-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WVZObZGFxdqYlOGex23Z8QQY4pru0rso4euHlqgtaSEk6JNlk9yEOl7Oiwhv6B7L +73eJ9TX8fY2MctSaFR75w== 0000075234-96-000002.txt : 19960227 0000075234-96-000002.hdr.sgml : 19960227 ACCESSION NUMBER: 0000075234-96-000002 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960223 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OWENS CORNING CENTRAL INDEX KEY: 0000075234 STANDARD INDUSTRIAL CLASSIFICATION: ABRASIVE ASBESTOS & MISC NONMETALLIC MINERAL PRODUCTS [3290] IRS NUMBER: 344323452 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-03660 FILM NUMBER: 96524450 BUSINESS ADDRESS: STREET 1: FIBERGLASS TOWER CITY: TOLEDO STATE: OH ZIP: 43659 BUSINESS PHONE: 4192488000 MAIL ADDRESS: STREET 1: FIBERGLASS TOWER CITY: TOLEDO STATE: OH ZIP: 43659 FORMER COMPANY: FORMER CONFORMED NAME: OWENS CORNING FIBERGLAS CORP DATE OF NAME CHANGE: 19920703 10-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended December 31, 1995 Commission File No. 1-3660 Owens Corning Fiberglas Tower, Toledo, Ohio 43659 Area Code (419) 248-8000 A Delaware Corporation I.R.S. Employer Identification No. 34-4323452 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Common Stock - $.10 Par Value New York Stock Exchange Rights to Purchase Series A New York Stock Exchange Participating Preferred Stock, no par value, of the Registrant Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes / X / No / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] At December 31, 1995, the aggregate market value of Registrant's $.10 par value common stock (Registrant's voting stock) held by non-affiliates was $2,289,208,060, assuming for purposes of this computation only that all directors and executive officers are considered affiliates. At December 31, 1995, there were outstanding 51,389,618 shares of Registrant's $.10 par value common stock. Parts of Registrant's definitive 1996 proxy statement filed or to be filed pursuant to Regulation 14A (the "1996 Proxy Statement") are incorporated by reference into Part III of this Form 10-K. -2- PART I ITEM 1. BUSINESS Owens Corning (formerly known as Owens-Corning Fiberglas Corporation), a global company incorporated in Delaware in 1938, serves consumers and industrial customers with high performance glass composites and building materials systems. These products are used in industries such as home improvement, new construction, transportation, marine, aerospace, energy, appliance, packaging and electronics. Many of these products are marketed under the trademark FIBERGLAS(R). Approximately eighty-two percent of the Company's sales are related to home improvement, sales of composite materials and sales outside U.S. markets. Approximately eighteen percent of the Company's sales are related to new U.S. residential construction. Owens Corning's executive offices are at Fiberglas Tower, Toledo, Ohio 43659; telephone (419) 248-8000. Unless the context requires otherwise, the terms "Owens Corning" and "Company" in this report refer to Owens Corning and its subsidiaries. The Company operates in two industry segments - Building Materials and Composite Materials - divided into eleven businesses. As a general rule, there is a commonality of process equipment and/or products within each industry segment. The Company also has affiliate companies in a number of countries. Affiliated companies' sales, earnings and assets are not included in either industry segment unless the Company owns more than 50% of the affiliate. Revenue, operating profit, and identifiable assets attributable to each of the Company's industry and geographic segments, as well as information concerning the dependence of the Company's industry segments on foreign operations, for each of the years 1995, 1994 and 1993, are contained in Note 1 to Owens Corning's Consolidated Financial Statements, entitled "Segment Data", on pages 34 through 39 hereof. BUILDING MATERIALS Principal Products And Methods Of Distribution Building Materials operates primarily in North America and Europe. It also has a growing presence in Latin America and Asia Pacific. Building Materials sells a variety of building and home improvement products in three major categories: glass fiber and foam insulation, roofing materials, and other specialty products for the home, such as housewrap, vinyl windows and patio doors, and vinyl siding. The businesses responsible for these products and markets include: Insulation - North America, Building Materials Sales and Distribution - North America, Building Materials - Europe, Roofing/Asphalt, Specialty and Foam Products, Western Fiberglass Group, Miraflex(TM) Products, Latin America, and Asia Pacific. -3- The Company's Building Materials Sales and Distribution - North America business is a major source of sales of building insulation products to lumber yards and home centers, and roofing shingles, housewrap, windows/patio doors, and vinyl siding to retailers and distributors. These products are used primarily in the home improvement and new residential construction markets. In 1995, the retail channel accounted for 40% of all of the Company's building material sales and over 25% of total overall corporate sales, including glass fiber and foam insulation products, asphalt roofing shingles, shingle underlayment, windows and patio doors, vinyl siding, and housewrap. More than 75% of the Company's retail channel sales are related to repair and remodeling activity within the home improvement industry. Other channels for the Company's building materials include sales of insulation products in North America to insulation contractors, metal building insulation laminators, mechanical insulation distributors and fabricators, manufactured housing producers, and appliance, office products and automotive manufacturers. Foam insulation and related products are sold to distributors and retailers who resell to residential builders, remodelers and do-it- yourself customers; commercial and industrial markets through specialty distributors; and, in some cases, large contractors, particularly in the agricultural and cold storage markets. In Europe, the Company sells building insulation to large insulation wholesalers, builders, merchants, contractors, distributors, and retailers. The Company sells mechanical insulation products to distributors, fabricators, and manufacturers in the heating, ventilation, power and process, appliance and fire protection industries. In Latin America, the Company produces and sells building and mechanical insulation through joint venture and licensee relationships. In Asia Pacific, the Company sells primarily mechanical insulation through joint venture businesses, including a new insulation plant in China, and licensees. The Company has licensed others for the manufacture of foam products at locations in Canada, Europe, the Middle East and Asia. The Company sells foam products through traditional agents and distributors where licensing does not exist. The Company sells roofing shingles to distributors and retailers, who resell them to residential roofing and remodeling contractors, as well as to do-it-yourself customers. Approximately 80% of roofing shingles sold in North America are used for reroofing, with new residential construction accounting for the remainder. The Company sells industrial asphalt under the Trumbull(TM) brand name. There are three principal kinds of industrial asphalt: Built-Up Roofing Asphalt (BURA), used in commercial roofing systems to provide waterproofing and adhesion; saturants or coating asphalt, used to manufacture roofing mats, felts and shingles; and industrial specialty asphalt, used by manufacturers in a variety of products such as waterproofing systems, adhesives, coatings, and product extenders, as well as in various automotive applications. There are various channels of distribution for the Company's asphalt products. The Company's asphalt products are used internally in the manufacture of the Company's residential roofing products and are also sold to other shingle manufacturers. In addition, asphalt is sold to roofing contractors and distributors for BURA systems and to manufacturers in a variety of other industries, including automotive, chemical, rubber and construction. -4- Seasonality Sales in the Building Materials segment tend to follow seasonal home improvement, remodeling and renovation, and new construction industry patterns. Sales levels for the segment, therefore, are typically lower in the winter months. Major Customers No customer in the Building Materials segment accounts for more than three percent of the segment's sales. COMPOSITE MATERIALS Principal Products and Methods of Distribution Composite Materials operates in North America, Europe and Latin America, with affiliates and licensees around the world, including a growing presence in Asia Pacific. The businesses responsible for these products include: Composites, Latin America, Pipe, and Asia Pacific. The Company is the world's leading producer of glass fiber materials used in composites. Composites are fabricated material systems made up of two or more components (e.g., plastic resin and glass fiber) used in various applications to replace traditional materials, such as aluminum, wood, and steel. The global composites industry has expanded to include more than 40,000 end-use applications. Worldwide, the composites industry has relatively few raw material component suppliers (glass fiber, resin and additives) delivering to thousands of industrial customers through various channels. Depending on the end-use application, these raw materials move through different manufacturing process chains, ultimately finding their way to consumers through myriad markets worldwide. The primary end use markets that the Company serves are construction, transportation, and electrical/electronics. Within the construction market, the major end-use application for glass fiber is asphaltic roofing shingles, where glass fiber is used to provide fire and mildew resistance in 95% of all shingles produced in North America. The Company sells glass fiber and/or mat directly to a small number of major shingle manufacturers (including the Company's own roofing business). Tubs, showers and other related internal building components used for both remodeling and new construction are also major applications of glass fiber materials in the construction market. These end-use products are some of the first successful material substitution conversions normally encountered in developing countries. Glass fiber for these markets is sold to direct accounts, and also to distributors around the world, who in turn service thousands of customers. The most significant use of glass fibers within the transportation market is the automotive industry, which continues to grow as the amount of composite materials used per vehicle increases. There are hundreds of composites applications, including exterior and interior body panels, instrument panels, bumpers, lamp housings, headliners, packaging for electronics, valve covers, luggage racks, distributor caps, timing belts, mufflers and tanks for alternative fuel vehicles. These composite parts are either produced by original equipment manufacturers (OEMs), or are purchased by OEMs from first-tier suppliers. Glass fibers for these parts are -5- sold mostly to first-tier and second-tier OEM suppliers. Non-automotive transportation applications include railcars, shipping containers, intermodal refrigerated containers, trailers and commercial ships. Within the electrical/electronics markets, glass fiber is used extensively in printed circuit boards made for the consumer electronics, transportation, and telecommunications industries. The Company sells glass fiber to a small number of large fabric weavers, who, in turn, supply the rest of the circuit board production value chain. Applications also include fiber optics and copper cable reinforcement connectors, circuit breaker boxes, computer housings, electricians' safety ladders, and hundreds of various electro/mechanical components. The Company manufactures large diameter glass-reinforced plastic (GRP) pipe designed for use in underground pressure and gravity fluid handling systems. The pipe is a filament- wound structural composite made with glass fiber and polyester resins. The Company has pipe joint ventures in Thailand, Saudi Arabia, Germany, Spain, Botswana, Argentina, and Colombia (1996 start up), and wholly-owned pipe plants in Norway and China. The Company, directly and with joint venture partners around the world, manufactures and sells GRP pipe directly to governments and private industry for major infrastructure projects primarily for the safe and efficient transport of water and waste. Major Customers No customer in the Composite Materials segment accounts for more than four percent of the segment's sales. GENERAL Raw Materials And Patents Owens Corning considers the sources and availability of raw materials, supplies, equipment and energy necessary for the conduct of its business in each industry segment to be adequate. The Company has numerous U.S. and foreign patents issued and applied for relating to its products and processes in each industry segment resulting from research and development efforts. The Company has issued royalty-bearing patent licenses to companies in several foreign countries. The licenses cover technology relating to both industry segments. Including the registered trademark Fiberglas, the Company has approximately 95 trademarks registered in the United States and approximately 400 trademarks registered in other countries. The Company considers its patent and trademark positions to be adequate for the present conduct of its business in each of its industry segments. Working Capital Owens Corning's manufacturing operations in each of its industry segments are generally continuous in nature and it warehouses much of its production prior to sale since it operates primarily with short delivery cycles. Inventories of finished goods, materials and supplies were within historical ranges at year-end 1995, when expressed as a percentage of fourth quarter annualized sales. -6- Research And Development During 1995, 1994 and 1993, the Company spent approximately $69 million, $64 million, and $61 million, respectively, for research and development activities. Customer sponsored research and development was not material in any of the last three years. Environmental Control Owens Corning's capital expenditures relating to compliance with environmental control requirements were approximately $14 million in 1995. The Company currently estimates that such capital expenditures will be approximately $19 million in 1996 and $25 million in 1997. The Company does not consider that it has experienced a material adverse effect upon its capital expenditures or competitive position as a result of environmental control legislation and regulations. Operating costs of environmental control equipment, however, were approximately $55 million in 1995. Owens Corning continues to invest in equipment and process modifications to remain in compliance with applicable environmental laws and regulations. The 1990 Clean Air Act Amendments (Act) provide that the United States Environmental Protection Agency (EPA) will issue regulations on a number of air pollutants over a period of years. Until these regulations are developed, the Company cannot determine the extent the Act will affect it. The Company anticipates that its sources to be regulated will include glass fiber manufacturing and asphalt processing activities. The EPA's announced schedule is to issue regulations covering glass fiber manufacturing by late 1997 and asphalt processing activities by late 2000, with implementation as to existing sources up to three years thereafter. Based on information now known to the Company, including the nature and limited number of regulated materials it emits, the Company does not expect the Act to have a material adverse effect on the Company's results of operations, financial condition, or long-term liquidity. Number Of Employees Owens Corning averaged approximately 17,300 employees during 1995 and had approximately 17,300 employees at December 31, 1995. Competition Owens Corning's products compete with a broad range of products made from numerous basic, as well as high- performance, materials. The Company competes with a number of manufacturers in the United States of glass fibers in primary forms, not all of which produce a broad line of glass fiber products. Approximately one-half of these producers compete with the Company's Building Materials industry segment in the sale of glass fibers in primary form. A similar number compete with the Company's Composite Materials industry segment. Companies in other countries, primarily Japan, export glass fiber products to the United States. The Company also competes outside the United States against a number of manufacturers of glass fibers in primary forms. Owens Corning also competes with many manufacturers, fabricators and distributors in the sale of products made from glass fibers. In addition, the Company competes with many other manufacturers in the sale of industrial asphalts and other products. Methods of competition include product performance, price, terms, service and warranty. -7- ITEM 2. PROPERTIES PLANTS Owens Corning's plants as of February 1, 1996 are listed below by industry segment and primary products, and are owned except as noted. The Company considers that these properties are in good condition and well maintained, and are suitable and adequate to carry on the Company's business. The capacity of each plant varies depending upon product mix. BUILDING MATERIALS SEGMENT Thermal And Acoustical Insulation Delmar, New York Newark, Ohio Eloy, Arizona Palestine, Texas* Fairburn, Georgia Salt Lake City, Utah Kansas City, Kansas Santa Clara, California Mount Vernon, Ohio Waxahachie, Texas Candiac, Canada Ravenhead, United Kingdom Edmonton, Canada Scarborough, Canada Guangzhou, China Shanghai, China* Pontyfelin, United Kingdom Vise, Belgium Queensferry, United Kingdom *Under construction. Roofing And Asphalt Processing (one of each at every location, except as noted) Atlanta, Georgia Kearney, New Jersey Brookville, Indiana (1) Medina, Ohio Channelview, Texas (2) Memphis, Tennessee Compton, California Minneapolis, Minnesota Denver, Colorado Morehead City, North Detroit, Michigan (2) Carolina (2) (3) Houston, Texas Oklahoma City, Oklahoma (2) Irving, Texas Portland, Oregon (4) Jacksonville, Florida (3) Savannah, Georgia Jessup, Maryland Summit, Illinois (3) (1) Roofing plant only. (2) Asphalt processing plant only. (3) Facility is partially leased. (4) Two asphalt processing plants, as well as one roofing plant. -8- Specialty and Foam Products Byron Center, Michigan Rockford, Illinois Hazleton, Pennsylvania St. Louis, Missouri Martinsville, Virginia* Tallmadge, Ohio *Facility is leased. Fabrication Centers Angola, Indiana Los Angeles, California* Athens, Alabama Memphis, Tennessee* Atlanta, Georgia* Montgomery, Alabama* Cleveland, Tennessee* Newark, New Jersey* Columbus, Ohio* Orlando, Florida* Dallas, Texas* Sacramento, California* Grand Rapids, Michigan* Shelbyville, Kentucky* Hebron, Ohio Springfield, Tennessee* Johnson City, Tennessee* Tiffin, Ohio* Laredo, Texas* Brantford, Canada *Facility is leased. COMPOSITE MATERIALS SEGMENT Textiles And Reinforcements Aiken, South Carolina Fort Smith, Arkansas Amarillo, Texas Huntingdon, Pennsylvania Anderson, South Carolina Jackson, Tennessee* Apeldoorn, The Netherlands Liversedge, United Kingdom Battice, Belgium Rio Claro, Brazil Birkeland, Norway San Vincente deCastellet/ Guelph, Canada Barcelona, Spain L'Ardoise, France Wrexham, United Kingdom *Facility is leased. Pipe Changchun, China Sandefjord, Norway* *Facility is leased. -9- OTHER PROPERTIES Owens Corning's general offices of approximately 300,000 square feet are located in the Fiberglas Tower, Toledo, Ohio. The lease for these offices terminates December 31, 1996. The Company has entered into lease arrangements for a new world headquarters facility of approximately 400,000 square feet, currently under construction in downtown Toledo. The lease for this facility terminates May 31, 2015, with options to extend through May 31, 2030. Under separate leases, the Company has additional general office space of approximately 145,000 square feet, and warehouse space of approximately 100,000 square feet, located in other buildings in Toledo. The Company's research and development function is conducted at its Science and Technology Center, located on approximately 500 acres of land outside Granville, Ohio. It consists of twenty-three structures totaling approximately 635,000 square feet, of which 25,000 square feet were mothballed at the end of 1995. ITEM 3. LEGAL PROCEEDINGS The paragraphs in Note 21 to the Company's Consolidated Financial Statements, entitled "Contingent Liabilities", on pages 63 through 67 hereof, are incorporated here by reference. Securities and Exchange Commission rules require the Company to describe certain governmental proceedings arising under federal, state or local environmental provisions unless the Company reasonably believes that the proceeding will result in monetary sanctions of less than $100,000. The following proceedings are reported in response to this requirement. Based on the information presently available to it, however, the Company believes that the costs which may be associated with these matters will not have a materially adverse effect on the Company's financial position or results of operations. As previously reported, the Company and more than 100 other companies have signed individual agreements with the United States Environmental Protection Agency (EPA) to conduct a Toxic Substance Control Act (TSCA) Audit Program to determine compliance status under TSCA section 8(e). The agreement provides that the Company will audit its records and report to the EPA any reportable matters which were not reported or which were reported late. The Company will pay stipulated penalties of up to $15,000 for each matter not timely reported, with a maximum penalty of $1 million in the aggregate. The Company has completed the portion of the audit dealing with substantial risk of injury to health. It has not been notified as to the amount of penalties it will be required to pay but estimates that the penalty for health related filings will be less than $150,000. The final report to the EPA, regarding environmental issues, is due six months after the EPA publishes final refined guidance on such reporting. During the first quarter of 1995, the Company signed a consent order with the Tennessee Department of Environment and Conservation, providing for a remedial investigation and feasibility study for two state Superfund sites. The Company is the primary generator in both sites. -10- ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Owens Corning has nothing to report under this Item. -11- Executive Officers of the Company (as of February 1, 1996) The term of office for elected officers is one year from the annual election of officers by the Board of Directors following the Annual Meeting of Stockholders on the third Thursday of April. All those listed have been employees of Owens Corning during the past five years except as indicated. Name and Age Position* Glen H. Hiner (61) Chairman of the Board and Chief Executive Officer since January 1992; formerly Senior Vice President - G.E. Plastics at General Electric Company (1983). Director since 1992. Alan D. Booth (52) Vice President and President, Insulation - North America since January 1994; formerly Vice President, Insulation Division, Construction Products Group (1993) and Vice President, Mechanical Products Division (1986). David T. Brown (47) Vice President and President, Building Materials Sales and Distribution-North America since January 1996; formerly Vice President and President, Roofing/Asphalt (1994), Vice President, Roofing/Asphalt Division (1993) and Vice President, Atlanta Regional Sales, Building Materials (1986). Christian L. Senior Vice President, Campbell (45) General Counsel and Secretary since January 1995; formerly Vice President, General Counsel and Secretary at Nalco Chemical (1990). Domenico Cecere (46) Vice President and President, Roofing/Asphalt since January 1996; formerly Vice President and Controller (1993); and Vice President, Finance and Administration, Europe (1992), Vice President and Assistant Controller (1991) and Vice President, Finance, Industrial Business (1990) at Honeywell, Inc. Charles H. Dana (56) Executive Vice President since January 1994; formerly Senior Vice President, and President - Industrial Materials Group (1989). David W. Senior Vice President Devonshire (50) and Chief Financial Officer since July 1993; formerly Corporate Vice President, Finance (1992) and Corporate Vice President and Controller (1990) at Honeywell, Inc. -12- Name and Age Position* Carl B. Hedlund (48) Vice President and President, Asia Pacific since December 1995; formerly Vice President and President, Retail/Distribution (1994), Vice President, Retail and Distribution, Construction Products Group (1993) and Vice President, Roofing Products Operating Division (1989). Robert C. Vice President and President, Lonergan (52) Science & Technology since January 1995; formerly President, Windows (1993); and President of Reb Plastics, Inc. (1984). Bradford C. Vice President - Corporate Relations Oelman (58) since November 1986. Gregory M. Senior Vice President, Human Thomson (48) Resources since October 1994; formerly Vice President, Human Resources, Public Service Electric & Gas (1988). Efthimios O. Vice President and Vidalis (41) President, Composites since January 1994; formerly Vice President, Reinforcements Division, Europe (1986). *Information in parentheses indicates year in which service in position began. -13- Part II ITEM 5. MARKET FOR OWENS CORNING'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The principal market on which Owens Corning's common stock is traded is the New York Stock Exchange. The high and low sales prices in dollars per share for Owens Corning's common stock as reported in the consolidated transaction reporting system for each quarter during 1995 and 1994 are set forth in the following tables. 1995 High Low 1994 High Low First Quarter 36-1/4 30-1/4 First Quarter 46 33-1/2 Second Quarter 40 34-5/8 Second Quarter 36-1/8 30-1/2 Third Quarter 47-1/8 36-1/2 Third Quarter 36-1/4 30-1/8 Fourth Quarter 46-3/4 40-3/8 Fourth Quarter 33-1/2 27-3/4
The number of stockholders of record of the Company's common stock on December 31, 1995 was 6,936. No dividends have been declared by the Company since the Company's November 5, 1986 recapitalization. In connection with certain of its current bank credit facilities, the Company has agreed to restrictions affecting the payment of cash dividends. As of January 1, 1996, these restrictions limited funds available for the payment of cash dividends by the Company to approximately $77 million. While the Company periodically evaluates the advisability of paying dividends, it currently does not anticipate paying dividends during 1996. -14- ITEM 6. SELECTED FINANCIAL DATA The following is a summary of certain financial information of the Company. 1995(a) 1994(b)1993(c) 1992(d)1991(e) (In millions of dollars, except per share data and where noted) Net sales $ 3,612$ 3,351 $ 2,944$ 2,878 $ 2,783 Cost of sales 2,670 2,536 2,266 2,234 2,186 Marketing, administrative and other expenses 454 429 350 350 1,171 Science and technology expenses 76 71 69 65 54 Restructure costs - 89 23 16 - Income (loss) from operations 412 226 236 213 (628) Cost of borrowed funds 87 94 89 110 131 Income (loss) before provision for income taxes 325 132 147 103 (759) Provision (credit) for income taxes 106 58 47 33 (238) Net income (loss) 231 159 131 73 (742) Net income (loss) per share Primary 4.64 3.61 3.00 1.70 (18.13) Fully diluted 4.40 3.35 2.81 1.67 (18.13) Dividends per share on common stock Declared - - - - - Paid - - - - - Weighted average number of shares outstanding (in thousands) Primary 49,711 44,209 43,593 43,013 40,924 Fully diluted 54,106 50,025 49,410 48,844 42,924 Net cash flow from operations 342 361 312 184 264 Capital spending 276 258 178 144 114 Total assets (f) 3,261 3,274 3,013 3,162 3,511 Long-term debt 794 1,037 898 1,018 1,148 Average number of employees (in thousands) 17 17 17 17 17 (a) During 1995, the Company recorded a one time $8 million tax credit as a result of a tax loss carryback. (b) During 1994, the Company recorded a $117 million charge ($85 million after-tax) for productivity initiatives and other actions. The Company also recorded a $10 million after-tax charge for the adoption of Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" for its non-U.S. plans, a $28 million after-tax charge for the adoption of SFAS No. 112, "Employers' Accounting for Postemployment Benefits," and a $123 million after-tax credit for the change in accounting method for rebuilding furnaces. -15- (c) During 1993, the Company recorded a $23 million charge for the restructuring of its European operations, an $8 million charge ($5 million after-tax) for the writedown of its hydrocarbon ventures to their net realizable value, a $26 million credit for the adoption of SFAS No. 109, "Accounting for Income Taxes," and a $14 million credit for the revaluation of deferred taxes. (d) During 1992, the Company recorded a $16 million charge ($11 million after-tax) to reorganize the Company's Building Materials segment and to centralize the Company's accounting and information systems. The Company also recorded a net extraordinary gain of $1 million resulting from the utilization of tax loss carryforwards, partially offset by a loss on the early retirement of debt. (e) During 1991, the Company recorded a non-recurring $800 million charge for unasserted asbestos litigation claims and a $227 million after-tax charge, or $5.55 per share, for the adoption of SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" for its U.S. plans. (f) During 1993, the Company adopted the provisions of FIN 39 which require the Company to present separately in its balance sheet its estimated contingent liabilities and related insurance assets. 1992 and 1991 assets have been restated to conform with the 1995, 1994, and 1993 presentations.
-16- ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (All per share information in Item 7 is on a fully diluted basis.) RESULTS OF OPERATIONS Net income for the year ended December 31, 1995 was $231 million, or $4.40 per share, compared to net income of $159 million, or $3.35 per share, and net income of $131 million, or $2.81 per share, for the years ended December 31, 1994 and 1993, respectively. The 1995 earnings growth reflects pricing gains and the benefits of acquisitions, as well as a one time gain of $8 million or $.15 per share which was the result of a tax loss carryback. Excluding the impact of the tax benefit, net income for the year ended December 31, 1995, was $223 million, or $4.25 per share. Please see Note 8 to the Consolidated Financial Statements. Net income of $159 million for the year ended December 31, 1994, included the following offsetting special items: an after-tax gain of $123 million, or $2.45 per share, reflecting a change to the capital method of accounting for the rebuilding of glass melting facilities; an after-tax charge of $85 million, or $1.69 per share, for productivity initiatives and other actions; a non-cash, after-tax charge of $10 million, or $.20 per share, to reflect adoption of Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," for plans outside the United States; and a non-cash, after-tax charge of $28 million, or $.56 per share, to reflect adoption of SFAS No. 112, "Employers' Accounting for Postemployment Benefits." Please see Notes 6, 16 and 17 to the Consolidated Financial Statements. Excluding special items, net income for the year ended December 31, 1993 was $118 million, or $2.56 per share. The 1993 special items included a credit of $26 million, or $.53 per share, for the cumulative effect of adopting the accounting standard for income taxes (SFAS No. 109); a one time gain of $14 million, or $.29 per share, reflecting a tax benefit resulting from a revaluation of deferred taxes, offset in part by an increase in the Company's corporate tax liability, necessitated by the increase in the federal statutory tax rate; an after-tax charge of $5 million, or $.10 per share, for the write-down of the Company's hydrocarbon ventures to their net realizable value; and a charge of $23 million, or $.47 per share, for the restructuring of the Company's European operations. Please see Notes 8 and 16 to the Consolidated Financial Statements. Net sales were $3.612 billion for the year ended December 31, 1995, reflecting an 8% increase from the 1994 level of $3.351 billion. Net sales in 1993 were $2.944 billion. Most of the 1995 growth is attributable to pricing gains achieved worldwide, with incremental growth resulting from acquisitions, which occurred mid year 1994 and throughout 1995. Please see Note 5 to the Consolidated Financial Statements. Sales outside the U.S. represented 27% of the total sales for the year ended December 31, 1995 compared to 24% for the years 1994 and 1993. Gross margin for the year ended December 31, 1995 increased to 26%, compared to 24% and 23% in 1994 and 1993, respectively, reflecting primarily pricing gains worldwide. Earnings before interest and taxes (EBIT) from ongoing operations increased to $412 million in 1995, from $343 million in 1994 and $267 million in 1993. -17- In the Building Materials segment, sales increased 6% for the year ended December 31, 1995 compared to 1994. This growth reflects pricing gains, and incremental sales from the 1995 acquisitions partially offset by a decline in volume, particularly in the Canadian markets. Income from operations for Building Materials decreased 9% from 1994 levels, after excluding the 1994 charge for restructure and other initiatives, primarily due to the weak economic conditions in Canada and start up costs associated with the Company's new insulation plant in Guangzhou, China. Building Materials sales in Europe increased 45% over the 1994 level, primarily resulting from a full year of sales from the June 1994 acquisition of the United Kingdom based insulation and industrial supply businesses of Pilkington plc (the "U.K. Acquisition"), and the addition of a second production line at the Company's insulation plant in Vise, Belgium. Late in the third quarter of 1995, the Company began shipping product from its insulation manufacturing facility in Guangzhou, China and announced plans for the construction of its second insulation plant in China, to be built in Shanghai. Roofing margins improved in 1995, driven primarily by improved pricing, and volume growth, including the successful introduction of Prominence(R) roofing shingles. The window business achieved significant sales growth and productivity improvements during the year, but has not yet reached break-even. In the foam insulation and related product markets, the Company has expanded its position with the acquisition of Falcon Manufacturing of Michigan, Inc. The Company also completed four other acquisitions in 1995 which are expected to contribute to the Company's overall growth strategy. These acquisitions increased the Company's small furnace technology base, as well as expanded its position in fabricated systems for the original equipment manufacturing market and its product offering for the window market. The Company further expanded its Building Materials multi-product offering in 1995 with the introduction of two branded products, Transitions(TM) vinyl siding and PinkWrap(TM) housewrap. In 1995 Miraflex(TM), the revolutionary new form of glass fiber developed by Owens Corning which combines two different glass compositions into one fiber, was successfully introduced to North American markets in its first commercial application, PinkPlus(R) insulation featuring Miraflex fiber. The Miraflex fibers are flexible, soft to the touch, virtually itch-free, resilient and form- filling, characteristics not normally associated with glass or inorganic fibers, which is driving the success of the new fiber. In the Composite Materials segment, sales increased 12% for the year ended December 31, 1995, or approximately 20% excluding the Company's previously consolidated polyester resins business, discussed below. The Composite Materials sales increase, driven by strong worldwide market demand, is attributable to volume and pricing gains, coupled with favorable currency impact from European markets. In the U.S., sales increased slightly, while in Europe, the Company's composites operations benefited from European economic improvement which resulted in increased demand, coupled with the positive effects of productivity initiatives. In 1995 the Company announced plans to expand global composites capacity by 135,000 metric tons by 1997, with a significant portion of the new capacity coming from the refiring of the second furnace at the Company's Jackson, Tennessee facility. The remaining expansion will be at other existing facilities in the U.S., Europe, Asia and Latin America. The Company in 1995 began a new large diameter glass reinforced plastic (GRP) pipe facility in China, pipe joint ventures in Spain and Argentina, as well as a composite materials service center in Colombia. Early in 1996 the Company announced the formation of a pipe joint venture in Colombia, increasing the Company's global presence. -18- During the third quarter of 1994, the Company entered into a joint venture with Alpha Corporation of Tennessee, whereby the two companies combined their existing resin businesses for fifty percent interests in Alpha/Owens-Corning, L.L.C., the largest manufacturer of polyester resins in North America. Please see Note 5 to the Consolidated Financial Statements. The Company's cost of borrowed funds for the year ended December 31, 1995 was $7 million lower than 1994, reflecting decreased borrowings resulting from the conversion of the Company's 8% convertible junior subordinated debentures into shares of common stock. Additionally, the proceeds from the issuance of $200 million of convertible preferred securities were partially used to pay off the Company's short-term credit facility, established during the second quarter of 1994 to finance the U.K. Acquisition. Please see Notes 2, 3 and 4 to the Consolidated Financial Statements. At December 31, 1995, certain of the Company's foreign subsidiaries have tax net operating loss carryforwards of approximately $27 million. The Company has $322 million in net deferred tax assets at December 31, 1995, all of which management expects will be realized through future income from operations. Please see Note 8 to the Consolidated Financial Statements. Early in the first quarter of 1996, the Company completed the sale of its share in a Japanese affiliate, Asahi Fiber Glass Co. Ltd., to its partner Asahi Glass Company for approximately $50 million and realized a pretax gain in excess of $25 million. Please see Note 12 to the Consolidated Financial Statements. LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS Cash flow from operations, excluding asbestos-related activities, was $342 million for 1995, compared to $361 million for 1994. The decline in cash flow from operations from 1994 to 1995 was due in part to funding of a Voluntary Employee's Beneficiary Association trust for tax planning purposes. Total receivables at December 31, 1995 were $15 million lower than the December 31, 1994 level due to the sale of $50 million in receivables early in 1995, resulting in a total of $100 million of receivables sold under the 1994 sales agreement. The receivables sold were largely offset by increased sales in 1995. Please see Notes 6 and 10 to the Consolidated Financial Statements. At December 31, 1995, the Company's net working capital was negative $9 million and its current ratio was .99, compared to negative $143 million and .87 at December 31, 1994, and negative $49 million and .94 at December 31, 1993, respectively. The increase in 1995 was due in part to decreased short-term borrowings as a result of the repayment of the financing used for the U.K. Acquisition. Excluding the impact of the short-term borrowings used to finance the U.K. Acquisition, the Company's net working capital was negative $33 million and its current ratio was .97 at December 31, 1994. During 1995, virtually all of the Company's $173 million issue of 8% convertible junior subordinated debentures were converted. Debentures not converted were redeemed for cash. The conversion resulted in the issuance of 5.8 million new shares of common stock. Also in 1995, Owens- Corning Capital, L.L.C., a Delaware limited liability company, of which all of the common limited company interests are indirectly owned by the Company, issued $200 million of 6.5% cumulative convertible preferred securities. The proceeds from the issuance were loaned to the Company and partially used to repay its short-term credit facility. Please see Notes 2 and 4 to the Consolidated Financial Statements. -19- The Company's total borrowings at December 31, 1995 were $893 million, $319 million lower than at year-end 1994, primarily due to the conversion of its 8% convertible junior subordinated debentures, and the repayment of debt through the issuance of the above mentioned preferred securities. As of December 31, 1995, the Company had unused lines of credit of $358 million available under long-term bank loan facilities and an additional $239 million under short-term facilities, compared to $293 million and $91 million, respectively, at year-end 1994. The increase in unused available lines of credit reflects increased availability, primarily in foreign credit facilities, a decrease in borrowings and a decrease in outstanding letters of credit supporting appeals from asbestos trials. Such letters of credit reduce credit availability under the Company's long- term U.S. loan facility. Capital spending for property, plant and equipment, excluding acquisitions, was $276 million during 1995. At the end of 1995, approved capital projects were $134 million. The Company expects that funding for these expenditures will be from the Company's operations and external sources as required. Gross payments for asbestos litigation claims during 1995, including $54 million in defense costs, were $308 million. Proceeds from insurance were $251 million, $100 million of which was received as a prepayment of a third quarter 1995 settlement with a major insurer, which confirmed the Company's access to $330 million of insurance for payment of asbestos litigation claims. Excluding the impact of the $100 million prepayment by the carrier, cash flow from asbestos related activities was a net pretax cash outflow of $157 million, or $94 million after-tax. During 1995, the Company received approximately 55,900 new asbestos personal injury cases and closed approximately 21,900 cases. Over the next twelve months total payments for asbestos litigation claims, including defense costs, are expected to be approximately $250 million. Proceeds from insurance of $100 million are expected to be available to cover these costs, resulting in a net pretax cash outflow of $150 million, or $90 million after-tax. Please see Note 21 to the Consolidated Financial Statements. The Company expects funds generated from operations, together with funds available under long and short term bank loan facilities, to be sufficient to satisfy its debt service obligations under its existing indebtedness, as well as its contingent liabilities for uninsured asbestos personal injury claims. The Company has been deemed by the Environmental Protection Agency (EPA) to be a potentially responsible party (PRP) with respect to certain sites under the Comprehensive Environmental Response, Compensation and Liability Act (Superfund). The Company has also been deemed a PRP under similar state or local laws, including two state Superfund sites where the Company is the primary generator. In other instances, other PRPs have brought suits or claims against the Company as a PRP for contribution under such federal, state or local laws. During 1995, the Company was designated as a PRP in such federal, state, local or private proceedings for nine additional sites. At December 31, 1995, a total of 42 such PRP designations remained unresolved by the Company, some of which designations the Company believes to be erroneous. The Company is also involved with environmental investigation or remediation at a number of other sites at which it has not been designated a PRP. The Company has established a $20 million reserve for its Superfund (and similar state, local and private action) contingent liabilities. In addition, based upon information presently available to the Company, and without regard to the application of insurance, the Company believes that, considered in the aggregate, the additional costs associated with such contingent liabilities, including any related litigation costs, will not have a materially adverse effect on the Company's financial position or results of operations. -20- The 1990 Clean Air Act Amendments (Act) provide that the EPA will issue regulations on a number of air pollutants over a period of years. Until these regulations are developed, the Company cannot determine the extent to which the Act will affect it. The Company anticipates that its sources to be regulated will include glass fiber manufacturing and asphalt processing activities. The EPA's announced schedule is to issue regulations covering glass fiber manufacturing by late 1997 and asphalt processing activities by late 2000, with implementation as to existing sources up to three years thereafter. Based on information now known to the Company, including the nature and limited number of regulated materials it emits, the Company does not expect the Act to have a materially adverse effect on the Company's results of operations, financial condition or long-term liquidity. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Pages 23 through 68 hereof are incorporated here by reference. ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Owens Corning has nothing to report under this Item. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF OWENS CORNING The information required by this Item is incorporated by reference from the Company's 1996 Proxy Statement except that certain information concerning Owens Corning's executive officers is included on pages 11 through 12 hereof. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item is incorporated by reference from the Company's 1996 Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is incorporated by reference from the Company's 1996 Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item is incorporated by reference from the Company's 1996 Proxy Statement. -21- PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) DOCUMENTS FILED AS PART OF THIS REPORT 1. See Index to Financial Statements on page 23 hereof 2. See Index to Financial Statement Schedules on page 69 hereof 3. See Exhibit Index beginning on page 71 hereof Management contracts and compensatory plans and arrangements required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K are denoted in the Exhibit Index by an asterisk ("*"). (b) REPORTS ON FORM 8-K No report on Form 8-K was filed during the fourth quarter of 1995. -22- Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. OWENS CORNING By /s/ G. H. Hiner Date February 14, 1996 Glen H. Hiner, Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ G. H. Hiner Date February 14, 1996 Glen H. Hiner, Chairman of the Board, Chief Executive Officer and Director /s/ David W. Devonshire Date February 14, 1996 David W. Devonshire, Senior Vice President and Chief Financial Officer /s/ Domenico Cecere Date February 14, 1996 Domenico Cecere, Vice President and President, Roofing/Asphalt, and Controller (Interim) /s/ Norman P. Blake Date February 20, 1996 Norman P. Blake, Jr., Director /s/ William Colville Date February 15, 1996 William W. Colville, Director /s/ Landon Hilliard Date February 15, 1996 Landon Hilliard, Director /s/ Trevor Holdsworth Date February 19, 1996 Trevor Holdsworth, Director /s/ Jon M. Huntsman, Jr. Date February 16, 1996 Jon M. Huntsman, Jr., Director W. Walker Lewis, Director Date /s/ David T. McGovern Date February 20, 1996 David T. McGovern, Director /s/ Furman C. Moseley Date February 19, 1996 Furman C. Moseley, Jr., Director /s/ W. Ann Reynolds Date February 15, 1996 W. Ann Reynolds, Director
-23- INDEX TO FINANCIAL STATEMENTS Item Page Report of Independent Public Accountants 24 Summary of Significant Accounting Policies 25-26 Consolidated Statement of Income - for the years ended December 31, 1995, 1994 and 1993 27-28 Consolidated Balance Sheet - December 31, 1995 and 1994 29-30 Consolidated Statement of Stockholders' Equity - for the years ended December 31, 1995, 1994 and 1993 31 Consolidated Statement of Cash Flows - for the years ended December 31, 1995, 1994 and 1993 32-33 Notes to Consolidated Financial Statements Notes 1 through 22 34-68 -24- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders of Owens Corning: We have audited the accompanying consolidated balance sheet of OWENS CORNING (a Delaware corporation) and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Owens Corning and subsidiaries as of December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. As discussed in Notes 6, 8 and 17 to the consolidated financial statements, effective January 1, 1994, the Company changed its methods of accounting for furnace rebuilds, postretirement benefits other than pensions for its non-U.S. plans, and postemployment benefits, and effective January 1, 1993, the Company changed its method of accounting for income taxes. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the Index to Financial Statement Schedules is presented for the purpose of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP January 20, 1996 Toledo, Ohio -25- OWENS CORNING AND SUBSIDIARIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of majority owned subsidiaries. Significant intercompany accounts and transactions are eliminated. Net Income per Share Primary net income per share is computed using the weighted average number of common shares outstanding and common equivalent shares during the period. Fully diluted net income per share reflects the dilutive effect of increased shares that would result from the conversion of debt and equity securities which are not treated as common stock equivalents. Unless otherwise indicated, all per share information included in the notes to the Owens Corning and subsidiaries' (the "Company") consolidated financial statements is presented on a fully diluted basis. Inventory Valuation Inventories are stated at cost, which is less than market value, and include material, labor, and manufacturing overhead. The majority of U.S. inventories are valued using the last-in, first-out (LIFO) method and the balance of inventories are generally valued using the first-in, first- out (FIFO) method. Intangible Assets Intangible assets consist primarily of goodwill, patents, and covenants not to compete and are carried at cost less accumulated amortization. Goodwill is amortized on a straight-line basis over a period of forty years. Other intangible assets are amortized over their estimated useful lives or actual contractual lives. The Company continually evaluates whether events and circumstances have occurred that indicate the remaining estimated useful lives of intangible assets may warrant revision or that the remaining balance of these intangible assets may not be recoverable. When factors indicate that intangible assets should be evaluated for possible impairment, the Company uses an estimate of the related business segment's undiscounted net income over the remaining life of the intangible asset in measuring whether the intangible asset is recoverable. Investments in Affiliates Investments in affiliates are accounted for using the equity method, under which the Company's share of earnings of these affiliates is reflected in income as earned and dividends are credited against the investment in affiliates when received. -26- OWENS CORNING AND SUBSIDIARIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Depreciation For assets placed in service prior to January 1, 1992, the Company's plant and equipment is depreciated primarily using the double-declining balance method for the first half of an asset's estimated useful life and the straight-line method is used thereafter. For assets placed in service after December 31, 1991, the Company's plant and equipment is depreciated using the straight-line method. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Rebuilding of Glass Melting Furnaces The Company's glass melting furnaces periodically require substantial rebuilding. As discussed in Note 17 to the consolidated financial statements, effective January 1, 1994, the Company adopted the capital method of accounting for the cost of rebuilding glass melting furnaces. Under this method, costs are capitalized when incurred and depreciated over the estimated useful lives of the rebuilt furnaces. Derivative Financial Instruments Gains and losses on hedges of existing assets or liabilities are included in the carrying amount of those assets or liabilities and are ultimately recognized in income as part of those carrying amounts. Gains and losses on hedges of net investments in foreign subsidiaries are included in stockholders' equity. Gains and losses related to qualifying hedges of firm commitments or anticipated transactions also are deferred and are recognized in income or as adjustments of carrying amounts when the hedged transaction occurs. Gains and losses on forward currency exchange contracts that do not qualify as hedges are recognized as other income or expense. Reclassifications Certain reclassifications have been made to 1994 and 1993 to conform with the classifications used in 1995. -27- OWENS CORNING AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 1995 1994 1993 (In millions of dollars, except share data) NET SALES $ 3,612 $ 3,351 $ 2,944 COST OF SALES 2,670 2,536 2,266 Gross margin 942 815 678 OPERATING EXPENSES Marketing and administrative expenses 444 391 327 Science and technology expenses (Note 9) 76 71 69 Restructure costs (Note 16) - 89 23 Other (Notes 2, 4, 10 and 16) 10 38 23 Total operating expenses 530 589 442 INCOME FROM OPERATIONS 412 226 236 Cost of borrowed funds (Notes 2 and 3) 87 94 89 INCOME BEFORE PROVISION FOR INCOME TAXES 325 132 147 Provision for income taxes (Note 8) 106 58 47 INCOME BEFORE EQUITY IN NET INCOME OF AFFILIATES 219 74 100 Equity in net income of affiliates (Notes 5 and 12) 12 - 5 INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES 231 74 105 Cumulative effect of accounting changes (Notes 6, 8 and 17) - 85 26 NET INCOME $ 231 $ 159 $ 131
The accompanying summary of significant accounting policies and notes are an integral part of this statement. -28- OWENS CORNING AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 (Continued) 1995 1994 1993 (In millions of dollars, except share data) NET INCOME PER COMMON SHARE: Primary: Income before cumulative effect of accounting changes $ 4.64 $ 1.70 $ 2.40 Cumulative effect of accounting changes - 1.91 .60 Net income per share $ 4.64 $ 3.61 $ 3.00 Assuming full dilution: Income before cumulative effect of accounting changes $ 4.40 $ 1.66 $ 2.28 Cumulative effect of accounting changes - 1.69 .53 Net income per share $ 4.40 $ 3.35 $ 2.81 Weighted average number of common shares outstanding and common equivalent shares during the period (in millions) Primary 49.7 44.2 43.6 Assuming full dilution 54.1 50.0 49.4
The accompanying summary of significant accounting policies and notes are an integral part of this statement. -29- OWENS CORNING AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET - DECEMBER 31, 1995 AND 1994 ASSETS 1995 1994 (In millions of dollars) CURRENT Cash and cash equivalents $ 18 $ 59 Receivables, less allowances of $19 million in 1995 and $16 million in 1994 (Note 10) 314 329 Inventories (Note 11) 253 223 Insurance for asbestos litigation claims - current portion (Note 21) 100 125 Deferred income taxes (Note 8) 70 156 VEBA trust (Note 6) 51 - Income tax receivable 50 12 Investment in affiliate held for sale (Note 12) 36 - Other current assets 35 26 Total current 927 930 OTHER Insurance for asbestos litigation claims (Note 21) 330 556 Deferred income taxes (Note 8) 252 308 Goodwill, less accumulated amortization of $19 million in 1995 and $14 million in 1994 (Note 5) 249 151 Investments in affiliates (Notes 5 and 12) 50 74 Other noncurrent assets (Note 6) 147 122 Total other 1,028 1,211 PLANT AND EQUIPMENT, at cost Land 52 51 Buildings and leasehold improvements 581 553 Machinery and equipment 2,266 2,172 Construction in progress 168 125 3,067 2,901 Less: Accumulated depreciation (1,761) (1,768) Net plant and equipment 1,306 1,133 TOTAL ASSETS $ 3,261 $ 3,274
The accompanying summary of significant accounting policies and notes are an integral part of this statement. -30- OWENS CORNING AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET - DECEMBER 31, 1995 AND 1994 (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994 (In millions of dollars) CURRENT Accounts payable and accrued liabilities (Note 13) $ 587 $ 598 Reserve for asbestos litigation claims - current portion (Note 21) 250 300 Short-term debt (Note 3) 64 155 Long-term debt - current portion (Note 2) 35 20 Total current 936 1,073 LONG-TERM DEBT (Note 2) 794 1,037 OTHER Reserve for asbestos litigation claims (Note 21) 887 1,145 Other employee benefits liability (Note 6) 367 390 Pension plan liability (Note 7) 75 77 Other 220 232 Total other 1,549 1,844 COMMITMENTS AND CONTINGENCIES (Notes 15, 20 and 21) COMPANY OBLIGATED CONVERTIBLE SECURITY OF SUBSIDIARY HOLDING SOLELY PARENT DEBENTURES (MIPS, Note 4) 194 - STOCKHOLDERS' EQUITY Preferred stock, no par value; authorized 8 million shares, none outstanding (Note 19) Common stock, par value $.10 per share; authorized 100 million shares; issued 1995--51.4 million and 1994--44.2 million shares (Notes 2, 5 and 18) 579 348 Deficit (781) (1,012) Foreign currency translation adjustments 9 (1) Other (Note 7) (19) (15) Total stockholders' equity (212) (680) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,261 $ 3,274
The accompanying summary of significant accounting policies and notes are an integral part of this statement. -31- OWENS CORNING AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 1995 1994 1993 (In millions of dollars) COMMON STOCK Balance beginning of year $ 348 $ 315 $ 299 Issuance of stock for: Conversion of debt (Note 2) 173 - - Acquisitions (Note 5) 42 27 - Awards under stock compensation plans (Note 18) 16 6 16 Balance end of year 579 348 315 DEFICIT Balance beginning of year (1,012) (1,171) (1,302) Net income 231 159 131 Balance end of year (781) (1,012) (1,171) FOREIGN CURRENCY TRANSLATION ADJUSTMENTS Balance beginning of year (1) 5 4 Translation adjustments 10 (6) 1 Balance end of year 9 (1) 5 OTHER Balance beginning of year (15) (18) (9) Net increase (decrease) (4) 3 (9) Balance end of year (19) (15) (18) STOCKHOLDERS' EQUITY $ (212) $ (680) $ (869)
The accompanying summary of significant accounting policies and notes are an integral part of this statement. -32- OWENS CORNING AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 1995 1994 1993 (In millions of dollars) NET CASH FLOW FROM OPERATIONS Net income $ 231 $ 159 $ 131 Reconciliation of net cash provided by operating activities: Noncash items: Cumulative effect of accounting changes (Notes 6, 8 and 17) - (85) (26) Provision for depreciation, amortization, and rebuilding furnaces (Note 17) 125 118 121 Provision for deferred income taxes (Note 8) 142 59 10 Other 5 9 10 (Increase) decrease in receivables (Note 10) 36 21 (22) (Increase) decrease in inventories (15) 17 4 Increase (decrease) in accounts payable and accrued liabilities (50) 53 114 Funding of VEBA trust (Note 6) (64) - - Other (68) 10 (30) Net cash flow from operations 342 361 312 NET CASH FLOW FROM INVESTING Additions to plant and equipment (276) (258) (178) Investment in subsidiaries, net of cash acquired (Note 5) (81) (120) - Other (4) 23 - Net cash flow from investing (361) (355) (178)
The accompanying summary of significant accounting policies and notes are an integral part of this statement. -33- OWENS CORNING AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 (Continued) 1995 1994 1993 (In millions of dollars) NET CASH FLOW FROM FINANCING (Notes 2, 3 and 4) Net additions (reductions) to long-term credit facilities $ 55 $ 10 $ (90) Other additions to long-term debt 9 145 - Other reductions to long-term debt (128) (51) (21) Net increase (decrease) in short-term debt (94) 69 26 Issuance of preferred stock of subsidiary, net of fees 194 - - Other - 5 11 Net cash flow from financing 36 178 (74) NET CASH FLOW FROM ASBESTOS- RELATED ACTIVITIES (Note 21) Proceeds from insurance for asbestos litigation claims 251 87 224 Payments for asbestos litigation claims (308) (215) (283) Net cash flow from asbestos-related activities (57) (128) (59) Effect of exchange rate changes on cash (1) - - Net increase (decrease) in cash and cash equivalents (41) 56 1 Cash and cash equivalents at beginning of year 59 3 2 Cash and cash equivalents at end of year $ 18 $ 59 $ 3
The accompanying summary of significant accounting policies and notes are an integral part of this statement. -34- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Segment Data The Company operates in two industry segments, Building Materials and Composite Materials, and reports its results in two ways: by industry segment and by geographic segment. See Note 5 for detail of 1995 and 1994 acquisitions and divestitures of businesses. The industry segments are defined as follows: Building Materials Production and sale of glass wool fibers formed into thermal and acoustical insulation and air ducts; extruded and expanded polystyrene insulation; roofing shingles and asphalt materials; underground storage tanks; windows; and the rebranded sale of patio doors; vinyl siding and housewrap. Composite Materials Production and sale of glass fiber yarns; rovings, mats and veils; strand and reinforcement products; fiber reinforced plastic pipe; and polyester and vinyl ester resins. The geographic segment reporting combines the two industry segments within the major regions: United States, Europe, and Canada and other. Intersegment sales are generally recorded at market or equivalent value. Income (loss) from operations by industry and geographic segment consists of net sales less related costs and expenses. In computing income (loss) from operations by segment, cost of borrowed funds and other general corporate income and expenses have been excluded. Certain corporate operating expenses directly traceable to industry and geographic segments have been allocated to those segments. During the first quarter of 1994, the Company recorded a $117 million pretax charge for productivity initiatives and other actions (Note 16). The impact of this charge was to reduce income from operations for Building Materials and Composite Materials by $70 million and $22 million, respectively, and to increase general corporate expense by $25 million. Geographically, income from operations for Building Materials in the United States and Canada and other was reduced by $50 million and $20 million, respectively. Income from operations for Composite Materials in the United States, Europe, and Canada and other was reduced by $6 million, $13 million, and $3 million, respectively. During the first quarter of 1993, the Company recorded a $23 million charge to reorganize its European operations, the full impact of which was reflected as a reduction to income from operations for the Composite Materials segment (Note 16). -35- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. Segment Data (Continued) Identifiable assets by industry and geographic segment are those assets that are used in the Company's operations in each industry and geographic segment and do not include general corporate assets. General corporate assets consist primarily of cash and cash equivalents, VEBA trust, deferred taxes, asbestos insurance, and corporate property and equipment. NET SALES 1995 1994 1993 (In millions of dollars) Industry Segments Building Materials United States $ 2,033 $ 1,952 $ 1,699 Europe 264 182 97 Canada and other 107 139 150 Total Building Materials 2,404 2,273 1,946 Composite Materials United States 610 595 528 Europe 459 355 346 Canada and other 139 128 124 Total Composite Materials 1,208 1,078 998 Intersegment sales Building Materials - - - Composite Materials 96 99 85 Eliminations (96) (99) (85) Net sales $ 3,612 $ 3,351 $ 2,944 Geographic Segments United States $ 2,643 $ 2,547 $ 2,227 Europe 723 537 443 Canada and other 246 267 274 3,612 3,351 2,944 Intersegment sales United States 54 43 42 Europe 21 22 15 Canada and other 88 91 66 Eliminations (163) (156) (123) Net sales $ 3,612 $ 3,351 $ 2,944
-36- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. Segment Data (Continued) INCOME (LOSS) FROM OPERATIONS 1995 1994 1993 (In millions of dollars) Industry Segments Building Materials United States $ 195 $ 145 $ 153 Europe 29 26 16 Canada and other 13 18 6 Total Building Materials 237 189 175 Composite Materials United States 135 108 101 Europe 64 (8) (15) Canada and other 26 9 12 Total Composite Materials 225 109 98 General corporate expense (50) (72) (37) Income from operations 412 226 236 Cost of borrowed funds (87) (94) (89) Income before provision for income taxes $ 325 $ 132 $ 147 Geographic Segments United States $ 330 $ 253 $ 254 Europe 93 18 1 Canada and other 39 27 18 General corporate expense (50) (72) (37) Income from operations 412 226 236 Cost of borrowed funds (87) (94) (89) Income before provision for income taxes $ 325 $ 132 $ 147
-37- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. Segment Data (Continued) IDENTIFIABLE ASSETS AT 1995 1994 1993 DECEMBER 31, (In millions of dollars) Industry Segments Building Materials United States $ 893 $ 718 $ 596 Europe 170 162 46 Canada and other 194 136 155 Total Building Materials 1,257 1,016 797 Composite Materials United States 361 326 302 Europe 388 335 256 Canada and other 145 160 157 Total Composite Materials 894 821 715 General corporate 1,024 1,363 1,438 3,175 3,200 2,950 Investments in affiliates accounted for under the equity method 86 74 63 Total assets $ 3,261 $ 3,274 $ 3,013 Geographic Segments United States $ 1,254 $ 1,044 $ 898 Europe 558 497 302 Canada and other 339 296 312 General corporate 1,024 1,363 1,438 3,175 3,200 2,950 Investments in affiliates accounted for under the equity method 86 74 63 Total assets $ 3,261 $ 3,274 $ 3,013
-38- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. Segment Data (Continued) PROVISION FOR DEPRECIATION, 1995 1994 1993 AMORTIZATION, AND REBUILDING (In millions of dollars) FURNACES Industry Segments Building Materials United States $ 49 $ 48 $ 47 Europe 11 6 2 Canada and other 8 8 11 Total Building Materials 68 62 60 Composite Materials United States 22 22 24 Europe 18 17 16 Canada and other 7 8 10 Total Composite Materials 47 47 50 General corporate 10 9 11 Total provision for depreciation, amortization, and rebuilding furnaces $ 125 $ 118 $ 121 Geographic Segments United States $ 71 $ 70 $ 71 Europe 29 23 18 Canada and other 15 16 21 General corporate 10 9 11 Total provision for depreciation, amortization, and rebuilding furnaces $ 125 $ 118 $ 121
-39- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 1. Segment Data (Continued) ADDITIONS TO PLANT AND EQUIPMENT 1995 1994 1993 (In millions of dollars) Industry Segments Building Materials United States $ 60 $ 85 $ 82 Europe 36 41 2 Canada and other 33 7 5 Total Building Materials 129 133 89 Composite Materials United States 37 41 31 Europe 39 35 32 Canada and other 18 26 7 Total Composite Materials 94 102 70 General corporate 53 23 19 Total additions $ 276 $ 258 $ 178 Geographic Segments United States $ 97 $ 126 $ 113 Europe 75 76 34 Canada and other 51 33 12 General corporate 53 23 19 Total additions $ 276 $ 258 $ 178
-40- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2. Long-Term Debt 1995 1994 (In millions of dollars) Unsecured U.S. credit facility due in 1997, variable $ 55 $ 35 Unsecured European credit facilities due through 2002, variable 40 - Unsecured Canadian credit facility due in 1997, variable - 4 Guaranteed debentures due in 2001, 10% 150 150 Debentures due in 2002, 8.875% 150 150 Debentures due in 2012, 9.375% 150 149 Guaranteed debentures due in 1998, 9.8% 100 100 Eurobonds due through 2001, 9.814% (Note 20) 63 140 Bonds due in 2000, 7.25%, payable in Deutsche marks (Note 20) 50 50 Convertible junior subordinated debentures due in 2005, 8%, convertible at $29.75 per share - 173 Notes due through 2002, 6.06% to 8.50%, payable in foreign currencies 26 38 Other long-term debt due through 2012, at rates from 5.375% to 12.47% 45 68 829 1,057 Less: Current portion (35) (20) Total long-term debt $ 794 $ 1,037
The U.S. credit facility has a maximum commitment of $475 million at December 31, 1995, of which $176 million was used for standby letters of credit and $244 million was unused. The rate of interest is either the bank's base rate, or 13/16% over the certificate of deposit rate, or 11/16% over the London Interbank Offered Rate (LIBOR). The weighted average rate of interest paid on borrowings under this facility during 1995 was 6.9%, (8.5% at December 31, 1995). A commitment fee of 1/4 of 1% is charged on the unused portions of this facility. The Canadian credit facility is payable in Canadian dollars and has a maximum commitment of 135 million Canadian dollars ($99 million U.S. dollars), all of which was unused at December 31, 1995. The rate of interest is either 11/16% over the Canadian cost of funds rate, or 11/16% over LIBOR on U.S. deposits, or .7875% over the Canadian bankers' acceptance rate. A commitment fee of 1/4 of 1% is charged on the unused portions of this facility. -41- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2. Long-Term Debt (Continued) The European credit facilities, payable in Belgian francs, have an aggregate commitment of 1.6 billion Belgian francs ($55 million U.S. dollars) of which 400 million Belgian francs ($15 million U.S. dollars) was unused at December 31, 1995. The rate of interest on the facilities ranges from 4.28% to 4.51% at December 31, 1995. The commitment fee on the unused portions of the facilities range from 3/20 to 1/4 of 1%. As is typical for bank credit facilities, the agreements relating to the facilities described above contain restrictive covenants, including requirements for the maintenance of working capital, interest coverage, and minimum coverage of fixed charges; and limitations on the early retirement of subordinated debt, additional borrowings, certain investments, payment of dividends, and purchase of Company stock. The agreements include a provision which would result in all of the unpaid principal and accrued interest of the facilities becoming due immediately upon a change of control in ownership of the Company. A material adverse change in the Company's business, assets, liabilities, financial condition or results of operations constitutes a default under the agreements. During 1995, the Company's $173 million issue of 8% convertible junior subordinated debentures were converted. The conversion resulted in the issuance of 5.8 million new shares of common stock. In conjunction with the conversion of the debentures, the Company paid fees of approximately $3 million which are reflected as other expenses on the Company's consolidated statement of income for the year ended December 31, 1995. In November 1994, Owens-Corning Finance (U.K.) PLC, a wholly- owned subsidiary of the Company, issued $140 million of Eurobonds. These bonds are convertible into fixed rate preference shares of Owens-Corning Finance (U.K.) PLC in November 2004 and may be redeemed at any time, at a premium, at the option of the Company. The bonds are guaranteed by the Company as to payments of principal and interest and rank similarly with all other senior unsecured debt of the Company. Subsequently, in a separate transaction, the Company sold a put option to the holder of the bonds allowing the option holder to require the Company to purchase a portion of the bonds. As a result of the holder's exercise of the put option, in May 1995, the Company repurchased a portion of the $140 million issue of Eurobonds for $77 million. -42- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2. Long-Term Debt (Continued) The aggregate maturities and sinking fund requirements for all long-term debt issues for each of the five years following December 31, 1995 are: Credit Other Long- Year Facilities Term Debt (In millions of dollars) 1996 $ - $ 35 1997 63 19 1998 8 112 1999 8 12 2000 6 75
3.Short-Term Debt 1995 1994 (In millions of dollars) Balance outstanding at December 31 $ 64 $ 155 Weighted average short-term borrowings $ 184 $ 165 Weighted average interest rates on short-term debt outstanding at December 31 7.5% 6.6%
In May 1995 the Company repaid its unsecured, variable rate, short-term bank credit facility that was used to finance the 1994 U.K. acquisition (Note 5). This facility had a maximum commitment of $110 million at December 31, 1994, all of which was used. The rate of interest on borrowings under this facility was 1/2 of 1% over LIBOR, or 6.6875% at December 31, 1994. In December 1995 the Company entered into two revolving credit agreements. Each quarter during 1996, the Company may borrow up to a predetermined amount from $13 million to $16 million. The amount borrowed may be repaid in U.S. dollars at less than or equal to the original borrowing, based upon predetermined British pound or Belgian franc currency exchange rates. The agreements are in effect through 1996 and bear interest at market rates in effect at the time of each borrowing. The Company had unused short-term lines of credit totalling $239 million and $91 million at December 31, 1995 and 1994, respectively. -43- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 4. Convertible Monthly Income Preferred Securities (MIPS) In May 1995, Owens-Corning Capital, L.L.C. ("OC Capital"), a Delaware limited liability company, all of the common limited liability company interests in which are owned indirectly by the Company, completed a private offering of 4 million shares of Convertible Monthly Income Preferred Securities ("preferred securities"). The aggregate purchase price for the offering was $200 million. In conjunction with the offering, the Company incurred $6 million in issuance costs. The preferred securities are guaranteed in certain respects by the Company and are convertible, at the option of the holders, into Company common stock at the rate of 1.1416 shares of Company common stock for each preferred security (equivalent to a conversion price of $43.80 per common share). OC Capital cannot initiate any action relating to conversion until after June 1, 1998. Distributions on the preferred securities are cumulative and are payable at the annual rate of 6-1/2 percent of the liquidation preference of $50 per preferred security. Distributions of $8 million have been recorded as other expenses on the Company's consolidated statement of income for the year ended December 31, 1995. The Company issued $200 million of 6-1/2 percent Convertible Subordinated Debentures due 2025 to OC Capital, which represents the sole asset of OC Capital, in exchange for the proceeds of the offering. The Company used the proceeds to repay the $110 million short-term bank credit facility utilized for the 1994 U.K. acquisition (Note 5), with the balance used to reduce borrowings under the Company's revolving credit facilities. 5. Acquisitions and Divestitures of Businesses During 1995 and 1994, the Company made several acquisitions in the Building Materials segment in the United States and Europe, which were consummated through the exchange of various combinations of common stock and cash. The aggregate purchase price including possible subsequent contingent consideration was $126 million and $155 million for 1995 and 1994, respectively. The 1995 acquisitions exchanged 946,922 shares of the Company's common stock and $82 million in cash which includes $1 million to be paid in the first quarter of 1996 and the 1994 acquisitions exchanged 855,556 shares of the Company's common stock and $120 million in cash, net of cash acquired, for all of the assets and liabilities of the companies acquired. The incremental sales from the acquisitions, in the year of acquisition, were $41 million and $134 million for the years ended December 31, 1995 and 1994, respectively. The largest of these acquisitions was the 1994 second quarter acquisition of Pilkington Insulation Limited and Kitsons Insulation Products Limited (collectively, "the U.K. acquisition"), the United Kingdom based insulation manufacturing and industrial supply businesses of Pilkington PLC. Acquiring two glass fiber insulation manufacturing facilities, one rock wool manufacturing facility and 14 distribution centers, the Company now represents the United Kingdom's largest manufacturer of glass fiber and rock wool insulation is a major -44- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. Acquisitions and Divestitures of Businesses (Continued) supplier of thermal and acoustical insulation products to the United Kingdom construction industry. The purchase price of the U.K. acquisition was $110 million and was financed with borrowings from the Company's short-term bank credit facility (Note 3). All acquisitions were accounted for under the purchase method of accounting, whereby the assets acquired and liabilities assumed have been recorded at their fair values and the results of operations for the acquisitions have been included in the Company's consolidated financial statements subsequent to the acquisition dates. The purchase price allocations were based on preliminary estimates of fair market value and are subject to revision. The 1995 acquisitions included goodwill of $97 million and non-competition agreements of $3 million. The 1994 acquisitions included goodwill of $78 million and non- competition agreements of $6 million. The goodwill and non-competition agreements are being amortized on a straight-line basis over 40 years and 7 years, respectively. The pro forma effect of the acquisitions was not material to net income for the years ended December 31, 1995, 1994 or 1993. On September 30, 1994, the Company entered into a joint venture with Alpha Corporation of Tennessee, whereby the two companies combined their existing resin businesses to form Alpha/Owens-Corning, L.L.C., the largest manufacturer of polyester resins in North America. The Company contributed two manufacturing plants (Valparaiso, Indiana and Guelph, Ontario) and owns a 50 percent interest in the joint venture. This joint venture is being accounted for under the equity method. For the nine months ended September 30, 1994 and the year ended December 31, 1993, resin sales totaled $58 million and $63 million, respectively, and were included in the Composite Materials segment. Late in the fourth quarter of 1994, the Company completed the sale of its underground storage tank manufacturing business. Sales for this business totaled $41 million and $43 million in 1994 and 1993, respectively, and were included in the Building Materials segment. 6. Postemployment and Postretirement Benefits Other Than Pensions The Company and its subsidiaries maintain health care and life insurance benefit plans for certain retired employees and their dependents. The health care plans in the U.S. are unfunded and pay either 1) stated percentages of covered medically necessary expenses, after subtracting payments by Medicare or other providers and after stated deductibles have been met or, 2) fixed amounts of medical expense reimbursement. Employees become eligible to participate in the health care plans upon retirement under one of the Company's pension plans if they have accumulated 10 years of service after age 45. Some of the plans are -45- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 6. Postemployment and Postretirement Benefits Other Than Pensions (Continued) contributory, with some retiree contributions adjusted annually. The Company has reserved the right to change or eliminate these benefit plans subject to the terms of collective bargaining agreements during their term. Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" for its non-U.S. plans. Accordingly, the projected cost of postretirement benefits is charged to expense during the years in which eligible employees render service. The cumulative effect of the adoption of this standard was a charge of $10 million, or $.20 per share. (The Company adopted Statement No. 106 for its U.S. plans effective January 1, 1991.) During 1993, the Company approved changes in its postretirement health care plans for retirees and active employees. These changes, which reduced the accumulated benefit obligation by $120 million and 1993 expense by $18 million, resulted in an unrecognized net reduction in prior service cost which will be amortized through 1999. The following table reconciles the status of the accrued postretirement benefits cost liability at October 31, 1995 and 1994, as reflected on the balance sheet as of December 31, 1995 and 1994: 1995 1994 (In millions of dollars) Accumulated Postretirement Benefits Obligation: Retirees $ (194) $ (176) Fully eligible active plan participants (21) (24) Other active plan participants (54) (46) Funded status (269) (246) Unrecognized net gain (11) (39) Unrecognized net reduction in prior service cost (72) (88) Benefit payments subsequent to the valuation date (October 31) 3 3 Accrued postretirement benefits cost liability (includes current liabilities of $19 million in 1995 and 1994) $ (349) $ (370)
-46- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 6. Postemployment and Postretirement Benefits Other Than Pensions (Continued) For measurement purposes, a 10.5% annual rate of increase in the per capita cost of covered health care claims was assumed for 1996. The rate was assumed to decrease to 10% for 1997, then decrease gradually to 6.0% by 2005. The health care cost trend rate assumption has a significant effect on the amounts reported. To illustrate, increasing the assumed health care cost trend rate by one percentage point in each year would increase the accumulated postretirement benefits obligation as of October 31, 1995, by $14 million and the aggregate of the service and interest cost components of net postretirement benefits cost for the year then ended by $2 million. The discount rate used in determining the accumulated postretirement benefits obligation was 7.5% in 1995, 8.5% in 1994, and 7.5% in 1993. Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits." This standard requires the Company to recognize the obligation to provide benefits to former or inactive employees after employment but before retirement under certain conditions. These benefits include, but are not limited to, salary continuation, supplemental unemployment benefits, severance benefits, disability-related benefits (including workers' compensation), job training and counseling, and continuation of benefits such as health care and life insurance coverage. The cumulative effect of the adoption of this standard, recorded in 1994, was an undiscounted charge of $28 million, or $.56 per share, net of related income taxes of $18 million. The following table reconciles the status of the accrued postemployment benefits cost liability at October 31, 1995 and 1994, as reflected on the balance sheet as of December 31, 1995 and 1994: 1995 1994 (In millions of dollars) Funded status $ (40) $ (45) Unrecognized net gain (2) - Benefit payments subsequent to the valuation date (October 31) 1 1 Accrued postemployment benefit cost liability (includes current liabilities of $4 million in 1995 and $5 million in 1994) $ (41) $ (44)
The net postemployment benefits expense was $2 million and $3 million for 1995 and 1994, the year of adoption, respectively. -47- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 6. Postemployment and Postretirement Benefits Other Than Pensions (Continued) The net postretirement benefits cost for 1995, 1994 and 1993 included the following components: 1995 1994 1993 (In millions of dollars) Service cost $ 7 $ 8 $ 7 Interest cost on accumulated post-retirement benefits obligation 19 19 23 Net amortization and deferral (24) (20) (13) Net postretirement benefits cost $ 2 $ 7 $ 17
In December 1995, the Company established and funded a Voluntary Employees' Beneficiary Association (VEBA) trust to cover certain employee welfare and postretirement benefits in the amount of $64 million, of which $13 million has been classified as long-term. 7. Pension Plans The Company has several defined benefit pension plans covering most employees. Under the plans, pension benefits are generally based on an employee's number of years of service. Company contributions to these pension plans are based on the calculations of independent actuaries using the projected unit credit method. Plan assets consist primarily of equity securities with the balance in fixed income investments or insurance contracts. The unrecognized cost of retroactive amendments and actuarial gains and losses are amortized over the average future service period of plan participants expected to receive benefits. In August of 1995, the Company amended the pension plan for U.S. salaried employees to change from a final average pay formula to a cash balance formula. The new plan provisions become effective on January 1, 1996. The change resulted in a reduction in the projected benefit obligation of $20 million. The change is expected to reduce pension expense in the future through the amortization of the reduction in the projected benefit obligation, reduced service cost and reduced interest cost on the projected benefit obligation. The reduction in pension expense for 1996 is expected to be $11 million. The impact on pension expense for 1995 was a reduction of $4 million. -48- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 7. Pension Plans (Continued) Pension expense for the Company's defined benefit pension plans includes the following: 1995 1994 1993 (In millions of dollars) Service cost $ 20 $ 22 $ 23 Interest cost on projected benefit obligation 64 58 62 Actual return on plan assets (114) (13) (124) Net amortization and deferral 30 (64) 50 Net pension expense $ - $ 3 $ 11
The funded status at October 31, 1995 and 1994 is as follows: 1995 1994 (In millions of dollars) Over Under Over Under Funded Funded Funded Funded Vested benefit obligation $ 359 $ 312 $ 310 $ 273 Accumulated benefit obligation $ 395 $ 355 $ 341 $ 343 Plan assets at fair value $ 500 $ 316 $ 466 $ 306 Projected benefit obligation 447 365 430 352 Plan assets in excess of (less than) projected benefit obligation 53 (49) 36 (46) Unrecognized loss 15 59 8 55 Unrecognized prior service cost (30) (31) (12) (24) Unrecognized transition amount (35) (11) (39) (13) Adjustment to minimum liability - (7) - (12) Net pension liability (includes current liabilities of $2 million in 1995 and $8 million in 1994 and noncurrent assets of $41 million in 1995 and $38 million in 1994) $ 3 $ (39) $ (7) $(40)
-49- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 7. Pension Plans (Continued) The 1995, 1994 and 1993 primary actuarial assumptions used for pension plans were: 1995 1994 1993 Discount rate 7.5% 8.5% 7.5% Expected long-term rate of return on plan assets 9.0% 9.5% 10.0% Rate of compensation increase 5.1% 5.1% 4.1%
The Company also sponsors defined contribution plans available to substantially all U.S. employees. Company contributions for the plans are based on matching a percentage of employee savings up to a maximum savings level. The Company's contributions were $12 million in 1995, $10 million in 1994, and $9 million in 1993. 8. Income Taxes Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Statement No. 109 changed the criteria for measuring the provision for income taxes and recognizing deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of corresponding liabilities and assets using enacted tax rates in effect for the year in which the differences are expected to reverse. The cumulative effect of the adoption of this standard, recorded in 1993, was an increase to earnings of $26 million, or $.53 per share. -50- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 8. Income Taxes 1995 1994 1993 (In millions of dollars) Income (loss) before provision (credit) for income taxes: U.S. $ 226 $ 119 $ 163 Foreign 99 13 (16) Total $ 325 $ 132 $ 147 Provision (credit) for income taxes: Current U.S. $ (45) $ (2) $ 24 State and local (4) (7) 7 Foreign 13 5 6 Total current (36) (4) 37 Deferred U.S. 113 51 27 State and local 15 13 1 Foreign 14 (2) (4) Total deferred 142 62 24 Adjustment to deferred tax assets and liabilities for an increase in the U.S. federal statutory rate - - (14) Total provision for income taxes $ 106 $ 58 $ 47
The reconciliation between the U.S. federal statutory rate and the Company's effective income tax rate is: 1995 1994 1993 U.S. federal statutory rate 35% 35% 35% Operating losses of foreign subsidiaries - 7 10 Utilization of research and development credits (3) - - Utilization of operating loss carryforwards - (7) (2) Utilization of tax loss carryback (2) - - Enacted federal tax rate change - - (10) State and local income taxes 2 3 3 Other 1 6 (4) Effective tax rate 33% 44% 32%
-51- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 8. Income Taxes (Continued) As of December 31, 1995, the Company has not provided for withholding or U.S. federal income taxes on approximately $196 million of accumulated undistributed earnings of its foreign subsidiaries as they are considered by management to be permanently reinvested. If these undistributed earnings were not considered to be permanently reinvested, approximately $25 million of deferred income taxes would have been provided. During 1995 and 1994, the Company utilized tax net operating loss carryforwards for certain of its foreign subsidiaries of approximately $2 million and $9 million, respectively. At December 31, 1995 and 1994, the Company had tax net operating loss carryforwards for certain of its foreign subsidiaries of approximately $27 million, certain of which expire through 1999. The cumulative temporary differences giving rise to the deferred tax assets and liabilities at December 31, 1995 and 1994 are as follows: 1995 1994 Deferred Deferred Deferred Tax Deferred Tax Tax Assets Liabilities Tax Assets Liabilities (In millions of dollars) Asbestos litigation claims $ 244 $ - $ 306 $ - Other employee benefits 160 - 171 - Depreciation - 116 - 138 Warranty and product liability reserves 27 - 29 - Operating loss carryforwards 27 - 27 - State and local taxes - 21 - 20 Other 60 39 122 6 Subtotal 518 176 655 164 Valuation allowances (20) - (27) - Total deferred $ 498 $ 176 $ 628 $ 164
Management fully expects to realize its net deferred tax assets through income from future operations. 9. Science and Technology Expenses Science and technology expenses include research and development costs of $69 million in 1995, $64 million in 1994, and $61 million in 1993. In addition to research and development costs, science and technology expenses include continuing commercial activities such as engineering and product modifications for special applications and testing. -52- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 10. Accounts Receivable Securitization In 1994 and 1995, the Company sold certain accounts receivable of its Building Materials operations to a 100% owned subsidiary, Owens-Corning Funding Corporation ("OC Funding"). In December 1994, OC Funding entered into a three-year agreement whereby it can sell, on a revolving basis, an undivided percentage ownership interest in a designated pool of accounts receivable up to a maximum of $100 million. At December 31, 1995 and 1994, $100 million and $50 million, respectively, have been sold under this agreement and the sale has been reflected as a reduction of accounts receivable in the Company's consolidated balance sheet. The discount of $6 million on the receivables sold has been recorded as other expenses on the Company's consolidated statement of income for the year ended December 31, 1995. The Company maintains an allowance for doubtful accounts based upon the expected collectibility of all consolidated trade accounts receivable, including receivables sold by OC Funding. 11. Inventories Inventories are summarized as follows: 1995 1994 (In millions of dollars) Finished goods $ 210 $ 192 Materials and supplies 127 118 FIFO inventory 337 310 Less: Reduction to LIFO basis (84) (87) $ 253 $ 223
Approximately $175 million of FIFO inventories were valued using the LIFO method at December 31, 1995 and 1994. During 1995, 1994, and 1993, certain inventories were reduced, resulting in the liquidation of LIFO inventory layers carried at lower costs in prior years as compared with the current cost of inventory. The effect of these inventory reductions was to reduce 1995, 1994, and 1993 cost of sales by $7 million, $3 million, and $1 million, respectively. -53- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 12. Investments in Affiliates At December 31, 1995 and 1994, the Company's affiliates, which generally are engaged in the manufacture of fibrous glass and related products for the insulation, construction, reinforcements, and textile markets, include: Percent Ownership 1995 1994 COMPOSITES: Alpha/Owens-Corning, L.L.C. (USA) 50% 50% Knytex Company, L.L.C. (USA) 50% 50% Vitro-Fibras, S.A. (Mexico) 40% 40% GLOBAL PIPE: Amiantit Fiberglass Industries, Ltd. (Saudi Arabia) 30% 30% Owens-Corning Eternit Rohre GmbH (Germany) 50% 50% Owens-Corning Pipe Botswana (Pty.), Ltd. (Botswana) 46% 49% Owens-Corning Tubs S.A. (Spain) 50% 50% Owens-Corning Canos, S.A. (Argentina) 50% - BUILDING MATERIALS - EUROPE: Arabian Fiberglass Insulation Company, Ltd. (Saudi Arabia) 49% 49% ASIA PACIFIC: Asahi Fiber Glass Company, Ltd. (Japan) 28% 28% LG Owens-Corning Corp. (Korea) 31% 30% Siam Fiberglass Co., Ltd. (Thailand) 20% 20%
-54- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 12. Investments in Affiliates (Continued) The following table provides summarized financial information on a combined 100% basis for the Company's affiliates accounted for under the equity method: 1995 1994 1993 (In millions of dollars) At December 31: Current assets $ 338 $ 328 $ 214 Noncurrent assets 472 513 387 Current liabilities 403 331 240 Noncurrent liabilities 253 250 147 For the year: Net sales 962 630 486 Gross margin 178 96 81 Net income 47 7 16
The Company's equity in undistributed net income of affiliates was $36 million at December 31, 1995. Subsequent to year end, the Company sold all of its interest in Asahi Fiber Glass Company, Ltd. for approximately $50 million, and realized a pretax gain in excess of $25 million. 13. Accounts Payable and Accrued Liabilities 1995 1994 (In millions of dollars) Accounts payable $ 309 $ 298 Payroll and vacation pay 87 117 Payroll, property, and miscellaneous taxes 39 30 Other employee benefits liability (Note 6) 23 24 Other 129 129 $ 587 $ 598
-55- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 14. Consolidated Statement of Cash Flows Cash payments, net of refunds, for income taxes and cost of borrowed funds are summarized as follows: 1995 1994 1993 (In millions of dollars) Income taxes $ (34) $ (4) $ 43 Cost of borrowed funds 94 97 95
The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. See Notes 2 and 5 for supplemental disclosure of Non-cash Investing and Financing Activities. 15. Leases The Company leases certain manufacturing equipment and office and warehouse facilities under operating leases, some of which include cost escalation clauses, expiring on various dates through 2015. Total rental expense charged to operations was $63 million in 1995, $54 million in 1994, and $42 million in 1993. At December 31, 1995, the minimum future rental commitments under noncancellable leases payable over the remaining lives of the leases are: Minimum Future Period Rental Commitments (In millions of dollars) 1996 $ 52 1997 52 1998 40 1999 20 2000 18 2001 through 2015 134 $ 316
-56- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 16. Restructuring of Operations and Other Initiatives During the first quarter of 1994, the Company recorded a $117 million pretax charge for productivity initiatives and other actions aimed at reducing costs and enhancing the Company's speed, focus, and efficiency. This $117 million pretax charge is comprised of an $89 million charge associated with the restructuring of the Company's business segments, as well as a $28 million charge, primarily composed of final costs associated with the administration of the Company's former commercial roofing business. The components of the $89 million restructure include: $44 million for personnel reductions, $20 million for divestiture of non-strategic businesses and facilities, $22 million for business realignments, and $3 million for other actions. The $44 million cost for personnel reductions primarily represents severance costs associated with the elimination of nearly 400 positions worldwide. The primary employee groups affected include science and technology personnel, field sales personnel, corporate administrative personnel, and commercial roofing and resin business personnel. As of December 31, 1995, the Company has recorded approximately $82 million in costs against its 1994 restructure reserve, of which $67 million represents actual cash expenditures and $15 million represents the non-cash effects of asset write-offs and business realignments. The $67 million cash expenditure includes severance costs of $42 million, divestiture or realignment of businesses and facilities costs of $22 million, and $3 million for other actions. During the first quarter of 1993, the Company recorded a $23 million charge to reorganize its European operations. This charge included $17 million for personnel reductions and $6 million for the writedown of fixed assets. 17. Glass Melting Furnace Rebuilds Effective January 1, 1994, the Company adopted the capital method of accounting for the cost of rebuilding glass melting furnaces. Under this method, costs are capitalized when incurred and depreciated over the estimated useful lives of the rebuilt furnaces. Previously, the Company established a reserve for the future rebuilding costs of its glass melting furnaces through a charge to earnings between dates of rebuilds. The change to the capital method provides a more appropriate measure of the Company's capital investment and is consistent with industry practice. The cumulative effect of this change in accounting method was an increase to earnings of $123 million, or $2.45 per share, net of related income taxes of $54 million. The effect of this change in accounting method was to increase depreciation expense and eliminate furnace rebuild provision. The pro forma effect of this change was not material to net income for the year ended December 31, 1993. -57- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 18. Stock Compensation Plans The Company's Stock Performance Incentive Plan (SPIP) and the Owens-Corning 1995 Stock Plan, (collectively, the "Plans"), permit up to two percent and one percent, respectively, of common shares outstanding at the beginning of each calendar year to be awarded as stock options and restricted stock (with 25% of this amount as the maximum permitted number of restricted stock awards). The Company may carry forward, independently for each plan, unused shares from prior years and may increase the shares available for awards in any calendar year through an advance of up to 25% of the subsequent year's allocation (determined by using 25% of the current year's allocation). These shares are also subject to the 25% limit for restricted stock awards. During 1995, the total number of shares available under the Plans for stock awards was 1,565,004 shares, 1,006,950 of which were awarded as stock options and 232,224 as restricted stock, which includes an advance of 54,355 shares from the 1996 allocation for SPIP. 599,840 shares are also available to be awarded under a prior plan; however, the Company does not expect any awards to be made under that plan. Additionally, the Company has a plan to award stock options and deferred stock awards to nonemployee directors, of which 95,500 shares were available for this purpose as of December 31, 1995. In 1995, 10,000 options and 4,000 stock awards were granted, of which 2,000 were issued in conjunction with the plan for nonemployee directors. During 1994, the total number of shares available for stock awards for SPIP was 1,075,752 shares, 894,000 of which were awarded as stock options and 59,450 as restricted stock, which included an advance of 93,478 shares from the 1995 allocation. Additionally, in 1994, 8,500 options and 4,000 stock awards were granted, of which 2,000 were issued in conjunction with the plan for nonemployee directors. Stock Options Activity during 1995 and 1994 in shares under option: 1995 1994 Number Price Number Price of Range per of Range per Shares Share Shares Share Beginning of year 3,290,454 $17.86-47.00 2,560,826 $17.86-47.00 Options granted 1,016,950 31.50-45.00 902,500 28.50-34.88 Options exercised (300,663) 17.86-40.50 (137,059) 18.75-30.63 Options cancelled (63,631) 30.63-40.50 (35,813) 26.75-40.50 End of year 3,943,110 $17.86-47.00 3,290,454 $17.86-47.00 Exercisable 2,107,427 $17.86-47.00 1,619,119 $17.86-47.00
-58- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 18. Stock Compensation Plans (Continued) Option prices represent the market price at date of grant. Shares issued under options are recorded in the common stock accounts at the option price. Options granted vest ratably through 1998 for the SPIP plan and, as determined by the compensation committee, for the Owens-Corning 1995 Stock Plan. Deferred Stock Awards At December 31, 1995, the Company had 15,711 shares of deferred stock outstanding, all of which were vested. During 1995, 2,000 shares of deferred stock were granted, and 2,629 shares were issued. Compensation expense is measured based on the market price of the stock at date of grant and is recognized on a straight-line basis over the vesting period. Restricted Stock Awards At December 31, 1995, the Company had 448,973 shares of restricted stock outstanding. Stock restrictions lapse, subject to alternate vesting plans for approved early retirement and involuntary termination, over various periods ending in 2005. 19.Share Purchase Rights Each outstanding share of the Company's common stock includes a preferred share purchase right. Each right entitles the holder to buy from the Company one one- hundredth of a share of Series A Participating Preferred Stock of the Company at a price of $50. The Board of Directors has designated 750,000 shares of the Company's authorized preferred stock as Series A Participating Preferred Stock. There are currently no preferred shares outstanding. Rights become exercisable and detach from the common stock ten days after a person or group acquires, or announces a tender offer for, 20% or more of the Company's outstanding shares of common stock. The rights expire on December 30, 1996, unless redeemed earlier by the Company. The rights are redeemable by the Company at one cent each at any time prior to ten days following public announcement or notice to the Company that an acquiring person or group has purchased 20% or more of the Company's outstanding common stock. If the Company is acquired in a merger or other business combination at any time after the rights become exercisable, each right would entitle its holder to buy shares of the acquiring or surviving company having a market value of twice the exercise price of the right. -59- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 20. Derivative Financial Instruments and Fair Value of Financial Instruments The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to help meet financing needs and to reduce exposure to fluctuating foreign currency exchange rates and interest rates. The Company is exposed to credit loss in the event of nonperformance by the other parties to the financial instruments described below. However, the Company does not anticipate nonperformance by the other parties. The Company does not engage in trading activities with these financial instruments and does not generally require collateral or other security to support these financial instruments. The notional amounts of derivatives summarized in the foreign exchange risk and interest rate risk management section below do not represent the amounts exchanged by the parties and, thus, are not a measure of the exposure of the Company through its use of derivatives. The amounts exchanged are calculated on the basis of the notional amounts and the other terms of the derivatives, which relate to interest rates, exchange rates, securities prices, or financial or other indexes. Foreign Exchange Risk and Interest Rate Risk Management The Company enters into various types of derivative financial instruments to manage its foreign exchange risk and interest rate risk, as indicated in the following table. Notional Amount Notional Amount December 31, 1995 December 31, 1994 (In millions of dollars) Forward currency exchange contracts $ 234 $ 194 Options purchased 25 22 Currency swaps 190 190 Interest rate swaps 150 150
The Company enters into forward currency exchange contracts to manage its exposure against foreign currency fluctuations on certain assets and liabilities denominated in foreign currencies. As of December 31, 1995, the Company has 21 forward currency exchange contracts maturing in 1996 which exchange 2.7 billion Belgian francs, 19 million U.S. dollars, 11 million British pounds, 117 million French francs, 17 billion Italian lira, and various other currencies. As of December 31, 1994, the Company had 29 forward currency exchange contracts which matured in 1995 and exchanged 4.4 billion Belgian francs, 23 million U.S. dollars, 38 million British pounds, 22 million Deutsche marks, 19 billion Italian lira, and various other currencies. Gains and losses on these foreign currency hedges are included in the carrying amount of the related assets and liabilities. At December 31, 1995 and 1994, deferred gains and losses on these foreign currency hedges are not material to the consolidated financial statements. -60- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 20. Derivative Financial Instruments and Fair Value of Financial Instruments (Continued) The Company enters into forward currency exchange contracts to hedge its equity investments in certain foreign subsidiaries and to manage its exposure against fluctuations in foreign currency rates. As of December 31, 1995, the Company has two forward currency exchange contracts maturing in 1996 which exchange 1 billion Belgian francs against approximately 34 million U.S. dollars to hedge its equity investments in certain of its European subsidiaries. As of December 31, 1994, the Company had two forward currency exchange contracts which matured in 1995 and exchanged 1 billion Belgian francs against approximately 32 million U.S. dollars to hedge its equity investments in certain of its European subsidiaries. At December 31, 1995 and 1994, losses of $4 million and $3 million on hedges of net investments in foreign subsidiaries are included in stockholders' equity, respectively. The Company has entered into forward currency exchange contracts to reduce its exposure to currency fluctuations on the proceeds of the sale of its investment in Asahi Fiber Glass Company, Ltd. (Note 12). As of December 31, 1995, these contracts exchange 5 billion Japanese yen for 50 million U.S. dollars. At December 31, 1995, gains of $3 million are included as deferred revenue. The Company entered into forward currency exchange contracts to reduce its exposure to currency fluctuations on the anticipated 1995 earnings of certain European subsidiaries. The nine forward currency exchange contracts which matured in 1995, exchanged 412 million Belgian francs and 8 million British pounds against approximately 25 million U.S. dollars. Gains and losses on these foreign currency hedges were included in income in the period in which the exchange rates changed. Gains on these forward currency exchange contracts were not material to the consolidated financial statements. The Company enters into option contracts to hedge anticipated transactions with certain of its foreign subsidiaries. As of December 31, 1995, the Company has eight currency option contracts maturing in 1996 which hedge the 1996 royalty payments of the Company's European subsidiaries. As of December 31, 1995, the currency option contracts exchanged 526 million Belgian francs and 6 million British pounds against approximately 25 million U.S. dollars. As of December 31, 1994, the Company had six currency option contracts which exchanged 496 million Belgian francs and 4 million British pounds against approximately 22 million U.S. dollars. Gains on the Company's hedges of these anticipated transactions are included as deferred revenue. At December 31, 1995 and 1994, deferred gains on option contracts are not material to the consolidated financial statements. As of December 31, 1994, the Company entered into two currency swap transactions to manage its exposure against foreign currency fluctuations on the principal amount of its guaranteed .814% Eurobonds (Note 2). At December 31, 1994, gains on these currency swaps were not material to the consolidated financial statements. During May 1995 the Company terminated these swaps. The termination of these swaps exchanged 140 million U.S. dollars for approximately 89 million British pounds, resulting in a gain of approximately 10 million U.S dollars. At that time, the Company entered into two cross-currency interest rate swaps from U.S. dollars into British pounds to hedge the interest and principal payments of the remaining Eurobonds through 2002. These agreements also convert part of the fixed rate interest into variable rate interest. The gain on the exercised swaps is being amortized over the -61- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 20. Derivative Financial Instruments and Fair Value of Financial Instruments (Continued) life of the original hedge. At December 31, 1995, $7 million of unamortized gain on the four cross-currency interest rate swaps is included in other liabilities. The Company has a cross-currency interest rate conversion agreement from Deutsche marks into U.S. dollars to hedge the interest and principal payments of its 7.25% Deutsche mark bonds, due in 2000. The agreement establishes a fixed interest rate of 11.1%. The Company enters into interest rate swaps to manage its interest rate risk. The Company has entered into four interest rate swap agreements to reduce the interest rates on its fixed rate borrowings. These agreements effectively convert an aggregate principal amount of $150 million of fixed rate long-term debt into variable rate borrowings with interest rates ranging from 5.875% to 8.025% in 1995 and 5.81% to 7.96% in 1994. The agreements mature in 1998. The differential interest to be paid or received is accrued as interest rates change and is recognized over the life of the agreements. Other Financial Instruments with Off-Balance-Sheet Risk As of December 31, 1995 and 1994, the Company is contingently liable for guarantees of indebtedness owed by certain unconsolidated affiliates of $71 million and $27 million, respectively. The Company is of the opinion that its unconsolidated affiliates will be able to perform under their respective payment obligations in connection with such guaranteed indebtedness and that no payments will be required and no losses will be incurred by the Company under such guarantees. Concentrations of Credit Risk As of December 31, 1995 and 1994, the Company has no significant group concentrations of credit risk. Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each category of financial instruments. Cash and short-term financial instruments The carrying amount approximates fair value due to the short maturity of these instruments. -62- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 20. Derivative Financial Instruments and Fair Value of Financial Instruments (Continued) Long-term notes receivable The fair value has been estimated using the expected future cash flows discounted at market interest rates. Long-term debt The fair value of the Company's long-term debt has been estimated based on quoted market prices for the same or similar issues, or on the current rates offered to the Company for debt of the same remaining maturities. Foreign currency swaps and interest rate swaps The fair values of foreign currency swaps and interest rate swaps have been estimated by traded market values or by obtaining quotes from brokers. Forward currency exchange contracts, option contracts, and financial guarantees The fair values of forward currency exchange contracts, option contracts, and financial guarantees are based on fees currently charged for similar agreements or on the estimated cost to terminate these agreements or otherwise settle the obligations with the counter parties at the reporting date. The estimated fair values of the Company's financial instruments as of December 31, 1995 and 1994, which have fair values different than their carrying amounts, are as follows: 1995 1994 Carrying Fair Carrying Fair Amount Value Amount Value (In millions of dollars) Assets Long-term notes receivable $ 24 $ 22 $ 20 $ 18 Liabilities Long-term debt 794 875 1,037 1,076 Off-Balance-Sheet Financial Instruments - Unrealized gains Foreign currency swaps - 39 - 26 Interest rate swaps - 14 - 4
-63- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 20. Derivative Financial Instruments and Fair Value of Financial Instruments (Continued) As of December 31, 1995 and 1994, the Company is contingently liable for guarantees of indebtedness owed by certain unconsolidated affiliates. There is no market for these guarantees and they were issued without explicit cost. Therefore, it is not practicable to establish their fair value. As of December 31, 1995 and 1994, the Company has also entered into certain forward currency exchange and option contracts, the fair values of which are not material to the consolidated financial statements. 21. Contingent Liabilities ASBESTOS LIABILITIES The Company is a co-defendant with other former manufacturers, distributors and installers of products containing asbestos and with miners and suppliers of asbestos fibers (collectively, the Producers) in personal injury and property damage litigation. The personal injury claimants generally allege injuries to their health caused by inhalation of asbestos fibers from the Company's products. Most of the claimants seek punitive damages as well as compensatory damages. The property damage claims generally allege property damage to school, public and commercial buildings resulting from the presence of products containing asbestos. Virtually all of the asbestos-related lawsuits against the Company arise out of its manufacture, distribution, sale or installation of an asbestos-containing calcium silicate, high temperature insulation product, the manufacture of which was discontinued in 1972. Status As of December 31, 1995, approximately 144,200 asbestos personal injury claims were pending against the Company, 55,900 of which were received in 1995. The Company received approximately 29,100 such claims in 1994, and 32,400 in 1993. Through December 31, 1995, the Company had resolved (by settlement or otherwise) approximately 160,600 asbestos personal injury claims. During 1993, 1994, and 1995, the Company resolved approximately 60,000 such claims and incurred total indemnity payments of $641 million (an average of about $10,700 per case). The Company's indemnity payments have varied considerably over time and from case to case, and are affected by a multitude of factors. These include the type and severity of the disease sustained by the claimant (i.e., mesothelioma, lung cancer, other types of cancer, asbestosis or pleural changes); the occupation of the claimant; the extent of the claimant's exposure to asbestos-containing products manufactured, sold or installed by the Company; the extent of the claimant's exposure to asbestos-containing products manufactured, sold or installed by other Producers; the number and financial resources of other Producer defendants; the jurisdiction of suit; the -64- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 21. Contingent Liabilities (Continued) presence or absence of other possible causes of the claimant's illness; the availability or not of legal defenses such as the statute of limitations or state of the art; whether the claim was resolved on an individual basis or as part of a group settlement; and whether the claim proceeded to an adverse verdict or judgment. Insurance As of December 31, 1995, the Company had approximately $430 million in unexhausted insurance coverage (net of deductibles and self-insured retentions and excluding coverage issued by insolvent carriers) under its liability insurance policies applicable to asbestos personal injury claims. This insurance, which is substantially confirmed, includes both products hazard coverage and primary level non- products coverage. Portions of this coverage are not available until 1997 and beyond under agreements with the carriers confirming such coverage. All of the Company's liability insurance policies cover indemnity payments and defense fees and expenses subject to applicable policy limits. In addition to its confirmed non-products insurance, the Company has a significant amount of potential non-products coverage with excess level carriers. The Company cautions, however, that this coverage is unconfirmed and that the amount and timing of additional recovery from these policies, if any, will depend on subsequent negotiations or proceedings. Reserve The Company's estimated total liabilities in respect of indemnity and defense costs associated with pending and unasserted asbestos personal injury claims that may be received through the year 1999 (the "Liabilities"), and its estimated insurance recoveries in respect of such claims (the "Insurance"), are reported separately as follows: -65- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 21. Contingent Liabilities (Continued) Asbestos Litigation Claims December 31, December 31, 1995 1994 (In millions of dollars) Reserve for asbestos litigation claims Current $ 250 $ 300 Other 887 1,145 Total Reserve 1,137 1,445 Insurance for asbestos litigation claims Current 100 125 Other 330 556 Total Insurance 430 681 Net Asbestos Liability $ 707 $ 764
Case filing rates have continued at historically high levels with the receipt of approximately 55,900 new claims during 1995, following the receipt of approximately 29,100 claims in 1994 and approximately 32,400 claims in 1993. Many of these new claims appear to be the product of mass screening programs and not to involve significant asbestos-related impairment. The large number of recent filings and the uncertain value of these claims have added to the uncertainties involved in estimating the Company's asbestos liabilities. Certain of the Company's principal co-defendants, the 20 members of the Center for Claims Resolution, have entered into a proposed "global" settlement which would require future claimants to satisfy certain medical criteria indicative of significant asbestos-related impairment as a pre-condition to their eligibility for settlement payments. The Company is using similar criteria in the implementation of its own settlement and litigation strategy and is also seeking to require more careful proof than in the past that claimants had significant exposure to the Company's asbestos- containing product or operations. The Company believes that this strategy will reduce the overall cost of asbestos personal injury claims in the long run by channeling indemnity payments to claimants who can establish significant asbestos-related impairment and exposure to the Company's asbestos-containing product or operations and by substantially reducing indemnity payments to individuals who are unimpaired or who did not have significant such exposure. The Company's strategy has resulted in an increased level of trial activity and an increase in the number and amount of compensatory and punitive damage verdicts and judgments against the Company. This strategy may have the effect of increasing average per-case indemnity costs for claims resolved with payment, while also increasing the number of claims dismissed without payment. -66- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 21. Contingent Liabilities (Continued) The Company cautions that such factors as the number of future asbestos personal injury claims received by it, the rate of receipt of such claims, and the indemnity and defense costs associated with asbestos personal injury claims, as well as the prospects for confirming additional, applicable insurance coverage beyond the $430 million referenced above, are influenced by numerous variables that are difficult to predict, and that estimates, such as the Company's, which attempt to take account of such variables, are subject to considerable uncertainty. Depending upon the outcome of the various uncertainties described above, particularly as they relate to unimpaired claims, it may be necessary at some point in the future for the Company to make additional provision for the uninsured costs of asbestos personal injury claims received through the year 1999 (although no such amounts are reasonably estimable at this time). The Company remains confident that its estimate of Liabilities and Insurance will be sufficient to provide for the costs of all such claims that involve malignancies or significant asbestos-related functional impairment. The Company has reviewed and will continue to review the adequacy of its estimate of Liabilities and Insurance on a periodic basis and make such adjustments as may be appropriate. The Company cannot estimate and is not providing for the cost of unasserted claims which may be received by the Company after the year 1999 because management is unable to predict the number of claims to be received after 1999, the severity of disease which may be involved and other factors which would affect the cost of such claims. Cash Expenditures The Company's anticipated cash expenditures for uninsured asbestos-related costs of claims received through 1999 are expected to approximate $707 million, the Company's Liabilities, net of Insurance, before tax benefits. Cash payments will vary annually depending upon a number of factors, including the pace of the Company's resolution of claims and the timing of payment of its Insurance. Management Opinion Although any opinion is necessarily judgmental and must be based on information now known to the Company, in the opinion of management, the additional uninsured and unreserved costs which may arise out of pending personal injury and property damage asbestos claims and additional similar asbestos claims filed in the future will not have a materially adverse effect on the Company's financial position. While such additional uninsured and unreserved costs incurred in and after the year 2000 may be substantial over time, management believes that any such additional costs will not impair the ability of the Company to meet its obligations, to reinvest in its businesses or to take advantage of attractive opportunities for growth. -67- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 21. Contingent Liabilities (Continued) NON-ASBESTOS LIABILITIES Various other lawsuits and claims arising in the normal course of business are pending against the Company, some of which allege substantial damages. Management believes that the outcome of these lawsuits and claims will not have a materially adverse effect on the Company's financial position or results of operations. 22.Quarterly Financial Information (Unaudited) Quarter First Second Third Fourth (In millions of dollars, except share data) 1995 Net sales $ 844 $ 877 $ 927 $ 964 Cost of sales 630 639 684 717 Gross margin $ 214 $ 238 $ 243 $ 247 Net income $ 33 $ 63 $ 70 $ 66 Net income per share: Primary net income per share $ .71 $ 1.25 $ 1.35 $ 1.27 Fully diluted net income per share $ .68 $ 1.20 $ 1.28 $ 1.21
-68- OWENS CORNING AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 22. Quarterly Financial Information (Unaudited) (Continued) Quarter First Second Third Fourth (In millions of dollars, except share data) 1994 Net sales $ 677 $ 852 $ 936 $ 886 Cost of sales 523 644 705 664 Gross margin $ 154 $ 208 $ 231 $ 222 Income (loss) before cumulative effect of accounting changes $ (67) $ 45 $ 53 $ 43 Cumulative effect of accounting changes (Notes 6 and 17) 85 - - - Net income $ 18 $ 45 $ 53 $ 43 Net income per share: Primary Income (loss) before cumulative effect of accounting changes $ (1.52) $ 1.03 $ 1.19 $ .98 Cumulative effect of accounting changes 1.93 - - - Net income per share $ .41 $ 1.03 $ 1.19 $ .98 Fully diluted Income (loss) before cumulative effect of accounting changes $ (1.30) $ .95 $ 1.09 $ .91 Cumulative effect of accounting changes 1.70 - - - Net income per share $ .40 $ .95 $ 1.09 $ .91
Net income per share and primary and fully diluted weighted average shares are computed independently for each of the quarters presented. Therefore, the sum of the quarterly net income per share may not equal the per share total for the year. -69- INDEX TO FINANCIAL STATEMENT SCHEDULES Number Description Page II Valuation and Qualifying Accounts and Reserves - for the years ended December 31, 1995, 1994, and 1993 70 -70- OWENS CORNING AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 Column A Column B Column C Column D Column E Additions (1) (2) Balance at Charged to Charged Balance Beginning Costs and to Other at End Classification of Period Expenses Accounts Deductions of Period (In millions of dollars) FOR THE YEAR ENDED DECEMBER 31, 1995: Allowance deducted from asset to which it applies - Doubtful Accounts $ 16 $ 5 $ - $ 2(A) $ 19 FOR THE YEAR ENDED DECEMBER 31, 1994: Allowance deducted from asset to which it applies - Doubtful Accounts $ 16 $ 5 $ - $ 5(A) $ 16 Shown separately - Rebuilding furnaces 124 - - 124(C) - FOR THE YEAR ENDED DECEMBER 31, 1993: Allowance deducted from asset to which it applies - Doubtful Accounts $ 20 $ 1 $ - $ 5(A) $ 16 Shown separately - Rebuilding furnaces 124 17 - 17(B) 124 Notes: (A) Uncollectible accounts written off, net of recoveries. (B) Expenditures for purposes for which reserve was created. (C) Effective January 1, 1994, the Company adopted the capital method for rebuilding furnaces. See Note 17 to the Consolidated Financial Statements.
-71- EXHIBIT INDEX Exhibit Number Document Description (3) Articles of Incorporation and By-Laws. Certificate of Incorporation of Owens Corning, as amended (filed herewith). By-Laws of Owens Corning, as amended (filed herewith). (4) Instruments Defining the Rights of Security Holders, Including Indentures. Credit Agreement, dated as of November 2, 1993, among Owens-Corning Fiberglas Corporation**, the Banks listed on Annex A thereto, and Credit Suisse, as Agent for the Banks (incorporated herein by reference to Exhibit (4) to the Company's quarterly report on Form 10-Q (File No. 1-3660) for the quarter ended September 30, 1993), as amended by Amendment No. 1 thereto (incorporated herein by reference to Exhibit (10) to the Company's quarterly report on Form 10-Q (File No. 1-3660) for the quarter ended June 30, 1994) and by Amendment No. 2 and Amendment No. 3 thereto (filed herewith). The Company agrees to furnish to the Securities and Exchange Commission, upon request, copies of all instruments defining the rights of holders of long- term debt of the Company where the total amount of securities authorized under each issue does not exceed ten percent of the Company's total assets. (10) Material Contracts. Credit Agreement, dated as of November 2, 1993, among Owens-Corning Fiberglas Corporation**, the Banks listed on Annex A thereto, and Credit Suisse, as Agent for the Banks (incorporated herein by reference to Exhibit (4) to the Company's quarterly report on Form 10-Q (File No. 1-3660) for the quarter ended September 30, 1993), as amended by Amendment No. 1 thereto (incorporated herein by reference to Exhibit (10) to the Company's quarterly report on Form 10-Q (File No. 1-3660) for the quarter ended June 30, 1994) and by Amendment No. 2 and Amendment No. 3 thereto (filed as Exhibit (4) to this annual report on Form 10-K). Rights Agreement, dated as of December 18, 1986, between Owens-Corning Fiberglas Corporation** and Manufacturers Hanover Trust Company, as Rights Agent, including, as Exhibit B of such Rights Agreement, the form of Right Certificate (incorporated herein by reference to Exhibits 1 and 2 to the Company's Registration Statement on Form 8- A (File No. 1-3660), dated December 23, 1986). -72- EXHIBIT INDEX Exhibit Number Document Description *Corporate Incentive Plan Terms Applicable to Certain Executive Officers (filed herewith). *Corporate Incentive Plan Terms Applicable to Key Employees Other Than Certain Executive Officers (filed herewith). *Long-Term Performance Incentive Plan Terms Applicable to Certain Executive Officers (filed herewith). *Long-Term Performance Incentive Plan Terms Applicable to Officers Other Than Certain Executive Officers (filed herewith). *Stock Performance Incentive Plan, as amended (filed herewith). *Agreement, dated December 2, 1994, with Christian L. Campbell (filed herewith). The following documents are incorporated herein by reference to Exhibit (10) to the Company's annual report on Form 10-K (File No. 1-3660) for 1994: * - Agreement, dated as of January 1, 1995, with William W. Colville. * - Agreement, dated June 16, 1993, with David W. Devonshire. *Director's Charitable Award Program (incorporated herein by reference to Exhibit (10) to the Company's quarterly report on Form 10-Q (File No. 1-3660) for the quarter ended September 30, 1993). *Executive Supplemental Benefit Plan, as amended (incorporated herein by reference to Exhibit (10) to the Company's quarterly report on Form 10-Q (File No. 1-3660) for the quarter ended March 31, 1993). *Employment Agreement, dated as of December 15, 1991, with Glen H. Hiner (incorporated herein by reference to Exhibit (10) to the Company's annual report on Form 10-K (File No. 1-3660) for 1991), as amended by First Amending Agreement made as of April 1, 1992 (incorporated herein by reference to Exhibit (19) to the Company's quarterly report on Form 10-Q (File No. 1-3660) for the quarter ended June 30, 1992). *1987 Stock Plan for Directors, as amended (incorporated herein by reference to Exhibit (19) to the Company's quarterly report on Form 10-Q (File No. 1-3660) for the quarter ended March 31, 1992). *Form of Key Management Severance Benefits Agreement (incorporated herein by reference to Exhibit (10) to the Company's annual report on Form 10-K (File No. 1- 3660) for 1991). -73- EXHIBIT INDEX Exhibit Number Document Description *1986 Equity Partnership Plan, as amended (incorporated herein by reference to Exhibit (19) to the Company's quarterly report on Form 10-Q (File No. 1-3660) for the quarter ended March 31, 1988), as amended by Amendment 1 thereto (incorporated herein by reference to Exhibit (19) to the Company's quarterly report on Form 10-Q (File No. 1-3660) for the quarter ended March 31, 1989), by Amendment 2 thereto (incorporated herein by reference to Exhibit (10) to the Company's annual report on Form 10-K (File No. 1-3660) for 1989) and by Amendment 3 thereto (incorporated herein by reference to Exhibit (10) to the Company's annual report on Form 10-K (File No. 1-3660) for 1990). *Form of Directors' Indemnification Agreement (incorporated herein by reference to Exhibit (10) to the Company's annual report on Form 10-K (File No. 1- 3660) for 1989). The following documents are incorporated herein by reference to Exhibit (10) to the Company's annual report on Form 10-K (File No. 1-3660) for 1987: * - Officers Deferred Compensation Plan. * - Deferred Compensation Plan for Directors, as amended. (11) Statement re Computation of Per Share Earnings (filed herewith). (21) Subsidiaries of Owens Corning (filed herewith). (23) Consent of Arthur Andersen LLP (filed herewith). (27) Financial Data Schedule (filed herewith). * Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K. ** Now known as Owens Corning. EX-3 2 xxxiii Exhibit (3) CERTIFICATE OF INCORPORATION OF OWENS CORNING We, the undersigned, in order to form a corporation for the purposes hereinafter stated, under and pursuant to the provisions of the General Corporation Law of the State of Delaware, do hereby certify as follows: FIRST. The name of this corporation is Owens Corning SECOND. Its principal office in the State of Delaware is located at 1209 Orange Street, City of Wilmington, County of New Castle, State of Delaware. The name and address of its resident agent is The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware. THIRD. The nature of the business and the objects and purposes to be transacted, promoted and carried on by the corporation are as follows: A. To manufacture, fabricate, buy, sell and deal in all kinds, forms and combinations of fibres composed of glass, minerals or any other substance and in the products thereof or in which such fibres form a part; and machinery, tools, implements, materials and supplies for the manufacture thereof; and to acquire, construct, equip, operate, maintain and dispose of factories, laboratories and all other things necessary or convenient for manufacturing and dealing in such fibres and substances and products thereof, and such machinery, tools, implements, materials and supplies; B. To manufacture, purchase or otherwise acquire, own, mortgage, pledge, sell, assign and transfer, or otherwise dispose of, and to invest, trade, deal in and deal with goods, wares and merchandise, and real and personal property of every class and description; C. To apply for, purchase or otherwise acquire patents, licenses, inventions, improvements, processes, copyrights, trade systems, trademarks and trade names and any secret or other information and any right, option, or contract in relation thereto, and to fulfill the terms and conditions thereof, and to maintain, lease, license, sell, transfer or otherwise dispose of and turn to account and deal in the same; D. To enter into any agreement for the sharing of profits, union of interest, cooperation or joint adventure, or otherwise, with any person, partnership, trustee, joint stock association, or corporation, or any business or transaction capable of being conducted so as, directly or indirectly, to benefit this corporation; E. To establish, support, maintain and operate or aid in the establishment, support, maintenance and operation of associations, institutions, funds, trusts and conveniences calculated to benefit employees or the ex- employees of the corporation or the dependents or connections of such persons; and to grant pensions and allowances, and to make payments for insurance, and to subscribe or guarantee money for any charitable or benevolent objects, or for any exhibition, or for any public, general or useful objects; F. To promote and organize any corporation or corporations for the purpose of acquiring or owning any of the properties, rights and liabilities of this corporation, or for any other purpose which may seem directly or indirectly calculated to benefit this corporation; G. To acquire the goodwill, rights, and properties and the whole or any part of the assets, tangible or intangible, and to undertake or in any way assume the liabilities of any person, firm, association or corporation, or to purchase the shares of or any other interest in any firm, association or corporation; to pay for said goodwill, rights, properties, assets, shares or other interest in cash, the shares of this company, bonds or other obligations of this corporation, or any other consideration, or by undertaking the whole or any part of the liabilities of the transferors; to hold or in any manner dispose of the whole or any part of such property so purchased; to conduct the whole or any part of any business so acquired; and to exercise all the powers necessary or convenient in and about the conduct and management of such business; H. To guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of shares of the capital stock of, or any bonds, securities or evidences of indebtedness created by any other corporation or corporations organized under the laws of this state or any other state, country, nation or government, and while the owner thereof to exercise all the rights, powers and privileges of ownership; I. To enter into, make and perform contracts of every kind and description with any person, firm, association, corporation, municipality, county, state, body politic or government or colony or dependency thereof; J. To borrow or raise moneys for any of the purposes of the corporation and from time to time, without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes; K. To purchase, hold, sell and transfer the shares of its own capital stock provided it shall not use its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of its capital except as otherwise permitted by law and provided further that shares of its own capital stock belonging to it shall not be voted upon directly or indirectly; L. To have one or more offices and to conduct any or all of its operations or business and to promote its objects within and without the State of Delaware without restriction as to place or amount; M. To have and to exercise any and all powers and privileges now or hereafter conferred by the laws of Delaware and all extensions thereof by amendments thereto hereafter made; N. To do all or any of the above things in any part of the world as principal, agent, contractor or otherwise, and by or through trustees, agents or otherwise, and either alone or in conjunction with others, and to do all such other things as are necessary, convenient or expedient to the above purposes. And it is hereby expressly provided that the enumeration herein of specific purposes or powers shall not be held to limit or restrict in any manner the general powers of the corporation; and it is further provided that any and all of the foregoing objects, powers or purposes may at any time and from time to time be changed, altered or amended in the manner provided by law for the amendment of certificates of incorporation, and none of the above clauses or the purposes therein specified or the powers thereby conferred shall be deemed subsidiary or auxiliary merely to the purposes mentioned in the first or any other clause of this article, but the company shall have full power to exercise all or any of the powers conferred by any part of this article in any part of the world. FOURTH. The total number of shares of stock which the Corporation is authorized to issue is 108,000,000 shares of which: (a) 8,000,000 shares shall be Preferred Stock, issuable in series, of no par value per share, and (b) 100,000,000 shares shall be Common Stock of par value of $.1O per share. The designations, powers, preferences and rights, and the qualifications, limitations or restrictions of the Preferred Stock and the Common Stock are as follows: A. Preferred Stock The Preferred Stock may be issued from time to time in one or more series and with such designation for each such series as shall be stated and expressed in the resolution or resolutions providing for the issue of each such series adopted by the Board of Directors. The Board of Directors in any such resolution or resolutions is expressly authorized to state and express for each such series: (i) Voting rights, if any, including, without limitation, the authority to confer multiple votes per share, voting rights as to specified matters or issues or, subject to the provisions of this Certificate of Incorporation, as amended, voting rights to be exercised either together with holders of Common Stock as a single class, or independently as a separate class; (ii) The rate per annum and the times at and conditions upon which the holders of shares of such series shall be entitled to receive dividends, the conditions and the dates upon which such dividends shall be payable and whether such dividends shall be cumulative or noncumulative, and, if cumulative, the terms upon which such dividends shall be cumulative; (iii) Redemption, repurchase, retirement and sinking fund rights, preferences and limitations, if any, the amount payable on shares of such series in the event of such redemption, repurchase or retirement, the terms and conditions of any sinking fund, the manner of creating such fund or funds and whether any of the foregoing shall be cumulative or noncumulative; (iv) The rights to which the holders of the shares of such series shall be entitled upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation; (v) The terms, if any, upon which the shares of such series shall be convertible into, or exchangeable for, shares of stock of any other class or classes or of any other series of the same or any other class or classes, including the price or prices or the rate or rates of conversion or exchange and the terms of adjustment, if any; and (vi) Any other designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof so far as they are not inconsistent with the provisions of this Certificate of Incorporation, as amended, and to the full extent now or hereafter permitted by the laws of the State of Delaware. All shares of the Preferred Stock of any one series shall be identical to each other in all respects, except that shares of any one series issued at different times may differ as to the dates from which dividends thereon, if cumulative, shall be cumulative. B. Common Stock (i) Whenever dividends upon the Preferred Stock at the time outstanding shall have been paid in full for all past dividend periods or declared and set apart for payment, such dividends as may be determined by the Board of Directors may be declared by the Board of Directors and paid from time to time to the holders of the Common Stock. (ii) In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, the assets and funds of the Corporation remaining after the payment to the holders of the Preferred Stock at the time outstanding of the full amounts to which they shall be entitled shall be distributed among the holders of the Common Stock according to their respective shares. (iii) The shares of Common Stock shall entitle the holders of record thereof to one vote for each share upon all matters upon which stockholders have the right to vote, subject only to any exclusive voting rights which may vest in holders of the Preferred Stock under the provisions of any series of the Preferred Stock established by the Board of Directors pursuant to the authority provided in this Article Fourth. FIFTH. The minimum amount of capital with which the corporation will commence business is One Thousand Dollars ($1,000.00). SIXTH. The name and place of residence of each of the incorporators are as follows: Names Residence L. E. Gray...............Wilmington, Delaware L. H. Herman.............Wilmington, Delaware Walter Lenz..............Wilmington, Delaware SEVENTH. The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever. EIGHTH. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized: A. To authorize and cause to be executed mortgages and liens, without limit as to amount, upon the real and personal property of the corporation, including after-acquired property; B. From time to time without the assent or vote of the stockholders, to fix the times for the declaration and payment of dividends; to fix and vary the amount to be reserved as working capital; to set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any reserve so created; to fix and determine, subject to the limitations imposed by law, what portion of the consideration received upon any issue of stock shall constitute capital and what portion, if any, paid-in surplus; to cause dividends to be paid from such paid-in surplus or from any surplus due to appreciation in value of any property of the corporation in the same manner as though the same were net profits or earned surplus; to determine whether dividends shall be declared and paid in cash or capital stock of the corporation or in other property; to determine the use and disposition of any surplus or net profits of the corporation and to use and apply any such surplus or net profits for the purchase or acquisition of bonds or other obligations or shares of stock of the corporation to such extent and in such manner and upon such terms as the Board of Directors shall deem expedient, and shares of stock of the corporation so purchased or acquired may be resold unless such shares have been canceled and retired for the purpose of decreasing the stock of the corporation as provided by law; C. Without the assent or vote of the stockholders, from time to time, to authorize and put into operation a plan or plans whereby the officers and employees of the corporation, or any of them, shall participate in the earnings and profits of the corporation; and pursuant to any plan so adopted, the Board of Directors shall have power to authorize the payment of extra compensation to any officer or employee and in the discretion of the Board of Directors such payment may be made in cash or in full-paid shares of the capital stock of the corporation or otherwise. D. The Corporation may in its By-Laws confer powers upon its Board of Directors in addition to the foregoing and in addition to the powers and authorities expressly conferred upon it by statute. NINTH. The fact that the stockholders or directors or officers of the corporation are, in whole or in part, the same as those of any other corporation shall not in any way affect the validity and enforceability of any agreement or transaction between the two corporations. TENTH. The stockholders and directors shall have the power to hold their meetings, to have an office or offices and to keep the books of this corporation (subject to the provisions of the statutes) outside of the State of Delaware at such places as may from time to time be designated by the By-Laws or by resolution of the Board of Directors. ELEVENTH. (a) Elections for directors shall not be by ballot unless demand is made for election by ballot by a stockholder entitled to vote for the election of directors. (b) The business and affairs of the Corporation shall be managed by a Board of Directors consisting of not less than nine nor more than twelve persons. The exact number of directors within the minimum and maximum limitations specified in the preceding sentence shall be fixed from time to time by the Board of Directors pursuant to a resolution adopted by the affirmative vote of a majority of the entire Board of Directors; and such exact number shall be eleven unless otherwise determined by resolution so adopted by a majority of the entire Board of Directors. As used in this Certificate of Incorporation, the term "entire Board of Directors" means the total authorized number of directors which the Corporation would have if there were no vacancies. At the 1984 Annual Meeting of Stockholders, the directors shall be divided into three classes, as nearly equal in number as possible, with the term of office of the first class to expire at the 1985 Annual Meeting of Stockholders, the term of office of the second class to expire at the 1986 Annual Meeting of Stockholders and the term of office of the third class to expire at the 1987 Annual Meeting of Stockholders. Commencing with the 1985 Annual Meeting of Stockholders, directors elected to succeed those directors whose terms have thereupon expired shall be elected for a term of office to expire at the third succeeding Annual Meeting of Stockholders after their election. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain, if possible, the equality of the number of directors in each class, but in no case will a decrease in the number of directors shorten the term of any incumbent director. If such equality is not possible, the increase or decrease shall be apportioned among the classes in such a way that the difference in the number of directors in any two classes shall not exceed one. (c) Subject to the rights of the holders of any series of Preferred Stock or any other class of capital stock of the Corporation (other than the Common Stock) then outstanding, newly-created directorships resulting from an increase in the authorized number of directors in any class of directors or vacancies in any such class resulting from death, resignation, retirement, disqualification, removal from office or other cause shall, if occurring prior to the expiration of the term of office of such class, be filled only by the affirmative vote of a majority of the remaining directors of the entire Board of Directors then in office, although less than a quorum, or by the sole remaining director. Any director of any class so elected shall hold office for a term that shall coincide with the remaining term of that class. His successor shall be elected by the stockholders at the same time and for the same term as the other directors of that class. (d) Whenever the holders of any one or more series of Preferred Stock issued by the Corporation shall have the right, voting separately by series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by this Article Eleventh unless expressly otherwise provided by the resolution or resolutions providing for the creation of such series. (e) Notwithstanding any other provision of this Certificate of Incorporation and subject to the other provisions of this Article Eleventh, the Board of Directors shall determine the rights, powers, duties, rules and procedures that shall affect the directors' power to manage and direct the business and affairs of the Corporation. Without limiting the foregoing, the Board of Directors shall designate and empower committees of the Board of Directors, shall elect and empower the officers of the Corporation, may appoint and empower other officers and agents of the Corporation, and shall determine the time and place of, and the notice requirements for, Board meetings, as well as quorum and voting requirements for, and the manner of taking, Board action. TWELFTH. Any action required or permitted to be taken by the stockholders of the corporation must be effected at a duly called annual or special meeting of such holders and may not be effected by any consent in writing by such holders. Except as otherwise required by law and subject to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, special meetings of stockholders of the corporation may be called only by the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors. THIRTEENTH. A. In addition to any affirmative vote required by law or this Certificate of Incorporation or the By-Laws of the corporation, and except as otherwise expressly provided in Section B of this Article THIRTEENTH, a Business Combination (as hereinafter defined) with, or proposed by or on behalf of, an Interested Stockholder (as hereinafter defined) or any Affiliate or Associate (as hereinafter defined) of such Interested Stockholder or any person who thereafter would be an Affiliate or Associate of such Interested Stockholder shall require the affirmative vote of not less than sixty-six and two-thirds percent (66 2/3%) of the votes entitled to be cast by the holders of all the then outstanding shares of Voting Stock (as hereinafter defined), voting together as a single class, excluding Voting Stock beneficially owned by such Interested Stockholder. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage or separate class vote may be specified, by law or in any agreement with any national securities exchange or otherwise. B. The provisions of Section A of this Article THIRTEENTH shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote, if any, as is required by law or by any other provision of this Certificate of Incorporation or the By-Laws of the corporation, or any agreement with any national securities exchange, if all of the conditions specified in either of the following Paragraphs 1 or 2 are met or, in the case of a Business Combination not involving the payment of consideration to the holders of the corporation's outstanding Capital Stock (as hereinafter defined), if the condition specified in the following Paragraph 1 is met: 1. The Business Combination shall have been approved, either specifically or as a transaction which is within an approved category of transactions, by a majority (whether such approval is made prior to or subsequent to the acquisition of, or announcement or public disclosure of the intention to acquire, beneficial ownership of the Voting Stock that caused the Interested Stockholder to become an Interested Stockholder) of the Continuing Directors (as hereinafter defined). 2. All of the following conditions shall have been met: a. The aggregate per share amount of cash and the Fair Market Value (as hereinafter defined), as of the date of the consummation of the Business Combination, of consideration other than cash to be received by holders of Common Stock in such Business Combination shall be at least equal to the highest amount determined under clauses (i), (ii), (iii) and (iv) below; (i) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by or on behalf of the Interested Stockholder for any share of Common Stock in connection with the acquisition by the Interested Stockholder of beneficial ownership of shares of Common Stock (x) within the two- year period immediately prior to the first public announcement of the proposed Business Combination (the "Announcement Date") or (y) in the transaction in which it became an Interested Stockholder, whichever is higher, in either case as adjusted for any subsequent stock split, stock dividend, subdivision or reclassification affecting or relating to the Common Stock; (ii) the Fair Market Value per share of Common Stock on the Announcement Date or on the date on which the Interested Stockholder became an Interested Stockholder (the "Determination Date"), whichever is higher, as adjusted for any subsequent stock split, stock dividend, subdivision or reclassification affecting or relating to the Common Stock; (iii) (if applicable) the price per share equal to the Fair Market Value per share of Common Stock determined pursuant to the immediately preceding clause (ii), multiplied by the ratio of (x) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by or on behalf of the Interested Stockholder for any share of Common Stock in connection with the acquisition by the Interested Stockholder of beneficial ownership of shares of Common Stock within the two-year period immediately prior to the Announcement Date, as adjusted for any subsequent stock split, stock dividend, subdivi sion or reclassification affecting or relating to the Common Stock to (y) the Fair Market Value per share of Common Stock on the day immediately preceding the first day in such two- year period on which the Interested Stockholder acquired beneficial ownership of any share of Common Stock, as adjusted for any subsequent stock split, stock dividend, subdivision or reclassification affecting or relating to the Common Stock; and (iv) the corporation's net income per share of Common Stock for the four full consecutive fiscal quarters immediately preceding the Announcement Date, multiplied by the higher of the then price/earnings multiple (if any) of such Interested Stockholder or the highest price/earnings multiple of the Corporation within the two-year period immediately preceding the Announcement Date (such price/earnings multiples being determined as customarily computed and reported in the financial community). b.The aggregate amount per share of cash and the Fair Market Value, as of the date of the consummation of the Business Combination, of consideration other than cash to be received by holders of shares of any class or series of outstanding Capital Stock, other than Common Stock, shall be at least equal to the highest amount determined under clauses (i), (ii), (iii) and (iv) below: (i) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by or on behalf of the Interested Stockholder for any share of such class or series of Capital Stock in connection with the acquisition by the Interested Stockholder of beneficial ownership of shares of such class or series of Capital Stock (x) within the two-year period immediately prior to the Announcement Date or (y) in the transaction in which it became an Interested Stockholder, whichever is higher, in either case as adjusted for any subsequent stock split, stock dividend, subdivision or reclassification affecting or relating to such class or series of Capital Stock; (ii) the Fair Market Value per share of such class or series of Capital Stock on the Announcement Date or on the Determination Date, whichever is higher, as adjusted for any subsequent stock split, stock dividend, subdivision or reclassification affecting or relating to such class or series of Capital Stock; (iii) (if applicable) the price per share equal to the Fair Market Value per share of such class or series of Capital Stock determined pursuant to the immediately preceding clause (ii), multiplied by the ratio of (x) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by or on behalf of the Interested Stockholder for any share of such class or series of Capital Stock in connection with the acquisition by the Interested Stockholder of beneficial ownership of shares of such class or series of Capital Stock within the two-year period immediately prior to the Announcement Date, as adjusted for any subsequent stock split, stock dividend, subdivision or reclassification affecting or relating to such class or series of Capital Stock to (y) the Fair Market Value per share of such class or series of Capital Stock on the day immediately preceding the first day in such two-year period on which the Interested Stockholder acquired beneficial ownership of any share of such class or series of Capital Stock, as adjusted for any subsequent stock split, stock dividend, subdivision or reclassification affecting or relating to such class or series of Capital Stock; and (iv) (if applicable) the highest preferential amount per share to which the holders of shares of such class or series of Capital Stock would be entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the corporation regardless of whether the Business Combination to be consummated constitutes such an event. The provisions of this Paragraph 2 shall be required to be met with respect to every class or series of outstanding Capital Stock, whether or not the Interested Stockholder has previously acquired beneficial ownership of any shares of a particular class or series of Capital Stock. c. The consideration to be received by holders of a particular class or series of outstanding Capital Stock shall be in cash or in the same form as previously has been paid by or on behalf of the Interested Stockholder in connection with its direct or indirect acquisition of beneficial ownership of shares of such class or series of Capital Stock. If the consideration so paid for shares of any class or series of Capital Stock varied as to form, the form of consideration for such class or series of Capital Stock shall be either cash or the form used to acquire beneficial ownership of the largest number of shares of such class or series of Capital Stock previously acquired by the Interested Stockholder. d. After the Determination Date and prior to the consummation of such Business Combination: (i) except as approved by a majority of the Continuing Directors, there shall have been no failure to declare and pay at the regular dates therefor any full quarterly dividends (whether or not cumulative) payable in accordance with the terms of any outstanding Capital Stock; (ii) there shall have been no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any stock split, stock dividend or subdivision of the Common Stock), except as approved by a majority of the Continuing Directors; (iii) there shall have been an increase in the annual rate of dividends paid on the Common Stock as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction that has the effect of reducing the number of outstanding shares of Common Stock, unless the failure so to increase such annual rate is approved by a majority of the Continuing Directors; and (iv) such Interested Stockholder shall not have become the beneficial owner of any additional shares of Capital Stock except as part of the transaction that results in such Interested Stockholder becoming an Interested Stockholder and except in a transaction that, after giving effect thereto, would not result in any increase in the Interested Stockholder's percentage beneficial ownership of any class or series of Capital Stock. e. A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the "Exchange Act") or, any subsequent provisions replacing the Exchange Act, shall be mailed to all stockholders of the corporation at least 30 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to the Exchange Act or subsequent provisions). The proxy or information statement shall contain on the first page thereof, in a prominent place, any statement as to the advisability (or inadvisability) of the Business Combination that the Continuing Directors, or any of them, may choose to make and, if deemed advisable by a majority of the Continuing Directors, the opinion of an investment banking firm selected by a majority of the Continuing Directors as to the fairness (or absence thereof) of the terms of the Business Combination from a financial point of view to the holders of the outstanding shares of Capital Stock other than the Interested Stockholder and its Affiliates or Associates, such investment banking firm to be paid a reasonable fee for its services by the corporation. f. Such Interested Stockholder shall not have made any major change in the corporation's business or equity capital structure without the approval of a majority of the Continuing Directors. C. The following definitions shall apply with respect to this Article THIRTEENTH: 1. The term "Business Combination" shall mean: a. any merger or consolidation of the corporation or any Subsidiary (as hereinafter defined) with (i) any Interested Stockholder or (ii) any other company (whether or not itself an Interested Stockholder) which is or after such merger or consolidation would be an Affiliate or Associate of an Interested Stockholder; or b. any sale, lease, exchange, mortgage, pledge, transfer or other disposition or security arrangement, investment, loan, advance, guarantee, agreement to purchase, agreement to pay, extension of credit, joint venture participation or other arrangement (in one transaction or a series of transactions) with or for the benefit of any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder involving any assets, securities, obligations or commitments of the corporation, any Subsidiary or any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder which has an aggregate Fair Market Value and/or involves aggregate commitments of $2,500,000 or more or constitutes more than 5 percent of the book value of the total assets (in the case of transactions involving assets or commitments other than capital stock) or 5 percent of the stockholders' equity (in the case of transactions in capital stock) of the entity in question (the "Substantial Part"), as reflected in the most recent fiscal year-end consolidated balance sheet of such entity existing at the time the stockholders of the corporation would be required to approve or authorize the Business Combination involving the assets, securities, obligations and/or commitments constituting any Substantial Part, provided that any arrangement, whether as employee, consultant or otherwise, other than as a director, pursuant to which any Interested Stockholder or any Affiliate or Associate thereof shall, directly or indirectly, have any control over or management of any aspect of the business or affairs of the corporation, shall be deemed to be a "Business Combination" irrespective of the value test set forth above; or c. the adoption of any plan or proposal for the liquidation or dissolution of the corporation or for any amendment to the corpora tion's By-Laws; or d. any reclassification of securities (including any reverse stock split), or recapitalization of the corporation, or any merger or consolidation of the corporation with any of its Subsidiaries or any other transaction (whether or not with or otherwise involving an Interested Stockholder) that has the effect, directly or indirectly, of increasing the proportionate share of any class or series of Capital Stock, or any securities convertible into Capital Stock or into equity securities of any Subsidiary, that is beneficially owned by any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder; or e. any agreement, contract or other arrangement providing for any one or more of the actions specified in the foregoing clauses (a) to (d). 2. The term "Capital Stock" shall mean all capital stock of the corporation authorized to be issued from time to time under Article FOURTH of this Certificate of Incorporation, and the term "Voting Stock" shall mean all Capital Stock which by its terms may be voted on all matters submitted to stockholders of the corporation generally. 3. The term "person" shall mean any individual, firm, company or other entity and shall include any group comprised of any person and any other person with whom such person or any Affiliate or Associate of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of Capital Stock. 4. The term "Interested Stockholder" shall mean any person (other than the corporation or any Subsidiary and other than any profit- sharing, employee stock ownership or other employee benefit plan of the corporation or any Subsidiary or any trustee of or fiduciary with respect to any such plan when acting in such capacity) who (a) is or has announced or publicly disclosed a plan or intention to become the beneficial owner of Voting Stock representing ten percent (10%) or more of the votes entitled to be cast by the holders of all then outstanding shares of Voting Stock; or (b) is an Affiliate or Associate of the corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner of Voting Stock representing ten percent (10%) or more of the votes entitled to be cast by the holders of all then outstanding shares of Voting Stock. 5. A person shall be a "beneficial owner" of any Capital Stock (a) which such person or any of its Affiliates or Associates beneficially owns, directly or indirectly; (b) which such person or any of its Affiliates or Associates has, directly or indirectly, (i) the right to acquire (whether such right is exercisable immediately or subject only to the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding; or (c) which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Capital Stock. For the purposes of determining whether a person is an Interested Stockholder pursuant to Paragraph 4 of this Section C, the number of shares of Capital Stock deemed to be outstanding shall include shares deemed beneficially owned by such person through application of this Paragraph 5 of Section C, but shall not include any other shares of Capital Stock that may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. 6. The terms "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 under the Exchange Act as in effect on July 24, 1986 (the term "registrant" in said Rule 12b-2 meaning in this case the corporation). 7. The term "Subsidiary" means any company of which a majority of any class of equity security is beneficially owned by the corporation; provided, however, that for the purposes of the definition of Interested Stockholder set forth in Paragraph 4 of this Section C, the term "Subsidiary" shall mean only a company of which a majority of each class of equity security is beneficially owned by the corporation. 8. The term "Continuing Director" means (i) any member of the Board of Directors of the corporation (the "Board of Directors"), while such person is a member of the Board of Directors, who is not an Interested Stockholder or an Affiliate or Associate or representative of the Interested Stockholder and was a member of the Board of Directors prior to the time that the Interested Stockholder became an Interested Stockholder, and (ii) any person who subsequently becomes a member of the Board of Directors, while such person is a member of the Board of Directors, who is not an Interested Stockholder or an Affiliate or Associate or representative of the Interested Stockholder, if such person's nomination for election or election to the Board of Directors is recommended or approved by a majority of the Continuing Directors then in office. 9. The term "Fair Market Value" means (a) in the case of cash, the amount of such cash; (b) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Exchange Act on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any similar system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by a majority of the Continuing Directors in good faith; and (c) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined in good faith by a majority of the Continuing Directors. 10. In the event of any Business Combination in which the corporation survives, the phrase "consideration other than cash to be received" as used in Paragraphs 2.a and 2.b of Section B of this Article THIRTEENTH shall include the shares of Common Stock and/or the shares of any other class or series of Capital Stock retained by the holders of such shares. D. A majority to the Continuing Directors shall have the power and duty to determine for the purposes of this Article THIRTEENTH, on the basis of information known to them after reasonable inquiry, all questions arising under this Article THIRTEENTH, including without limitation, (a) whether a person is an Interested Stockholder, (b) the number of shares of Capital Stock or other securities beneficially owned by any person, (c) whether a person is an Affiliate or Associate of another, (d) whether a Proposed Action (as hereinafter defined) is with, or proposed by, or on behalf of an Interested Stockholder or an Affiliate or Associate of an Interested Stockholder, (e) whether the assets that are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the corporation or any Subsidiary in any Business Combination has, an aggregate Fair Market Value of $2,500,000 or more, and (f) whether the assets or securities that are the subject of any Business Combination constitute a Substantial Part. Any such determination made in good faith shall be binding and conclusive on all parties. E. Nothing contained in this Article THIRTEENTH shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law. F. The fact that any Business Combination complies with the provisions of Section B of this Article THIRTEENTH shall not be construed to impose any fiduciary duty, obligation or responsibility on the Board of Directors, or any member thereof, to approve such Business Combination or recommend its adoption or approval to the stockholders of the corporation, nor shall such compliance limit, prohibit or otherwise restrict in any manner the Board of Directors, or any member thereof, with respect to evaluations of or actions and responses taken with respect to such Business Combination. G. For the purposes of this Article THIRTEENTH, a Business Combination or any proposal to amend, repeal or adopt any provision of this Certificate of Incorporation inconsistent with this Article THIRTEENTH (collectively, "Proposed Action") is presumed to have been proposed by, or on behalf of, an Interested Stockholder or an Affiliate or Associate of an Interested Stockholder or a person who thereafter would become such if (1) after the Interested Stockholder became such, the Proposed Action is proposed following the election of any director of the corporation who with respect to such Interested Stockholder, would not qualify to serve as a Continuing Director, or (2) such Interested Stockholder, Affiliate, Associate or person votes for or consents to the adoption of any such Proposed Action, unless as to such Interested Stockholder, Affiliate, Associate or person a majority of the Continuing Directors makes a good faith determination that such Proposed Action is not proposed by or on behalf of such Interested Stockholder, Affiliate, Associate or person, based on information known to them after reasonable inquiry. H. Notwithstanding any other provisions of this Certificate of Incorporation or the By- Laws of the corporation (and notwithstanding the fact that a lesser percentage or separate class vote may be specified by law, this Certificate of Incorporation or the By-Laws of the corporation), any proposal to amend, repeal or adopt any provision of this Certificate of Incorporation inconsistent with this Article THIRTEENTH which is proposed by or on behalf of an Interested Stockholder or an Affiliate or Associate of an Interested Stockholder shall require the affirmative vote of the holders of not less than sixty-six and two-thirds percent (66 2/3%) of the votes entitled to be cast by the holders of all the then outstanding shares of Voting Stock, voting together as a single class, excluding Voting Stock beneficially owned by such Interested Stockholder; provided, however, that this Section H shall not apply to, and such sixty-six and two-thirds percent (66 2/3%) vote shall not be required for, any amendment, repeal or adoption unanimously recommended by the Board of Directors if all of such directors are persons who would be eligible to serve as Continuing Directors within the meaning of Section C, Paragraph 8 of this Article THIRTEENTH. FOURTEENTH. The corporation shall indemnify to the full extent authorized or permitted by law any person made, or threatened to be made, a party to any action or proceeding (whether civil or criminal or otherwise) by reason of the fact that he, his testator or intestate, is or was a director or officer of the corporation or by reason of the fact that such director or officer, at the request of the corporation, is or was serving any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, in any capacity. Nothing contained herein shall affect any rights to indemnification to which employees other than directors and officers may be entitled by law. No director of the corporation shall be personally liable to the corporation or its stockholders for monetary damages for any breach of fiduciary duty by such a director as a director. Notwithstanding the foregoing sentence, a director shall be liable to the extent provided by applicable law (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which such director derived an improper personal benefit. No amendment to or repeal of this Article FOURTEENTH shall apply to or have any effect on the liability or alleged liability of any director of the corporation for or with respect to any acts or omissions of such director occurring prior to such amendment. FIFTEENTH. The By-Laws of this corporation may be amended by the affirmative vote of a majority of the whole Board of Directors or by the affirmative vote of the holders of a majority of the issued and outstanding common stock of this corporation. Any provision of the By-Laws adopted or amended by the stockholders may be amended by the Board of Directors except that the stockholders may from time to time specify particular provisions thereof which shall not be amended by the Board of Directors. SIXTEENTH. (a) Notwithstanding anything contained in this Certificate of Incorporation to the contrary, Article ELEVENTH, Article TWELFTH and Article FOURTEENTH hereof shall not be altered, amended or repealed and no provision inconsistent therewith shall be adopted without the affirmative vote of the holders of at least 66 2/3% of the voting power of all the shares of the corporation entitled to vote generally in the election of directors, voting together as a single class. Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 66 2/3% of the voting power of all the shares of the corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend, adopt any provision inconsistent with or repeal this paragraph (a) of Article SIXTEENTH. (b) The corporation reserves the right to amend, alter, change or repeal any provision contained in its Certificate of Incorporation, or any amendment thereof, in the manner now or hereafter prescribed by the laws of the State of Delaware or this Certificate of Incorporation, and all rights conferred upon the stockholders of the corporation are granted subject to this reservation. SEVENTEENTH. The rights of the holders of the Common Stock, the Preferred Stock or other capital stock of the corporation, whenever acquired, shall be subordinate to the rights of all holders of indebtedness in the event of any reorganization or liquidation of the corporation, even if the claim for such indebtedness is disallowed, avoided or subordinated pursuant to the provisions of Title 11 of the United States Code, as in effect from time to time, or other applicable laws. EIGHTEENTH. The corporation is to have perpetual existence. In Witness Whereof, we have hereunto set our hands and seals this 31st day of October, 1938. L. E. Gray (L. S.) L. H. Herman (L. S.) Walter Lenz (L. S.) In Presence of: Harold E. Grantland }ss State of Delaware, County of New Castle, Be it remembered that on the 31st day of October, 1938, personally came before me, a Notary Public in and for the County and State aforesaid, L. E. Gray, L. H. Herman and Walter Lenz, all of the parties to the foregoing Certificate of Incorporation, known to me personally to be such, and severally acknowledged said Certificate to be the act and deed of the signers respectively and that the facts herein stated are truly set forth. Given under my hand and seal the day and year aforesaid, Harold E. Grantland Notary Public Harold E. Grantland Notary Public Appointed Jan. 11, 1937 State of Delaware Term Two Years TERMS OF PREFERRED STOCK created by CERTIFICATE OF DESIGNATION OF SERIES A PARTICIPATING PREFERRED STOCK filed December 24, 1986 and CERTIFICATE OF INCREASE OF DESIGNATION OF SERIES A PARTICIPATING PREFERRED STOCK filed August 9, 1994 Section 1. Designation and Amount. The shares of such series shall be designated as Series A Participating Preferred Stock, no par value (the "Series A Preferred Stock") and the number of shares constituting such series shall be 750,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Preferred Stock. Section 2. Dividends and Distributions. (A) Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking prior and superior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock, $.10 par value of the Corporation (the "Common Stock") and of any other junior stock which may be outstanding, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of January, April, July and October in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $2.50 per share ($10.00 per annum), or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment date and the next subsequent Quarterly Dividend Payment Date, a dividend of $2.50 per share ($10.00 per annum) on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall accumulate but shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof. Section 3. Voting Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights: (A) Subject to the provisions for adjustment as hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 100 votes (and each one one-hundredth of a share of Series A Preferred Stock shall entitle the holder thereof to one vote) on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) Except as otherwise provided herein, in the Restated Certificate of Incorporation, in any other certificate of designation creating a series of preferred stock or any similar stock, or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation. (C) If at the time of any annual meeting of stockholders for the election of directors, the equivalent of six quarterly dividends (whether or not consecutive) payable on any share or shares of Series A Preferred Stock are in default, the number of directors constituting the Board of Directors of the Corporation shall be increased by two. In addition to voting together with the holders of Common Stock for the election of other directors of the Corporation, the holders of record of the Series A Preferred Stock, voting separately as a class to the exclusion of the holders of Common Stock, shall be entitled at said meeting of stockholders (and at each subsequent annual meeting of stockholders), unless all dividends in arrears have been paid or declared and set apart for payment prior thereto, to vote for the election of two directors of the Corporation. Until the default in payments of all dividends which permitted the election of said directors shall cease to exist any director who shall have been so elected pursuant to the next preceding sentence may be removed at any time, either with or without cause, only by the affirmative vote of the holders of the shares at the time entitled to cast a majority of the votes entitled to be cast, for the election of any such director at a special meeting of such holders called for that purpose, and any vacancy thereby created may be filled by the vote of such holders. If and when such default shall cease to exist, the holders of the Series A Preferred Stock shall be divested of the foregoing special voting rights, subject to revesting in the event of each and every subsequent like default in payments of dividends. Upon the termination of the foregoing special voting rights, the terms of office of all persons who may have been elected directors pursuant to said special voting rights shall forthwith terminate, and the number of directors constituting the Board of Directors shall be reduced by two. The voting rights granted by this Section 3(c) shall be in addition to any other voting rights granted to the holders of the Series B Preferred Stock in this Section 3. (D) Except as provided herein, in Section 10 or by applicable law, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for authorizing or taking any corporate action. Section 4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not: (i) declare or pay dividends on, make any other distributions on any shares or stock ranking junior (either as to dividends or upon liquidation, dissolution or winding-up) to the Series A Preferred Stock; (ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock except dividends paid ratably on the Series A Preferred Stock, and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding-up) with the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or (iv) purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding- up) with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. Section 5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever, shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of preferred stock, without designation asto series, and may be reissued as part of a new series of preferred stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein, in the Restated Certificate of Incorporation, in any other certificate of designation creating a series of preferred stock or any similar stock or as otherwise required by law. Section 6. Liquidation, Dissolution or Winding-Up. Upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, no distribution shall be made (A) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding-up) to the Series A Preferred Stock unless prior thereto, the holders of shares of Series A Preferred Stock shall have received the higher of (i) $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, or (ii) an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of Common Stock; nor shall any distribution be made (B) to the holders of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding-up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding-up. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the provision in clause (A) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and thedenominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, or otherwise changed, then in any such case each share of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 8. No Redemption. The shares of Series A Preferred Stock shall not be redeemable. Section 9. Rank. Unless otherwise provided in the Restated Certificate of Incorporation of the Corporation or a Certificate of Designation relating to a subsequent series of preferred stock of the Corporation, the Series A Preferred Stock shall rank junior to all other series of the Corporation's preferred stock as to the payment of dividends and the distribution of assets on liquidation, dissolution or winding- up, and senior to the Common Stock of this Corporation. Section 10. Amendment. The Restated Certificate of Incorporation of the Corporation, as amended, shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred Stock, voting together as a single series. Section 11. Fractional Shares. Series A Preferred Stock may be issued in fractions of a share (in one one-hundredths (1/100) of a share and integral multiples thereof) which shall be entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Preferred Stock. EX-3 3 Exhibit (3) OWENS CORNING BY-LAWS As Adopted April 21, 1988 OWEN CORNING BY-LAWS TABLE OF CONTENTS SECTION PAGE ARTICLE I STOCKHOLDERS 1. Annual Meeting 1 2. Special Meetings 1 3. Organization and Conduct of Business 1 4. Nomination of Directors 2 5. Notice of Meetings 3 6. Quorum 3 7. Record Dates 4 8. Proxies and Voting 4 9. Stock List 5 ARTICLE II BOARD OF DIRECTORS 1. Qualifications of Directors 5 2. Number, Term of Office and Vacancies 5 3. Regular Meetings 5 4. Special Meetings 5 5. Quorum 6 6. Participation in Meetings by Conference Telephone 6 7. Conduct of Business 6 8. Compensation of Directors 6 9. Approval of Minutes 6 ARTICLE III COMMITTEES 1. Committees of the Board of Directors 6 2. Conduct of Business 7 3. Officers 8 ARTICLE IV OFFICERS 1. Elected Officers 8 2. Appointed Officers 8 3. Compensation 9 4. Chairman of the Board 9 5. Vice Chairman of the Board 9 SECTION PAGE ARTICLE IV OFFICERS (Continued) 6. Chief Executive Officer 9 7. President 9 8. Vice President 9 9. Secretary 10 10. Treasurer 10 11. Controller 10 12. All Officers 10 13. Delegation of Authority 10 14. Removal 11 15. Action with Respect to Securities of Other Corporations 11 16. Security 11 ARTICLE V STOCK 1. Certificates of Stock 11 2. Transfers of Stock 11 3. Lost, Stolen or Destroyed Certificates 12 4. Regulations 12 ARTICLE VI FINANCES 1. Fiscal Year 12 2. Borrowings 12 3. Banking Authorizations 12 ARTICLE VII NOTICES 1. Notices 13 2. Waivers 13 ARTICLE VIII MISCELLANEOUS 1. Facsimile Signatures 13 2. Corporate Seal 13 3. Reliance upon Books, Reports and Records 14 4. Time Periods 14 5. Gender 14 ARTICLE IX INDEMNIFICATION OF DIRECTORS AND OFFICERS 14 ARTICLE X AMENDMENTS 16 BY-LAWS of OWENS CORNING ARTICLE I STOCKHOLDERS Section 1. Annual Meeting. An annual meeting of the stockholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, either within or without the State of Delaware, on such date, and at such time as the Board of Directors shall each year fix, which date shall be within thirteen months subsequent to the last annual meeting of stockholders. Section 2. Special Meetings. Except as otherwise required by law or by the Certificate of Incorporation and subject to the rights of the holders of any class or series of stock having a preference over the common stock of the Corporation as to dividends or upon liquidation, dissolution or winding up, special meetings of stockholders may be called only by the Board of Directors pursuant to a resolution approved by a majority of the whole Board of Directors. Special meetings of stockholders shall be held at such place, within or without the State of Delaware, date and time as the Board of Directors shall fix. Section 3. Organization and Conduct of Business. Such person as the Board of Directors may have designated or, in the absence of such a person, the Chief Executive Officer of the Corporation or, in his absence, such person as may be chosen by the holders of a majority of the shares entitled to vote who are present, in person or by proxy, shall call to order any meeting of the stockholders and act as chairman of the meeting. In the absence of the Secretary of the Corporation, the secretary of the meeting shall be such person as the chairman appoints. The chairman of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as he determines to be in order. At a meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before a meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before a meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that notice of the date of the meeting is not given to stockholders, or public disclosure by means of a filing with the Securities and Exchange Commission of such date is not made, at least 70 days prior to the date of such meeting, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the meeting (a) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (b) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the stockholder and (d) any material interest of the stockholder in such business. Notwithstanding anything in the By-Laws to the contrary, no business shall be conducted at a meeting of stockholders, except in accordance with the procedures set forth in this Article I, Section 3. The chairman of a meeting of stockholders shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Article I, Section 3, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Section 4. Nomination of Directors. Only persons who are nominated in accordance with the procedures set forth in this Article I, Section 4, shall be eligible for election as directors by action of the stockholders. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders by or at the direction of the Board of Directors or by any stockholder of the Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Article I, Section 4. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that notice of the date of the meeting is not given to stockholders, or public disclosure by means of a filing with the Securities and Exchange Commission of such date is not made, at least 70 days prior to the date of such meeting, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Such stockholder's notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, and (iii) the class and number of shares of the Corporation which are beneficially owned by such person; and (b) as to the stockholder giving the notice (i) the name and address, as they appear on the Corporation's books, of such stockholder and (ii) the class and number of shares of the Corporation which are beneficially owned by such stockholder. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by the By-Laws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. Section 5. Notice of Meetings. Written notice of the place, date, and time of all meetings of stockholders, and the purpose or purposes for which the meeting was called, shall be given, not less than ten nor more than sixty days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting, except as otherwise provided herein or required by the Delaware General Corporation Law or the Certificate of Incorporation. No notice of any meeting of stockholders need be given to any stockholder who submits a signed waiver of notice to the Secretary of the Corporation, whether before or after the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting, in person or by proxy, for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the grounds that the meeting is not lawfully called or convened. When a meeting is adjourned to another place, date or time, written notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than thirty days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, written notice of the place, date, and time of the adjourned meeting shall be given in conformity herewith. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting. Section 6. Quorum. At any meeting of the stockholders, the holders of a majority of all the shares of the stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number may be required by the Certificate of Incorporation or by law. Where a separate vote by a class or classes is required, a majority of the shares of such class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to the vote on that matter. If a quorum shall fail to attend any meeting, the chairman of the meeting or the holders of a majority of the shares of stock entitled to vote who are present, in person or by proxy, may adjourn the meeting to another place, date, or time. If a notice of any adjourned special meeting of stockholders is sent to all stockholders entitled to vote thereat, stating that it will be held with those present constituting a quorum, then except as otherwise required by the Certificate of Incorporation or by law, those present at such adjourned meeting, in person or by proxy, shall constitute a quorum, and all matters shall be determined by a majority of the votes cast at such meeting. Section 7. Record Dates. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders, or to receive payment of any dividend or other distribution or allotment of any rights, or 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 a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which record date shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to the time for such other action as described in this section. If no record date is fixed pursuant to the foregoing paragraph: (a) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and (b) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. 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. Section 8. Proxies and Voting. A stockholder may, by written proxy filed in accordance with the procedures established for the meeting, authorize any other person to vote for such stockholder at any and all meetings of stockholders and to waive all notices which such stockholder may be entitled to receive. Each stockholder shall have one vote for every share of stock entitled to vote which is registered in his or her name on the record date for the meeting, except as otherwise provided herein or required by the Certificate of Incorporation or by law. All voting, including on the election of directors, unless otherwise required by the Certificate of Incorporation or by law, may be by a voice vote; provided, however, that upon demand therefor by a stockholder entitled to vote for the election of directors, elections for directors shall be by ballot. Every vote taken by ballots shall be counted by an inspector or inspectors appointed by the chairman of the meeting. All elections shall be determined by a plurality of the votes cast, and, except as otherwise required by the Certificate of Incorporation or by law, all other matters shall be determined by a majority of the votes cast. Section 9. Stock List. A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in the name of each stockholder, shall be open to the examination of any such stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least ten (10) 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 stock list shall also be kept at the place of the meeting during the whole time thereof and shall be open to the examination of any such stockholder who is present. This list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. ARTICLE II BOARD OF DIRECTORS Section 1. Qualifications of Directors. Each director shall be a person sui juris. No director need be a stockholder of the Corporation. Section 2. Number, Term of Office and Vacancies. The number of directors who shall constitute the whole Board of Directors, and the terms of office of each director, shall be determined in accordance with the Certificate of Incorporation. Newly created directorships and vacancies shall be filled in the manner provided in the Certificate of Incorporation. Section 3. Regular Meetings. Regular meetings of the Board of Directors shall be held at such place or places, on such date or dates, and at such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each regular meeting shall not be required. Section 4. Special Meetings. Special meetings of the Board of Directors may be called by one-third of the directors then in office (rounded up to the nearest whole number) or by the Chairman of the Board or Chief Executive Officer and shall be held at such place, on such date, and at such time as they or he shall fix. Notice of each special meeting shall be given to each director by the Secretary or Assistant Secretary of the Corporation or by the Chairman of the Board, Chief Executive Officer, or directors calling said meeting. Such notice may be given personally or by telephone, or by written notice, telegram, cable, facsimile or telex, mailed or directed to the address of the director appearing upon the books of the Corporation, and shall set forth the date, time and place of the meeting, but need not state the purpose or purposes thereof unless required by the Certificate of Incorporation or by law. Notice of the meeting shall be sufficient in time if actually delivered to the director notified, or delivered properly addressed and prepaid to the carrier thereof, or telecopied, sufficiently early to be delivered in due and regular course to the director notified, in time to enable him to attend such meeting. Notice to any director of a meeting of the Board of Directors may be waived by him, and shall be deemed waived by him by his presence at the meeting. Section 5. Quorum. At any meeting of the Board of Directors, a majority of the total number of the whole Board shall constitute a quorum for all purposes. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof. Section 6. Participation in Meetings By Conference Telephone. Members of the Board of Directors, or of any committee thereof, may participate in a meeting of the Board or any 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 such meeting. Section 7. Conduct of Business. At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided herein or required by the Certificate of Incorporation or by law. Action may be taken by the Board of Directors without a meeting if all members thereof consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors. Section 8. Compensation of Directors. Directors, pursuant to resolution of the Board of Directors, may receive fixed fees and other compensation for their services as directors, including, without limitation, their services as members of committees of the Board of Directors. Section 9. Approval of Minutes. The minutes of meetings of the Board of Directors may be acted upon at any subsequent meeting thereof and the approval of the minutes of any meeting of the Board of Directors shall have the effect of ratifying and validating any of the acts reported therein with like effect as if such acts had been properly approved or authorized at such meeting, providing that such approval is by such vote as would have been sufficient to authorize the acts so reported. ARTICLE III COMMITTEES Section 1. Committees of the Board of Directors. The Board of Directors, by a vote of a majority of the whole Board may, from time to time, designate committees of the Board, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board and shall, for those committees and any other provided for herein, elect a director or directors to serve as the member or members thereof, designating, if it desires, other directors as alternate members who may replace any absent or disqualified member at any meeting of the committee. If the resolution which designates the committee or a supplemental resolution of the Board of Directors shall so provide, any committee so designated may exercise the power and authority of the Board of Directors to declare a dividend, to authorize the issuance of stock or to adopt a certificate of ownership and merger pursuant to Section 253 of the Delaware General Corporation Law. In the absence or disqualification of any member of any committee and any alternate member in his place, the member or members of the committee present at the meeting and not disqualified from voting, whether or not he or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member. Section 2. Conduct of Business. Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by the Certificate of Incorporation or by law. Unless otherwise designated by the Board of Directors, one-third of the members shall constitute a quorum unless the committee shall consist of one or two members, in which event one member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof. Each committee shall hold meetings upon the call of its chairman, the Chairman of the Board, the Chief Executive Officer, or any one of its members, at such date, time and place as set forth in the notice of meeting. Notice of each meeting of a committee of the Board of Directors shall be given to each member by the Secretary or Assistant Secretary of the Corporation, Chairman of the Board, Chief Executive Officer or by the member of the committee calling the meeting. Such notice may be given personally or by telephone or by written notice, telegram, cable, facsimile or telex, mailed or directed to the address of the member appearing upon the books of the Corporation and shall set forth the date, time and place of the meeting, but need not state the purpose or purposes thereof unless required by the Certificate of Incorporation or by law. Notice of the meeting shall be sufficient in time if actually delivered to the member of the committee notified, or delivered properly addressed and prepaid to the carrier thereof, or telecopied, sufficiently early to be delivered in due and regular course to the member notified, in time to enable him to attend such meeting. Notice to any member of a meeting of a committee of the Board may be waived by him, and shall be deemed waived by him by his presence at the meeting. Action may be taken by conference telephone as provided in Article II, Section 6. Action may be taken by any committee without a meeting if all members thereof consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of such committee. Section 3. Officers. The Board of Directors may designate one or more members of any committee to act as the chairman and the secretary of any committee, and each person so designated shall continue as such during the pleasure of the Board. Unless so designated, a committee may choose its own officers, including officers pro tem, and if no secretary has been designated by the Board or the committee, the Secretary of the Corporation shall act as secretary of the committee and keep proper minutes of the proceedings of such committee. ARTICLE IV OFFICERS Section 1. Elected Officers. The officers of the Corporation shall consist of a President, one or more Vice Presidents, a Secretary, a Treasurer and such other officers as the Board of Directors may from time to time elect. The Board of Directors shall consider the election of officers at its first meeting after every annual meeting of stockholders and may consider that subject at such other times as the Board may deem appropriate. Each officer shall hold office until his successor is elected and qualified or until his earlier resignation, retirement or removal. Each officer elected by the Board of Directors or appointed pursuant to Section 2 of this Article IV shall be retired from the Corporation, unless mandatory retirement of such officer is prohibited by law, in accordance with the Corporation's retirement programs not later than the last day of the month in which the officer attains age sixty- five. Any number of offices may be held by the same person. Each officer elected by the Board of Directors or any person thereto specifically authorized by the Board may, in the name and on behalf of the Corporation, receive and receipt for moneys and other properties, execute and deliver contracts, deeds, mortgages, leases, bonds, undertakings, powers of attorney, and other instruments, and assign, endorse, transfer, deliver, release, and satisfy any and all contracts, mortgages, leases, stock certificates, bonds, promissory notes, drafts, checks, bills, orders, receipts, acquittances, and other instruments, and may, when necessary, affix the corporate seal thereto. The Chairman of the Board, President, Chief Executive Officer and Vice Presidents elected by the Board may delegate, designate or authorize named individuals to execute and attest on behalf of the Corporation bids, contracts, performance bonds and similar documents arising in the ordinary day-to-day operations of the Corporation and its divisions. Section 2. Appointed Officers. The Chief Executive Officer designated by the Board of Directors, or if a Chief Executive Officer has not been so designated, the President of the Corporation, may, from time to time, create and abolish such functional, divisional or regional offices of Vice President or Assistant Vice President with such powers and duties and subject to such limitations of authority as he may prescribe and he may make appointments to, and removals from, any such office, but such appointees shall not exercise specific powers or duties pertaining to the elective offices of the Corporation as provided in this Article IV of the By-Laws, except as prescribed by the Board of Directors, either generally or specially. Section 3. Compensation. The Board of Directors, or any committee thereof so designated, may, from time to time, fix the compensation of the several officers, agents, and employees of the Corporation and may delegate to any officer of the Corporation, or any committee composed of officers of the Corporation, the power to fix the compensation of the officers, agents, and employees of the Corporation. Section 4. Chairman of the Board. The Board of Directors may elect one of the members of the Board as Chairman of the Board, who, if elected, shall preside at all meetings of stockholders and directors and shall also perform such duties as may be prescribed by the Board. Except where by law the signature of the President is required, the Chairman of the Board shall possess the same power as the President to sign all certificates, contracts and other instruments of the Corporation. Section 5. Vice Chairman of the Board. The Board of Directors may designate one of the members of the Board as Vice Chairman of the Board who, in the absence or disability of the Chairman of the Board or during any vacancy of that office, shall perform the duties of the Chairman of the Board. He shall also perform such duties as may be prescribed by the Board or delegated to him by the Chief Executive Officer. Section 6. Chief Executive Officer. The Board of Directors shall designate either the Chairman of the Board or the President as Chief Executive Officer of the Corporation, who, subject to the direction and control of the Board, shall have the responsibility for the general management and control of the business and affairs of the Corporation and shall perform all duties and have all powers which are commonly incident to the office of chief executive or which the Board of Directors delegates to him. He shall have power to sign all stock certificates, contracts and other authorized instruments of the Corporation and shall have general supervision and direction of all other officers, employees and agents of the Corporation. The Chief Executive Officer, prior to each annual meeting of stockholders, shall submit to the Board of Directors a report of the operations of the Corporation during the preceding fiscal year and of its affairs, and from time to time shall report to the Board all matters affecting the Corporation's interests which may come to his knowledge. Section 7. President. The President, in the absence or disability of the Chairman of the Board and the Vice Chairman of the Board or during vacancies in both of such offices, shall preside at all meetings of stockholders and directors. He shall perform such duties as may be prescribed by the Board of Directors or delegated to him by the Chief Executive Officer. Section 8. Vice President. Each Vice President shall have such powers and duties as may be delegated to him by the Board of Directors. The Board of Directors, or the Chief Executive Officer, or if a Chief Executive Officer has not been so designated, the President, may assign further descriptive titles to the Vice Presidents, prescribe their duties and rank and may designate them numerically. Section 9. Secretary. The Secretary shall keep an accurate record of all proceedings of the stockholders and the Board of Directors and committees of the Board; sign all certificates for shares and deeds, mortgages, bonds, contracts, notes and other instruments executed by the Corporation requiring his signature or as may be prescribed by the Chief Executive Officer or the President; give notices of meetings of stockholders and of directors; produce on request at any meeting of stockholders a certified list of stockholders arranged in alphabetical order, showing the number of shares held by each; and perform such other and further duties as may from time to time be prescribed by the Board, or a committee of the Board, or as may from time to time be assigned or delegated to him by the Chief Executive Officer or the President. He shall have custody and care of the seal of the Corporation. Section 10. Treasurer. Subject to the direction and control of the Board of Directors, the Chief Executive Officer, and any officer who may be designated by the Board with responsibility for finance, the Treasurer shall have custody of the funds and securities belonging to the Corporation, and shall deposit all funds in the name and to the credit of the Corporation in such depository or depositories as may be designated by the Board or by an officer or officers duly authorized by the Board to designate depositories. He shall make such disbursements of the funds of the Corporation as are authorized and shall render to the Board of Directors, whenever the Board may require it, an account of all his transactions as Treasurer. The Treasurer shall also perform such other duties as the Board of Directors may prescribe from time to time. Section 11. Controller. The Controller shall keep proper books of account and full and accurate records of the receipts and disbursements of the funds belonging to the Corporation and of its operations. The Controller shall render to the Board of Directors, any of its committees, the Chief Executive Officer, and the President, such statements as to the financial condition of the Corporation and as to its operations as each or any of them may request. Section 12. All Officers. The several officers shall perform all other duties usually incident to their respective offices, or which may be required by the stockholders or Board of Directors; shall from time to time, and also whenever requested, report to the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President all matters affecting the Corporation's interests which may come to their knowledge and, on the expiration of their terms of office, shall respectively deliver all books, papers, money and property of the Corporation in their hands to their successors, or to the Chief Executive Officer, or to any person designated by the Board to receive the same. Section 13. Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof. Section 14. Removal. Any officer of the Corporation may be removed at any time, with or without cause, by the Board of Directors. Section 15. Action with Respect to Securities of Other Corporations. Unless otherwise directed by the Board of Directors, each of the Chairman of the Board, the Vice Chairman of the Board, the President, any Vice President elected by the Board of Directors, the Treasurer and the Secretary shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders of, or with respect to any action of stockholders of, any other corporation in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other corporation. Section 16. Security. The Board of Directors may require any officer, agent or employee of the Corporation to provide security for the faithful performance of his duties, in such amount and of such character and on such terms as may be determined from time to time by the Board of Directors. ARTICLE V STOCK Section 1. Certificates of Stock. Each stockholder shall be entitled to a certificate signed by, or in the name of the Corporation by, the Chairman of the Board, the Vice Chairman of the Board, the President or a Vice President, and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, certifying the number of shares owned by him. Any or all of the signatures and the seal of the Corporation on the certificate may be facsimile, engraved, stamped or printed. In the event that any officer or transfer agent who has signed or whose facsimile signature has been placed upon a stock certificate shall have ceased to be such officer or transfer agent before such certificate is issued, it may be issued by the Corporation with the same effect as if the officer or transfer agent were such at the date of issue. Section 2. Transfers of Stock. Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by a transfer agent or agents designated to transfer shares of the stock of the Corporation. Except where a certificate is issued in accordance with Section 3 of Article V of these By-Laws, an outstanding certificate for the number of shares involved shall be surrendered for cancellation before a new certificate is issued therefor. Section 3. Lost, Stolen or Destroyed Certificates. If a person claiming to be the holder of stock in the Corporation claims that the certificate representing such stock has been lost, stolen or destroyed, a duplicate certificate or written instrument may be issued by the Corporation's Transfer Agent for the stock upon being furnished with an affidavit of such loss, theft or destruction in form and substance satisfactory to the Transfer Agent and, upon giving to the Corporation of a bond or agreement of indemnity executed by such holder or owner with a surety company authorized to do business in the State of Delaware or in the State of Ohio as surety, in form approved by counsel for the Corporation, for full and complete indemnification to the Corporation of all losses, costs and expenses of every kind and nature whatsoever which may result to the Corporation or any of its agents or employees by reason of the issuance of such duplicate certificate. Section 4. Regulations. The issue, transfer, conversion and registration of certificates of stock shall be governed by such other regulations as the Board of Directors may establish. ARTICLE VI FINANCES Section 1. Fiscal Year. The fiscal year shall begin on the first day of January in each year. Section 2. Borrowings. Any two of the following officers: the Chairman of the Board, Vice Chairman of the Board, President, Executive Vice President, Senior Vice President, Vice President-Finance, Treasurer, Assistant Treasurer, or any employee of the Corporation designated in writing by any two of said officers, may from time to time in the name of the Corporation borrow money with an obligation to repay not exceeding one year from any bank, trust company or financial institution in such amounts as the officers or designated employee may deem necessary or desirable for the current needs of the Corporation. All obligations for moneys borrowed by the Corporation, and guarantees by the Corporation of moneys borrowed by subsidiaries of the Corporation, shall bear the signatures of any two of the following officers: the Chairman of the Board, Vice Chairman of the Board, President, Executive Vice President, Senior Vice President, Vice President-Finance, Treasurer and Assistant Treasurer, only one of which may be an Assistant Treasurer. Section 3. Banking Authorizations. Except as provided in Section 2 of this Article VI, all checks, drafts, notes, or other obligations for the payment of money shall be signed by such person or persons as the Board of Directors shall direct. The Board may delegate to any officer or officers the power to designate a depository or depositories for the Corporation and to appoint a signer or signers upon such instruments in respect of the funds held by all or any particular depositories. The Board may authorize the use of facsimile or mechanically applied signatures or may delegate to an officer or officers the power to authorize the use thereof. The Board may authorize the use of Depository Transfer Instruments without signature from one corporate account maintained with a duly designated depository to any other corporate account maintained either with the same or some other duly designated depository. The Board may authorize the use of other generally accepted means of transferring funds without signature from a corporate account maintained with a duly designated depository to any other corporate account or to the account of another party at the same or some other depository. ARTICLE VII NOTICES Section 1. Notices. Except as otherwise specifically provided herein or required by the Certificate of Incorporation or by law, all notices required to be given, other than by publication in a newspaper, to any stockholder, director, officer, employee or agent shall be in writing and may in every instance be effectively given by hand delivery to the recipient thereof, by depositing such notice in the mails, postage paid, or by sending such notice by pre-paid telegram or mailgram. Any such notice shall be addressed to such stockholder, director, officer, employee or agent at his or her last known address as the same appears on the books of the Corporation. The time when such notice is received, if hand delivered, or dispatched, if delivered through the mails or by telegram or mailgram, shall be the time of the giving of the notice. Section 2. Waivers. A written waiver of any notice, signed by a stockholder, director, officer, employee or agent, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such stockholder, director, officer, employee or agent. Neither the business to be transacted nor the purpose of any meeting need be specified in such a waiver unless so required by the Certificate of Incorporation or as otherwise provided in these By-Laws. ARTICLE VIII MISCELLANEOUS Section 1. Facsimile Signatures. In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these By-Laws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof. Section 2. Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware". Section 3. Reliance upon Books, Reports and Records. Each director, each member of any committee designated by the Board of Directors, and each officer of the Corporation shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other person as to matters which such director, committee member or officer reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation. Section 4. Time Periods. In applying any provision of these By-Laws which require that an act be done or not done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included. Section 5. Gender. Whenever the masculine gender is used in these By-Laws, it shall be deemed to include both the male and female genders. ARTICLE IX INDEMNIFICATION OF DIRECTORS AND OFFICERS The Corporation shall, to the fullest extent permitted by applicable law from time to time in effect, (but, in the case of any amendment of such law, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment) indemnify any and all persons who may serve or who have served at any time as directors or officers of the Corporation, or who at the request of the Corporation may serve or at any time have served as directors, officers, employees or agents of another corporation (including subsidiaries of the Corporation) or of any partnership, joint venture, trust or other enterprise, and any directors or officers of the Corporation who at the request of the Corporation may serve or at any time have served as agents or fiduciaries of an employee benefit plan of the Corporation or any of its subsidiaries, from and against any and all of the expenses, liabilities or other matters referred to in or covered by law whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent. The Corporation may also indemnify any and all other persons whom it shall have power to indemnify under any applicable law from time to time in effect to the extent permitted by such law. The indemnification provided by this Article IX shall not be deemed exclusive of any other rights to which any person may be entitled under any provision of the Certificate of Incorporation, other By-Law, agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office, and shall be contract rights and continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. If a claim under this Article IX is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty days, the director or officer may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the director or officer shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the director or officer to enforce a right to indemnification hereunder (but not in a suit brought by the director or officer to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the director or officer has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the director or officer is proper in the circumstances because the director or officer has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board, independent legal counsel, or its stockholders) that the director or officer has not met such applicable standard of conduct, shall create a presumption that the director or officer has not met the applicable standard of conduct or, in the case of such a suit brought by the director or officer, be a defense to such suit. In any suit brought by the director or officer to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the director or officer is not entitled to be indemnified, or to such advancement of expenses, under this Article IX or otherwise shall be on the Corporation. The indemnification provided in this Article IX shall inure to each person referred to herein, whether or not the person is serving in any of the enumerated capacities at the time such expenses (including attorneys' fees), judgments, fines or amounts paid in settlement are imposed or incurred, and whether or not the claim asserted against him is based on matters which antedate the adoption of this Article IX. None of the provisions of this Article IX shall be construed as a limitation upon the right of the Corporation to exercise its general power to enter into a contract or understanding of indemnity with a director, officer, employee, agent or any other person in any proper case not provided for herein. Each person who shall act or have acted as a director or officer of the Corporation shall be deemed to be doing so in reliance upon such right of indemnification. For purposes of this Article IX, the term "Corporation" shall include constituent corporations referred to in subsection (h) of Section 145 of the General Corporation Law of the State of Delaware (or any similar provision of applicable law at the time in effect). ARTICLE X AMENDMENTS These By-Laws may be amended by a majority vote of the stockholders entitled to vote at any annual or special meeting of the stockholders provided notice of the proposed amendment shall be included in the notice of the meeting. The Board of Directors, by a majority vote of the whole Board at any meeting, may amend these By- Laws, including By-Laws adopted by the stockholders, provided that the stockholders may from time to time specify particular provisions of the By-Laws which shall not be amended by the Board of Directors. EX-4 4 Exhibit (4) AMENDMENT NO. 2 Dated as of April 27, 1995 to CREDIT AGREEMENT dated as of November 2, 1993 OWENS-CORNING FIBERGLAS CORPORATION, a Delaware corporation (the "Borrower"), the banks listed on the signature pages hereof (the "Banks"), and CREDIT SUISSE, as Agent (the "Agent") for the Banks under the Credit Agreement, dated as of November 2, 1993 (as amended by Amendment No. 1 thereto, the "Credit Agreement"), among the Borrower, the Banks and the Agent hereby agree as follows (with capitalized terms used herein and not otherwise defined having the meaning ascribed thereto in the Credit Agreement): 1. From and after the date hereof, the Credit Agreement shall be amended by inserting the following at the end of the definition of "Mandatorily Redeemable Stock" contained in Section 10.01 thereof: "For purposes of this Agreement, the MIPS (as defined in Section 4.10) shall not constitute Mandatorily Redeemable Stock." 2. This Amendment No. 2 shall be construed in accordance with and governed by the law of the State of New York (without giving effect to its choice of laws principles). 3. This Amendment No. 2 may be signed in any number of counterparts, each of which shall be deemed to be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective as of the date hereof upon execution and delivery by the Borrower, the Agent and the Majority Banks. 4. From and after the date hereof, each reference in the Credit Agreement to "this Agreement", "hereof", "hereunder" or words of like import, and all references to the Credit Agreement in any and all agreements, instruments, documents, notes, certificates and other writings of every kind and nature shall be deemed to mean the Credit Agreement as modified and amended by this Amendment No. 2. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective authorized officers as of the date first above written. OWENS-CORNING FIBERGLAS CORPORATION By /s/ Michael I. Miller Name: Michael I. Miller Title: Vice President & Treasurer By /s/ David W. Devonshire Name: David W. Devonshire Title: Chief Financial Officer CREDIT SUISSE, as Agent and as a Bank By /s/ Christopher J. Eldin /s/ Andrea Shkane Name: Christopher J. Eldin / Andrea Shkane Title: Member of Senior Management / Associate ABN AMRO BANK, N.V. By /s/ J. M. Janovsky /s/ Kathryn C. Toth Name: J. M. Janovsky / Kathryn C. Toth Title: Group Vice President / Vice President THE BANK OF NEW YORK By /s/ Paula M. DiPonzio Name: Paula M. DiPonzio Title: Vice President THE BANK OF NOVA SCOTIA By /s/ F. C. H. Ashby Name: F. C. H. Ashby Title: Senior Manager Loan Operations BARCLAYS BANK PLC By /s/ Kevin F. Heraty Name: Kevin Heraty Title: Director CHEMICAL BANK By /s/ Peter C. Eckstein Name: Peter C.Eckstein Title: Vice President CITIBANK, N.A. By /s/ Barbara A. Cohen Name: Barbara A. Cohen Title: Vice President THE FIRST NATIONAL BANK OF CHICAGO By /s/ Robert L. Jackson Name: Robert L. Jackson Title: Authorized Agent THE FUJI BANK, LIMITED By /s/ Peter L. Chinnici Name: Peter L. Chinnici Title: Joint General Manager MELLON BANK, N.A. By /s/ Frederick W. Okie, Jr. Name: Frederick W. Okie, Jr. Title: Vice President THE MITSUBISHI BANK, LTD. (CHICAGO BRANCH) By /s/ Noboru Kobayashi Name: Noboru Kobayashi Title: Joint General Manager THE NORTHERN TRUST COMPANY By /s/ S. Biff Bowman Name: S. Biff Bowman Title: Vice President ROYAL BANK OF CANADA By /s/ Gordon MacArthur Name: Gordon MacArthur Title: Manager THE TORONTO-DOMINION BANK By /s/ Lisa Allison Name: Lisa Allison Title: Mgr. Cr. Admin. TRUST COMPANY BANK By /s/ Jennifer P. Harrelson Name: Jennifer P. Harrelson Title: Group Vice President By /s/ Kim Coleman Name: Kim Coleman Title: Banking Officer KREDIETBANK, N.V. By /s/ Michael V. Curran /s/John E. Thierfelder Name: Michael V. Curran John E. Thierfelder Title: Vice President Assistant Vice President EX-4 5 Exhibit (4) AMENDMENT NO. 3 dated as of January 19, 1996 to CREDIT AGREEMENT dated as of November 2, 1993 THIS AMENDMENT NO. 3 (this "Amendment"), dated as of January 19, 1996, among OWENS CORNING (formerly known as Owens- Corning Fiberglas Corporation), a Delaware corporation (the "Borrower"), the banks listed on the signature pages hereof (the "Banks"), and CREDIT SUISSE, as Agent (the "Agent") (with capitalized terms used herein and not otherwise defined herein having the meanings ascribed thereto in the Credit Agreement hereafter referred to), W I T N E S S E T H: WHEREAS, the Borrower, the Banks and the Agent have entered into a Credit Agreement dated as of November 2, 1993 (the "Credit Agreement"); WHEREAS, the Borrower has requested, and the Banks and the Agent have agreed to, the amendments to the Credit Agreement set forth in this Amendment; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Borrower, the Banks and the Agent agree as follows: 1. Amendments. Upon and after this Amendment becomes effective, the Credit Agreement shall be amended as follows: (a) Section 4.06(e) shall be amended by deleting "$42,000,000" and inserting in lieu thereof "$82,000,000". (b) Section 4.06(g) shall be amended by deleting "$85,000,000" and inserting in lieu thereof "$135,000,000". (c) Section 4.08 shall be amended by inserting the following after the end of clause (j) thereof and prior to the word "and": ", (k) Investments consisting of Debt to which Section 4.06 does not apply by reason of the provisions of such Section or Guaranties to which Section 4.10 does not apply by reason of the provisions of such Section". (d) Section 4.08 shall be further amended by relettering the last clause thereof, presently clause (k), as clause (l). (e) The Credit Agreement shall be further amended by replacing all references therein to Section 4.08(k) with references to Section 4.08(l). (f) Section 4.10(h) shall be amended (i) by deleting "$40,000,000" and inserting in lieu thereof "$80,000,000" and (ii) by deleting the following clause appearing at the end of such Section 4.10(h): "in each case in accordance with the terms and provisions of such Notes as in effect on the Amendment Effective Date of Amendment 1 to the Credit Agreement," and inserting in lieu thereof the following: "in each case in accordance with the terms and provisions of certain of such Notes as in effect on the Amendment Effective Date of Amendment No. 1 to this Agreement and other of such Notes as issued after the Effective Date of Amendment No. 3 to this Agreement in order to further consummate the Jackson Transaction, as applicable," (g) Section 4.10 shall be further amended by inserting the following after clause (h) thereof and prior to the word "and": "(i) Guaranties of (i) obligations of Affiliated Entities to manufacture and deliver goods in the ordinary course of business, or (ii) obligations of Affiliated Entities that are product warranties given in the ordinary course of business with respect to such goods, or are in the nature of, and not exceeding in general scope, product warranties that would otherwise be given in the ordinary course of business with respect to such goods, (j) Guaranties of up to $25,000,000 in aggregate outstanding principal amount of the India Project Debt," (h) Section 4.10 shall be further amended by re- lettering the last clause thereof, presently clause (i), as clause (k). (i) The Credit Agreement shall be further amended by replacing all references therein to Section 4.10(i) with references to Section 4.10(k). (j) Section 4.10(k) (as relettered in accordance with this Amendment) shall be amended by deleting "$75,000,000" and inserting in lieu thereof "$100,000,000". (k) Section 10.01 shall be amended to add the following new definition in the appropriate alphabetical location: "'Affiliated Entity' means a Subsidiary, an Affiliate, or a Person that uses technology supplied by, or whose operations are supervised by, the Borrower or its Subsidiaries or Affiliates". (l) Section 10.01 shall be further amended by amending the definition of "Commitment Fee Rate" to read in its entirety as follows: "'Commitment Fee Rate' means (a) if the S&P Rating is not lower than BBB+ and the Moody's Rating is not lower than Baa1, 0.125%, (b) if the S&P Rating is lower than BBB+ or the Moody's Rating is lower than Baa1, but the S&P Rating is not lower than BBB and the Moody's Rating is not lower than Baa2, 0.150%, (c) if the S&P Rating is lower than BBB or the Moody's Rating is lower than Baa2, but the S&P Rating is not lower than BBB- and the Moody's Rating is not lower than Baa3, 0.200%, (d) if the S&P Rating is lower than BBB- or the Moody's Rating is lower than Baa3, but the S&P Rating is not lower than BB+ and the Moody's Rating is not lower than Ba1, 0.350% and (e) if the S&P Rating is lower than BB+ or the Moody's Rating is lower than Ba1, 0.500%." (m) Section 10.01 shall be further amended by adding the following definitions in the appropriate alphabetical location: "'India Joint Venture' means the entity or entities established in India by the Borrower and its joint venture partners to construct, own and operate a facility for the manufacture of glass fiber reinforcement products and of which the Borrower, directly or indirectly, owns at least 49% of the outstanding equity." "'India Project Debt' means Debt consisting of construction or term Debt incurred by the India Joint Venture in connection with the development, construction, and placement in service of a glass fiber reinforcement plant to be located in India." (n) Section 10.01 shall be further amended by amending the definition of "Letter of Credit Fee Rate" to read in its entirety as follows: "'Letter of Credit Fee Rate' means the sum of (a) (i) if the S&P Rating is not lower than BBB+ and the Moody's Rating is not lower than Baa1, 0.375%, (ii) if the S&P Rating is lower than BBB+ or the Moody's Rating is lower than Baa1, but the S&P Rating is not lower than BBB and the Moody's Rating is not lower than Baa2, 0.450%, (iii) if the S&P Rating is lower than BBB or the Moody's Rating is lower than Baa2, but the S&P Rating is not lower than BBB- and the Moody's Rating is not lower than Baa3, 0.500%, (iv) if the S&P Rating is lower than BBB- or the Moody's Rating is lower than Baa3, but the S&P Rating is not lower than BB+ and the Moody's Rating is not lower than Ba1, 0.875% or (v) if the S&P Rating is lower than BB+ or the Moody's Rating is lower than Ba1, 1.250%, plus (b) the applicable Utilization Fee." (o) Section 10.01 shall be further amended by amending the definition of "LIBOR Margin" to read in its entirety as follows: "'LIBOR Margin' means the sum of (a) (i) if the S&P Rating is not lower than BBB+ and the Moody's Rating is not lower than Baa1, 0.375%, (ii) if the S&P Rating is lower than BBB+ or the Moody's Rating is lower than Baa1, but the S&P Rating is not lower than BBB and the Moody's Rating is not lower than Baa2, 0.450%, (iii) if the S&P Rating is lower than BBB or the Moody's Rating is lower than Baa2, but the S&P Rating is not lower than BBB- and the Moody's Rating is not lower than Baa3, 0.500%, (iv) if the S&P Rating is lower than BBB- or the Moody's Rating is lower than Baa3, but the S&P Rating is not lower than BB+ and the Moody's Rating is not lower than Ba1, 0.875% or (v) if the S&P Rating is lower than BB+ or the Moody's Rating is lower than Ba1, 1.250%, plus (b) the applicable Utilization Fee." (p) Section 10.01 shall be further amended (i) by amending clause (j) of the definition of "Permitted Lien" to read in its entirety as follows: "(j) a Lien on accounts receivable (and proceeds thereof) constituting the interest of, or securing the obligations of the Borrower or any Subsidiary to, a purchaser of such accounts receivable or undivided interests therein;" (ii) by inserting after clause (s) of the definition of "Permitted Lien" and prior to the word "and" a new clause (t) to read in its entirety as follows: "(t) a Lien constituting a pledge, for purposes of securing the India Project Debt, of the stock or other equity interests owned by the Borrower, a Subsidiary or an Affiliate in (i) the India Joint Venture and/or (ii) any entity established for the sole purpose of owning all or any portion of the India Joint Venture;" and (iii) by re-lettering the last clause of such definition, currently clause (t), as clause (u). (q) The Credit Agreement shall be further amended by replacing all references therein to clause (t) of the definition of "Permitted Lien" with references to clause (u) of such definition. (r) Section 10.01 shall be further amended by deleting "October 31, 1997" from the definition of "Termination Date" and inserting in lieu thereof "February 1, 1999". (s) Section 10.01 shall be further amended by amending the definition of "Utilization Fee" to read in its entirety as follows: "'Utilization Fee' means, at any time, (a) if the aggregate principal amount of Loans and Letter of Credit Participations outstanding exceeds 50% of the aggregate amount of Commitments at such time, (i) if the S&P Rating is greater than or equal to BBB- and the Moody's Rating is greater than or equal to Baa3, 0%, (ii) if the S&P rating is lower than BBB- or the Moody's Rating is lower than Baa3, but the S&P Rating is not lower than BB+ and the Moody's Rating is not lower than Ba1, 0.125% and (iii) if the S&P Rating is lower than BB+ or the Moody's Rating is lower than Ba1, 0.25% or (b) if the aggregate principal amount of Loans and Letter of Credit Participations outstanding does not exceed 50% of the aggregate amount of Commitments at such time, 0%." (t) Section 10.02 shall be amended by inserting the following at the end thereof: "Without limiting the generality of the foregoing, for purposes of establishing compliance with the financial covenants set forth in Article 4 hereof, if the Borrower or a Subsidiary makes a borrowing the proceeds of which are intended to be used for the repayment, on the same day, of another borrowing, the Borrower shall not be deemed to be not in compliance with a financial covenant solely by reason of the fact that for some period of time during such day both borrowings are outstanding, so long as the Borrower or such Subsidiary has irrevocably directed such repayment on such day, and such repayment actually occurs on such day." 2. Effective Date. This Amendment shall become effective as of the date first above written upon the date (the "Effective Date") that the Agent shall have received (a) executed counterparts to this Amendment from the Borrower, the Agent and the Banks, (b) a certificate of the Secretary or an Assistant Secretary of the Borrower, dated the Effective Date, substantially in the form of Annex A hereto, to which shall be attached copies of the resolutions and by-laws referred to in such certificate, (c) a copy of the certificate of incorporation of the Borrower, certified as of a recent date by the Secretary of State or other appropriate official of the Borrower's jurisdiction of incorporation, (d) a good standing certificate with respect to the Borrower, issued as of a recent date by the Secretary of State or other appropriate official of the jurisdiction of the Borrower's incorporation, together with a telegram from such Secretary of State or other official, updating the information in such certificate; and (e) an opinion of the General Counsel of the Borrower, dated the Effective Date, in the form of Annex B hereto. 3. Representations and Warranties. The Borrower represents and warrants to the Agent and the Banks as follows: (a) Power; Authorization. The Borrower has the corporate power, and has taken all necessary corporate action to authorize it, to execute, deliver and perform in accordance with its terms this Amendment and to perform in accordance with its terms the Credit Agreement as amended by this Amendment. This Amendment has been duly executed and delivered by the Borrower and is, and the Credit Agreement as amended by this Amendment is, a legal, valid and binding obligation of the Borrower enforceable in accordance with its terms. (b) Required Approvals; Compliance with Law, etc. The execution, delivery and performance in accordance with its terms of this Amendment, and the performance in accordance with its terms of the Credit Agreement as amended by this Amendment, do not and will not (i) require any Governmental Approval or any consent or approval of the stockholders of the Borrower or of any Subsidiary other than consents and approvals that have been obtained and are listed on Schedule 3.02 to the Credit Agreement, (ii) violate or conflict with, result in a breach of, or constitute a default under, (A) any Contract to which the Borrower or any Subsidiary is a party or by which any of them or any of their respective properties may be bound or (B) any Applicable Law or (iii) result in or require the creation of any Lien upon any assets of the Borrower or any Consolidated Subsidiary except for Liens, if any, in favor of the Agent and the Banks arising under Sections 1.12 and 8.06 of the Credit Agreement. 4. Survival. Each of the foregoing representations and warranties shall be made at and as of the Effective Date. Each of the representations and warranties made under the Credit Agreement as amended by this Amendment (and including those made herein) shall survive to the extent provided in the Credit Agreement and not be waived by the execution and delivery of this Amendment, or any investigation by the Agent or the Banks or any of them. 5. Governing Law. This Amendment shall be construed in accordance with and governed by the law of the State of New York (without giving effect to its choice of laws principles). 6. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be deemed to be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 7. Reference to Agreement. From and after the Effective Date, each reference in the Credit Agreement to "this Agreement", "hereof", "hereunder" or words of like import, and all references to the Credit Agreement in any and all agreements, instruments, documents, notes, certificates and other writings of every kind and nature shall be deemed to mean the Credit Agreement as modified and amended by this Amendment. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective authorized officers as of the date first above written. OWENS CORNING (formerly known as Owens-Corning Fiberglas Corporation) By /s/ Michael I. Miller Name: Michael I. Miller Title: Vice President & Treasurer By /s/ C. Jackson Snyder Name: C. Jackson Snyder Title: Assistant Treasurer CREDIT SUISSE, as Agent and as a Bank By /s/ Christopher J. Eldin /s/ Thomas G. Muoio Name: Christopher J. Eldin Thomas G. Muoio Title: Member of Senior Mgmt./ Associate ABN AMRO BANK, N.V., BY ABN AMRO NORTH AMERICA, INC., AS AGENT By /s/ J. M. Janovsky Name: J. M. Janovsky Title: Group Vice President By /s/ Kathryn C. Toth Name: Kathryn C. Toth Title: Vice President THE BANK OF NEW YORK By /s/ Douglas Ober Name: Douglas Ober Title: Vice President THE BANK OF NOVA SCOTIA By /s/ F. C. H. Ashby Name: F. C. H. Ashby Title: Senior Manager Loan Operations BARCLAYS BANK PLC By /s/ Kevin Heraty Name: Kevin Heraty Title: Director CHEMICAL BANK By /s/ Timothy J. Storms Name: Timothy J. Storms Title: Managing Director CITIBANK, N.A. By /s/ Marjorie Futornick Name: Marjorie Futornick Title: Vice President THE FIRST NATIONAL BANK OF CHICAGO By /s/ Robert L. Jackson Name: Robert L. Jackson Title: Authorized Agent THE FUJI BANK, LIMITED By /s/ Peter L. Chinnici Name: Peter L. Chinnici Title: Joint General Manager MELLON BANK, N.A. By /s/ Mark F. Johnston Name: Mark F. Johnston Title: Assistant Vice President THE MITSUBISHI BANK, LTD. (CHICAGO BRANCH) By /s/ Noboru Kobayashi Name: Noboru Kobayashi Title: Joint General Manager THE NORTHERN TRUST COMPANY By /s/ S. Biff Bowman Name: S. Biff Bowman Title: Vice President ROYAL BANK OF CANADA By /s/ Shelley Browne Name: Shelley Browne Title: Senior Manager THE TORONTO-DOMINION BANK By /s/ Frederic B. Hawley Name: Title: SUNTRUST BANK, ATLANTA (formerly Trust Company Bank) By /s/ Christina T. LaVoy Name: Christina T. LaVoy Title: Banking Officer By /s/ Charles J. Johnson Name: Charles J. Johnson Title: Vice President KREDIETBANK, N.V. By /s/ Robert Snauffer Name: Robert Snauffer Title: Vice President EX-10 6 Exhibit (10) OWENS CORNING Corporate Incentive Plan Terms Applicable to Certain Executive Officers 1. Application Set forth below are the annual incentive plan terms applicable to those employees of Owens-Corning Fiberglas Corporation (the "Company") and its subsidiaries who are executive officers of the Company and whose annual incentive compensation for any taxable year of the Company commencing on or after January 1, 1995 the Committee (as hereafter defined) anticipates would not be deductible by the Company in whole or in part but for compliance with section 162(m)(4)(C) of the Internal Revenue Code of 1986 as amended ("162(m) Covered Employee"), including members of the Board of Directors who are such employees. Such terms are hereafter referred to as the "Plan" or "Corporate Incentive Plan". 2. Eligibility All 162(m) Covered Employees shall be eligible to be selected to participate in this Corporate Incentive Plan. The Committee shall select the 162(m) Covered Employees who shall participate in this Plan in any year no later than 90 days after the commencement of the year (or no later than such earlier or later date as may be the applicable deadline for the compensation payable to such 162(m) Covered Employee for such year hereunder to qualify as "performance-based" under section 162(m)(4)(C) of the Internal Revenue Code of 1986 as amended (the "Code")). Selection to participate in this Plan in any year does not require the Committee to, or imply that the Committee will, select the same person to participate in the Plan in any subsequent year. 3. Administration The Plan shall be administered by the Compensation Committee of the Board of Directors (the "Board"), or by another committee appointed by the Board consisting of not less than two (2) Directors who are not Employees (the "Committee"). The Committee shall be comprised exclusively of Directors who are not Employees and who are "outside directors" within the meaning of Section 162(m)(4)(C) of the Code. The Committee shall, subject to the provisions herein, select employees to participate herein; establish and administer the performance goals and the award opportunities applicable to each participant and certify whether the goals have been attained; construe and interpret the Plan and any agreement or instrument entered into under the Plan; establish, amend, or waive rules and regulations for the Plan's administration; and make all other determinations which may be necessary or advisable for the administration of the Plan. Any determination by the Committee pursuant to the Plan shall be final, binding and conclusive on all employees and participants and anyone claiming under or through any of them. 4. Establishment of Performance Goals and Award Opportunities No later than 90 days after the commencement of each year commencing on or after January 1, 1995 (or than such earlier or later date as may be the applicable deadline for compensation payable hereunder for such year to qualify as "performance-based" under section 162(m)(4)(C) of the Code), the Committee shall establish in writing the method for computing the amount of compensation which will be payable under the Plan to each participant in the Plan for such year if the performance goals established by the Committee for such year are attained in whole or in part and if the participant's employment by the Company, its subsidiaries and affiliates continues without interruption during that year. Such method shall be stated in terms of an objective formula or standard that precludes discretion to increase the amount of the award that would otherwise be due upon attainment of the goals. No provision hereof is intended to preclude the Committee from exercising negative discretion with respect to any award hereunder, within the meaning of the Treasury regulations under Code section 162(m). No later than 90 days after the commencement of each year commencing on or after January 1, 1995 (or than such earlier or later date as may be the applicable deadline for compensation payable hereunder for such year to qualify as "performance-based" under section 162(m)(4)(C) of the Code), the Committee shall establish in writing the performance goals for such year, which shall be based on any of the following performance criteria, either alone or in any combination, and on either a consolidated or business unit level, as the Committee may determine: sales, net asset turnover, earnings per share, cash flow, cash flow from operations, operating profit, net income, operating margin, net income margin, return on net assets, return on total assets, return on common equity, return on total capital, and total shareholder return. The foregoing criteria shall have any reasonable definitions that the Committee may specify, which may include or exclude any or all of the following items as the Committee may specify: extraordinary, unusual or non-recurring items; effects of accounting changes; effects of currency fluctuations; effects of financing activities (e.g., effect on earnings per share of issuance of convertible debt securities); expenses for restructuring or productivity initiatives; other non-operating items; spending for acquisitions; effects of divestitures; and effects of asbestos activities and settlements. Any such performance criterion or combination of such criteria may apply to the participant's award opportunity in its entirety or to any designated portion or portions of the award opportunity, as the Committee may specify. Unless the Committee determines otherwise at any time prior to payment of a participant's award hereunder for any year, extraordinary items, such as capital gains and losses, which affect any performance criterion applicable to the award (including but not limited to the criterion of net income) shall be excluded or included in determining the extent to which the corresponding performance goal has been achieved, whichever will produce the higher award. 5. Maximum Award The maximum dollar amount that may be paid to any participant under the Plan for any year is equal to the excess of (a) an amount equal to 200% of the participant's annual rate of salary at the time the performance goal is established by the Committee for such year or, if later, on January 1 of such year, over (b) the amount of any annual incentive compensation to which the participant is contractually entitled for such year pursuant to any employment agreement with the Company. 6. Attainment of Performance Goals Required Awards shall be paid under this Plan for any year solely on account of the attainment of the performance goals established by the Committee with respect to such year, within the meaning of applicable Treasury regulations. Awards shall also be contingent on continued employment by the Company, its subsidiaries and affiliates during such year. The only exceptions to these rules apply in the event of termination of employment by reason of death or Disability, or in the event of a Change of Control of the Company (as such terms are defined in the Company's Stock Performance Incentive Plan as amended on June 15, 1995 ("SPIP")), during such year, in which case the following provisions shall apply. In the event of termination of employment by reason of death or Disability during a Plan year, an award shall be payable under this Plan to the participant or the participant's estate for such year, which shall be adjusted, pro-rata, for the period of time during the Plan year the participant actually worked. In the event of a Change of Control during a Plan year and prior to any termination of employment, incentive awards shall be paid under the Plan at the higher of (a) one half of participating salary for such year (as determined by the Committee), or (b) projected performance for the year, determined at the time the Change of Control occurs. An additional exception shall apply in the event of termination of employment by reason of Retirement (as defined in the SPIP) during a Plan year, but only if and to the extent it will not prevent any award payable hereunder (other than an award payable in the event of death, Disability, Change of Control or Retirement) from qualifying as "performance-based compensation" under section 162(m)(4)(C) of the Code. Subject to the preceding sentence, in the event of termination of employment by reason of Retirement during a Plan year an award may but need not (as the Committee may determine) be payable under this Plan to the participant, which shall be adjusted, pro-rata, for the period of time during the Plan year the participant actually worked. A participant whose employment terminates prior to the end of a Plan year for any reason not excepted above shall not be entitled to any award under the Plan for that year. 7. Shareholder Approval and Committee Certification Contingencies; Payment of Awards Payment of any awards under this Plan shall be contingent upon shareholder approval, prior to payment, of the material terms of the performance goals under which the awards are to be paid, in accordance with applicable Treasury regulations under Code section 162(m). Unless and until such shareholder approval is obtained, no award shall be paid pursuant to this Plan. Subject to the provisions of paragraph 6 above relating to death, Disability, Change of Control and Retirement, payment of any award under this Plan shall also be contingent upon the Compensation Committee's certifying in writing that the performance goals and any other material terms applicable to such award were in fact satisfied, in accordance with applicable Treasury regulations under Code section 162(m). Unless and until the Committee so certifies, such award shall not be paid. Unless the Committee provides otherwise, (a) earned awards shall be paid promptly following such certification, and (b) such payment shall be made in cash (subject to any payroll tax withholding the Company may determine applies). Any amount payable to a participant hereunder shall be in addition to any annual incentive compensation to which the participant may be contractually entitled for such year pursuant to an employment agreement with the Company, unless such employment agreement provides otherwise. 8. Amendment or Termination The Committee may amend, modify or terminate this Plan at any time, provided that a termination or modification shall only become effective 30 days after written notice thereof is given to each participant. Each participant shall be eligible to receive the incentive compensation to which the participant would have been otherwise entitled but for such termination or modification, pro-rata for the period of the Plan year prior to the termination or modification. 9. Interpretation and Construction Any provision of this Plan to the contrary notwithstanding, (a) awards under this Plan are intended to qualify as performance- based compensation under Code Section 162(m)(4)(C), and (b) any provision of the Plan that would prevent an award under the Plan from so qualifying shall be administered, interpreted and construed to carry out such intention and any provision that cannot be so administered, interpreted and construed shall to that extent be disregarded. No provision of the Plan, nor the selection of any eligible employee to participate in the Plan, shall constitute an employment agreement or affect the duration of any participant's employment, which shall remain "employment at will" unless an employment agreement between the Company and the participant provides otherwise. Both the participant and the Company shall remain free to terminate employment at any time to the same extent as if the Plan had not been adopted. 10. Governing Law The terms of this Plan shall be governed by the laws of the State of Delaware, without reference to the conflicts of laws principles of that state. EX-10 7 Exhibit (10) OWENS CORNING Corporate Incentive Plan Terms Applicable to Key Employees Other Than Certain Executive Officers 1. Application Set forth below are the annual incentive plan terms applicable to those employees of Owens-Corning Fiberglas Corporation (the "Company") and its subsidiaries who in the opinion of the Committee (as hereafter defined) are key employees of the Company or a subsidiary, including members of the Board of Directors who are such employees, but excluding any such employees who are executive officers of the Company and whose annual incentive compensation for any taxable year of the Company commencing on or after January 1, 1995 the Committee anticipates would not be deductible by the Company in whole or in part but for compliance with section 162(m)(4)(C) of the Internal Revenue Code of 1986 as amended ("162(m) Covered Employee"). Such terms are hereafter referred to as the "Incentive Plan". 2. Eligibility All employees of the Company and its subsidiaries who in the opinion of the Committee are key employees of the Company or a subsidiary, including members of the Board of Directors who are such employees, but excluding 162(m) Covered Employees, shall be eligible to be selected to participate in this Incentive Plan. The Committee may select the eligible employees who shall participate in this Incentive Plan in any year at any time before or during such year. Selection to participate in this Incentive Plan in any year does not require the Committee to, or imply that the Committee will, select the same person to participate in the Incentive Plan in any subsequent year. 3. Administration The Plan shall be administered by the Compensation Committee of the Board of Directors (the "Board"), or by another committee appointed by the Board consisting of not less than two (2) Directors who are not Employees (the "Committee"). To the extent permitted by law, the Committee may delegate its administrative authority with respect to the Incentive Plan and, in the event of any such delegation of authority, the term "Committee" as used in this Incentive Plan shall be deemed to refer to the Committee's delegate as well as to the Committee. The Committee shall, subject to the provisions herein, select employees to participate herein; establish and administer the performance goals and the award opportunities applicable to each participant and determine whether the goals have been attained; construe and interpret the Incentive Plan and any agreement or instrument entered into under the Incentive Plan; establish, amend, or waive rules and regulations for the Incentive Plan's administration; and make all other determinations which may be necessary or advisable for the administration of the Incentive Plan. Any determination by the Committee pursuant to the Incentive Plan shall be final, binding and conclusive on all employees and participants and anyone claiming under or through any of them. 4. Establishment of Performance Goals and Award Opportunities At any time before or during each year, the Committee shall establish the method for computing the amount of compensation which will be payable under the Incentive Plan to each participant in the Incentive Plan for such year if the performance goals established by the Committee for such year are attained in whole or in part and if the participant's employment by the Company, its subsidiaries and affiliates continues without interruption during that year. The Committee shall also establish the performance goals for such year, which may be based on any of the following performance criteria (either alone or in any combination, and on either a consolidated or business unit level), as the Committee may determine, or such other criteria as the Committee may select: sales, net asset turnover, earnings per share, cash flow, cash flow from operations, operating profit, net income, operating margin, net income margin, return on net assets, return on total assets, return on common equity, return on total capital, and total shareholder return. The foregoing criteria shall have any definitions that the Committee may specify, which may include or exclude any or all of the following items as the Committee may specify: extraordinary, unusual or non-recurring items; effects of accounting changes; effects of currency fluctuations; effects of financing activities (e.g., effect on earnings per share of issuance of convertible debt securities); expenses for restructuring or productivity initiatives; other non- operating items; spending for acquisitions; effects of divestitures; and effects of asbestos activities and settlements. Any such performance criterion or combination of such criteria may apply to the participant's award opportunity in its entirety or to any designated portion or portions of the award opportunity, as the Committee may specify. At any time prior to payment of an award under this Incentive Plan, the Committee may determine whether extraordinary items, such as capital gains and losses, which affect any performance criterion applicable to such award (including but not limited to the criterion of net income) shall be excluded or included in determining the extent to which the corresponding performance goal has been achieved. 5. Maximum Awards Aggregate awards under the Incentive Plan for any year may not exceed 100% of the participating salaries of participants in the Incentive Plan for such year, as determined by the Committee. 6. Employment Requirement A participant's award under this Incentive Plan for any year shall be contingent on continued employment by the Company, its subsidiaries and affiliates during such year. The only exceptions to this rule apply in the event of termination of employment by reason of death, disability, retirement or job elimination (all as determined by the Committee), or in the event of a change of control of Owens-Corning (as determined by the Committee), during such year, in which case the following provisions shall apply. In the event of termination of employment by reason of death, disability, retirement or job elimination during a year (as determined by the Committee), an award shall be payable under this Incentive Plan to the participant or the participant's estate for such year, which shall be adjusted, pro-rata, for the period of time during the year the participant actually worked. In the event of a change of control of Owens-Corning during a year and prior to any termination of employment, incentive awards shall be paid under the Incentive Plan at the higher of (a) one half of participating salary for such year (as determined by the Committee), or (b) projected performance for the year, determined at the time the change of control occurs. A participant whose employment terminates prior to the end of a year for any reason not excepted above shall not be entitled to any award under the Incentive Plan for that year. 7. Payment of Awards Except as provided otherwise in this Incentive Plan or by the Committee, payment of each award under this Incentive Plan for any year shall be contingent upon a determination by the Committee that the performance goals and employment conditions applicable to such award have been satisfied. Unless and until the Committee so determines, such award shall not be paid. Unless the Committee provides otherwise, (a) earned awards shall be paid promptly following such determination, and (b) such payment shall be made in cash (subject to any payroll tax withholding the Company may determine applies). 8. Amendment or Termination The Committee may amend, modify or terminate this Incentive Plan at any time, provided that a termination or modification shall only become effective 30 days after written notice thereof is given to each participant. Each participant shall be eligible to receive the incentive compensation to which the participant would have been otherwise entitled but for such termination or modification, pro-rata for the period of the year prior to the termination or modification. 9. Interpretation and Construction Any provision of this Incentive Plan to the contrary notwithstanding, (a) no provision of this Incentive Plan shall apply to any 162(m) Covered Employee, and (b) any provision of this Incentive Plan that would prevent an award to any 162(m) Covered Employee under any plan or arrangement other than this Incentive Plan from qualifying as performance-based compensation under Code Section 162(m)(4)(C) shall be administered, interpreted and construed to enable such award to so qualify and any provision that cannot be so administered, interpreted and construed shall to that extent be disregarded. No provision of the Incentive Plan, nor the selection of any eligible employee to participate in the Incentive Plan, shall constitute an employment agreement or affect the duration of any participant's employment, which shall remain "employment at will" unless an employment agreement between the Company and the participant provides otherwise. Both the participant and the Company shall remain free to terminate employment at any time to the same extent as if the Incentive Plan had not been adopted. 10. Governing Law The terms of this Incentive Plan shall be governed by the laws of the State of Delaware, without reference to the conflicts of laws principles of that state. EX-10 8 Exhibit (10) OWENS CORNING Long-Term Performance Incentive Plan Terms Applicable to Certain Executive Officers Set forth below are the Rules and Regulations of the Compensation Committee, promulgated under the Stock Performance Incentive Plan as amended on June 15, 1995, that constitute the long-term performance incentive plan terms applicable to those employees of the Company and its Subsidiaries who are executive officers of the Company and whose remuneration for any performance period hereunder the Committee anticipates would not be deductible by the Company in whole or in part but for compliance with section 162(m)(4)(C) of the Internal Revenue Code of 1986 as amended ("162(m) Covered Employee"), including members of the Board of Directors who are such employees. Such long-term performance incentive plan terms are hereafter referred to as the "Long-Term Performance Incentive Plan", the "Plan" or the "LTPIP". 1. All 162(m) Covered Employees shall be eligible to be selected to participate in this Long-Term Performance Incentive Plan. The Committee shall select the 162(m) Covered Employees who shall participate in this Plan in any performance period no later than 90 days after the commencement of the performance period (or no later than such earlier or later date as may be the applicable deadline for any compensation payable to such 162(m) Covered Employee hereunder for such performance period to qualify as "performance-based" under section 162(m)(4)(C) of the Internal Revenue Code of 1986 as amended (the "Code")). Selection to participate in this Plan in any performance period does not require the Committee to, or imply that the Committee will, select the same person to participate in the LTPIP in any subsequent performance period. 2. Being selected to participate in the Long-Term Performance Incentive Plan in any performance period means that the individual is being granted the opportunity to earn a cash award equal to the Fair Market Value of up to a specified number of shares of Company common stock if the Company attains performance goals established by the Committee for such performance period and the participant's employment by the Company, its Subsidiaries and Affiliates continues without interruption during that period ("phantom performance shares"). Payment for each phantom performance share that is earned shall be based on the Fair Market Value of a share of Company common stock on the date on which the Committee certifies (in accordance with paragraph 10 below) that the performance goals and any other material terms applicable to such phantom performance share were in fact satisfied. Phantom performance shares may be redeemed only for cash and may not be redeemed for equity securities in lieu of cash, and are not transferable by the participant other than by will or the laws of descent and distribution (within the meaning of SEC Rule 16b-3(a)(2)). If (and only if) the Committee expressly so provides at the time an eligible employee is selected to participate in the LTPIP in any performance period, the participant's award for such performance period may be paid in the form of shares of Company common stock rather than cash, in which case all provisions of this LTPIP applicable to phantom performance shares (other than the preceding sentence) shall likewise apply to the participant's opportunity to earn such shares of Company common stock. 3. No later than 90 days after the commencement of each performance period (or than such earlier or later date as may be the applicable deadline for compensation payable hereunder for such performance period to qualify as "performance-based" under section 162(m)(4)(C) of the Code), the Committee shall establish in writing the method for computing the number of phantom performance shares which each participant in the Plan for such performance period will earn under the Plan for such performance period if the performance goals established by the Committee for such performance period are attained in whole or in part and if the participant's employment by the Company, its subsidiaries and affiliates continues without interruption during that performance period. Such method shall be stated in terms of an objective formula or standard that precludes discretion to increase the amount of the award that would otherwise be due upon attainment of the goals. No provision hereof is intended to preclude the Committee from exercising negative discretion within the meaning of the Treasury regulations under Code section 162(m). No later than 90 days after the commencement of each performance period (or than such earlier or later date as may be the applicable deadline for compensation payable hereunder for such performance period to qualify as "performance-based" under section 162(m)(4)(C) of the Code), the Committee shall establish in writing the performance goals for such performance period, which shall be based on any of the following performance criteria, either alone or in any combination, and on either a consolidated or business unit level, as the Committee may determine: sales growth, earnings per share growth, cash flow, cash flow from operations, operating profit growth, net income growth, operating margin, net income margin, return on net assets, return on total assets, return on common equity, return on total capital, and total shareholder return. The foregoing criteria shall have any reasonable definitions that the Committee may specify, which may include or exclude any or all of the following items as the Committee may specify: extraordinary, unusual or non-recurring items; effects of accounting changes; effects of currency fluctuations; effects of financing activities (e.g., effect on earnings per share of issuance of convertible debt securities); expenses for restructuring or productivity initiatives; other non-operating items; spending for acquisitions; effects of divestitures; and effects of asbestos activities and settlements. Any such performance criterion or combination of such criteria may apply to the participant's award opportunity in its entirety or to any designated portion or portions of the award opportunity, as the Committee may specify. Unless the Committee determines otherwise at any time prior to payment of a participant's award for any performance period hereunder, extraordinary items, such as capital gains and losses, which affect any performance criterion applicable to the award (including but not limited to the criterion of net income) shall be excluded or included in determining the extent to which the corresponding performance goal has been achieved, whichever will produce the higher award. 4. The first performance period under the LTPIP shall be the period commencing on July 1, 1995 and ending on December 31, 1997. New performance periods of three years' duration each shall commence on January 1, 1996 and on each subsequent anniversary of that date. 5. No later than 90 days after the commencement of a performance period (or than such earlier or later date as may be the applicable deadline for compensation hereunder for such performance period to qualify as "performance-based" under section 162(m)(4)(C) of the Code), the Committee shall establish in writing the number of phantom performance shares which each person selected to participate in the LTPIP in such performance period shall be granted the opportunity to earn if the performance goals applicable to such performance period are achieved in whole or in part. In no event shall any participant be granted the opportunity to earn more than 50,000 shares (or the cash equivalent thereof) with respect to any performance period hereunder. (The foregoing amount represents the highest number of shares (or equivalent amount of cash) which any participant may be granted the opportunity to earn hereunder for any performance period if the maximum performance objectives for such performance period are attained). The foregoing amount shall be appropriately adjusted to reflect a change in corporate capitalization, such as a stock split or dividend, or a corporate transaction, such as any merger, consolidation, separation (including a spinoff or other distribution of property), reorganization, or partial or complete liquidation. 6. Any phantom performance shares granted under this Plan shall be paid solely on account of the attainment of the performance goals established by the Compensation Committee with respect to such phantom performance shares, within the meaning of applicable Treasury regulations. Payment of any such phantom performance shares shall also be contingent on continued employment by the Company, its Subsidiaries and Affiliates during the performance period to which such phantom performance shares relate. The only exceptions to these rules apply in the event of termination of employment by reason of death or Disability (within the meaning of the Stock Performance Incentive Plan as amended by the Board of Directors on June 15, 1995 (SPIP)), or in the event of a Change of Control of the Company (within the meaning of the SPIP), during a performance period, in which case the following provisions shall apply. In the event that the employment of a participant who has been granted phantom performance shares with respect to a performance period terminates by reason of death or Disability during such performance period, the participant shall be paid the cash value of the number of phantom performance shares, if any, that the participant would have earned for such performance period if the participant's employment had not terminated prior to the end of the performance period, multiplied by a fraction the numerator of which shall be the number of full calendar months elapsed in the performance period prior to the termination of employment and the denominator of which shall be 30, in the case of the first performance period, or 36, in the case of subsequent performance periods. Such fractional amount shall be paid at the time payment would have been made if the participant's employmment had not terminated prior to the end of the performance period. In the case of a Change of Control during a performance period, all phantom performance shares then outstanding shall become fully vested, earned and payable as if maximum performance levels were attained and shall be cashed out by the Company as of the date the Change of Control occurs, if and to the extent so provided in Article 8 of the SPIP. An additional exception shall apply in the event of termination of employment by reason of Retirement during a performance period, but only if and to the extent it will not prevent any award payable hereunder (other than an award payable in the event of death, Disability, Change of Control or Retirement) from qualifying as "performance-based compensation" under section 162(m)(4)(C) of the Code. Subject to the preceding sentence, in the event that the employment of a participant who has been granted phantom performance shares with respect to a performance period terminates by reason of Retirement during such performance period, the participant may but need not (as the Committee may determine) be paid the cash value of the number of phantom performance shares, if any, that the participant would have earned for such performance period if the participant's employment had not terminated prior to the end of the performance period, multiplied by a fraction the numerator of which shall be the number of full calendar months elapsed in the performance period prior to termination of employment and the denominator of which shall be 30, in the case of the first performance period, or 36, in the case of subsequent performance periods. Any such payment shall be made at the time payment would have been made if the participant's employment had not terminated prior to the end of the performance period. A participant whose employment terminates prior to the end of a performance period for any reason not excepted above shall not be entitled to any payment for phantom performance shares granted to such participant for that performance period. 7. With respect to any phantom performance share granted hereunder, in no event shall the Committee have discretion to increase the amount of compensation payable that would otherwise be due upon attainment of the performance goals applicable to such phantom performance share. This provision shall be administered in accordance with any applicable Treasury regulations under Code section 162(m). 8. Payment and vesting of any awards granted under this LTPIP shall be contingent upon stockholder approval at the 1996 Annual Meeting of Stockholders of the amendments to the Stock Performance Incentive Plan that were adopted by the Board of Directors on June 15, 1995. Unless and until such shareholder approval is obtained, no LTPIP award shall vest or be paid. 9. Payment of any awards granted under this LTPIP shall be contingent upon shareholder approval, prior to payment, of the material terms of the performance goals under which such awards are to be paid, in accordance with applicable Treasury regulations under Code section 162(m). Unless and until such shareholder approval is obtained, no such award shall be paid. 10. Subject to the provisions of paragraph 6 above relating to death, Disability, Change of Control and Retirement, payment of any award granted under this LTPIP shall also be contingent upon the Compensation Committee's certifying in writing that the performance goals and any other material terms applicable to such award were in fact satisfied, in accordance with applicable Treasury regulations under Code section 162(m). Unless and until the Committee so certifies, such award shall not be paid. 11. Any amount payable to a participant hereunder shall be in addition to any other compensation to which the participant may be contractually entitled for such performance period pursuant to an employment agreement with the Company, unless such employment agreement provides otherwise. 12. All phantom performance shares are intended to constitute Stock Bonus Awards within the meaning of the SPIP, and are granted under and subject to the terms and conditions of the SPIP, which shall control in the event of any conflict. All phantom performance shares shall be documented by a written instrument issued to the participant and signed by a duly authorized representative of the Company. The Plan is not intended to confer any rights upon any individual to any phantom performance share or with respect to any phantom performance share. All such rights, if any, shall be governed by and determined exclusively in accordance with the written instrument issued to the participant in accordance with the foregoing provisions of this paragraph. 13. Capitalized terms which are used but not defined in the Plan shall have the meanings ascribed to such terms in the SPIP, unless the context requires otherwise. 14. The Committee may amend or terminate the Plan at any time, provided that no such amendment or termination shall adversely affect any outstanding phantom performance share without the written consent of the participant. 15. Any provision of this Plan to the contrary notwithstanding, (a) awards under this Plan are intended to qualify as performance-based compensation under Code Section 162(m)(4)(C), and (b) any provision of the Plan that would prevent an award under the Plan from so qualifying shall be administered, interpreted and construed to carry out such intention and any provision that cannot be so administered, interpreted and construed shall to that extent be disregarded. EX-10 9 Exhibit (10) OWENS CORNING Long-Term Performance Incentive Plan Terms Applicable to Officers Other Than Certain Executive Officers Set forth below are the Rules and Regulations of the Compensation Committee, promulgated under the Stock Performance Incentive Plan as amended on June 15, 1995, that constitute the long-term performance incentive plan terms applicable to those employees of the Company and its Subsidiaries who are elected or appointed officers of the Company, including members of the Board of Directors who are such employees, other than any such employees who are executive officers of the Company and whose remuneration for any performance period hereunder the Committee anticipates would not be deductible by the Company in whole or in part but for compliance with section 162(m)(4)(C) of the Internal Revenue Code of 1986 as amended ("162(m) Covered Employee"). Such long- term performance incentive plan terms are hereafter referred to as the "LT Plan". 1. All employees of the Company and its Subsidiaries who are elected or appointed officers of the Company, including members of the Board of Directors who are such employees, other than 162(m) Covered Employees, shall be eligible to be selected to participate in this LT Plan. The Committee may select the eligible employees who shall participate in this LT Plan in any performance period at any time before or during the first half of the performance period. Selection to participate in this LT Plan in any performance period does not require the Committee to, or imply that the Committee will, select the same person to participate in the LT Plan in any subsequent performance period. 2. Being selected to participate in this LT Plan in any performance period means, in the case of eligible executive officers of the Company, that the individual is being granted the opportunity to earn a cash award equal to the Fair Market Value of up to a specified number of shares of Company common stock if the Company attains performance goals established by the Committee for such performance period and the participant's employment by the Company, its Subsidiaries and Affiliates continues without interruption during that period ("phantom performance shares"). Payment for each phantom performance share that is earned shall be based on the Fair Market Value of a share of Company common stock on the date on which the Committee determines that the performance goals and any other material terms applicable to such phantom performance share were in fact satisfied. Phantom performance shares may be redeemed only for cash and may not be redeemed for equity securities in lieu of cash, and are not transferable by the participant other than by will or the laws of descent and distribution (within the meaning of SEC Rule 16b-3(a)(2)). If (and only if) the Committee expressly so provides at the time an eligible executive officer is selected to participate in this LT Plan in any performance period, the participant's award for such performance period may be paid in the form of shares of Company common stock rather than cash, in which case all provisions of this LT Plan applicable to phantom performance shares (other than the preceding sentence) shall likewise apply to the participant's opportunity to earn such shares of Company common stock. Being selected to participate in this LT Plan in any performance period means, in the case of participants other than executive officers of the Company, that the individual is being granted a combination of restricted shares of Company common stock and performance shares. The restricted shares shall entitle the participant to vote and receive dividends, but shall be non-transferable by the participant and shall be forfeited to the Company unless either (a) the Company achieves performance goals specified for such performance period and the participant's employment by the Company, its Subsidiaries and Affiliates continues without interruption during that period, or (b) the participant's employment by the Company, its Subsidiaries and Affiliates continues for seven years (or such shorter period as the Committee may specify) after the close of the performance period. The performance shares shall represent the opportunity to earn up to a specified number of shares of Company common stock in excess of the number of restricted shares, or their cash value (as the Committee may determine), if the Company achieves specified performance goals during the performance period that exceed the performance goals which must be achieved to earn the restricted shares and if the participant's employment by the Company, its Subsidiaries and Affiliates continues without interruption during that period. 3. At any time before or during the first half of each performance period, the Committee shall establish the method for computing the number of phantom performance shares, restricted shares and performance shares (as applicable) which each participant in the LT Plan for such performance period will earn under the LT Plan for such performance period if the performance goals established by the Committee for such performance period are attained in whole or in part and if the participant's employment by the Company, its subsidiaries and affiliates continues without interruption during that performance period. At any time before or during the first half of each performance period, the Committee shall also establish the performance goals for such performance period, which may be based on any of the following performance criteria, either alone or in any combination, and on either a consolidated or business unit level, as the Committee may determine, or on such other criteria as the Committee may select: sales growth, earnings per share growth, cash flow, cash flow from operations, operating profit growth, net income growth, operating margin, net income margin, return on net assets, return on total assets, return on common equity, return on total capital, and total shareholder return. The foregoing criteria shall have any definitions that the Committee may specify, which may include or exclude any or all of the following items as the Committee may specify: extraordinary, unusual or non-recurring items; effects of accounting changes; effects of currency fluctuations; effects of financing activities (e.g., effect on earnings per share of issuance of convertible debt securities); expenses for restructuring or productivity initiatives; other non-operating items; spending for acquisitions; effects of divestitures; and effects of asbestos activities and settlements. Any such performance criterion or combination of such criteria may apply to the participant's award opportunity in its entirety or to designated portion or portions of the award opportunity, as the Committee may specify. At any time prior to payment of an award for a performance period hereunder, the Committee may determine whether extraordinary items, such as capital gains and losses, which affect any performance criterion applicable to the award (including but not limited to the criterion of net income) shall be excluded or included in determining the extent to which the corresponding performance goal has been achieved. 4. The first performance period under this LT Plan shall be the period commencing on July 1, 1995 and ending on December 31, 1997. New performance periods of three years' duration each shall commence on January 1, 1996 and on each subsequent anniversary of that date. 5. At any time before or during the first half of each performance period, the Committee shall establish the number of phantom performance shares which each eligible executive officer selected to participate in this LT Plan in such performance period, and the number of restricted shares and performance shares which each other eligible officer selected to participate in this LT Plan in such performance period, shall be granted the opportunity to earn if the performance goals applicable to such performance period are achieved in whole or in part. In no event shall any participant who is an executive officer be granted the opportunity to earn more than 50,000 shares (or the cash equivalent thereof) with respect to any performance period, and in no event shall any participant who is not an executive officer be granted the opportunity to earn more than 8,000 restricted shares and 4,000 performance shares with respect to any performance period. (The foregoing amounts represent the highest number of shares (or equivalent amount of cash) which the participants in question may be granted the opportunity to earn hereunder if the maximum performance objectives are achieved with respect to any performance period). The foregoing amounts shall be appropriately adjusted to reflect a change in corporate capitalization, such as a stock split or dividend, or a corporate transaction, such as any merger, consolidation, separation (including a spinoff or other distribution of property), reorganization, or partial or complete liquidation. 6. Payment of any phantom performance shares shall be contingent on continued employment by the Company, its Subsidiaries and Affiliates during the performance period to which such phantom performance shares relate. The only exceptions to this rule apply in the event of termination of employment by reason of death, Disability or Retirement (within the meaning of the Stock Performance Incentive Plan as amended by the Board of Directors on June 15, 1995 (SPIP)), or in the event of a Change of Control of the Company (within the meaning of the SPIP), during a performance period, in which case the following provisions shall apply. In the event that the employment of a participant who has been granted phantom performance shares with respect to a performance period terminates by reason of death or Disability during such performance period, the participant shall be paid the cash value of the number of phantom performance shares, if any, that the participant would have earned for such performance period if the participant's employment had not terminated prior to the end of the performance period, multiplied by a fraction the numerator of which shall be the number of full calendar months elapsed in the performance period prior to the termination of employment and the denominator of which shall be 30, in the case of the first performance period, or 36, in the case of subsequent performance periods. Such fractional amount shall be paid at the time payment would have been made if the participant's employment had not terminated prior to the end of the performance period. In the case of a Change of Control during a performance period, all phantom performance shares then outstanding shall become fully vested, earned and payable as if maximum performance levels were attained and shall be cashed out by the Company as of the date the Change of Control occurs, if and to the extent so provided in Article 8 of the SPIP. In the event that the employment of a participant who has been granted phantom performance shares with respect to a performance period terminates by reason of Retirement during such performance period, the participant may (but need not, as the Committee may determine) be paid the cash value of the number of phantom performance shares, if any, that the participant would have earned for such performance period if the participant's employment had not terminated prior to the end of the performance period, multiplied by a fraction the numerator of which shall be the number of full calendar months elapsed in the performance period prior to termination of employment and the denominator of which shall be 30, in the case of the first performance period, or 36, in the case of subsequent performance periods. Any such payment shall be made at the time payment would have been made if the participant's employment had not terminated prior to the end of the performance period. A participant whose employment terminates prior to the end of a performance period for any reason not excepted above shall not be entitled to any payment for phantom performance shares granted to such participant for that performance period. 7. In the event that the employment of a participant who has been granted restricted shares and performance shares with respect to a performance period terminates by reason of death or Disability during such performance period, the participant shall vest in that number of the restricted shares, if any, and shall be issued that number of performance shares, if any, that the participant would have vested in or been issued at the end of the performance period if the participant's employment had not terminated prior to the end of the performance period, multiplied by a fraction the numerator of which shall be the number of full calendar months elapsed in the performance period prior to the termination of employment and the denominator of which shall be 30, in the case of the first performance period, or 36, in the case of subsequent performance periods. Such fractional number of shares shall be issued free of restrictions at the time shares would have vested or been issued if the participant's employment had not terminated prior to the end of the performance period. In the case of a Change of Control during a performance period, all restricted shares and performance shares granted with respect to such performance period that are then outstanding shall become fully vested, earned and distributable as if maximum performance levels were attained and shall be cashed out by the Company as of the date the Change of Control occurs, if and to the extent so provided in Article 8 of the SPIP. In the event that the employment of a participant who has been granted restricted shares and performance shares with respect to a performance period terminates by reason of Retirement during such performance period, the participant may (but need not, as the Committee may determine) vest in the number of restricted shares and be issued the number of performance shares, if any, that the participant would have earned for such performance period if the participant's employment had not terminated prior to the end of the performance period, multiplied by a fraction the numerator of which shall be the number of full calendar months elapsed in the performance period prior to termination of employment and the denominator of which shall be 30, in the case of the first performance period, or 36, in the case of subsequent performance periods. Any such shares shall be issued free of restrictions at the time shares would have vested or been issued if the participant's employment had not terminated prior the end of the performance period. A participant whose employment terminates prior to the end of a performance period for any reason not excepted above shall not be entitled to vest in any restricted shares or be issued any performance shares granted to such participant for that performance period. In the case of a Change of Control after a performance period, vesting of any restricted shares granted with respect to such performance period that are then outstanding shall continue to be contingent on the participant's continued employment for seven years (or such shorter period as the Committee may specify) after the close of such performance period, in accordance with paragraph 2 above. If any termination of employment (whether by reason of death, Disability, Retirement or otherwise) occurs at any time after the conclusion of a performance period, any restricted shares that were granted with respect to such performance period and that are outstanding on the date of such termination of employment shall be forfeited. 8. Payment and vesting of any awards granted under this LT Plan shall be contingent upon stockholder approval at the 1996 Annual Meeting of Stockholders of the amendments to the Stock Performance Incentive Plan that were adopted by the Board of Directors on June 15, 1995. Unless and until such stockholder approval is obtained, no LT Plan award shall vest or be paid. 9. Except as provided otherwise in this LT Plan or by the Committee, payment and vesting of any award granted under this LT Plan shall be contingent upon satisfaction of the performance goals and employment conditions applicable to such award. 10. At any time during a performance period, and without the consent of any participant, the Committee may change the performance criteria and/or performance goals applicable to phantom performance shares, restricted shares and performance shares granted under this LT Plan for such performance period. Any such change may operate to the detriment or advantage of the affected participants. 11. All awards granted under this LT Plan, whether phantom performance shares, restricted shares or performance shares, are intended to constitute Stock Bonus Awards within the meaning of the SPIP, and are granted under and subject to the terms and conditions of the SPIP, which shall control in the event of any conflict. All such awards shall be documented by a written instrument issued to the participant and signed by a duly authorized representative of the Company. This LT Plan is not intended to confer any rights upon any individual to any award or with respect to any award. All such rights, if any, shall be governed by and determined exclusively in accordance with the written instrument issued to the participant in accordance with the foregoing provisions of this paragraph. 12. Capitalized terms which are used but not defined in this LT Plan shall have the meanings ascribed to such terms in the SPIP, unless the context requires otherwise. 13. The Committee may amend or terminate this LT Plan at any time, provided that no such amendment or termination shall adversely affect any outstanding award without the written consent of the participant. 14. Any provision of this LT Plan to the contrary notwithstanding, (a) no provision of this LT Plan shall apply to any 162(m) Covered Employee, and (b) any provision of this LT Plan that would prevent an award to any 162(m) Covered Employee under any plan or arrangement other than this LT Plan from qualifying as "performance-based compensation" under section 162(m)(4)(C) of the Code shall be administered, interpreted and construed to enable such award to so qualify and any provision that cannot be so administered, interpreted and construed shall to that extent be disregarded. EX-10 10 Exhibit (10) OWENS-CORNING FIBERGLAS CORPORATION STOCK PERFORMANCE INCENTIVE PLAN (as amended on June 15, 1995) ARTICLE 1. Establishment, Purpose, and Duration 1.1 Establishment of the Plan. Owens-Corning Fiberglas Corporation, a Delaware corporation (hereinafter referred to as the "Company"), hereby establishes an incentive compensation plan to be known as the "Owens-Corning Fiberglas Corporation Stock Performance Incentive Plan" (such Plan as amended from time to time being hereinafter referred to as the "Plan"), as set forth in this document. The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, and Stock Bonuses (including Phantom Stock Bonuses and Restricted Stock). The Board of Directors of the Company approved the Plan on January 23, 1992, subject to ratification by an affirmative vote of a majority of Shares of Common Stock present and entitled to vote at the 1992 Annual Stockholders Meeting. Following such ratification, the Plan became effective May 1, 1992 (the "Effective Date"). The Board of Directors of the Company thereafter amended the Plan on June 15, 1995, subject to stockholder approval of the amendments at the 1996 Annual Stockholders Meeting. Provided such approval is obtained, the Plan as so amended is effective as of June 15, 1995, and shall remain in effect as provided in Section 1.3 herein. 1.2 Purpose of the Plan. The purpose of the Plan is to promote the success and enhance the value of the Company by linking the personal interests of Participants to those of Company stockholders. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Participants upon whose judgment, interest, and special effort the successful conduct of its operation largely is dependent. 1.3 Duration of the Plan. The Plan shall commence on the Effective Date, as described in Section 1.1 herein, and shall remain in effect, subject to the right of the Board of Directors to terminate the Plan at any time pursuant to Article 9 herein, until all Shares subject to it shall have been purchased or acquired according to the Plan's provisions. However, in no event may an Award be granted under the Plan on or after the tenth anniversary of the Plan's Effective Date. ARTICLE 2. Definitions and Construction 2.1 Definitions. Whenever used in the Plan, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter of the word is capitalized: (a) "Affiliates" means any corporation (other than a Subsidiary), partnership, joint venture, or any other entity in which the Company owns, directly or indirectly, at least a ten percent (10%) Beneficial Ownership interest. (b) "Award" means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options or Stock Bonuses (including Phantom Stock Bonuses and Restricted Stock). (c) "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act. (d) "Board" or "Board of Directors" means the Board of Directors of Owens-Corning Fiberglas Corporation. (e) "Cause" means a felony conviction of a Participant or the failure of a Participant to contest prosecution for a felony, or a Participant's willful misconduct or dishonesty, any of which is directly and materially harmful to the business or reputation of the Company, including any Subsidiary, Parent, or Affiliate. (f) "Change of Control" of the Company shall be deemed to have occurred as of the first day any one or more of the following conditions shall have been satisfied: (i) Any Person (other than the Company, any Company employee benefit plan (including its trustee), any Person acting on behalf of the Company in a distribution of stock to the public, or any entity owned directly or indirectly by the stockholders (immediately prior to such transaction) of the Company in substantially the same proportions as their ownership of the Company) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of Directors; or (ii) The occurrence of any transaction or event relating to the Company that is required to be reported in response to the requirements of Item 5(f) of Schedule 13E-3 of Regulation 13A of the Exchange Act; or (iii) When, during any period of two (2) consecutive years during the existence of the Plan, the individuals who, at the beginning of such period, constitute the Board of Directors of the Company, cease for any reason other than death to constitute at least a majority thereof, unless each Director who was not a Director at the beginning of such period was elected by, or on the recommendation of, at least two-thirds (2/3rds) of the Directors at the beginning of such period, provided that any Director elected by or on the recommendation of at least two-thirds (2/3rds) of the Directors at the beginning of any such two (2) year period shall be treated as if he or she had been a Director at the beginning of such period; or (iv) The occurrence of a transaction requiring stockholder approval for the acquisition of the Company by an entity other than the Company or a Subsidiary through purchase of assets, or by merger, or otherwise. (g) "Change-of-Control Price" means the highest price per Share of Company Common Stock paid in any transaction reported on the New York Stock Exchange Composite Tape, or paid in any transaction related to a Potential or actual Change of Control of the Company at any time during the preceding sixty (60) calendar day period, as determined by the Committee. (h) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (i) "Committee" means the committee of two (2) or more Directors appointed by the Board to administer the Plan, as further provided in Article 3 herein. When used herein, "Committee" shall also include any person or persons to whom the Committee's authority has been lawfully delegated pursuant to Article 3. (j) "Company" means Owens-Corning Fiberglas Corporation, a Delaware corporation, and any successor thereto as provided in Article 14 herein. (k) "Director" means any individual who is a member of the Board of Directors of the Company. (l) "Disability" or "Disabled" means disability as determined under the long-term disability program of the Company, a Subsidiary or Affiliate applicable to the Employee. (m) "Employee" means any employee of the Company or a Subsidiary, including part-time employees and employees who are represented by a collective bargaining agent with respect to such employment. (n) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor Act thereto. (o) "Fair Market Value" means, as of any given date, (i) with respect to Incentive Stock Options, the closing sale price of the Stock on such date on the New York Stock Exchange Composite Tape; and (ii) with respect to Nonqualified Stock Options and any other Awards under the Plan not related to Incentive Stock Options, the closing sale price of the Stock on such date on the New York Stock Exchange Composite Tape, or, if (and only if) the Committee in its discretion so specifies, the average on such date of the closing price of the Stock on each day on which the Stock is traded over a period of up to 20 trading days immediately prior to such date. However, if the foregoing method of determining Fair Market Value is not consistent with any then applicable regulations of the U.S. Secretary of the Treasury, then Fair Market Value shall be determined in accordance with those regulations. (p) "Incentive Stock Options" or "ISO" means an option to purchase Shares, granted under Article 6 herein, which the Committee designates as an Incentive Stock Option and is intended by the Committee to qualify for the tax treatment applicable to incentive stock options under Section 422 of the Code. (q) "Insider" shall mean an Employee whose transactions in equity securities of the Company are, at the time an Award is made under this Plan, subject to Section 16 of the Exchange Act. (r) "Nonqualified Stock Option" or "NQSO" means an option to purchase Shares, granted under Article 6 herein, which is not intended by the Committee to qualify for the tax treatment applicable to incentive stock options under Section 422 of the Code. (s) "Option" or "Stock Option" means an Incentive Stock Option or a Nonqualified Stock Option granted under Article 6 herein. (t) "Option Price" means the price at which a Share may be purchased by a Participant pursuant to an Option, as determined by the Committee, and as further described in Section 6.3 herein. (u) "Parent" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (v) "Participant" means a current or former eligible Employee who has outstanding an Award granted under the Plan. (w) "Period of Restriction" means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, at its discretion), and the Shares are subject to a substantial risk of forfeiture, as provided in Article 7 herein. (x) "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d)(3) and 14(d)(2) thereof, including a "group" as defined in Section 13(d). (y) "Phantom Stock Bonus Award" means an amount of cash that is determined by reference to the Fair Market Value of a designated number of Shares, which is paid to an Employee or which the Committee agrees to pay to an Employee in the future in lieu of, or as a supplement to, any other compensation that may have been earned by services rendered prior to the payment date, subject to such terms and conditions (if any) as the Committee may impose. Phantom Stock Bonus Awards are a specific type of Stock Bonus Award. (z) "Potential Change of Control" of the Company shall mean the occurrence of one or more of the following: (i) The entering into an agreement by the Company, the consummation of which would result in a Change of Control; or (ii) The acquisition of Beneficial Ownership, directly or indirectly, by any Person (other than the Company, any Company employee benefit plan (including its trustee), any Person acting on behalf of the Company in a distribution of stock to the public, or any entity owned directly or indirectly by the stockholders (immediately prior to the acquisition) of the Company in substantially the same proportions as their ownership of the Company) of securities of the Company representing five percent (5%) or more of the combined voting power of the Company's then outstanding securities, and the adoption by the Board of Directors of a resolution to the effect that a Potential Change of Control of the Company has occurred for purposes of this Plan. (aa) "Restricted Stock" means an Award granted to a Participant pursuant to Article 7 herein. (bb) "Retirement" means termination of employment with the Company, its Subsidiaries and Affiliates at or after attainment of age 55 with a vested retirement benefit under a pension plan of the Company, a Subsidiary or Affiliate. (cc) "Share(s)" or "Stock" means the Shares of common stock, $0.10 par value, of Owens-Corning Fiberglas Corporation. (dd) "Stock Bonus Award" means Shares, or an amount of cash that is determined by reference to the Fair Market Value of Shares, which is distributed or paid to an Employee or which the Committee agrees to distribute or pay in the future in lieu of, or as a supplement to, any other compensation that may have been earned by services rendered prior to the distribution or payment date, subject to such terms and conditions (if any) as the Committee may impose. The amount of any Stock Bonus Award payable in Shares may but need not be determined by reference to the Fair Market Value of Stock. Phantom Stock Bonus Awards and Restricted Stock Awards are specific types of Stock Bonus Awards. (ee) "Subsidiary" means any corporation in which the Company owns, directly or indirectly, at least fifty percent (50%) of the total combined voting power of all classes of stock, or any other entity (including, but not limited to, partnerships and joint ventures) in which the Company owns at least fifty percent (50%) of the combined equity thereof. (ff) "Year" or "Plan Year" means each consecutive twelve (12) month period beginning January 1 and ending December 31. 2.2 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural. 2.3 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. ARTICLE 3. Administration 3.1 The Committee. The Plan shall be administered by the Compensation Committee of the Board, or by any other Committee appointed by the Board consisting of not less than two (2) Directors who are not Employees. Unless the Board determines otherwise, the Committee shall be comprised exclusively of Directors who are not Employees and who (i) qualify to administer the Plan under Rule 16b-3 under the Exchange Act as such Rule may be in effect from time to time ("SEC Rule 16b-3"), and (ii) are "outside directors" within the meaning of Section 162(m)(4)(C) of the Code. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors. 3.2 Authority of the Committee. The Committee shall have full power, subject to the provisions herein, to select Employees to whom Awards are granted; to determine the size, types, and frequency of Awards granted hereunder; to determine the terms and conditions of such Awards in a manner consistent with the Plan; to establish and administer any performance goals applicable to awards hereunder and to certify that any such goals are attained; to construe and interpret the Plan and any agreement or instrument entered into under the Plan; to establish, amend, or waive rules and regulations for the Plan's administration; and to amend the terms and conditions of any outstanding Award to the extent such terms and conditions are within the discretion of the Committee as provided in the Plan. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan. To the extent permitted by law, and to the extent allowable by SEC Rule 16b-3, the Committee may delegate its authorities as identified hereunder. 3.3 Rule 16b-3 Requirements; Code Section 162(m). Any provision of the Plan to the contrary notwithstanding: (i) the Committee may impose such conditions on any Award as it may determine, on the advice of counsel, are necessary or desirable to satisfy any exemption from Section 16 of the Exchange Act for which the Company intends transactions by Insiders to qualify, including without limitation SEC Rule 16b-3; (ii) transactions by or with respect to Insiders shall comply with any applicable conditions of SEC Rule 16b-3 unless the Committee determines otherwise; (iii) transactions with respect to persons whose remuneration would not be deductible by the Company but for compliance with the provisions of Section 162(m)(4)(C) of the Code shall conform to the requirements of Section 162(m)(4)(C) of the Code unless the Committee determines otherwise; (iv) the Plan is intended to give the Committee the authority to grant awards that qualify as performance-based compensation under Code Section 162(m)(4)(C) as well as awards that do not so qualify; and (v) any provision of the Plan that would prevent the Committee from exercising the authority referred to in clause (iv) above or that would prevent an award that the Committee intends to qualify as performance-based compensation under Code Section 162(m)(4)(C) from so qualifying or that would prevent any transaction by or with respect to an Insider from complying with any applicable condition of SEC Rule 16b-3 with which the Committee intends such transaction to comply, or that would prevent any transaction by or with respect to an Insider from qualifying for any exemption from Section 16 of the Exchange Act for which the Company intends such transaction to qualify (including SEC Rule 16b- 3), shall be administered, interpreted and construed to carry out such intention and any provision that cannot be so administered, interpreted and construed shall to that extent be disregarded. 3.4 Decisions Binding. All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders or resolutions of the Board of Directors shall be final, conclusive, and binding on all persons, including the Company, its stockholders, Employees, Participants, and their estates and beneficiaries. ARTICLE 4. Shares Subject to the Plan 4.1 Number of Shares. Subject to adjustment as provided in Section 4.2 herein, the total number of Shares available for grant under the Plan in each calendar year, during any part of which the Plan is effective, shall be two percent (2%) of the total outstanding Shares as of the first day of such calendar year; provided, however, that Shares not granted in any calendar year may be carried forward and granted in any of the three immediately subsequent calendar years (in addition to the new Shares made available in those years). The maximum number of Shares with respect to which Options may be granted to any Employee in any calendar year shall be twenty-five percent( 25%) of the total number of Shares available for grant under the Plan in such calendar year. No more than 500,000 Shares may be issued or transferred pursuant to Incentive Stock Options granted under this Plan. No more than one-half percent (.5%) of the total outstanding Shares as of the first day of any calendar year may be granted in that year in the form of Stock Bonuses (including Phantom Stock Bonuses and Restricted Stock). However, unused Shares carried forward from previous years shall retain their character such that this one-half percent (.5%) limitation shall increase in direct relationship to those unused Shares reserved for Stock Bonuses in the prior three years. The Company may increase the Shares available for Awards in any calendar year through an advance of up to twenty-five percent (25%) of the subsequent year's allocation (determined by using twenty- five percent (25%) of the current year's allocation), with such Shares retaining their character as to Stock Bonus grant availability. Any Shares granted hereunder may consist, in whole, or in part, of authorized and unissued Shares or Treasury Shares or Shares purchased in the open market or in private transactions for purposes of the Plan. 4.2 Adjustments in Authorized Shares. In the event of any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, stock split, Share combination, or other change in the corporate structure of the Company affecting the Shares, a substitution or adjustment shall be made in the number and class of Shares which may be delivered under the Plan, and in the number and class of and/or price of Shares subject to outstanding Options and Stock Bonus awards (including any Restricted Stock granted hereunder), as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights; and further provided that the number of Shares subject to any Award shall always be a whole number. 4.3 Charging of Shares. If any Shares subject to an Award or, in the case of a Phantom Stock Bonus Award, the cash value of any Shares on which such Award is based, shall not be issued, transferred or paid to an Employee and shall cease to be issuable, transferable or payable to an Employee because of the termination, expiration or cancellation, in whole or in part, of such Award or for any other reason, or if any such Shares shall, after issuance or transfer, be reacquired by the Company because of an Employee's failure to comply with or satisfy the terms and conditions of an Award, the Shares not so issuable or transferable or, in the case of a Phantom Stock Bonus Award, the Shares the cash value of which has ceased to be payable, or the Shares so reacquired by the Company, as the case may be, shall no longer be charged against the limitations provided for in section 4.1 above, may again be made subject to Awards, and shall be added to the number of Shares available for grant under the Plan in the calendar year in which the Shares cease to be issuable or transferable, the cash value ceases to be payable or the Shares are reacquired (as the case may be). ARTICLE 5. Eligibility and Participation 5.1 Eligibility. All Employees shall be eligible to be selected to participate in this Plan, including Employees who are Directors but excluding Directors who are not Employees. 5.2 Actual Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible Employees, those to whom Awards shall be granted and shall determine the nature and amount of each Award. Awards may be made on a stand-alone basis or in conjunction with other Awards hereunder. Except as provided otherwise in Section 6.1 below, the grant of any award may be effective on the date on which the Committee acts to grant the award or on any earlier or subsequent date specified by the Committee, and the effective date specified by the Committee shall be considered the date of grant of the award for all purposes of this Plan. ARTICLE 6. Stock Options 6.1 Grant of Options. Subject to the terms and provisions of the Plan, the Committee may grant Options under this Plan to eligible Employees at any time and from time to time, whether or not they are eligible to receive similar or dissimilar incentive compensation under any other plan or arrangement of the Company. Options may be granted in the form of ISOs, NQSOs or a combination thereof. Nothing in this Article 6 shall be deemed to prevent the grant of NQSOs in excess of the maximum established by Section 422 of the Code. The grant of any option may be effective on the date on which the Committee acts to grant the option or on any subsequent date specified by the Committee, and the effective date specified by the Committee shall be considered the date of grant of the option for all purposes of this Plan. 6.2 Options to be in Writing. Each Option grant shall be evidenced in a writing signed by a representative of the Company duly authorized to do so, that shall specify or incorporate by reference the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such other provisions as are provided hereunder and any other terms and conditions that may be imposed by the Committee. The Option instrument also shall specify whether the Option is an Incentive Stock Option or a Nonqualified Stock Option. 6.3 Option Price. In no case shall the Option Price of any Option granted under this Plan be less than one hundred percent (100%) of the Fair Market Value of a Share on the date the Option is granted. 6.4 Duration of Options. Each Option shall expire at such time as determined at the time of grant; provided, however, that no Option shall be exercisable later than the tenth (10th) anniversary date of its grant. 6.5 Exercise of Options. Options granted under the Plan shall be exercisable at such times and be subject to such restrictions, terms and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant. However, except as provided in Article 8 herein, in no event may any Option granted under this Plan become exercisable prior to six (6) months following the date of its grant. Options shall be exercised by the delivery of a written notice of exercise to the Company, or by giving the Company notice of such exercise by such other means as the Company may permit in accordance with applicable law, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment. The Option Price upon exercise of any Option shall be payable to the Company in full either: (a) in cash or its equivalent; or (b) by tendering previously acquired Shares having a Fair Market Value at the time of exercise equal to the total Option Price (provided that the Shares which are tendered must have been held by the Participant for at least six (6) months prior to their tender or for such other period of time, if any, as the Committee may direct); or (c) by a combination of (a) and (b). The Option Price shall also be deemed fully paid if and when the Company receives documentation that it determines satisfies the cashless exercise provisions of the Federal Reserve Board's Regulation T, or when the Option Price is paid by any other means which the Committee determines to be consistent with the Plan's purpose and applicable law. As soon as practicable after receipt of notification of exercise acceptable to the Company and full payment (including tax withholding requirements, if any, as further provided in Article 12 herein), the Company shall deliver to the Participant, in the Participant's name, in the name of the Participant and another person as joint tenants with rights of survivorship, or in nominee or street name on behalf of the Participant (as the Participant may direct and the Committee may permit) Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s). 6.6 Restrictions. At the time of grant, restrictions may be imposed on any Shares acquired pursuant to the exercise of an Option under the Plan, including, without limitation, restrictions under applicable Federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares. 6.7 Termination of Employment Due to Death, Disability, or Retirement. (a) Termination by Death. In the event the employment of a Participant with the Company and its Subsidiaries is terminated by reason of death, any outstanding Options may thereafter be immediately exercised, to the extent then exercisable (or on such accelerated basis as the Committee shall determine at or after grant), by the legal representative of the estate or by the legatee of the optionee under the will of the optionee, for a period of three years and six months (or such shorter period as the Committee shall specify at or after grant) from the date of such death or until the expiration of the stated term of such Option, whichever period is shorter. (b) Termination by Disability. If a Participant's employment with the Company and its Subsidiaries terminates by reason of Disability, any Stock Option held by such Participant may thereafter be exercised, to the extent it was exercisable at the time of termination due to Disability (or on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after (i) three years and six months (or such shorter period as the Committee shall specify at or after grant) from the date of such termination of employment, or (ii) the expiration of the stated term of such Stock Option, whichever period is shorter; provided, however, that, if the Participant dies within such three- year-and-six-month period (or such shorter period as the Committee shall specify at or after grant), any unexercised Stock Option held by such Participant shall thereafter be exercisable to the extent to which it was exercisable at the time of death for a period of twelve months (or such shorter period as the Committee shall specify at or after grant) from the date of such death or for the stated term of such Stock Option, whichever period is shorter. If an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option shall thereafter be treated as a Nonqualified Stock Option. (c) Termination by Retirement. If a Participant's employment with the Company and its Subsidiaries is terminated by reason of Retirement, any Stock Option held by such Participant may thereafter be exercised to the extent it was exercisable at the time of such Retirement (or on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after five years (or such shorter period as the Committee shall specify at or after grant) from the date of such termination of employment or the expiration of the stated term of such Stock Option, whichever period is shorter; provided, however, that, if the Participant dies within such five year period (or such shorter period as the Committee may specify at or after grant), any unexercised Stock Option held by such Participant shall thereafter be exercisable, to the extent to which it was exercisable at the time of death, for the shorter of (i) and (ii) where (i) is a period of twelve months (or such shorter period as the Committee shall specify at or after grant) from the date of such death or, if longer, the remainder of such five year (or shorter) period from the date of such termination of employment, and (ii) is the expiration of the stated term of the Stock Option. In the event of termination of employment by reason of Retirement, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option shall thereafter be treated as a Nonqualified Stock Option. 6.8 Termination of Employment for Other Reasons. Unless otherwise determined by the Committee at or after grant, if a Participant's employment with the Company and its Subsidiaries terminates voluntarily (other than by reason of Retirement or under circumstances constituting Cause), the Stock Option shall thereupon terminate, except that such Stock Option may be exercised to the extent it was exercisable at the time of termination of employment for the lesser of one year (or such shorter period as the Committee may specify at or after grant) from the date of employment termination or the balance of such Stock Option's term. If a Participant's employment with the Company and its Subsidiaries is involuntarily terminated by the Company without Cause, the Option shall thereupon terminate, except that it may thereafter be exercised to the extent it was exercisable at the time of termination of employment (or on such accelerated basis as the Committee shall determine at or after grant) for the lesser of three years and six months (or such shorter period as the Committee may specify at or after grant) from the date of employment termination or the balance of such Stock Option's term. If the employment of a Participant shall terminate for Cause, all outstanding Options held by the Participant immediately shall be forfeited to the Company and no additional exercise period shall be allowed, regardless of the vested status of the Options. 6.9 Nontransferability of Options. No Option granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all Options granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant. Notwithstanding the foregoing and any other provision of the Plan to the contrary, if the Committee so permits, Options may be transferred, following the death of a Participant, to a beneficiary designated by the Participant in accordance with Article 10 below. 6.10 Hardship Withdrawal Provision. No Employee shall make any elective contribution or employee contribution to the Plan (within the meaning of Treasury Regulation section 1.401(k)- 1(d)(2)(iv)(B)(4)) during the balance of the calendar year after the Employee's receipt of a hardship distribution from a plan of the Company or a related party within the provisions of Code sections 414(b), (c), (m) or (o) containing a cash or deferred arrangement under section 401(k) of the Code, or during the following calendar year. The preceding sentence shall not apply if and to the extent that the Company determines it is not necessary to qualify any such plan as a cash or deferred arrangement under section 401(k) of the Code. ARTICLE 7. Restricted Stock 7.1 Grant of Restricted Stock. Subject to the terms and provisions of the Plan, Restricted Stock may be granted to eligible Employees at any time and from time to time, whether or not they are eligible to receive similar or dissimilar incentive compensation under any other plan or arrangement of the Company. The purchase price for Shares of Restricted Stock shall be equal to their par value per Share. 7.2 Restricted Stock Agreement. Each Restricted Stock grant shall be evidenced by a Restricted Stock Agreement that shall specify the Period of Restriction, or Periods, the number of Restricted Stock Shares granted, and such other provisions as provided hereunder or as the Committee may impose. 7.3 Nontransferability of Restricted Stock. Except as provided in this Article 7, the Shares of Restricted Stock granted hereunder may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction as specified in the Restricted Stock Agreement and the satisfaction of any conditions determined at the time of grant and specified in the Restricted Stock Agreement. However, except as provided in Article 8 herein, in no event may any Restricted Stock granted under the Plan become vested in a Participant prior to six (6) months following the date of its grant. All rights with respect to the Restricted Stock granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant. 7.4 Other Restrictions. The Committee shall impose such other restrictions on any Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including, without limitation, a required purchase price imposed upon Participants, restrictions based upon the achievement of specific performance goals (Company- wide, divisional, and/or individual), and/or restrictions under applicable Federal or state securities laws; and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions. Further, the Committee at its discretion, may require that the Shares evidencing such Restricted Stock grants be held in custody by the Company until any or all restrictions thereon shall have lapsed. 7.5 Certificate Legend. In addition to any legends placed on certificates pursuant to Section 7.4 herein, each certificate representing Shares of Restricted Stock granted pursuant to the Plan shall bear the following legend: "The sale or other transfer of the Shares of Stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer as set forth in the Owens-Corning Fiberglas Corporation Stock Performance Incentive Plan, and in the related Restricted Stock Agreement. A copy of the Plan and such Restricted Stock Agreement may be obtained from the Secretary of Owens-Corning Fiberglas Corporation." 7.6 Removal of Restrictions. Except as otherwise provided in this Article 7, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after the last day of the Period of Restriction, provided the applicable conditions to vesting of such Shares have been fulfilled. Once the Shares are released from the restrictions, the Participant shall be entitled to have the legend required by Section 7.5 removed from his or her Share certificate. 7.7 Voting Rights. During the Period of Restriction and prior to any forfeiture of the Shares, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares. 7.8 Dividends and Other Distributions. During the Period of Restriction and prior to any forfeiture of the Shares, Participants holding Shares of Restricted Stock granted hereunder shall be entitled to receive all dividends and other distributions paid with respect to those Shares while they are so held. If any such dividends or distributions are paid in Shares, the Shares shall be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid. 7.9 Termination of Employment. The Committee may but need not provide at or after the grant of Restricted Stock for the restrictions on all or any disignated portion of the Shares of Restricted Stock to lapse in the event of death, Disability, Retirement or other designated termination of employment. ARTICLE 7A. Stock Bonuses 7A.1 Except as otherwise provided in section 15.3, Stock Bonus Awards shall be subject to the following provisions: (a) An eligible Employee may be granted a Stock Bonus Award whether or not he is eligible to receive similar or dissimilar incentive compensation under any other plan or arrangement of the Company. (b) Shares subject to a Stock Bonus Award (other than a Phantom Stock Bonus Award) may be issued or transferred to an Employee, and the cash value of the Shares on which a Phantom Stock Bonus Award is based may be paid to an Employee, at the time such Award is granted, or at any time subsequent thereto, or in installments from time to time, and subject to such terms and conditions, as the Committee shall determine. In the event that any such issuance, transfer or payment shall not be made to the Employee at the time such Award is granted, the Committee may but need not provide for payment to such Employee, either in cash or Shares, from time to time or at the time or times such Shares shall be issued or transferred or cash shall be paid to such Employee, of amounts not exceeding the dividends which would have been payable to such Employee in respect of such Shares (as adjusted under section 4.2) if such Shares had been issued or transferred to such Employee at the time such Award was granted. (c) Any Stock Bonus Award may, in the discretion of the Committee, be settled in cash, on each date on which Shares would otherwise have been delivered or become unrestricted, in an amount equal to the Fair Market Value on such date of the Shares which would otherwise have been delivered or become unrestricted. A Phantom Stock Bonus Award shall be payable only in the form of cash. Subject to Section 4.3 above, the Shares subject to a Stock Bonus Award (including a Phantom Stock Bonus Award) shall be deducted from the number of Shares available for grant under the Plan, whether the Award is settled in the form of cash or Shares. (d) Stock Bonus Awards shall be subject to such terms and conditions, including, without limitation, restrictions on the sale or other disposition of any Shares to be issued or transferred pursuant to such Award, and conditions calling for forfeiture of the Award or the Shares issued or transferred or cash paid pursuant thereto in designated circumstances, as the Committee shall determine; provided, however, that upon the issuance or transfer of Shares to an Employee pursuant to any such Award, the recipient shall, with respect to such Shares, be and become a shareholder of the Company fully entitled to receive dividends, to vote and to exercise all other rights of a stockholder except to the extent otherwise provided in the Award. All or any portion of a Stock Bonus Award may but need not be made in the form of a Restricted Stock Award or a Phantom Stock Bonus Award. (e) Each Stock Bonus Award shall be evidenced in a writing, signed by a representative of the Company duly authorized to do so, which shall be consistent with and subject to this Plan. ARTICLE 8. Change of Control 8.1 Acceleration and Cashout. Subject to the provisions of Section 8.2 herein, upon the occurrence of a Change of Control of the Company, or, if and to the extent so determined by the Committee in writing at or after grant (subject to any right of approval expressly reserved by the Committee at the time of such determination), in the event of a Potential Change of Control of the Company, unless specifically prohibited by the terms of Article 15 herein: (a) Any Stock Options awarded under the Plan immediately shall become fully vested and exercisable; (b) Any restrictions and other conditions pertaining to outstanding Stock Bonuses (including Phantom Stock Bonuses and Restricted Stock), including but not limited to vesting requirements, immediately shall lapse; and (c) The value of all outstanding Stock Options and Stock Bonuses (including Phantom Stock Bonuses and Restricted Stock) shall, to the extent determined by the Committee at or after grant, be cashed out by the Company on the basis of the Change-of-Control Price (or, in the case of Incentive Stock Options, Fair Market Value) as of the date the Change of Control occurs, or Potential Change of Control is determined to have occurred, or such other date as the Committee may determine prior to the occurrence of the Change of Control or Potential Change of Control. Notwithstanding the foregoing provisions of this Section 8.1, the Committee may determine, in its sole discretion, that no Change of Control or Potential Change of Control shall be deemed to have occurred with respect to a Participant (i) by reason of any actions or events ("Interested Actions") in which the Participant acts in a capacity other than as a director, officer, or employee of the Company (or a Subsidiary or Affiliate, where applicable), or (ii) with respect to any such action or event occurring within 90 days following the public announcement of any Interested Actions, regardless of whether the director, officer, or Participant is interested in such action or event. 8.2 Award Replacement. Notwithstanding Section 8.1 herein, no acceleration of vesting and exercisability, nor lapse of restrictions and other conditions, nor cashout shall occur (pursuant to Sections 8.1(a), (b), and (c) herein) for outstanding Awards granted hereunder if the Committee reasonably determines in good faith, prior to the Change of Control or Potential Change of Control, that such Awards shall be honored or assumed, or new rights substituted therefor (such honored, assumed, or substituted award hereinafter called an "Alternative Award") by a Participant's employer (or the parent or a subsidiary of such employer) simultaneous with or immediately following the Change of Control or Potential Change of Control, provided, however, that any such Alternative Award must: (a) In the event of Stock Options and Stock Bonuses: (i) Be based on stock which is traded on an established securities market, or which will be so traded within thirty (30) days of the Change of Control or Potential Change of Control; or (ii) Have a value based directly upon an objective standard of valuation (including, but not limited to, a publicly reported stock index) acceptable to the Committee under the circumstances and provide each Participant, subject to requirements as to vesting or lapse of restrictions, with an opportunity to put the Shares or other securities covered by the Award to his or her employer (or the parent, general partner, or a subsidiary of such employer) for purchase with payment to be made in cash within ten (10) business days of receipt of such employee's put; (b) For all Awards: (i) Provide such Participant (or each Participant in a class of Participants) with rights and entitlements substantially equivalent to or better than the rights, terms, and conditions applicable under such Awards, including, but not limited to, an identical or better vesting schedule and identical or better timing and methods of payment; (ii) Have substantially equivalent economic value to such Awards (determined at the time of the Change of Control or Potential Change of Control); (iii) Have terms and conditions which provide that in the event the Participant's employment is involuntarily terminated without Cause or constructively terminated: (A) Any conditions on a Participant's rights under, or any restrictions on transfer or exercisability applicable to, each such Alternative Award shall be waived or shall lapse, as the case may be; and (B) Each Participant shall have the right to surrender such Alternative Awards within thirty (30) days following such termination in exchange for a payment in cash equal to the excess of the Fair Market Value of the stock subject to the Alternative Award over the price, if any, that a Participant would be required to pay to exercise such Alternative Award. For this purpose, a constructive termination shall mean a termination by a Participant following a material reduction in the Participant's compensation, a reduction in the Participant's responsibilities, or the relocation of the Participant's principal place of employment to another location, in each case without the Participant's advance written consent. 8.3 Excise Tax Reimbursement. In the event that any accelerations, lapse of restrictions, cashouts, Award replacements, and/or any other event under this Plan will cause a Participant to be subject to the tax (the "Excise Tax") imposed by Section 4999 of the Code (or any similar tax that may hereafter be imposed), the Company shall pay to the Participant at the time specified below an additional amount (the "Gross-up Payment") such that the net amount retained by the Participant, after deduction of any Excise Tax on the Total Payments (as hereinafter defined) and any Federal, state, and local income tax and Excise Tax upon the Gross-up Payment provided for by this Section 8.3, but before deduction for any Federal, state, or local income tax on the Total Payments, shall be equal to the Total Payments. For purposes of determining whether any Participant will be subject to the Excise Tax and the amount of such Excise Tax: (a) Any other payments or benefits received or to be received by a Participant in connection with a Change of Control of the Company or a Participant's termination of employment (whether pursuant to the terms of this Plan or any other plan, arrangement, or agreement with the Company, any Person whose actions result in a Change of Control of the Company or any Person affiliated with the Company or such Person) (which together with the benefits and/or payments provided hereunder, shall constitute the "Total Payments") shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of tax counsel selected by the Committee, such other payments or benefits (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code or are otherwise not subject to the Excise Tax; (b) The amount of the total Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of: (A) the total amount of the Total Payments; or (B) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (a) above); and (c) The value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Section 280G(d)(3) of the Code. For purposes of determining the amount of the Gross-Up Payment, a Participant shall be deemed to pay Federal income taxes at the highest marginal rate of Federal income taxation for the calendar year in which the Gross-Up Payment is to be made and the applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time the Gross- Up Payment is made, a Participant shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and Federal, state and local income tax imposed on the portion of the Gross-Up Payment being repaid by a Participant if such repayment results in a reduction in Excise Tax and/or a Federal, state, and local income tax deduction), plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time the Gross-Up Payment is made (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest payable with respect to such excess) at the time that the amount of such excess is finally determined. The Gross-Up Payment or portion thereof provided for in this Section 8.3 shall be paid no later than the thirtieth (30th) calendar day following payment of any amounts under this section, provided, however, that if the amount of such Gross-Up Payment or portion thereof cannot be finally determined on or before such day, the Company shall pay to a Participant on such day an estimate, as determined in good faith by the Company, of the minimum amount of such payments and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than the forty-fifth (45th) calendar day after payment of any amounts under this Section 8.3. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to each Participant, payable on the fifth (5th) calendar day after demand by the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). ARTICLE 9. Amendment, Modification and Termination 9.1 Amendment and Termination. The Board may, at any time and from time to time, amend or modify the Plan in any respect without stockholder approval, unless stockholder approval of the amendment or modification in question is required under Delaware law, the Code (including without limitation Code section 162(m)(4) and Code Section 422 and Treasury regulations issued or proposed thereunder), any applicable exemption from Section 16 of the Exchange Act (including without limitation SEC Rule 16b-3) for which the Company intends transactions by Insiders to qualify, any national securities exchange or system on which the Stock is then listed or reported, by any regulatory body having jurisdiction with respect to the Plan, or under any other applicable laws, rules or regulations. The Board may also terminate the Plan at any time. The Committee may amend the terms of any Award granted under the Plan, prospectively or retroactively, but no such amendment shall impair the rights of any Participant without such Participant's consent. 9.2 Awards Previously Granted. No termination, amendment or modification of the Plan shall in any manner adversely affect any Award previously granted under the Plan, without the written consent of the Participant holding such Award ARTICLE 10. Beneficiary Designation The Committee may (but need not) permit a Participant, from time to time and subject to such terms and conditions as it may impose, to name a beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Human Resource Department of the Company during the Participant's lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate. ARTICLE 11. Rights of Employees; Other Plans and Arrangements 11.1 Employment. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of the Company. For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Subsidiaries or Affiliates (or between Subsidiaries and Affiliates) shall not be deemed a termination of employment. 11.2 Participation. No Employee shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award. 11.3 Transferability Restriction. Any derivative security issued under this Plan (within the meaning of SEC Rule 16b-3(a)(2)) is not transferable by the participant other than by will or the laws of descent and distribution. Notwithstanding the foregoing and any other provision of the Plan to the contrary, if the Committee so permits, an award under this Plan may be transferred, following the death of a Participant, to a beneficiary designated by the Participant in accordance with Article 10 above. 11.4 Other Plans and Arrangements. Nothing in this Plan is intended to be a substitute for, or shall preclude or limit the establishment or continuation of, any other plan, practice or arrangement for the payment of compensation or fringe benefits to directors, officers, or employees generally, or to any class or group of such persons, which the Company or any Subsidiary now has or may hereafter lawfully put into effect, including, without limitation, any incentive compensation, retirement, pension, group insurance, restricted stock, stock purchase, stock bonus, stock incentive or stock option plan. ARTICLE 12. Withholding 12.1 Tax Withholding. A Participant shall remit to the Company an amount sufficient to satisfy any taxes the Company determines are required by law to be withheld with respect to any grant, exercise, or payment made under or as a result of this Plan. 12.2 Share Withholding. With respect to withholding required upon the exercise of Options, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event hereunder, the Committee may permit or require Participants, subject to such terms and conditions as it may impose, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the maximum marginal total tax which could be imposed on the transaction or such greater or lesser amount as the Committee may permit. If the Committee so provides, such Shares withheld may be already owned Shares which the Participant tenders in satisfaction of the withholding requirement or Shares issuable by the Company in connection with the exercise of Options, the lapse of restrictions on Restricted Stock or the other taxable event hereunder, or Shares from any other source. ARTICLE 13. Indemnification No member of the Board or the Committee, nor any officer or employee of the Company acting on behalf of the Board or the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Board or the Committee and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation. ARTICLE 14. Successors All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. ARTICLE 15. Requirements of Law 15.1 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges, as the Company may determine apply. 15.2 Governing Law. To the extent not preempted by Federal law, the Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Delaware, without reference to the principles of conflicts of laws of that State. 15.3 Non-U.S. Laws. In the event the laws of a foreign country, in which the Company, a Subsidiary or Affiliate has Employees, prescribe certain requirements for stock incentives to qualify for advantageous treatment under the tax or other laws or regulations of that country, the proper officers of the Company, may restate, in whole or in part, this Plan and may include in such restatement additional provisions for the purpose of qualifying the restated plan and stock incentives granted thereunder under such laws and regulations; provided, however, that (a) the terms and conditions of any stock-based incentive granted under such restated plan may not be more favorable to the recipient than would be permitted if such stock-based incentive had been granted under the Plan as herein set forth, (b) all Shares allocated to or utilized for the purposes of such restated plan shall be subject to the limitations of Article 4, and (c) the provisions of the restated plan may give the Board less but not more discretion to amend or terminate such restated plan than is provided with respect to this Plan by the provisions of Article 9 hereof. EX-10 11 Exhibit (10) December 2, 1994 Mr. Christian Campbell 2483 West Branch Court Naperville, IL. 60565 Dear Christian: This letter will confirm the offer made to you for the position of Senior Vice President, General Counsel and Secretary for Owens-Corning reporting to me starting January 1, 1995. The specifics of the employment offer are as follows: Your starting annual base salary will be $275,000 subject to regular review by the Board Compensation Committee. You will participate in the Annual Corporate Incentive Compensation Plan which is presently based upon corporate earnings per share, cash flow and sales growth. Your participation in this plan will be 100% of your base salary and your target award will be 50% of base salary. Obviously, corporate business results will determine actual payments but you will be guaranteed $137,500 for 1995, which is target bonus. This payment will be made at the same time as our annual incentive payments are normally made, which is the last day in February of 1996. You will be awarded 15,000 stock options and 3,000 restricted stock shares upon your initial day of employment. The price of the options will be based on the closing price of Owens-Corning stock on the date of your hire. The options will vest one third each year for three years. The restricted shares will vest 50% in five years and the remaining 50% in ten years from date of grant. These restricted shares will be valued at vesting based upon their market value at that time. You will be given a one time "sign-on" bonus of $50,000 (net of applicable taxes) on your first day of employment. This will address certain perquisites in which you currently participate, such as car allowances, club memberships, etc. You will have four weeks of vacation with Owens-Corning. You will be eligible for tax preparation/planning assistance, financial counseling, personal liability insurance and other benefits accorded Leadership council participants. In addition, you will be given a membership in the Toledo Club (or equivalent) which is a prestigious downtown dining and exercise club which can be utilized for business entertainment associated with your position. For relocation purposes, you will be treated as a transferring employee, which means that we will purchase your home if you are unable to sell it. Specifics of our plan would be communicated upon acceptance of our offer. In addition to the above items, you will also be entitled to Owens-Corning's full benefits package, which includes a health care plan, Savings and Deferral Investment Plan (401(k)), life insurance plan, salary continuation and long- term disability plan. Employment is contingent upon successful completion of a physical examination (which includes a drug screening) and reference checking. You may contact Juanita Kesler (in Corporate Human Resources) at (419) 248-7414 to arrange a physical examination. The enclosed severance agreement should be executed upon your acceptance of this offer. If you have any questions regarding the above offer or any benefits, please call me at (419) 248-6518 or Greg Thomson at (419) 248-6310. Yours truly, Glen H. Hiner AGREED TO AND ACCEPTED: /s/ Christian L. Campbell Christian Campbell 12/13/94 Date EX-11 12 Exhibit (11) OWENS CORNING AND SUBSIDIARIES COMPUTATION OF PER SHARE EARNINGS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 Primary: 1995 1994 1993 (In millions of dollars, except share data) Net income $ 231 $ 159 $ 131 Weighted average number of shares outstanding (thousands) 49,152 43,647 42,734 Weighted average common equivalent shares (thousands): Deferred awards 16 21 264 Stock options using weighted average market price 543 541 595 Primary weighted average number of common shares outstanding and common equivalent shares (thousands) 49,711 44,209 43,593 Primary per share amount $ 4.64 $ 3.61 $ 3.00 Fully Diluted: Net income $ 238 $ 168 $ 139 Weighted average number of shares outstanding (thousands) 49,152 43,647 42,734 Weighted average common equivalent shares (thousands): Deferred awards 16 21 265 Stock options using the higher of average market price or market price at end of period 566 559 613 Shares from assumed conversion of debt 1,562 5,798 5,798 Shares from assumed conversion of preferred securities 2,810 - - Fully diluted weighted average number of common shares outstanding and common equivalent shares (thousands) 54,106 50,025 49,410 Fully diluted per share amount $ 4.40 $ 3.35 $ 2.81 EX-21 13 Exhibit (21) State or Other Jurisdiction Under the Laws of Subsidiaries of Owens Corning Which Organized (12/31/95) Barbcorp, Inc. Delaware Crown Mfg. Inc. Canada Dansk-Svensk Glasfiber A/S Denmark Deutsche Owens-Corning Glasswool GmbH Germany Eric Company Delaware European Owens-Corning Fiberglas, S.A. Belgium Falcon Manufacturing Acquisition Corporation Delaware FALOC Holdings L.P. Delaware FALOC, Inc. Delaware Fiber-flex Co., Inc. New Jersey Fiberflex Incorporated Georgia Fiber-Lite Corporation Delaware IPM, Inc. Delaware Kitsons Insulation Products Ltd. United Kingdom Matcorp, Inc. Delaware N.V. Owens-Corning S.A. Belgium O/C/FIRST CORPORATION Ohio OCFOGO, Inc. Delaware O.C. Funding B.V. The Netherlands O/C/SECOND CORPORATION Delaware OC Utah Four Corporation Utah OCW Corporation (dba, Delsan) Delaware Owens-Corning A/S Norway Owens-Corning Building Products (U.K.) Ltd. United Kingdom Owens-Corning Canada Inc. Canada Owens-Corning Capital Holdings I, Inc. Delaware Owens-Corning Capital Holdings II, Inc. Delaware Owens-Corning Capital L.L.C. Delaware Owens-Corning Cayman Limited Cayman Islands Owens-Corning Changchun Guan Dao Company Ltd. PRC China Owens-Corning Fiberglas A.S. Limitada Brazil Owens-Corning Fiberglas Deutschland GmbH Germany Owens-Corning Fiberglas Espana, S.A. Spain Owens-Corning Fiberglas France S.A. France Owens-Corning Fiberglas (G.B.) Ltd. United Kingdom Owens-Corning Fiberglas (Italy) S.r.l. Italy Owens-Corning Fiberglas Norway A/S Norway Owens-Corning Fiberglas S.A. Uruguay Owens-Corning Fiberglas Sweden AB Sweden Owens-Corning Fiberglas Sweden Inc. Delaware Owens-Corning Fiberglas Technology Inc. Illinois Owens-Corning Fiberglas (U.K.) Ltd. United Kingdom Owens-Corning Finance (U.K.) plc United Kingdom Owens-Corning FSC, Inc. Barbados State or Other Jurisdiction Under the Laws of Subsidiaries of Owens Corning Which Organized (12/31/95) Owens-Corning Funding Corporation Delaware Owens-Corning (Guangzhou) Fiberglas Co., Ltd. PRC China Owens-Corning Holdings Limited Cayman Islands Owens-Corning Isolation France S.A. France Owens-Corning Ontario Holdings Inc. Canada Owens-Corning Overseas Holdings, Inc. Delaware Owens-Corning (Overseas) Management Limited Cyprus Owens-Corning Real Estate Corporation Ohio Owens-Corning Trading, Ltd. British Virgin Islands Owens-Corning UK Holdings Limited United Kingdom Owens-Corning Veil Netherlands B.V. The Netherlands Owens-Corning Veil U.K. Ltd. United Kingdom Owens-Corning Vertriebs GmbH Germany Palmetto Products, Inc. Delaware Scanglas Ltd. United Kingdom SFF Acquisition Corp. Tennessee SFF2 Acquisition Corp. Kentucky Soltech, Inc. Kentucky UC Industries, Inc. Delaware WD s.a. Belgium Western Fiberglass, Inc. Utah Western Fiberglass of Arizona Utah Western Fiberglass of Texas, Inc. Utah Willcorp, Inc. Delaware Wrexham A.R. Glass Ltd. United Kingdom Zola Castor Holding Corporation Delaware 1053051 Ontario Inc. Canada 1086269 Ontario Inc. Canada
EX-23 14 Exhibit (23) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our report dated January 20, 1996, included in Owens Corning's annual report on Form 10-K for the year ended December 31, 1995, into the Company's previously filed Registration Statements, File Nos. 33-9563, 33-9986, 33-9987, 33-18262, 33-20997, 33-27209, 33-31687, 33- 48707, 33-57886 and 33-60487. ARTHUR ANDERSEN LLP Toledo, Ohio February 20, 1996 EX-27 15
5 This schedule contains summary financial information extracted from SEC form 10-K and is qualified in its entirety by reference to such financial statements. 1,000,000 12-MOS DEC-31-1995 DEC-31-1995 18 0 333 19 253 927 3,067 1,761 3,261 936 794 579 0 0 (791) 3,261 3,612 3,612 2,670 2,670 514 4 87 337 106 231 0 0 0 231 4.64 4.40
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