Document:

<PAGE>   1
                                                           Exhibit 4.7

THIS IS A SAMPLE OF THE TERMS AND CONDITIONS OF UBS BLOCK CERTIFICATES WHICH IS
PROVIDED AS AN EXAMPLE ONLY. THE ACTUAL TERMS AND CONDITIONS APPLICABLE WILL BE
INCLUDED IN THE DOCUMENTS REFERRED TO IN PART I OF THIS REGISTRATION STATEMENT.

                                                 Prospectus, dated June 16, 2000

"BLOC"-CERTIFICATES ON UBS AG REGISTERED SHARES

SUMMARY OF THE TERMS AND CONDITIONS

             ISSUER      UBS AG

       LEAD MANAGER      UBS WARBURG

              ISSUE      150'000 "BLOC"-CERTIFICATES

         UNDERLYING      REGISTERED SHARES OF UBS AG

        ISSUE PRICE      CHF 220.92

       STRIKE PRICE      CHF 0.00

          CAP LEVEL      CHF 255.00

         ISSUE DATE      Friday, June 16, 2000

       PAYMENT DATE      Friday, June 23, 2000

    EXPIRATION DATE Friday, June 15, 2001; 12.00 p.m.

    REDEMPTION DATE      Friday, June 22, 2001

        OPTION TYPE      "European" style capped call warrant

        *SETTLEMENT      Cash settlement if underlying at expiration closes
                         higher or at cap. Physical settlement if underlying at
                         expiration closes lower than cap.

                LOT      Minimum 1 certificate for trading and exercise

 SALES RESTRICTIONS      U.S.A, U.S. persons

            LISTING      Application has been made to list the above mentioned
                         Warrants on the SWX Swiss Exchange.

  LAW/JURISDICTION       The issue is governed by Swiss law/ Place
                         of Jurisdiction is Zurich.

   SYMBOL/SECURITY-      UBSBK
          NO./ ISIN      1.094.283
                         CH0010942834
<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                            Page

<S>                                                                         <C>
Loss-risks                                                                    3

Terms and Conditions of the "BLOC"-Certificates                               4

Information relating to the Underlying                                       10

General information on the "BLOC"-Certificates                               11

Information on the Issuer                                                    12
</TABLE>
<PAGE>   3
                                   LOSS RISKS

WARRANTS/"BLOC"-CERTIFICATES

When you buy warrants or "BLOC"-Certificates on securities, currencies or
precious metals, you acquire an option to purchase or sell these underlying
securities, currencies or precious metals at a pre-determined price.

When you buy warrants on an index, assuming that your expectations are fulfilled
you are entitled to a cash settlement calculated on the basis of the difference
between the price specified in the warrant agreement (strike price) and the
market price of the underlying index/asset at the time the warrant is exercised.

A change in price, or failure of an expected price change in the underlying to
materialise, can influence the value of the warrant/ "BLOC"-Certificate
disproportionately, and even render it worthless. Due to the fact that warrants/
"BLOC"-Certificates usually expire on short terms it cannot be safely assumed
that the price of the warrant/ "BLOC"-Certificate will recover again in
sufficient time.

When calculating your expected returns, it is important to allow for the costs
associated with the exercise or sale of the warrant/ "BLOC"-Certificate. If your
expectations should fail to materialise, and you therefore choose not to
exercise the warrants/ "BLOC"-Certificates, they expire on maturity if out of
the money and are subsequently worthless. The loss then resides in the price you
paid for the warrants/ "BLOC"-Certificates.

RISK-HEDGING TRANSACTIONS

You can never be certain that, during the life of the warrants/
"BLOC"-Certificates, you will be able to conclude transactions when you need to
in order to preclude or limit the risks arising from their purchase. This
depends on the prevailing market situation and the terms of the underlying
agree-ment. In certain circumstances, it may only be possible to conclude these
transactions at an unfa-vourable market price, resulting in a loss.

BUYING WARRANTS ON CREDIT

If your purchase of warrants/ "BLOC"-Certificates is to be financed by a loan,
it is important to realize that, should your expectations fail to materialise,
you not only have to bear the resulting loss, but also have to pay interest on
the loan as well as repay the principal amount! It is therefore imperative to
verify your financial resources in advance, in order to determine whether you
would be able to pay the interest and repay the loan at short notice should you
incur losses instead of realising the anticipated profit.

ADVICE FROM YOUR PRINCIPAL BANK

This information is not intended to replace the advice you should always obtain
from your principal bank before making a decision to buy. Only investors who are
fully aware of the risks associated with warrants and are financially able to
bear any losses that may arise, should consider engaging in transactions of this
type.
<PAGE>   4
                              TERMS AND CONDITIONS

*     As of August 19, 2000 the Holder has an additional right for a CASH
      SETTLEMENT INSTEAD OF A DELIVERY OF SHARES. These Terms and Conditions
      will be amended as follows:

      Depending on whether the Closing Price is above or below the Cap Level,
      the Holder of ,,BLOC" Certificates receives (a) a cash settlement in CHF
      through UBS Warburg or (b) has the option for either a physical settlement
      or a cash settlement:

      a)   CLOSING PRICE (GREATER THAN OR EQUAL TO) CAP LEVEL:

           1 "BLOC" - Certificate entitles the Holder to a cash payment in CHF,
           if the Closing Price of the Share is at or above the Cap Level on the
           Expiration Date. The cash payment corresponds to the difference
           between the Exercise Price and the Cap Level.

      b)   CLOSING PRICE < CAP LEVEL:

           1 "BLOC" - Certificate entitles the Holder to choose at his sole
           discretion between the delivery of one Share or a cash settlement. A
           Holder opting for the cash settlement has to give written notice to
           any UBS AG Branch in Switzerland by 12.00 noon (Zurich time) not
           later than TEN BUSINESS DAYS before Expiration. In such case, the
           cash settlement corresponds to the Closing Price of the Shares at
           Expiration. Without notice from the Holder, delivery of the Share
           will take place."

      AT EXPIRATION THE "BLOC"-CERTIFICATES WILL BE EXERCISED AUTOMATICALLY.

1.    GENERAL

      UBS AG, acting through its financial services group UBS WARBURG
      (hereinafter also referred to as "UBS WARBURG") has issued 150'000
      "BLOC"-CERTIFICATES (Buy-Low-Or-Cash) ON THE REGISTERED SHARES OF UBS AG
      (the "BLOC"-Certificates). The "BLOC"-Certificates will be represented by
      a Permanent Global Certificate in which the Holders have a co-ownership in
      proportion to their holdings.

      During the whole life of the "BLOC"-Certificates the Permanent Global
      Certificate will be deposited with SIS SEGAINTERSETTLE AG, the Swiss
      Securities Services Corporation, in Olten.

      Unless UBS WARBURG deems the printing of "BLOC"-Certificates necessary, no
      "BLOC"-Certificates will be printed and no rights under the Permanent
      Global Certificate will be exchanged against effective
      "BLOC"-Certificates. If UBS WARBURG deems the printing of the
      "BLOC"-Certificates to be necessary, the effective "BLOC"-Certificates
      will be printed and delivered without any costs to the Holders.

      As long as no effective "BLOC"-Certificates have been issued, the
      expression "BLOC"-Certificate and Holder herein shall refer to the
      entitlement under the Permanent Global Certificate.
<PAGE>   5
DEFINITIONS:

"BUSINESS DAY"                      means any day on which UBS AG offices
                                    in Zurich are open for regular business and
                                    on which the Shares (as defined below) are
                                    traded on the Related Exchange (as defined
                                    below).

"BLOC"                              means the "BLOC"-Certificate is a Capped
                                    Call-Warrant.

"CAP LEVEL"                         means CHF 255.00.

"CASH SETTLEMENT DATE"              means, in case of cash settlement in respect
                                    of any "BLOC"-Certificate, the day on which
                                    the cash settlement amount in CHF is paid,
                                    being 5 Business Days after the Expiration
                                    Date, this day being JUNE 22, 2001.

"CLOSING PRICE"                     means the closing level of the Shares
                                    on the respective Expiration Date.

"EXERCISE PRICE"                    means CHF 0.00.

"EXPIRATION DATE" OR "EXPIRATION"   means the last day on which the "BLOC"-
                                    Certificates on the Shares may be traded,
                                    this day being JUNE 15, 2001.

"HOLDER"                            means the person entitled to the rights
                                    conferred by "BLOC"-Certificates.

"LISTING"                           means the listing on the SWX SWISS EXCHANGE

"MARKET DISRUPTION EVENT"           means the suspension or material limitation
                                    of trading on the Related Exchange of the
                                    Shares or securities generally, or of
                                    options or futures relating to such Shares
                                    or options or futures relating to securities
                                    generally on any options or futures exchange
                                    on which options or futures relating to such
                                    Shares are traded. For the purposes of this
                                    definition, a limitation on the hours and
                                    number of days of trading will not
                                    constitute a Market Disruption Event if it
                                    results from an announced change in the
                                    regular business hours of the Related
                                    Exchange, as the case may be but a
                                    limitation on trading imposed during the
                                    course of a day by reason of movements in
                                    price otherwise exceeding levels permitted
                                    by the Related Exchange, as the case may be,
                                    will constitute a Market Disruption Event.

"RELATED EXCHANGE"                  means the SWX SWISS EXCHANGE

"SHARE"                             means the REGISTERED SHARES of UBS AG with
                                    CHF 10.00 par value each.

"SHARE DELIVERY DATE"               means, in case of physical settlement
                                    of any "BLOC"-Certificates, the day
                                    for delivery of Shares, being 5 Business
                                    Days after the Expiration Date, this day
                                    being JUNE 22, 2001.

"THE COMPANY"                       means UBS AG.
<PAGE>   6
2.    RIGHTS UNDER THE CERTIFICATES *

      1 "BLOC"-Certificate entitles the Holder EITHER to a PHYSICAL SETTLEMENT
      of the Shares or to a CASH settlement in CHF through UBS WARBURG on the
      SHARE DELIVERY DATE or the CASH SETTLEMENT DATE:

      PHYSICAL SETTLEMENT:    1 "BLOC"-Certificate entitles the Holder to
                              require the delivery of ONE SHARE, if the Closing
                              Price of the Share is below the Cap Level on the
                              Expiration Date.

      CASH SETTLEMENT:        1 "BLOC"-Certificate entitles the Holder to a cash
                              payment in CHF, if the Closing Price of the Share
                              is at or above the Cap Level on the Expiration
                              Date. The cash payment corresponds to the
                              difference between the Exercise Price and the Cap
                              level per 1 "BLOC"-Certificate.

      AT EXPIRATION THE "BLOC"-CERTIFICATES WILL BE EXERCISED AUTOMATICALLY.

3.    PROVISION OF SECURITY OF THE EXERCISE RIGHTS

      UBS WARBURG has undertaken the necessary steps to secure its obligation
      upon exercise of the "BLOC"-Certificates on the Expiration Date.

4.    SALES RESTRICTIONS

      U.S.A. / U.S. persons

      The "BLOC"-Certificates have not been and will not be registered under the
      U.S. Securities Act of 1933 (the "Securities Act") and may not be offered
      or sold within the United States or to, or for the account or benefit of,
      U.S. persons except in transactions exempt from the registration
      requirements of the Securities Act. UBS WARBURG will not offer or sell the
      "BLOC"-Certificates, (i) as part of the distribution at any time of (ii)
      otherwise until AUGUST 2, 2000, within the United States or to, or for the
      account or benefit of, U.S. persons, and it will have sent to each dealer
      to which it sells "BLOC"-Certificates during the restricted period a
      confirmation or other notice setting forth the restrictions on offers and
      sales of the "BLOC"-Certificates in the United States or to, or for the
      account or benefit of, U.S. persons. Terms used in this paragraph have the
      meanings given to them by Regulation S under the Securities Act.

      In addition, until AUGUST 2, 2000, an offer or sale of "BLOC"-Certificates
      within the United States by a dealer that is not participating in the
      offering may violate the registration requirements of the Securities Act."

5.    RIGHTS IN CONNECTION WITH THE SHARES

      The Holder has no rights in connection with the Shares. In case of a
      physical settlement all the rights in connection with the Shares belong to
      the Holder after the Expiration Date.
<PAGE>   7
      The responsibility for the registration of the Shares is borne by the
      purchaser. For the registration of the Shares the applicable legal and
      statutory registration provisions effective on the Exercise Date will
      apply.

6.    ADJUSTMENTS

      6.1   POTENTIAL ADJUSTMENT EVENTS

      Following each Potential Adjustment Event (as defined below), UBS WARBURG
      shall determine the appropriate adjustment, if any, to be made to the
      Exercise Price and/or Cap Level, the number of underlying Shares of each
      lot of 1 "BLOC"-CERTIFICATE, and/or any other terms of the
      "BLOC"-Certificates insofar as they relate to the Shares to account for
      the diluting or concentrative effect of the Potential Adjustment Event or
      otherwise necessary to preserve the economic equivalent of the rights of
      the Holders under the "BLOC"-Certificates immediately prior to the
      Potential Adjustment Event, such adjustment to be effective as of the date
      determined by UBS WARBURG.

      For the purposes of this Section 6.1, "Potential Adjustment Event" means
      the declaration by The Company of any of the following:

      (i)   a subdivision, consolidation or reclassification of Shares (unless
            an Extraordinary Event (as defined below) or a free distribution of
            Shares to existing holders by the way of bonus, capitalisation or
            similar issue;

      (ii)  a distribution to existing holders of the Shares of (a) additional
            Shares or (b) other Share capital or securities granting the right
            to payment of dividends and/or the proceeds of liquidation of The
            Company equally or proportionately with such payments to holders of
            the Shares or (c) any other type of securities, rights or
            Certificates or other assets, in any case for payment (in cash or
            otherwise) at less than the prevailing market price as determined by
            UBS WARBURG;

      (iii) an extraordinary dividend;

      (iv)  any event in respect of the Shares analogous to any of the foregoing
            events or otherwise having, in the reasonable opinion of UBS
            WARBURG, a diluting or concentrative effect on the market value of
            the Shares.

      In determining to what extent an adjustment should be made as a result of
      the occurrence of a Potential Adjustment Event, if options contracts or
      futures contracts on the Shares are traded on a Related Exchange, UBS
      WARBURG may take into consideration, but shall not be bound by, any
      adjustment to the terms of the relevant options contract or futures
      contract made and announced by such Related Exchange.

      6.2   EXTRAORDINARY EVENTS

      If any of the following events (each an "Extraordinary Event") occurs on
      or prior to a Share Delivery Date:
<PAGE>   8
      (i)   the Share is reclassified or changed (other than a change in par
            value, if any as a result of a subdivision or combination);

      (ii)  The Company consolidates, amalgamates or merges with or into another
            entity (other than a consolidation amalgamation or merger following
            which The Company is the surviving entity);

      (iii) the Shares are the subject of a Takeover (as defined below)

      (iv)  by reason of the adoption of or any change in any applicable law,
            all assets of The Company or all the outstanding Shares, are
            nationalised, expropriated or otherwise required to be transferred
            to any government, governmental agency or authority; or

      (v)   by reason of the bankruptcy or insolvency (or other analogous event)
            of The Company (a) all the Shares are required to be transferred to
            any trustee, liquidator or similar official or (b) holders of the
            Shares become legally prohibited from transferring them;

      then UBS WARBURG shall, in case of physical settlement,

      (1)   if the Extraordinary Event involves an offer solely of Shares
            (whether of The Company or a third party) (the "New Shares")
            determine the number (or fraction) of such New Shares to which a
            holder of a Share would have been entitled upon the consummation of
            such Extraordinary Event and UBS WARBURG shall deliver such New
            Shares on the Share Delivery Date in lieu of each Share; or

      (2)   if the Extraordinary Event involves an offer of (i) cash and/or
            securities or assets other than New Shares ("Cash Consideration") or
            (ii) Cash Consideration and New Shares, determine the amount (the
            "Replacement Asset") in Cash Consideration and/or New Shares to
            which a holder of a Share would have been entitled upon the
            consummation of such Extra-ordinary Event and the amount of
            Replacement Assets shall be payable and/or deliverable by UBS
            WARBURG on the relevant Share Delivery Date in lieu of each Share.

      The obligation by UBS WARBURG in respect of any "BLOC"-Certificates
      affected by such Extraordinary Event shall be satisfied by payment and/or
      delivery of any Replacement Asset or New Shares pursuant to sub-paragraphs
      (1) and (2) above.

      For the purpose of this Section 6.2, "Takeover" in relation to the Shares
      means that, in the reasonable opinion of UBS WARBURG, a person or more
      than one person acting in concert has (or have as the case may be)
      acquired (whether through a series of transactions or not) Shares
      amounting to a total of fifty per cent or more of (a) the aggregate
      nominal value of all issued Shares then outstanding less (b) the aggregate
      nominal value of any Shares held by such person (or persons as the case
      may be) as of JUNE 23, 2001 provided such acquisition(s) is (are) made on
      or before JUNE 15, 2001.

      For the purpose of this Section the term "person" shall include any legal
      entity and any government, governmental agencies or authorities.

      6.3   EXCHANGE OF SHARES FOR OTHER SECURITIES OF THE COMPANY

      In the event that The Company would grant to its holders of Shares the
      right on a discretionary basis to exchange the Shares for other securities
      of The Company the Holders shall be duly notified thereof in accordance
      with Section 8. Such notification shall include the
<PAGE>   9
      date after which UBS WARBURG, in its absolute discretion, shall have the
      right to replace the Shares deliverable under the "BLOC"-Certificates by
      such new securities of The Company and such decision shall be binding upon
      all holders of "BLOC"-Certificates.

7.    NOTIFICATIONS OF ADJUSTMENTS

      UBS WARBURG shall as soon as practicable notify Holders of any
      determination made pursuant to Section 6. The details of any
      determinations will be available for inspection by Holders at the office
      of UBS AG.

8.    NOTICES

      All notices pertaining to the "BLOC"-Certificates shall be validly given
      by publication in the electronical Media such as Reuters / Investdata and
      according to the listing rules of the Swiss Admission Board.

9.    MARKET DISRUPTION EVENTS

      If UBS WARBURG reasonably determines that a Market Disruption Event has
      occurred on the Expiration Date and is continuing, then the Expiration
      Date shall be the next following Business Day on which there is no Market
      Disruption Event.

10.   LISTING

      The listing of the "BLOC"-Certificates will be applied for on the SWX
      Swiss Exchange and will be maintained during the life of the
      "BLOC"-Certificates.

11.   TAXES

      Each Holder shall assume and be responsible to the proper governmental or
      regulatory authority for any and all taxes assessed or assessable against
      the Holder by any jurisdiction or governmental or regulatory applicable to
      the transactions covered hereby.

12.   FURTHER ISSUES

      UBS WARBURG reserves the right to issue at any time additional
      "BLOC"-Certificates fungible with the "BLOC"-Certificates on the Shares as
      described herein.

13.   CALCULATION

      All calculations and determinations hereunder by the Issuer or the
      Lead-Manager shall (save in the case of manifest error) be final and
      binding on the Investors.
<PAGE>   10
      14.   APPLICABLE LAW AND JURISDICTION

      The form and contents of the "BLOC"-Certificates are subject to and
      governed by Swiss law. Place of jurisdiction for all disputes affecting
      the "BLOC"-Certificates and the rights and obligations attached thereto
      shall be Zurich.
<PAGE>   11
      INFORMATION RELATING TO THE UNDERLYING

Name/domicile of issuer:         UBS AG, Bahnhofstrasse 45, 8021 Zurich

Listing:                         Primary exchange: SWX Swiss Exchange

Underlying securities:           registered shares with CHF 10.00 par value each

Security number/ISIN:            1.074.074/ 1

Type of share:                   registered shares

Transferability:                 in accordance with Art 2, 3 and 6 of the Terms
                                 and Conditions of the Warrants

<TABLE>
<CAPTION>

Price development:                          1997     1998     1999    2000*
<S>                                       <C>      <C>      <C>      <C>
                                 High     450.00   657.00   532.00   251.00
                                 Low      227.50   258.00   399.00   189.25
</TABLE>

                                 *Prices from 1.1.2000 to 16.6.2000
                                  (source: Bloomberg)
                                 UBS AG has splitted their shares per May
                                 8, 2000 at a ratio of 1 : 2

Current financial report         During the whole life of the Warrants the
                                 current financial report is available at
                                 UBS Warburg, P.0. Box, CH-8098 Zurich
                                 (Switzerland) or can be ordered free of
                                 charge by telephone (number +41 1 239 47 03)
                                 or fax (number +41 1 239 21 11) or by e-mail
                                 swiss-prospectus@ubsw.com 24-hours a day.
<PAGE>   12
                       GENERAL INFORMATION ON THE WARRANTS

Legal basis                     All necessary corporate action has been
                                taken by the Issuer in connection with
                                authorising the issue of the Warrants. The issue
                                of Warrants was autorised on June 16, 2000 by
                                two officers of the Issuer. The net proceeds
                                from the sale of the Warrants will be used by
                                the Issuer for general corporate purposes.

Taxation                        Each Warrantholder shall assume and be
                                responsible to the proper governmental or
                                regulatory authority for any and all taxes
                                assessed or assessable against the Warrantholder
                                by any jurisdiction or governmental or
                                regulatory applicable to the transactions
                                covered hereby.

                                Each Warrantholder will have to bear the Swiss
                                Federal Tax for the delivery of the underlying.

Delivery of the Underlying:     UBS AG has taken all necessary steps
                                to ensure the delivery of the Underlying
                                during the whole life of the Warrants.

Law/Jurisdiction:               The form and contents of the Warrants are
                                subject to and governed by Swiss law. Place of
                                jurisdiction for all disputes affecting the
                                Warrants and the rights and obligations attached
                                thereto shall be Zurich.

Paying/exercise agent:          UBS AG, Zurich is the paying and exercise agent.
<PAGE>   13
                            INFORMATION ON THE ISSUER

Issuer's information:           Detailed information about UBS AG together with
                                the current financial report is in our basis
                                documentation, dated June 30, 2000 (the "basis
                                documentation") which is deposited with SWX
                                Swiss Exchange and will be updated on a
                                regularly basis (the "Updates").

                                During the whole life of Warrants the basis
                                documentation and this prospectus are available
                                at UBS Warburg, P.0. Box, CH-8098 Zurich
                                (Switzerland) or can be ordered free of charge
                                by telephone (number +41 1 239 47 03) or fax
                                (number +41 1 239 21 11) or by e-mail
                                swiss-prospectus@ubsw.com 24-hours a day.

No material adverse change:     UBS AG confirms, that since the publication of
                                the basis documentation and the Updates there is
                                no material adverse change.<PAGE>   1

                                                                   EXHIBIT 10.67

                      THIRD FORBEARANCE EXTENSION AGREEMENT

                  THIRD FORBEARANCE EXTENSION AGREEMENT, dated as of November 6,
2000 (this "Forbearance Extension"), among

                  (i) DENALI INCORPORATED (the "Borrower");

                  (ii) each of the guarantors which are signatories hereto (each
         a "Guarantor", collectively, the "Guarantors");

                  (iii) CANADIAN IMPERIAL BANK OF COMMERCE (in its capacity as
         administrative agent for the Lenders referenced below, the
         "Administrative Agent");

                  (iv) ING (U.S.) CAPITAL LLC (in its capacity as documentation
         agent for the Lenders referenced below, the "Documentation Agent"); and

                  (v) the lenders party to the Credit Agreement referenced below
         (the "Lenders"), in respect of the Credit Agreement referenced below.

                                   WITNESSETH:

                  WHEREAS, the Borrower, the Lenders, the Administrative Agent
and the Documentation Agent have entered into that certain Credit Agreement,
dated as of January 12, 1999 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement");

                  WHEREAS, the Guarantors are party to that certain Guarantee,
dated as of January 12, 1999 (as amended, supplemented or otherwise modified
from time to time, the "Guarantee"), in favor of the Administrative Agent for
the benefit of the Lenders;

                  WHEREAS, the Borrower, the Guarantors, the Lenders, the
Administrative Agent and the Documentation Agent have entered into that certain
Forbearance Agreement, dated as of June 30, 2000 (the "Forbearance Agreement"),
as extended by that certain Forbearance Extension Agreement, dated as of July
31, 2000 (the "First Forbearance Extension"), as extended by that certain Second
Forbearance Extension Agreement, dated as of September 30, 2000 (the "Second
Forbearance Extension");

                  WHEREAS, the Specified Events of Default (as defined in the
Forbearance Agreement) and the Additional Specified Events of Default (as
defined in the Second Forbearance Extension) have occurred and are continuing;

                  WHEREAS, the Forbearance Termination Date (as defined in the
Forbearance Agreement and as extended by the Second Forbearance Extension) has
expired;

                  WHEREAS, the Borrower and the Guarantors have requested that
the Lenders, the Administrative Agent and the Documentation Agent to revive the
Forbearance Period and extend the Forbearance Termination Date and to provide
for certain other amendments or modifications to the Credit Agreement and the
Forbearance Agreement.

                  NOW, THEREFORE, in consideration of the premises, the mutual
covenants contained herein and for other valuable consideration, the receipt and
adequacy of which are hereby

<PAGE>   2

acknowledged, the Borrower, the Guarantors, the Administrative Agent, the
Documentation Agent and the Lenders hereby agree as follows:

                  1. Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed thereto in the Credit Agreement,
the Forbearance Agreement, the First Forbearance Extension or the Second
Forbearance Extension, as applicable.

                  2. Forbearance Extension; Deferral of Principal; Other
Modifications.

                           (a) The Forbearance Period is hereby revived and the
         Forbearance Termination Date is hereby amended to be the earliest to
         occur of (i) November 30, 2000, (ii) the closing of the Blair
         Transaction and (iii) the occurrence of a Forbearance Event of Default.

                           (b) During the Forbearance Period, no Eurodollar Loan
         shall be made or continued with an Interest Period that ends later than
         November 30, 2000.

                           (c) Section 2(e) of the Second Forbearance Extension
         is hereby superceded by the following. Subject to the terms and
         conditions set forth herein, the Lenders shall defer their rights to
         exercise any warrants held by the Lenders relating to the Borrower that
         are exercisable on July 31, 2000, August 31, 2000, September 30, 2000
         or October 31, 2000 until the Forbearance Termination Date. If the
         Blair Transaction is consummated on or prior to November 30, 2000, the
         Lenders shall surrender such warrants to the Borrower for cancellation.

                  3. Termination. The forbearance and deferral of principal
payments set forth in Section 3 of the Forbearance Agreement, as modified by
Section 2 of the First Forbearance Extension, Section 2 of the Second
Forbearance Extension and Section 2 of this Forbearance Extension shall
terminate on the Forbearance Termination Date. Upon such termination, the
Administrative Agent, the Documentation Agent and the Lenders shall be entitled
to exercise all rights and remedies granted to them pursuant to the Credit
Agreement and the other Loan Documents or under applicable law.

                  4. Representations and Warranties. In order to induce the
Administrative Agent, the Documentation Agent and the Lenders to enter into this
Forbearance Extension, the Borrower and each Guarantor hereby represents and
warrants to the Administrative Agent, the Documentation Agent and to each Lender
that:

                           (a) Other than as set forth in Section 4(b), each of
         the representations and warranties made by the Borrower and each of the
         Guarantors in each Loan Document to which it is a party is true and
         correct in all material respects as of the date hereof.

                           (b) Other than the Specified Events of Default and
         the Additional Specified Events of Default, no Default or Event of
         Default has occurred and is continuing as of the date hereof.

                  5. Conditions Precedent to Effectiveness of Forbearance
Extension. This Forbearance Extension shall not become effective unless and
until:

                           (a) the Administrative Agent has received this
         Forbearance Extension, executed and delivered by a duly authorized
         officer of the Borrower, each Guarantor, the Required Lenders, the
         Administrative Agent and the Documentation Agent;

<PAGE>   3

                           (b) the Administrative Agent shall have received for
         the account of each Lender payment of all accrued interest, excluding
         any accrued default interest, through October 31, 2000;

                           (c) payments due to the holders of the Permanent
         Subordinated Debt as of the date hereof shall have been deferred
         pursuant to a waiver agreement, dated as of the date hereof, among the
         Borrower and the holders of the Permanent Subordinated Debt and such
         waiver agreement shall have been duly executed by the Borrower and each
         such noteholder and shall be in form and substance satisfactory to the
         Administrative Agent; and

                           (d) the Administrative Agent has received such other
         documents and information as the Administrative Agent may reasonably
         require, which documents and information shall be satisfactory to the
         Administrative Agent in its sole discretion.

                  6. Forbearance Events of Default. The Forbearance Period shall
immediately terminate and the forbearance and deferral of principal payments set
forth in Section 3 of the Forbearance Agreement, as modified by Section 2 of the
First Forbearance Extension, Section 2 of the Second Forbearance Extension and
Section 2 of this Forbearance Extension shall be of no further force and effect
upon the occurrence of any of the following (each, a "Forbearance Event of
Default"):

                           (a) the occurrence of one or more Defaults or Events
         of Default under the Credit Agreement (other than a Specified Event of
         Default or an Additional Specified Event of Default); or

                           (b) any representation or warranty made or deemed
         made by the Borrower or any Guarantor herein, in the Forbearance
         Agreement, the First Forbearance Extension or this Forbearance
         Extension or which is contained in any certificate, document or
         financial or other statement created and/or delivered at any time under
         or in connection with the Forbearance Agreement, the First Forbearance
         Extension, the Second Forbearance Extension or this Forbearance
         Extension or on or subsequent to the date hereof under or in connection
         with any other Loan Document shall prove to have been incorrect in any
         material respect on or as of the date made or deemed made; or

                           (c) the Borrower or any Subsidiary shall default in
         the observance or performance of any agreement contained herein or in
         the Forbearance Agreement, the First Forbearance Extension, the Second
         Forbearance Extension or this Forbearance Extension (after giving
         effect to the provisions hereof); or

                           (d) the Borrower shall make, or permit to be made by
         any Guarantor, any payment to any Person in respect of the Permanent
         Subordinated Debt so long as an Event of Default shall continue to
         exist under the Credit Agreement and such payment shall be waived by
         the holders of the Permanent Subordinated Debt or a payment blockage
         notice shall remain in effect, in each case without the prior written
         consent of the Administrative Agent, the Documentation Agent and the
         Lenders; or

                           (e) the Administrative Agent shall determine in good
         faith that the Blair Transaction will not close on or prior to November
         30, 2000; or

                           (f) the lenders under the Dutch Credit Facility shall
         accelerate the payment of principal owing under the Dutch Credit
         Facility or shall take any action in furtherance of the exercise of
         remedies in respect of the Dutch Credit Facility.

<PAGE>   4

                  7. Absence of Waiver. The parties hereto agree that the
agreements set forth herein shall not be deemed to:

                           (a) be a consent to cure, or waiver of, any Default
         or Event of Default;

                           (b) except as expressly set forth herein, modify or
         limit any other term or condition of the Credit Agreement, the
         Forbearance Agreement, the First Forbearance Extension, the Second
         Forbearance Extension or any other Loan Document;

                           (c) impose upon any Lender, the Administrative Agent
         or the Documentation Agent any commitment or obligation, express or
         implied, to consent to any amendment or further modification of the
         Credit Agreement, the Forbearance Agreement, the First Forbearance
         Extension or other Loan Documents;

                           (d) impose upon any Lender, the Administrative Agent
         or any Documentation Agent any commitment or obligation, express or
         implied, to grant or extend any financial accommodations to the
         Borrower or the Guarantors (other than as expressly set forth herein)
         or to modify or extend the Forbearance Agreement, the First Forbearance
         Extension or this Forbearance Extension; or

                           (e) prejudice any right or remedy that the
         Administrative Agent, the Documentation Agent or the Lenders may now
         have or may in the future have under the Credit Agreement or under or
         in connection with the other Loan Documents or any instrument or
         agreement referred to therein including, without limitation, any right
         or remedy resulting from any Default or Event of Default.

                  8. Release of Claims and Waiver. Each of the Borrower and each
Guarantor hereby releases, remises, acquits and forever discharges each Lender,
the Administrative Agent and the Documentation Agent and each of their
employees, agents, representative, consultants, attorneys, officers, directors,
partners, fiduciaries, predecessors, successors and assigns, subsidiary
corporations, parent corporations and related corporate divisions (collectively,
the "Released Parties"), from any and all actions, causes of action, judgments,
executions, suits, debts, claims, demands, liabilities, obligations, damages and
expenses of any and every character, known or unknown, direct or indirect, at
law or in equity, of whatever nature or kind, whether heretofore or hereafter
arising, for or because of any matter or things done, omitted or suffered to be
done by any of the Released Parties prior to and including the date of execution
hereof, and in any way directly or indirectly arising out of any or in any way
connected to this Agreement or the Loan Documents (collectively, the "Released
Matters"). Each of the Borrower and each Guarantor hereby acknowledges that the
agreements in this Section 8 are intended to be in full satisfaction of all or
any alleged injuries or damages arising in connection with the Released Matters.
Each of the Borrower and each Guarantor hereby represents and warrants to the
Administrative Agent, the Documentation Agent and each Lender that it has not
purported to transfer, assign or otherwise convey any right, title or interest
of the Borrower or any Guarantor in any Released Matter to any other Person and
that the foregoing constitutes a full and complete release of all Released
Matters.

                  9. Miscellaneous.

                           (a) Section headings used in this Forbearance
         Extension are for convenience of reference only and shall not affect
         the construction of this Forbearance Extension.

                           (b) This Forbearance Extension may be executed by one
         or more of the parties hereto by facsimile or in any number of separate
         counterparts and all of said counterparts taken together shall be
         deemed to constitute one and the same instrument.

<PAGE>   5

                           (c) This Forbearance Extension and the rights and
         obligations of the parties under this Forbearance Extension shall be
         governed by, and construed and interpreted in accordance with, the law
         of the State of New York.

                           (d) This Forbearance Extension shall be deemed a
         "Loan Document" for purposes of the Credit Agreement and the other Loan
         Documents.

                           (e) This Forbearance Extension constitutes the entire
         agreement among the parties with respect to the subject matter hereof
         and supersedes all prior and contemporaneous oral or written agreements
         with respect to the subject matter hereof.

                           (f) Time is of the essence in this Forbearance
         Extension.

                           (g) No amendment or modification of this Forbearance
         Extension shall be effective unless made in writing and signed by all
         parties. Each of the Borrower and each of the Guarantors acknowledges
         and agrees that any and all future discussions with any Lender, the
         Administrative Agent or the Documentation Agent shall be without
         prejudice to any Lender, the Administrative Agent or the Documentation
         Agent and shall not be deemed to modify, waive, or amend any term or
         provision of this Forbearance Extension or the Loan Documents.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Forbearance Extension to be duly executed and delivered as of the day and year
first above written.

                                       DENALI INCORPORATED,
                                       as Borrower

                                       By /S/ RICHARD W. VOLK
                                         --------------------------------
                                         Name: RICHARD W. VOLK
                                         Title: CHAIRMAN, PRESIDENT & CEO

                                       CANADIAN IMPERIAL BANK OF COMMERCE,
                                       as Administrative Agent
                                       By: GERALD GIRARDI
                                           Name: GERALD GIRARDI
                                           Title: EXECUTIVE DIRECTOR

                                       ING (U.S.) CAPITAL LLC,
                                       as Documentation Agent and as a Lender
                                       By: ROBERT L. FELLOWS
                                           Name: ROBERT L. FELLOWS
                                           Title: DIRECTOR

                                       CIBC INC.,
                                       as a Lender
                                       By: GERALD GIRARDI
                                           Name: GERALD GIRARDI
                                           Title: EXECUTIVE DIRECTOR

<PAGE>   6

                                       KEY CORPORATE CAPITAL INC.,
                                       as a Lender
                                       By: MICHAEL D. CARROLL
                                           Name: MICHAEL D. CARROLL
                                           Title: VICE PRESIDENT

                                       BANK OF OKLAHOMA N.A.,
                                       as a Lender
                                       By: PAMELA J. BEEN
                                           Name: PAMELA J. BEEN
                                           Title: VICE PRESIDENT

<PAGE>   7

                                       SOUTHWEST BANK OF TEXAS, N.A.,
                                       as a Lender
                                       By: PRESTON C. CLARE
                                           Name: PRESTON C. CLARE
                                           Title: SENIOR VICE PRESIDENT

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