UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1996 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-9860
BARR LABORATORIES, INC.
(Exact name of Registrant as specified in its charter)
New York 22-1927534
(State or Other Jurisdiction of
(I.R.S. - Employer
Incorporation or Organization)
Identification No.)
Two Quaker Road, P. O. Box 2900, Pomona, New York 10970-0519
(Address of principal executive offices)
914-362-1100
(Registrant's telephone number)
Securities registered Name of each
pursuant to Section exchange on
12(b) of the Act: which registered:
Title of each class
Common Stock, Par Value American Stock
$0.01 Exchange
Securities registered pursuant to Section 12(g) of the Act: None
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock of the Registrant
held by nonaffiliates was approximately $112,628,337 as of June
30, 1996 (assuming solely for purposes of this calculation that
all Directors and Officers of the Registrant are "affiliates").
Number of shares of Common Stock, Par Value $.01, outstanding as
of June 30, 1996: 14,037,027.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's 1996 Annual Report to Shareholders
are incorporated by reference in Part II and Part IV hereof.
Portions of the Registrant's 1996 Proxy Statement are
incorporated by reference in Part III hereof.
<PAGE>
PART I
Item 1. Business
Barr Laboratories, Inc. ("Barr" or the "Company") is a
leading independent developer, manufacturer and marketer of high
quality generic pharmaceuticals. The Company ranks among the top
ten independent companies in the U.S. generic pharmaceutical
business as measured by net sales and market capitalization.
Barr, which is listed on the American Stock Exchange (AMEX-BRL),
also ranks among the top 50 pharmaceutical companies in the U.S.
in terms of overall sales.
Barr manufactures, markets and distributes a wide range of
prescription drug products equivalent to branded pharmaceuticals.
The Company's product line is primarily focused in the following
therapeutic categories:
- treatments for cancer (oncologicals);
- hormone replacement therapies (hormonal agents) used in
estrogen replacement and the treatment of menopause;
- pain management products (narcotic analgesics);
- medicines for hypertension and heart disease
(cardiovascular agents); and
- antibiotics and medicine to combat infections (anti-
infectives).
Barr also markets several products that represent other
therapeutic categories including a line of products to treat
anxiety, depression and other similar disorders
(psychotherapeutics). These products are manufactured in tablet,
capsule and powder form.
Generic pharmaceuticals, such as those made and sold by
Barr, represent an increasing proportion of medicines dispensed
in the U.S. In calendar 1995, the generic pharmaceutical
industry had total U.S. sales of approximately $7.5 billion
(according to IMS International), more than twice the amount of
sales reported just five years ago. Although generic
pharmaceuticals must meet the same standards as branded
pharmaceuticals, these equivalent medicines are sold at prices
that are typically lower than the branded product. The Company
believes that the industry will benefit from the increasing
efforts by government (both state and federal), employers, third-
party payers, and consumers to control health care costs, as well
as from the more than 100 major branded pharmaceutical products
that will come off-patent within the next ten years.
Company Background
The Company was founded in 1970 by Mr. Edwin A. Cohen and a
partner, and commenced active business in 1972 as a manufacturer
of generic drug products.
Current Products
Currently, the Company is marketing approximately 42 drug
products, representing various dosage strengths of 22 chemical
entities.
Key among the Company's current products is Tamoxifen.
Tamoxifen is a non-steroidal anti-estrogen used to treat advanced
breast cancer, as well as to delay the recurrence of the cancer
following surgery.
<PAGE>
Barr distributes Tamoxifen (which is sold under the Barr
label) under an agreement with the Innovator holding the
product's patent. In 1993, as a result of a settlement of a
patent challenge against the Innovator of Tamoxifen, Barr entered
into a non-exclusive Supply and Distribution Agreement
("Agreement"). Under the terms of the Agreement, Barr purchases
its Tamoxifen directly from the Innovator at a discount from the
Innovator's average wholesale customer price.
Patent protected until 2002, the total current annual market
for Tamoxifen is approximately $300 million. As a percentage of
Barr's total sales, Tamoxifen accounted for approximately 74%,
72% and 49% of total fiscal year 1996, 1995, and 1994 sales,
respectively.
The Company currently has an approved Abbreviated New Drug
Application (ANDA) to manufacture Tamoxifen. Therefore, at the
time of patent expiration (or should another company's patent
challenge succeed), Barr would begin to manufacture Tamoxifen.
Manufacturing Tamoxifen would significantly lower Barr's costs
and would dramatically improve the current profit margins earned
by the Company on Tamoxifen sales. One generic competitor was
unsuccessful in challenging the patent during the past fiscal
year. While other companies may pursue similar challenges, the
Company does not believe that the Tamoxifen patent will be
successfully challenged prior to patent expiration.
Product Development
Barr's long-term growth is expected to be driven by its
ability to be the first or second to market with new generic
versions of select, branded pharmaceuticals. Barr's strategy to
maximize opportunities for generic pharmaceuticals has three
components: offering a therapeutically focused product line;
aggressively investing in research and development (R&D) in
categories representing strong potential where Barr has a
competitive advantage; adding significant products through
selective patent challenges; and strengthening market position
through licensing, partnering and other innovative business
relationships.
Barr has made a significant investment in processes and
equipment that enable it to develop and manufacture difficult or
toxic compounds into profitable therapies. This investment, a
significant barrier to entry for potential competitors, offers a
distinctive advantage for Barr.
For the fiscal years ended June 30, 1996, 1995, and 1994,
total research and development expenditures were approximately
$11 million, $10 million and $7 million, respectively.
Management anticipates that research and development expenditures
in fiscal 1997 will exceed comparable expenditures in fiscal
1996. See Item 7. "Management's Discussion and Analysis of
Financial Conditions and Results of Operations."
Marketing and Customers
The Company sells its products to customers in the United
States and Puerto Rico through an integrated sales and marketing
force. This sales force is supplemented by customer service
representatives who inform the Company's customers of new Company
products, order status and current pricing.
<PAGE>
The Company markets its drug products to drug store chains,
wholesalers, distributors and repackagers. The Company's
products are sold under the Barr label as well as the customers'
own private labels.
The Company has approximately 300 direct customers. In
fiscal 1996 and 1994, McKesson Drug Company accounted for
approximately 10% and 11% of net sales, respectively. In fiscal
1995, approximately 10% of net sales were generated by sales to
Cardinal Health, Inc. No other customer accounted for greater
than 10% of sales in any of the last three fiscal years.
Competition
The Company competes in varying degrees with numerous other
manufacturers of pharmaceutical products (both branded and
generic). These competitors include the generic divisions of
proprietary pharmaceutical companies (either marketing units or
other generic manufacturers), large independent generic
manufacturers/distributors that seek to provide "one stop
shopping" by offering a full line of products, and generic
manufacturers that have targeted select therapeutic categories
and market niches.
The principal competitive factors in the generic
pharmaceutical industry are:
- the ability to introduce generic versions of branded
products promptly after the expiration of market
exclusivity;
- maintenance of sufficient inventories to ensure
timely deliveries;
- price;
- quality; and
- customer service.
Many of the Company's competitors have greater financial and
other resources, and are therefore able to devote more resources
than the Company in such areas as marketing and product
development. In order to ensure its ability to compete
effectively, the Company has:
- focused its product development in areas of historical
strength or competitive advantage;
- targeted products for development that offer significant
barriers to entry for competitors, including:
difficulty in sourcing raw materials; difficulty in
formulation or establishing bioequivalence;
manufacturing that requires unique facilities,
processes or expertise; and
- invested in plant and equipment to give it a competitive
edge in manufacturing.
These factors, when combined with the Company's investment in new
product development and its focus on select therapeutic
categories, provide the basis for its belief that it will
continue to remain a leading independent generic pharmaceutical
company.
Raw Materials
The active chemical raw materials essential to the Company's
business are bulk pharmaceutical chemicals which are purchased
from numerous manufacturers in the U.S. and throughout the world.
All purchases are made in United States dollars, and therefore,
while currency fluctuations do not have an immediate impact on
prices the Company pays, such
<PAGE>
fluctuations may, over time, have
an effect on prices to the Company. In addition, because prior
U.S. Food and Drug Administration (FDA) approval of raw material
suppliers is required, if raw materials from an approved
supplier were to become unavailable, the required FDA approval of
a new supplier could cause a significant delay in the manufacture
of the drug product affected. However, in some cases, the
Company has an FDA approved alternate supplier which would
mitigate substantially the effect of any such delay. To date,
the Company has not experienced any significant delays from lack
of raw material availability. However, there can be no assurance
that significant delays will not occur in the future.
Employees
As of June 30, 1996, the Company had approximately 386 full-
time employees. Of these, approximately one-third are
represented by a union which has a collective bargaining
agreement with the Company. The Company's current collective
bargaining agreement with its employees, who are represented by
Local 8-149 of the Oil, Chemical and Atomic Workers International
Union ("OCAW"), expires on April 1, 2001.
Government Regulation
All pharmaceutical manufacturers, including the Company, are
subject to extensive regulation by the federal government,
principally by the FDA, and, to a lesser extent, by the U.S. Drug
Enforcement Administration ("DEA") and state governments. The
Federal Food, Drug and Cosmetic Act, the Controlled Substances
Act and other federal statutes and regulations govern or
influence the testing, manufacturing, safety, labeling, storage,
record keeping, approval, pricing, advertising and promotion of
the Company's products. Non-compliance with applicable
requirements can result in fines, recalls and seizure of
products. Under certain circumstances, the FDA also has the
authority to revoke drug approvals previously granted.
FDA
FDA approval is required before any new drug or a generic
equivalent to a previously approved drug can be marketed. The
Company generally receives approval for products by submitting an
ANDA to the FDA. When processing an ANDA, the FDA waives the
requirement of conducting complete clinical studies, although it
may require bioavailability and/or bioequivalence studies.
"Bioavailability" indicates the rate and extent of absorption and
levels of concentration of a drug product in the blood stream
needed to produce a therapeutic effect. "Bioequivalence"
compares the bioavailability of one drug product with another,
and when established, indicates that the rate of absorption and
levels of concentration of a generic drug in the body are
substantially equivalent to the previously approved drug. An ANDA
may be submitted for a drug on the basis that it is the
equivalent to a previously approved drug. Although antibiotic
drugs are classified separately for purposes of FDA approval, the
approval procedure for such drugs substantially conforms to the
foregoing outline.
Among the requirements for drug approval by the FDA is that
the Company's manufacturing procedures and operations conform to
current Good Manufacturing Practices ("cGMP"), as defined in the
U.S. Code of Federal Regulations. The cGMP regulations must be
followed at all times during the manufacture of pharmaceutical
products. In complying with the
<PAGE>
standards set forth in the cGMP
regulations, the Company must continue to expend time, money and
effort in the areas of production and quality control to ensure
full technical compliance.
If the FDA believes a company is not in compliance with
cGMP, certain sanctions are imposed upon that company including
(i) withholding from the company new drug approvals as well as
approvals for supplemental changes to existing applications; (ii)
preventing the company from receiving the necessary export
licenses to export its products; and (iii) classifying the
company as an "unacceptable supplier" and thereby disqualifying
the company from selling products to federal agencies. The
Company believes it is currently in
compliance with cGMP.
In May of 1992, the Generic Drug Enforcement Act of 1992
(the "Act") was enacted. This Act, a result of the legislative
hearings and investigations into the generic drug approval
process, allows the FDA to impose debarment and other penalties
on individuals and companies that commit certain illegal acts
relating to the generic drug approval process. In some
situations, the Act requires the FDA to debar (i.e., not accept
or review ANDAs for a period of time) a company or an individual
that has committed certain violations. It also provides for
temporary denial of approval of applications during the
investigation of certain violations that could lead to debarment
and also, in more limited circumstances, provides for the
suspension of the marketing of approved drugs by the affected
company. Lastly, this Act allows for civil penalties and
withdrawal of previously approved applications. Neither the
Company nor any of its employees was or is currently affected by
the provisions of this Act.
DEA
Because the Company markets some and intends to reintroduce
a wide range of controlled substances in its analgesic and
psychotherapeutic product lines, it must meet the requirements of
the Controlled Substances Act and the regulations issued
thereunder and administered by the DEA. These regulations
include stringent requirements for manufacturing controls and
security to prevent diversion of or unauthorized access to the
drugs in each stage of the production and distribution process.
The DEA monitors allocation to the Company of raw materials used
in the production of controlled substances based on historical
sales data. The Company believes it is currently in compliance
with all applicable DEA requirements.
Patents
The Process Patent Amendments Act of 1988 provides that the
use or sale within the United States, or importation into the
United States, of a product that was made either domestically or
abroad by a process covered by a United States patent,
constitutes infringement of the process patent. After proper
notice, this legislation could subject the Company to potential
patent infringement claims if a supplier of an active ingredient
to the Company were to infringe a United States process patent in
the manufacture of such ingredient. The Company has received no
such notice.
<PAGE>
Medicaid
In November 1990, a law regarding reimbursement for
prescribed Medicaid drugs was passed as part of the Congressional
Omnibus Budget Reconciliation Act of 1990. This law basically
required drug manufacturers to enter into a rebate contract with
the Federal Government. All generic pharmaceutical
manufacturers, whose products are covered by the Medicaid
program, are required to rebate to each state a percentage
(currently 11% in the case of products manufactured by the
Company and 15% for Tamoxifen sold by the Company) of their
average net sales price for the products in question. The Company
provides an accrual for future estimated rebates in its
consolidated financial statements.
Effect of the General Agreement on Tariffs and Trade ("GATT")
With the signing of the GATT accord in December 1994, one of
the provisions called for harmonization of patent life throughout
GATT countries. U.S. enabling legislation had provisions which
in effect offered a limited extension of the period of monopoly
protection for intellectual property including patents. While a
number of patented drugs will receive extended patent protection
(the maximum extension being 36 months) as a result of this
enabling legislation, the patent extensions resulting from the
implementation of GATT are not expected to materially impact any
of the product candidates in Barr's current pipeline.
Other
The Company is also governed by federal, state and local
laws of general applicability, such as laws regulating working
conditions, equal employment opportunity, and environmental
protection.
Item 2. Properties
Barr's operations are located in Pomona and Blauvelt, New
York; Northvale, New Jersey; and Forest, Virginia.
The Company's analytical and product development
laboratories and certain production facilities are located in
Pomona, New York. Barr operates two facilities totaling
approximately 81,000 square feet on 40 acres. The Company owns
these facilities and the land.
The first building consists of a 33,000 square foot facility
devoted to the analytical and product development laboratories as
well as the equipment used in the research and development of new
dosage forms. This facility houses one of Barr's two enclosed-
manufacturing suites. With these suites, which include
sophisticated air-handling systems that eliminate the dangers of
handling toxic chemicals, Barr can effectively pursue oncology as
well as other product candidates whose manufacture demands that
such facilities be in place. The second building on the Pomona
site provides approximately 48,000 square feet of office and
manufacturing space. This building houses the R&D administrative
staff and pharmacy operations team, as well as additional
manufacturing and warehousing capabilities. During fiscal 1996,
the Company initiated the construction of a 17,000 square foot
manufacturing suite within this facility, that will be used to
manufacture products requiring special material handling (such as
cancer
<PAGE>
treatments and hormonal agents). This additional capacity
will be brought on-line during the first half of fiscal 1997.
In Northvale, New Jersey, about 15 miles from the Pomona
site, three buildings are used for manufacturing, packaging and
shipping operations. Manufacturing is located in a 28,000 square
foot building which the Company purchased in 1984 with the aid of
funding through the New Jersey Economic Development Authority.
This facility includes pharmaceutical manufacturing equipment, as
well as the Company's second enclosed-manufacturing suite. The
building also has the necessary vaults, permits, etc. to support
the Company's narcotic analgesic development plans. In 1991, the
Company purchased an additional parcel of land in Northvale for
future use.
Across from the manufacturing facility, Barr leases a 40,000
square foot building that houses manufacturing support staff
offices as well as the Company's automated packaging operations.
The lease on this building expires on June 30, 1998. The Company
has determined that it will not renew the lease on this building,
and has begun the process of re-incorporating its packaging
operations within its other manufacturing facilities.
The Company's third building in Northvale, a 50,000 square
foot leased facility, serves as the Company's warehousing and
distribution facility. This lease expires in July 1999. The
Company can extend this lease for an additional five years.
The Company's executive, administrative and sales and
marketing operations are located in two sub-leased facilities of
approximately 38,000 square feet in Blauvelt, New York. This
location is approximately 7 miles from both Pomona and Northvale.
The leases on these facilities expire in May 1999.
In January 1996, the Company purchased a facility in Forest,
Virginia, that it plans to use for pharmaceutical manufacturing.
Construction to retrofit this 65,000 square foot facility for
pharmaceutical manufacturing was initiated at fiscal year-end,
and it is expected to be operational in late fiscal 1997. The
facility is located on a 50 acre site that will accommodate
additional expansion. At fiscal year-end, the Company was
formalizing plans for the construction of a 100,000 square foot
warehouse and packaging facility to support Virginia-based
manufacturing as well as product distribution.
Item 3. Legal Proceedings
Ciprofloxacin Patent Challenge
On January 6, 1995, the Company received FDA approval to
manufacture and market ciprofloxacin tablets, the generic
equivalent of Miles, Inc.'s CIPRO. A broad spectrum antibacterial
agent, Ciprofloxacin is used to treat lower respiratory, skin,
bone and joint, and urinary tract infections. U.S. sales for
Ciprofloxacin totaled in excess of $500 million for the year
ended December 31, 1995.
The Company is currently challenging the validity of certain
patents held by Bayer AG and Miles Inc. for Ciprofloxacin. In
January 1992, Bayer AG and Miles Inc. filed a patent infringement
action in the United States District Court for the Southern
District of New York,
<PAGE>
seeking to block Barr from marketing
Ciprofloxacin until certain U.S. patents expire. The Company
expects to expend significant resources during fiscal 1997, to
prepare for a trial on the merits of the patent challenge. The
FDA approval will become effective with the Company's success in
its patent challenge, or upon expiration of the patents in 2003,
whichever occurs first.
Fluoxetine Hydrochloride Patent Challenge
In February 1996, Barr filed an ANDA seeking approval from the
FDA to market fluoxetine hydrochloride, the generic equivalent of
Eli Lilly Company's ("Lilly") Prozac. The Company notified Lilly
pursuant to the provisions of the Waxman-Hatch Act and on April
19, 1996, Lilly filed a patent infringement action in the United
States District Court for the Southern District of Indiana -
Indianapolis Division seeking to prevent Barr from marketing
fluoxetine until certain U.S. patents expire in 2002. The case
is in the discovery stage and no trial date has been set.
Miscellaneous
As of June 30, 1996, the Company was involved, as plaintiff and
defendant, in other lawsuits incidental to its business.
Management of the Company, based on the advice of legal counsel,
believes that the disposition of such litigation will not have
any significant adverse effect on the Company's consolidated
financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
The information required by Item 5 is included on page 34 of the
1996 Annual Report to Shareholders ("Annual Report") and is
incorporated herein by reference.
Item 6. Selected Financial Data
The information required by Item 6 is included on page 36 of the
Annual Report and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information required by Item 7 is included on pages 17
through 20 of the Annual Report and is incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data
The information required by Item 8 is included on pages 21
through 35 of the Annual Report and is incorporated herein by
reference.
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The Company's executive officers are as follows:
NAME AGE POSITION
Bruce L. Downey 48 Chairman of the Board, Chief
Executive Officer and President
Paul M. Bisaro 35 Chief Financial Officer, General Counsel
and Secretary
Timothy P. Catlett 41 Vice President, Sales and
Marketing
Ezzeldin A. Hamza 45 Senior Vice President-Research and
Development
Catherine F. Higgins 44 Vice President-Human Resources
Bruce W. Hooey 34 Vice President, Chief Information
Officer
William T. McKee 35 Director of Finance and Treasurer
Mary E. Petit 47 Vice President, Quality
Gerald F. Price 49 Executive Vice President
Bruce L. Downey became the Company's President, Chief
Operating Officer and a member of the Board of Directors in
January 1993 and was elected Chairman of the Board and Chief
Executive Officer in February of 1994. Prior to assuming these
positions, from 1981 to 1993, Mr. Downey was a partner in the
law firm of Winston & Strawn and a predecessor firm of Bishop,
Cook, Purcell and Reynolds. Mr. Downey served as the Company's
lead attorney throughout its legal proceedings with the FDA.
Paul M. Bisaro was employed by the Company as General
Counsel in July 1992. He was acting General Counsel to the
Company since January 1992. Mr. Bisaro was elected Secretary of
the Company in September 1992 and elected a Vice President in
1993. In August 1994, Mr. Bisaro was elected to the position of
Chief Financial Officer. Prior to assuming these positions with
the Company, he was associated from 1989 to 1992 with the law
firm of Winston & Strawn and a predecessor firm, Bishop, Cook,
Purcell and Reynolds. Prior to that, Mr. Bisaro was a Consultant
with Arthur Andersen & Co.
<PAGE>
Timothy P. Catlett was employed by the Company in February
1995 as Vice President, Sales and Marketing. Since 1978, Mr.
Catlett held a number of positions with the Lederle Laboratories
division of American Cyanamid Company. Since 1993 he served as
Vice President, Cardiovascular Marketing.
Ezzeldin A. Hamza was employed by the Company in July 1984
as Director of Quality Control and thereafter, from August 1987,
served as Director of Scientific Affairs. In December 1988, Mr.
Hamza was elected to the position of Vice President-Technical
Affairs. In 1993, he was elected Senior Vice President-Research
and Development.
Catherine F. Higgins was employed by the Company in December
1991 as Vice President-Human Resources and was elected an officer
in September 1992. From June 1985 to December 1991, Ms. Higgins
served as Vice President-Human Resources for Inspiration
Resources Corporation. From August 1979 to May 1985, Ms. Higgins
was employed by Continental Grain Company as Director-Human
Resources.
Bruce W. Hooey was employed by the Company in December 1993
as Chief Information Officer. He was elected an officer of the
Company in December of 1994 and elected a Vice President of the
Company in December 1995. Mr. Hooey served as a Principal with
Deloitte & Touche Management Consultants from August 1985 until
joining Barr.
William T. McKee was employed by the Company in January 1995
as Director of Finance and was appointed Treasurer in March 1995.
Prior to joining the Company, Mr. McKee served as Vice President-
Finance for Absolute Entertainment. From January 1990 through
June 1993, Mr. McKee was a Senior Manager for Gramkow &
Carnevale, CPAs, and from September 1983 through January 1990 was
employed by Deloitte & Touche.
Mary E. Petit, Pharm. D., was employed by the Company in
January 1995 as Vice President, Quality. From June 1992 to
January 1995, Dr. Petit was Vice President, Quality Management
with the Lederle Laboratories division of American Cyanamid. Dr.
Petit held positions of increasing responsibility during her 12
year tenure with Lederle. Prior to Lederle, she held a variety of
academic appointments at the University of Utah Colleges of
Pharmacy and Medicine. She has authored over 20 scientific
publications and presented nationally.
Gerald F. Price was employed by the Company in January 1990
as Executive Vice President. He was elected an officer of the
Company in January 1990. Prior to assuming these positions, he
served as Group Vice President-Operations of Del Laboratories.
He also served as Vice President-Manufacturing for L'Oreal
Corporation, Director of Manufacturing for Amway Corporation and
was associated with The Procter & Gamble Company in a variety of
manufacturing positions.
The Company's directors and executive officers are elected
annually to serve until the next annual meeting or until their
successors have been elected and qualified. The directors of the
Company and their business experience are set forth on pages 2
and 3 of the Company's Notice of Annual Meeting of Shareholders,
dated October 25, 1996 (the "Proxy Statement") and are
incorporated herein by reference.
<PAGE>
Item 11. Executive Compensation
A description of the compensation of the Company's executive
officers is set forth on pages 8 through 11 of the Proxy
Statement and, with the exception of the section headed
"Compensation Committee Report on Executive Compensation" on page
11, is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
A description of the security ownership of certain beneficial
owners and management is set forth on pages 6 and 7 of the Proxy
Statement and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
A description of certain relationships and related transactions
is set forth on page 14 of the Proxy Statement and is
incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a) Financial Statement Schedules:
The consolidated balance sheets as of June 30, 1996 and
1995, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three
years in the period ended June 30, 1996 and the related
notes to the consolidated financial statements, together
with the Independent Auditors' Report, are incorporated
herein by reference. With the exception of the
aforementioned information and the information incorporated
by reference in Items 5 through 8, the Annual Report is not
be deemed filed as part of this report. The following
additional financial data should be read in conjunction with
the financial statements in the Annual Report. All other
schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial
statements or notes.
Page
Independent Auditors' Report 16
Financial Statement Schedule:
II Valuation and Qualifying Accounts 17
Exhibits:
3.1 Certificate of Incorporation of Registrant (1)
3.2 By-Laws of the Registrant (2)
4.1 Loan and Security Agreement dated April 12, 1996 (9)
10.1 Stock Option Plan (3)
<PAGE>
10.2 Savings and Retirement Plan (8)
10.3 Economic Development Bond Financing Agreement, dated
December 19, 1984, relating to 265 Livingston Street (2)
10.4 Note Purchase Agreement dated June 28, 1991 -
$20,000,000 - 10.15% Senior Secured Notes dated June
28, 2001 (4)
10.5 Amendments 1, 2 and 3 dated April 1996 to Note
Purchase Agreement dated June 28, 1991 --
$20,000,000 Senior Secured Notes
10.6 Collective Bargaining Agreement, effective April 1,
1996
10.7 Agreement with Bruce L. Downey (4)
10.8 Agreement with Ezzeldin A. Hamza (4)
10.9 Distribution and Supply Agreement for Tamoxifen
Citrate dated March 8, 1993 (4)
10.10 1993 Stock Incentive Plan (5)
10.11 1993 Employee Stock Purchase Plan (6)
10.12 1993 Stock Option Plan for Non-Employee Directors (7)
10.13 Agreement with Edwin A. Cohen and Amendment thereto (8)
11.0 Statement Re: Computation of Per Share Earnings
13.0 1996 Annual Report to Shareholders
21.0 Subsidiaries of the Company (1)
23.0 Consent of Deloitte & Touche LLP
27.0 Financial Data Schedule
(1) Previously filed with the Securities and Exchange
Commission as an Exhibit to the Registrant's Annual
Report on Form 10-K for the year ended June 30,
1988 and incorporated herein by reference.
(2) Previously filed with the Securities and Exchange
Commission as an Exhibit to the Registrant's Annual
Report on Form 10-K for the year ended June 30, 1986
and incorporated herein by reference.
(3) Previously filed with the Securities and Exchange
Commission as an Exhibit to the Registrant's
Registration Statement on Form S-1 No. 33-13472 and
incorporated herein by reference.
<PAGE>
(4) Previously filed with the Securities and Exchange
Commission as an Exhibit to the Registrant's Annual
Report on Form 10-K for the year ended June 30, 1993
and incorporated herein by reference.
(5) Previously filed with the Securities and Exchange
Commission as an Exhibit to the Registrant's
Registration Statement on Form S-8 No. 33-73696 and
incorporated herein by reference.
(6) Previously filed with the Securities and Exchange
Commission as an Exhibit to the Registrant's
Registration Statement on Form S-8 No. 33-73700 and
incorporated herein by reference.
(7) Previously filed with the Securities and Exchange
Commission as an Exhibit to the Registrant's
Registration Statement on Form S-8 No. 33-73698 and
incorporated herein by reference.
(8) Previously filed with the Securities and Exchange
Commission as an Exhibit to the Registrant's Annual
Report on Form 10-K for the year ended June 30, 1995
and incorporated herein by reference.
(9) The Registrant agrees to furnish to the Securities
and Exchange Commission, upon request, a copy of any
instrument defining the rights of the holders of its
long-term debt wherein the total amount of
securities authorized thereunder does not exceed 10%
of the total assets of the Registrant and its
subsidiaries on a consolidated basis.
(b) Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned
thereunto duly authorized.
BARR LABORATORIES, INC.
Signature Title Date
BY BRUCE L. DOWNEY Chairman of the Board, Chief September 12, 1996
(Bruce L.Downey) Executive Officer & President
BY PAUL M. BISARO Chief Financial Officer, September 12, 1996
(Paul M. Bisaro) General Counsel & Secretary
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
Signature Title Date
BRUCE L. DOWNEY Chairman of the Board, Chief September 12, 1996
(Bruce L. Downey) Executive Officer & President
EDWIN A. COHEN Vice Chairman of the Board September 12, 1996
(Edwin A. Cohen)
ROBERT J. BOLGER Director September 12, 1996
(Robert J. Bolger)
MICHAEL F. FLORENCE Director September 12, 1996
(Michael F. Florence)
WILSON L. HARRELL Director September 12, 1996
(Wilson L. Harrell)
BERNARD C. SHERMAN Director September 12, 1996
(Bernard C. Sherman)
GEORGE P. STEPHAN Director September 12, 1996
(George P. Stephan)
JACOB M. KAY Director September 12, 1996
(Jacob M. Kay)
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Barr Laboratories, Inc.:
We have audited the financial statements of Barr Laboratories,
Inc. and subsidiaries (the "Company") as of June 30, 1996 and
1995, and for each of the three years in the period ended June
30, 1996, and have issued our report thereon dated August 28,
1996; such financial statements and report are included in your
June 30, 1996 Annual Report to Shareholders and are incorporated
herein by reference. Our audits also included the financial
statement schedule of Barr Laboratories, Inc., listed in Item 14.
This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
August 28, 1996
<PAGE>
Schedule II
Barr Laboratories, Inc.
Valuation and Qualifying Accounts
Years ended June 30, 1996, 1995, and 1994
Balance at Additions, Recovery Deduct-
Beginning costs and against tions Balance
of Year expense write- write- at end of
offs offs Year
Allowance for
doubtful accounts:
Year ended June 30, 1994 $400 400 20 20 800
Year ended June 30, 1995 800 - - 400 400
Year ended June 30, 1996 400 95 2 305 192
Reserve for returns
and allowances:
Year ended June 30, 1994 1,000 2,021 - 1,821 1,200
Year ended June 30, 1995 1,200 4,813 - 4,313 1,700
Year ended June 30, 1996 1,700 5,114 - 5,207 1,607
Inventory reserves:
Year ended June 30, 1994 6,647 3,447 - 4,351 5,743
Year ended June 30, 1995 5,743 2,345 - 4,538 3,550
Year ended June 30, 1996 3,550 2,359 - 4,630 1,279
<PAGE>
Exhibit 13
BARR LABORATORIES INC.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Fiscal 1996 to Fiscal 1995 (thousands of dollars)
Net sales increased approximately 16% to $232,224 from $199,720.
The increase is primarily attributable to a continued increase in
demand for Tamoxifen, the breast cancer treatment distributed by
the Company, as well as increased sales for the balance of the
Company's product lines.
Net sales of Tamoxifen increased approximately $28,000 to
$171,000 or 74% of net sales, compared to $143,000 or 72% of net
sales in the prior year. This 20% growth resulted from increases
in the Company's market share and price. While the Company's
Tamoxifen revenues increased in fiscal 1996, the rate of growth
between fiscal 1995 and 1996 declined compared to prior years.
This decline in the rate of growth was expected given the
dramatic growth achieved immediately after the Company began
distributing Tamoxifen and given the Company's share of the
current market. Prior to December 1995, the Company competed
against the Innovator's 10 mg dosage strength only. In January
1996, the Innovator introduced a 20 mg strength of this product.
While the Company may experience some decline in its market share
during the last six months of calendar year 1996 as some
consumers switch to the new dosage strength, the new dosage
strength has not had a material adverse effect on the Company's
sales through June 30, 1996. As permitted under the terms of its
existing agreement with the Innovator, the Company will begin
distributing the 20 mg strength in December 1996. Based on the
relatively low current sales of the branded product, it does not
appear that such an introduction will have a material impact on
Barr's financial statements. Tamoxifen is a patented product
manufactured for the Company by the Innovator and distributed by
the Company under a non-exclusive license agreement with the
Innovator. Currently Tamoxifen only competes against the
Innovator's products, which are sold under a brand name.
Net sales of Barr-manufactured products increased by
approximately 8% primarily as a result of increases in volume.
Methotrexate accounted for approximately 10% of the Company's net
sales in 1996 as compared to 14% in 1995. No other Barr-
manufactured product accounted for 10% or more of net sales in
either year.
Gross profit increased to $42,830 from $40,222 due to increased
sales volume. However, gross margin decreased as a percentage of
net sales from 20% to 18%. The decline in gross margin is
primarily attributed to the lower gross margins associated with
the increased distribution of Tamoxifen and price competition on
certain of the Company's manufactured products. The Company
believes that its new product, Megestrol Acetate, which was
introduced in November 1995, will contribute to offsetting lower
margins on certain Barr-manufactured products, including
Methotrexate. The Company continues to experience competition on
sales of Methotrexate, and it is impossible to predict whether
future price erosion will occur. If it were to occur, this could
have an adverse effect on the Company's gross margins and gross
profits.
<PAGE>
Due to the nature of the generic pharmaceutical industry, as the
product line matures and competition from other manufacturers
intensifies, selling prices and the related margins on those
products typically decline. The Company's future operating
results are dependent on several factors including its ability to
introduce new products to its product line, customer purchasing
practices and changes in the amount of competition affecting the
Company's products. In addition, the ability to receive
sufficient quantities of raw materials to maintain its production
is critical. While the Company has not experienced any
interruption in sales due to the lack of raw materials, the
Company is in the process of developing alternate raw material
suppliers for its key products in the event raw material
shortages were to occur.
Selling, general and administrative expenses increased to $21,695
from $19,014, yet remained consistent as a percentage of net
sales, as was expected, due to the increase in net sales. The
increase reflects increases in personnel costs; additional
advertising and promotion costs associated with the introduction
of Megestrol Acetate in late November 1995; and a full-year of
depreciation from the December 1994 implementation of a new core
computer system. Fiscal 1996 also included approximately $700 in
non-recurring charges in connection with a voluntary early
retirement program and a legal settlement. During fiscal 1996,
Barr entered into multi-year agreements with another company and
a related party to share in development and litigation costs
associated with certain of its patent challenges. These
agreements resulted in the reimbursement of $1,977 in legal fees.
Research and development expenses increased to $11,274 from
$10,443. This resulted from higher outside testing and raw
material costs associated with an increase in the number of
products under development when compared to the prior year as
well as increases in salaries and related costs associated with
the addition of scientists. These increases were partially
offset by a decrease in fees paid to outside laboratories to
conduct biostudies. Such a decrease was expected since the prior
year's amounts included biostudy costs for conjugated estrogens.
The number, complexity and associated costs of biostudies for
conjugated estrogens are greater than those for other products
currently under development.
Interest income increased 48% to $2,778 from $1,874, due to $485
in interest income received in February 1996 in connection with
an income tax refund from the Internal Revenue Service as well as
an increase in the rate of return earned on cash and cash
equivalents during the year.
Interest expense declined 30% primarily due to a reduction in
long-term debt during the year and an increase in capitalized
interest associated with an increase in capital improvements in
comparison to the prior year. These decreases were partially
offset by an increase in interest expense in connection with the
Company's December 1995 agreement with the Innovator of Tamoxifen
to pay monthly interest on the unsecured Tamoxifen payable
balance in return for the elimination of the cash collateral
requirement.
In fiscal 1996 and 1995, the Company incurred extraordinary
losses on the early extinguishment of debt. In 1996, the Company
negotiated the prepayment of $2 million in principal of its $20
million 10.15% Senior Secured Notes. The Company recorded an
extraordinary loss for the related prepayment penalty and write-
off of deferred financing costs. In 1995, the Company incurred
an extraordinary loss primarily from the write-off of deferred
financing costs associated with its $10 million 10.05%
Convertible Subordinated Notes which were converted to common
stock.
<PAGE>
Results of Operations
Fiscal 1995 to Fiscal 1994 (thousands of dollars)
Net sales increased approximately 83% to $199,720 from $109,133.
This increase was primarily attributable to continued increase in
demand for Tamoxifen, the breast cancer treatment manufactured by
the Innovator and distributed by the Company.
During the fiscal year ended June 30, 1995, sales of Tamoxifen
accounted for approximately $143,000 or 72% of net sales compared
to approximately $53,000 or 49% of net sales in fiscal 1994. The
growth in Tamoxifen sales was primarily attributable to increases
in the Company's market share. Additionally, fiscal 1995 sales
reflected the inclusion of a full year of Tamoxifen revenues as
compared to 8 months of sales in 1994 as the Company began
distributing Tamoxifen in November 1993.
Net sales of Barr-manufactured products increased by
approximately 1%. An overall increase of 16% in shipments of
Barr-manufactured products helped to offset significant sales
discounts and allowances, particularly reduced prices on certain
products. Methotrexate accounted for approximately 14% of the
Company's net sales in 1995 as compared to 25% in 1994. No other
product accounted for more than 10% of net sales in either year.
Gross profit increased to $40,222 from $31,112 due to increased
sales volume. However, gross margin as a percentage of net sales
decreased to 20% from 29%. This decrease was primarily
attributable to the lower gross margins earned from the
distribution of Tamoxifen compared to margins earned on
manufactured products, price competition on certain of the
Company's manufactured products and, to a lesser extent, higher
manufacturing overhead costs.
Selling, general and administrative expenses decreased slightly
to $19,014 from $19,170 and declined as a percentage of net sales
to 9.5% from 17.6%. This percentage decrease was largely
attributed to the overall growth in the Company's sales exceeding
the rate of growth in operating expenses. The net decrease in
fiscal 1995 occurred despite increases in personnel costs and
costs resulting from the implementation of a new core computer
system. These increases were offset primarily by decreases in
legal expenses, reductions in sales commissions as a result of
the re-negotiation of an outside sales representative's contract
in the third quarter of fiscal 1994, and reductions in the
Company's provision for bad debts.
Research and development expenses increased 54% to $10,443 from
$6,778. This increase reflected the Company's renewed commitment
to its research and development efforts. Increased spending with
outside laboratories to conduct biostudies of products such as
conjugated estrogens as well as increased personnel costs were
the main areas of increased spending.
Interest income increased to $1,874 from $689 due to an increase
in the average short-term investment balance as well as an
increase in the rate of return earned on those investments.
Effective July 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes." The cumulative effect of this accounting change, a one-
time gain of $374 or $0.03 per share, was recorded during fiscal
1994.
<PAGE>
Liquidity and Capital Resources
The Company had cash and cash equivalents of $44,893 at June 30,
1996, a decrease from $52,987 at June 30, 1995. However, the
Company's non-escrow cash increased $12,125 to $23,969 from June
30, 1995, as the cash held in a cash collateral account to secure
credit extended to the Company by the Innovator of Tamoxifen
decreased to $20,924 from $41,143 at June 30, 1995. The decrease
in the cash collateral account is a result of an Alternative
Collateral Agreement ("Collateral Agreement") entered into in
December 1995 between the Company and the Innovator of Tamoxifen
(see Note 1). The amount in the cash collateral account at June
30, 1996 represents the portion of its payable which the Company
has decided to secure in connection with its cash management
policy.
Cash provided from operating activities was $5,368 for the year
ended June 30, 1996, which included net earnings of $7,016.
Accounts receivable increased primarily as a result of higher
sales volume. Increases in inventory were primarily due to
increased purchases of Tamoxifen and raw materials for Barr-
manufactured products in anticipation of new product launches.
Accounts payable increased primarily as a result of new
construction and equipment purchases.
During fiscal 1996, the Company invested $16,048 in capital
assets including the purchase of a new manufacturing facility in
Forest, Virginia, the expansion of the Company's existing
manufacturing facilities, and the purchase of new machinery and
equipment. In fiscal 1997, the Company estimates that it will
invest an additional $24 million in construction and new
equipment for its New York and Virginia facilities. Management
believes that purchasing the Virginia facility will be
significantly more cost-effective than constructing a new
facility.
In February 1996, the Company's Board of Directors declared a 3-
for-2 stock split effected in the form of a 50% stock dividend.
Approximately 4.7 million additional shares of common stock were
distributed.
In April 1996, the Company signed a Loan and Security Agreement
("Equipment Agreement") with BankAmerica Leasing and Capital
Group which will provide the Company up to $18,750 in financing
for equipment purchased over the 12 months ending April 1996. As
of June 30, 1996, the Company has utilized $3,153 of this
facility for the acquisition of certain of its machinery and
equipment. In July 1996, the Company obtained for future use a
3-year, $10 million revolving credit facility ("Revolver") with
BankAmerica Illinois which provides Barr with additional
borrowing power and flexibility to capitalize on strategic
opportunities as they develop. Any borrowings under the Revolver
will be secured by certain accounts receivable and inventory.
The Company has not yet drawn upon the Revolver. The Company
will be required to meet certain financial covenants under both
arrangements. Management believes that existing capital
resources will be adequate to meet its needs for the foreseeable
future.
Environmental Matters
The Company has obligations for environmental safety and clean-up
under various state, local and federal laws, including the
Comprehensive Environmental Response, Compensation and Liability
Act, commonly known as Superfund. Based on information currently
available, environmental expenditures have not had, and are not
anticipated to have, any material effect on the Company's
consolidated financial statements.
Effects of Inflation
Inflation has had only a minimal impact on the operations of the
Company in recent years.
<PAGE>
<TABLE>
BARR LABORATORIES, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 1996 and 1995 (in thousands of dollars, except share amounts)
<CAPTION>
1996 1995
<S> ASSETS <C> <C>
Current assets:
Cash and cash equivalents $44,893 $ 52,987
Accounts receivable (including
receivables from related parties of
$886 in 1996 and $925 in 1995) less 32,065 27,307
allowances
of $1,799 and $2,100 in 1996 and
1995, respectively
Inventories 42,396 35,890
Deferred income taxes 2,771 3,601
Prepaid expenses 648 678
Total current assets 122,773 120,463
Property, plant and equipment, net 45,739 34,799
Other assets 708 691
Total assets $169,220 $155,953
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable (including
payables to a related $ 58,537 $ 55,355
party of $250 in 1995)
Accrued liabilities 6,332 5,452
Current portion of long-term debt 3,815 43
Income taxes payable 1,104 1,249
Total current liabilities 69,788 62,099
Long-term debt 17,709 20,371
Other liabilities 238 253
Deferred income taxes 1,324 1,377
Commitments & contingencies
Contingencies (note 6)
Shareholders' equity:
Shareholders' Equity:
Cumulative convertible preferred
stock, Series A, $1 par value
per share; authorized 2,000,000
shares: none issued Common stock,
$.01 par value per share;
authorized 30,000,000 shares; issued
14,115,664 and 9,334,852 in 1996 and
1995, respectively 141 93
Additional paid-in capital 43,526 42,230
Retained earnings 36,507 29,543
80,174 71,866
Treasury stock at cost; 78,637 and
52,425 shares in 1996 and 1995,
respectively (13) (13)
Total shareholders' equity 80,161 71,853
Total liabilities and shareholders' $169,220 $155,953
equity
See accompanying notes to the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
BARR LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994
(thousands of dollars, except share amounts)
(unaudited)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Net sales (including sales to related
parties of $4,296, $2,585, and $1,850
in 1996, 1995 and 1994, respectively) $ 232,224 $ 199,720 $ 109,133
Cost of sales 189,394 159,498 78,021
Gross profit 42,830 40,222 31,112
Costs and expenses:
Selling, general and administrative 21,695 19,014 19,170
Research and development 11,274 10,443 6,778
Earnings from operations 9,861 10,765 5,164
Interest income 2,778 1,874 689
Interest expense (1,767) (2,535) (2,683)
Other income 637 118 575
Earnings before income taxes, extrordinary
loss and cumulative effect of accounting 11,509 10,222 3,745
change
Income tax expense 4,368 3,852 1,461
Earnings before extraordinary loss and
cumulative effect of accounting change 7,141 6,370 2,284
Extraordinary loss on early extinguishment
of debt,net of taxes (125) (145) -
Earnings before cumulative effect of 7,016 6,225 2,284
accounting change
Cumulative effect of accounting change - - 374
Net earnings $ 7,016 $ 6,225 $ 2,658
PER COMMON SHARE:
Earnings before extraordinary loss and
cumulative effect of accounting change $ 0.49 $ 0.47 $ 0.17
Extraordinary loss on early extinguishment
of debt, net of taxes (0.01) (0.01) -
Earnings before cumulative effect of
accounting change 0.48 0.46 0.17
Cumulative effect of accounting change - - 0.03
Net earnings per common and common
equivalent shares $ 0.48 $ 0.46 $ 0.20
Net earnings per common share assuming
full dilution 0.48 0.46 0.20
Weighted average number of common shares 14,504,948 13,417,038 13,331,879
Weighted average number of shares assuming
full dilution 14,760,064 13,417,038 13,363,401
See accompanying notes to the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
BARR LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994 (in
thousands of dollars, except share amounts)
<CAPTION>
Common Additional Common Stock Total
Stock Paid-in Retained in Treasury Shareholders'
Shares Amount capital Earnings Shares Amount Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1993 8,690,237 $ 87 $30,764 $20,660 52,425 $(13) $51,498
Net earnings 2,658 2,658
Issuance of common
stock for exercised
stock options and
employees'stock
purchase plans 93,500 1 827 828
Balance, June 30, 1994 8,783,737 88 31,591 23,318 52,425 (13) 54,984
Net earnings 6,225 6,225
Issuance of common
stock for exercised
stock options and
employees'stock
purchase plans 40,757 661 661
Issuance of common
stock upon conversion
of convertible
subordinated notes 510,358 5 9,978 9,983
Balance, June 30, 1995 9,334,852 93 42,230 29,543 52,425 (13) 71,853
Net earnings 7,016 7,016
Issuance of common
stock for exercised
stock options and
employees'stock
purchase plans 80,757 1 1,310 1,311
Stock split
(3 for 2) 4,700,055 47 (14) (52) 26,212 (19)
Balance, June 30, 1996 14,115,664 $141 $43,526 $36,507 78,637 $(13) $80,161
See accompanying notes to the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
BARR LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended June 30, 1996, 1995
and 1994
(thousands of dollars, except share
information)
<CAPTION>
<S> <C> 1996 <C> 1995 <C> 1994
CASH FLOWS FROM (USED IN) OPERATING
ACTIVITIES:
Net earnings $ 7,016 $ 6,225 $ 2,658
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities:
Depreciation and amortization 4,920 4,429 3,613
Deferred income tax (benefit) expense 777 (407) 523
Cumulative effect of accounting change - - (374)
Write-off of deferred financing fees
associated with early extinguishment
of debt 31 188 -
(Gain) loss on disposal of equipment 63 (113) 24
Gain on disposal of investment property - - (548)
Write-off of discontinued capital projects - - 53
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (4,758) (5,674) (13,049)
Inventories (6,506) (6,540) (7,050)
Prepaid expenses 30 (35) (329)
Other assets (107) 198 (55)
Increase (decrease) in:
Accounts payable and accrued liabilities 4,047 23,303 28,584
Income taxes payable (145) 320 534
Net cash provided by operating activities 5,368 21,894 14,584
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Purchases of property, plant and equipment (16,048) (6,328) (4,752)
Proceeds from sale of investment property - - 900
Proceeds from sale of property, plant and equipment 184 340 36
Net cash used in investing activities (15,864) (5,988) (3,816)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Principal payments on long-term debt (2,043) (62) (145)
Proceeds from loans 3,153 - -
Fees associated with stock split (19) - -
Fees associated with conversion of debt to equity - (17) -
Proceeds from exercise of stock options
and employee stock purchases 1,311 661 828
Net cash provided by financing activities 2,402 582 683
(Decrease)/Increase in cash and cash equivalents (8,094) 16,488 11,451
Cash and cash equivalents, beginning of year 52,987 36,499 25,048
Cash and cash equivalents, end of year $ 44,893 $ 52,987 $ 36,499
Supplemental cash flow data-Cash paid during the year:
Interest, net of portion capitalized $ 1,727 $ 2,541 $ 3,072
Income taxes 3,930 3,766 705
Supplemental disclosure of non-cash financing activity:
Issuance of 765,537 shares of common stock upon conversion
of $10,000 Convertible Subordinated Notes $ 10,000
See accompanying notes to the consolidated financial statements.
</TABLE>
<PAGE>
BARR LABORATORIES, INC.
Notes to the Consolidated Financial Statements
(in thousands of dollars, except share amounts)
(1) Summary of Significant Accounting Policies
(a) Principles of Consolidation and Other Matters
The consolidated financial statements include the
accounts of Barr Laboratories, Inc. (the "Company") and
its wholly-owned subsidiaries. All significant
intercompany balances and transactions have been
eliminated in consolidation.
Sherman Delaware, Inc., and affiliated companies
controlled 64.9% of the common stock of the Company at
June 30, 1996. Dr. Bernard C. Sherman is a principal
stockholder of Sherman Delaware, Inc. and a Director of
Barr Laboratories, Inc.
(b) Credit and Market Risk
The Company operates in one industry segment; it
manufactures, markets and distributes a wide range of
generic pharmaceutical products. The Company also
distributes a patented breast cancer agent, Tamoxifen
Citrate, under an agreement with the Innovator. The
Company's current manufacturing plants are located in
New Jersey and New York and its products are sold
throughout the United States primarily to wholesale and
retail distributors. In addition, the Company
manufactures and sells many products to other companies
that resell these pharmaceuticals under their own
(private) label. In fiscal 1996 and 1994 McKesson Drug
Company accounted for approximately 10% and 11% of net
sales, respectively. In fiscal 1995, approximately 10%
of net sales were generated by sales to Cardinal
Health, Inc. No other customer accounted for greater
than 10% of sales in any of the last three fiscal
years. The Company performs ongoing credit evaluations
of its customers' financial condition and generally
requires no collateral from its customers.
(c) Inventories
Inventories are stated at the lower of cost, determined
on a first-in, first-out (FIFO) basis, or market.
(d) Property, Plant and Equipment
Property, Plant and Equipment is recorded at cost.
Depreciation is provided for on a straight-line basis
over the estimated useful lives of the related assets.
Leasehold improvements are amortized on a straight-line
basis over the shorter of their useful lives or the
terms of the respective leases.
<PAGE>
The estimated useful lives of the major classification
of depreciable assets are:
Years
Buildings 45
Building Improvements 10
Machinery and Equipment 3-10
Leasehold Improvements 3-10
Automobiles and Trucks 3-5
Maintenance and repairs are charged to operations as
incurred; renewals and betterments are capitalized.
(e) Income Taxes
Income taxes are accounted for under Statement of
Financial Accounting Standards No. 109, Accounting for
Income Taxes ("SFAS No. 109"). Under SFAS No. 109,
deferred tax assets and liabilities are recognized for
the differences between the financial statement
carrying amounts of existing assets and liabilities and
their respective tax bases.
(f) Research and Development
Research and development costs, which consist
principally of product development costs, are charged
to operations as incurred.
(g) Earnings Per Share
Earnings per common share in 1996 and 1994 was computed
using the weighted average number of common and
dilutive common equivalent shares outstanding during
the year. In 1994, the inclusion of other potentially
dilutive securities was anti-dilutive. Earnings per
common share in 1995 was computed by dividing earnings
by the weighted average number of shares outstanding
during the period. In 1995, the effects of stock
options outstanding resulted in less than 3% dilution.
On February 21, 1996, the Company's Board of Directors
declared a 3-for-2 stock split effected in the form of
a 50% stock dividend. Approximately 4.7 million
additional shares of common stock were distributed on
March 25, 1996 to shareholders of record as of March 4,
1996. All prior year share and per share amounts have
been adjusted for the stock split.
(h) Cash and Cash Equivalents
Cash equivalents consist of short-term, highly liquid
investments (primarily market auction securities with
interest rates that are re-set in intervals of 7 to 71
days) which are readily convertible into cash at par
value (cost). As of June 30, 1996 and 1995, $20,924
and $41,143, respectively, of the Company's cash was
held in a cash collateral account to secure extension
of credit to it by the Innovator
<PAGE>
of Tamoxifen Citrate
in accordance with the Distribution and Supply
Agreement between the Company and the Innovator.
In December 1995, the Company and the Innovator of
Tamoxifen entered into an Alternative Collateral
Agreement ("Collateral Agreement") which suspends
certain sections of the Supply and Distribution
Agreement ("Distribution Agreement") entered by both
parties in March, 1993. Under the Collateral
Agreement, extensions of credit to the Company will no
longer need to be secured by a letter of credit or cash
collateral. However, the Company may at its discretion
maintain a balance in the escrow account based on its
short-term cash requirements. All remaining terms of
the Distribution Agreement remain in place. In return
for the elimination of the cash collateral requirement
and in lieu of issuing letters of credit, the Company
has agreed to pay the Innovator monthly interest based
on the average monthly Tamoxifen payable balance, as
defined in the agreement, and maintain compliance with
certain financial covenants. The Company was in
compliance with such covenants at June 30, 1996.
(i) Deferred Financing Fees
All costs associated with the issuance of debt are
being amortized on a straight-line basis over the life
of the related debt. The unamortized amounts of $533
and $369 at June 30, 1996 and 1995, respectively, are
included in Other assets in the Consolidated Balance
Sheets.
In connection with the early extinguishment of $2,000
of the 10.15% Senior Secured Notes and the 10.05%
convertible subordinated notes, the Company wrote off
$31 and $188 in deferred financing fees in 1996 and
1995, respectively. See Note (4) Long-Term Debt.
(j) Fair Value of Financial Instruments
Cash, Accounts Receivable and Accounts Payable - The
carrying amounts of these items are a reasonable
estimate of their fair value.
Long-Term Debt - The fair value of debt at June 30,
1996 and 1995 is estimated at $23 million and $22
million, respectively. Estimates were determined by
discounting the future cash flows using rates currently
available to the Company.
The fair value estimates presented herein are based on
pertinent information available to management as of
June 30, 1996. Although management is not aware of any
factors that would significantly affect the estimated
fair value amounts, such amounts have not been
comprehensively revalued for purposes of these
financial statements since that date, and current
estimates of fair value may differ significantly from
the amounts presented herein.
<PAGE>
(k) Use of Estimates in the Preparation of Financial
Statements
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and use assumptions that
affect certain reported amounts and disclosures; actual
results may differ.
(l) Revenue Recognition
The Company recognizes revenue when goods are shipped.
(m) Reclassifications
Certain amounts in prior year financial statements
have been reclassified to conform with the current year
presentation.
2) Inventories
A summary of inventories is as follows:
June 30,
---------------------
1996 1995
Raw Materials and
Supplies $19,648 $17,470
Work-in-Process 4,920 4,520
Finished Goods 17,828 13,900
------- -------
$42,396 $35,890
======= =======
Tamoxifen Citrate, purchased as a finished product,
accounted for $12,590 and $9,966 of finished goods inventory
as of June 30, 1996 and 1995, respectively.
(3) Property, Plant and Equipment
A summary of property, plant and equipment is as follows:
June 30,
------------------------
1996 1995
Land $ 2,338 $ 1,814
Buildings and
Improvements 21,639 19,109
Machinery and
Equipment 36,528 35,243
Leasehold
Improvements 1,659 1,659
Automobiles and
Trucks 68 81
Construction in
Progress 13,396 2,460
------ ------
75,628 60,366
Less: Accumulated
Depreciation &
Amortization 29,889 25,567
------- -------
$45,739 $34,799
======= =======
<PAGE>
For the years ended June 30, 1996, 1995 and 1994, $526,
$176, and $388 of interest was capitalized, respectively.
(4) Long-Term Debt
A summary of long-term debt is as follows:
June 30,
-----------------
1996 1995
New Jersey Economic
Development
Authority Bond (a) $ 371 $ 414
10.15% Senior Secured Notes
Due June
28, 2001 (b) 18,000 20,000
Equipment Financing (c) 3,153 -
------ ------
21,524 20,414
Less: Current Installments of
Long-Term Debt 3,815 43
------- -------
Total Long-Term Debt $17,709 $20,371
======= =======
(a) The New Jersey Economic Development Authority Bond is
payable to a bank. Such loan is secured by a first
mortgage on land, building and improvements on the
facility located at 265 Livingston Street. Interest is
charged at 75% of the bank's prime rate. The prime
rate was 8.25% and 9% at June 30, 1996 and 1995,
respectively. Monthly installments are $3.6 plus
interest, through December 1999. Upon maturity in
January 2000, there will be a final installment equal
to the then remaining principal balance of $220.
(b) In June 1991, the Company entered into a note purchase
agreement and issued
$20,000 of senior secured notes bearing interest at a
rate of 10.15%, payable semiannually. In March 1996,
the Company negotiated the prepayment of $2,000 of
these Notes. The cash payment of $2,213 included a
prepayment penalty of $169 and accrued interest through
March 15, 1996 of $44. The prepayment penalty of $169
and the related write-off of approximately $31 in
previously deferred financing costs resulted in an
extraordinary loss, which net of taxes of $76, was $125
or $0.01 per share. Principal payments of $3,600 per
year are due beginning in June 1997 through the
maturity date of June 28, 2001. These notes are
collateralized by a first mortgage on the Pomona, New
York facility and all machinery and equipment other
than machinery and equipment in the Forest, Virginia
facility.
The senior notes contain certain financial covenants
including restrictions on dividend payments not to
exceed $5 million plus 50% of net earnings subsequent
to July 1, 1991. The Company was in compliance with
all such covenants as of June 30, 1996.
The note purchase agreement permits the Company to
repay these notes prior to their scheduled maturity.
However, this would require a substantial prepayment
fee which is calculated based on current market rates
and the note rate. Based on current market rates
available to the Company, refinancing such notes
currently is considered prohibitive.
<PAGE>
(c) In April 1996, the Company signed a Loan and Security
Agreement with
BankAmerica Leasing and Capital Group which will
provide the Company up to $18,750 in financing for
equipment to be purchased over the 12 months ending
April 1997. Notes entered into under this agreement
require no principal payment for the first two
quarters; bear interest quarterly at a rate equal to
the London Interbank Offer Rate (LIBOR) plus 125 basis
points; and have a term of 72 months. LIBOR was 5.625
at June 30, 1996. The Agreement contains certain
financial covenants with which the Company was in
compliance as of June 30, 1996.
In June 1991, the Company entered into a note purchase
agreement and issued $10,000 of convertible
subordinated notes bearing interest at the rate of
10.05%, payable semiannually. In February 1995, these
notes were converted into 765,537 shares of common
stock, as adjusted for the 3-for-2 stock split in March
1996, and the Company incurred an extraordinary loss
resulting primarily from the write-off of deferred
financing costs. This extraordinary loss from early
extinguishment of debt, net of taxes of $92, was $145
or $0.01 per share for the year ended June 30, 1995.
Principal maturities of existing long-term debt for the next
five years and thereafter are as follows:
Year Ending
June 30,
1997 $3,815
1998 3,987
1999 3,987
2000 4,185
2001 3,944
Thereafter 1,606
(5) Related-Party Transactions
The Company's related party transactions were with
affiliated companies of Dr. Bernard C. Sherman. During the
years ended June 30, 1996, 1995, and 1994, the Company
purchased $1,800, $435, and $124, respectively, of bulk
pharmaceutical material from such companies. During fiscal
1996, the Company also entered a multi-year agreement with a
Company controlled by Dr. Sherman to share litigation costs
in connection with one of its patent challenges. For the
year ended June 30, 1996, the Company received $570 in
connection with such agreement which was recorded as a
reduction to selling, general and administrative expenses.
In June 1992, a shareholder action was filed against the
Company and Edwin A. Cohen, then President of the Company,
and Louis J. Guerci, who was a Vice President of the
Company. In November 1994, the Company agreed to settle
this matter. Management strongly believed that the case was
without merit, but determined that it was in the
<PAGE>
Company's
best interest to settle rather than participate in continued
litigation. In December 1994, the court approved the
settlement. As of June 30, 1996, the final payment amount
(on the "claims made basis") has not been determined or
paid. In connection with this action, the Company has
separately agreed to indemnify Mr. Guerci in connection
therewith. As of June 30, 1996, the Company has made
advances of approximately $288 and $35 in legal fees and
expenses to legal counsel on behalf of Mr. Guerci and Mr.
Cohen, respectively.
During the years ended June 30, 1996, 1995 and 1994, Mr.
Cohen earned $213, $250 and $83, respectively, under a
consulting agreement.
(6) Income Taxes
Effective July 1, 1993, the Company adopted SFAS 109. The
cumulative effect of this accounting change was a one-time
gain of $374 or $0.03 per share which is reported separately
in the Consolidated Statement of Operations for fiscal 1994.
A summary of the components of income tax expense is as
follows:
Year Ended June 30,
1996 1995 1994
Federal:
Current $3,110 $3,680 $ 821
Deferred 617 (242) 412
_____ _____ _____
3,727 3,438 1,233
State:
Current 405 487 117
Deferred 160 (165) 111
565 322 228
------ ------ ------
$4,292 $3,760 $1,461
====== ====== ======
Income tax expense for the years ended June 30, 1996 and
1995 is included in the financial statements as follows:
1996 1995
Continuing operations $ 4,368 $ 3,852
Extraordinary loss on early
extinguishment of debt (76) (92)
------- -------
$ 4,292 $ 3,760
======= =======
<PAGE>
The provision for income taxes differs from amounts computed
by applying the statutory federal income tax rate to income
before taxes due to the following:
Year Ended June 30
1996 1995 1994
Federal Income Taxes at Statutory
Rate $ 3,958 $ 3,475 $ 1,274
State Income Taxes, Net
of Federal Income Tax Effect 360 212 151
Other, Net (26) 73 36
------- ------- -------
$ 4,292 $ 3,760 $ 1,461
======= ======== =======
The temporary differences that give rise to deferred tax
assets and liabilities as of June 30, 1996 and 1995 are as
follows:
Deferred Tax Assets 1996 1995
Receivable Reserves $ 776 $ 1,036
Inventory Reserves 187 848
Inventory Capitalization 552 593
Other Operating Reserves 1,256 1,124
----- -----
2,771 3,601
Deferred Tax Liability:
Plant and Equipment (1,324) (1,377)
------- --------
Net Deferred Tax Asset $ 1,447 $ 2,224
======= =======
(7) Shareholders' Equity
Preferred Stock
The cumulative convertible preferred stock, Series A has
voting rights equal to the number of shares of common stock
of the Company into which each share may be converted (with
a conversion basis of one share of common stock for each
share of preferred stock). As of June 30, 1996, none have
been issued.
Employee Stock Option Plans
The Company has stock option plans, which were approved by
the shareholders and which authorize the granting of options
to officers and certain key employees to purchase the
Company's common stock at a price equal to the market price
on the date of grant.
During fiscal 1994, the shareholders ratified the adoption
by the Board of Directors of the 1993 Stock Incentive Plan
("the 1993 Option Plan") in order to ensure, among other
things, that the Company would continue to have an adequate
number of shares of common stock available for grants of
incentive and unqualified stock options.
<PAGE>
The Company's other option plan was approved by the
shareholders in 1986 ("the 1986 Option Plan"). As of June
30, 1996, options will no longer be granted under this Plan.
All options granted to date under the 1993 Option Plan and
1986 Option Plan are exercisable between one and two years
from the date of grant and expire ten years after the date
of grant except in cases of death or termination of
employment as defined in each Plan. Also, to date, no
option has been granted under either the 1993 Option Plan or
the 1986 Option Plan at a price below the current market
price of the Company's common stock on the date of grant.
A summary of the activity resulting from all plans, adjusted
for the 3-for-2 stock split, is as follows:
No. of Option
Shares Price
Outstanding at 6/30/93 779,700 $2.91-11.66
Granted 112,875 11.33-13.50
Canceled (49,944) 6.00-11.50
Exercised (140,250) 2.91-11.50
--------
Outstanding at 6/30/94 702,381 2.91-13.50
Granted 288,750 14.46-16.87
Canceled (14,260) 6.00-14.46
Exercised (27,000) 2.91-11.50
-------
Outstanding at 6/30/95 949,871 2.91-16.87
Granted 382,494 15.79-15.96
Canceled (33,375) 4.25-15.79
Exercised (73,625) 3.66-16.25
---------
Outstanding at 6/30/96 1,225,365 2.91-16.87
=========
Exercised to date through 455,000
6/30/96
Expired under 1986 Plan 42,748
Available for Grant 301,887
(2,025,000 authorized)
Exercisable at 6/30/96 616,373 2.91-16.87
<PAGE>
Non-Employee Directors' Stock Option Plan
During fiscal year 1994, the shareholders ratified the
adoption by the Board of Directors of the 1993 Stock Option
Plan for Non-Employee Directors (the "Directors' Plan"). An
aggregate of 225,000 shares of common stock were available
under the Directors' Plan. This formula plan, among other
things, enhances the Company's ability to attract and retain
experienced directors. Each eligible non-employee director
on any grant date is optioned 4,500 shares except in the
case of the first grant date (which was the date of the 1993
Annual Meeting) where each eligible director was optioned
18,000 shares. Effective December 1995, the number of
shares which each non-employee director will be optioned was
increased from 4,500 to 7,500 on grant date.
All options granted under the Directors' Plan have ten-year
terms and are exercisable at an option exercise price equal
to the market price of common stock on the date of grant.
Each option is exercisable on the date of the first annual
shareholders' meeting immediately following the date of
grant of the option, provided there has been no interruption
of the optionee's service on the Board before that date.
The following is a summary of activity, adjusted for the
stock split, for the three fiscal years ended June 30, 1996:
No. of Option Price
Shares
Outstanding at
6/30/93 0
Granted 72,000 $13.75
Outstanding at
6/30/94 72,000 13.75
Granted 27,000 17.08
------
Outstanding at
6/30/95 99,000 13.75-17.08
Granted 45,000 15.50
-------
Outstanding at
6/30/96 144,000 13.75-17.08
=======
Available for Grant
(225,000
authorized) 81,000
======
Exercisable at
6/30/96 99,000 13.75-17.08
======
Employee Stock Purchase Plan
During fiscal 1994, the shareholders ratified the adoption
by the Board of Directors of the 1993 Employee Stock
Purchase Plan (the "Purchase Plan") to offer employees an
inducement to acquire an ownership interest in the Company.
The Purchase Plan permits
<PAGE>
eligible employees to purchase,
through regular payroll deductions, an aggregate of 300,000
shares of common stock at approximately 85% of the fair
market value of such shares. During fiscal 1995, the
initial year of the plan, 34,135 shares were purchased under
the plan. In fiscal 1996, an additional 39,985 shares were
purchased under the plan.
(8) Savings and Retirement Plan
The Company has a savings and retirement plan (the "401(k)
Plan") which is intended to qualify under Section 401(k) of
the Internal Revenue Code. Employees are eligible to
participate in the 401(k) Plan in the first month following
the month of hire. Prior to June 30, 1995, under the terms
of the 401(k) Plan, participating employees could contribute
up to a maximum of 15% of their earnings (9% of their
earnings before taxes and up to 6% of after-tax earnings).
Beginning July 1, 1995, participating employees may
contribute up to a maximum of 12% of their earnings before
or after taxes. The Company is required, pursuant to the
terms of its union contract, to contribute to each union
employee's account an amount equal to the 2% minimum
contribution made by such employee. The Company may, at its
discretion, contribute a percentage of the amount
contributed by an employee to the 401(k) Plan up to a
maximum of 10% of such employee's compensation. Participants
are always fully vested with respect to their own salary and
cash contributions and any profits arising therefrom.
Participants become vested with respect to 20% of the
Company's contributions to their accounts and any profits
arising therefrom for each full year of employment with the
Company and thus become fully vested after five full years
of employment.
The Company's contributions to the 401(k) Plan were $1,488,
$1,173, and $945, for the years ended June 30, 1996, 1995,
and 1994 respectively.
In January 1994, after an extensive review of certain
administrative aspects of the 401(k) Plan, the Company
submitted an application to the Internal Revenue Service
(IRS) under the Voluntary Compliance Review (VCR) program.
On September 14, 1995, the Company received a Compliance
Statement from the IRS indicating that the IRS would not
pursue the sanction of plan disqualification provided that
the Company's proposed corrective actions, which were
included in the VCR application, were completed by December
13, 1995. The Company completed the corrective actions
within the required time-frame.
(9) Other Income
A summary of other income is as follows:
Year Ended June 30,
1996 1995 1994
Net Gain (Loss) on Sale of
Property(a) $(63) $113 $524
Joint Venture Litigation(b) 694 - -
Other 6 5 51
---- ---- ----
Other Income $637 $118 $575
<PAGE>
(a) The Company sold unused manufacturing equipment in 1995
and undeveloped investment property in 1994 and
recognized gains of $113 and $548, respectively, from
such sales.
(b) In May 1996, the Company and an affiliated company
reached an agreement with a former partner in a
proposed joint venture and received on June 10, 1996,
$694 of a $1,000 deposit which was paid in escrow in
furtherance of the possible joint venture. The Company
had previously written off the $1,000 investment in the
fourth quarter of fiscal 1992.
(10) Commitments and Contingencies
The Company is party to various operating leases which
relate to the rental of office and plant facilities and of
equipment. The Company is satisfied with its ability to
extend such leases, if necessary. Rent expense charged to
operations was $1,126, $1,217 and $1,007 in 1996, 1995 and
1994, respectively. Future minimum rental payments,
exclusive of taxes, insurance and other costs under
noncancellable long-term operating lease commitments, are as
follows:
Minimum
Year Rental
Ending Payments
June 30,
1997 $ 1,049
1998 1,087
1999 745
2000 147
2001 49
Thereafter -
Product Liability
The Company maintains product liability insurance coverage
in the amount of $10,000. No significant product liability
suit has ever been filed against the Company, however, if
one were filed and such a case were successful against the
Company, it could have a material adverse effect upon the
business and financial condition of the Company to the
extent such judgment was not covered by insurance or
exceeded the policy limits.
Shareholder Action
On November 16, 1994, the Company agreed to settle a 1992
shareholder action, filed against the Company and two former
officers, which alleged the violation of certain SEC
regulations. In December 1994, the Court approved the
settlement.
Management strongly believed that the case was without
merit, but determined that it was in the Company's best
interest to settle rather than participate in continued
litigation. The total settlement, valued at approximately
$1.8 million, will be shared equally by the Company and its
insurers. A provision for the Company's estimated share of
the cost of the action had been previously included in
the Company's 1994 consolidated financial statements, and
therefore the final payment is not expected to have any
significant
<PAGE>
adverse effect on the Company's future
operations. As of June 30, 1996, the final payment amount
(on the "claims made basis") has not been determined or
paid.
Internal Revenue Service ("IRS")
In December 1995, the Company received a letter from the IRS
disallowing approximately $750 in research and development
tax credits, originating from the fiscal years ended June
30, 1989 through June 30, 1992, on the grounds that research
and development tax credits taken in developing generic
drugs for approval under the ANDA procedure are excluded
from the definition of the term "qualified research" by the
duplication exclusion contained in section 41(d)(4)(C) of
the IRS Code. The Company intends to vigorously defend its
position and has filed a written protest requesting a
conference with the Office of the Regional Director of
Appeals to review the case. If the Company does not reach
an agreement with the appeals office, the Company will
petition the tax court. The ultimate disposition of this
matter is not expected to have a significant adverse effect
on the Company's consolidated financial statements.
Other Litigation
As of June 1996, the Company was involved with other
lawsuits incidental to its business, including patent
infringement actions. Management of the Company, based on
the advice of legal counsel, believes that the ultimate
disposition of such other lawsuits will not have any
significant adverse effect on the Company's consolidated
financial statements.
(11) Subsequent Event
On July 31, 1996, the Company obtained for future use a 3-
year, $10 million revolving credit facility with BankAmerica
Illinois which the Company has yet to draw down. Any
borrowings under the revolving credit facility will be
secured by accounts receivable and inventory. The Company
will be required to meet certain financial covenants under
this facility.
<PAGE>
<TABLE>
(12) Quarterly Data (Unaudited)
A summary of the quarterly results of operations is as
follows:
<CAPTION>
(in thousands of dollars,
except per share amounts)
Three-Month Period Ended
Sept. 30 Dec. 31 Mar. 31 June 30
<S> <C> <C> <C> <C>
Fiscal Year 1996:
Net sales $54,176 $57,465 $60,088 $60,495
Gross profit 10,717 10,924 10,683 10,507
Earnings before
extraordinary loss on
early extinguishment of
debt 2,201 1,989 1,269 1,682
Net earnings 2,201 1,989 1,144 1,682
Earnings before
extraordinary loss on
early extinguishment of
debt per common share
and common share equivalent(1)$0.15 $0.14 $0.09 $0.11
Net earnings per common
share and common
equivalent share (1) 0.15 0.14 0.08 0.11
Net earnings assuming full
dilution(1) 0.15 0.14 0.08 0.11
Price Range of Common
Stock:(2)
High $16.41 $20.50 $27.50 $31.25
Low 13.66 14.00 17.08 24.63
Fiscal Year 1995:
Net sales $44,047 $50,878 $49,286 $55,509
Gross profit 9,944 11,021 9,727 9,530
Earnings before
extraordinary loss on
early extinguishment of
debt 1,845 2,248 1,041 1,236
Net earnings 1,845 2,248 896 1,236
Earnings before
extraordinary loss on
early extinguishment of
debt per common share and
common share equivalent(1) $ 0.14 $ 0.16 $ 0.08 $ 0.08
Net earnings per common
share and common
equivalent share (1) 0.14 0.16 0.06 0.08
Net earnings assuming full
dilution (1) 0.14 0.16 0.06 0.08
Price Range of Common
Stock:(2)
High $16.00 $17.83 $17.08 $14.91
Low 12.25 15.00 12.91 11.33
</TABLE>
<PAGE>
(1) The sum of the individual quarters may not equal the full
year amounts due to the effects of the market prices in the
application of the treasury stock method. Amounts reflect
adjustment for March 1996 3-for-2 stock split. During its two
most recent fiscal years, the Company paid no cash dividends
(2) The Company's common stock is listed and traded on the
American Stock Exchange. At June 30, 1996, there were
approximately 704 record holders of common stock. The Company
believes that a significant number of beneficial owners hold
their shares in street names.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of
Barr Laboratories, Inc.:
We have audited the accompanying consolidated balance sheets of
Barr Laboratories, Inc. and subsidiaries (the "Company") as of
June 30, 1996 and June 30, 1995, and the related consolidated
statements of operations, shareholders' equity and cash flows for
each of the three years in the period ended June 30, 1996. These
consolidated 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
the 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 consolidated financial statements present
fairly, in all material respects, the financial position of Barr
Laboratories, Inc. and subsidiaries at June 30, 1996 and June 30,
1995, and the results of their operations and their cash flows
for each of the three years in the period ended June 30, 1996 in
conformity with generally accepted accounting principles.
As discussed in Note 6 to the consolidated financial statements,
effective July 1, 1993, the Company changed its method of
accounting for income taxes to conform with Statement of
Financial Accounting Standards No. 109.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
August 28, 1996
<PAGE>
RESPONSIBILITY FOR FINANCIAL REPORTING
Management is responsible for the preparation and accuracy of the
consolidated financial statements and other information included
in this report. The consolidated financial statements have been
prepared in conformity with generally accepted accounting
principles using, where appropriate, management's best estimates
and judgments.
In meeting its responsibility for the reliability of the
financial statements, management has developed and relies on the
Company's system of internal accounting control. The system is
designed to provide reasonable assurance that assets are
safeguarded and that transactions are executed as authorized and
are properly recorded.
The Board of Directors reviews the financial statements and
reporting practices of the Company through its Audit Committee,
which is composed entirely of directors who are not officers or
employees of the Company. The committee meets with the
independent auditors and management to discuss audit scope and
results and also to consider internal control and financial
reporting matters. The independent auditors have direct
unrestricted access to the Audit Committee. The entire Board of
Directors reviews the Company's financial performance and
financial plan.
/s/ Bruce L. Downey
Chairman of the Board, Chief Executive Officer and President
<PAGE>
<TABLE>
Selected Financial Data
(in thousands of dollars, except per share amounts)
Statements of Year Ended June 30,
Operations 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net Sales $232,224 $199,720 $109,133 $ 58,047 $100,790
Earnings (loss)
before income
taxes,
extraordinary loss
and cumulative
effect of
accounting change 11,509 10,222 3,745 12,827(1) (3,464)
Income tax expense
(benefit) 4,368(7) 3,852(5) 1,461 5,040 (1,555)
Earnings (loss)
before
extraordinary loss
and cumulative
effect of
accounting change 7,141 6,370 2,284 7,787 (1,909)
Net earnings (loss) 7,016(7) 6,225(5) 2,658(6) 7,787 (1,909)
Earnings (loss)
before
extraordinary loss
and cumulative
effect of
accounting change
per common and
common equivalent
share(8): 0.49 0.47 0.17 0.60 (0.15)
Earnings (loss) per
common and common
equivalent share(8) 0.48(7) 0.46(5) 0.20(6) 0.60 (0.15)
Earnings (loss) per
common share
assuming full
dilution(8) 0.48(7) 0.46(5) 0.20(6) 0.60 (0.15)
Balance Sheet Data 1996 1995 1994 1993 1992
Working capital (2) 52,985 58,364 53,227 51,371 12,168
Total Assets 169,220 155,953 125,907 94,283 88,467
Long-term Debt (2)(3) 17,709 20,371 30,433 30,498 543
Shareholders'
Equity (4) 80,161 71,853 54,984 51,498 42,844
<FN>
(1) Fiscal 1993 includes $21,690 of pre-tax income from lawsuit settlements.
(2) Includes effects of reclassification of $30,000 of debt to long-term debt
in 1993 and $30,000 of debt to current liabilities in 1992.
(3) Excludes current installments (See Note 4 to Consolidated Financial
Statements).
(4) The Company has not paid a cash dividend in any of the above years.
(5) Fiscal 1995 includes the effect of a $145 ($0.01 per share) extraordinary
loss (net of tax of $92) on early extinguishment of debt.
(See Note 4 to the Consolidated Financial Statements).
(6) Includes the effect of a $374 ($0.03 per share) gain from the cumulative
effect of an accounting change. (See Note 6 to the Consolidated Financial
Statements).
(7) Fiscal 1996 includes the effect of a $125 ($0.01 per share) extraordinary
loss (net of tax of $76) on early extinguishment
of debt. (See Note 4 to the Consolidated Financial Statements).
(8) Amounts have been adjusted for the March 1996 3-for-2 stock split effected
in the form of a 50% stock dividend.
<PAGE>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Post-
Effective Amendment to Registration Statement No. 33-13901, and
in Registration Statement Nos. 33-73696, 33-73698 and 33-73700 of
Barr Laboratories, Inc. on Form S-8 of our reports dated August
28, 1996, appearing and incorporated by reference in the Annual
Report on Form 10-K of Barr Laboratories, Inc. for the year ended
June 30, 1996.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
September 24, 1996
<PAGE>
</TABLE>
<TABLE>
EXHIBIT 11
BARR LABORATORIES, INC.
COMPUTATION OF PER SHARE EARNINGS (1)
(Amounts in thousands, except per share amounts)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
PRIMARY
Average shares outstanding 13,979 13,418 13,035
Net effect of dilutive stock options -
based on the treasury stock method using
average market price 526 - (2) 297
Total 14,505 13,418 13,332
Net earnings $7,016 $6,225 $2,658
Net earnings per share $0.48 $0.46 $0.20
FULLY DILUTED
Average shares outstanding 13,979 13,418 13,035
Net effect of dilutive stock options -
based on the treasury stock method using
average market price 781 336 327
Convertible debenture - - 755
Total 14,760 13,754 14,117
Net earnings $7,016 $6,225 $2,658
Add convertible debt interest, deferred
finance charges, net of income tax effect - 668
Total $7,016 $6,225 $3,326
Net earnings per share $0.48 $0.45 (3) $0.24(4)
(1) 1995 and 1994 have been adjusted for the March 1996 3-for-2
stock split.
(2) Stock options of 312 in 1995 are not included
because their inclusion results in less than 3% dilution.
(3) Results in less than 3% dilution.
(4) Anti-dilutive.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 44,893
<SECURITIES> 0
<RECEIVABLES> 32,065
<ALLOWANCES> 0
<INVENTORY> 42,396
<CURRENT-ASSETS> 122,773
<PP&E> 45,739
<DEPRECIATION> 0
<TOTAL-ASSETS> 169,220
<CURRENT-LIABILITIES> 69,788
<BONDS> 21,524
<COMMON> 141
0
0
<OTHER-SE> 80,033
<TOTAL-LIABILITY-AND-EQUITY> 169,220
<SALES> 232,224
<TOTAL-REVENUES> 232,224
<CGS> 189,394
<TOTAL-COSTS> 189,394
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,767
<INCOME-PRETAX> 11,509
<INCOME-TAX> 4,368
<INCOME-CONTINUING> 7,141
<DISCONTINUED> 0
<EXTRAORDINARY> (125)
<CHANGES> 0
<NET-INCOME> 7,016
<EPS-PRIMARY> 0.48
<EPS-DILUTED> 0.48
<FN>
Accounts Receivable and PP&E are Net
</TABLE>
Barr Laboratories, Inc.
_____________________________________
AMENDMENT NUMBER ONE
_____________________________________
Dated as of March 1, 1996
10.15% Senior Secured Notes due June 28, 2001
<PAGE>
AMENDMENT NUMBER ONE
AMENDMENT NUMBER ONE (this "Agreement"), dated as of March
1, 1996, among BARR LABORATORIES, INC. (together with its
successors and assigns, the "Company"), a New York corporation,
and the Persons identified as "Holders" on the signature pages
hereof that have delivered an executed signature page
(collectively, the "Holders").
RECITALS:
A. The Company entered into those certain separate Note
Purchase Agreements, each dated as of June 28, 1991
(collectively, as in effect immediately prior to the date hereof,
the "Existing Note Purchase Agreement" and, as amended hereby,
the "Amended Note Purchase Agreement"), with each of Connecticut
General Life Insurance Company, Life Insurance Company of North
America, CIGNA Property and Casualty Insurance Company and
American Life & Casualty Insurance Company (individually, a
"Purchaser" and collectively, the "Purchasers"), pursuant to
which the Company issued and sold to the Purchasers and the
Purchasers purchased from the Company, Twenty Million Dollars
($20,000,000) in aggregate principal amount of the Company's
Senior Secured Notes due June 28, 2001 (collectively, as amended
from time to time, the "Notes").
B. The Company has requested that the holders of the Notes
agree to, among other things, amend certain provisions of the
Existing Note Purchase Agreement as further set forth herein,
which requested amendment requires the consent of the Majority
Holders of the Notes.
C. Subject to the terms and conditions set forth in this
Agreement, the Company and the Holders are willing to agree to
amend the Existing Note Purchase Agreement in the manner
specified on Exhibit A hereto and as more particularly set forth
herein.
AGREEMENT:
NOW THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the
Holders agree as follows:
1. WARRANTIES AND REPRESENTATIONS.
To induce the Holders to enter into this Agreement, the
Company warrants and represents to the Holders that as of the
Effective Date (as hereinafter defined):
1 Authorization, Execution and Enforceability.
The execution and delivery by the Company of this Agreement
and the performance of its obligations under the Amended Note
Purchase Agreement and the Security Documents have been duly
authorized by all necessary action on the
<PAGE>
part of the Company.
Each of the Amended Note Purchase Agreement and the Security
Documents constitutes a valid and binding obligation of the
Company, enforceable in accordance with its respective terms,
except that the enforceability thereof may be:
(a) limited by bankruptcy, insolvency or other similar laws
affecting the enforceability of creditors' rights generally; and
(b) subject to the availability of equitable remedies.
2 No Conflicts, etc.
The execution and delivery by the Company of this Agreement
and the performance by the Company of its obligations under the
Amended Note Purchase Agreement and the Security Documents do not
conflict with, result in any breach in any of the provisions of,
constitute a default under, violate or result in the creation of
any Lien upon any Property of the Company or any Subsidiary under
the provisions of:
(a) any charter document, agreement with shareholders or
bylaws of the Company or any Subsidiary;
(b) any agreement, instrument or conveyance by which the
Company or any Subsidiary or any of their respective Properties
may be bound or affected; or
(c) any statute, rule or regulation or any order, judgment
or award of any court, tribunal or arbitrator by which the
Company or any Subsidiary or any of their respective Properties
may be bound or affected.
3 Security Interests.
The Liens of the Holders in the Collateral (as defined in
the Trust Indenture) previously granted to the Security Trustee
remain valid, enforceable and perfected as of the date hereof and
the Collateral is subject to no other Liens not otherwise
permitted under the Amended Note Purchase Agreement and the
Security Documents.
<PAGE>
4 Existence of Defaults.
After giving effect to the Amendment, no condition exists
that would constitute a Default or an Event of Default under the
Amended Note Purchase Agreement.
5 Disclosure.
Neither this Agreement nor any written statement furnished
by the Company to the Holders in connection herewith contains any
untrue statement of a material fact or omits a material fact
necessary to make the statements contained therein or herein not
misleading.
2. AMENDMENT WITH RESPECT TO EXISTING NOTE PURCHASE AGREEMENT;
AFFIRMATION.
1 Amendment.
The Company and, subject to the satisfaction of the
conditions set forth in Section 3 hereof, the Holders, each
hereby consent and agree that the Existing Note Purchase
Agreement is hereby amended in the manner specified in Exhibit A
to this Agreement (such amendment provided for in such Exhibit is
herein referred to as the "Amendment").
2 Affirmation of Obligations under Documents.
The Company hereby acknowledges and affirms all of its
obligations under the terms of the Amended Note Purchase
Agreement and the Security Documents.
3 Scope of Amendment.
Except as expressly set forth in this Agreement, no
provision of the Existing Note Purchase Agreement, any Security
Document or any other agreement, document or instrument shall be
deemed to have been amended hereby. No Default or Event of
Default, or right, remedy, or power consequent thereon, whether
as provided in the Existing Note Purchase Agreement, the Amended
Note Purchase Agreement, any Security Document or by law, shall
be deemed to have been waived or affected hereby.
3. CONDITIONS TO EFFECTIVENESS OF AMENDMENT.
This Amendment shall not become effective until all of the
following conditions precedent shall have been satisfied in full
(the date of such satisfaction being herein referred to as the
"Effective Date"):
1 Execution and Delivery of this Agreement.
The Company and Holders constituting Majority Holders shall
have executed and delivered to each other an original counterpart
of this Agreement.
<PAGE>
2 No Defaults; Warranties and Representations True.
After giving effect to the Amendment, no Default or Event of
Default shall exist and the warranties and representations set
forth in Section 1 hereof shall be true and correct.
3 Proceedings Satisfactory.
All proceedings taken in connection with this Agreement and
all documents and papers relating thereto shall be reasonably
satisfactory to the Holders. The Holders shall have received
copies of such documents and papers as they may reasonably
request in connection therewith, all in form and substance
reasonably satisfactory to the Holders.
4 Expenses.
The Company shall have paid all costs and expenses of the
Holders relating to this Agreement in accordance with Section 4.6
hereof.
4. MISCELLANEOUS.
1 Terms Defined.
Terms used herein and not otherwise defined herein shall
have the respective meanings specified in the Amended Note
Purchase Agreement. A violation of this Agreement (including
without limitation, a material misrepresentation of any warranty
or representation contained herein) shall constitute an "Event of
Default" thereunder.
2 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND ENFORCED
IN ACCORDANCE WITH, AND GOVERNED BY, INTERNAL CONNECTICUT LAW.
3 Duplicate Originals.
Two or more duplicate originals of this Agreement may be
signed by the parties, each of which shall be an original but all
of which together shall constitute one and the same instrument.
This Agreement may be executed in one or more counterparts and
shall be effective when at least one counterpart shall have been
executed by each party hereto, and each set of counterparts that,
collectively, show execution by each party hereto shall
constitute one duplicate original.
4 Waivers and Amendments.
Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, or by any action or
inaction, but only by an
<PAGE>
instrument in writing signed by the
party against which enforcement of the change, waiver, discharge
or termination is sought.
5 Section Headings.
The titles of the Sections hereof appear as a matter of
convenience only, do not constitute a part of this Agreement and
shall not affect the construction hereof.
6 Costs and Expenses.
On the Effective Date, the Company shall pay all costs and
expenses of the Holders relating to this Agreement, including,
but not limited to, the statement for reasonable fees and
disbursements of their special counsel presented to the Company
on the Effective Date. The Company will also pay, upon receipt
thereof, each additional statement for reasonable fees and
disbursements of the Holders' special counsel rendered after the
Effective Date in connection with this Agreement, the Amended
Note Purchase Agreement or the Security Documents.
7 Survival.
All warranties, representations, certifications and
covenants made by the Company in this Agreement and in each of
the Security Documents or in any certificate or other instrument
delivered pursuant to this Agreement or any of the Security
Documents shall be considered to have been relied upon by the
Holders and shall survive the execution and delivery of this
Agreement, regardless of any investigation made by or on behalf
of the Holders. All statements in any such certificate or other
instrument shall constitute warranties and representations of the
Company under this Agreement or such Security Document.
8 Time of Essence.
Time is and shall be of the essence in the satisfaction of
all the conditions set forth in Section 3 of this Agreement.
[Remainder of page intentionally blank; next page is signature p
age.]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed on its behalf by a duly authorized
officer or agent thereof.
Company: BARR LABORATORIES, INC.
By /s/Paul M. Bisaro
Name: Paul M Bisaro
Title:Chief Financial Officer
General Counsel and Secretary
Holder: CONNECTICUT GENERAL LIFE
INSURANCE COMPANY *
By CIGNA Investments, Inc.
By:/s/Stephen A. Osborne
Name: Stephen A. Osborne
Title: Managing Director
Holder: LIFE INSURANCE COMPANY OF
NORTH AMERICA *
By CIGNA Investments, Inc.
By:/s/Stephen A. Osborne
Name: Stephen A. Osborne
Title: Managing Director
<PAGE>
Holder: CIGNA PROPERTY AND CASUALTY
INSURANCE COMPANY *
By CIGNA Investments, Inc.
By:/s/Stephen A. Osborne
Name: Stephen A. Osborne
Title: Managing Director
<PAGE>
Holder: AMERICAN LIFE & CASUALTY
INSURANCE
COMPANY
By:/s/Gary F. Greaves
Name: Gary F. Greaves
Title: Vice President
<PAGE>
EXHIBIT A
AMENDMENT TO EXISTING NOTE PURCHASE AGREEMENT
5. Section 10. The definition of the term "Restricted
Investment" in Section 10 of the Existing Note Purchase Agreement
is hereby amended by replacing clause (i) of such definition and
the remainder of the text following such clause with the
following:
" (i) Investments listed on Annex 3
to this Agreement;
(j) Investments of up to
$6,000,000 in the equity of Fermic S.A. or one of
its affiliates (Fermic S.A. or such affiliate
being the owner of a fermentation facility in
Mexico); and
(k) Investments in so-called
market auction securities rated Aa2 or higher by
Moody's Investors Service, Inc. or AA or higher by
Standard & Poor's Corporation and which have a
reset date not more than three hundred sixty-five
(365) days from the date of acquisition thereof.
Investments shall be valued at cost less any
return of capital through the sale or liquidation
thereof or other return of capital thereon, net of the
expenses of any such sale or liquidation or any such
return of capital."
<PAGE>
Barr Laboratories, Inc.
_____________________________________
AMENDMENT NUMBER TWO
_____________________________________
Dated as of March 15, 1996
10.15% Senior Secured Notes due June 28, 2001
<PAGE>
AMENDMENT NUMBER TWO
AMENDMENT NUMBER TWO (this "Agreement"), dated as of March
15, 1996, among BARR LABORATORIES, INC. (together with its
successors and assigns, the "Company"), a New York corporation,
and the Persons identified as "Holders" on the signature page
hereof (collectively, the "Holders").
RECITALS:
A. The Company entered into those certain separate Note
Purchase Agreements, each dated as of June 28, 1991
(collectively, as in effect immediately prior to the date hereof,
the "Existing Note Purchase Agreement" and, as amended hereby,
the "Amended Note Purchase Agreement"), with each of Connecticut
General Life Insurance Company, Life Insurance Company of North
America, CIGNA Property and Casualty Insurance Company and
American Life & Casualty Insurance Company (individually, a
"Purchaser" and collectively, the "Purchasers"), pursuant to
which the Company issued and sold to the Purchasers and the
Purchasers purchased from the Company, Twenty Million Dollars
($20,000,000) in aggregate principal amount of the Company's
Senior Secured Notes due June 28, 2001 (collectively, as amended
from time to time, the "Notes").
B. The Holders are the registered holders of one hundred
percent (100%) of the Notes outstanding on the date hereof.
C. The Company has requested that it be permitted to
prepay in full all of the Notes held by American Life & Casualty
Insurance Company (the "Selling Noteholder"), such prepayment to
be made on terms and subject to the conditions set forth herein.
D. The Company has requested that, in connection with the
proposed prepayment of all of the Notes held by the Selling
Noteholder, and in order to permit such prepayment, the Holders
agree to the amendment of certain provisions of the Existing Note
Purchase Agreement, and waive the application of certain other
provisions of the Existing Note Purchase Agreement, all as
further set forth herein, which requested amendment and waiver
will require the consent all of the holders of the Notes.
E. Subject to the terms and conditions set forth in this
Agreement, the Company and the Holders are willing to permit the
prepayment of all of the Notes held by the Selling Noteholder and
the irrevocable cancellation thereof, and in connection therewith
are willing to amend the Existing Note Purchase Agreement and to
waive the application of certain provisions of the Existing Note
Purchase Agreement, all as more particularly set forth herein.
AGREEMENT:
NOW THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the
Holders agree as follows:
<PAGE>
1. WARRANTIES AND REPRESENTATIONS.
To induce the Holders to enter into this Agreement, the
Company warrants and represents to the Holders that as of the
Effective Date (as hereinafter defined):
1 The Notes.
As of the Effective Date and immediately prior to giving
effect to the payment of the Prepayment Amount (as determined in
accordance with Exhibit A) to the Selling Noteholder, the
aggregate principal amount of the Notes outstanding is equal to
$20,000,000, and the aggregate principal amount of Notes held by
the Selling Noteholder is equal to $2,000,000.
2 Material Adverse Effect; Disclosure.
(a) Since June 30, 1995 there has been no change in the
business, prospects, profits, Properties or condition (financial
or otherwise) of the Company or any Subsidiary except changes in
the ordinary course of business that, in the aggregate, have not
had a material adverse effect on the business, prospects,
profits, Properties or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or the ability of
the Company to perform any of its obligations set forth in the
Amended Note Purchase Agreement and the Security Documents.
(b) Neither this Agreement nor any written statement
furnished by the Company to the Holders in connection herewith
contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein
or herein not misleading. There is no fact that the Company has
not disclosed to each Holder in writing that has had or, so far
as the Company can now reasonably foresee, could reasonably be
expected to have, a material adverse effect on the business,
prospects, profits, Properties or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole,
or the ability of the Company to perform any of its obligations
set forth in the Amended Note Purchase Agreement and the Security
Documents.
3 Authorization, Execution and Enforceability.
The execution and delivery by the Company of this Agreement
and the performance by the Company of its obligations under this
Agreement (including, without limitation, the proposed prepayment
of the Notes held by the Selling Noteholder), the Amended Note
Purchase Agreement and each of the Security Documents have been
duly authorized by all necessary action on the part of the
Company. Each of this Agreement, the Amended Note Purchase
Agreement and the Security Documents constitutes a valid and
binding obligation of the Company, enforceable in accordance with
its respective terms, except that the enforceability thereof may
be:
<PAGE>
(a) limited by bankruptcy, insolvency or other similar laws
affecting the enforceability of creditors' rights generally; and
(b) subject to the availability of equitable remedies.
4 No Conflicts, etc.
The execution and delivery by the Company of this Agreement
and the performance by the Company of its obligations under this
Agreement, the Amended Note Purchase Agreement and each of the
Security Documents do not conflict with, result in any breach in
any of the provisions of, constitute a default under, violate or
result in the creation of any Lien upon any Property of the
Company or any Subsidiary under the provisions of:
(a) any charter document, agreement with shareholders or
bylaws of the Company or any Subsidiary;
(b) any agreement, instrument or conveyance by which the
Company or any Subsidiary or any of their respective Properties
may be bound or affected; or
(c) any statute, rule or regulation or any order, judgment
or award of any court, tribunal or arbitrator by which the
Company or any Subsidiary or any of their respective Properties
may be bound or affected.
5 Security Interests.
The Liens of the Holders in the Collateral (as defined in
the Trust Indenture) previously granted to the Security Trustee
remain valid, enforceable and perfected as of the date hereof and
the Collateral is subject to no other Liens not otherwise
permitted under the Amended Note Purchase Agreement and the
Security Documents.
6 Existence of Defaults.
Immediately prior to, and immediately after giving effect
to, the Amendments, no condition exists that would constitute a
Default or an Event of Default under the Existing Note Purchase
Agreement or the Amended Note Purchase Agreement.
<PAGE>
2. AMENDMENTS WITH RESPECT TO EXISTING NOTE PURCHASE AGREEMENT;
AFFIRMATION.
1 Amendments.
The Company and, subject to the satisfaction of the
conditions set forth in Section 3 hereof, the Holders, each
hereby consent and agree that:
(a) compliance by the Company with Section 5 of the
Existing Note Purchase Agreement and the Amended Note Purchase
Agreement is waived to the extent (and only to the extent)
necessary to permit the payment of the Prepayment Amount to the
Selling Noteholder in accordance with the terms and conditions
set forth in this Agreement (including, without limitation, those
set forth in Section 3); and
(b) Section 5.1(a) of the Existing Note Purchase Agreement
is hereby amended by replacing each reference to "Four Million
Dollars ($4,000,000)" therein with a reference to "Three Million
Six Hundred Thousand Dollars ($3,600,000)"
(collectively, such amendments and waivers, together with those
provided for in Exhibit A, are herein collectively referred to as
the "Amendments").
2 Affirmation of Obligations under Security Documents.
The Company hereby acknowledges and affirms all of its
obligations under the terms of the Amended Note Purchase
Agreement and the Security Documents.
3 Scope of Amendment.
Except as expressly set forth in this Agreement, no
provision of the Existing Note Purchase Agreement, any Security
Document or any other agreement, document or instrument shall be
deemed to have been amended hereby. No Default or Event of
Default, or right, remedy, or power consequent thereon, whether
as provided in the Existing Note Purchase Agreement, the Amended
Note Purchase Agreement, any Security Document, any other
agreement, document or instrument, or by law to any holder of
Notes, shall be deemed to have been waived or affected hereby.
3. CONDITIONS TO EFFECTIVENESS OF AMENDMENTS.
The Amendments shall not become effective until all of the
following conditions precedent shall have been satisfied in full
(the date of such satisfaction being herein referred to as the
"Effective Date"):
1 Execution and Delivery of this Agreement.
The Company and the Holders shall have executed and
delivered to each other an original counterpart of this
Agreement.
<PAGE>
2 No Defaults; Warranties and Representations True.
After giving effect to the Amendments, no Default or Event
of Default shall exist and the warranties and representations set
forth in Section 1 hereof shall be true and correct.
3 Proceedings Satisfactory.
All proceedings taken in connection with this Agreement and
all documents and papers relating thereto shall be reasonably
satisfactory to the Holders. The Holders shall have received
copies of such documents and papers as they may reasonably
request in connection therewith, all in form and substance
reasonably satisfactory to the Holders.
4 Payment of Prepayment Amount; Cancellation of Notes.
The Company shall have paid, on or before March 15, 1996, an
amount equal to the Prepayment Amount in respect of the Notes
held by the Selling Noteholder, and all of such Notes shall have
been delivered to the Company and cancelled and no Notes shall be
permitted to be issued in replacement or substitution therefor.
5 Expenses.
The Company shall have paid all costs and expenses of the
Holders relating to this Agreement in accordance with Section 4.6
hereof.
4. MISCELLANEOUS.
1 Terms Defined.
Terms used herein and not otherwise defined herein shall
have the respective meanings specified in the Amended Note
Purchase Agreement. A violation of this Agreement (including
without limitation, a material misrepresentation of any warranty
or representation contained herein) shall constitute an "Event of
Default" thereunder.
<PAGE>
2 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND ENFORCED
IN ACCORDANCE WITH, AND GOVERNED BY, INTERNAL CONNECTICUT LAW.
3 Duplicate Originals.
Two or more duplicate originals of this Agreement may be
signed by the parties, each of which shall be an original but all
of which together shall constitute one and the same instrument.
This Agreement may be executed in one or more counterparts and
shall be effective when at least one counterpart shall have been
executed by each party hereto, and each set of counterparts that,
collectively, show execution by each party hereto shall
constitute one duplicate original.
4 Waivers and Amendments.
Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, or by any action or
inaction, but only by an instrument in writing signed by the
party against which enforcement of the change, waiver, discharge
or termination is sought.
5 Section Headings.
The titles of the Sections hereof appear as a matter of
convenience only, do not constitute a part of this Agreement and
shall not affect the construction hereof.
6 Costs and Expenses.
On the Effective Date, the Company shall pay all costs and
expenses of the Holders relating to this Agreement, including,
but not limited to, the statement for reasonable fees and
disbursements of their special counsel presented to the Company
on the Effective Date. The Company will also pay, upon receipt
thereof, each additional statement for reasonable fees and
disbursements of the Holders' special counsel rendered after the
Effective Date in connection with this Agreement, the Amended
Note Purchase Agreement or the Security Documents.
7 Survival.
All warranties, representations, certifications and
covenants made by the Company in this Agreement, in the Amended
Note Purchase Agreement and in each of the Security Documents or
in any certificate or other instrument delivered pursuant to this
Agreement, the Amended Note Purchase Agreement or any of the
Security Documents shall be considered to have been relied upon
by the Holders and shall survive the execution and delivery of
this Agreement, regardless of any investigation made by or on
behalf of the Holders. All statements in any such certificate or
other instrument shall constitute warranties and
<PAGE>
representations
of the Company under this Agreement, the Amended Note Purchase
Agreement or such Security Document.
8 Time of Essence.
Time is and shall be of the essence in the satisfaction of
all the conditions set forth in Section 3 of this Agreement.
[Remainder of page intentionally blank; next page is signature p
age.]
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed on its behalf by a duly authorized
officer or agent thereof.
<PAGE>
Company: BARR LABORATORIES, INC.
By /s/William T. McKee
Name: William T. McKee
Title: Treasurer
Holder: CONNECTICUT GENERAL LIFE
INSURANCE COMPANY *
By CIGNA Investments, Inc.
By: /s/Stephen A. Osborne
Name: Stephen A. Osborne
Title:Managing Director
Holder: LIFE INSURANCE COMPANY OF
NORTH AMERICA *
By CIGNA Investments, Inc.
By: /s/Stephen A. Osborne
Name: Stephen A. Osborne
Title:Managing Director
<PAGE>
Holder: CIGNA PROPERTY AND CASUALTY
INSURANCE COMPANY *
By CIGNA Investments, Inc.
By: /s/Stephen A. Osborne
Name: Stephen A. Osborne
Title:Managing Director
<PAGE>
Holder: AMERICAN LIFE & CASUALTY
INSURANCE
COMPANY
By:/s/Gary F Greaves
Name: Gary F. Greaves
Title: Vice President
EXHIBIT A
DETERMINATION OF PREPAYMENT AMOUNT
5. Prepayment Amount. The Prepayment Amount shall be
equal to the aggregate principal amount of Notes held by American
Life & Casualty Insurance Company immediately prior to the
Effective Date (which principal amount of Notes the Company
represents and warrants to be equal to $2,000,000), together with
interest accrued thereon to the date of prepayment and together
with the Modified Make-Whole Amount (as such term is defined
below) calculated with respect to such principal amount of Notes
as of the date of prepayment.
As used herein:
Modified Make-Whole Amount -- shall have the meaning
ascribed to the term "Make-Whole Amount" in the Amended Note
Purchase Agreement, provided that the Modified Make-Whole
Amount shall be determined as though the reference to "fifty
one-hundredths percent (0.50%) per annum" in clause (b) of
the definition of "Make-Whole Discount Rate" were a
reference to "one and twenty-five one-hundredths percent
(1.25%) per annum".
<PAGE>
Barr Laboratories, Inc.
_____________________________________
AMENDMENT NUMBER THREE
_____________________________________
Dated as of April 1, 1996
10.15% Senior Secured Notes due June 28, 2001
<PAGE>
AMENDMENT NUMBER THREE
AMENDMENT NUMBER THREE (this "Agreement"), dated as of April
1, 1996, among BARR LABORATORIES, INC. (together with its
successors and assigns, the "Company"), a New York corporation,
and the Persons identified as "Holders" on the signature page
hereof (collectively, the "Holders").
RECITALS:
A. The Company entered into those certain separate Note
Purchase Agreements, each dated as of June 28, 1991
(collectively, as in effect immediately prior to the date hereof,
the "Existing Note Purchase Agreement" and, as amended hereby,
the "Amended Note Purchase Agreement"), with each of Connecticut
General Life Insurance Company, Life Insurance Company of North
America, CIGNA Property and Casualty Insurance Company and
American Life Casualty Insurance Company (individually, a
"Purchaser" and collectively, the "Purchasers"), pursuant to
which the Company issued and sold to the Purchasers and the
Purchasers purchased from the Company, Twenty Million Dollars
($20,000,000) in aggregate principal amount of the Company's
Senior Secured Notes due June 28, 2001 (collectively, as amended
from time to time, the "Notes").
B. Simultaneously with the execution of the Existing Note
Purchase Agreement, the Company entered into that certain Trust
Indenture, dated as of June 28, 1991 (as in effect immediately
prior to the date hereof, the "Existing Trust Indenture" and, as
amended hereby, the "Amended Trust Indenture"), with State Street
Bank and Trust Company of Connecticut, N.A. (the "Security
Trustee"), pursuant to which the Company granted to the Security
Trustee a security interest in certain Property of the Company to
secure the payment by the Company of the Secured Obligations (as
defined in the Existing Trust Indenture) and the performance of
the Secured Undertakings (as defined in the Existing Trust
Indenture).
C. The Holders are the registered holders of one hundred
percent (100%) of the Notes outstanding on the date hereof.
D. The Company has requested that the Holders agree to,
among other things, amend certain provisions of the Existing Note
Purchase Agreement and the Existing Trust Indenture as further
set forth herein, which requested amendments require the consent
of the holders of the Notes and the Security Trustee.
E. Subject to the terms and conditions set forth in this
Agreement, the Company, the Holders and the Security Trustee are
willing to agree to amend the Existing Note Purchase Agreement
and the Existing Trust Indenture, all in the manner specified on
certain Exhibits hereto and as more particularly set forth
herein.
F. The Amended Note Purchase Agreement and the Amended
Trust Indenture are sometimes herein referred to as the "Amended
Financing Documents."
<PAGE>
AGREEMENT:
NOW THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the
Holders agree as follows:
1. WARRANTIES AND REPRESENTATIONS.
To induce the Holders to enter into this Agreement, the
Company warrants and represents to the Holders that as of the
Effective Date (as hereinafter defined):
1 Material Adverse Effect; Disclosure.
(a) Since June 30, 1995 there has been no change in the
business, prospects, profits, Properties or condition (financial
or otherwise) of the Company or any Subsidiary except changes in
the ordinary course of business that, in the aggregate, have not
had a material adverse effect on the business, prospects,
profits, Properties or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or the ability of
the Company to perform any of its obligations set forth in the
Amended Note Purchase Agreement and the Security Documents.
(b) Neither this Agreement nor any written statement
furnished by the Company to the Holders in connection herewith
contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein
or herein not misleading. There is no fact that the Company has
not disclosed to each Holder in writing that has had or, so far
as the Company can now reasonably foresee, could reasonably be
expected to have, a material adverse effect on the business,
prospects, profits, Properties or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole,
or the ability of the Company to perform any of its obligations
set forth in the Amended Note Purchase Agreement and the Security
Documents.
2 Authorization, Execution and Enforceability.
The execution and delivery by the Company of this Agreement
and the performance of its obligations under each of the Amended
Financing Documents have been duly authorized by all necessary
action on the part of the Company. Each of the Amended Financing
Documents constitutes a valid and binding obligation of the
Company, enforceable in accordance with its respective terms,
except that the enforceability thereof may be:
(a) limited by bankruptcy, insolvency or other similar laws
affecting the enforceability of creditors' rights generally; and
(b) subject to the availability of equitable remedies.
<PAGE>
3 No Conflicts, etc.
The execution and delivery by the Company of this Agreement
and the performance by the Company of its obligations under each
of the Amended Financing Documents do not conflict with, result
in any breach in any of the provisions of, constitute a default
under, violate or result in the creation of any Lien upon any
Property of the Company or any Subsidiary under the provisions
of:
(a) any charter document, agreement with shareholders or
bylaws of the Company or any Subsidiary;
(b) any agreement, instrument or conveyance by which the
Company or any Subsidiary or any of their respective Properties
may be bound or affected; or
(c) any statute, rule or regulation or any order, judgment
or award of any court, tribunal or arbitrator by which the
Company or any Subsidiary or any of their respective Properties
may be bound or affected.
4 Security Interests.
The Liens of the Holders in the Collateral (as defined in
the Amended Trust Indenture) previously granted to the Security
Trustee remain valid, enforceable and perfected as of the date
hereof and the Collateral is subject to no other Liens not
otherwise permitted under the Amended Financing Documents and the
Security Documents, as amended.
5 Existence of Defaults.
After giving effect to the Amendments, no condition exists
that would constitute a Default or an Event of Default under the
Amended Note Purchase Agreement.
6 Disclosure.
Neither this Agreement nor any written statement furnished
by the Company to the Holders in connection herewith contains any
untrue statement of a material fact or omits a material fact
necessary to make the statements contained therein or herein not
misleading.
2. AMENDMENTS WITH RESPECT TO EXISTING NOTE PURCHASE AGREEMENT
AND EXISTING TRUST INDENTURE; AFFIRMATION.
<PAGE>
1 Amendments.
The Company and, subject to the satisfaction of the
conditions set forth in Section 3 hereof, the Holders, each
hereby consent and agree that:
(a) the Existing Note Purchase Agreement is hereby amended
in the manner specified in Exhibit A1 to this Agreement; and
(b) the Existing Trust Indenture is hereby amended in the
manner specified in Exhibit A2 to this Agreement; and
(collectively, such amendments provided for in such Exhibits are
herein referred to as the "Amendments").
2 Affirmation of Obligations under Financing Documents.
The Company hereby acknowledges and affirms all of its
obligations under the terms of the Amended Note Purchase
Agreement, the Amended Trust Indenture and the other Security
Documents.
3 Scope of Amendment.
Except as expressly set forth in this Agreement, no
provision of the Existing Note Purchase Agreement, the Notes, the
Existing Trust Indenture or any other agreement, document or
instrument shall be deemed to have been amended hereby. No
Default or Event of Default, or right, remedy, or power
consequent thereon, whether as provided in the Existing Note
Purchase Agreement, the Notes, the Existing Trust Indenture, the
Amended Note Purchase Agreement, the Amended Trust Indenture, or
by law, to any holder of Notes, shall be deemed to have been
waived or affected hereby.
3. CONDITIONS TO EFFECTIVENESS OF AMENDMENTS.
The Amendments shall not become effective until all of the
following conditions precedent shall have been satisfied in full
(the date of such satisfaction being herein referred to as the
"Effective Date"):
1 Execution and Delivery of this Agreement.
The Company and the Holders shall have executed and
delivered to each other and the Security Trustee an original
counterpart of this Agreement, and the Security Trustee shall
have executed and delivered to the Company and each of the
Holders the "Security Trustee's Consent and Agreement" attached
to this Agreement.
2 No Defaults; Warranties and Representations True.
<PAGE>
After giving effect to the Amendments, no Default or Event
of Default shall exist and the warranties and representations set
forth in Section 1 hereof shall be true and correct.
3 Proceedings Satisfactory.
All proceedings taken in connection with this Agreement and
all documents and papers relating thereto shall be reasonably
satisfactory to the Holders. The Holders shall have received
copies of such documents and papers as they may reasonably
request in connection therewith, all in form and substance
reasonably satisfactory to the Holders.
4 Expenses.
The Company shall have paid all costs and expenses of the
Holders relating to this Agreement in accordance with Section 5.6
hereof.
4. DIRECTION TO SECURITY TRUSTEE.
Each of the Holders, by its execution and delivery hereof,
hereby requests and directs the Security Trustee to
(a) consent and agree to the amendments to the Existing
Trust Indenture and such other agreements to which it is a party,
as such amendments are described herein, by executing and
delivering the "Security Trustee's Consent and Agreement"
attached to this Agreement;
(b) execute and deliver a "Release, Consent and
Acknowledgement" substantially in the form of Exhibit B attached
to this Agreement; and
(c) execute and deliver four Uniform Commercial Code
financing statement partial releases, one each for filing with
respect to (i) financing statement number 133450 (New York
Secretary of State), (ii) financing statement 91-1896 (Rockland
County, New York), (iii) financing statement 1404418 (New Jersey
Secretary of State) and (iv) financing statement 002494 (Bergen
County, New Jersey), each substantially in the respective forms
set forth on Exhibit C attached to this Agreement.
5. MISCELLANEOUS.
1 Terms Defined.
Terms used herein and not otherwise defined herein shall
have the respective meanings specified in the Amended Note
Purchase Agreement. A violation of this Agreement (including
without limitation, a material misrepresentation of any warranty
or representation contained herein) shall constitute an "Event of
Default" thereunder.
<PAGE>
2 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND ENFORCED
IN ACCORDANCE WITH, AND GOVERNED BY, INTERNAL CONNECTICUT LAW.
3 Duplicate Originals.
Two or more duplicate originals of this Agreement may be
signed by the parties, each of which shall be an original but all
of which together shall constitute one and the same instrument.
This Agreement may be executed in one or more counterparts and
shall be effective when at least one counterpart shall have been
executed by each party hereto, and each set of counterparts that,
collectively, show execution by each party hereto shall
constitute one duplicate original.
4 Waivers and Amendments.
Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, or by any action or
inaction, but only by an instrument in writing signed by the
party against which enforcement of the change, waiver, discharge
or termination is sought.
5 Section Headings.
The titles of the Sections hereof appear as a matter of
convenience only, do not constitute a part of this Agreement and
shall not affect the construction hereof.
6 Costs and Expenses.
On the Effective Date, the Company shall pay all costs and
expenses of the Holders relating to this Agreement, including,
but not limited to, the statement for reasonable fees and
disbursements of their special counsel presented to the Company
on the Effective Date. The Company will also pay, upon receipt
thereof, each additional statement for reasonable fees and
disbursements of the Holders' special counsel rendered after the
Effective Date in connection with this Agreement or the Amended
Financing Documents.
7 Survival.
All warranties, representations, certifications and
covenants made by the Company in this Agreement and in each of
the Amended Financing Documents or in any certificate or other
instrument delivered pursuant to this Agreement or any of the
Amended Financing Documents shall be considered to have been
relied upon by the Holders and shall survive the execution and
delivery of this Agreement, regardless of any investigation made
by or on behalf of the Holders. All statements in any such
certificate or other instrument shall constitute warranties and
representations of the Company under this Agreement or such
Amended Financing Document.
<PAGE>
8 Time of Essence.
Time is and shall be of the essence in the satisfaction of
all the conditions set forth in Section 3 of this Agreement.
[Remainder of page intentionally blank; next page is signature p
age.]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed on its behalf by a duly authorized
officer or agent thereof.
Company: BARR LABORATORIES, INC.
By /s/William T. McKee
Name: William T McKee
Title:Treasurer
<PAGE>
Holder: CONNECTICUT GENERAL LIFE
INSURANCE COMPANY*
By CIGNA Investments, Inc.
By: /s/Stephen A. Osborne
Name: Stephen A. Osborne
Title:Managing Director
Holder: LIFE INSURANCE COMPANY OF
NORTH AMERICA *
By CIGNA Investments, Inc.
By: /s/Stephen A. Osborne
Name: Stephen A. Osborne
Title:Managing Director
Holder: CIGNA PROPERTY AND CASUALTY
INSURANCE COMPANY *
By CIGNA Investments, Inc.
By: /s/Stephen A. Osborne
Name: Stephen A. Osborne
Title:Managing Director
<PAGE>
SECURITY TRUSTEE'S CONSENT AND AGREEMENT
The Security Trustee hereby consents and agrees to the
amendments and modifications to the Existing Trust Indenture and
the other amendments and modifications provided for by this
Agreement.
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Security Trustee
By________________________________
Name:
Title:
<PAGE>
EXHIBIT A1
AMENDMENTS TO EXISTING NOTE PURCHASE AGREEMENT
6. Section 7.10(a). Section 7.10(a) of the Existing Note
Purchase Agreement is hereby amended by renumbering clause (vii)
and clause (viii) thereof as clause (viii) and clause (ix),
respectively, and inserting a new clause (vii) to read in its
entirety as follows:
" (vii) 1996 Grandfathered Purchase Money
Liens;"
7. Section 8.1. Section 8.1 of the Existing Note Purchase
Agreement is hereby amended by deleting the expression "and"
following the semicolon at the end of clause (j) thereof,
renumbering clause (k) thereof as clause (l), and inserting a new
clause (k) to read in its entirety as follows:
" (k) Notice of Certain Advances -- with
reasonable promptness, a copy of each request for an
advance or other funding of Permitted Purchase Money
Indebtedness (as such term is defined in the Trust
Indenture), with all attachments and accompanying
information, and containing a description of the
Property purchased or to be purchased therewith
(including, without limitation, serial numbers or other
similar identification of such Property) and providing
the location thereof; and"
8. Section 10. Section 10 of the Existing Note Purchase
Agreement is hereby amended by adding the following defined
terms, each to be placed in its respective appropriate
alphabetical position within such Section:
" Amendment Number Three -- means Amendment Number Three
dated as of April 1, 1996 to the Note Purchase Agreement and
the Trust Indenture."
" 1996 Grandfathered Purchase Money Liens -- means Liens
on Property acquired by the Company during the period from
June 1, 1995 to April 15, 1996, which Liens secure
"Permitted Purchase Money Indebtedness" (as such term is
defined in the Trust Indenture), and which Property is
described on Exhibit C of Exhibit B to Amendment Number
Three."
<PAGE>
EXHIBIT A2
AMENDMENTS TO EXISTING TRUST INDENTURE
9. Second "Whereas" Clause. Clause (b) of the second
appearing "whereas" clause in the Recitals of the Existing Trust
Indenture is hereby amended and restated in its entirety to read
as follows:
" (b) all of its machinery and equipment
(including, without limitation, the books, records,
warranties and computer disks, tapes and software in
connection therewith), furniture, furnishings,
appliances, apparatus, tools, parts and supplies
wherever located, including, without limitation, all of
its machinery, equipment, furniture, furnishings,
appliances, apparatus and tools located in or on, or
attached to, the Mortgaged Real Property and/or the
Improvements, except as otherwise specified in Section
2 hereof."
10. Section 1. Section 1 of the Existing Trust Indenture
is amended by adding each of the following definitions, in its
appropriate alphabetical position, to read as follows:
" Exempt Property -- means, at any time, all Property of
the Company of the types described in clause (a) and clause
(b) of Section 2, to the extent that such Property is (i)
purchased or otherwise acquired for use in the New Facility
or (ii) is moved from the Company's facility in Northvale,
New Jersey for use in the New Facility (it being understood
that no Property moved from the Company's facility in
Pomona, New York shall constitute Exempt Property)."
" New Facility -- means the pharmaceutical manufacturing
facility of the Company located in Forrest, Virginia."
" Permitted Purchase Money Indebtedness -- means
indebtedness incurred by the Company through advances
aggregating no more than $18,750,000 pursuant to one or more
credit facilities (including, without limitation, that Loan
and Security Agreement dated as of April 12, 1996, between
the Company and BA Leasing & Capital Corporation), which
indebtedness is secured by a Lien on Property of the Company
(other than Property consisting of plumbing, electrical or
HVAC fixtures or other similar Property) acquired with such
indebtedness at a purchase price not in excess of the amount
of such indebtedness, so long as such Lien extends to no
other Property and secures no other indebtedness."
<PAGE>
11. Section 2. Section 2 of the Existing Trust Indenture
is hereby amended and restated in its entirety to read as
follows:
" 2. GRANT OF SECURITY.
The Company hereby grants to the Security Trustee a
continuing security interest in all of the Property of the
Company specified below in this Section 2 (whether now in
existence or hereafter acquired or wherever the same may be
located) for the purpose of securing payment by the Company
of the Secured Obligations and the performance by the
Company of the Secured Undertakings:
do we need to carve out the property subject to the BA facility,
or is our release with them sufficient?
(a) all machinery, equipment, appliances,
and apparatus, other than such items constituting
Exempt Property,
(b) all furniture, fixtures, fittings,
furnishings, tools, parts and supplies, other than such
items constituting Exempt Property,
(c) all bonds and amounts placed in escrow
with the Security Trustee in accordance with the
provisions of Section 3.4(b) or Section 3.5(b) hereof,
and
(d) all books, records, warranties and
computer disks, tapes and software used in connection
with the Property described in clause (a) and clause
(b) above, together with all of the Company's right,
title and interest in, to and under products and
proceeds of the foregoing (including, without
limitation, proceeds of insurance covering the
foregoing, all proceeds from the disposition of any of
the foregoing and all proceeds from any indemnity,
warranty or guaranty payable by reason of loss of,
damage to or otherwise with respect to any of the
foregoing) and all of the Company's right, title and
interest in, to and under any replacements or
substitutions of, or accessions to, the foregoing."
12. Section 3.9(e). Section 3.9(e) of the Existing Trust
Indenture is hereby amended by replacing each reference to
"Section 7.11" of the Note Purchase Agreement (whether such
reference is to the entirety of Section 7.11 or to a clause
therein) with a reference to "Section 7.10".
13. Section 3.9(e). Section 3.9(e) of the Existing Trust
Indenture is hereby amended by deleting clause (iv) thereof and
replacing it with the following expression:
"(iv) no Liens permitted by Section 7.10(a)(vi) or
Section 7.10(a)(vii) shall be permitted to encumber the
Collateral other than Liens securing Permitted Purchase
Money Indebtedness outstanding at such time."
<PAGE>
EXHIBIT B
[FORM OF CONSENT]
RELEASE, CONSENT AND ACKNOWLEDGMENT
Reference is made to that certain Loan and Security Agreement
Number 950196 by and between BA LEASING & CAPITAL CORPORATION
("Lender") and BARR LABORATORIES, INC., ("Borrower"), dated as of
April 12, 1996 ("Agreement"), and to the Collateral (defined
below).
(a) State Street Bank and Trust Company of Connecticut,
N.A., as Security Trustee under the Trust Indenture dated as of
June 28, 1991 (as amended, the "Trust Indenture"), between Barr
Laboratories, Inc. and State Street Bank and Trust Company of
Connecticut, N.A. (as Security Trustee thereunder, the
"Creditors' Representative"), has an interest as, inter alia,
mortgage holder in the real property described in Exhibit B (the
"Real Property").
(b) The Agreement provides, inter alia, for the grant of a
security interest by Borrower in the Collateral, which is or may
be located upon the Real Property.
(c) Lender, as a condition to entering into the Agreement,
requires that the Creditors' Representative, on behalf of the
holders of the Notes (defined below), enter into this agreement
with the Lender.
NOW, THEREFORE, for a good and sufficient consideration,
receipt of which is hereby acknowledged, the Creditors'
Representative and the Lender hereby agree as follows:
14. The Creditors' Representative hereby consents to the
placement of Collateral on the Real Property.
15. The Collateral shall be considered to be personal
property and shall not be considered part of the Real Property
regardless of whether or by what means it is or may become
attached or affixed to the Real Property.
16. Neither the Creditors' Representative nor the holders
of the Notes will claim any interest in the Collateral.
17. The Creditors' Representative hereby releases and
waives any right, title or interest, including without limitation
any security interest arising under the Trust Indenture or that
certain Mortgage, Assignment of Rents and Security Agreement
dated as of June 28, 1991, by the Borrower to the Creditors'
Representative, it may now have or hereafter acquire in the
Collateral.
18. If the Creditors' Representative (for itself or on
behalf of the holders of the Notes) is in possession, or is
entitled to be in possession, of the Real Property, it will
permit Lender to enter upon the Real Property for the purpose of
exercising its rights with respect to the Collateral under
<PAGE>
the
terms of the Agreement, or otherwise as permitted by law with
respect to the Collateral, including, without limitation, the
right to remove the Collateral from the Real Property, without
charge by the Creditors' Representative (other than with respect
to actual out-of-pocket expenses incurred in connection with
providing to the Lender such access to, and allowing usage of,
the Real Property); provided that the Lender agrees in writing to
(1) conduct any such removal in a reasonable and prudent manner,
(2) repair any damage to the Real Property or any other property
in which the Creditors' Representative may have an interest that
is caused by or incidental to the activities of the Lender
(including the repair of damage to improvements located on the
Real Property caused by the Lender's removal of Collateral) and
(3) hold the Creditors' Representative (and the holders of the
Notes) harmless and to indemnify each of them with respect to any
and all losses, obligations, damages and other liabilities that
they, the Real Property or any other property in which they have
an interest may suffer or incur as a result of the Lender's
activities on the Real Property. The Creditors' Representative
(for itself or on behalf of the holders of the Notes) will not
object to the entry by the Lender onto the Real Property for the
purpose of exercising the Lender's rights with respect to the
Collateral at any time during which it is not in possession, or
otherwise entitled to be in possession, of the Real Property.
19. Creditors' Representative acknowledges that the Lender
expects to fund the acquisition by Borrower from time to time of
additional equipment constituting Collateral, and agrees that the
Borrower's granting of liens in the Collateral to the Lender do
not violate Section 7.10(a) of the Note Purchase Agreement
(defined below) or Section 3.9(e)(iv) of the Trust Indenture.
20. The Creditors' Representative agrees for the benefit of
the Lender to execute such Uniform Commercial Code financing
statement releases with respect to the release of its interest,
if any, in the Collateral as are necessary to give effect to the
agreement evidenced hereby (it being understood that the filing
of any such financing statement releases shall be conducted by
the Lender at its own expense).
21. This agreement shall be binding upon the heirs,
successors and assigns of the Creditors' Representative and the
holders of the Notes, provided, that the consent granted pursuant
to paragraph 5 above shall not be binding on future owners or
holders of the Real Property taking their interest as a result of
a foreclosure or other enforcement action with respect to the
Real Property.
22. All of the understandings, agreements, representations
and warranties contained herein are solely for the benefit of the
Creditors' Representative, the holders of the Notes and the
Lender, and their respective successors and assigns, and there
are no other parties, including the Borrower, who are intended to
be benefited, in any manner, by this consent.
23. Nothing contained in this consent is intended to affect
or limit, in any manner, the security interest that each of the
parties hereto has in any and all of the assets of the Borrower,
whether tangible or intangible, insofar as the rights of the
Borrower and third parties are involved. The parties hereto
specifically reserve any and all of their respective rights,
security interests and rights to assert security interests as
against the Borrower and any third parties.
<PAGE>
24. This consent relates only to security interests in the
Collateral and the Real Property, and shall not affect any other
security interest or right of repayment that the Lender, the
Creditors' Representative or the holders of the Notes may have.
25. As used herein, the following capitalized terms are
assigned the following meanings:
Collateral -- means the property described on the attached
Exhibit A (to the extent that such property is acquired by the
Borrower on or after the date hereof) and the attached Exhibit C,
to the extent that
(a) such property does not consist of plumbing, electrical
or HVAC fixtures, or other similar property,
(b) such property was acquired with indebtedness incurred
by the Borrower pursuant to the Agreement through advances
aggregating no more than $18,750,000,
(c) such property secures the payment of such indebtedness
under the Agreement and secures no other indebtedness and
(d) such property was acquired with such indebtedness under
the Agreement at a purchase price for all such property not in
excess of the aggregate amount of such indebtedness under the
Agreement.
Note Purchase Agreement -- means that certain Note Purchase
Agreement dated as of June 28, 1991, between the Borrower and the
persons listed on Annex 1 thereto, as amended from time to time.
Notes -- means the Borrower's 10.15% Senior Secured Notes
issued pursuant to the Note Purchase Agreement, as amended from
time to time.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
consent as of April __, 1996.
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, N.A.,
as Security Trustee
By________________________________
Name:
Title:
BA LEASING & CAPITAL
CORPORATION
By________________________________
Name:
Title:
<PAGE>
EXHIBIT A to Release, Consent and Acknowledgment
26. New personal property used in the production,
processing and manufacture of pharmaceutical products identified
as Collateral pursuant to the Agreement.
37.
27. All purchase orders and agreements, deposits, progress
payments or the like related to item 1 above.
28. All log books, manuals, maintenance programs,
documentation or other information related to items 1 and 2
above.
29. All warranties or other rights arising from any source
related to items 1, 2 and 3 above.
30. All proceeds including insurance proceeds of any of
items 1, 2, 3 or 4 above.
EXHIBIT B to Release, Consent and Acknowledgment
<PAGE>
Real Property
ALL THAT CERTAIN PLOT, PIECE OR PARCEL OF LAND, SITUATE, LYING
AND BEING IN THE TOWN OF HAVERSTRAW, COUNTY OF ROCKLAND AND STATE
OF NEW YORK, BOUNDED AND DESCRIBED AS FOLLOWS:
BEGINNING AT A MONUMENT SET IN THE WESTERLY SIDE OF QUAKER ROAD,
WHERE THE SAME IS INTERSECTED BY THE SOUTHERLY LINE OF LANDS NOW
OR FORMERLY OF HIGH TOR PROPERTIES, INC.;
THENCE ALONG SAID LANDS NORTH 81 DEGREES 04' 03" WEST 2198.71
FEET TO A STONE WALL AND LANDS NOW OR FORMERLY OF ZUBIAURRE;
THENCE ALONG SAID LANDS AND ALONG LANDS NOW OR FORMERLY OF
ZARATE, SOUTH 18 DEGREES 23' 19" WEST 195.71 FEET TO A POINT;
MARKED BY A CROSS CUT IN SAID STONE WALL AND LANDS NOW OR
FORMERLY OF SKY;
THENCE PARTLY ALONG SAID LANDS NOW OR FORMERLY OF SKY, SOUTH 22
DEGREES 37" 28" WEST 95.00 FEET TO A POINT;
THENCE STILL ALONG LANDS NOW OR FORMERLY OF SKY AND ALONG LANDS
NOW OR FORMERLY OF HEAVNER, LANDS NOW OR FORMERLY OF PROSELLER
AND LANDS NOW OR FORMERLY OF DEISROTH, SOUTH 18 DEGREES 05" 22"
WEST 734.44 FEET TO LANDS NOW OR FORMERLY OF MARCZAM;
THENCE ALONG SAID LANDS NOW OR FORMERLY OF MARCZAN, THE FOLLOWING
COURSE AND DISTANCES;
SOUTH 81 DEGREES 05' 12" EAST 1104.70 FEET TO A POINT AND LANDS
NOW OR FORMERLY OF MOUNT IVY SAND AND GRAVEL COMPANY;
THENCE ALONG SAID LANDS NOW OR FORMERLY OF MOUNT IVY SAND AND
GRAVEL COMPANY, NORTH 8 DEGREES 57' 51" EAST 500.00 FEET, SOUTH
81 DEGREES 03' 39" EAST 1220.00 FEET AND SOUTH 8 DEGREES 51' 17"
WEST 259.36 FEET AND SOUTH 81 DEGREES 29' 03" EAST 226.32 FEET TO
A MONUMENT SET IN SAID LANDS;
THENCE NORTH 8 DEGREES 18' 22" WEST 220.37 FEET AND NORTH 12
DEGREES 21' 57" EAST 131.79 TO A POINT AND THE WESTERLY SIDE OF
QUAKER ROAD;
THENCE ALONG THE WESTERLY SIDE OF QUAKER ROAD, NORTH 7 DEGREES
18' 02" WEST 443.58 FEET TO THE POINT OR PLACE OF BEGINNING.
EXHIBIT C to Release, Consent and Acknowledgment
<PAGE>
[Omitted from form]
EXHIBIT C
FORM OF UCC-3 FINANCING STATEMENTS
_______________________________
AGREEMENT BETWEEN
BARR LABORATORIES
and
LOCAL 8-149
OIL, CHEMICAL, and ATOMIC WORKERS
INTERNATIONAL UNION
EFFECTIVE - APRIL 1, 1996
EXPIRES - MARCH 31, 2001
BARR LABORATORIES, INC.
and
OIL, CHEMICAL AND ATOMIC WORKERS
INTERNATIONAL UNION, LOCAL 8-149
AFL-CIO
COLLECTIVE BARGAINING AGREEMENT
<PAGE>
TABLE OF CONTENTS
ARTICLE I. UNION RECOGNITION 1
ARTICLE II. MANAGEMENT RIGHTS 2
ARTICLE III. UNION ACTIVITIES 4
ARTICLE IV. HOURS 5
ARTICLE V. PROBATIONARY PERIOD 12
ARTICLE VI. SENIORITY 13
ARTICLE VII. DISCHARGE AND DISCIPLINE 18
ARTICLE VIII. UNION BULLETIN BOARDS 19
ARTICLE IX. LEAVES OF ABSENCE 20
ARTICLE X. BEREAVEMENT 23
ARTICLE XI. JURY DUTY 23
ARTICLE XII. GENERAL 24
ARTICLE XIII. GRIEVANCES 31
ARTICLE XIV. VACATIONS 37
ARTICLE XV. HOLIDAYS AND HOLIDAY PAY 40
ARTICLE XVI. WAGE INCREASES 42
ARTICLE XVII. HEALTH AND WELFARE 51
ARTICLE XVIII. CHECKOFF 52
ARTICLE XIX. RELOCATION 53
ARTICLE XX. UNION SECURITY 53
ARTICLE XXI. UNION REPRESENTATION AND STEWARDS 53
ARTICLE XXII. SICK LEAVE, PERSONAL DAYS, LONGEVITY DAY 56
ARTICLE XXIII. SHIFT DIFFERENTIAL 58
ARTICLE XXIV. REPORTING AND CALL-IN PAY 58
ARTICLE XXV. SAFETY AND HEALTH 59
ARTICLE XXVI. WASH UP TIME AND REST PERIODS 63
ARTICLE XXVII. TUITION REFUND PLAN 63
ARTICLE XXVIII. LOCKOUTS AND STRIKES 64
ARTICLE XXIX. BIDDING AND POSTING 65
ARTICLE XXX. CREDIT UNION CHECK-OFF 69
ARTICLE XXXI. 401(k) PLAN (EMPLOYEE SAVINGS AND RETIREMENT
PLAN) 69
ARTICLE XXXII. SUCCESSORS AND ASSIGNS 71
ARTICLE XXXIII. SEVERANCE PAY 71
ARTICLE XXXIV. DURATION AND TERMINATION 72
<PAGE>
AGREEMENT
AGREEMENT made this ____ day of April, 1996, effective as of
April 1, 1996, by and between BARR LABORATORIES, INC., for its
facilities at 265 Livingston Street, Northvale, New Jersey, 2
Quaker Road, Pomona, New York and 246 Pegasus Avenue, Northvale,
New Jersey; 232 Pegasus Avenue, Northvale, New Jersey and 267
Livingston Street, Northvale, New Jersey (hereinafter
collectively referred to as the "Employer") and OIL, CHEMICAL AND
ATOMIC WORKERS INTERNATIONAL UNION, LOCAL 8-149, AFL-CIO
(hereinafter referred to as the "Union").
WHEREAS, both parties having accepted the principle of
collective bargaining as a means of establishing wages, hours and
working conditions of the covered employees and being desirous of
continuing to do so for the purpose of fostering relations of
mutual interest, and
WHEREAS, it is the purpose and intent of the parties to
promote sound and peaceful labor relations,
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties do hereby agree as
follows:
I. UNION RECOGNITION
1. The Company recognizes the Union as the sole
collective bargaining agent for purposes of collective bargaining
with respect to rates of pay, wages, hours and other terms and
conditions of employment for all its full-time and regular part-
time employees employed by the Company at its facilities
presently located at 265 Livingston Street, Northvale, New
Jersey, 2 Quaker
1
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Road, Pomona, New York, 246 Pegasus Avenue,
Northvale, New Jersey, 232 Pegasus Avenue, Northvale, New Jersey
and 267 Livingston Street, Northvale, New Jersey; excluding
office clerical employees, professional employees, maintenance
trade and engineering employees, laboratory employees, Food
Service employees, Groundskeeping employees, and guards and
supervisors as defined in the National Labor Relations Act.
However, it is agreed that all new hires for helper and any
additional craftsman beyond the current three (3) slots in plant
maintenance will be represented by the Union.
II. MANAGEMENT RIGHTS
1. The Company has, retains and shall possess and
exercise all rights and functions, powers, privileges and
authority not specifically and expressly contracted away or
limited by the terms of this Agreement.
2. As illustrative of the rights the Company possesses
and retains, but in no way to be construed as a limitation, the
Company shall have the exclusive right to: manage all of the
Company's operations and its business affairs; direct the work
force; determine production methods and procedures; assign work,
evaluate jobs and the performance of jobs for pay purposes and to
reevaluate them; decide the methods, means and processes of
manufacture, type of machinery and equipment to be used, the
number and classifications of employees to be used in the various
aspects of the Company's operations or for particular
assignments, types and quantity of business to be scheduled for
production, quality of material, and the standards of efficiency
and quality of workmanship required; decide selling prices and
products, methods of selling and distributing products; determine
the location of the business and to relocate any part or all of
the Company's operations; discontinue operations in whole or in
part; allocate and transfer production; introduce new
2
<PAGE>
or improved methods or facilities, or to change existing manufacturing
practices, decide methods and facilities, maintain order and
efficiency; the right to hire, promote, demote, transfer,
suspend, discharge, or otherwise discipline employees; determine
the size and composition of the work force and relieve employees
from duty because of lack of work or other reasons; determine the
hours of work and schedule hours and determine overtime;
establish, adjust and revise job classifications, hourly rates,
establish rules pertaining to the operation of the plant and
discipline employees for violation of such rules; determine an
employee's qualifications to perform work in any particular
position and to reassess and upgrade qualification standards for
employees, including incumbents, in particular positions whenever
and to whatever extent deemed by the Company to best serve the
Company's overall interests in ensuring regulatory compliance and
product quality and integrity and maximizing productivity,
efficiency and safety; perform scientific and engineering
studies; to contract out or subcontract work; establish or
discontinue extra shifts, except as expressly amended or changed
as hereinafter set out; to enforce procedures designed to ensure
that employees do not report for work or perform work under the
influence of drugs, alcohol or other substances that may or do
impair or reduce mental acuity, motor coordination, and/or other
performance capabilities that could affect regulatory compliance,
product quality and integrity, or safety; to make and implement
unilaterally any decisions that in the opinion of management are
required to ensure regulatory compliance, product quality and
integrity, and the safe operation of Company facilities; and to
implement measures deemed necessary by Company management to
maximize productivity and efficiency. The enumeration of
specific rights in this Section shall not be construed as
supporting a negative implication that other rights of the
Company have been waived or compromised in any way. Nor shall
the enumeration of such rights be construed as expanding or
contracting in any way the Union's right, to the extent otherwise
secured by applicable precedents under the National Labor
Relations Act as amended, to demand that the Company engage in
collective bargaining over the effects of the
3
<PAGE>
exercise of such rights on the wages, terms and conditions of employment and
employment security of employees covered by this Agreement.
3. Furthermore, the Company retains the right to take
whatever steps it deems necessary to meet and comply with all
Federal, state or local regulations including but not limited to
those promulgated by DEA, FDA and any regulatory agency.
4. Within the limits prescribed in Article XII,
Section 4 of this Agreement, Management has the right to use
supervisors and other non-bargaining unit personnel to perform
unit work.
5. With respect to any rights heretofore exercised by or
inherent in the Company and not expressly limited by the terms of
this Agreement, and with respect to any rights retained by or
conferred upon the Company in the terms of this Agreement, any
failure by the Company to exercise such rights, or the exercise
of such rights by the Company in a particular manner, shall not
be construed to be a waiver of or limitation on any such right, a
waiver of or limitation on the right to exercise any such right,
or a waiver of or limitation on the right to exercise any such
right, or a waiver of or limitation on the right to exercise any
such right in a different manner. Nor shall enumeration of
rights reserved to the Company in this Agreement be construed as,
or considered as evidence of, an implied limitation on or
preclusion of any Company rights not so enumerated.
III. UNION ACTIVITIES
1. There shall be no grievance investigated, presented,
discussed, processed or handled during working hours without the
Vice President Human Resources or the Manager Human Resources
first being notified and her permission to do so obtained, nor
shall the investigation, presentation, discussion, processing or
handling of grievances interfere in any way with the normal
4
<PAGE>
and efficient conduct of the Company's operations. In the case of
Departmental Stewards, however, this Section shall be deemed to
have been complied with in cases where such Stewards find it
necessary to be excused from their regular work responsibilities
for brief periods of time for such purposes if notice is provided
and permission obtained in advance from the Steward's Plant
Manager.
2. An authorized agent of the Union shall be permitted
to visit the plant during working hours, after first notifying
the Vice President Human Resources or her designee, for the
purpose of investigating and settling grievances and insuring the
proper administration of the contract; provided, however, that
said representative shall conduct his business in such manner so
as not to interfere with the normal and efficient conduct of the
Company's operations. The Union shall keep the Company currently
advised, in writing, of the officer or representative of the
Union who is authorized to deal with the Company, and no one
shall be deemed such a representative unless he is so designated
by the Union to the Company.
IV. HOURS
1. The standard work week shall be five (5) consecutive
days, forty (40) hours per week; eight (8) hours per day, from
12:01 a.m. Monday to 12:00 p.m. the following Sunday, exclusive
of lunch. The standard work day shall consist of eight and one-
half (8-1/2) consecutive hours with a one-half (1/2) hour unpaid
lunch break between the hours of 7:00 a.m. and 5:00 p.m.
However, the Company retains sole and unrestricted discretion to
change work schedules for employees in any part or all of its
operations to best serve the Company's overall interests in
ensuring regulatory compliance and product quality and integrity,
and maximizing productivity, efficiency and safety. The Union
and employees affected by such a change will be provided notice
at least two (2) weeks in advance of implementation of the
change. Shifts may be established or discontinued in the
5
<PAGE>
sole and unrestricted discretion of the Employer on notice to the
Union and the affected employees of thirty (30) calendar days
whenever reasonably practicable, but in any event not less than
fourteen (14) calendar days. Whenever a shift change is
implemented for less than all of the employees in a department,
the Company shall first seek to obtain enough employees to staff
the new shift by asking for volunteers from among the employees
in the department. In the event there are more volunteers than
openings, employees shall be selected on the basis of their
seniority. In the event an insufficient number of volunteers
come forth, the Company may have the work done by nonbargaining
unit employees for up to two (2) months, hire for such positions
from outside the bargaining unit, and/or require additional
employees, in reverse order of seniority, to either work the new
shift or go onto layoff status.
The Employer may implement a Tuesday through Saturday
workweek or Wednesday through Sunday workweek provided the
following criteria are met:
(a) Employees assigned to work Tuesday through Saturday or
Wednesday through Sunday workweeks must work a five (5)
consecutive day week.
(b) The Company shall first seek to obtain employees for
such workweeks by asking for volunteers. If more volunteers come
forward than there are openings, employees shall be selected on
the basis of their seniority. If an insufficient number of
volunteers come forth, the Company may have the work done by
nonbargaining unit employees for up to two (2) months, hire for
such positions from outside the bargaining unit, and/or require
additional employees, in reverse order of seniority, to either
work the new workweek or go onto layoff status.
6
<PAGE>
(c) Those employees hired for the Tuesday through Saturday
or Wednesday through Sunday workweek shall have a right to bid
into openings occurring less than one hundred and eighty (180)
days after their initial hire date the Monday through Friday
workweek, except as otherwise provided in Article V, Section 7.
(d) The Employer agrees to preserve a three day weekend
during holiday weeks.
Employees assigned to work Tuesday through Saturday or Wednesday
through Sunday workweeks pursuant to the terms of this Section
and who by virtue of such assignment work on Saturday or Sunday,
shall receive premium pay in the amount of eighty-five cents
($0.85) per hour for each hour worked on such days. Except as
provided in Article XXIV, nothing in this Agreement shall be
construed as obligating the Company to provide any minimum hours
of work per day, per week, per month or per year.
2. The Employer has sole and unrestricted discretion to
establish a ten (10) hours per day shift, exclusive of the thirty
(30) minute unpaid lunch period, at the straight-time wage rate.
For employees assigned to work such a shift, except as otherwise
provided below, forty (40) hours per week shall constitute a
week's work. If a ten hour work day as hereinbefore described is
implemented, the Employer shall schedule employees assigned to
work such shifts in such a manner as to make all straight-time
work days after the first one in each work week follow each other
consecutively. The Employer shall have the right to schedule
such four day work weeks to begin on Monday, Tuesday or Wednesday
in the same manner and subject to the same conditions (except for
the five (5) consecutive day week requirement) as would apply
under Section 1 of this Article to the
7
<PAGE>
assignment of employees to work five (5) day work weeks beginning
on those days. The Employer shall also have the option to schedule
two crews to work a ten (10) hour work days in such a manner as to
provide employee coverage in the department on each of the seven (7)
days of the workweek, provided however that in such event employees in
each crew shall be scheduled to work eight (8) consecutive days, with
the first and last of the eight (8) days being on Thursday and
with both crews overlapping for the full ten (10) hour shift on
Thursday. The Employer will provide notice to the Union and
affected employees at least two (2) weeks before commencement of
any of the special shifts provided for in this Section.
Employees working ten-hour days shall be entitled to an
additional rest period of fifteen (15) minutes after working
eight (8) hours. Employees who are assigned to work special
shifts pursuant to this Section shall be entitled to take the
Holidays specified in Article XV, Section 2 of this Agreement off
without loss of pay or, if required to work on a Holiday, shall
be compensated at a rate equal to two and one-half times the rate
they would have been paid had the work been performed on a normal
workday. Employees assigned to work special shifts under this
Section whose workweek does not encompass a Holiday shall receive
an additional eight (8) hours straight-time pay for that
workweek. Employees scheduled to work hours on Saturday or
Sunday pursuant to this Section shall be paid a premium of eighty-
five cents ($0.85) per hour for all such weekend hours worked.
3. OVERTIME: Employees shall be paid overtime premium
pay for all hours worked over eight (8) hours in any one day
(except as otherwise provided above in Section 2 of this
Article), or forty (40) paid hours in any one work week and for
any time worked on scheduled holidays enumerated in Article XV.
Employees who fail to work any portion of the straight time work
for which they are scheduled in a given work week will not be
entitled to premium pay for overtime in that week, except to the
extent that their total hours worked in that week exceed forty
8
<PAGE>
(40) hours, unless the employee's failure to work such straight
time is due to serious illness or serious injury, or the
employee's being on jury duty, vacation, paid sick leave, or
bereavement leave; and Saturday and Sunday overtime shall be paid
on the same basis. Except as otherwise provided in this Article,
overtime hours worked on Sundays shall be compensated at a rate
equal to twice the employee's base wage rate. Only time actually
paid shall be included in computing overtime. Any time worked
when once included in computing overtime under any applicable
provision of this Agreement shall not thereafter be included in
computing overtime under any other applicable provisions hereof.
In no event, shall there be any duplication or pyramiding of any
overtime or premium pay, whether for Sundays, holidays or
overtime purposes or otherwise.
The Company shall have discretion to determine which job
classification(s) will be needed to perform available overtime
work. Overtime shall first be offered to qualified employees
within the job classification within the department in which the
overtime is available. Such opportunities shall be equally
divided among the employees in the department in the same job
classification and assigned to work in the same building. For
purposes of equalization, an opportunity offered and refused
shall be counted as overtime worked. If an insufficient number
of employees within the department and currently assigned to the
classification that the Company has designated to work overtime
are available for such work, the Company may fill the overtime
with qualified volunteers from outside the department on the
basis of seniority (in which case the Company shall offer the
overtime to employees then assigned to work in the classification
that the Company has designated to work the overtime and working
in the location (Northvale or Pomona) where the overtime is to be
worked, then to employees assigned to work in such classification
at any other Company facilities covered by this Agreement, and
then to any other qualified employees assigned to work at any
such facilities), and/or by drafting employees from within the
building and department in reverse order of seniority.
9
<PAGE>
In any situations in which overtime work is of such a nature as to
require the employee performing it to have any special skills or
experience, the Company has sole and unrestricted discretion to
assign overtime work to the employee or employees who, in the
Company's judgment, is or are best suited to carry out the
assignment competently, efficiently and safely. To the extent
overtime assignments do not, in the judgement of the Company,
require employees of special skill and/or experience, however,
the Company shall be required to distribute such assignments
evenly among employees in the department; and any time worked by
an employee in an overtime assignment made on the basis of
special skills or experience shall be credited to that employee
for overtime equalization purposes, as would any other overtime
worked. The Union shall be informed of all special overtime
assignments made on the basis of special skills or experience on
at least a weekly basis. It is understood that the Company shall
not be required to create unnecessary overtime for any purpose.
4. When an employee is requested by the Company to work
outside of or beyond his regular hours, he shall be expected to
do so, unless the Company determines that extraordinary hardship
would result by requiring the employee to work such an overtime
assignment. However, under no circumstances will notice for
mandatory overtime be given less than four (4) hours before such
overtime would begin. No employee shall be required to work more
than fourteen (14) hours in any workday or more than fifty-six
(56) hours in any workweek, except as otherwise provided in
Section 2 of this Article. In the event an employee is required
to work an overtime assignment and has difficulty with working
the assignment due to a schedule conflict, he shall not be
required to work the overtime if he is able to find a qualified
volunteer to take his place who is acceptable to the supervisor
scheduling the overtime. In such cases, the employee shall be
charged with having worked the overtime for the purposes of
overtime distribution; and the volunteer who works the overtime
shall not be so charged.
10
<PAGE>
5. HOLIDAY WORK: The Company shall, unless
extraordinary hardship would result, give seven (7) days' notice
of overtime work scheduled on a holiday or during a holiday
weekend (i.e., a weekend preceded or followed by a day designated
as a holiday in Article XV, Section 2 of this Agreement). The
Company shall have the right to open the plant for business on
holidays and to expect employees to work on such days. Except as
otherwise provided above in Section 3 of this Article, work
performed by employees on holidays shall be considered as premium
work, and such work shall be paid for at time and one-half.
6. Hours and pay representing holiday pay, and vacation
pay and all other hours of pay representing non-working time will
be included in figuring overtime for the week and in figuring
straight time average hourly rates.
7. REST PERIODS AND LUNCH PERIODS: The Company shall
provide employees with a one-half (1/2) hour unpaid lunch period
and two (2) rest periods of fifteen (15) minutes duration. It is
understood and agreed that the scheduling of such periods remains
exclusively vested in the Company, and the taking of such periods
shall in no way interfere with the normal and efficient
operations of the plant.
8. Notwithstanding any other provision of this
Agreement, the Employer has sole and unrestricted discretion to
determine when it is necessary to suspend or shut down some part
or all of its operations because of an Act of God, any
circumstances beyond the Employer's control, or any emergency
situation that could compromise product quality or integrity or
endanger the life and safety of an employee or because of
regulatory compliance considerations. In such cases, employees
will be compensated in accordance with the terms of Article XXIV
of this Agreement. In the case of such a suspension or shut-down
in which the Employer requests affected employees to wait in a designated
11
<PAGE>
area available for work, the waiting time shall be
considered time worked. If the plant is closed under the
circumstances specified in this Section, and employees are
scheduled to work the following Saturday, said Saturday work
shall be paid for at time and one-half.
9. The provisions of this Article are intended solely to
provide a basis for determining the number of hours of work for
which an employee shall be entitled to be paid at overtime rates,
and shall not be construed as a guarantee to such employee of any
specified number of hours of work either per day or per week, or
as limiting the right of the Company to fix the number of hours
of work (including overtime) either per day or per week for such
employee.
10. CHECK CASHING: The Employer will grant each employee
an additional fifteen (15) minutes to their lunch period on check
cashing day.
V. PROBATIONARY PERIOD
1. The Company has the right to employ such new
employees as it deems necessary and qualified to do the work
available and may hire such persons from any source. The Company
also retains the right to refuse to employ any such person in its
discretion.
2. Generally, there shall be a six (6) month
probationary period for new employees, which may be extended for
up to an additional one (1) month by mutual agreement between the
Company and the Union. New employees hired into the Porter or
Supplier/Material Handler classifications, however, shall be
required to complete a probationary period of ninety (90) days,
which may be extended by up to an additional thirty (30) days by
mutual agreement between the Company and the Union.
12
<PAGE>
3. The computation of the probationary period shall not
include any work time absent from the job for any reason, and
said probationary period will automatically be extended for all
such work time lost.
4. All probationary period employees may be laid off,
disciplined, discharged or otherwise terminated during their
probationary period for any reason whatsoever, with or without
cause, and such layoff, discipline, discharge or termination
shall not be subject to the grievance procedure of this
Agreement. Nothing in this Agreement shall be construed as a
limitation on this provision in any way.
5. After completion of their probationary period,
employees shall be deemed to be regular employees, and their
seniority shall revert to the date of employment.
6. Nothing in this provision shall be considered a
restriction or limitation upon the training periods established
by the Company for the various job operations or on providing
training periods of greater duration than the probationary period
established herein. Such employees shall be notified of the
length of training period.
VI. SENIORITY
1. Seniority is defined as the total length of
continuous service with the Company.
2. Each Employee shall accumulate seniority rights after
the probationary period provided in ARTICLE V has been
successfully completed, and such seniority shall date from the
time of the employee's most recent date of hire.
13
<PAGE>
3. LAYOFF AND RECALL: The Company shall have the right
to determine when a layoff is necessary, including the right to
determine the number of employees to be laid off, the department
in which the layoff will occur, and the duration of such layoffs.
In the event a layoff becomes necessary, employees will be laid
off in accordance with their seniority. However, employees to be
laid off shall be permitted to bump employees with less seniority
in an equivalent or lower rated, unprotected job, where the
Company determines the bumping employee is qualified and able to
perform the available work, and where the Company determines in
its sole and unrestricted discretion that displacement of the
incumbent by the bumping employee will not materially affect the
Company's ability to ensure full and undiminished compliance with
regulatory obligations and product quality and integrity. The
Company shall have the right to exempt from bumping up to fifty
percent (50%) of the positions in each classification in each
department, except for Porter and Packer positions. Employees
exercising bumping rights pursuant to this Section shall serve a
probationary period of six (6) work weeks in the position into
which they have bumped, during which period the Company shall
have the right to determine that continuation of the employee in
the position is not consistent with the Company's overall
interests of ensuring regulatory compliance and product quality
and integrity, and maximizing productivity, efficiency and
safety. In the event of such a determination, the employee
bumped out of the position shall be recalled and the employee who
bumped into the position may, in the discretion of the Company,
either be laid off or transferred to another position. In no
event shall an employee be permitted to bump upward. An employee
shall be permitted to exercise bumping rights under this Section
only one (1) time in connection with any layoff affecting the
employee (unless the employee is bumped by a more senior employee
from a position into which he has bumped as a consequence of the
same layoff, in which case the employee may exercise any
additional bumping rights he has one (1) additional time); and
the employee's decision as to whether and how to exercise any
bumping rights available to him, once made and
14
<PAGE>
communicated to
the Company, shall be irrevocable. The Company shall give forty-
eight (48) hours advance notice of layoff or equivalent pay in
lieu of notice. If more than twenty (20) employees are laid off
in any period of twenty-one (21) days or less, employees who are
involuntarily put out of work by the layoff(s) shall be given
five (5) working days notice of their layoff, provided that the
Employer has determined at the time of the layoff that the
employee is expected to remain on layoff status for a period of
more than thirty (30) calendar days. If an employee is otherwise
entitled to five (5) days notice pursuant to this Section and one
or more paid holidays provided for in Article XV, Section 2 of
this Agreement falls within the notice period, such paid
holiday(s) shall be deemed a working day(s) for purposes of the
notice requirement. The Employer has the option to provide to
any portion of or all employees involuntarily put out of work as
a result of a layoff pay in lieu of any notice required by this
Section. The Employer shall continue to make contributions for
medical coverage of employees put out of work by a layoff for
ninety (90) days after the layoff. Recall will be in the reverse
order of layoff, and employees recalled from a layoff to the
classification that they occupied prior to the layoff shall be
compensated for hours worked at the rate in effect for them in
the classification immediately prior to the layoff. Employees
occupying Porter positions on the effective date of this
Agreement shall, during the term of this Agreement and so long as
they continue to occupy such positions, be protected from layoff
resulting from a decision of the Company to subcontract the
Porter work that would otherwise be done by them.
4. TRANSFERS: The Company shall have the right to
transfer employees on a temporary basis. The Company shall
provide forty-eight (48) hours advance notice of all transfers
between shifts. With respect to transfers involving a relocation
of greater than five (5) miles from an employee's regular
station, the Company must provide twenty-four (24) hours notice.
A temporary transfer shall be defined as a transfer of an
employee at the direction of the Company that is intended
15
<PAGE>
by the Company at the time it is made to continue for no more than sixty
(60), in the case of an employee's transfer to a different shift
and/or to a different location (i.e., Pomona or Northvale), or in
the case of an employee's temporary reassignment to a different
job on the same shift and in the same location as his regular
assignment, for no more than ninety (90) consecutive calendar
days. Provided, however, the Company shall have the right to
extend any temporary transfer for up to an additional sixty (60)
days if the Company and the Union mutually agree. The Union
shall, however, not refuse to agree to any extension of a
temporary transfer in any case in which failure to extend the
transfer would result in a substantial disruption of production
or compromise in any way the Company's ability to ensure
regulatory compliance. No employee shall suffer a reduction of
pay as the result of temporary transfer, except that employees
who are temporarily transferred between shifts to facilitate the
exercise of bumping rights in the wake of a layoff shall not be
entitled to continue receiving any shift differential applicable
to the shift from which they transferred during the period of the
temporary transfer. Employees transferred to a higher rate job
shall receive that rate for all time spent in that job. All
transfers shall be at the Company's sole and unrestricted
discretion and may be without regard to seniority.
Notwithstanding any other provision in this Agreement, the
Company shall have the right, on the basis of its sole and
unrestricted discretion, to move the physical location of any
part of its operations to another situs. Packers selected for
temporary transfers to the Cephalexin area at the Company's
Pomona, New York facility shall be selected in reverse order of
seniority.
5. Seniority rights and employment shall be terminated
if an employee:
(a) Is discharged for cause.
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(b) Voluntarily quits.
(c) Has less than two (2) years of seniority and is laid
off on or after the effective date of this Agreement for a period
of six (6) consecutive calendar months or more.
(d) Has two (2) to five (5) years of seniority and is
laid off on or after the effective date of this Agreement
for a period of more than twelve (12) consecutive calendar
months.
(e) Has more than five (5) years seniority and is
laid off on or after the effective date of this
Agreement for a period of more than eighteen (18)
consecutive calendar months.
(f) Fails to return to work within five (5)
calendar days after recall from layoff.
(g) Fails to return to work immediately after the
expiration of a leave of absence.
(h) Accepts other employment while on a leave of
absence, or misrepresents the purpose for which a leave
of absence was granted.
(i) Transfers out of the bargaining unit.
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(j) Absent for three (3) days without notifying
the Company unless the employee can demonstrate by
clear and convincing evidence that he was unable to do
so due to circumstances beyond his control.
(k) Retires.
(l) Accepts severance pay provided by the Company
pursuant to Article XXXIII of this Agreement.
6. In order to insure the proper administration of this
Article, the Company agrees to submit an up-to-date seniority
list to the Union and the Chief Steward four (4) times a year on
a quarterly basis. The Company also agrees to post the list in
the plant.
7. For purposes of any layoff pursuant to Section 3 of
this Article, the Chief Steward shall be deemed senior to all
other employees in the bargaining unit.
VII. DISCHARGE AND DISCIPLINE
1. The Company shall have the right at any time to
discharge or discipline any employee for good cause. No
disciplinary action may be taken, however, unless the employee is
provided notice of the disciplinary action within ten (10) work
days after the Company learns of the conduct on which the
disciplinary action is based.
2. In the event of discharge or other disciplinary
action taken against a non-probationary employee, the Company
will promptly furnish the affected employee with a written
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statement specifying the reason for the discharge or other
disciplinary action. Such action on the part of the Company
shall be subject to the Grievance Procedure specified in Article
XIII of this Agreement (beginning with Step 3 of Section 3
thereof), provided that a grievance is filed in writing with the
Company within ten (10) work days of receipt by the employee of
the written statement specifying the reason for discharge or
other disciplinary action. Failure to file such grievance within
ten (10) work days shall bar its consideration under any
provisions of this Agreement.
3. A disciplinary memorandum shall not be taken into
account for purposes of determining eligibility for job bids or
the appropriate level of discipline for multiple violations in
the same category under the Company's progressive discipline
policy more than twelve (12) months after the issuance of the
memorandum.
4. The Department Steward, if available, shall be
invited to attend any meeting in which an employee in the
Steward's department is to be informed of any decision to
discipline or discharge the employee.
VIII. UNION BULLETIN BOARDS
The Union shall have the exclusive use of one bulletin board
to be provided by the Company, upon which the Union may post
notices of the following types:
(a) Notices of Union elections involving the Company's
employees.
(b) Notices of the results of such elections.
(c) Notices of Union appointments affecting the Company's
employees.
(d) Notices of meetings and activities pertaining to the
Company's employees; and
(e) Job vacancies and bids.
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The Union shall not post Union materials on Company premises
other than on the designated Union bulletin boards.
IX. LEAVES OF ABSENCE
1. For the purpose of this Agreement, a leave of absence
is defined as a limited and specified period of time officially
granted to an employee by the Company to absent himself from his
job duties for sick leave, family leave, or personal leave as
hereinafter defined, which time off shall be taken without pay
and subject to all conditions herein.
2. MATERNITY LEAVE OF ABSENCE: A leave of absence for
reasons of maternity shall be granted employees upon
certification from a doctor that the employee is unable to
perform her regular job functions, and said leave shall continue
in effect until such time that a certification from a doctor is
presented stating the employee is physically able to perform the
regular functions of her job. An employee who has been employed
by the Company for at least twelve (12) months and who has worked
at least one thousand (1,000) hours during the immediately
preceding twelve (12) month period shall be entitled to a
personal leave of absence of up to six (6) months to care for his
or her newborn baby or newly adopted infant, after completion of
any prebirth medical disability leave (in the case of an employee
who is the child's mother).
3. SICK LEAVE OF ABSENCE: An employee who has been
employed by the Company for at least twelve (12) months and who
has worked at least one thousand (1,000) hours during the
immediately preceding twelve (12) months may be granted, upon
timely application, a leave of absence without pay for a period
not to exceed twelve (12) consecutive months if the employee
suffers from a serious health condition. The Company may, in its
sole and unrestricted discretion, require that any period of
leave pursuant to this Section be supported by certification
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issued by a duly licensed health care provider which shall state,
at a minimum: (a) the date on which the serious health condition
commenced; (b) the probable duration of the condition; and the
medical facts within the provider's knowledge regarding the
condition. The Company may, in its sole and unrestricted
discretion and at its own expense, require that the employee
obtain an opinion regarding the serious health condition from a
licensed health care provider designated or approved by the
Company. An employee who fails to report to work immediately on
the date set for the expiration of his or her leave shall be
considered to have abandoned his or her employment unless the
Company receives a certificate from a licensed health care
provider, prior to expiration of such leave, that the employee is
still unable to perform his/her regular job functions.
4. PERSONAL LEAVE OF ABSENCE: Upon written application
from an employee for a personal leave of absence, the Company, in
its exclusive discretion, may grant a written leave of absence
without pay where good cause is shown, for a maximum period of
six (6) months. An employee who has been employed by the Company
for at least twelve (12) months, who has worked at least one
thousand (1,000) hours during the immediately preceding twelve
(12) months, and whose parent, spouse or child is suffering from
a serious health condition shall be entitled to unpaid leave, if
timely requested, of up to twelve (12) weeks in any twelve (12)
month period to care for such parent, spouse or child.
Permission for leave requested pursuant to this Section shall not
be unreasonably withheld. No employee has the absolute right to
return to work prior to the expiration of his leave unless he
notifies the Company, in writing, at least five (5) working days
prior to the intended date for return to work; and the Company,
in its sole discretion, determines that the employee's early
return as proposed will best serve the Company's overall interest
in ensuring regulatory compliance and product quality and
integrity, and maximizing productivity, efficiency and safety.
The leave of absence for personal reasons may be extended by
mutual agreement of the
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parties. An employee who fails to report
to work immediately on the date set for the expiration of his
leave shall be considered as having voluntarily quit, unless a
reasonable excuse is given as determined by the Company.
5. The employee who returns from an authorized leave of
absence and is capable of properly and adequately performing his
job without significant additional training, will be reinstated
in the job he held at the time his leave commenced if that
position is vacant and the Company's production needs are such as
to make filling the position at that time desirable. If a
returning employee's prior position is not vacant or filling the
position at that time is deemed by the Company to be not
desirable, he will be allowed to exercise "bumping" rights unless
the Company determines that the employee's exercise of such
rights would significantly impair the interests of ensuring
regulatory compliance and product quality and integrity, and
maximizing safety. In such case, the employee shall be placed on
layoff status until such time as his prior position becomes
vacant and production needs make filling the position desirable,
or the Company determines that the employee's exercise of
"bumping rights" will not significantly impair the aforementioned
interests.
6. An employee who accepts employment elsewhere during
any leave of absence taken pursuant to the terms of this Article
will be considered as having voluntarily quit, unless previously
authorized.
7. Employees will accumulate seniority while on an
approved leave of absence pursuant to this Article. Employees on
leave granted pursuant to this Article will not, however, receive
credit as time worked for purposes of accrual of or entitlement
to any benefits except as otherwise provided in Article XV,
Section 1(a) and Article XVII, Section 3.
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SECTION 8. Any leave requested and taken by an employee
pursuant to the terms of this Article shall be charged against
the employee's eligibility for leave under the Family and Medical
Leave Act to the extent consistent with the terms of said Act.
X. BEREAVEMENT
1. When death occurs in an employee's immediate family,
which shall mean father, mother, husband, wife, son or daughter,
the employee shall be entitled, on notification to the Company,
to take the five (5) work days immediately following the
employee's learning of such death with pay for bereavement leave.
In the case of the death of the brother, sister, mother-in-law,
father-in-law, grandchildren or grandparents of an employee who
has completed his probationary period, the employee on request
will be excused for three (3) consecutive working days with pay
to grieve. The Company will not unreasonably withhold its
consent to reasonable extensions on bereavement leave as
circumstances warrant, but employees to whom such extensions are
granted shall not be entitled to pay during the period of such
extended leave.
2. Reasonable evidence of the death and relationship may
be required by the Company supporting the claim for such time off
from work.
XI. JURY DUTY
Full-time employees who are called for jury duty shall be
granted the necessary time off for such purpose. The Company
will pay the employee the greater of the employee's daily wages
(to be computed on the same basis as holiday pay) or forty
dollars ($40.00) per day for the first three (3) days of jury
service. In the case of any employee required to serve on jury
duty for more than three (3) days, the Company will pay such
employee for such additional service the difference, if any,
between the employee's daily earnings (to be computed the same as
holiday pay) and the monies paid
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to such employee by the
authorized governmental agency, provided that such additional
jury duty is not the result of a voluntary act by the employee.
At the request of the Company, the employee shall present
evidence of jury duty and receipt of compensation. The employee
must notify the plant manager immediately upon receipt of summons
for jury service in order to qualify for jury duty leave.
XII. GENERAL
1. The Company and the Union agree that they will not
discriminate against an employee by reason of race, color, creed,
age, sex, sexual preference, physical or mental disability,
national origin, membership or non-membership in the Union.
2. Nothing in this Agreement shall be construed as
constituting an agreement that any work is or may become the
exclusive right of any employee or classification of employees.
The Company retains the sole and unrestricted discretion to
direct employees, on a temporary basis, to perform work not
within the job description of the position that they normally
occupy whenever the Company determines that the interests of
ensuring regulatory compliance and product quality and integrity,
and maximizing productivity, efficiency or safety will best be
served by doing so. This clause shall not contravene the
seniority and overtime provisions.
3. All provisions of this Agreement are assumed to be in
conformity with the applicable laws of the States of New Jersey
and New York and the United States. If any provisions are later
proven to be contrary to any applicable law existing at this time
or subsequently enacted, such provision shall then be considered
void, and the invalidity or unenforceability of such provision
shall have no effect on the remaining provisions of the
Agreement.
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4. The Company has the right to use supervisors and
other non-bargaining unit personnel to perform bargaining unit
work to whatever extent and for whatever duration management
deems best serves the Company's overall interests in ensuring
regulatory compliance and product quality and integrity, and
maximizing safety. Supervisors also may, in the interests of
efficiency and orderly production, fill in or work on a
particular job as dictated by the necessities of the operation.
However, if an employee within the bargaining unit leaves the
employ of the Company, he will not be replaced with a supervisory
employee provided the position is still available. Likewise, if
there are overtime opportunities, supervisory employees shall not
replace bargaining unit employees; but this proscription shall
not preclude qualified supervisors from doing up to two (2) hours
of unit work if there are no qualified bargaining unit employees
in the plant and available to do the work at the time. Some
examples of supervisors working are:
(a) Emergencies occurring during scheduled working days
when an operation is not fully manned.
(b) Instructing or training of employees, including self-
training.
(c) Performing experimental work involving new products,
new equipment, new methods or new materials.
(d) Making minor adjustments and set up.
(e) Providing for the continuance of the work flow.
(f) Product validation or other nonproduction scientific work.
It is agreed that the Company shall not exercise its rights under
this Section in such a way as to reduce systematically the number
of bargaining unit positions.
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5. The Company shall be responsible for instituting
formal training procedures in all job classifications. Training
shall be performed by such personnel as the Company deems, in its
sole and unrestricted discretion, best suited to effective and
efficient performance of the training function. Employees
assigned to perform such training functions shall be compensated
at a rate one dollar and fifty cents ($1.50) above their normal
rate during the period of such assignment. A training guide
shall be developed covering the skills and responsibilities which
employees in each type of work shall be taught. Employees may be
directed to participate in cross-training exercises to ensure the
availability of adequate personnel with the appropriate skill mix
to deal with emergency or peak load situations, or to best serve
the Company's overall interests in ensuring regulatory compliance
and product quality and integrity, and maximizing productivity,
efficiency and safety. The determination of the departments in
which cross-training will be done and the number of employees in
such departments to be given cross-training is a matter committed
to the sole and unrestricted discretion of the Company. If less
than all employees in a job classification within a department
are to be assigned to participate in cross-training exercises,
employees shall be selected for such exercises on the basis of
seniority. Employees temporarily assigned to positions, other
than the ones they normally occupy, for cross-training purposes
shall not be deemed to have transferred into such positions. The
Company will inform the Union at least two (2) weeks prior to
implementation of its plans, and any modifications thereof, for
cross-training in any department with bargaining unit employees
who will be involved in the cross-training program. All
employees who participate in training, whether as trainers or
trainees, shall be required to certify on documentation provided
by the Company that such training has been completed. However,
it is understood that an employee's signature as required by the
preceding sentence does not necessarily signify that the
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employee certifies or believes that the content of the training was
sufficient to qualify the employee receiving the training to
perform work of the sort that was the subject of the training.
6. MANAGEMENT TRAINEES: Whereas it is the expressed
intent of the Company to train, educate and familiarize
supervisors and managers with the Company's total operation,
including each phase of the operation, department by department,
the Company shall have the right to have management trainees work
on any or all jobs, including production jobs included in the
bargaining unit, with the following limitations:
(a) Management trainees shall not be included in the
bargaining unit and shall not be required to join the Union.
(b) Management trainees shall not exceed fifteen
percent (15%) or ten (10) employees, whichever is the
lesser, of the total number of bargaining unit employees at
any given time (i.e., if there are forty (40) bargaining
unit employees, there shall not be more than six (6)
management trainees). The Company will notify the Union of
its decision to employ management trainees pursuant to this
Section on or before the commencement date of the employment
of any such employees.
(c) A management trainee shall not perform bargaining
unit work for a period in excess of fifteen (15) months on
an over-all basis, and not more than four (4) consecutive
months in any one department.
(d) Although the company identifies with and
subscribes to the policy of promotion from within, and
may select employees from the bargaining unit to become
management trainees, it is understood that it is within
the Company's sole and
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unrestricted discretion to
determine and select employees to become management
trainees and may make such selection from any outside
source.
(e) It is not the intent of the Company to
substitute management trainees for bargaining unit
employees in the performance of bargaining unit work.
(f) The Union shall be entitled to meet with the
Company every six (6) months to review the Management
Trainee Program.
7. SUMMER HELP: Employees hired during the summer
vacation period (90 days or less) or during the two-week
Christmas period shall be excluded from coverage under the
Agreement.
SECTION 8. Coffee will be provided at Company expense in
all break rooms utilized by bargaining unit employees.
SECTION 9. Bargaining unit employees shall be supplied by
the Company with uniforms to be worn in performing their work,
and the Company shall make arrangements for periodic cleaning of
such uniforms at Company expense.
SECTION 10. When bargaining unit employees are required for
job-related reasons to travel using their own vehicles between
the Company's facilities at the Northvale, New Jersey location
and the Pomona, New York location, they shall be reimbursed by
the Company for such travel at the rate of twenty-eight cents
($0.28) per mile.
SECTION 11. Paychecks for bargaining unit employees shall
be issued weekly, and payday shall be on Wednesday.
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SECTION 12. Bagels and/or donuts shall be provided for
bargaining unit employees required to work overtime on Saturday,
unless one or more employees are scheduled to work straight time
on that day.
SECTION 13. Bargaining unit employees working the second
shift shall not be required to begin mandatory overtime work on
Saturdays any sooner than eight (8) hours after completion of
their final, straight-time shift (which would have begun on the
preceding Friday); notwithstanding the foregoing, second shift
employees may begin overtime work on Saturdays in less than eight
(8) hours after completion of their last preceding straight-time
shift if such arrangement is mutually agreeable to the employee
and the supervisor responsible for scheduling the overtime work.
SECTION 14. The Company will generally seek to maintain a
one-to-one ratio of QA Associates to QA Inspectors in the Quality
Assurance Department. Notwithstanding the foregoing, it shall
not be considered a violation of the terms of this Agreement for
the Company to have as many as two (2) more QA Associates than QA
Inspectors in the Department for a period of up to four (4)
months if the Company deems that such an imbalance advances the
Company's interests in ensuring regulatory compliance and product
quality and integrity and maximizing productivity, efficiency and
safety.
SECTION 15. WORK AND FAMILY COMMITTEE: The Company and the
Union recognize that counseling and other forms of assistance may
be of value to an employee and his or her family in situations in
which personal problems have the potential to interfere with the
employee's performance of job responsibilities. The Company and
Union also recognize that Company policies may have an impact on
the lives of employees. The Company and the Union agree that
employees should strive to achieve an appropriate balance between
work and family responsibilities. In addition,
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the Company and
Union further agree to work together to address issues related to
the mutual goal of achieving a balance between work and family
responsibilities. Accordingly, the Company and the Union have
agreed upon a Work and Family Policy and agree to maintain a Work
and Family Committee as a forum in which such issues can be
constructively considered and discussed. The Committee will be
comprised of four (4) members, two (2) designated by the Union
and two (2) designated by the Company. The Committee's mandate,
in addition to sustaining dialog about work and family issues
that are relevant to the Company's employees, shall include
working to assure that employees are aware of the Company's
Employee Assistance Plan, including the resources that employees
can access through that Plan, and any other professional
community resources that might be able to assist with problems
relating to the employee's efforts to achieve a healthy balance
between work and family. Communications by individual employees
with Committee members regarding particular problems that such
employees are encountering in striving to achieve that balance
shall be treated as strictly confidential and shall not be
discussed with anyone other than current members of the Work and
Family Committee. Information that an employee shares with Work
and Family Committee members, as is the case with all
communications with Employee Assistance Program counsellors, in
connection with the employee's efforts to obtain assistance from
the Committee on matters within its mandate shall be treated as
confidential and shall not be considered in any way as a basis
for disciplinary action of any kind. The Committee will meet
quarterly at agreed upon times and places to review issues
brought to the Committee's attention by employees or Management.
Chairing the Committee meetings and the preparation of minutes
will alternate between Union and Management members. Union
members of the Committee shall be compensated at their regularly
assigned wage rates for time spent in the Committee's meetings.
Nothing in this Section shall be construed as overriding or
modifying any other provisions of this Agreement.
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SECTION 16. CHILD CARE: The Company shall, as soon as is
practicable after the effective date of this Agreement, establish
a flexible spending account in accordance with Section 125 of the
Internal Revenue Code, which will make it possible for employees
to set aside a portion of pretax income each year to be used to
defray dependent care expenses. The Company shall also contract
with the Rockland Council for Young Children to provide child
care counseling and referral services for any employees requiring
such assistance.
XIII. GRIEVANCES
1. For purposes of this Agreement, a grievance is any
dispute or difference of opinion between the Company and the
Union, or between the Company and any of its employees covered by
this Agreement, involving the meaning, interpretation or
application of the express provisions of this Agreement. Any
dispute over whether a complaint is subject to these procedures
shall be treated as a grievance, in accordance with the
procedures prescribed in this Agreement, subject to the
provisions of Article XXVIII, LOCKOUTS AND STRIKES. Permission
to investigate grievances shall not be unreasonably denied,
provided however that the Union shall conduct no grievance
investigation in such a manner as to interfere in any way with
Company operations without the prior, express consent of the Vice
President Human Resources or Plant Manager.
2. Grievance adjustments below the Step 3 level shall be
binding only with respect to that specific grievance and shall
not be deemed to establish a binding standard for the bargaining
unit as a whole, unless the Company and the Union specifically
agree otherwise in writing.
3. Except as otherwise provided in Article VII,
DISCHARGE AND DISCIPLINE, and Article XXVIII, LOCKOUTS AND
STRIKES, no grievance shall be entertained by the Company, except
in the following order and manner, and within the following time
limits:
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STEP 1: In the event an employee covered by this
Agreement has a complaint involving the interpretation,
application or alleged violation of this Agreement, he shall take
the matter up with his immediate Supervisor at a mutually
convenient time within ten (10) work days of the occurrence of
the event out of which the grievance arises, or within ten (10)
working days from the date when the Union or the employee should
reasonably have been aware of the facts on which the grievance is
based. The employee may be accompanied by a Union Representative
if the employee so desires. The Supervisor shall give his answer
to the employee as soon as practical, but in any event within ten
(10) work days.
STEP 2: In the event the grievance is not settled in
Step 1, it shall be reduced to writing, stating the specific
relief sought, signed by the employee and presented by the
Department Steward to the Supervisor within ten (10) work days
from the time the Supervisor gives his answer as provided in
Step 1 above. The Supervisor will discuss the matter with the
employee and the Department Steward presenting the written
grievance as soon as is practical, and in any event within ten
(10) work days after the Supervisor receives the written
grievance. The Supervisor will give a written answer to the
employee and the Union as soon as is practical, but in any event
within ten (10) work days of the time the written grievance is
presented. The presentation of the Supervisor's written answer
shall terminate Step 2.
STEP 3: In the event the grievance is not settled in
Step 2, the Union may, within ten (10) work days after the
termination of Step 2, request a meeting with the Vice President,
Human Resources, or her representative, to discuss the grievance.
The Vice President, Human Resources, or her representative, the
employee, either the Chief Steward or a Department Steward of the
Union, and a representative of the International or Local Union,
if available, shall meet as soon as practical
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at a mutually
convenient time, but in any event within ten (10) work days of
such written request, and discuss the matter in an attempt to
arrive at a satisfactory resolution of the grievance. The answer
of the Vice President, Human Resources, shall be given, in
writing, to the employee and the Union within ten (10) work days
of the meeting referred to in this Step. The issuance of the
answer to the affected employee and the Union shall terminate
Step 3.
STEP 4: In the event the grievance is not settled in
Step 3, the Union may, within ten (10) work days of receipt by
the Union of said answer, request in writing that the grievance
be submitted to arbitration as provided in Section 4 below.
4. Within ten (10) days of the Company's receipt of the
Union's request for arbitration, the Union or the Company, on an
alternating basis (beginning with the Union for the first
arbitral panel requested during the term of this Agreement),
shall request the American Arbitration Association ("AAA") to
submit a panel of seven (7) qualified and available arbitrators,
providing a copy of such request contemporaneously to the other
party and pay any necessary fee to obtain such a panel. Within
ten (10) work days after receipt of the panel, the parties shall
alternately strike names from the panel, beginning with the party
requesting the arbitration, until the name of the arbitrator is
thus chosen. The request for an arbitral panel shall be deemed
to have been made upon mailing it to AAA. If the party
responsible for requesting the arbitral panel from AAA fails to
do so within the ten (10) day period prescribed for the
submission of such request, the other party shall have the right
to request the panel and select the arbitrator from among any of
the names on the panel obtained from AAA. If either party fails
or refuses to participate in the arbitrator selection process in
such a manner as to assure that it is completed within the
aforementioned ten (10) day period allotted for the process, the
other party shall have the right to designate the arbitrator from
among those on the panel who have not been previously stricken by
one of the parties. The arbitrator shall be notified of his
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selection by a joint letter from the Company and the Union
requesting that he set a time and place for the hearing, subject
to the availability of the Company and Union representatives, and
the letter shall specify the issue(s) to the arbitrator. Any
grievance as to which the arbitration hearing is not completed
within six (6) months after selection of the arbitrator shall be
deemed finally determined on the basis of the Company's final
response in Step 3 of the grievance procedure unless the failure
to complete the hearing within such period is solely the product
of either: (a) the Company's refusal to make its representative
available to attend the hearing in that period; or (b) the
unavailability of the arbitrator on any dates within such period.
If the failure to complete the hearing within six (6) months is
solely the result of the Company's refusal to make its
representative available on any dates within such period, the
Company shall be deemed to have waived all defenses to the issue
of liability, leaving only the issue of appropriate relief to be
determined by the arbitrator.
5. The arbitrator so appointed shall conduct a hearing
and render his decision, in writing, with all reasonable
promptness. Any decision rendered by an arbitrator appointed
hereunder shall be final and binding upon the Company, the Union,
and the employee or employees involved on matters that are the
proper subject of arbitration hereunder.
6. Any arbitrator appointed under the provisions of this
Article shall consider and decide only the particular issue(s)
presented to him in writing by the Company and the Union, and his
decision and award shall be based solely upon his interpretation
of the meaning or application of the express terms of this
Agreement to the facts of the grievance presented. If the matter
sought to be arbitrated does not involve an interpretation of the
express terms of this Agreement, the arbitrator shall so rule in
his award and the matter shall not be further entertained by the
arbitrator. The arbitrator shall have no right to amend, modify,
nullify, ignore, add to or subtract from the provisions
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of this Agreement. The arbitrator shall have no authority to overturn
or modify any action of the Company unless the Union shows by clear
and convincing evidence that such action was violative of the
express terms of this Agreement or was arbitrary and capricious
or, in any case involving disciplinary action taken against an
employee, either that the employee did not commit the act on
which the disciplinary action was based or that the Company's
action against the employee was arbitrary and capricious.
7. The compensation and expenses of the arbitrator, and
other expenses mutually agreed to in advance, shall be borne
equally by the Company and the Union.
8. Employees losing time as a result of participation in
arbitration proceeding sunder this Article, shall be made whole
by the party on whose behalf they appear.
9. A grievance initiated by either the Company or the
Union, involving the interpretation or application of this
Agreement, may be commenced at the Step 3 level, as set forth
above, by the filing of such grievance in writing with the other
party within ten (10) work days after the party initiating the
grievance has reason to believe that the other party has assumed
a position inconsistent with the terms of this Agreement. In the
event of a grievance initiated by the Company, the written
grievance shall be accompanied by a request for a meeting with
the Local President of the Union. All rights, obligations and
time limits for action by the Vice President Human Resources,
specified in Steps 3, 4 and 5 and Section 4 above, shall apply to
the President of the Local Union in grievances initiated by the
Company, and all rights, obligations and time limits applicable
to the Union or employee in Steps 3, 4 and 5 and Section 4, shall
apply to the Company.
10. If any steps or actions provided for in this Article
are not taken, appeals herein provided for are not taken or
filed, or notice is not given within the time limit specified for
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<PAGE>
such steps, actions, appeals or notice, then the grievance shall
be deemed final and settled on the basis of the Company's last
reply. If the Company's reply is not timely given at any stage
in the grievance procedure, then the grievance shall be deemed
denied at the expiration of the time limit within which an answer
is required and such denial may be appealed to the next step in
the grievance procedure specified. Any of the time limits
specified in this Article may be extended by mutual agreement
between the parties. Saturdays, Sundays, days on which the
Company facilities are closed for any part or all of the day due
to inclement weather, and those holidays specified in Article XV
of this Agreement shall not be included in the computation of
time periods specified by this Article.
11. In general, any investigation, discussion and
settlement of grievances shall be done during working hours,
provided however that no such activities shall be conducted in
such a manner as to interfere in any way with Company operations
without the prior, express permission of the Vice President Human
Resources or Plant Manager.
SECTION 12. The Company and the Union may, by mutual
agreement in writing, submit any unresolved grievance to
mediation under contract under the auspices of the New Jersey
Board of Mediation. If the mediator in such a case is unable to
arrive at a mediated settlement that is acceptable to both
parties, the parties shall request that he or she issue a written
"Mediator's Recommendation," which shall be final and binding on
both parties as to the case in which it is issued but shall have
no precedential effect and shall not be admissible for any
purpose in any future cases. In any case in which the parties
agree to mediation, they shall be deemed to have waived any right
to arbitration to which they might otherwise have been entitled
pursuant to the terms of this Agreement. The fact that a party
declines to agree to mediation in a particular case shall not be
admissible for any purpose in that or any other case.
36
<PAGE>
XIV. VACATIONS
1. All employees covered by this Agreement shall be
eligible for paid vacations according to the following schedule
with the length of an employee's continuous service being
calculated from the anniversary date of hire:
Less than
Two (2) years of continuous service One (1) week
After
Two (2) years of continuous service Two (2) weeks
After
Five (5) years of continuous service Three (3) weeks
After
Ten (10) years of continuous service Four (4) weeks
After
Fifteen (15) years of continuous service Five (5) weeks
Employees shall accrue vacation rights each year at the rate of
one twelfth (1/12) of the total amount of the employee's vacation
eligibility under this Section for each month he or she works or
is on vacation or paid leave provided for in Article XXII of this
Agreement. For purposes of this Section, an employee shall be
considered to have worked a month, and therefore to have earned
vacation accrual credit, if he actually works or is on vacation
or Article XXII paid leave for at least one hundred (100) hours
in that month. Accrual will begin on January 1 of each year or,
in the case of employees who are hired or return to work after
January 1, on the date the employee begins work. Accrual rate
increases provided for in the schedule set forth above shall
become applicable on January 1 of the year of the anniversary
date on which the employee will reach the amount of continuous
service making him eligible for an increased amount of vacation.
Any accrued vacation not taken before December 31 of the year
following the year in which it accrued shall be lost, and in
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<PAGE>
no event will an employee be entitled to receive pay in lieu of
vacation except where the employee is laid off or leaves the
Company's employ with accrued and unused vacation, or where the
employee is prevented from taking properly scheduled vacation by
a Company requirement that he cancel such scheduled vacation and
he is unable to reschedule the vacation to be taken before the
end of the year. Employees with less than five (5) years of
service shall be entitled to take vacation only to the extent
that it has accrued. Beginning in the calendar year after
completing four (4) years of continuous service with the Company
and subject to the provisions of Section 3 of this Article,
however, employees shall be entitled to take up to one-half of
the vacation that they will be eligible to accrue during the
calendar year at any time prior to July 1 of that year. Such
employees shall be entitled to take up to the full amount of
vacation that they will be eligible to accrue during the calendar
year at any time after June 30 of that year. In the event the
employee fails to work the entire year (including, without
limitation, because of being discharged, suspended, or laid off,
or because of going on disability or a leave without pay status),
any pay received by the employee for vacation not accrued at the
time the employee leaves the active workforce shall be deducted
from the employee's paycheck for the final pay period preceding
the employee's ceasing or interrupting work. If the employee's
final paycheck is in an amount insufficient to reimburse the
Employer for the amount of unaccrued vacation previously taken,
the employee shall pay the Employer the difference on or before
his final day at work.
2. Eligible employees who take vacation in a week when
they are scheduled to work an eight (8) hour shift shall receive
as vacation pay eight (8) times the employee's straight time
hourly rate for each day of vacation. Vacation payment shall be
made the last scheduled pay day before Eligible employees taking
vacation in a week in which they are scheduled to work four (4) or
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<PAGE>
more ten (10) hour days shall receive vacation pay for each
day of vacation equal to the amount of pay they would have
received had they worked the scheduled ten (10) hours on that
day.
3. Accrued vacation may be taken at any time during the
calendar year, except that newly hired employees shall not be
entitled to take vacation or receive pay in lieu of vacation
until after successful completion of their probationary period.
However, the employee must obtain permission to schedule any
vacation from the Company at least one (1) month before the
scheduled departure date. The Company will not unreasonably
withhold its permission, but retains discretion to deny an
employee's request if it is deemed inconsistent with production
requirements or the Company's overall interests of ensuring
regulatory compliance and product quality and integrity, and
maximizing productivity, efficiency and safety. Subject to the
foregoing, if two or more employees request the same vacation
period and the Company deems it inadvisable for all of such
employees to be out on vacation at the same time, the employee or
employees with greater seniority shall be given preference.
4. Vacation must be taken in no less than eight hour
blocks, or in the case of employees taking vacation on a day when
they would have been scheduled to work ten (10) hour shifts, in
ten-hour blocks.
5. The Company will maintain a record of all vacation
time used by an employee and provide updated information
regarding the amount of vacation taken and accrued to employees
on request. If the Company acquires the payroll accounting
capability to provide periodic information of the employees'
vacation account balances on payroll stubs or through other means
without incurring substantial additional expense during the term
of this Agreement, it shall do so.
39
<PAGE>
XV. HOLIDAYS AND HOLIDAY PAY
1. Full-time and regular part-time employees shall be
eligible for holiday pay. Eligible full-time employees will be
credited with eight (8) hours (or ten (10) hours in the case of
employees who would have been scheduled to work a ten (10) hour
shift but for the holiday) worked on holidays enumerated in
Section 2 below, provided they have passed their probationary
period. Holiday pay for eligible part-time employees shall be
prorated on the basis of the average daily straight-time hours
they are regularly scheduled to work in the week in which the
holiday falls. Otherwise eligible employees shall not receive
holiday pay (or be credited with hours worked) under the
following conditions:
(a) An employee who has an unexcused tardiness or who is
absent on the work day or part of the work day preceding or
following the holiday, except for employees absent because of
serious illness or serious accident for no more than five (5)
working days prior to or following the holiday.
(b) Employees who are off on a personal leave of absence.
(c) Employees on suspension or disciplinary layoff.
(d) The employee who would not normally be scheduled to
work and who would not normally work on such day in any event.
2. The following days shall be considered holidays under
this Agreement:
New Years Day Thanksgiving Day
Martin Luther King's Birthday Day after Thanksgiving
Presidents' Day Christmas Eve
Memorial Day Christmas Day
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<PAGE>
July 4th Day before New Year's Day
Labor Day Employee's Birthday
Religious holidays shall be permitted to be celebrated
without pay and employees shall not be penalized for their
absence on such days.
3. Subject to the limitations set forth in Article 4,
Section 3, work performed on holidays shall be paid at the rate
of time and one-half (1/2) the employee's regular rate in
addition to the holiday pay.
4. If a holiday falls within an employee's vacation,
such employee shall be paid holiday pay for the holiday in
addition to his vacation pay, or shall receive an extra day of
vacation, as agreed by the Company and the employee.
5. Except as otherwise provided in Article IV, Section 2
of this Agreement, holiday pay for an employee entitled thereto
shall be computed on the basis of eight (8) times the employee's
average straight time hourly earnings in the last calendar
quarter ending immediately prior to the particular paid holiday.
Overtime premium payments, holiday payments, vacation payments
and all other non-working time payments shall be excluded from
the holiday computation.
6. All holidays falling on a Sunday shall be celebrated
on the following Monday.
7. All holidays falling on a Saturday shall be
celebrated on the preceding Friday.
41
<PAGE>
XVI. WAGE INCREASES
1. (a) Effective April 1, 1996, all employees in the
Chemical Operator II, Maintenance Mechanic, Machine Mechanic,
Chemical Operator I, Set-Up Mechanic, and QA Inspector
classifications will receive a wage increase of $1.20 per hour;
all employees in the Licensed Trailer Truck Driver, Line
Technician, and Supplier/Material Handler classifications will
receive a wage increase of $1.00 per hour; and all employees in
the Packer and Porter classifications will receive a wage
increase of $0.50 per hour.
(b) Effective April 1, 1997, all employees in the
Senior Manufacturing Operator, Chemical Operator II,
Maintenance Mechanic, Machine Mechanic, Chemical Operator I,
Set-Up Mechanic, and QA Inspector classifications will
receive a wage increase of $0.50 per hour; all employees in
the Licensed Trailer Truck Driver, Line Technician, and
Supplier/Material Handler classifications will receive a
wage increase of $0.40 per hour; and all employees in the
Packer and Porter classifications will receive a wage
increase of $0.30 per hour.
(c) Effective April 1, 1998, all employees in the
Senior Manufacturing Operator, Chemical Operator II,
Maintenance Mechanic, Machine Mechanic, Chemical Operator I,
Set-Up Mechanic, and QA Inspector classifications will
receive a wage increase of $0.50 per hour; all employees in
the Licensed Trailer Truck Driver, Line Technician, and
Supplier/Material Handler classifications will receive a
wage increase of $0.40 per hour; and all employees in the
Packer and Porter classifications will receive a wage
increase of $0.30 per hour.
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<PAGE>
(d) Effective April 1, 1999, all employees in the
Senior Manufacturing Operator, Chemical Operator II,
Maintenance Mechanic, Machine Mechanic, Chemical Operator I,
Set-Up Mechanic, and QA Inspector classifications will
receive a wage increase of $0.50 per hour; all employees in
the Licensed Trailer Truck Driver, Line Technician, and
Supplier/Material Handler classifications will receive a
wage increase of $0.50 per hour; and all employees in the
Packer and Porter classifications will receive a wage
increase of $0.30 per hour.
(e) Effective April 1, 2000, all employees in the
Senior Manufacturing Operator, Chemical Operator II,
Maintenance Mechanic, Machine Mechanic, Chemical Operator I,
Set-Up Mechanic, and QA Inspector classifications will
receive a wage increase of $0.50 per hour; all employees in
the Licensed Trailer Truck Driver, Line Technician, and
Supplier/Material Handler classifications will receive a
wage increase of $0.50 per hour; and all employees in the
Packer and Porter classifications will receive a wage
increase of $0.50 per hour.
2. The Company shall have sole and unrestricted
discretion with respect to establishing new job classifications,
revising old job classifications and/or combining job
classifications, and establishing the hourly rates of pay for
employees who perform work therein. In the event the Company
determines that revision or combination of an old job
classification warrants a reduction in the hourly rates of
employees in the positions affected by a revision or combination,
and in all cases in which the Company establishes a new job
classification, the Company shall propose the new rate to the
Union at least two (2) weeks before it is scheduled to go into
effect and the parties shall negotiate in good faith in an effort
to reach agreement on the new rate. In the event the Union
believes that the hourly rates of jobs affected by a
classification revision or combination should be
43
<PAGE>
increased, the
Union shall propose a new rate and the parties shall negotiate in
good faith in an effort to reach agreement on the rate. If the
parties reach impasse during the term of this Agreement in
negotiations regarding wage rate changes entered into pursuant to
this Section, the Company shall have the right to implement
unilaterally its final offer. The Union has the right to grieve
this decision pursuant to the terms of Article XIII of this
Agreement. In the event the Union grieves the Company's
implementation of its final offer, and the Company later agrees
or an arbitrator rules that a different rate should apply, such
revised rate shall be applied retroactively to the date of the
Company's unilateral implementation of its final offer put forth
in the original negotiations.
3. The Company shall have the right to establish hourly
rates of pay for various jobs, and to revise or otherwise change
such hourly rates, but in no event shall any rate be revised
downward, except as provided above in Section 2 of this Article.
4. The Company shall negotiate with the Union, the rate
of all newly created jobs, prior to posting a bid or interviewing
potential candidates.
5. The parties agree that there will be one rate of hire
in each classification for new employees.
6. As noted in the schedules set forth below in
Section 8 of this Article, employees shall receive the general
wage increase and incremental wage increases in progression until
they reach the maximum rate.
7. JOB DESCRIPTIONS: The Company has sole and
unrestricted discretion to determine whether and when written job
descriptions for bargaining unit jobs need to be revised or
updated. Whenever such job descriptions are revised or updated,
the Company shall promptly
44
<PAGE>
provide the Union with copies of the
new descriptions. The Union has the right, within twenty (20)
workdays after receipt of the new job descriptions, to submit
written suggestions for changes in such job descriptions (with
explanations of the rationales for any such suggestions) that it
believes the Company should consider. The Company shall consider
any such suggestions offered by the Union in good faith. If the
Company declines to accept any such suggestion and there remains
a dispute as to whether, without the suggested change, the job
description in question accurately describes the content of the
job that is its subject, the Union may process the dispute
through the grievance and arbitration procedure prescribed in
Article XIII of this Agreement.
8. WAGE RATES: The wage rates applicable to positions
covered by this Agreement shall be as follows:
Senior Manufacturing Operator
Effective Effective Effective Effective Effective
4/1/96 4/1/97 4/1/98 4/1/99 4/1/00
$18.20 $18.70 $19.20 $19.70 $20.20
To be eligible to bid on Senior Manufacturing Operator internship
position openings, employees must, at the time of their
submission of a bid on such openings, be currently employed as a
Chemical Operator I, Chemical Operator II, or a Machine Mechanic,
and have worked for at least one (1) year and demonstrated
proficiency in one or more of the five (5) production disciplines
in which Senior Manufacturing Operators are expected to
demonstrate and maintain a high level of proficiency (i.e.,
Compounding, Tableting, Coating, Encapsulation, and Packaging).
Employees who successfully bid on Senior Manufacturing Operator
internships shall receive a $0.25/hr. increase upon moving into
an internship assignment or within fifteen (15) days of receiving
the bid, whichever occurs first. Upon becoming certified as
proficient in two (2) of the Senior Manufacturing Operator
disciplines, interns shall receive an additional $0.25/hr.
increase in their wages. Additional increases in the amount of
$0.50/hr, would occur for interns who become certified as
proficient in the third and fourth disciplines. Upon
certification of an intern's proficiency in the fifth of the five
(5) disciplines in which Senior Manufacturing Operators must
demonstrate proficiency, employees shall begin to receive the
appropriate full Senior Manufacturing Operator rate specified
above. The probationary period prescribed in Article XXIX of
this Agreement shall apply upon an employee's initial assignment
to a Senior Manufacturing Operator internship and at each
assignment to a new discipline during the employee's internship.
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Maintenance Mechanic
Effective Effective Effective Effective Effective
4/1/96 4/1/97 4/1/98 4/1/99 4/1/00
$16.35 $16.85 $17.35 $17.85 $18.35
Chemical Operator II
Effective Effective Effective Effective Effective
4/1/96 4/1/97 4/1/98 4/1/99 4/1/00
Maximum Rate $16.20 $16.70 $17.20 $17.70 $18.20
The number of Chemical Operator II positions, if any, on each
shift and in each department shall be determined by the Company
in its sole and unrestricted discretion.
Machine Mechanic
Effective Effective Effective Effective Effective
4/1/96 4/1/97 4/1/98 4/1/99 4/1/00
Rate $15.30 $15.80 $16.30 $16.80 $17.30
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<PAGE>
Chemical Operator I
Effective Effective Effective Effective Effective
4/1/96 4/1/97 4/1/98 4/1/99 4/1/00
Start $12.70 $13.20 $13.70 $14.20 $14.70
After 3 months from
Date of Hire $13.20 $13.70 $14.20 $14.70 $15.20
After 6 months from
Date of Hire $13.70 $14.20 $14.70 $15.20 $15.70
After 9 months from
Date of Hire $14.20 $14.70 $15.20 $15.70 $16.20
After 12 months from
Date of Hire $14.70 $15.20 $15.70 $16.20 $16.70
Employees designated by the Company as Special Materials
Operators shall be paid a premium for all time spent working in
such capacity of ten (10) percent above the otherwise applicable
rate for a Chemical Operator.
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<PAGE>
Set-Up Mechanic
Effective Effective Effective Effective Effective
4/1/96 4/1/97 4/1/98 4/1/99 4/1/00
Start $13.50 $14.00 $14.50 $15.00 $15.50
After 3 months from
Date of Hire $14.15 $14.65 $15.15 $15.65 $16.15
After 6 months from
Date of Hire $14.90 $15.40 $15.90 $16.40 $16.90
Quality Assurance
Effective Effective Effective Effective Effective
4/1/96 4/1/97 4/1/98 4/1/99 4/1/00
Start $12.35 $12.85 $13.35 $13.85 $14.35
After 3 months from
Date of Hire $12.70 $13.20 $13.70 $14.20 $14.70
After 6 months from
Date of Hire $13.05 $13.55 $14.05 $14.55 $15.05
After 9 months from
Date of Hire $13.40 $13.90 $14.40 $14.90 $15.40
After 12 months from
Date of Hire $13.75 $14.25 $14.75 $15.25 $15.75
48
<PAGE>
Line Technician
Effective Effective Effective Effective Effective
4/1/96 4/1/97 4/1/98 4/1/99 4/1/00
Start $11.90 $12.30 $12.70 $13.20 $13.70
After 3 months from
Date of hire $12.25 $12.65 $13.05 $13.55 $14.05
After 6 months from
Date of hire $12.65 $13.05 $13.45 $13.95 $14.45
After 9 months from
Date of hire $12.95 $13.35 $13.75 $14.25 $14.75
After 12 months from
Date of hire $ 13.30 $13.70 $14.10 $14.60 $15.10
Shipping, Receiving, Supplier and Material Handler
Effective Effective Effective Effective Effective
4/1/96 4/1/97 4/1/98 4/1/99 4/1/00
Start $11.40 $11.80 $12.20 $12.70 $13.20
After 3 months from
Date of Hire $11.75 $12.15 $12.55 $13.05 $13.55
After 6 months from
Date of Hire $12.15 $12.55 $12.95 $13.45 $13.95
After 9 months from
Date of Hire $12.45 $12.85 $13.25 $13.75 $14.25
After 12 months from
Date of Hire $12.80 $13.20 $13.60 $14.10 $14.60
Material Handler Truck Drivers shall be paid at a rate fifty
cents ($0.50) per hour higher than those otherwise applicable to
employees in the Shipping, Receiving, Supplier, Material Handler
classification.
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<PAGE>
Packers
Effective Effective Effective Effective Effective
4/1/96 4/1/97 4/1/98 4/1/99 4/1/00
Start $9.15 $9.45 $9.75 $10.05 $10.55
After 3 months from
Date of Hire $9.65 $9.95 $10.25 $10.55 $11.05
After 6 months from
Date of Hire $10.15 $10.45 $10.75 $11.05 $11.55
After 9 months from
Date of Hire $10.65 $10.95 $11.25 $11.55 $12.05
After 12 months from
Date of Hire $11.15 $11.45 $11.75 $12.05 $12.55
Porter
Effective Effective Effective Effective Effective
4/1/96 4/1/97 4/1/98 4/1/99 4/1/00
Start $8.90 $9.20 $9.50 $9.80 $10.30
After 3 months from
Date of Hire $9.40 $9.70 $10.00 $10.30 $10.80
After 6 months from
Date of Hire $9.90 $10.20 $10.50 $10.80 $11.30
After 9 months from
Date of Hire $10.40 $10.70 $11.00 $11.30 $11.80
After 12 months from
Date of Hire $10.90 $11.20 $11.50 $11.80 $12.30
Licensed Tractor Trailer Driver
Effective Effective Effective Effective Effective
4/1/96 4/1/97 4/1/98 4/1/99 4/1/00
$14.50 $14.90 $15.30 $15.80 $16.30
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<PAGE>
Any employee who was classified as a Labeler as of June 30,
1989 shall continue to have his/her rate RED circled. All
Porters hired prior to July 1, 1989 shall continue to be paid at
the Supplier/Material handler rate.
SECTION 9. HOLIDAY BONUS: The Company shall pay a holiday
bonus to all nonprobationary employees beginning in December of
1996. The amount of the bonus shall be $200.00, with prorated
lesser amounts for employees who have worked less than the full
calendar year preceding the date on which the bonus is to be
paid. The bonus checks prescribed in this Section shall be
distributed to eligible employees on or before December 15 of
each year.
XVII. HEALTH AND WELFARE
1. The Company agrees to make available to its regular
full-time employees (and their dependents) covered by this
Agreement who are actively employed, Health and Welfare coverage
with the OIL, CHEMICAL AND ATOMIC WORKERS INTERNATIONAL UNION,
LOCAL 8-149 Welfare Plan, which shall include dental insurance
coverage with a benefit of up to $1,250 per employee per year.
For the remainder of the term of this Agreement, the Employer
contribution shall be 20.6% of gross payroll straight time
excluding overtime, unused sick pay and unused vacation pay.
This rate shall, however, be adjusted to cover any changes in
premium charges to the Union by its providers during the first
four years of this Agreement up to a maximum aggregate increase
of thirty percent (30%) over the premium levels in effect on the
effective date of this Agreement, and for any increase of up to
seven percent (7%) in the fifth and final year of this Agreement.
The Employer shall calculate such contribution for any employee
who actually works and/or is paid time for vacation, Article XXII
sick leave and/or holidays for a total in excess of one hundred
(100) hours in any calendar month, as if said employee had worked
all scheduled straight
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<PAGE>
time in that month. The contribution on behalf of any employee
whose total paid time for time worked is equal to or less than
one hundred (100) hours shall be calculated on a pro-rated basis
by multiplying the amount of a full contribution by the ratio
derived by dividing the amount of the employee's paid time in
that month by the total amount of scheduled straight time in that
month, plus any paid holiday time for which the employee would
have been eligible if he had actually worked all scheduled
straight time.
2. EMPLOYEES' ELIGIBILITY: Full-time employees covered
by this agreement are eligible upon completion of one hundred
twenty (120) days of continuous active service. Full-time
employees are defined as those employees completing 2,080 hours
of service in a calendar year. Part-time employees are defined
as those employees completing at least 1,560 hours of service in
a calendar year.
3. The Employer shall contribute to the Oil, Chemical
and Atomic Workers International Union, Local 8-149 Welfare Plan
for those eligible employees who are on family or medical leave
pursuant to the terms of Article IX, and for employees who are on
disability and workers' compensation for a maximum period of six
(6) months.
XVIII. CHECKOFF
In a manner and to the extent permitted by law, the Company
agrees to deduct each month from the wages of each of its
employees who are members of the Union and who have voluntarily
authorized same, the prescribed union dues and initiation fees,
and to remit the same monthly to the Union. Each authorization
shall be in writing, signed by the employee, and shall be
delivered by the Union to the Company. The Union agrees to
indemnify and save the Company harmless from any and all claims
and/or disputes arising out of the Company's actions in
compliance with this provision.
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<PAGE>
XIX. RELOCATION
In the event the Company shall at any time move its
operations from its present location to any other place within a
radius of 100 miles, the employees in service with the Company at
the time of such move shall be offered a opportunity for
employment in the new location, and this Agreement shall continue
in full force and effect and shall be applicable to such
employees in the new location, provided, however, a majority of
the employees so offered employment relocate and are employed
with the Company at the new location.
XX. UNION SECURITY
1. It shall be a condition of employment that all
employees of the Employer covered by this Agreement who are
members of the Union in good standing on the effective date of
this Agreement shall remain members in good standing, and those
current employees who are not members on the effective date of
this Agreement, shall, on the thirty-first (31st) day thereafter,
become and remain members in good standing in the Union. It
shall also be a condition of employment that all employees
covered by this Agreement and hired after the effective date of
this Agreement, shall, on the thirty-first (31st) day after said
hiring date, become and thereafter remain members in good
standing in the Union.
2. Upon written notice from the Union, the Employer
shall discharge any employee not a member in good standing as
defined under the National Labor Relations Act, as amended.
XXI. UNION REPRESENTATION AND STEWARDS
1. (a) The establishment of a Union Committee composed
of not more than three (3) members, which shall also serve as the
Grievance Committee and the establishment of a Steward
53
<PAGE>
system is agreed to by the Company. The Union shall be permitted to have
two (2) alternate stewards.
(b) Representatives of the International Union shall be
permitted to assist the Committee at all times, provided that
such representatives shall accord at least forty-eight (48) hours
advance notice to the Company's Vice President Human Resources of
any need for access to Company facilities, respect and observe
any applicable sign-in and site security rules, and refrain from
interfering with or impeding Company operations or the work of
any employee. In cases of emergency, the Union may request and
the Vice President Human Resources may permit access to Company
premises on less than forty-eight (48) hours notice. Such
permission shall not be unreasonably denied.
(c) In the event the Company establishes a second shift,
there shall be one (1) steward employed on the second shift and
the Union shall be permitted to have one (1) alternate steward on
said shift.
(d) The Chief Steward and Stewards shall be allowed two (2)
hours off, without pay, four (4) times a calendar year, for the
purpose of attending Union Educational and Training Sessions
related to the performance of their responsibilities as stewards
at Barr Laboratories.
(e) The Department Stewards will be expected to perform on
a full-time basis the responsibilities of the jobs to which they
are assigned in the bargaining unit. Management will allow them
a reasonable amount of time away from their duties (up to a
maximum of four (4) hours per week) to handle union business,
provided a request for such excused time is made and approved in
advance by the Vice President Human Resources or Plant Manager
and the proposed scheduling of
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the release time requested will
not significantly interfere with or impair the Company's overall
interests of ensuring regulatory compliance and product quality
and integrity, and maximizing productivity, efficiency and
safety. The Chief Steward shall be expected to perform on a full-
time basis the responsibilities of a bargaining unit position,
except that he will be granted a total of twelve (12) hours per
week to handle Union business, to be scheduled in advance in at
least four (4) hour blocks at times that are mutually agreeable
to the Company and the Union, and which may be changed no more
frequently than quarterly. In the event of extraordinary need,
the Vice President Human Resources may, in her sole and
unrestricted discretion, grant a request of the Chief Steward for
release time in addition to the weekly period(s) regularly set
aside for Union business pursuant to the terms of this Section.
The Chief Steward's bargaining unit work will be scheduled to be
performed on a Monday through Friday schedule. The Chief Steward
shall be eligible for overtime assignments on the same basis as
other similarly situated employees in his classification and so
long as he confines his handling of Union business to the
prearranged twelve (12) hour schedule prescribed above, such
hours shall be treated as time worked for purposes of eligibility
for overtime premium pay as provided for in Article IV, Section 3
of this Agreement. All employment conditions applicable to the
Chief Steward under this Section shall also apply to the Unit
Secretary.
SECTION 2. The Company will make available for the
exclusive use of the Union at least one (1) office with a
telephone and a reasonable amount of file space.
SECTION 3. Department Stewards shall be allowed up to three
and one-half (3.5) hours of unpaid leave to attend each quarterly
meeting of the Union. The amount of such leave will vary based
on the individual shift schedule of each Steward, but shall not
exceed three and one-half (3.5) hours for any Steward. If shift
schedules should change in such a manner during the term of this
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Agreement as to make the aforementioned amount of release time
clearly inadequate to permit attendance at the quarterly
meetings, the Company and the Union will meet to work out a
reasonable accommodation of their respective interests.
Notwithstanding any other provision of this Agreement, the
Company reserves the right to deny any Department Steward's
request for leave to attend any one or more quarterly meetings
because of unusual work related problems that would significantly
affect productivity, efficiency, quality or regulatory
compliance, although the Company acknowledges that it expects
such instances to be rare. The Union will provide the Company
with a schedule of its quarterly meetings in January of each
calendar year. Each Department Steward shall be responsible for
confirming with his or her Supervisor the time and dates of any
release requirements pursuant to this Section one (1) week prior
to the scheduled quarterly meeting with respect to which leave is
requested.
XXII. SICK LEAVE, PERSONAL DAYS, LONGEVITY DAY
1. The Company agrees to continue, for the life of this
Agreement, its current policy of paid sick leave. Each employee
employed eight (8) months or more, shall be entitled to five (5)
days of paid sick leave per calendar year.
2. New employees shall be eligible to receive paid sick
leave at the rate of one (1) day for each two (2) months of
employment to commence after the employee's eighth (8th) month of
employment, but not retroactively.
3. Employees not using all or any of the five (5) paid
sick days shall have the option of receiving unused sick pay on
or about December 15th of each calendar year, or banking up
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to five (5) days for use in the following year. The number of paid
sick days an employee has available shall not affect charging of
occurrences under the Company's attendance policy.
4. Sick days may be used in four (4) hour blocks, but
not less, except that employees assigned to work ten (10) hour
shifts must use their sick days in blocks of not less than five
(5) hours.
5. The Company will maintain a record of all sick leave
and personal time used by the employee and provide updated
information regarding the amount of sick leave taken and accrued
and unused personal and longevity days to employees on request.
If the Company acquires the payroll accounting capability to
provide such information periodically on payroll stubs or through
other means without incurring substantial additional expense
during the term of this Agreement, it shall do so.
6. PERSONAL DAYS: In order to qualify for one (1)
personal day per contract year, the following conditions must be
met by an employee:
(a) The employee must give 3 working days advance notice to
department supervisor as to which day is to be taken as a
personal day, and
(b) The personal day cannot be added to the employee's
vacation period, and
(c) The personal day cannot be taken during a week of a
holiday, nor shall it be taken on a working day before or after a
holiday.
(d) The personal day may be used in four (4) hour
blocks, or in five (5) hour blocks in the case of
employees assigned to work ten (10) hour shifts. The
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above conditions must be met for an employee to take
the personal day in four (4) or five (5) hour blocks
unless a personal emergency exists.
If all the above conditions are met, said personal day may
be taken at the employee's option.
Subject to the foregoing conditions, employees who have been
employed by Barr for five (5) or more consecutive years,
shall be entitled to take one (1) additional personal day
per year.
7. LONGEVITY DAY: Those employees who have attained ten
(10) years of service or more shall receive a personal day off
with pay as a longevity day. Said employee must give one (1)
week's notice to his Supervisor before taking such day: If there
is any limitation on the number of people taking the longevity
day at a particular time, seniority shall apply. The longevity
day must be taken as a day, not less.
XXIII. SHIFT DIFFERENTIAL
In the event the Company establishes a second shift, there
shall be a ten percent (10%) shift differential paid to each
employee employed on said second shift. In the event the Company
establishes a third shift, there shall be a fifteen percent (15%)
shift differential paid to each employee employed on said third
shift.
The differential for the shift starting at midday (Example:
11:30 a.m. to 8:00 p.m.) shall be eight percent (8%).
XXIV. REPORTING AND CALL-IN PAY
1. REGULAR WORK (REPORTING TIME): Any employee who
reports to work unless otherwise previously notified eight (8)
hours prior to starting time by the Company shall
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receive four (4) hours work or pay for that day. If in the course
of the day an employee is sent home because of lack of work, and has
completed at least four (4) hours of work, or five (5 hours work
if he is assigned to work a ten (10) hour shift, he shall be paid
for the remainder of his shift.
2. EMERGENCY WORK (CALL-IN): When an employee is called
for emergency work, has completed his regular eight (8) hour
shift, and is eligible under Article IV for overtime pay, he
shall be paid a minimum of four (4) hours pay at the rate of time
and one-half (1-1/2). If, upon completion of the first four (4)
hours of work on the emergency job the employee is required to
stay over for additional work, he shall be paid a minimum of an
additional four (4) hours pay at the rate of time and one-half (1-
1/2).
XXV. SAFETY AND HEALTH
1. The Company shall assume the responsibility imposed
in accordance with State Workers Compensation Laws for employees
who suffer injury or disease resulting from conditions on the
job.
2. No employee shall knowingly be permitted to work on a
job which poses a recognized health hazard (including any
medically demonstrated sensitivity that would make continued
exposure to a substance with which he comes into contact in the
performance of his assigned job duties where continued exposure
to the substance would be detrimental to his health) unless
effective control measures (i.e., engineering and/or
administrative controls and, where appropriate, personal
protective equipment) have been provided. No employee shall
knowingly perform any unsafe act that presents a danger either to
the employee or to others. In the event that an individual
cannot perform a specific job function due to illness, injury or
physical sensitivity to substances present in the workplace, that
individual will be given suitable alternative work, if such work
is available, provided
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the employee provides the Company with a
statement from his physician confirming that, despite the
limitation that precludes him from performing his normal job
functions, he is fit to perform the job functions of the
available alternative work. In addition, the Company may, in its
sole and unrestricted discretion, require that any employee
claiming to have a job related illness or injury or a physical
sensitivity that interferes with or precludes his performance of
the normal responsibilities of his position submit to an
examination by a physician chosen and paid for by the Company for
the purpose of obtaining independent medical verification of the
condition and any work limitations resulting from it. In the
event no alternative work is available, "bumping" shall apply
unless the Company determines in its discretion that allowing the
employee to exercise "bumping" rights would be inconsistent with
the Company's overall interests of ensuring regulatory compliance
and product quality and integrity, and maximizing productivity,
efficiency and safety. Employees who are transferred or bump
into positions pursuant to this Section that have lower wage
rates than their usual jobs shall be compensated at the higher
rate for one (1) month, and will thereafter be compensated at the
lower rate.
3. The Company shall make available annually, to all
employees, a physical examination and pay for same. The Health
and Safety Committee will help determine the protocol for
physical examinations. The Company shall inform the Union of any
changes in the physicians or medical group performing the
physicals. In addition to annual physical examinations, all
employees shall be required to participate and cooperate fully in
all medical surveillance programs deemed by the Company to be
necessary for compliance with applicable provisions of the Code
of Federal Regulations or other regulatory provisions, or any
other medical surveillance approved by the Health and Safety
Committee.
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4. The Company shall institute and maintain all
necessary precautions for safeguarding its employees against
conditions that the Company knows or should know are likely to be
harmful their health and safety. Both the Company and the Union
recognize their mutual obligation to assist in the prevention,
correction, and elimination of all unhealthy and unsafe working
conditions and practices.
5. There shall be established a joint labor-management
Health and Safety Committee consisting of two Union and two
Company representatives. It shall hold meetings eight (8) times
per year at times and places mutually convenient and agreeable to
the representatives of the Union and the Company attending and
scheduled by or before December 31 of the year prior to the year
in which the meetings are to be held. The purpose of such
meetings shall be to consider, review and/or provide
recommendations for workplace conditions and health and safety
related practices. Members of the Committee shall also conduct
monthly tours of the Company's manufacturing facilities with
advance notice to and in cooperation with plant and departmental
Management. Findings from these tours shall be reviewed at the
regular meetings of the Committee. Union representatives shall
be compensated at their regularly assigned wage rate for
reasonable time spent in connection with the work of the
Committee.
6. Any employee who is injured on the job, and who
must miss time from work on the day of the injury and (or the
following day) on the instructions of the Company physician or
other physicians acceptable to the Company, will be paid special
compensation pay up to the balance of the work day as well as the
following day. Any employee who receives compensation pay for
this time period due to a claim from Workers' Compensation shall
not be eligible for special compensation pay.
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7. At least once each year, the parties will undertake
an industrial hygiene survey in the plants performed by a
certified industrial hygienist mutually acceptable to the Company
and the Union, and whose fee shall be paid by the Company. A
Company representative and a Union representative shall accompany
such hygienist at all times during any on-site inspection
activities. An unedited report of the survey shall be submitted
in writing to the Company and the Union. At a mutually
established time, subsequent to the receipt of reports, the
Company and the Union will meet to review such reports and to
consider the findings. The parties may conduct a second survey
in any year by mutual agreement.
8. The Company and the Union agree that the Director of
OCAW's District Resource Center and the Company's Associate
director of Health and Safety shall meet and confer for the
purpose of developing a mutually acceptable protocol for a joint
training program on health and safety awareness for Barr's
bargaining unit employees. It is agreed that the curriculum and
course content will be fully reviewed and approved in advance of
any training sessions, that the training sessions will be in
segments of no more than two (2) hours at a time and for a
cumulative total in any calendar year of no more than four (4)
hours, and that all such training sessions shall be scheduled at
mutually agreeable times and in such a way as to minimize any
disruption of the Company's production and any impact on the
Company's ability to ensure regulatory compliance, product
quality and integrity, productivity, efficiency and safety. Any
further health and safety training deemed necessary by Management
will be provided by the Company.
9. The Company will provide protective equipment
including waterproof boot coverings and outdoor clothing for
employees as required.
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10. The Company will reimburse employees in departments
where required and applicable, up to Seventy Dollars ($70.00) for
one pair of safety shoes upon completion of their probationary
period. Employees will also be reimbursed for the cost of
replacement safety shoes, up to a maximum of Seventy Dollars
($70.00) upon turning in worn out safety shoes previously paid
for in whole or in part by the Company.
XXVI. WASH UP TIME AND REST PERIODS
1. There shall be a five (5) minute wash-up time in all
departments prior to the lunch period.
2. For employees working an eight (8) hour shift, there
shall be a fifteen (15) minute rest period with the first four
(4) hours worked, and another fifteen (15) minute rest period
within the second four (4) hours worked.
XXVII. TUITION REFUND PLAN
The Company will reimburse an employee for up to $1,500 per
semester with a limit of two (2) semesters per contract year, for
tuition costs only.
The course to be taken must be related to the employee's
job. All courses must be taken at an accredited school approved
by the Company. In order to qualify for this benefit, the
employee must apply to the Vice President Human Resources or her
designee at least six (6) weeks prior to the date on which the
tuition payment would be due, providing a detailed description of
the course to be taken and identifying the institution offering
it. Such applications may be denied if the Company determines,
in its sole and unrestricted discretion, either that the course
is insufficiently related to the employee's job or that the
Company should not approve the school.
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It is further agreed that the employee in question must
attain a "B" average or better (or, in the case of approved
courses offered on a pass-fail basis, the employee must obtain a
passing mark in the course); and if the employee fails to attain
same, the Company will not reimburse such monies expended towards
tuition costs. Enrollment is subject to the Company's prior
approval.
It is further agreed that educational tuition shall be
available to all employees in the bargaining unit employed at
least one (1) year or more.
XXVIII. LOCKOUTS AND STRIKES
1. The Union shall not call or authorize any strike,
work stoppage, slowdown, sit-in or any other interference with
work, and the Employer shall not cause any lockout. Where an
unauthorized strike, work stoppage, slowdown, sit-in or any other
interference with work occurs, the Union will make immediate
efforts to return the strikers to their respective jobs, and
shall request the strikers to cease any action which may affect
production. The Employer agrees, in consideration of the
performance of the Union of the aforesaid undertakings, to
absolve the Union, its officers or agents, of any liability by
suit for damages for breach of contract, or of any kind or
character whatsoever. It is distinctly understood and agreed
that the Union will not be held liable for any unauthorized or
outlaw strikes or the individual acts or actions of any employee
or group of employees, so long as the Union faithfully discharges
its duty as hereinbefore described to use its best efforts to
discourage such acts and to bring about their early cessation.
2. Should any employee or group of employees engage in
any strike, work stoppage, slowdown, sit-in or any other
interference with work, the Employer shall have the right to
summarily discharge the aforesaid employee or groups of
employees. In any such case, resort may
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be had to the grievance
procedure under Article XIII of this Agreement only to determine
the question of whether the disciplined employee did, in fact,
engage in the conduct of which he is accused.
3. In the event the Union or any of its officers, agents
or members engage in conduct violative of Section 1 of this
Article, it is agreed that the Company may:
(a) Seek to enjoin such conduct in any appropriate State
Court;
(b) Submit the matter to an arbitrator mutually agreed to
by the Company and the Union or, in the absence of such
agreement, an arbitrator chosen by the Company from a panel of
five (5) arbitrators obtained from the American Arbitration
Association; and
(c) Seek any other legal, equitable, administrative,
judicial or contract remedies available to the Company under law.
XXIX. BIDDING AND POSTING
1. All job vacancies shall be posted on all bulletin
boards in all Company production facilities for three (3) days,
exclusive of Saturday, Sunday, and paid holidays provided for in
Article XV of this Agreement. Qualifications will be determined
by seniority and ability to perform the job. The Company has
sole and unrestricted discretion to determine who, among two (2)
or more qualified candidates is the best qualified to perform the
work of the position in such a manner as to maximize the
contributions of the position to the Company's overall interests
of ensuring regulatory compliance and product quality and
integrity, and maximizing productivity, efficiency and safety.
In evaluating the qualifications of candidates, the Company will
take into full
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consideration the employee's past performance,
demonstrated skills, disciplinary record, and over-all
competency. Among equally qualified bidders, seniority shall
control.
An employee bidding on a job shall give the job bid to the
Human Resources Department which shall notify the chief steward
as soon as bidding is closed. The Company shall interview all
bidders within five (5) working days from the end of the posting
date. Within three (3) days of the close of interviewing of
bidders, or as soon as any labor-management dispute is resolved,
the Company shall notify the steward and award the bid. Upon
request by the steward, the Company will provide a written
explanation of why an employee was not awarded the job.
Proficiency, aptitude, manual dexterity, and/or other
scientifically developed and validated testing developed in-house
or from other sources will, to the extent deemed helpful by the
Company in its sole and unrestricted discretion, be administered
to bidders to determine their suitability for training and
performance. Such tests shall be related to those skills and
qualifications necessary to the position. Any employee who has
previously worked for at least six (6) months and demonstrated
proficiency in a position on which he seeks to bid shall not be
required to take any mechanical aptitude test administered to
other bidders for the job to demonstrate qualification for that
job. Discriminatory administration of tests will be subject to
the Union Grievance procedure. If the bidding employee fails the
proficiency or aptitude test for the relevant position, that
employee shall not be entitled to bid on that position or other
positions requiring similar qualifications for a period of one
(1) year.
In order to assist incumbent bargaining unit employees who
for any reason anticipate that they may have difficulty in
performing well enough on aptitude tests utilized by the Company
to determine qualifications of job bidders, the Company agrees
that it will offer a basic skills training course
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(covering reading and math skills) to all interested employees at least
twice a year. Attendance at such training course shall be
entirely voluntary, on the participating employee's own time, and
uncompensated.
In general, aptitude tests (designed to test a candidate's
knowledge, skills and abilities for performance of job
functions), when administered, will be given to candidates prior
to selection of an employee to fill a job and used to assess the
candidate's capabilities for completing training and successfully
performing the job. Proficiency testing may be used to assess
job knowledge at the preselection stage, where prior experience
and/or specific job knowledge are prerequisites to selection for
a job, or after the completion of training to assess whether the
employee has acquired sufficient job knowledge through training
to be able to perform the responsibilities of the job
successfully. Testing for aptitude and proficiency will be
limited to testing for knowledge, skills and abilities necessary
for successful job performance, and the Union agrees that
selection procedures meet this criterion if professionally
developed and validated in accordance with the Principles for
Validation and Use of Personnel Selection Procedures issued by
the Society for Industrial and Organizational Psychology.
Further, tests that have been in recent use in the Company's
employee selection procedures shall be presumed to meet this
criterion until new, professionally developed tests are
available.
A successful bidder must be transferred to his new position
within fifteen (15) days. If transfer to the new position takes
longer than fifteen (15) days, he/she will in any event, be
entitled to the higher rate of pay (if a higher rate is otherwise
applicable under the terms of this Agreement) effective fifteen
(15) days after an award. An employee who successfully bids on a
higher rated job will receive the 3-month rate for that job or
their current rate, whichever is higher, and will progress
through the wage schedule thereafter.
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In the event that none of the bidding employees are
qualified for the available position, the Company may go outside.
Each employee shall be eligible for only one successful
lateral bid per year. In addition, each employee shall be
eligible for only two (2) successful upgrade bids in a calendar
year. But, in no event, shall any employee be eligible for more
than two (2) successful bids in one (1) calendar year.
Therefore, an employee who has successfully bid laterally shall
be allowed only one (1) upgrade bid.
If a bidding employee refuses an award, that employee shall
not be entitled to bid on any other job for a period of one (1)
year.
Any employee selected for a new position in accordance with
this Article shall be on probation which will not last more than
ninety (90) days, to demonstrate the necessary skill, ability and
physical capability to learn and perform all aspects of the work
in a satisfactory manner consistent with the Company's overall
interests of ensuring regulatory compliance and product quality
and integrity, and maximizing productivity, efficiency and
safety. Such probationary period may be extended for an
additional thirty (30) days on mutual agreement between the Union
and the Company. At any time during the probationary day period
the Company may elect to return the employee to his old job and
is under no obligation to retain in the position an employee who
has been determined by the Company to be unsatisfactory for any
reason.
In the event that an employee awarded a bid is not
successful during the probationary period (i.e., performance is
deemed by the Company to be unacceptable or employee decides to
return to previous position), the Company shall award the job to
the next senior bidder whose name appears on the original bid
list, assuming that such employee is deemed by the Company to be
qualified for the
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new position. After exhausting those employees
deemed by the Company to be qualified on the original bid list,
the Company, in its sole and unrestricted discretion, may fill
the position by hiring from among applicants from outside the
Company.
Any employee who voluntarily returns to his old job during
the probationary period shall not be eligible to bid on any new
job for a period of twelve (12) months.
New employees shall not be permitted to bid on any new job
until they successfully complete their probationary period.
XXX. CREDIT UNION CHECK-OFF
1. In a manner and to the extent permitted by law, the
Company agrees to deduct each week from the wages of each of its
employees who are members of the Union and who have voluntarily
authorized same, the prescribed credit union deductions and to
remit the same monthly to the Union. Each authorization shall be
in writing, signed by the employees, and shall be delivered by
the Union to the Company. The Union agrees to indemnify and save
the Company harmless from any and all claims and/or disputes
arising out of the Company's actions in compliance with this
provision.
2. The Company agrees to allow payroll deductions for
the Local 8-149 OCAW Federal Credit Union. Such deductions, if
elected by employee, are to be made on a weekly basis and
remitted on a monthly basis.
XXXI. 401(k) PLAN (EMPLOYEE SAVINGS AND RETIREMENT PLAN)
1. The employees may elect to contribute two percent
(2%) of annual straight time wages and have the option of
contributing up to twelve percent (12%) of annual straight time
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wages according to the by-laws of the plan. The Company agrees
to match at one hundred percent (100%) the first two percent (2%)
of each participating employee's annual straight time wages
contributed to the plan.
2. The Company guarantees past service credit for
vesting purposes only for employees hired prior to July 1, 1983.
The minimum vesting schedule shall be as follows unless changed
by Federal Regulations:
20% after 1st year of service
40% after 2nd year of service
60% after 3rd year of service
80% after 4th year of service
100% after 5th year of service
If an employee quits or is terminated, he shall receive all of
his contribution and interest earned pursuant to the above
schedule.
3. An employee must be eighteen (18) years of age or
older in order to be eligible to participate in the employee
401(k) Plan.
4. All employees hired before October 23, 1978 will
receive a one-time severance pay as follows:
(a) Two percent (2%) of their straight-time pay earned
since they began working with Barr until July 1, 1983.
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(b) Collect a lump sum at age 55 or upon retirement, if
they retire after age 55 at their option.
(c) Provided they are employed as of July 1, 1984.
5. The plan shall be attached hereto and become a part
hereof.
6. The Company will notify the Union in advance and
discuss any changes in the 401(k) Plan. Any such changes will
not have retroactive effect. The Company and the chief shop
steward will regularly educate the employees in regard to the
401(k) Plan.
XXXII. SUCCESSORS AND ASSIGNS
This Agreement will be binding upon successors and/or
assigns and shall survive any sale, change of name or
reorganization.
XXXIII. SEVERANCE PAY
Employees who are permanently laid off or who retire at age
59-1/2 or after, shall be eligible to receive severance pay as
follows:
0 but less than 1 Year of Service None
1 Year of Service
but less than 2 Years of Service 1 Week
2 Years of Service
but less than 5 Years of Service 2 Weeks
5 Years of Service
but less than 8 Years of Service 4 Weeks
8 Years of Service
but less than 10 Years of Service 6 Weeks
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10 Years of Service
but less than 12 years of Service 8 Weeks
12 Years of Service and over 10 Weeks
Pay for each week of severance entitlement shall be paid at
forty (40) hours per week at the employee's straight time rate.
"Permanent layoff" as used in this Section shall mean a layoff
that is contemplated by the Company at the time it is implemented
to result, or does in fact result, in the affected employee
losing work for a period of one (1) year or more. Severance pay
as hereinbefore provided shall be payable within ten (10) days of
the anniversary of the effective date of the employee's layoff,
except that severance pay for employees laid off prior to the
effective date of this Agreement shall be payable within ten (10)
days after the second anniversary of their layoffs. Permanently
laid off employees entitled to severance pay pursuant to this
Article may request early payment of their severance pay benefits
within sixty (60) days of their layoff (or, in the case of
employees laid off prior to the effective date of this Agreement,
within fourteen (14) months of their layoff), and severance pay
in such cases shall be payable within ten (10) days of the
Company's receipt of the request.
XXXIV. DURATION AND TERMINATION
This Agreement shall be in full force and effect, commencing
April 1, 1996 up to and including March 31, 2001, and shall
automatically renew itself from year to year thereafter, but
either party may terminate it or propose modifications or
amendments at the end of the contract expiration date and the end
of each year thereafter, by giving the other party written notice
by registered mail no earlier than ninety (90) days nor later
than sixty (60) days before each automatic renewal date.
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It is agreed that all rights and obligations arising under
or provided in this Agreement shall expire on its termination
date.
IN WITNESS WHEREOF, the parties hereto have set their hands
the day and year first above written.
OIL, CHEMICAL AND ATOMIC WORKERS
INTERNATIONAL UNION, LOCAL 8-149,
AFL-CIO
By /s/ Mark Dudzic
Its President, O.C.A.W. Local 8-149
BARR LABORATORIES, INC.
By /s/ Catherine F. Higgins
Vice President Human Resources
COMMITTEE:
By /s/ Raymond Stever
By /s/ Brian Kopac
By /s/ Jean Lahens
By /s/ Larry Graham, Int'l Representative, O.C.A.W. Local 8-149
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