SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarterly Period Ended March 31, 1999
Commission File Number 1-7107
LOUISIANA-PACIFIC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 93-0609074
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
111 S. W. Fifth Avenue, Portland, Oregon 97204-3699
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 221-0800
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 the number of shares outstanding of each of the issuer's classes of
common stock: 107,398,225 shares of Common Stock, $1 par value, outstanding as
of April 30, 1999.
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ABOUT FORWARD-LOOKING STATEMENTS
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 provide a "safe harbor" for all forward-looking
statements to encourage companies to provide prospective information about their
businesses and other matters as long as those statements are identified as
forward-looking and are accompanied by meaningful cautionary statements
identifying important factors that could cause actual results to differ
materially from those discussed in the statements. This report contains, and
other reports and documents filed by L-P with the Securities and Exchange
Commission may contain, forward-looking statements. These statements are or will
be based upon the beliefs and assumptions of, and on information available to,
the management of L-P.
The following statements are or may constitute forward-looking statements:
(1) statements preceded by, followed by or that include the words "may," "will,"
"could," "should," "believe," "expect," "anticipate," "intend," "plan,"
"estimate," "potential," "continue" or "future" or the negative or other
variations thereof and (2) other statements regarding matters that are not
historical facts. These forward-looking statements are subject to various risks
and uncertainties, including the following:
o Risks and uncertainties relating to the possible invalidity of the
underlying beliefs and assumptions;
o Possible changes or developments in social, economic, business,
industry, market, legal and regulatory circumstances and conditions;
and
o Actions taken or omitted to be taken by third parties, including
customers, suppliers, business partners, competitors and
legislative, regulatory, judicial and other governmental authorities
and officials.
In addition to the foregoing and any risks and uncertainties specifically
identified in the text surrounding forward-looking statements, any statements in
the reports and other documents filed by L-P with the Commission that warn of
risks or uncertainties associated with future results, events or circumstances
identify important factors that could cause actual results, events and
circumstances to differ materially from those reflected in the forward-looking
statements.
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PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1999 1998
------- -------
Net sales $ 603.1 $ 548.3
------- -------
Costs and expenses:
Cost of sales 471.1 496.0
Depreciation, amortization and depletion 42.8 39.5
Selling and administrative 45.9 44.0
Interest expense 9.0 9.7
Interest income (9.8) (2.1)
------- -------
Total costs and expenses 559.0 587.1
------- -------
Income (loss) before taxes and minority interest 44.1 (38.8)
Provision (benefit) for income taxes 17.4 (12.5)
Minority interest in net income (loss)
of consolidated subsidiaries (.5) (1.2)
------- -------
Net income (loss) $ 27.2 $ (25.1)
======= =======
Net income (loss) per share - basic and diluted $ .26 $ (.23)
======= =======
Average shares outstanding - basic 106.2 109.0
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- diluted 106.3 109.0
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Cash dividends per share $ .14 $ .14
======= =======
The accompanying notes are an integral part of these unaudited financial
statements
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CONDENSED CONSOLIDATED BALANCE SHEETS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(DOLLAR AMOUNTS IN MILLIONS) (UNAUDITED)
MAR. 31, 1999 DEC. 31, 1998
------------- -------------
ASSETS
Cash and cash equivalents $ 42.5 $ 126.5
Accounts receivable, net 212.3 134.7
Inventories 265.8 205.7
Prepaid expenses 13.7 8.1
Income tax refunds receivable 38.1 43.9
Deferred income taxes 121.8 93.2
-------- --------
Total current assets 694.2 612.1
-------- --------
Timber and timberlands 505.6 499.0
Property, plant and equipment 2,225.6 2,086.5
Less accumulated depreciation (1,201.1) (1,173.2)
-------- --------
Net property, plant and equipment 1,024.5 913.3
Notes receivable from asset sales 403.8 403.8
Goodwill and other assets 165.1 90.9
-------- --------
Total assets $2,793.2 $2,519.1
======== ========
LIABILITIES AND EQUITY
Current portion of long-term debt $ 26.5 $ 34.1
Accounts payable and accrued liabilities 272.5 192.5
Current portion of contingency reserves 205.0 140.0
-------- --------
Total current liabilities 504.0 366.6
-------- --------
Long-term debt, excluding current portion:
Limited recourse notes payable 396.5 396.5
Other long-term debt 235.1 63.3
-------- --------
Total long-term debt, excluding current portion 631.6 459.8
-------- --------
Contingency reserves, excluding current portion 117.5 228.0
Deferred income taxes and other
commitments and contingencies 300.4 241.9
Stockholders' equity:
Common stock 117.0 117.0
Additional paid-in-capital 464.6 465.4
Retained earnings 931.0 918.8
Treasury stock (202.8) (204.0)
Loans to Employee Stock Ownership Trusts (22.9) (28.8)
Accumulated comprehensive income (loss) (47.2) (45.6)
-------- --------
Total stockholders' equity 1,239.7 1,222.8
-------- --------
Total liabilities and equity $2,793.2 $2,519.1
======== ========
The accompanying notes are an integral part of these unaudited financial
statements
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(DOLLAR AMOUNTS IN MILLIONS) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1999 1998
------ ------
Cash flows from operating activities:
Net income (loss) $ 27.2 $(25.1)
Depreciation, amortization and depletion 42.8 39.5
Cash settlements of contingencies (63.5) (15.7)
Other adjustments 5.1 7.3
Decrease (increase) in certain working
capital components and deferred taxes (.8) (49.4)
------ ------
Net cash provided by (used in) operating activities 10.8 (43.4)
------ ------
Cash flows from investing activities:
Capital spending (28.3) (45.4)
ABT purchase, including replacement of debt (208.6) - - -
Other investing activities, net 4.6 13.5
------ ------
Net cash used in investing activities (232.3) (31.9)
------ ------
Cash flows from financing activities:
New borrowings, including net increase
in revolving borrowings 165.0 77.3
Repayment of long-term debt (14.9) (18.5)
Increase (decrease) in short-term notes payable -- 19.5
Cash dividends (15.0) (15.4)
Other financing activities, net 2.4 2.8
------ ------
Net cash provided by (used in) financing activities 137.5 65.7
------ ------
Net increase (decrease) in cash and cash equivalents (84.0) (9.6)
Cash and cash equivalents at beginning of period 126.5 31.9
------ ------
Cash and cash equivalents at end of period $ 42.5 $ 22.3
====== ======
The accompanying notes are an integral part of these unaudited financial
statements
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Notes to Unaudited Consolidated Summary Financial Statements
1. These consolidated summary financial statements should be read in
conjunction with the consolidated financial statements and the notes
thereto included in L-P's Annual Report on Form 10-K for the year ended
December 31, 1998 (as the same may be amended, the "1998 Form 10-K").
These consolidated summary financial statements reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the
opinion of the management of L-P, necessary to present fairly, in all
material respects, the consolidated financial position and results of
operations of L-P and its subsidiaries. Certain 1998 amounts have been
reclassified to conform to the 1999 presentation.
Results of operations for interim periods are not necessarily indicative
of results to be expected for an entire year.
2. Basic earnings per share are based on the weighted average number of
shares of common stock outstanding during the applicable period. Diluted
earnings per share include the effects of potentially dilutive common
stock equivalents. The effects of potentially dilutive common stock
equivalents are not included in the calculation of diluted earnings per
share for the three months ended March 31, 1998 because they were
anti-dilutive as a result of L-P's net losses for that period.
3. The preparation of interim financial statements requires the estimation of
L-P's effective income tax rate based on estimated annual amounts of
taxable income and expenses. These estimates are updated quarterly.
4. The preparation of interim financial statements requires the estimation of
L-P's year-end inventory quantities and costs for purposes of determining
last in, first out (LIFO) inventory adjustments. These estimates are
revised quarterly and the estimated incremental change in the LIFO
inventory reserve is expensed over the remainder of the year.
5. Components of comprehensive income (loss) include net income (loss),
currency translation adjustments and other income (loss). Comprehensive
income was $25.6 million in the first quarter of 1999 and comprehensive
loss was ($23.7) million in the first quarter of 1998.
6. In June 1998, the Financial Accounting Standards Board adopted Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). The new statement will
require recognition of all financial instruments as either assets or
liabilities on the balance sheet at fair value; changes to fair value will
impact earnings either as gains or losses. SFAS 133 will be effective for
L-P beginning January 1, 2000. L-P is assessing the impact this statement
will have on the Company's financial statements and related disclosures.
7. In February 1999, L-P acquired all of the capital stock of ABT Building
Products Co. ("ABT") for approximately $160 million. Concurrent with the
acquisition, L-P also paid off approximately $49 million of ABT debt. In
connection with the acquisition, L-P borrowed $100.0 million under a new
uncommitted bank credit facility and increased its net revolving
borrowings under its existing credit facility by $65 million. The
acquisition was accounted for as a purchase and ABT's results of
operations for the period subsequent to the acquisition have been included
in L-P's Condensed Consolidated Statements of Income for the period ended
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March 31, 1999. The purchase price has been preliminarily allocated to the
assets and liabilities of ABT based on their estimated fair values in
L-P's Condensed Consolidated Balance Sheet at March 31, 1999. Based on
current estimates, L-P has recorded purchase price in excess of net assets
acquired ("goodwill") of $75 million in its Condensed Consolidated Balance
Sheet at March 31, 1999, which is being amortized using the straight-line
method over 15 years. However, L-P is still in the process of obtaining
information to be used in the determination of the fair value of certain
assets and liabilities, which could affect both the amount of purchase
price allocated to those assets and liabilities and the amount of goodwill
recorded and amortized in future periods.
The following unaudited pro forma financial information gives effect to
the acquisition of ABT as if it had been consummated at the beginning of
each period presented.
QUARTER ENDED MARCH 31,
-----------------------
DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE 1999 1998
-----------------------
Net sales $644.5 $624.0
Net income (loss) 26.1 (25.2)
Net income (loss) per share
- basic and diluted .25 (.23)
The principal pro forma adjustments reflected in the foregoing pro forma
information are adjustments to record interest expense on indebtedness
incurred in connection with the acquisition and the amortization of
goodwill. The foregoing pro forma information is provided for illustrative
purposes only and does not purport to be indicative of results that
actually would have been achieved had the acquisition been consummated at
the beginning of the periods presented or of future results.
8. The following table sets forth selected segment data for the quarters
ended March 31, 1999 and 1998:
QUARTER ENDED MARCH 31,
-----------------------
DOLLAR AMOUNTS IN MILLIONS 1999 1998
-----------------------
Sales:
Structural products $345.0 $281.5
Exterior products 37.8 28.1
Industrial panel products 53.8 43.2
Specialty and other products 141.6 174.6
Pulp 24.9 20.9
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Total sales $603.1 $548.3
====== ======
Profit (loss):
Structural products $ 73.7 $ 5.0
Exterior products 7.7 4.9
Industrial panel products 1.1 .8
Specialty and other products (7.6) (6.7)
Pulp (5.8) (11.6)
General corporate and other
expense, net (25.8) (23.6)
Interest income (expense), net .8 (7.6)
------ ------
Total profit (loss) $ 44.1 $(38.8)
====== ======
9. The description of certain legal and environmental matters involving L-P
set forth in Part II of this report under the caption "Legal Proceedings"
is incorporated herein by reference.
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Item 2. Management's Discussion and Analysis and Results of Operations.
Sales increased approximately 10% to $603.1 million in the first quarter
of 1999 from $548.3 million in the first quarter of 1998, and L-P had net income
in the first quarter of 1999 of $27.2 million ($.26 per share) compared to a net
loss in the first quarter of 1998 of $25.1 million ($.23 per share). Improved
market prices for oriented strand board (OSB) and plywood, the acquisition of
ABT, and improved pulp operations were the primary factors for these increases
in sales and earnings.
L-P operates in five segments: structural products; exterior products;
industrial panel products; specialty and other products; and pulp. Structural
products is the most significant segment, accounting for more than 50% of sales
during the first quarter of both 1999 and 1998. L-P's results of operations are
discussed separately for each segment below. Production volumes and industry
product price trends are presented below in the tables captioned "Summary of
Production Volumes" and "Industry Product Price Trends."
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Selected Segment Data
INCREASE
QUARTER ENDED MARCH 31, (DECREASE)
-----------------------------------
DOLLAR AMOUNTS IN MILLIONS 1999 1998 99-98
-----------------------------------
Sales:
Structural products $ 345.0 $ 281.5 +23%
Exterior products 37.8 28.1 +35
Industrial panel products 53.8 43.2 +25
Specialty and other products 141.6 174.6 -19
Pulp 24.9 20.9 +19
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Total sales $ 603.1 $ 548.3 +10
======== ========
Profit (loss):
Structural products $ 73.7 $ 5.0 +1,374%
Exterior products 7.7 4.9 +57
Industrial panel products 1.1 .8 +38
Specialty and other products (7.6) (6.7) -13
Pulp (5.8) (11.6) +50
General corporate and other
expense, net (25.8) (23.6) -9
Interest income (expense), net .8 (7.6) +111
-------- --------
Total profit (loss) $ 44.1 $ (38.8) +214
======== ========
Structural Products
The structural products segment consists of oriented strand board (OSB),
plywood, lumber and engineered wood products (EWP). The significant growth in
sales in the structural products segment in 1999 was primarily due to price
increases in OSB and plywood offset by lower lumber prices.
OSB market price trends continued upward in 1999. OSB average selling
prices increased 32% in the first quarter of 1999 compared to the first quarter
of 1998. Robust U.S. housing markets have created strong demand for OSB and
plywood. OSB sales volume increased approximately 14% in the first quarter of
1999 compared to the first quarter of 1998, due primarily to a net capacity
increase.
Total plywood sales increased approximately 12% in the first quarter of
1999 compared to the first quarter of 1998. Plywood average selling prices
increased approximately 21% reflecting the strong demand factors discussed
above. Plywood volumes decreased approximately 7% in the same period. This
decrease is primarily the result of a temporary shut-down at one of L-P's
plywood manufacturing facilities and the allocation of additional veneer to
laminated veneer lumber (LVL) production rather than to plywood production.
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Lumber sales increased approximately 6% in the first quarter of 1999
compared to the first quarter of 1998. The increase in lumber sales resulted
from an increase in volume of approximately 13% offset by a 6% decrease in
average selling prices. The volume increase reflects a shift to a higher
percentage of outside sales in 1999 compared to 1998 and a lower percentage of
sales to the distribution business within L-P (part of the Specialty and other
products segment).
Engineered wood products (EWP) include engineered I-Joists, LVL and
hardwood veneer. Sales of EWP products increased significantly, primarily as a
result of a marketing agreement to sell the products of an independent producer.
Sales volumes also increased in this segment due to strong residential and
commercial construction markets. The average selling prices of EWP products did
not change significantly.
In the first quarter of 1999, profitability of the structural products
segment increased significantly, largely as a result of price improvements for
OSB and plywood and improvement in the efficiency of L-P's production
facilities. Lower log costs in the southern region of the country contributed to
the increase in plywood earnings. Log costs in the southern region of the
country decreased approximately 9% in the first quarter of 1999 compared to the
first quarter of 1998. Log costs in northern regions and Canada decreased
approximately 3% compared to the prior-year period. Structural products profits
also benefited in 1999 from the sale of unprofitable California operations in
mid-1998.
Exterior Products
The exterior product segment consists of siding and related products such
as soffit, facia and trim. In 1999, this segment includes new products from the
purchase of ABT, including hardboard siding, vinyl siding and other products.
Average sales prices of OSB-based exterior products increased slightly in the
first quarter of 1999 compared to the first quarter of 1998, while volumes
decreased about 8%. Total sales and profits increased in 1999 primarily due to
the acquisition of ABT.
Industrial Panel Products
The industrial panels segment consists of particleboard, medium density
fiberboard (MDF) and hardboard and, in 1999, the laminated industrial panel
products of ABT. The addition of the ABT's industrial panel products in 1999 is
the primary reason for the increase in sales and profits in this segment.
Specialty and Other Products
The specialty and other products segment includes distribution facilities,
wood chips, coatings and chemicals, cellulose insulation, Ireland operations,
Alaska operations, moldings and other products. In the first quarter of 1999,
sales for this segment decreased 19% compared to the first quarter of 1998,
primarily due to the sale of the assets of the Weather-Seal windows and doors
division, Creative Point Inc. and two California distribution facilities,
partially offset by sales of certain ABT products.
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Pulp
Pulp segment operations in the first quarter of 1999 continued to be
impacted by the worldwide over-capacity in the pulp industry and the Asian
market crisis, although pricing did improve late in the quarter as the Asian
economy improved slightly. Total losses in the first quarter of 1999 decreased
50% compared to the first quarter of 1998 due to partial recovery of inventory
market write-downs taken in previous periods and lower unit costs due to higher
production volumes. L-P's pulp facilities took significant downtime in the first
quarter of 1998. Sales increased primarily due to volume increases.
General Corporate Expense, Net
General corporate expense increased primarily due to the addition of sales
and marketing personnel as L-P has increased its focus on customers and
additional costs for administrative infrastructure, including the conversion to
new accounting and human resource systems.
Interest, Net
Cash from asset sales was used to repay loans and lines of credit in late
1998, reducing debt levels and interest expense into early 1999. Interest
expense rose slightly late in the first quarter of 1999 and will continue to be
higher in the future as a result of borrowings to finance the acquisition of
ABT.
Legal and Environmental Matters
For a discussion of legal and environmental matters involving L-P and the
potential impact thereof on L-P's financial position, results of operations and
cash flows, see "Legal Proceedings" in Part II of this report.
Financial Position, Liquidity and Capital Resources
Net cash provided by operations was $11 million in the first quarter of
1999 compared to $43 million used in operations in the first quarter of 1998.
The increase in cash provided by operations resulted primarily from improved
operating results and tax refunds. Partially offsetting these increases, L-P
made $64 million in litigation-related payments during the first quarter of 1999
compared to $16 million in the first quarter of 1998.
Net cash used in investing activities was $232 million in the first
quarter of 1999 compared to net cash used in investing activities of $32 million
in the first quarter of 1998. L-P used $209 million of funds to acquire ABT in
February 1999. Capital expenditures in property, plant, equipment and timber
decreased in the first quarter of 1999 compared to the same period in 1998
primarily because L-P did not have any new mills under construction. L-P has
announced plans to build several wood-processing facilities in Canada, including
an OSB plant, and is building an OBS facility in Chile.
In the first quarter of 1999, L-P borrowed $165 million, primarily to
finance the acquisition of ABT. Borrowings in the first quarter of 1998 were
primarily used to fund operations.
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L-P expects to be able to meet its cash requirements through cash from
operations, existing cash balances, existing credit facilities and access to the
capital markets. Cash and cash equivalents totalled $43 million at March 31,
1999 compared to $127 million at December 31, 1998. L-P has a $300 million
revolving credit facility available through January 2002, under which L-P had
$65 million of borrowings outstanding at March 31, 1999. L-P also had $100
million of borrowings under a new uncommitted bank credit facility outstanding
at March 31, 1999. L-P has filed a shelf registration statement for the sale of
up to $500 million of debt securities to be offered from time to time in one or
more series. The proceeds from the sale of such securities are anticipated to be
used by L-P for general corporate purposes, which may include repayment of debt
(including debt incurred in connection with the acquisition of ABT).
Changes in L-P's balance sheet from December 31, 1998 to March 31, 1999,
including increases of $77 million in accounts receivable, $60 million in
inventories, $111 million in net property, plant and equipment and $75 million
in goodwill, resulted primarily from the consolidation of ABT and L-P for
financial reporting purposes. The increase of $137 million in current
liabilities resulted primarily from the consolidation of ABT and an increase in
the current portion of contingency reserves to reflect the expected payment, in
the first quarter of 2000, of the second fund relating to L-P's nationwide class
action siding litigation settlement.
Contingency reserves, which represent an estimate of future cash needs for
various contingencies (primarily payments for siding litigation settlements),
totalled $323 million at March 31, 1999, of which $205 million is estimated to
be payable within one year. As with many accounting estimates, there is inherent
uncertainty concerning the reliability and precision of these estimates. The
amounts ultimately paid in resolving these contingencies could exceed the
current reserves by a material amount. Contingency reserves decreased in 1999
due to the continued implementation of the early payment program relating to
L-P's nationwide class action siding litigation settlement. Litigation-related
payments totalled $64 million for the first quarter of 1999.
Year 2000 Compliance
The Year 2000 problem refers to a worldwide issue relating to a flaw in
many computer programs and computer applications embedded in equipment and other
devices. In many existing software and hardware applications, two digits were
used to represent the year, such as "99" for "1999." If not corrected, these
applications may interpret "00" to be the year 1900 rather than 2000, producing
erroneous data or, at worst, failing altogether. L-P recognizes the Year 2000
problem as a serious issue. Accordingly, L-P now considers the potential impact
of the Year 2000 in connection with all in-house application development and
purchases of third-party software. In the fall of 1997, L-P undertook a formal
project to address its Year 2000 exposure and readiness. As discussed separately
under the caption "ABT" below, ABT undertook a similar project prior to being
acquired by L-P.
All of L-P's business groups, operations and corporate functions are
covered by the Year 2000 project. The project team is staffed by full-time
employees, contractors and consultants as appropriate. The project is
continuously monitored by a management steering committee and L-P's internal
auditors to ensure that proper methodology is being followed, that adequate
controls are in place and that appropriate steps are being taken to limit risk.
In addition, periodic reports are made to senior management, the finance and
audit committee and the board of directors.
The project is divided into three primary areas: (1) information systems;
(2)
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manufacturing systems/building infrastructure; and (3) business partners
(including suppliers and customers).
Information Systems. L-P's information systems include such common business
applications as payroll, human resources, sales order entry, inventory
management, finance and accounting. L-P's Year 2000 project phases for
information systems include: inventorying and prioritizing all information
systems; assessing the Year 2000 readiness of such systems; remediating such
systems (through conversion, upgrades, replacement or risk-managed acceptance of
non-compliant items); testing; and developing and implementing contingency
plans, to the extent determined to be appropriate, for each mission critical
system. The inventory and assessment phases for L-P's information systems have
been completed. L-P has replaced its basic payroll, human resources and most
accounting applications with off-the-shelf packages, the initial implementation
of which was completed as of January, 1999. Approximately 23% of L-P's other
business critical information systems require further remediation through system
upgrades and/or replacements. The remediation of most of these systems is
expected to be completed by June 30, 1999, and the remediation of all of these
systems is scheduled for completion by September 30, 1999. Testing and
contingency planning are underway and are scheduled to be completed by November
30, 1999.
Manufacturing Systems/Building Infrastructure. With respect to L-P's
manufacturing systems and building infrastructure, the Year 2000 project is
focused on surveying and, where necessary, remediating all computer-controlled
and/or embedded devices used in L-P's manufacturing processes or in building
infrastructure (such as the heating and air conditioning systems, security
access and alarm systems, telephones, and office equipment used in L-P's offices
and plants). The Year 2000 project phases for manufacturing systems and building
infrastructure include: inventorying items that are exposed to Year 2000 issues;
assessing the Year 2000 readiness of such items; remediating such items (through
conversion, upgrades, replacement, or risk-managed acceptance of non-compliant
items), testing; and developing and implementing contingency plans, to the
extent determined to be appropriate, for each business group and facility
location. The inventory phase for L-P's manufacturing systems and building
infrastructure has been completed. More than 96% of the inventoried systems have
been assessed for Year 2000 readiness, with completion of this phase scheduled
for May 1999. Approximately 5% of L-P's manufacturing systems and building
infrastructure assessed to date have been determined to require remediation.
Most of the required remediation is expected to be completed by June 30, 1999
and all required remediation is scheduled to be completed by September 30, 1999.
Testing and contingency planning are underway and are scheduled to be completed
by November 30, 1999.
Business Partners. L-P also faces the risk of business disruption from outside
business partners, which may have information systems, manufacturing systems or
infrastructure that are not Year 2000 compliant. In this regard, L-P's Year 2000
project includes identifying and prioritizing L-P's major business partners
(primarily suppliers of raw materials and essential services such as utilities
and transportation and significant customers), assessing their Year 2000
readiness and developing contingency plans where appropriate. The identification
and prioritization phases have been completed and L-P has requested that all of
its major business partners respond to a survey eliciting information as to
their Year 2000 readiness. Of the approximately 40% of the business partners
that have responded
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to the survey, none have disclosed significant readiness issues. L-P plans to
reiterate its request for information from all critical business partners that
have not responded to the survey by July 31, 1999 and to monitor the Year 2000
readiness of its most critical business partners throughout 1999. If L-P's
efforts in this regard cause it to believe that significant risk is present, L-P
will seek to identify alternate business partners and to develop contingency
plans to address potential business disruptions prior to December 1999.
Costs. The total expense associated with L-P's Year 2000 project is presently
estimated to be approximately $5.5 million, of which approximately $1.3 million
had been incurred by March 31, 1999. These costs are being expensed as incurred
and are not expected to have a material effect on L-P's financial position or
results of operations. These costs do not include expenses and capital costs
associated with replacing systems which L-P would have replaced regardless of
Year 2000 issues, including a new human resources information system and a new
core financial system.
Most Reasonably Likely Worst-case Scenario. The occurrence of unscheduled
downtime at L-P's facilities resulting from internal or third-party system
failures could have an adverse effect on L-P's business, results of operations
and cash flows. In this regard, L-P believes that its dependence on third
parties for critical services such as telecommunications, energy, water and
other utilities, financial services and transportation poses the greatest risk.
L-P is seeking to assess the Year 2000 readiness of all mission critical systems
and business partners and to develop appropriate contingency plans. These plans
may include identifying alternative systems and suppliers and assisting major
customers who may be affected by Year 2000 issues. However, there can be no
assurance that L-P will not experience unscheduled downtime, business
disruptions or other adverse consequences of the Year 2000 problem.
ABT. ABT implemented a project to address its Year 2000 exposure and readiness
prior to its acquisition by L-P. ABT's Year 2000 project is generally similar in
scope and structure to L-P's Year 2000 project. Most of the required remediation
of ABT's systems and building infrastructure is expected to be completed by June
30, 1999 and all required remediation is scheduled to be completed by September
30, 1999. L-P has substantially completed the process of integrating ABT's Year
2000 project into L-P's Year 2000 project. However, the discussion of L-P's Year
2000 project contained in this report does not address ABT's information
systems, manufacturing systems, building infrastructure, business partners or
Year 2000 project.
Additional Considerations. Despite the extensive efforts of L-P's project team,
it is likely that some unexpected problems associated with the Year 2000 issue
will arise. In addition, the costs and completion dates for L-P's Year 2000
project discussed herein are based on management's estimates, which were derived
using numerous assumptions regarding future events, including continued
availability of certain resources, remediation plans of business partners and
other factors. There can be no assurance that these estimates will be achieved
and actual results could differ significantly from L-P's current expectations.
14
<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SUMMARY OF PRODUCTION VOLUMES
QUARTER ENDED MARCH 31
----------------------
1999 1998
----- -----
Oriented strand board
panels and siding,
million square feet 3/8" basis 1,152 1,015
Softwood plywood,
Million square feet 3/8" basis 223 231
Lumber, million board feet 260 286
Industrial panel products*
(particleboard, medium density
fiberboard and hardboard),
million square feet3/4" basis 142 144
Engineered I-Joists,
Million lineal feet 24 22
Laminated Veneer Lumber (LVL),
Thousand cubic feet 1,749 1,631
Pulp, thousand short tons 95 50
- ----------
* Excludes ABT products.
15
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INDUSTRY PRODUCT PRICE TRENDS
OSB PLYWOOD LUMBER PARTICLEBOARD
---------- --------- --------- -------------
N. CENTRAL SOUTHERN
7/16" BASIS PINE 1/2" FRAMING
24/16 BASIS LUMBER INLAND
SPAN CDX COMPOSITE INDUSTRIAL
RATING 3 PLY PRICES 3/4" BASIS
---------- --------- --------- -------------
Annual Average
1993 $236 $282 $394 $258
1994 265 302 405 295
1995 245 303 337 290
1996 184 258 398 276
1997 142 265 417 262
1998 205 284 349 259
1998 First Quarter Average
158 266 368 253
1998 Fourth Quarter Average
176 301 340 255
1999 First Quarter Average
259 329 394 254
Source: Random Lengths
16
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Certain legal and environmental matters involving L-P are discussed below.
Environmental Proceedings
In March 1995, L-P's subsidiary, Ketchikan Pulp Company ("KPC"), entered
into agreements with the federal government to resolve violations of the Clean
Water Act and the Clean Air Act that occurred at KPC's pulp mill during the late
1980's and early 1990's. These agreements were subsequently approved by the U.S.
District Court for the District of Alaska. In addition to civil and criminal
penalties that were paid in 1995, KPC agreed to undertake certain remedial and
pollution-control projects. These projects included (i) capital projects for
spill containment and water treatment plant upgrades estimated to cost
approximately $13.4 million (of which approximately $7.5 million had been spent
at March 31, 1999) and (ii) non-capital projects relating to the investigation
and remediation of Ward Cove, a body of water adjacent to the mill site,
estimated to cost approximately $6.3 million (of which approximately $1.8
million had been spent at March 31, 1999). As a result of the closure of the
mill in May 1997, KPC's obligations with respect to the capital projects have
been suspended through January 2000, and KPC is in the process of seeking
permanent relief from those obligations. KPC's obligations with respect to the
Ward Cove investigation and remediation have not been affected by the closure of
the mill.
In June 1997, KPC entered into an agreement with the State of Alaska and
the U.S. Environmental Protection Agency (the "EPA") to investigate and, if
necessary, clean up the former mill site. KPC has completed the investigative
portion of this project and commenced work on the clean-up portion of this
project, which is expected to be completed in mid-1999. Total costs associated
with this project are estimated to be approximately $2.7 million, of which
approximately $2.6 million had been spent at March 31, 1999.
KPC has completed the closure of a landfill near Thorne Bay, Alaska,
pursuant to an agreement with the U.S. Forest Service (the "USFS"). Costs of the
project totaled approximately $6.5 million. KPC is also continuing to monitor
leachate from the landfill in order to evaluate whether treatment of the
leachate is necessary.
Certain L-P plant sites have, or are suspected of having, substances in
the ground or in the groundwater underlying the sites that are considered
pollutants. Where the pollutants were caused by previous owners of the property,
L-P is vigorously pursuing those parties through legal channels as well as
insurance coverage under all applicable policies.
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
noncompliance. In some instances, 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. Based on the information
currently available, management believes
17
<PAGE>
that any fines, penalties or other losses resulting from the matters discussed
above will not have a material adverse effect on the consolidated financial
position or results of operations of L-P.
Colorado Criminal Proceedings
In June 1995, a federal grand jury returned an indictment in the U.S.
District Court for the District of Colorado against L-P in connection with
alleged environmental violations, as well as alleged fraud in connection with
the submission of unrepresentative oriented strand board (OSB) product samples
to an industry product certification agency, by L-P's Montrose (Olathe),
Colorado OSB plant. In connection with entering a guilty plea as to certain
criminal violations in May 1998, (i) L-P agreed to pay total penalties of $37
million (including making $500,000 in charitable contributions), of which $12
million was paid in 1998, and was sentenced to five years of probation and (ii)
all remaining charges against L-P were dismissed. Under the terms of the
original agreement, the $25 million balance of the fine assessed against L-P,
which is secured by a statutory lien, was payable in three equal annual
installments, together with accrued interest, beginning July 1, 2000. However,
in April 1999, the court approved a modification to the agreement, which now
provides for the payment of this balance, without interest, on June 1, 1999.
In December 1995, L-P received a notice of suspension from the EPA stating
that, because of the criminal proceedings pending against L-P in Colorado, the
Montrose facility would be prohibited from purchasing timber directly from the
USFS. In April 1998, L-P signed a Settlement and Compliance Agreement with the
EPA. This agreement formally lifted the 1995 suspension imposed on the Montrose
facility. The agreement has a term of five years and obligates L-P to (i)
develop and implement certain corporate policies and programs, including a
policy of cooperation with the EPA, an employee disclosure program and a policy
of nonretaliation against employees, (ii) conduct its business to the best of
its ability in accordance with federal laws and regulations and local and state
environmental laws, (iii) report significant violations of law to the EPA, and
(iv) conduct at least two audits of its compliance with the agreement.
OSB Siding Matters
L-P has been named as a defendant in numerous class action and nonclass
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 U.S. 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, have owned, or 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, is
entitled to receive from the settlement fund established under the agreement a
payment
18
<PAGE>
equal to the replacement cost (determined by a third-party construction cost
estimator and currently estimated to be in the range of $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 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 payable under the settlement agreement and the
amount previously paid. The extent of damage to OSB siding at each claimant's
property is determined by an independent adjuster in accordance with a specified
protocol. Settlement payments are not subject to adjustment 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 may pursue a claim against the contractor/builder to
the extent the award was reduced.
The settlement requires L-P to contribute $275 million to the settlement
fund in seven annual installments payable during the period from 1996 through
2002 in the following amounts: $100 million; $55 million; $40 million; $30
million; $20 million; $15 million; and $15 million. As of March 31, 1999, L-P
had funded the first three installments. L-P also had funded a significant
portion of the last four installments through the Early Payment Program
discussed below. The estimated cumulative total of approved claims under the
settlement, as calculated under the terms of the settlement (without giving
effect, in the case of unpaid claims, to discounted settlements under the Early
Payment Program), exceeded $550 million at March 31, 1999. In these
circumstances, unless L-P makes an additional contribution of $50 million to the
settlement fund by August 2001, the settlement will terminate as to all claims
in excess of $275 million that remain unpaid. In addition, unless L-P makes a
second additional contribution of $50 million to the settlement fund by August
2002, the settlement will terminate as to all claims in excess of $325 million
that remain unpaid. If L-P makes both of these additional contributions, the
settlement would continue in effect until at least August 2003, at which time
L-P would be required to make an election with respect to all unpaid claims that
were filed prior to December 31, 2002. If, in August 2003, L-P elects to pay
pursuant to the settlement all approved claims that remain unpaid at that time,
50% of the unpaid claims must be paid by August 2004 and the remaining 50% must
be paid by August 2005. If L-P elects not to pay the unpaid claims pursuant to
the settlement, the settlement will terminate with respect to such unpaid claims
and all unpaid claimants will be free to pursue their individual remedies from
and after August 2003.
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
19
<PAGE>
OSB Inner-Seal siding or damage to utility grade OSB siding (sold without any
express warranty), either of which could create additional claims. In addition
to payments to the settlement fund, L-P was 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. 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 claims under the settlement,
as of March 31, 1999, approximately $5.9 million remained of the $195 million
paid into the fund to date (all of which is presently dedicated to the payment
of expenses or held in reserve).
On October 26, 1998, L-P announced an agreement to offer early payments to
eligible claimants who have submitted valid and approved claims under the
original settlement agreement (the "Early Payment Program") and to establish an
additional $125 million fund to pay all other approved claims that are filed
before December 31, 1999 (the "Second Settlement Fund").
The Early Payment Program applies to all claimants who are entitled to be
paid from the $80 million of mandatory contributions to the settlement fund that
remain to be made under the settlement agreement, and to all claimants who
otherwise would be paid from the proceeds of the two optional $50 million
contributions to the settlement fund that L-P may elect to make under the
settlement agreement. The early payments from the $80 million of mandatory
contributions are discounted at a rate of 9% per annum calculated from their
original payment dates (1999-2002) to the date the early payment offer was made.
The early payments from the two $50 million optional contributions are
discounted at a rate of 12% per annum calculated from 2001 and 2002,
respectively, to the date the early payment offer was made. Claimants may accept
or reject the discounted early payments in favor of remaining under the original
settlement, but may not arbitrate the amount of their early payments. For
purposes of determining whether L-P has made any mandatory or optional
contribution to the settlement fund as of the respective due date therefor, L-P
will receive credit for the undiscounted amount of such contribution to which
the discounted amount thereof paid pursuant to the Early Payment Program is
attributable. At March 31, 1999, approximately $130.3 million in Early Payment
Program checks had been mailed and $117.3 million had been cashed in settlement
claims, while approximately $3.0 million in such checks remained to be mailed.
Giving effect only to Early Payment Program checks that had actually been
cashed, L-P had effectively satisfied a cumulative total of approximately $350.5
million of its mandatory and optional contributions to the settlement fund at
March 31, 1999.
The $125 million Second Settlement Fund represents an alternative source
of payment for all approved claims not eligible for the Early Payment Program
and all new claims filed before December 31, 1999. In early 2000, claimants
electing to participate in the Second Settlement Fund will be offered a pro rata
share of the fund in complete satisfaction of their claims, which they may
accept or reject in favor of remaining under the original settlement. Claimants
who accept their pro rata share may not file additional claims under the
settlement or arbitrate the amount of their payments. Claimants who elect not to
participate in the Second Settlement Fund remain bound by the terms of the
original settlement. If L-P is dissatisfied with the number of claimants who
elect to be paid from the Second Settlement Fund, L-P may refuse to proceed with
funding at its sole
20
<PAGE>
option. In that event, the Second Settlement Fund will be canceled and all the
claimants who had elected to participate in it will be governed by the original
settlement.
A settlement of a related class action in Florida was approved by the
Circuit Court for Lake County, Florida, on October 4, 1995. 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 is $3.40 per square foot for lap
siding and $2.82 per square foot for panel siding, subject to reduction by 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 until
October 4, 2000.
ABT Hardboard Siding Matters
ABT, ABTco, Inc., a wholly owned subsidiary of ABT ("ABTco" and, together
with ABT, the "ABT Entities"), Abitibi-Price Corporation ("Abitibi"), a
predecessor of ABT, and certain affiliates of Abitibi (the "Abitibi Affiliates"
and, together with Abitibi, the "Abitibi Entities") have been named as
defendants in a conditionally certified class action filed in the Circuit Court
of Choctaw County, Alabama, on December 21, 1995 and in six other putative class
action proceedings filed in the following courts on the following dates: the
Court of Common Pleas of Allegheny County, Pennsylvania on August 8, 1995; the
Superior Court of Forsyth County, North Carolina on December 27, 1996; the
Superior Court of Onslow County, North Carolina on January 21, 1997; the Court
of Common Pleas of Berkeley County, South Carolina on September 25, 1997; the
Circuit Court of Bay County, Florida on March 11, 1998 (subsequently removed to
the U.S. District Court for the Northern District of Florida); and the Superior
Court of Dekalb County, Georgia on September 25, 1998. These actions were
brought on behalf of various persons or purported classes of persons (including
nationwide classes) who own or have purchased or used hardboard siding
manufactured or sold by the ABT Entities or the Abitibi Entities. In general,
the plaintiffs in these actions have alleged unfair business practices, breach
of warranty, fraud, misrepresentation, negligence, and other theories related to
alleged defects, deterioration, or other failure of such hardboard siding, and
seek unspecified compensatory, punitive, and other damages, attorneys' fees and
other relief. In addition, Abitibi has been named in certain other actions,
which may result in liability to ABT under the allocation agreement between ABT
and Abitibi described below. Except in the case of certain of the putative class
actions that have been stayed, the ABT Entities have filed answers in these
proceedings that deny all material allegations of the plaintiffs and assert
affirmative defenses. L-P intends to cause the ABT Entities to defend these
proceedings vigorously.
L-P, the ABT Entities and the Abitibi Entities have also been named as
defendants in a putative class action proceeding filed in the Circuit Court of
Jackson County, Missouri on April 22, 1999 and brought on behalf of a purported
class of persons in Missouri who
21
<PAGE>
own or have purchased hardboard siding manufactured by the defendants. In
general, the plaintiffs in this proceeding have alleged breaches of warranty,
fraud, misrepresentation, negligence, strict liability and other theories
related to alleged defects, deterioration or other failure of such hardboard
siding, and seek restitution, punitive damages, attorneys' fees and other
relief. L-P and the ABT Entities intend to defend this proceeding vigorously.
ABT and Abitibi have agreed to an allocation of liability with respect to
claims relating to (1) siding sold by the ABT Entities after October 22, 1992
("ABT Board"), and (2) siding sold by the Abitibi Entities on or before, or held
as finished goods inventory by the Abitibi Entities on, October 22, 1992
("Abitibi Board"). In general, ABT and Abitibi have agreed that all amounts paid
in settlement or judgment (other than any punitive damages assessed individually
against either the ABT Entities or the Abitibi Entities) following the
completion of any claims process resolving any class action claim (including
consolidated cases involving more than 125 homes owned by named plaintiffs)
shall be paid (a) 100% by ABT insofar as they relate to ABT Board, (b) 65% by
Abitibi and 35% by ABT insofar as they relate to Abitibi Board, and (c) 50% by
ABT and 50% by Abitibi insofar as they cannot be allocated to ABT Board or
Abitibi Board. In general, amounts paid in connection with class action claims
for joint local counsel and other joint expenses, and for plaintiffs' attorneys'
fees and expenses, are to be allocated in a similar manner, except that joint
costs of defending and disposing of class action claims incurred prior to the
final determination of what portion of claims relate to ABT Board and what
portion relate to Abitibi Board are to be paid 50% by ABT and 50% by Abitibi
(subject to adjustment in certain circumstances). ABT and Abitibi have also
agreed to certain allocations (generally on a 50/50 basis) of amounts paid for
settlements, judgments and associated fees and expenses in respect of non-class
action claims relating to Abitibi Board. ABT is solely responsible for such
amounts in respect of claims relating to ABT Board. Based on the information
currently available, management believes that the resolution of the foregoing
matters will not have a material adverse effect on the financial position or
results of operations of L-P.
Other Proceedings
LP 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 consolidated financial position or results of operations of L-P.
22
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3.1 Bylaws of L-P as amended April 23, 1999
4.1 Loan Agreement, dated February 3, 1999, between L-P and
Centric Capital Corporation and related Promissory Note
27.1 Financial Data Schedule
(b) Reports on Form 8-K
On March 5, 1999, L-P filed a Current Report on Form 8-K reporting
matters under Items 2 and 5 thereof.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LOUISIANA-PACIFIC CORPORATION
Date: May 14, 1999 By /s/ Gary C. Wilkerson
----------------------------------
Gary C. Wilkerson
Vice President and General Counsel
Date: May 14, 1999 By /s/ Curtis M. Stevens
----------------------------------
Curtis M. Stevens
Vice President, Chief Financial
Officer and Treasurer
(Principal Financial Officer)
24
LOUISIANA-PACIFIC CORPORATION
Index to Bylaws
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 3
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 5
Section 4. Regular Meetings 5
Section 5. Special Meetings 6
Section 6. Notice 6
Section 7. Quorum and Manner of Acting 6
Section 8. Organization 6
Section 9. Resignations 6
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 7
Section 14. Board and Committee Telephonic Meetings 7
Section 15. Mandatory Retirement Age 7
ARTICLE III. EXECUTIVE AND OTHER COMMITTEES 8
Section 1. Executive and Other Committees 8
Section 2. General 8
<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 9
Section 3. Removal 10
Section 4. Vacancies 10
Section 5. Chairman 10
Section 6. President 10
Section 7. Vice Presidents 10
Section 8. Secretary 10
Section 9. Treasurer 11
Section 10. Additional Powers and Duties 11
Section 11. Compensation 11
ARTICLE VI INDEMNIFICATION 11
Section 1. General 11
Section 2. Employee Benefit or Welfare Plan Fiduciary Liability 12
Section 3. Persons Not to be Indemnified Under Section 2 12
Section 4. Advances of Expenses 12
Section 5. Mandatory Indemnification in Certain Circumstances 13
Section 6. Right to Indemnification upon Application;
Procedure upon Application 13
Section 7. Enforcement of Rights 14
Section 8. Bylaws as Contract; Non-Exclusivity 14
ARTICLE VII STOCK AND TRANSFER OF STOCK 14
Section 1. Stock Certificates 14
Section 2. Transfers of Shares 14
Section 3. Regulations, Transfer Agents and Registrars 15
Section 4. Replacement of Certificates 15
Section 5. Fixing of Record Date 15
ARTICLE VIII. FISCAL YEAR 16
ARTICLE IX SEAL 16
ARTICLE X. AMENDMENTS 16
<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.
<PAGE>
Section 5. Quorum. A majority of the outstanding shares of the Corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of stockholders except as otherwise provided by statute or in the
Certificate of Incorporation. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally noticed. The
stockholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Section 6. Organization. At each meeting of the stockholders the Chairman,
or in his absence or inability to act, the President, or in the absence or
inability to act of the Chairman and the President, a Vice President, or in the
absence of all the foregoing, any person chosen by a majority of those
stockholders present shall act as chairman of the meeting. The Secretary, or, in
his absence or inability to act, the Assistant Secretary or any person appointed
by the chairman of the meeting, shall act as secretary of the meeting and keep
the minutes thereof.
Section 7. Conduct of Business. The Board of Directors shall have
authority to determine from time to time the procedures governing, and the rules
of conduct applicable to, annual and special meetings of the stockholders.
Except as otherwise determined by the Board of Directors prior to the meeting,
the chairman of any stockholders meeting shall determine the order of business
and shall have authority in his discretion to adjourn such meeting and to
determine the procedures governing such meeting and to regulate the conduct
thereat, including, without limitation, imposing restrictions on the persons
(other than stockholders of the Corporation or their duly appointed proxies) who
may attend any such stockholders meeting, determining whether any stockholder or
any proxy may be excluded from any stockholders meeting based upon any
determination by the chairman in his sole discretion that any such person has
unduly disrupted or is likely to disrupt the proceedings thereat and specifying
the circumstances in which any person may make a statement or ask questions at
any stockholders meetings.
Section 8. Voting. Except as otherwise provided by statute, the
Certificate of Incorporation, or any certificate duly filed pursuant to Section
151 of the Delaware General Corporation Law, each stockholder shall be entitled
to one vote on each matter submitted to a vote at a meeting of stockholders for
each share of capital stock held of record by him on the date fixed by the Board
of Directors as the record date for the determination of the stockholders who
shall be entitled to notice of and to vote at such meeting; or if such record
date shall not have been so fixed, then at the close of business on the day next
preceding the day on which notice thereof shall be given. Except as otherwise
provided by statute, these Bylaws, or the Certificate of
<PAGE>
Incorporation, any corporate action to be taken by vote of the stockholders
shall be authorized by a majority of the total votes, or when stockholders are
required to vote by class by a majority of the votes of the appropriate class,
cast at a meeting of stockholders by the holders of shares present in person or
represented by proxy and entitled to vote on such action. Unless required by
statute, or determined by the chairman of the meeting to be advisable, the vote
on any question need not be by written ballot and may be by such other means as
the chairman deems advisable under the circumstances. On a vote by written
ballot, each ballot shall be signed by the stockholder voting, or by his proxy,
if there be such proxy, and shall state the number of shares voted.
Section 9. Proxies. Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him by a proxy
signed by such stockholder or his attorney-in-fact. No proxy shall be valid
after the expiration of three years from the date thereof, unless otherwise
provided in the proxy.
Section 10. List of Stockholders. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 11. Inspectors. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If the inspectors shall not be so appointed or if
any of them shall fail to appear or act, the chairman of the meeting may appoint
inspectors. The inspectors shall determine the number of shares outstanding and
the voting power of each, the number of shares represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and shall receive
votes or ballots, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes or ballots,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the chairman of the
meeting or any stockholder entitled to vote thereat, the inspectors shall make a
report in writing of any challenge, request or matter determined by them and
shall execute a certificate of any fact found by them. No director or candidate
for the office of director shall act as inspector of an election of directors.
Inspectors need not be stockholders.
Section 12. Denial of Action by Consent of Stockholders. No action
required to
<PAGE>
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 (i) with respect to an election to be held at an annual meeting of
stockholders, not later than the close of business on the 45th calendar day
prior to the first anniversary of the initial mailing date of the Corporation's
proxy materials for the preceding year's annual meeting, provided that if the
date of the annual meeting at which an election is to be held is more than 30
calendar days before or after the preceding year's annual meeting, such notice
must be received by the close of business on the 10th day following the date on
which notice of such meeting is first given to stockholders, and (ii) with
respect to an election to be held at a special meeting of stockholders for the
election of directors, not later than 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 for election 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 signed 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, only such business shall be conducted as shall have been brought
before the meeting (a) pursuant to the Corporation's notice of meeting pursuant
to Section 4 of this Article, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of record of the Corporation who complies
with the notice procedures set forth in this Section 14. For business to be
properly brought before an annual meeting by any such stockholder, the
stockholder must give written notice thereof to the Chairman, either by
<PAGE>
personal delivery or by certified mail, postage prepaid, addressed to the
Chairman at the Corporation's executive offices not later than the close of
business on the 45th calendar day prior to the first anniversary of the initial
mailing date of the Corporation's proxy materials for the preceding year's
annual meeting, provided that if the date of the annual meeting is more than 30
calendar days before or after the preceding year's annual meeting, such notice
must be received by the close of business on the 10th day following the date on
which notice of such meeting is first given to stockholders. Each such notice
shall set forth as to each matter the stockholder proposes to bring before the
annual meeting the information with respect to stockholder proposals presented
for inclusion in the Corporation's proxy materials required by Rule 14a-8
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, or any rule or regulation adopted to replace
such rule. 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 in accordance with the provisions of this Section 14,
and if he should so determine, he shall so declare to the meeting and such
business not properly brought before the meeting shall not be transacted.
ARTICLE II. BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors.
Section 2. Number, Classification, Election and Qualification. The number
of directors of the Corporation shall be eight, but, by vote of a majority of
the entire Board of Directors or amendment of these Bylaws, the number thereof
may be increased or decreased to such greater or lesser number (not less than
three) as may be so provided. At the first election of directors by the
stockholders, the directors shall be divided into three classes; the term of
office of those of the first class to expire at the first annual meeting
thereafter; of the second class at the second annual meeting thereafter; and of
the third class at the third annual meeting thereafter. At each annual election
held after such classification and election, directors shall be elected to
succeed those whose terms expire, each such newly elected director to hold
office for a term of three years and until his successor is elected or until his
death, resignation, retirement or removal. Except as otherwise provided by
statute or these Bylaws, directors shall be elected at the annual meeting of the
stockholders, and the persons receiving a plurality of the votes cast at such
election shall be elected, provided that a quorum is present at the meeting.
Directors need not be stockholders.
Section 3. Place of Meetings. Meetings of the Board of Directors may be
held at such place, within or without the State of Delaware, as the Board of
Directors may from time to time determine or as shall be specified in the notice
or waiver of notice of such meeting.
<PAGE>
Section 4. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately after, and at the
same place as, the annual meeting of stockholders for the purpose of electing
officers and the transaction of other business. The Board of Directors may
provide by resolution the time and place, either within or without the State of
Delaware, for holding of additional regular meetings without other notice than
such resolution.
Section 5. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman, President or any two
directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the State of
Delaware, as the place for holding any special meeting of the Board of Directors
called by them.
Section 6. Notice. Notice of any special meeting shall be given personally
or by telephone to each director at least twenty-four hours before the time at
which the meeting is to be held or shall be mailed to each director, postage
prepaid, at his residence or business address at least three days before the day
on which the meeting is to be held; provided that, in the case of any special
meeting to be held by conference telephone or similar communications equipment,
notice of such meeting may be given personally or by telephone to each director
not less than six hours before the time at which the meeting is to be held.
Except as otherwise specifically provided in these Bylaws, neither the business
to be transacted at, nor the purpose of any regular or special meeting of the
Board of Directors need be specified in the notice of the meeting.
Section 7. Quorum and Manner of Acting. A majority of the entire Board of
Directors shall be present in person at any meeting of the Board of Directors in
order to constitute a quorum for the transaction of business at such meeting,
except that one-third of the entire Board of Directors present in person at a
meeting shall constitute a quorum if the Chairman is present at the meeting.
Except as otherwise specifically required by statute or the Certificate of
Incorporation, the vote of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the Board of Directors. In the
absence of a quorum at any meeting of the Board of Directors, a majority of the
directors present or, if no director be present, the Secretary may adjourn such
meeting to another time and place. At any adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at the
meeting as originally called. Except as provided in Article III of these Bylaws,
the directors shall act only as a board of directors and the individual
directors shall have no power as such.
Section 8. Organization. At each meeting of the Board of Directors, the
Chairman (or, in his absence or inability to act, the President, or in his
absence or inability to act, another director chosen by a majority of the
directors present) shall act as chairman of the meeting. The Secretary (or, in
his absence or inability to act, any person appointed by the chairman) shall act
as secretary of the meeting and keep the
<PAGE>
minutes thereof.
Section 9. Resignations. Any director of the Corporation may resign at any
time by giving written notice of his resignation to the Board of Directors or
Chairman or the President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 10. Vacancies and Newly Created Directorships. Vacancies and newly
created directorships resulting from any increase in the authorized number of
directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and any director so chosen
shall hold office until the next election of the class for which such director
has been chosen and until his successor is elected and qualified, or until his
earlier resignation or removal. When one or more directors shall resign from the
Board of Directors, effective at a future date, a majority of the directors then
in office, including those who have so resigned, shall have power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each director so chosen shall hold
office as provided in this section in the filling of other vacancies.
Section 11. Removal of Directors. All or any number of the directors may
be removed at any time, but only for cause and only by the affirmative vote of
the holders of at least 75 percent of the outstanding Common Stock of the
Corporation at a meeting of the stockholders expressly called for that purpose.
A vacancy in the Board of Directors caused by any such removal may be filled by
such stockholders at such meeting, or if the stockholders shall fail to fill
such vacancy, as in these Bylaws provided.
Section 12. Compensation. The Board of Directors shall have authority to
fix the compensation, including fees and reimbursement of expenses, of directors
for services to the Corporation in any capacity, provided, no such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 13. Board and Committee Action Without Meeting. Any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the Board
of Directors or committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
of Directors or committee.
Section 14. Board and Committee Telephonic Meetings. A director or a
member of a committee designated by the Board of Directors may participate in a
meeting of the Board of Directors or such committee by means of conference
telephone
<PAGE>
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,
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 the following matters: (i) approving or adopting, or
recommending to the stockholders, any action or matter expressly required by the
Delaware General Corporation Law to be submitted to stockholders for approval or
(ii) adopting, amending or repealing these Bylaws. 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
<PAGE>
any authority of the Board of Directors.
ARTICLE IV. EXCEPTIONS TO NOTICE REQUIREMENTS
Section 1. Waiver of Notice. Whenever notice is required to be given under
these Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice.
Section 2. Unlawful Notice. Whenever notice is required to be given under
these Bylaws to any person with whom communication is unlawful, the giving of
such notice to such person shall not be required and there shall be no duty to
apply to any governmental authority or agency for a license or permit to give
such notice to such person. Any action or meeting which shall be taken or held
without notice to any such person with whom communication is unlawful shall have
the same force and effect as if such notice has been duly given.
ARTICLE V. OFFICERS
Section 1. Number, Election and Qualification. The elected officers of the
Corporation shall be a Chairman, a President, one or more Vice Presidents (one
or more of whom may be designated Executive Vice President or Senior Vice
President), a Secretary, and a Treasurer. Such officers shall be elected from
time to time by the Board of Directors, each to hold office until the meeting of
the Board of Directors following the next annual meeting of the stockholders and
until his successor is elected and qualified, or until his earlier resignation
or removal. The Board of Directors may from time to time appoint such other
officers (including a Chairman of the Executive Committee, a Controller and one
or more Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers
and Assistant Controllers), and such agents, as may be necessary or desirable
for the business of the Corporation. Such other officers and agents shall have
such duties as may be prescribed by the Board of Directors and shall hold office
during the pleasure of the Board of Directors. Any two or more offices may be
held by the same person. From and after the distribution by G-P of the stock it
presently holds in the Corporation, no person who is serving as an officer or
director of G-P shall concurrently serve as an officer of the Corporation.
Section 2. Resignations. Any officer of the Corporation may resign at any
<PAGE>
time by giving written notice of his resignation to the Board of Directors, the
Chairman, the President or the Secretary. Any such resignation shall take effect
at the time specified therein or, if the time when it shall become effective
shall not be specified therein, immediately upon its receipt; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 3. Removal. Any officer or agent of the Corporation may be removed
either with or without cause, at any time, by the Board of Directors, except
that a vote of a majority of the entire Board of Directors shall be necessary
for the removal of an elected officer. Such removal shall be without prejudice
to the contractual rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office may be filled for the
unexpired portion of the term of the office which shall be vacant, in the manner
prescribed in these Bylaws for the regular election or appointment of such
office.
Section 5. Chairman. The Chairman shall be the chief executive officer of
the Corporation, and shall have general direction over the management of its
business, properties and affairs. The Chairman shall preside, when present, at
all meetings of the stockholders and of the Board of Directors and, in the
absence of the Chairman of the Executive Committee, at all meetings of the
Executive Committee. He shall have general power to execute bonds, deeds and
contracts in the name of the Corporation and to affix the corporate seal; to
sign stock certificates; and to remove or suspend such employees or agents as
shall not have been elected or appointed by the Board of Directors. In the
absence or disability of the Chairman, his duties shall be performed and his
powers shall be exercised by the President.
Section 6. President. The President shall be the chief operating officer
of the Corporation and, subject to the direction of the Board of Directors and
the Chairman, he shall have general direction over the operations of the
Corporation. He shall have general power to execute bonds, deeds and contracts
in the name of the Corporation and to affix the corporate seal; and to sign
stock certificates.
Section 7. Vice Presidents. The several Vice Presidents shall perform all
such duties and services as shall be assigned to or required of them from time
to time, by the Board of Directors or the President, respectively, and unless
their authority be expressly limited shall act in the order of their election in
the place of the President, exercising all his powers and performing his duties,
during his absence or disability. The Board of Directors however, may from time
to time designate the relative positions of the Vice Presidents of the
Corporation and assign to any one or more of them such particular duties as the
Board of Directors may think proper.
Section 8. Secretary. The Secretary shall attend to the giving of notice
of all
<PAGE>
meetings of stockholders and of the Board of Directors and shall record all of
the proceedings of such meetings in a book to be kept for that purpose. He shall
have charge of the corporate seal and have authority to attest any and all
instruments or writings to which the same may be affixed. He shall keep and
account for all books, documents, papers and records of the Corporation, except
those which are hereinafter directed to be in charge of the Treasurer. He shall
have authority to sign stock certificates and shall generally perform all the
duties usually appertaining to the office of secretary of a corporation. In the
absence of the Secretary, an Assistant Secretary or Secretary pro tempore shall
perform his duties.
Section 9. Treasurer. The Treasurer shall have the care and custody of all
moneys, funds and securities of the Corporation, and shall deposit or cause to
be deposited all funds of the Corporation in and with such depositaries as
shall, from time to time, be designated by the Board of Directors or by such
officers of the Corporation as may be authorized by the Board of Directors to
make such designation. He shall have power to sign stock certificates; to
indorse for deposit or collection, or otherwise, all checks, drafts, notes,
bills of exchange or other commercial paper payable to the Corporation, and to
give proper receipts or discharges therefor. He shall keep all books of account
relating to the business of the Corporation, and shall render a statement of the
Corporation's financial condition whenever required so to do by the Board of
Directors, the chairman or the President. In the absence of the Treasurer, the
Board of Directors shall appoint an Assistant Treasurer to perform his duties.
Section 10. Additional Powers and Duties. In addition to the foregoing
enumerated duties and powers, the several officers of the Corporation shall
perform such other duties and exercise such further powers as may be provided by
these Bylaws or as the Board of Directors may from time to time determine or as
may be assigned to them by any competent superior officer.
Section 11. Compensation. The compensation of the officers of the
Corporation for their services as such officers shall be fixed from time to time
by the Board of Directors. An officer of the Corporation shall not be prevented
from receiving compensation by reason of the fact that he is also a director of
the Corporation, but any such officer who shall also be a director shall not
have any vote in the determination of the amount of compensation paid to him.
ARTICLE VI. INDEMNIFICATION
Section 1. General. The Corporation shall, to the full extent permitted by
Section 145 of the Delaware General Corporation Law, as amended from time to
time, indemnify all persons whom it may indemnify pursuant thereto against all
expenses (including, without limitation, attorneys' fees), judgments, fines
(including excise taxes) and amounts paid in settlement (collectively, "Losses")
incurred in connection with any
<PAGE>
action, suit, or proceeding, whether threatened, pending, or completed
(collectively, "Proceedings") to which such person was or is a party or is
threatened to be made a party by reason of the fact that such person is or was a
director, officer, employee, or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise;
provided, however, that the Corporation shall indemnify any such person seeking
indemnification in connection with a Proceeding initiated by such person only if
such Proceeding was authorized by the Board of Directors of the Corporation.
Section 2. Employee Benefit or Welfare Plan Fiduciary Liability. In
addition to any indemnification pursuant to Section 1 of this Article, but
subject to the express exclusions set forth in Section 3 of this Article, the
Corporation shall indemnify any natural person who is or was serving at the
direction or request of the Corporation in a fiduciary capacity with respect to
an employee benefit or welfare plan covering one or more employees of the
Corporation or of an affiliate of the Corporation, or who is or was performing
any service or duty on behalf of the Corporation with respect to such a plan,
its participants or beneficiaries, against all Losses incurred by such person in
connection with any Proceeding arising out of or in any way connected with such
service or performance, to the extent such Losses are insurable under applicable
law but are not covered by collectible insurance or indemnified pursuant to
Section 1 of this Article. This Section is intended to provide a right to
indemnification as permitted by Section 145(f) of the Delaware General
Corporation Law.
Section 3. Persons Not to be Indemnified Under Section 2. No
indemnification shall be made under Section 2 of this Article to any person
(other than an employee of the Corporation or of an affiliate of the
Corporation) who was or is acting as a lawyer, accountant, actuary, investment
adviser or arbitrator with respect to an employee benefit or welfare plan
against any expense, judgment, fine or amount paid in settlement incurred by
such person in connection with any action, suit or proceeding arising out of or
in any way connected with his actions in such capacity. No indemnification shall
be made under Section 2 of this Article to any person determined (in the manner
prescribed by Section 145(d) of the Delaware General Corporation Law) to have
participated in, or to have had actual knowledge of and have failed to take
appropriate action with respect to, any violation of any of the
responsibilities, obligations or duties imposed upon fiduciaries by the Employee
Retirement Income Security Act of 1974 or amendments thereto or by the common or
statutory law of the United States of America or any state or jurisdiction
therein, knowing such in either case to have been a violation of such
responsibilities, obligations or duties.
Section 4. Advances of Expenses. Except as limited by the other provisions
of this Section, the Corporation shall pay promptly (and in any event within 60
days of receipt of the written request of the person who may be entitled to such
payment) all expenses (including but not limited to attorneys' fees) incurred in
connection with any Proceeding by any person who may be entitled to
indemnification under Sections 1 or 2
<PAGE>
of this Article in advance of the final disposition of such Proceeding.
Notwithstanding the foregoing, any advance payment of expenses on behalf of a
director or officer of the Corporation shall be, and if the Board of Directors
so elects, any advance payment of expenses on behalf of any other person who may
be entitled to indemnification under Sections 1 or 2 of this Article may be,
conditioned upon the receipt by the Corporation of an undertaking by or on
behalf of such director, officer, or other person to repay the amount advanced
in the event that it is ultimately determined that such director, officer, or
person is not entitled to indemnification; provided that such advance payment of
expenses shall be made without regard to the ability to repay the amounts
advanced. Notwithstanding the foregoing, no advance payment of expenses shall be
made by the Corporation if a determination is reasonably and promptly made by a
majority vote of directors who are not parties to such Proceeding, even though
less than a quorum, or if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, that, based upon the
facts known to such directors or counsel at the time such determination is made
following due inquiry, (a) in the case of a person who may be entitled to
indemnification under Section 1, such person did not act in good faith and in a
manner that such person reasonably believed to be in or not opposed to the best
interests of the Corporation or, with respect to any criminal proceeding, such
person had reasonable cause to believe his conduct was unlawful, or (b) in the
case of a person who may be entitled to indemnification under Section 2, such
person is not entitled to indemnification under the standard set forth in the
second sentence of Section 3. Nothing in this Article VI shall require any such
determination to be made as a condition to making any advance payment of
expenses, unless the Board of Directors so elects.
Section 5. Mandatory Indemnification in Certain Circumstances. To the
extent that a director, officer, employee, or agent has been successful on the
merits or otherwise in the defense of any Proceeding referred to Section 1 or
Section 2 of this Article, or in the defense of any claim, issue, or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Section 6. Right to Indemnification upon Application; Procedure upon
Application. Any indemnification under Sections 1 or 2 shall be made promptly,
and in any event within 60 days of receipt of the written request of the person
who may be entitled thereto following the conclusion of such person's
participation in any Proceeding or 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,
<PAGE>
with respect to any criminal proceeding, such person had reasonable cause to
believe his conduct was unlawful, or (b) in the case of a person who may be
entitled to indemnification under Section 2, such person is not entitled to
indemnification under the standard set forth in the second sentence of Section
3.
Section 7. Enforcement of Rights. The right to indemnification or to an
advance of expenses as granted by this Article shall be enforceable by any
person entitled thereto in any court of competent jurisdiction, if the Board of
Directors or independent legal counsel denies the claim, in whole or in part, or
if no disposition of such claim is made within 100 days of receipt by the Board
of Directors of such person's written request for indemnification or an advance
of expenses. Such person's expenses (including but not limited to attorneys'
fees) incurred in connection with successfully establishing his right to
indemnification or an advance of expenses, in whole or in part, in any such
proceedings shall also be indemnified by the Corporation.
Section 8. Bylaws as Contract; Non-Exclusivity. All rights to
indemnification and advances or 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 of 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. Transfer of Shares. Transfers of Shares of stock of the
<PAGE>
Corporation shall be made on the stock records of the Corporation only upon
authorization by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary or
with a transfer agent, and on surrender of the certificate or certificates for
such shares properly indorsed or accompanied by a duly executed stock transfer
power and the payment of all taxes thereon. Except as otherwise provided by law,
the Corporation shall be entitled to recognize the exclusive right of a person
in whose name any share or shares stand on the record of stockholders as the
owner of such share or shares for all purposes, including, without limitation,
the rights to receive dividends or other distributions, and to vote as such
owner, and the Corporation may hold any such stockholder of record liable for
calls and assessments and the Corporation shall not be bound to recognize any
equitable or legal claim to or interest in any such share or shares on the part
of any other person whether or not it shall have express or other notice
thereof. Whenever any transfer of shares shall be made for collateral security,
and not absolutely, such fact shall be stated in the entry of the transfer if,
when the certificates are presented for transfer, both the transferor and
transferee request the Corporation to do so.
Section 3. Regulations, Transfer Agents and Registrars. The Board of
Directors may make such additional rules and regulations, not inconsistent with
these Bylaws, as it may deem expedient concerning the issue, transfer and
registration of certificates for shares of stock of the Corporation. It may
appoint and change from time to time one or more transfer agents and one or more
registrars and may require all certificates for shares of stock to bear the
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
<PAGE>
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.
<PAGE>
ARTICLE VIII. FISCAL YEAR
The fiscal year of the Corporation shall be the calendar year.
ARTICLE IX. SEAL
The Board of Directors shall provide a corporate seal, which shall be in
such form as the Board of Directors shall determine.
ARTICLE X. AMENDMENTS
These Bylaws may be amended or repealed, or new Bylaws may be adopted, at
any annual or special meeting of the stockholders, by the affirmative vote of
the holders of at least 75 percent of the outstanding Common Stock of the
Corporation; provided, however, that the notice of such meeting shall have been
given as provided in these Bylaws, which notice shall mention that amendment or
repeal of these Bylaws, or the adoption of new Bylaws, is one of the purposes of
such meeting. These Bylaws may also be amended or repealed or new Bylaws may be
adopted, by the Board of Directors by the vote of two-thirds of the entire Board
of Directors.
LOAN AGREEMENT
Louisiana-Pacific Corporation February 3, 1999
111 SW Fifth Avenue
Portland, OR 97204
Gentlemen:
We are pleased to make available to you an uncommitted credit
facility for general corporate purposes on the terms set forth in this
letter.
1. We agree to consider from time to time, in our sole discretion, your
requests that we make Advances (as hereinafter defined) to you, on a
discount basis in an aggregate Stated Amount (as hereinafter defined) not
to exceed at any one time outstanding the amount set forth on Schedule I
hereto as the "Facility Amount, " on the terms and conditions set forth
below. This letter is not a commitment to lend but rather sets forth the
procedures to be used in connection with your requests for our making of
Advances to you from time to time on or prior to the termination hereof
pursuant to Paragraph 11 hereof and, in the event that we make Advances to
you hereunder, your obligations to us with respect thereto. The Advances
shall be evidenced by the "grid" promissory note executed by you in an
amount equal to the amount set forth on Schedule I hereto as the "Facility
Amount", such promissory note to be in substantially the form of the
promissory note attached hereto (the "Note").
2. As used herein, the following terms shall have the following meanings
(terms defined in the singular to have the corresponding meanings when
used in the plural, and vice versa):
"Advance" means any advance that we shall make to you hereunder
pursuant to your request as provided herein. Unless otherwise
required by the context, any reference herein or in the Note to the
amount of an Advance shall be construed to refer to the Discounted
Proceeds thereof actually remitted to you or to your account as
proved herein.
"Discounted Amount" of any Advance means the amount by which the
Stated Amount of such Advance exceeds the Discounted Proceeds of
such Advance.
"Discounted Proceeds" of any Advance means the net proceeds of such
Advance transferred or wired to you or to your account in accordance
with the last sentence of Paragraph 3 hereof.
"Stated Amount" of any Advance means the full stated or face amount
of such Advance, which in all circumstances shall be equal to the
sum of (x) the Discounted Proceeds of such Advance plus (y) the
Discount Amount of such Advance.
3. The Stated Amount of each Advance shall be equal to the amount set forth
on Schedule I hereto as the "Minimum Stated Amount" or any integral
multiple of $1,000 in excess thereof. Each Advance shall be made upon (a)
your request to us by telephone, telecopy or letter, given by any of the
persons listed on Exhibit A hereto or otherwise designated by you in
writing ("Designated Persons") that you wish to borrow money on a
specified date, in a specific amount and for a specified term (which
shall, in no event, be longer than the number of days set forth on
Schedule I hereto as the "Maximum Term"), and (b) our mutual agreement as
to such date and as to the term, the Discount Amount and Stated Amount
applicable to any such Advance. On the date of any such Advance, we will
make such Advance available to you in
<PAGE>
same day funds by directing our administrative agent to transfer or wire
the net proceeds of such Advance to the account designated by you in item
(C) of Schedule I attached hereto or to such other account as may be
designated from time to time by a Designated Person pursuant to written
notice to us.
4. Our agreement and acceptance of this letter, together with your furnishing
us certified copies of resolutions of your board of directors authorizing
Designated Person(s) to execute this letter and any documents delivered
pursuant hereto and to request Advances, together with specimen signatures
of such Designated Persons, shall constitute a representation and warranty
by you that (a) the execution, delivery and performance of this letter has
been duly authorized by all necessary corporate action and does not
contravene any law, or any contractual or legal restriction, applicable to
you and (b) no authorization or approval or other action by, and no notice
to or filing with, any government authority or regulatory body is required
for such execution, delivery and performance or for the making of any
Advance.
5. Each request by you for an Advance shall constitute a representation and
warranty by you, as of the making of such Advance and giving effect to the
application of the proceeds therefrom, that (a) no payment default has
occurred and is continuing under any agreement or instrument relating to
any of your indebtedness, (b) such Advance when made will constitute your
legal, valid and binding obligation, (c) such Advance is being incurred,
and will be repaid at maturity in its full Stated Amount, in the ordinary
course of your business out of the cash flow generated in the normal
day-to-day conduct and operations of your business (to include
refinancings), and (d) no event has occurred and no circumstance exists as
a result of which the information which you have provided to us in
connection herewith would include an untrue statement of a material fact
or omit to state any material fact or any fact necessary to make the
statements contained therein, in light of the circumstances under which
they were made, not misleading. In no event shall an Advance be made if
any of your representations in Paragraph 4 hereof or in this Paragraph 5
shall fail to be true and correct in all respects on the date of such
Advance.
6. You shall repay the full Stated Amount of each Advance in accordance with
the terms hereof and of the Note. You shall have no right to prepay all or
any portion of any Advance or the Stated Amount thereof prior to its
stated maturity.
7. You shall make each payment hereunder and under the Notes on or before
12:00 noon (New York City time) on the day when due in lawful money of the
United States of America to our account, #5591317 , ABA #071000013, The
Centric Capital Corporation Commercial Paper Account at The First National
Bank of Chicago, One First National Plaza, Chicago, Illinois, 60670 in
same day funds. All computations of interest shall be made on the basis of
a year of 360 days, for the actual number of days (including the first day
but excluding the last day) elapsed.
8. Whenever any payment to be made hereunder shall be otherwise due on a
Saturday, a Sunday or other day of the year on which banks are required or
authorized to close in New York City, New York, Winston Salem, North
Carolina or Chicago, Illinois (any other day being a "Business Day"), such
payment shall be made on the next succeeding Business Day.
9. You agree that you will not apply the proceeds of any Advance to purchase
or carry margin stock within the meaning of Regulation G issued by the
Board of Governors of the Federal Reserve System.
10. We shall incur no liability to you in acting upon any telephone, telecopy,
telex or letter request or communication which we believe in good faith to
have been given by a Designated Person or in otherwise acting in good
faith under this letter. Further, all documents required to be executed in
conjunction with Advances under this letter may be signed by any
Designated Person.
11. This letter shall remain in effect until terminated by either you or us by
giving prior written notice of termination hereof to the other party
hereto, but no such termination shall affect your obligations with respect
to the Advances hereunder outstanding at the time of such termination.
<PAGE>
12. All communications hereunder shall be in writing (other than the
communication provided for in the second sentence of Paragraph 15 hereof)
and mailed, telecopied or delivered to the address specified on Schedule I
hereto for you and for us, or as to each party, to such other address as
may be designated by such party in a written notice to the other party.
Written communication shall be effective upon receipt unless such
communication is mailed in which case it shall be effective three Business
Days after deposit in first class mail.
13. We may assign to one or more banks or other entities all or any part of,
or may grant participations to one or more banks or other entities in or
to all or any part of, any Advance or Advances hereunder and under the
Note. You may not assign your rights or obligations hereunder or any
interest herein.
14. You agree to pay on demand all costs, expenses including, but not limited
to, legal fees and losses, if any, incurred by us in connection with the
enforcement of this letter or the Note.
15. You agree to furnish us with such financial statements or other
information as we may reasonably request. You shall immediately notify us
of any change in the short term or long term ratings assigned by any
statistical rating organization to any of your outstanding indebtedness.
16. If any of the following events shall occur and be continuing:
(a) you shall fail to pay any amount due hereunder or under the Note when
the same becomes due and payable; or
(b) any representation or warranty made by you (or any of your officers)
in connection with any Advance or otherwise in connection with the Note
shall prove to have been incorrect in any material respect when made; or
(c) you shall, without our prior written consent, merge or consolidate
with or into, or convey, transfer, lease or dispose of (whether in one
transaction or in a series of transactions) all or substantially all of
your assets to, any person or entity; or
(d) you shall fail to perform or observe any other material term, covenant
or agreement in connection with any Advance or otherwise in connection
with the Note on your part to be performed or observed; or
(e) you shall fail to pay any principal of or premium or interest on any
indebtedness, which we deem to be material (excluding indebtedness
evidenced by the Note), when the same becomes due and payable (whether by
scheduled maturity, required prepayments, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
indebtedness; or any other event shall occur or condition shall exist
under any agreement or instrument relating to such indebtedness and shall
continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such
indebtedness; or any such indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof; or
(f) you shall generally not pay your debts as such debts become due, or
shall admit in writing your inability to pay your debts generally, or
shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against you seeking to adjudicate you
as bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or
composition of you or your debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, custodian
or other similar official for you or any substantial part of your
property; or you shall take any corporate action to authorize any of the
actions set forth above in this subparagraph (f);
<PAGE>
then, and in any such event, we may declare the Note and all amounts
payable thereunder to be forthwith due and payable, whereupon the Note and
all such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind all of which
you hereby expressly waive; provided however, that in the event of an
actual or deemed entry of an order for relief with respect to you under
the Federal Bankruptcy Code, the Note and all such other amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly
waived by you.
17. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF GEORGIA.
18. You agree that you will not institute against or join any other person in
instituting against us any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under any
federal or state bankruptcy or similar law, for one year and a day after
the latest maturing commercial paper note issued by us is paid in full.
19. At our option, we may, upon notice that either Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., or Moody's
Investors Service, Inc. has (i) lowered or downgraded its short term
commercial paper or corporate bond or other short term ratings of you, or
(ii) placed your securities on a watch list of securities singled out for
surveillance, with either negative or developing implications in a Rating
Category, amend Schedule I hereof to provide for an amended "Facility
Amount" and amended "Maximum Term."
20. As long as you shall have any Advances outstanding, you agree that you
will maintain a separate line of credit with a commercial bank, in an
unutilized aggregate amount equal to the aggregate Stated Amount of all
such outstanding Advances.
21. The obligations under this Agreement are solely our corporate obligations.
No recourse shall be had for the payment of any amount owing by us
hereunder or any other obligation or claim of or against us arising out of
or based upon this Agreement against any of our stockholders, employees,
officers, directors or incorporators.
22. You irrevocably agree that any legal action, suit or proceeding against us
arising out of this Agreement may be brought in the United States District
Court for the Northern District of Georgia, or in the courts of the State
of Georgia and hereby irrevocably accept and submit to the non-exclusive
jurisdiction of each of the aforesaid courts in personam, generally and
unconditionally with respect to any action, suit or proceeding for you and
in respect of your properties, assets and revenues. You further
irrevocably agree to the service of any legal process, summons, notices
and documents out of any of the aforesaid courts by mailing copies thereof
by registered or certified air mail, postage prepaid, to you at your
address designated pursuant to this Agreement. Nothing herein shall in any
way be deemed to limit our ability to serve any such legal process,
summons, notices and documents in any other manner, as may be permitted by
applicable law or to obtain jurisdiction over you, or bring action, suits
or proceedings against you in such other jurisdictions, and in such
manner, as may be permitted by applicable law.
<PAGE>
If the terms of this letter are satisfactory to you, please indicate your
agreement and acceptance thereof by signing a counterpart of this letter and
returning it to us.
Very truly yours,
CENTRIC CAPITAL CORPORATION
By: /s/ David L. Corts
-------------------------------------
Wachovia Bank, N.A.
Referral Bank for Centric Funding
Capital Corporation
Agreed and Accepted:
By: /s/ Curtis M. Stevens
-------------------------------
Name & Title: Curtis M. Stevens
----------------------------
Vice President, Treasurer, &
Chief Financial Officer
By: /s/ Lynn L. Miller
Name & Title: Lynn L. Miller
Assistant Treasurer
<PAGE>
SCHEDULE I
to
Loan Agreement dated as of February 3, 1999
between Centric Capital Corporation and Louisiana-Pacific Corporation
(A) For the purposes of Paragraphs 1 and 3 of this Loan Agreement:
The "Facility Amount" is $100,000,000.
The "Minimum Stated Amount" is $5,000,000
The "Maximum Term" is 180 days.
(B) For the purpose of Paragraph 12 of this Loan Agreement:
The address for written communications to you is:
Louisiana-Pacific Corporation
111 S.W. Fifth Avenue
Portland, OR 97204
Attention: Asst. Treasurer
Telephone: 503/821-5307
Fax Number: 503/821-5319
The address for written communications to us is:
Centric Capital Corporation
c/o Wachovia Bank, N.A.
191 Peachtree Street, NE
Atlanta, GA 30303
Attention: David Corts
Mail Code: GA-370
Telephone: 404.332.6756
Fax Number: 404.332.6898
(C) For the purposes of this Loan Agreement, instructions for wire transfer of
funds to you are:
Name of Bank: Bank of America, N.T. & S.A.
Bank ABA Number: 121000358
Account Name: Lousiana-Pacific Corporation
Account Number: 12333-00059
<PAGE>
EXHIBIT A
to
the Loan Agreement
For the purpose of Paragraph 3 of this Loan Agreement, the
"Designated Persons" are:
Name Title
---- -----
Lynn L. Miller Asst. Treasurer
Russell S. Pattee Controller - Financial Reporting
William L. Hebert Director - Business Development
Curtis M. Stevens Vice President, Treasurer & CFO
Anton C. Kirchhof Secretary
<PAGE>
Promissory Note
DATE: February 3, 1999 $100,000,000
FOR VALUE RECEIVED, the undersigned (hereinafter called the "Borrower"), HEREBY
PROMISES TO PAY to the order of Centric Capital Corporation (hereinafter called
the "Lender") the entire Stated Amount (as such term is defined in the Loan
Agreement hereinafter referred to) of each Advance (as defined below) on the
date mutually agreed to by the Lender and the Borrower at the time of such
Advance as the maturity date thereof. Any overdue amount hereunder and any
overdue amount of fees or other amounts payable under the Loan Agreement
referred to below shall bear interest, payable on demand, at a fluctuating
interest rate per annum equal to the Prime Rate plus 2%. As used herein, "Prime
Rate" shall mean the prime rate of U.S. money center commercial banks as
published in the Wall Street Journal. Changes in the Prime Rate shall be
effective as of the day of each such change.
The Borrower shall have no right to prepay all or any portion of any
Advance or the Stated Amount thereof.
The Borrower shall make each payment of principal and interest hereunder
prior to 12:00 noon (New York City time) on the day when due in lawful money of
the United States of America to the Lender's account, The Centric Capital
Corporation Commercial Paper Account, # 5591317, ABA # 071000013 at The First
National Bank of Chicago, One First National Plaza, Chicago, Illinois, 60670 in
same day funds. Whenever any payment to be made hereunder shall be otherwise due
on a day other than a Business Day (as defined in the Loan Agreement) such
payment shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment of interest.
The Borrower hereby authorizes the Lender to endorse on the grid attached
hereto the date and Stated Amount of each Advance made by the Lender to the
Borrower hereunder, the maturity date thereof, the rate of discount applicable
thereto, the Discounted Proceeds and the Discount Amount (as such terms are
defined in the Loan Agreement referred to below) thereof, and all payments made
on account thereof, provided that the failure to do so shall not affect the
obligation of the Borrower to the Lender.
The Borrower also agrees to pay on demand all costs and expenses
(including fees and expenses of counsel) incurred by the Lender in enforcing
this Promissory Note.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF GEORGIA.
This Promissory Note is the "grid" promissory note referred to in, and is
entitled to the benefits of, the Loan Agreement dated February 3, 1999 (the
"Loan Agreement" ), between the Borrower and the Lender, which Loan Agreement,
among other things, sets forth procedures to be used in connection with the
Borrower's periodic requests that the Lender make advances on a discounted basis
(the "Advances") to the Borrower from time to time in an aggregate Stated Amount
not to exceed at any time outstanding the amount first above mentioned.
IN WITNESS WHEREOF, the Borrower has signed this Note by its undersigned
officer duly authorized to do so, the day and year first above written.
LOUISIANA-PACIFIC CORPORATION
By: /s/ Curtis M. Stevens
------------------------------------
Name & Title: Curtis M. Stevens, Vice President, Treasurer & CFO
--------------------------------------------------
By: /s/ Lynn L. Miller
------------------------------------
Name & Title: Lynn L. Miller, Asst. Treasurer
<PAGE>
GRID
Date of Stated Maturity of Rate of Discounted Discounted Date Payment
Advance Amount Advance Discount Proceeds Amount Received
======= ====== ======= ======== ======== ====== ========
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Summary Financial Statements and Notes included in this Form 10-Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 37,500
<SECURITIES> 5,000
<RECEIVABLES> 218,100
<ALLOWANCES> (5,800)
<INVENTORY> 265,800
<CURRENT-ASSETS> 670,200
<PP&E> 2,225,600
<DEPRECIATION> (1,201,100)
<TOTAL-ASSETS> 2,769,200
<CURRENT-LIABILITIES> 504,000
<BONDS> 631,600
0
0
<COMMON> 117,000
<OTHER-SE> 1,122,700
<TOTAL-LIABILITY-AND-EQUITY> 2,769,200
<SALES> 603,100
<TOTAL-REVENUES> 603,100
<CGS> 471,100
<TOTAL-COSTS> 559,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (800)
<INCOME-PRETAX> 44,100
<INCOME-TAX> 17,400
<INCOME-CONTINUING> 27,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,200
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
