CONSOLIDATED BALANCE SHEETS
DECEMBER 31 (DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE) 1996 1995
- -------------------------------------------------------- ------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 18.7 $ 38.6
Short-term notes payable 35.4 98.3
Accounts payable and accrued liabilities 190.6 161.6
Current portion of contingency reserves 100.0 150.0
------- -------
Total current liabilities 344.7 448.5
LONG-TERM DEBT, excluding current portion 458.6 201.3
DEFERRED INCOME TAXES 163.2 207.5
CONTINGENCY RESERVES, excluding current portion 159.8 250.5
OTHER LONG-TERM LIABILITIES AND MINORITY INTEREST 34.8 41.6
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 472.7 472.4
Retained earnings 1,140.0 1,400.8
Treasury stock, 8,170,799 shares
and 8,588,427 shares, at cost (183.3) (192.7)
Loans to Employee Stock Ownership Trusts (61.6) (85.5)
Other (57.2) (56.0)
-------- --------
Total stockholders' equity 1,427.6 1,656.0
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,588.7 $2,805.4
======== ========
See notes to financial statements.
- 25 -
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31 (DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE)
1996 1995 1994
-------- -------- --------
NET SALES $2,486.0 $2,843.2 $3,039.5
-------- -------- --------
COSTS AND EXPENSES:
Cost of sales 2,123.5 2,250.3 2,158.4
Depreciation and amortization 150.6 152.0 143.8
Cost of timber harvested 41.2 50.6 53.5
Selling and administrative 139.7 121.4 125.2
Settlement charges and other
unusual items, net 350.0 366.6 ---
Interest expense, net of capitalized
interest of $7.1, $10.9 and $5.5 14.2 5.3 9.0
Interest income (6.4) (8.2) (10.0)
-------- -------- --------
Total costs and expenses 2,812.8 2,938.0 2,479.9
-------- -------- --------
Income (loss) before taxes and
minority interest (326.8) (94.8) 559.6
Provision (benefit) for income taxes (125.6) (45.8) 209.8
Minority interest in net income (loss)
of consolidated subsidiaries (.5) 2.7 2.9
-------- -------- --------
NET INCOME (LOSS) $ (200.7) $ (51.7) $ 346.9
======== ======= ========
NET INCOME (LOSS) PER SHARE $ (1.87) $ (.48) $ 3.15
========= ======== ========
CASH DIVIDENDS PER SHARE OF COMMON STOCK $ .56 $ .545 $ .485
========= ======== ========
AVERAGE SHARES OF COMMON STOCK (thousands) 107,410 107,040 110,140
========= ======== ========
See notes to financial statements.
- 26 -
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31 (DOLLAR AMOUNTS IN MILLIONS) 1996 1995 1994
- -------------------------------------------------- ------- ------ ------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $(200.7) $(51.7) $346.9
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation, amortization and
cost of timber harvested 191.8 202.6 197.3
Accrued settlement charges
and other unusual items, net 350.0 366.6 ---
Cash settlements of contingencies (263.4) (13.6) ---
Other adjustments 3.8 26.9 23.6
Decrease (increase) in receivables 31.9 28.7 (41.6)
Decrease (increase) in inventories 31.1 (103.9) 25.1
Decrease (increase) in income tax
refunds receivable (99.5) --- ---
Decrease (increase) in prepaid expenses 1.4 (7.0) (.2)
Increase (decrease) in accounts payable
and accrued liabilities (1.6) 38.2 39.4
Increase (decrease) in income taxes payable --- (7.5) .4
Increase (decrease) in deferred income taxes (22.0) (144.7) 5.0
------ ------ ------
Net cash provided by operating activities 22.8 334.6 595.9
CASH FLOWS FROM INVESTING ACTIVITIES
Plant, equipment and logging road additions,
including cash used in acquisitions (244.0) (362.9) (286.0)
Timber and timberland additions, net (22.0) (49.7) (66.0)
Assets sold and divested 62.4 23.5 4.2
Other investing activities, net (9.1) 1.8 (2.5)
------ ------ ------
Net cash used in investing activities (212.7) (387.3) (350.3)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in short-term notes payable (12.9) 47.8 5.8
Long-term borrowings 262.7 30.0 ---
Repayment of long-term debt (53.4) (82.0) (106.6)
Cash dividends (60.1) (58.2) (53.4)
Purchase of treasury stock --- (120.2) (54.3)
Loans to ESOTs --- --- (56.0)
Treasury stock sold to ESOTs --- --- 56.0
Other financing activities, net 6.0 (5.2) 17.2
------ ------ ------
Net cash provided by (used in)
financing activities 142.3 (187.8) (191.3)
------ ------ ------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (47.6) (240.5) 54.3
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 75.4 315.9 261.6
------ ------ ------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 27.8 $ 75.4 $315.9
====== ====== ======
See notes to financial statements.
</TABLE>
- 27 -
<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
------------------ ------------------ ------- -------- ----- ----- ------
BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1993 116,937,022 $117.0 6,755,938 $(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, 1994 116,937,022 117.0 4,944,804 (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, 1995 116,937,022 117.0 8,588,427 (192.7) 472.4 1,400.8 (85.5) (56.0) 1,656.0
Net income (loss) --- --- --- --- --- (200.7) --- --- (200.7)
Cash dividends, $.56 per share --- --- --- --- --- (60.1) --- --- (60.1)
Issuance of shares for employee
stock plans and for
other purposes --- --- (417,628) 9.4 .3 --- --- --- 9.7
Employee stock ownership
trust contribution --- --- --- --- --- --- 23.9 --- 23.9
Currency translation adjustment,
pension liability adjustment and
deferred compensation, net --- --- --- --- --- --- --- (1.2) (1.2)
----------- ----- --------- ---- ----- ------- ------ ----- ------
BALANCE
AS OF DECEMBER 31, 1996 116,937,022 $117.0 8,170,799 $(183.3) $472.7$ 1,140.0$ (61.6) $(57.2) $1,427.6
=========== ====== ========= ======= =========================== ====== ========
</TABLE>
See notes to financial statements.
- 28 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Louisiana-Pacific Corporation (the Company or L-P) 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 and Ireland. The principal
customers for the Company's building products are retail home centers,
distributors and wholesalers 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 under the heading "Business
Outlook" 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 Taxes,"
"Retirement Plans," "Settlement Charges and Other Unusual Items," 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 (1,073,251 shares at December 31, 1996). 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 1996, 1995 and 1994 for
interest (net of capitalized interest) was $13.4 million, $4.6 million and $9.0
million. Net cash paid (received) during 1996, 1995 and 1994 for income taxes
was $(4.1) million, $109.0 million and $204.4 million.
- 29 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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) 1996 1995
------------------------- ------ ------
Logs $106.4 $176.9
Lumber 47.4 58.3
Panel products 54.4 30.7
Other building products 70.0 70.5
Pulp 25.4 35.7
Other raw materials 26.3 27.7
Supplies 23.0 22.0
LIFO reserve (88.6) (104.1)
------ ------
Total $264.3 $317.7
====== ======
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 generally
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
1996, 1995 and 1994 was $7.1 million, $10.9 million and $5.5 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 1996, 1995 and 1994 were $3.8 million, $3.1 million and $.8
million.
- 30 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 in 1995 was included in the
line item "Settlement Charges and Other Unusual Items, Net" in the income
statement. See the Note to the financial statements entitled "Settlement Charges
and Other Unusual Items" for a discussion of charges in 1996 and 1995 related to
impairment of property, plant and equipment.
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, 1996
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, 1996 and 1995, L-P had approximately $45.9 million and
$17.8 million of goodwill, net of accumulated amortization, recorded in the
balance sheet under the caption "other assets." This goodwill has resulted from
the purchase of subsidiaries and is being amortized on a straight-line basis
over 10 to 15 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.
2. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
DECEMBER 31 (IN MILLIONS) 1996 1995
------------------------ ------ ------
Accounts payable $ 90.3 $ 98.6
Salaries and wages payable 36.6 19.8
Taxes other than income taxes 12.2 12.4
Workers' compensation 12.0 12.0
Other accrued liabilities 39.5 18.8
------ ------
$190.6 $161.6
====== ======
- 31 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
3. INCOME TAXES
Income (loss) before taxes and minority interest for the years ended
December 31, was taxed under the following jurisdictions:
YEAR ENDED DECEMBER 31 (IN MILLIONS) 1996 1995 1994
------------------------------------ ------- ------- ------
Domestic $(255.1) $(123.0) $524.1
Foreign (71.7) 28.2 35.5
------- ------ ------
$(326.8) $ (94.8) $559.6
======= ====== ======
Provision (benefit) for income taxes includes the following:
YEAR ENDED DECEMBER 31 (IN MILLIONS) 1996 1995 1994
----------------------------------- ------- ------- ------
Current tax provision (benefit):
U.S. federal $ (87.4) $ 74.4 $171.8
State and local (10.0) 14.7 24.9
Foreign 12.2 6.1 8.1
------- ------ ------
Total current tax provision (benefit) $ (85.2) $ 95.2 $204.8
======= ====== ======
Deferred tax provision (benefit):
U.S. federal $ 2.6 $(129.2) $ 3.3
State and local .3 (16.4) .4
Foreign (43.3) 4.6 1.3
------- ------ ------
Total deferred tax provision (benefit) $ (40.4) $(141.0) $ 5.0
======= ====== ======
The tax effects of significant temporary differences creating deferred tax
(assets) and liabilities at December 31, 1996 and 1995 were as follows:
DECEMBER 31 (IN MILLIONS) 1996 1995
----------------------------------- ------ ------
Property, plant and equipment $ 95.3 $174.9
Timber and timberlands 143.0 147.3
Inventories (1.2) (4.3)
Accrued liabilities (33.7) (2.3)
Contingency reserves (100.5) (155.0)
Benefit of foreign capital loss
and NOL carryover (13.6) (9.3)
Benefit of foreign ITC carryover (68.4) (77.0)
Other 26.0 (4.4)
Valuation allowance 43.2 55.2
------ ------
Net deferred tax liability 90.1 125.1
Less net current deferred tax assets (73.1) (82.4)
------ ------
Net noncurrent deferred tax liabilities $163.2 $207.5
====== ======
Due to the current domestic tax benefit in 1996, L-P is expecting refunds
from federal and state taxing authorities of approximately $99.5 million, which
have been reflected as current assets.
L-P's subsidiary, Louisiana-Pacific Canada Ltd. (LPC), has unrealized
foreign investment tax credits (ITC) of approximately C$93 million. These
credits can be carried forward to offset future tax of LPC and reduce LPC's
basis in the related property, plant and equipment. The credits expire C$3
million in 1997, C$20 million in 1999, C$6 million in 2000, C$46 million in
2001, C$4 million in
- 32 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2003, C$13 million in 2004 and C$1 million in 2005. In addition, LPC has a
capital loss carryover of C$23 million available to offset capital gains in
future years which does not expire.
The following table summarizes the differences between the statutory U.S.
federal and effective income tax rates:
YEAR ENDED DECEMBER 31 1996 1995 1994
---------------------- ----- ----- ----
Federal tax rate (35)% (35)% 35%
Tax-exempt investment income -- (2) --
State and local income taxes (4) (4) 4
Exempt foreign sales corporation income -- (3) --
Other, net 1 (4) (1)
---- ---- ----
(38)% (48)% 38%
==== ==== ====
4. LONG-TERM DEBT
INTEREST RATE DECEMBER 31,
(IN MILLIONS) AT 12/31/96 1996 1995
- ---------------------------------------------- ------------- ----- ------
Project Bank Financings --
Chetwynd, B.C. pulp mill, refinanced subsequent
to year-end, interest rate variable 6.1% $51.0 $80.0
Nova Scotia fiber gypsum plant, refinanced subsequent
to year-end, interest rate variable 6.3 34.7 34.7
Sunpine Forest Products, subsidiary sold during 1996 --- --- 5.9
Waterford, Ireland, OSB plant, payable 1996-2001,
interest rate variable 6.8 41.4 30.0
Project Revenue Bond Financings --
Newberry, MI, payable in 2009,
interest rate variable 4.7 7.6 7.6
Two Harbors, MN, payable in 2004,
interest rate variable 4.7 8.0 8.0
Wilmington, NC, payable in 1999,
interest rate variable 5.5 10.0 10.0
Hanceville, AL payable 1996-2000,
interest rate fixed 5.7 .5 .6
Employee Stock Ownership Trust (ESOT) Loans --
Hourly ESOT, payable annually through 1999,
interest rate fixed 8.3 25.5 34.0
Salaried ESOT, payable annually through 1999,
interest rate variable 4.6 18.0 24.0
Revolving Credit Facility, refinanced subsequent
to year-end, interest rate variable 6.2 275.0 ---
Other installment notes and contracts, payable in
varying amounts, through 2000, interest rates vary 4.3-7.0 5.6 5.1
------ ------
477.3 239.9
Less current portion (18.7) (38.6)
------ ------
$458.6 $201.3
====== ======
The carrying amounts of L-P's long-term debt approximates fair market
value since the debt is primarily variable rate debt. Substantially all of L-P's
debt is unsecured. 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 1996 and 1995.
- 33 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
At December 31, 1996, L-P had a $300 million revolving credit facility
with a group of banks which was due in 2001. Interest on borrowings under the
credit line was computed on one of numerous variable interest rate formulas at
L-P's option. L-P paid a commitment fee on the unused credit line. Borrowings in
1996 were classified as long-term debt as amounts are not expected or required
to be repaid during 1997. Borrowings in 1995 were classified as short-term as
amounts were expected to be repaid during 1996. Subsequent to year-end, this
revolving credit facility was replaced with a new $425 million credit facility
under substantially the same terms. The new facility includes a $300 million
revolving credit line and $125 million term facility to refinance the Chetwynd
and Nova Scotia debt. Borrowings under the new facility are due in 2002.
Additionally, L-P's subsidiary, L-P Canada Ltd. entered into a $30 million
(Canadian) revolving credit facility subsequent to year-end.
The weighted average interest rate for all debt at December 31, 1996 and
1995 was 6.2 percent and 5.9 percent. Required repayment of principal for
long-term debt is as follows:
YEAR ENDED DECEMBER 31 (IN MILLIONS)
-----------------------------------
1997 $ 18.7
1998 22.0
1999 34.9
2000 7.2
2001 6.6
2002 and after 387.9
------
$477.3
======
5. 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 9,900 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 purchased by the ESOTs in 1994 is
based on the market value of the shares at the time of allocation. L-P's ESOTs
held a total of 13,117,695 shares at December 31, 1996 of which 9,303,634 were
allocated to participants' accounts.
ESOT expense was comprised of the following:
YEAR ENDED DECEMBER 31 (IN MILLIONS) 1996 1995 1994
----------------------------------- ----- ----- -----
Compensation expense $28.2 $28.9 $18.1
Interest incurred on ESOT debt 3.2 4.3 4.8
Dividends paid on unallocated ESOT shares (2.2) (2.8) (3.1)
Market value adjustment (2.2) (2.3) --
----- ----- -----
Total ESOT expense $27.0 $28.1 $19.8
===== ===== =====
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
- 34 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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:
<TABLE>
<CAPTION>
1996 1995
---------------------------- ---------------------------
PLANS WITH PLANS WITH PLANS WITH PLANS WITH
ASSETS IN ACCUMULATED ASSETS IN ACCUMULATED
EXCESS OF BENEFITS EXCESS OF BENEFITS
ACCUMULATED IN EXCESS ACCUMULATED IN EXCESS
BENEFITS OF ASSETS BENEFITS OF ASSETS
DECEMBER 31 (IN MILLIONS)- ----------- -------------- ------------- -----------
-------------------
Accumulated benefit
obligation
<S> <C> <C> <C> <C>
Vested portion $19.9 $89.8 $19.1 $88.9
Non-vested portion .2 2.9 .3 4.3
---- ---- ---- ----
Total 20.1 92.7 19.4 93.2
Effect of future
compensation -- -- -- .1
---- ---- ---- ----
Projected benefit
obligation 20.1 92.7 19.4 93.3
Plan assets 39.6 87.3 33.6 88.8
---- ---- ---- ----
Net funded status 19.5 (5.4) 14.2 (4.5)
Unrecognized asset
at transition (5.1) (8.0) (4.3) (9.6)
Unrecognized net loss .2 20.9 1.8 19.3
Adjustment to recognize
minimum liability -- (9.7) -- (9.6)
---- ---- ---- ----
Net prepaid (accrued)
pension expense $14.6 $(2.2) $11.7 $(4.4)
==== ===== ==== ====
</TABLE>
The actuarial assumptions used to determine pension expense and the funded
status of the plans for 1996 and 1995 were: a discount rate on benefit
obligations of 7.75 percent and 7.5 percent, and an 8.75 percent expected
long-term rate of return on plan assets.
The assets of the plans at December 31, 1996 and 1995 consist mostly of
government obligations, and minor amounts in equity securities and cash and cash
equivalents.
- 35 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Pension expense included the following components:
YEAR ENDED DECEMBER 31 (IN MILLIONS) 1996 1995 1994
----------------------------------- ----- ----- -----
Benefits earned by employees $ .5 $ .4 $ 4.8
Interest cost on projected
benefit obligation 8.3 7.9 8.2
Return on plan assets (10.9) (10.2) (10.1)
Net amortization and deferral (1.7) (2.4) (1.3)
----- ----- -----
Net periodic pension expense (income) (3.8) (4.3) 1.6
Contributions to multiemployer and
defined contribution pension plans 2.1 2.0 1.8
Gain from curtailment of pension plan --- --- (5.2)
----- ----- -----
Net pension expense (income) $ (1.7) $ (2.3) $ (1.8)
===== ===== =====
L-P has several plans which provide minimal post-retirement benefits other
than pensions. Net expense related to these plans in 1996, 1995 and 1994 was $.8
million, $.6 million and $.8 million. L-P does not generally provide
post-employment benefits.
6. STOCK OPTIONS AND PLANS
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 for grants on or
after January 1, 1995. As allowed by SFAS 123, L-P has elected to adopt only the
disclosure provisions of the standard and therefore recorded no compensation
expense for certain stock option plans and all stock purchase plans. Had
compensation expense for L-P's stock-based compensation plans been determined
based on the fair value at the grant dates for awards under those plans
consistent with the method of FASB Statement 123, the L-P's net income (loss)
and earnings per share would have been reduced to the pro forma amounts
indicated below:
YEAR ENDED DECEMBER 31 (IN MILLIONS, EXCEPT PER SHARE) 1996 1995
----------------------------------------------------- ------ ------
Net income (loss)
As reported $(200.7) $(51.7)
Pro forma (206.0) (53.6)
Net income (loss) per share
As reported $(1.87) $(.48)
Pro forma (1.92) (.50)
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model using the actual option terms with
the assumptions of a 2.2 percent dividend yield, expected volatility of 27
percent, and a risk free interest rate of 6.7 percent.
Stock Option 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 $.7 million in 1996, $1.0 million in 1995 and
$(.3) million in 1994. Shares available for grant at December 31, 1996 were
292,150.
- 36 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Changes in options outstanding and exercisable were as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES
--------------------------------------
YEAR ENDED DECEMBER 31 1996 1995 1994
---------------------- --------------------------------------
<S> <C> <C> <C>
Options outstanding at January 1 1,370,410 2,611,123 2,800,662
Options granted 605,000 114,000 193,350
Options exercised (196,530) (1,046,412) (209,809)
Options cancelled (131,350) (308,301) (173,080)
-------- -------- --------
Options outstanding at December 31 1,647,530 1,370,410 2,611,123
========= ========= =========
Options exercisable at December 31 762,850 668,900 1,137,453
======= ======= =========
</TABLE>
WEIGHTED AVERAGE PRICE PER SHARE
--------------------------------
YEAR ENDED DECEMBER 31 1996 1995 1994
---------------------- --------------------------------
EXERCISE PRICE
Options granted $22.18 $21.57 $28.05
===== ===== =====
Options exercised $12.13 $11.55 $12.77
===== ===== =====
Options cancelled $21.39 $12.73 $12.49
===== ===== =====
Options outstanding $21.14 $19.40 $15.37
===== ===== =====
Options exercisable $19.05 $17.05 $12.63
===== ===== =====
FAIR VALUE AT DATE OF GRANT
Options granted $ 8.38 $ 8.98 $ N/A
===== ===== =====
Restricted Stock Plans
L-P has also granted 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 expense is recorded
in the year to which the performance criteria relates. L-P did not meet the
performance criteria in 1996 or 1995 and therefore recognized no compensation
expense for restricted stock awards. L-P met the performance criteria in 1994
and recognized compensation expense for restricted stock awards of $10.6
million. Shares available for grant at December 31, 1996 were 2,886,667.
Changes in the Restricted Stock Awards outstanding were as follows:
NUMBER OF SHARES
------------------------------
YEAR ENDED DECEMBER 31 1996 1995 1994
---------------------- ------------------------------
Restricted awards outstanding at January 1 251,208 664,500 960,000
Restricted awards granted --- 145,000 256,000
Restricted awards exercised --- (42,875) (412,500)
Restricted awards cancelled (141,750) (515,417) (139,000)
------- ------- -------
Restricted awards outstanding at December 31 109,458 251,208 664,500
======= ======= =======
Fair value at date of grant $ N/A $ 27.00 $ N/A
======= ======= =======
- 37 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
L-P also has a restricted stock plan in which the shares are issued at the
date of grant. The shares are non-transferable until the time period specified
lapses. There are no other performance criteria. Under this plan 150,000 shares
were granted and issued in 1996. These shares vest 30,000 shares in 1997, 30,000
shares in 1998, 30,000 share in 1999 and 60,000 shares in 2006. Deferred
compensation was recorded in the other equity line in the balance sheet in the
amount of $3.8 million based on the market value of the stock at the date of
issuance. The deferred compensation balance is amortized to expense over the
years during which the certificates vest. The amount of expense recorded in 1996
related to these restricted shares was $.8 million.
Stock Purchase Plans
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, 1996, 750,000 shares and 558,063
shares were subscribed at $18.59 and $20.35 per share under the 1996 and 1995
Employee Stock Purchase Plans. During 1996, L-P issued 71,398 shares to
employees at an average price of $22.09 under all Employee Stock Purchase Plans,
including the completion of the purchase period for the 1994 Plan.
7. SETTLEMENT CHARGES AND OTHER UNUSUAL ITEMS
1996
In the third quarter of 1996, L-P recorded pre-tax charges of $350.0
million ($215.0 million after tax, or $2.00 per share) to reflect expected costs
to be incurred in the shut-down of the pulp mill owned and operated by L-P's
Ketchikan Pulp Company (KPC) subsidiary as well as the settlement of all
outstanding shareholder securities class action claims, a reserve for other
litigation and a reserve for the planned shut-down and other costs related to
certain other non-strategic facilities.
The charge for the shut-down of the Ketchikan Pulp mill includes the
Company's best estimates of all costs related to the closing of operations
including the write-down of property, plant and equipment to estimated salvage
value, severance costs, inventory write-downs, environmental and general
property clean- up and other costs. L-P and KPC believe the shut-down of this
mill was caused by changes in economic and operating conditions as a result of
modifications made to the long-term timber supply contract made by the U.S.
Forest Service. These changes were required by Congress as part of the Tongass
Timber Reform Act passed in 1990. KPC filed claims against the USFS which were
resolved subsequent to year-end. See the Note entitled "Subsequent Events" for
further information.
In 1996, as part of the implementation of current management's strategic
plan, L-P evaluated the viability of all its current operations and made plans
for the closure or sale of certain other manufacturing facilities including
several sawmills, structural panel products plants and other plants. The
facilities have been written down to their estimated salvage or sales value. The
total charge related to property and equipment write-downs, including the KPC
facilities was $191.1 million. The facilities covered by this charge incurred
operating losses of approximately $64 million through in 1996, of which
approximately $40 million related to pulp segment assets and $24 million related
to building products related assets.
L-P reached an agreement on behalf of all defendants to settle all
outstanding shareholder securities class action claims brought in 1995 against
the company and four former and current officers. The agreement has been given
court approval and is discussed further in the Note entitled "Contingencies."
The settlement required a payment of approximately $65 million, of which
- 38 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
approximately $20 million was covered by insurance. L-P received the insurance
proceeds and paid the settlement amount into an escrow account in 1996. L-P also
reserved additional amounts related to other outstanding litigation, including
plaintiffs who opted out of the siding class action settlements.
Detail regarding the industry segments to which this $350.0 million charge
relate is presented in the Note entitled "Segment Information." Broken down by
type of expense, $191.1 million related to property and equipment write-downs,
$19.3 million related to inventory write-downs and $139.6 million related to
reserves taken for severance and other shut-down charges as well as litigation
costs.
1995
In the third quarter of 1995, L-P recorded a pre-tax charge of $366.6
million ($221.8 million after tax, or $2.07 per share). This charge included
$345.0 million for class action settlements related to the Company's siding
product, as well as write-downs on planned disposals by mid-1996 of certain
facilities, principally sawmills. The historical results of these operations
were not significant. A gain on the sale of a non-strategic asset was netted
against this charge.
8. CONTINGENCIES
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. In addition to civil and criminal penalties that have been
paid, 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. With the
impending closure of the pulp mill, KPC is currently seeking the EPA's and
court's guidance regarding the necessity of these expenditures. 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. KPC is also negotiating with the
state and EPA to conduct investigative and clean-up activities at the pulp mill
following shut-down. Total anticipated costs for these activities are unknown at
this time, but KPC has recorded its initial estimated amount.
The USFS has named KPC as a potentially responsible party for costs
related to the capping of a landfill near Thorne Bay, Alaska. Total costs may
range up to $8 million.
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 $33 million and $14 million at December 31, 1996
and 1995. The increase during 1996 related primarily to the shut down of the
Ketchikan Pulp Company pulp operations. As with all accounting estimates,
significant uncertainty exists in the reliability and precision of the estimates
- 39 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 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, which was subsequently expanded
to include the taking 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 is now facing 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. No trial date has been set.
In December 1995, L-P received a notice of suspension from the 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. 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 an interim
period in recognition of L-P's environmental compliance efforts. Under recently
revised regulations of the United States Department of Agriculture, the EPA
suspension will also have the effect of prohibiting L-P's Montrose facility from
purchasing timber directly, but not indirectly, from the United States Forest
Service.
- 40 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
L-P maintains a reserve for its estimate of the cost of the Montrose
criminal proceedings, although as with any estimate, there is uncertainty
concerning the actual costs to be incurred. At the present time, L-P cannot
predict whether or to what extent the circumstances described above will result
in further civil litigation or investigation by government authorities, or the
potential financial impact of any such current or future proceedings, in which
case 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 numerous class action and non-class
action proceedings, brought on behalf of various persons or purported classes of
persons (including nationwide classes in the United States and Canada) 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.
The United States District Court for the District of Oregon has given
final approval to a settlement between L-P and a nationwide class composed of
all persons who own, who have owned, or who subsequently acquire property on
which L-P's OSB siding was installed prior to January 1, 1996, excluding persons
who timely opted out of the settlement and persons who are members of the
settlement class in the Florida litigation described below. 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 and currently estimated to be in the
range $2.20 to $6.40 per square foot depending on the type of product and
geographic location) 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 in accordance with a specified protocol. There will be no
adjustment to settlement payments for improper maintenance or installation.
A claimant who is dissatisfied with the amount to be paid under the
settlement may elect to pursue claims against L-P in a binding arbitration
seeking compensatory damages without regard to the amount of payment calculated
under the settlement protocol. A claimant who elects to pursue an arbitration
claim must prove his entitlement to damages under any available legal theory,
and L-P may assert any available defense, including defenses that otherwise had
been waived under the settlement agreement. If the arbitrator reduces the damage
award otherwise payable to the claimant because of a finding of improper
installation, the claimant will be entitled to pursue a claim against the
contractor/builder to the extent the award was reduced.
L-P is required to pay $275 million into the settlement fund in seven
annual installments beginning in mid-1996: $100 million (paid in June 1996), $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
- 41 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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, except for
claims arising under their existing 25-year limited warranty after termination
of the settlement agreement. The settlement agreement does not cover
consequential damages resulting from damage to OSB siding or damage to utility
grade OSB siding (sold without any express warranty), either of which could
create additional claims. 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. In addition to
payments to the settlement fund, L-P will be required to pay fees of class
counsel in the amount of $26.25 million, as well as expenses of administering
the settlement fund and inspecting properties for damage and certain other
costs. As of December 31, 1996, approximately $68 million of the first year's
$100 million installment remained, after accruing interest on undisbursed funds
and deducting class notification costs, prior claims costs (including payments
advanced to homeowners in urgent circumstances) and payment of a small number of
claims under the settlement. By that date, approximately 78,000 claims forms had
been requested and mailed and approximately 33,300 claims had been submitted;
inspections and claims payments were at a very early stage.
Approximately 1,400 opt out notices were timely submitted, including about
1,200 individual property owners (a number of whose claims have subsequently
been resolved) and about 200 developers/owners of commercial properties; this
has resulted in additional claims being filed by those who opted out,
predominantly by owners/developers of commercial properties, most of which have
been settled.
A settlement of the Florida class action 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 that the deduction from the
payment to a member of the Florida class will be not greater than the deduction
computed for a similar claimant under the national settlement agreement
described above. Class members will be entitled to make claims for up to five
years after October 4, 1995. As of December 31, 1996, approximately 21,781
claims forms had been requested and mailed; approximately 12,000 completed
claims forms had been returned, and approximately 11,500 inspections had been
completed; this resulted in approximately 9,221 allowed claims, at an aggregate
cost of approximately $26 million (including adjustments to deductions to
conform to the national settlement).
L-P maintains reserves for the estimated costs of these siding
settlements, although, as with any estimate, there is uncertainty concerning the
actual costs to be incurred. The discussion above notes some of the factors, in
addition to
- 42 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
the inherent uncertainty of predicting the outcome of claims and litigation,
that could cause actual costs to vary materially from current estimates.
Other OSB Matters
Three separate purported class actions on behalf of owners and purchasers
of properties in which L-P's OSB panels are used for flooring, sheathing, or
underlayment have been consolidated in the United States District Court for the
Northern District of California under the caption Agius v. Louisiana-Pacific
Corporation. The actions seek damages and equitable relief for alleged fraud,
misrepresentation, breach of warranty, negligence, and improper trade practices
related to alleged improprieties in testing, APA certification, and marketing of
OSB structural panels, and alleged premature deterioration of such panels. A
separate state court action entitled Carney v. Louisiana-Pacific Corporation is
pending in the Superior Court of the State of California for the City and County
of San Francisco, seeking relief under California consumer protection statutes
based on similar allegations.
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
In October 1996, L-P reached an agreement in principle to settle pending
securities class actions in which L-P and certain of its present and former
executive officers were named as defendants. The actions were brought on behalf
of various purported classes of purchasers of L-P's common stock and were
consolidated in the United States District Court for the District of Oregon
under the caption In Re Louisiana Pacific Corp. Securities Litigation.
Plaintiffs were seeking 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. The proposed settlement, which was entered into without any
admission of liability by any defendant, provides for payment by L-P of
approximately $65 million, of which approximately $20 million was covered by
insurance. L-P received the insurance proceeds and paid the settlement amount in
1996. The settlement received final approval in the court in February 1997.
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.
- 43 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The balance in L-P's contingency reserves, exclusive of the environmental
reserves discussed above, was $227 million and $387 million at December 31,
1996, and 1995. As L-P receives additional information regarding these
contingencies, L-P will monitor its estimated exposure and adjust its accrual
accordingly. Although the preliminary statistics from the siding settlements
indicate present reserves are adequate, the amounts ultimately paid for these
contingencies 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.
9. COMMITMENTS
L-P is obligated to purchase timber under certain cutting contracts,
primarily with the U.S. Forest Service (USFS), which extend to 2002. L-P's best
estimate of its commitment at current contract rates under these contracts is
approximately $25.5 million for approximately 378 million board feet of timber.
This commitment is based on a revised contract with the USFS in Alaska for L-P's
Ketchikan Pulp Company subsidiary (see the Note entitled "Subsequent Events" for
a further discussion of this revised contract).
Payments under all operating leases that were charged to rental expense
during 1996, 1995, and 1994 were $17.0 million, $10.7 million and $7.6 million.
L-P's future minimum rental payments under non-cancelable operating leases total
approximately $6.8 million.
During 1997, L-P plans expenditures of $150-$175 million for plant
additions and improvements, timber and logging roads.
10. SEGMENT INFORMATION
L-P operates in two major industry segments. The major products included
in each segment are detailed further in the "Product Information Summary" in
Item 1. 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.
- 44 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Export sales are 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) 1996 1995 1994
--------------------------------------------------------------------------
Total sales -- point of origin
U.S. $2,389 $2,703 $2,937
Canada and other 162 191 158
Intersegment sales to U.S. (65) (51) (55)
----- ----- -----
Total sales $2,486 $2,843 $3,040
===== ===== =====
Export sales (included above) $ 268 $ 457 $ 371
===== ===== =====
Profit (loss)
U.S. $ 107 $ 353 $ 585
Canada and other (24) 37 46
Settlement charges and other unusual items, net (350) (367) --
General corporate expense and interest, net (60) (118) (71)
----- ----- -----
Income (loss) before taxes and minority
interest $ (327) $ (95) $ 560
===== ===== =====
Identifiable assets
U.S. $2,195 $2,305 $2,353
Canada 308 434 363
All other 86 66 28
----- ----- -----
Total assets $2,589 $2,805 $2,744
===== ===== =====
- 45 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Information about L-P's industry segments is as follows:
YEAR ENDED DECEMBER 31 (IN MILLIONS) 1996 1995 1994
--------------------------------------------------------------------------
Total sales
Building products $2,328 $2,535 $2,831
Pulp 177 334 220
Intersegment sales to pulp (19) (26) (11)
----- ----- -----
Total sales $2,486 $2,843 $3,040
===== ===== =====
Profit (loss)
Building products $ 174 $ 346 $ 636
Pulp (91) 44 (5)
Settlement charges and other unusual items, net(1) (350) (367) --
General corporate expense, net (52) (121) (72)
Interest, net (8) 3 1
----- ----- -----
Income (loss) before taxes and minority
interest $ (327) $ (95) $ 560
===== ===== =====
Identifiable assets
Building products $1,346 $1,389 $1,146
Pulp 341 457 440
Timber, timberlands, logging equipment and roads 682 727 733
General corporate assets 220 232 425
----- ----- -----
Total assets $2,589 $2,805 $2,744
===== ===== =====
Depreciation, amortization and cost of timber harvested
Building products $ 164 $ 158 $ 162
Pulp 25 36 29
Capital expenditures
Building products 203 286 228
Pulp 36 47 30
Timber, timberlands, logging equipment and roads 38 69 92
- --------------------------
(1) In 1996, of the total $350 million charge, $171 million related to the pulp
segment, $134 million related to the building products segment (including
litigation costs related to building products) and $45 million was not
allocable to either industry segment.
In 1995, the substantial majority of the $366.6 million charge related to
class action settlements concerning the company's siding product and
therefore would be primarily allocated to building products.
11. SUBSEQUENT EVENTS
Acquisition
On January 2, 1997, L-P purchased all of the outstanding common stock of
GreenStone Industries, a cellulose insulation manufacturer. The total purchase
price paid by L-P in cash, stock and assumption of liabilities was approximately
$45 million.
- 46 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Ketchikan Pulp Company Timber Contract
In February 1997, L-P's Ketchikan Pulp Company (KPC) subsidiary and the
U.S. Government reached an agreement that will provide KPC's two sawmills with
timber to operate for three additional years. The government also agreed to
immediately pay KPC $135 million to settle damage claims filed against the U.S.
Forest Service (USFS) and potentially another $5 million in 3 years if KPC meets
certain conditions. The Company plans to record the settlement as an unusual
item when the funds are received. See Note entitled "Settlement Charges and
Other Unusual Items" and Management's Discussion and Analysis for a further
discussion of the KPC contract dispute.
- 47 -
<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, 1996 and 1995, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1996. 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, 1996 and 1995, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1996 in conformity with generally accepted accounting
principles.
/s/ ARTHUR ANDERSEN LLP
Portland, Oregon
January 31, 1997
(except with respect to the matter discussed under the heading "Ketchikan Pulp
Company Timber Contract" in Note 11 as to which date is February 21, 1997)
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
January 31, 1997
- 48 -
<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 1997 annual meeting of stockholders (the "1997 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."
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," "Compensation of Executive Officers," "Director's
Compensation," Agreements with Executive Officers,", and "Section 16(a)
Beneficial Ownership Reporting Compliance" in the 1997 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 1997 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 1997 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, 1996, and 1995.
Consolidated Statements of Income--years ended December 31, 1996,
1995, and 1994.
Consolidated Statements of Cash Flows--years ended December 31,
1996, 1995, and 1994.
Consolidated Statements of Stockholders' Equity--years ended
December 31, 1996, 1995, and 1994.
Notes to Financial Statements.
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<PAGE>
Report of Independent Public Accountants.
No financial statement schedules are required to be filed.
B. REPORTS ON FORM 8-K
The registrant did not file any reports on Form 8-K during the quarter
ended December 31, 1996.
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.
- 50 -
<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 28, 1997 LOUISIANA-PACIFIC CORPORATION
(Registrant)
/s/ WILLIAM L. HEBERT
William L. Hebert
Vice President, Treasurer
and Controller
----------------------------------------
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 28, 1997 /s/ MARK A. SUWYN
--------------------
Mark A. Suwyn
Chairman, Chief Executive Officer
and Director
(Principal Executive Officer)
March 28, 1997 /s/ WILLIAM L. HEBERT
------------------------
William L. Hebert
Vice President, Treasurer and
Controller
(Principal Financial & Accounting
Officer)
<PAGE>
Date Signature and Title
March 28, 1997 /s/ WILLIAM C. BROOKS
------------------------
William C. Brooks
Director
March 28, 1997 /s/ ARCHIE W. DUNHAM
-----------------------
Archie W. Dunham
Director
March 28, 1997 /s/ PIERRE S. DU PONT IV
---------------------------
Pierre S. du Pont IV
Director
March 28, 1997 /s/ WILLIAM E. FLAHERTY
--------------------------
William E. Flaherty
Director
March 28, 1997 /s/ BONNIE GUITON HILL
-------------------------
Bonnie Guiton Hill
Director
March 28, 1997 /s/ DONALD R. KAYSER
-----------------------
Donald R. Kayser
Director
March 28, 1997 /s/ FRANCINE I. NEFF
-----------------------
Francine I. Neff
Director
March 28, 1997 /s/ LEE C. SIMPSON
---------------------
Lee C. Simpson
Director
March 28, 1997 /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, as amended by Amendment No. 1 dated as of July 28, 1995,
and Amendment No. 2 dated as of October 30, 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, 1996. The registrant agrees to furnish
a copy of any such instrument to the Securities and Exchange
Commission upon request.
4.A.2 Credit Agreement dated as of January 31, 1997, among the
registrant, Louisiana-Pacific Canada Ltd., Bank of America
National Trust and Savings Association and the other financial
institutions party thereto.
10.A The registrant's 1984 Employee Stock Option Plan as amended to
date.*
10.B The registrant's 1991 Employee Stock Option Plan.*
10.C 1992 Non-Employee Director Stock Option Plan and Related Form of
Option Agreement. Incorporated by
<PAGE>
Exhibit Description of Exhibit
reference to Exhibit 10.C to the registrant's Form 10-K report for
1992.*
10.D Louisiana-Pacific Corporation Directors' Deferred Compensation
Plan.*
10.E(1) The registrant's Key Employee Restricted Stock Plan as amended.*
10.E(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.F(1) Louisiana-Pacific Corporation 1997 Incentive Stock Award Plan
effective March 1, 1997 (subject to stockholder approval).*
10.F(2) Form of Award Agreements for Non-Qualified Stock Options and
Performance Shares under the Louisiana-Pacific 1997 Incentive
Stock Award Plan (subject to stockholder approval).*
10.F(3) Louisiana-Pacific Annual Cash Incentive Award Plan adopted March
1, 1997 (subject to stockholder approval of performance goals).*
10.G The registrant's Supplemental Benefits Plan.*
10.H Employment Agreement between the registrant and Mark A. Suwyn
dated January 2, 1996. Incorporated by reference to Exhibit 10.L
to the registrant's Form 10-K report for 1995.*
10.I Restricted Stock Award Agreement between the registrant and Mark
A. Suwyn dated January 31, 1996. Incorporated by reference to
Exhibit 10.M to the registrant's Form 10-K report for 1995.*
10.J Employment Agreement between the registrant and Stephen Grant
dated August 1, 1995. Incorporated by reference to Exhibit 10.P to
the registrant's Form 10-K report for 1995.*
<PAGE>
Exhibit Description of Exhibit
10.K 1997 Cash Incentive Award for Mark A. Suwyn adopted March 1, 1997
(subject to stockholder approval).*
10.L Letter agreement dated April 19, 1996, with Michael D. Hanna, with
respect to attached employment agreement dated January 15, 1995,
between Mr. Hanna and Associated Chemists, Inc.*
10.M Executive Employment Agreement effective as of January 1, 1997, by
and between the registrant and Karen D. Lundquist.*
11 Louisiana-Pacific Corporation and Subsidiaries: Calculation of Net
Income Per Share for the Year Ended December 31, 1996.
21 List of subsidiaries of the registrant.
23 Consent of Independent Public Accountants.
27 Financial data schedule.
LOUISIANA-PACIFIC CORPORATION
Index to Bylaws
Page No.
--------
ARTICLE I. STOCKHOLDERS' MEETINGS . . . . . . 1
Section 1. Annual Meeting. . . . . . . . 1
Section 2. Special Meetings. . . . . . . 1
Section 3. Place of Meetings . . . . . . 1
Section 4. Notice of Meeting . . . . . . 1
Section 5. Quorum. . . . . . . . . . . . 1
Section 6. Organization. . . . . . . . . 2
Section 7. Conduct of Business . . . . . 2
Section 8. Voting. . . . . . . . . . . . 2
Section 9. Proxies . . . . . . . . . . . 3
Section 10. List of Stockholders. . . . . 3
Section 11. Inspectors. . . . . . . . . . 3
Section 12. Denial of Action by Consent
of Stockholders . . . . . . 4
Section 13. Nominations for Director . . 4
Section 14. Notice of Stockholder Business 4
ARTICLE II. BOARD OF DIRECTORS . . . . . . . . 5
Section 1. General Powers. . . . . . . . 5
Section 2. Number, Classification,
Election and Qualification. 5
Section 3. Place of Meetings . . . . . . 6
Section 4. Regular Meetings. . . . . . . 6
Section 5. Special Meetings. . . . . . . 6
Section 6. Notice. . . . . . . . . . . . 6
Section 7. Quorum and Manner of Acting . 6
Section 8. Organization. . . . . . . . . 7
Section 9. Resignations. . . . . . . . . 7
Section 10. Vacancies and Newly Created .
Directorships . . . . . . . 7
Section 11. Removal of Directors. . . . . 7
Section 12. Compensation. . . . . . . . . 7
Section 13. Board and Committee Action
Without Meeting . . . . . . 8
Section 14. Board and Committee Telephonic
Meetings. . . . . . . . . . 8
Section 15. Mandatory Retirement Age. . . 8
ARTICLE III. EXECUTIVE AND OTHER COMMITTEES . . 8
Section 1. Executive and Other Committees 8
Section 2. General . . . . . . . . . . . 9
- i -
<PAGE>
ARTICLE IV. EXCEPTIONS TO NOTICE REQUIREMENTS 9
Section 1. Waiver of Notice. . . . . . . 9
Section 2. Unlawful Notice . . . . . . . 9
ARTICLE V. OFFICERS . . . . . . . . . . . . . 9
Section 1. Number, Election and
Qualification . . . . . . . 9
Section 2. Resignations. . . . . . . . . 10
Section 3. Removal . . . . . . . . . . . 10
Section 4. Vacancies . . . . . . . . . . 10
Section 5. Chairman . . . . . . . . . . 10
Section 6. President . . . . . . . . . . 11
Section 7. Vice Presidents . . . . . . . 11
Section 8. Secretary . . . . . . . . . . 11
Section 9. Treasurer . . . . . . . . . . 11
Section 10. Additional Powers and Duties. 12
Section 11. Compensation. . . . . . . . . 12
ARTICLE VI. INDEMNIFICATION. . . . . . . . . . 12
Section 1. General . . . . . . . . . . . 12
Section 2. Employee Benefit or Welfare
Plan Fiduciary Liability. . 12
Section 3. Persons Not to be Indemnified
Under Section 2 . . . . . . 13
Section 4. Advances of Expenses . . . . 13
Section 5. Mandatory Indemnification in
Certain Circumstances . . 14
Section 6. Right to Indemnification upon
Application; Procedure upon
Application . . . . . . . . 14
Section 7. Enforcement of Rights . . . . 14
Section 8. Bylaws as Contract;
Non-Exclusivity . . . . . . 15
ARTICLE VII. STOCK AND TRANSFER OF STOCK. . . . 15
Section 1. Stock Certificates. . . . . . 15
Section 2. Transfers of Shares . . . . . 15
Section 3. Regulations, Transfer Agents
and Registrars. . . . . . . 16
Section 4. Replacement of Certificates . 16
Section 5. Fixing of Record Date . . . . 16
ARTICLE VIII. FISCAL YEAR. . . . . . . . . . . . 16
ARTICLE IX. SEAL . . . . . . . . . . . . . . . 16
ARTICLE X. AMENDMENTS . . . . . . . . . . . . 17
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<PAGE>
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
- 1 -
<PAGE>
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
- 2 -
<PAGE>
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.
- 3 -
<PAGE>
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
- 4 -
<PAGE>
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 ten, 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
- 5 -
<PAGE>
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
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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
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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.
Section 15. Mandatory Retirement Age. The date upon which a director
shall retire from service as a director of this Corporation shall be the date of
the next annual meeting of stockholders following the date the director attains
age 70 and no person who has attained the age of 70 shall become a nominee for
election as a director of the Corporation. Any director who, on February 1,
1997, has already attained age 70 shall retire at the end of his or her then
current term of office.
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
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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
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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
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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.
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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
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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
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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.
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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
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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.
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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.
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LOUISIANA-PACIFIC CORPORATION
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Rights Agent
Rights Agreement
Restated as of February 3, 1991
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<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
Table of Defined Terms...............................................iii
1 Certain Definitions....................................................1
2 Appointment of Rights Agent............................................4
3 Issuance of Right Certificates.........................................4
4 Form of Right Certificates.............................................6
5 Countersignature and Registration......................................6
6 Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificate......................................................7
7 Exercise of Rights; Purchase Price;
Expiration Date of Rights..............................................8
8 Cancellation and Destruction of
Right Certificates....................................................10
9 Reservation and Availability of
Capital Shares........................................................11
10 Preferred Shares Record Date..........................................12
11 Adjustment of Purchase Price, Number
of Shares or Number of Rights.........................................12
12 Certificate of Adjusted Purchase Price
or Number of Shares...................................................20
13 Consolidation, Merger or Sale or
Transfer of Assets or Earning Power...................................20
14 Fractional Rights and Fractional Shares...............................24
15 Rights of Action......................................................25
16 Agreement of Right Holders............................................26
17 Right Holders and Right Certificate
Holders Not Deemed a Stockholder......................................26
18 Concerning the Rights Agent...........................................27
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Section Page
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19 Merger or Consolidation or Change
of Name of Rights Agent...............................................27
20 Duties of Rights Agent................................................28
21 Change of Rights Agent................................................30
22 Issuance of New Right Certificates....................................31
23 Redemption............................................................32
24 Exchange..............................................................33
25 Notice of Certain Events..............................................34
26 Notices...............................................................35
27 Supplements and Amendments............................................36
28 Certain Covenants.....................................................36
29 Successors............................................................37
30 Benefits of This Agreement............................................37
31 Severability..........................................................37
32 Determinations and Actions by the
Board of Directors, etc...............................................37
33 Governing Law.........................................................38
34 Counterparts..........................................................38
35 Descriptive Headings..................................................38
Exhibit A -- Form of Certificate of Designations
Exhibit B -- Form of Right Certificate
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TABLE OF DEFINED TERMS
Term Defined Page Section
Acquiring Person 1 1(a)
Adjustment Shares 13 11(a)(ii)
Affiliate 2 1(b)
Agreement 1 Intro
Associate 2 1(b)
Beneficial Owner 2 1(c)
Business Day 3 1(d)
Certificate of Designations 1 Intro
close of business 3 1(e)
Common Shares 3 1(f)
common stock equivalents 14 11(a)(iii)
Company (Louisiana-Pacific Corporation) 1 Intro
Company (Following a Section 13(a) event) 21 13(a)
current market value of a whole right
(for purposes of fractional Rights and
fractional shares) 24 14(a)
current market value of one one-hundredth
of a Preferred Share (for purposes of
fractional Rights and fractional shares) 25 14(b)
current per share market price of the
Common Shares 15 11(d)(i)
current per share market price of the
Preferred Shares 16 11(d)(ii)
Distribution Date 5 3(a)
equivalent preferred shares 14 11(b)
Exchange Act 2 1(b)
Exchange Date 8 7(b)
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Term Defined Page Section
Exchange Ratio 33 24(a)
Final Expiration Date 8 7(b)
NASDAQ 16 11(d)(i)
Person 3 1(g)
Plan (Employee Benefit Plan) 1 1(a)
Preferred Shares 3 1(h)
Principal Party 22 13(b)
Purchase Price 3 1(i)
Qualifying Tender Offer 4 1(j)
Record Date 1 Intro
Redemption Date 8 7(b)
Redemption Price 32 23(a)
Registered Common Shares 22 13(b)
Right 1 Intro
Rights Agent 1 Intro
Section 11(a)(ii) event 13 11(a)(ii)
Section 13 event 21 13(a)
Shares Acquisition Date 4 1(k)
Stockholder Rights Plan 4 1
Subsidiary 4 1(1)
Trading Day 16 11(d)(i)
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<PAGE>
RIGHTS AGREEMENT
This Rights Agreement (the "Agreement") restated as of February 3,
1991, between LOUISIANA-PACIFIC CORPORATION, a Delaware corporation (the
"Company"), and FIRST CHICAGO TRUST COMPANY OF NEW YORK, a New York corporation
(the "Rights Agent");
W I T N E S S E T H :
WHEREAS the Board of Directors of the Company has authorized the
issuance of and declared a dividend payable, in one right (a "Rights") for each
Common Share (as hereinafter defined) of the Company outstanding on June 6, 1988
(the "Record Date"), upon the terms and subject to the conditions herein set
forth;
WHEREAS each such Right shall represent the right to purchase one
one-hundredth of a share of Series A Junior Participating Cumulative Preferred
Stock, $1 par value, of the Company, and shall have the rights and preferences
set forth in the form of Certificate of Designations, attached hereto as Exhibit
A; and
WHEREAS the Board of Directors of the Company has further authorized
the issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are defined in
Sections 3 and 7 hereof);
WHEREAS the Company entered into a Rights Agreement dated as of May
23, 1988, with The Chase Manhattan Bank, N.A., as the original Rights Agent,
which agreement was amended as of October 28, 1990, to permit the substitution
of First Chicago Trust Company of New York as successor Rights Agent; and the
Company and said successor Rights Agent have amended and restated the Rights
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as defined) who or
which, together with all Affiliates and Associates (as defined) of such Person,
shall be the Beneficial Owner as defined) of 20 percent or more of the Common
Shares of the Company then outstanding, provided, however, that an Acquiring
Person shall not include (i) the Company, any wholly owned Subsidiary of the
Company any employee benefit plan ("Plan") of the Company or of a Subsidiary of
the Company or any Person holding Common Shares for or pursuant to the terms of
any
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such Plan or (ii) any Person who or which, together with all Affiliates and
Associates of such Person, first became the Beneficial Owner of 20 percent or
more of the Common Shares of the Company as the result of a Qualifying Tender
Offer (as defined). For purposes of this subsection (a), in determining the
percentage of the outstanding shares of Common Shares with respect to which a
Person is the Beneficial Owner (i) all shares as to which such Person is deemed
the Beneficial Owner shall be deemed outstanding and (ii) shares which are
subject to issuance upon the exercise or conversion of outstanding conversion
rights, rights, warrants and options other than those referred to in (i) shall
not be deemed outstanding. Any determination made by the Board of Directors as
to whether any Person is or is not an Acquiring Person shall be conclusive and
binding upon all holders of Rights.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the
date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of
Section 13(d) of the Exchange Act and Regulation 13D-G thereunder (or any
comparable or successor law or regulation), in each case as in effect on
the date hereof; or
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time or the fulfillment of a
condition or both) pursuant to any agreement, arrangement or understanding
(other than customary arrangements with and among underwriters and selling
group members with respect to a bona fide public offering of securities),
or upon the exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote, alone or in concert with
others, pursuant to any agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement,
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<PAGE>
arrangement or understanding to vote such security (1) arises solely from
a revocable proxy given to such Person or any of such Person's Affiliates
or Associates in response to a public proxy solicitation made pursuant to,
and in accordance with, the applicable rules and regulations of the
Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding (other than
customary arrangements with and among underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding voting (other than voting pursuant to a
revocable proxy as described in the proviso to Section l(c)(ii)(B)) or
disposing of any securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the state of New York are authorized
or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5 p.m., New
York City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5 p.m., New York City time, on the next succeeding
Business Day.
(f) "Common Shares" when used with reference to the Company shall
mean shares of common stock of the par value of $l each of the Company. "Common
Shares" when used with reference to any Person other than the Company shall mean
shares of the common stock of such Person (or other class of equity securities
or equity interests) having power to control or direct the management of such
Person or, if such Person is a Subsidiary of another Person, of the Person which
ultimately controls such first-mentioned Person and which has issued and
outstanding such common stock (or such other class of equity securities or
equity interests).
(g) "Person" shall mean any individual, firm, partnership,
corporation, association, group (as such term is used in Rule 13d-5 under the
Exchange Act) or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(h) "Preferred Shares" shall mean shares of Series A Junior
Participating Cumulative Preferred Stock, $1 par value, of the Company.
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(i) "Purchase Price" shall mean the price to be paid for each one
one-hundredth of a Preferred Share pursuant to the exercise of a Right, which
price is, as of the date hereof, as set forth in Section 7(c). The Purchase
Price is subject to adjustment from time to time as set forth in Sections 11 and
13.
(j) "Qualifying Tender Offer" shall mean a tender offer made by any
Person, other than an Acquiring Person, an Affiliate or Associate of an
Acquiring Person, or a Person that beneficially owns 5 percent or more of the
Company's outstanding Common Shares, to purchase all outstanding Common Shares
of the Company for cash in an amount, net to the sellers, which equals or
exceeds the highest per share price paid by such Person, or any of its
Affiliates or Associates for any such Common Shares within the 24-month period
prior to such offer and for which such Person has obtained binding commitments
for any required financing at the time the tender offer is first made; provided
that (i) all shares duly tendered pursuant to such tender offer shall be
accepted for payment and (ii) upon consummation of such tender offer such Person
shall beneficially own at least 85 percent of the outstanding Common Shares of
the Company. For purposes of this subsection (k), in determining the percentage
of outstanding Common Shares of the Company (A) shares held by a Person who is a
director and also an officer of the Company shall be deemed not outstanding and
(B) shares held by Plans in which employee participants do not have the right to
determine confidentially whether Common Shares of the Company held subject to
the Plan will be tendered in a tender offer shall be deemed not outstanding.
(k) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for the purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(l) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting equity securities or equity interests
is owned, directly or indirectly, by such Person.
The terms and conditions embodied in this Rights Agreement, as from
tine to time amended, may be referred to as the "Stockholder Rights Plan" of the
Company.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
in accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
Section 3. Issuance of Right Certificates
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(a) Until the earlier of the close of business on (i) the 10th day
after the Shares Acquisition Date or (ii) the 10th Business Day (or such later
date as may be determined by the Board of Directors of the Company prior to such
time as any Person becomes an Acquiring Person) after the date of the
commencement by, or first public announcement of the intent of, any Person
(other than the Company, any wholly owned Subsidiary of the Company, any Plan of
the company or of any Subsidiary of the Company, or any entity holding Common
Shares of the Company for or pursuant to the terms of any such Plan) to
commence, a tender or exchange offer (other than a tender offer which would,
upon acceptance of shares for payment, be a Qualifying Tender Offer) the
consummation of which would result in beneficial ownership by a Person, together
with its Affiliates and Associates, of 30 percent or more of the outstanding
Common Shares of the Company, including any such date which is after the date of
this Agreement and prior to the issuance of the Rights (the earlier of (i) and
(ii) being herein referred to as the "Distribution Date"), (x) the Rights will
be evidenced by (A) certificates for Common Shares of the Company (which
certificates shall also be deemed to be Right Certificates) or, as the case may
be, (B) certificates issued subsequent to the Record Date and bearing the legend
set forth in Section 3(c) hereof (and, in neither case, by separate Right
Certificates) and the record holders of such certificates for Common Shares
shall be the record holders of the Rights represented thereby and (y) the Rights
and the right to receive Right Certificates will be transferable only
simultaneously with and together with the transfer of Common Shares of the
Company. Until the Distribution Date (or the earlier of the Redemption Date or
the Final Expiration Date (as such terms are defined in Section 7 hereof)), the
surrender for transfer of such certificates for Common Shares shall also
constitute the surrender for transfer of the Rights associated with the Common
Shares represented thereby. As soon as practicable after the Distribution Date,
after notification by the Company, the Rights Agent will send, by first-class,
postage-prepaid mail, to each record holder of Common Shares of the Company as
of the close of business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate, in substantially the
form of Exhibit B hereto, evidencing one Right for each Common Share so held. As
of the Distribution Date, the Rights will be evidenced solely by such Right
Certificates and may be transferred by the transfer of the Right Certificates as
permitted hereby, separately and apart from any transfer of one or more shares
of Common Shares, and the holders of such Right Certificates as listed in the
records of the Company or any transfer agent or registrar for the Rights shall
be the record holders thereof.
(b) Rights shall be issued in respect of all Common Shares of the
Company issued after the Record Date, but prior to the earliest of the
Distribution Date (the Redemption Date, the Exchange Date, or the Final
Expiration Date). Certificates for such Common Shares shall also be deemed to be
certificates for
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<PAGE>
Rights and shall have impressed on, printed on, written on or otherwise affixed
to them the following legend (or the form of legend specified in any version of
this Rights Agreement prior to the current amendment and restatement hereof):
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Stockholder Rights Plan of Louisiana-Pacific
Corporation (the "Plan"), until separate certificates for such Rights are
issued. Under certain circumstances, as set forth in the Plan, such Rights
will be evidenced by separate certificates and will no longer be evidenced
by this certificate. The terms of the Plan, a copy of which is on file at
the principal executive offices of Louisiana-Pacific Corporation, are
hereby incorporated herein by reference. Louisiana-Pacific Corporation
will mail or cause to be mailed to the holder of this certificate a copy
of the Plan without charge promptly following receipt of a written request
therefor. Under certain circumstances set forth in the Plan, Rights
beneficially owned by any Person who is, was or becomes an Acquiring
Person or any Affiliate or Associate thereof (as such terms are defined in
the Plan) and any subsequent holder of such Rights, may become null and
void.
(c) Certificates for Common Shares, if any, issued after the
Distribution Date but prior to the earlier of the Redemption Date or the Final
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate does not evidence any Right issued pursuant to the terms
of the Stockholder Rights Plan of Louisiana-Pacific Corporation.
Section 4. Form of Right Certificates. The Right Certificates (and
the forms of election to purchase, assignment and certificate to be printed on
the reverse thereof), when, as and if issued, shall be substantially the same as
Exhibit B hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Common Shares of the Company or the Rights may from time
to time be listed, or to conform to usage. Subject to the provisions of Section
22 hereof, the Right Certificates, whenever issued, which are issued in respect
of Common Shares which were issued and outstanding as of the close of business
on the Distribution Date, shall be dated as of the close of business on the
Distribution Date, and on their face shall entitle the holders thereof to
purchase such number of Preferred Shares
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<PAGE>
(including fractional shares which are integral multiples of one one-hundredth
of a share) as shall be set forth therein at the price per one one-hundredth of
a Preferred Share set forth therein, but the number of such Preferred Shares and
fractions thereof and the Purchase Price shall be subject to adjustment as
provided herein.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary,
or an Assistant Secretary, of the Company, either manually or by facsimile
signature. The Right Certificates shall be countersigned manually by the Rights
Agent and shall not be valid for any purpose unless so countersigned. In case
any officer of the Company who shall have signed any of the Right Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, and issued and delivered
by the Company with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its shareholder services office, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificate.
(a) Subject to the provisions of Sections 7(f) and 14 hereof, at any
time after the close of business on the Distribution Date, and at or prior to
the close of business on the earliest of the Redemption Date, the Exchange Date,
or the Final Expiration Date (as such terms are defined in Section 7 hereof),
any Right Certificate or Right Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of Preferred Shares as
the Right
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<PAGE>
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent with the form of assignment on the reverse side thereof (or
with a written instrument of transfer in form satisfactory to the Company and
the Rights Agent enclosed with such Right Certificate), executed by the
registered holder thereof or his attorney authorized in writing, and with such
signature guaranteed. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate until the certificate set forth in the form of
assignment on the reverse side of such Right Certificate shall have been
completed and executed by the registered holder thereof or his attorney
authorized in writing, and with such signature guaranteed, and the Company shall
have been provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) of the Rights represented by such Right
Certificate or the Affiliates or Associates of such Beneficial Owner (or former
Beneficial Owner) as the Company shall reasonably request. Upon receipt of such
executed form of assignment and certificate and of such additional evidence, if
requested, the Rights Agent shall countersign and deliver to the person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loan, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company shall issue and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered owner in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Until the Distribution Date, no Right may be exercised.
(b) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the
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<PAGE>
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof and certificate thereon duly
executed (with signatures duly guaranteed), to the Rights Agent at the
shareholder services office or agency of the Rights Agent designated for such
purpose, together with payment of the Purchase Price with respect to each Right
exercised, at or prior to the earliest of (i) the close of business on June 6,
1998 (the "Final Expiration Dates"), (ii) the time at which the Rights are
exchanged (the "Exchange Date") as provided in Section 24, or (iii) the time at
which the Rights are redeemed (the "Redemption Date"), as provided in Section 23
hereof.
(c) The Purchase Price for each one one-hundredth of a Preferred
Share pursuant to the exercise of a Right shall initially be $75.00, and shall
be payable in lawful money of the United States of America in accordance with
Section 7(d) hereof. The Purchase Price and the number of Preferred Shares to be
acquired upon exercise of a Right shall be subject to adjustment from time to
time as provided in Sections 11 and 13 hereof.
(d) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and form of certificate thereon
duly executed, accompanied by payment of the Purchase Price for the shares to be
purchased and an amount equal to any applicable transfer tax required to be paid
by the holder of such Right Certificate in accordance with Section 9 by bank
certified check or cashier's check payable to the order of the Company, and such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights represented by such Right Certificate or the
Affiliates or Associates thereof as the Company may reasonably request, the
Rights Agent shall thereupon promptly (i) requisition from any transfer agent of
the Preferred Shares certificates for the number of Preferred Shares to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, and/or, as provided in Section 14 hereof,
requisition from the depositary agent depositary receipts representing such
number of one one-hundredths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company hereby directs the depositary agent to comply with such request, (ii)
when appropriate, requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section 14, (iii)
promptly after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate.
Notwithstanding the foregoing provisions of this Section 7(d), the Company may
suspend the issuance of
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Preferred Shares upon exercise of Rights for a reasonable period, not in excess
of 90 days, during which the Company seeks to register under the Securities Act
of 1933, as amended, and any applicable securities law of any jurisdiction, the
Preferred Shares to be issued pursuant to the Rights; provided, however, that
nothing contained in this Section 7(d) shall relieve the Company of its
obligations under Section 9(c) hereof.
(e) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
(f) Notwithstanding anything in this Agreement to the contrary, upon
the occurrence of a Section ll(a)(ii) event or Section 13 event, any Rights
beneficially owned by (i) an Acquiring Person or any Affiliate or Associate of
an Acquiring Person, (ii) a transferee of an Acquiring Person or of any
Affiliate or Associate of such Acquiring Person who becomes a transferee after
the Acquiring Person becomes such (other than a transferee in a transaction
described in Section 23(b)), or (iii) a transferee who acquired such Rights from
an Acquiring Person or an Affiliate or Associate of an Acquiring Person prior to
or concurrently with the Acquiring Person becoming such in a transaction which
the Board of Directors has determined to be part of an arrangement which has as
a primary purpose or effect the avoidance of this Section 7(f), shall become
null and void, and any holder of such Rights (whether or not such holder is an
Acquiring Person or an Affiliate or Associate of an Acquiring Person) shall
thereafter have no right to exercise such Rights under any provision of this
Agreement or otherwise. Any Right Certificate issued pursuant to Section 3 that
represents Rights beneficially owned by an Acquiring Person or any Affiliate or
Associate thereof and any Right Certificate issued at any time upon the transfer
of any Rights to an Acquiring Person or any Affiliate or Associate thereof or to
any nominee of such Acquiring Person, Affiliate or Associate, and any Right
Certificate issued pursuant to Sections 6 or 11 upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this
sentence, shall or shall be deemed to contain the following legend:
The Rights represented by this Right Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or Affiliate or
Associate of an Acquiring Person (as such terms are defined in the
Stockholder Rights Plan). This Right Certificate and the Rights
represented hereby are void in the circumstances specified in the
Stockholder Rights Plan.
The Company shall use all reasonable efforts to ensure that the
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<PAGE>
provisions of this Section 7(f) are complied with, but shall have no liability
to any holder of Rights or any other Person as a result of its failure to make
any determination under this Section 7(f) with respect to an Acquiring Person or
its Affiliates, Associates or transferees.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Shares.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares
(and, will use its best efforts, following the occurrence of a Section ll(a)(ii)
event, to cause to be reserved and kept available out of its authorized and
unissued Common Shares and/or other securities or out of its authorized and
issued shares held in its treasury), the number of Preferred Shares (and,
following the occurrence of a Section ll(a)(ii) event, the number of Common
Shares and/or other securities) as will from time to time be sufficient to
permit the exercise in full of all outstanding Rights.
(b) So long as the Preferred Shares (and, following the occurrence
of a Section ll(a)(ii) event, Common Shares and/or other securities) issuable
upon the exercise of Rights may be listed on any national securities exchange,
the Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares issued or reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such exercise.
(e) If necessary to permit the issuance of shares and/or other
securities pursuant to the Rights, the Company will use its best efforts from
and after the time the Rights become exercisable to register such shares and/or
other securities under the Securities Act of 1933, as amended, and any
applicable securities laws and to keep such registration effective until the
Final Expiration Date.
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<PAGE>
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all one one-hundredths of Preferred
Shares (and, following the occurrence of a Section l(a)(ii) event, Common Shares
and/or other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any Preferred Shares (or Common Shares and/or other securities as the case
may be) upon the exercise of Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or the issuance or
delivery of certificates for the Preferred Shares (or Common Shares and/or other
securities, as the case may be) in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered for exercise or to
issue or deliver any certificates for Preferred Shares (or Common Shares and/or
other securities, as the case may be) upon the exercise of any Rights until any
such tax shall have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each Person in whose name
any certificate for Preferred Shares (or Common Shares and/or other securities,
as the case may be) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) were made; provided, however, that if the
date of such surrender and payment is a date upon which the transfer books for
the Preferred Shares (or Common Shares and/or other securities, as the case may
be) are closed, such Person shall be deemed to have become the record holder of
such shares on, and such certificate shall be dated, the next succeeding
Business Day on which such transfer books are open.
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights. The Purchase Price, the number and kind of shares which may be
purchased upon exercise of a Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time
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after the date of this Agreement and prior to the close of business
on the earlier of the Redemption Date or the Final Expiration Date
(A) declare or pay any dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares,
(C) combine the outstanding Preferred Shares into a smaller number
of Preferred Shares or (D) issue any shares of its capital stock in
a reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation), then
and in each such event, the Purchase Price in effect at the time of
the record date for such dividend or on the effective date of such
subdivision, combination or reclassification, and the number and
kind of Preferred Shares or capital stock, as the case may be,
issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of Preferred Shares or capital
stock, as the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the Right was
exercisable and the transfer books of the Company were open, he
would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an
adjustment under both this Section ll(a)(i) and Section ll(a)(ii)
hereof, the adjustment provided for in this Section ll(a)(i) shall
be in addition to, and shall be made prior to, any adjustment
required pursuant to Section ll(a)(ii) hereof.
(ii) Subject to Section 24, in the event that, at any time after the
date of this Agreement any Person (other than the Company, any wholly owned
Subsidiary of the Company, any Plan of the Company or of a Subsidiary of the
Company, or any Person holding Common Shares for or pursuant to the terms of any
such Plan), alone or together with its Affiliates and Associates, shall become
an Acquiring Person (except in a transaction to which the provisions of Section
13(a) hereof apply), then, immediately upon the occurrence of such event (a
"Section ll(a)(ii) event"), proper provision shall be made so that each holder
of a Right, except as provided in Section 7(f) hereof, shall thereafter have a
right to receive for each Right, upon exercise thereof in accordance with the
terms of this Agreement and payment of the then-current Purchase Price, in lieu
of one one-hundredth of a Preferred Share, such number of Common Shares of the
Company as shall equal the result obtained by multiplying the then-current
Purchase Price by the then number of one one-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to the first occurrence of a
Section ll(a)(ii) event, and dividing that product by 50 percent
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of the current per share market price (determined pursuant to Section ll(d)
hereof) for Common Shares on the date of such first occurrence (such number of
shares being hereinafter referred to as the "Adjustment Shares"); provided that
such provision shall not be effective until such time as the Rights are no
longer subject to redemption pursuant to Section 23(a) hereof.
(iii) In lieu of issuing Common Shares in accordance with Section
ll(a)(ii) hereof, the Company may, if the Board of Directors determines that
such action is necessary or appropriate and not contrary to the interest of
holders of Rights, and, in the event that the number of Common Shares which are
authorized by the Company's Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in accordance with
Section ll(a)(ii) hereof, the Company shall, with respect to each Right, make
adequate provision to substitute for all or a portion of the Adjustment Shares
upon payment of the applicable Purchase Price (A) cash, (B) other equity
securities of the Company (including, without limitation, shares of preferred
stock or units of preferred stock having the same value as Common Shares (such
shares or units of preferred stock, "common stock equivalents")), (C) debt
securities of the Company, (D) other assets or (E) any combination of the
foregoing, having an aggregate value equal to the Adjustment Shares for which
substitution is made. To the extent that the Company determines that some action
is to be taken pursuant to this Section ll(a)(iii), the Company shall provide,
subject to Section 7(f) hereof, that such action shall apply uniformly to all
outstanding Rights.
(b) In the event that the Company shall at any time after the close
of business on the Record Date and prior to the close of business on the earlier
of the Redemption Date or the Final Expiration Date fix a record date prior to
the Redemption Date or Final Expiration Date for the issuance of rights, options
or warrants to all holders of Preferred Shares entitling them (for a period
expiring within 45 calendar days after such record date) to subscribe for or
purchase Preferred Shares (or shares having the same rights, privileges and
preferences as the Preferred Shares ("equivalent preferred shares")) or
securities convertible into Preferred Shares or equivalent preferred shares, at
a price per Preferred Share or per share of equivalent preferred share (or
having an effective price per share or a converted basis in the case of a
security convertible into Preferred Shares or equivalent preferred shares) less
than the current per share market price of the Preferred Shares (as determined
in accordance with Section 11(d) hereof) on such record date, then the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of
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Preferred Shares and/or equivalent preferred shares so to be offered (and/or the
aggregate price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
by delivery of consideration part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors, whose determination shall be net forth in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In the event that the Company shall at any time after the close
of business on the Record Date and prior to the close of business on the earlier
of the Redemption Date or the Final Expiration Date fix a record date for the
making of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend payable in Preferred
Shares) or subscription rights or warrants (excluding those referred to in
Section 11(b)), the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the current per
share market price per one Preferred Share (as determined in accordance with
Section 11(d) hereof) on such record date, less the fair market value of the
portion of the assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to one Preferred Share, and the
denominator of which shall be such current per share market price per one
Preferred Share. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so made,
the Purchase Price shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "current per
share market price" of the Common Shares on any date shall be deemed to be
the average of the daily closing prices per share of such Common Shares on
each
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of the 20 consecutive Trading Days (as such term is hereinafter defined)
through and including the Trading Day immediately preceding such date;
provided, however, that in the event the current per share market price of
the Common Shares is determined during a period following the announcement
by the issuer of such Common Shares of (A) a dividend or distribution on
such Common Shares payable in such Common Shares or securities convertible
into such Common Shares, or (B) any subdivision, combination, or
reclassification of such Common Shares, and prior to the expiration of 20
Trading Days after the ex-dividend date for such dividend, distribution,
subdivision, combination, or reclassification, then, and in each such case
the current market price shall be appropriately adjusted to take into
account such event. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case
as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York
Stock Exchange, Inc., or, if the Common Shares are not listed or admitted
to trading on the New York Stock Exchange, Inc., as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which
the Common Shares are listed or admitted to trading or, if the Common
Shares are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported
by the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then in use, or, if on
any such date the Common Shares are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Shares selected by
the Board of Directors. The term "Trading Days" shall mean a day on which
the principal national securities exchange on which the Common Shares are
listed or admitted to trading is open for the transaction of business or,
if the Common Shares are not listed or admitted to trading on any national
securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares shall be determined in the
same manner as set forth above for Common Shares in clause (i) of this
Section 11(d). If the current per share market price of the Preferred
Shares cannot be determined in the manner provided above, the "current per
share market price" of the Preferred Shares shall be conclusively deemed
to be the current per share market price of the Common Shares
(appropriately adjusted to reflect any stock split, stock dividend,
subdivision, combination, reclassification, or similar transaction
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<PAGE>
occurring after the date hereof) multiplied by one hundred.
If neither the Common Shares nor the Preferred Shares are publicly
held or so listed or traded, "current per share market price" shall mean the
fair value per share as determined in good faith by the Board of Directors based
upon such appraisals or valuation reports of such independent experts as the
Board of Directors shall in good faith determine appropriate. Any such
determination of "current per share market price" shall be described in a
statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1 percent in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of
a Common Share or other share or one-millionth of a Preferred Share as the case
may be.
(f) If, as a result of an adjustment made pursuant to Section 11(a)
or Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Shares, the number of such other shares so receivable upon exercise of
any Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in this Section 11 and the provisions of Sections 7,
9, 10, 13 and 14 hereof with respect to the Preferred Shares shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i) below, upon each adjustment of the Purchase Price as a result
of the calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a Preferred Share (calculated to the nearest one one-millionth
of a Preferred Share) obtained by (i) multiplying (x) the number of one
one-hundredths of a Preferred Share covered by a Right immediately prior to such
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
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<PAGE>
(i) The Company may elect, on or after the date of any adjustment of
the Purchase Price, to adjust the number of Rights instead of making any
adjustment in the number of Preferred Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price by the Purchase Price in effect immediately
after such adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least ten days after the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, as applicable, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price per one
one-hundredth of a Preferred Share and the number of shares which were expressed
in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the advice or opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable one one-hundredths of a Preferred
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<PAGE>
Share at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, the issuance to the holder of any Right exercised after such record date
the number of one one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such further adjustments in the number of one
one-hundredths of a Preferred Share which may be acquired upon exercise of the
Rights, and such adjustments in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that the
Board of Directors in their sole discretion shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of any Preferred Shares at less than the current market
price, (iii) issuance wholly for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares, (iv)
dividends on Preferred Shares payable in Preferred Shares or (v) issuance of
rights, options or warrants referred to in Section 11(b), hereafter made by the
Company to holders of its Preferred Shares shall not be taxable to such holders
or shall reduce the taxes payable by such holders.
(n) The Company shall not, at any time after the Distribution Date
(i) consolidate with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), (ii) merge with or into
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of
transactions, assets or earning power aggregating more than 50 percent of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section (o)
hereof), if (A) at the time of or immediately after such consolidation, merger
or sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the
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<PAGE>
Rights or (B) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the Person which constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) hereof shall
have distributed or otherwise transferred to its stockholders, or other Persons
holding an equity interest in such Person, Rights previously owned by such
Person or any of its Affiliates or Associates; provided, however, this Section
11(n) shall not affect the ability of any Subsidiary of the Company to
consolidate with, merge with or into, or sell or transfer assets or earning
power to, any other Subsidiary of the Company.
(a) After the Distribution Date, the Company shall not, except as
permitted by Sections 23 or 26 hereof, take (or permit any Subsidiary to take)
any action if at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights, including, without limiting the
generality of the foregoing, any merger, consolidation or sale or transfer of
assets or earning power.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the date of this Agreement
and prior to the Distribution Date (i) declare or pay a dividend on the
outstanding Common Shares payable in Common Shares, (ii) subdivide the
outstanding Common Shares, (iii) combine the outstanding Common Shares into a
smaller number of shares, or (iv) issue any shares of its capita] stock in a
reclassification of the outstanding Common Shares, the number of Rights
associated with each Common Share then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately adjusted
so that the number of Rights thereafter associated with each Common Share
following any such event (including other Common Shares issued after the date of
such event, but prior to the Distribution Date) shall equal the result obtained
by multiplying the number of Rights associated with each Common Share
immediately prior to such event by a fraction the numerator of which shall be
the total number of Common Shares outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total number
of Common Shares outstanding immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Shares and the Common Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing Common Shares)
in accordance with Section 25 hereof. Notwithstanding the
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foregoing sentence, the failure of the Company to make such certification or
give such notice shall not affect the validity of or the force or effect of the
requirement for such adjustment. Any adjustment to be made pursuant to Sections
11 and 13 of this Rights Agreement shall be effective as of the date of the
event giving rise to such adjustment. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, directly or indirectly, after there is an
Acquiring Person, (i) the Company shall consolidate with, or merge with and
into, any other Person (other than a Subsidiary of the Company in a transaction
that complies with Section 11(o) hereof), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) shall consolidate with the Company, or merge with and
into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such consolidation or merger,
all or part of the Common Shares shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, or (iii) the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one or more transactions to any Person or
Persons (other than the Company or any of its Subsidiaries) in one or more
transactions each of which complies with Section 11(o), assets or earning power
aggregating more than 50 percent of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company or one or more of its wholly owned Subsidiaries) (any event
described in clauses (i), (ii) or (iii) of this Section 13(a) being a "Section
13 event"), then, and in each such case, proper provision shall be made so that
(A) each holder of a Right, except as provided in Section 7(f) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the
then-current Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid and nonassessable Common
Shares of the Principal Party (as hereinafter defined) which Common Shares shall
not be subject to any liens, encumbrances, rights of first refusal, transfer
restrictions or other adverse claims, as shall be equal to the result obtained
by (1) multiplying the then-current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Section 13 event (or, if a
Section 11(a)(ii) event has occurred prior to the Section 13 event, multiplying
the number of such one one-hundredths of a share for which a Right was
exercisable immediately prior to the first occurrence of such Section 11(a)(ii)
event by the Purchase Price in effect
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<PAGE>
immediately prior to such first occurrence), and dividing that product by (2) 50
percent of the current per share market price (determined in accordance with
Section 11(d)(i) hereof) of the Common Shares of such Principal Party on the
date of consummation of such Section 13 event; (B) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Agreement; (C) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party after the first
occurrence of a Section 13 event; (D) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of shares
of its Common Shares in accordance with Section 9 hereof applicable to the
reservation of Capital Shares) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the shares of its Common Shares
thereafter deliverable upon the exercise of the Rights; and (E) the provisions
of Section 11(a)(ii) hereof shall be of no further effect following the first
occurrence of any Section 13 event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (i) or (ii)
of Section 13(a) hereof, (A) the Person that is the issuer of any
securities into which Common Shares of the Company are converted in such
merger or consolidation, or, if there is more than one such issuer, the
issuer of Common Shares that has the highest aggregate current market
price (determined in accordance with Section 11(d) hereof) and (B) if no
securities are so issued, the Person that is the other party to such
merger or consolidation, or, if there is more than one such Person, the
Person the Common Shares of which has the highest aggregate current market
price (determined in accordance with Section 11(d) hereof); and
(ii) in the case of any transaction described in clause (iii) of
Section 13(a) hereof, the Person that is the party receiving the largest
portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or
earning power transferred pursuant to such transaction or transactions or
if the Person receiving the largest portion of the assets or earning power
cannot be determined, whichever Person the Common Shares of which has the
highest aggregate.current market price (determined in accordance with
Section 11(d) hereof);
provided, however, that in any such case, (A) if the Common Shares of such
Person are not at such time and have not been
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<PAGE>
continuously over the preceding twelve-month period registered under Section 12
of the Exchange Act ("Registered Common Shares"), or such Person is not a
corporation, and such Person is direct or indirect Subsidiary of another Person
that has registered Common Shares outstanding, "Principal Party" shall refer to
such other Person; (B) if the Common Shares of such Person are not Registered
Common Shares or such Person is not a corporation, and such Person is a direct
or indirect Subsidiary of another Person but is not a direct or indirect
Subsidiary of another Person which has Registered Common Shares outstanding,
"Principal Party" shall refer to the ultimate parent entity of such
first-mentioned Pereon; (C) if the Common Shares of such Person are not
Registered Common Shares or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and one or more of
such other Persons has Registered Common Shares outstanding, "Principal Party"
shall refer to whichever of such other Persons is the issuer of the Registered
Common Shares having the highest aggregate current market price (determined in
accordance with Section 11(d) hereof); and (D) if the Common Shares of such
Person are not Registered Common Shares or such Person is not a corporation, and
such Person is directly or indirectly controlled by more than one Person, and
none of such other Persons have Registered Common Shares outstanding, "Principal
Party" shall refer to whichever ultimate parent entity is the corporation having
the greatest stockholders' equity or, if no such ultimate parent entity is a
corporation, shall refer to whichever ultimate parent entity is the entity
having the greatest net assets.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement confirming
that (i) such Principal Party shall, upon consummation of such consolidation,
merger or sale or transfer of assets or earning power, assume this Agreement in
accordance with Sections 13(a) and (b) hereof, (ii) all rights of first refusal
or preemptive rights in respect of the issuance of Common Shares of such
Principal Party upon exercise of outstanding Rights have been waived, (iii) any
provision of the authorized securities of such Principal Party or of its
charter, bylaws or other instruments governing its corporate affairs which would
obligate such Principal Party to issue in connection with, or as a consequence
of, the consummation of a transaction referred to in Section 13(a) hereof,
Common Shares of such Principal Party at less than the then-current per share
market price (determined in accordance with Section 11(d)(i) hereof) or
securities exercisable for, or convertible into, such Common Shares at less than
such then-current per share market price (other than to the holders of Rights
pursuant to this Section 13) have been waived or canceled, and (iv) such
transaction shall not result in a default by such Principal Party under this
Agreement and further providing that, as soon as practicable after the date of
any consolidation, merger or sale or transfer of assets or earning
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power referred to in Section 13(a) hereof, such Principal Party will:
(A) prepare and file a registration statement under the Securities
Act of 1933, as amended, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its
best efforts to cause such registration statement to become effective as
soon as practicable after such filing and use its best efforts to cause
such registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Securities Act of 1933, as amended)
until the Final Expiration Date of the Rights, and similarly comply with
applicable state securities laws;
(B) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on the NASDAQ or such other system then in use; and
(C) deliver to holders of the Rights historical financial statements
for such Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act.
In the event that at any time after the occurrence of a Section
11(a)(ii) event hereof some or all of the Rights shall not have been exercised
at the time of a Section 13 event, the Rights which have not theretofore been
exercised shall thereafter be exercisable in the manner described in Section
13(a) (without taking into account any prior adjustment required by Section
11(a)(ii)).
(d) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Right (i.e.,
Rights to acquire less than one one-hundredth of a Preferred Share). If the
Company shall determine not to issue such fractional Rights, there shall be paid
to the registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes of
this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no such
sale takes
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place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange, Inc., or, if the Rights are not listed or admitted to trading on
the New York Stock Exchange, Inc., as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors. If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on such date will be
as determined in good faith by the Board of Directors, based upon such
appraisals or valuation reports of such independent experts as the Board of
Directors shall in good faith determine appropriate.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights, or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one one-hundredth
of a Preferred Share may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it, provided that such agreement shall provide that
the holders of such depositary receipts shall have all the rights, privileges
and preferences to which they are entitled as beneficial owners of the Preferred
Shares. With respect to fractional Preferred Shares that are not integral
multiples of one one-hundredth of a Preferred Share, if the Company does not
issue fractional shares or depositary receipts in lieu thereof, the Company
shall pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Preferred Share. For purposes of
this Section 14(b), the current market value of one one-hundredth of a Preferred
Share shall be one one-hundredth of the closing price of a Preferred Share (as
determined in accordance with Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right, by the acceptance of the Rights,
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right except
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as permitted by this Section 14.
Section 15. Rights Of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be evidenced by
the certificates for Common Shares registered in the name of the holders of the
Common Shares (which certificates for Common Shares shall also constitute
certificates for Rights) and each Right will be transferable only in connection
with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and certificates
duly executed; and
(c) subject to Sections 6(a) and 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Right Certificate
(or, prior to the Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificates
or the associated Common Shares certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary.
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Section 17. Right Holders and Right Certificate Holders Not Deemed a
Stockholder. No holder, as such, of any Right or Right Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose the holder of
the number of one one-hundredths of a Preferred Share or any other securities of
the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right or Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Bights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Right Certificate
or certificate for the Preferred Shares or Common Shares or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of its counsel as set forth in
Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name
of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or
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consolidation to which the Rights Agent or any successor Rights Agent shall be a
party, or any corporation succeeding to the corporate trust or stock transfer
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. If, at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and if at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(b) If at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and if at that time any of the
Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the advice or opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such advice
or opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate sighed by any one of the Chairman of the Board, the
President, any Vice President, the Treasurer or the Secretary of the Company and
delivered to the
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Rights Agent; provided, however, that so long as any Person is an Acquiring
Person hereunder, such certificate shall be signed by a majority of the menders
of the Board of Directors; and such certificate shall be full authorization to
the Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own gross negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due authorization, execution and delivery hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming null and void
pursuant to Section 7(f) hereof) or any adjustment required under the provisions
of Sections 11 or 13 hereof (including the manner, method or amount thereof) or
the ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after receipt by the Rights Agent of the certificate describing any
such adjustment as contemplated by Section 12 hereof); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Shares
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary or the Treasurer of the Company, and to apply
to such
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officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer; provided, however, that so
long as any Person is an Acquiring Person hereunder, the Rights Agent shall
accept such instructions and advice only from the Board of Directors and shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with such instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Agreement and the date on and/or after which such action shall
be taken or such omission shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of, the Rights Agent in accordance
with a proposal included in any such application on or after the date specified
in such application (which date shall not be less than five Business Days after
the date any such officer of the Company or, if there is an Acquiring Person
hereunder, a majority of the members of the Board of Directors, actually
receives such application, unless any such officer or a majority of the members
of the Board of Directors shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in response
to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided that reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties or in the exercise of its rights hereunder if
the Rights Agent shall have reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
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(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate included with the form of
assignment or form of election to purchase, as the case may be, has either not
been completed, not signed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with the
Company. If such certificate has been completed and signed, the Rights Agent may
assume without further inquiry that the Right Certificate is not owned by a
person described in Section 7(f) hereof and shall not be charged with any
knowledge to the contrary.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares and Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares and
Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the Company shall become the Rights Agent and the registered
holder of any Right Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the state of New
York (or of any other state of the United States so long as such corporation is
authorized to do business as a banking institution in the state of New York), in
good standing, having a principal office in the state of New York, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose.
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Not later than the effective date of any such appointment, the Company shall
file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Shares and Preferred Shares, and mail a notice
thereof in writing to the registered holders of the Right Certificates. Failure
to give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by the Board of Directors to reflect any adjustment
or change in the Purchase Price per share and the number or kind or class of
shares or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of Common Shares of the Company following
the Distribution Date and prior to the close of business on the earlier of the
Redemption Date or the Final Expiration Date, the Company (a) shall, with
respect to Common Shares of the Company so issued or sold pursuant to the
exercise of stock options or under any Plan, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors, issue
Right Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Right
Certificate shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Right Certificate would be issued, and (ii) no such Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) The Company may, at its option, by action of the Board of
Directors at any time prior to the close of business on the earlier of (i) the
10th day following the Shares Acquisition Date or (ii) the Final Expiration
Date, redeem all, but not less than all, the then outstanding Rights at a
redemption price of $.01 per Right as such amount may be appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred to as
the "Redemption Price").
(b) In the event that if, following the occurrence of a Shares
Acquisition Date and following the expiration of the right of redemption under
subparagraph (a) of this Section 23, but prior to any Section 13 event, (i) a
Person who is an
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Acquiring Person or an Affiliate or Associate of such Person shall have
transferred or otherwise disposed of a number of Common Shares in one
transaction, or a series of transactions (not directly or indirectly involving a
purchase by the Company or any of its Subsidiaries), which did not result in the
occurrence of a Section 11(a)(ii) event or a Section 13 event, such that such
Person is thereafter a Beneficial Owner of 10 percent or less of the outstanding
Common Shares of the Company, (ii) there are no other Persons, immediately
following the transfer or other disposition described in clause (i), who are
Acquiring Persons, and (iii) the transfer or other disposition described in
clause (i) was other than pursuant to a transaction or series of transactions
which directly or indirectly involved the Company or any of its Subsidiaries,
then the right of redemption provided in subparagraph (a) of this Section 23
shall be reinstated and thereafter all outstanding Rights shall again be subject
to the provisions of this Section 23. Notwithstanding anything in this Agreement
to the contrary, the Rights shall not be exercisable at any time when the Rights
are subject to any effective right of redemption by the Company under this
Agreement.
(c) Immediately upon the action of the Board of Directors ordering
the redemption of the Rights, or at such time and date thereafter as the Board
of Directors may specify, and without any further action and without any notice,
the right to exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price. Promptly after
the action of the Board of Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights in any manner other than that
specifically set forth in this Section 23, and other than in connection with the
purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange.
(a) The Company may, at its option, by action of the Board of
Directors, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then-outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section 7(f))
for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such
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exchange ratio being herein referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any Plan of the Company or of a Subsidiary of the
Company, or any Person holding Common Shares for or pursuant to the terms of any
such Plan), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50 percent or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Common Shares equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common Shares for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 7(f) hereof)
held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or equivalent preferred shares, as such
term is defined in Section 11(b)) for Common Shares exchangeable for Rights, at
the initial rate of one one-hundredth of a Preferred Share (or equivalent
preferred share) for each Common Share, as appropriately adjusted to reflect
adjustments in the voting rights of the Preferred Shares pursuant to the terms
thereof, so that the fraction of a Preferred Share delivered in lieu of each
Common Share shall have at least the same voting rights as one Common Share.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional shares, the Company shall pay to the registered holders
of the Right Certificates with regard to which such fractional shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Common Share. For the purposes of this Section
24(d), the current market value of a whole share shall be the closing price of a
Common Share
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determined in the manner set forth in Section 11(d).
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to declare or pay any dividend payable in stock of any
class to the holders of its Preferred Shares or to make any other distribution
to the holders of its Preferred Shares (other than a regular quarterly cash
dividend), or (ii) to offer to the holders of its Preferred Shares options,
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, or (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), or (iv) to effect any consolidation or merger into or with, or to
effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one or more transactions, of more than
50 percent of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person or Persons, or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Right Certificate, in accordance with
Section 26 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, or distribution of rights
or warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up is to take place and the
date of participation therein by the holders of record of the Preferred Shares,
if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least 20 days prior to the
record date for determining holders of the Preferred Shares for purposes of such
action, and in the case of any such other action, at least 20 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the Preferred Shares, whichever shall be the earlier. The
failure to give notice required by this Section 25 or any defect therein shall
not affect the legality or validity of the action taken by the Company or the
vote upon any such action.
(b) In case any Section 11(a)(ii) event shall occur, then (i) the
Company shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the occurrence of
such event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in
Section 25(a) to Preferred Shares shall be deemed thereafter to refer to Common
Shares and/or, if appropriate, other securities.
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<PAGE>
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows: Louisiana-Pacific Corporation, 111
S.W. Fifth Avenue, Portland, Oregon 97204, Attention: Secretary. Subject to the
provisions of Section 21 hereof, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) to the principal office of the Rights Agent
as follows:
First Chicago Trust Company of New York
36 Went Broadway
New York, New York 10007
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, if prior
to the Distribution Date, to the holder of certificates representing Common
Shares of the Company) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments.
(a) Prior to the Distribution Date, the Company may by action of the
Board of Directors, and the Rights Agent shall if the Company so directs,
supplement or amend any provision of this Agreement in any manner without the
approval of any holders of Common Shares. From and after the Distribution Date,
the Company may by action of the Board of Directors, and the Rights Agent shall
if directed by the Company, from time to time, supplement or amend this
Agreement without the approval of any holders of Right Certificates in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period herein or (iv) to change or
supplement any other provisions, hereunder in any manner which the Board of
Directors may deem necessary or desirable so long as the interests" of the
holders of the Rights or Right Certificates (other than an Acquiring Person or
any Affiliate or Associate of an Acquiring Person) shall not be materially and
adversely affected thereby; provided, however, this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) a time period governing redemption of the Rights if the Rights are not then
redeemable, or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights (other than an Acquiring Person or any
Affiliate or Associate of an
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<PAGE>
Acquiring Person). Upon the delivery of a certificate from an appropriate
officer of the Company or, so long as any Person is an Acquiring Person
hereunder, from the Board of Directors, which states that the proposed
supplement or amendment is in compliance with the terms of this Section 26(a),
the Rights Agent shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of the Common Shares of the
Company.
(b) After the Distribution Date and prior to the earlier of the
Redemption Date or the Final Expiration Date, the Company shall not effect any
amendment to the Certificate of Designations for the Preferred Shares which
would materially and adversely affect the rights, privileges or powers of the
Preferred Shares, without the prior approval of the holders of two-thirds or
more of the then outstanding Rights.
Section 28. Certain Covenants.
Subject to Section 27 and the other provisions of this Agreement:
(a) no adjustment to the Purchase Price, the number of Preferred
Shares or Common Shares or other securities, as the case may be (or fractions of
a share), for which a Right is exercisable or the number of Rights outstanding
shall be made or be effective if such adjustment would have the effect of
reducing or limiting the benefits the holders of the Rights would have had
absent such adjustment, including, without limitation, the benefits under
Section 11(a)(ii) and Section 13, unless the terms of this Agreement are amended
so as to preserve such benefits; and
(b) the Company shall not, during any time when there exists an
Acquiring Person (i) sell or issue, or permit any Subsidiary to sell or issue,
to an Acquiring Person, or any Affiliate or Associate thereof, any rights,
options, warrants or convertible securities on terms similar to, or which
materially adversely affect the value of, the Rights, or (ii) sell or issue to
an Acquiring Person, or any Affiliate or Associate thereof, Preferred Shares,
Common Shares or shares of any other class of capital stock if such sale or
issue is intended to or would materially adversely affect the value of the
Rights.
Section 29. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 30. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the
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<PAGE>
Distribution Date, the Cocoon Shares of the Company) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares of the Company).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors determines in their good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of
this Agreement and the Rights shall not then be redeemable, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth day following the date of such
determination by the Board of Directors.
Section 32. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Agreement, any calculation of the number of Common
Shares of the Company outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of which any
Person is the Beneficial owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the Exchange Act Regulations as in effect on
the date hereof. Except as otherwise specifically provided herein, the Board of
Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power (a) to interpret the provisions of this
Agreement and (b) to make all determinations deemed necessary or advisable for
the administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (ii)
below, all omissions with respect to the foregoing) which are done or made by
the Board of Directors in good faith shall (i) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties, and (ii) not subject the Board of Directors or any member thereof to
any liability to the holders of the Rights.
Section 33. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
state of Delaware and for all purposes shall be governed by and construed in
accordance with
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<PAGE>
the laws of such state applicable to contracts to be made and performed entirely
within such state; provided, however, that the rights and obligations of the
Rights Agent hereunder shall be governed by the laws of the state of New York
(or state of incorporation of any successor Rights Agent).
Section 34. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 35. Descriptive Headings. Descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals thereto affixed and
attested as of the day and year first above written.
LOUISIANA-PACIFIC CORPORATION
Attest:
By /s/ Anton C. Kirchoff /s/ Harry A. Merlo
Name: Anton C. Kirchoff Name: Harry A. Merlo
Title: Secretary Title Chairman and President
FIRST CHICAGO TRUST COMPANY OF
NEW YORK
Attest:
By: /s/ Joanne Gorostiola By /s/ John C. Bambach
Name: Joanne Gorostiola Name: John C. Bambach
Title: Customer Service Officer Title: Vice President
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<PAGE>
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATIONS OF SERIES A JUNIOR
PARTICIPATING CUMULATIVE PREFERRED STOCK,
$1 Par Value
of
LOUISIANA-PACIFIC CORPORATION
---------------------
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
---------------------
The undersigned, Harry A. Merlo and Donald R. Holman, certify that:
1. They are the Chairman and President and the Secretary,
respectively, of Louisiana-Pacific Corporation, a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation").
2. That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation, as amended, of the Corporation
and pursuant to Section 151 of the General Corporation Law of the State of
Delaware, the said Board of Directors on May 23, 1988, duly adopted the
following resolution, which resolution remains in full force and effect,
creating a series of shares of Preferred Stock of the par value of $1 each (the
"Preferred Stock") of the Corporation designated as Series A Junior
Participating Cumulative Preferred Stock, $1 par value:
"RESOLVED that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, as amended (the "Certificate of Incorporation"), a
series of the Preferred Stock of the Corporation be, and it hereby is, created,
and that the designation and amount thereof and the voting powers, preferences
and relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof are as
follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as Series A Junior Participating Cumulative Preferred Stock, $1
Par Value (the Series A Preferred Stock") and the number of shares constituting
such series shall be 1,000,000.
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<PAGE>
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Preferred Stock, in preference
to the holders of Common Stock of the par value of $1 per share (the Common
Stock) of the Corporation and of any other junior stock which may be
outstanding, shall be entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose, (i) quarterly
dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $23.00 per share ($92.00 per annum), or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the-aggregate per share amount of
all cash dividends declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock, and (ii) subject to the provision for adjustment
hereinafter set forth, quarterly distributions (payable in kind) on each
Quarterly Dividend Payment Date in an amount per share equal to 100 times the
aggregate per share amount of all noncash dividends or other distributions
(other than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock, by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or with respect to the first Quarterly Dividend Payment Date since the
first issuance of any share or fraction of a share of Series A Preferred Stock.
In the event the Corporation shall at any time after May 23, 1988, declare or
pay any dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which holders of
shares of Series A Preferred Stock are entitled under clauses (i)(b) or (ii) of
the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a mandatory dividend or
distribution on the Series A Preferred Stock as provided in Section 2(A)
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common
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<PAGE>
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a mandatory dividend of $23.00 per
share ($92.00 per annum) on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
cumulate but shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 30 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the holder
thereof to one vote (and each one one-hundredth of a share of Series A Preferred
Stock shall entitle the holder thereof to one one-hundredth of one vote) on all
matters submitted to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided in the Certificate of Incorporation
or herein or by law, the holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock shall vote together as one class on all
matters submitted to a vote of the stockholders of the Corporation.
(C) In addition, the holders of shares of Series A Preferred Stock
shall have the following special voting rights:
(i) If and whenever accrued dividends on Series A Preferred Stock
shall not have been paid or declared
- A-3 -
<PAGE>
and a sum sufficient for the payment thereof set aside in an amount
equivalent to six quarterly dividends on all Shares of Series A Preferred
Stock at the time outstanding, then and in each such event the holders of
Series A Preferred Stock and each other series of Preferred Stock now or
hereafter issued which shall be accorded such clans voting right by the
Board of Directors and which shall have the right to elect two directors
as the result of a prior or subsequent default in payment of dividends on
such series (each such other series being hereinafter called "Other Series
of Preferred Stock"), voting separately as a class without regard to
series, shall be entitled to elect two directors, in addition to the
directors to be elected by the holders of all shares of the Corporation
entitled to vote for the election of directors, and the holders of all
shares (including the Series A Preferred Stock) otherwise entitled to vote
for directors, voting separately as a class, shall be entitled to elect
the remaining members of the Board of Directors.
(ii) Such special voting right of the holders of Series A Preferred
Stock may be exercised until all dividends in default on the Series A
Preferred Stock shall have been paid in full or declared and funds
sufficient therefor set aside, and when so paid or provided for such
special voting right of the holders of Series A Preferred Stock shall
cease, but subject always to the same provisions for the vesting of such
special voting rights in the case of any such future dividend default or
defaults.
(iii) At any time after such special voting rights shall have so
vested in the holders of Series A Preferred Stock, the Secretary of the
Corporation may, and upon the written request of the holders of record of
10 percent or more in number of shares of Series A Preferred Stock and
each Other Series of Preferred Stock then outstanding addressed to him at
the principal executive office of the Corporation shall, call a special
meeting of the holders of Preferred Stock so entitled to vote for the
election of the directors to be elected by them as herein provided, to be
held within 60 days after such call and at the place and upon the notice
provided by law and in the bylaws for the holding of meetings of
stockholders; provided, however, that the Secretary shall not be required
to call such special meeting in the case of any such request received less
than 90 days before the date fixed for any annual meeting of stockholders,
and if in such case such special meeting is not called, the holders of
Preferred Stock so entitled to vote shall be
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<PAGE>
entitled to exercise the special voting rights provided in this Section
3(C) at such annual meeting. If any such special meeting required to be
called as above provided shall not be called by the Secretary within 30
days after receipt of any such request, then the holders of record of 10
percent or more in number of shares of Series A Preferred Stock and each
Other Series of Preferred Stock then outstanding may designate in writing
one of their number to call such meeting, and the person so designated
may, at the expense of the Corporation, call such meeting to be held at
the place and upon the notice above provided, and for that purpose shall
have access to the stock books of the Corporation. No such special meeting
and no adjournment thereof shall be held on a date later than 60 days
before the annual meeting of the stockholders or a special meeting held in
place thereof next succeeding the time when the holders of Series A
Preferred Stock become entitled to elect directors as above provided.
(iv) If, at any meeting so called or at any annual meeting held
while the holders of shares of Series A Preferred Stock have the special
voting rights provided for in this Section 3(C), the holders of not less
than 33-1/3 percent of the then outstanding shares of Series A Preferred
Stock and each Other Series of Preferred Stock are present in person or by
proxy, which percentage shall be sufficient to constitute a quorum for the
election of additional directors as herein provided, the then authorized
number of directors of the Corporation shall automatically be increased by
two, as of the time of such special meeting or the time of the first such
annual meeting held while such holders have said special voting rights and
such quorum is present, and the holders of the Series A Preferred Stock
and each Other Series of Preferred Stock, voting as a class, shall be
entitled to elect the additional directors so provided for.
(v) Upon the election at such meeting by the holders of the shares
of Series A Preferred Stock and each Other Series of Preferred Stock,
voting as a class, of the two directors they are entitled so to elect, the
persons so elected, together with such persons as may be or may have been
elected as directors by the holders of all shares (including Series A
Preferred Stock) otherwise entitled to vote for directors, shall
constitute the duly elected directors of the Corporation. The additional
directors so elected by holders of Series A Preferred Stock and each Other
Series of Preferred Stock, voting as a class, shall
- A-5 -
<PAGE>
serve until the next annual meeting or until their respective successors
shall be elected and qualified, and at each subsequent meeting of
stockholders at which the directorship of any director elected by the vote
of holders of Series A Preferred Stock and each Other Series of Preferred
Stock under the special voting rights set forth in this Section 3(C) is up
for election said special voting rights shall apply in the reelection of
such director or in the election of his successor; provided, however, that
whenever the holders of Series A Preferred Stock and each Other Series of
Preferred Stock shall be divested of the special rights to elect two
directors as above provided, the terms of office of all persons elected as
directors by the holders of Series A Preferred Stock and each Other Series
of Preferred Stock, voting as a class, or elected to fill any vacancies
resulting from the death, resignation, or removal of directors so elected
by the holders of Series A Preferred Stock and each Other Series of
Preferred Stock, shall forthwith terminate and the authorized number of
directors shall be reduced accordingly.
(vi) If, at any time after a special meeting of stockholders or an
annual meeting of stockholders at which the holders of Series A Preferred
Stock and each Other Series of Preferred Stock have elected additional
directors as provided above, and while the holders of Series A Preferred
Stock and each Other Series of Preferred Stock shall be entitled to elect
two directors, the number of directors who have been elected by the
holders of Series A Preferred Stock and each Other Series of Preferred
Stock (or who by reason of one or more resignations, deaths or removals
have succeeded any directors so elected) shall by reason of resignation,
death or removal be less than two but at least one, the vacancy in the
directors elected by the holders of the Series A Preferred Stock and each
Other Series of Preferred Stock may be filled by the remaining director
elected by such holders, and failing such election within 30 days after
such vacancy arises, or if there shall not be incumbent at least one
director elected by such holders, the Secretary of the Corporation may,
and upon the written request of the holders of record of 10 percent or
more in number of shares of Series A Preferred Stock and each Other Series
of Preferred Stock then outstanding addressed to him at the principal
office of the Corporation shall, call a special meeting of the holder of
Preferred Stock so entitled to vote for an election to fill such vacancy
or vacancies, to be held within 60 days after such call and at the place
and upon the notice provided
- A-6 -
<PAGE>
by law and in the bylaws for the holding of meetings of stockholders;
provided, however, that the Secretary shall not be required to call such
special meeting in the case of any such request received less than 90 days
before the date fixed for any annual meeting of stockholders, and if in
such case such special meeting is not called, the holders of Preferred
Stock so entitled to vote shall be entitled to fill such vacancy or
vacancies at such annual meeting. If any such special meeting required to
be called as above provided shall not be called by the Secretary within 30
days after receipt of any such request, then the holders of record of 10
percent or more in number of shares of Series A Preferred Stock and each
Other Series of Preferred Stock then outstanding may designate in writing
one of their number to call such meeting, and the person so designated
may, at the expense of the Corporation, call such meeting to be held at
the place and upon the notice above provided, and for that purpose shall
have access to the stock books of the Corporation; no such special meeting
and no adjournment thereof shall be held on a date later than 60 days
before the annual meeting of the stockholders or a special meeting held in
place thereof next succeeding the time when the holders of Series A
Preferred Stock and each Other Series of Preferred Stock become entitled
to elect directors as above provided.
(D) Nothing herein shall prevent the directors or stockholders from
taking any action to increase the number of authorized shares of Series A
Preferred Stock, or increasing the number of authorized shares of Preferred
Stock of the same class as the Series A Preferred Stock or the number of
authorized shares of Common Stock, or changing the par value of the Common Stock
or Preferred Stock, or issuing options, warrants, or rights to any class of
stock of the Corporation as authorized by the Certificate of Incorporation now,
or as it may hereafter be amended.
(E) The provisions of this Section 3 shall govern the election of
directors by holders of Series A Preferred Stock notwithstanding any provisions
of the Certificate of Incorporation to the contrary, including, without
limitation, the first sentence of section (4) of Article Tenth of the
Certificate of Incorporation.
(F) Except as eat forth herein, holders of Series A Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote as set forth in the Certificate
of Incorporation or herein or by law) for taking any corporate action.
- A-7 -
<PAGE>
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividend and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividend on, make any other distributions on any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares
of any stock of the Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any share of stock ranking on a parity with
the Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the
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<PAGE>
Corporation could, under Section 4(A), purchase or otherwise acquire such shares
at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. The
Corporation Shall take all such action as is necessary so that all such shares
shall after their cancellation become authorized but unissued shares of
Preferred Stock, without designation as to series, and may be reissued as part
of a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
Section 6. Liquidation Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (A) to the holders of shares of stock ranking Junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received the higher of (i) $1.00 per share ($.O1 per
one one-hundredth of a share), plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, or (ii) an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the aggregate amount to
be distributed per share to holders of Common Stock; nor shall any distribution
be made (B) to the holders of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up. In the event the Corporation shall at any time declare or pay any dividend
on Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the aggregate amount to which holders of
shares of Series A Preferred Stock are entitled under clause (A)(ii) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common
- A-9 -
<PAGE>
Stock are exchanged for or changed into other stock or securities, cash and/or
any other property, or otherwise changed, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of share. of Series A Preferred
Stock shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 8. By Redemption. The shares of Series A Preferred Stock
shall not be redeemable. Notwithstanding the foregoing, the Corporation may
acquire shares of Series A Preferred Stock in any other manner permitted by law,
the Certificate of Incorporation or herein.
Section 9. Rank. Unless otherwise provided in the Certificate of
Incorporation or a Certificate of Designations relating to a subsequent series
of Preferred Stock of the Corporation, the Series A Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets on liquidation, dissolution
or winding up, and senior to the Common Stock of the Corporation.
Section 10. Amendment. The Certificate of Incorporation shall not be
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least a
majority of the outstanding shares of Series A Preferred Stock, voting
separately as a class.
Section 11. Fractional Shares. Series A Preferred Stock may be
issued in one-hundredths of a share or other fractions of a share which shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Preferred Stock.
- A-10 -
<PAGE>
3. The authorized number of shares of Preferred Stock is 15,000,000.
The number of shares of Series A Junior Participating Cumulative Preferred Stock
is 1,000,000. None of the shares of such series has been issued.
Dated: _______________________, 1988.
------------------------------
Harry A. Merlo
Chairman and President of
Louisiana-Pacific Corporation
ATTEST:
- ------------------------------
Donald R. Holman
Secretary of
Louisiana-Pacific Corporation
- A-11 -
<PAGE>
Exhibit B
Form of Right Certificate
Certificate No. R ________ Rights
NOT EXERCISABLE AFTER JUNE 6, 1998, OR EARLIER IF REDEEMED. THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY
ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE
RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY ARE VOID IN THE CIRCUMSTANCES SPECIFIED IN
THE RIGHTS AGREEMENT.]*
Right Certificate
LOUISIANA-PACIFIC CORPORATION
This certifies that ___________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the registered owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement restated as of February 3, 1991 (the "Rights
Agreement"), between Louisiana-Pacific Corporation, a Delaware corporation (the
Company), and First Chicago Trust Company of New York (the "Rights Agent," which
term shall include every successor Rights Agent under the Rights Agreement), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5 p.m. (New York City time) on
June 6, 1998, at the office or agency of the Rights Agent or its successor
designated for such purpose, one one-hundredth of a fully paid nonassessable
share of Series A Junior Participating Cumulative Preferred Stock, $l par value
(the "Preferred Shares"), of the Company, at a purchase price.
- --------------
* That portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence initially of $___ per one one-hundredth
of a Preferred Share (the "Purchase Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase and related
- B-1 -
<PAGE>
certificate duly executed. As provided in the Rights Agreement, the Purchase
Price and the number of Preferred Shares which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and are available from the Rights Agent or the Company upon written
request.
Upon the occurrence of certain events specified in Section 7(f) of
the Rights Agreement, if the Rights evidenced by this Right Certificate are or
were beneficially owned by an Acquiring Person or an Affiliate or Associate of
an Acquiring Person (as such terms are defined in the Rights Agreement) or,
under certain circumstances, a transferee of any such Acquiring Person,
Affiliate or Associate, such Rights shall become null and void and any holder
thereof (whether or not such holder is an Acquiring Person or an Affiliate or
Associate of an Acquiring Person) shall thereafter have no right to exercise
such Rights.
In certain circumstances described in the Rights Agreement, the
Rights evidenced hereby may entitle the holder hereof to purchase capital stock
of an entity other than the Company or receive cash or other assets, all as
prescribed in the Rights Agreement.
This Right Certificate, with or without other Right Certificates,
upon surrender at the office or agency of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights equal to the aggregate number of Rights
evidenced by the Right Certificate or Right Certificates surrendered. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised. Subject to the provisions of the
Rights Agreement, the Rights evidenced by this Right Certificate may, but are
not required to, be redeemed by the Company at a redemption price of $.01 per
Right.
No fractional Preferred Shares will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a
- B-2 -
<PAGE>
Preferred Share, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof, a cash payment will be Bade, as
provided in the Rights Agreement.
No holder of this Right certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal. Dated as of
- ---------------------.
ATTEST: LOUISIANA-PACIFIC CORPORATION
- ------------------------------ ----------------------------
Secretary Chairman and President
Countersigned:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By__________________________
Authorized Signature
- B-3 -
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Right Certificate.)
FOR VALUE RECEIVED ____________________________ hereby sells, assigns and
transfers unto -----------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with full power of
substitution.
Dated: ________________________, 19__
-----------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: _____________, 19__ ____________________________
Signature
Signature Guaranteed:
Form of Reverse Side of Right Certificate -- continued
NOTICE
This signature to the foregoing Assignment and
- B-4 -
<PAGE>
Certificate must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Right
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement) and, in the case of an
Assignment, will affix a legend to that effect on any Right Certificates issued
in exchange for this Right Certificate.
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To LOUISIANA-PACIFIC CORPORATION
The undersigned hereby irrevocably elects to exercise
__________________ Rights represented by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights and requests that
certificates for such Preferred
Shares be issued in the name of:
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
Please insert social security or other identifying number:
- ---------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
- --------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
Dated ____________, 19___
- B-5 -
<PAGE>
----------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as such terms are defined in the Rights Agreement); and Form of Reverse
Side of Right Certificate -- continued
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: _______________, 19__ __________________________
Signature
Signature Guaranteed:
- --------------------------------------------------------------------------------
NOTICE
The signatures in the foregoing Form of Election to Purchase and
Certificate must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Right
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement) and, in the case of an
Assignment, will affix a legend to that effect on any Right Certificates issued
in exchange for this Right Certificate.
- B-6 -
<PAGE>
EXHIBIT 28
DESCRIPTION OF COMMON STOCK
OF LOUISIANA-PACIFIC CORPORATION
General
The authorized capital stock of Louisiana-Pacific Corporation ("L-P")
consists of 15,000,000 shares of Preferred Stock, $1 par value ("Preferred
Stock"), none of which have been issued, and 75,000,000 shares of Common Stock,
$1 par value ("Common Stock"). All outstanding shares of Common Stock are fully
paid and nonassessable. Holders of Common Stock have no preemptive or conversion
rights and there are no redemption or sinking fund provisions relating to the
Common Stock. As L-P has no Preferred Stock outstanding, there is no restriction
on repurchase or redemption of Common Stock as a result of arrearages in the
payment of dividends or sinking fund installments with respect to any class of
stock issued by L-P. The holders of outstanding shares of Common Stock are
entitled to one vote per share. Voting for directors is not cumulative. The
board of directors of L-P is divided into three classes serving staggered
three-year terms.
Subject to the rights of any Preferred Stock which may be issued in
the future, the holders of Common Stock are entitled to such dividends as the
board of directors may declare out of funds legally available therefor, at such
times and in such amounts as the board deems advisable, and to share pro rata in
all assets of L-P available for distribution to its stockholders upon
liquidation.
Business Combinations
Article Tenth of L-P's Certificate of Incorporation, relating to
certain business combinations, provides that:
(a) At any time a person beneficially owns at least 20 percent of
L-P's outstanding Common Stock, certain mergers or other transactions
involving L-P, including the issuance of voting securities of L-P other
than pursuant to employee benefit plans, must be approved by holders of at
least 75 percent of the outstanding Common Stock unless (i) such person
acquired its Common Stock in a cash tender offer for all the outstanding
Common Stock or has no interest in such merger or other transaction other
than solely as a holder of Common Stock, (ii) certain price requirements
are met, or (iii) such merger or other transaction has been approved by at
least two-thirds of the entire board of directors of L-P;
- 1 -
<PAGE>
(b) Changes to L-P's bylaws must be approved by at least two-thirds
of the directors, or by the affirmative vote of holders of at least 75
percent of the outstanding Common Stock;
(c) Directors may only be removed for cause and by the affirmative
vote of holders of at least 75 percent of the outstanding Common Stock; and
(d) Any stockholder action must be taken at a meeting of
stockholders.
Article Tenth may be changed only by the affirmative vote of holders of at least
75 percent of the outstanding Common Stock.
Preferred Stock
The authorized Preferred Stock may be issued in the future without
any further action by the holders of the Common Stock, except as provided in
Article Tenth of L-P's Certificate of Incorporation discussed above. The board
of directors is authorized to divide the Preferred Stock into series and within
the limitations provided by law and L-P's charter, to designate the different
series and fix and determine the relative rights and preferences of any series
so established. If Preferred Stock is issued, the rights of the holders of
Common Stock will be subordinated in certain respects to the rights of the
holders of the Preferred Stock.
Preferred Stock Purchase Rights
Effective June 6, 1988, L-P distributed purchase rights ("Rights") to
holders of Common Stock on the basis of one Right for each share pursuant to a
Rights Agreement. A copy of the Rights Agreement as amended and restated as of
February 3, 1991 (the "Rights Agreement"), may be obtained by stockholders from
L-P. Each Right entitles the registered holder to purchase from L-P one
one-hundredth of a share of Series A Junior Participating Cumulative Preferred
Stock, $1 par value, of L-P (the "Preferred Shares"). The Rights are not
exercisable and are attached to and trade with shares of Common Stock until the
earlier of (i) 10 days following a public announcement that a person, other than
certain exempt persons, has acquired, or obtained the right to acquire,
beneficial ownership of 20 percent or more of the outstanding Common Stock,
other than pursuant to a Qualifying Tender Offer (as defined) (an "Acquiring
Person"), or (ii) 10 business days following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer (other
than a Qualifying Tender Offer) the consummation of which would result in the
beneficial ownership by a person of 30 percent or more of the outstanding Common
Stock. Upon such an event, the
- 2 -
<PAGE>
Rights will trade separately. When the Rights first become exercisable, holders
of the Rights will be entitled to receive, upon exercise and the payment of
$75.00 per Right (the "Purchase Price"), one one-hundredth of a Preferred Share.
Unless the Rights are earlier redeemed or exchanged, in the event that a person
becomes an Acquiring Person, each holder of a Right (other than Rights
beneficially owned by the Acquiring Person or certain transferees, which will
thereafter be void) will thereafter have the right to receive, upon exercise and
payment of the Purchase Price, shares of Common Stock having a value equal to
two times the Purchase Price. Similarly, upon the occurrence of certain
acquisition transactions involving L-P, proper provision must be made so that
each holder of a Right (other than Rights beneficially owned by the Acquiring
Person or certain transferees, which will thereafter be void) thereafter will
have the right to receive, upon exercise and payment of the Purchase Price,
common stock of the acquiring company having a value equal to two times the
Purchase Price.
At any time after a person becomes an Acquiring Person and prior to
the acquisition by such Acquiring Person of 50 percent or more of the
outstanding shares of Common Stock, L-P may exchange the Rights (other than
Rights beneficially owned by such Acquiring Person or certain transferees, which
became null and void), in whole or in part, for Common Stock at the rate of one
share per Right, subject to adjustments to prevent dilution.
Each Preferred Share will be entitled to receive upon declaration the
greater of (i) cash and non-cash dividends in an amount equal to 100 times the
per share dividends declared on the Common Stock or (ii) a preferential annual
dividend of $92.00 per share. The holders of Preferred Shares, voting as a
separate class, will be entitled to elect two directors if dividends on such
stock are in arrears in an amount equal to six quarterly dividends. In the event
of liquidation, each Preferred Share will be entitled to receive a liquidation
payment in an amount equal to the greater of $1.00 plus all accrued and unpaid
dividends and distributions or an amount equal to 100 times the aggregate amount
to be distributed per share of Common Stock. Each Preferred Share will have one
vote, voting together with the Common Stock. In the event of any merger,
consolidation, or other transaction in which shares of Common Stock are
exchanged, each Preferred Share will be entitled to receive 100 times the amount
received per share of Common Stock.
The Rights will expire on June 6, 1998, unless earlier redeemed or
exchanged by L-P. Until the close of business on the earlier of (i) the 10th day
following public announcement that a person has become an Acquiring Person or
(ii) the expiration date of the Rights, the Rights may be redeemed at
- 3 -
<PAGE>
L-P's election in whole, but not in part, at a price of $.01 per Right. L-P's
right of redemption may be reinstated if an Acquiring Person reduces his
beneficial ownership to 10 percent or less of the outstanding Common Stock in a
transaction not involving a purchase by L-P.
The Rights have certain antitakeover effects, but should not
discourage a Qualifying Tender Offer or interfere with any merger or other
business combination approved by L-P's board of directors at a time when the
Rights are redeemable. The Rights will cause substantial dilution to a person or
group that attempts to acquire L-P on terms not approved by L-P's board of
directors except pursuant to a Qualifying Tender Offer.
- 4 -
<PAGE>
RIGHTS AGREEMENT, AS RESTATED
AMENDMENT NO. 1
Amendment No. 1, dated as of July 28, 1995 (the "Amendment"), to the
Rights Agreement, restated as of February 3, 1991 (the "Rights Agreement"),
between Louisiana-Pacific Corporation, a Delaware corporation (the "Company"),
and First Chicago Trust Company of New York, a New York corporation (the "Rights
Agent").
WITNESSETH:
WHEREAS, the Company and the Rights Agent entered into the Rights
Agreement; and
WHEREAS, on July 28, 1995, the Board of Directors of the Company, in
accordance with Section 27 of the Rights Agreement, determined it desirable and
in the best interest of the Company and its stockholders to supplement and amend
certain provisions of the Rights Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Amendment to Section 1(a). Section 1(a) of the Rights
Agreement is amended to read in its entirety as follows:
"(a) 'Acquiring Person' shall mean any Person (as defined) who
or which, together with all Affiliates and Associates (as defined) of
such Person, shall be the Beneficial Owner (as defined) of 15 percent
or more of the Common Shares of the Company then outstanding, provided,
however, that an Acquiring Person shall not include the Company, any
wholly-owned Subsidiary of the Company, any employee benefit plan
("Plan") of the Company or of a Subsidiary of the Company, or any
Person holding Common Shares of the Company for or pursuant to the
terms of any such Plan. Notwithstanding the foregoing: (i) no Person
shall become an 'Acquiring Person' as the result of an acquisition of
Common Shares of the Company by the Company which, by reducing the
number of Common Shares of the Company outstanding, increases the
proportionate number of Common Shares of the Company beneficially owned
by such Person to 15 percent or more of the Common Shares of the
Company then outstanding, provided, however, that if a Person shall
become the Beneficial Owner of
<PAGE>
15 percent or more of the Common Shares of the Company then outstanding
by reason of such share acquisitions by the Company and shall
thereafter become the Beneficial Owner of any additional Common Shares
of the Company, then such Person shall be deemed to be an 'Acquiring
Person' unless upon the consummation of the acquisition of such
additional Common Shares of the Company such Person does not own 15
percent or more of the Common Shares of the Company then outstanding;
and (ii) if the Board of Directors determines in good faith that a
Person who would otherwise be an 'Acquiring Person' became such
inadvertently (including, without limitation, because (A) such Person
was unaware that it beneficially owned a percentage of the Common
Shares of the Company that would otherwise cause such Person to be an
'Acquiring Person' or (B) such Person was aware of the extent of its
Beneficial Ownership of Common Shares of the Company but had no actual
knowledge of the consequences of such Beneficial Ownership under this
Agreement) and without any intention of changing or influencing control
of the Company, and if such Person as promptly as practicable divested
or divests itself of Beneficial Ownership of a sufficient number of
Common Shares of the Company so that such Person would no longer be an
'Acquiring Person', then such Person shall not be deemed to be or to
have become an 'Acquiring Person' for any purposes of this Agreement.
For purposes of this subsection (a), in determining the percentage of
the outstanding shares of Common Shares of the Company with respect to
which a Person is the Beneficial Owner (i) all shares as to which such
Person is deemed the Beneficial Owner shall be deemed outstanding and
(ii) shares which are subject to issuance upon the exercise or
conversion of outstanding conversion rights, rights, warrants and
options other than those referred to in clause (i) of this sentence
shall not be deemed outstanding. Any determination made by the Board of
Directors as to whether any Person is or is not an 'Acquiring Person'
shall be conclusive and binding upon all holders of Rights.
Section 2. Amendment to Section 1(j). Section 1(j) of the Rights
Agreement is deleted.
Section 3. Amendment to Section 3(a). The first sentence of Section
3(a) of the Rights Agreement is amended by (i) deleting the parenthetical clause
"(other than a tender offer which would, upon acceptance of shares for payment,
be a Qualifying Tender Offer)", and (ii) deleting the number "30" and inserting
in lieu thereof the number "15."
<PAGE>
Section 4. Amendments to Section 13(a). (a) The first sentence of
Section 13(a) of the Rights Agreement is amended by deleting clause (ii) of said
sentence and inserting in lieu thereof the following "(ii) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof) shall consolidate with the Company, or merge with and into the
Company and the Company shall be the continuing or surviving corporation of such
merger and, in connection with such consolidation or merger, all or part of the
Common Shares shall be changed into or exchanged for stock or other securities
of the Company or of any other Person or cash or any other property, or."
(b) The first sentence of Section 13(a) of the Rights Agreement is
further amended by deleting the phrase "(other than the Company or any of its
Subsidiaries) in one or more transactions each of which complies with Section
11(o)" appearing in clause (iii) of said sentence and inserting in lieu thereof
the phrase "(other than the Company or any of its wholly owned Subsidiaries in
one or more transactions each of which complies with Section 11(o))", and by
deleting the phrase "to any other Person or Persons (other than the Company or
one or more of its wholly owned Subsidiaries)" appearing in said sentence.
Section 5. Amendment to Section 23(a). Section 23(a) of the Rights Agreement is
amended so as to read in its entirety as follows:
"(a) The Company may, at its option, by action of the Board of
Directors at any time prior to the earlier of (i) the time that any
Person first becomes an Acquiring Person or (ii) the close of business
on the Final Expiration Date, redeem all, but not less than all, the
then outstanding Rights at a redemption price of $.01 per Right as such
amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after February 3, 1991 (such
redemption price being hereinafter referred to as the 'Redemption
Price'."
Section 6. Amendment to Section 23(b). Section 23(b) of the Rights
Agreement is deleted.
Section 7. Amendment to Section 24(c). Section 24(c) is amended to read
in its entirety as follows:
"(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Shares (or equivalent preferred
shares, as such term is defined in Section 11(b)) for Common Shares
exchangeable for Rights, at the initial rate (as of February 3, 1991)
of one-hundredth of a Preferred Share (or equivalent preferred share)
for each Common Share, as appropriately adjusted to
<PAGE>
reflect subsequent adjustments in the rights of the Preferred Shares
pursuant to the terms thereof, so that the fraction of a Preferred
Share delivered in lieu of each Common Share shall have the same rights
to participate (taking into account any minimum preferential amounts)
in dividends and distributions upon liquidation, dissolution or winding
of the Company, as one Common Share."
Section 8. Amendment to Section 27(a). The first two sentences of
Section 27(a) are amended by deleting the words "Distribution Date" each place
that such words appear therein and inserting in lieu thereof the words
"occurrence of a Section 11(a)(ii) event."
Section 9. Rights Agreement as Amended. The term "Agreement" as used in
the Rights Agreement shall be deemed to refer to the Rights Agreement as amended
hereby. This Amendment shall be effective as of the date hereof and, except as
set forth herein, the Rights Agreement shall remain in full force and effect and
be otherwise unaffected hereby.
Section 10. Counterparts. This Amendment may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all of such counterparts shall together constitute but
one in the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and their respective seals to be hereunto affixed and attested, all as
of the day and year first above written.
Attest: LOUISIANA-PACIFIC CORPORATION
By /s/ ANTON C. KIRCHHOF By /s/ WILLIAM L. HEBERT
Anton C. Kirchhof William L. Hebert
Treasurer and Chief
Financial Officer
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By /s/ JAMES KUZMICH By /s/ JOANNE GOROSTIOLA
James Kuzmich Joanne Gorostiola
Assistant Vice President
<PAGE>
RIGHTS AGREEMENT, AS RESTATED
AMENDMENT NO. 2
Amendment No. 2, dated as of October 30, 1995 (the "Amendment"), to
the Rights Agreement, restated as of February 3, 1991 and as amended by
Amendment No. 1 thereto dated as of July 28, 1995 (the "Rights Agreement"),
between Louisiana-Pacific Corporation, a Delaware corporation (the "Company"),
and First Chicago Trust Company of New York, a New York corporation (the "Rights
Agent").
WITNESSETH:
WHEREAS, the Company and the Rights Agent have entered into the Rights
Agreement; and
WHEREAS, on October 29, 1995, the Board of Directors of the Company,
in accordance with Section 27 of the Rights Agreement, determined it desirable
and in the best interest of the Company and its stockholders to supplement and
amend certain provisions of the Rights Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Amendment to Section 7(c). The first sentence of Section
7(c) of the Rights Agreement is amended to read in its entirety as follows: "The
Purchase Price for each one one-hundredth of a Preferred Share pursuant to the
exercise of a Right shall be $200.00, and shall be payable in lawful money of
the United States of America in accordance with Section 7(d) hereof."
Section 2. Rights Agreement as Amended. The term "Agreement" as used
in the Rights Agreement shall be deemed to refer to the Rights Agreement as
amended hereby. This Amendment shall be effective as of the date hereof and,
except as set forth herein, the Rights Agreement shall remain in full force and
effect and be otherwise unaffected hereby.
Section 3. Counterparts. This Amendment may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all of such counterparts shall together constitute but
one in the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and their respective seals to be hereunto affixed and attested, all as
of the day and year first above written.
Attest: LOUISIANA-PACIFIC CORPORATION
By /s/ Anton C. Kirchhof By /s/ William L. Hebert
Anton C. Kirchhof William L. Hebert
Treasurer and
Chief Financial Officer
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By /s/ James Kuzmich By /s/ Joanne Gorostiola
James Kuzmich Joanne Gorostiola
Assistant Vice President
- 2 -
CREDIT AGREEMENT
DATED AS OF JANUARY 31, 1997
AMONG
LOUISIANA-PACIFIC CORPORATION,
AS THE REVOLVING BORROWER,
LOUISIANA-PACIFIC CANADA LTD.,
AS THE TERM BORROWER,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS AGENT,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
ARRANGED BY
BANCAMERICA SECURITIES, INC.
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS.............................. 1
1.01 Certain Defined Terms.................................... 1
1.02 Accounting Principles.................................... 16
ARTICLE II
THE CREDITS.............................. 16
2.01 Amounts and Terms of Commitments......................... 16
(a) The Term Credit..................................... 16
(b) The Revolving Credit................................ 16
2.02 Loan Accounts; Notes; Designation of Revolving
Borrower...................................................... 17
2.03 Procedure for Committed Borrowing........................ 18
2.04 Conversion and Continuation Elections for
Committed Borrowings.......................................... 19
2.05 Bid Borrowings........................................... 21
2.06 Procedure for Bid Borrowings............................. 21
2.07 Procedure for Swingline Loans............................ 26
2.08 Voluntary Termination or Reduction of
Commitments................................................... 28
2.09 Prepayments.............................................. 29
2.10 Repayment................................................ 30
(a) The Revolving Credit................................ 30
(b) Bid Loans........................................... 30
(c) Swingline Loans..................................... 30
(d) The Term Credit..................................... 30
2.11 Interest................................................. 30
2.12 Fees..................................................... 31
(a) Facility Fees....................................... 31
(b) Arrangement, Agency, Bid Loan Fees.................. 31
(c) Upfront Fees........................................ 31
2.13 Computation of Fees and Interest......................... 32
2.14 Payments by the Borrowers................................ 33
2.15 Payments by the Banks to the Agent....................... 33
2.16 Sharing of Payments, Etc................................. 34
2.17 Quarterly Adjustments.................................... 35
2.18 Guaranty................................................. 36
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY................. 36
3.01 Taxes.................................................... 36
3.02 Illegality............................................... 37
3.03 Increased Costs and Reduction of Return.................. 38
3.04 Funding Losses........................................... 39
3.05 Inability to Determine Rates............................. 40
3.06 Survival................................................. 40
i
<PAGE>
ARTICLE IV
CONDITIONS PRECEDENT.......................... 40
4.01 Conditions of Initial Loans.............................. 40
(a) Credit Agreement, the Guaranty and Notes........... 40
(b) Legal Opinions..................................... 40
(c) Resolutions........................................ 40
(d) Incumbency......................................... 41
(e) Payment of Fees.................................... 41
(f) Certificates....................................... 41
(g) Termination of Existing Agreement.................. 41
(h) Other Documents.................................... 42
4.02 Conditions to All Borrowings............................. 42
(a) Notice of Borrowing. ............................. 42
(b) Continuation of Representations and
Warranties............................................... 42
(c) Financial Statements............................... 42
(d) No Existing Default................................ 42
ARTICLE V
REPRESENTATIONS AND WARRANTIES..................... 43
5.01 Corporate Existence...................................... 43
5.02 Subsidiaries............................................. 43
5.03 Corporate Authorization.................................. 43
5.04 Governmental Authorization............................... 43
5.05 No Contravention......................................... 43
5.06 Binding Effect........................................... 44
5.07 Encumbrances............................................. 44
5.08 Compliance with Laws..................................... 44
5.09 Litigation............................................... 44
5.10 No Default............................................... 44
5.11 Use of Proceeds; Margin Regulations...................... 44
5.12 Regulated Entities....................................... 45
5.13 Financial Statements..................................... 45
5.14 ERISA Compliance......................................... 45
5.15 Swap Obligations......................................... 46
ARTICLE VI
AFFIRMATIVE COVENANTS......................... 46
6.01 Use of Proceeds.......................................... 46
6.02 Preservation of Corporate Existence, Etc................. 46
6.03 Notices.................................................. 47
6.04 Payment of Obligations................................... 48
6.05 Insurance................................................ 48
6.06 Inspection of Property and Books and Records............. 48
6.07 Financial Statements..................................... 48
6.08 ERISA Compliance......................................... 49
ARTICLE VII
NEGATIVE COVENANTS........................... 50
7.01 Funded Debt to Net Worth................................. 50
ii
<PAGE>
7.02 Disposition of Property.................................. 50
7.03 Mergers.................................................. 50
7.04 Encumbrances............................................. 51
7.05 Use of Proceeds.......................................... 51
7.06 ERISA.................................................... 51
ARTICLE VIII
EVENTS OF DEFAULT........................... 52
8.01 Events of Default........................................ 52
8.02 Remedies................................................. 54
8.03 Rights Not Exclusive..................................... 55
8.04 Notice of Default........................................ 55
ARTICLE IX
THE AGENT............................... 55
9.01 Appointment and Authorization; "Agent"................... 55
9.02 Delegation of Duties..................................... 56
9.03 Liability of Agent....................................... 56
9.04 Reliance by Agent........................................ 56
9.05 Notice of Default........................................ 57
9.06 Credit Decision.......................................... 57
9.07 Indemnification of Agent................................. 58
9.08 Agent in Individual Capacity............................. 58
9.09 Successor Agent.......................................... 59
9.10 Withholding Tax.......................................... 60
ARTICLE X
MISCELLANEOUS............................. 61
10.01 Amendments and Waivers.................................. 61
10.02 Notices................................................. 62
10.03 No Waiver; Cumulative Remedies.......................... 63
10.04 Costs and Expenses...................................... 63
10.05 Borrower Indemnification................................ 64
10.06 Payments Set Aside...................................... 64
10.07 Successors and Assigns.................................. 65
10.08 Assignments, Participations, etc........................ 65
10.09 Designated Bidders...................................... 67
10.10 Confidentiality......................................... 67
10.11 Set-off................................................. 68
10.12 Notification of Addresses, Lending Offices,
Etc.......................................................... 68
10.13 Counterparts............................................ 69
10.14 Severability............................................ 69
10.15 No Third Parties Benefited.............................. 69
10.16 Certain Interpretive Provisions......................... 69
10.17 Governing Law; Submission to Jurisdiction............... 70
10.18 Arbitration; Reference Proceeding....................... 71
10.19 Waiver of Jury Trial.................................... 72
10.20 Judgment................................................ 72
10.21 Provisions With Respect to Term Borrower............... 72A
10.22 Entire Agreement....................................... 72A
iii
<PAGE>
SCHEDULES
Schedule 2.01 Commitments
Schedule 5.14(c) ERISA Matters
Schedule 10.02 Lending Offices, Addresses for Notices
EXHIBITS
Exhibit A-1 Form of Notice of Borrowing (Revolving Loans
and Swingline Loans)
Exhibit A-2 Form of Notice of Borrowing (Term Loans)
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D-1 Form of Legal Opinion of Borrowers' Counsel
Exhibit D-2 Form of Legal Opinion of Term Borrower's
Canadian Counsel
Exhibit D-3 Form of Legal Opinion of Agent's Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Invitation for Competitive Bids
Exhibit G Form of Competitive Bid Request
Exhibit H Form of Competitive Bid
Exhibit I Form of Revolving Note
Exhibit J Form of Bid Loan Note
Exhibit K Form of Term Note
Exhibit L Form of Designation Agreement
Exhibit M Form of Guaranty
iv
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of January 31, 1997, among
Louisiana-Pacific Corporation, a corporation organized under the laws of the
State of Delaware (the "Revolving Borrower"), Louisiana-Pacific Canada Ltd., a
corporation organized under the laws of the province of British Columbia, Canada
(the "Term Borrower"), 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 Revolving
Borrower a revolving credit facility with a swingline subfacility upon the terms
and conditions set forth in this Agreement; and
WHEREAS, the Banks have agreed to make available to the Term
Borrower a term loan facility 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
<PAGE>
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, 1997, (i) 0.1700% for Offshore Rate Committed Loans and 0.0000%
for Base Rate Committed Loans and Swingline Loans, in each case, to the
Revolving Borrower, and (ii) 0.2500% for Offshore Rate Committed Loans and
0.000% for Base Rate Committed Loans, in each case, to the Term Borrower
and (B) from and after April 1, 1997, 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.
------------------------------------------------------
Applicable Margin with Respect to:
------------------------------------------------------
Revolving Loans
and Swingline Loans Term Loans
Interest Coverage Offshore Base Rate and Offshore
Ratio Rate Swingline Rate Base Rate
------ ---------- ------ ---------
at End of Fiscal
- ----------------
Quarter
- -------
Greater than or equal 0.1700% 0.0000% 0.2500% 0.0000%
to 5.00 to 1.00
Greater than or equal 0.2500% 0.0000% 0.3750% 0.0000%
to 3.00 to 1.00 but
less than 5.00 to
1.00
Less than 3.00 to 0.3250% 0.0000% 0.5000% 0.0000%
1.00
The Applicable Margin for each fiscal quarter commencing on or after April
1, 1997 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
2
<PAGE>
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 BancAmerica 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 Revolving Borrower 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
Revolving Borrower 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 Revolving Borrower.
"Bid Loan Note" has the meaning specified in subsection 2.02(b).
3
<PAGE>
"BofA" means Bank of America National Trust and Savings Association,
a national banking association.
"Borrower" means each of the Revolving Borrower and the Term
Borrower, and "Borrowers" means both the Revolving Borrower and the Term
Borrower.
"Borrowing" means a borrowing hereunder consisting of (i) Committed
Loans of the same Type made to the same Borrower on same day by the Banks,
(ii) Bid Loans made to the Revolving Borrower on the same day by the Banks
or Designated Bidders, or (iii) a Swingline Loan or Loans made to the
Revolving Borrower 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" means, as to each Bank, such Bank's obligation to make
Term Loans pursuant to subsection 2.01(a) and Revolving Loans pursuant to
subsection 2.01(b).
"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 Period.
"Committed Loan" means a Revolving Loan or a Term Loan, and may be
an Offshore Rate Committed Loan or a Base Rate Committed Loan (each, a
"Type" of Committed Loan).
4
<PAGE>
"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, a Borrower (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 L.
"Dollars", "dollars", and "$" means dollars of the United States of
America.
"EBIT" means, for any period, for the Revolving Borrower 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
5
<PAGE>
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 organized under the laws of the United
States, or any state thereof, or under the laws of any other country which
is a member of the OECD, or a political subdivision of any such country,
and acting through a branch or agency located in the United States, and
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 Revolving Borrower 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 Revolving Borrower 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 Revolving Borrower 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 Revolving Borrower 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).
6
<PAGE>
"Facility Fee Percentage" means (A) for the period from the Closing
Date through March 31, 1997, 0.0800%, and (B) from and after April 1,
1997, 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 or equal to
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 or after
April 1, 1997 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
7
<PAGE>
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, determined on a consolidated basis for the
Revolving Borrower and its Subsidiaries, 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.
"Guaranty" means a guaranty executed by Louisiana-Pacific
Corporation substantially in the form of Exhibit M.
"Indemnified Liabilities" has the meaning specified in Section
10.05.
"Indemnified Person" 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 Revolving Borrower 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
8
<PAGE>
converted into another Type of Committed Loan, and (c) as to any Swingline
Loan, the Business Day agreed upon by the Revolving Borrower 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 Revolving Borrower 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 applicable Borrower
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 Revolving Borrower 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 Revolving
Borrower 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 Term Loan shall extend beyond
the Term Maturity Date and no Interest Period for any Revolving Loan
shall extend beyond the
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date set forth in clause (a) of the definition of "Revolving
Termination Date".
"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
Revolving Borrower and the Agent.
"LIBO 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 LIBO 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 a Borrower under Article II,
and, in the case of the Revolving Borrower, may be a Revolving Loan, a
Swingline Loan, or a Bid Loan, and, in the case of the Term Borrower, may
be a Term 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 Revolving
Commitments, and (b) otherwise, Banks then holding at least 60% of the
then
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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 Revolving Borrower 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 Revolving Borrower and its Subsidiaries, of (1) the capital accounts
as determined by GAAP and (2) debt of the Revolving Borrower which is
subordinated by the holders thereof to the Loans and other sums now or
hereafter owed by the Borrowers or their 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.
"Note" means a Revolving Note, a Term Note or a Bid Loan Note and
"Notes" means all of the Revolving Notes, the Term Notes and the Bid Loan
Notes.
"Notice of Borrowing" means a notice in substantially the form of
Exhibit A-1 in the case of the Revolving Borrower and Exhibit A-2 in the
case of the Term Borrower.
"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)
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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 Revolving Borrower 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 plan years.
"Permitted Swap Obligations" means all obligations (contingent or
otherwise) of either Borrower or any of their Subsidiaries existing or
arising under Swap Contracts, provided that each of the following criteria
is satisfied:
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(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 Revolving Borrower sponsors or maintains or to which the
Revolving Borrower 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, (i) with respect
to Loans other than Term Loans, the percentage equivalent (expressed as a
decimal, rounded to the eighth decimal place) at such time of such Bank's
Revolving Commitment divided by the combined Revolving Commitments of all
Banks, (ii) with respect to Term Loans, the percentage equivalent
(expressed as a decimal, rounded to the eighth decimal place) at such time
of the principal amount of such Bank's Term Loan divided by the combined
Term Loans 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.
"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
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Person or any of its property or to which the Person or any of its
property is subject.
"Revolving Borrower" is defined in the preamble.
"Revolving Commitment" has the meaning specified in subsection
2.01(b).
"Revolving Loan" has the meaning specified in subsection 2.01(b).
"Revolving Note" has the meaning specified in subsection 2.02(b).
"Revolving Termination Date" means the earlier to occur of:
(a) January 31, 2002; 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 Revolving
Borrower.
"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
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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 Revolving Borrower 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(c).
"Swingline Loan" has the meaning specified in subsection 2.01(c).
"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.
"Term Borrower" is defined in the preamble.
"Term Commitment" means $125,000,000.
"Term Loan" has the meaning specified in subsection 2.01(a).
"Term Maturity Date" means February 1, 2002.
"Term Note" has the meaning specified in subsection 2.02(b).
"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.
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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 Borrowers.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments. (a) The Term Credit. Each Bank
severally agrees, on the terms and conditions set forth herein, to make a single
loan to the Term Borrower (each such loan, a "Term Loan") on the Closing Date in
an amount not to exceed the amount set forth on Schedule 2.01 opposite such
Bank's name under the heading "Term Commitment". Each Bank's Term Loan shall not
exceed its pro rata share (as set forth on Schedule 2.01 opposite such Bank's
name under the heading "Pro Rata Share (Term Loans)") of the aggregate Term
Loans made on the Closing Date. Amounts borrowed as Term Loans which are repaid
or prepaid by the Term Borrower may not be reborrowed.
(b) The Revolving Credit. Each Bank severally agrees, on the terms
and conditions set forth herein, to make loans to the Revolving Borrower (each
such loan, a "Revolving Loan") 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 under the heading "Revolving Commitment" (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 "Revolving Commitment"); provided, however,
that, after giving effect to any Committed Borrowing of Revolving Loans, the
aggregate principal amount of all outstanding Revolving Loans, together with the
aggregate principal amount of all Bid Loans and Swingline Loans outstanding,
shall not at any time exceed the combined Revolving Commitments. Within the
limits of each Bank's Revolving Commitment, and subject to the other terms and
conditions hereof, the Revolving Borrower may borrow under this subsection
2.01(b), prepay under Section 2.09 and reborrow under this subsection 2.01(b).
(c) The Swingline Bank agrees, on the terms and conditions set forth
herein, to make a portion of the combined Revolving Commitments of all the Banks
available to the Revolving Borrower by making swingline loans (each such loan a
"Swingline Loan") to the Revolving Borrower 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
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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 Revolving Loans, may exceed the Swingline Bank's
Revolving Commitment; provided, however, that, after giving effect to any
Borrowing of a Swingline Loan, the aggregate principal amount of all outstanding
Revolving Loans, Swingline Loans and Bid Loans shall not at any time exceed the
combined Revolving Commitments. Within the foregoing limits, and subject to the
other terms and conditions hereof, the Revolving Borrower may borrow under this
subsection 2.01(c), prepay under Section 2.09 and reborrow under this subsection
2.01(c).
2.02 Loan Accounts; Notes; Designation of Revolving Borrower.
(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 each Borrower 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 either Borrower hereunder or under any Note
or the Revolving Borrower under the Guaranty 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 Revolving Loans, Swingline Loans and Bid Loans made by such Bank
or Designated Bidder to the Revolving Borrower may be evidenced by one or more
notes in the form of Exhibit I (a "Revolving Note") or Exhibit J (a "Bid Loan
Note") as applicable, instead of loan accounts. Upon the request of any Bank
made through the Agent, the Term Loan made by such Bank to the Term Borrower may
be evidenced by a note in the form of Exhibit K (a "Term Note"), 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 applicable Borrower with
respect thereto. Each such Bank and Designated Bidder is irrevocably authorized
by the applicable Borrower 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 applicable Borrower 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 either
Borrower hereunder or under any such Note or of the Revolving Borrower under the
Guaranty to such Bank or Designated Bidder.
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(c) The Term Borrower hereby irrevocably appoints the Revolving Borrower
as its agent and attorney-in-fact, authorized to execute and deliver on its
behalf any and all statements, certificates, documents and agreements as may be
required or contemplated hereunder, including Notices of Borrowing and Notices
of Conversion/Continuation, and to receive any and all notices and other
communications from the Agent and the Banks hereunder and to perform on the Term
Borrower's behalf any and all other acts, deeds and requirements of this
Agreement.
2.03 Procedure for Committed Borrowing.
(a) Each Committed Borrowing shall be made upon the applicable
Borrower'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 Term Loan available to the
Agent for the account of the Term Borrower, or its Pro Rata Share of each
Committed Borrowing available to the Agent for the account of the Revolving
Borrower, in the case of a Revolving Loan, in each case at the Agent's Payment
Office by 11:00 a.m. (San Francisco time) on the Borrowing Date requested by the
applicable Borrower 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 applicable Borrower by the Agent in immediately
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available funds at such office by crediting by 1:00 p.m. (San Francisco time) on
such date the account of the applicable Borrower 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
applicable Borrower 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; provided, that, if the
failure to credit any such funds received from a Bank by the Agent in
immediately available funds by 11:00 a.m. (San Francisco time) on such Borrowing
Date to the applicable Borrower by 1:00 p.m. (San Francisco time) on such date
is due to the gross negligence or willful misconduct of the Agent, then the
Agent shall pay to such Bank interest on such funds at the Federal Funds Rate
from such date of receipt by the Agent to the 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 applicable Borrower 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
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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 applicable Borrower to continue such Committed Loans as, and convert such
Committed Loans into, Offshore Rate Committed Loans shall terminate.
(b) The applicable Borrower 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 applicable Borrower;
(B) the proposed Conversion/Continuation Date;
(C) the aggregate amount of Committed Loans to be
converted or renewed;
(D) the Type of Committed Loans resulting from the
proposed conversion or continuation; and
(E) 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 applicable Borrower 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 applicable
Borrower 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
applicable Borrower, 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, no Borrower may elect to have a Committed Loan
converted into or continued as an Offshore Rate Committed Loan.
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(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 Revolving Borrower 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 Revolving Borrower; provided, however, that the Banks and
Designated Bidders may, but shall have no obligation to, submit such offers and
the Revolving Borrower 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 Revolving Borrower, 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 Revolving Loans
made by all Banks plus the aggregate principal amount of all Swingline Loans
then outstanding exceed the combined Revolving 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 Revolving Borrower 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.
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Subject to subsection 2.06(c), the Revolving Borrower 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
Revolving Borrower 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 Revolving
Borrower 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;
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(C) in case the Revolving Borrower elects a LIBOR
Auction, the margin above or below LIBOR (the "LIBOR Bid Margin")
offered for each such Bid Loan, expressed in multiples of 1/1000th
of one basis point to be added to or subtracted from the applicable
LIBOR and the Interest Period applicable thereto;
(D) in case the Revolving Borrower elects an Absolute
Rate Auction, the rate of interest per annum expressed in multiples
of 1/1000th 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
Revolving Borrower 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
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received within the times set forth in subsection 2.06(c). The Agent's notice to
the Revolving Borrower 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 Revolving
Borrower.
(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 Revolving Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection 2.06(d). The Revolving Borrower 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 Revolving Borrower 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 Revolving Borrower 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
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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 Revolving Borrower 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 Revolving
Borrower 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 Revolving Borrower 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 Revolving Borrower 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 Revolving
Borrower 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; provided, that, if the
failure to credit any such funds received from a Bank or Designated Bidder
by the Agent in immediately available funds by 11:00 a.m. (San Francisco
time) on such date of Bid Borrowing to the Revolving Borrower by 1:00 p.m.
(San Francisco time) on such date is due to the gross negligence or
willful misconduct of the Agent, then the Agent shall pay to such Bank or
Designated Bidder interest on such funds at the Federal Funds Rate from
such date of receipt by the Agent to the 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 Revolving Borrower and the aggregate amount borrowed pursuant to such
Bid Borrowing and the Interest Period applicable thereto.
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(iv) From time to time, the Revolving Borrower 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 Revolving Borrower
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
Revolving Borrower 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 Revolving
Borrower 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 Revolving Borrower
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 Revolving Borrower'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 Revolving Borrower 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 Revolving Borrower 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 Revolving Borrower by the
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Agent in immediately available funds by crediting the account of the Revolving
Borrower 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(b) 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 Revolving Borrower'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 Revolving Borrower pursuant to Section 2.03
requesting that Base Rate Committed Loans be made pursuant to Section 2.01(b) 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 Revolving Borrower'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
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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 Revolving Borrower. 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 Revolving Borrower 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 Revolving
Borrower may, upon not less than three Business Days' prior notice to the Agent,
terminate the Revolving Commitments, or permanently reduce the Revolving
Commitments by an aggregate minimum amount of $10,000,000 or any integral
multiple of $1,000,000 in excess thereof; unless, after giving effect thereto
and to any prepayments of Revolving Loans or Swingline Loans made on the
effective date thereof, (i) the then-outstanding principal amount of Revolving
Loans, Bid Loans and Swingline Loans would exceed the amount of the combined
Revolving 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 Revolving
Commitments may not be increased. Any reduction of the Revolving Commitments
shall be applied to each Bank's Revolving Commitment according to its Pro Rata
Share. All accrued facility fees to, but not including, the effective date of
any reduction or termination of the Revolving Commitments, shall be paid on the
effective date of such reduction or termination. At no time shall the Swingline
Commitment exceed the combined Revolving Commitments or the Revolving Commitment
of the Swingline Bank and any reduction of the Revolving Commitments or the
Revolving Commitment of the Swingline Bank which reduces the combined Revolving
Commitments or the Swingline Bank's Revolving Commitment, respectively, below
the then-current amount of the Swingline Commitment shall result
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in an automatic corresponding reduction of the Swingline Commitment to the
amount of the combined Revolving Commitments or the Swingline Bank's Revolving
Commitment, respectively, as so reduced, without any action on the part of the
Swingline Bank. At the close of business on the Closing Date, the Term
Commitments shall automatically be reduced to zero.
2.09 Prepayments. (a) Subject to Section 3.04, each Borrower may, at any
time or from time to time, upon irrevocable notice to the Agent, 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, the applicable Borrower, 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, and must be received by the Agent
prior to 9:00 a.m. (San Francisco time) (i) three Business Days prior to the
proposed date of prepayment in the case of Offshore Rate Committed Loans, (ii)
one Business Day prior to the proposed date of prepayment in the case of Base
Rate Committed Loans, and (iii) on the proposed date of prepayment in the case
of Swingline Loans. 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 a Borrower, such Borrower 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 Revolving Borrower
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 Revolving Borrower 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 CleanUp Day has ended).
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2.10 Repayment.
(a) The Revolving Credit. The Revolving Borrower shall repay to the
Banks on the Revolving Termination Date the aggregate principal amount of
Revolving Loans outstanding on such date.
(b) Bid Loans. The Revolving Borrower shall repay each Bid Loan on
the last day of the relevant Interest Period.
(c) Swingline Loans. The Revolving Borrower 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.
(d) The Term Credit. The Term Borrower shall repay to the Banks on
the Term Maturity Date the aggregate principal amount of Term 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 applicable Borrower'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 LIBO 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), each Borrower agrees to pay interest on such unpaid principal or
other amount, from the date such amount becomes due
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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 each Borrower 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 each Borrower shall pay such Bank or Designated Bidder interest at
the highest rate permitted by applicable law.
2.12 Fees.
(a) Facility Fees. The Revolving Borrower shall pay to the Agent for
the account of each Bank a facility fee on the full amount of such Bank's
Revolving 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, 1997 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 Revolving 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 Revolving Borrower 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 Revolving Borrower
and the Arranger and Agent dated November 20, 1996.
(c) Upfront Fees. The Revolving Borrower shall pay to the Agent on
the Closing Date for the account of each Bank which is a party to the Existing
Agreement an upfront fee equal to 0.050% times (i) its Commitment hereunder less
(ii) its "Commitment" as defined in the Existing Agreement, if, as to such
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Bank, the amount set forth in clause (i) less the amount set forth in clause
(ii) is greater than zero.
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 Borrowers 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 either
Borrower's obligations hereunder or under any Note or any other document or
instrument given in connection herewith.
(b) Each determination of an interest rate by the Agent shall be
conclusive and binding on the Borrowers 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 Revolving Borrower) as a replacement Reference Bank for
the terminated Reference Bank. Until the appointment of such replacement
Reference Bank, the Offshore Rate and LIBO 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.
(e) For the purpose of the Interest Act (Canada) only, where
interest is calculated based on a year comprised of 360 days, 365 days, or 366
days, the yearly rate or percentage of interest to which such interest rate is
equivalent, is the rate obtained by multiplying the rate by the actual number of
days in the year and dividing by 360, 365 or 366 as the case may be.
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2.14 Payments by the Borrowers.
(a) All payments to be made by the Borrowers shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Borrowers 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 applicable Borrower
prior to the date on which any payment is due to the Banks or Designated Bidders
that such Borrower will not make such payment in full as and when required, the
Agent may assume that such Borrower 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 such Borrower 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 applicable Borrower 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
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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
applicable Borrower 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 such Borrower 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 applicable Borrower of such failure to
fund and, upon demand by the Agent, such Borrower 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. Each Borrower
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
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to such participation as fully as if such Bank were the direct creditor of such
Borrower 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 applicable Borrower 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 applicable Borrower of such amounts due within five Business Days of the
Agent's receipt of such financial reports and certificate, and the applicable
Borrower 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 either Borrower's obligations
hereunder or under any Note or any other document or instrument given in
connection herewith.
(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 Revolving
Borrower, each Bank, severally, if no Default or Event of Default exists, shall
refund to the Agent for distribution to
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the applicable Borrower the amount of such excess actually received and retained
by such Bank.
2.18 Guaranty. All obligations of the Term Borrower hereunder and under
any Note shall be guaranteed by the Revolving Borrower pursuant to the Guaranty.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes. (a) Any and all payments by the Borrowers 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 Borrowers shall
pay all Other Taxes.
(b) Each Borrower 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 by such Borrower 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 a Borrower 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) such Borrower shall make such deductions and
withholdings;
(iii) such Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance
with applicable law; and
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(iv) such Borrower 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 a Borrower of
Taxes or Other Taxes, such Borrower 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 a Borrower 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 such Borrower 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 Borrowers 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 Revolving Borrower
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 Borrowers 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, upon
its receipt of notice of such fact and demand from such Bank (with a copy to the
Agent) (i) the Revolving Borrower shall prepay in full such Offshore Rate Loans
to it 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
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such day, or immediately, if such Bank or its Designated Bidder may not lawfully
continue to maintain such Offshore Rate Loans, and (ii) the Offshore Rate Loan
of the Term Borrower to that Bank shall be automatically converted to a Base
Rate Committed Loan, either on the last day of the Interest Period thereof, if
such Bank may lawfully continue to maintain such Offshore Rate Loan to such day,
or immediately, if such Bank may not lawfully continue to maintain such Offshore
Rate Loan, and, in the case of a conversion to a Base Rate Committed Loan prior
to the last day of the Interest Period thereof, the Term Borrower shall pay, on
the date of such automatic conversion, interest accrued thereon to such day and
amounts required under Section 3.04. If the Revolving Borrower is required to so
prepay any Offshore Rate Committed Loan that is a Revolving Loan, then
concurrently with such prepayment, the Revolving Borrower 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 applicable Borrower 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 each Borrower 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
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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 Commitments, 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
applicable Borrower through the Agent, such Borrower 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. Each Borrower 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 such Borrower to make on a timely basis any
payment of principal of any Offshore Rate Loan;
(b) the failure of such Borrower to borrow, continue or convert a
Committed Loan after such Borrower has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Conversion/Continuation;
(c) the failure of such Borrower 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 or subsection
3.02(b) 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.
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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 LIBO Rate for any requested Interest Period with respect to a
proposed Offshore Rate Loan, or that the Offshore Rate or the LIBO 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 Borrowers 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,
each Borrower may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If such Borrower does not revoke
such Notice of Borrowing, the Banks shall make, convert or continue the
Committed Loans, as proposed by such Borrower, in the amount specified in the
applicable notice submitted by such Borrower, 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 Borrowers 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, the Guaranty and Notes. This Agreement, the
Guaranty 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 LLP, counsel to the Revolving Borrower,
substantially in the form of Exhibit D-1, (ii) an opinion, dated the Closing
Date, of Russell & DuMoulin, Canadian counsel to the Term Borrower,
substantially in the form of Exhibit D-2, and (iii) an opinion, dated the
Closing Date, of Morrison & Foerster, special California counsel to the Agent,
substantially in the form of Exhibit D-3;
(c) Resolutions. A copy of a resolution or resolutions passed by the
Board of Directors of each Borrower,
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certified by the Secretary or an Assistant Secretary of such Borrower as being
in full force and effect on the Closing Date, authorizing the Borrowings and
Guaranty 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 each Borrower 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 such Borrower;
(e) Payment of Fees. Evidence of payment by the Revolving Borrower
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 Borrowers and BofA with respect to such costs); including any such costs,
fees and expenses arising under or referenced in Sections 2.12(b) and (c) and
10.04;
(f) Certificates. A certificate signed by a duly authorized officer
of each Borrower, 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 to be made by it;
(g) Termination of Existing Agreement. Evidence (i) that all
commitments to extend credit under the Credit Agreement (the "Existing
Agreement") dated as of February 16, 1996 among the Revolving Borrower, the
financial institutions party thereto, and BofA, as agent for such financial
institutions, have been terminated, and (ii) of payment or repayment (or
provision satisfactory to the Agent for payment or repayment thereof out of the
proceeds of a Borrowing hereunder on the Closing Date) by the Revolving Borrower
of (A) all facility fees accrued to the Closing Date under subsection 2.12(a) of
the Existing Agreement and (B) all principal and accrued interest outstanding
thereunder 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
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deemed to be terminated, notwithstanding the notice provisions of Section 2.08
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 Revolving Borrower any promissory note given to it by
the Revolving Borrower 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 either Borrower 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 Revolving Borrower 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 the last two sentences
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 Revolving Borrower's consolidated financial
condition or results of operations sufficient to impair the Revolving Borrower's
ability to repay the Loans in accordance with the terms hereof, and neither the
Revolving Borrower nor any Subsidiary shall have any contingent obligations,
liabilities for taxes or other outstanding financial obligations which are
material in the aggregate to the Revolving Borrower, 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.
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Each Notice of Borrowing and Competitive Bid Request submitted by a Borrower
hereunder shall constitute a representation and warranty by such Borrower
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
Each Borrower represents and warrants to the Agent and each Bank that:
5.01 Corporate Existence. Each Borrower is a corporation duly organized
and existing under the laws of the jurisdiction of its incorporation, and is
properly qualified as a foreign corporation and in good standing in every
jurisdiction in which such Borrower is doing business of a nature that requires
such qualification;
5.02 Subsidiaries. Each of its Subsidiaries 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 to be executed
by it, including, in the case of the Revolving Borrower, the Guaranty, are
within such Borrower's powers, have been duly authorized, and are not in
conflict with the terms of any charter, bylaw or other organization papers of
such Borrower, or any instrument or agreement to which such Borrower or any of
its Subsidiaries is a party or by which such Borrower or any of its Subsidiaries
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 such Borrower of
this Agreement or any instrument or agreement required hereunder to be executed
by it, including, in the case of the Revolving Borrower, the Guaranty, 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
such Borrower or any of its Subsidiaries, nor is there any judgment, decree or
order of any court or governmental authority binding on such Borrower or any its
Subsidiaries, which would be contravened by the execution, delivery, performance
or enforcement of this Agreement or any instrument or agreement required
hereunder, including, in the case of the Revolving Borrower, the Guaranty;
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5.06 Binding Effect. This Agreement is a legal, valid and binding
agreement of such Borrower, enforceable against such Borrower in accordance with
its terms, and any instrument or agreement required hereunder, including, in the
case of the Revolving Borrower, the Guaranty, when executed and delivered, will
be similarly legal, valid, binding and enforceable;
5.07 Encumbrances. The properties and assets of such Borrower and its
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. Such Borrower and each of its Subsidiaries 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 Revolving Borrower's consolidated financial condition or
operations or materially impair such Borrower's ability to perform its
obligations hereunder or under any instrument or agreement required hereunder,
including, in the case of the Revolving Borrower, the Guaranty;
5.09 Litigation. Except as disclosed in reports filed by the Revolving
Borrower 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 such Borrower, threatened against or affecting
such Borrower or any of its Subsidiaries or their respective properties, the
adverse determination of which might reasonably be expected to materially affect
the Revolving Borrower's consolidated financial condition or operations or
materially impair such Borrower's ability to perform its obligations hereunder
or under any instrument or agreement required hereunder, including, in the case
of the Revolving Borrower, the Guaranty;
5.10 No Default. No Default or Event of Default has occurred and is
continuing or would result from the incurring of obligations by either Borrower
under this Agreement or the Notes or, in the case of the Revolving Borrower,
under the Guaranty;
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 of the Borrowers nor any of their Subsidiaries 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;
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5.12 Regulated Entities. None of the Borrowers, any Person controlling
either Borrower, or any Subsidiary of either Borrower is an "Investment Company"
within the meaning of the Investment Company Act of 1940. Neither of the
Borrowers is 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, 1995, and subsequent periods, furnished by the Revolving
Borrower to the Agent and the Banks present fairly, in all material respects,
the consolidated financial position of the Revolving Borrower (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 Revolving Borrower
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 Revolving
Borrower's consolidated financial condition or results of operations sufficient
to impair the Borrowers' ability to repay the Loans in accordance with the terms
hereof. Neither of the Borrowers nor any of its Subsidiaries 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
Revolving Borrower, nothing has occurred which would cause the loss of such
qualification. The Revolving Borrower 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 Revolving
Borrower, 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 Revolving Borrower'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 Revolving Borrower's consolidated financial
condition or results of operations;
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(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 Revolving Borrower 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 Revolving Borrower 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 Revolving Borrower nor
any ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA; and
(d) The Term Borrower (i) does not sponsor or maintain or make, is
not making, and is not obligated to make contributions, and in the case of a
multiple employer plan (as described in Section 4064(a) of ERISA) has not made
contributions at any time during the immediately preceding five plan years to a
pension plan (as defined in Section 3(2) of ERISA) subject to ERISA, (iii) does
not make, is not making and is not obligated to make contributions nor, during
the preceding three calendar years, has it made or been obligated to make
contributions to a "multiemployer plan", within the meaning of Section
4001(a)(3) of ERISA, and (iii) does not sponsor or maintain and does not make,
is not making, and is not obligated to make contributions to an employee benefit
plan (as defined in Section 3(3) of ERISA) subject to ERISA; and
5.15 Swap Obligations. Neither Borrower nor any of their 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, each Borrower will and,
with respect to Sections 6.02, 6.03, 6.04, 6.05, 6.06 and 6.08, will cause each
of its Subsidiaries 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
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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 either
Borrower, or a Subsidiary thereof, is a defendant;
(b) any dispute which may exist between either Borrower or any of
its Subsidiaries and any governmental regulatory body or any threatened action
by any governmental agency to acquire or condemn any of the properties of either
Borrower or any of its Subsidiaries where the amount involved is $30,000,000 or
more;
(c) any strike involving 1,000 or more employees of either Borrower or any
of its Subsidiaries which has continued for thirty (30) days;
(d) any proceeding or order before any court or administrative body
requiring either Borrower or any of its Subsidiaries 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 either
Borrower 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 either Borrower 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 either Borrower 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
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(f) any Default or Event of Default known to either Borrower.
Each notice under this Section shall be accompanied by a written
statement by the chief financial officer of the Revolving Borrower setting forth
details of the occurrence referred to therein and stating what action the
Revolving Borrower 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 material
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 Borrowers and each of
their Subsidiaries, 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 Borrowers and their 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
Revolving Borrower and its Subsidiaries as of the end of each of the first
three quarterly accounting periods in each fiscal year of the Revolving
Borrower; 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 Revolving Borrower;
(b) (i) On a consolidated basis summary balance sheets and
statements of income, shareholders' equity and cash flows for the
Revolving Borrower and its Subsidiaries as of the end of each fiscal year
of the Revolving Borrower, certified by an independent certified public
accountant or accountants selected by the Revolving Borrower and
acceptable to the 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
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Event of Default by either Borrower under this Agreement, or a statement
disclosing any such defaults if any are found; and (ii) on a consolidated
basis unaudited summary balance sheets and statements of income,
shareholders' equity and cash flows for the Term Borrower and its
Subsidiaries as of the end of each fiscal year of the Term Borrower; such
statements referred to in clauses (i) and (ii) of this Section 6.07(b)
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 Revolving Borrower;
(c) Within 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Revolving Borrower and within
90 days after the end of each fiscal year of the Revolving Borrower, 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 Revolving Borrower and, in the case of financial statements
as of the end of each fiscal year, reviewed by the Revolving Borrower'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
Revolving Borrower, 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 Revolving Borrower with the Securities and
Exchange Commission; and
(f) Such other financial statements, lists of property and
accounts, forecasts, legal opinions or reports as to either Borrower or
any of its Subsidiaries, 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; (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; and (d) not take or permit any
action which would cause the representations in subsection 5.14(d) with respect
to the Term Borrower to cease to be true and correct in all material respects.
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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, no Borrower will, nor
will it permit any of its Subsidiaries 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 Term Borrower or of the
Revolving Borrower 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 all
such dispositions by the Revolving Borrower and its Subsidiaries ten percent
(10%) of the total consolidated assets of the Revolving Borrower (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) either Borrower may merge or consolidate with any other Person
if, (i) in the case of a merger or consolidation of the Revolving Borrower, the
Revolving Borrower (or the resulting corporation in a consolidation) will be the
surviving corporation, (ii) in the case of a merger or consolidation of the Term
Borrower, the resulting corporation will, under applicable Canadian law, succeed
by operation of law to all rights and obligations of the Term Borrower, and
(iii), in all events, such Borrower (or such resulting corporation) will not be
in default under any of the terms of this Agreement immediately after the merger
or consolidation; provided that, in the case of a merger or consolidation of the
Term Borrower and the Revolving Borrower, the Revolving Borrower will be the
surviving corporation; and
(b) any Subsidiary may be merged with or dissolved into the
Revolving Borrower or with or into any other Subsidiary; provided that, (i) in
the case of a merger with or dissolution
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into the Revolving Borrower, the Revolving Borrower will be the surviving
corporation, and (ii) in the case of a merger with or dissolution into the Term
Borrower, the resulting corporation will, under applicable Canadian law, succeed
by operation of law to all rights and obligations of the Term Borrower;
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 Revolving Borrower (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 either Borrower 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 either
Borrower or any Affiliate of either Borrower. 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. ss. 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
Revolving Borrower 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
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ERISA, and the Revolving Borrower 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) Either Borrower 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 either
Borrower or any of its Subsidiaries or any judgment shall be entered against
either Borrower or any of its Subsidiaries 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 Borrowers and their
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) Either Borrower or any of its Subsidiaries 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 either Borrower or any of its Subsidiaries, 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 either Borrower or any of its Subsidiaries, 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 either Borrower or
any of its Subsidiaries may be obligated as borrower having an aggregate
principal amount
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(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 either Borrower or
any of its Subsidiaries is the Defaulting Party or (2) any Termination Event as
to which either Borrower or any of its Subsidiaries is an Affected Party, and,
in either event, the Swap Termination Value owed by either Borrower 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 Revolving Borrower 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 Revolving Borrower 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 either Borrower or any of its Subsidiaries to divest itself of
such a substantial part of its assets that the ability of the Borrowers 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
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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 Revolving Borrower 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 Revolving Borrower's voting securities;
(j) At any time prior to termination or expiration of the Term
Commitment and payment in full of the Term Loans and any other obligations of
the Term Borrower hereunder and under any other document or instrument given in
connection herewith, (i) the Revolving Borrower shall fail to beneficially own,
free and clear of all liens, 100% of the issued and outstanding shares of the
voting and nonvoting stock (including warrants, options, conversion rights, and
other rights of purchase or convert into such stock) of the Term Borrower on a
fully diluted basis, or (ii) there shall occur the creation or imposition of any
lien on any shares of capital stock of the Term Borrower;
(k) At any time prior to termination or expiration of the Term
Commitment and payment in full of the Term Loans and any other obligations of
the Term Borrower hereunder and under any other document or instrument given in
connection herewith and of any amounts due under the Guaranty, the Guaranty is
for any reason partially (including with respect to future advances) or wholly
revoked or invalidated, or otherwise ceases to be in full force and effect, or
the Revolving Borrower or any other Person contests in any manner the validity
or enforceability thereof or denies that it has any further liability or
obligation thereunder; or
(l) Either Borrower 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 such Borrower or written notice thereof to the Borrowers 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
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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 each Borrower; 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, the Guaranty 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 Borrowers under
subsection 8.01(l) 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
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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 either Borrower or any Subsidiary or
affiliate of either Borrower, 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 either Borrower 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 either Borrower or any of such Borrower'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 either
Borrower), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in
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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 document or instrument given in connection herewith 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 a Borrower 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
either Borrower or 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
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business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrowers and their 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
Borrowers 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 Borrowers. 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
either Borrower 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
Borrowers and without limiting the obligation of either Borrower 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 Borrowers. 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
Borrowers and their Subsidiaries and affiliates as though BofA (or such
successor agent) were not the Agent hereunder and
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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
Borrowers or their Subsidiaries or affiliates (including information that may be
subject to confidentiality obligations in favor of such Borrower 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 Revolving Borrower 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 Revolving
Borrower, 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 Borrowers may continue to deal with the
retiring Agent as Agent hereunder until the Revolving Borrower 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 Revolving Borrower has
not received notice of the appointment of a successor agent within 30 days of
the retiring Agent's notice of resignation, the Borrowers shall deal directly
with the Banks and Designated Bidders until the Revolving Borrower 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.
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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 Borrowers 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 Borrowers 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 grants a participation in all or part
of the obligations of the Borrowers 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.
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(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 either Borrower 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
Borrowers 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 Borrowers and
acknowledged by the Agent, do any of the following:
(a) increase or extend any 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;
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(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;
(e) amend this Section, or Section 2.16, or any provision herein
providing for consent or other action by all Banks; or
(f) release the Revolving Borrower from its obligations under the
Guaranty or terminate the Guaranty, except in each case as expressly provided
for therein;
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 either
Borrower 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
either Borrower 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 Borrowers 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
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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 Borrowers. 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 a Borrower to give such notice and the Agent and the Banks
and Designated Bidders shall not have any liability to the Borrowers 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
each Borrower to repay the Loans made to it 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 Borrowers 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
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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 Borrower Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Borrowers 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 Borrowers 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 Borrowers, 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 Borrowers.
10.06 Payments Set Aside. To the extent that a Borrower 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
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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 no Borrower may 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 Revolving Borrower
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, it being agreed that no Bank shall assign all or
a portion of its Revolving Commitment without assigning a ratable portion of its
Term Loan and no Bank shall assign all or a portion of its Term Loan without
assigning a ratable portion of its Revolving Commitment; provided, however, that
the Borrowers 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 Borrowers and the Agent by such Bank and the Assignee; (ii) such Bank and
its Assignee shall have delivered to the Borrowers and the Agent an Assignment
and Acceptance substantially in the form of Exhibit E ("Assignment and
Acceptance"); 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
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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; provided, that the
assignor Bank and the Assignee shall each be entitled to the benefits of the
indemnification provisions which would otherwise survive the payment of the
other obligations of the Borrowers.
(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)), each Borrower 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, as
applicable, replacement Notes in the form of Exhibit I and Exhibit K in the
principal amount of the Revolving Commitment and Term Loan, respectively,
retained by the assignor Bank (such Notes to be in exchange for, but not in
payment of, the Notes with respect to Committed Loans held by such Bank, which
shall be returned to the applicable Borrower, along with any Bid Loan Note held
by such Bank if it is not retaining a portion of its Loans and its Revolving
Commitment, concurrently with the delivery by such Borrower of its replacement
Notes). Immediately upon each assignor Bank'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 either Borrower (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 Borrowers 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
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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
Borrowers 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 ss.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 Revolving
Borrower, 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 Borrowers or any of their Subsidiaries, or by the Agent on such Borrower'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 either Borrower or any of its Subsidiaries, except to the extent such
information (i) was or becomes generally available to the public other than as a
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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 a Borrower, provided that such source is not bound by a
confidentiality agreement with a Borrower 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 a Borrower or any of its
Subsidiaries 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 either Borrower, any such
notice being waived by each Borrower 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
such Borrower against any and all obligations of such Borrower 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 applicable Borrower 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
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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 Borrowers, 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 (other than
Participants, to the extent provided for herein) 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
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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.
(g) 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 Borrowers, 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; Submission to Jurisdiction. (a) THIS AGREEMENT AND
THE NOTES AND THE GUARANTY 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.
(b) SUBJECT TO SECTION 10.18, ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT, THE NOTES, THE GUARANTY OR ANY OTHER DOCUMENT OR
INSTRUMENT GIVEN IN CONNECTION HEREWITH MAY BE BROUGHT IN THE COURTS OF THE
STATE OF CALIFORNIA OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT
OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE
BORROWERS, THE BANKS, THE DESIGNATED BIDDERS AND THE AGENT HEREBY CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THE AFORESAID
COURTS. EACH OF THE BORROWERS, THE BANKS, THE DESIGNATED BIDDERS AND THE AGENT
HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH BORROWER
HEREBY WAIVES
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PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
10.18 Arbitration; Reference Proceeding.
(a) THE BORROWERS, THE BANKS, THE DESIGNATED BIDDERS AND THE AGENT
EACH AGREE THAT ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, THE GUARANTY 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
ARBITRATION SHALL BE CONDUCTED WITHIN THE COUNTY OF SAN FRANCISCO, CALIFORNIA.
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
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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 ANY 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 Waiver of Jury Trial. IF A CONTROVERSY OR CLAIM IS NOT SUBMITTED TO
ARBITRATION AS PROVIDED AND LIMITED IN SUBSECTIONS (a) AND (b) OF SECTION 10.18
AND IS NOT DETERMINED BY A REFERENCE AS PROVIDED IN SUBSECTION (c) OF SUBSECTION
10.18, THEN THE BORROWERS, THE BANKS, THE DESIGNATED BIDDERS AND THE AGENT EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE NOTES, THE
GUARANTY, AND ANY OTHER DOCUMENT OR INSTRUMENT GIVEN IN CONNECTION HEREWITH, OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY SUCH ACTION, PROCEEDING
OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR ANY PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS,
TORT CLAIMS, OR OTHERWISE. THE BORROWERS, THE BANKS, THE DESIGNATED BIDDERS AND
THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT,
THE NOTES, THE GUARANTY OR ANY OTHER DOCUMENT OR INSTRUMENT GIVEN IN CONNECTION
HEREWITH OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT,
THE NOTES, THE GUARANTY AND ANY OTHER DOCUMENT OR INSTRUMENT GIVEN IN CONNECTION
HEREWITH.
10.20 Judgment. If, for the purposes of obtaining judgment in any court,
it is necessary to convert a sum due hereunder or under any other document or
instrument given in connection herewith in one currency into another currency,
the rate of exchange used shall be that at which in accordance with normal
banking procedures the Agent could purchase the first currency with such other
currency on the Business Day preceding that on which final judgment is given.
The obligation of each Borrower in respect of any such sum due from it to the
Agent or any Bank hereunder or under such other documents or instruments shall,
notwithstanding any judgment in a currency (the "Judgment Currency") other than
that in which such sum is denominated in accordance with the applicable
provisions of this Agreement (the "Agreement Currency"), be discharged only to
the extent that on the Business Day following receipt by the Agent (for its own
account or for the account of any Bank) of any sum adjudged to be so due in the
Judgment Currency, the Agent may in accordance with
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normal banking procedures purchase the Agreement Currency with the Judgment
Currency. If the amount of the Agreement Currency so purchased is less than the
sum originally due to the Agent or such Bank in the Agreement Currency, each
Borrower agrees, as a separate obligation and notwithstanding any such judgment,
to indemnify the Agent or the Person to whom such obligation was owing against
such loss. If the amount of the Agreement Currency so purchased is greater than
the sum originally due to the Agent or such Bank in such currency, the Agent or
such Bank agrees to return the amount of any excess to the applicable Borrower
(or to any other Person who may be entitled thereto under applicable law).
10.21 Provisions With Respect to Term Borrower. All representations,
warranties, covenants and obligations of the Term Borrower set forth herein and
in all other documents and instruments given in connection herewith shall
terminate and be of no further force and effect after termination or expiration
of the Term Commitment and payment in full of the Term Loans and all other
monetary obligations of the Term Borrower then due and owing hereunder and
thereunder; provided, that the use of the term "Subsidiary" or "Subsidiaries"
herein shall continue to include the Term Borrower.
10.22 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 Borrowers, 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: /s/ MICHAEL D. HANNA
Title: Executive Vice President
By: /s/ WILLIAM L. HEBERT
Title: Vice President, Treasurer &
Controller
LOUISIANA-PACIFIC CANADA LTD.
By: /s/ WILLIAM L. HEBERT
Title: Vice President, Treasurer &
Controller
By: /s/ LYNN L. MILLER
Title: Assistant Treasurer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By: /s/ MICHAEL J. BALOK
Title: Managing Director
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Swingline
Bank and as a Bank
By: /s/ MICHAEL J. BALOK
Title: Managing Director
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ABN AMRO BANK N.V.
By: /s/ ERRETT E. HUMMEL
Title: Errett E. Hummel, Vice President
By: /s/ BRIAN W. DIXON
Title: Brian W. Dixon, Senior Manager
ROYAL BANK OF CANADA
By: /s/ J. BLAINE SHAUM
Title: Regional Manager
SOCIETE GENERALE
By: /s/ J. BLAINE SHAUM
Title: Regional Manager
By:
Title:
SOCIETE GENERALE FINANCE
(IRELAND) LIMITED
By: /s/ J. BLAINE SHAUM
Title: Regional Manager
By:
Title:
THE BANK OF NOVA SCOTIA
By: /s/ -----------------
Title: Officer
By: /s/ -----------------
Title: Officer
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THE CHASE MANHATTAN BANK
By: /s/ HELEN SANTO
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ GARY S. GAGE
Title: Senior Vice President
UNITED STATES NATIONAL BANK OF
OREGON
By: /s/ JANICE T. THEDE
Title: Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ WILLIAM F.
Title: Senior Vice President
WELLS FARGO BANK, N.A.
By: /s/----------------
Title: Vice President
By: /s/ EDITH LIM
Title: Vice President
75
LOUISIANA-PACIFIC CORPORATION
1984 EMPLOYEE STOCK OPTION PLAN
1. Purpose. The continued growth and success of Louisiana-Pacific
Corporation (the "Corporation") are dependent upon its ability to retain the
services of key employees of the highest competence and to provide incentive for
effective service and superior performance. The purpose of this 1984 Employee
Stock Option Plan (the "Plan") is to provide an incentive to certain key
employees of the Corporation and its subsidiaries (as hereinafter defined) to
continue in their employment and also to afford them the opportunity to acquire,
or increase, stock ownership in the Corporation in order that they may have a
direct proprietary interest in its success.
2. Stock. The stock subject to option and other provisions of the Plan
shall be shares of the Corporation's authorized but unissued, or reacquired, $1
par value common stock ("Common Stock"). The total number of shares of Common
Stock with respect to which options may be granted shall not exceed in the
aggregate 1,000,000, provided that such aggregate number of shares shall be
subject to adjustment in accordance with the provisions of paragraph 5(g).
In the event that any outstanding option under the Plan shall terminate
or expire prior to the end of the period during which options may be granted
under the Plan, the shares of Common Stock allocable to the unexercised portion
of such option may be made the subject of additional options and stock
appreciation rights granted under the Plan.
3. Administration; Grant of Options and Stock Appreciation
Rights.
(a) The Plan shall be administered by the Board of Directors; however,
any action relating to the Plan may be taken by the Board of Directors only if a
majority of the Board of Directors and a majority of the directors acting in the
matter are disinterested persons. The term "disinterested person" as used in
this Plan shall mean a person who is not at the time he exercises discretion in
administering the Plan eligible, and has not at any time within one year prior
thereto been eligible, for selection as a person to whom stock may be allocated
or to whom stock options or stock appreciation rights may be granted pursuant to
the Plan or any other plan of the Corporation or any of its affiliates entitling
the participants therein to acquire stock, stock options or stock appreciation
rights of the Corporation or any of its affiliates.
(b) In administering the Plan, the Board of Directors may adopt, amend
and rescind rules and regulations for carrying out the Plan. The interpretation
and decision of the Board of Directors with regard to any question arising under
the Plan shall be final and conclusive. No member of the Board of Directors
shall be liable for any action taken or determination made in good faith.
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(c) Subject to the provisions of paragraph 3(a), the Board of Directors
shall grant options and stock appreciation rights pursuant to the Plan. Options
or stock appreciation rights may be granted to the same employee on more than
one occasion. Options may be granted without related stock appreciation rights.
Stock appreciation rights may be granted only with respect to a related option.
(d) Pursuant to the bylaws of the Corporation, the Board of Directors
may designate a committee of not less than three directors, all of whom shall be
"disinterested persons" as that term is defined in paragraph 3(a), which, in
lieu of the Board of Directors, shall have full authority pursuant to the
foregoing subparagraphs (a), (b) and (c) of paragraph 3, in the administration
of the Plan with respect to the participation therein of officers or former
officers of the Corporation.
4. Eligibility. The individuals who shall be eligible to participate in
the Plan shall be such salaried employees (including officers who may also be
directors) of the Corporation or of any corporation in which the Corporation
owns, directly or indirectly, stock possessing more than 50 percent of the total
combined voting power of all classes of stock (such a corporation being herein
called a "subsidiary") as the Board of Directors shall determine.
5. Terms and Conditions of Options. Options granted pursuant to the
Plan shall be evidenced by agreements in such form as the Board of Directors
shall from time to time approve, which agreements shall comply with and be
subject to the following terms and conditions:
(a) Payment: Upon exercise of an option, in whole or in part, the
option price for shares to which the exercise relates shall be paid in full in
cash; except that
(1) shares to be issued pursuant to exercise of stock
appreciation rights pursuant to paragraph 11, if any, shall be issued
without any cash payment by the optionee; and
(2) the Board of Directors may, in its discretion, designate
an option, at the time of grant or thereafter, as eligible for
alternative methods of payment of the option price on the following
terms and conditions:
(A) Method of Payment: Payment of the option price of
shares subject to an option so designated may be made, at the
election of the optionee, either in cash or by delivering to
the Corporation shares of Common Stock having a fair market
value equal to the option price, or any combination of cash
and Common Stock having a combined value equal to the option
price. Shares of Common Stock may not be used in payment or
partial payment unless an option for at least 2,000 shares is
being exercised.
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(B) Payment in Common Stock: Payment in shares of
Common Stock shall be made by delivering to the Corporation
certificates, duly endorsed for transfer, representing shares
of Common Stock having an aggregate fair market value on the
date of exercise equal to that portion of the option price
which is to be paid in Common Stock. The fair market value of
a share of Common Stock on the date of exercise shall be
deemed to be the closing price per share of Common Stock on
the New York Stock Exchange on the date of exercise or, if no
sale of Common Stock shall have been made on that Exchange on
that date, on the next preceding business day on which there
was a sale of such stock on that Exchange.
(C) Fractional Shares: Whenever payment of the option
price would require delivery of a fractional share, the
optionee shall deliver the next lower whole number of shares
of Common Stock and a cash payment shall be made by the
optionee for the balance of the option price.
(D) Limitations on Exercises: The Corporation may, in
the discretion of its Board of Directors, refuse to permit
repeated and successive exercises of options, payment of which
is to be made in Common Stock, if the effect of such exercises
would be to excessively compound or pyramid the number of
shares of Common Stock owned by the optionee.
(b) Number of Shares: The option shall state the total number of shares
of Common Stock subject thereto.
(c) Option Price: The option price shall be not less than 85 percent of
the fair market value of the shares of Common Stock on the date of the granting
of the option. The fair market value of a share of Common Stock on any such date
is defined as the closing price per share thereof on the New York Stock Exchange
on that date or, if no sale of Common Stock shall have been made on that
Exchange on that date, on the next preceding business day on which there was a
sale of such stock on that Exchange.
(d) Terms of Options: Each option granted under the Plan shall expire
not more than ten years from the date the option is granted.
(e) Date of Exercise: Any option may be exercised at any time, in whole
or in part, unless the Board of Directors shall provide that an option may not
be exercised by the optionee, in whole or in part, for any period or periods of
time; provided, however, that no option shall be exercisable in part with
respect to a number of shares fewer than 100.
(f) Termination of Employment: In the event that an optionee's
employment by the Corporation shall terminate, his option shall terminate three
months following the date of termination of his employment; however, if the
employee shall die while in the employ of the Corporation during a period of
continuous employment by the Corporation, which includes the date on which the
option was granted, his estate, personal representative or beneficiary
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shall have the right, subject to the provisions of paragraphs 5(d) and (e)
hereof, to exercise his option at any time within twelve months from the date of
his death. Whether an authorized leave of absence or absence on military or
government service shall constitute a termination of employment for the purposes
of the Plan shall be determined by the Board of Directors, which determination
shall be final and conclusive. For purposes of this paragraph, an optionee's
employment by a subsidiary shall be deemed to be employment by the Corporation.
(g) Recapitalization: In the event of any change in capitalization
which affects the Common Stock, whether by stock dividend, stock distribution,
stock split-up, subdivision or combination of shares, merger or consolidation or
otherwise, such proportionate adjustments, if any, as the Board of Directors in
its discretion deems appropriate to reflect such change shall be made with
respect to the total number of shares of Common Stock in respect of which
options may be granted under the Plan, the number of shares covered by each
outstanding option, and the price per share under each such option; however, any
fractional shares resulting from any such adjustment shall be eliminated.
A dissolution of the Corporation, or a merger or consolidation in which
the Corporation is not the resulting or surviving corporation (or in which the
Corporation is the resulting or surviving corporation but becomes a subsidiary
of another corporation), shall cause every option outstanding hereunder to
terminate concurrently with consummation of any such dissolution, merger or
consolidation, except that the resulting or surviving corporation (or, in the
event the Corporation is the resulting or surviving corporation but has become a
subsidiary of another corporation, such other corporation) may, in its absolute
and uncontrolled discretion, tender an option or options to purchase its shares
on terms and conditions, both as to number of shares and otherwise, which will
substantially preserve the rights and benefits of any option then outstanding
hereunder.
In the event of a change in the Corporation's presently authorized
Common Stock which is limited to a change of all its presently authorized shares
with par value into the same number of shares with a different par value or into
the same number of shares without par value, the shares resulting from any such
change shall be deemed to be Common Stock within the meaning of this Plan.
(h) Transferability: No option, stock appreciation right or any other
right under the Plan shall be assignable or transferable except by will or the
laws of descent and distribution. During an optionee's lifetime, only he or his
guardian or legal representative may exercise any such option or right.
(i) Employee's Agreements: Each optionee shall agree to remain in the
employ of and to render his services to the Corporation or a subsidiary for a
period of two years from the date of grant of the option.
(j) Rights as a Stockholder: An optionee shall have no rights as a
stockholder with respect to shares covered by his option until the date of the
issuance or transfer of the
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<PAGE>
shares to him and only after such shares are fully paid. Except as provided in
paragraph 5(g) no adjustment shall be made for dividends or other rights for
which the record date is prior to the date of such issuance or transfer.
(k) Provision for Taxes: It shall be a condition to the Corporation's
obligation to issue or reissue shares of Common Stock upon exercise of any
option or any related stock appreciation rights that the optionee pay, or make
provision satisfactory to the Corporation for payment of, any federal and state
income and other taxes which the Corporation is obligated to withhold or collect
with respect to the issue or reissue of such shares.
(l) Other Provisions: The option agreeements shall contain such other
provisions as the Board of Directors shall deem advisable.
6. Term of Plan and Effective Date. Options may be granted pursuant to
the Plan from time to time within ten years after January 30, 1984, the date of
adoption of the Plan by the Board of Directors of the Corporation. The Plan
shall be subject to approval by the affirmative vote of the holders of at least
a majority of the securities of the Corporation present, or represented by
proxy, and entitled to vote at a meeting (to be duly held in accordance with the
applicable laws of the state of Delaware) for which proxies are solicited
substantially in accordance with rules and regulations, if any, as are then in
effect under Section 14(a) of the Securities Exchange Act of 1934, which
approval must occur within twelve months after said date of adoption of the Plan
by the Board of Directors. Options and stock appreciation rights granted
pursuant to the Plan prior to such approval shall be subject to such approval.
7. Amendment and Discontinuance. The Board of Directors of the
Corporation may alter, amend, suspend or terminate the Plan; however, any
amendment of the Plan which would materially (i) increase the benefits accruing
to optionees under the Plan, (ii) increase the number of securities which may be
issued under the Plan or (iii) modify the requirements as to eligibility for
participation in the Plan, shall be subject to approval by holders of securities
of the Corporation in the same manner as specified in paragraph 6 within twelve
months before or after the date of such amendment by the Board of Directors.
8. Application of Proceeds. The proceeds received by the Corporation
from the sale of Common Stock pursuant to options shall be available for general
corporate purposes.
9. No Obligation to Exercise Option. The granting of an option shall
impose no obligation upon the optionee to exercise the same, in whole or in
part.
10. Restrictions on Exercise. Any provision of the Plan to the contrary
notwithstanding, no option granted pursuant to the Plan shall be exercisable at
any time, in whole or in part, (i) prior to the shares of Common Stock subject
to the option being authorized for listing on the New York Stock Exchange, or
(ii) if issuance and delivery of the shares of Common Stock subject to the
option would be in violation of any applicable laws or regulations.
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<PAGE>
11. Stock Appreciation Rights.
(a) Grant of Stock Appreciation Rights: Stock appreciation rights may
be granted, in connection with all or any part of any option granted under the
Plan, either at the time of the grant of the option or at any time thereafter
during the term of the option. The number of stock appreciation rights granted
to an optionee shall not exceed the number of shares of Common Stock which the
optionee may purchase upon exercise of a related option or options granted to
him under the Plan.
(b) Exercise and Termination of Stock Appreciation Rights:
(1) A holder of stock appreciation rights may exercise such
rights, in whole or in part, in lieu of exercise of his related option,
or any part thereof, to the extent the option is then exercisable and
unexercised; in which event the optionee shall (i) surrender his option
with respect to a number of shares equal to the number of stock
appreciation rights exercised, and (ii) receive the number of shares of
Common Stock or amount of cash determined pursuant to paragraph
11(c)(3). The number of shares of Common Stock available for the grant
of future options and stock appreciation rights under the Plan shall be
reduced by the number of shares with respect to which an option is so
surrendered.
(2) Upon any exercise of an option or the related stock
appreciation rights, both the number of shares subject to the option
and the number of the optionee's stock appreciation rights shall be
reduced by the number (i) of shares as to which the option is
exercised, or (ii) of stock appreciation rights exercised. Upon
expiration or termination of an optionee's option, his stock
appreciation rights granted in connection therewith shall also
terminate or expire and may no longer be exercised.
(c) Terms and Conditions of Stock Appreciation Rights: Stock
appreciation rights granted to an optionee pursuant to the Plan shall be
evidenced by an agreement and shall be subject to the following terms and
conditions, and to such other terms and conditions not inconsistent with the
Plan as shall from time to time be provided by the Board of Directors:
(1) Stock appreciation rights may be exercised at the election
of the holder at such time or times, and to the same proportionate
extent that the option to which they relate shall be exercisable.
(2) In the event of any adjustment, pursuant to paragraph
5(g), in the number of shares of Common Stock subject to an option
granted under the Plan, the number of stock appreciation rights granted
thereunder in connection with such option shall be proportionately
adjusted.
(3) Upon exercise of stock appreciation rights, in
consideration of the surrender or partial surrender of his related
option and services theretofore rendered
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<PAGE>
to the Corporation or a subsidiary, the holder thereof shall be
entitled to receive, with respect to each such right, an amount equal
to the difference between:
(A) The fair market value of a share of Common Stock
at the time of exercise, and
(B) The per share option price for the shares subject
to the related option and the stock appreciation right being
exercised; however, if paid in cash such amount shall not
exceed twice such per share option price. Such amount shall be
payable as the optionee shall elect, in cash, shares of Common
Stock or any combination thereof; however, the Board of
Directors, or the committee appointed pursuant to paragraph
3(d), shall have sole discretion to consent to or disapprove
any election to receive cash in full or partial payment of
such amount. Such consent or disapproval may be given at any
time after the election to which it relates and no amount
shall be paid in cash prior to action by the Board of
Directors (or the committee, if one is appointed) consenting
to such payment. If the optionee is to receive all or a
portion of such amount in shares, the number of shares shall
be determined by dividing such amount or portion thereof by
the fair market value of one share of Common Stock at the time
of exercise. If the number of shares so determined is not a
whole number, such number shall be reduced to the next lower
whole number.
For purposes of this paragraph 11(c)(3), the fair market value of a
share of Common Stock at the time of exercise of a stock appreciation right
shall be (i) in the case of any such right exercised during the period specified
in Rule 16b-3(e)(3) (iii) under the Securities Exchange Act of 1934 (a "window
period"), the fair market value of the Common Stock for such window period as
designated by the Board of Directors (or the committee, if one is appointed) in
its discretion, which value shall not exceed the highest daily closing price per
share of Common Stock on the New York Stock Exchange during such window period
and shall be not less than the arithmetic mean of the daily closing prices of
the Common Stock on the New York Stock Exchange during such window period, or
(ii) in all other cases, the closing price per share of Common Stock on the New
York Stock Exchange on the date of exercise or, if no sale of Common Stock shall
have been made on that Exchange on that date, on the next preceding business day
on which there was a sale of such stock on that Exchange.
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LOUISIANA-PACIFIC CORPORATION
1991 EMPLOYEE STOCK OPTION PLAN
1. Purpose. The continued growth and success of Louisiana-Pacific
Corporation (the "Corporation") are dependent upon its ability to retain the
services of key employees of the highest competence and to provide incentives
for effective service and superior performance. The purpose of this 1991
Employee Stock Option Plan (the "Plan") is to provide an incentive to certain
key employees of the Corporation and its subsidiaries (as hereinafter defined)
to continue in their employment and also to afford them the opportunity to
acquire, or increase, stock ownership in the Corporation in order that they may
have a direct proprietary interest in its success. Options granted under the
Plan shall be nonqualified options which are not intended to qualify as
incentive stock options under Section 422A of the Internal Revenue Code.
2. Stock. The stock subject to option and other provisions of the Plan
shall be shares of the Corporation's authorized but unissued, or reacquired, $1
par value common stock ("Common Stock"). The total number of shares of Common
Stock with respect to which options may be granted shall not exceed in the
aggregate 1,000,000, provided that such aggregate number of shares shall be
subject to adjustment in accordance with the provisions of paragraph 5(g).
In the event that any outstanding option under the Plan shall be
canceled or terminate or expire prior to the end of the period during which
options may be granted under the Plan, the shares of Common Stock allocable to
the unexercised portion of such option may be made the subject of additional
options and stock appreciation rights granted under the Plan.
3. Administration; Grant of Options and Stock Appreciation Rights.
(a) The Plan shall be administered by the Board of Directors of the
Corporation; however, any action relating to the Plan may be taken by the Board
of Directors only if a majority of the Board of Directors and a majority of the
directors acting in the matter are disinterested persons. The term
"disinterested person" as used in this Plan shall have the meaning ascribed to
it in the rules and regulations promulgated by the Securities and Exchange
Commission pursuant to Section 16 of the Securities Exchange Act of 1934 (the
"Exchange Act").
(b) In administering the Plan, the Board of Directors may adopt, amend
and rescind rules and regulations for carrying out the Plan. The interpretation
and decision of the Board of Directors with regard to any question arising under
the Plan shall be final and conclusive. No member of the Board of Directors
shall be liable for any action taken or determination made in good faith with
respect to the Plan or to any options or stock appreciation rights granted
pursuant to the Plan.
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<PAGE>
(c) Subject to the provisions of paragraph 3(a), the Board of Directors
shall grant options and stock appreciation rights pursuant to the Plan. Options
or stock appreciation rights may be granted to the same employee on more than
one occasion. Options may be granted without related stock appreciation rights.
Stock appreciation rights may be granted only with respect to a related option.
(d) Pursuant to the bylaws of the Corporation, the Board of Directors
may designate a committee of not less than three directors, all of whom shall be
"disinterested persons" as that term is defined in paragraph 3(a), which, in
lieu of the Board of Directors, shall have full authority pursuant to the
foregoing subparagraphs (a), (b) and (c) of paragraph 3, or such lesser
authority as the Board of Directors may provide in such designation. To the
extent of such designation, any reference to "Board of Directors" in the Plan
shall be deemed to refer to such committee.
4. Eligibility. The individuals who shall be eligible to participate in
the Plan shall be such salaried employees (including officers who may also be
directors) of the Corporation or of any corporation in which the Corporation
owns, directly or indirectly, stock possessing more than 50 percent of the total
combined voting power of all classes of stock (such a corporation being herein
called a "subsidiary") as the Board of Directors shall determine.
5. Terms and Conditions of Options. Options granted pursuant to the
Plan shall be evidenced by agreements in such form as the Board of Directors
shall from time to time approve, which agreements shall comply with and be
subject to the following terms and conditions:
(a) Payment: Upon exercise of an option, in whole or in part, the
option price for shares to which the exercise relates shall be paid in full in
cash; except that
(1) shares to be issued pursuant to exercise of stock
appreciation rights pursuant to paragraph 11, if any, shall be issued
without any cash payment by the optionee; and
(2) the Board of Directors may, in its discretion, designate
an option, at the time of grant or thereafter, as eligible for
alternative methods of payment of the option price on the following
terms and conditions:
(A) Method of Payment: Payment of the option price of
shares subject to an option so designated may be made, at the
election of the optionee, either in cash or by delivering to
the Corporation shares of Common Stock having a fair market
value equal to the option price, or any combination of cash
and Common Stock having a combined value equal to the option
price. Shares of Common Stock may not be used in payment or
partial payment unless an option for at least 2,000 shares is
being exercised.
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<PAGE>
(B) Payment in Common Stock: Payment in shares of
Common Stock shall be made by delivering to the Corporation
certificates, duly endorsed for transfer, representing shares
of Common Stock having an aggregate fair market value on the
date of exercise equal to that portion of the option price
which is to be paid in Common Stock. The fair market value of
a share of Common Stock on the date of exercise shall be
deemed to be the closing price per share of Common Stock on
the New York Stock Exchange on the date of exercise or, if no
sale of Common Stock shall have been made on that Exchange on
that date, on the next preceding business day on which there
was a sale of such stock on that Exchange.
(C) Fractional Shares: Whenever payment of the option
price would require delivery of a fractional share, the
optionee shall deliver the next lower whole number of shares
of Common Stock and a cash payment shall be made by the
optionee for the balance of the option price.
(D) Limitations on Exercises: The Corporation may, in
the discretion of its Board of Directors, refuse to permit
repeated and successive exercises of options, payment of which
is to be made in Common Stock, if the effect of such exercise
would be to excessively compound or pyramid the number of
shares of Common Stock owned by the optionee.
(b) Number of Shares: The option shall state the total number of shares
of Common Stock subject thereto.
(c) Option Price: The option price shall be not less than 85 percent of
the fair market value of the shares of Common Stock on the date of the granting
of the option. The fair market value of a share of Common Stock on any such date
is defined as the closing price per share thereof on the New York Stock Exchange
on that date or, if no sale of Common Stock shall have been made on that
Exchange on that date, on the next preceding business day on which there was a
sale of such stock on that Exchange.
(d) Term of Option: Each option granted under the Plan shall expire not
more than ten years from the date the option is granted.
(e) Date of Exercise: Any option may be exercised at any time following
the expiration of six months after the date of grant, in whole or in part,
unless the Board of Directors shall provide that an option may not be exercised
by the optionee, in whole or in part, for any period or periods of time;
provided, however, that no option shall be exercisable in part with respect to a
number of shares fewer than 100. An option agreement may, in the discretion of
the Board of Directors, provide that an option will become immediately and fully
exercisable (i) in the event of death of the optionee or (ii) upon the
occurrence of a change of control of the Corporation. For purposes of the Plan,
a change of control shall be deemed to occur if (x) any person or group,
together with its affiliates and associates (other than the Corporation or any
of its subsidiaries or employee benefit plans),
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<PAGE>
acquires direct or indirect beneficial ownership of 20 percent or more of the
then outstanding shares of Common Stock or commences a tender or exchange offer
for 30 percent or more of the then outstanding shares of Common Stock, or (y)
the Corporation is to be liquidated or dissolved. The terms "group,"
"affiliates," "associates" and "beneficial ownership" shall have the meanings
ascribed to them in the rules and regulations promulgated under the Exchange
Act.
(f) Termination of Employment: In the event that an optionee's
employment by the Corporation shall terminate, his option shall terminate three
months following the date of termination of his employment; however, if the
employee shall die while in the employ of the Corporation during a period of
continuous employment by the Corporation, which includes the date on which the
option was granted, his estate, personal representative or beneficiary shall
have the right, subject to the provisions of paragraph 5(e), to exercise his
option at any time within 12 months from the date of his death, notwithstanding
the option term specified pursuant to paragraph 5(d). Whether an authorized
leave of absence or absence on military or government service shall constitute a
termination of employment for the purposes of the Plan shall be determined by
the Board of Directors. For purposes of this paragraph, optionee's employment by
a subsidiary shall be deemed to be employment by the Corporation.
(g) Recapitalization: In the event of any change in capitalization
which affects the Common Stock, whether by stock dividend, stock distribution,
stock split, subdivision or combination of shares, merger or consolidation or
otherwise, such proportionate adjustments, if any, as the Board of Directors in
its discretion deems appropriate to reflect such change shall be made with
respect to the total number of shares of Common Stock in respect of which
options may be granted under the Plan, the number of shares covered by each
outstanding option, and the exercise price per share under each such option;
however, any fractional shares resulting from any such adjustment shall be
eliminated.
A dissolution of the Corporation, or a merger or consolidation in which
the Corporation is not the resulting or surviving corporation (or in which the
Corporation is the resulting or surviving corporation but becomes a subsidiary
of another corporation), shall cause every option outstanding hereunder to
terminate concurrently with consummation of any such dissolution, merger or
consolidation, except that the resulting or surviving corporation (or, in the
event the Corporation is the resulting or surviving corporation but has become a
subsidiary of another corporation, such other corporation) may, in its absolute
and uncontrolled discretion, tender an option or options to its shares on terms
and conditions, both as to number of shares and otherwise, which will
substantially preserve the rights and benefits of any option then outstanding
hereunder.
In the event of a change in the Corporation's presently authorized
Common Stock which is limited to a change of all its presently authorized shares
with par value into the same number of shares with a different par value or into
the same number of shares without par value, the shares resulting from any such
change shall be deemed to be Common Stock within the meaning of this Plan.
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<PAGE>
(h) Transferability: No option, stock appreciation right or any other
right under the Plan shall be assignable or transferable other than by will or
the laws of descent and distribution. During an optionee's lifetime, only he or
his guardian or legal representative may exercise any such option or right.
(i) Employee's Agreements: Each option shall agree to remain in the
employ of and to render his services to the Corporation or a subsidiary for a
period of one year from the date of grant of the option.
(j) Rights as a Stockholder: An optionee shall have no rights as a
stockholder with respect to shares covered by his option until the date of the
issuance or transfer of the shares to him and only after such shares are fully
paid. Except as provided in paragraph 5(g) no adjustment shall be made for
dividends or other rights for which the record date is prior to the date of such
issuance or transfer.
(k) Provision for Taxes: It shall be a condition to the Corporation's
obligation to issue or reissue shares of Common Stock upon exercise of any
option or any related stock appreciation rights that the optionee pay, or make
provision satisfactory to the Corporation for payment of, any federal and state
income and other taxes which the Corporation is obligated to withhold or collect
with respect to the issue or reissue of such shares.
(l) Other Provisions: The option agreements shall contain such other
provisions as the Board of Directors shall deem advisable.
6. Effective Date and Term of Plan. Options may be granted pursuant to
the Plan from time to time beginning February 3, 1991, the date of adoption of
the Plan by the Board of Directors of the Corporation. The Plan shall continue
in effect until options have been granted covering all available shares of
Common Stock as specified in paragraph 2 or until the Plan is terminated by the
Board of Directors, whichever is earlier, except as provided below.
The Plan shall be subject to approval by the affirmative vote of the
holders of at least a majority of the securities of the Corporation present, or
represented by proxy, and entitled to vote at a meeting (to be duly held in
accordance with the applicable laws of the state of Delaware) for which proxies
are solicited substantially in accordance with rules and regulations, if any, as
are then in effect under Section 14(a) of the Exchange Act, which approval must
occur within twelve months after said date of adoption of the Plan by the Board
of Directors. Options and stock appreciation rights granted pursuant to the Plan
prior to such approval shall be subject to such approval.
7. Amendment or Termination. The Board of Directors may alter, amend,
suspend or terminate the Plan at any time. Amendments to the Plan shall be
subject to stockholder approval to the extent required to comply with any
exemption to the short-swing profit provisions of Section 16(b) of the Exchange
Act pursuant to rules and regulations promulgated thereunder or with the rules
and regulations of any securities exchange on which
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<PAGE>
the Common Stock is listed. Expiration or termination of the Plan shall not
affect outstanding options or stock appreciation rights except as provided in
paragraph 6. The Board of Directors may also modify the terms and conditions of
any outstanding option, subject to the consent of the optionee and consistent
with the provisions of the Plan.
8. Application of Proceeds. The proceeds received by the Corporation
from the sale of Common Stock pursuant to options shall be available for general
corporate purposes.
9. No Obligation to Exercise Option. The granting of an option shall
impose no obligation upon the optionee to exercise the same, in whole or in
part.
10. Restrictions on Exercise. Any provision of the Plan to the contrary
notwithstanding, no option granted pursuant to the Plan shall be exercisable at
any time, in whole or in part, (i) prior to the shares of Common Stock subject
to the option being authorized for listing on the New York Stock Exchange, or
(ii) if issuance and delivery of the shares of Common Stock subject to the
option would be in violation of any applicable laws or regulations.
11. Stock Appreciation Rights.
(a) Grant of Stock Appreciation Rights: Stock appreciation rights may
be granted, in connection with all or any put of any option granted under the
Plan, either at the time of the grant of the option or at any time thereafter
during the term of the option. The number of stock appreciation rights granted
to an optionee shall not exceed the number of shares of Common Stock which the
optionee may purchase upon exercise of a related option or options granted to
him under the Plan.
(b) Exercise and Termination of Stock Appreciation Rights:
(1) A holder of stock appreciation rights may exercise such
rights, in whole or in part, in lieu of exercise of his related option,
or any part thereof, to the extent the option is then exercisable and
unexercised; in which event the optionee shall (i) surrender his option
with respect to a number of shares equal to the number of stock
appreciation rights exercised, and (ii) receive the number of shares of
Common Stock or amount of cash determined pursuant to paragraph
11(c)(3). The number of shares of Common Stock available for the grant
of future options and stock appreciation rights under the Plan shall be
reduced by the number of shares with respect to which an option is so
surrendered.
(2) Upon any exercise of an option or the related stock
appreciation rights, both the number of shares subject to the option
and the number of the optionee's stock appreciation rights shall be
reduced by (i) the number of shares as to which the option is
exercised, or (ii) the number of stock appreciation rights exercised.
Upon expiration or termination of an optionee's option, his stock
appreciation rights granted in connection therewith shall also
terminate or expire and may no longer be exercised.
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<PAGE>
(c) Terms and Conditions of Stock Appreciation Rights: Stock
appreciation rights granted to an optionee pursuant to the Plan shall be
evidenced by an agreement and shall be subject to the following terms and
conditions, and to such other terms and conditions not inconsistent with the
Plan as shall from time to time be provided by the Board of Directors:
(1) Stock appreciation rights may be exercised at the election
of the holder at such time or times, and to the same proportionate
extent that the option to which they relate shall be exercisable.
(2) In the event of any adjustment, pursuant to paragraph
5(g), in the number of shares of Common Stock subject to an option
granted under the Plan, the number of stock appreciation rights granted
thereunder in connection with such option shall be proportionately
adjusted.
(3) Upon exercise of stock appreciation rights, in
consideration of the surrender or partial surrender of his related
option and services theretofore rendered to the Corporation or a
subsidiary, the holder thereof shall be entitled to receive, with
respect to each such right, an amount equal to the difference between:
(A) The fair market value of a share of Common Stock
at the time of exercise, and
(B) The per share option price for the shares subject
to the related option and the stock appreciation right being
exercised; however, if paid in cash such amount shall not
exceed twice such per share option price.
Such amount shall be payable as the optionee shall elect, in cash,
shares of Common Stock or any combination thereof; however, the Board of
Directors shall have sole discretion to consent to or disapprove any election to
receive cash in full or partial payment of such amount. Such consent or
disapproval may be given at any time after the election to which it relates and
no amount shall be paid in cash prior to action by the Board of Directors
consenting to such payment. If the optionee is to receive all or a portion of
such amount in shares, the number of shares shall be determined by dividing such
amount or portion thereof by the fair market value of one share of Common Stock
at the time of exercise. If the number of shares so determined is not a whole
number, such number shall be reduced to the next lower whole number.
For purposes of this paragraph 11(c)(3), the fair market value of a
share of Common Stock at the time of exercise of a stock appreciation right
shall be (i) in the case of any such right exercised during the period specified
in Rule 16b-3(e)(3)(iii) under the Exchange Act (or any successor rule) (a
"window period"), the fair market value of the Common Stock for such window
period as designated by the Board of Directors in its discretion, which value
shall not exceed the highest daily closing price per share of Common Stock on
the New York Stock Exchange during such window period and shall be not less than
the arithmetic mean of the closing price per share of the Common Stock on the
New York Stock Exchange during
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<PAGE>
such window period, or (ii) in all other cases, the closing price per share of
Common Stock on the New York Stock Exchange on the date of exercise or, if no
sale of Common Stock shall have been made on that Exchange on that date, on the
next preceding business day on which there was a sale of such stock on that
Exchange.
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LOUISIANA-PACIFIC CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
August 1, 1985
This Plan shall be known as the Louisiana-Pacific Corporation
Directors' Deferred Compensation Plan. The purpose of this Plan is to provide
for deferral of directors' compensation.
ARTICLE I
Eligibility
Any member of the Board of Directors of Louisiana-Pacific
Corporation (the "Company") other than an employee of the Company or one of its
subsidiaries who is entitled to compensation from the Company for services as a
director ("Eligible Director") may elect to defer receipt of such compensation.
ARTICLE II
Participation
1. Election. An Eligible Director becomes a Participant by
filing with the Company a form of election to participate provided by the
Company. An Eligible Director may elect to defer either:
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<PAGE>
(a) The Eligible Director's annual director's fees; or
(b) All compensation to be earned as a director of the
Company, including annual director's fees and fees for attendance at or
participation in board of directors or committee meetings.
2. Election Deadlines. An Eligible Director may file an
election on or prior to December 31 to defer compensation earned for subsequent
calendar years.
Any person who becomes an Eligible Director and who was not an
Eligible Director on the preceding December 31 may file an election before he
attends his first meeting as a director to defer compensation earned during the
remainder of that calendar year and subsequent calendar years.
ARTICLE III
Deferred Account
A deferred reserve account (the "Deferred Account") shall be
established for each Participant for bookkeeping purposes only and not as a
fund. Deferred compensation earned during a quarter shall be credited to the
Deferred Account as of the end of such quarter.
There shall be credited to each Participant's Deferred Account
as of the end of each quarter an amount equal to interest on the account balance
at the beginning of such quarter at a rate equal to the 90-day commercial paper
rate for high-grade unsecured notes
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<PAGE>
sold through dealers by major corporations as reported in the "Money Rates"
report of the Wall Street Journal for the first business day of such quarter.
A Participant's rights are limited to receiving from the
Company payment of the balance in the Deferred Account.
The Deferred Account of a Participant shall continue for all
purposes to be a part of the general funds of the Company. A Participant's
rights shall be no greater than the rights of any unsecured general creditor of
the Company.
ARTICLE IV
Nonassignment
A Participant's right to his Deferred Account shall not be in
any manner assigned, transferred, pledged, or encumbered by a Participant except
by will or the laws of descent and distribution, and shall not be subject to
levy, attachment, garnishment or other process by or on behalf of any of the
Participant's creditors.
ARTICLE V
Payment of Deferred Account
Payment of a Participant's Deferred Account shall begin on the
first day of the first quarter after the Participant ceases being a director of
the Company.
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<PAGE>
A Participant must elect (in the form of election to
participate) to receive payment of his Deferred Account in either a lump sum or
in equal quarterly installments payable over a five-year or a ten-year period.
Payments shall be made to the Participant or, if he dies prior
to receiving full payment of his Deferred Account, to his surviving spouse or,
if there is no surviving spouse, in one lump sum to his estate.
ARTICLE VI
Administration
This Plan shall be administered by the Compensation Committee
of the Board (the "Committee"). The Committee shall have full power and
authority to interpret the provisions and to supervise the administration of
this Plan and to take all action in connection therewith as it deems necessary
or advisable. All decisions and interpretations of the Committee shall be final.
ARTICLE VII
Termination
1. Termination of Participation. A Participant may terminate
participation by signing and filing with the Company a notice of termination. A
notice of termination filed on or prior to December 31 shall be effective for
compensation earned in subsequent calendar years. A Director's Deferred Account
will continue to be subject to the provisions
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<PAGE>
of this Plan following termination of participation. An Eligible Participant who
terminates participation may again elect to participate in the Plan.
2. Termination of Plan. This Plan shall continue in effect
until terminated by resolution of the Board. In the event of termination of the
Plan, Deferred Accounts existing prior to termination shall continue to be
subject to the provisions of the Plan as if the Plan had not been terminated.
ARTICLE VIII
Amendment
This Plan may be amended from time to time by resolution of
the Board, but no such amendment shall permit a Deferred Account established
pursuant to the Plan prior to the amendment to be paid to a Participant prior to
the time the Participant would otherwise be entitled to receive it.
ARTICLE IX
Effective Date
This Plan is effective January 1, 1986, and applies to
compensation earned by Participant on or after that date.
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<PAGE>
ELECTION TO PARTICIPATE IN THE
LOUISIANA-PACIFIC CORPORATION DIRECTORS'
DEFERRED COMPENSATION PLAN
I elect to participate in the Louisiana-Pacific Corporation
Directors' Deferred Compensation Plan (the "Plan"), and I agree to be bound by
the terms and conditions of the Plan.
I elect to defer pursuant to the Plan:
___ My annual directors' fees.
___ All compensation to be earned by me as a director,
including annual directors' fees and fees for
attendance at or participation in board of directors
or committee meetings.
I further elect that my Deferred Account to be established
pursuant to the Plan shall be paid to me as follows:
___ In a lump sum on the first day of the first calendar
quarter after I cease being a director of
Louisiana-Pacific Corporation.
___ In equal quarterly installments over a period of
___ five years or
___ ten years
beginning on the first day of the first calendar
quarter after I cease being a director of
Louisiana-Pacific Corporation.
I understand that this election irrevocably (i) defers receipt
of my compensation as a director of Louisiana-Pacific Corporation while this
election is effective, and (ii) establishes the method of payment of my Deferred
Account to be established pursuant to the Plan.
Dated: ________________, 19__
----------------------------------
Director
Receipt Acknowledged:
Louisiana-Pacific Corporation
By ___________________________________
Dated: ______________________________
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EXHIBIT 10H(1)
LOUISIANA-PACIFIC CORPORATION
KEY EMPLOYEE RESTRICTED STOCK PLAN
1. Purpose.
The continued growth and success of Louisiana-Pacific
Corporation are dependent upon its ability to attract and retain the services of
key employees of the highest competence and to provide incentives for their
effective service and superior performance. The purpose of the Louisiana-Pacific
Corporation Key Employee Restricted Stock Plan is to advance the interests of
Louisiana-Pacific Corporation through a program permitting grants of restricted
stock which will attract, motivate, and retain key employees and encourage key
employees to identify with the interests of the stockholders of
Louisiana-Pacific Corporation.
2. Definitions.
When used in the Plan, the following terms shall have the
meanings set forth below:
(a) Agreement. "Agreement" means the written Restricted Stock
Award Agreement that evidences a Restricted Stock Award.
(b) Award Date. "Award Date" means the date on which a
Restricted Stock Award is made.
(c) Board. "Board" means the Board of Directors of
Louisiana-Pacific.
(d) Committee. "Committee" means the Compensation Committee of
the Board.
(e) Exchange Act. "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
(f) Executive Officer. "Executive Officer" means the president
or any vice president of Louisiana-Pacific.
(g) Fair Market Value. "Fair Market Value" of a Share on any
date means the closing price of a Share as reported on the New York Stock
Exchange Composite Tape for that date or, if no Share was sold on that Exchange
on that date, on the next preceding day on which a Share was sold on that
Exchange.
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<PAGE>
(h) Louisiana-Pacific. "Louisiana-Pacific" means
Louisiana-Pacific Corporation, a Delaware corporation.
(i) Participant. "Participant" means an eligible employee who
has received a Restricted Stock Award under the Plan.
(j) Plan. "Plan" means the Louisiana-Pacific Corporation Key
Employee Restricted Stock Plan as described herein.
(k) Restricted Stock Award. "Restricted Stock Award" or
"Award" means an award of the right to receive a grant of Restricted Shares
under the Plan.
(1) Share. "Share" means a share of Louisiana-Pacific's $1 par
value common stock.
(m) Subsidiary. "Subsidiary" means any corporation in which
Louisiana-Pacific owns, directly or indirectly, stock possessing more than 50
percent of the total combined voting power of all classes of stock in such
corporation.
Capitalized terms not otherwise defined herein shall have the
meanings as the definitions of such terms included in the General Rules and
Regulations under the Exchange Act.
3. Eligibility.
The persons who shall be eligible to receive Restricted Stock
Awards under the Plan shall be salaried employees (including officers who may
also be directors) of Louisiana-Pacific and its subsidiaries.
4. Administration.
The Plan shall be administered by the Committee. However, no
action regarding the Plan may be taken by the Committee unless the Committee
consists of three or more persons all of whom are "disinterested persons" as
that term is defined in Rule 16b-3(d)(3) under the Exchange Act.
The Committee shall be authorized, subject to the provisions
of the Plan, to adopt, amend, and rescind rules and regulations for
administration of the Plan and for its own acts and proceedings and to take all
action necessary or appropriate to administer the Plan, to interpret the Plan's
provisions, and to decide all questions and resolve all controversies and
disputes which may arise in connection with the Plan. All decisions,
determinations, and interpretations of the Committee with regard to any question
arising under the Plan shall be conclusive and binding upon all parties
concerned. No member of
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<PAGE>
the Committee or the Board shall be liable for any action taken or determination
made in good faith.
5. Grant of Restricted Stock Awards.
The Committee shall have the sole authority and discretion to
make Restricted Stock Awards to Executive Officers, division general managers,
and other key employees recommended for such Awards by an Executive Officer or a
division general manager and to determine the number of Shares of each such
Award.
Each Restricted Stock Award shall be evidenced by an Agreement
in such form and containing such terms, not inconsistent with the Plan, as the
Committee from time to time shall approve. Restricted Stock Awards may be made
to the same person on more than one occasion.
6. Shares Subject to Restricted Stock Awards.
Shares subject to Restricted Stock Awards under the Plan may
be either authorized but unissued Shares or treasury Shares. The total number of
Shares with respect to which Restricted Stock Awards may be made under the Plan
shall not exceed 1,700,000 Shares, or such greater number of Shares as is
determined pursuant to an adjustment in accordance with Section 8. In the event
that any Shares previously subject to Awards under the Plan are forfeited, such
Shares shall again be available for use in connection with new Restricted Stock
Awards under the Plan.
7. Terms of Restricted Stock Awards.
(a) Issuance of Shares. No Shares shall be issued on the Award
Date. Shares subject to a Restricted Stock Award shall be issued on the date or
dates set forth in the Agreement evidencing such Award, provided that no such
date shall occur earlier than the first anniversary of the Award Date except as
provided in Section 8 below, and provided further that the Participant is
employed by Louisiana-Pacific or any of its Subsidiaries on such date. Such
Shares shall be represented by stock certificates registered in the name of the
Participant and, if not delivered to the Participant pursuant to subsection (c)
hereof immediately following issuance, shall be held in the custody of
Louisiana-Pacific.
(b) Rights as Stockholder Prior to Delivery of Shares. After
issuance of the Shares and prior to delivery of the Shares, the Participant
shall have the right to receive dividends, to vote the Shares, and to enjoy all
other stockholder rights, with the exception that (i) the Participant shall not
be entitled to delivery of a stock certificate for the Shares, (ii)
Louisiana-Pacific shall retain custody of the shares, and (iii) the Participant
may not sell, transfer, assign, pledge, exchange, encumber, or otherwise dispose
of the Shares.
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<PAGE>
(c) Delivery of Shares. Subject to the provisions of the Plan,
and any additional conditions and restrictions (including, but not limited to,
performance criteria based on earnings per share, return on assets, return on
equity, net income, or such other standard as the Committee deems appropriate)
that may be imposed by the Committee and set forth in the Agreement, one or more
stock certificates for the Shares subject to a Restricted Stock Award shall be
delivered to the Participant on such date or dates as shall be set forth in the
Agreement evidencing such Award, provided that such Shares have been issued
pursuant to subsection (a) hereof. The Committee may at any time, in its sole
discretion, accelerate the date of delivery of all or a portion of the Shares
issued pursuant to an Award. A Participant shall enjoy all stockholder rights
with respect to Shares that may have been delivered and such Shares shall no
longer be subject to the terms of the Plan or the Agreement.
(d) Termination of Employment. Notwithstanding any other
provisions to the contrary, in the event that a Participant's employment with
Louisiana-Pacific and its Subsidiaries terminates for any reason (including
retirement, death, or disability), (i) any Restricted Stock Award granted to the
Participant shall immediately expire, (ii) no further Shares shall be delivered
to the Participant pursuant to a Restricted Stock Award, and (iii) any Shares
issued pursuant to a Restricted Stock Award that have not yet been delivered to
the Participant shall be forfeited back to Louisiana-Pacific. The date of
termination of a Participant's employment shall be determined by the Committee,
which determination shall be final.
(e) Nontransferability of Award. No Restricted Stock Award
shall be subject to sale, transfer, assignment, pledge, or encumbrance, and any
such attempted action shall be void.
8. Changes Affecting Shares.
In the event of any change in capitalization which affects the
Shares, whether by stock dividend, stock distribution, stock split, subdivision
or combination of Shares, merger or consolidation, or otherwise, such
proportionate adjustments, if any, as the Committee in its discretion deems
appropriate to reflect such change shall be made with respect to the total
number of Shares for which Restricted Stock Awards may be granted under the Plan
and the number of Shares covered by outstanding Awards; however, any fractional
Shares resulting from any such adjustment shall be eliminated.
If (i) any person or Group, together with its Affiliates and
Associates (other than Louisiana-Pacific or any of its Affiliates, subsidiaries
or employee benefit plans), acquires direct or indirect Beneficial ownership of
20 percent or more of the then outstanding Shares or commences a tender or
exchange offer for 30 percent or more of the then outstanding Shares, or (ii)
Louisiana-Pacific is to be liquidated or dissolved, the Committee in its sole
discretion may accelerate the date on which Shares are to be issued pursuant to
Section 7(a) or may terminate outstanding Restricted Stock Awards.
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In the event of a change in Louisiana-Pacific's presently
authorized Shares which is limited to a change of all of its presently
authorized shares of $1 par value common stock into the same number of shares
with a different par value or into the same number of shares without par value,
the shares resulting from any such change shall be deemed to be Shares within
the meaning of the Plan.
9. Effective Date.
The Plan shall become effective upon adoption by the Board,
subject to approval by the holders of a majority of the securities of
Louisiana-Pacific present, or represented by proxy, and entitled to vote at a
meeting (to be duly held in accordance with the applicable laws of the state of
Delaware) for which proxies are solicited substantially in accordance with rules
and regulations, if any, as are then in effect under Section 14(a) of the
Exchange Act, provided the total vote cast on the proposal to approve the Plan
represents over 50 percent in interest of all securities entitled to vote.
Restricted Stock Awards made under the Plan prior to such approval shall be
subject to such approval.
10. Amendment and Termination of Plan.
The Board may amend, suspend, or terminate the Plan, in whole
or in part, from time to time, provided that, without a Participant's consent,
no such amendment, suspension, or termination shall impair rights or obligations
pursuant to outstanding Restricted Stock Awards; and, provided further, that
stockholder approval shall be obtained for any such amendment, suspension, or
termination which materially (i) increases the benefits accruing to Participants
under the Plan, (ii) increases the number of Shares which may be issued under
the Plan (other than pursuant to Section 8 hereof), or (iii) modifies the
requirements as to eligibility for participation in the Plan.
11. Miscellaneous Provisions.
(a) No Right of Continued Employment. Nothing in the Plan, or
in any Restricted Stock Award granted pursuant to the Plan, shall confer upon
any person the right to continue in the employ of Louisiana-Pacific or any of
its Subsidiaries, or interfere in any way with the right of Louisiana-Pacific or
any Subsidiary to terminate the person's employment at any time.
(b) Withholding Taxes. A Participant shall be required to pay
to Louisiana-Pacific an amount sufficient to provide for any withholding taxes
in connection with a Restricted Stock Award. The Committee may, in its
discretion and subject to such rules as it may adopt, permit a Participant to
satisfy this withholding obligation by electing (i) to have Louisiana-Pacific
withhold from the Shares otherwise to be delivered to the Participant that
number of Shares that would satisfy the withholding obligation or (ii) to
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<PAGE>
transfer to Louisiana-Pacific already owned Shares to satisfy the withholding
obligation. In addition, the Committee may permit a Participant to elect
withholding in the manner specified above in excess of statutory minimum
withholding requirements as long as such withholding in the aggregate does not
exceed a Participant's estimated tax obligations arising from recognition of
compensation income in connection with a Restricted Stock Award. All withholding
elections must be made on or before the date that the amount of tax to be
withheld is determined.
(c) Delaware Law to Govern. The Plan and all Agreements
entered into under the Plan shall be constructed pursuant to the laws of the
State of Delaware.
(d) Restrictions on Issuance and Delivery of Shares.
Notwithstanding any other provision to the contrary, Louisiana-Pacific reserves
the right to restrict the issuance and delivery of Shares pursuant to a
Restricted Stock Award under the Plan until such time as (i) satisfactory
assurances are received that the Shares when issued shall be duly listed on the
New York Stock Exchange, (ii) any legal requirements or regulations have been
met relating to the registration of the Shares under the Securities Act of 1933
and any applicable state laws, and (iii) any other legal requirements have been
met.
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LOUISIANA-PACIFIC CORPORATION
1997 INCENTIVE STOCK AWARD PLAN
Effective March 1, 1997
<PAGE>
LOUISIANA-PACIFIC CORPORATION
1997 INCENTIVE STOCK AWARD PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1. ESTABLISHMENT AND PURPOSE......................................................................... 1
1.1 Establishment................................................................................... 1
1.2 Purpose......................................................................................... 1
ARTICLE 2. DEFINITIONS....................................................................................... 1
2.1 Defined Terms................................................................................... 1
ARTICLE 3. ADMINISTRATION.................................................................................... 3
3.1 General......................................................................................... 3
3.3 Liability of Committee Members.................................................................. 3
ARTICLE 4. DURATION OF THE PLAN AND SHARES SUBJECT TO THE
PLAN................................................................................................. 3
4.1 Duration of the Plan............................................................................ 3
4.2 Other Stock Plans............................................................................... 3
ARTICLE 5. ELIGIBILITY....................................................................................... 4
ARTICLE 6. AWARDS............................................................................................ 4
6.1 Types of Awards................................................................................. 4
6.2 Award Agreements................................................................................ 4
6.3 Nonuniform Determinations....................................................................... 4
6.4 Provisions Governing All Awards................................................................. 5
ARTICLE 7. STOCK OPTIONS..................................................................................... 5
ARTICLE 8. STOCK APPRECIATION RIGHTS......................................................................... 6
ARTICLE 9. PERFORMANCE SHARES................................................................................ 6
ARTICLE 10. RESTRICTED STOCK................................................................................. 7
ARTICLE 11. OTHER STOCK-BASED AND COMBINATION AWARDS......................................................... 8
ARTICLE 12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION....................................................... 8
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ARTICLE 13. AMENDMENT AND TERMINATION........................................................................ 8
ARTICLE 14. MISCELLANEOUS.................................................................................... 8
14.1 Tax Withholding................................................................................ 8
14.2 Securities Law Restrictions.................................................................... 9
14.3 Governing Law.................................................................................. 9
ARTICLE 15. STOCKHOLDER APPROVAL............................................................................. 9
</TABLE>
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LOUISIANA-PACIFIC CORPORATION
1997 INCENTIVE STOCK AWARD PLAN
ARTICLE 1. ESTABLISHMENT AND PURPOSE
1.1 Establishment. LOUISIANA-PACIFIC CORPORATION
("Corporation"), hereby establishes the Louisiana-Pacific Corporation 1997
Incentive Stock Award Plan (the "Plan"), effective as of March 1, 1997, subject
to stockholder approval as provided in Article .
1.2 Purpose. The purpose of the Plan is to promote the
long-term interests of Corporation and its stockholders by enabling Corporation
to attract, retain, and reward key employees of Corporation and its subsidiaries
and to strengthen the mutuality of interests between such employees and
Corporation's stockholders. The Plan is designed to serve this purpose by
offering stock options and other equity-based incentive awards and encourage key
employees to acquire an ownership in Corporation.
ARTICLE 2. DEFINITIONS
2.1 Defined Terms. The following definitions are applicable to
the Plan:
"AWARD" means an award or grant made to a Participant pursuant
to the Plan.
"AWARD AGREEMENT" means an agreement as described in Section
of the Plan.
"BOARD" means the Board of Directors of Corporation.
"CODE" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, or any successor thereto, together with
rules, regulations, and interpretations promulgated thereunder. Where
the context so requires, any reference to a particular Code section
will be construed to refer to the successor provision to such Code
section.
"COMMITTEE" means the Compensation Committee of the Board.
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"COMMON STOCK" means the common stock, $1 par value, of
Corporation or any security of Corporation issued in substitution,
exchange, or lieu thereof.
"CORPORATION" means Louisiana-Pacific Corporation, a Delaware
corporation, or any successor corporation thereto.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FAIR MARKET VALUE" means on any given date, the closing price
per share of Common Stock as reported for such day by the principal
exchange or trading market on which Common Stock is traded (as
determined by the Committee) or, if Common Stock was not traded on such
date, on the next preceding day on which Common Stock was traded. If
the Common Stock is not listed on a stock exchange or if trading
activities for Common Stock are not reported, the Fair Market Value
will be determined by the Committee.
"PARTICIPANT" means an employee of Corporation or a Subsidiary
who is granted an Award under the Plan.
"PLAN" means this Louisiana-Pacific Corporation 1997 Incentive
Stock Award Plan, as set forth herein and as it may be hereafter
amended and from time to time.
"SHARE" means a share of Common Stock.
"SUBSIDIARY" means any corporation in which Corporation
directly or indirectly controls 50 percent or more of the total
combined voting power of all classes of stock having voting power.
"VEST" or "VESTED" means:
(a) In the case of an Award that requires exercise, to be or
to become immediately and fully exercisable and free of all
restrictions;
(b) In the case of an Award that is subject to forfeiture, to
be or to become nonforfeitable, freely transferable, and free of all
restrictions;
(c) In the case of an Award that is required to be earned by
attaining specified performance goals, to be or to become earned and
nonforfeitable, freely transferable, and free of all restrictions; or
(d) In the case of any other Award as to which payment is not
dependent solely upon the exercise of a right, election, exercise, or
option, to be or to become immediately payable and free of all
restrictions.
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ARTICLE 3. ADMINISTRATION
3.1 General. The Plan will be administered by the Committee.
The Committee will have full power and authority to administer the Plan in its
sole discretion. A majority of the members of the Committee will constitute a
quorum and action approved by a majority will be the act of the Committee.
3.2 Authority of the Committee. Subject to the terms of the
Plan, the Committee:
(a) Will select the Participants, determine the types of
Awards to be granted to Participants, determine the shares or share
units subject to Awards, and determine the terms and conditions of
individual Award Agreements;
(b) Has the authority to interpret the Plan, to establish,
amend, and revoke any rules and regulations relating to the Plan, to
make all other determinations necessary or advisable for the
administration of the Plan; and
(c) May correct any deficit, supply any omission, or reconcile
any inconsistency in the Plan or in any Award Agreement in the manner
and to the extent the Committee deems desirable to carry out the
purposes of the Plan.
Decisions of the Committee, or any delegate as permitted by the Plan, will be
final, conclusive, and binding on all Participants.
3.3 Liability of Committee Members. No member of the Committee
will be liable for any action or determination made in good faith with respect
to the Plan, any Award, or any Participant.
ARTICLE 4. DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN
4.1 Duration of the Plan. The Plan is effective March 1, 1997,
subject to approval by Corporation's stockholders as provided in Article . The
Plan will remain in effect until Awards have been granted covering all the
available Shares and all outstanding Awards have been exercised, settled, or
terminated in accordance with the terms of the applicable Award Agreement, or
the Plan is otherwise terminated by the Board. Termination of the Plan will not
affect outstanding Awards.
4.2 Other Stock Plans. The Plan is separate from the following
existing plans (the "Prior Plans"):
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<PAGE>
Louisiana-Pacific Corporation 1991 Employee Stock Option Plan;
Louisiana-Pacific Corporation 1984 Employee Stock Option Plan;
and Louisiana-Pacific Corporation Key Employee Restricted
Stock Plan.
The Plan will neither affect the operation of the Prior Plans nor be affected by
the Prior Plans, except that no further stock options or restricted stock awards
will be granted under any of the Prior Plans after the date the Plan is approved
by Corporation's stockholders as described in Article .
4.3 General Limitation on Awards. Subject to adjustment
pursuant to Article of the Plan, the maximum number of Shares for which Awards
may be granted under the Plan may not exceed 5 million Shares.
4.4 Cancellation or Expiration of Awards. If an Award under
the Plan is canceled or expires for any reason prior to having been fully vested
or exercised by a Participant or is settled in cash in lieu of Shares or is
exchanged for other Awards, all Shares covered by such Awards will again become
available for additional Awards under the Plan.
ARTICLE 5. ELIGIBILITY
Officers and other key employees of Corporation and its
Subsidiaries (including employees who may also be directors of Corporation or a
Subsidiary) who, in the Committee's judgment, are or will be contributors to the
long-term success of Corporation will be eligible to receive Awards under the
Plan.
ARTICLE 6. AWARDS
6.1 Types of Awards. Awards under the Plan may consist of:
stock options (either incentive stock options, within the meaning of Section 422
of the Code, or nonstatutory stock options), stock appreciation rights,
performance shares, restricted stock grants, and other stock-based awards (as
described in Article of the Plan). Awards of performance shares and restricted
stock may provide the Participant with dividends or dividend equivalents and
voting rights prior to vesting.
6.2 Award Agreements. Each Award will be evidenced by a
written Award Agreement between Corporation and the Participant. Award
Agreements may, subject to the provisions of the Plan, contain any provision
approved by the Committee. Any Award Agreement may make provision for any matter
that is within the discretion of the Committee or may retain the Committee's
discretion to approve or authorize any action with respect to the Award during
the term of the Award Agreement.
6.3 Nonuniform Determinations. The Committee's determinations
under the Plan or under one or more Award Agreements, including without
limitation, (a) the selection of Participants to receive Awards, (b) the type,
form, amount, and timing of
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<PAGE>
Awards, (c) the terms of specific Award Agreements, and (d) elections and
determinations made by the Committee with respect to exercise or payments of
Awards, need not be uniform and may be made by the Committee selectively among
Participants and Awards, whether or not Participants are similarly situated.
6.4 Provisions Governing All Awards. All Awards will be
subject to the following provisions:
(a) Transferability. Except as otherwise provided in this
Section , each Award (but not Shares issued following Vesting or
exercise of an Award) will not be transferable other than by will or
the laws of descent and distribution and Awards requiring exercise will
be exercisable during the lifetime of the Participant only by the
Participant or, in the event the Participant becomes legally
incompetent, by the Participant's guardian or legal representative.
Notwithstanding the foregoing, the Committee, in its discretion, may
include in any Award Agreement a provision that the Award is
transferable, without payment of consideration, to immediate family
members of the Participant or to a trust for the benefit of or a
partnership composed solely of such family members.
(b) Employment Rights. Neither the adoption of the Plan nor
the granting of any Award will confer on any person the right to
continued employment with Corporation or any Subsidiary, nor will it
interfere in any way with the right of Corporation or a Subsidiary to
terminate such person's employment at any time for any reason, with
or without cause.
(c) Effect of Change in Control. The Committee may, in its
discretion, include in any Award Agreement a provision that upon the
effective date of a change in control of Corporation (as that term may
be defined in the Award Agreement), all or a specified portion of the
Award (i) will become fully Vested, (ii) will terminate, or (iii) may
be converted into shares of an acquiror. In any such change in control
provision, the Committee may provide whether or to what extent such
acceleration in the Vesting of an Award will be conditioned to avoid
resulting in an "excess parachute payment" within the meaning of
Section 280G(b) of the Code.
ARTICLE 7. STOCK OPTIONS
The option price for each stock option may not be less than
100 percent of the Fair Market Value of the Common Stock on the date of grant.
Stock options will be exercisable for such period as specified by the Committee
in the applicable Award Agreement, but in no event may options be exercisable
for a period of more than ten years after their date of grant. The option price
of each Share as to which a stock option is exercised must be paid in full at
the time of exercise. The Committee may, in its discretion, provide in any Award
Agreement for a stock option that payment of the option
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<PAGE>
price may be made in cash, by tender of Shares owned by the Participant valued
at Fair Market Value as of the date of exercise, subject to such guidelines for
the tender of Shares as the Committee may establish, in such other consideration
as the Committee deems appropriate, or a combination of cash, shares of Common
Stock, and such other consideration. The number of Shares subject to options and
stock appreciation rights granted under the Plan to any individual Participant
during any three-calendar year period may not exceed 200,000.
In the case of an Option designated as an incentive stock
option, the terms of the option and the Award Agreement must conform with the
statutory and regulatory requirements specified pursuant to Section 422 of the
Code, as in effect on the date such incentive stock option is granted.
The Committee may, in its discretion, include in an Award
Agreement for any option a provision that in the event previously acquired
Shares are surrendered by a Participant in payment of all or a portion of either
(a) the option exercise price or (b) the Participant's federal, state, or
local tax withholding obligation with respect to such exercise, the Participant
will automatically be granted a replacement or reload option (with an option
price equal to the Fair Market Value of a Share on the date of such exercise)
for a number of Shares equal to all or a portion of the number of Shares
surrendered. Such replacement option will be subject to such terms and
conditions as the Committee determines.
ARTICLE 8. STOCK APPRECIATION RIGHTS
Stock appreciation rights may be granted in tandem with a
stock option, in addition to a stock option, or may be freestanding and
unrelated to a stock option. Stock appreciation rights granted in tandem or in
addition to a stock option may be granted either at the same time as the stock
option or at a later time. No stock appreciation right may be exercisable
earlier than six months after grant, except in the event of the
Participant's death or disability. A stock appreciation right will entitle
the Participant to receive from Corporation an amount equal to the increase in
the Fair Market Value of a Share on the exercise of the stock appreciation right
over the grant price. The Committee may determine in its discretion whether the
stock appreciation right may be settled in cash, shares, or a combination of
cash and shares.
ARTICLE 9. PERFORMANCE SHARES
9.1 General. Performance shares may be granted in the form of
actual Shares or Share units having a value equal to Shares. An Award of
performance shares will be granted to a Participant subject to such terms and
conditions set forth in the Award Agreement as the Committee deems appropriate,
including, without limitation, the condition that the performance shares or a
portion thereof will Vest only in the event specified performance goals are met
within a specified performance period, as set forth in the Award Agreement. An
Award Agreement for a performance share Award may also, in addition to
specifying performance goals, condition Vesting of such Award on continued
employment
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<PAGE>
for a period specified in the Award Agreement. In the event that a stock
certificate is issued in respect of performance shares, the certificate will be
registered in the name of the Participant but will be held by Corporation until
the time the performance shares become Vested. The performance conditions and
the length of the performance period will be determined by the Committee. The
Committee may, in its discretion, reduce or eliminate the Vesting of performance
shares if, in the Committee's judgment, it determines that the Vesting of the
performance share Award is not appropriate given actual performance over the
applicable performance period. The maximum number of Shares issuable to any
individual Participant with respect to performance share Awards in any four
calendar-year period may not exceed 100,000 Shares. The Committee, in its sole
discretion, may provide in an Award Agreement whether performance shares granted
in the form of share units will be paid in cash, shares, or a combination of
cash and shares.
9.2 Performance Goals for Executive Officers. The performance
goals for performance share awards granted to executive officers of Corporation
may relate to corporate performance, business unit performance, or a combination
of both.
Corporate performance goals will be based on financial
performance goals related to the performance of Corporation as a whole and may
include one or more measures related to earnings, profitability, efficiency, or
return to stockholders such as earnings per share, operating profit, stock
price, costs of production, or other measures.
Business unit performance goals will be based on a combination
of financial goals and strategic goals related to the performance of an
identified business unit for which a Participant has responsibility. Strategic
goals for a business unit may include one or a combination of objective factors
relating to success in implementing strategic plans or initiatives, introductory
products, constructing facilities, or other identifiable objectives. Financial
goals for a business unit may include the degree to which the business unit
achieves one or more objective measures related to its revenues, earnings,
profitability, efficiency, operating profit, costs of production, or other
measures.
Any corporate or business unit goals may be expressed as
absolute amounts or as ratios or percentages. Success may be measured against
various standards, including budget targets, improvement over prior periods, and
performance relative to other companies, business units, or industry groups.
ARTICLE 10. RESTRICTED STOCK
Restricted stock may be granted in the form of actual Shares
or Share units having a value equal to Shares. A restricted stock Award will be
subject to such terms and conditions set forth in the Award Agreement as the
Committee deems appropriate, including, without limitation, restrictions on the
sale, assignment, transfer, or other disposition of such restricted stock and
provisions that such restricted stock or stock units be forfeited upon
termination of the Participant's employment for specified reasons within a
specified period of time or upon other conditions, as set forth in the Award
Agreement.
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The Award Agreement for a restricted stock Award may also, in addition to
conditioning Vesting of the Award on continued employment, further condition
Vesting on attainment of performance goals. In the event that a stock
certificate is issued in respect of restricted stock, such certificate will be
registered in the name of the Participant but will be held by the Corporation
until the end of the restricted period. The employment conditions and the length
of the period for vesting of restricted stock will be established by the
Committee at the time of grant and set forth in the Award Agreement. The
Committee, in its sole discretion, may provide in an Award Agreement whether
restricted stock granted in the form of Share units will be paid in cash,
Shares, or a combination of cash and Shares.
ARTICLE 11. OTHER STOCK-BASED AND COMBINATION AWARDS
The Committee may grant other Awards under the Plan pursuant
to which Shares are or may in the future be acquired, or Awards denominated in
or measured by Share equivalent units, including Awards valued using measures
other than the market value of Shares. For such other stock-based awards that
are granted to executive officers of Corporation and that condition Vesting of
such Awards, in whole or in part, on attaining performance goals, such Awards
will be subject to the same limitations on types of performance goals and the
same limitation on the maximum number of Shares issuable to any individual
Participant as provided in Article 9 of the Plan. The Committee may also grant
Awards under the Plan in tandem or combination with other Awards or in exchange
for Awards, or in tandem or combination with, or as alternatives to, grants or
rights under any other employee plan of Corporation.
ARTICLE 12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in capitalization affecting the
Common Stock of Corporation, such as a stock dividend, stock split,
recapitalization, merger, consolidation, split-up, spinoff, combination or
exchange of shares, or other form of reorganization, or corporate change, or any
distribution with respect to Common Stock other than regular cash dividends, the
Committee may make such substitution or adjustment, if any, that it deems to be
equitable as to the number and kind of Shares or other securities issued or
reserved for issuance pursuant to the Plan and to outstanding Awards.
ARTICLE 13. AMENDMENT AND TERMINATION
The Board may amend, suspend, or terminate the Plan or any
portion of the Plan at any time, provided no amendment may be made without
stockholder approval if such approval is required by applicable law or the
requirements of an applicable stock exchange.
ARTICLE 14. MISCELLANEOUS
14.1 Tax Withholding. Corporation will have the right to
deduct from any settlement of any Award under the Plan, including the delivery
or vesting of Shares, any
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federal, state, or local taxes of any kind required by law to be withheld with
respect to such payments or to take such other action as may be necessary in the
opinion of Corporation to satisfy all obligations for the payment of such taxes.
The recipient of any payment or distribution under the Plan must make
arrangements satisfactory to Corporation for the satisfaction of any such
withholding tax obligations. Corporation will not be required to make any such
payment or distribution under the Plan until such obligations are satisfied. The
Committee, in its discretion, may permit a Participant to satisfy the
Participant's federal, state, or local tax, or tax withholding obligations with
respect to an Award by having Corporation retain the number of Shares having a
Fair Market Value equal to the amount of taxes or withholding taxes.
14.2 Securities Law Restrictions. No Shares will be issued
under the Plan unless counsel for Corporation is satisfied that such issuance
will be in compliance with applicable federal and state securities laws.
Certificates for Shares delivered under the Plan may be subject to such
stop-transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Common Stock is then
listed, and any applicable federal or state securities law. The Committee may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
14.3 Governing Law. Except with respect to references to the
Code or federal securities laws, the Plan and all actions taken thereunder will
be governed by and construed in accordance with the laws of the state of Oregon.
ARTICLE 15. STOCKHOLDER APPROVAL
The adoption of the Plan and the grant of Awards under the
Plan are expressly subject to the approval of the Plan by the affirmative vote
of at least a majority of the stockholders of Corporation present, or
represented by proxy, and entitled to vote at Corporation's 1997 annual
meeting of stockholders.
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AWARD AGREEMENT
UNDER THE
LOUISIANA-PACIFIC CORPORATION
1997 INCENTIVE STOCK AWARD PLAN
NONQUALIFIED STOCK OPTION
Corporation: LOUISIANA-PACIFIC CORPORATION
111 S.W. Fifth Avenue
Portland, Oregon 97204
Participant: ----------------------------
----------------------------
----------------------------
Grant Date: ----------------------------
Option: A Nonqualified Stock Option
Option Shares: ______ Shares
Exercise Price: $______ per Share
Subject to the terms and conditions of the Louisiana-Pacific
Corporation 1997 Incentive Stock Award Plan (the "Plan") and this Agreement,
effective as of the Grant Date, Corporation grants to Participant the Option to
purchase the Option Shares at the Exercise Price.
The provisions of Appendix A attached to this Agreement are
incorporated by reference as part of this Agreement.
LOUISIANA-PACIFIC CORPORATION
By _______________________________________
Its ______________________________________
------------------------------------------
Participant
<PAGE>
APPENDIX A
TO
AWARD AGREEMENT FOR NONQUALIFIED STOCK OPTION
This Award Agreement evidences the grant of a Nonqualified
Stock Option (the "Option") to Participant under the Plan.
Capitalized terms are defined in Section 8.
1. OPTION SHARES; ADJUSTMENT
In the event of a declaration of a stock dividend or a stock
split (whether effected as a dividend or otherwise) by Corporation where the
record date for such dividend or stock split is after the Grant Date, the number
of Option Shares and the Exercise Price will automatically be adjusted
proportionately to reflect the effect of such dividend or stock split.
2. TERMS OF THE OPTION
The Option is subject to all applicable provisions of the Plan
and to the following terms and conditions:
2.1 Nonqualified Stock Option. The Option is not intended to
qualify as an incentive stock option meeting the requirements of IRC ss. 422.
2.2 Term. The term of the Option extends ten years from the
Grant Date unless terminated earlier in accordance with this Agreement.
2.3 Exercisability. The Option initially will not be
exercisable and, unless the Option is terminated or canceled earlier or the
exercisability of the Option is accelerated in accordance with this Agreement,
the Option may be exercised from time to time to purchase a whole number of
Option Shares up to the following limits:
(a) Prior to the first anniversary of the Grant Date, the
Option may not be exercised;
(b) During the one-year period beginning on the first
anniversary of the Grant Date, the Option may be exercised to purchase
up to one-third of the total Option Shares;
(c) During the one-year period beginning on the second
anniversary of the Grant Date, the Option may be exercised to purchase
up to two-thirds of the total Option Shares; and
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<PAGE>
(d) On and after the third anniversary of the Grant Date, the
Option may be exercised to purchase all the Option Shares.
2.4 Effect of Termination of Employment. The Option may not be
exercised (in whole or in part) unless Participant is continuously Employed by
an Employer from the Grant Date through at least the first anniversary of the
Grant Date. If Participant ceases to be an Employee for any reason on or after
the first anniversary of the Grant Date, the term of the Option will continue
for the applicable Continuation Period. The Option will remain exercisable
during the Continuation Period, if at all, only to the extent the Option had
become exercisable pursuant to Sections 2.3 and 2.10 of this Agreement on or
prior to the Termination Date. The Option, to the extent not previously
exercised, will be canceled automatically at the end of the applicable
Continuation Period.
2.5 Method of Exercise. The Option, or any portion thereof,
may be exercised, to the extent it has become exercisable pursuant to this
Agreement, by delivery of written notice to Corporation stating the number of
Shares, form of payment, and proposed date of closing.
2.6 Other Documents. Upon any exercise of the Option,
Participant must furnish Corporation before the closing of such exercise such
other documents or representations as Corporation may require to assure
compliance with applicable laws and regulations.
2.7 Payment. The Exercise Price for the Shares purchased upon
exercise of the Option must be paid in full in United States dollars at or
before closing by one or a combination of the following:
2.7.1 Payment in cash or certified check or bank draft payable
to the order of Corporation;
2.7.2 Delivery of previously acquired Shares having a Fair
Market Value equal to the Exercise Price; or
2.7.3 By delivery (in a form approved by the Committee) of an
irrevocable direction to a securities broker acceptable to the
Committee:
(a) To sell Shares subject to the Option and to
deliver all or a part of the sales proceeds to Corporation in
payment of all or a part of the Exercise Price and withholding
taxes due; or
(b) To pledge Shares subject to the Option to the
broker as security for a loan and to deliver all or a part of
the loan proceeds to Corporation in payment of all or a part
of the Exercise Price and withholding taxes due.
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<PAGE>
2.8 Previously Acquired Shares. Delivery of previously
acquired Shares in full or partial payment for the exercise of the Option is
subject to the following conditions:
2.8.1 The Shares tendered must be in good delivery form;
2.8.2 Any Shares remaining after satisfying the payment for
the Option will be reissued in the same manner as the Shares tendered;
2.8.3 No fractional Shares will be issued and whenever payment
of the full Exercise Price with Shares would require delivery of a
fractional Share, Participant must deliver the next lower whole number
of Shares and make a cash payment to Corporation for the balance of the
Exercise Price; and
2.8.4 Shares may be tendered in full or partial payment of the
Exercise Price only in connection with the exercise of the Option with
respect to at least 2,000 Shares.
2.9. Transferability.
2.9.1 General. Except as provided in Section 2.9.2, the Option
is not transferable other than by will or the laws of descent and distribution
and may be exercised during the lifetime of Participant only by Participant or,
in the case Participant becomes legally incompetent, by Participant's guardian
or legal representative. No assignment or transfer of the Option in violation of
the foregoing restriction, whether voluntary, involuntary or by operation of law
or otherwise, except by will or the laws of descent and distribution, will vest
in the assignee or transferee any interest or right whatsoever, but immediately
upon any attempt to assign or transfer the Option, the Option will terminate and
be of no force or effect. Whenever the word "Participant" is used in any
provision of this Agreement under circumstances where the provision should
logically be construed to apply to the executor, administrator, or the person or
persons to whom this Option may be transferred by will or by the laws of descent
and distribution, it will be deemed to include such person or persons.
2.9.2 Permitted Family Transfers. The Option may be
transferred by Participant, without payment of consideration, to Participant's
immediate family members or lineal descendants ("Permitted Family Members"), to
trusts for the benefit of Permitted Family Members, or to family partnerships or
limited liability companies of which Participant and Permitted Family members
are the only partners or members. For purposes of this Section, a transfer of
the Option to a family partnership or limited liability company in exchange for
a partnership or limited liability company interest will be deemed to be a
transfer without payment of consideration.
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<PAGE>
2.10 Effect of Change in Control.
2.10.1 Acceleration of Vesting. Upon a Change in Control Date,
the Option, to the extent it had not yet become exercisable, will become fully
exercisable. This acceleration will not extend the date on which the Option
terminates. If, or to the extent, the acceleration of the exercisability of the
Option pursuant to this Section 2.10.1 results in an "excess parachute payment"
within the meaning of Section 280G of the Code, Corporation will reimburse
Participant, on an after-tax basis, for (1) any excise tax imposed by Section
4999(a) of the Code that is directly attributable to the acceleration of the
exercisability of the Option, and (2) any income taxes and excise taxes imposed
on any reimbursement pursuant to this sentence. For purposes of computing any
after-tax reimbursement, Participant will be deemed to pay federal, state, and
local income taxes (for the state and locality of Participant's residence) at
the highest effective combined marginal rates (giving effect to the
deductibility of state and local taxes) for the tax year in which the
reimbursement payment is made. No reimbursement will be due pursuant to this
Section 2.10.1 if, or to the extent, Participant is entitled to payment or
reimbursement for the same amounts under any other agreement with Corporation.
2.10.2 Dissolution. The Option will terminate upon the
effective date of a dissolution or liquidation of Corporation.
2.10.3 Merger. In the event of a merger or consolidation in
which Corporation is not the resulting or surviving corporation (or in which
Corporation is the resulting or surviving corporation but becomes a subsidiary
of another corporation), the Option will automatically be converted into an
option to purchase a number of shares of the stock of the resulting or surviving
corporation (or, in the event Corporation becomes a subsidiary of another
corporation, such other corporation) into which Corporation's Shares are
converted in the transaction with such terms and conditions, both as to number
of shares, option price, and otherwise, as will substantially preserve the
economic rights and benefits of Participant under this Agreement.
3. TAX REIMBURSEMENT
It is a condition of Corporation's obligation to issue
Shares in connection with an exercise of the Option that Participant pay to
Corporation, or make provision satisfactory to Corporation for the payment of,
an amount sufficient to provide for any withholding or similar tax liability
imposed on Corporation in connection with or with respect to any exercise of the
Option.
4. CONDITIONS PRECEDENT
The Option granted pursuant to this Agreement is expressly
subject to the approval of the Plan by Corporation's stockholders pursuant to
Article 15 of the Plan.
Corporation will use its best efforts to obtain approval of
the Plan and this
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<PAGE>
Option by any state or federal agency or authority that Corporation determines
has jurisdiction. If Corporation determines that any required approval cannot be
obtained, this Option will terminate on notice to Participant to that effect.
Without limiting the foregoing, Corporation will not be required to issue any
Shares upon exercise of all or any portion of the Option until Corporation has
taken all action required to comply with all applicable federal and state
securities laws.
5. SUCCESSORSHIP
Subject to restrictions on transferability set forth in
Section 2.9, this Agreement will be binding upon and benefit the parties, their
successors and assigns.
6. NOTICES
Any notices under this Option must be in writing and will be
effective when actually delivered personally or, if mailed, when deposited as
registered or certified mail directed to the address of Corporation's records or
to such other address as a party may certify by notice to the other party.
7. ARBITRATION
Any dispute or claim that arises out of or that relates to
this Agreement or to the interpretation, breach, or enforcement of this
Agreement, must be resolved by mandatory arbitration in accordance with the then
effective arbitration rules of Arbitration Service of Portland, Inc., and any
judgment upon the award rendered pursuant to such arbitration may be entered in
any court having jurisdiction thereof.
8. DEFINED TERMS
When used in this Agreement, the following terms have the
meaning specified below:
o ACQUIRING PERSON means any person or related person or
related persons which constitute a "group" for purposes of Section
13(d) and Rule 13d-5 under the Securities Exchange Act of 1934 (the
"Exchange Act"), as such Section and Rule are in effect as of the Grant
Date; provided, however, that the term Acquiring Person shall not
include (a) Corporation or any of its Subsidiaries, (b) any employee
benefit plan or related trust of Corporation or any of its
Subsidiaries, (c) any entity holding voting capital stock of
Corporation for or pursuant to the terms of any such employee benefit
plan, or (d) any person or group solely because such person or group
has voting power with respect to capital stock of Corporation arising
from a revocable proxy or consent given in response to a public proxy
or consent solicitation made pursuant to the Exchange Act.
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<PAGE>
o APPROVED RETIREMENT means termination of employment with an
Employer after Participant attains age 60, but only if such retirement
is approved by Corporation's Chief Executive Officer, in his sole
discretion.
o CHANGE IN CONTROL of Corporation means:
(a) The acquisition by any Acquiring Person of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
20 percent or more of the combined voting power of the then outstanding
Voting Securities; provided, however, that for purposes of this
paragraph (a) the following acquisitions will not constitute a Change
in Control: (i) any acquisition directly from Corporation, (ii) any
acquisition by Corporation, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by Corporation
or any corporation controlled by Corporation, or (iv) any acquisition
by any corporation pursuant to a transaction that complies with clauses
(i), (ii), and (iii) of paragraph (c) of this definition of Change in
Control; or
(b) During any period of 12 consecutive calendar months,
individuals who at the beginning of such period constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual who
becomes a director during the period whose election, or nomination for
election, by Corporation's shareholders was approved by a vote of at
least a majority of the directors then constituting the Incumbent Board
will be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger, or consolidation
or sale or other disposition of all or substantially all of the assets
of Corporation (a "Business Combination") in each case, unless,
following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners of the
Voting Securities outstanding immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50
percent of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns Corporation or all or substantially all of
Corporation's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Voting
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<PAGE>
Securities, (ii) no Person (excluding any employee benefit plan, or
related trust, of Corporation or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20
percent or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or
the combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed prior
to the Business Combination and (iii) at least a majority of the
members of the board of directors of the corporation resulting from
such Business Combination were members of Incumbent Board at the time
of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(d) Approval by the shareholders of Corporation of any plan or
proposal for the liquidation or dissolution of Corporation.
o CHANGE IN CONTROL DATE means the first date following the
Grant Date on which a Change in Control has occurred.
o CONTINUATION PERIOD means a period during which the Option
continues to be exercisable after termination of Employment, namely the
period ending on the earlier of the expiration of the original term of
the Option or:
(a) If the termination of Employment is by reason of
Participant's death or Disability, the expiration of one year
following the Termination Date;
(b) If the termination of Employment is by reason of
Participant's Approved Retirement, the expiration of two years
following the Termination Date;
(c) In the case of an involuntary termination of
Participant's Employment by an Employer, the expiration of
five business days following the Termination Date; or
(d) If the termination of Employment is for any other
reason, the expiration of 30 days following the Termination
Date.
o DISABILITY means the condition of being permanently unable
to perform Participant's duties for an Employer by reason of a
medically determinable physical or mental impairment that can be
expected to result in death or that has lasted or can be expected to
last for a continuous period of at least 12 months.
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<PAGE>
o EMPLOYEE AND EMPLOYMENT both refer to service by
Participant as a full-time or part-time employee of an Employer, and
include periods of illness or other leaves of absence authorized by an
Employer. A transfer of Participant's Employment from one Employer to
another will not be treated as a termination of Employment.
o EMPLOYER means Corporation or a Subsidiary of Corporation.
o TERMINATION DATE means the date Participant ceases to be an
Employee.
o VOTING SECURITIES means Corporation's issued and
outstanding securities ordinarily having the right to vote at elections
of directors.
o Capitalized terms not otherwise defined in this Agreement
have the meanings given them in the Plan.
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<PAGE>
AWARD AGREEMENT
UNDER THE
LOUISIANA-PACIFIC CORPORATION
1997 INCENTIVE STOCK AWARD PLAN
NONQUALIFIED STOCK OPTION
Corporation: LOUISIANA-PACIFIC CORPORATION
111 S.W. Fifth Avenue
Portland, Oregon 97204
Participant: ----------------------------
----------------------------
----------------------------
Grant Date: ----------------------------
Award: Performance Shares
Target Shares: ______ Shares
Performance Period: The four calendar year period ending
December 31, 2000
Subject to the terms and conditions of the Louisiana-Pacific
Corporation 1997 Incentive Stock Award Plan (the "Plan") and this Agreement,
effective as of the Grant Date, Corporation grants to Participant the right to
receive a number of Performance Shares equal to up to 200 percent of the Target
Shares.
The provisions of Appendix A attached to this Agreement are
incorporated by reference as part of this Agreement.
LOUISIANA-PACIFIC CORPORATION
By _______________________________________
Its ______________________________________
------------------------------------------
Participant
<PAGE>
APPENDIX A
TO
AWARD AGREEMENT FOR PERFORMANCE SHARES
This Award Agreement evidences the grant of Performance Shares
to Participant under the Plan.
Capitalized terms are defined in Section 9.
1. PERFORMANCE SHARES; ADJUSTMENT
In the event of a declaration of a stock dividend or a stock
split (whether effected as a dividend or otherwise) by Corporation where the
record date for such dividend or stock split is after the Grant Date, the number
of Target Shares will automatically be adjusted proportionately to reflect the
effect of such dividend or stock split. Furthermore, the number of Target Shares
will be increased to reflect reinvestment (using the Fair Market Value of a
Share on the dividend payment date) of cash dividends paid with respect to
Corporation's common stock during the Performance Period.
2. TERMS OF AWARD
This Award is subject to all the provisions of the Plan and to
the following terms and conditions:
2.1 Performance Goals. The number of Performance Shares, if
any, to be issued pursuant to this Award will be based on corporate performance
by Corporation during the Performance Period (or, in the case of an Approved
Retirement prior to the end of the Performance Period, during the Short Period
described in Section 2.5.3(a)) based on a comparison of Corporation's annualized
total stockholder return for the period to the mean annualized total stockholder
return for the Peer Group companies.
2.2 Determination of Payout Percentage. The Committee will
compute the positive or negative difference in percentage points (the "TSR
Difference") by subtracting the Peer Group TSR from Corporation's TSR for
the Performance Period (or, if applicable, the Short Period). The Payout
Percentage will be determined from the following table based on the TSR
Difference.
TSR Difference Payout Percentage
-------------- -----------------
Less than negative 3% 0%
Negative 3% 20%
0% 60%
Positive 3% 100%
Positive 13% and above 200%
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<PAGE>
For TSR Differences between the levels represented in the table, the Payout
Percentage will be interpolated on a straight-line basis and rounded to the
nearest whole percent.
2.3 Performance Shares. If Participant remains an Employee
through the end of the Performance Period, Participant will be entitled to
receive a number of Performance Shares (the "Payout Shares") equal to the
product of the Payout Percentage determined pursuant to Section 2.2 multiplied
by the number of Target Shares (and rounded down to a whole number of Shares).
In the event Participant terminates Employment before the end of the Performance
Period, Participant will be entitled to receive the number of Performance
Shares, if any, described in Section 2.5. Any portion of this Award that does
not become Vested pursuant to this Agreement will be canceled and Participant
will not receive any Shares or other payment with respect to such non-Vested
portion of the Award.
2.4 Settlement of Award.
2.4.1 General. Except as provided in Section 2.4.2, this Award
will be settled on a settlement date selected by the Committee as soon as
practicable after the end of the Performance Period by the delivery to
Participant of:
(a) An unrestricted certificate for 50 percent of the Payout
Shares; and
(b) A certificate subject to the restrictions described in
Section 2.7 of this Agreement for the balance of the Payout Shares (the
"Restricted Payout Shares").
2.4.2 Early Settlement. In the event Participant (or
Participant's representative) becomes entitled to receive Performance Shares
pursuant to Section 2.5.2 (on account of death or Disability), Section 2.5.3(a)
(on account of Approved Retirement), or 2.6.1(a) (on account of a Change in
Control), this Award will be settled on a settlement date selected by the
Committee as soon as practical after the Termination Date, the end of the
Retirement Year, or the Change in Control Date, respectively, by the delivery to
Participant of an unrestricted certificate for all the Performance Shares
determined pursuant to those Sections.
2.5 Employment Requirement.
2.5.1 General. Except as otherwise expressly provided in
Sections 2.5.2 and 2.5.3, if Participant ceases to be an Employee for any reason
prior to the end of the Performance Period, this Award will be canceled and
Participant will not receive any Shares or other payment with respect to this
Award.
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<PAGE>
2.5.2 Effect of Death or Disability.
(a) In the event Participant dies or terminates Employment by
reason of Disability prior to the end of the Performance Period, Participant or
Participant's representative will be entitled to receive a number of Performance
Shares equal to 100 percent of the number of Target Shares.
(b) In the event Participant dies or terminates Employment by
reason of Disability after the end of the Performance Period but before the end
of the Restriction Period, the Restricted Payout Shares (if any) will
automatically become fully Vested as of the Termination Date.
2.5.3 Effect of Approved Retirement.
(a) In the event Participant terminates Employment by reason
of Approved Retirement prior to the end of the Performance Period, the Committee
will determine the TSR Difference for the Short Period consisting of the portion
of the Performance Period ending on the last day of the Retirement Year. A
Payout Percentage will be determined from the table set forth in Section 2.2
based on that Short Period TSR Difference. Participant will be entitled to
receive a prorated number of Performance Shares (rounded down to a whole number
of Shares) equal to (a) the product of the Payout Percentage multiplied by the
number of Target Shares, multiplied by (b) a fraction with a numerator equal to
the number of whole fiscal years from the beginning of the Performance Period
through the last day of the Retirement year and a denominator equal to the whole
number of fiscal years in the Performance Period.
(b) In the event Participant terminates Employment by reason
of Approved Retirement after the end of the Performance Period but before the
end of the Restriction Period, the Restricted Payout Shares (if any) will
automatically become fully Vested as of the Termination Date.
2.6 Effect of Change in Control.
2.6.1 General.
(a) Upon the occurrence of a Change in Control Date prior to
the end of the Performance Period, Participant will be entitled to a number of
Performance Shares equal to 100 percent of the Target Shares.
(b) Upon the occurrence of a Change in Control Date during the
Restriction Period all Restricted Payout Shares (if any) will automatically
become fully Vested.
2.6.2 Reimbursement. If, or to the extent, (a) the
determination of Participant's Performance Shares pursuant to Section 2.6.1(a)
as a result of a Change in Control or (b) the Vesting of Restricted Payout
Shares in connection with a Change in
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<PAGE>
Control pursuant to Section 2.6.1(b) results in an "excess parachute payment"
within the meaning of Section 280G of the Code, Corporation will reimburse
Participant, on an after-tax basis, for (i) any excise tax imposed by Section
4999(a) of the Code that is directly attributable to such determination or
Vesting, and (2) any income taxes and excise taxes imposed on any reimbursement
pursuant to this Section 2.6.2. For purposes of computing any after-tax
reimbursement, Participant will be deemed to pay federal, state, and local
income taxes (for the state and locality of Participant's residence) at the
highest effective combined marginal rates (giving effect to the deductibility of
state and local taxes) for the tax year in which the reimbursement payment is
made. No reimbursement will be due pursuant to this Section 2.6.2 if, or to the
extent, Participant is entitled to payment or reimbursement for the same amounts
under any other agreement with Corporation.
2.7 Restricted Payout Shares. A certificate for the Restricted
Payout Shares (if any) will be issued in Participant's name but will be retained
by Corporation. During the Restriction Period, the Restricted Payout Shares may
not be sold, assigned, or encumbered. If Participant dies or terminates
Employment by reason of Disability or Approved Retirement before the expiration
of the Restriction Period, the Restricted Payout Shares will be governed by
Sections 2.5.2 and 2.5.3. If a Change in Control Date occurs during the
Restriction Period, the Restricted Payout Shares will be governed by Section
2.6.1(b). If Participant terminates Employment for any other reason prior to the
expiration of the Restriction Period, all the Restricted Payout Shares will be
forfeited and the certificate for such Restricted Payout Shares will be
canceled. If Participant remains an Employee through the Restriction Period, the
restrictions of this Section 2.7 will lapse upon the expiration of the
Restriction Period and an unrestricted certificate for the Restricted Payout
Shares will be issued to Participant. During the Restriction Period, dividends
paid with respect to the Restricted Payout Stock will be reinvested (using the
Fair Market Value of a Share on the dividend payment date) in additional
Restricted Payout Shares and Participant will be entitled to exercise all voting
rights with respect to the Restricted Payout Shares.
2.8 Other Documents. Participant will be required to furnish
Corporation such other documents or representations as Corporation may require
to assure compliance with applicable laws and regulations as a condition of
Corporation's obligation to issue any performance Shares.
2.9 Adjustment of Payout Percentage. Pursuant to authority
granted under the Plan, the Committee may, in its discretion, reduce (even to
zero) the Payout Percentage if, in the Committee's judgment, the Payout
Percentage determined in accordance with Section 2.2 of this Agreement is not
appropriate given actual performance by Corporation over the Performance Period
(or, if applicable, the Short Period).
2.10. Transferability.
2.10.1 General. Except as provided in Section 2.10.2, the
Award is not transferable other than by will or the laws of descent and
distribution. No assignment or transfer of the Award in violation of the
foregoing restriction, whether voluntary, involuntary
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<PAGE>
or by operation of law or otherwise, except by will or the laws of descent and
distribution, will vest in the assignee or transferee any interest or right
whatsoever, but immediately upon any attempt to assign or transfer the Award,
the Award will terminate and be of no force or effect. Whenever the word
"Participant" is used in any provision of this Agreement under circumstances
where the provision should logically be construed to apply to the executor,
administrator, or the person or persons to whom this Award may be transferred by
will or by the laws of descent and distribution, it will be deemed to include
such person or persons.
2.10.2 Permitted Family Transfers. The Award may be
transferred by Participant, without payment of consideration, to Participant's
immediate family members or lineal descendants ("Permitted Family Members"), to
trusts for the benefit of Permitted Family Members, or to family partnerships or
limited liability companies of which Participant and Permitted Family Members
are the only partners or members. For purposes of this Section, a transfer of
the Award to a family partnership or limited liability company in exchange for a
partnership or limited liability company interest will be deemed to be a
transfer without payment of consideration.
3. RIGHTS AS STOCKHOLDER
Prior to the issuance of Performance Shares in settlement of
this Award, Participant will have no rights as a stockholder of Corporation with
respect to this Award or the Target Shares. Participant's rights with respect to
Restricted Payout Shares during the Restriction Period will be as set forth in
Section 2.7 of this Agreement.
4. WITHHOLDING TAXES
Corporation will have the right to require Participant to
remit to Corporation, or to withhold from other amounts payable to Participant,
as compensation or otherwise, or from Payout Shares to be delivered to
Participant in settlement of this Award (or Restricted Payout Shares to be
delivered to Participant at the expiration of the Restriction Period), an amount
sufficient to satisfy all federal, state and local withholding tax requirements
with respect to the Award or the Payout Shares. Participant may, by written
notice to Committee which complies with any applicable timing restrictions
imposed pursuant to Rule 16b-3 under the Exchange Act, elect to have withholding
taxes satisfied by withholding Vested Shares. To the extent required by Rule
16b-3, such election will be subject to approval by the Committee.
5. CONDITIONS PRECEDENT
This Award is expressly subject to the approval of the Plan by
Corporation's stockholders pursuant to Article 15 of the Plan.
Corporation will use its best efforts to obtain approval of
the Plan and this Award by any state or federal agency or authority that
Corporation determines has jurisdiction. If Corporation determines that any
required approval cannot be obtained, this
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<PAGE>
Award will terminate on notice to Participant to that effect. Without limiting
the foregoing, Corporation will not be required to issue any certificates for
Payout Shares, or any portion thereof, until Corporation has taken all action
required to comply with all applicable federal and state securities laws.
6. SUCCESSORSHIP
Subject to restrictions on transferability set forth in
Section 2.10, this Agreement will be binding upon and benefit the parties, their
successors and assigns.
7. NOTICES
Any notices under this Agreement must be in writing and will
be effective when actually delivered personally or, if mailed, when deposited as
registered or certified mail directed to the address of Corporation's records or
to such other address as a party may certify by notice to the other party.
8. ARBITRATION
Any dispute or claim that arises out of or that relates to
this Agreement or to the interpretation, breach, or enforcement of this
Agreement, shall be resolved by mandatory arbitration in accordance with the
then effective arbitration rules of Arbitration Service of Portland, Inc., and
any judgment upon the award rendered pursuant to such arbitration may be entered
in any court having jurisdiction thereof.
9. DEFINED TERMS
When used in this Agreement, the following terms have the
meaning specified below:
o ACQUIRING PERSON means any person or related person or
related persons which constitute a "group" for purposes of Section
13(d) and Rule 13d-5 under the Securities Exchange Act of 1934 (the
"Exchange Act"), as such Section and Rule are in effect as of the Grant
Date; provided, however, that the term Acquiring Person shall not
include (a) Corporation or any of its Subsidiaries, (b) any employee
benefit plan or related trust of Corporation or any of its
Subsidiaries, (c) any entity holding voting capital stock of
Corporation for or pursuant to the terms of any such employee benefit
plan, or (d) any person or group solely because such person or group
has voting power with respect to capital stock of Corporation arising
from a revocable proxy or consent given in response to a public proxy
or consent solicitation made pursuant to the Exchange Act.
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<PAGE>
o APPROVED RETIREMENT means termination of Employment with an
Employer after Participant attains age 60, but only if such retirement
is approved by Corporation's Chief Executive Officer, in his sole
discretion.
o CHANGE IN CONTROL of Corporation means:
(a) The acquisition by any Acquiring Person of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
20 percent or more of the combined voting power of the then outstanding
Voting Securities; provided, however, that for purposes of this
paragraph (a) the following acquisitions will not constitute a Change
in Control: (i) any acquisition directly from Corporation, (ii) any
acquisition by Corporation, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by Corporation
or any corporation controlled by Corporation, or (iv) any acquisition
by any corporation pursuant to a transaction that complies with clauses
(i), (ii), and (iii) of paragraph (c) of this definition of Change in
Control; or
(b) During any period of 12 consecutive calendar months,
individuals who at the beginning of such period constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual who
becomes a director during the period whose election, or nomination for
election, by Corporation's stockholders was approved by a vote of at
least a majority of the directors then constituting the Incumbent Board
will be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger, or consolidation
or sale or other disposition of all or substantially all of the assets
of Corporation (a "Business Combination") in each case, unless,
following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners of the
Voting Securities outstanding immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50
percent of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns Corporation or all or substantially all of
Corporation's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Voting
Securities, (ii) no Person (excluding any employee benefit plan, or
related trust, of Corporation or such corporation resulting from such
Business
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<PAGE>
Combination) beneficially owns, directly or indirectly, 20 percent or
more of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the stockholders of Corporation of any plan or
proposal for the liquidation or dissolution of Corporation.
o CHANGE IN CONTROL DATE means the first date following the
Grant Date on which a Change in Control has occurred.
o DISABILITY means the condition of being permanently unable
to perform Participant's duties for an Employer by reason of a
medically determinable physical or mental impairment that can be
expected to result in death or that has lasted or can be expected to
last for a continuous period of at least 12 months.
o EMPLOYEE AND EMPLOYMENT both refer to service by
Participant as a full-time or part-time employee of an Employer, and
include periods of illness or other leaves of absence authorized by an
Employer. A transfer of Participant's Employment from one Employer to
another will not be treated as a termination of Employment.
o EMPLOYER means Corporation or a Subsidiary of Corporation.
o PAYOUT PERCENTAGE means the percentage determined as
provided in Section 2.2 used to determine the number of Performance
Shares to be issued to Participant pursuant to this Award.
o PEER GROUP means the following forest products companies:
Boise Cascade, Georgia-Pacific, Potlatch, Weyerhaeuser, and Willamette
Industries. In the event that during the Performance Period any of the
foregoing companies (1) is subject to a Change in Control, or (2)
becomes a debtor in a voluntary or involuntary bankruptcy case, such
company automatically will be excluded from the Peer Group for the
entire Performance Period.
o PEER GROUP TSR means the mean annualized total stockholder
return (computed in the same manner as described in the definition of
TSR or Total Stockholder Return) for the members of the Peer Group.
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<PAGE>
o PERFORMANCE PERIOD means the period described on the cover
page to this Agreement.
o PERFORMANCE SHARES means the number of Shares issuable to
Participant pursuant to this Award as provided in Section 2.3.
o RESTRICTION PERIOD means the two-year period following the
expiration of the Performance Period during which the restrictions
described in Section 2.7 are applicable.
o RETIREMENT YEAR means the fiscal year during which
Participant terminates Employment by reason of an Approved Retirement.
o SHORT PERIOD means, in the event of an Approved Retirement,
the portion of the Performance Period through the end of the Retirement
Year determined as provided in Section 2.5.3.
o TSR OR TOTAL STOCKHOLDER RETURN means, for the Performance
Period or, if applicable, the Short Period, an amount (expressed as a
percentage) equal to 1 less than:
(a) the ratio of the Closing Investment to the Base
Investment;
(b) raised to an exponential power with an exponent equal to 1
divided by the number of years in the Performance Period (or the Short
Period).
For purposes of the forgoing calculation:
(i) BASE PRICE means the mean daily stock price
(based on reported closing stock trading prices for each day
on the principal exchange or market on which the Shares trade)
of the Shares for the last fiscal quarter of the fiscal year
preceding the Performance Period.
(ii) BASE INVESTMENT means $100.
(iii) CLOSING PRICE means the mean daily stock price
(computed in the same manner as described above for Base
Price) of the Shares for each trading day of the last fiscal
quarter of the Performance Period (or, for an Approved
Retirement, the last fiscal quarter of the Short Period).
(iv) CLOSING INVESTMENT means the product of the
Closing Price and a number of Shares equal to:
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<PAGE>
(A) The Base Investment divided by the Base
Price;
(B) Increased, as of the ex-dividend date of
each dividend or distribution paid during the
Performance Period (or Short Period), by a number (or
fractional number) of Shares equal to the dollar
amount or, in the case of a non-cash distribution,
the market value (as of the date of distribution) of
each such dividend or distribution divided by the
closing stock trading price of the Shares on the
ex-dividend date;
(C) With all closing prices and dividend or
distribution amounts adjusted to reflect any stock
dividends or stock splits or similar changes
in capitalization.
o TSR DIFFERENCE means the positive or negative difference
computed by subtracting the Peer Group TSR for a period from
Corporation's TSR for that period.
o TARGET SHARES means the number of Shares set forth on the
cover page to this Agreement that is used to determine the number of
Performance Shares to be issued to Participant under this Award.
o TERMINATION DATE means the date Participant ceases to be an
Employee.
o VOTING SECURITIES means Corporation's issued and outstanding
securities ordinarily having the right to vote at elections of
directors.
o Capitalized terms not otherwise defined in this Agreement
have the meanings given them in the Plan.
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LOUISIANA-PACIFIC CORPORATION
ANNUAL CASH INCENTIVE AWARD PLAN
THIS ANNUAL CASH INCENTIVE AWARD PLAN (the "Plan") was adopted
by Louisiana-Pacific Corporation, a Delaware corporation ("Corporation"),
effective March 1, 1997. Capitalized terms that are not otherwise defined herein
have the meanings set forth in Section 4.
SECTION 1. INCENTIVE AWARDS
1.1 Target Award. Each Award opportunity will specify a
targeted incentive opportunity (the "Target Award") expressed either as a dollar
amount or as a percentage of a Participant's regular annualized base salary.
1.2 Incentive Awards. The amount paid for each Award will be
equal to the ---------------- product of:
(a) The Total Success Percentage for the Participant for the
Plan Year; multiplied by
(b) The Participant's Target Award for the Plan Year.
However, in no event may a Participant's Award payment for a Plan Year exceed
the lesser of (i) 150 percent of the Participant's Target Award, or (ii)
$1,250,000.
1.3 Performance Goals. The Goals that will be used to measure
a Participant's Award will consist of one or more of the following:
(a) Corporate Goals measuring financial performance related to
the Corporation as a whole. Corporate Goals may include one or more
measures related to earnings, profitability, efficiency, or return to
stockholders and may include earnings, earnings per share, operating
profit, stock price, costs of production, or other measures, whether
expressed as absolute amounts, as ratios, or percentages of other
amounts. Success may be measured against various standards, including
budget targets, improvement over prior years, and performance relative
to other companies or industry groups.
(b) Business Unit Goals measuring financial or strategic
performance of an identified business unit for which a Participant has
responsibility. Strategic Business Unit Goals may include one or a
combination of objective factors related to success in implementing
strategic plans or initiatives, introducing products, constructing
facilities, or other identifiable objectives. Financial Business Unit
Goals may include the degree to which the business unit achieves one or
more measures related to its revenues, earnings, profitability,
efficiency, operating profit, costs of production, or other
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<PAGE>
measures, whether expressed as absolute amounts or as ratios or
percentages, which may be measured against various standards, including
budget targets, improvement over prior years, and performance relative
to other companies or business units.
(c) Individual Goals measuring success in developing and
implementing particular tasks assigned to an individual Participant.
Individual Goals will naturally vary depending upon the
responsibilities of individual Participants and may include, without
limitation, goals related to success in developing and implementing
particular management plans or systems, reorganizing departments,
establishing business relationships, or resolving identified problems.
1.4 Weighting of Goals. Each Goal will be weighted with a
Weighting Percentage so that the total Weighting Percentages for all Goals used
to determine a Participant's Award is 100 percent.
1.5 Achievement Percentage. Each Goal will also specify the
Achievement Percentages (ranging from 0 to 150 percent) to be used in computing
the payment of an Award based upon the extent to which the particular Goal is
achieved. Achievement Percentages for a particular Goal may be based on:
o An "all or nothing" measure that provides for a specified
Achievement Percentage if the Goal is met, and a zero Achievement
Percentage if the Goal is not met;
o Several levels of performance or achievement (such as a
Threshold Level, a Target Level, and a Maximum Level) that each
correspond to a specified Achievement Percentage; or
o Continuous or numerical measures that define a sliding
scale of Achievement Percentages.
1.6 Computation of Awards. As soon as possible after the
completion of each Plan Year, a computation will be made for each Participant
of:
o The extent to which Goals were achieved and the
corresponding Achievement Percentages for each Goal:
o A Weighted Achievement Percentage for each Goal equal to
the product of the Achievement Percentage and the Weighting Percentage
for that Goal;
o The Total Success Percentage equal to the sum of all the
Weighted Achievement Percentages for all the Participant's Goals; and
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<PAGE>
o An Award amount equal to the product of the Total Success
Percentage and the Participant's Target Award.
1.7 Right to Receive Award. A Participant must continue
Employment with Corporation until the end of a Plan Year in order to be entitled
to receive an Award for that Plan Year. If a Participant terminates Employment
with Corporation before the end of the Plan Year for a reason other than death,
Disability, or Approved Retirement, the Participant will not be entitled to any
Award for that Plan Year. If a Participant terminates Employment with
Corporation before the end of the Plan Year due to death or Disability, the
Participant or the Participant's beneficiary or estate will be entitled to an
Award equal to 100 percent of the Participant's Target Award. If a Participant
terminates Employment with Corporation by reason of Approved Retirement prior to
the expiration of the Plan year, the Participant will be entitled to an Award
computed as follows:
o The Total Success Percentage will be determined after the
end of the Plan Year as if the Participant had remained an Employee for
the entire Plan Year; and
o The Participant's Award computed pursuant to Section 1.6
will be prorated based on the number of days before and the number of
days after the effective date of the Approved Retirement.
1.8 Payment of Awards. Each Participant's Award will be paid
in cash in a lump sum within 30 days after the amount of the Award has been
determined.
SECTION 2. ADMINISTRATION
For each Plan Year, the Committee will approve the Target
Awards for all Participants and will approve Corporate Goals and Achievement
Percentages for the Corporate Goals. After the end of each Plan Year, the
Committee will certify the extent to which the Corporate Goals have been
achieved. In addition, the Committee will have exclusive authority to establish
Goals, Weighting Percentages, and Achievement Percentages, to certify
achievement, and to take all other actions with respect to Awards for
Corporation's Chief Executive Officer and any other Participants that the
Committee determines may be subject to Section 162(m) of the Internal Revenue
Code of 1986.
SECTION 3. MISCELLANEOUS
3.1 Nonassignability of Benefits. A Participant's benefits
under the Plan cannot be sold, transferred, anticipated, assigned, pledged,
hypothecated, seized by legal process, subjected to claims of creditors in any
way, or otherwise disposed of.
3.2 No Right of Continued Employment. Nothing in the Plan will
confer upon any Participant the right to continued Employment with Corporation
or interfere in any way with the right of Corporation to terminate the person's
Employment at any time.
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<PAGE>
3.3 Amendments and Termination. The Committee has the power to
terminate this Plan at any time or to amend this Plan at any time and in any
manner that it may deem advisable.
SECTION 4. DEFINITIONS
For purposes of this Plan, the following terms have the
meanings set forth in this Section 4:
"ACHIEVEMENT PERCENTAGE" means a percentage (from 0 to 150
percent) corresponding to a specified level of achievement or
performance of a particular Goal.
"APPROVED RETIREMENT" means termination of employment with an
Employer after Participant attains age 60, but only if such retirement
is approved by Corporation's Chief Executive Officer, in his sole
discretion.
"AWARD" means an incentive award under the Plan.
"CORPORATION" means Louisiana-Pacific Corporation, a Delaware
corporation.
"COMMITTEE" means the Compensation Committee of the Board.
"DISABILITY" means the condition of being permanently unable
to perform Participant's duties for an Employer by reason of a
medically determinable physical or mental impairment that can be
expected to result in death or that has lasted or can be expected to
last for a continuous period of at least 12 months.
"EMPLOYEE AND EMPLOYMENT" both refer to service by Participant
as a full-time or part-time employee of Corporation, and include
periods of illness or other leaves of absence authorized by
Corporation.
"GOAL" means one of the elements of performance used to
determine Awards under the Plan as described in Section 1.3.
"PARTICIPANT" means an eligible employee selected to
participate in the Plan for all or a portion of a Plan Year.
"PLAN YEAR" means a calendar year.
"TARGET AWARD" means the targeted incentive award for a
Participant for a Plan Year as provided in Section 1.1.
"TOTAL SUCCESS PERCENTAGE" means the sum of the Weighted
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<PAGE>
Achievement Percentages for each Goal for a Participant.
"WEIGHTED ACHIEVEMENT PERCENTAGE" means the product of the
Achievement Percentage and the Weighting Percentage for a Goal as
provided in Section 1.6.
- 5 -
LOUISIANA-PACIFIC
SUPPLEMENTAL BENEFITS PLAN
THIS SUPPLEMENTAL BENEFITS PLAN (the "Plan") is established by
Louisiana-Pacific Corporation ("L-P"), a Delaware corporation, effective January
1, 1989.
1. A participant in the Louisiana-Pacific Salaried Employee
Stock Ownership Trust (the "ESOT") whose share of employer contributions and
forfeitures which would otherwise be contributed and allocated to the
participant's accounts in the profit sharing fund and the stock bonus fund of
the ESOT is reduced for a plan year by reason of the application of Section
401(a)(17) of the Internal Revenue Code (limiting compensation which can be
taken into account under the ESOT to $200,000 as adjusted for cost of living)
shall be entitled to a supplemental benefit under this Plan for the plan year in
an amount equal to the reduction.
2. The supplemental benefit will not be paid to the
participant currently. Rather, the employer (L-P or, if a subsidiary of L-P is
the employer, the subsidiary) shall credit to a book reserve (the "Supplemental
Benefit Account") the amount of the supplemental benefit. The credit shall be
made as of December 31 of the applicable ESOT plan year. There shall be a
separate account for each participant who is entitled to a supplemental benefit
under this Plan.
3. Except as provided in paragraph 5 relating to an
unforeseeable emergency, the supplemental benefit, plus the additional amount
credited to the Supplemental Benefit Account under paragraph 7, shall be paid to
the participant upon termination of employment for any reason other than death,
or to a beneficiary designated by the participant should the participant die
while employed.
4. The amount of the Supplemental Benefit Account shall be
paid to the participant or designated beneficiary in a single lump sum cash
payment within 60 days after termination of employment. If at the time of death
no beneficiary has been designated or the designated beneficiary is not then
living, the amount shall be paid to the participant's estate.
5. In the event that the participant incurs a financial need
as a result of an "unforeseeable emergency," the employer may, in its sole
discretion, pay all or a portion of the Supplemental Benefit Account to the
participant prior to the time it would otherwise be payable under the terms of
paragraph 4. Any such payment because of an unforeseeable emergency shall be
made only to the extent reasonably necessary to satisfy the emergency need.
For purposes of this Plan, an unforeseeable emergency is a severe
financial hardship resulting from a sudden and unexpected illness or accident of
the participant or a dependent,
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<PAGE>
loss of property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the
participant's control. The circumstances that will constitute an unforeseeable
emergency will depend upon the facts of each case, but, in any case, payment may
not be made to the extent that any hardship is or may be relieved:
(a) Through reimbursement or compensation by insurance or
otherwise, or
(b) By liquidation of the participant's assets, to the extent
the liquidation of such assets would not itself cause severe financial
hardship.
Examples of what shall not be considered to be an unforeseeable emergency
include the need to send a child to college or the desire to purchase a home.
6. The beneficiary referred to in paragraphs 3 and 4 may be
designated or changed by the participant (without the consent of the spouse or
any prior beneficiary) by written notice to L-P sent by certified or registered
mail, addressed as follows:
Louisiana-Pacific Corporation
111 S.W. Fifth Avenue
Portland, Oregon 97204
Attention: Treasurer
7. There shall be credited to the Supplemental Benefit Account
an additional amount (i.e., in addition to the principal amount credited to such
account under paragraph 2 hereof) equal to the interest which would have accrued
on such principal amount if such amount had earned interest, compounded
quarterly at the rate specified below, from the date such amount was credited to
the account until paid out pursuant to the foregoing provisions of the Plan. The
rate of interest for each calendar quarter shall equal the 90-day commercial
paper rate for high-grade unsecured notes sold through dealers by major
corporations as reported in the "Money Rates" report of the Wall Street Journal
for the first business day of such quarter. Notwithstanding the foregoing, if,
at any time interest is to be computed under this paragraph 7, the participant
is indebted to the employer for borrowed funds other than an employee relocation
loan, the interest rate under this paragraph shall not exceed the interest rate
being paid by the participant with respect to such borrowed funds.
8. No payment under this Plan shall be made unless the
participant is fully vested in the participant's accounts under the ESOT. If the
participant's accounts under the ESOT are forfeited, then the participant's
Supplemental Benefit Account under this Plan shall also be forfeited, subject to
being restored upon return to employment if the circumstances are such that the
participant's accounts under the ESOT would also have been restored.
9. Nothing contained in this Plan and no action taken under
its provisions shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the employer and the participant, the
participant's designated beneficiary, or any other
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<PAGE>
person. The supplemental benefit under the provisions of this Plan shall
continue for all purposes to be a part of the general funds of the employer and
subject to claims of unsecured general creditors of the employer. To the extent
that any person acquires a right to receive payments from the employer under the
Plan, such right shall be unsecured.
10. A participant's right or that of any other person to a
payment pursuant to the Plan shall not be assigned, transferred, pledged or
encumbered except by will or by the laws of descent and distribution.
11. If the employer shall find that any person to whom any
payment is payable under the Plan is unable to care for his affairs because of
illness or accident or is a minor, any payment due (unless a prior claim
therefor shall have been made by a duly appointed guardian, committee or other
legal representative) may be paid to the spouse, child, a parent, or a brother
or sister, or to any person deemed by the employer to have incurred expense for
such person otherwise entitled to payment, in such manner and proportions as the
employer may determine. Any such payment shall be a complete discharge of the
liabilities of the employer under the Plan.
12. Nothing contained herein shall be construed as conferring
upon any participant the right to continue in the employ of the employer in an
executive or any other capacity.
13. Payments under the Plan will not constitute compensation
for purposes of any retirement or life insurance benefit plan of the employer,
including, without limitation, the ESOT, as any such plan or trust may be
amended from time to time.
14. The Board of Directors of L-P shall have full power and
authority to interpret, construe and administer the Plan and the Board's
interpretation and construction thereof and actions thereunder, including the
amount or recipient of the payment to be made therefrom, shall be binding and
conclusive on all persons for all purposes. No member of the Board shall be
liable to any person for any action taken or omitted in connection with the
interpretation and administration of the Plan, unless attributable to his own
willful misconduct or lack of good faith.
15. The Plan shall be binding upon and inure to the benefit of
L-P and its subsidiaries, its successors and assigns and the participants and
their heirs, executors, administrators, and legal representatives.
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<PAGE>
16. The Plan shall be governed by and construed in accordance
with the laws of Oregon and applicable federal law (federal law shall be
controlling in the event of any conflict with Oregon law).
IN WITNESS WHEREOF, L-P has caused this Plan to be executed by
its duly authorized officers as of the date first above written.
LOUISIANA-PACIFIC CORPORATION
By /s/ JOHN C. HART
(Vice) President
By /s/ DONALD R. HOLMAN
Secretary
- 4 -
1997 CASH INCENTIVE AWARD
MARK A. SUWYN
The Compensation Committee of the board of directors of
Louisiana-Pacific Corporation ("L-P") has approved and adopted this Cash
Incentive Award for calendar year 1997 for Mark A. Suwyn ("Suwyn"), pursuant to
the Louisiana-Pacific Corporation Annual Cash Incentive Award Plan. Subject to
approval of the performance goals for annual cash incentive awards by the
stockholders, L-P will pay to Suwyn as additional cash compensation the amounts
set forth below if the corresponding performance goals are attained on or before
December 31, 1997.
<TABLE>
<S> <C>
1. Acquisitions. Acquire business(es) that add at least $500 million $ 30,000
in sales and $50 million in earnings, both on an annualized basis
as of the acquisition date(s)
2. West Coast Timberlands. Establish and gain board of director 30,000
approval of a plan to enhance the value to be realized from the
West Coast timberlands
3. Ketchikan Pulp Company. Shut down the pulp mill by March 31 30,000
and, unless the sawmills cannot operate for reasons beyond the
company's control, generate $10 million in cash from sawmill
operations
4. Commodity Business. Achieve $150 million in operating 20,000
earnings in the commodity business of structural panels, lumber
and industrial panels
5. Specialty Division. Achieve $20 million in operating earnings 20,000
and achieve growth in sales of $110 million over 1996 in the
Specialty Division
6. Pulp Division. Limit losses in the Pulp Division to less than $15 20,000
million and achieve a final board of director-approved resolution
of L-P's long-term position in the pulp business
7. Siding. Approve and implement a long-term plan which 20,000
determines the direction of siding as a product line
8. Culture Change and Improvement. Complete the training of at 20,000
least 11,000 employees in RCT fundamentals, complete the
development of the BPI training program and have at least 5,000
employees complete the initial training, and have strategic plans
approved for each business segment
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<PAGE>
9. EPA Suspension and Debarment. Settle the EPA suspension and 20,000
debarment proceeding (case no. 95-0156-00) with the result that
there is no continuing suspension or debarment with respect to
any facilities of L-P
10.Safety. Implement a safety management system in at least 15 10,000
major manufacturing facilities
11.Employee Compensation and Development Systems. Establish 10,000
and implement a new compensation system for all salaried
employees and establish a new employee development system
(including performance management and career development) for
all salaried employees
12.Information Systems. Establish and implement a strategic plan 10,000
for new information systems
Total Cash Incentive Target Award $240,000
Based on Suwyn Performance Goals:
</TABLE>
Additional Award. If the actual Award achieved is $240,000, L-P shall pay Suwyn
an additional $120,000 (an additional 50 percent of the Target Award). If the
actual Award achieved is less than $240,000 but at least $180,000, L-P shall pay
to Suwyn an additional $90,000 (an additional 37.5 percent of the Target Award).
Certification of Performance. No part of the above Award amounts shall be paid
until the Compensation Committee has certified in writing that the relevant
performance goals have been achieved.
AWARD OPPORTUNITY BASED ON CORPORATE PERFORMANCE
Pursuant to the Annual Cash Incentive Award Plan, the Compensation
Committee hereby approves an additional Award opportunity of a Target amount of
$240,000, with the actual Award amount to be paid to Suwyn determined on the
basis of L-P's earnings per share (EPS) for calendar year 1997, as follows:
- 9 -
<PAGE>
PERCENT OF TARGET AWARD TO BE PAID
150%------------------------------------------------------------------
100%------------------------------------------------------------------
50%------------------------------------------------------------------
$0.30 $0.60 $1.20
EPS Performance
No part of the above Award based upon corporate performance shall be
paid until L-P's audited consolidated financial statements for 1997 have been
completed.
Adopted by the Compensation Committee March 11, 1997
- 10 -
L-P LOUISIANA-PACIFIC CORPORATION April 19, 1996
lll S.W. Fifth Avenue
Portland, Oregon 97204
503/221-0800
FAX: 503/796-0204
Mr. Mike Hanna
President
Associated Chemists, Inc.
Dear Mike:
The purpose of the memo is to capture the essence of our discussions regarding
your position with Louisiana-Pacific in the event the pending acquisition of ACI
is completed.
In the first month while we await the Hart Scott Rodino ruling, you should plan
on spending some of your time traveling to our operations to learn better what
we do and how ACI might leap forward in sales with L-P. As you will not yet be
an employee, you will be in a perfect position to talk and observe. I anticipate
announcing at the OPC meeting Saturday that if the deal goes through, I
anticipate you working with additional parts of the company.
Once aboard, I see you with the following responsibilities in the beginning
(refer to attached organizational chart):
*The Specialty Products groups will report to you directly. These will
tend to be stand-alone businesses with a single person running each
one. They represent the growth segment of our business plan. *Building
Products Sales & Marketing will report directly to you. This
organization will have the responsibility to develop the marketing
approaches to and carry out sales of all our building products to the
retail and wholesale trades. The two primary thrusts envisioned at this
time are building and maintaining the preferred position as a supplier
of building products to the retail trade (Home Depot, Lowes, etc.) a
becoming the clear #1 developer and manufacturer of Engineered Wood
Products to the building trades.
Depending on the number and type of acquisitions we make (and therefore the
complexity we create) this position would also take responsibility in about a
year for the Manufacturing Division which will be run by a VP-Manufacturing to
be selected soon.
You will have the responsibility to convene and lead the Operating Policy
Committee (OPC) which is comprised of the key Senior Managers across the
company. This committee meets every 2-3 months to deal with major operational
issues, sets the tone and direction for the
- 1 -
<PAGE>
manner in which we deal with our people and recommends policy changes necessary
to support our business and management thrusts.
In this position, you will have the primary role in all business operations. You
will be a key member of the Senior Management team and therefore involved in all
Strategic Issues and decisions. You will be my substitute in meetings with
customers, shareholders and employees that I can not attend.
Your compensation, benefits and contractual arrangements at ACI will be honored
for the first three years after the acquisition is completed. During the year
your compensation will be adapted into a new L-P plan, but will not diminish
your compensation as noted below:
* Salary $280,000
* Annual Bonus for 1996
-40% paid on July 15, 1996 $ 88,000
-60% paid December 1996 or January 1997 $132,000
At the end of three years your compensation, benefits and contractual
arrangements will be folded into standard Senior Executive L-P Plans. In
addition, you will be awarded stock options to purchase 45,000 shares, 1/3 of
which will vest on 1/1/97, 1/1/98, and 1/1/99. The options will be granted at
85% of the market price on the date of the ACI closing, pending extension of
this feature by the Board. These options will vest immediately upon a changed of
control of the company.
I look forward to working with you.
Sincerely,
/s/ MARK A. SUWYN
Mark A Suwyn
- 2 -
<PAGE>
EMPLOYMENT AGREEMENT
DATED: January 15, 1995
FROM: Associated Chemists, Inc.
OWNERS: Richard L. Rosenberg and Mary M. Rosenberg
TO: Michael D. Hanna
1. Employment
(a) The Corporation agrees to employ Hanna and Hanna agrees to be employed
by the Corporation in the capacity of President and Chief Operating Officer. The
term of the employment shall be for two years effective January 15, 1995 and is
subject to termination only for Cause.
(b) The Corporation and Hanna further agree to a two year notice period
for termination or separation, other than for cause. This paragraph is intended
to bind both parties to a two-year notice regardless of the date given in
Paragraph 1(a).
ASSOCIATED CHEMISTS, INC.
By Michael D. Hanna
President
Richard L. Rosenberg
Richard L. Rosenberg - "OWNER"
Mary M. Rosenberg
Mary M. Rosenberg - "OWNER"
Michael D. Hanna
Michael D. Hanna - "HANNA"
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is
entered into effective as of January 1, 1997, by and between LOUISIANA PACIFIC
CORPORATION, a corporation organized and existing under the laws of Delaware
(the "Corporation"), and KAREN D. LUNDQUIST (the "Executive"). The Corporation
and Executive are herein referred to collectively as the "Parties," or singly as
a "Party" as the context requires or permits. All references to Section and
subsections refer to Sections and subsections of this Agreement, and all
reference to Exhibits and Schedules are to Exhibits and Schedules annexed hereto
each of which is made a part hereof for all purposes.
PREMISES:
A. The Corporation desires to hire the services of
Executive and to provide Executive with compensation and terms of employment
which will retain, motivate and competitively reward the Executive;
B. Executive is not currently a party to any employment
contract that would prevent her from being employed by the Corporation in
accordance with the terms of this Agreement;
C. Executive represents that her employment by the
Corporation will not violate any federal immigration laws and regulations
promulgated thereunder; and
D. Executive desires to render services to the
Corporation upon the following terms and conditions.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and of the mutual benefits to the Parties to be derived
hereunder, the Corporation and Executive agree as follows:
1. EMPLOYMENT. Corporation hereby employs Executive to
perform those duties generally described in this Agreement, and Executive hereby
accepts and agrees to such employment on the terns and conditions set forth.
2. TERM. The "Term" of this Agreement shall be for a
period of three (3) years commencing effective as of January 1, 1997, and
expiring at midnight on December 31, 1999, unless earlier terminated in the
manner provided herein. In the event the Parties have not agreed to extend this
Agreement or have not entered into a new agreement prior to the end of the Term,
then Executive's employment with the Corporation shall continue in accordance
with all of the provisions of this Agreement until such time as this Agreement
is amended or superseded by a new employment agreement.
- 1 -
<PAGE>
3. DUTIES.
3.1 During the Term, Executive shall be employed by
Corporation as the Vice President of Manufacturing of the Corporation, and shall
have all of the rights, powers and obligations normally associated with or
attributed to an executive officer of the Corporation. Executive is hired to
perform the following duties: (i) head of manufacturing for all commodity
operations which includes lumber, OSB, plywood and industrial panel facilities
world-wide, (ii) managing four manufacturing managers reporting directly to
Executive plus such additional staff as required, and (iii) being a
participating member of the Senior Management Team which sets policy and
direction for the Corporation. Executive shall devote her full working time,
attention and energy to the business of the Corporation, and shall not during
the term be engaged in any other business activities which will significantly
interfere or conflict with the reasonable performance of her duties hereunder,
except as provided in Section 3.2. In the performance of these duties, Executive
will initially report directly to Mark Suwyn, the Corporation's Chief Executive
Officer.
3.2 The Parties acknowledge that Executive is a founder,
shareholder, director, and officer of Creative Breakthroughs, Inc. ("Company"),
a company that renders services to the Corporation as an independent contractor.
Executive will resign her position of officer and will not participate directly
in negotiations involving the Corporation and Company for services. Executive
will, however, remain active as a compensated director of the Company and retain
her shareholdings in the Company. It is acknowledged that the Company may
continue to render services to the Corporation. The Parties agree that
Executive's continued activities as a director on behalf of the Company shall
not be asserted by the Corporation as a conflict of interest or a breach by
Executive of her duties and responsibilities (fiduciary or other) to Corporation
or other breach of this Agreement or applicable laws.
4. COMPENSATION. For services rendered by Executive,
Corporation shall compensate Executive as follows:
4.1 BASE SALARY. Corporation shall pay Executive a base
salary of $190,000 per year, payable as earned in equal monthly or twice-monthly
payments. Base salary shall be adjusted annually based upon performance and
shall be subject to Corporation's executive compensation plans in effect from
time to time. All salary payments shall be subject to withholding and other
applicable taxes.
4.2 SHORT TERM INCENTIVE COMPENSATION. Executive shall be
paid a minimum of $50,000 incentive compensation prior to the first annual
anniversary of the term of this Agreement. Following such first anniversary,
this incentive compensation may be increased or decreased which determination
shall be based on Executive's performance.
4.3 LONG TERM INCENTIVE COMPENSATION. As an additional
incentive to Executive to utilize her talents and skills to maximize the growth
and profitability of Corporation, Corporation will establish, annually, in
advance, criteria for bonus
- 2 -
<PAGE>
compensation for Executive based on Executive's contribution to the strategic
objectives of the Corporation. Such bonus compensation shall be in the range
between $20,000 and $50,000 but in no event less than $20,000 per annum.
4.4 STOCK OPTIONS.
4.4.1 As a further incentive to Executive, promptly upon
execution of this Agreement and subject to Board approval which approval the
Chief Executive Officer will recommend, the Corporation will grant to Executive
options entitling her to acquire 30,000 of the Corporation's shares trading in a
public medium pursuant to the terms (including price) and conditions of its
share option plan available to other senior executive officers of the
Corporation. Under such plan, so long as Executive is rendering services under
this Agreement, Executive shall become vested (on each following January 1
during the Term commencing January 1, 1997) in an option to acquire 10,000 of
such shares and Executive will have a period of five (5) years from the time of
vesting to exercise each option. The price per share of each share subject to
such option shall be an amount equal to the closing price of such shares as of
the last trading day of 1996. Once vested such option shall not be forfeitable
for any reason.
4.4.2 Notwithstanding anything contained in this Agreement
to the contrary, upon the occurrence of any of the following events, Executive
shall be Immediately vested in all options to such 30,000 shares:
4.4.2.1 Executive's employment with Corporation shall
be terminated without cause or due to death or disability as defined in
paragraph 7.4;
4.4.2.2 The Chief Executive Officer of the
Corporation as of January I 1997, shall be replaced.
4.4.2.3 Executive's duties are significantly
curtailed or reduced.
4.4.2.4 The effective control of the Corporation
shall change as defined in the standard form option agreement used for executive
options from those persons and/or entities who effectively control the
Corporation as of January 1, 1997, to other persons and/or entities.
4.5 MOVING EXPENSES. Executive shall have paid for her,
or reimbursed, all the expenses of her move to Portland, Oregon including,
without limitation the following:
4.5.1 Packing and unpacking and transporting all household
goods;
4.5.2 Expenses associated with Minnesota residential
premises lease severance;
- 3 -
<PAGE>
4.5.3 Expenses associated with preparing for shipment,
transporting and delivering two horses;
4.5.4 Usual and customary closing costs and expenses of
purchasing and closing title to a home in Portland, Oregon area;
4.5.5 Expenses associated with preparing for shipment,
transporting and receiving two vehicles, and
4.5.6 Personal travel expenses from Minnesota to Portland,
Oregon for as many trips as are reasonably necessary for Executive to complete
her move to Portland, Oregon.
4.6 OTHER BENEFITS. Executive will be eligible to
participate in all regular salaried executive employee benefit programs: Heath
Care Coverage, Life and Accidental Death & Dismemberment Insurance, Long Term
Disability coverage, Personal Accident Insurance, Employee Stock Ownership
Trust, and Employee Stock Purchase Plans. Executive shall be entitled to
participate in any health and life insurance, retirement, pension,
profit-sharing, or other benefit plan as hereafter adopted by the Corporation on
the same basis as other employees.
4.7 VACATION\SICK PAY. Executive shall be entitled to
four (4) weeks paid vacation time and such additional paid time for sick and
personal leave time on the same basis as other senior executives of the
Corporation are provided such leave time. Upon termination of Executive's
employment for any reason, the Corporation shall compensate Executive for such
unused and accrued vacation time at Executive's then current base salary.
5. WORKING FACILITIES. Corporation shall provide
Executive with such reasonable working facilities and services, including an
office and secretarial assistance, as are necessary and appropriate for the
performance of her duties. Such facilities and services shall be provided to
Executive at Corporation's principal place of business or such other place as
may be agreed to by the Corporation and Executive.
6. EXPENSES. Corporation will reimburse Executive for
actual and reasonable business expenses incurred by Executive in connection with
the business of Corporation, including expenses for automobile, entertainment,
travel, attendance at conventions, employee training and similar items, on
Executive's periodic presentation of an itemized account of such expenses,
together with supporting documentation.
7. TERMINATION OF EMPLOYMENT.
7.1 TERMINATION FOR CAUSE. Corporation may terminate this
Agreement, without liability, for "cause" (as defined below) by delivering to
Executive thirty (30) days' advance written notice of termination setting forth
the reasons for such termination. Upon delivery of such notice, except as
expressly herein or in the Corporation's policies provided
- 4 -
<PAGE>
to the contrary, all obligations of the Corporation hereunder shall cease. As
used herein, the term "Cause" shall mean the following: (i) Executive shall have
been incompetent in the performance of her duties hereunder; (ii) material,
willful or gross misconduct by Executive in the performance of her duties
hereunder; (iii) the failure by Executive to perform or observe any substantial
obligation of such employment that is not remedied within thirty (30) days after
the receipt of written notice thereof from Corporation (provided such neglect or
failure is unrelated to disability); or (iv) a final nonappealable conviction of
or a plea of guilty or nolo contendere by Executive to any felony or misdemeanor
involving fraud, embezzlement, theft or dishonesty involving Corporation.
7.2 TERMINATION WITHOUT CAUSE. Corporation may terminate
Executive's employment with Corporation at any time upon ninety (90) days' prior
written notice without cause. If the Corporation so terminates Executive's
employment without cause at any time prior to January 1, 2000, it agrees to pay
Executive a severance payment of an amount equal to nine (9) months of
Executive's then base salary or if the Corporation so terminates Executive's
employment without cause after December 31, 1999, it agrees to pay Executive a
severance payment of an amount equal to (i) nine (9) months of Executive's then
base salary, plus (ii) one ( 1 ) month of Executive's then base salary for each
full or partial year of employment with the Corporation to a maximum of eighteen
(18) months' salary, plus the greater of (a) Executive's annual short and long
term incentive compensation earned by Executive for the last year's short and
long term incentive compensation prorated to the date of termination of
Executive's employment, or (b) the amount of such incentive compensation due
Executive at the time of termination, if determinable. In addition, Corporation
shall, at its expense, make available to Executive out placement services of
first class quality.
7.3 BY DEATH. This Agreement shall terminate
automatically upon the death of Executive, and, except for the Corporation's
obligations (hereby assumed by the Corporation) for the payment of accrued base
salary and incentive compensation (determined pursuant to the provisions of
Section 7.2 as if Executive were terminated without cause) and except as
expressly herein or in the Corporation's policies provided to the contrary, all
obligations of Corporation hereunder shall cease.
7.4 BY DISABILITY. If Executive shall be prevented from
properly performing her duties hereunder by reason of any physical or mental
incapacity for a period of more than one hundred eighty (180) consecutive
calendar days in any twelve-month period, then, to the extent permitted by law,
the Corporation may terminate Executive's employment by delivery of thirty (30)
days' advance written notice of termination. Thirty (30) days following delivery
of such notice of termination, except for the Corporation's obligations (hereby
assumed by the Corporation) for the payment of accrued base salary and incentive
compensation (determined pursuant to the provisions of Section 7.2 as if
Executive were terminated without cause) and except as expressly herein or in
the Corporation's policies provided to the contrary, all obligations of the
Corporation hereunder shall cease.
8. NOTICES. All notices or other communications required
or permitted hereunder shall be made in writing and shall be deemed to have been
duly given if delivered
- 5 -
<PAGE>
by hand or mailed, postage prepaid, by certified or registered mail, return
receipt requested, or by Federal Express (or other established express delivery
service which maintains delivery records), freight prepaid, and addressed as
follows:
If to Corporation: Louisiana Pacific Corporation
111 S.W. Fifth Avenue
Portland, Oregon 97204
Attn: General Counsel
If to Executive: Karen D. Lundquist
c/o Parsons, Davies, Kinghorn & Peters
185 South State Street, Suite 700
Salt Lake City, Utah 84111
Attention: John Parsons
Notice of change of address shall be effective only when made in accordance with
this Section.
9. GOVERNING LAW. This Agreement shall be governed by
and interpreted in accordance with the laws of the state of Oregon.
10. ARBITRATION. In the event of a dispute or controversy
between the Parties as to the provisions or performance of this Agreement, such
dispute or controversy shall be submitted to arbitration in Portland, Oregon in
accordance with the Commercial Rules of Arbitration of the American Arbitration
Association.
11. EXPENSES OF LEGAL PROCEEDINGS. If any action, suit or
proceeding is brought by a Party with respect to a matter or matters governed by
this Agreement, all costs and expenses of the prevailing Party incurred in
connection with such proceeding, including reasonable attorneys' fees, shall be
paid by the nonprevailing Party.
12. ENTIRE AGREEMENT. Except for incentive compensation,
stock options and benefits that require reference to extraneous documents for
further definition, this Agreement contains the entire agreement between the
Parties with respect to any written or oral negotiations, commitments and
understandings. No letter, telegram or other communication passing between the
Parties shall be deemed a part of this Agreement; nor shall a subsequent
communication have the effect of modifying or adding to this Agreement unless it
is distinctly stated in such letter, telegram or other communication that it is
to constitute a part of this Agreement and is signed by the Parties to this
Agreement.
13. SEVERABILITY. If and to the extent that any court of
competent jurisdiction holds any provision, or any part thereof, of this
Agreement to be invalid or unenforceable, such holding shall in no way affect
the validity of the remainder of this Agreement.
- 6 -
<PAGE>
14. WAIVER. No failure by either Party to insist upon the
strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach hereof
shall constitute a waiver of any such breach, any subsequent breach of the same
obligation, or of any other covenant, agreement, term, or condition.
15. COUNTERPARTS AND HEADINGS. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one and the same instrument. All
headings in this Agreement are inserted for convenience or reference and shall
not affect the meaning or interpretation of this Agreement.
16. BINDING EFFECT. The rights and obligations of the
Parties under this Agreement shall inure to the benefit of and shall bind the
respective legal representatives, successors and permitted assigns of the
Parties.
DATED as of the date first above written.
Corporation: LOUISIANA PACIFIC CORPORATION
By /s/ MARK A. SUWYN
Duly Authorized Officer
Executive:
/s/ KAREN D. LUNDQUIST
Karen D. Lundquist
- 7 -
EXHIBIT 11
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
CALCULATION OF NET INCOME PER SHARE
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Number of Shares
---------------------------------------------
Including Common Excluding Common
Stock Equivalents Stock Equivalents (1)
----------------- ---------------------
Weighted average number of shares
<S> <C> <C>
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) (1,227,983) (1,227,983)
Weighted average number of shares of treasury
stock held during the period (8,302,837) (8,302,837)
Common stock equivalents:
Application of the "treasury stock" method
to stock option and purchase plans 27,481 ----
----------- -----------
Weighted average number of shares of common
stock and common stock equivalents 107,433,683 107,406,202
=========== ===========
Rounded to 107,430,000 107,410,000
=========== ===========
Net income (loss) $(200,700,000) $(200,700,000)
=========== ===========
Net income (loss) per share $(1.87) $(1.87)
=========== ===========
</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.
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
- ----------------------
Associated Chemists, Inc. Oregon
Creative Point, Inc. California
GreenStone Industries, Inc. Delaware
Pacific Rim Recycling, Inc. Delaware
GreenStone Industries-Ft. Wayne, Inc. Indiana
Ketchikan Pulp Company Washington
Louisiana-Pacific Corporation (W. Va.) West Virginia
Louisiana-Pacific Polymers, Inc. Oregon
L-P Foreign Sales Corporation Guam
New Waverly Transportation, Inc. Texas
Foreign Subsidiaries
- ---------------------
Louisiana-Pacific Canada Ltd. British Columbia, Canada
Louisiana-Pacific Forest Products, Ltd. British Columbia, 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
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 registrants' previously filed
Registration Statement Nos. 2-97014, 33-42276, 33-50958, 33-60264, 33-62944,
33-54859, 33-55105, 33-62317 and 333-10987.
/s/ ARTHUR ANDERSEN LLP
Portland, Oregon
March 27, 1997
<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.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<S> <C>
<CASH> 27,800
<SECURITIES> 0
<RECEIVABLES> 102,500
<ALLOWANCES> (1,400)
<INVENTORY> 264,300
<CURRENT-ASSETS> 579,200
<PP&E> 2,486,000
<DEPRECIATION> (1,207,500)
<TOTAL-ASSETS> 2,588,700
<CURRENT-LIABILITIES> 344,700
<BONDS> 458,600
0
0
<COMMON> 117,000
<OTHER-SE> 1,310,600
<TOTAL-LIABILITY-AND-EQUITY> 2,588,700
<SALES> 2,486,000
<TOTAL-REVENUES> 2,486,000
<CGS> 2,315,300
<TOTAL-COSTS> 2,805,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,200
<INCOME-PRETAX> (326,800)
<INCOME-TAX> (125,600)
<INCOME-CONTINUING> (200,700)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (200,700)
<EPS-PRIMARY> (1.87)
<EPS-DILUTED> 0
</TABLE>
