<PAGE>
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, 2000
Commission File Number 1-7107
LOUISIANA-PACIFIC CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 93-0609074
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
</TABLE>
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: 104,162,116 shares of Common Stock, $1 par value, outstanding as
of April 30, 2000.
<PAGE>
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 Louisiana-Pacific Corporation ("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, including without limitation, plans for product development,
forecasts or future costs and expenditures, possible outcomes of legal
proceedings and the adequacy of reserves for loss contingencies. These
forward-looking statements are subject to various risks and uncertainties,
including the following:
- Risks and uncertainties relating to the possible invalidity of the
underlying beliefs and assumptions;
- Possible changes or developments in social, economic, business,
industry, market, legal and regulatory circumstances and conditions;
and
- 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.
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(AMOUNTS IN MILLIONS EXCEPT PER SHARE) (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
MARCH 31
-----------------------
2000 1999
---- ----
<S> <C> <C>
Net sales...................................................................... $ 776.9 $ 600.1
--------- ---------
Costs and expenses:
Cost of sales.............................................................. 547.7 468.1
Depreciation, amortization and depletion................................... 61.3 42.8
Selling and administrative................................................. 64.4 46.2
Unusual credits and charges, net........................................... (1.6) --
Interest expenses.......................................................... 17.1 9.0
Interest income............................................................ (8.7) (9.8)
---------- ----------
Total costs and expenses............................................... 680.2 556.3
---------- ----------
Income before taxes and minority interest...................................... 96.7 43.8
Provision for income taxes..................................................... 38.5 17.1
Minority interest in net income (loss) of consolidated subsidiaries............ .5 (.5)
--------- ----------
Net income..................................................................... $ 57.7 $ 27.2
========= =========
Net income per share - basic and diluted....................................... $ .55 $ .26
========= ==========
Average shares outstanding
- Basic............................................................... 104.1 106.2
========= =========
- Diluted............................................................. 104.1 106.3
========= =========
Cash dividends per share....................................................... $ .14 $ .14
========= ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED FINANCIAL
STATEMENTS.
2
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(DOLLAR AMOUNTS IN MILLIONS) (UNAUDITED)
<TABLE>
<CAPTION>
Mar. 31, 2000 Dec. 31, 1999
--------------- ---------------
<S> <C> <C>
ASSETS
Cash and cash equivalents................................ $ 105.8 $ 116.0
Accounts receivable, net................................. 257.0 200.7
Inventories.............................................. 330.5 293.4
Prepaid expenses......................................... 13.5 18.5
Deferred income taxes.................................... 110.8 110.8
------------ ------------
Total current assets............................. 817.6 739.4
------------ ------------
Timber and timberlands................................... 605.3 611.1
Property, plant and equipment............................ 2,557.0 2,537.4
Accumulated depreciation................................. (1,238.4) (1,203.4)
------------ ------------
Net property, plant and equipment........................ 1,318.6 1,334.0
------------ ------------
Goodwill, net of amortization............................ 341.3 347.7
Notes receivable from asset sales........................ 403.8 403.8
Other assets............................................. 48.8 52.2
------------ ------------
Total assets..................................... $ 3,535.4 $ 3,488.2
============ ============
LIABILITIES AND EQUITY
Current portion of long-term debt........................ $ 48.0 $ 44.9
Accounts payable and accrued liabilities................. 295.3 306.5
Income taxes payable..................................... 36.1 9.3
Current portion of contingency reserves.................. 180.0 180.0
------------ ------------
Total current liabilities........................ 559.4 540.7
------------ ------------
Long-term debt, excluding current portion:
Limited recourse notes payable....................... 396.5 396.5
Other long-term debt................................. 614.2 618.3
------------ ------------
Total long-term debt, excluding current portion.. 1,010.7 1,014.8
------------ ------------
Contingency reserves, excluding current portion.......... 126.2 128.8
Deferred income taxes and other.......................... 451.4 443.9
Commitments and contingencies
Stockholders' equity:
Common stock......................................... 117.0 117.0
Additional paid-in capital........................... 443.9 445.4
Retained earnings.................................... 1,119.4 1,076.4
Treasury stock....................................... (238.7) (228.3)
Loans to Employee Stock Ownership Trusts............. (5.2) (6.9)
Accumulated comprehensive loss....................... (48.7) (43.6)
------------ ------------
Total stockholders' equity....................... 1,387.7 1,360.0
------------ ------------
Total liabilities and equity..................... $ 3,535.4 $ 3,488.2
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED FINANCIAL
STATEMENTS.
3
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(DOLLAR AMOUNTS IN MILLIONS) (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------------------------------
2000 1999
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................................ $ 57.7 $ 27.2
Depreciation, amortization and depletion.............................. 61.3 42.8
Cash settlements of contingencies..................................... (4.0) (63.5)
Unusual credits and charges, net...................................... 3.5 --
Other adjustments..................................................... 7.1 5.1
Increase in certain working capital components and
deferred taxes.................................................... (72.1) (.8)
--------- ----------
Net cash provided by operating activities................................. 53.5 10.8
--------- ---------
Cash flows from investing activities:
Capital spending...................................................... (41.7) (28.3)
ABT purchase, including replacement of debt........................... -- (208.6)
Other investing activities, net....................................... 6.3 4.6
--------- ---------
Net cash used in investing activities............................. (35.4) (232.3)
--------- ---------
Cash flows from financing activities:
New borrowings, including net increase in revolving borrowings........ -- 165.0
Repayment of long-term debt........................................... (3.6) (14.9)
Cash dividends........................................................ (14.7) (15.0)
Purchase of treasury stock............................................ (11.2) (0.2)
Other financing activities............................................ 1.2 2.6
--------- ---------
Net cash provided by (used in) financing activities............... (28.3) 137.5
--------- ---------
Net decrease in cash and cash equivalents................................. (10.2) (84.0)
Cash and cash equivalents at beginning of period.......................... 116.0 126.5
--------- ---------
Cash and cash equivalents at end of period................................ $ 105.8 $ 42.5
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED FINANCIAL
STATEMENTS.
4
<PAGE>
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, 1999.
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, results of
operations and cash flows of L-P and its subsidiaries. Certain 1999
amounts have been reclassified to conform to the 2000 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.
<TABLE>
<CAPTION>
Three Months Ended March 31
-----------------------------
(Shares in millions) 2000 1999
-------------- -----------
<S> <C> <C>
Average shares outstanding used to determine
basic income per common share ................... 104.1 106.2
Dilutive effects of stock options granted and ESPP
plan shares ..................................... - .1
----- ------
Average shares outstanding used to determine
fully diluted income per common share ........... 104.1 106.3
===== ======
</TABLE>
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 for the periods include:
<TABLE>
<CAPTION>
Three Months Ended March 31
-----------------------------
(Dollars in millions) 2000 1999
------------- -------------
<S> <C> <C>
Net income ..................................... $ 57.7 $ 27.2
Currency translation adjustment ................ (4.9) (1.9)
Other .......................................... (.2) .3
--------- -------
Total comprehensive income ............. $ 52.6 $ 25.6
======== =======
</TABLE>
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, as amended by SFAS 137, will be effective for L-P beginning
January 1, 2001. L-P is currently determining the impact this statement
will have on the Company's financial statements and related
disclosures.
5
<PAGE>
7. The following table sets forth selected segment data for the quarters
ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
(Dollar amounts in millions) 2000 1999
------------ -----------
<S> <C> <C>
Sales:
Structural products.......................................... $ 494.3 $ 376.1
Exterior products............................................ 64.8 37.8
Industrial panel products.................................... 72.7 53.8
Other products............................................... 104.9 110.5
Pulp......................................................... 40.2 21.9
--------- ---------
Total sales.............................................. $ 776.9 $ 600.1
========= =========
Operating profit (loss):
Structural products.......................................... $ 114.0 $ 74.5
Exterior products............................................ 8.1 7.7
Industrial panel products.................................... 2.6 1.1
Other products............................................... .8 (8.6)
Pulp......................................................... 4.4 (5.9)
Unusual credits and charges, net 1.6 --
General corporate and other expense, net......................... (26.4) (25.8)
Interest income (expense), net................................... (8.4) .8
---------- ---------
Total operating profit................................... $ 96.7 $ 43.8
========= =========
</TABLE>
8. 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.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS.
Sales increased approximately 29% to $776.9 million in the first
quarter of 2000 from $600.1 million in the first quarter of 1999, and L-P had
net income in the first quarter of 2000 of $57.7 million ($.55 per diluted
share) compared to $27.2 million ($.26 per diluted share) in the first quarter
of 1999. Improved market prices for oriented strand board (OSB) and improved
pulp operations were the primary factors for these increases in sales and
earnings. Additionally, increases in sales and profits were due to the
operations of ABT Building Products, Inc. (ABT), which was acquired in February
1999, Le Groupe Forex Inc. (Forex), which was acquired in September 1999, and
certain assets of Evans Forest Products Ltd. (Evans), which were acquired in
November 1999.
L-P operates in five segments: structural products; exterior products;
industrial panel products; other products; and pulp. Structural products is the
most significant segment, accounting for more than 60% of sales during the first
quarter of both 2000 and 1999. 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."
SELECTED SEGMENT DATA
<TABLE>
<CAPTION>
Three Months Ended March 31 Percentage Change
-------------------------------- ---------------------
Dollar Amounts in Millions 2000 1999 00-99
-------------- -------------- ---------------------
<S> <C> <C> <C>
Sales:
Structural products ................. $ 494.3 $ 376.1 +31%
Exterior products ................... 64.8 37.8 +71
Industrial panel products ........... 72.7 53.8 +35
Other products ...................... 104.9 110.5 -5
Pulp ................................ 40.2 21.9 +84
----------- -----------
Total Sales ..................... $ 776.9 $ 600.1 +29
=========== ===========
Operating Profit (Loss):
Structural products ................. $ 114.0 $ 74.5 +53%
Exterior products ................... 8.1 7.7 +5
Industrial panel products ........... 2.6 1.1 +136
Other products ...................... .8 (8.6) +109
Pulp ................................ 4.4 (5.9) +175
Unusual credits and charges, net..... 1.6 -- n/a
General corporate and other
expenses, net ..................... (26.4) (25.8) -2
Interest income (expense), net ...... (8.4) .8 -1,150
----------- -----------
Total Operating Profit .......... $ 96.7 $ 43.8 +121
=========== ===========
</TABLE>
STRUCTURAL PRODUCTS
The structural products segment consists of OSB, plywood, lumber and
engineered wood products (EWP). The significant growth in sales in the
structural products segment in 2000 was primarily due to price and volume
increases in OSB, which were partially offset by lower plywood prices. Lumber
and EWP prices remained constant. Increases in sales volumes were principally
related to the additional capacities acquired through the Forex and Evans
acquisitions.
In the first quarter of 2000, sales volumes increased by 19% over first
quarter 1999 while sales prices increased by 12%. OSB largely drove these
increases through increased market prices and capacity additions through the
acquisition of Forex. These additional sales lead to profitability increases,
which offset higher raw material costs in lumber and EWP and higher production
costs in plywood, EWP and lumber. Log costs increased approximately 2% in the
first quarter 2000 as compared to the first quarter 1999. Additionally, during
the first quarter of 2000, new equipment was installed at several mills, which
resulted in increased down time that negatively impacted operating performance.
7
<PAGE>
EXTERIOR PRODUCTS
The exterior product segment consists of siding and related products
such as soffit, fascia and trim. Sales of OSB-based, hard board and vinyl
exterior products increased in the first quarter of 2000 compared to the
first quarter of 1999, which include only approximately one month of ABT's
operations. The increase in sales of OSB-based exterior products, which are
not included in ABT's operations, was due in part to a demand-driven
conversion of a standard OSB mill into a specialty OSB and siding mill during
the latter part of 1999, and resulted in improved operating performance as
production capacity was more effectively utilized. The increase in profits of
OSB-based exterior products offset losses generated by vinyl exterior
products, while profits generated by hard board exterior products were
essentially flat. The results of vinyl exterior
products were negatively affected by higher raw materials costs.
INDUSTRIAL PANEL PRODUCTS
The industrial panels segment consists of particleboard, medium density
fiberboard (MDF), hardboard and laminated industrial panels. The addition of the
ABT products is the primary reason for the increase in sales and profits in
this segment.
OTHER PRODUCTS
The other products segment includes wood chips, cellulose insulation,
Ireland operations, Alaska operations, moldings and other products. In the first
quarter of 2000, sales for this segment decreased 5% compared to the first
quarter of 1999, primarily due to the sale of the assets of Associated Chemists
Inc. and certain assets from the Alaskan operations, as partially offset by the
increased sales and profits of ABT products. During first quarter 1999, L-P
recognized the write-down of accounts receivable and inventory associated with
Creative Point, Inc. and two California distribution facilities which were
subsequently sold.
PULP
Pulp segment operations improved significantly for the first quarter of
2000 compared to the first quarter of 1999. This improvement was primarily
attributable to sales volumes increasing 8% and sales prices increasing 73%,
which were partially offset by increases in raw material and production costs.
UNUSUAL CREDITS AND CHARGES, NET
In the first quarter of 2000, the Company recorded a $5.0 million ($3.1
million after taxes) gain on insurance recovery for siding related matters and
an impairment charge of $3.4 million ($2.1 million after taxes) to reduce the
carrying value of a polymer plant to its estimated net realizable value. The
remaining net book value and operating results of this plant are not material to
L-P's financial results. L-P anticipates an additional insurance recovery for
siding related matters of approximately $14 million in the second quarter of
2000.
GENERAL CORPORATE EXPENSE, NET
General corporate expense for the first quarter of 2000 compared to the
first quarter of 1999 increased primarily due to increased business development
expenses. Other general corporate expenses remained consistent with the first
quarter of 1999.
INTEREST, NET
Interest expense increased significantly in the first quarter of 2000
as a result of borrowings to finance the ABT, Forex and Evans acquisitions.
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 Item 1, Legal Proceedings, in Part II of this report.
8
<PAGE>
OSB SIDING LITIGATION UPDATE
The following discussion updates, and should be read in conjunction
with, the discussion of L-P's OSB siding litigation set forth in Item 7 of L-P's
annual report on Form 10-K for the year ended December 31, 1999, Management's
Discussion and Analysis of Financial Condition and Results of Operations, under
the subheading "Legal Matters."
Through the first three months of 2000, claimants have continued to
file claims under both the National Settlement and the Florida Settlement;
however, the rate of claim filings has decreased. Subject to completion of the
verification and calculation of individual claim amounts, L-P estimates that
approximately $350 million of claims are eligible for participation in the $125
million second settlement fund. Although L-P has elected to fund the second
settlement fund and expects that payments under the second settlement fund will
commence in May 2000, L-P has not yet been able to assess the impact of the
Second Fund on its total siding liability. See "OSB Siding Matters" in Item 1,
Legal Proceedings, in Part II of this report.
As of March 31, 2000, (i) approximately 280,000 requests had been
received for claim forms for the National Settlement and the Florida Settlement,
compared to 273,000 at December 31, 1999, and (ii) approximately 179,000
completed claim forms for the National Settlement and the Florida Settlement had
been received, compared to 172,000 at December 31, 1999. The average payment
amount for settled claims as of March 31, 2000 and December 31, 1999 was
approximately $5,100. The total number of completed claim forms pending (not
settled) as of March 31, 2000 was approximately 72,000 (approximately 67,000 at
December 31, 1999) with approximately 76,000 claims settled (approximately
76,000 at December 31, 1999) and approximately 31,000 claims dismissed
(approximately 29,000 at December 31, 1999). Dismissal of claims is typically
the result of claims for product not produced by L-P or claims that lack
sufficient information or documentation after repeated efforts to correct those
deficiencies. The average payment amount for claims settled after March 31, 2000
may be significantly impacted by the Second Fund.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations was $54 million in the first quarter of
2000 compared to $11 million used in operations in the first quarter of 1999.
The increase in cash provided by operations resulted primarily from improved
operating results and reduced payments related to contingencies.
Net cash used in investing activities was $35 million in the first
quarter of 2000 compared to net cash used in investing activities of $232
million in the first quarter of 1999. L-P used $209 million of funds to acquire
ABT in February 1999. Capital expenditures for property, plant, equipment and
timber increased in the first quarter of 2000 compared to the same period in
1999, primarily due to acquisitions of equipment to modernize, and thereby
improve the utilization of, current mills. L-P estimates that in 2000 it will
make capital expenditures of approximately $230 million to, among other things,
begin construction on an OSB mill, a veneer mill and two composite decking
plants.
In the first quarter of 1999, L-P borrowed $165 million, primarily to
finance the acquisition of ABT.
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 totaled $106 million at March 31,
2000 compared to $116 million at December 31, 1999. L-P has a $300 million
revolving credit facility under which no borrowings were outstanding at March
31, 2000. This facility is available until 2002. L-P also has a $50 million
(Canadian) revolving credit facility under which no borrowings were outstanding
at March 31, 2000. This facility is available until March 2001. L-P has an
additional approximately $34 million available under a $250 million credit
facility established in connection with acquisitions made in 1999. Borrowings in
an amount equal to approximately $240 million currently mature in June 2000. L-P
has registered under the Securities Act the offer and sale of up to $750 million
of debt securities, which may be offered from time to time in one or more
series. The amount, price, other terms of any such offering will be determined
on the basis of market conditions and other factors existing at the time of such
offering. The proceeds from the sale of such securities are anticipated to be
used by L-P to refinance a portion of its existing indebtedness and for general
corporate purposes.
Changes in L-P's balance sheet from December 31, 1999 to March 31,
2000, include increases of $56 million in accounts receivable and $37 million in
inventories. These increases are a result of seasonal fluctuations in operating
performance.
9
<PAGE>
Contingency reserves, which represent an estimate of future cash needs
for various contingencies (primarily payments for siding litigation
settlements), totaled $306 million at March 31, 2000, of which $180 million is
estimated to be payable within one year. As with all 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.
Litigation-related payments totaled $4 million for the first quarter of 2000.
STOCK REPURCHASE PLAN
As of March 31, 2000, L-P had reacquired approximately 7.9 million
shares for $125 million under an authorization to reacquire up to 20 million
shares from time to time in the open market. L-P reacquired 850,000 shares for
$11.2 million in the first quarter of 2000. L-P had approximately 104 million
shares outstanding at quarter end.
ASSETS HELD FOR SALE
L-P is seeking to sell its Chetwynd, British Columbia pulp mill, which
is presently managed by an unrelated party pursuant to a management agreement
having a term of 24 months that expires in April 2001. In addition, L-P is
exploring the possible sale of the Samoa, California pulp mill. L-P currently
believes it has adequate support for the carrying value of the affected assets
based upon the assumption that L-P will continue to operate the facility.
However, should L-P decide to proceed with a sale of the assets, it is possible
that L-P will be required to record an impairment charge.
In 1996, L-P purchased all the outstanding shares of GreenStone
Industries, Inc., a maker of cellulose insulation. Since that time, GreenStone
has incurred losses. Management is aggressively taking actions to return the
operations to profitability, including implementation of cost-cutting measures,
development of new installers and a reorganization of the sales force. A
significant factor in returning the operations to sustained profitability is the
future cost and availability of waste paper, which is the primary raw material
used in the manufacture of cellulose insulation. Management is exploring options
to secure more stable and cost-efficient waste paper supplies. L-P currently
believes it has adequate support for the carrying value of the GreenStone
assets, including goodwill, and therefore no impairment charge is currently
required. However, it is possible that future analyses will indicate that an
impairment charge is necessary.
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SUMMARY OF PRODUCTION VOLUMES
<TABLE>
<CAPTION>
Three Months Ended March 31
-------------------------------
2000 1999
------------ ---------------
<S> <C> <C>
Oriented strand board panels, million square feet 3/8"
basis ............................................................. 1,357 1,041
Softwood plywood, million square feet 3/8" basis ....................... 268 223
Lumber, million board feet ............................................. 264 260
Wood-based siding, million square feet 3/8" basis ...................... 179 130
Industrial panel products (particleboard, medium density fiberboard
and hardboard), million square feet 3/4" basis .................... 164 142
Engineered I-Joists, million lineal feet ............................... 24 24
Laminated Veneer Lumber (LVL), thousand cubic feet ..................... 2,150 1,749
Pulp, thousand short-tons .............................................. 99 95
</TABLE>
10
<PAGE>
Industry Product Trends
<TABLE>
<CAPTION>
OSB Plywood Lumber Particleboard
--------------------- ----------------- ------------------ ------------------
N. Central Southern Pine Inland
7/16" Basis 1/2" Basis Framing Lumber Industrial
24/16 Span Rating Cdx 3-Ply Composite Prices 3/4" Basis
--------------------- ----------------- ------------------ ------------------
Annual Average
<C> <C> <C> <C> <C>
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
1999 ................... 260 326 401 273
1999 1st Qtr. Avg. ..... 218 318 384 247
1999 4th Qtr. Avg. ..... 234 282 376 286
2000 1st Qtr. Avg. ..... 261 247 384 291
</TABLE>
- -----------------------------
Source: RANDOM LENGTHS
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Certain environmental matters and legal proceedings involving L-P are
discussed below.
ENVIRONMENTAL MATTERS
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 former pulp mill during
the late 1980s and early 1990s. These agreements were subsequently approved by
the U.S. District Court for the District of Alaska. Although KPC sold the mill
site and related facilities in 1999, it remains obligated under these agreements
to undertake certain projects relating to the investigation and remediation of
Ward Cove, a body of water adjacent to the mill site, estimated to cost
approximately $6.7 million (of which approximately $2.0 million had been spent
at March 31, 2000).
In connection with the clean-up of KPC's former log transfer
facilities, the United States Forest Service (the "USFS") has asserted that KPC
is obligated to adhere to more stringent clean-up standards than those imposed
by the Alaska Department of Environmental Conservation. L-P disputes the
authority of the USFS to require KPC to adhere to the more stringent standards.
Adherence to the more stringent standards, if ultimately required, could
substantially increase the cost of the clean-up.
L-P is involved in a number of other environmental proceedings and
activities, and may be wholly or partially responsible for known or unknown
contamination existing at a number of other sites at which it has conducted
operations or disposed of wastes. Based on the information currently available,
management believes that any fines, penalties or other costs or losses resulting
from these matters will not have a material adverse effect on the financial
position, results of operations, cash flows or liquidity 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 OSB product samples
to an industry product certification agency, by L-P's Montrose (Olathe),
Colorado OSB plant. Pursuant to a guilty plea to certain criminal violations
entered in May 1998, (i) L-P paid penalties of $37 million (of which $12 million
was paid in 1998 and the balance was paid in the second quarter of 1999), and
was sentenced to five years of probation and (ii) all remaining charges against
L-P were dismissed. The terms of L-P's probation require, among other things,
that L-P not violate any federal, state or local law.
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
In 1994 and 1995, L-P was 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 purchased or used OSB siding manufactured by L-P. In
general, the plaintiffs in these actions 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.
12
<PAGE>
In June, 1996, the U.S. District Court for the District of Oregon
approved a settlement between L-P and a nationwide class composed of all persons
who own, have owned, or 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 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%) 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.
The settlement requires L-P to contribute $275 million to the
settlement fund. Approximately $269 million of that obligation had been
satisfied at March 31, 2000 through cash payments of $259 million on a
discounted basis. L-P's remaining mandatory contributions to the settlement
fund are due in June 2000 (approximately $2 million), June 2001
(approximately $2 million), and June 2002 (approximately $2 million). In
addition to its mandatory contributions, at March 31, 2000, L-P had paid, on
a discounted basis, approximately $96 million of its two $50 million funding
options, at a cost to L-P of approximately $66 million. L-P was entitled to
pay its mandatory and optional contributions to the settlement fund on a
discounted basis as a result of early payments pursuant to the early payment
program.
At March 31, 2000, the estimated cumulative total of approved claims
under the settlement agreement exceeded the sum of L-P's historical mandatory
and optional contributions and remaining mandatory contributions to the
settlement fund by approximately $375 million. Claims accounting for
approximately $348 million of this excess are eligible for participation in the
$125 million second settlement fund, which represents an alternative source of
payment for such claims. In addition, there were approximately 400 claims that
had been filed that were potentially eligible for participation in the second
settlement fund but that had not yet been processed at April 30, 2000. In
general, only claims filed (or postmarked for filing) on or prior to December
31, 1999 are eligible for participation in the second settlement fund. Between
January 1 and March 31, 2000, approximately 3,000 new claims were filed.
L-P has elected to fund the second settlement fund and expects that
payments under the second settlement fund will commence in May 2000. Holders of
claims who are eligible to participate in the second settlement fund will be
offered a pro rata portion (based upon the amount of their eligible claims in
relation to the total amount of all eligible claims) of $125 million in complete
satisfaction of their claims, which they may accept or reject in favor of
remaining under the original settlement. Eligible claimants who accept their pro
rata share of the second settlement fund may not file additional claims under
the settlement or arbitrate the amount of their payments. Holders of claims who
are eligible to participate in the second settlement fund but who elect not to
participate in the second settlement fund will remain bound by the terms of the
original settlement. Because eligible claimants who elect not to participate in
the second settlement fund will not be eligible to receive payment under the
original settlement prior to August 2004 and will be subject to the risk of the
original settlement terminating, L-P believes that eligible claimants will have
a substantial incentive to elect to participate in the second settlement fund.
Based upon the payments that L-P has committed to make, the original
settlement will continue in effect until at least August 2003. Within 60 days
after June 7, 2003, the Claims Administrator shall notify L-P of the dollar
value of all remaining unfunded and approved claims. L-P shall then have 60
days to notify the Claims Administrator whether L-P elects to fund all such
remaining claims. If L-P elects to fund those claims, then L-P will pay by
the end of the next 12-month period (2004) the greater of: (i) 50% of the
aggregate sum of those claims (with the remaining 50% to be paid by 12 months
thereafter in 2005); or (ii) 100% of
13
<PAGE>
the aggregate sum of those claims, up to a maximum of $50 million (with all
remaining claims paid 12 months thereafter in 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 the date of L-P's election.
If L-P makes all contributions to the original settlement fund required
under the settlement agreement, including all additional optional contributions
as specified above, class members will be deemed to have released L-P from all
claims for damaged OSB siding, except for claims arising under their existing
25-year limited warranty after termination of the settlement agreement. The
settlement agreement does not cover consequential damages resulting from damage
to OSB 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.
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; and the Superior Court
of Dekalb County, Georgia on September 25, 1998. ABT and Abitibi have also been
named as defendants in a putative class action proceeding filed in the Circuit
Court of Jasper County Texas on October 5, 1999. These actions were brought on
behalf of various persons or purported classes of persons (including nationwide
classes) who own or have purchased or installed hardboard siding manufactured or
sold by the defendants. In general, the plaintiffs in these actions have claimed
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 (including consequential damage to the structures on
which the siding was installed), 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.
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 L-P, the ABT Entities and
Abitibi have been named as defendants in a putative class action proceeding
filed in the District Court of Johnson County, Kansas on July 14, 1999. These
actions were brought on behalf of purported classes of persons in Missouri and
Kansas, respectively, who own or have purchased hardboard siding manufactured by
the defendants. In general, the plaintiffs in these proceedings have claimed
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 unspecified compensatory, punitive and other
damages (including consequential damage to the structures on which the siding
was installed), attorneys' fees and other relief.
14
<PAGE>
On May 8, 2000, the Circuit Court of Choctaw County, Alabama, under the
caption FOSTER, ET AL. V. ABTCO, INC., ABT BUILDING PRODUCTS CORPORATION,
ABITIBI-PRICE, INC. AND ABITIBI-PRICE CORPORATION (NO. CV95-151-M),
preliminarily approved a settlement agreement among the defendants and attorneys
representing a nationwide class composed of all persons who own or formerly
owned homes or, subject to limited exceptions, other buildings or structures on
which hardboard siding manufactured by the defendants was installed between
May 15, 1975 and May 15, 2000, excluding persons who timely opt out of the
settlement and certain other persons. Subject to final court approval, the
settlement will, if fully implemented, result in resolution of all claims
that have been asserted by class members in the various proceedings described
above. Under the settlement agreement, class members who have previously made
a warranty claim or have already repaired or replaced their siding will have
until May 15, 2001 to file a claim; class members whose siding was installed
between May 15, 1975 and May 15, 1976 will have at least nine months
following the date on which the settlement becomes final and nonappealable to
file their claims; and all other class members will have twenty-five years
after their siding was installed to file a claim.
Under the settlement agreement, the defendants will be entitled to
elect to make an offer of settlement to an eligible claimant based on the
information set forth in the claim submitted by such claimant, and such
claimant will be entitled to accept or reject the offer. If an eligible
claimant declines the offer, or if no offer is made, such claimant will be
entitled to a payment based on an independent inspection. Such payments will
be based on a specified amount (ranging from $2.65 to $6.21, depending upon
location) per square foot of covered siding that has experienced specified
types of damage, subject to reduction based on the age of the damaged siding
and any failure to paint the damaged siding within stated intervals (except
in the case of damaged siding installed on mobile homes, as to which a
uniform 50% reduction will apply in all circumstances). If applicable,
payments under the settlement will also be subject to reduction to reflect
any warranty payments or certain other payments previously recovered by a
claimant on account of the damaged siding. Under the settlement agreement,
L-P will be required to pay fees of class counsel in the amount of $7
million, as well as expenses of administering the settlement and certain
other costs.
The settlement agreement is subject to final approval by the court
following a fairness hearing presently expected to be held in September of
2000. Potential members of the settlement class may elect to opt out of the
settlement class by making a written request no later than July 31, 2000. The
defendants have the right to withdraw from the settlement if there are
excessive elections to opt out.
The foregoing description of the settlement agreement does not purport
to be complete, and is qualified in its entirety by reference to the full text
thereof, which is filed as Exhibit 10.1 to this report and incorporated herein
by reference.
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 ABT hardboard siding matters will not have a
material adverse effect on the financial position, results of operations, cash
flows or liquidity of L-P.
15
<PAGE>
FIBREFORM WOOD PRODUCTS, INC. PROCEEDINGS
L-P has been named as a defendant in an action filed by FibreForm Wood
Products, Inc. ("FibreForm") in the Superior Court of Los Angeles County,
California on July 13, 1999. The action was subsequently removed by L-P and the
other named defendants to the United States District Court for the Central
District of California. FibreForm has alleged, in connection with failed
negotiations between FibreForm and L-P regarding a possible joint venture, that
L-P and the other defendants engaged in a fraudulent scheme to gain control over
FibreForm's proprietary manufacturing processes under the guise of such
negotiations. FibreForm has alleged fraudulent misrepresentation, negligent
misrepresentation, misappropriation of trade secrets, unfair competition, breach
of contract and breach of a confidentiality agreement by L-P and the other
defendants. FibreForm seeks general, special and consequential damages of at
least $250 million, punitive damages, restitution, injunctive and other relief
and attorneys' fees. L-P believes that FibreForm's allegations are without merit
and intends to defend this action vigorously. Based on the information currently
available, management believes that the resolution of this matter will not have
a material adverse effect on the financial position, results of operations, cash
flows or liquidity of L-P.
OTHER PROCEEDINGS
L-P and its subsidiaries are parties to other legal proceedings. Based
on the information currently available, management believes that the resolution
of such proceedings will not have a material adverse effect on the financial
position, results of operations, cash flows or liquidity of L-P.
CONTINGENCY RESERVES
For information regarding L-P's financial statement reserves for the
estimated costs of the environmental and legal matters referred to above, see
Note 8 of the Notes to financial statements included in Item 8, Financial
Statements and Supplementary Data, in L-P's annual report on Form 10-K for the
year ended December 31, 1999.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
L-P held its Annual Meeting of Stockholders on May 1, 2000, at which
the stockholders of L-P voted on and approved the following:
1. The election of two Class III directors of L-P for terms expiring at the
Annual Meeting of Stockholders in 2002.
2. The approval of the 2000 Employee Stock Purchase Plan.
The voting with respect to each of these matters was as follows:
1. ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
NAME FOR WITHHELD
---- --- --------
<S> <C> <C>
Archie W. Dunham 78,730,510 13,956,777
Mark A. Suwyn 78,717,899 13,969,388
</TABLE>
2. APPROVAL OF THE 2000 EMPLOYEE STOCK PURCHASE PLAN
<TABLE>
<CAPTION>
FOR AGAINST ABSTENTIONS
--- ------- -----------
<S> <C> <C>
90,916,319 1,162,815 608,153
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
<TABLE>
<S> <C>
3.1 Bylaws of L-P as amended September 1, 1999.
16
<PAGE>
10.1 Amendment to Credit Facility, dated as of March 10,
2000, between Louisiana-Pacific Canada Ltd., as
successor to Louisiana-Pacific Acquisition Inc. and
Bank of America, N.A.
10.2 Settlement Agreement, dated May 3, 2000, among ABT
Building Products Corporation, ABTco, Inc.,
Abitibi-Price Corporation, attorneys representing
plaintiffs in hardboard siding class action
litigation and the other parties named therein.
27.1 Financial Data Schedule
</TABLE>
(b) REPORTS ON FORM 8-K
L-P did not file any Current Reports on Form 8-K
during the quarter for which this report is filed.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and 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 10, 2000 By: /s/ GARY C. WILKERSON
------------------------------------
Gary C. Wilkerson
Vice President and General Counsel
Date: May 10, 2000 By: /s/ CURTIS M. STEVENS
------------------------------------
Curtis M. Stevens
Vice President, Chief Financial
Officer and Treasurer
(Principal Financial Officer)
<PAGE>
Exhibit 3.1
LOUISIANA-PACIFIC CORPORATION
INDEX TO BYLAWS
<TABLE>
<CAPTION>
ARTICLE I. STOCKHOLDERS' MEETINGS............................................................1
<S> <C> <C>
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
</TABLE>
ii
<PAGE>
BYLAWS OF
LOUISIANA-PACIFIC CORPORATION
ARTICLE I. STOCKHOLDERS' MEETINGS
Section 1. ANNUAL MEETING. The annual meeting of the stockholders shall
be held on the first Friday in the month of May in each year at 10:30 a.m. or at
such other time or date in April or May of each year as shall be fixed by the
Board of Directors, for the election of directors and the transaction of such
other business as may properly come before the meeting. If the date fixed for
the annual meeting shall be a legal holiday in the place of the meeting, the
meeting shall be held on the next succeeding business day.
Section 2. SPECIAL MEETINGS. Special meetings of the stockholders for
any proper purposes, unless otherwise provided by the law of Delaware, may be
called by the Chairman or pursuant to resolution of the Board of Directors and
shall be called by the Chairman at the request in writing of a majority of the
directors. Business transacted at a special meeting of stockholders shall be
confined to the purpose or purposes of the meeting as stated in the notice of
the meeting.
Section 3. PLACE OF MEETINGS. Meetings of the stockholders may be held
at such places, within or without the State of Delaware, as the Board of
Directors or the officer calling the same shall specify in the notice of such
meeting.
Section 4. NOTICE OF MEETING. Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall, unless otherwise prescribed by statute,
be given not less than ten nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction of the Chairman,
the President, the Secretary, or other persons calling the meeting, to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be given when deposited in the United States mail, postage
prepaid, directed to the stockholder at his address as it appears on the records
of the Corporation. When a meeting is adjourned to another time or place, notice
of the adjourned meeting need not be given provided that the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, the adjournment is for no more than thirty days, and after
the adjournment no new record date is fixed for the adjourned meeting. Notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting if all the conditions of the proviso in the preceding
sentence are not met. At an adjourned meeting, the Corporation may transact any
business which might have been transacted at the original meeting.
Section 5. QUORUM. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a
1
<PAGE>
meeting of stockholders except as otherwise provided by statute or in the
Certificate of Incorporation. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally noticed. The
stockholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Section 6. ORGANIZATION. At each meeting of the stockholders the
Chairman, or in his absence or inability to act, the President, or in the
absence or inability to act of the Chairman and the President, a Vice President,
or in the absence of all the foregoing, any person chosen by a majority of those
stockholders present shall act as chairman of the meeting. The Secretary, or, in
his absence or inability to act, the Assistant Secretary or any person appointed
by the chairman of the meeting, shall act as secretary of the meeting and keep
the minutes thereof.
Section 7. CONDUCT OF BUSINESS. The Board of Directors shall have
authority to determine from time to time the procedures governing, and the rules
of conduct applicable to, annual and special meetings of the stockholders.
Except as otherwise determined by the Board of Directors prior to the meeting,
the chairman of any stockholders meeting shall determine the order of business
and shall have authority in his discretion to adjourn such meeting and to
determine the procedures governing such meeting and to regulate the conduct
thereat, including, without limitation, imposing restrictions on the persons
(other than stockholders of the Corporation or their duly appointed proxies) who
may attend any such stockholders meeting, determining whether any stockholder or
any proxy may be excluded from any stockholders meeting based upon any
determination by the chairman in his sole discretion that any such person has
unduly disrupted or is likely to disrupt the proceedings thereat and specifying
the circumstances in which any person may make a statement or ask questions at
any stockholders meetings.
Section 8. VOTING. Except as otherwise provided by statute, the
Certificate of Incorporation, or any certificate duly filed pursuant to Section
151 of the Delaware General Corporation Law, each stockholder shall be entitled
to one vote on each matter submitted to a vote at a meeting of stockholders for
each share of capital stock held of record by him on the date fixed by the Board
of Directors as the record date for the determination of the stockholders who
shall be entitled to notice of and to vote at such meeting; or if such record
date shall not have been so fixed, then at the close of business on the day next
preceding the day on which notice thereof shall be given. Except as otherwise
provided by statute, these Bylaws, or the Certificate of Incorporation, any
corporate action to be taken by vote of the stockholders shall be authorized by
a majority of the total votes, or when stockholders are required to vote by
class by a majority of the votes of the appropriate class, cast at a meeting of
stockholders by the holders of shares present in person or represented by proxy
and
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entitled to vote on such action. Unless required by statute, or determined by
the chairman of the meeting to be advisable, the vote on any question need not
be by written ballot and may be by such other means as the chairman deems
advisable under the circumstances. On a vote by written ballot, each ballot
shall be signed by the stockholder voting, or by his proxy, if there be such
proxy, and shall state the number of shares voted.
Section 9. PROXIES. Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him by a proxy
signed by such stockholder or his attorney-in-fact. No proxy shall be valid
after the expiration of three years from the date thereof, unless otherwise
provided in the proxy.
Section 10. LIST OF STOCKHOLDERS. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 11. INSPECTORS. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If the inspectors shall not be so appointed or if
any of them shall fail to appear or act, the chairman of the meeting may appoint
inspectors. The inspectors shall determine the number of shares outstanding and
the voting power of each, the number of shares represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and shall receive
votes or ballots, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes or ballots,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the chairman of the
meeting or any stockholder entitled to vote thereat, the inspectors shall make a
report in writing of any challenge, request or matter determined by them and
shall execute a certificate of any fact found by them. No director or candidate
for the office of director shall act as inspector of an election of directors.
Inspectors need not be stockholders.
Section 12. DENIAL OF ACTION BY CONSENT OF STOCKHOLDERS. No action
required to be taken or which may be taken at any annual or special meeting of
the stockholders of the Corporation may be taken without a meeting, and the
power of stockholders to consent in writing, without a meeting, to the taking of
any action is specifically denied.
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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 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
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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 nine, but, by vote of a majority
of the entire Board of Directors or amendment of these Bylaws, the number
thereof may be increased or decreased to such greater or lesser number (not less
than three) as may be so provided. At the first election of directors by the
stockholders, the directors shall be divided into three classes; the term of
office of those of the first class to expire at the first annual meeting
thereafter; of the second class at the second annual meeting thereafter; and of
the third class at the third annual meeting thereafter. At each annual election
held after such classification and election, directors shall be elected to
succeed those whose terms expire, each such newly elected director to hold
office for a term of three years and until his successor is elected or until his
death, resignation, retirement or removal. Except as otherwise provided by
statute or these Bylaws, directors shall be elected at the annual meeting of the
stockholders, and the persons receiving a plurality of the votes cast at such
election shall be elected, provided that a quorum is present at the meeting.
Directors need not be stockholders.
Section 3. PLACE OF MEETINGS. Meetings of the Board of Directors may be
held at such place, within or without the State of Delaware, as the Board of
Directors may from time to time determine or as shall be specified in the notice
or waiver of notice of such meeting.
Section 4. REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at the same place as, the annual meeting of stockholders for the purpose of
electing officers and the transaction of other business. The Board of Directors
may provide by resolution the
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time and place, either within or without the State of Delaware, for holding of
additional regular meetings without other notice than such resolution.
Section 5. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the Chairman, President or any two
directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the State of
Delaware, as the place for holding any special meeting of the Board of Directors
called by them.
Section 6. NOTICE. Notice of any special meeting shall be given
personally or by telephone to each director at least twenty-four hours before
the time at which the meeting is to be held or shall be mailed to each director,
postage prepaid, at his residence or business address at least three days before
the day on which the meeting is to be held; provided that, in the case of any
special meeting to be held by conference telephone or similar communications
equipment, notice of such meeting may be given personally or by telephone to
each director not less than six hours before the time at which the meeting is to
be held. Except as otherwise specifically provided in these Bylaws, neither the
business to be transacted at, nor the purpose of any regular or special meeting
of the Board of Directors need be specified in the notice of the meeting.
Section 7. QUORUM AND MANNER OF ACTING. A majority of the entire Board
of Directors shall be present in person at any meeting of the Board of Directors
in order to constitute a quorum for the transaction of business at such meeting,
except that one-third of the entire Board of Directors present in person at a
meeting shall constitute a quorum if the Chairman is present at the meeting.
Except as otherwise specifically required by statute or the Certificate of
Incorporation, the vote of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the Board of Directors. In the
absence of a quorum at any meeting of the Board of Directors, a majority of the
directors present or, if no director be present, the Secretary may adjourn such
meeting to another time and place. At any adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at the
meeting as originally called. Except as provided in Article III of these Bylaws,
the directors shall act only as a board of directors and the individual
directors shall have no power as such.
Section 8. ORGANIZATION. At each meeting of the Board of Directors, the
Chairman (or, in his absence or inability to act, the President, or in his
absence or inability to act, another director chosen by a majority of the
directors present) shall act as chairman of the meeting. The Secretary (or, in
his absence or inability to act, any person appointed by the chairman) shall act
as secretary of the meeting and keep the minutes thereof.
Section 9. RESIGNATIONS. Any director of the Corporation may resign at
any time by giving written notice of his resignation to the Board of Directors
or Chairman or the President or the Secretary. Any such resignation shall take
effect at the time
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specified therein or, if the time when it shall become effective shall not be
specified therein, immediately upon its receipt; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
Section 10. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Vacancies and
newly created directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and any director so chosen
shall hold office until the next election of the class for which such director
has been chosen and until his successor is elected and qualified, or until his
earlier resignation or removal. When one or more directors shall resign from the
Board of Directors, effective at a future date, a majority of the directors then
in office, including those who have so resigned, shall have power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each director so chosen shall hold
office as provided in this section in the filling of other vacancies.
Section 11. REMOVAL OF DIRECTORS. All or any number of the directors
may be removed at any time, but only for cause and only by the affirmative vote
of the holders of at least 75 percent of the outstanding Common Stock of the
Corporation at a meeting of the stockholders expressly called for that purpose.
A vacancy in the Board of Directors caused by any such removal may be filled by
such stockholders at such meeting, or if the stockholders shall fail to fill
such vacancy, as in these Bylaws provided.
Section 12. COMPENSATION. The Board of Directors shall have authority
to fix the compensation, including fees and reimbursement of expenses, of
directors for services to the Corporation in any capacity, provided, no such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 13. BOARD AND COMMITTEE ACTION WITHOUT MEETING. Any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the Board
of Directors or committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
of Directors or committee.
Section 14. BOARD AND COMMITTEE TELEPHONIC MEETINGS. A director or a
member of a committee designated by the Board of Directors may participate in a
meeting of the Board of Directors or such committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at the meeting.
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
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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 any authority of the Board of Directors.
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ARTICLE IV. EXCEPTIONS TO NOTICE REQUIREMENTS
Section 1. WAIVER OF NOTICE. Whenever notice is required to be given
under these Bylaws, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
Section 2. UNLAWFUL NOTICE. Whenever notice is required to be given
under these Bylaws to any person with whom communication is unlawful, the giving
of such notice to such person shall not be required and there shall be no duty
to apply to any governmental authority or agency for a license or permit to give
such notice to such person. Any action or meeting which shall be taken or held
without notice to any such person with whom communication is unlawful shall have
the same force and effect as if such notice has been duly given.
ARTICLE V. OFFICERS
Section 1. NUMBER, ELECTION AND QUALIFICATION. The elected officers of
the Corporation shall be a Chairman, a President, one or more Vice Presidents
(one or more of whom may be designated Executive Vice President or Senior Vice
President), a Secretary, and a Treasurer. Such officers shall be elected from
time to time by the Board of Directors, each to hold office until the meeting of
the Board of Directors following the next annual meeting of the stockholders and
until his successor is elected and qualified, or until his earlier resignation
or removal. The Board of Directors may from time to time appoint such other
officers (including a Chairman of the Executive Committee, a Controller and one
or more Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers
and Assistant Controllers), and such agents, as may be necessary or desirable
for the business of the Corporation. Such other officers and agents shall have
such duties as may be prescribed by the Board of Directors and shall hold office
during the pleasure of the Board of Directors. Any two or more offices may be
held by the same person. From and after the distribution by G-P of the stock it
presently holds in the Corporation, no person who is serving as an officer or
director of G-P shall concurrently serve as an officer of the Corporation.
Section 2. RESIGNATIONS. Any officer of the Corporation may resign at
any time by giving written notice of his resignation to the Board of Directors,
the Chairman, the President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified
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therein, immediately upon its receipt; and unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Section 3. REMOVAL. Any officer or agent of the Corporation may be
removed either with or without cause, at any time, by the Board of Directors,
except that a vote of a majority of the entire Board of Directors shall be
necessary for the removal of an elected officer. Such removal shall be without
prejudice to the contractual rights, if any, of the person so removed. Election
or appointment of an officer or agent shall not of itself create contract
rights.
Section 4. VACANCIES. A vacancy in any office may be filled for the
unexpired portion of the term of the office which shall be vacant, in the manner
prescribed in these Bylaws for the regular election or appointment of such
office.
Section 5. CHAIRMAN. The Chairman shall be the chief executive officer
of the Corporation, and shall have general direction over the management of its
business, properties and affairs. The Chairman shall preside, when present, at
all meetings of the stockholders and of the Board of Directors and, in the
absence of the Chairman of the Executive Committee, at all meetings of the
Executive Committee. He shall have general power to execute bonds, deeds and
contracts in the name of the Corporation and to affix the corporate seal; to
sign stock certificates; and to remove or suspend such employees or agents as
shall not have been elected or appointed by the Board of Directors. In the
absence or disability of the Chairman, his duties shall be performed and his
powers shall be exercised by the President.
Section 6. PRESIDENT. The President shall be the chief operating
officer of the Corporation and, subject to the direction of the Board of
Directors and the Chairman, he shall have general direction over the operations
of the Corporation. He shall have general power to execute bonds, deeds and
contracts in the name of the Corporation and to affix the corporate seal; and to
sign stock certificates.
Section 7. VICE PRESIDENTS. The several Vice Presidents shall perform
all such duties and services as shall be assigned to or required of them from
time to time, by the Board of Directors or the President, respectively, and
unless their authority be expressly limited shall act in the order of their
election in the place of the President, exercising all his powers and performing
his duties, during his absence or disability. The Board of Directors however,
may from time to time designate the relative positions of the Vice Presidents of
the Corporation and assign to any one or more of them such particular duties as
the Board of Directors may think proper.
Section 8. SECRETARY. The Secretary shall attend to the giving of
notice of all meetings of stockholders and of the Board of Directors and shall
record all of the proceedings of such meetings in a book to be kept for that
purpose. He shall have charge of the corporate seal and have authority to attest
any and all instruments or writings to which the same may be affixed. He shall
keep and account for all books,
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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 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,
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trust, or other enterprise; PROVIDED, HOWEVER, that the Corporation shall
indemnify any such person seeking indemnification in connection with a
Proceeding initiated by such person only if such Proceeding was authorized by
the Board of Directors of the Corporation.
Section 2. EMPLOYEE BENEFIT OR WELFARE PLAN FIDUCIARY LIABILITY. In
addition to any indemnification pursuant to Section 1 of this Article, but
subject to the express exclusions set forth in Section 3 of this Article, the
Corporation shall indemnify any natural person who is or was serving at the
direction or request of the Corporation in a fiduciary capacity with respect to
an employee benefit or welfare plan covering one or more employees of the
Corporation or of an affiliate of the Corporation, or who is or was performing
any service or duty on behalf of the Corporation with respect to such a plan,
its participants or beneficiaries, against all Losses incurred by such person in
connection with any Proceeding arising out of or in any way connected with such
service or performance, to the extent such Losses are insurable under applicable
law but are not covered by collectible insurance or indemnified pursuant to
Section 1 of this Article. This Section is intended to provide a right to
indemnification as permitted by Section 145(f) of the Delaware General
Corporation Law.
Section 3. PERSONS NOT TO BE INDEMNIFIED UNDER SECTION 2. No
indemnification shall be made under Section 2 of this Article to any person
(other than an employee of the Corporation or of an affiliate of the
Corporation) who was or is acting as a lawyer, accountant, actuary, investment
adviser or arbitrator with respect to an employee benefit or welfare plan
against any expense, judgment, fine or amount paid in settlement incurred by
such person in connection with any action, suit or proceeding arising out of or
in any way connected with his actions in such capacity. No indemnification shall
be made under Section 2 of this Article to any person determined (in the manner
prescribed by Section 145(d) of the Delaware General Corporation Law) to have
participated in, or to have had actual knowledge of and have failed to take
appropriate action with respect to, any violation of any of the
responsibilities, obligations or duties imposed upon fiduciaries by the Employee
Retirement Income Security Act of 1974 or amendments thereto or by the common or
statutory law of the United States of America or any state or jurisdiction
therein, knowing such in either case to have been a violation of such
responsibilities, obligations or duties.
Section 4. ADVANCES OF EXPENSES. Except as limited by the other
provisions of this Section, the Corporation shall pay promptly (and in any event
within 60 days of receipt of the written request of the person who may be
entitled to such payment) all expenses (including but not limited to attorneys'
fees) incurred in connection with any Proceeding by any person who may be
entitled to indemnification under Sections 1 or 2 of this Article in advance of
the final disposition of such Proceeding. Notwithstanding the foregoing, any
advance payment of expenses on behalf of a director or officer of the
Corporation shall be, and if the Board of Directors so elects, any advance
payment of expenses on behalf of any other person who may be entitled to
indemnification under Sections 1 or 2 of this Article may be, conditioned upon
the receipt by the Corporation
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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, 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.
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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
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
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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 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.
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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.
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Exhibit 10.1
THIS AMENDMENT TO CREDIT FACILITY ("AMENDMENT"), dated as of March 10,
2000, is entered into between LOUISIANA-PACIFIC CANADA LTD., successor to
Louisiana-Pacific Acquisition Inc. (the "BORROWER") and BANK OF AMERICA, N.A.
(the "LENDER").
RECITALS
A. The Borrower and the Lender are party to the letter agreement dated
September 8, 1999 (the "CREDIT FACILITY") pursuant to which the
Lender has extended credit to the Borrower to help finance the
acquisition of Le Groupe Forex, Inc.
B. The Borrower has requested that the Lender extend the maturity date
of the Credit Facility and agree to certain other amendments to the
Credit Facility.
C. The Lender is willing to extend the maturity date of the Credit
Facility, and to amend the Credit Facility, subject to the terms
and conditions of this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINED TERMS. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings, if any, assigned to
them in the Credit Facility.
2. AMENDMENTS TO CREDIT FACILITY.
(a) Section 1(c) of the Credit Facility shall be amended by
deleting clause (i) in the first paragraph thereof and
replacing it with the following new clause (i): "(i) (A)
from and including the Closing Date through and including
March 12, 2000, the Offshore Rate PLUS 0.575%, (B) from
and including March 13, 2000 through and including June
30, 2000, the Offshore Rate PLUS 0.70% and (C) from and
including July 1, 2000 through and including the Maturity
Date, the Offshore Rate PLUS 1.00%; or".
(b) The definition of "Maturity Date" in Exhibit A of the
Credit Facility shall be amended by deleting such
definition in its entirely and replacing it with the
following new definition:
"Maturity Date: September 30, 2000."
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3. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants as follows:
(a) No Default or Event of Default has occurred and is continuing.
(b) The execution, delivery and performance by the Borrower of this
Amendment has been duly authorized by all necessary corporate
and other action and do not and will not require any
registration with, consent or approval of, notice to or action
by, any person (including any governmental agency) in order to
be effective and enforceable. This Amendment has been duly
executed and delivered by the Borrower. The Credit Facility as
amended by this Amendment constitutes the legal, valid and
binding obligations of the Borrower, enforceable against it in
accordance with its respective terms, without defense,
counterclaim or offset.
(c) All representations and warranties of the Borrower contained in
the Credit Facility are true and correct.
(d) The Borrower is entering into this Amendment on the basis of
its own investigation and for its own reasons, without reliance
upon the Lender or any other person.
4. EFFECTIVE DATE. This Amendment will become effective on the date
upon which the Lender has received from the Borrower a duly
executed original or facsimile of this Amendment, together with a
duly executed original or facsimile Guarantor Acknowledgment and
Consent in the form attached hereto.
5. RESERVATION OF RIGHTS. The Borrower acknowledges and agrees that
the execution and delivery by the Lender of this Amendment, shall
not be deemed to create a course of dealing or otherwise obligate
the Lender to forbear or execute similar amendments under the same
or similar circumstances in the future.
6. MISCELLANEOUS.
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Credit Facility are and shall remain in full
force and effect and all references therein to such Credit
Facility shall henceforth refer to the Credit Facility as
amended by this Amendment. This Amendment shall be deemed
incorporated into, and a part of, the Credit Facility.
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(b) This Amendment shall be binding upon and inure to the benefit
of the parties hereto and thereto and their respective
successors and assigns. No third party beneficiaries are
intended in connection with this Amendment.
(c) This Amendment shall be governed by and construed in accordance
with the law of the State of California (without regard to
principles of conflicts of laws).
(d) This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same
instrument.
(e) This Amendment, together with the Credit Facility, contains the
entire and exclusive agreement of the parties hereto with
reference to the matters discussed herein and therein. This
Amendment supersedes all prior drafts and communications with
respect thereto. This Amendment may not be amended except in
accordance with the provisions of Section 6(a) of the Credit
Facility.
(f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such
provision shall be invalidated without affecting the remaining
provisions of this Amendment or the Credit Facility,
respectively.
(g) Borrower covenants to pay to or reimburse the Lender, upon
demand, for all costs and expenses (including allocated costs
of in-house counsel) incurred in connection with the
development, preparation, negotiation, execution and delivery
of this Amendment and any other document executed and delivered
in connection herewith, including without limitation appraisal,
audit, search and filing fees incurred in connection therewith.
(h) Borrower represents and warrants to Lender that, after the
effectiveness of the Credit Facility, Louisiana-Pacific
Acquisition Inc. was duly wound up and dissolved with its
assets distributed to, and liabilities assumed by, its sole
shareholder, the Borrower, and that pursuant to such
transaction Borrower acquired and assumed all of the rights,
liabilities and obligations of Louisiana-Pacific Acquisition
Inc. under the Credit Facility. Without in any way limiting the
legal effect of the transaction described above, Borrower
confirms that it assumes and will perform and observe all
obligations of the "Borrower" under and as defined in the
Credit Facility.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
LOUISIANA-PACIFIC CANADA LTD.
By: /s/ Curtis M. Stevens
---------------------------------------------------
Title: Vice President, Treasurer and Chief
Financial Officer
------------------------------------------------
BANK OF AMERICA, N.A.
By: /s/ Michael Balok
--------------------------------------------------
Title: Managing Director
------------------------------------------------
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<PAGE>
GUARANTOR ACKNOWLEDGMENT
AND CONSENT
The undersigned, a guarantor with respect to the Borrower's obligations
to the Lender under the Credit Facility, hereby (i) acknowledges and consents to
the execution, delivery and performance by Borrower of the foregoing Amendment
to Credit Facility ("AMENDMENT"), and (ii) reaffirms and agrees that the
guaranty to which the undersigned is party and all other documents and
agreements executed and delivered by the undersigned to the Lender in connection
with the Credit Facility are in full force and effect, without defense, offset
or counterclaim. (Capitalized terms used herein have the meanings specified in
the Amendment.)
LOUISIANA-PACIFIC CORPORATION
Dated: March 10, 2000 By: /s/ Curtis M. Stevens
----------------------- -----------------------------------------
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Exhibit 10.2
IN THE CIRCUIT COURT OF CHOCTAW COUNTY, ALABAMA
THOMAS A. FOSTER and LINDA E. Civil Action No. CV95-151-M
FOSTER, et al.
Plaintiffs, NATIONAL CLASS ACTION
SETTLEMENT AGREEMENT
v.
ABTco, INC., ABT BUILDING PRODUCTS
CORP., ABITIBI-PRICE, INC. and ABITIBI-
PRICE CORP.,
Defendants.
- ---------------------------------------
RECITALS
The Settlement Class Representative Plaintiffs in this Action
represent owners of structures throughout the United States on which Hardboard
Siding manufactured by the Defendants was installed prior to the Initial Notice
Date in this Action. The Settlement Class Representatives allege that the
Hardboard Siding manufactured by Defendants at the facility in Roaring River,
North Carolina and installed on structures owned by the Settlement Class Members
has buckled, discolored and deteriorated and caused damage to other parts of the
structures. Plaintiffs allege that the warranties applicable to such hardboard
siding contain unconscionable limitations and exclusions, and that the
warranties have failed of their essential purpose, and seek money damages and
other relief as a result.
Defendants deny all such allegations. However, they have
agreed to enter into this Settlement in order to put to rest all controversy and
to avoid the further expense and burdensome, protracted litigation which would
be involved in defending this and any future actions, without in any way
acknowledging any fault or liability on their part. For their part, although
Plaintiffs' Class Counsel are confident of their contentions and arguments, they
recognize that there are significant legal and factual obstacles to a successful
prosecution of this
<PAGE>
Action; that it would involve time consuming and lengthy proceedings to resolve
them; and that the ultimate outcome would be uncertain.
In order to provide meaningful, immediate relief to the
Settlement Class Members and to resolve through compromise in a fair,
appropriate manner the many contentious legal and factual issues involved in
this Action, the Settlement Class Representatives, through their Class Counsel,
have negotiated a siding repair program available to all Settlement Class
Members regardless of when their Siding was installed. This Settlement Agreement
provides immediate payments to Settlement Class Members with Damaged Siding
under a Compensation Formula that takes into account the cost of removal and
replacement of the Siding; the length of time the Siding has been on the
structure; whether the Siding has been painted periodically; and the location of
the damage on the structure. The Parties believe this formula is a reasonable
and appropriate means of determining the amount to be paid to Settlement Class
Members to settle fully their claims in a prompt and equitable manner.
This Settlement Agreement provides substantial monetary and
non-monetary benefits to Settlement Class Members whose Hardboard Siding
experiences Compensable Damage. Among other things, the Settlement Agreement
provides increased compensation for failed Siding with fewer procedural or
substantive conditions to payment, is based on compensation for current labor
and materials costs to repair or replace Siding (as opposed to reimbursing
Settlement Class Members only for one or two times the original cost of the
materials or for the original installation costs), extends the benefits of the
Settlement Agreement to subsequent owners or transferees of Properties with
Hardboard Siding, extends the benefits of the Settlement Agreement to Persons
who previously settled warranty claims without legal representation, even if
future claims were released in such settlements, permits Settlement Class
Members who already have repaired or replaced their Siding to recover under the
Settlement Agreement without regard to the notice requirements of the original
warranty, acknowledges and provides for special circumstances, such as where the
Property has been listed for sale, where significant water intrusion is being
experienced, or where the style of the Damaged Siding is not
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<PAGE>
practicably available, involves simplified claim forms and claim procedures,
permits in appropriate circumstances an "Accelerated Payment" by Defendants, and
contains built-in protections to insure that the Settlement Agreement is
administered fairly in accordance with the terms of this Agreement, including
audit procedures by Class Counsel and the right of all Class Members to obtain
an inspection of their Property conducted by Independent Inspectors.
With limited exceptions, the improved terms of the Settlement
Agreement will be available to all Settlement Class Members for twenty-five (25)
years from the Date of Installation of the Settlement Class Members' Hardboard
Siding. In addition, the ABT Defendants have agreed for a minimum of two
additional years to provide the Enhanced Warranty that is attached to this
Settlement Agreement to Persons who purchase ABT Siding and to undertake their
best efforts to put copies of the new Enhanced Warranty and the company's Owner
Installation and Maintenance Instructions into the hands of such Property
Owners.
NOW, THEREFORE, THIS SETTLEMENT AGREEMENT is entered into this
3rd day of May, 2000, by and among (a) the Settlement Class Representative
Plaintiffs in this case, for themselves and on behalf of the plaintiff
settlement class as hereinafter defined; and (b) Defendants ABTco, Inc. and ABT
Building Products Corp.; and Defendants Abitibi-Price, Inc. and Abitibi-Price
Corporation.
Subject to Court approval and such additional discovery and
investigations as Plaintiffs' Class Counsel deem necessary or appropriate, and
as required by the United States Constitution and the Alabama Rules of Civil
Procedure, it is hereby stipulated and agreed by the Parties that upon the entry
by the Court of a Final Order and Judgment approving the settlement and
directing its implementation, this Action shall be settled and compromised upon
the terms and conditions set forth below.
1. DEFINITIONS
As used in this Agreement and in the attached Exhibits, the following
definitions apply to this Agreement:
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<PAGE>
1.1 ABITIBI DEFENDANTS means defendants Abitibi-Price, Inc. and
Abitibi-Price Corp., all of their present or former parents, subsidiaries or
affiliates, and/or all of their present or former directors, officers,
employees, successors, agents and assigns.
1.2 ABITIBI SIDING means Hardboard Siding manufactured between
December 22, 1969 and October 19, 1992 at the Roaring River, North Carolina
facility and that is or has been installed on the Property of a Settlement Class
Member, excluding any such products that were labeled and sold by the Abitibi
Defendants as B-grade, shop, or cull.
1.3 ABT DEFENDANTS means defendants ABTco, Inc. and ABT Building
Products Corp., all of their present or former parents, subsidiaries or
affiliates, and all of their present or former directors, officers, employees,
successors, agents and assigns.
1.4 ABT SIDING means Hardboard Siding manufactured at the Roaring
River, North Carolina facility on or after October 20, 1992, and that is or has
been installed on the Property of a Settlement Class Member on or before the
Initial Notice Date, excluding any such products that were labeled and sold by
the ABT Defendants as B-grade, shop or cull.
1.5 ACTION means the above-captioned action, THOMAS A. FOSTER, ET
AL. V. ABTCO, INC., ET. AL, Case No. CV-95-151-M, Circuit Court of Choctaw
County, Alabama.
1.6 ADMINISTRATIVE EXPENSES means the costs and expenses to be
paid by Defendants in connection with the Settlement of this Action, as more
particularly set forth in Section 4, below.
1.7 AGREEMENT or SETTLEMENT AGREEMENT means this Settlement
Agreement, including all Exhibits.
1.8 ATTORNEY FEES AND EXPENSES means the reasonable amounts
awarded by the Court as compensation for the services provided by Plaintiffs'
Class Counsel and as reimbursement of their reasonable costs and expenses
(including expert or consulting witness fees and expenses), as provided in
Paragraph 14.3, below.
1.9 CLAIM means a request for payment for Damage or for
reimbursement of an Unreimbursed Repair submitted to the Claims Office under
this Settlement Agreement.
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<PAGE>
1.10 CLAIM FOR UNREIMBURSED REPAIR means a Claim in the form
attached to this Agreement as Exhibit A and filed by a Settlement Class Member
who seeks reimbursement of costs or expenses incurred to repair or replace
Siding prior to submission of a Claim.
1.11 CLAIM FORM means the simplified Claim Forms for submitting
Claims under the terms of this Settlement Agreement, attached hereto as Exhibits
A, B and C.
1.12 CLAIMANT means any Person who submits a Claim during the term
of this Agreement.
1.13 CLAIM PERIOD means (a) with respect to each Claim (other than
a Claim for Unreimbursed Repair or a Prior Claim), twenty-five (25) years after
the Date of Installation; (b) with respect to a Prior Claim, twelve (12) months
from the Initial Notice Date; and (c) with respect to a Claim for Unreimbursed
Repairs for which the repair or replacement was commenced prior to or within six
(6) months following the Initial Notice Date without actual notice of this
Settlement Agreement, the Claim Period is twelve (12) months from the Initial
Notice Date.
In the event the Final Order and Judgment approving this
Settlement is appealed, and Defendants do not implement its terms for Settlement
Class Members during the pendency of the appeal, the Claims Period for Claims
involving Prior Claims or Claims for Unreimbursed Repairs shall be extended and
shall expire no earlier than nine (9) months following the Settlement Date.
A Claim shall be deemed "filed" or "submitted" as of the date
of its postmark when mailed first class, registered or certified mail, postage
prepaid and properly addressed to the Claims Office, or when delivered to any
commercial one or two-day delivery service if properly addressed to the Claims
Office, or when actually received by the Claims Office, whichever is first.
In all events, claims filed on behalf of Class Members whose
siding was installed between May 15, 1975 and May 15, 1976 shall have at least 9
months following the Settlement
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<PAGE>
Date within which to file a Claim, and the applicable age and paint deductions
shall be tolled as to such claim between the Initial Notice Date and the
Settlement Date.
1.14 CLAIMS OFFICE means the office or department established by
the Defendants for the purpose of implementing the Settlement Agreement.
1.15 SETTLEMENT CLASS REPRESENTATIVES or SETTLEMENT CLASS
REPRESENTATIVE PLAINTIFFS means Thomas Foster, Linda Foster, Nancy Fiedler,
Daniel Gaines, William Dunn, Jerry Kolar and Verdis Sheffield, the named
plaintiffs in this Action.
1.16 COMPENSABLE DAMAGE means, with respect to Site-Built
Structures, Damage that is not Excluded Damage, and with respect to Mobile
Homes, any panel siding that has sustained Damage.
1.17 COURT means the Circuit Court of Choctaw County, in which the
Action is pending.
1.18 DAMAGE, DAMAGES and DAMAGED as it relates to Hardboard
Siding means any of the following:
a. thickness swell in excess of 15% of the Defendants'
maximum standard tolerance, that is, a total measure
of 0.604" for Siding with a nominal thickness of
one-half (1/2) inch and a total measure of 0.518" for
Siding with a nominal thickness of 7/16 inch;
b. edge checking, where a feeler gauge of 0.025"
thickness and one-half inch width can be inserted
one-half inch into a suspected delaminated edge with
moderate hand pressure;
c. fungal or other moisture induced degradation which
results in soft board in which moderate thumb
pressure deforms, indents or punches a hole in the
board;
d. buckling, warping or bowing of Siding in excess of
1/4" between studs spaced not more than 16" inches on
center and 5/8" between studs spaced more than 16"
and not more than 24" on center. Waviness or apparent
warping, buckling or bowing of Siding is not
considered to constitute Damage if such is due to the
Siding conforming to the curvature of misaligned
framing;
e. wax bleed, raised or popped fibers or fiber bundles,
where the condition exists on more than 20% of the
exposed board surface and, in the case of
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wax bleed, where the Siding in question was painted
within two years of the date of the claim. "Wax
Bleed" does not include paint discoloration;
f. delaminated or cracked primer or primer peel, or
peeling, blistering, flaking, chipping, cracking or
other loss of adhesion of the original factory
finish;
g. separation of the Fusion Finish-TM- overlay from the
substrate.
Damage does not include (i) intentional, reckless or negligent
physical damage to Siding (unrelated to installation or maintenance or weather)
caused directly or indirectly by a Claimant or other Person; or (ii) conditions
requiring routine painting, washing, caulking or similar maintenance; or (iii)
damage to Siding to the extent resulting from natural disaster including, but
not limited to, fire, hurricane, flood, earthquake, earth movement, or other
similar force majeure events.
1.19 DAMAGE PAYMENT
a. With respect to SITE BUILT STRUCTURES, Damage Payment
means the amount payable to Settlement Class Members
under this Settlement Agreement calculated in
accordance with the compensation formula A =[(CD) x
(RC)]-D where A is the Damage Payment, CD is the
amount of Compensable Damage, RC is the Replacement
Cost, and D is the applicable Deductions.
b. With respect to MOBILE HOMES, Damage Payment means
50% of the applicable Replacement Cost times the
number of panels on the mobile home evidencing Damage
without any other Age or Non-Painting Deduction.
c. All Damage Payments shall be in the amounts and paid
at the times provided in this Settlement Agreement
calculated in strict accordance with the provisions
of this Agreement; provided that the payments to
Settlement Class Members who file a Claim for
Unreimbursed Repair shall not exceed the lesser of
the reasonable and properly documented out-of-pocket
costs of the repairs or replacements or the amount
that would have been awarded under the compensation
formula; and provided, further that any amounts
payable under this compensation formula shall be
reduced by any compensation received by the
Settlement Class Member on account of such Damaged
Siding from any other source, including but not
limited to Defendants, builders, developers,
contractors, manufacturers, wholesalers, retailers or
insurers, but only to the extent that the sum of such
other payments and the Damage Payment exceeds the
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<PAGE>
product of Replacement Cost multiplied times the
total square footage of the Siding that has sustained
Damage.
d. If any portion of a piece of lap or panel Siding has
sustained both Excluded Damage and Compensable
Damage, the entire surface area of that lap board or
panel Siding will be deemed to be Compensable Damage
in calculating the Damage Payment.
e. Compensable Damage to any Siding, the production of
which has been discontinued or is discontinued before
or during the Term of this Agreement and for which
there is no reasonably appropriate substitute, shall
be entitled to payment as follows: (i) if 30% or more
of any Side of a Property has sustained Compensable
Damage, then the Compensation Formula shall include
all of the remaining Siding on that Side as
Compensable Damage; or (ii) if 40% or more of the
Siding on the entire Property has sustained
Compensable Damage, then the Compensation Formula
shall include all of the remaining Siding on the
Property as Compensable Damage. The Parties agree
that no reasonable substitute exists to match the
following list of currently discontinued profiles: 4"
OC Fir, Redwood Panel, 9" Plain Beaded, Band Sawn
Lap, System 25 Great Random Shake, Textured Panel,
and Bevelside-4 Fir.
1.20 DATE OF THE CLAIM means the date on which a properly
documented Claim under this Settlement Agreement is postmarked when mailed first
class, registered or certified mail, postage prepaid and properly addressed to
the Claims Office, or when delivered to any commercial one or two-day delivery
service, if properly addressed to the Claims Office, or when actually received
by the Claims Office, whichever is first.
1.21 DATE OF INSTALLATION means the date or approximate date that
Hardboard Siding was installed on the Property of a Settlement Class Member.
With respect to Siding originally installed on a newly constructed Property, in
the absence of other reasonable documentation indicating a different
installation date, the Date of Installation will be presumed to be the later of
the date of (a) manufacture as identified by any stamp on the back of Claimant's
sample submitted with a Claim or otherwise identified by a stamp on the back of
Claimant's Siding, (b) the certificate of occupancy, (c) the first purchase of
the newly constructed Property having such Siding installed, or (d) with respect
to Mobile Homes, the date of the original bill of sale.
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1.22 DEDUCTIONS, as they relate to Site Built Structures, means the
following:
a. AGE DEDUCTION
i. No deduction for the first year following
the Date of Installation;
ii. 4% per year thereafter.
b. NON-PAINTING DEDUCTION
i. No deduction for the first five years
following the Date of Installation;
ii. No deduction if Siding was repainted within
five years from Date of Installation and at
least once each five years thereafter;
iii. If Siding is not painted within five years
from Date of Installation, 4% per year
commencing at the end of the fifth year from
the Date of Installation until the earlier
of (a) the date painted; or (b) the Date of
the Claim;
iv. If Siding is not painted within seven years
from Date of Installation, 4% per year
commencing at the end of the fifth year from
the Date of Installation until painted and
an additional 1% per year commencing at the
end of the seventh year from the Date of
Installation until the earlier of (a) the
date painted; or (b) the Date of the Claim;
v. If the Siding has been painted since the
Date of Installation, 4% for each year from
the end of the fifth year following the
previous painting until the earlier of (a)
the date painted; or (b) the Date of the
Claim.
vi. The Non-Painting Deduction shall be
suspended as of the date the Damage occurs
(but not as to any later, unrelated Damage)
provided that the fact such Damage occurred
on such date is verified by the filing of an
earlier warranty, insurance or other claim,
an independent inspection, or other evidence
which reasonably establishes the fact and
amount of such Damage.
c. The Age Deduction and the Non-Painting Deduction
applicable to a Claim for an Unreimbursed Repair
shall be calculated as of the date the repair was
commenced.
d. The Age Deduction and Non-Painting Deduction
applicable to a Prior Claim shall be calculated only
to the date the Prior Claim was submitted to the
Defendants.
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1.23 DEFENDANTS means the Abitibi Defendants and the ABT
Defendants.
1.24 ELIGIBLE CLAIMANT means a Settlement Class Member who timely
submits a Claim under this Settlement Agreement and substantially complies with
the requirement to supply all information and materials required by this
Settlement Agreement in support of his or her Claim, and who meets any of the
following requirements:
a. a current owner of Property on the Initial Notice
Date; or
b. a current or former owner of Property on the Initial
Notice Date who incurred an Unreimbursed Repair Cost;
or
c. a current or former owner of Property on the Initial
Notice Date who made a Prior Claim (regardless of
whether such owner signed or executed a release of
claims except as provided in PARA 1.50(b) where legal
proceedings have been initiated); or
d. the current owner of Property who is a
successor-in-interest or other proper assignee of any
former owner of the Property who incurred an
Unreimbursed Repair Cost or made a Prior Claim.
e. Eligible Claimants may appoint a designated agent
(e.g., an attorney or a contractor) to assist or
represent him/her in connection with the filing of a
Claim provided that, except as provided in paragraph
1.24(d), the Claim may only be filed by and in the
name of the Eligible Claimant and may not be assigned
to a third party for collection or otherwise.
1.25 ENHANCED WARRANTY means the new 25-year Enhanced Warranty
attached to this Settlement Agreement as Exhibit D.
1.26 EXCLUDED DAMAGE ON SITE BUILT STRUCTURES means Damage which is
excluded from the calculation of Compensable Damage occurring on Site-Built
Structures, as follows:
a. BUCKLING of any piece of Hardboard Siding
i. that is attached to studs that are placed
more than 24" on center or, in the case of
7/16" lap siding, that is attached to studs
that are placed more than 16" on center; or
ii. that is not in contact with the stud or
sheathing at the point where there are
missing nails or where nails do not
penetrate into the studs.
b. DETERIORATION occurring on any piece of Hardboard
Siding that is:
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i. installed within 6" from the ground or
within 1" from hardscape (e.g., driveways,
patios, sidewalks);
ii. installed at roof/wall intersections and
which has less than a 1" cut back between
the intersections;
iii. in direct contact with un-flashed masonry
and concrete surfaces;
iv. within 8" around the perimeter of windows,
doors and other openings;
v. within 12" from the roof line on the
backside of chimney chases that do not have
a "cricket" or "saddle" to direct water flow
away from the chimney.
c. EXCLUDED DAMAGE also includes:
i. all Damage that is readily observable and
that is horizontal or runs downward from and
is continuous with and originates
exclusively from the Excluded Damage. (Any
doubts as to whether Damage is continuous
with and originates exclusively from
Excluded Damage shall be resolved in favor
of the Claimant.); or
ii. any Damage to Hardboard Siding that is not
used on the structure as Siding (e.g.,
Siding that is ripped and used as trim or
band board).
1.27 FAIRNESS HEARING means the settlement approval hearing(s) to
be conducted by the Court in connection with the determination of the fairness,
adequacy and reasonableness of this Agreement in accordance with Ala. R. Civ. P.
23(e).
1.28 FIELD INSPECTION REPORT means the report, in a form to be
mutually agreed upon by the Parties, to be completed by the Independent
Inspector firm when conducting an inspection of a Property.
1.29 FINAL ORDER AND JUDGMENT means the Order to be entered by the
Court, in a form that is mutually agreeable to the Parties, approving this
Agreement as fair, adequate and reasonable and in the best interests of the
Class as a whole in accordance with Ala. R. Civ. P. 23(e), and making such other
findings and determinations as are necessary and appropriate to effectuate the
terms of this Agreement.
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1.30 HARDBOARD SIDING or SIDING means lap or panel hardboard siding
manufactured by the Abitibi Defendants between December 22, 1969 and October 19,
1992, and by the ABT Defendants since October 20, 1992, at the manufacturing
facility in Roaring River, North Carolina, and which was installed on a Property
prior to the Initial Notice Date. The capitalized terms Hardboard Siding and
Siding as used herein include only hardboard forms of siding, and do not include
siding manufactured from plywood, T-111, vinyl, fiber-cement or other materials
or processes, nor do those terms include hardboard siding manufactured by the
Defendants at any manufacturing facilities other than the Roaring River, North
Carolina manufacturing plant.
1.31 INDEPENDENT INSPECTOR means the firm(s) or person(s) retained
by mutual agreement of the Parties, with the approval of the Court, to inspect
Properties in accordance with the terms of this Agreement.
1.32 INITIAL NOTICE DATE means the first date upon which the Notice
of Proposed Class Action Settlement is either mailed to the Settlement Class
Members or published pursuant to the Notice Plan approved by the Court.
1.33 MOBILE HOME means a structure meeting all of the following
requirements: (a) that is built in a manufacturing facility that is designed to
fabricate and assemble family dwellings; (b) that have Vehicle Identification
Numbers (VIN), (c) that are sided predominately (more than 50%) with panel
Siding, and (d) that subsequent to their manufacture, are transported to a
remote location for final installation. Manufactured homes (such as modular
homes) that do not meet these criteria are considered Site-Built Homes but may
elect to be treated as Mobile Homes if they are sided predominantly with panel
siding. Any such election must be made at the time the Claimant submits his or
her Claim Form.
1.34 NOTICE ADMINISTRATOR means the firm(s) hired to implement the
Notice Plan.
1.35 NOTICE OF PROPOSED CLASS ACTION SETTLEMENT means the
Court-approved Notice to Class Members of Proposed Settlement in the form
attached as Exhibit E to this Agreement and any additional notices agreed to by
the Parties that may be ordered by the Court.
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1.36 NOTICE PLAN means the plan and schedule for providing
class-wide notice of the Settlement and certification of the Settlement
Class, including the Notice of Proposed Class Action Settlement and summary
forms of notice, all as more particularly described in Exhibit F hereto.
1.37 OPT-OUT PERIOD means the 60-day period from the Initial Notice
Date.
1.38 PARTIES means Plaintiffs, the Settlement Class and the
Defendants.
1.39 PERSON means any individual or legal entity.
1.40 PLAINTIFFS means the individuals acting as named
representative Plaintiffs in this Action.
1.41 PLAINTIFFS' CLASS COUNSEL OR CLASS COUNSEL includes
Plaintiffs' Co-Lead Class Counsel, and the following additional attorneys:
Daniel Berger, Berger Law Firm, 912 Frick Building, 437 Grant Street,
Pittsburgh, Pennsylvania 15219; William H. Garvin, III of Weller, Green, Toups,
& Terrell, 2937 Kerry Forest Parkway, Suite A-2, Tallahassee, Florida 32308;
Kenneth Gilman of Gilman & Pastor, One Boston Place, 28th Floor, Boston,
Massachusetts 02108; Garrett M. Hodes of Humphrey, Farrington & McClain, P.C.,
221 West Lexington, Suite 400, P.O. Box 900, Independence, Missouri 64051;
Clinton Krislov of Krislov & Associates, Ltd., Suite 810, 222 North LaSalle
Street, Chicago, Illinois 60601-1086; Jonathan Nachsin of Law Offices of
Jonathan Nachsin, 200 North LaSalle Street, Suite 2100, Chicago, Illinois
60601-1095; Ellen M. Doyle of Malakoff, Doyle & Finberg, PC, The Frick Building,
Suite 200, Pittsburgh, Pennsylvania 15219, Beverly C. Moore, Jr. of Moore &
Brown, 4900 Massachusetts Avenue, N.W., Suite 230, Washington, D.C. 20016, and
Steve Toll of Cohen, Milstein, Hausfeld & Toll, 999 Third Avenue, Suite 3600,
Seattle, Washington 98104.
1.42 PLAINTIFFS' CO-LEAD CLASS COUNSEL OR CO-LEAD CLASS COUNSEL
means the following counsel:
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Charles R. Watkins John W. Sharbrough, III
SUSMAN & WATKINS M. Stephen Dampier
Two First National Plaza THE SHARBROUGH LAW FIRM, LLC
Suite 600 P.O. Box 996
Chicago, Illinois 60603 Mobile, Alabama 36601
David J. Guin Steven A. Martino
DONALDSON, GUIN & SLATE, LLC JACKSON, TAYLOR & MARTINO, P.C.
2900 Highway 280 P.O. Box 894
Suite 230 Mobile, Alabama 36601-0894
Birmingham, Alabama 35223
SPECIAL COUNSEL FOR MOBILE
HOME OWNERS:
Justin O'Toole Lucey
JUSTIN O'TOOLE LUCEY, P.A.
415 Mill Street
Mt. Pleasant, South Carolina 29464
1.43 PRELIMINARY APPROVAL means the Court's Order, substantially in
the form of Exhibit G hereto, certifying the Settlement Class, granting
preliminary approval of this Agreement and approving the Notice Plan.
1.44 PRIOR CLAIM means a claim or request submitted to the
Defendants, or any of them, for compensation or reimbursement because of damage
to Siding (whether or not in the form of a warranty claim) prior to the date of
the entry of the Final Order and Judgment. A Prior Claim does not include a
legal proceeding described in PARA 1.50(b).
1.45 PROPERTY or PROPERTIES means any structure including homes
(whether a Mobile Home or a Site-Built Structure), garages, outbuildings, town
houses, condominiums, apartments, commercial or industrial structures, and other
types of buildings or structures onto which Siding is currently installed or on
which an Unreimbursed Repair was performed, except for fences and detached
structures not used for garages with a floor area of less than 65 square feet.
1.46 RELEASEES means Defendants, including their successors,
parents, subsidiaries, divisions, or affiliates, and their officers, directors,
stockholders, partners, agents, servants, successors, subrogees and assigns and
their respective insurers.
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1.47 RELEASING PARTIES means all Settlement Class Members who have
not timely opted out of the Settlement Class, on behalf of themselves and any
Person(s) claiming by or through them.
1.48 REPLACEMENT COST means the average cost per square foot of
surface area of Siding in the State where the Property is located, as agreed
upon by the Parties with reference to current R.S. Means Co. data, including all
materials, labor and incidental costs as required to remove, replace and repair
Siding panels or boards that have sustained Damage (including an appropriate
adjustment for waste and overlap) with new Siding and to repaint and otherwise
restore the exterior of the Property to the extent reasonably necessary to make
the repair cosmetically acceptable and in conformity with good building
practices and all applicable laws, building codes, and zoning regulations. The
initial Replacement Cost for each State has been determined by R.S. Means Co. as
set forth in Exhibit H attached to this Agreement. The initial Replacement Cost
shall be adjusted annually on or about each anniversary of the execution of this
Agreement in accordance with a mutually agreeable formula that takes into
account increases and reductions, if any, in the cost of any of its elements.
The cost actually incurred to obtain permits for Siding repair or replacement
work conducted in conjunction with this Agreement also shall be reimbursed by
Defendants to Eligible Claimants - up to a maximum amount of $100 each - upon
presentation of proof of the expenditure.
1.49 SETTLED CLAIM means every claim, action, cause of action,
liability, right, demand, suit, matter, obligation, damage, loss or cost,
including consequential damages to Property or Properties and any claim for
other damages, losses or costs, of every kind and description, that the
Releasing Parties now have, have had in the past or may have in the future
against any of the Defendants arising out of the subject matter of the Action,
whether known or unknown, asserted or unasserted, which if known to the
Releasing Parties would have materially affected their Settlement with the
Releasees and which accrue or have accrued as a result of having Defendants'
Hardboard Siding on the Releasing Parties' Property. Without limiting the scope
of the foregoing, "Settled Claims" shall include:
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a. property damage to Class Members' Siding or to the
structure on which the Siding is installed or to any
surrounding property;
b. any claim for breach or violation of or for benefits
conferred by any federal, state, common or other law
or statute, regulation or ordinance;
c. any claim for breach of any duty imposed by law, by
contract or otherwise, including without limitation
breach of warranty express or implied or other
contract, promissory or equitable estoppel or
principles of unjust enrichment;
d. any claim based on principles of tort law or other
kind of liability, including without limitation,
those based on principles of strict product
liability, negligence, reliance, racketeering, fraud,
conspiracy, concerted action aiding and abetting,
veil-piercing liability, alter-ego or successor
liability, consumer fraud, negligent
misrepresentation, intentional misrepresentation, or
other direct or derivative liability;
e. any claim related to alleged defects or inadequacies
in the design, manufacture, advertising, product
literature, sale, distribution or marketing of
Hardboard Siding;
f. any claim for declaratory or injunctive relief
associated with the above;
g. any claim for diminution in value of or consequential
or collateral damage including, but not limited to,
claimed damage to the Siding or to any component of
the structure on which the Siding is installed or to
any surrounding property;
h. any claim for emotional damages, mental anguish, or
similar claim arising out of Damage to the Siding or
because of the installation of the Siding on the
Property; and
i. any claim for penalties, punitive damages, exemplary
damages, or any claim for damages based upon a
multiplication of compensatory damages associated
with the above.
"Settled Claims" shall not include (a) any claim for bodily
injury (including wrongful death); or (b) claims for pain and suffering,
emotional distress, mental anguish, or similar injuries associated with such
bodily injury to the extent allowed by law; or (c) subject to Section 13.2,
claims against parties who are not Releasees under the terms of this Settlement
Agreement.
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1.50 SETTLEMENT CLASS OR CLASS is a class composed of all Persons
who own or formerly owned Property in the United States or its Territories on
which Hardboard Siding has been installed at any time after May 15, 1975 and
before May 15, 2000, except:
a. All Persons who, in accordance with the terms of this
Agreement, properly execute and timely file during
the Opt-Out Period a request for exclusion from the
Settlement Class;
b. All Persons represented by counsel who, individually
or as members of a class, initiated against
Defendants, or any of them, legal proceedings that
were resolved prior to the Initial Notice Date by
settlement, judgment, release, dismissal or other
final disposition resulting in the termination of the
proceedings against the Defendant.
1.51 SETTLEMENT CLASS MEMBER OR CLASS MEMBER means a member of the
Settlement Class.
1.52 SETTLEMENT DATE means the date on which all of the following
have occurred: (a) the entry of the Final Order and Judgment without material
modification, and (b) finality for the Final Order and Judgment by virtue of
that order having become final and non-appealable through (i) the expiration of
all allowable appeal periods without an appeal having been filed; (ii) final
affirmance of the Final Order and Judgment on appeal or final dismissal or
denial of all such appeals, including petitions for review, rehearing or
certiorari.
1.53 SIDE of a Property means all exterior Hardboard
Siding-surfaced areas of a Property facing the same direction.
1.54 SITE-BUILT STRUCTURES or SITE-BUILT HOMES means all Properties
built on-site and also includes any other Property subject to this Settlement
Agreement except for Mobile Homes.
1.55 UNREIMBURSED REPAIR COSTS or PRIOR UNREIMBURSED REPAIR means
the properly documented out-of-pocket expenses reasonably incurred by an
Eligible Claimant to repair or replace Hardboard Siding that had sustained
Compensable Damage.
2. CERTIFICATION OF SETTLEMENT CLASS
2.1 The Parties to this Agreement agree for settlement purposes
only that this Action shall be certified and proceed as a class action under
Ala. R. Civ. P. 23(b)(3), consisting of all
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members of the Settlement Class, with the named Plaintiffs as the Settlement
Class representatives and Plaintiffs' Class Counsel as counsel for the
Settlement Class.
3. SUBMISSION FOR PRELIMINARY APPROVAL
3.1 As soon as practicable after execution of this Agreement, the
Parties shall jointly submit this Agreement, through their respective attorneys,
to the Court for Preliminary Approval.
4. ADMINISTRATIVE EXPENSES OF SETTLEMENT
4.1 In addition to their obligation to timely make Damage
Payments, Defendants shall pay all Administrative Expenses incurred in
connection with the Settlement, including but not limited to each of the
following:
a. The reasonable costs and expenses incurred by the
Notice Administrator in connection with the
preparation and execution of the Notice Plan, in the
manner and to the extent described in Paragraph 14.1,
below;
b. The reasonable costs and expenses incurred by the
Independent Inspector firm in the manner and to the
extent described in Paragraph 6 below;
c. All costs and expenses incurred in connection with
the establishment, implementation and administration
of the Settlement Agreement;
d. All costs and expenses incurred in connection with
the Defendants' obligation under Paragraph 7.2 to
provide copies of the Owner Maintenance Instructions
and the Owner's Installation Check List to Property
owners;
e. The amounts approved by the Court as reasonable
Attorneys' Fees and Expenses, in the manner and to
the extent described in Paragraph 14.3, below; and
f. Any Court-approved incentive award to be paid to the
Settlement Class Representatives, in the manner and
to the extent described in Paragraph 14.4, below.
4.2 Defendants shall have thirty (30) days from the actual receipt
of any demand for payment by the Notice Administrator and/or Independent
Inspector within which to object to the demand, or any portion thereof, or to
the reasonableness of any cost, charge or expense included therein. If such a
challenge is made, Defendants shall promptly pay the portion of the expense, if
any, to which it has no objection and attempt to resolve any differences that
remain with the
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assistance of Class Counsel. If Class Counsel, Defendants and any involved third
parties are unable to resolve the dispute, the same shall be submitted to the
Court in the Action for final and binding resolution. Defendants shall be deemed
to have waived any objection to a claim for payment that is not made within
thirty (30) days of its receipt.
4.4 Payments to Eligible Claimants under the Settlement Agreement
shall be made as provided in Paragraph 5.
5. SETTLEMENT AGREEMENT AND CLAIMS ADMINISTRATION PROGRAM
5.1 Before the Initial Notice Date, the Notice Administrator shall
establish and staff a telephone system in a manner reasonably agreeable to the
Parties to answer a toll-free telephone number established to respond to
inquiries by Settlement Class Members regarding the settlement and/or the
Settlement Agreement. The telephone system will be designed so as to prevent
placing callers on hold for inordinate amounts of time. The Notice Plan shall
direct Persons who believe they may be Settlement Class Members to call the
toll-free number to request a Class Notice and Claim Forms, or to obtain the
Class Notice and Claim Forms from an Internet web site, which also shall be
established no later than the Initial Notice Date.
5.2 Promptly following the execution of this Agreement, Defendants
shall establish, to the reasonable satisfaction of Class Counsel, a properly
staffed and equipped Claims Office to process in a timely way all Claims under
the Settlement Agreement and to coordinate with the Notice Administrator the
establishment and operation of the toll-free number, the Internet web site, and
the dissemination of the Class Notice and related press releases and press kits
as called for by the Notice Plan. Defendants shall maintain such a Claims Office
for so long as necessary to process all Claims filed under the Settlement
Agreement.
5.3 In the event Settlement Class Members contact Defendants
regarding a potential warranty claim, or otherwise without apparent knowledge of
this Settlement Agreement, Defendants shall promptly reply to any communications
or inquiries from such Persons by advising them of this Settlement Agreement and
either provide them with a claim packet or with
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the toll-free telephone number from which such claim packets may be obtained
from the Notice Administrator. All Class Notice forms and claims packets shall
be sent to the requesting party by first class mail.
5.4 A computer database shall be established and maintained by the
Claims Office and the database shall collect and retain all information
necessary to determine the Claimant's eligibility for participation in the
settlement and the disposition of the Claim. Plaintiffs' Class Counsel shall be
provided full access to the information in this database.
5.5 An Eligible Claimant must properly complete and timely file a
Claim Form. In order for the claims office to initiate the processing of a Claim
Form, Claimants must provide the following basic information:
a. name(s) of Claimant(s);
b. mailing address;
c. address of Property for which a Claim is being
submitted (if different from the mailing address);
d. evidence that the Claimant's siding is Hardboard
Siding manufactured by the Defendants, in one of the
forms delineated in Paragraph 5.6 below; and
e. verification that the Claimant is (or with respect to
Claims involving a Prior Claim or a Claim for
Unreimbursed Repair, was) the owner of the Property
(examples of sufficient verification of property
ownership include property tax bills for the current
year, deeds or deed of trust) or that the Claim has
been properly assigned to the Claimant.
5.6 When submitting a Claim Form, the Claimant must also provide
one of the forms of proof set forth in subparagraphs (a) through (e) that the
Claimant's siding is Abitibi or ABT Siding, or in the alternative, a check in
accordance with subparagraph (f), below:
a. a 2" x 2" square or 2" diameter round sample of the
Siding from the structure in question sufficient to
identify the Product as manufactured by Defendants;
or
b. a prior communication from one of the Defendants
(such as where a prior warranty claim was considered)
which acknowledges that the siding on the subject
Property is Abitibi or ABT Siding; or
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c. an invoice or warranty, along with photographs of the
exterior walls of the Property, that shows that the
siding on the Property is Abitibi or ABT Siding; or
d. a photograph depicting the back of the siding and
showing the identifying stamp of the ABT or Abitibi
Defendants; or
e. such other evidence that reasonably identifies the
Siding as ABT or Abitibi Siding.
f. If the Claimant does not provide one of the proofs of
product identification described above, s/he may have
the product identified by sending to the Claims
Office a check or money order in the amount of $50
made payable to the Independent Inspector firm. In
the event that the Independent Inspector identifies
the product as Abitibi/ABTco hardboard siding, the
Inspector shall proceed to inspect the property in
accordance with the terms of Section 6, below, and
the $50 shall be refunded to the Claimant with the
payment of his/her Claim.
Notwithstanding any other provisions of this paragraph, the
requirement of proof that the siding in question is Abitibi or ABT Siding is
satisfied if the Defendants' records or warranty claims database confirm that
the siding on the subject property is Abitibi or ABT Siding.
5.7 Processing of each of the Claim Forms by the Claims Office
shall commence when the Claimant provides the Claims Office with the information
required by Paragraphs 5.5 and 5.6, above. The Claims Office shall advise any
Claimant who fails to submit information required by the Claim Form, including
the information specified in Paragraphs 5.5 and 5.6, of the respects in which
the Claim Form is incomplete and request the Claimant to supply the missing
information. Any request by the Claims Office must be in writing and mailed to
the Claimant by first class mail within forty-five (45) days after the receipt
of the Claim Form; if no such request is made, processing of the Claim Form
shall commence prior to the expiration of the 45 day period; provided, that no
Claim will be eligible for payment until the information required by Paragraphs
5.5 and 5.6 has been supplied.
5.8 If a request for information described in Paragraphs 5.5, 5.6
and 5.7 is timely made by the Claims Office but not complied with by the
Claimant within one hundred and eighty
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(180) days after the mailing of such request, absent reasonable justification
for the delay, the Claim may be denied by written notice to the Claimant,
without prejudice to the right of the Claimant to file within the Claim Period
an additional Claim for the same or different Damage. The filing date for the
subsequent Claim, if any, will not relate back to the date of the earlier Claim;
provided, that the Non-Painting Deduction, if any, applicable to such Claim
shall be governed by Paragraph 1.22(b)(vi).
5.9 All Claimants with Compensable Damage to Hardboard Siding
shall be paid in accordance with the Damage Payment calculation provided for in
this Settlement Agreement, without regard to contrary requirements that may have
been set forth in any prior warranty applicable to such Siding and without
regard to any legal or factual defenses Defendants might have been able to
assert to such payment in the absence of this Agreement. In this regard, and for
purposes of this Settlement Agreement only, Defendants specifically waive as to
the Settlement Class Members all legal and factual defenses that might have been
asserted against such claim, including without limitation, defenses asserting a
lack of causation, intervening or superseding cause, lack of privity, lack of
reliance, the "economic loss" rule, contributory negligence, assumption of risk,
failure to make timely demand, that the express warranty was not the "basis of
the bargain," or because of a statute of limitations or repose.
5.10 Defendants may make one offer of settlement to a Claimant (the
"Accelerated Payment Offer") for each Claim submitted. For the first six (6)
months after the Fairness Hearing, the Defendants shall have a reasonable period
of time (not to exceed 45 days) after a substantially complete Claim Form is
received by the Claims Office in which to make the Accelerated Payment Offer.
After that six-month period, Defendants shall have thirty (30) days after a
substantially complete Claim Form is received by the Claims Office in which to
make the Accelerated Payment Offer. For purposes of deciding whether they will
make such an offer, Defendants may evaluate the Claim by making a single visit
to the Property at such reasonable time as may be agreed to by the Claimant to
obtain additional details about his or her Claim. After such review and
evaluation, and in their sole discretion, Defendants may elect to make a
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written settlement offer to Claimant to resolve the Claim without resort to the
independent inspection procedure under Section 6, below. Any written offer under
Paragraph 5.10 or 5.11 shall include the Accelerated Payment check and shall be
communicated to Claimant in substantially the forms attached as Exhibit I and
Exhibit J and shall include a detailed explanation of the basis for and
calculation of the Accelerated Payment Offer.
5.11 If the amount of the Damage Payment under this Settlement
Agreement reasonably can be determined from the information presented to the
Defendants in the Claim Form, or if the Defendants inspect the property of the
Claimant, the Accelerated Payment Offer shall be calculated on the same basis as
the Damage Payment that would otherwise be due under this Settlement Agreement.
If the amount of the Damage Payment cannot reasonably be calculated from such
information, the amount of the Accelerated Payment Offer shall be set by the
Defendants in good faith, applying the compensation principles set forth in this
Settlement Agreement.
5.12 Any Claimant who receives an Accelerated Payment Offer shall
have forty-five (45) days after its receipt to decline the offer. Any Claimant
who deposits or cashes an Accelerated Payment check shall have the unilateral
right, for an additional period of thirty (30) days after depositing or cashing
the Accelerated Payment check, to revoke his or her acceptance by returning the
amount of the check and electing in writing to have his or her Claim inspected,
processed and determined under Section 6, below. If a Claimant does not decline
an Accelerated Payment Offer within forty-five (45) days after its receipt, the
Accelerated Payment Offer shall be deemed accepted; provided, however, if the
Claimant was absent from the Property or did not receive the check or
Accelerated Payment Offer or failed to return the amount of the check due to
mistake or excusable neglect, the forty-five day revocation period shall run
from the date the Claimant returns to the Property, receives the check, or
discovers the mistake, whichever is sooner.
5.13 Class Counsel, including their experts, consultants or agents,
shall be allowed reasonable access to review the records of Defendants that
pertain to the Accelerated Payment
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Offers. If at any time Class Counsel are not reasonably satisfied that
Defendants have implemented and are administering the process for the
Accelerated Payment Offers in conformance with this Agreement, Class Counsel
shall advise Defendants of their concerns. If Defendants fail to satisfy these
concerns, Class Counsel may, at their sole discretion, bring the matter to the
attention of the Court by noticed motion. In its discretion, the Court may
conduct a hearing on any objections raised by Class Counsel, and if the Court
finds that Defendants' have failed to implement the Accelerated Payment Offer
process in good faith, the Court may provide such relief as it deems proper
under the circumstances, including the revocation of the Accelerated Payment
Offer process.
5.14 All Claims that are not resolved by an Accelerated Payment
Offer shall be inspected by the Independent Inspector in accordance with the
provisions of Paragraph 6, below.
5.15 Claims shall be processed and paid in a reasonably prompt
manner, substantially in the order in which they are received; provided,
however, that priority may be given to Claimants who have listed, posted or
advertised their Property for sale and priority shall be given to Claimants who
are experiencing water intrusion into their homes which they have contracted to
repair. The Claims Office shall calculate the Damage Payment due Eligible
Claimants in accordance with the terms of this Settlement Agreement and shall
make such payments directly to Eligible Claimants or their assignees. The amount
of such Damage Payments shall be entered into the Claims Office's computer data
system. Upon written request by Class Counsel, a listing of such payments shall
be provided to Plaintiffs' Class Counsel no less frequently than quarterly.
5.16 Any Damage Payment made on the basis of the results of the
inspection of the Independent Inspector in an amount greater than five-hundred
dollars ($500) shall be made in two installments. The first installment shall be
in an amount equal to eighty percent (80%) of the total Damage Payment and it
shall be paid at the time the Claimant is advised of the amount of his or her
Compensable Damage as determined by the Independent Inspector's inspection. The
second installment equal to the remaining twenty percent (20%) shall be paid
promptly upon the Claimant's submission to the Claims Office of satisfactory
evidence of the Claimant's purchase
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of any type of replacement siding or other exterior wall cladding to repair the
areas of Compensable Damage to the Claimant's Property or other evidence that
repairs have been made.
5.17 Any person who acquires Property from a Class Member after the
Initial Notice Date may, if he or she so elects, succeed to all the rights and
obligations of the Class Member under this Settlement Agreement.
5.18 All forms of notice, claims, claim denial, etc. used by the
Defendants to explain the rights of Class Members under the Settlement shall be
communicated in a timely manner, shall be clear, drafted in "plain English" and
approved in advance by Co-Lead Class Counsel.
5.19 Any Eligible Claimant who suffers additional Damage to his/her
Hardboard Siding that has not already been the subject of a Claim hereunder may
submit up to five additional Claims within the Settlement Agreement Claim
Period, not to exceed one every twelve months; provided, however, that
Defendants shall not be obligated to pay more than once for Damaged Siding for
which a Claimant previously has been compensated.
6. INDEPENDENT INSPECTION
6.1 The Property of any Eligible Claimant filing a Claim that is
not satisfied by an Accelerated Payment Offer shall be inspected by the
Independent Inspector and the Damage Payment shall be calculated and the Claim
shall be paid in accordance with the results of that inspection. The Claims
Office shall request an inspection of the Claimant's Property by the Independent
Inspector within the earlier of fourteen (14) days following a Claimant's
rejection of an Accelerated Payment Offer, or, if an Accelerated Payment Offer
is not made, forty-five (45) days after a substantially complete Claim Form is
received by the Claims Office; and the inspection shall occur as soon thereafter
as reasonably practicable. The Independent Inspector will use its best efforts
to ensure that inspections occur within forty-five (45) days after being
requested by the Claims Office to conduct an inspection.
6.2 In making the inspection, the sole duties of the Independent
Inspector shall be: (a) to verify that the Claimant's siding is Hardboard Siding
if requested to do so pursuant to Paragraph 5.6(f) or by Defendants (at their
expense); (b) to calculate and record the amount of
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Damage and Excluded Damage on the Site Built Structures and the number of panels
on Mobile Homes evidencing Damage; and (c) to report his or her findings to
Claims Office. The Independent Inspector shall not be made aware of the
existence and terms of any Accelerated Payment Offer made to the Claimant. The
findings of the Independent Inspector shall be made in writing in the Field
Inspection Report, which shall be mailed or otherwise transmitted to the Claims
Office within ten (10) business days following the completion of the inspection.
6.3 If Defendants do not make an Accelerated Payment Offer, the
Defendants shall pay the cost of inspection. If Defendants do make an
Accelerated Payment Offer which is rejected by Claimant, the cost of the
Independent Inspection also shall be borne by Defendants unless the amount of
the Accelerated Payment Offer exceeds the Damage Payment, in which case the
inspection fee shall be borne by the Claimant up to a maximum of $150 and
deducted from the Damage Payment.
6.4 Within thirty (30) days of receipt of the Independent
Inspector's Field Inspection Report, the Claims Office shall send to the
Claimant a check for the first installment of the Damage Payment due under
paragraph 5.16, calculated in accordance with the results of the Independent
Inspection, a copy of the Field Inspection Report and an explanation of the
calculation of the Damage Payment and the Claimant's rights with respect
thereto.
6.5 If a Claimant is dissatisfied with the determinations made by
the first Independent Inspector, the Claimant may request a second independent
inspection by so notifying the Claims Office. The notification must be in
writing and postmarked no later than thirty (30) days following the Claimant's
receipt of the first installment Damage Payment check or written denial of the
Claim, and the Claimant must return the Damage Payment check to the Claims
Office with the notification. If the check was for less than $150, the Claimant
must also send a check made payable to the Claims Office for the difference
between the Damage Payment and $150 (the amount of the inspection fee for which
Claimant is responsible). Promptly upon its receipt of a timely objection and
check from the Claimant, the Claims Office shall order a second inspection of
the Claimant's Property. The second inspection shall be conducted by a different
individual
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inspector from the Independent Inspection firm, and the second inspector shall
not be made aware of the existence or results of the first inspection.
6.6 If a Claimant requests a second inspection, his or her Damage
Payment will be calculated on the basis of the results of whichever of the two
inspections results in the greater award. The Damage Payment will be reduced by
the amount of the second inspection fee unless the Second Inspection results in
a payment to the Claimant that is 25% or more greater than the payment that was
calculated on the basis of the original Independent Inspection, in which event
the amount of the second inspection fee will be refunded to the Claimant or will
not be deducted from the Damage Payment, as appropriate.
6.7 In the event any Party reasonably believes that any of the
Independent Inspectors are not properly applying any of the terms of Paragraph 6
(including the inspection protocol attached as Exhibit K), or in the event there
is a question about the application of the terms of this Agreement by any of the
Independent Inspectors, then: (a) the objecting Party's counsel shall notify
counsel for the other Parties to this Agreement in writing of the concern; (b)
Plaintiffs' Co-Lead Class Counsel and counsel for Defendants shall confer within
thirty (30) days of receipt of the written notification to try to resolve the
concern; and (c) in the event Plaintiffs' Co-Lead Counsel and counsel for
Defendants cannot resolve the concern, then the dispute shall be submitted to
the Court or other third party mutually agreeable to the Parties for resolution.
7. ENHANCED WARRANTY FOR LATER PURCHASERS; ADDITIONAL EFFORTS TO PROVIDE
INSTALLATION AND MAINTENANCE INSTRUCTIONS TO PROPERTY OWNERS
7.1 As part of this Settlement Agreement, upon the entry of the
Final Order and Judgment in this Action, the ABT Defendants agree to provide the
Enhanced Warranty to any person who installs the Hardboard Siding within two (2)
years after the Initial Notice Date in a form substantially equivalent to the
Enhanced Warranty attached hereto as Exhibit D, provided that the terms of such
Enhanced Warranty may be changed within such two (2) year period in order to
bring it into compliance with any subsequent changes in federal or state law.
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7.2 The ABT Defendants also agree to adopt and to make available
to each Class Member whose identity becomes known to them,and to use their best
efforts to provide to each Person who installs Hardboard Siding within two (2)
years after the Initial Notice Date,a copy of their Owner Maintenance
Instructions, Installation Instructions and Owner's Installation Check List in
substantially the form attached hereto as Exhibits L, M and N.
7.3 As to any purchaser who purchases Hardboard Siding
manufactured by the ABT Defendants subsequent to the entry of the Initial Notice
Date, whether or not covered by the Settlement Agreement, the ABT Defendants
agree not to assert as a defense to any claim on account of damage to such
Siding that the Siding was improperly installed or maintained so long as such
Hardboard Siding was installed or maintained, as the case may be, in compliance
with the installation and maintenance instructions attached hereto; provided,
however, that such instructions may be changed to reflect changes in good
building practices in the area in which the Siding is installed.
8. RIGHT TO CONDUCT AUDITS
8.1 Plaintiff's Co-Lead Class Counsel shall have the right to
audit the Defendants' Accelerated Payment Offers.
8.2 Additionally, Plaintiffs' Class Counsel may generally audit
the Defendants' compliance with the terms of this Agreement. In this connection,
the Defendants' shall pay the costs and fees incurred by Class Counsel in
performing such audits, including the costs and fees charged by any consultants
they may retain to assist them, up to a maximum total cost for all such audits
under paragraphs 8.1 and 8.2 of $40,000. The timing of any and all audits under
this Paragraph 8.2 shall be at the sole discretion of Plaintiffs' Co-Lead Class
Counsel, provided that the sole issue to be considered in connection with any
such audit is whether Defendants have properly implemented and complied with the
terms of this Settlement Agreement.
9. NOTICE OF PROPOSED CLASS ACTION SETTLEMENT
9.1 Upon Preliminary Approval, and as the Court may otherwise
direct, the Parties shall cause the Notice of Proposed Class Action Settlement
describing this proposed Settlement
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Agreement and the Fairness Hearing to be provided to the members of the
Settlement Class as provided in this Section and in accordance with the Notice
Plan or as otherwise approved or directed by the Court.
9.2 The mailed Notice, in a form substantially in the form of
attached Exhibit E and approved by the Court, shall be mailed, first class
postage prepaid, to each member of the Class identified by the Parties through
reasonable efforts. The Notice shall be made available for distribution and
publication in Spanish as well as English where appropriate or upon request.
9.3 No later than the Initial Notice Date, the Notice
Administrator shall cause a nationwide toll-free telephone facility and Internet
website to be established, in accordance with Paragraph 11.1 below. The
telephone facility shall be capable of (a) receiving requests for the long form
of the Notice of Proposed Class Action Settlement and other materials described
in this Section; (b) providing generalized information concerning deadlines for
opt-outs, proofs of claim, and presentations to the Court at the Fairness
Hearing; and (c) mailing the materials to Class Members as provided in this
Paragraph. The facility may, as reasonable and appropriate under instructions
from Plaintiffs' Co-Lead Class Counsel, refer individual inquiries to
Plaintiffs' Class Counsel for response. The facility shall maintain records of
all mailings and such other information in such form and in such manner as
Plaintiffs' Co-Lead Class Counsel and Defendants jointly direct.
9.4 The Notice of Proposed Class Action Settlement shall be mailed
to additional Settlement Class Members whose identities or addresses become
known during the term of the Agreement. The Notice of Proposed Class Action
Settlement shall also be distributed to such contractors, builders, distributors
and mobile home manufacturers who are reasonably determined by Defendants and/or
Plaintiffs' Class Counsel to have been involved in the sale, distribution,
installation or use of Defendants' Hardboard Siding.
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10. CLASS MEMBERS' RIGHT OF EXCLUSION; DEFENDANTS' RIGHT OF TERMINATION
10.1 A Settlement Class Member may opt out of the Class during the
Opt-Out Period. To exercise the opt-out right set forth in this Paragraph, the
Settlement Class Member must complete, sign, and return a request for exclusion.
The request must be signed by the Settlement Class Member and must state the
address of the Settlement Class Member's Property(ies) on which Hardboard Siding
has been installed and the number of units of residential Property or commercial
structures clad with the Siding. Such request must be postmarked on or before
the end of the Opt-Out Period and sent to the Notice Administrator (who shall
provide one copy of the opt-out notice to Co-Lead Class Counsel and one copy to
Defendants). Any Settlement Class Member who elects to opt out of the Settlement
Class pursuant to this Paragraph shall not be entitled to relief under or be
affected by this Agreement or the Settlement Agreement. Class Counsel may
contact opt-outs to assure that the opt-outs understand the effect of their
election.
10.2 To the extent that the statutes of limitations and/or repose
or any defense of lapse of time are tolled by operation of law, they will
continue to be tolled as to any Class Member who opts out of the Settlement
until ninety (90) days after receipt of the request to opt out or for such
longer period as the law may provide without reference to this Agreement.
10.3 In the event that, in the sole discretion of the Defendants,
the number of Class Members requesting exclusion reaches a level that in their
judgment threatens to frustrate the essential purpose of this Agreement,
Defendants may elect unilaterally to terminate this Agreement by so notifying
Plaintiffs' Class Counsel and the Court, not less than ten (10) days prior to
the date set for the Fairness Hearing.
10.4 If this Agreement is terminated by Defendants under Paragraph
10.3, the legal position of each Party shall be the same as it was immediately
prior to the execution of this Agreement; and each Party may exercise its legal
rights to the same extent as if this Agreement never had been executed.
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11. NOTICE ADMINISTRATION
11.1 The Notice Administrator shall, under the supervision of the
Court, establish and maintain the toll-free number and answering system
(including live operators to the extent deemed necessary by mutual agreement of
Plaintiffs' Class Counsel and Defendants) and Internet web site, and shall mail
the Class Notice, appropriate claim forms attached hereto as Exhibits A, B and
C, and Request for Exclusion form to any Property Owner who requests a copy. The
substance and content of the answering system, Internet web site, and any
scripts or pre-selected or suggested dialog shall be subject to Defendants'
prior approval, provided that such approval is not unreasonably withheld. The
Notice Administrator shall maintain the records of its activities, including
logs of all telephone calls and a running tally of the number of Notice packages
mailed, in computerized database form and shall provide such periodic and
special reports and other such information as the Court, Plaintiffs' Class
Counsel (with notice to and consent of Defendants, provided such consent is not
unreasonably withheld) and/or Defendants may request. Plaintiffs' Co-Lead Class
Counsel and Defendants shall have the right independently to audit any work of
the Notice Administrator. The Notice Administrator may, as appropriate under
instructions from Plaintiffs' Co-Lead Class Counsel with the consent of counsel
for the Defendants, which shall not unreasonably be withheld, provide additional
information or refer individual inquiries to Plaintiffs' Class counsel for
response.
11.2 In the event Plaintiffs' Co-Lead Class Counsel or Defendants
reasonably believe that the Notice Administrator is not properly applying any of
the terms of this Agreement or in the event there is a question concerning the
application of the terms of this Agreement by the Notice Administrator, the
Parties shall meet and attempt to resolve the matter, failing which the dispute
promptly shall be submitted to the Court whose ruling shall be final and
non-appealable.
12. EXCLUSIVE REMEDY; DISMISSAL OF ACTION; JURISDICTION OF COURT
12.1 The terms and conditions of this Agreement shall constitute
the sole and exclusive remedy for any and all Settled Claims of Class Members
against Defendants; and upon entry of
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the Final Order and Judgment by the Court, each Class Member who has not opted
out of the Class shall be barred from initiating, asserting or prosecuting any
Settled Claims against Defendants.
12.2 From and after the entry of the Final Order and Judgment, no
action or proceeding may be brought by any public or private party on behalf of
a Class Member in which any Settled Claim is asserted or the subject of inquiry;
nor may any Class Member commence or remain a member of a class action or be the
beneficiary of any state or federal proceeding in which any of the Settled
Claims is asserted against any of the Defendants or is the subject of inquiry.
As soon as practicable after the Settlement Date, the Complaint in the Action
shall be dismissed.
12.3 The Court shall retain exclusive and continuing jurisdiction
of the Action, all Parties and Class Members, to interpret and enforce the
terms, conditions, and obligations of this Agreement, including any question
regarding the proper administration of the Settlement Agreement.
13. RELEASES
13.1 Upon entry of the Final Order and Judgment, each Settlement
Class Member who has not timely opted out of the Settlement Class shall, on
behalf of himself and any Person claiming by or through him as his heir,
administrator, devisee, predecessor, successor, representative of any kind,
shareholder, partner, director, owner or co-tenant of any kind, affiliate,
subrogee, assignee, or insurer (the "Releasing Parties"), and regardless of
whether any Class Member executes and delivers a written release, be deemed to
and does hereby release and forever discharge Defendants, and all of their
present and former divisions, predecessors, affiliates, subordinates, parents
and all of their present or former directors, officers, attorneys, employees,
servants, agents, successors, assigns, subsidiaries and insurers (including
co-insurers and re-insurers) solely with regards to policies held by Defendants
(all the foregoing parties being referred to as "Releasees"), of and from any
and all Settled Claims and related subrogation claims of the Releasing Party's
subrogees or insurance carriers not protected from waiver of subrogation by the
provisions of applicable insurance policies (or assigned or subrogated prior to
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final approval of this Agreement and not subject to compromise or settlement by
the policyholder), except as may otherwise be provided in this Agreement.
13.2 The Releasing Parties specifically release and forever
discharge any other person or entity from any and all claims that arise out of
Hardboard Siding on the Property of a Releasing Party to the extent such claims
are based on alleged defects or inadequacies in the design, manufacture,
advertising, product literature, sale, distribution or marketing of Hardboard
Siding, all of which claims have been compromised and settled in their entirety
by Defendants under the terms of this Settlement Agreement; PROVIDED, HOWEVER,
Releasing Parties retain any other claim or cause of action (such as for
improper installation of the Siding) they may have against any other person or
entity not a Party to this Settlement Agreement.
13.3 If any Releasing Party brings an action or asserts a claim
against a Releasee contrary to the terms of this Release, the counsel of record
for such Releasing Party shall be provided with a copy of this Settlement
Agreement. If such Releasing Party does not within thirty (30) days thereafter
dismiss his or her action or claim and the action or claim is subsequently
dismissed or decided in favor of the Releasee, the Releasing Party shall
indemnify and hold harmless the Releasee from any and all costs and expenses,
including reasonable attorneys fees, incurred by the Releasee in the defense of
the action or claim.
13.4 Except as otherwise provided in this Paragraph 13, nothing in
this Agreement shall be construed in any way to prejudice or impair the right of
Defendants or members of the Settlement Class to pursue such rights and remedies
as they may have against third parties or under any applicable insurance
policies. Nothing in this Agreement limits the rights of members of the
Settlement Class to pursue claims for Hardboard Siding installed on a Property
subsequent to the Initial Notice Date.
14. EXPENSES AND FEES
14.1 The Defendants shall pay all reasonable fees and expenses
incurred in providing the Notice called for under this Agreement and under the
Notice Plan (or as otherwise ordered by the Court) (the "Notice Costs").
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14.2 If the Court does not issue the Final Order and Judgment, or
in the event that for any reason the Settlement Date does not occur, Defendants
nevertheless shall continue to bear the costs of the Notice Plan and any other
expenses incurred to such point in implementing the terms of this Agreement,
along with any associated shutdown expenses, including any notices as the Court
may direct and Defendants shall not have the right to recoup such funds,
regardless of whether the Court issues the Final Order and Judgment. Plaintiffs'
Class Counsel and the Class Members shall bear no obligation for any costs
incurred in connection with the implementation of the Notice Plan or for any
other expenses incurred by the Defendants hereunder.
14.3 Within 7 days after the Settlement Date, the Defendants shall
pay on behalf of the Settlement Class Members reasonable attorneys' fees in the
amount of $7,000,000 and reasonable expenses in immediately available funds
subject to agreement between Co-Lead Class Counsel and counsel for Defendants in
an amount not to exceed $375,000.
14.4 Within 7 days after the Settlement Date, the Defendants shall
pay any Court approved incentive award to the currently named Plaintiffs in this
Action, and in FYOLA, ET AL. V. ABITIBI-PRICE, INC., ET al., Case No. GD
95-12854; JOHN EZZELL, ET AL. V. ABTCO., INC., CASE No. 9 7-CVS-167, Superior
Court Division of State of North Carolina; WILLIAM BEENY AND DEBORAH BEENY, ET
AL. V. ABTCO., INC., ET AL., Case No 99-CV-206193, Circuit Court of Jackson
County, Missouri; and JOEL UPTAIN, ET AL., V. ABTCO., ET AL., Case No.
99C-08974, District Court of Johnson County, Kansas, not to exceed $5,000 to any
one individual or married couple.
14.5 Class Counsel may designate two attorneys among them to assist
in the implementation of the duties of Class Counsel under this Settlement
Agreement. The ABT Defendants shall pay the reasonable fees of these two
attorneys (not to exceed their normal hourly rates) for time actually incurred
by them to accomplish the necessary duties of Class Counsel hereunder. Class
Counsel shall provide bills in accordance with the ABT Defendants' billing
guidelines to ABT Defendants and counsel for ABT Defendants.
14.6 In the event of an appeal of the Final Order and Judgment,
Defendants agree to pay simple interest on the fees due under paragraph 14.3 (at
the prime rate of interest in effect at
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such time) from the date of the Final Order and Judgment until the Settlement
Date. The interest rate payable under this paragraph 14.6 shall be recalculated
every 6 months.
15. ENFORCEMENT OF AGREEMENT
15.1 In the event Defendants fail to perform under the Agreement or
to make a payment due and owing under the terms of this Agreement, Plaintiffs'
Co-Lead Class Counsel shall give Defendants written notice of the breach. If the
breach is not cured to the satisfaction of Class Counsel within sixty (60) days,
Plaintiffs' Class Counsel shall apply to the Court for relief.
15.2 In the event of a breach by Class Members or Defendants under
this Agreement, the Court may exercise all equitable powers over the breaching
Party(ies) to enforce this Agreement and the Final Order and Judgment
irrespective of the availability or adequacy of any remedy at law. Such powers
include, among others, the power of specific performance, contempt and
injunctive relief.
16. REPRESENTATIONS AND WARRANTIES
Defendants represent and warrant that (i) they have all requisite
corporate power and authority to execute, deliver, and perform this Agreement
and to consummate the transactions contemplated hereby, (ii) the execution,
delivery, and performance of this Agreement and the consummation by it of the
actions contemplated herein have been duly authorized by all necessary corporate
action on the part of such Defendants; (iii) their signatories to the Agreement
have full authority to sign on behalf of and to bind such Defendants to the
terms of the Agreement, and (iv) this Agreement has been duly and validly
executed and delivered by such Defendants and constitutes their legal, valid and
binding obligation.
17. MISCELLANEOUS PROVISIONS
17.1 This Agreement is for settlement purposes only. It has been
entered into for the purpose of compromising and settling a disputed matter and
is not an admission of a deficiency in the manufacture of Hardboard Siding, or
in the handling or administration of prior warranty claims or in the validity of
any denial or defense asserted by Defendants, nor is this Agreement an admission
by Plaintiffs of the validity of any of the Defendants' asserted defenses.
Neither
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the execution of this Agreement, nor any of its provisions or attachments, nor
any action taken pursuant to its terms shall be admitted in this or any other
Action or proceeding as evidence or construed as an admission by either Party of
the validity of any claim or of any defense or of any facts alleged in this or
any other Action. This Agreement, however, may be admitted as evidence in any
action to enforce its terms.
17.2 Any certification of a conditional or preliminary Settlement
Class pursuant to the terms of this Agreement shall not constitute, and shall
not be construed as, an admission on the part of Defendants that this Action, or
any other proposed or class action, is appropriate for certification as a
litigation class pursuant to Ala. R. Civ. P. 23 or any similar state or federal
class action statute or rule. This Agreement is without prejudice to the rights
of Defendants to (a) seek to vacate the conditional certification order in this
Action should this Settlement not be approved or implemented for any reason; or
(b) oppose final certification in this Action should this Settlement not be
approved or implemented for any reason; or (c) use the certification of this
Settlement Class to oppose certification of any other proposed class arising out
of the issues and claims that are asserted herein.
17.3 This Settlement Agreement has been negotiated at arm's length
by Class Counsel and counsel for the Defendants. If a dispute should later arise
regarding any of its terms, no Party shall be deemed to be the drafter of any
particular provision of the Agreement; and no part of the Agreement shall be
construed against any Party. The Parties further acknowledge and agree that the
obligations and releases contained in the Agreement are fair and reasonable in
the context of the compromises negotiated.
17.4 Plaintiffs' Co-Lead Counsel and counsel for Defendants
regularly shall meet in person or by telephone conference to discuss the
implementation and execution of this Agreement and to attempt to resolve any
concerns of the Parties regarding its implementation.
17.5 This Agreement shall be construed under and governed by the
laws of the State of Alabama, applied without regard to its laws applicable to
choice of law.
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17.6 Plaintiffs' Class Counsel have taken substantial discovery in
the Action, including extensive document review and depositions of the
Defendants' personnel with responsibility for claims processing and manufacture
of Siding. In addition, Class Counsel have engaged in extensive informal
discovery, have consulted with experts and interviewed many potential witnesses
with relevant knowledge of the issues in this case. Based on that formal and
informal discovery - as well as Class Counsel's knowledge of and participation
in other class actions involving hardboard siding - Class Counsel have evaluated
the factual bases for the claims asserted in the Action and as to many of the
defenses raised by Defendants to those claims. Class Counsel believe they have
engaged in more than sufficient discovery to evaluate the terms of this
Agreement on an informed basis and to negotiate a fair and reasonable resolution
of the Action.
17.7 This Agreement, including all attached Exhibits, shall
constitute the entire Agreement among the Parties with regard to the subject
matter of this Agreement and shall supersede any previous agreements and
understandings between the Parties. This Agreement may not be changed, modified,
or amended except in writing signed by Plaintiffs' Co-Lead Class Counsel and
Defendants' counsel and subject to Court approval. The Parties contemplate that
the Exhibits may be modified by subsequent agreement of counsel for all
Defendants and Plaintiffs' Co-Lead Class Counsel prior to dissemination to the
Class Members.
17.8 This Agreement may be executed by the Parties in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
17.9 This Agreement, if approved by the Court, shall be binding
upon and inure to the benefit of the Class, the Parties, and their
representatives, heirs, successors, and assigns.
17.10 The headings of the Sections of this Agreement are included
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect its construction. References to a "Section" includes
reference to all paragraphs within the referenced Section.
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17.11 Any notice, instruction, application for Court approval or
application for Court order sought in connection with this Agreement or other
document to be given by any Party to any other Party shall be in writing and
delivered personally or by facsimile followed by overnight courier, to the
following representatives of the parties:
FOR ABT DEFENDANTS: FOR ABITIBI DEFENDANTS:
Stephen Zovickian George F. Hritz
Michael I. Begert HOGAN & HARTSON, LLP.
Geoffrey M. Howard 100 Park Avenue
MCCUTCHEN, DOYLE, BROWN & New York, New York 10017
ENERSEN, LLP
Three Embarcadero Center
San Francisco, California 94111
FOR THE PLAINTIFF CLASS:
Charles R. Watkins John W. Sharbrough, III
SUSMAN & WATKINS M. Stephen Dampier
Two First National Plaza THE SHARBROUGH LAW FIRM, LLC
Suite 600 P.O. Box 996
Chicago, Illinois 60603 Mobile, Alabama 36601
David J. Guin Steven A. Martino
DONALDSON, GUIN & SLATE, LLC JACKSON, TAYLOR & MARTINO, P.C.
2900 Highway 280 P.O. Box 894
Suite 230 Mobile, Alabama 36601-0894
Birmingham, Alabama 35223
SPECIAL COUNSEL FOR MOBILE
HOME OWNERS:
Justin O'Toole Lucey
JUSTIN O'TOOLE LUCEY, P.A.
415 Mill Street
Mt. Pleasant, South Carolina 29464
17.12 Except as otherwise provided in this Agreement, any filing,
submission, Claim, notice or written communication shall be deemed filed,
delivered, submitted or effective as of the date of its postmark when mailed
first class, registered or certified mail, postage prepaid, properly addressed
to the recipient, or when delivered to any commercial one- or two-day
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delivery service properly addressed to the recipient, or when actually received
by the recipient, whichever first occurs.
17.13 Throughout the Term of this Agreement, in accordance with
record retention policies that are reasonably satisfactory to Class Counsel,
Defendants will use reasonable efforts to preserve all records and evidence at
the Roaring River plant which are or could be relevant to, or could lead to the
discovery of relevant evidence, concerning the research and development of
Hardboard Siding, its marketing, distribution, and manufacture, and the
operation of its Hardboard Siding warranty claims process.
17.14 Each Class Member who files a Claim under the Settlement
Agreement and does not repair or replace the siding for which a Damage Payment
was made shall advise any direct, subsequent purchaser of the Property in
writing of the existence of this Settlement Agreement and the amount of the
Damage Payment.
17.15 In no event shall Defendants, any attorneys representing
Defendants, Plaintiffs or Plaintiffs' Class Counsel have any liability for
claims of wrongful or negligent conduct by any third party with respect to the
implementation of any term of this Settlement Agreement.
DATED this 3 day of May, 2000.
ABT DEFENDANTS:
ABTco, Inc. ABT BUILDING PRODUCTS CORP.
By: /s/ Curtis M. Stevens By: /s/ Curtis M. Stevens
----------------------------- ---------------------------------------
Its: Vice President, Finance and Its: Treasurer
Treasurer
---------------------------- ---------------------------------------
By: /s/ Stephen Zovickian By: /s/ Stephen Zovickian
---------------------------- ---------------------------------------
Stephen Zovickian Stephen Zovickian
McCUTCHEN, DOYLE, BROWN & ENERSEN, LLP McCUTCHEN, DOYLE, BROWN & ENERSEN, LLP
Three Embarcadero Center Three Embarcadero Center
San Francisco, California 94111 San Francisco, California 94111
(415) 393-2000 (415) 393-2000
Counsel for ABT Defendants Counsel for ABT Defendants
39
<PAGE>
ABITIBI DEFENDANTS:
ABITIBI-CONSOLIDATED, INC., ABITIBI-PRICE CORP.
formerly ABITIBI-PRICE, INC.
By: /s/ Louis Veronneau By: /s/ Louis Veronneau
-------------------------------- --------------------------------------
Its: Managing Counsel Its: Managing Counsel
------------------------------- -------------------------------------
By: /s/ George F. Hritz By: /s/ George F. Hritz
------------------------------- -------------------------------------
George F. Hritz George F. Hritz
HOGAN & HARTSON, LLP HOGAN & HARTSON, LLP
100 Park Avenue 100 Park Avenue
New York, New York 10017 New York, New York 10017
(212) 916-7228 (212) 916-7228
Counsel for Abitibi Defendants Counsel for Abitibi Defendants
FOR THE PLAINTIFF CLASS:
/s/ Charles R. Watkins /s/ John W. Sharbrough, III
- ----------------------------------- -----------------------------------
Charles R. Watkins John W. Sharbrough, III
SUSMAN & WATKINS M. Stephen Dampier
Two First National Plaza THE SHARBROUGH LAW FIRM, LLC
Suite 600 P.O. Box 996
Chicago, Illinois 60603 Mobile, Alabama 36601
/s/ David J. Guin /s/ Steven A. Martino
- ----------------------------------- -----------------------------------
David J. Guin Steven A. Martino
DONALDSON, GUIN & SLATE, LLC JACKSON, TAYLOR & MARTINO, P.C.
2900 Highway 280 P.O. Box 894
Suite 230 Mobile, Alabama 36601-0894
Birmingham, Alabama 35223
SPECIAL COUNSEL FOR MOBILE HOME OWNERS:
/s/ Justin O'Toole Lucey
- -----------------------------------
Justin O'Toole Lucey
JUSTIN O'TOOLE LUCEY, P.A.
415 Mill Street
Mt. Pleasant, South Carolina 29464
40
<TABLE> <S> <C>
<PAGE>
<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>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 42,700
<SECURITIES> 63,100
<RECEIVABLES> 259,500
<ALLOWANCES> (2,500)
<INVENTORY> 330,500
<CURRENT-ASSETS> 817,600
<PP&E> 2,557,000
<DEPRECIATION> 1,238,400
<TOTAL-ASSETS> 3,535,400
<CURRENT-LIABILITIES> 559,400
<BONDS> 1,010,700
0
0
<COMMON> 117,000
<OTHER-SE> 1,270,700
<TOTAL-LIABILITY-AND-EQUITY> 3,535,400
<SALES> 776,900
<TOTAL-REVENUES> 776,900
<CGS> 547,700
<TOTAL-COSTS> 671,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,400
<INCOME-PRETAX> 96,700
<INCOME-TAX> 38,500
<INCOME-CONTINUING> 57,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,700
<EPS-BASIC> .55
<EPS-DILUTED> .55
</TABLE>
