<PAGE> 1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 2, 1999
Commission file number 333-04254
BAR TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3753384
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3770 Embassy Parkway, Akron, Ohio 44333-8367
--------------------------------------------
(Address of Principal Executive Offices)
(330) 670-3000 (Registrant's telephone number including area code)
--------------
5700 Lombardo Center Drive, Suite 100, Seven Hills, Ohio 44131
--------------------------------------------------------------
(Former name, former address and fiscal year, if changed since last report )
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-X is not contained herein, and will not be contained, to the
best of the 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 number of shares outstanding of each of the issuer's classes of common stock
as of January 2, 1999 was as follows:
Class A Common Stock, $0.001 par value 204,458 shares
Class B Common Stock, $0.001 par value 536,829 shares
Class C Common Stock, $0.001 par value 536,865 shares
DOCUMENTS INCORPORATED BY REFERENCE
None
----
1
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
Bar Technologies Inc. a Delaware corporation ("Bar Tech" or, the "Company"),
produces and markets special bar quality ("SBQ") steel bar products. SBQ steel
bar products are high quality hot rolled and cold finished carbon and alloy
steel bars used primarily in critical applications in the automotive and
industrial equipment industries.
The Company was formed when it acquired certain steelmaking and bar rolling
assets (the "BRW Assets") from the former Bar, Rod & Wire Division (the
"Bethlehem BRW Division") of Bethlehem Steel Corporation ("Bethlehem") in
September 1994. The Bethlehem BRW Division was a leading manufacturer of high
quality engineered bar, rod and wire products prior to its shutdown in December
1992. In conjunction with the acquisition, the Company developed and implemented
a major modernization and expansion plan. In February 1996, the Company
restarted the mill facility located in Lackawanna, New York and began producing
and shipping hot rolled bar products. The Company commenced its commercial
steelmaking operations at its Johnstown, Pennsylvania facility in August 1996 in
conjunction with the commissioning of its continuous caster.
In April 1996, the Company acquired Bliss & Laughlin Industries Inc. ("BLI"),
one of the largest processors of cold finished steel bar products in North
America, to complement its existing scope of product offerings and enhance its
distribution network.
The Company's principal owners, Blackstone Capital Partners II Merchant Banking
Fund L. P. and its affiliates ("Blackstone") and certain affiliates of the
successor to Veritas Capital, Inc. ("Veritas"), serving as general partners for
limited partnerships, acquired Republic Engineered Steels, Inc. ("Republic") in
September 1998. Blackstone and Veritas intend to combine the Company and
Republic (the "Combination") during 1999, subject to refinancing a significant
portion of the combined companies' debt.
BUSINESS
The production of SBQ steel bar products is a segment of the overall steel
market. The bar products segment is further divided into three categories which
are delineated by the quality and the end use of the bar product: (i.)
reinforcing bar, (ii.) merchant quality bar and, (iii.) hot-rolled engineered
bar. Hot-rolled engineered bar is the highest quality segment of the bar product
market. The Company produces various grades and sizes of finished hot rolled
engineered bar products. The Company intends to operate in the higher quality
end of the hot rolled engineered bar market. SBQ steel bar products sell for
higher prices per net ton than merchant or commodity grade steel bar products as
they generally contain more alloys than merchant and commodity grade products
and are sold to customers who require precise metallurgical content and
compliance with rigorous quality specifications. The semi-finished billets
produced in the Company's Johnstown, Pennsylvania facility are produced to
specified chemical composition and quality.
The Company's hot-rolled engineered bar products include rounds, squares,
hexagons and flats in both cut lengths and coils. The Company produces hot
rolled engineered bar products up to 3 1/4" in diameter which are generally used
by its customers in critical applications where product strength, integrity and
durability are imperative considerations. These applications include: cam
shafts, axles, roller bearings, automotive suspension parts, large fasteners,
hydraulic hose fittings, transmission gears, and forged hand tools.
The Company also produces cold finished bars which are high quality processed
steel bars used in machined and shafting products that require superior
straightness, tolerance, finish and mechanical properties. Cold finished bars
are processed from hot rolled bars, by a process that cleans, draws and
straightens the raw material and cuts it to specific lengths. The Company
believes that it offers one of the widest ranges of sizes and shapes in the cold
finished bar industry. Products include round bars from 1/4" to 6" in diameter,
square bars from 3/8" to 6" square, flat bars from 1/4" to 3" thick and from
1/2" to 14-5/8"
2
<PAGE> 3
wide, and hexagonal bars from 1/4" to 3-1/4" thick. End users of cold finished
bars incorporate them in a wide range of products including electrical and
non-electrical machinery and equipment and a wide variety of vehicular equipment
including automobiles, trucks, sport-utility vehicles, off-road vehicles and
agricultural equipment.
The Company also thermally treats both hot rolled and cold finished bars. The
Company's thermally treated steel products include stress relieved, carbon
restored, normalized or annealed products, all of which offer high strength
combined with machinability.
The Company operates in two reportable segments: hot-rolled and cold-finished.
The Company manages the reportable segments as separate strategic business
units. Differences between the segments include: manufacturing techniques and
equipment, competition, and end-users.
SALES AND MARKETING
The Company's strategy is to expand its role as a critical supplier to
automotive and industrial equipment original equipment manufacturers ("OEMs")
and its first tier suppliers. These customers are increasingly consolidating
their supplier base and are seeking long-term partnerships with large suppliers
who have the capability to offer a broad range of products. The Company's
proposed Combination with Republic is an important step in achieving this
objective. Republic is a long-term industry participant with a strong reputation
for quality products which serves an established customer base with a broad
range of high-end SBQ bar products.
As the Company transitioned from initial operational and organizational start-up
activities to a focused commercial effort, it began receiving qualifications
from certain Tier I and II suppliers to the U.S. automotive market. This
requirement generally takes between three and twelve months for a supplier to
achieve. As a result of these qualifications, the Company shifted its product
mix from lower to higher margin and product grades.
Penetration of these targeted market segments is dependent upon various factors,
including the ability to produce product to precise chemistry and manufacturing
tolerances. Additionally, producers must meet pre-qualification requirements,
including QS-9000 certification, to become approved suppliers for certain
potential customers such as automotive OEMs and their suppliers. These
requirements vary in scope and generally take between one and three years for a
supplier to achieve. Frequently, the qualification process requires the Company
to supply one or more trial heats of engineered bar products for customer
evaluation.
Certain customers in the higher quality bar segments require their suppliers to
be certified to third party quality systems such as QS-9000 and ISO 9000 before
commencing new supplier trials. The Company obtained QS-9000 certification for
its Lackawanna hot rolled steelmaking operations in August 1998 and is in the
process of obtaining such certification for its Johnstown melt shop with
completion scheduled for the third quarter 1999. The Company's Hamilton, Ontario
and Harvey, Illinois cold finishing plants also received QS-9000 certification
in 1998. Certification of the Company's facility in Cartersville, Georgia has
begun with expected completion in the first quarter 2000.
Subsequent to the acquisition of Republic, the Company and Republic share common
management and have begun to perform certain sales, marketing and administrative
functions on a combined basis. This includes marketing both companies' steel
products jointly under the combined brand name "Republic Technologies
International" using a single sales force. However, throughout fiscal 1998, each
customer purchase order for steel products continued to be placed directly with
the Company or Republic, as appropriate, to make the sale. The costs of joint
functions have been borne ratably by the Company and Republic based upon
relative sales volumes achieved.
As of January 4, 1999, Republic Technologies International Marketing, LLC
("Marketing JV") was formed. The Company and Republic expect to finalize an
agreement in the second quarter 1999 under which this jointly owned Marketing JV
will market, advertise, promote and sell both companies' steel products to each
company's existing and potential customers. The Company and Republic will be
reimbursed for expenses they incur on behalf of the Marketing JV, including
compensation costs of employees of the Company and Republic who perform sales
and marketing functions for the Marketing JV. Except for certain prior
commitments to customers that will continue to be placed with the Company or
3
<PAGE> 4
Republic as applicable, it is intended that customer purchase orders will be
placed with the Marketing JV. Pursuant to allocation procedures to be approved
by the boards of directors of both companies, the production of steel products
to fulfill these orders will be allocated between the Company and Republic. To
compensate the Marketing JV for marketing services performed, it is intended
that the Company and Republic will pay commissions at specified percentages of
sales.
The Company has direct sales representation in the major manufacturing centers
of the Midwest, Great Lakes and Southeast regions of the United States,
including among others, the Chicago, Detroit and Cleveland markets, and Canada.
The Company believes the majority of hot rolled and cold finished bar product
consumption in North America to be in these markets. Previously, the Company
utilized independent sales agents to cover the remaining areas of the United
States and Canada in which it markets its cold finished bar. In addition to the
combined sales and marketing functions with Republic, the Company also uses
independent sales agents in certain areas in the South and on the West Coast.
The Company also has customer service and sales personnel to staff the inside
sales organization. The Company is not dependent on a single or a small number
of customers. The loss of any one customer would not have a material adverse
effect on its business.
SEASONALITY
The Company's business is subject to some degree of seasonality. The primary end
markets for the Company's products are the automotive and industrial equipment
industries. Consequently, the SBQ industry, including the Company, typically
experiences higher shipment volumes and revenues in the second and third
quarters due to seasonality of the automotive and industrial equipment
industries.
RAW MATERIAL
The Company's primary raw material for the manufacture of hot rolled products is
ferrous scrap metal, which is generated principally from industrial, automotive,
demolition and railroad sources. The high quality of the Company's products
requires the use of premium grades of scrap metal, the supply of which is more
limited. Prices for scrap metal vary based on numerous factors including
quality, periodic shortages, freight costs, speculation by scrap brokers and
other conditions beyond the control of the Company. However, the Company
generally has not had difficulty purchasing adequate scrap metal of the required
quality. The Company believes that adequate supplies of scrap metal will
continue to be available in sufficient quantities for the foreseeable future.
The Company currently purchases scrap from Republic who is pooling the purchase
requirements of both the Company and Republic to purchase scrap in the open
market through a number of scrap brokers and dealers.
The Company currently purchases semi-finished billets from other steelmakers for
use in production at its Lackawanna facility. However, the Company plans to
phase out these purchases and purchase grades it does not produce from Republic.
Additionally, the Company purchases various materials such as nickel, chrome,
molybdenum, vanadium, manganese, silicon, aluminum, titanium, sulfur, lead, lime
and fluorspar for use as alloying agents and cleansing materials.
Prices of these materials could fluctuate significantly.
For fiscal 1998, approximately 45% of BLI's products were produced from hot
rolled bar from numerous outside sources in sizes either outside of the
Company's current capability, or which the Company chooses not to produce.
These products include flats, small diameter rods and large rounds. The Company
expects that these products will continue to be readily available. The
remaining product supply is furnished directly from the Company's Lackawanna
facility and other affiliate sources. The proportion of purchases from
non-affiliated suppliers is expected to be reduced to 15% by the end of 1999,
as the Company and Republic integrate their manufacturing processes.
ENERGY SOURCES
The Company's primary use of electricity is its electric furnace operations in
Johnstown, Pennsylvania. The principal use of natural gas is for billet
reheating operations at the Lackawanna, New York rolling mill.
The Company has negotiated a five-year contract, expiring in May 2002 for
electrical power with a utility company for its operations in Johnstown,
Pennsylvania. The Company has also negotiated an agreement for natural gas
expiring in April 2001 at its Lackawanna, New York rolling mill. Both
4
<PAGE> 5
agreements allow the Company to purchase energy at rates considered competitive
in the current marketplace.
All of the Company's energy sources are transmitted via common carrier
utilities, and therefore could be subject to disruption or curtailment.
Therefore, the Company's results of operations would be adversely affected to
the extent lost profits from such an event could not be recovered under the
Company's insurance policies. The Company has not experienced any material
curtailment or loss of electricity or natural gas since it began its operations.
COMPETITION
The Company competes mainly on the basis of product quality, price, customer
service, breadth of product offering and delivery capability. The Company
believes its cost structure provides it with the means to compete effectively on
pricing. The Company has corporate departments specifically dedicated to quality
and customer service, which allows it to adequately support its customers'
technological and other service needs. The Company believes that it has one of
the widest selections of product grades and sizes in the industry. The domestic
steel industry is highly competitive and additionally, foreign competition can
be significant in certain market areas in which certifications are not required.
Recent entrants into the SBQ steel market compete directly with the Company in a
major portion of its products. Maintaining high standards of product quality
while keeping production costs competitive is essential to the Company's ability
to compete in its markets. The Company believes that its proposed Combination
with Republic will provide for additional opportunities to improve its market
competitiveness.
The Company's primary competition for its hot rolled bar products are both large
domestic steelmakers and specialized mini-mills. Many of the large steelmakers
have greater financial resources and utilize modern technologies similar to some
of the equipment and processes currently in place at the Company.
The Company believes it is one of the four largest cold finishing marketers in
the United States. However, numerous competitors exist in the domestic cold
finishing market. There are over 20 cold finishers in the domestic market at
present. Although direct foreign competition in the cold finishing industry is
not a significant market factor, the ability of domestic competitors to obtain
low-cost imported hot rolled bar could have an adverse affect on the Company's
operations.
The Company maintains a Canadian production facility in Hamilton, Ontario. As a
result, the Company is subject to business risks inherent in Canada, including
political uncertainty, import and export limitations, exchange controls and
currency fluctuations. The Company believes risks related to its foreign
operation are mitigated due to the political and economic stability of the
country in which its facility is located.
Foreign competition is a significant factor in the North American engineered bar
industry. Imports are substantially affected by fluctuations in the value of
various world currencies. If the U. S. dollar were to strengthen significantly
against foreign currencies, the price and sales volume of the Company's products
could be adversely affected. There can be no assurance that economic changes
will not result in increased foreign competition in the Company's North American
markets.
BACKLOG
The Company had backlog of approximately 63,000 hot-rolled and 40,000
cold-finished tons at January 2, 1999. Management does not believe that the
amount of backlog is a reliable indication of future sales. Orders for both
engineered hot rolled and cold finished bar products generally are filled within
five to 12 weeks of the order depending on the product, customer specification
and other product requirements. Customer orders generally are cancellable
without penalty prior to finish size rolling and depend on the changing
production schedule of customers.
PATENTS, TRADEMARKS AND TRADE NAMES
The Company has the patents, trademarks and trade names necessary for the
operation of its business as now conducted. The loss of any or all of these
patents, trademarks and trade names would not have a material adverse effect on
the Company's business. However, in recognition of these trademarks in the
5
<PAGE> 6
marketplace, the Company considers these intellectual property rights important
to its business and intends to actively defend and enforce them as necessary.
EMPLOYEES
In 1998, the Company and an affiliate of Republic entered into a settlement
agreement with the United Steelworkers of America ("USWA") under which a new
master labor agreement was established for all U.S. employees of the Company and
Republic represented by the USWA. The new collective bargaining agreement
relating to certain Company employees at the Lackawanna, Johnstown and Harvey
facilities became effective in February 1999 and expires in October 2003. Wage
and benefit provisions under this collective bargaining agreement are specified
until expiration of the agreement and will be subject to negotiations at that
time.
As part of the agreement, the Company committed to establish a $1.6 million fund
to be distributed to eligible USWA employees in May 1999 in full and complete
satisfaction of the Company's obligation under its predecessor collective
bargaining agreement to establish an employee stock ownership plan ("ESOP").
Additionally, the collective bargaining agreement granted the USWA the power to
appoint one director.
The agreement also provides that covered employees will be able to purchase
shares of the combined company following the Combination of the Company and
Republic. A maximum of $15 million of shares will be offered in the aggregate at
the same price per share attributable to the common stock of the combined
company acquired directly and indirectly by Blackstone in the Combination. Such
offering is to occur no later than six months after the closing of the
Combination. Holders of these shares will be granted piggyback registration
rights entitling them to registration of their shares in an underwritten initial
public offering of the combined company, subject to customary provisions.
Production and maintenance employees at BLI's Hamilton, Ontario facility are
covered by a separate collective bargaining agreement with the USWA, which
expires in October 2003. Production and maintenance employees at BLI's Medina,
Ohio facility are covered by a collective bargaining agreement with the
International Association of Machinists and Aerospace Workers (the "IAM") that
expires in October 2000. Production employees at BLI's Batavia, Illinois and
Cartersville, Georgia facilities are not represented by a union.
As of January 2, 1999, the Company had approximately 850 employees. At January
1, 1999, certain salaried employees of the Company were terminated by the
Company and became employees of Republic. Under the terms of an employee leasing
and overhead allocation agreement, the Company and Republic share the costs of
common expenses including, but not limited to sales and marketing services,
administrative services, plant overhead and costs for certain common facilities.
Salary and benefit costs are allocated according to each company's approximate
share of combined trade volumes. Certain salaried employees located at the
Company's facilities in Lackawanna, New York and Johnstown, Pennsylvania were
also included in this arrangement. However, the Company leased back the services
of these employees, the salary and benefit costs of which are borne entirely by
the Company.
ENVIRONMENTAL MATTERS
The domestic steel industry is subject to a broad range of Federal, state and
local environmental laws and regulations including those governing discharges
into the air and water, handling and disposal of solid and hazardous wastes, the
remediation of soil and ground water contaminated by petroleum products or
hazardous substances or wastes, and the health and safety of employees. The
Company has taken, and continues to take, into account the requirements of such
environmental laws and regulations in the conduct of its facilities and believes
that it is currently in substantial compliance with such material laws and
regulations. As is the case with most steel producers, the Company could incur
significant costs related to environmental compliance. To the extent the Company
might incur any substantial costs, these costs most
6
<PAGE> 7
likely would be incurred over a number of years; however, no assurance can be
given that future regulatory actions regarding soil or ground water at the
Company's facilities, as well as continued compliance with environmental
requirements, will not require the Company to incur significant costs that may
have a material adverse effect on the Company's financial condition, results of
operations or cash flows.
Through the Company's contractual agreements with Bethlehem, the Company has
sought to reduce the impact of costs arising from or related to actual or
potential environmental conditions at the Company's facilities caused or created
by Bethlehem or its predecessors in title and attributable to the period in
which the Bethlehem BRW Division or its predecessors operated such facilities.
Pursuant to such arrangements, Bethlehem has agreed to indemnify the Company for
such costs by limiting the Company's potential exposure to any such damages
incurred (i) through December 1996, to 50% of the first $2.0 million in damages,
or $1.0 million, and (ii) thereafter, to 50% of the first $10.0 million of
damages, or $5.0 million in the aggregate. Although several investigations of
past or present environmental conditions at the Company's facilities have been
conducted by or on behalf of Bethlehem and certain regulatory agencies, the
reports and results of which have been made available to the Company, an
in-depth, environmental review of the Company's facilities to determine the
potential scope, if any, of required remediation at such facilities has not been
conducted by or on the behalf of the Company. There can be no assurance that
Bethlehem will meet its obligations under the indemnification arrangements or
that there will not be future contamination for which the Company might be fully
liable and that may require the Company to incur significant costs that could
have a material adverse effect on the Company's financial condition, results of
operations or cash flows.
Bethlehem is conducting remediation activities on a small portion of the
Lackawanna facility historically used for mill scale storage, which was
identified by the U. S. Environmental Protection Agency (the "EPA") pursuant to
an Administrative Order on Consent issued August 1990 as requiring certain
corrective action. Bethlehem currently awaits approval of the Remediation Work
Plan for the former mill scale storage area submitted to the EPA in September
1994. Bethlehem is ultimately liable for compliance with the Administrative
Order on Consent and the Company believes that Bethlehem is likely to fulfill
these obligations, although there can be no assurance such will occur.
In August 1995, BLI received a request for information from the EPA pursuant to
section 104(e) of CERCLA with respect to a federal investigation and potential
remediation of two hazardous waste treatment sites in Kansas City, Kansas and
Kansas City, Missouri. In 1985, BLI shipped ten capacitors from its Harvey,
Illinois facility to these sites for disposal. The capacitors held approximately
88 gallons of oil that may have contained polychlorinated biphenyls. At this
time, BLI has not received any further correspondence from the EPA and has not
been named as a potentially responsible party under CERCLA at either site;
however, there can be no assurance at this time that further action by the EPA
will not occur. The Company has not estimated the amount of liability it may
incur in connection with this disposal. The Company understands that the EPA has
identified approximately 1,300 customers of the treatment sites, which operated
over a period of several years. While no assurances can be given, the Company
does not believe that BLI's liability relating to these sites will have a
material adverse effect on the Company's financial condition, results of
operations or cash flows.
Various Federal, state and local laws, regulations and ordinances govern the
removal, encapsulation or disturbance of asbestos containing materials ("ACMs").
Such laws and regulations may impose liability for the release of ACMs and may
provide for third parties to seek recovery from owners or operators of
facilities at which ACMs were or are located for personal injury associated with
exposure to ACMs. The Company is aware of the presence of ACMs at its
facilities, but it believes that such materials are in acceptable condition at
this time. The Company believes that any future costs related to remediation of
ACMs at these sites will not be material, either on an individual basis or in
the aggregate, although there can be no assurance with respect thereto.
The Company has the necessary environmental permits for the construction and
operation of its business.
Canadian Drawn Steel Company, Inc. ("CDSC"), BLI's Canadian subsidiary, is also
subject to Canadian federal, provincial, regional and municipal environmental
laws and regulations. BLI believes that it is
7
<PAGE> 8
currently in substantial compliance with all applicable material environmental
laws and regulations and does not anticipate any substantial additional capital
expenditures for environmental control facilities in the near future. However,
there can be no assurance that the Company will not be required to incur
significant costs that could have a material adverse effect on the Company's
financial condition, results of operations or cash flows.
Some of the steel processing operations presently conducted by Bliss & Laughlin
Steel Company ("BLSC") commenced over 100 years ago by predecessors of BLSC and
included properties which over the years were sold by BLSC's predecessors. Given
the nature and geographic diversity of its current and its predecessors' former
operations, it is possible that claims would be asserted against BLI in the
future based upon the current property ownership of BLI and by historical
operations by its predecessors. However, BLI has received an indemnification
from the former owner and operator of such properties for certain environmental
claims or liabilities relating to activities at BLI's Harvey and Batavia,
Illinois and Medina, Ohio properties prior to October 23, 1984, when BLSC
succeeded to ownership of such properties, and for certain environmental claims
or liabilities relating to properties that were sold by BLSC's predecessors.
There can be no assurance that such former owner and operator will meet its
obligation under the indemnification agreements or that there will not be future
contamination for which the Company might be fully liable and that may require
the Company to incur significant costs that could have a material adverse effect
on the Company's financial condition, results of operations or cash flows.
While the Company believes that the foregoing environmental matters will not,
individually or in the aggregate have a material adverse impact on the Company's
financial condition, results of operations or cash flows, there can be no
assurance to that effect.
ITEM 2. PROPERTIES
The Company operates manufacturing locations in seven locations and leases its
corporate offices. The locations and square footage information are as follows:
Executive Offices - The Company's corporate offices, which are leased, were
recently relocated to Akron, Ohio. The new corporate offices, which are shared
with Republic, are approximately 33,000 square feet.
Johnstown, Pennsylvania - Aggregate floor area of approximately 1.9 million
square feet of manufacturing, office and storage space.
Lackawanna, New York - Aggregate floor area of approximately 1.1 million square
feet of manufacturing, office and storage space.
Harvey, Illinois - Aggregate floor area of approximately 331,000 square feet of
manufacturing, office and storage space.
Batavia, Illinois - Aggregate floor area of approximately 61,000 square feet of
manufacturing, office and storage space.
Cartersville, Georgia - Aggregate floor area of approximately 92,000 square feet
of manufacturing, office and storage space.
Hamilton, Ontario, Canada - Aggregate floor area of approximately 135,000 square
feet of manufacturing, office and storage space.
Medina, Ohio - Aggregate floor area of approximately 126,000 square feet of
manufacturing, office and storage space.
All property relating to the Company's manufacturing facilities is owned by the
Company. In addition, the Company maintains operating leases for various of its
sales offices. The Company's corporate offices were relocated from Seven Hills,
Ohio to Akron, Ohio in March 1999. As part of the Company's initiatives
8
<PAGE> 9
related to its proposed combination with Republic, the new corporate offices
located in Akron, Ohio are headquarters to both the Company and Republic in an
attempt to reduce overhead and increase efficiency. The Company is actively
pursuing a tenant to sub-lease its Seven Hills, Ohio former offices which are
presently unoccupied. The Company believes that all of its production facilities
operate efficiently and have adequate capacity to achieve its strategic
expansion objectives.
ITEM 3. LEGAL PROCEEDINGS
Bethlehem is conducting remediation activities on a small portion of the
Lackawanna facility historically used for mill scale storage, which was
identified by the U. S. Environmental Protection Agency (the "EPA") pursuant to
an Administrative Order on Consent issued August 1990 as requiring certain
corrective action. Bethlehem currently awaits approval of the Remediation Work
Plan for the former mill scale storage area submitted to the EPA in September
1994. Bethlehem is ultimately liable for compliance with the Administrative
Order on Consent and the Company believes that Bethlehem is likely to fulfill
these obligations, although there can be no assurance such will occur.
In August 1995, BLI received a request for information from the EPA pursuant to
section 104(e) of CERCLA with respect to a federal investigation and potential
remediation of two hazardous waste treatment sites in Kansas City, Kansas and
Kansas City, Missouri. In 1985, BLI shipped ten capacitors from its Harvey,
Illinois facility to these sites for disposal. The capacitors held approximately
88 gallons of oil that may have contained polychlorinated biphenyls. At this
time, BLI has not received any further correspondence from the EPA and has not
been named as a potentially responsible party under CERCLA at either site;
however, there can be no assurance at this time that further action by the EPA
will not occur. The Company has not estimated the amount of liability it may
incur in connection with this disposal. The Company understands that the EPA has
identified approximately 1,300 customers of the treatment sites, which operated
over a period of several years. While no assurances can be given, the Company
does not believe that BLI's liability relating to these sites will have a
material adverse effect on the Company's financial condition, results of
operations or cash flows.
Except as described hereunder, the Company is not involved in any other
proceedings which, either individually or in the aggregate, may have a material
adverse effect on the financial condition, results of operations or cash flows
of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
9
<PAGE> 10
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company has three classes of common equity: Class A Common Stock, Class B
Common Stock, and Class C Common Stock (collectively, the "Common Stock"). There
is currently no established trading market for the Company's Common Stock.
ITEM 6. SELECTED FINANCIAL DATA (UNAUDITED)(1) (2)
<TABLE>
<CAPTION>
(In thousands of dollars, except per share data)
Three Months
Year Ended Year Ended Ended
January 2, January 3, December 28, Years Ended September 30,
1999 1998 1996 1996 1995
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 271,851 $ 242,896 $ 40,251 $ 77,163
Operating loss (17,679) (22,727) (8,702) (31,460) $ (10,658)
Net loss before extraordinary item (41,978) (44,823) (13,525) (41,419) (12,832)
Extraordinary item -- -- -- (2,214) --
Net loss (41,978) (44,823) (13,525) (43,633) (12,832)
Net loss applicable to common shares (42,363) (45,208) (13,618) (44,018) (13,217)
Net loss per common share: basic and
diluted
Net loss before extraordinary item $ (33.14) $ (50.88) $ (18.37) $ (93.08) $ (67.29)
Extraordinary item -- -- -- (4.93) --
--------- --------- --------- --------- ---------
Net loss $ (33.14) $ (50.88) $ (18.37) $ (98.01) $ (67.29)
========= ========= ========= ========= =========
Total assets $ 222,501 $ 205,678 $ 206,287 $ 200,979 $ 46,001
Long-term debt 128,962 130,741 132,093 132,426 44,952
Redeemable preferred stock 5,500 5,500 5,500 5,500 5,500
Cash dividends declared per
preferred share 350 350 88 350 350
</TABLE>
(1) The Company changed its fiscal year from its previous calendar quarter
basis ended September 30 to a 4/4/5 week fiscal quarter basis ending
the Saturday closest to December 31. As a result, the Company's fiscal
year 1997 began on December 29, 1996 and ended on January 3, 1998.
Fiscal 1997 includes 53 weeks while 1998, 1996 and 1995 each include 52
weeks.
The three month transition period ended December 28, 1996 bridges the
gap between the Company's old and new fiscal year-ends.
(2) The Company had no income statement activity prior to the acquisition
of the BRW Assets on September 26, 1994, and such activity was
insignificant for the period from September 26 through September 30,
1994. As of September 30, 1994, the Company had total assets of $46.8
million, long-term debt of $34.8 million, and redeemable preferred
stock of $5.5 million. No dividends were declared during the period.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company acquired certain steelmaking and hot bar rolling assets from the
former Bar, Rod and Wire Division of Bethlehem Steel Corporation ("Bethlehem")
in September 1994. The Company commenced operations at its Lackawanna, New York
hot bar rolling mill in February 1996 and commissioned its continuous caster and
commenced the melt shop located at its Johnstown, Pennsylvania facility in
August 1996.
10
<PAGE> 11
In April 1996, the Company completed a recapitalization (the "Recapitalization")
which included i.) the issuance of $91.6 million in aggregate principal amount
of 13-1/2% Senior Notes due 2001 for proceeds of approximately $90.0 million;
ii.) the purchase by Blackstone of 536,829 shares of Class B Common Stock of the
Company in consideration of $30.0 million; iii.) the establishment of a $90.0
million senior revolving credit agreement (the "Revolving Credit Agreement")
with a group of banks led by Chase Manhattan Bank, as agent; and, iv.) the
completion of the merger with BLI, a major independent cold finished processor
of steel bars. The Company acquired BLI for an aggregate equity purchase price
of approximately $38.0 million, plus the assumption of $3.6 million of debt and
the refinancing of $16.8 million of debt. The acquisition and the subsequent
repayment of the $16.8 million in debt was financed with the proceeds from the
Company's Recapitalization.
In September 1997, the Company's principal owners, Blackstone and Veritas
purchased 536,865 shares of Class C non-voting Common Stock for $30.0 million.
The proceeds were utilized for various capital projects at the Company's
facilities. These projects are anticipated to be completed by the second half of
1999. Additionally, the Company and its commercial banks negotiated an amendment
to its existing $90.0 million Revolving Credit Agreement (the "Amended
Agreement"). The Amended Agreement provided for the addition of a new revolving
credit sub-facility (the "Sub-Facility") and amended certain portions of the
Revolving Credit Agreement. The Sub-Facility component of the Amended Agreement
provides the Company with up to $15.0 million of additional borrowing capacity
based on a higher receivables and inventory advance rate than in the Revolving
Credit Agreement.
In September 1998, Blackstone and Veritas and their respective affiliates,
serving as general partners for limited partnerships, acquired Republic.
Blackstone and Veritas intend to combine BarTech and Republic during 1999,
subject to refinancing a significant portion of the combined companies' debt.
Subsequent to the acquisition of Republic, the Company and Republic share common
management and have begun to perform certain sales, marketing and administrative
functions on a combined basis. This includes marketing both companies' steel
products jointly under the combined brand name "Republic Technologies
International" using a single sales force. However, throughout fiscal 1998, each
customer purchase order for steel products continued to be placed directly with
the Company or Republic, as appropriate, to make the sale. The costs of joint
functions have been borne ratably by the Company and Republic based upon
relative sales volumes achieved. The Company also participates in an inventory
purchasing arrangement with Republic. Under the terms of this arrangement,
Republic purchases inventory products on behalf of both companies and bills the
Company for its respective purchases, plus an administrative fee.
Pending the proposed combination as of January 4, 1999, Republic Technologies
International Marketing, LLC ("Marketing JV") was formed. The Company and
Republic expect to finalize an agreement in the second quarter 1999 under which
this jointly owned Marketing JV will market, advertise, promote and sell both
companies' steel products to each company's existing and potential customers.
The Company and Republic will be reimbursed for expenses they incur on behalf of
the Marketing JV, including compensation costs of employees of the Company and
Republic who perform sales and marketing functions for the Marketing JV. Except
for certain prior commitments to customers that will continue to be placed with
the Company or Republic as applicable, it is intended that customer purchase
orders will be placed with the Marketing JV. Pursuant to allocation procedures
to be approved by the boards of directors of both companies, the production of
steel products to fulfill these orders will be allocated between the Company and
Republic. To compensate the Marketing JV for marketing services performed, it is
intended that the Company and Republic will pay commissions at specified
percentages of sales.
The Company's strategy is to expand its role as a critical supplier to
automotive original equipment manufacturers and their first tier suppliers. To
successfully penetrate these markets, producers must meet pre-qualification
requirements for certain potential customers. Certain customers in the higher
quality bar segments require their suppliers to be certified to third party
quality systems such as QS-9000 and ISO 9000 before commencing new supplier
trials. The Company obtained QS-9000 certification for its Lackawanna hot rolled
steelmaking operations in August 1998 and is in the process of obtaining such
certification for its Johnstown hot rolled facility with completion scheduled
for third quarter 1999. The Company's Hamilton, Ontario and Harvey, Illinois
cold finishing plants also received QS-9000 certification in 1998. Certification
of the Company's facility in Cartersville, Georgia has begun with expected
completion in the first quarter 2000. As a result of these qualifications, the
Company has accelerated the shift of its product mix from lower to higher
margins and product grades.
11
<PAGE> 12
RESULTS OF OPERATIONS
FISCAL YEAR 1998 ENDED JANUARY 2, 1999 COMPARED WITH FISCAL YEAR 1997 ENDED
JANUARY 3, 1998
Net sales for the fiscal year ended January 2, 1999 totaled $271.9 million on
shipments of approximately 527,000 net tons compared with net sales of $242.9
million for the fiscal year ended January 3, 1998 on shipments of approximately
450,000 tons. Fiscal 1998 net sales for hot-rolled products were $114.1 million
while net sales for cold-finished products were $157.8 million for the same
period compared with fiscal 1997 hot-rolled net sales of $83.8 million and
cold-finished net sales of $159.1 million. The $29.0 million increase in net
sales is largely the result of a 17.1% increase in shipping volumes, primarily
of hot-rolled products, coupled with a slight increase in selling prices per ton
on hot-rolled products. The increase in fiscal 1998 net sales was adversely
affected as selling prices per ton on cold-finished products decreased as a
reaction to downward market pressures on pricing from the Company's competition.
Cost of sales totaled $262.5 million, or 96.5% of net sales, for the fiscal year
ended January 2, 1999 compared with cost of sales of $239.4 million, or 98.5% of
net sales, for the similar period ended January 3, 1998. Cost of sales in fiscal
1998 consisted of $120.2 million on hot-rolled products and $142.3 million on
cold-finished products compared with $97.3 million on hot-rolled products and
$142.1 million on cold-finished products in fiscal 1997. The decrease in cost of
sales as a percentage of net sales was due to operating cost efficiencies
associated with the higher production and shipping levels in fiscal 1998
partially offset by production outages experienced at the Company's Lackawanna
facility during its third quarter fiscal 1998 due to the installation of a new
rolling mill electrical control system. The improvement in operating costs was
primarily generated by a decrease in manufacturing costs on a cost per ton basis
for the Company's hot-rolled products while costs on a per ton basis for
cold-finished products remained relatively unchanged.
Cost of sales for the fiscal year 1997 reflect operating cost inefficiencies
related to production outages during the fourth quarter of that period as the
Company experienced a major mechanical breakdown at its Lackawanna hot bar
rolling mill operation. A failure on its No. 1 rolling stand resulted in a
twelve-day production outage. Additionally in fiscal 1997, the Company
experienced operating cost inefficiencies relating to the integration of
inexperienced personnel into its Lackawanna rolling mill crews. The Company
added a third and fourth production shift at the Lackawanna facility, which
began in April and August 1997, respectively. As a result, cost of sales as a
percentage of net sales for fiscal 1997 was 116.1% for hot-rolled products and
89.3% for cold-finished products.
Depreciation and amortization for the fiscal year ended January 2, 1999 was $6.0
million compared with $4.5 million for the fiscal year ended January 3, 1998.
The increase was primarily attributable to additional depreciation as a result
of the installation of a new rolling mill electrical control system at the
Company's Lackawanna facility and upgrades to its computer system in an effort
to improve its processes related to financial and operational information.
Selling, general and administrative expense was $21.1 million during the fiscal
year ended January 2, 1999 compared with $21.7 million for the fiscal year ended
January 3, 1998. The decrease in selling, general and administrative expense was
primarily due to the combination of sales and marketing efforts of the Company
and Republic in an effort to reduce overhead and improve customer service. In
the fall of 1998, the companies commenced marketing their respective steel
products jointly under the combined brand name "Republic Technologies
International" using a single sales force. However, throughout fiscal 1998 each
customer purchase order for steel products continued to be placed directly with
the Company or Republic, as appropriate to make the sale. The costs of such
joint marketing efforts have been borne ratably by the Company and Republic
based upon their approximate sales volumes achieved through such joint
marketing.
The improvement in selling, general and administrative expense was offset by
$1.3 million of non-recurring expenses in fiscal 1998 as the Company incurred
costs for employee severance compensation and the relocation of its corporate
offices previously located in Seven Hills, Ohio as the Company began
12
<PAGE> 13
initiatives to reduce overhead and increase efficiency in anticipation of its
proposed combination with Republic.
Interest expense, net increased to $27.0 million for the year ended January 2,
1999 compared with $23.3 million for the similar period for the year ended
January 3, 1998. The $3.7 million increase reflects higher average debt levels
borrowed under the Company's Revolving Credit Agreement.
Other income was $2.7 million for the year ended January 2, 1999 and $1.4
million for the year ended January 3, 1998. Income for the year ended January 2,
1999 primarily represented proceeds of $2.3 million for a settlement of an
antitrust lawsuit against certain graphite electrode producers. Other income for
the year ended January 3, 1998 is primarily comprised of a gain on the sale of
certain real property at the Company's facility in Johnstown, Pennsylvania.
The provision for income taxes for fiscal 1998 and fiscal 1997 consisted of
currently payable income taxes, primarily foreign income taxes owed by CDSC. As
a result, the Company reported a net loss of $42.0 million in fiscal 1998
compared with a net loss of $44.8 million in fiscal 1997.
TRANSITION PERIOD - THREE MONTHS ENDED DECEMBER 28, 1996
As a result of the change of its fiscal year, the Company's fiscal 1997 began
December 29, 1996 and ended January 3, 1998. Fiscal 1996 began October 1, 1995
and ended September 30, 1996. The following discussion for the Company's results
of operations covers the three month transition period ended December 28, 1996,
which bridges the gap between the Company's old and new fiscal year ends.
The company recorded net sales of $40.3 million for the three months ended
December 28, 1996, which included hot-rolled net sales of $4.9 million and net
sales of cold-finished products of $35.4 million.
Despite the inclusion of BLI operations for the three months ended December 28,
1996, the Company continued to incur losses from operations as a result of its
continued start-up activities. The Company reported a loss from operations of
$8.7 million for the three months ended December 28, 1996, as the Company
continued to experience lower gross profits reflecting its re-entry into the
lower margin segment of the market. Inefficiencies resulting from initial low
volume production levels, the commercial start-up of the Johnstown melt shop and
the newly commissioned continuous caster contributed to the Company's operating
loss for this three-month period.
Interest expense, net was $5.1 million for the three-month period ended December
28, 1996, as a result of the higher average debt levels following the Company's
Recapitalization in April 1996.
The provision for income taxes consisted primarily of a provision for foreign
taxes related to a subsidiary of BLI.
FISCAL YEAR 1997 ENDED JANUARY 3, 1998 COMPARED WITH FISCAL YEAR 1996 ENDED
SEPTEMBER 30, 1996
The results of BLI have been included since the date of its acquisition, April
2, 1996. The overall comparability of fiscal 1997 was influenced by the
Company's continuing progression in moving from the start-up status of
operations towards levels of sales and production necessary to generate
operating income and the future benefit to be attained from operating BarTech
and BLI on a vertically integrated basis.
Net sales for the fiscal year ended January 3, 1998 totaled $242.9 million
compared with net sales of $77.2 million for the fiscal year ended September 30,
1996. Fiscal 1997 net sales consisted of $83.8 million for hot-rolled and $159.1
million for cold-finished. In fiscal 1996, net sales of cold-finished products
of $73.1 million were included since the BLI acquisition date of April 1996
through September 30, 1996. The $165.7 million increase in net sales is
primarily the result of the Company's continuing progression in moving from the
start-up status of operations toward levels of sales and production necessary to
generate
13
<PAGE> 14
operating income. The benefits obtained from operating Bar Tech and BLI on a
vertically integrated basis were evidenced as net sales for cold-finished
products increased $86.0 million from $73.1 million in fiscal 1996, which
included BLI for the last six months of the fiscal year, to $159.1 million in
fiscal 1997. Fiscal 1997 net sales of hot-rolled products benefited from
initiatives begun in the fourth quarter of fiscal 1996, which included among
others, the establishment of a full-time sales force, successful trials for
pre-qualification requirements and continuing sales to numerous new customers.
The $79.7 million increase in hot-rolled product net sales in fiscal 1997 was
supported by increased production at the Johnstown caster and by the addition of
a third and fourth production shift at the Lackawanna facility, which began in
April and August 1997, respectively.
In October 1997, the Company experienced a major mechanical breakdown at its
Lackawanna hot bar rolling mill operation. A failure on its No. 1 rolling stand
gearbox resulted in catastrophic damage to the drive gear. The Company returned
to partial operations after nine days, and full production resumed after twelve
days. The Company lost an estimated 15,000 to 20,000 production tons during the
outage. Because of the low finished hot-bar inventory levels at the time of the
failure, shipment performance was adversely affected during and after the
outage.
As a result, the Company's delivery performance deteriorated and certain
customers did not place orders in November and December 1997. These customers
generally were in the higher margin segment of the Company's product line.
Accordingly, the Company's unit sales price also declined during the fourth
quarter 1997. Following the outage, the Company's delivery performance improved
such that all of the customers which did not place orders in the latter part of
the fourth quarter of fiscal 1997, placed orders and accepted shipments in the
first quarter of fiscal 1998.
Cost of sales for the year ended January 3, 1998 were $239.4 million, or 98.5%
of net sales, compared with $92.0 million, or 119.2% of net sales for the year
ended September 30, 1996. Fiscal 1996 cost of sales for hot-rolled products of
$25.2 million on net sales of $4.0 million reflect the preparation for the
start-up of production at the Company's Johnstown facility which commenced
operations in August 1996. Cost of sales for fiscal 1997 reflect inefficiencies
relating to the integration of inexperienced personnel into its Lackawanna
rolling mill crews. This was evidenced as cost of sales as a percentage of net
sales for fiscal 1997 was 116.1% for hot-rolled products and 89.3% for
cold-finished products.
Depreciation and amortization for the year ended January 3, 1998 were $4.5
million compared with $2.0 million for the year ended September 30, 1996. The
increase of $2.5 million was primarily attributable to the Company's
modernization and expansion projects during its initial start-up period. Also
contributing to the increase was additional amortization of goodwill as a result
of the BLI acquisition on April 2, 1996.
Selling, general and administrative expense was $21.7 million during the fiscal
year ended January 3, 1998 compared with $14.6 million for the fiscal year ended
September 30, 1996. The increase in selling, general and administrative expense
was primarily due to higher wage and salary costs as the Company continued to
recruit qualified professionals in fiscal 1997. Contributing to the increase, to
a lesser extent, was a one-time charge for consulting fees incurred by the
Company in connection with re-negotiations of its electric power contract for
the primary mill at its Franklin operations and severance costs incurred in
relation to the Company's relocation of its corporate offices from Johnstown,
Pennsylvania to Seven Hills, Ohio (a suburb of Cleveland, Ohio).
Interest expense, net increased $12.5 million to $23.3 million for the year
ended January 3, 1998 from $10.8 million for the year ended September 30, 1996.
This increase was the result of borrowings on the $90.0 million revolving credit
agreement which the Company established as part of its Recapitalization in April
1996.
The provision for income taxes was $0.2 million for both years ended January 3,
1998 and September 30, 1996. The provision for income taxes consists primarily
of a provision for foreign taxes relating to CDSC.
14
<PAGE> 15
Despite the inclusion of the BLI operations since its acquisition in April 1996,
the Company continued to incur losses from operations as a result of its
continued investment in start-up activities. As a result, the Company reported a
net loss of $44.8 million for the year ended January 3, 1998 compared with a
loss of $43.6 million after an extraordinary loss on the early extinguishment of
debt of $2.2 million for the year ended September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Prior to the acquisition of Republic by Blackstone and Veritas, the Company's
liquidity and capital resources were managed on a stand-alone basis. The
resources available to the Company on a stand-alone basis are described below.
Subsequently, the Company's relationship with Republic has provided additional
capital resources and sources of liquidity through the combined management of
the two companies, as more fully described below.
The Company's primary capital resources have consisted of long-term debt and
borrowings under a Revolving Credit Agreement. The long-term debt financing
arrangements consist principally of Senior Notes and economic development
financing. As described in Note 7 to the Consolidated Financial Statements, the
Company has obtained approval for deferral of principal and interest payments on
certain economic development financing. As further described in Note 7 to the
Consolidated Financial Statements, in March 1999, the Company obtained waivers
of default provisions under the terms of certain loans in exchange for payment
of certain amounts the lenders considered delinquent. The Company also agreed,
subject to consummation of the Combination, to refinance certain economic
development loans and modify the terms of other economic development loans.
As described in Note 6 to the Consolidated Financial Statements, the Company has
a Revolving Credit Agreement that provides for an aggregate principal amount of
up to $90.0 million, including letters of credit, through April 2, 2000. Also as
described in Note 6, a Sub-Facility component of the Revolving Credit Agreement
provides the Company with up to $15.0 million of additional borrowing capacity
through September 1, 1999 based on a higher receivable and inventory advance
rate. Amounts available under the Revolving Credit Agreement and Sub-Facility
vary based upon the Company's borrowing base, as defined under the agreements.
As of January 2, 1999, no amounts were available for additional borrowings under
the Revolving Credit Agreement and Sub-Facility.
There are no restrictions on the ability of BLI to transfer funds to the
Company.
15
<PAGE> 16
Blackstone and Veritas, principal owners of both the Company and Republic, plan
to combine the two companies during 1999. Pending the completion of the
Combination, the Company and Republic are combining their sales efforts and
commencing marketing their respective steel products jointly under the combined
brand name "Republic Technologies International". As of January 4, 1999,
Republic Technologies International Marketing, LLC ("Marketing JV") was formed.
The Company and Republic expect to finalize an agreement in the second quarter
1999 under which this jointly owned Marketing JV will market, advertise, promote
and sell both companies' steel products to each company's existing and potential
customers. The Company and Republic will be reimbursed for expenses they incur
on behalf of the Marketing JV, including compensation costs of employees of the
Company and Republic who perform sales and marketing functions for the Marketing
JV. Except for certain prior commitments to customers that will continue to be
placed with the Company and Republic as applicable, it is intended that customer
purchase orders will be placed with the Marketing JV. Pursuant to allocation
procedures to be approved by the boards of directors of both companies, the
production of steel products to fulfill these orders will be allocated between
the Company and Republic. To compensate the Marketing JV for marketing services
performed, it is intended that the Company and Republic will pay commissions at
specified percentages of sales.
The Company participates in an inventory purchasing arrangement with Republic.
Under the terms of this arrangement, Republic purchases inventory products on
behalf of the combined company and bills the Company for their respective share
plus an administrative fee. A similar arrangement is in place with regards to
insurance. Republic purchases insurance coverage for the combined companies for
which the costs are borne ratably by the Company and Republic based on their
respective share. In December 1998, Republic completed its negotiations for a
two-year insurance contract for the combined company which included third-party
financing for certain payments.
Since its formation, the Company has incurred substantial losses as a result of
the ongoing start-up activities of its facilities and its general and
administrative expenses. Any substantial delay in achieving or a failure to
bring the facilities up to commercial volumes and productivity levels, or to
sell its products in its target markets could have a material adverse effect on
the Company's financial condition and results of operations. Also, in the event
of a substantial delay in integrating the operations of the Company and Republic
including implementation of the Combination, or the occurrence of any
substantial unanticipated costs related thereto, could have a material adverse
effect on the Company's financial condition and results of operations. In the
event of the above, the Company may need to borrow additional funds under its
Revolving Credit Agreement or, to the extent that the funds were not available
thereunder, to obtain additional financing to meet its cash flow requirements.
The Company is highly leveraged. Restrictive covenants included in the indenture
and other debt obligations may have the effect of limiting the Company's ability
to incur additional indebtedness, sell assets, or acquire other entities and may
otherwise limit the operational and financial flexibility of the Company.
The Company and Republic presently perform certain functions on a combined basis
and intend to further integrate operations in 1999 through the Marketing JV. As
a consequence, management believes that capital resources and liquidity of the
Company and Republic can and will be managed on a combined basis prior to
consummation of the Combination. Management has prepared fiscal 1999 financial
and operational plans on a combined basis for the Company and Republic. Based on
these plans, even if the Combination is not consummated during 1999, management
believes that the aggregate of cash flows from combined operations, available
funds under existing credit agreements and funds expected to be available to
refinance certain acquisition-related debt of Republic, will be sufficient in
1999 to enable both the Company and Republic to meet their debt service
requirements when due and to fund their capital expenditures, working capital
and general corporate requirements, although there can be no assurances with
respect thereto.
Cash used by operating activities decreased to $7.2 million for the year ended
January 2, 1999, a decrease of $43.7 million, from $50.9 million used by
operating activities for the year ended January 3, 1998. The decrease was
primarily attributable to the growth in accounts payable and other current
liabilities resulting from higher inventory levels, and a decrease in accounts
receivable.
16
<PAGE> 17
Capital expenditures during the year ended January 2, 1999 were $16.3 million
compared with $5.8 million for the year ended January 3, 1998. Capital
expenditures for fiscal 1998 were primarily due to the installation of a new
rolling mill electrical process control system and upgrades to its computer
system in an effort to improve its processes related to financial and
operational information.
Dividends paid to holders of the Company's preferred stock were approximately
$385 thousand in both fiscal 1998 and 1997.
As of January 2, 1999, the Company had capital commitments of $3.4 million
outstanding for fiscal 1999. The Company has a technical exchange agreement that
requires payments of $6.0 million over four years, including $1.8 million for
fiscal 1999. (See Note 14 to the Consolidated Financial Statements).
As of January 2, 1999, the Company had net operating loss carryforwards of
approximately $148 million available to offset future federal and state taxable
income during the carryforward periods which expire through 2019. These
carryforwards include amounts available from certain prior year operating loss
carryforwards which were limited as a result of the Recapitalization.
Utilization of these prior year loss carryforwards is limited to approximately
$1.1 million annually through 2010.
In March 1999 the Company announced plans to close BLI's cold-finishing plants
in Medina, Ohio and Batavia, Illinois by July 1999. The planned closures
resulted from the overall strategic plan of the Company and Republic to utilize
both companies' plants in key market areas to best service the combined customer
base. The closure of these plants is not expected to have a material effect on
the Company's future results of operations or cash flows. The Company believes
there will be no material impairments of the carrying values of the related
assets. These plant closures will affect less than ninety employees and the
related severance costs are not material to the Company's consolidated financial
statements.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and For Hedging Activities," ("SFAS 133"). This statement establishes accounting
and reporting standards requiring that every derivative instrument be recorded
on the balance sheet as either an asset or liability measured at fair value.
SFAS 133 requires that changes in the fair value of derivatives be recognized
currently in earnings unless specific hedge accounting criteria are met. SFAS
133 is effective for fiscal years beginning after June 15, 1999, and cannot be
applied retroactively. The Company has not completed its evaluation of SFAS 133
and accordingly, is unable to determine what impact, if any, SFAS 133 will have
on its financial statements.
ENVIRONMENTAL MATTERS
The domestic steel industry is subject to a broad range of federal, state and
local environmental laws and regulations including those governing discharges
into the air and water, handling and disposal of solid and hazardous wastes, the
remediation of soil and ground water contaminated by petroleum products or
hazardous substances or wastes, and the health and safety of employees. The
Company has taken, and continues to take, into account the requirements of such
environmental laws and regulations in the operation of its facilities and
believes that it is currently in substantial compliance with such material laws
and regulations. As is the case with most steel producers, the Company could
incur significant costs related to environmental compliance. To the extent the
Company might incur any substantial costs, these costs most likely would be
incurred over a number of years; however, no assurance can be given that future
regulatory actions regarding soil or ground water at the Company's facilities,
as well as continued compliance with environmental requirements, will not
require the Company to incur significant costs that may have a material adverse
effect on the Company's financial condition, results of operations or cash
flows.
17
<PAGE> 18
The Company has sought to reduce the impact of costs arising from or related to
actual or potential environmental conditions at the Company's facilities caused
or created by Bethlehem or its predecessors in title and attributable to the
period in which the Bethlehem BRW Division or its predecessors operated such
facilities through the Company's contractual agreements with Bethlehem. Pursuant
to such arrangements, Bethlehem has agreed to indemnify the Company for such
costs by limiting the Company's potential exposure to any such damages incurred
(i) through December 1996, to 50% of the first $2.0 million in damages, or $1.0
million, and (ii) thereafter, to 50% of the first $10.0 million of damages, or
$5.0 million in the aggregate. Although several investigations of past or
present environmental conditions at the Company's facilities have been conducted
by or on behalf of Bethlehem and certain regulatory agencies, the reports and
results of which have been made available to the Company, an in-depth,
environmental review of the Company's facilities to determine the potential
scope, if any, of required remediation at such facilities has not been conducted
by or on the behalf of the Company. There can be no assurance that Bethlehem
will meet its obligations under the indemnification arrangements or that there
will not be future contamination for which the Company might be fully liable and
that may require the Company to incur significant costs that could have a
material adverse effect on the Company's financial condition and results of
operations.
Bethlehem is conducting remedial activities on a small portion of the Lackawanna
facility historically used for mill scale storage, which was identified by the
U. S. Environmental Protection Agency (the "EPA") pursuant to an Administrative
Order on Consent issued August 1990 as requiring certain corrective action.
Bethlehem currently awaits approval of the Remedial Work Plan for the former
mill scale storage area submitted to the EPA in September 1994. Bethlehem is
ultimately liable for compliance with the Administrative Order on Consent and
the Company believes that Bethlehem is likely to fulfill these obligations,
although there can be no assurance such will occur.
In August 1995, BLI received a request for information from the EPA pursuant to
section 104(e) of CERCLA with respect to a federal investigation and potential
remediation of two hazardous waste treatment sites in Kansas City, Kansas and
Kansas City, Missouri. In 1985, BLI shipped ten capacitors from its Harvey,
Illinois facility to these sites for disposal. The capacitors held approximately
88 gallons of oil that may have contained polychlorinated biphenyls. At this
time, BLI has not received any further correspondence from the EPA and has not
been named as a potentially responsible party under CERCLA at either site;
however, there can be no assurance at this time that further action by the EPA
will not occur. The Company has not estimated the amount of liability it may
incur in connection with this disposal. The Company understands that the EPA has
identified approximately 1,300 customers of the treatment sites, which operated
over a period of several years. While no assurances can be given, the Company
does not believe that BLI's liability relating to these sites will have a
material adverse effect on the Company's financial condition, results of
operations and cash flows.
Various Federal, state and local laws, regulations and ordinances govern the
removal, encapsulation or disturbance of asbestos containing materials ("ACMs").
Such laws and regulations may impose liability for the release of ACMs and may
provide for third parties to seek recovery from owners or operators of
facilities at which ACMs were or are located for personal injury associated with
exposure to ACMs. The Company is aware of the presence of ACMs at its
facilities, but it believes that such materials are in acceptable condition at
this time. The Company believes that any future costs related to remediation of
ACMs at these sites will not be material, either on an individual basis or in
the aggregate, although there can be no assurance with respect thereto.
The Company has the necessary environmental permits for the construction and
operation of its business.
Canadian Drawn Steel Company, Inc. ("CDSC"), BLI's Canadian subsidiary, is also
subject to Canadian federal, provincial, regional and municipal environmental
laws and regulations. BLI believes that it is currently in substantial
compliance with all applicable material environmental laws and regulations and
does not anticipate any substantial additional capital expenditures for
environmental control facilities in the near future. However, there can be no
assurance that the Company will not be required to incur significant
18
<PAGE> 19
costs that could have a material adverse effect on the Company's financial
condition and results of operations.
Some of the steel processing operations presently conducted by Bliss & Laughlin
Steel Company ("BLSC") commenced over 100 years ago by predecessors of BLSC and
included properties which over the years were sold by BLSC's predecessors. Given
the nature and geographic diversity of its current and its predecessors' former
operations, it is possible that claims would be asserted against BLI in the
future based upon the current property ownership of BLI and by historical
operations by its predecessors. However, BLI has received an indemnification
from the former owner and operator of such properties for certain environmental
claims or liabilities relating to activities at BLI's Harvey and Batavia,
Illinois and Medina, Ohio properties prior to October 23, 1984, when BLSC
succeeded to ownership of such properties, and for certain environmental claims
or liabilities relating to properties that were sold by BLSC's predecessors.
There can be no assurance that such former owner and operator will meet its
obligation under the indemnification agreements or that there will not be future
contamination for which the Company might be fully liable and that may require
the Company to incur significant costs that could have a material adverse effect
on the Company's financial condition and results of operations.
While the Company believes that the foregoing environmental matters will not,
individually or in the aggregate have a material adverse impact on the Company's
financial condition or results of operations, or on the Company's competitive
position with respect to other steelmakers that are subject to the same
environmental requirements, there can be no assurance to that effect.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
YEAR 2000
The Year 2000 issue ("Year 2000") is the result of computer programs being
written using two digits rather than four digits to define the applicable year.
Computer equipment, software and other devices with embedded technology that are
time-sensitive may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in system failures or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to receive orders or manufacture product, ship inventory, process transactions,
send invoices, deposit cash, or engage in other normal business activities. The
inability of business processes to function properly in year 2000 could have
adverse effects on companies and entities throughout the world.
The Company has developed plans to address issues related to the impact of Year
2000 in four major areas: infrastructure, business applications, plant
applications and suppliers.
The infrastructure portion of the program addresses wide and local area
networks, servers, personal computing, telecommunications systems and software,
fax and facility security systems. Each location's equipment has been
inventoried and assessed for Year 2000 problems. Some facilities have completed
the remediation process through replacement or upgrade, and have been tested. As
of January 2, 1999, this portion of the program is approximately 75% complete.
The remaining facilities are scheduled to be completed by September 1999.
The business application portion of the program addresses applications and
system software that run on the larger mainframe and mid-range computers. These
systems are being upgraded and/or replaced with new applications to provide Year
2000 readiness. As of January 2, 1999, approximately 50% of this program area
has been completed, with four facilities converted or upgraded and the remaining
facilities scheduled to be completed by September 1999.
The Company's plant systems include hardware, software and associated embedded
computer technologies that are used to operate the Company's manufacturing
facilities. These systems have been inventoried and adequately assessed. Five
plant sites have completed remediation and testing. The final plant site is
scheduled for remediation and testing in July 1999.
19
<PAGE> 20
The Company is currently assessing the impact of the Year 2000 issue as it
relates to its suppliers and customers to identify the extent to which the
Company may be vulnerable in the event those parties fail to properly resolve
their own Year 2000 issues. Readiness questionnaires were sent to the Company's
supplier base. Less than 25% of the suppliers surveyed responded.
As part of the Year 2000 readiness plan, the Company is continuing to assess the
risks associated with the potential system failures of its suppliers, banks,
utilities and internal systems. The Company is developing contingency plans for
these failures, which may include, but are not limited to the use of alternative
suppliers and developing alternative manual systems.
The cost of the Year 2000 project is estimated at $1.6 to $2.0 million and is
being funded through operating cash flows. The Company has to date incurred $0.3
million of costs and expects to incur the remaining amounts through year 2000.
The cost of replacement hardware and software will be capitalized as appropriate
according to the Company's capital policies and amortized over the applicable
useful lives.
The Company presently believes that it has effective plans in place to
anticipate and resolve the potential Year 2000 issues. In the event, however,
that the Company does not properly and fully anticipate and resolve all Year
2000 issues, there can be no assurance that Year 2000 issues will not materially
impact and adversely effect the Company's results of operations or its
relationships with third parties.
The estimated costs and dates by which the Company believes it will have
completed its objectives are based on management's best estimates, which rely on
numerous assumptions regarding future events, including the availability of
certain key resources, third-party remediation plans, and other factors. These
estimates, however, may prove to be inaccurate, and actual results could differ
materially from those anticipated. Factors that could result in material
differences include, without limitation, the availability and cost of personnel
with the appropriate training and experience, the ability to accurately
identify, assess, remediate and test all relevant computer codes and embedded
technology, and similar uncertainties. In addition, Year 2000 issues may lead to
possible third-party claims, the impact of which cannot be estimated at this
time. No assurances can be given that the aggregate cost of defending and
resolving such claims, if any, would not have a material adverse effect on the
Company.
The Company currently believes that the most reasonably likely worst case
scenario for its operations with respect to the Year 2000 issue would be the
inability to sustain its current level of shipments, inability to bill or
invoice and a decrease in operational efficiency as a result of an increase in
manual processing efforts. This could result in potential lost sales and
profits. The Company is continuing to develop its contingency plans to address
these potential disruptions to its business.
FORWARD LOOKING STATEMENTS
Statements included in this filing with the Securities and Exchange Commission
(including those portions of Management's Discussion and Analysis that refer to
the future) may contain forward-looking statements that are not historical facts
but refer to management's intentions, beliefs, or expectations for the future.
It is important to note that the Company's actual results could differ
materially from those projected in such forward-looking statements. Certain
factors that could cause actual results to differ from those in such
forward-looking statements include, but are not limited to, the following:
Any substantial delay in the proposed combination of the Company and
Republic, or in the event of a combination that the combined company is
unable to achieve the objectives of rationalizing and modernizing
production facilities;
Any substantial unanticipated delays or difficulties in implementing
the agreement with respect to the marketing JV or managing the capital
resources and liquidity of the Company and Republic on a combined
basis;
Any substantial delay in the implementation of the Company's plans or
substantial unanticipated costs associated with its plans for a
successful transition into an integrated steelmaking and bar rolling
operation;
The ability of the Company to sell its products in its targeted markets
at gross margins necessary to produce and maintain positive operating
income. The Company's success is dependent on its ability to increase
sales. The Company is in the process of enhancing its sales and
customer service programs;
The Company is subject to a variety of competitive factors such as
pricing, the financial strength of its competitors and the Company's
ability to establish a favorable position in the steelmaking and bar
rolling industry. The Company's competitive position could also be
adversely affected by any consolidation of its competition in the
steelmaking industry; and
20
<PAGE> 21
The ability of the Company and its major suppliers to remedy its
Year 2000 issues timely and in a cost-effective manner.
The Company has, in a previous filing with the Securities and Exchange
Commission, made projections with respect to the future performance of the
Company. Actual results have differed substantially from these initial
projections for various reasons, including the replacement of the Company's
original management team. As a result, the projections included in such previous
filing cannot be relied upon as an indicator of future Company performance. The
Company does not intend to update these projections and cautions that historical
information should not be used in evaluating future performance of the Company.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risks due to changes in interest rates with
respect to its long-term debt. The table below presents principal cash flows and
weighted average interest rates of the Company's long-term debt at January 2,
1999 by expected maturity dates as well as the respective fair value amounts.
The Company has a cold-finishing plant in Canada and is, therefore, subject to
foreign currency exchange risk exposure. Historically, the exchange rate
volatility and related exposure to the Company has been minimal. At the present
time, the Company does not hedge foreign currency risk.
The fair value of the Company's Senior Notes was determined using quoted market
prices. Remaining long-term debt consists of the Company's economic development
financing, a subordinated note and an Industrial Revenue Bond (see Note 7 to the
Consolidated Financial Statements). The fair value of the Company's economic
development financing approximates carrying value as the development authorities
continue to offer such financing on substantially the same terms as provided to
the Company.
<TABLE>
<CAPTION>
(in millions)
There-
1999 2000 2001 2002 2003 after Total Fair Value
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed:
Senior Notes $91.6 $91.6 $97.8
Interest rate 13.5%
All other $ 2.2 $ 5.0 $ 4.8 $ 5.2 $ 3.1 $14.5 $34.8 $34.3
Average
interest rates 6.0% 5.8% 5.6% 5.4% 4.2% 2.9%
Variable $ 1.6 $ 1.2 $ 1.8 $ 1.8 $ 0.5 $ 3.6 $10.5 $10.5
Average
interest rates (1) (1) (1) (1) (1) (1) (1) (1)
</TABLE>
(1) - At variable rates based on Prime, LIBOR, or other money market rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted in a separate section of this report
following the signature page.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Changes in Accountants
A report on Form 8-K was filed on December 28, 1998 by the Company announcing
the appointment of the accounting firm of Deloitte & Touche LLP as independent
accountants to audit its fiscal 1998 financial statements and the dismissal of
Arthur Andersen LLP, its previous independent public accountants, which has been
approved by the board of directors.
Disagreements with Accountants on Accounting and Financial Disclosure
None.
21
<PAGE> 22
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
EXECUTIVE OFFICERS AND DIRECTORS
The Company's executive officers and directors as of January 2, 1999
are as follows (each of the Company's executive officers hold the same position
with Republic):
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------- --- ----------------------------------------------------
<S> <C> <C>
Thomas N. Tyrrell 53 Chief Executive Officer and Director
Joseph F. Lapinsky 48 President and Chief Operating Officer
Robert L. Meyer 49 Executive Vice President and General Manager, Hot-
Rolled Bar Division
John G. Asimou 53 Executive Vice President and General Manager,
Cold-Finished Bar Division
Brenda K. Brown 38 Vice President of Finance and Controller
John B. George 52 Vice President of Finance and Treasurer, Secretary
David A. Stockman 52 Class B Director
Richard C. Lappin (c) 54 Class B Director
Robert B. McKeon (a)(b) 43 Chairman and Director
Thomas J. Campbell (a) (b) 39 Director
Daniel R. DeVos (b) 56 Director
Anthony Rainaldi 73 Director
Buddy W. Davis (b) 68 Director
</TABLE>
(a) Member of Compensation Committee.
(b) Member of Audit, Budget, and Finance Committees.
(c) Appointed January 19, 1999
22
<PAGE> 23
Thomas N. Tyrrell has served as Chief Executive Officer of the Company since
September 1996, and has served as a director of the Company since December 1996.
Mr. Tyrrell also served as President of the Company from September 1996 to
September 1998. From 1993 to 1996, Mr. Tyrrell served as Vice Chairman and
Executive Vice President-Commercial of Birmingham Steel Corporation, a producer
of steel bar, rod and wire. Mr. Tyrrell was the President and Chief Executive
Officer of American Steel & Wire Corporation from 1986 to 1993, a producer of
steel bar, rod and wire, when it was acquired by Birmingham Steel Corporation.
From 1978 to 1986, Mr. Tyrrell was Vice President - Commercial of Raritan River
Steel Company, a producer of steel rod. From 1967 to 1978, Mr. Tyrrell was
employed by Bethlehem Steel Corporation, a fully integrated steel producer, in
various sales and product development capacities. Mr. Tyrrell is also a director
of Republic Engineered Steels, Inc.
Joseph F. Lapinsky became President and Chief Operating Officer in October 1998.
Mr. Lapinsky served as a Corporate Vice President and President of Republic
Engineered Steels, Inc. Hot-Rolled Bar Division from January 1997 to September
1998. Prior to that time, Mr. Lapinsky served as General Manager of Republic
Engineered Steels, Inc. hot-rolled bar operations from September 1995 to January
1997. Prior to that time, he was Executive Vice President of Autumn Industries,
Inc. from September 1991 to September 1995 and Executive Vice President of CSC
Industries, Inc. from December 1987 to September 1991. Mr. Lapinsky has been
active in the steel industry since 1973. Mr. Lapinsky is also a director of
Republic Engineered Steels, Inc.
Robert L. Meyer has served as Executive Vice President and General Manager,
Hot-Rolled Bar Division since October 1998. Mr. Meyer served as Executive Vice
President and Chief Operating Officer of the Company from October 1996 until
September 1998. From 1994 to 1996, Mr. Meyer was President and Chief Operating
Officer of Chase Brass & Copper, Inc., a producer of copper alloy rod. From 1993
to 1995, Mr. Meyer was Vice President and General Manager of the Precious Metals
Products Division of Handy & Harman, Inc., a manufacturer of metal products
including automotive parts and wire and tubing products. From 1986 to 1988, Mr.
Meyer was employed by American Steel & Wire Corporation as General Manager of
its rod mill and, from 1988 to 1993, as Vice President of Operations. Prior to
1986, Mr. Meyer was employed by the United States Steel Corporation in various
supervisory SBQ bar manufacturing capacities.
John G. Asimou became Executive Vice President and General Manager, Cold
Finished Bar Division in October 1998. Mr. Asimou served as Executive Vice
President of Technology & Development of the Company from August 1996 until
September 1998. From 1993 to 1996, Mr. Asimou was Vice President - Quality &
Technology for Birmingham Steel Corporation. From 1986 to 1993, Mr. Asimou
served as General Manager - Quality and Technology of American Steel & Wire
Corporation. From 1984 to 1986, Mr. Asimou was Metallurgical Service Engineer
for Bethlehem Steel Corporation. From 1968 to 1984, Mr. Asimou served in various
SBQ bar and rod assignments for United States Steel Corporation, a fully
integrated steel producer.
Brenda K. Brown became Vice President of Finance and Controller in October 1998.
From September 1997 to October 1998, Ms. Brown was Director of Finance for the
Seat Belt Systems Division of TRW Inc. From 1992 to 1997, Ms. Brown was
Director of Finance and Information Services for TRW's Nelson Stud Welding
Division. From 1984 to 1992, Ms. Brown held various finance positions for TRW.
John B. George became Vice President of Finance and Treasurer in October 1998.
He was also appointed Secretary in December 1998. Prior to joining the Company,
Mr. George previously served as Treasurer of Republic Engineered Steels, Inc.
since April 1991. From November 1989 to April 1991, he was Assistant Treasurer
for Republic Engineered Steels, Inc. Mr. George has been active in the steel
industry since 1969.
David A. Stockman was elected as a Class B Director of the Company upon
consummation of the Recapitalization. Mr. Stockman is a Senior Managing Director
of the Blackstone Group L. P., with which he has been associated since 1988. Mr.
Stockman is also a director of UCAR International Inc. and Co-Chairman of the
board of directors of Collins & Aikman Corporation, and Chairman of the board of
directors of Republic Engineered Steels, Inc.
Richard C. Lappin was elected as a Class B Director of the Company in January
1999. Mr. Lappin recently joined the Blackstone Group L. P. as a Senior Managing
Director. Prior to joining Blackstone, Mr. Lappin served as President of Farley
Industries, President of Fruit of the Loom and President and CEO of Doehler-
23
<PAGE> 24
Jarvis and Southern Fastening Systems. Over the course of his career, he has
also held senior executive positions with Champion Spark Plug Company and RTE
Corporation. Mr. Lappin is also a director of Republic Engineered Steels, Inc.
Robert B. McKeon has served as Chairman and director of the Company since
September 1993. Mr. McKeon has served as President of Veritas Capital, Inc., a
New York- based merchant banking and private equity investment firm, since its
formation in 1992. From 1990 to 1992, Mr. McKeon was Chairman and from 1988 to
1990, was President of Wasserstein Perella Management Partners, Inc., a New York
merchant banking fund. Mr. McKeon was formerly Chairman of Maybelline Inc. from
1990 to 1992 and Co-Chairman and Co-Chief Executive Officer of Collins and
Aikman Inc. from 1989 to 1992. Mr. McKeon also serves as Chairman of the
Connecticut Health and Educational Facilities Authority, Chairman of HITCO
Technologies Inc., and Chairman of H. Kock & Sons Inc, and is a director of
Republic Engineered Steels, Inc.
Thomas J. Campbell has served as a director of the Company since September 1993.
Mr. Campbell has served as a partner and is a director of Veritas Capital Inc.,
a New York merchant banking and private equity firm, since its formation in
1992. From 1988 to 1992, Mr. Campbell was Vice President of Wasserstein Perella
Management Partners, Inc., a New York merchant banking fund. Mr. Campbell also
served as a director of Collins & Aikman Inc. from 1988 to 1992 and as a
director of Maybelline Inc. from 1990 to 1992. Mr. Campbell is also a director
of HITCO Technologies Inc. and Republic Engineered Steels, Inc.
Daniel R. DeVos has served as a director of the Company since December 1994. Mr.
DeVos has served as the President and Chief Executive Officer of Concurrent
Technologies Corporation since 1992. Mr. DeVos was President and Chief Executive
Officer of Metalworking Technology, Inc. and National Defense Environmental
Corporation from 1990 until such corporations were merged into Concurrent
Technologies Corporation in 1992. Mr. DeVos serves as the director
representative of the Commonwealth of Pennsylvania. Mr. DeVos is also director
of the United States National Bank, Johnstown, Pennsylvania.
Anthony Rainaldi has served as a director of the Company since April 1995. From
1983 to 1994, Mr. Rainaldi was a District Director and Member of the
International Executive Board of the USWA. Mr. Rainaldi serves as a director
representative of the USWA. Mr. Rainaldi is also director of Sharpsville Quality
Products.
Buddy W. Davis has served as a director of the Company since December 1994. Mr.
Davis was a District Director of the USWA, from 1974 to April 1993, when he
retired. Mr. Davis serves as a director representative of the USWA. He is also a
director of Acme Metals, Inc.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
As of January 1, 1999, the Company terminated the employment of certain salaried
employees who were subsequently re-employed by Republic. Under the terms of an
employee leasing and overhead allocation agreement with Republic, salary and
benefit costs are borne ratably according to each company's approximate share of
shipping volumes. Among these salaried employees previously employed by the
Company were Messrs. Tyrrell, Meyer and Asimou who presently hold the positions
of Chief Executive Officer, Executive Vice President and General Manager,
Hot-Rolled Bar Division and Executive Vice President and General Manager, Cold
Finished Bar Division, respectively, for both the Company and Republic.
Mr. Lapinsky is employed by Republic and presently holds the position of
President and Chief Operating Officer for both the Company and Republic.
24
<PAGE> 25
The following table sets forth for the fiscal years ended January 2, 1999 and
January 3, 1998, the three month period ended December 28, 1996 and the fiscal
year ended September 30, 1996, the compensation paid by the Company and its
affiliate to its Chief Executive Officer and each of its four most highly
compensated executive officers:
<TABLE>
<CAPTION>
All Other
Name & Principal Position Year Salary ($) Bonus ($) Compensation ($)
- --------------------------------------- ------ ------------- ---------------- ---------------------
<S> <C> <C> <C> <C>
Thomas N. Tyrrell 1998 $ 367,000 $ 175,000 $ 4,620 (a)
Chief Executive Officer 1997 $ 350,000 n/a $ 2,100 (a)
1996* $ 87,500 n/a $ 658 (a)
1996 $ 35,950 $ 300,000 (b) $ 483 (a)
Joseph F. Lapinsky 1998 $ 229,160 (d) $ 363,075 (b) n/a
President & Chief Operating 1997 n/a n/a n/a
Officer 1996* n/a n/a n/a
1996 n/a n/a n/a
Robert L. Meyer 1998 $ 205,000 $ 112,500 $ 2,706 (a)
Executive Vice President & General 1997 $ 195,000 n/a $ 1,170 (a)
Manager, Hot-Rolled Bar Division 1996* $ 35,500 $ 150,000 (b) $ 232 (a)
1996 n/a n/a n/a
John G. Asimou 1998 $ 191,250 $ 87,500 $ 2,525 (a)
Executive Vice President & General 1997 $ 180,000 n/a $ 1,080 (a)
Manager, Cold-Finished Bar 1996* $ 44,792 n/a $ 338 (a)
Division 1996 $ 18,585 $ 135,000 (b) $ 124 (a)
Frederick L. Deichert 1998 $ 113,710 $ 68,750 $ 46,039 (a) (c)
Vice President of Finance and 1997 $ 145,000 n/a $ 870 (a)
Chief Financial Officer 1996* $ 6,042 $ 12,000 (b) n/a
1996 n/a n/a n/a
</TABLE>
* The amounts set forth herewith represent compensation paid by the
Company for the three month period ended December 28, 1996. This
presentation is the result of the Company's change in its fiscal year
from its previous calendar quarter basis ended September 30 to a 4/4/5
week fiscal quarter basis ending the Saturday closest to December 31.
As a result, the Company's fiscal year 1996 ended on September 30, and
its fiscal 1997 began on December 29, 1996 and ended on January 3,
1998.
(a) The amounts set forth in this column for Messrs. Tyrrell , Meyer,
Asimou and Deichert reflect amounts of annual premiums paid by the
Company under group term life insurance for such officers. The life
insurance carries a maximum value of two times base salary for each
officer and has no cash surrender value.
(b) In fiscal 1998, Mr. Lapinsky received a retention bonus of $83,075, and
signing bonuses totalling $280,000 upon assuming his new positions with
the Company and Republic. Messrs. Meyer and Deichert received signing
bonuses of $150,000 and $12,000, respectively during the three month
25
<PAGE> 26
period ended December 28, 1996. Messrs. Tyrrell and Asimou received
signing bonuses of $300,000 and $135,000, respectively, in fiscal 1996.
(c) Mr. Deichert was terminated from the Company in November 1998. The
amounts set forth in this column for fiscal 1998, consisted of life
insurance premiums (see note (a) above) and severance compensation of
$44,125, which included a lump sum payment of $26,000. Under a
severance agreement between the Company and Mr. Deichert, he is
entitled to $145,000 in severance compensation over the one year period
following his termination, plus the lump sum severance payment and
accrued 1998 bonus.
(d) Mr. Lapinsky joined the Company in October 1998 as President and Chief
Operating Officer. He also holds this position with Republic Engineered
Steels, Inc., an affiliate of the Company. Amounts presented for Mr.
Lapinsky are his combined earnings from both companies for the full
fiscal year.
Messrs. Tyrrell, Lapinsky, Meyer, and Asimou entered into employment agreements
with the Company and Republic (the "Employment Agreements") effective October 1,
1998, each of which contains substantially similar terms and conditions except
with respect to salary provisions. The Employment Agreements will continue until
September 30, 2001, and will renew annually thereafter each October 1 for one
year renewal terms unless terminated by Messrs. Tyrrell, Lapinsky, Meyer and
Asimou, as applicable, or the Company or Republic at least 90 days prior to the
expiration date . The annual base salaries of Messrs. Tyrrell, Lapinsky, Meyer
and Asimou currently in effect under these Employment Agreements are $400,000,
$275,000, $235,000 and $225,000, respectively, and each Employment Agreement
provides for an annual increase based on performance. Messrs. Tyrrell, Lapinsky,
Meyer and Asimou are also entitled to receive an annual bonus, which will be no
less than $150,000, $100,000, $75,000 and $75,000, respectively, for fiscal
years 1999 and 2000.
As a result of signing the Employment Agreements, Messrs. Tyrrell, Meyer, and
Asimou, and other members of management, forfeited their rights to prior vested
and unvested options to purchase common stock of the Company. Mr. Deichert and
Mr. Ben L. Bishop Jr., who terminated from the Company during 1998, have
forfeited their rights to prior vested or unvested options to purchase common
stock of the Company under the terms of their respective separation agreements.
Subject to consummation of the proposed combination of the Company and Republic,
the continuing executives listed in the Summary Compensation Table above are
eligible to receive in the future options to acquire an aggregate, 6.0% of the
common stock of the survivor entity of the Combination, subject to dilution. The
exercise price per share will equal the price per share paid by Blackstone.
Directors' Compensation and Consulting Arrangements
Each non-employee director of the Company is entitled to receive, as annual
compensation for serving on the board of directors of the Company, $25,000, plus
reimbursement of reasonable out-of-pocket expenses.
26
<PAGE> 27
Item 12. Security Ownership of Certain Beneficial Owners and Management
The table below sets forth certain information concerning the beneficial
ownership of the Company's common stock by (i) all persons known by the Company
to own beneficially more than 5% of the Company's Common Stock, (ii) each
director, (iii) each of the named officers, and (iv) all directors and named
executive officers as a group:
<TABLE>
<CAPTION>
Beneficial Owner Shares Ownership %
- ------------------ ------ -----------
<S> <C> <C>
Blackstone Management Associates II L.L.C. (a) (b) (c) 930,530 72.8%
BRW Partners Inc. (a) (d) (e) 196,410 15.4%
Veritas Capital, LLC (f) 68,897 5.4%
BRW Partners LLC (g) 56,371 4.4%
KDJ, LLC (h) 17,896 1.4%
Thomas N. Tyrrell 0 *
Joseph F. Lapinsky 0 *
Robert L. Meyer 0 *
John C. Asimou 0 *
Frederick L. Deichert 0 *
David A. Stockman (c) 0 *
Richard C. Lappin (c) 0 *
Robert B. McKeon (e) 339,574 26.6%
Thomas J. Campbell (e) 339,574 26.6%
Daniel R. DeVos 0 *
Anthony Rainaldi 0 *
Buddy W. Davis 0 *
All directors and named executive officers as a group 339,574 26.6%
</TABLE>
* Represents less than 1% of the Company's outstanding common stock.
(a) Blackstone's investment was made indirectly through BRW Steel Holdings
L.P., a Delaware limited partnership initially organized by persons
associated with Veritas in connection with the acquisition of the BRW
Assets from Bethlehem ("BRWSH"), and BRW Steel Offshore Holdings L.P.,
a Delaware limited partnership newly organized by Blackstone and
persons associated with Veritas in connection with the recapitalization
("Offshore BRWSH"; together with BRWSH, the "Partnerships"), whereby
the Partnerships became the direct holders of all newly issued shares
of Class B Common Stock and all shares of Class A Common Stock
previously held solely by BRWSH. After Blackstone's investment, both
Blackstone and BRW Partners, Inc. ("BRWPI"), a corporation controlled
by principals of Veritas, hold partnership interests in each
Partnership. The limited partnership agreement of BRWSH was amended to
provide, and the limited partnership agreement of Offshore BRWSH
provides, for certain sharing arrangements between Blackstone, on the
one hand, and BRWPI and the current limited partners of BRWSH, on the
other hand, with respect to proceeds from the sale of the Common Stock
held by such Partnerships. Such limited partnership agreements also
provide that, subject to the Stockholders' Agreement, Blackstone will
exercise all voting and dispositive power with respect to the Class B
Common Stock held by the Partnerships and BRWPI will exercise all
voting and dispositive power with respect to the Class A Common Stock
held by the Partnerships.
(b) Blackstone Management Associates II L.L.C., as the general partner of
each of Blackstone Capital Partners II Merchant Banking Fund L.P.,
Blackstone Offshore Capital Partners II L.P. and Blackstone Family
Investment Partnership II L.P., exercises voting and dispositive power
with respect to 536,829 shares. Of such shares, approximately 385,177
shares, 113,697 shares and 37,955 shares, respectively, are held by
Blackstone Capital Partners II Merchant Banking Fund L.P., Blackstone
Offshore Capital Partners II L.P. and Blackstone Family Investment
Partnership II L.P. Blackstone Management Associates II L.L.C. holds
393,701 shares of non-voting Class C Common Stock.
27
<PAGE> 28
(c) Messrs. Stockman and Lappin are affiliated with Blackstone in the
capacities described under "Executive Officers and Directors". Their
address is c/o The Blackstone Group L.P., 345 Park Avenue, New York
10154. Such individuals disclaim beneficial ownership of any shares of
Common Stock beneficially owned by Blackstone.
(d) BRWPI is one of the two general partners of the Partnerships and
exercises voting and dispositive power with respect to the 196,410
shares of Class A Common Stock. BRWPI holds 143,164 shares of
non-voting Class C Common Stock.
(e) BRWPI is owned by Robert B. McKeon and Thomas J. Campbell, both of whom
are principals of Veritas and are directors of the Company. Pursuant to
the organizational documents of BRWPI, all material actions to be taken
by BRWPI as a general partner of BRWSH require the approval of Mr.
McKeon and Mr.Campbell. BRWPI's address is c/o Veritas Capital Inc., 10
East 50th Street, New York, New York 10022. Messrs. McKeon and Campbell
each are considered to have beneficial ownership of all of the shares
included in the table above beneficially owned by BRWPI due to their
control of BRWPI.
(f) Veritas Capital LLC is owned by Robert B. McKeon.
(g) BRW Partners LLC is owned by Messrs. Robert B. McKeon and Thomas J.
Campbell. BRW Partners LLC is the general partner of BRW Steel Holdings
II L.P. BRW Partners LLC's address is c/o Veritas Capital Management
LLC, 660 Madison Avenue, 14th Floor, New York, New York 10021.
(h) KDJ LLC is owned by Thomas J. Campbell.
Messrs. Tyrrell, Lapinsky, Meyer, Asimou, and George and Ms. Brown, executives
of the Company (the "Executives"), entered into employment agreements with the
Company and Republic (the "Employment Agreements") effective October 1, 1998,
each of which contains substantially similar terms and conditions other than
compensation. Subject to consummation of the proposed combination of the Company
and Republic, the Executives and other members of management are eligible to
receive in the future options to acquire an aggregate 9.0% of the common stock
of the survivor entity of the Combination, subject to dilution. The exercise
price per share will equal the price per share paid by Blackstone.
As a result of signing the Employment Agreements, Messrs. Tyrrell, Meyer, and
Asimou, and other members of management, forfeited their rights to prior vested
and unvested options to purchase common stock of the Company. Messrs. Deichert
and Bishop, who terminated from the Company during 1998, have forfeited their
rights to prior vested or unvested options to purchase common stock of the
Company under the terms of their respective separation agreements.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Messrs. Davis and Rainaldi are members of the board of directors of the Company
pursuant to the Company's predecessor collective bargaining agreement and serve
as representatives of the USWA and the Company employees covered by the
collective bargaining agreement.
In connection with the Recapitalization, an affiliate of Blackstone received an
origination fee and expense reimbursement totaling $2.0 million and an affiliate
of Veritas received a financial advisory fee and expense reimbursement totaling
$2.0 million in fiscal 1996.
In connection with the Recapitalization, the Company entered into a management
agreement with the Johnstown Advisors Corp ("Advisors") and Blackstone
Management Partners L.P. ("Blackstone Advisors"), an affiliate of Blackstone.
Johnstown Advisors Corp. is owned by the principals of BRWPI, the general
partner of BRW Steel Holdings, LP, which owns approximately 26.6% of the common
stock of the Company, on a fully diluted basis. Blackstone owns approximately
72.8% of the common stock of the Company, on a fully diluted basis. Pursuant to
this agreement, Advisors and Blackstone Advisors are to provide certain
management and financial monitoring services to the Company for which they will
share
28
<PAGE> 29
equally an annual advisory fee of $0.9 million plus reimbursement of certain
out-of-pocket expenses. Under this agreement, the Company expensed $0.9
million in fiscal 1998 and $1.5 million in fiscal 1997.
Blackstone and Veritas, principal owners of both the Company and Republic, plan
to combine the two companies during 1999.
At January 1, 1999, certain salaried employees of the Company were terminated by
the Company and became employees of Republic. Under the terms of an employee
leasing and overhead allocation agreement, the Company and Republic share the
costs of common expenses including, but not limited to sales and marketing
services, administrative services, plant overhead and costs for certain common
facilities. Salary and benefit costs are allocated according to each company's
approximate share of combined trade volumes. Among the salaried employees
included in this overhead allocation are Messrs. Tyrrell, Meyer and Asimou who
hold the positions of Chief Executive Officer, Executive Vice President and
General Manager, Hot Rolled Bar Division and Executive Vice President and
General Manager, Cold Finished Bar Division, respectively, for both the Company
and Republic. Certain salaried employees located at the Company's facilities in
Lackawanna, New York and Johnstown, Pennsylvania were also included in this
arrangement. However, the Company leased back the services of these employees,
of which the salary and benefit costs are borne entirely by the Company.
As of January 4, 1999, Republic Technologies International Marketing, LLC
("Marketing JV") was formed. The Company and Republic expect to finalize an
agreement in the second quarter 1999 under which this jointly owned Marketing JV
will market, advertise, promote and sell both companies' steel products to each
company's existing and potential customers. The Company and Republic will be
reimbursed for expenses they incur on behalf of the Marketing JV, including
compensation costs of employees of the Company and Republic who perform sales
and marketing functions for the Marketing JV. Except for certain prior
commitments to customers that will continue to be placed with the Company or
Republic as applicable, it is intended that customer purchase orders will be
placed with the Marketing JV. Pursuant to allocation procedures to be approved
by the boards of directors of both companies, the production of steel products
to fulfill these orders will be allocated between the Company and Republic. To
compensate the Marketing JV for marketing services performed, it is intended
that the Company and Republic will pay commissions at specified percentages of
sales.
The Company participates in an inventory purchasing arrangement with Republic.
Under the terms of this arrangement, Republic purchases inventory products on
behalf of the combined company and bills the Company for its respective
purchases plus an administrative fee. During the period from September 8, 1998
to January 2, 1999, the Company purchased billet and bar products as well as
scrap material at market prices from Republic, totaling approximately $16.1
million. A similar arrangement is in place with regard to insurance. Republic
purchased insurance coverage for the combined company for which the costs are
borne ratably by the Company and Republic based on their respective share of
coverage. In December 1998, Republic completed negotiations for a two-year
insurance contract for the combined company for which the terms of payment
include a third-party financing arrangement.
As a result of the above, the Company had a current receivable due from Republic
of approximately $1.9 million, a current payable due to Republic of $15.5
million and a non-current payable due to Republic of $0.5 million at January 2,
1999. At January 2, 1999 and January 3, 1998, current amounts payable to
Blackstone were $0.9 million and $1.5 million, respectively.
29
<PAGE> 30
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- ------------------------------------------------------------------------
(a) (1) The following consolidated financial statements of the Company are
included in a separate section of this report following the signature
page:
Consolidated Statements of Operations - Years Ended January 2,
1999 and January 3, 1998, Three Months Ended December 28,
1996, and Year Ended September 30, 1996
Consolidated Balance Sheets - January 2, 1999 and January 3,
1998
Consolidated Statements of Stockholders' Equity (Deficit) -
Years Ended January 2, 1999 and January 3, 1998, Three Months
Ended December 28, 1996, and Year Ended September 30, 1996
Consolidated Statements of Cash Flows - Years Ended January 2,
1999 and January 3, 1998, Three Months Ended December 28,
1996, and Year Ended September 30, 1996
Notes to Consolidated Financial Statements - January 2, 1999
Reports of Independent Auditors
(a) (2) Financial Statement Schedules
The following consolidated financial statement schedule of the
Company is included in a separate section of this report
following the signature page:
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and therefore, have been
omitted.
(a) (3) Exhibits
Exhibit No. Description
----------- -----------
3.1 Amended and Restated Certificate of
Incorporation of Bar Technologies Inc.
(filed as Exhibit 3.1 of Bar Technologies
Inc. Form 10-K for the year ended January 3,
1998, SEC File No. 333-04254 and
incorporated by reference and made a part
hereof.)
3.2* Amended and Restated By-laws of Bar
Technologies Inc.
4.1* Indenture, dated as of April 1, 1996, among
BarTech, BLI Acquisition Corporation, Bliss
& Laughlin Industries Inc., Bliss & Laughlin
Steel Company, Canadian Drawn Steel Company
Inc. and the United States Trust Company of
New York.
4.2* Form of Note.
4.3* Common Stock Registration Rights Agreement,
dated as of April 1, 1996, among BarTech,
BRW Steel Holdings, L.P., BRW Steel Offshore
Holdings, L.P., Blackstone Capital Partners
II Merchant Banking Fund L.P. and Chase
Securities Inc.
30
<PAGE> 31
4.4* Warrant Agreement, dated as of April 1, 1996,
between BarTech and United States Trust Company of
New York.
10.1* Credit Agreement, dated as of April 2, 1996,
between BarTech, Bliss & Laughlin Steel Company
and Chase Manhattan Bank, formerly known as
Chemical Bank.
10.2* Master Pledge Agreement, dated April 2, 1996,
among BRW Steel Holdings, L.P., BRW Steel Offshore
Holdings, L.P., BarTech, Bliss and Laughlin
Industries Inc., Bliss & Laughlin Steel Company
and United States Trust Company of New York.
10.8 Employment agreement dated December 2, 1996,
between the Company and Mr. Frederick L. Deichert
(filed as Exhibit 10.8 of Bar Technologies Inc.
Form 10-K for the year ended September 30, 1996,
SEC File No. 333-04254 and incorporated by
reference and made a part hereof.)
10.14* Master Agreement dated July 18, 1994, by and among
the Commonwealth of Pennsylvania, acting by and
through the Department of Commerce, the
Pennsylvania Industrial Development Authority, the
Commonwealth of Pennsylvania, acting by and
through the Department of Community Affairs, the
Johnstown Industrial Development Corporation, the
County of Cambria, the City of Johnstown, BarTech
and BRW Steel Corporation-Johnstown.
10.15* Amendment No. 1 to the Master Agreement dated
September 21, 1994, by and among the Commonwealth
of Pennsylvania, acting by and through the
Department of Commerce, the Pennsylvania
Industrial Development Authority, the Commonwealth
of Pennsylvania, acting by and through the
Department of Community Affairs, the Johnstown
Industrial Development Corporation, the County of
Cambria, the City of Johnstown and BarTech.
10.16* Sunny Day Fund Loan Agreement dated September 21,
1994, by and between BarTech and the Commonwealth
of Pennsylvania acting by and through its
Department of Commerce.
10.17* Pennsylvania Industrial Development Authority
Consent, Subordination and Assumption Agreement,
dated August 4, 1994, effective as of September
21, 1994, by BarTech and Johnstown Industrial
Development Corporation in favor of the
Pennsylvania Industrial Development Authority.
10.18* Economic Development Partnership Loan Agreement
dated September 21, 1994, between the City of
Johnstown and BarTech.
10.19* Economic Development Set-Aside Loan Agreement
dated as of July 6, 1995, between the City of
Johnstown and BarTech.
10.20* Economic Development Set-Aside Loan Agreement
dated July 6, 1995, between the City of Johnstown
and BarTech.
10.21* Section 108 Loan Agreement dated July 20, 1994, by
and between the City of Johnstown, the County of
Cambria and the Company.
31
<PAGE> 32
10.22* Amendment No. 1 to Section 108 Loan
Agreement, dated August 1994, by and among the
City of Johnstown, the County of Cambria and the
Company.
10.23* Loan and Use Agreement dated September 21, 1994,
by and between the Company and Marine Midland
Bank.
10.24* Loan Agreement dated August 12, 1994, by and
between the Company and Buffalo and Erie County
Regional Development Corporation.
10.25* Community Development Block Grant Loan Agreement
dated November 3, 1995, between Cambria County and
the Company.
10.26* BID Loan Agreement dated March 12, 1996, between
Johnstown Industrial Development Corporation and
the Company.
10.27* Contribution Agreement dated December 1993, by and
between the Company and Bethlehem Steel
Corporation.
10.28* Amendment No. 1 to Contribution Agreement dated
January 1994, by and between the Company and
Bethlehem Steel Corporation.
10.29* Amendment No. 2 to the Contribution Agreement
dated January 7, 1994, by and between the Company
and Bethlehem Steel Corporation.
10.30* Amendment No. 3 to Contribution Agreement dated
June 7, 1994, by and between the Company and
Bethlehem Steel Corporation.
10.31* Amendment No. 4 to Contribution Agreement dated
June 29, 1994, by and between the Company and
Bethlehem Steel Corporation.
10.32* Amendment No. 5 to Contribution Agreement dated
September 21, 1994, by and between the Company and
Bethlehem Steel Corporation.
10.33* Subordinated Loan Agreement dated September 21,
1994, by and between the Company and Bethlehem
Steel Corporation.
10.34 Loan Agreement dated December 1, 1988 between
Development Authority of Cartersville and Bliss &
Laughlin Steel Company (filed as Exhibit 10 (e) to
Form 10-K of Bliss & Laughlin Industries Inc. for
the year ended September 30, 1989 and incorporated
by reference and made a part hereof).
10.35* Collective Bargaining Agreement dated February 15,
1994 by and between the Company, the United Steel
Workers of America and the AFL-CIO.
10.36* Amendment No. 1 to the Collective Bargaining
Agreement dated September 21, 1994, by and between
the Company, the United Steel Workers of America
and the AFL-CIO.
10.37* Letter Agreement dated March 28, 1996, by and
between the Company, BRW Steel Holdings, L.P. and
the United Steel Workers of America.
32
<PAGE> 33
10.38* Amended and Restated Intercreditor and
Subordination Agreement dated April 2, 1996, by
and between the Company and United States Trust
Company of New York, Bethlehem Steel Corporation,
the Pennsylvania Lenders (as defined therein), the
Lackawanna Lenders (as defined therein), Chase
Manhattan Bank (formerly known as Chemical Bank)
Rokop Corporation, those parties who in the future
become Government Lenders (as defined therein),
those parties who in the future become Notes
Refinancing lenders (as defined therein), and each
of the Pledgors (as defined therein) from time to
time, made party thereto.
10.40 Amended Credit Agreement dated September 11, 1997,
by and between the Company and Chase Manhattan
Bank (filed as Exhibit 10.4 of Bar Technologies
Inc. Form 10-K for the year ended January 3, 1998,
SEC File No. 333-04254 and incorporated by
reference and made a part hereof.)
10.41 Subscription Agreement for Bar Technologies Inc.
dated September 11, 1997 (filed as Exhibit 10.41
of Bar Technologies Inc. Form 10-K for the year
ended January 3, 1998, SEC File No. 333-04254 and
incorporated by reference and made a part hereof.)
10.42 Amended and Restated Stockholders' Agreement for
Bar Technologies Inc. dated September 11,
1997(filed as Exhibit 10.42 of Bar Technologies
Inc. Form 10-K for the year ended January 3, 1998,
SEC File No. 333-04254 and incorporated by
reference and made a part hereof.) .
10.43 Deferral letter from The Pennsylvania Department
of Community and Economic Development dated
November 21, 1997(filed as Exhibit 10.43 of Bar
Technologies Inc. Form 10-K for the year ended
January 3, 1998, SEC File No. 333-04254 and
incorporated by reference and made a part hereof.)
10.44 Agreement between the Company and Pennsylvania
Electric Company, dated July 9, 1997(filed as
Exhibit 10.44 of Bar Technologies Inc. Form 10-K
for the year ended January 3, 1998, SEC File No.
333-04254 and incorporated by reference and made
a part hereof.)
10.45 Employment Agreement dated October 1, 1998,
between the Company and Mr. Thomas N. Tyrrell,
Chief Executive Officer, filed herewith.
10.46 Employment Agreement dated October 1, 1998,
between the Company and Mr. Joseph Lapinsky,
President and Chief Operating Officer, filed
herewith.
10.47 Employment Agreement dated October 1, 1998,
between the Company and Mr. Robert L. Meyer,
Executive Vice President and General Manager,
Hot-Rolled Bar Division, filed herewith.
10.48 Employment Agreement dated October 1, 1998,
between the Company and Mr. John Asimou, Executive
Vice President and General Manager, Cold-Finished
Bar Division, filed herewith.
10.49 Employee Leasing and Overhead Agreement between
the Company and Republic Engineered Steels, Inc.
dated March 8, 1999, filed herewith.
33
<PAGE> 34
10.50 Collective Bargaining Agreement dated August 1,
1998 by and between the Company, RES Acquisition
Corporation and the United Steel Workers of
America, filed herewith.
10.51 Employment Separation and General Release dated
November 20, 1998, between the Company and
Frederick L. Deichert, filed herewith.
16 Letter Regarding Change in Certifying Accountants
(filed as Exhibit 16 to the Bar Technologies Inc.
Form 8-K dated December 28, 1998, and incorporated
by reference and made a part hereof).
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.
* Filed as an exhibit to the Registration Statement on Form
S-4 of Bar Technologies Inc., SEC Registration No. 333-4254
and incorporated by reference and made a part hereof.
(b) Reports on Form 8-K
On December 28, 1998, the Company filed a Form 8-K to announce the
appointment of Deloitte & Touche LLP as independent accountants to
audit its fiscal 1998 financial statements and the dismissal of
Arthur Andersen LLP, its previous independent public accountants,
which has been approved by the board of directors.
On December 31, 1998, the Company filed a Form 8-K to announcing a
change in its fiscal year effective with its reporting of fiscal
1999, from a 4/4/5 week fiscal quarter basis ending the Saturday
closest to December 31 to a calendar quarter basis with the fiscal
year ending on December 31.
34
<PAGE> 35
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.
Bar Technologies Inc.
---------------------
(Registrant)
Date: March 31, 1999 By: /s/ Thomas N. Tyrrell
----------------------------
Thomas N. Tyrrell
Chief Executive Officer
By: /s/ Brenda K. Brown
-----------------------------
Brenda K. Brown
Vice President of Finance and
Controller
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints Robert
B. McKeon, Thomas N. Tyrrell and David Stockman, each acting alone, his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments or supplements to this report and to
file the same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on March 31, 1999.
<TABLE>
<S> <C>
/s/ Thomas N. Tyrrell /s/ Buddy W. Davis
- --------------------- ------------------
Thomas N. Tyrrell, Chief Executive Buddy W. Davis, Director
Officer and Director
/s/ David A. Stockman /s/ Daniel R. DeVos
- --------------------- -------------------
David A. Stockman, Class B Director Daniel R. DeVos, Director
/s/ Robert B. McKeon /s/ Anthony Rainaldi
- -------------------- --------------------
Robert B. McKeon, Chairman and Director Anthony Rainaldi, Director
/s/ Thomas J. Campbell /s/ Brenda K. Brown
- ---------------------- -------------------
Thomas J. Campbell, Director Brenda K. Brown,
Vice President of Finance and
Controller
/s/ Richard C. Lappin
- ---------------------
Richard C. Lappin, Class B
Director
</TABLE>
35
<PAGE> 36
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Bar Technologies Inc.
We have audited the accompanying consolidated balance sheet of Bar Technologies
Inc. and subsidiaries as of January 2, 1999, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for the
year then ended. Our audit also included the financial statement schedule for
the year ended January 2, 1999 listed in the Index at Item 14(a)(2). These
financial statements and financial statement schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such fiscal 1998 consolidated financial statements present
fairly, in all material respects, the financial position of Bar Technologies
Inc. and subsidiaries as of January 2, 1999, and the results of their operations
and their cash flows for the year then ended in conformity with generally
accepted accounting principles. Also, in our opinion, such fiscal 1998 financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
March 31, 1999
36
<PAGE> 37
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Bar Technologies Inc.:
We have audited the accompanying consolidated balance sheet of Bar Technologies
Inc. (a Delaware corporation) and subsidiaries as of January 3, 1998 and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for the year ended January 3, 1998, the three month period ended
December 28, 1996 and the year ended September 30, 1996. These consolidated
financial statements and schedule referred to below are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bar Technologies Inc. and
subsidiaries as of January 3, 1998 and the results of their operations and their
cash flows for the year ended January 3, 1998, the three months ended December
28, 1996 and the year ended September 30, 1996, in conformity with generally
accepted accounting principles.
Our audits of Bar Technologies Inc. and subsidiaries were made for the purpose
of forming an opinion on the basic financial statements taken as a whole.
Schedule II is presented for the purpose of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
March 24, 1998
37
<PAGE> 38
BAR TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED JANUARY 2, 1999 AND
JANUARY 3, 1998, THE THREE MONTHS ENDED DECEMBER 28, 1996 AND THE YEAR ENDED
SEPTEMBER 30, 1996
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months
Year Ended Year Ended Ended Year Ended
January 2, January 3, December 28, September 30,
1999 1998 1996 1996
--------------- -------------- --------------- ------------
<S> <C> <C> <C> <C>
Net sales $ 271,851 $ 242,896 $ 40,251 $ 77,163
Cost of sales 262,462 239,370 43,427 91,995
Depreciation and amortization 5,961 4,523 1,221 2,036
Selling, general and
administrative expense 21,107 21,730 4,305 14,592
--------- --------- --------- ---------
Loss from operations (17,679) (22,727) (8,702) (31,460)
Interest expense, net 26,959 23,306 5,148 10,833
Other income 2,663 1,415 328 1,079
--------- --------- --------- ---------
Loss before provision for
income taxes (41,975) (44,618) (13,522) (41,214)
Provision for income taxes 3 205 3 205
--------- --------- --------- ---------
Loss before extraordinary item (41,978) (44,823) (13,525) (41,419)
Extraordinary loss on early
extinguishment of debt -- -- -- 2,214
--------- --------- --------- ---------
Net loss (41,978) (44,823) (13,525) (43,633)
Preferred stock dividends 385 385 93 385
--------- --------- --------- ---------
Net loss applicable to
common shares $ (42,363) $ (45,208) $ (13,618) $ (44,018)
========= ========= ========= =========
Per share data - basic and diluted:
Loss before extraordinary item $ (33.14) $ (50.88) $ (18.37) $ (93.08)
Extraordinary loss on early
extinguishment of debt -- -- -- (4.93)
--------- --------- --------- ---------
Net loss $ (33.14) $ (50.88) $ (18.37) $ (98.01)
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
38
<PAGE> 39
BAR TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JANUARY 2, 1999 AND JANUARY 3, 1998
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
January 2, 1999 January 3, 1998
--------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,188 $ 3,391
Accounts receivable, less allowances of $1,104 and
$817, respectively 26,152 34,287
Accounts receivable due from affiliates 1,935 --
Inventories 74,168 58,277
Other current assets 2,676 1,977
--------- ---------
Total current assets 107,119 97,932
Property, plant and equipment:
Land and improvements 2,580 2,628
Buildings and improvements 19,944 20,189
Machinery and equipment 72,162 60,058
Construction-in-progress 8,396 4,134
--------- ---------
Total property, plant and equipment 103,082 87,009
Accumulated depreciation (12,983) (7,432)
--------- ---------
Net property, plant and equipment 90,099 79,577
Goodwill, net of accumulated amortization of $891 and
$567, respectively 11,969 12,293
Restricted debt service fund 1,551 1,551
Other assets 11,763 14,325
--------- ---------
Total assets $ 222,501 $ 205,678
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
39
<PAGE> 40
BAR TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JANUARY 2, 1999 AND JANUARY 3, 1998
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
January 2, 1999 January 3, 1998
--------------- ---------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 44,791 $ 33,339
Amounts due to affiliates 16,401 1,531
Accrued interest 4,885 3,605
Other accrued liabilities 19,687 12,647
Current maturities of long-term debt 3,805 3,033
Revolving credit facility 79,000 53,650
--------- ---------
Total current liabilities 168,569 107,805
Long-term debt 128,962 130,741
Deferred income taxes 5,001 5,047
Amounts due to affiliates, long-term 531 --
Other long-term liabilities 5,377 4,964
--------- ---------
Total liabilities 308,440 248,557
Redeemable stock:
Series A preferred stock $0.001 par value
Authorized 5,000 shares
Issued and outstanding, 1,100 shares 5,500 5,500
Commitments and contingencies (Note 14)
Stockholders' equity (deficit):
Series B preferred stock $0.001 par value
Authorized, issued and outstanding, 1 share -- --
Class A common stock, $0.001 par value
Authorized, 1,000,000 shares
Issued and outstanding, 204,458 shares -- --
Class B common stock, $0.001 par value
Authorized, 600,000 shares
Issued and outstanding, 536,829 shares 1 1
Class C common stock, non-voting, $0.001 par value,
Authorized, 600,000 shares
Issued and outstanding, 536,865 shares 1 1
Additional paid-in capital 63,055 63,055
Warrants outstanding 5,119 5,119
Accumulated deficit (158,424) (116,061)
Accumulated other comprehensive loss (1,191) (494)
--------- ---------
Total stockholders' equity (deficit) (91,439) (48,379)
--------- ---------
Total liabilities and stockholders' equity (deficit) $ 222,501 $ 205,678
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
40
<PAGE> 41
Bar Technologies Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity (Deficit)
For the Years Ended January 2, 1999 and January 3, 1998, the Three Months
Ended December 28, 1996 and the Year Ended September 30, 1996
(In thousands of dollars)
<TABLE>
<CAPTION>
Additional
Class A Class B Class C Paid-in Warrants Accumulated
Common Stock Common Stock Common Stock Capital Outstanding Deficit
------------ ------------ ------------ ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1995 $ - $ 3,704 $ (13,217)
Net loss $ (43,633)
Preferred stock dividend $ (385)
Other comprehensive
income - foreign currency
translation adjustments
Issuance of common stock $ 1 $ 30,002
Issuance of warrants $ 5,119
Amortization of deferred
compensation
------- -------- ----------- -------- --------- ---------
Balance, September 30, 1996 $ - $ 1 $ 33,706 $ 5,119 $ (57,235)
Net loss $ (13,525)
Preferred stock dividend $ (93)
Other comprehensive
income - foreign currency
translation adjustments
------- -------- ----------- -------- --------- ---------
Balance, December 28, 1996 $ - $ 1 $ 33,706 $ 5,119 $ (70,853)
Net loss $ (44,823)
Preferred stock dividend $ (385)
Other comprehensive
income - foreign currency
translation adjustments
Issuance of common stock $ 1 $ 29,349
------- -------- ----------- -------- --------- ---------
Balance, January 3, 1998 $ - $ 1 $ 1 $ 63,055 $ 5,119 $(116,061)
Net loss $ (41,978)
Preferred stock dividend $ (385)
Other comprehensive
income - foreign currency
translation adjustments
------- -------- ----------- -------- --------- ---------
Balance, January 2, 1999 $ - $ 1 $ 1 $ 63,055 $ 5,119 $(158,424)
======= ======== =========== ======== ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
<CAPTION>
Accumulated
Other Total
Deferred Comprehensive Comprehensive Stockholders'
Compensation Income (Loss) Income (Loss) Equity (Deficit)
------------ ------------- ------------- ----------------
<S> <C> <C> <C> <C>
Balance, September 30, 1995 $ (112) $ (9,625)
Net loss $ (43,633) $ (43,633)
Preferred stock dividend $ (385)
Other comprehensive
income - foreign currency
translation adjustments $ (49) $ (49) $ (49)
Issuance of common stock $ 58 $ 30,061
Issuance of warrants $ 5,119
Amortization of deferred
compensation $ 54 $ 54
--------- ----------- ----------- ------------
Balance, September 30, 1996 $ - $ (49) $ (43,682) $ (18,458)
===========
Net loss $ (13,525) $ (13,525)
Preferred stock dividend $ (93)
Other comprehensive
income - foreign currency
translation adjustments $ (82) $ (82) $ (82)
--------- ----------- ----------- ------------
Balance, December 28, 1996 $ - $ (131) $ (13,607) $ (32,158)
===========
Net loss $ (44,823) $ (44,823)
Preferred stock dividend $ (385)
Other comprehensive
income - foreign currency
translation adjustments $ (363) $ (363) $ (363)
Issuance of common stock $ 29,350
--------- ----------- ----------- ------------
Balance, January 3, 1998 $ - $ (494) $ (45,186) $ (48,379)
===========
Net loss $ (41,978) $ (41,978)
Preferred stock dividend $ (385)
Other comprehensive
income - foreign currency
translation adjustments $ (697) $ (697) $ (697)
--------- ----------- ----------- ------------
Balance, January 2, 1999 $ - $ (1,191) $ (42,675) $ (91,439)
========== =========== =========== ============
</TABLE>
41
<PAGE> 42
BAR TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JANUARY 2, 1999 AND
JANUARY 3, 1998, THE THREE MONTHS ENDED DECEMBER 28, 1996
AND THE YEAR ENDED SEPTEMBER 30, 1996
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Three Months
Year Ended Year Ended Ended Year Ended
January 2, January 3, December 28, September 30,
1999 1998 1996 1996
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net loss $ (41,978) $ (44,823) $ (13,525) $ (43,633)
Adjustments to reconcile net cash
used by operating activities:
Depreciation and amortization 5,961 4,523 1,221 2,036
Extraordinary loss on early
extinguishment of debt -- -- -- 2,214
Accretion of original issue discount 1,393 1,243 285 633
Amortization of deferred financing cost 2,819 2,131 511 1,396
(Increase) decrease in accounts receivable 7,657 (16,148) 755 900
Increase in inventory (16,179) (462) (12,157) (12,016)
(Increase) decrease in other current assets (720) 1,159 (67) (1,306)
Increase in accounts payable 11,642 6,504 4,023 5,473
Increase in due to/from affiliates 13,466 -- -- --
Increase (decrease) in other
current liabilities 8,494 (4,051) 2,220 12,150
Other 232 (930) (242) (129)
------------ ------------ ------------ ------------
Net cash used by operating activities (7,213) (50,854) (16,976) (32,282)
------------ ------------ ------------ ------------
Cash flows from investing activities
Net capital expenditures (16,325) (5,813) (186) (21,300)
Acquisition of BLI, net of cash -- -- -- (41,028)
------------ ------------ ------------ ------------
Net cash used by investing activities (16,325) (5,813) (186) (62,328)
------------ ------------ ------------ ------------
Cash flows from financing activities
Net receipts under revolving credit agreement 25,350 13,850 17,300 22,500
Issuance of debt -- 324 -- 104,363
Repayments of debt (2,401) (2,588) (4,727) (32,154)
Proceeds from issuance of common stock -- 29,350 -- 30,003
Proceeds from issuance of warrants -- -- -- 5,119
Preferred stock dividends (385) (385) (93) (385)
Deferred debt financing costs -- -- -- (12,398)
Deposits into bond interest escrow -- 12,836 6,149 (18,516)
------------ ------------ ------------ ------------
Net cash provided by investing activities 22,564 53,387 18,629 98,532
------------ ------------ ------------ ------------
Effect of exchange rate changes on cash
(229) (363) 44 (49)
Net increase (decrease) in cash and cash
equivalents (1,203) (3,643) 1,511 3,873
Cash and cash equivalents-beginning of year 3,391 7,034 5,523 1,650
------------ ------------ ------------ ------------
Cash and cash equivalents-end of year $ 2,188 $ 3,391 $ 7,034 $ 5,523
============ ============ ============ ============
Supplemental cash flow information:
Interest paid $ 20,584 $ 18,957 $ 5,360 $ 2,976
Income taxes paid $ 196 $ -- $ -- $ 622
</TABLE>
The accompanying notes are an integral part of these statements.
42
<PAGE> 43
BAR TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 2, 1999 AND JANUARY 3, 1998, THE THREE MONTHS ENDED
DECEMBER 28, 1996 AND THE YEAR ENDED SEPTEMBER 30, 1996
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE INFORMATION)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED
INFORMATION
NATURE OF OPERATIONS AND CUSTOMER CONCENTRATION
Bar Technologies Inc. and subsidiaries ("BarTech" or the "Company") is a
producer of high quality hot rolled engineered and cold finished steel bar
products. The Company was formed on September 26, 1994, when it acquired certain
steelmaking and bar rolling assets of the former Bar, Rod and Wire Division of
Bethlehem Steel Corporation ("Bethlehem"). In February 1996, the Company
restarted its Lackawanna, New York bar mill and began the production of hot
rolled engineered bar products. In conjunction with the acquisition, the Company
developed and implemented a major modernization and expansion plan and
subsequently began commercial steelmaking operations at its Johnstown,
Pennsylvania facility in August 1996.
On April 2, 1996, the Company consummated an amended merger agreement with Bliss
& Laughlin Industries, Inc. ("BLI"), a major independent cold finished processor
of steel bars. The Company financed the acquisition with part of the proceeds of
its recapitalization. (See Note 5 - Recapitalization)
The Company's principal owners, Blackstone Capital Partners II Merchant Banking
Fund L. P. and its affiliates ("Blackstone") and certain affiliates of the
successor to Veritas Capital, Inc. ("Veritas") serving as general partners for
limited partnerships, acquired Republic Engineered Steels, Inc. ("Republic") in
September 1998. Blackstone and Veritas intend to combine the Company and
Republic (the "Combination") during 1999, subject to refinancing a significant
portion of the combined companies' debt.
Subsequent to the acquisition of Republic, the Company and Republic share common
management and have begun to perform certain sales, marketing and administrative
functions on a combined basis. This includes marketing both companies' steel
products jointly under the combined brand name "Republic Technologies
International" using a single sales force. However, throughout fiscal 1998, each
customer purchase order for steel products continued to be placed directly with
the Company or Republic, as appropriate, to make the sale. The costs of joint
functions have been borne ratably by the Company and Republic based upon
relative sales volumes achieved. The Company also participates in an inventory
purchasing arrangement with Republic. Under the terms of this arrangement,
Republic purchases inventory products on behalf of both companies and bills the
Company for its respective purchases, plus an administrative fee.
As of January 4, 1999, Republic Technologies International Marketing, LLC
("Marketing JV") was formed. The Company and Republic expect to finalize an
agreement in the second quarter 1999 under which this jointly owned Marketing JV
will market, advertise, promote and sell both companies' steel products to each
company's existing and potential customers. The Company and Republic will be
reimbursed for expenses they incur on behalf of the Marketing JV, including
compensation costs of employees of the Company and Republic who perform sales
and marketing functions for the Marketing JV. Except for certain prior
commitments to customers that will continue to be placed with the Company or
Republic as applicable, it is intended that customer purchase orders will be
placed with the Marketing JV. Pursuant to allocation procedures to be approved
by the boards of directors of both companies, the production of steel products
to fulfill these orders will be allocated between the Company and Republic. To
compensate the Marketing JV for marketing services performed, it is intended
that the Company and Republic will pay commissions at specified percentages of
sales.
43
<PAGE> 44
Since its formation, the Company has incurred substantial losses as a result of
the ongoing start-up of its facilities and its general administrative expenses.
Any substantial delay in achieving or a failure to bring the facilities up to
commercial volumes and productivity levels, or to sell its products in its
target markets could have a material adverse effect on the Company's financial
condition and results of operations. Also, in the event of a substantial delay
in integrating the operations of the Company and Republic, including
implementation of the Combination or the occurrence of any substantial
unanticipated cost related thereto, could have material adverse effect on the
Company's financial condition and results of operations. In the event of the
above, the Company may need to borrow funds under its Credit Agreement or, to
the extent funds are not available thereunder, to obtain additional financing to
meet its cash flow requirements. The Company is highly leveraged. Restrictive
covenants included in the indenture and other debt obligations may have the
effect of limiting the Company's ability to incur additional indebtedness, sell
assets, or acquire other entities and may otherwise limit the operational and
financial flexibility of the Company.
The Company and Republic presently perform certain functions on a combined basis
and intend to further integrate operations in 1999 through the Marketing JV. As
a consequence, management believes that capital resources and liquidity of the
Company and Republic can and will be managed on a combined basis prior to
consummation of the Combination. Management has prepared fiscal 1999 financial
and operational plans on a combined basis for the Company and Republic. Based on
these plans, even if the Combination is not consummated during 1999, management
believes that the aggregate of cash flows from combined operations, available
funds under existing credit agreements and funds expected to be available to
refinance certain acquisition-related debt of Republic, will be sufficient in
1999 to enable both the Company and Republic to meet their debt service
requirements when due and to fund their capital expenditures, working capital
and general corporate requirements, although there can be no assurances with
respect thereto.
The Company has two operating segments: hot-rolled and cold-finished special
quality steel bar products. The Company operates in both the United States and
Canada. Major market areas include the Midwest and Great Lakes Regions of the
United States, with customers that include the automotive, machinery, and tool
industries, as well as, independent forgers and steel service centers. The
Company's ability to generate future revenue may be dependent on economic
conditions in these geographic areas including conditions that affect those
industries.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Bar Technologies
Inc. and its wholly owned subsidiary, Bliss & Laughlin Industries Inc. ("BLI")
from April 2, 1996, the effective date of the acquisition. All significant
intercompany accounts and transactions have been eliminated.
FISCAL YEAR CHANGE
Effective with its reporting for fiscal 1999, the Company is changing its fiscal
year from a 4/4/5 week fiscal quarter basis ending the Saturday closest to
December 31 to a calendar quarter basis with the fiscal year ending on December
31. Accordingly, under the new fiscal year calendar, the Company's quarters will
each be comprised of three calendar months ending March 31, June 30, September
30 and December 31. Previously, each of the Company's quarters were comprised of
thirteen weeks. Due to the relative proximity of the new fiscal year end date
with the Company's former year end date, no transition period will be required.
Effective February 1997, the Company changed its fiscal year from its previous
calendar quarter basis ended September 30 to a 4/4/5 week fiscal quarter basis
ending the Saturday closest to December 31. As a result, the Company's fiscal
year 1997 began on December 29, 1996 and ended on January 3, 1998. Fiscal 1997
included 53 weeks while fiscal 1998 and 1996 each included 52 weeks. The
three-month transition period ended December 28, 1996 bridges the gap between
the Company's old and new fiscal year ends.
44
<PAGE> 45
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
RESTRICTED DEBT SERVICE FUND
The restricted debt service fund consists of a noncurrent escrow amount required
by the Marine Midland Term Loan (see Note 7).
INVENTORIES
Inventories are valued at the lower of cost or market (net realizable value).
Cost is determined using the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and include improvements that
significantly extend the useful lives of existing plant and equipment. The
Company provides for depreciation of property, plant and equipment on the
straight-line method based upon the estimated useful lives of the assets.
Depreciation expense was $5,631 for fiscal 1998, $4,198 for fiscal 1997, $1,140
for the three months ended December 28, 1996 and $1,874 for fiscal 1996. The
range of estimated useful lives of the Company's assets are as follows:
Buildings and improvements 40 years
Machinery and equipment 7 - 20 years
Repairs and maintenance costs are expensed as incurred. Capital expenditures
which cannot be used immediately are included in construction-in-process. As
these projects are completed, they are transferred to depreciable assets. Net
gains or losses related to asset dispositions are recognized in earnings in the
period in which the disposition occurs.
The Company reviews long-lived assets and certain identifiable intangibles for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceed the amount or fair
value, as defined, of the assets. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less costs to sell.
GOODWILL
Goodwill represents the amount paid for BLI in excess of the fair value of the
identifiable net assets acquired. It is being amortized on a straight-line basis
over 40 years.
NET LOSS PER SHARE
Basic earnings per share are computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share reflect the potential dilution that could
occur if common stock equivalents (i.e., warrants and stock options) were
exercised and then shared in the earnings of the Company. For the years ended
January 2, 1999 and January 3, 1998, the three months ended December 28, 1996,
and the year ended September 30, 1996, the reported basic and diluted earnings
per share were the same; however, securities totaling 91,609, 137,416, 132,606,
and 114,512, respectively for the above periods, were excluded from the diluted
earnings per share calculations due to their antidilutive effect.
45
<PAGE> 46
The weighted average number of common shares used in the calculation of net loss
per common share were 1,278,152 and 888,581 for the years ended January 2, 1999
and January 3, 1998, respectively, 741,287 for the three month period ended
December 28, 1996 and 449,114 for the year ended September 30, 1996.
INCOME TAXES
Deferred income taxes are provided for all temporary differences between the
book and tax basis of assets and liabilities.
FOREIGN CURRENCY TRANSLATION
Asset and liability accounts of the Company's foreign subsidiary, Canadian Drawn
Steel Company, Inc. ("CDSC"), are translated into U. S. dollars in accordance
with Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translation". Balance sheet accounts are translated using current exchange rates
in effect at the balance sheet date and revenue and expense accounts are
translated using a weighted average exchange rate during the period. Translation
adjustments are reflected as other comprehensive income (loss) in shareholders'
equity and had no tax effects for any of the periods presented.
Transaction gains and losses are included in the consolidated statements of
operations as incurred. These amounts were not significant in all periods
presented.
REVENUE RECOGNITION
The Company records revenues at the time product is shipped to its customers.
Sales are made with no right of return.
ACCOUNTING ESTIMATES
The presentation of the consolidated financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses and disclosure of contingent assets and liabilities. The
estimates and assumptions used in the accompanying consolidated financial
statements are based upon management's evaluation of the relevant facts and
circumstances as of the date of the financial statements. Actual results may
differ from the estimates and assumptions used in preparing the accompanying
consolidated financial statements.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and For Hedging Activities," ("SFAS 133"). This statement establishes accounting
and reporting standards requiring that every derivative instrument be recorded
on the balance sheet as either an asset or liability measured at fair value.
SFAS 133 requires that changes in the fair value of derivatives be recognized
currently in earnings unless specific hedge accounting criteria are met. SFAS
133 is effective for fiscal years beginning after June 15, 1999, and cannot be
applied retroactively. The Company has not completed its evaluation of SFAS 133
and accordingly, is unable to determine what impact, if any, SFAS 133 will have
on its financial statements.
RECLASSIFICATIONS
Certain amounts for prior periods have been reclassified to conform with the
current year presentation.
46
<PAGE> 47
NOTE 2 - INVENTORIES
Inventories consisted of the following: (in thousands)
<TABLE>
<CAPTION>
January 2, January 3,
1999 1998
---------- ----------
<S> <C> <C>
Raw materials $ 13,965 $ 14,569
Work-in-process 21,812 22,341
Finished goods 38,391 21,367
---------- ----------
Total $ 74,168 $ 58,277
========== ==========
</TABLE>
NOTE 3 - OTHER ASSETS
<TABLE>
<CAPTION>
Other assets consisted of the following: (in thousands)
January 2, January 3,
1999 1998
------- -------
<S> <C> <C>
Deferred financing costs, net of accumulated
amortization of $7,170 and $4,351, respectively $ 6,557 $ 9,188
Deferred income taxes 1,214 1,214
Other 3,992 3,923
------- -------
Total $11,763 $14,325
======= =======
</TABLE>
NOTE 4 - ACQUISITION
On April 2, 1996, the Company consummated an amended merger agreement with BLI,
a major independent cold finished processor of steel bars. The Company acquired
BLI for $9.50 per common share in cash for an aggregate equity purchase price of
approximately $38.0 million, plus the assumption of $3.6 million of debt and the
refinancing of $16.8 million of debt. The Company financed the acquisition with
part of the proceeds of its recapitalization. (See Note 5 - Recapitalization).
The acquisition was accounted for as a purchase, and accordingly, the results of
operations of BLI have been included in the consolidated financial statements
since April 2, 1996. The purchase price, including acquisition expenses, was
allocated to assets acquired and liabilities assumed based on fair market values
at the date of acquisition. The excess of the purchase price over the fair
market value of the net assets acquired was recognized as goodwill and is being
amortized over 40 years. The fair value of assets acquired and liabilities
assumed are summarized as follows: (in thousands)
<TABLE>
<CAPTION>
<S> <C>
Current assets $ 53,743
Property, plant and equipment 21,468
Other assets 5,165
Goodwill 12,860
Current liabilities (38,142)
Long-term liabilities (13,064)
--------
Total $ 42,030
========
</TABLE>
47
<PAGE> 48
NOTE 5 - RECAPITALIZATION AND EQUITY CONTRIBUTIONS
On April 2, 1996, the Company completed a recapitalization ("Recapitalization)
which included the following:
- - The issuance of $91.6 million in aggregate principal amount of 13-1/2%
Senior Secured Notes due 2001 for proceeds of $90.0 million.
- - The issuance of 536,829 shares of Class B Common Stock in
consideration of $30.0 million in cash provided by Blackstone ("the
Blackstone Investment").
- - The establishment of a new senior revolving credit agreement ("the
Revolving Credit Agreement") among the Company and a syndicate of
banks with Chase Manhattan Bank (formerly Chemical Bank), as agent,
which provides the Company with a revolving credit facility in an
aggregate principal amount of up to $90.0 million, of which a portion
will be available in the form of letters of credit.
- - The consummation of an amended merger agreement with BLI, a major
independent cold finished processor of steel bars. The Company
acquired BLI for $9.50 per common share in cash for an aggregate
equity purchase price of approximately $38.0 million, plus the
assumption of $3.6 million of debt and the refinancing of $16.8
million of debt. The Company financed the acquisition with part of the
proceeds of the Recapitalization.
- - The repayment of the following indebtedness: (i) approximately $16.8
million aggregate principal amount of outstanding loans under BLI
Revolving Credit Facilities; (ii) approximately $5.8 million aggregate
principal amount of outstanding loans under the Existing Bar Tech
Credit Facilities; and (iii) approximately $6,100 aggregate principal
amount of outstanding loans under the Master Agreement with the
Commonwealth of Pennsylvania and various of its agencies (the "Master
Agreement").
On September 11, 1997, the Company's principal owners, Blackstone and Veritas
purchased 536,865 shares of Class C non-voting common stock for $30.0 million.
The proceeds were used to fund the Company's capital program aimed at enhancing
the productive capacity of its steelmaking facilities. Approximately $14.0
million was for improvements to the Company's Johnstown, Pennsylvania mill
facility to produce enhanced machinability (including leaded) and bearing steel
grades. An additional $14.0 million was for several projects at the Company's
Lackawanna, New York 13" bar mill. The remaining amounts were for various
projects at the Company's cold-finishing subsidiary, BLI. These projects are
expected to be completed during the second half of fiscal 1999.
NOTE 6 - REVOLVING CREDIT AGREEMENT
In April 1996, the Company entered into a $90.0 million Revolving Credit
Agreement with a group of banks with Chase Manhattan Bank as agent. The
revolving facility provided the Company with an aggregate principal amount of up
to $90.0 million, of which $5.4 million is in the form of letters of credit. The
Credit Agreement matures April 2, 2000 and is initially secured by (i) all of
the inventory, accounts receivable, related intangibles and documents and the
proceeds of the foregoing; (ii) all of the Common Stock of the Company
outstanding as of April 2, 1996, subject to dilution and release under certain
circumstances, and; (iii) all of the Capital Stock of each direct or indirect
subsidiary of the Company. The pledges of Capital Stock referred to in (ii) and
(iii) will be made on a first priority basis and will be equal and ratable with
the liens on such capital stock in favor of holders of Senior Notes. Borrowings
under the Credit Agreement bear interest at a rate per annum equal to, at the
Company's option, either a prime rate plus 2.0% or an adjusted LIBOR rate plus
3.0%, subject to upward adjustment in certain circumstances.
The Credit Agreement contains a number of covenants that, among other things,
restrict the ability of the Company to dispose of assets, incur additional
indebtedness, prepay other indebtedness or amend other debt instruments, pay
dividends, create liens on assets, enter into sale and leaseback transactions,
make investments, loans or advances, make acquisitions, engage in mergers or
consolidations, change the business conducted by the Company, make capital
expenditures above certain levels or engage in certain transactions with
affiliates and otherwise restrict corporate activities. In addition, under the
Credit Agreement, the Company is required to maintain a minimum Consolidated
Interest Coverage Ratio. The Credit Agreement also contains provisions that
prohibit any modifications of the Indenture Agreement dated April 2, 1996 to the
Senior Notes in any manner adverse to the Lenders and that limit the Company's
48
<PAGE> 49
ability to refinance the Senior Notes without the consent of such Lenders. In
the third quarter of 1997, the Company and its commercial banks negotiated an
amendment to its existing $90.0 million Revolving Credit Agreement (the "Amended
Agreement"). The Amended Agreement provides for the addition of a new revolving
Sub-Facility ("Sub-Facility") and amends certain portions of its original
Revolving Credit Agreement. The Sub-Facility component of the Amended Agreement
provides the Company with up to $15.0 million of additional borrowing capacity
based on a higher receivable and inventory advance rate than in the Revolving
Credit Agreement. The Sub-Facility component of the Amended Agreement expires on
September 1, 1999. The maturity date of the Amended Agreement remains April 2,
2000.
Borrowings under the Amended Agreement bear interest at a rate per annum
equal to, at the Company's option, either a prime rate plus 2.0% or adjusted
LIBOR plus 3.0%, subject to upward adjustment in certain circumstances.
Sub-Facility borrowings bear interest at a rate per annum equal to, at the
Company's option, either a prime rate plus 3.5% or LIBOR plus 4.5%. Borrowings
outstanding under the Amended Agreement including the Sub-Facility were $79.0
million at January 2, 1999 and $53.7 million at January 3, 1998, respectively.
There were no amounts available under the Amended Agreement and Sub-Facility at
January 2, 1999 based on the applicable borrowing base under its Amended
Agreement. Weighted-average interest rates on borrowings under the Amended
Agreement and the Sub-Facility at January 2, 1999 were 8.79% and 11.50%,
respectively. At January 3, 1998, weighted-average interest rates were 8.98% and
11.00%, respectively.
The Amended Agreement contains a number of covenants similar to those in the
Revolving Credit Agreement. Additionally, under the Amended Agreement, the
Company is required to maintain a minimum Consolidated Interest Coverage Ratio
beginning with annualized results for the quarter ended September 30, 1998. The
Amended Agreement also contains provisions that prohibit any modifications of
the Indenture Agreement dated April 2, 1996 to the Senior Notes in any manner
adverse to the Lenders and that limit the Company's ability to refinance the
Senior Notes without the consent of such Lenders.
49
<PAGE> 50
NOTE 7 - FINANCING ARRANGEMENTS
The Company had the following long-term debt obligations outstanding:
<TABLE>
<CAPTION>
January 2, January 3,
1999 1998
-------- --------
<S> <C> <C>
13-1/2% Senior Secured Notes, due April 1, 2001 $ 91,609 $ 91,609
Marine Midland Term Loan, interest rate at Prime or LIBOR plus
1.0%, due March 1, 2003 6,929 7,578
RDC Loan, interest rate at 7.75%, due July 1, 2004 411 482
Economic Development Partnership ("EDP I"), interest at 3.0%,
due October 1, 2009 5,707 5,707
Sunny Day Fund I ("SDF I"), interest rate at 3.0%, due
October 1, 2009 6,491 6,607
Community Development Block Grant Program ("CDBG"),
interest rate at 3.0%, due July 1, 2010 690 690
Economic Development Partnership ("EDP II"), interest rate at
3.0%, due July 1, 2010 1,300 1,300
Housing and Urban Development 108 ("HUD") Bonds, interest
rates between 6.6% and 8.2%, due on various dates from August 1,
1999 to September 26, 2003 5,750 7,000
Pennsylvania Industrial Development Authority Note ("PIDA I"),
interest rate at 2.0%, due October 1, 2009 1,646 1,646
Pennsylvania Industrial Development Authority Note ("PIDA II"),
interest rate at 3.0%, due March 1, 2011 1,797 1,797
Bethlehem Subordinated Note, interest rate at 7.0%, due
September 26, 2002 5,500 5,500
Business Infrastructure Development ("BID"), Program, interest
rate at 3.0%, due April 1, 2011 2,500 2,500
Economic Development Partnership ("EDP III"), interest rate at
3.0%, due December 1, 2007 3,000 3,000
Industrial Revenue Bond ("IRB"), interest rate is variable,
calculated weekly, representing minimum rate required to sell
bonds in a secondary market, due December 1, 2018 3,600 3,600
U.S. Bank Mortgage Note, interest at 9.35%, due April 1, 2002 -- 315
-------- --------
136,930 139,331
Less: Original issue discount 4,163 5,557
-------- --------
Total 132,767 133,774
Less: Current maturities 3,805 3,033
-------- --------
Long - term debt $128,962 $130,741
======== ========
</TABLE>
The Company incurred an extraordinary charge of $2.2 million during the third
quarter of fiscal 1996, to reflect the recognition of premium and previously
deferred charges resulting from the repayment of debt as part of the
Recapitalization.
SENIOR SECURED NOTES
In April 1996, the Company completed a Recapitalization which included the
issuance of $91.6 million in aggregate principal amount Senior Secured Notes
("Senior Notes"). Interest on the Senior Notes is at 13-1/2% per annum and is
payable semi-annually on each April 1 and October 1, to the holders of record of
Senior Notes at the close of business on March 15 and September 15 immediately
preceding such interest payment date.
50
<PAGE> 51
The Senior Notes are callable after three years at the following redemption
prices:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1999 106.750%
2000 103.375%
</TABLE>
The Senior Notes are fully and unconditionally guaranteed (the "Guarantee") on a
senior basis, jointly and severally, by the Company's wholly-owned subsidiary,
BLI and its wholly-owned subsidiary, CDSC. The subsidiary guarantors comprise
all of the direct and indirect subsidiaries of the Company.
The following is the condensed information of the subsidiary guarantors on a
combined basis. The separate financial statements and other disclosures
concerning the subsidiary guarantors are not presented because management does
not believe they would be material to investors. The following information is as
of and for the years ended January 2, 1999 and January 3, 1998, the three months
ended December 28, 1996 and the period ended September 30, 1996: (in thousands)
<TABLE>
<CAPTION>
Three Months
Year Ended Year Ended Ended Period Ended
January 2, January 3, December 28, September 30,
1999 1998 1996 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Current assets $ 48,465 $ 56,948 $ 48,814 $ 52,082
Noncurrent assets 37,745 37,868 39,229 39,871
Current liabilities 33,152 43,180 37,811 41,117
Noncurrent liabilities 13,979 13,611 13,244 13,209
Net sales 157,764 159,120 35,369 73,120
Gross profit 15,562 17,026 3,419 5,118
Operating income 3,519 3,307 105 3,165
Net income (loss) 1,751 1,035 (497) (4,414)
</TABLE>
The Senior Notes and the Guarantee are collateralized by liens on (i) interests
in certain real properties owned or leased by the Company and the Guarantors on
the issue date, (ii) interest in machinery and equipment owned on, or acquired
after, the issue date by the Company and the Guarantors located at such real
properties, (iii) all of the Common Stock of the Company outstanding on the
issue date (which was pledged on a non-recourse basis and will be subject to
dilution for issuances of Common Stock subsequent to the Offering and release
upon the occurrence of certain events), (iv) all of the outstanding capital
stock of the Company's existing subsidiaries, (v) certain contract and
intellectual property rights of the Company and the Guarantor, (vi) the Interest
Escrow Account, and (vii) proceeds of the foregoing.
The Indenture contains certain restrictive covenants including (i) limitations
on additional indebtedness, (ii) limitations on issuances and sales of preferred
stock of certain subsidiaries, (iii) limitations on restricted payments, (iv)
limitations on liens, (v) limitations on sale-leaseback transactions, (vi)
limitations on payment restrictions affecting the subsidiaries, (vii)
limitations on the disposition of proceeds from asset sales, (viii) limitations
on transactions with interested persons and (ix) limitations on designations of
Unrestricted Subsidiaries (as defined). In addition, the indenture limits the
ability of the Company and the guarantors to consolidate, merge or sell all or
substantially all of their assets. These covenants are subject to important
exceptions and qualifications.
If the Company has Excess Cash Flow for any fiscal year, it will be required,
subject to certain exceptions and limitations (including its ability to retain
the first $10.0 million of Excess Cash Flow), to use 75% of such Excess Cash
Flow to make an offer to purchase Senior Notes at a price equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of the purchase.
Issued in connection with the Senior Notes are warrants which entitle the
holders thereof to acquire an aggregate of 91,609 shares of Class A Common
Stock, representing approximately 10% of the Company's
51
<PAGE> 52
outstanding common stock on a fully diluted basis immediately after giving
effect to the consummation of the Recapitalization and certain other agreed to
issuances of common stock.
The warrants can be exercised at a price of $0.01 per share of common stock on
or after July 1, 1996 and after the occurrences of certain other events. The
warrants expire on April 1, 2001. The recording of these warrants created an
original issue discount on the Senior Notes.
ECONOMIC DEVELOPMENT FINANCING
In connection with the acquisition of the assets of Bethlehem BRW Division and
its original modernization and expansion plan, the Company entered into loan
agreements with lenders in Pennsylvania and New York to procure financing for
the transaction.
Pennsylvania
The Company entered into the Master Agreement with the Commonwealth of
Pennsylvania and various of its agencies (collectively, the "Commonwealth") on
July 18, 1994. Pursuant to the Master Agreement, the Company entered into loan
agreements with the Commonwealth, through its Department of Commerce and
Department of Community Affairs. The total amount committed to the Company by
the Commonwealth pursuant to the Master Agreement was $33.0 million. The loans
have been made through the Sunny Day Fund ("SDF"), the Johnstown Industrial
Development Corporation ("IDC"), the Pennsylvania Industrial Development
Authority ("PIDA"), the Business Infrastructure Development Program ("BID"), the
Economic Development Partnership ("EDP"), the Community Development Block Grant
Program ("CDBG") and the Enterprise Zone Competitive Program ("ECP"). (The loans
governed by the Master Agreement are collectively referred to herein as the
"Commonwealth Loans").
The Company has obtained approval from the Pennsylvania Industrial Development
Authority regarding the deferral of principal on its PIDA and BID loans, and
principal and interest deferral on its EDP loans. The Company must resume
principal payments related to PIDA and BID loans and principal and interest
payments related to EDP loans beginning January 2000. All deferred loans are
required to be amortized over their original maturity schedule with no deferral
of final maturity.
As of January 2, 1999 and January 3, 1998, $23.1 million and $23.2 million,
respectively, in aggregate principal amount of Commonwealth Loans were
outstanding.
New York
JDA Guaranteed Marine Midland Term Loan - The Company is party to a Loan and Use
Agreement, dated September 21, 1994, with Marine Midland Bank ("Marine Midland")
(the "Marine Midland Loan"), whereby Marine Midland loaned $10.0 million to the
Company for use in connection with the acquisition of Lackawanna, New York real
estate from Bethlehem. The Marine Midland Loan is guaranteed by the New York Job
Development Authority ("JDA"). Interest on the Marine Midland Loan is the Prime
rate, or the LIBOR rate, as determined by the Company.
RDC Loan - The Company is party to a Loan Agreement with the Buffalo and Erie
County Regional Development Corporation ("RDC") providing for a loan in the
amount of $0.5 million to be used by the Company for working capital needs (the
"RDC Loan"). The RDC Loan has an interest rate of 7.75% per annum until July 1,
1999, and has an adjustable rate thereafter. The RDC Loan is secured by a
Security Agreement which grants RDC a security interest in equipment, fixtures,
inventory, accounts receivable, chattel paper and general intangibles.
BETHLEHEM SUBORDINATED LOAN AGREEMENT
The Company entered into $5.5 million Subordinated Loan Agreement, dated
September 21, 1994, with Bethlehem (the "Bethlehem Loan"). The terms of the
agreement provide for three equal installments on the first day of October in
each of the years 2000, 2001 and 2002 at a rate of 7.0% per annum and is due on
52
<PAGE> 53
October 1, 2002. The Bethlehem Loan is secured by a subordinated security
interest in certain real and personal property of the Company and any and all
proceeds therefrom. The outstanding principal amount under the Bethlehem Loan
has been reduced by an original issue discount.
OTHER
In March 1999, the Company obtained waivers of default provisions under the
terms of the Marine Midland Loan and certain Commonwealth Loans in exchange for
payment of certain amounts the lenders considered delinquent. The Company also
agreed, subject to consummation of the Combination, to refinance the SDF, PIDA I
and PIDA II loans and to modify the terms of certain other Commonwealth Loans.
Maturities of the Company's long-term debt obligations were as follows: (in
thousands)
<TABLE>
<S> <C>
1999 $ 3,805
2000 6,239
2001 98,219
2002 7,079
2003 3,514
Thereafter 18,074
----------------
Total $ 136,930
================
</TABLE>
NOTE 8 - SEGMENTS AND RELATED INFORMATION
The Company operates in two reportable segments: hot-rolled and cold-finished.
The Company manages the reportable segments as separate strategic business
units. Differences between the segments include: manufacturing techniques and
equipment, competition, and end-users. The Company's hot-rolled engineered bar
products include rounds, squares and hexagons in both cut lengths and coils. The
Company produces hot rolled engineered bar products up to 3 1/4" in diameter
which are generally used by its customers in critical applications where product
strength, integrity and durability are imperative considerations such as cam
shafts, axles, roller bearings, automotive suspension parts, large fasteners,
hydraulic hose fittings, transmission gears, and forged hand tools.
The Company also produces cold finished bars which are used in machined and
shafting products that require superior straightness, tolerance, finish and
mechanical properties. Cold finished bars are processed from hot rolled bars, by
a process that cleans, draws and straightens the raw material and cuts it to
specific lengths. Products include round bars from 9/16" to 3-1/2" in diameter
and hexagonal bars from 1" to 1-13/16" thick. End users of cold finished bars
incorporate them in a wide range of products including electrical and
non-electrical machinery and equipment and a wide variety of vehicular equipment
including automobiles, trucks, sport-utility vehicles, off-road vehicles and
agricultural equipment.
Both segments operate in similar markets within the United States and Canada.
Major market areas include the Midwest, Southeast and Great Lakes Regions of the
United States, with customers that include automotive, machinery and tool
industries as well as independent forgers and steel service centers.
The accounting policies of both segments are the same as those described in the
Company's Summary of Significant Accounting Policies. The Company measures
segment performance based on earnings before interest, taxes, depreciation and
amortization ("EBITDA").
53
<PAGE> 54
Hot-rolled accounts for intersegment sales at current market prices as if the
transaction had taken place with a third party.
<TABLE>
<CAPTION>
For the Year Ended January 2, 1999
(in thousands)
------------------------------------------------------------------------------------------
Inter
Cold- Total Segment
Hot-Rolled Finished Segments Eliminations Consolidated
------------- ------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Net sales $ 164,016 $ 157,764 $ 321,780 $ (49,929) $ 271,851
Depreciation and amortization 3,780 2,181 5,961 -- 5,961
Segment profit (EBITDA) (14,759) 5,704 (9,055) -- (9,055)
Segment assets 153,661 86,210 239,871 (17,370) 222,501
Capital expenditures 14,228 2,097 16,325 -- 16,325
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended January 3, 1998
(in thousands)
------------------------------------------------------------------------------------------
Inter
Cold- Total Segment
Hot-Rolled Finished Segments Eliminations Consolidated
------------- ------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Net sales $ 140,494 $ 159,120 $ 299,614 $ (56,718) $ 242,896
Depreciation and amortization 2,518 2,005 4,523 -- 4,523
Segment profit (EBITDA) (22,102) 5,313 (16,789) -- (16,789)
Segment assets 138,509 94,816 233,325 (27,647) 205,678
Capital expenditures 4,590 1,223 5,813 -- 5,813
</TABLE>
<TABLE>
<CAPTION>
For the Three Months Ended December 28, 1996
(in thousands)
------------------------------------------------------------------------------------------
Inter
Cold- Total Segment
Hot-Rolled Finished Segments Eliminations Consolidated
------------- ------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Net sales $ 12,304 $ 35,369 $ 47,673 $ (7,422) $ 40,251
Depreciation and amortization 599 622 1,221 -- 1,221
Segment profit (EBITDA) (7,880) 727 (7,153) -- (7,153)
Segment assets 139,303 88,043 227,346 (21,059) 206,287
Capital expenditures 50 136 186 -- 186
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended September 30, 1996
(in thousands)
------------------------------------------------------------------------------------------
Inter
Cold- Total Segment
Hot-Rolled Finished Segments Eliminations Consolidated
------------- ------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Net sales $ 12,531 $ 73,120 $ 85,651 $ (8,488) $ 77,163
Depreciation and amortization 838 1,198 2,036 -- 2,036
Segment profit (EBITDA) (26,378) (1,967) (28,345) -- (28,345)
Segment assets 126,368 91,953 218,321 (17,342) 200,979
Capital expenditures 20,400 900 21,300 -- 21,300
</TABLE>
The reconciliation of segment profit (EBITDA) to net loss before extraordinary
item is as follows: (in thousands)
<TABLE>
<CAPTION>
Year Ended Year Ended Three Months Year Ended
January 2, January 3, Ended December 28, September 30,
1999 1998 1996 1996
---------------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Segment profit (EBITDA) $ (9,055) $ (16,789) $ (7,153) $ (28,345)
Provision for income taxes 3 205 3 205
Interest expense, net 26,959 23,306 5,148 10,833
Depreciation and amortization 5,961 4,523 1,221 2,036
---------------- --------------- ------------------ ---------------
Net Loss before extraordinary
item $ (41,978) $ (44,823) $ (13,525) $ (41,419)
================ =============== ================== ===============
</TABLE>
The Company operates in both the United States and Canada. Its net sales from
external customers in Canada were approximately $22.0 million, $34.0 million,
$8.0 million, and $31.0 million for the years ended January 2, 1999 and January
3, 1998, the three months ended December 28, 1996, and the year ended September
30, 1996, respectively. Its principal long-lived assets, consisting of property,
plant, and equipment, were $4.1 million and $4.5 million and January 2, 1999 and
January 3, 1998, respectively.
54
<PAGE> 55
NOTE 9 - PENSIONS AND OTHER POSTRETIREMENT BENEFIT PLANS
At January 2, 1999, the Company adopted SFAS 132, "Employers' Disclosure about
Pensions and Other Postretirement Benefits" ("SFAS 132"). This statement revises
the disclosures for pension and other postretirement benefit plans but does not
change the way obligations or expense are measured or recognized in the
financial statements. Disclosures for prior periods have been conformed to the
requirements of SFAS 132.
BLI maintains defined benefit pension plans covering substantially all hourly
employees of its Harvey, Illinois, and Medina, Ohio plants. Employees at the
Batavia, Illinois and Cartersville, Georgia, plants are not covered. Benefits
are based on years of service and employee's age at termination. The Company's
Canadian subsidiary, CDSC, maintains pension plans covering substantially all
employees. Benefits for the CDSC salaried employees' plan are based on an
average salary for the five most recent years prior to retirement. Benefits for
the CDSC bargaining unit employees' plan are based on years of service. The
Company's policy is to fund pension cost in accordance with the requirements of
the Employee Retirement Income Security Act of 1974 in the United States and
local regulations in Canada.
BLI and CDSC also sponsor postretirement plans for health care and life
insurance that cover most full-time employees. The plans pay stated percentages
of most necessary medical expenses incurred by retirees, after subtracting
payments by Medicare or other providers and after a stated deductible has been
met. Participants become eligible for benefits if they retire from BLI or CDSC
after reaching age 55 with 10 or more years of service.
In addition, the Company and its subsidiaries maintain various defined
contribution plans, including salary savings plans, profit sharing plans and a
supplemental incentive compensation plan. Expense related to these plans was
approximately $317, $171, $44 and $56 in fiscal 1998, fiscal 1997, the three
months ended December 28, 1996 and fiscal 1996, respectively.
At January 2, 1999 and January 3, 1998, the plan assets for all plans were
invested in various trust funds administered by a trustee.
The components of the net periodic pension costs are summarized as follows: (in
thousands)
<TABLE>
<CAPTION>
Three Months
Year Ended Year Ended Ended Period Ended
January 2, January 3, December 28, September 30,
1999 1998 1996 1996
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Service cost $ 394 $ 393 $ 183 $ 186
Interest cost on projected benefit obligations 1,283 1,254 645 614
Expected return on plan assets (1,718) (1,633) (780) (896)
Amortization of prior service cost 40 35 -- --
Recognized net actuarial loss (gain) 21 22 9 188
------- ------- ------- -------
Net periodic pension cost $ 20 $ 71 $ 57 $ 92
======= ======= ======= =======
</TABLE>
Net periodic postretirement benefit cost included the following components: (in
thousands)
<TABLE>
<CAPTION>
Three Months
Year Ended Year Ended Ended Period Ended
January 2, January 3, December 28, September 30,
1999 1998 1996 1996
---------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Service cost of benefit earned $ 202 $ 161 $ 41 $ 66
Interest on accumulated postretirement
benefit obligations 431 415 105 184
Recognized net actuarial loss 42 10 -- --
-------- -------- -------- --------
Net periodic postretirement cost $ 675 $ 586 $ 146 $ 250
======== ======== ======== ========
</TABLE>
55
<PAGE> 56
The change in benefit obligation, change in plan assets, funded status and
amounts recognized in the consolidated balance sheets related to the Company's
pension plans and other postretirement benefits are as follows: (in thousands)
<TABLE>
<CAPTION>
PENSION PLANS OTHER BENEFITS
------------------------------------ -----------------------------
JANUARY 2, JANUARY 3, JANUARY 2, JANUARY 3,
1999 1998 1999 1998
------------------------------------ -----------------------------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $ 19,142 $ 17,115 $ 6,579 $ 5,426
Service cost 394 393 202 161
Interest cost 1,283 1,254 431 415
Amendments -- 68 -- --
Foreign currency exchange rate change (654) (371) (456) --
Actuarial (gain) loss (90) -- (33) --
Change in discount rate 418 1,718 75 913
Benefits paid (1,300) (1,035) (320) (336)
------------------------------------ -----------------------------
Benefit obligation at end of year $ 19,193 $ 19,142 $ 6,478 $ 6,579
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year $ 20,946 $ 19,735 -- --
Actual return on plan assets 2,384 2,364 -- --
Employer contribution 508 332 $ 320 $ 336
Foreign currency exchange rate change (712) (450) -- --
Benefits paid (1,300) (1,035) (320) (336)
------------------------------------ -----------------------------
Fair value of plan assets at end of year $ 21,826 $ 20,946 $ -- $ --
Funded status - overfunded (underfunded) $ 2,633 $ 1,804 $ (6,478) $ (6,579)
Unrecognized net actuarial loss 19 484 1,346 1,445
Unrecognized prior service cost 502 574 -- --
------------------------------------ -----------------------------
Prepaid (accrued) benefit cost $ 3,154 $ 2,862 $ (5,132) $ (5,134)
==================================== =============================
WEIGHTED AVERAGE ASSUMPTIONS:
Discount rate 6.83% 7.00% 6.81% 6.93%
Expected return on plan assets 8.50% 8.50%
Rate of compensation increase 4.59% 4.59%
</TABLE>
The projected benefit obligation, accumulated benefit obligation, and fair value
of plan assets for the pension plan with accumulated benefit obligations in
excess of plan assets were $1,321, $1,289, and $1,231, respectively, as of
January 2, 1999, and $1,172, $1,144, and $1,083, respectively, as of January 3,
1998.
For measurement purposes, a weighted average annual rate of increase in the per
capita cost of covered health care claims of 7.56% was assumed for fiscal 1999;
the rate assumed to decrease by approximately 0.5% per year to 5.40% for fiscal
2003, and remain at that level thereafter. To illustrate the health care cost
trend on amounts reported, changing the assumed health care cost trend rates by
one percentage point in each year would have the following effects as of and for
the fiscal year ended January 2, 1999: (in thousands)
<TABLE>
<CAPTION>
One Percentage Point
Increase Decrease
------------------ --------------------
<S> <C> <C>
Effect on total service and interest cost components $ 123 $ 112
Effect on postretirement benefit obligation $ 1,204 $ 1,115
</TABLE>
56
<PAGE> 57
NOTE 10 - INCOME TAXES
The components of deferred income taxes at January 2, 1999 and January 3, 1998
were as follows:
<TABLE>
<CAPTION>
(in thousands)
Asset (liability) January 2, 1999 January 3, 1998
- -----------------
<S> <C> <C>
Net operating loss carryforwards $ 59,310 $ 41,876
Inventory 2,560 1,733
Post retirement benefits 2,019 2,002
Property basis differences (8,319) (6,336)
Other - net 894 209
Valuation allowance (59,670) (42,736)
---------- ----------
Net deferred income taxes $ (3,206) $ (3,252)
========== ==========
</TABLE>
Net deferred income tax assets (liabilities) as of January 2, 1999 and January
3, 1998 recorded in the balance sheet were as follows:
<TABLE>
<CAPTION>
(in thousands)
January 2, 1999 January 3, 1998
--------------- ---------------
<S> <C> <C>
Prepaid expense $ 581 $ 581
Other assets 1,214 1,214
Other long-term liabilities (5,001) (5,047)
---------- ----------
Net deferred income taxes $ (3,206) $ (3,252)
========== ==========
</TABLE>
As of January 2, 1999, the Company had net operating loss carryforwards of
approximately $148 million available to offset future federal and state taxable
income during the carryforward periods which expire through 2019. These
carryforwards include amounts available from certain prior year operating loss
carryforwards which were limited as a result of the Recapitalization.
Utilization of these prior year loss carryforwards is limited to approximately
$1.1 million annually through 2010.
The realization of these tax benefits will depend upon the Company's ability to
generate future taxable income. Based upon its history of net operating losses,
the Company has recorded a valuation allowance to offset net deferred tax assets
that are not expected to be realized.
The provision for income taxes for fiscal 1998, fiscal 1997, the three months
ended December 28, 1996 and fiscal 1996 consisted of currently payable income
taxes, primarily foreign income taxes owed by CDSC. The difference between the
U.S. statutory income tax rate of 35% and the Company's effective rate results
principally from the recorded valuation allowances used to offset the deferred
tax benefits of tax loss carryforwards incurred by its U.S. operations during
each of these periods.
NOTE 11 - COMMON AND PREFERRED STOCK
The Company's authorized capital stock consists of 1,000,000 shares of Class A
Common Stock, 600,000 shares of Special Class B Common Stock, 600,000 shares of
Special Class C Common Stock and 5,000 shares of Series A Preferred Stock and
one share of Series B Preferred Stock, each with a par value of $0.001 per
share. The Special Class B Common Stock allows the holders to designate
directors who will hold 50 % of the voting power of the Board of Directors. The
Special Class B Common Stock will also have certain rights in the event of a
liquidation, dissolution or winding up of the Company. The Company's Class C
common stock is non-voting.
In connection with the Recapitalization, 66,600 shares of existing common stock
of the Company were converted into 196,410 shares of Class A Common Stock. As a
result, the number of shares outstanding prior to the Recapitalization and
earnings per share amounts were adjusted to reflect this reclassification of
shares.
57
<PAGE> 58
On September 26, 1994, the Company issued 1,100 shares of Series A Cumulative
Preferred Stock with a $0.001 par value to Bethlehem in connection with the
formation of the Company. The shares were issued at $5,000 per share or $5.5
million in total.
In each year, the Series A Preferred Stock is entitled to receive, whether or
not declared by the Board of Directors, cash dividends equal to $350 per share,
which dividends are cumulative. In the event that the Company is liquidated, the
holders of Series A Preferred Stock are entitled to a liquidation preference,
prior to any payment on the Common Stock, of $5,000 per share plus any unpaid
dividends. The Company is required to redeem all shares of Series A Preferred
Stock on the sixth anniversary of the date of original issuance of such shares
(September 26, 2000) for a total of $5,000 per share plus all accrued or
declared but unpaid dividends, and the Company may, at its option, redeem shares
of Series A Preferred Stock at an earlier date at the mandatory redemption
price, plus accrued but unpaid dividends. Holders of Series A Preferred Stock do
not generally vote on stockholders' matters. However, the consent or vote of
66-2/3% in voting power of the Series A Preferred Stock are only transferable by
a holder of Series A Preferred Stock to an affiliate of such holder or upon the
prior written consent of the Company. Upon redemption or repurchase by the
Company, shares of Series A Preferred Stock will not be reissued and will be
canceled.
One share of Series B Preferred Stock was issued to the union representing the
Company's Johnstown, PA and Lackawanna, NY facilities. The Series B Preferred
Stock is not entitled to receive dividends and is non-redeemable. In the event
that the Company is liquidated, the holder of Series B Preferred Stock is to be
entitled to a liquidation preference, after payment to the holders of the Series
A Preferred Stock and prior to any payment on the Common Stock, of $100 per
share. The Series B Preferred Stock does not generally vote on stockholders'
matters; however, the holder of Series B Preferred Stock has the right to
nominate and elect two directors to the Board of Directors, and to remove such
directors as provided in the Company's Bylaws.
As part of the Recapitalization in April 1996, the Company issued 536,829 shares
of Class B common stock in consideration of $30.0 million in cash provided by
Blackstone. In September 1997, the Company issued 536,865 shares of Class C
common stock to Blackstone and Veritas for capital contributions of $30.0
million.
NOTE 12 - STOCK PLANS
As part of the Company's previous collective bargaining agreement with the
United Steelworkers of America ("USWA"), the Company committed to grant
employees represented by the USWA a minimum of 20% equity interest in its common
stock through one or more stock ownership plans ("ESOP"), subject to dilution
for events occurring subsequent to February 1994. Following the Recapitalization
and Equity Investment, the commitment had been reduced to 3.7% of the Company's
common stock as of January 3, 1998, on a fully diluted basis. Under the previous
collective bargaining agreement, the allocation methodology and timing had not
been determined by the parties and the ESOP had not been established.
In 1998, the Company and an affiliate of Republic entered into a settlement
agreement with the USWA under which new master labor agreements were established
for all USWA employees of the Company and Republic. The new collective
bargaining agreements expire in 2003. As part of the new agreements, the Company
committed to establish a $1.6 million fund to be distributed to eligible USWA
employees in May 1999 in full and complete satisfaction of the Company's
obligation to establish an ESOP.
The agreement also provides that covered employees will be able to purchase
shares of the combined company following the Combination of the Company and
Republic. A maximum of $15 million of shares will be offered in the aggregate at
the same price per share attributable to the common stock of the combined
company acquired directly and indirectly by Blackstone in the Combination. Such
offering is to occur no later than six months after the closing of the
Combination. Holders of these shares will be granted piggyback registration
rights entitling them to registration of their shares in an underwritten initial
public offering of the combined company, subject to customary provisions.
58
<PAGE> 59
Under Equity Award Agreements with certain executive employees in fiscal 1996
and prior periods the Company committed to award common stock grants. The value
of these awards on the date of commitment was recorded as deferred compensation
and was amortized over the terms of the employment agreements. Common stock
grants to these employees in fiscal 1996 represent 8,048 shares of Class A
common stock.
Severance agreements were negotiated with certain former Company executives
during fiscal 1998 and 1996. Included in Selling, General and Administrative
Expense for the years ended January 2, 1999 and September 30, 1996 relating to
these agreements were $0.3 million and $2.9 million, respectively.
Pursuant to the terms of certain executives' prior employment agreements, the
Company granted 4,810, 18,094, and 22,903 non-qualified stock options during the
year ended January 3, 1998, the three months ended December 28, 1996 and the
year ended September 30, 1996, respectively, at a price of $55.89 per share,
which approximated fair market value at the date of grant. No options were
granted during fiscal 1998. Expiration dates for the options were ten years from
the grant date and the options became exercisable according to certain criteria
regarding the Company's performance and length of service of the executive.
In the fourth quarter of fiscal year 1998, the executives of the Company (the
"Executives") entered into employment agreements with the Company and Republic
(the "Employment Agreements"). Each of the Employment Agreements contains
substantially similar terms and conditions other than compensation. Subject to
consummation of the proposed combination of the Company and Republic, the
Executives and two other members of management are eligible to receive in the
future options to acquire an aggregate 9.0% of the common stock of the survivor
entity of the Combination, subject to dilution. The exercise price per share
will equal the price per share paid by Blackstone.
As a result of signing the Employment Agreements, the Executives and other
members of management forfeited their rights, if any, to prior vested and
unvested options to purchase common stock of the Company. Two former executives
who terminated from the Company during 1998, have forfeited their rights to
prior vested or unvested options to purchase common stock of the Company under
the terms of their respective separation agreements.
Activity related to stock options is summarized below. The exercise price for
all shares was $55.89 per share.
<TABLE>
<CAPTION>
Three Months
Ended
December 28,
(in thousands) Fiscal 1998 Fiscal 1997 1996 Fiscal 1996
-------------- -------------- --------------- ---------------
<S> <C> <C> <C>
Options outstanding at beginning period 45,807 40,997 22,903 --
Granted -- 4,810 18,094 22,903
Forfeited (45,807) -- -- --
------------ ------------ ------------ ------------
Outstanding at end of period -- 45,807 40,997 22,903
============ ============ ============ ============
Exercisable at end of period -- 3,892 -- --
============ ============ ============ ============
Weighted average fair value of option
of option granted N/A $ 20.21 $ 19.85 $ 20.52
============ ============ ============ ============
</TABLE>
59
<PAGE> 60
The Company accounts for its equity award agreements and stock option grants
under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees," under which the compensation costs, if applicable, have been
determined. Had the compensation costs been determined consistent with SFAS No.
123, "Accounting for Stock Based Compensation," net income (loss) and earnings
per share would have been as follows: (in thousands except for per share
amounts)
<TABLE>
<CAPTION>
Three Months
Ended
December 28,
Fiscal 1998 Fiscal 1997 1996 Fiscal 1996
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Net (loss):
As reported $ (41,978) $ (44,823) $ (13,525) $ (43,633)
Pro Forma (41,791) (44,976) (13,559) (43,633)
Diluted earnings per share:
As reported $ (33.14) $ (50.88) $ (18.37) $ (98.01)
Pro Forma (32.70) (50.62) (18.29) (98.01)
</TABLE>
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions for the grants in fiscal 1997, the three months period ended
December 28, 1996 and fiscal 1996: (in thousands)
<TABLE>
<CAPTION>
Three Months
Ended
December 28,
Fiscal 1997 1996 Fiscal 1996
---------------- --------------- ---------------
<S> <C> <C> <C>
Average risk free interest rate 6.44% 6.27% 6.56%
Expected dividend yield 0% 0% 0%
Expected life of options 7 years 7 years 7 years
Expected volatility rate 0% 0% 0%
</TABLE>
NOTE 13 - RELATED PARTY TRANSACTIONS
In connection with the Recapitalization, an affiliate of Blackstone received an
origination fee and expense reimbursement totaling $2.0 million and an affiliate
of Veritas received a financial advisory fee and expense reimbursement totaling
$2.0 million in fiscal 1996.
In connection with the Recapitalization, the Company entered into a management
agreement with the Johnstown Advisors Corp. ("Advisors") and Blackstone
Management Partners L.P. ("Blackstone Advisors"), an affiliate of Blackstone.
Johnstown Advisors Corp. is owned by the principals of BRW Partners Inc., the
general partner of BRW Steel Holdings, LP, which owns approximately 26.6% of the
common stock of the Company, on a fully diluted basis. Blackstone owns
approximately 72.8% of the common stock of the Company, on a fully diluted
basis. Pursuant to this agreement, Advisors and Blackstone Advisors are to
provide certain management and financial monitoring services to the Company for
which they will share equally an annual advisory fee of $0.9 million plus
reimbursement of certain out-of-pocket expenses. Under this agreement, the
Company expensed $0.9 million in fiscal 1998 and $1.5 million in fiscal 1997.
Subsequent to the acquisition of Republic, the Company and Republic share common
management and have begun to perform certain sales, marketing and administrative
functions on a combined basis. This
60
<PAGE> 61
includes marketing both companies' steel products jointly under the combined
brand name "Republic Technologies International" using a single sales force.
However, throughout fiscal 1998 each customer purchase order for steel products
continued to be issued directly to the Company or Republic, as appropriate, to
make the sale. The costs of joint functions are borne ratably by the Company and
Republic based upon relative sales volume achieved.
The Company participates in an inventory purchasing arrangement with Republic.
Under the terms of this arrangement, Republic purchases inventory products on
behalf of both companies and bills the Company for its respective purchases plus
an administrative fee. During the period from September 8, 1998 to January 2,
1999, the Company purchased billet and bar products as well as scrap material at
market prices from Republic, totaling approximately $16.1 million. A similar
arrangement is in place with regard to insurance. Republic purchased insurance
coverage for the combined company for which the costs are borne ratably by the
Company and Republic based on their respective share of coverage. In December
1998, Republic completed negotiations for a two-year insurance contract for the
combined company for which the terms of payment include a third-party financing
arrangement.
At January 1, 1999, certain salaried employees of the Company became employees
of Republic. Under the terms of an employee leasing and overhead allocation
agreement, the Company and Republic share the costs of common expenses
including, but not limited to sales and marketing services, administrative
services, plant overhead and costs for certain common facilities. Costs are
allocated according to each company's approximate share of combined trade
volumes. Among the salaried employees included in this overhead allocation were
Messrs. Tyrrell, Meyer and Asimou who hold the positions of Chief Executive
Officer, Executive Vice President and General Manager, Hot Rolled Bar Division
and Executive Vice President and General Manager, Cold Finished Bar Division,
respectively, for both the Company and Republic. Certain salaried employees
located at the Company's facilities in Lackawanna, New York and Johnstown,
Pennsylvania were also included in this arrangement. However, the Company leased
back the services of these employees, the salary and benefit costs of which are
borne entirely by the Company.
As of January 4, 1999, Republic Technologies International Marketing, LLC
("Marketing JV") was formed. The Company and Republic expect to finalize an
agreement in the second quarter 1999 under which this jointly owned Marketing JV
will market, advertise, promote and sell both companies' steel products to each
company's existing and potential customers. The Company and Republic will be
reimbursed for expenses they incur on behalf of the Marketing JV, including
compensation costs of employees of the Company and Republic who perform sales
and marketing functions for the Marketing JV. Except for certain prior
commitments to customers that will continue to be placed with the Company or
Republic as defined in the agreement, it is intended that customer purchase
orders will be placed with the Marketing JV. Pursuant to allocation procedures
to be approved by the boards of directors of both companies, the production of
steel products to fulfill these orders will be allocated between the Company and
Republic. To compensate the Marketing JV for marketing services performed, it is
intended that the Company and Republic will pay commissions at specified
percentages of sales.
As a result of the above, the Company had a current receivable due from Republic
of approximately $1.9 million, a current payable due to Republic of $15.5
million and a non-current payable due to Republic of $0.5 million at January 2,
1999. At January 2, 1999 and January 3, 1998, current amounts payable to
Blackstone were $0.9 million and $1.5 million, respectively.
NOTE 14 - COMMITMENTS AND CONTINGENCIES
The Company, in the ordinary course of business, is the subject of or party to
various pending or threatened legal and environmental actions. The Company
provides for the costs related to these matters when a loss is probable and the
amount is reasonably estimable. Based on information presently known to the
Company, management believes that any ultimate liability resulting from these
actions will not have a material adverse affect on its consolidated financial
position, results of operations or cash flows.
The Company uses certain lease arrangements to supplement its financing
activities. Rental expense under operating leases was $0.9 million for the year
ended
61
<PAGE> 62
January 2, 1999, $0.8 million for the year ended January 3, 1998, $0.06 million
for the three month period ended December 28, 1996, and $0.2 million for the
year ended September 30, 1996. At January 2, 1999, total minimum lease payments
under noncancellable operating leases are $0.7 million in 1999, $0.6 million in
2000, $0.3 million in 2001, $0.2 million in 2002 and 2003 and $0.9 million
thereafter.
On January 25, 1999, the Company entered into a technical exchange agreement
with Sanyo Special Steel Company, Ltd. ("Sanyo") for a total of $6.0 million
plus expenses. The four year agreement provides for technical assistance to the
Company in order to improve its operations and facilities at its Lackawanna, New
York facility. The Company's future obligation is divided into 9 installments
over the following years: $1.8 million in 1999, $1.2 million in 2000, $1.2
million in 2001, $1.2 million in 2002 and $0.6 million in 2003.
Republic also has a technical exchange agreement with Sanyo. The Company
subsequently entered into an agreement with Republic to share with each other
the information obtained from Sanyo for use at their respective steelmaking
facilities.
NOTE 15 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS AND SIGNIFICANT
GROUP CONCENTRATION OF CREDIT RISK
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:
CASH AND CASH EQUIVALENTS
The carrying amount approximates fair value because of the short
maturity of those investments.
REDEEMABLE PREFERRED STOCK
It is not practicable to estimate the fair value of this preferred
stock, which is not publicly traded.
LONG-TERM DEBT
The fair value of the company's long-term debt obligations are
estimated based upon quoted market prices for the same or similar
issues or on the current rates offered to the company for debt of the
same remaining maturities. The fair value of the company's senior
secured notes is determined using quoted market prices. The fair value
of the company's economic development financing approximates carrying
values as the development authorities continue to provide such
financing on substantially the same terms as provided to the company.
The estimated fair value of the Company's financial instruments are as follows:
(in thousands)
<TABLE>
<CAPTION>
January 2, 1999 January 3, 1998
---------------------------------- -----------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 2,188 $ 2,188 $ 3,391 $ 3,391
Long-term debt 132,767 142,601 133,774 133,575
Redeemable preferred stock 5,500 -- 5,500 --
</TABLE>
62
<PAGE> 63
BAR TECHNOLOGIES INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JANUARY 2, 1999 AND JANUARY 3, 1998, THE THREE MONTHS
ENDED DECEMBER 28, 1996 AND THE YEAR ENDED SEPTEMBER 30, 1996 (IN THOUSANDS)
<TABLE>
<CAPTION>
Additions
-------------------------------------------
Charged to Deductions
Balance at Charged to Other from Balance
Beginning Costs and Accounts - Reserves at End of
Description of Year Expenses Recoveries Describe (b) Year
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL
ACCOUNTS:
1998 $ 817 448 (11) 55 (c)(d) (205) $ 1,104
1997 567 1,160 (885) (3) (c) (22) 817
*1996 549 18 567
1996 117 432 (a) 549
VALUATION ALLOWANCE
FOR DEFERRED TAX ASSETS:
1998 $42,736 16,934 $ 59,670
1997 24,791 17,945 42,736
*1996 19,142 5,649 24,791
1996 11,697 7,445 19,142
</TABLE>
* The Company changed its fiscal year from its previous calendar quarter
basis ended September 30, to a 4/4/5 week fiscal quarter basis ending
the last Saturday of the fifth week. As a result, the Company's fiscal
year 1997 began on December 29, 1996 and ended on January 3, 1998.
Fiscal 1997 includes 53 weeks while fiscal 1998 and 1996 each include
52 weeks. This period represents the three month transition period
that bridges the Company's old and new year ends.
(a) Represents the allowance recognized in connection with the acquisition
of Bliss & Laughlin Industries, Inc.
(b) Represents uncollected accounts charged-off against the allowance.
(c) Foreign currency translation.
(d) Addition to allowance due to reclassification of $60.
63
<PAGE> 1
Exhibit 10.45
EMPLOYMENT AGREEMENT
AGREEMENT, made October 1, 1998 by and between BAR TECHNOLOGIES, INC.,
REPUBLIC ENGINEERED STEELS, INC., AND RES ACQUISITION CORP., Delaware
corporations, (hereinafter "Company" shall refer to these entities and to the
survivor entity in any combination of such entities) and THOMAS N. TYRRELL (the
"Executive").
RECITALS
--------
In order to induce the Executive to serve as the Chief Executive
Officer of the Company (the "CEO"), the Company desires to provide the Executive
with compensation and other benefits on the terms and conditions set forth in
this Agreement.
The Executive is willing to accept such employment and perform services
for the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. EMPLOYMENT.
1.1 Subject to the terms and conditions of this Agreement, the
Company agrees to employ Executive during the term hereof as the CEO. In this
capacity, the Executive shall report to the Board of Directors of the Company
(the "Board") and shall have the customary powers, responsibilities and
authorities of the CEO of corporations of the size, type and nature of the
Company, as it exists from time to time, and as are assigned by the Board. It is
understood by the parties that the size, type, and nature of the Company is
expected to expand rapidly via acquisition or other business combination and
that Executive's duties will be commensurate with the duties of the CEO of such
expanded enterprise.
1.2 Subject to the terms and conditions of this Agreement, the
Executive hereby accepts employment as the CEO of the Company commencing as of
October 1, 1998, and agrees to devote his full business time and efforts to the
performance of services, duties and responsibilities in connection therewith,
subject at all times to review and control of the Board. During the term of
Employment, the Executive also agrees to serve, if elected, as an officer and/or
director of any Subsidiary of the Company, without the payment of any additional
compensation therefor.
1.3 Nothing in this Agreement shall preclude the Executive from
engaging in charitable and community affairs, from managing any passive
investment (I.E., an investment with respect to which the Executive is in no way
involved with the management or operation of the entity in which the Executive
has invested) made by him in publicly traded equity securities or other property
(provided that no such investment may exceed 1% of the equity of any entity,
without the prior approval of the Board) or from serving, subject to the prior
approval of the Board, as a member of boards of directors or as a trustee of any
other corporation, association or entity, to the extent that any of the above
activities do not interfere with the performance of his
<PAGE> 2
duties hereunder. For purposes of the preceding sentence, any approval by the
Board required herein shall not be unreasonably withheld.
2. TERM OF EMPLOYMENT. The Executive's term of employment under this
Agreement (the "Term of Employment") shall commence on October 1, 1998 and,
subject to the terms hereof, shall terminate on the earlier of (i) September 30,
2001, (the "Initial Term") or (ii) termination of the Executive's employment
pursuant to this Agreement; PROVIDED, HOWEVER, that subsequent to the Initial
Term, the Executive's Term of Employment under this Agreement shall
automatically renew annually each October 1 for one year renewal terms (the
"Renewal Term"); unless the Company shall deliver to the Executive or the
Executive shall deliver to the Company written notice, at least 90 days prior to
the expiration of the Initial Term or any Renewal Term, that the Term of
Employment shall not be extended, in which case the Term of Employment will end
at its then scheduled expiration date and shall not be further extended except
by written agreement of the Company and the Executive.
3. COMPENSATION.
3.1 SALARY. During the Initial Term of the Executive's employment
under the terms of this Agreement, the Company shall pay Executive a base salary
("Base Salary") at the rate of not less than Four Hundred Thousand Dollars
($400,000) per annum. Base Salary shall be payable in accordance with the
ordinary payroll practices of the Company. During the Term of Employment, the
Board shall, in good faith, review and, if determined by the Board to be
appropriate, increase the Executive's salary at least annually and in accordance
with the Company's customary procedures and practices regarding the salaries of
senior executives, which procedures and practices, for example, will include a
review of the performance of the Company and the Executive, and any increase in
the cost of living during the relevant period. Increases in the rate of salary,
once granted, shall not be subject to revocation or decrease thereafter.
3.2 ANNUAL BONUS. (a) In addition to his base salary, the Executive
shall be eligible to receive an annual bonus (the "Annual Bonus"). Annual Bonus
amounts payable to the Executive shall be determined in the sole discretion of
those members of the Board of Directors who were nominated and elected at the
request of Blackstone. Subject to the foregoing, the Annual Bonus shall be
determined in accordance with the Company's customary procedures and practices
regarding bonus awards to senior executives, which procedures and practices, for
example, shall include an evaluation of the Company's progress in meeting its
cash flow targets during the relevant period; notwithstanding the foregoing, the
Annual Bonus shall not be less than One Hundred Fifty Thousand Dollars
($150,000) for the fiscal years ending December 31, 1999 and December 31, 2000
(the "Minimum Bonus"). A pro rata amount will be added to the 1999 bonus for the
period October 1, 1998 through December 31, 1998. In addition, Company shall pay
Executive a bonus for 1998 equal to nine-twelfths (9/12ths) of the bonus that
Executive would have received under his employment agreement with Bar
Technologies, Inc. that is otherwise superseded by this Agreement. If EBITDA (as
such term is defined in paragraph (c) below) equals or exceeds the EBITDA
targets hereafter set by the Board in consultation with Executive for any fiscal
year under this Agreement (except 1998), the Annual Bonus shall be at least Two
Hundred Fifty Thousand Dollars ($250,000) (the "Target Bonus"); PROVIDED,
HOWEVER, that such
2
<PAGE> 3
methodology for the determination of the Annual Bonus shall only be utilized
until such time as a formula based on increase in shareholder value is mutually
agreed upon by the parties hereto; PROVIDED, FURTHER, if due to conditions
beyond the Executive's control, the EBITDA targets are not met for any fiscal
year during the Term of this Agreement, or targets are not met under such other
methodology as is being utilized for any fiscal year during the Term of this
Agreement, the Board, in their sole discretion, may override such targets, and
award the Executive an Annual Bonus irrespective of the achievement of such
targets. "Blackstone" shall mean, collectively, Blackstone Capital Partners II
Merchant Banking Fund L.P., Blackstone Offshore Capital Partners II L.P.,
Blackstone Family Investment Partnership II L.P., The Blackstone Group L.P. and
their affiliates.
(b) The Annual Bonus shall be payable as soon as practicable after
December 31 of each calendar year in which such Annual Bonus was earned (the
"Bonus Term"); but in any event, the Annual Bonus shall be paid no later than 90
business days following the end of the Bonus Term; PROVIDED, HOWEVER, no Annual
Bonus shall be payable unless the Executive is employed on the last day of each
such Bonus Term. The proviso in the previous sentence shall not apply if the
Executive's employment is terminated pursuant to Section 6.1 or 6.4 of this
Agreement.
(c) For purposes of this Section 3.2 "EBITDA" shall mean the
consolidated net income of the Company for the bonus period plus, to the extent
deducted in computing such consolidated net income, without duplication, the sum
of (a) income tax expense, (b) interest expense, (c) depreciation and
amortization expense, (d) any special charges (including, without limitation,
any noncash fees or expenses incurred in connection with the Transactions) and
any extraordinary or non-recurring losses, (e) monitoring and management fees
paid to any of the funds, the Veritas Entities and/or their respective
Affiliates, (f) dividend payments on and mandatory redemptions of the Bethlehem
Preferred Stock, in each case made in accordance with the terms thereof and to
the extent permitted by Section 6.06(d), (g) noncash expenses incurred in
connection with an employee stock ownership plan and (h) other noncash items
reducing consolidated net income, minus, to the extent added in computing such
consolidated net income, without duplication, (i) interest income, (ii)
extraordinary or nonrecurring gains and (iii) other noncash items increasing
consolidated net income.
All terms and section references in the above definition of EBITDA shall have
the same meaning as in the Credit Agreement by and between Bar Technologies,
Inc., Bliss & Laughlin Steel Company, the Lenders named therein and Chemical
Bank Delaware dated as of April 2, 1996.
4. EMPLOYEE BENEFITS.
4.1 STOCK OPTIONS. The Executive shall be eligible to receive
through an option plan two percent (2%) of the total available authorized and
outstanding common shares plus options on a fully diluted basis (including all
equity or options of the entire management team) of the survivor entity of the
business combination between Bar Technologies, Inc. and Republic Engineered
Steels, Inc. Such option shall be subject to dilution that may result from any
other action or transaction involving shares of Company. The Executive shall
receive the benefits of
3
<PAGE> 4
an Option Agreement (the "Option Agreement"), which Option Agreement shall be
drafted subsequent to the signing of this Agreement and which Option Agreement
shall contain terms substantially similar to the Option Term Sheet, a copy of
which is attached hereto as Appendix A. The Executive shall also be eligible to
participate in a performance stock plan on a pro rata basis like other key
executives, said plan to be developed at a later date.
4.2 EMPLOYEE WELFARE BENEFIT PROGRAMS, PLANS AND PRACTICES. The
Company shall provide the Executive while employed hereunder with coverage under
all welfare benefit programs, plans and practices (commensurate with his
position in the Company and to the extent permitted under any employee benefit
plan) in accordance with the terms thereof, which the Company makes available to
its senior executives. In addition, Company shall provide substantially similar
benefits as are provided under The Birmingham Steel Corporation Management
Security Plan (the "MSP") dated July 27, 1993; PROVIDED, HOWEVER, that such
benefits shall be subject to the same terms and conditions as under the MSP;
PROVIDED, FURTHER, that Executive shall be given credit for his Years of
Employment (as such term is defined in the MSP) at Birmingham Steel, which such
employment began January 1, 1994, without contribution by the Executive for
years prior to the commencement of his employment hereunder; and provided
further, that such benefit shall continue to accrue through December 31, 1998,
but no additional benefits shall accrue to Executive under this provision for
services provided after December 31, 1998.
4.3 VACATION. The Executive shall be entitled to twenty (20)
business days paid vacation each calendar year, which shall be taken at such
times as are consistent with the Executive's responsibilities hereunder. Any
vacation days not taken by March 31 of the following year, unless approved by
the Board, shall be forfeited without pay.
4.4 ADDITIONAL PERQUISITES. During the Executive's employment
hereunder, the Company shall provide the Executive with (i) term life insurance
in an amount equal to two (2) times Base Salary; (ii) payment for initiation
fees at a social, dining, athletic or country club that the Board has approved
for use by Executive for priority business entertainment purposes; (iii) the
right to participate in the 401(k) plan; (iv) long-term disability coverage
providing a monthly benefit of Twenty-Two Thousand, Five Hundred Dollars
($22,500.00); and (v) a one-thousand dollar ($1,000) annual allowance for tax
return preparation expenses. Executive shall provide documentation of expenses
under item (v) as requested by Company.
5. EXPENSES. Subject to prevailing Company policy or such guidelines as
may be established by the Board, the Company will reimburse the Executive for
all reasonable expenses incurred by the Executive in carrying out his duties.
6. TERMINATION OF EMPLOYMENT.
6.1 TERMINATION NOT FOR CAUSE OR FOR GOOD REASON. (a) The Company or
Executive may terminate the Executive's Term of Employment at any time for any
reason by written notice. If the Executive's employment is terminated (i) by the
Company at the end of the Initial or any Renewal Term by giving notice of
nonrenewal under Section 2, or by the Company
4
<PAGE> 5
prior to the end of the Initial Term or any Renewal Term, for any reason other
than Cause (as defined in Section 6.2(b) hereof), Disability (as defined in
Section 6.3 hereof) or death or (ii) by the Executive for Good Reason (as
defined in Section 6.1(b) hereof) the Company shall continue to pay Executive's
Base Salary and the Minimum Bonus or the Target Bonus, as applicable, for the
longer of (i) the remainder of the Initial Term or any Renewal Term, if
applicable, in effect immediately prior to the termination or (ii) one year,
with such payments to be made in accordance with the terms of Sections 3.1 and
3.2. In addition, Executive shall, during the period that he continues to be
compensated under this Agreement, continue participation and benefits under
Company's welfare benefit plans and programs that he is otherwise participating
in prior to cessation of employment; provided that, if such participation and
benefits cannot be provided under the terms of the applicable plans or programs,
the Company shall pay or reimburse Executive his costs for substantially
equivalent coverage.
(b) For purposes of this Agreement, "Good Reason" shall mean any of
the following (without Executive's express prior written consent):
(i) A reduction by the Company in Executive's Base Salary, a
reduction of the Minimum Bonus or Target Bonus, or a material change to the
formula used to determine bonus awards, provided that a change to such formula
that is mutually agreed to by the parties as contemplated under Section 3.2
shall not be "Good Reason" for this purpose; or
(ii) A substantial diminution or material adverse change in the
Executive's duties, responsibilities or reporting responsibility, unless due to
a promotion or increased responsibility; or
(iii) Relocation of Executive's primary work site to a location
more than fifty (50) miles from the Company's headquarters in Seven Hills, Ohio;
provided, however, that a relocation of the Company's headquarters within the
State of Ohio shall not constitute "Good Reason" for this purpose.
6.2 VOLUNTARY TERMINATION BY THE EXECUTIVE; DISCHARGE FOR CAUSE. (a)
In the event that the Executive's employment is terminated (i) by the Company
for Cause, as hereinafter defined or (ii) by the Executive other than for Good
Reason, Disability or death, the Executive shall only be entitled to receive (i)
any Base Salary accrued but unpaid prior to such termination, (ii) any earned
but unpaid bonus from a prior Bonus Term, and (ii) any benefits provided under
the employee benefit programs, plans and practices referred to in Section 4.2
hereof, in accordance with their terms. After the termination of the Executive's
employment under this Section 6.2, the obligations of the Company under this
Agreement to make any further payments, or provide any benefit specified herein,
to the Executive shall thereupon cease and terminate, except any benefits that
may be required by federal or state law.
(b) As used herein, the term "Cause" shall be limited to (i) willful
gross misconduct by the Executive in the performance of his duties hereunder,
(ii) willful gross neglect by the Executive of his duties hereunder (other than
due to Disability, as such term is defined in Section 6.3 hereof) or repeated
and willful failure to follow reasonable instructions of the Board,
5
<PAGE> 6
(iii) any breach of the provisions of Section 11 of this Agreement by the
Executive or (iv) conviction or plea of guilty or nolo contendere by the
Executive to any felony (or indictable offense). Termination of the Executive
pursuant to this Section 6.2 shall be made by delivery to the Executive of
written notice, given at least 30 days prior to such Termination, from the Board
specifying the particulars of the conduct by the Executive set forth in any of
clauses (i) through (iv) above. Termination shall be effective on the date set
forth in the notice, unless within 30 days after receiving such notice, the
Executive shall have cured Cause to the reasonable satisfaction of the Board of
Directors; provided, however, that no cure shall be possible for (A) any breach
of Section 11 of this Agreement by the Executive or (B) a conviction or plea of
nolo contendere by the Executive to any felony (or indictable offense); and
provided further that Executive may be required to vacate Company premises prior
to the effective date of termination in those instances.
6.3 DISABILITY. In the event that Executive is unable to perform his
duties under this Agreement on account of a disability which continues for one
hundred eighty (180) consecutive days or more, or for an aggregate of one
hundred eighty (180) days in any period of twelve (12) months, Company may, in
its discretion, terminate Executive's employment hereunder and Company's
obligation to make payments under Section 3 shall, except for earned but unpaid
salary and bonuses, cease immediately upon such termination, or, if later, shall
cease on the date Executive becomes entitled to benefits under the Company's
long-term disability program. The Company may, in its discretion, require
written confirmation from a physician of Disability during any extended absence.
For purposes of this Agreement, "Disability," shall be defined by the terms of
the Company's long-term disability policy, or, in the absence of such policy, as
a physical or mental disability that prevents Executive from performing
substantially all of his duties under this Agreement and which is expected to be
permanent. The commencement date and expected duration of any physical or mental
condition that prevents Executive from performing his duties hereunder shall be
determined by a medical doctor selected by mutual agreement between Executive
and the Company.
6.4 DEATH. In the event of the Executive's death during his Term of
Employment hereunder or at any time thereafter while payments are still owing to
the Executive under the terms of this Agreement, all obligations of the Company
to make any further payments, other than the obligation to pay any accrued but
unpaid Base Salary and a pro rata share of the prior year's Annual Bonus, shall
terminate upon the Executive's death, and benefits shall become payable under
the Company's life and accidental death insurance program in accordance with its
terms.
6.5 NO FURTHER NOTICE, COMPENSATION OR INDEMNITY. (a) The Executive
understands and agrees that he shall not be entitled to any further notice,
compensation or indemnity upon Termination of Employment under this Agreement
other than amounts specified in this Section 6 and the Option Shares as set
forth in Appendix A hereto. Executive shall not have any obligation to seek
comparable employment following such termination or resignation. However, any
payment hereunder shall be offset by any compensation the Executive earns with a
new employer or from self-employment, but no such offset shall apply to any
compensation earned by Executive if his employment with Company is terminated
within twelve (12) months
6
<PAGE> 7
of a Change in Control (i) by the Company or successor other than for Cause (as
defined in Section 6.2) or (ii) by Executive for Good Reason (as defined in
Section 6.1).
(b) A "Change in Control" occurs on the first date on which the
holdings of Blackstone (as defined in Section 3.2 above) or Veritas, or the
combined holdings of Blackstone and Veritas, do not represent more than 50% of
the voting control of the Company. "Veritas" means "Veritas Entities or their
respective Affiliates", as that term is defined in the Credit Agreement by and
between Bar Technologies, Inc., Bliss & Laughlin Steel Company, the Lenders
named therein and Chemical Bank Delaware dated as of April 2, 1996.
6.6 THE EXECUTIVE'S DUTY TO PROVIDE MATERIALS. Upon the termination
of the Term of Employment for any reason, the Executive or his estate shall
surrender to the Company all correspondence, letters, files, contracts, mailing
lists, customer lists, advertising material, ledgers, supplies, equipment,
checks, and all other materials and records of any kind that are the property of
the Company or any of its subsidiaries or affiliates, that may be in the
Executive's possession or under his control, including all copies of any of the
foregoing; provided, however, the Executive shall not be required to surrender
his personal rolodex, telephone book and personal materials.
6.7. CERTAIN REDUCTION OF PAYMENTS.
(a) Anything in this Agreement to the contrary notwithstanding,
if it is determined that any portion of the sum of (i) the amounts paid or
payable to the Executive or for the Executive's benefit under the Agreement (the
"Agreement Benefits") and (ii) the amount of all other payments, and the value
of all other benefits received or to be received by the Executive or for the
Executive's benefit (collectively, along with Agreement Benefits, referred to as
"Benefits"), is likely to result in the imposition of a tax to the Executive or
his estate under Code Section 4999 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code"), the aggregate present value of the
Agreement Benefits yet to be paid to the Executive shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this Agreement, "Reduced
Amount" shall be an amount expressed as a single sum that maximizes the
aggregate present value of Agreement Benefits previously paid and yet to be paid
to the Executive without causing the aggregate of any Benefits previously paid
and yet to be paid to the Executive to be subject to taxation to the Executive
or his estate under Section 4999 of the Code. The provisions of this subsection
(a) and subsection (b) shall be applied in a manner that is consistent with the
provisions of subsection (c) below, and to the extent required, the provisions
of subsection (c) shall supersede the provisions of this subsection (a) and
subsection (b) to permit such consistency.
(b) If, determined in a manner consistent with subsection (a)
above, Agreement Benefits in excess of the Reduced Amount are paid to the
Executive or for his benefit, or the Internal Revenue Service asserts that the
amount of Benefits received by the Executive or for his benefit are in excess of
the amounts not subject to tax under Section 4999 of the Code, and such
assertion is determined to have a high probability of being successful, such
excess amounts (hereinafter referred to as "Overpayments") shall be treated for
all purposes as a loan to the Executive. The amount treated as a loan, together
with interest at the applicable federal rate
7
<PAGE> 8
provided for in Section 1274(d) of the Code, shall be paid by the Executive to
the Company as soon as practicable following the date the Executive is notified
in writing of such Overpayments.
(c) In the event that payment of any Benefits would result in
all or a portion of such payment to be subject to excise tax under Section 4999
of the Code, then the Executive's payment shall be either (i) the full payment
or (ii) such lesser amount which would result in no portion of the payment being
subject to excise tax under Section 4999 of the Code, whichever of the foregoing
amounts, taking into account the applicable federal, state and local employment
taxes, income taxes, and the excise tax imposed by Section 4999 of the Code,
results in the Executive's receipt, on an after-tax basis, of the greatest
amount of the payment notwithstanding that all or some portion of the payment
may be taxable under Section 4999 of the Code.
(d) All determinations required to be made under this Amendment
shall be made by a nationally recognized accounting firm selected by the Company
(the "Accounting Firm"). The Company shall cause the Accounting Firm to provide
detailed supporting calculations of its determinations to the Executive and the
Company. All fees and expenses of the Accounting Firm shall be borne equally by
the Executive and the Company.
7. NOTICES. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company: The Blackstone Group
345 Park Avenue
New York, NY 10154
Attention: David A. Stockman
with a copy to: R. Jeffrey Pollock, Esq.
McDonald, Hopkins, Burke &
Haber Co., L.P.A.
600 Superior Avenue, Suite 2100
Cleveland, OH 44114
To Executive: Thomas N. Tyrrell
863 Smithfield Drive, Apt. 1501
Sagamore Hills, OH 44067
with a copy to:
-------------------------------
-------------------------------
-------------------------------
-------------------------------
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
8
<PAGE> 9
8. SEPARABILITY; LEGAL FEES. If any provision of this Agreement shall
be declared to be invalid or unenforceable, in whole or in part, such invalidity
or unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. Each party shall bear the costs of any legal
fees and other fees and expenses which may be incurred in respect of enforcing
its respective rights under this Agreement.
9. ASSIGNMENT. This contract shall be binding upon and inure to the
benefit of the heirs and representatives of the Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by the Executive (except by will or, in the case of the Options, by trust for
the benefit of the Executive's spouse and/or children or by operation of the
laws of intestate succession) or by the Company, except that the Company may
assign this Agreement to any successor (whether by merger, purchase or
otherwise) to all or substantially all of the stock, assets or business of the
Company. If this Agreement is not assumed by a successor to Company, the
Agreement may be terminated by Executive under the terms of Section 6.1(a) as a
termination for Good Reason.
10. AMENDMENT. This Agreement may only be amended by written agreement
of the parties hereto.
11. NONDISCLOSURE OF CONFIDENTIAL INFORMATION; NON-COMPETITION. (a) The
Executive shall not, without the prior written consent of the Company, use,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information pertaining to the
business of the Company or any of its affiliates, except (i) while employed by
the Company, in the business of and for the benefit of the Company, or (ii) when
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof) with
jurisdiction to order the Executive to divulge, disclose or make accessible such
information. For purposes of this Section 11(a), "Confidential Information"
shall mean non-public information concerning the financial data, strategic
business plans, product development (or other proprietary product data),
customer lists, marketing plans and other non-public, proprietary and
confidential information of the Company, Bliss & Laughlin Industries Inc. or
their respective affiliates or customers, that, in any case, is not otherwise
available to the public (other than by the Executive's breach of the terms
hereof).
(b) In consideration of the Company's obligations under this
Agreement the Executive agrees that during the period of his employment
hereunder and for a period of twelve (12) months thereafter, without the prior
written consent of the Board, (i) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner, investor,
lender or employee or in any other capacity, carry on, be engaged in or have any
financial interest in, any business which is in competition with the business of
the Company and (ii) he shall not, on his own behalf or on behalf of any person,
firm or company, directly or indirectly, solicit or offer employment to any
person who has been employed by the Company at any time during the 12 months
immediately preceding such solicitation.
9
<PAGE> 10
(c) For purposes of this Section 11, a business shall be deemed to
be in competition with the Company if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Company as a part of the business
of the Company within the same geographic area in which the Company effects such
purchases, sales or dealings or renders such services. Nothing in this Section
11 shall be construed so as to preclude the Executive from investing in any
publicly or privately held company, provided the Executive's beneficial
ownership of any class of such company's securities does not exceed 1% of the
outstanding securities of such class.
(d) The Executive agrees that this covenant not to compete is
reasonable under the circumstances and will not interfere with his ability to
earn a living or to otherwise meet his financial obligations. The Executive and
the Company agree that if in the opinion of any court of competent jurisdiction
such restraint is not reasonable in any respect, such court shall have the
right, power and authority to excise or modify such provision or provisions of
this covenant as to the court shall appear not reasonable and to enforce the
remainder of the covenant as so amended. The Executive agrees that any breach of
the covenants contained in this Section 11 would irreparably injure the Company.
Accordingly, the Executive agrees that the Company may, in addition to pursuing
any other remedies it may have in law or in equity, cease making any payments
otherwise required by this Agreement and obtain an injunction against the
Executive from any court having jurisdiction over the matter restraining any
further violation of this Agreement by the Executive. Notwithstanding the
expiration of the term of this Agreement, the provisions of this Section 11
hereunder shall remain in effect as long as is necessary to give effect thereto.
12. BENEFICIARIES; REFERENCES. The Executive shall be entitled to
select (and change, to the extent permitted under any applicable law) a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following the Executive's death, and may change such election, in
either case by giving the Company written notice thereof. In the event of the
Executive's death or a judicial determination of his incompetence, reference in
this Agreement to the Executive shall be deemed, where appropriate, to refer to
his beneficiary, estate or other legal representative. Any reference to the
masculine gender in this Agreement shall include, where appropriate, the
feminine.
13. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 13 are in addition to the survivorship provisions of
any other section of this Agreement.
14. ARBITRATION. Except as otherwise provided in Section 11(d) hereof,
any dispute or controversy arising under or in connection with this Agreement
shall be resolved by binding arbitration held in the City of Cleveland, Ohio and
conducted in accordance with the commercial arbitration rules of the American
Arbitration Association in effect at the time of the arbitration. Each party
shall bear its own expenses in connection with any such arbitration and joint
expenses shall be borne by both parties in equal portions.
10
<PAGE> 11
15. GOVERNING LAW. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Ohio without reference to
rules relating to conflicts of law.
16. EFFECT ON PRIOR AGREEMENTS. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding, both written and oral, between the
Company, any affiliate of the Company or any predecessor of the Company or
affiliate of the Company and the Executive.
17. WITHHOLDING. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
19. INDEMNIFICATION. Executive shall be provided with the same
indemnifications and directors and officers insurance coverages as apply to the
key officers and directors of the Company.
COMPANY
/s/ David A. Stockman
---------------------------------
David A. Stockman
EXECUTIVE
---------------------------------
Thomas N. Tyrrell
11
<PAGE> 12
APPENDIX A
OPTION TERM SHEET
EQUITY OWNERSHIP
- ----------------
STOCK OPTIONS Upon the effective date of the Agreement
pursuant to a stock option agreement including,
among other provisions, the terms set forth below,
the Company shall grant the Executive nonqualified
options (or at Company's discretion, incentive
stock options with or without nonqualified
options) to purchase two percent (2%) of the total
Available Common Stock of Company. "Available
Common Stock" of the Company shall be defined as
the authorized and outstanding common shares plus
options on a fully diluted basis (including all
equity or options of the entire management team),
taking into account the effects of the
contemplated merger and any related transactions
to the merger.
OPTION TERM The option term shall be 10 years; provided,
however, that exercisable options shall expire
earlier upon termination of employment as follows:
Termination for Cause/Quit w/o Good Reason:
Immediately upon termination of employment.
Termination w/o Cause/Quit w/Good Reason: the
remaining term of the Agreement (i.e. during the
applicable salary continuation period) plus three
months.
A termination of employment at the expiration of
the Agreement on account of the Company's notice
of nonrenewal, or a termination during the term by
mutual agreement of the parties: One year after
termination of employment.
Death/Disability: One year after termination of
employment.
Unexercisable options will terminate upon
termination of employment, unless vesting
acceleration is explicitly provided for.
<PAGE> 13
OPTION EXERCISE PRICE Options shall be granted at an exercise price
which is equal to the price per share paid by
Blackstone.
EXERCISABILITY OF OPTIONS
- -------------------------
--VESTING Options shall become exercisable with respect to
33"% of the shares subject to such options on each
September 30, 1999, 2000, 2001 respectively, if
the Executive's Term of Employment continues
through and includes such dates.
Options shall expire and no longer be exercisable
following termination of employment by the Company
for Cause, resignation by the Executive without
Good Reason, or nonrenewal by Executive, but shall
accelerate and become fully exercisable upon the
earliest of (i) death, (ii) disability, (iii)
termination without Cause or resignation for Good
Reason (collectively, a "Good Termination"), or
(iv) on the first date on which the holdings of
Blackstone (as defined in Section 3.2 above) or
Veritas, or the combined holdings of Blackstone
and Veritas, do not represent more than 50% of the
voting control of the Company. "Veritas" means
"Veritas Entities or their respective Affiliates",
as that term is defined in the Credit Agreement by
and between Bar Technologies, Inc., Bliss &
Laughlin Steel Company, the Lenders named therein
and Chemical Bank Delaware dated as of April 2,
1996. If the Company gives notice of nonrenewal at
the expiration of the Initial or any renewal
terms, unvested options shall vest in accordance
with the schedule set forth above during the
applicable salary continuation period; options
that do not vest by that date shall terminate.
DILUTION OF STOCK OPTIONS The Executive's exercisable and unexercisable
options shall be subject to the same dilution as
may apply to all common stockholders, provided
that the anticipated transaction referred to in
Section 4.1 of the Agreement shall not have a
dilutive effect on the two percent (2%) discussed
herein.
ADJUSTMENTS In the event of any change in the outstanding
common stock by reason of a stock split, spin-off,
stock dividend, stock combination or
reclassification, recapitalization, consolidation
or merger, or similar event, the Board shall
adjust appropriately the number of shares subject
to options under
2
<PAGE> 14
this Term Sheet and make other revisions as it
deems are equitably required.
NONTRANSFERABILITY Except as otherwise provided herein, the Executive
cannot sell or otherwise transfer the options and
shares purchased upon exercise of an option
("Option Shares") prior to a Public Offering that
includes Blackstone shares. Any sale of Option
Shares shall in all cases be completed in
compliance with applicable securities laws.
Transfers of Option Shares shall be permitted in
the event of death to beneficiaries of the estate,
and during lifetime to trusts, the beneficiaries
of which are the Executive, a charitable
institution or institutions selected by Executive,
or members of his family, and options may, in the
event of death, be exercised by beneficiaries or
the estate, subject in all cases to agreeing to be
bound by the same terms as the Executive. As a
condition to exercising options, the Executive
must agree to be bound by the terms of the
stockholders" agreement that will be drafted
subsequent to the Employment Agreement.
RIGHTS The Executive shall have the same voting, dividend
and other rights with respect to Option Shares as
the Company's other common stockholders.
REGISTRATION RIGHTS/PUBLIC
OFFERING OPTION SHARES: It is expected that the stockholder
agreement will provide piggyback rights.
OPTIONS: Immediately following the first Public
Offering that includes Blackstone shares, the
Company shall file, at its own expenses, an S-8 to
register the shares subject to option, which
shares shall be subject to an applicable "standard
underwriter lock-up agreement."
TAGALONG/DRAGALONG RIGHTS It is expected that the stockholder's agreement
will provide tagalong and dragalong rights.
PUTS AND CALLS Puts and calls for the options and Option Shares
shall be as set forth in Appendix B; PROVIDED,
HOWEVER, if there is a Change in Control prior to
a Public Offering, any Option Shares or
exercisable Options (i) may be put to the Company
at the difference between FMV and the exercise
price, but (ii) the Company shall not have a call;
PROVIDED, FURTHER, no put or call shall be
consummated if such put or
3
<PAGE> 15
call would result in a violation of applicable law
or the terms of any financing documents. There
shall be no puts or calls subsequent to a Public
Offering. An exercise period (e.g., one year after
termination of employment) will otherwise be
specified for puts and calls.
--FAIR MARKET VALUE
("FMV") If there is no public trading market for the
shares of the Company, the FMV of the shares
will be the per share price, as determined by
the Board in good faith; PROVIDED, HOWEVER,
if the Executive or Executive's beneficiaries
or estate disagree with the Board's
determination, the FMV shall be determined by
an independent nationally recognized, full
service investment banker who follows the
Company and is reasonably acceptable to both
the Company and the Executive or Executive's
beneficiaries or estate.
--PUBLIC OFFERING Public offering shall mean the sale of the shares
of any class of the Company's stock to the public
pursuant to an effective registration statement
(other than a registration statement on Form S-4
or S-8 or any similar or successor form) filed
under the Securities Act of 1933, as amended.
4
<PAGE> 16
APPENDIX B
PUTS AND CALLS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
BAD TERMINATIONS GOOD TERMINATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
FIRED FOR QUIT W/O "GOOD FIRED W/O "CAUSE"/QUIT DEATH/DISABILITY
"CAUSE" REASON" WITH "GOOD REASON"
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPTION SHARES Any Option Any Option Shares Any Option Shares can be Called at May put Option Shares to Company at
Shares can be can be Called at FMV prior to a Public Offering. FMV prior to a Public Offering.
Called at the the lesser of
lesser of cost cost or FMV. Any Option Shares may be put to
or FMV. the Company at FMV prior to a
No put. Public Offering. No put or call subsequent to a
No Put. Public Offering.
No put or call subsequent
to a Public Offering.
- ---------------------------------------------------------------------------------------------------------------------------------
OPTIONS All Options All Options Options shall remain outstanding Options shall remain outstanding
terminate terminate without until termination of the Agreement until termination of employment
without any any payment. plus 3 months. plus one year.
payment.
May put Options to the Company at May put Options to Company at the
the difference between FMV and the difference between FMV and the
exercise price prior to a Public exercise price prior to a Public
Offering. Offering.
No put or call subsequent to a No put or call subsequent to a
Public Offering. Public Offering.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Options at Expiration of Employment Term: If employment terminates because
the Executive gives notice of intent not to renew, all options shall
terminate without payment at termination of employment in that event. If
employment is terminated because the Company elects not to renew the
Agreement, Executive shall vest in options during the applicable salary
continuation period under Section 6.1. Unvested options at the end of such
period shall terminate.
<PAGE> 1
Exhibit 10.46
EMPLOYMENT AGREEMENT
AGREEMENT, made October 1, 1998 by and between BAR TECHNOLOGIES, INC.,
REPUBLIC ENGINEERED STEELS, INC., AND RES ACQUISITION CORP., Delaware
corporations, (hereinafter "Company" shall refer to these entities and to the
survivor entity in any combination of such entities) and JOSEPH F. LAPINSKY (the
"Executive").
RECITALS
--------
In order to induce the Executive to serve as the President and Chief
Operating Officer (the "COO") of the Company, the Company desires to provide the
Executive with compensation and other benefits on the terms and conditions set
forth in this Agreement.
The Executive is willing to accept such employment and perform services
for the Company, on the terms and conditions hereinafter set forth. Executive
acknowledges that his acceptance of this Agreement is a release of claims to any
payments or benefits under any previous agreements with Republic Engineered
Steels, Inc., including, without limitation, the Change of Control Agreement,
which agreements are superseded by this Agreement.
It is therefore hereby agreed by and between the parties as follows:
1. EMPLOYMENT.
1.1 Subject to the terms and conditions of this Agreement, the
Company agrees to employ Executive during the term hereof as the President and
COO. In this capacity, the Executive shall report to the Chief Executive Officer
of the Company (the "CEO") and shall have the customary powers, responsibilities
and authorities of President and COO of corporations of the size, type and
nature of the Company, as it exists from time to time, and as are assigned by
the CEO. It is understood by the parties that the size, type, and nature of the
Company is expected to expand rapidly via acquisition or other business
combination and that Executive's duties will be commensurate with the duties of
a President and COO of such expanded enterprise.
1.2 Subject to the terms and conditions of this Agreement, the
Executive hereby accepts employment as the President and COO of the Company
commencing as of October 1, 1998, and agrees to devote his full business time
and efforts to the performance of services, duties and responsibilities in
connection therewith, subject at all times to review and control of the CEO.
During the term of Employment, the Executive also agrees to serve, if elected,
as an officer and/or director of any Subsidiary of the Company, without the
payment of any additional compensation therefor.
1.3 Nothing in this Agreement shall preclude the Executive from
engaging in charitable and community affairs, from managing any passive
investment (I.E., an investment with respect to which the Executive is in no way
involved with the management or operation of the entity in which the Executive
has invested) made by him in publicly traded equity securities or other property
(provided that no such investment may exceed 1% of the equity of any entity,
without the prior approval of the CEO) or from serving, subject to the prior
approval of the CEO,
<PAGE> 2
as a member of boards of directors or as a trustee of any other corporation,
association or entity, to the extent that any of the above activities do not
interfere with the performance of his duties hereunder. For purposes of the
preceding sentence, any approval by the CEO required herein shall not be
unreasonably withheld.
2. TERM OF EMPLOYMENT. The Executive's term of employment under this
Agreement (the "Term of Employment") shall commence on October 1, 1998 and,
subject to the terms hereof, shall terminate on the earlier of (i) September 30,
2001, (the "Initial Term") or (ii) termination of the Executive's employment
pursuant to this Agreement; provided, however, that subsequent to the Initial
Term, the Executive's Term of Employment under this Agreement shall
automatically renew annually each October 1 for one year renewal terms (the
"Renewal Term"); unless the Company shall deliver to the Executive or the
Executive shall deliver to the Company written notice, at least 90 days prior to
the expiration of the Initial Term or any Renewal Term, that the Term of
Employment shall not be extended, in which case the Term of Employment will end
at its then scheduled expiration date and shall not be further extended except
by written agreement of the Company and the Executive.
3. COMPENSATION.
3.1 SALARY. During the Initial Term of the Executive's employment
under the terms of this Agreement, the Company shall pay Executive a base salary
("Base Salary") at the rate of not less than Two Hundred Seventy-Five Thousand
Dollars ($275,000) per annum. Base Salary shall be payable in accordance with
the ordinary payroll practices of the Company. During the Term of Employment,
the CEO shall, in good faith, review and, if determined by the CEO to be
appropriate, increase the Executive's salary at least annually and in accordance
with the Company's customary procedures and practices regarding the salaries of
senior executives, which procedures and practices, for example, will include a
review of the performance of the Company and the Executive, and any increase in
the cost of living during the relevant period. Increases in the rate of salary,
once granted, shall not be subject to revocation or decrease thereafter.
3.2 ANNUAL BONUS. (a) In addition to his base salary, the Executive
shall be eligible to receive an annual bonus (the "Annual Bonus"). Annual Bonus
amounts payable to the Executive shall be determined in the sole discretion of
the CEO and those members of the Board of Directors who were nominated and
elected at the request of Blackstone. Subject to the foregoing, the Annual Bonus
shall be determined in accordance with the Company's customary procedures and
practices regarding bonus awards to senior executives, which procedures and
practices, for example, shall include an evaluation of the Company's progress in
meeting its cash flow targets during the relevant period; notwithstanding the
foregoing, the Annual Bonus shall not be less than One Hundred Thousand Dollars
($100,000) for the fiscal years ending December 31, 1999 and December 31, 2000
(the "Minimum Bonus"). A pro rata amount will be added to the 1999 bonus for the
period October 1, 1998 through December 31, 1998. If EBITDA (as such term is
defined in paragraph (c) below) equals or exceeds the EBITDA targets hereafter
set by the CEO and/or the Board in consultation with Executive for any fiscal
year under this Agreement (except 1998), the Annual Bonus shall be at least One
Hundred Fifty Thousand Dollars ($150,000) (the "Target Bonus"); provided,
however, that such methodology for the
2
<PAGE> 3
determination of the Annual Bonus shall only be utilized until such time as a
formula based on increase in shareholder value is mutually agreed upon by the
parties hereto; provided, further, if due to conditions beyond the Executive's
control, the EBITDA targets are not met for any fiscal year during the Term of
this Agreement, or targets are not met under such other methodology as is being
utilized for any fiscal year during the Term of this Agreement, the CEO and the
Board, in their sole discretion, may override such targets, and award the
Executive an Annual Bonus irrespective of the achievement of such targets.
"Blackstone" shall mean, collectively, Blackstone Capital Partners II Merchant
Banking Fund L.P., Blackstone Offshore Capital Partners II L.P., Blackstone
Family Investment Partnership II L.P., The Blackstone Group L.P. and their
affiliates.
(b) The Annual Bonus shall be payable as soon as practicable after
December 31 of each calendar year in which such Annual Bonus was earned (the
"Bonus Term"); but in any event, the Annual Bonus shall be paid no later than 90
business days following the end of the Bonus Term; provided, however, no Annual
Bonus shall be payable unless the Executive is employed on the last day of each
such Bonus Term. The proviso in the previous sentence shall not apply if the
Executive's employment is terminated pursuant to Section 6.1 or 6.4 of this
Agreement.
(c) For purposes of this Section 3.2 "EBITDA" shall mean the
consolidated net income of the Company for the bonus period plus, to the extent
deducted in computing such consolidated net income, without duplication, the sum
of (a) income tax expense, (b) interest expense, (c) depreciation and
amortization expense, (d) any special charges (including, without limitation,
any noncash fees or expenses incurred in connection with the Transactions) and
any extraordinary or non-recurring losses, (e) monitoring and management fees
paid to any of the funds, the Veritas Entities and/or their respective
Affiliates, (f) dividend payments on and mandatory redemptions of the Bethlehem
Preferred Stock, in each case made in accordance with the terms thereof and to
the extent permitted by Section 6.06(d), (g) noncash expenses incurred in
connection with an employee stock ownership plan and (h) other noncash items
reducing consolidated net income, minus, to the extent added in computing such
consolidated net income, without duplication, (i) interest income, (ii)
extraordinary or nonrecurring gains and (iii) other noncash items increasing
consolidated net income.
All terms and section references in the above definition of EBITDA shall have
the same meaning as in the Credit Agreement by and between Bar Technologies,
Inc., Bliss & Laughlin Steel Company, the Lenders named therein and Chemical
Bank Delaware dated as of April 2, 1996.
3.3 RETENTION BONUS. Executive shall receive a retention bonus of
One Hundred Seventy-Five Thousand Dollars ($175,000) ("Retention Bonus") within
30 days after the Executive's Term of Employment commences.
3.4 SIGNING BONUS. Executive shall receive a signing bonus of
$105,000 ("signing Bonus") within 30 days after the Executive's Term of
Employment commences. If the Executive resigns or the Executive's Term of
Employment is terminated for Cause (as defined in Section 6.2(b) hereof), the
Executive shall immediately repay the following portion of the Signing Bonus to
the Company (less the applicable portion of any federal, state or local income
tax paid
3
<PAGE> 4
by the Executive on the Signing Bonus): if such resignation or termination
occurs (i) on or before September 30, 1999, 100%; (ii) after September 30, 1999
but on or before September 30, 2000, 66.67%; or (iii) after September 30, 2000
but on or before September 30, 2001, 33.33%.
4. EMPLOYEE BENEFITS.
4.1 STOCK OPTIONS. The Executive shall be eligible to receive
through an option plan one and one-half percent (1.5%) of the total available
authorized and outstanding common shares plus options on a fully diluted basis
(including all equity or options of the entire management team) of the survivor
entity of the business combination between Bar Technologies, Inc. and Republic
Engineered Steels, Inc. Such option shall be subject to dilution that may result
from any other action or transaction involving shares of Company. The Executive
shall receive the benefits of an Option Agreement (the "Option Agreement"),
which Option Agreement shall be drafted subsequent to the signing of this
Agreement and which Option Agreement shall contain terms substantially similar
to the Option Term Sheet, a copy of which is attached hereto as Appendix A. The
Executive shall also be eligible to participate in a performance stock plan on a
pro rata basis like other key executives, said plan to be developed at a later
date.
4.2 EMPLOYEE WELFARE BENEFIT PROGRAMS, PLANS AND PRACTICES. The
Company shall provide the Executive while employed hereunder with coverage under
all welfare benefit programs, plans and practices (commensurate with his
position in the Company and to the extent permitted under any employee benefit
plan) in accordance with the terms thereof, which the Company makes available to
its senior executives.
4.3 VACATION. The Executive shall be entitled to twenty (20)
business days paid vacation each calendar year, which shall be taken at such
times as are consistent with the Executive's responsibilities hereunder. Any
vacation days not taken by March 31 of the following year, unless approved by
the CEO, shall be forfeited without pay.
4.4 ADDITIONAL PERQUISITES. During the Executive's employment
hereunder, the Company shall provide the Executive with (i) term life insurance
in an amount equal to two (2) times Base Salary; (ii) payment for initiation
fees at a social, dining, athletic or country club that the CEO has approved for
use by Executive for priority business entertainment purposes; (iii) the right
to participate in the 401(k) plan; (iv) long-term disability coverage providing
a monthly benefit of Fifteen Thousand Dollars ($15,000); (v) a one-thousand
dollar ($1,000) annual allowance for tax return preparation expenses; and (vi) a
one-time one-thousand dollar ($1,000) allowance for legal fees incurred in
reviewing this Agreement. Executive shall provide documentation of expenses
under items (v) and (vi) as requested by Company.
5. EXPENSES. Subject to prevailing Company policy or such guidelines as
may be established by the CEO, the Company will reimburse the Executive for all
reasonable expenses incurred by the Executive in carrying out his duties.
4
<PAGE> 5
6. TERMINATION OF EMPLOYMENT.
6.1 TERMINATION NOT FOR CAUSE OR FOR GOOD REASON. (a) The Company or
Executive may terminate the Executive's Term of Employment at any time for any
reason by written notice. If the Executive's employment is terminated (i) by the
Company at the end of the Initial or any Renewal Term by giving notice of
nonrenewal under Section 2, or by the Company prior to the end of the Initial
Term or any Renewal Term, for any reason other than Cause (as defined in Section
6.2(b) hereof), Disability (as defined in Section 6.3 hereof) or death or (ii)
by the Executive for Good Reason (as defined in Section 6.1(b) hereof) the
Company shall continue to pay Executive's Base Salary and the Minimum Bonus or
the Target Bonus, as applicable, for the longer of (i) the remainder of the
Initial Term or any Renewal Term, if applicable, in effect immediately prior to
the termination or (ii) one year, with such payments to be made in accordance
with the terms of Sections 3.1 and 3.2. In addition, Executive shall, during the
period that he continues to be compensated under this Agreement, continue
participation and benefits under Company's welfare benefit plans and programs
that he is otherwise participating in prior to cessation of employment; provided
that, if such participation and benefits cannot be provided under the terms of
the applicable plans or programs, the Company shall pay or reimburse Executive
his costs for substantially equivalent coverage.
(b) For purposes of this Agreement, "Good Reason" shall mean any of
the following (without Executive's express prior written consent):
(i) A reduction by the Company in Executive's Base Salary, a
reduction of the Minimum Bonus or Target Bonus, or a material change to the
formula used to determine bonus awards, provided that a change to such formula
that is mutually agreed to by the parties as contemplated under Section 3.2
shall not be "Good Reason" for this purpose; or
(ii) A substantial diminution or material adverse change in the
Executive's duties, responsibilities or reporting responsibility, unless due to
a promotion or increased responsibility; or
(iii) Relocation of Executive's primary work site to a location
more than fifty (50) miles from the Company's headquarters in Seven Hills, Ohio;
provided, however, that a relocation of the Company's headquarters within the
State of Ohio shall not constitute "Good Reason" for this purpose.
6.2 VOLUNTARY TERMINATION BY THE EXECUTIVE; DISCHARGE FOR CAUSE. (a)
In the event that the Executive's employment is terminated (i) by the Company
for Cause, as hereinafter defined or (ii) by the Executive other than for Good
Reason, Disability or death, the Executive shall only be entitled to receive (i)
any Base Salary accrued but unpaid prior to such termination, (ii) any earned
but unpaid bonus from a prior Bonus Term, and (iii) any benefits provided under
the employee benefit programs, plans and practices referred to in Section 4.2
hereof, in accordance with their terms. After the termination of the Executive's
employment under this Section 6.2, the obligations of the Company under this
Agreement to make any further payments,
5
<PAGE> 6
or provide any benefit specified herein, to the Executive shall thereupon cease
and terminate, except any benefits that may be required by federal or state law.
(b) As used herein, the term "Cause" shall be limited to (i) willful
gross misconduct by the Executive in the performance of his duties hereunder,
(ii) willful gross neglect by the Executive of his duties hereunder (other than
due to Disability, as such term is defined in Section 6.3 hereof) or repeated
and willful failure to follow reasonable instructions of the CEO, (iii) any
breach of the provisions of Section 11 of this Agreement by the Executive or
(iv) conviction or plea of guilty or nolo contendere by the Executive to any
felony (or indictable offense). Termination of the Executive pursuant to this
Section 6.2 shall be made by delivery to the Executive of written notice, given
at least 30 days prior to such Termination, from the CEO specifying the
particulars of the conduct by the Executive set forth in any of clauses (i)
through (iv) above. Termination shall be effective on the date set forth in the
notice, unless within 30 days after receiving such notice, the Executive shall
have cured Cause to the reasonable satisfaction of the Board of Directors;
provided, however, that no cure shall be possible for (A) any breach of Section
11 of this Agreement by the Executive or (B) a conviction or plea of nolo
contendere by the Executive to any felony (or indictable offense); and provided
further that Executive may be required to vacate Company premises prior to the
effective date of termination in those instances.
6.3 DISABILITY. In the event that Executive is unable to perform his
duties under this Agreement on account of a disability which continues for one
hundred eighty (180) consecutive days or more, or for an aggregate of one
hundred eighty (180) days in any period of twelve (12) months, Company may, in
its discretion, terminate Executive's employment hereunder and Company's
obligation to make payments under Section 3 shall, except for earned but unpaid
salary and bonuses, cease immediately upon such termination, or, if later, shall
cease on the date Executive becomes entitled to benefits under the Company's
long-term disability program. The Company may, in its discretion, require
written confirmation from a physician of Disability during any extended absence.
For purposes of this Agreement, "Disability," shall be defined by the terms of
the Company's long-term disability policy, or, in the absence of such policy, as
a physical or mental disability that prevents Executive from performing
substantially all of his duties under this Agreement and which is expected to be
permanent. The commencement date and expected duration of any physical or mental
condition that prevents Executive from performing his duties hereunder shall be
determined by a medical doctor selected by mutual agreement between Executive
and the Company.
6.4 DEATH. In the event of the Executive's death during his Term of
Employment hereunder or at any time thereafter while payments are still owing to
the Executive under the terms of this Agreement, all obligations of the Company
to make any further payments, other than the obligation to pay any accrued but
unpaid Base Salary and a pro rata share of the prior year's Annual Bonus, shall
terminate upon the Executive's death, and benefits shall become payable under
the Company's life and accidental death insurance program in accordance with its
terms. 1.1
6
<PAGE> 7
6.5 NO FURTHER NOTICE, COMPENSATION OR INDEMNITY. (a) The Executive
understands and agrees that he shall not be entitled to any further notice,
compensation or indemnity upon Termination of Employment under this Agreement
other than amounts specified in this Section 6 and the Option Shares as set
forth in Appendix A hereto. Executive shall not have any obligation to seek
comparable employment following such termination or resignation. However, any
payment hereunder shall be offset by any compensation the Executive earns with a
new employer or from self-employment, but no such offset shall apply to any
compensation earned by Executive if his employment with Company is terminated
within twelve (12) months of a Change in Control (i) by the Company or successor
other than for Cause (as defined in Section 6.2) or (ii) by Executive for Good
Reason (as defined in Section 6.1).
(b) A "Change in Control" occurs on the first date on which the
holdings of Blackstone (as defined in Section 3.2 above) or Veritas, or the
combined holdings of Blackstone and Veritas, do not represent more than 50% of
the voting control of the Company. "Veritas" means "Veritas Entities or their
respective Affiliates", as that term is defined in the Credit Agreement by and
between Bar Technologies, Inc., Bliss & Laughlin Steel Company, the Lenders
named therein and Chemical Bank Delaware dated as of April 2, 1996.
6.6 THE EXECUTIVE'S DUTY TO PROVIDE MATERIALS. Upon the termination
of the Term of Employment for any reason, the Executive or his estate shall
surrender to the Company all correspondence, letters, files, contracts, mailing
lists, customer lists, advertising material, ledgers, supplies, equipment,
checks, and all other materials and records of any kind that are the property of
the Company or any of its subsidiaries or affiliates, that may be in the
Executive's possession or under his control, including all copies of any of the
foregoing; provided, however, the Executive shall not be required to surrender
his personal rolodex, telephone book and personal materials.
6.7 CERTAIN REDUCTION OF PAYMENTS.
(a) Anything in this Agreement to the contrary notwithstanding, if
it is determined that any portion of the sum of (i) the amounts paid or payable
to the Executive or for the Executive's benefit under the Agreement (the
"Agreement Benefits") and (ii) the amount of all other payments, and the value
of all other benefits received or to be received by the Executive or for the
Executive's benefit (collectively, along with Agreement Benefits, referred to as
"Benefits"), is likely to result in the imposition of a tax to the Executive or
his estate under Code Section 4999 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code"), the aggregate present value of the
Agreement Benefits yet to be paid to the Executive shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this Agreement, "Reduced
Amount" shall be an amount expressed as a single sum that maximizes the
aggregate present value of Agreement Benefits previously paid and yet to be paid
to the Executive without causing the aggregate of any Benefits previously paid
and yet to be paid to the Executive to be subject to taxation to the Executive
or his estate under Section 4999 of the Code. The provisions of this subsection
(a) and subsection (b) shall be applied in a manner that is consistent with the
provisions
7
<PAGE> 8
of subsection (c) below, and to the extent required, the provisions of
subsection (c) shall supersede the provisions of this subsection (a) and
subsection (b) to permit such consistency.
(b) If, determined in a manner consistent with subsection (a) above,
Agreement Benefits in excess of the Reduced Amount are paid to the Executive or
for his benefit, or the Internal Revenue Service asserts that the amount of
Benefits received by the Executive or for his benefit are in excess of the
amounts not subject to tax under Section 4999 of the Code, and such assertion is
determined to have a high probability of being successful, such excess amounts
(hereinafter referred to as "Overpayments") shall be treated for all purposes as
a loan to the Executive. The amount treated as a loan, together with interest at
the applicable federal rate provided for in Section 1274(d) of the Code, shall
be paid by the Executive to the Company as soon as practicable following the
date the Executive is notified in writing of such Overpayments.
(c) In the event that payment of any Benefits would result in all or
a portion of such payment to be subject to excise tax under Section 4999 of the
Code, then the Executive's payment shall be either (i) the full payment or (ii)
such lesser amount which would result in no portion of the payment being subject
to excise tax under Section 4999 of the Code, whichever of the foregoing
amounts, taking into account the applicable federal, state and local employment
taxes, income taxes, and the excise tax imposed by Section 4999 of the Code,
results in the Executive's receipt, on an after-tax basis, of the greatest
amount of the payment notwithstanding that all or some portion of the payment
may be taxable under Section 4999 of the Code.
(d) All determinations required to be made under this Amendment
shall be made by a nationally recognized accounting firm selected by the Company
(the "Accounting Firm"). The Company shall cause the Accounting Firm to provide
detailed supporting calculations of its determinations to the Executive and the
Company. All fees and expenses of the Accounting Firm shall be borne equally by
the Executive and the Company.
7. NOTICES. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company: Bar Technologies, Inc. and
Republic Engineered Steels, Inc.
c/o Suite 100
5700 Lombardo Center Drive
Seven Hills, Ohio 44131-2545
Attention: Thomas N. Tyrrell
with a copy to: R. Jeffrey Pollock, Esq.
McDonald, Hopkins, Burke &
Haber Co., L.P.A.
600 Superior Avenue, Suite 2100
Cleveland, OH 44114
8
<PAGE> 9
To Executive: Joseph F. Lapinsky
8309 Blue Heron Drive
Massillon, Ohio 44646
with a copy to:
------------------------
------------------------
------------------------
------------------------
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
8. SEPARABILITY; LEGAL FEES. If any provision of this Agreement shall
be declared to be invalid or unenforceable, in whole or in part, such invalidity
or unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. Each party shall bear the costs of any legal
fees and other fees and expenses which may be incurred in respect of enforcing
its respective rights under this Agreement.
9. ASSIGNMENT. This contract shall be binding upon and inure to the
benefit of the heirs and representatives of the Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by the Executive (except by will or, in the case of the Options, by trust for
the benefit of the Executive's spouse and/or children or by operation of the
laws of intestate succession) or by the Company, except that the Company may
assign this Agreement to any successor (whether by merger, purchase or
otherwise) to all or substantially all of the stock, assets or business of the
Company. If this Agreement is not assumed by a successor to Company, the
Agreement may be terminated by Executive under the terms of Section 6.1(a) as a
termination for Good Reason.
10. AMENDMENT. This Agreement may only be amended by written agreement
of the parties hereto.
11. NONDISCLOSURE OF CONFIDENTIAL INFORMATION; NON-COMPETITION. (a) The
Executive shall not, without the prior written consent of the Company, use,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information pertaining to the
business of the Company or any of its affiliates, except (i) while employed by
the Company, in the business of and for the benefit of the Company, or (ii) when
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof) with
jurisdiction to order the Executive to divulge, disclose or make accessible such
information. For purposes of this Section 11(a), "Confidential Information"
shall mean non-public information concerning the financial data,
9
<PAGE> 10
strategic business plans, product development (or other proprietary product
data), customer lists, marketing plans and other non-public, proprietary and
confidential information of the Company, Bliss & Laughlin Industries Inc. or
their respective affiliates or customers, that, in any case, is not otherwise
available to the public (other than by the Executive's breach of the terms
hereof).
(b) In consideration of the Company's obligations under this
Agreement the Executive agrees that during the period of his employment
hereunder and for a period of twelve (12) months thereafter, without the prior
written consent of the Board, (i) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner, investor,
lender or employee or in any other capacity, carry on, be engaged in or have any
financial interest in, any business which is in competition with the business of
the Company and (ii) he shall not, on his own behalf or on behalf of any person,
firm or company, directly or indirectly, solicit or offer employment to any
person who has been employed by the Company at any time during the 12 months
immediately preceding such solicitation.
(c) For purposes of this Section 11, a business shall be deemed to
be in competition with the Company if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Company as a part of the business
of the Company within the same geographic area in which the Company effects such
purchases, sales or dealings or renders such services. Nothing in this Section
11 shall be construed so as to preclude the Executive from investing in any
publicly or privately held company, provided the Executive's beneficial
ownership of any class of such company's securities does not exceed 1% of the
outstanding securities of such class.
(d) The Executive agrees that this covenant not to compete is
reasonable under the circumstances and will not interfere with his ability to
earn a living or to otherwise meet his financial obligations. The Executive and
the Company agree that if in the opinion of any court of competent jurisdiction
such restraint is not reasonable in any respect, such court shall have the
right, power and authority to excise or modify such provision or provisions of
this covenant as to the court shall appear not reasonable and to enforce the
remainder of the covenant as so amended. The Executive agrees that any breach of
the covenants contained in this Section 11 would irreparably injure the Company.
Accordingly, the Executive agrees that the Company may, in addition to pursuing
any other remedies it may have in law or in equity, cease making any payments
otherwise required by this Agreement and obtain an injunction against the
Executive from any court having jurisdiction over the matter restraining any
further violation of this Agreement by the Executive. Notwithstanding the
expiration of the term of this Agreement, the provisions of this Section 11
hereunder shall remain in effect as long as is necessary to give effect thereto.
12. BENEFICIARIES; REFERENCES. The Executive shall be entitled to
select (and change, to the extent permitted under any applicable law) a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following the Executive's death, and may change such election, in
either case by giving the Company written notice thereof. In the event of the
Executive's death or a judicial determination of his incompetence, reference in
this Agreement to the Executive shall be deemed, where appropriate, to refer to
his beneficiary, estate or other legal
10
<PAGE> 11
representative. Any reference to the masculine gender in this Agreement shall
include, where appropriate, the feminine.
13. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 13 are in addition to the survivorship provisions of
any other section of this Agreement.
14. ARBITRATION. Except as otherwise provided in Section 11(d) hereof,
any dispute or controversy arising under or in connection with this Agreement
shall be resolved by binding arbitration held in the City of Cleveland, Ohio and
conducted in accordance with the commercial arbitration rules of the American
Arbitration Association in effect at the time of the arbitration. Each party
shall bear its own expenses in connection with any such arbitration and joint
expenses shall be borne by both parties in equal portions.
15. GOVERNING LAW. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Ohio without reference to
rules relating to conflicts of law.
16. EFFECT ON PRIOR AGREEMENTS. With the exception of any retention
bonus otherwise payable to Executive on December 31, 1998 from Republic
Engineered Steels, Inc., this Agreement contains the entire understanding
between the parties hereto and supersedes in all respects any prior or other
agreement or understanding, both written and oral, between the Company, any
affiliate of the Company or any predecessor of the Company or affiliate of the
Company and the Executive, including, without limitation, any Change of Control
Agreement with Republic Engineered Steels, Inc. In accepting this Agreement,
Executive releases all claims to any payments or benefits under such agreement
or agreements.
17. WITHHOLDING. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
11
<PAGE> 12
19. INDEMNIFICATION. Executive shall be provided with the same
indemnifications and directors and officers insurance coverages as apply to the
key officers and directors of the Company.
COMPANY
/s/ Thomas N. Tyrrell
---------------------------------
Thomas N. Tyrrell, CEO
EXECUTIVE
/s/ Joseph F. Lapinsky
---------------------------------
Joseph F. Lapinsky
12
<PAGE> 13
APPENDIX A
OPTION TERM SHEET
EQUITY OWNERSHIP
- ----------------
STOCK OPTIONS Upon the effective date of the Agreement pursuant
to a stock option agreement including, among other
provisions, the terms set forth below, the Company
shall grant the Executive nonqualified options (or
at Company's discretion, incentive stock options
with or without nonqualified options) to purchase
one and one-half percent (1.5%) of the total
Available Common Stock of Company. "Available
Common Stock" of the Company shall be defined as
the authorized and outstanding common shares plus
options on a fully diluted basis (including all
equity or options of the entire management team),
taking into account the effects of the
contemplated merger and any related transactions
to the merger.
OPTION TERM The option term shall be 10 years; provided,
however, that exercisable options shall expire
earlier upon termination of employment as follows:
Termination for Cause/Quit w/o Good Reason:
Immediately upon termination of employment.
Termination w/o Cause/Quit w/Good Reason: the
remaining term of the Agreement (i.e. during the
applicable salary continuation period) plus three
months.
A termination of employment at the expiration of
the Agreement on account of the Company's notice
of nonrenewal, or a termination during the term by
mutual agreement of the parties: One year after
termination of employment.
Death/Disability: One year after termination of
employment.
Unexercisable options will terminate upon
termination of employment, unless vesting
acceleration is explicitly provided for.
OPTION EXERCISE PRICE Options shall be granted at an exercise price
which is equal to the price per share paid by
Blackstone.
<PAGE> 14
EXERCISABILITY OF OPTIONS
--VESTING Options shall become exercisable with respect to
33 1/3% of the shares subject to such options on
each September 30, 1999, 2000, 2001 respectively,
if the Executive's Term of Employment continues
through and includes such dates.
Options shall expire and no longer be exercisable
following termination of employment by the Company
for Cause, resignation by the Executive without
Good Reason, or nonrenewal by Executive, but shall
accelerate and become fully exercisable upon the
earliest of (i) death, (ii) disability, (iii)
termination without Cause or resignation for Good
Reason (colletively, a "Good Termination"), or
(iv) on the first date on which the holdings of
Blackstone (as defined in Section 3.2 above) or
Veritas, or the combined holdings of Blackstone
and Veritas, do not represent more than 50% of the
voting control of the Company. "Veritas" means
"Veritas Entities or their respective Affiliates",
as that term is defined in the Credit Agreement by
and between Bar Technologies, Inc., Bliss &
Laughlin Steel Company, the Lenders named therein
and Chemical Bank Delaware dated as of April 2,
1996. If the Company gives notice of nonrenewal at
the expiration of the Initial or any renewal
terms, unvested options shall vest in accordance
with the schedule set forth above during the
applicable salary continuation period; options
that do not vest by that date shall terminate.
DILUTION OF STOCK OPTIONS The Executive's exercisable and unexercisable
options shall be subject to the same dilution as
may apply to all common stockholders, provided
that the anticipated transaction referred to in
Section 4.1 of the Agreement shall not have a
dilutive effect on the one and one-half percent
(1.5%) discussed herein.
ADJUSTMENTS In the event of any change in the outstanding
common stock by reason of a stock split, spin-off,
stock dividend, stock combination or
reclassification, recapitalization, consolidation
or merger, or similar event, the Board shall
adjust appropriately the number of shares subject
to options under this Term Sheet and make other
revisions as it deems are equitably required.
2
<PAGE> 15
NONTRANSFERABILITY Except as otherwise provided herein, the Executive
cannot sell or otherwise transfer the options and
shares purchased upon exercise of an option
("Option Shares") prior to a Public Offering that
includes Blackstone shares. Any sale of Option
Shares shall in all cases be completed in
compliance with applicable securities laws.
Transfers of Option Shares shall be permitted in
the event of death to beneficiaries of the estate,
and during lifetime to trusts, the beneficiaries
of which are the Executive, a charitable
institution or institutions selected by Executive,
or members of his family, and options may, in the
event of death, be exercised by beneficiaries or
the estate, subject in all cases to agreeing to be
bound by the same terms as the Executive. As a
condition to exercising options, the Executive
must agree to be bound by the terms of the
stockholders' agreement that will be drafted
subsequent to the Employment Agreement.
RIGHTS The Executive shall have the same voting, dividend
and other rights with respect to Option Shares as
the Company's other common stockholders.
REGISTRATION RIGHTS/PUBLIC
OFFERING OPTION SHARES: It is expected that the stockholder
agreement will provide piggyback rights.
OPTIONS: Immediately following the first Public
Offering that includes Blackstone shares, the
Company shall file, at its own expenses, an S-8 to
register the shares subject to option, which
shares shall be subject to an applicable "standard
underwriter lock-up agreement."
TAGALONG/DRAGALONG RIGHTS It is expected that the stockholder's agreement
will provide tagalong and dragalong rights.
PUTS AND CALLS Puts and calls for the options and Option Shares
shall be as set forth in Appendix B; PROVIDED,
HOWEVER, if there is a Change in Control prior to
a Public Offering, any Option Shares or
exercisable Options (i) may be put to the Company
at the difference between FMV and the exercise
price, but (ii) the Company shall not have a call;
PROVIDED, FURTHER, no put or call shall be
consummated if such put or call would result in a
violation of applicable law or the terms of any
financing documents. There shall be no puts or
calls subsequent to a Public Offering. An exercise
period
3
<PAGE> 16
(e.g., one year after termination of employment)
will otherwise be specified for puts and calls.
- --FAIR MARKET VALUE ("FMV") If there is no public trading market for the
shares of the Company, the FMV of the shares will
be the per share price, as determined by the Board
in good faith; PROVIDED, HOWEVER, if the Executive
or Executive's beneficiaries or estate disagree
with the Board's determination, the FMV shall be
determined by an independent nationally
recognized, full service investment banker who
follows the Company and is reasonably acceptable
to both the Company and the Executive or
Executive's beneficiaries or estate.
- --PUBLIC OFFERING Public offering shall mean the sale of the shares
of any class of the Company's stock to the public
pursuant to an effective registration statement
(other than a registration statement on Form S-4
or S-8 or any similar or successor form) filed
under the Securities Act of 1933, as amended.
4
<PAGE> 17
APPENDIX B
PUTS AND CALLS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
BAD TERMINATIONS GOOD TERMINATIONS
- ---------------------------------------------------------------------------------------------------------
FIRED FOR QUIT W/O FIRED W/O "CAUSE"/ QUIT DEATH/DISABILITY
"CAUSE" "GOOD WITH "GOOD REASON"
REASON"
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPTION Any Option Any Option Any Option Shares can May put Option Shares
SHARES Shares can Shares can be Called at FMV prior to Company at FMV prior
be Called at be Called to a Public Offering. to a Public Offering.
the lesser of at the
cost or FMV. lesser of Any Option Shares may No put or call subsequent
cost or FMV. be put to the Company to a Public Offering.
at FMV prior to a
No Put. No put. Public Offering.
No put or call subsequent
to a Public Offering.
- ---------------------------------------------------------------------------------------------------------
OPTIONS All Options All Options Options shall remain Options shall remain
terminate terminate outstanding until outstanding until
without any without any termination of the termination of
payment. payment. Agreement plus 3 employment plus one year.
months.
May put Options to May put Options to
the Company at the Company at the
difference between difference between
FMV and the exercise FMV and the exercise
price prior to a price prior to a Public
Public Offering. Offering.
No put or call subsequent No put or call subsequent
to a Public Offering. to a Public Offering.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Options at Expiration of Employment Term: If employment terminates because
the Executive gives notice of intent not to renew, all options shall
terminate without payment at termination of employment in that event. If
employment is terminated because the Company elects not to renew the
Agreement, Executive shall vest in options during the applicable salary
continuation period under Section 6.1. Unvested options at the end of such
period shall terminate.
<PAGE> 1
Exhibit 10.47
EMPLOYMENT AGREEMENT
AGREEMENT, made October 1, 1998 by and between BAR TECHNOLOGIES, INC.,
REPUBLIC ENGINEERED STEELS, INC., AND RES ACQUISITION CORP., Delaware
corporations, (hereinafter "Company" shall refer to these entities and to the
survivor entity in any combination of such entities) and ROBERT L. MEYER (the
"Executive").
RECITALS
--------
In order to induce the Executive to serve as the Executive Vice
President and General Manager--Hot Rolled Bar Division of the Company, the
Company desires to provide the Executive with compensation and other benefits on
the terms and conditions set forth in this Agreement.
The Executive is willing to accept such employment and perform services
for the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. EMPLOYMENT.
1.1 Subject to the terms and conditions of this Agreement, the
Company agrees to employ Executive during the term hereof as the Executive Vice
President and General Manager--Hot Rolled Bar Division. In this capacity, the
Executive shall report to the President of the Company (the "President") and
shall have the customary powers, responsibilities and authorities of Executive
Vice President and General Manager--Hot Rolled Bar Division of corporations of
the size, type and nature of the Company, as it exists from time to time, and as
are assigned by the President. It is understood by the parties that the size,
type, and nature of the Company is expected to expand rapidly via acquisition or
other business combination and that Executive's duties will be commensurate with
the duties of an Executive Vice President and General Manager--Hot Rolled Bar
Division of such expanded enterprise.
1.2 Subject to the terms and conditions of this Agreement, the
Executive hereby accepts employment as the Executive Vice President and General
Manager--Hot Rolled Bar Division of the Company commencing as of October 1,
1998, and agrees to devote his full business time and efforts to the performance
of services, duties and responsibilities in connection therewith, subject at all
times to review and control of the President. During the term of Employment, the
Executive also agrees to serve, if elected, as an officer and/or director of any
Subsidiary of the Company, without the payment of any additional compensation
therefor.
1.3 Nothing in this Agreement shall preclude the Executive from
engaging in charitable and community affairs, from managing any passive
investment (I.E., an investment with respect to which the Executive is in no way
involved with the management or operation of the entity in which the Executive
has invested) made by him in publicly traded equity securities or other property
(provided that no such investment may exceed 1% of the equity of any entity,
without the prior approval of the President) or from serving, subject to the
prior approval of the President, as a member of boards of directors or as a
trustee of any other corporation, association
<PAGE> 2
or entity, to the extent that any of the above activities do not interfere with
the performance of his duties hereunder. For purposes of the preceding sentence,
any approval by the President required herein shall not be unreasonably
withheld.
2. TERM OF EMPLOYMENT. The Executive's term of employment under this
Agreement (the "Term of Employment") shall commence on October 1, 1998 and,
subject to the terms hereof, shall terminate on the earlier of (i) September 30,
2001, (the "Initial Term") or (ii) termination of the Executive's employment
pursuant to this Agreement; provided, however, that subsequent to the Initial
Term, the Executive's Term of Employment under this Agreement shall
automatically renew annually each October 1 for one year renewal terms (the
"Renewal Term"); unless the Company shall deliver to the Executive or the
Executive shall deliver to the Company written notice, at least 90 days prior to
the expiration of the Initial Term or any Renewal Term, that the Term of
Employment shall not be extended, in which case the Term of Employment will end
at its then scheduled expiration date and shall not be further extended except
by written agreement of the Company and the Executive.
3. COMPENSATION.
3.1 SALARY. During the Initial Term of the Executive's employment
under the terms of this Agreement, the Company shall pay Executive a base salary
("Base Salary") at the rate of not less than Two Hundred Thirty-Five Thousand
Dollars ($235,000) per annum. Base Salary shall be payable in accordance with
the ordinary payroll practices of the Company. During the Term of Employment,
the CEO shall, in good faith, review and, if determined by the CEO to be
appropriate, increase the Executive's salary at least annually and in accordance
with the Company's customary procedures and practices regarding the salaries of
senior executives, which procedures and practices, for example, will include a
review of the performance of the Company and the Executive, and any increase in
the cost of living during the relevant period. Increases in the rate of salary,
once granted, shall not be subject to revocation or decrease thereafter.
3.2 ANNUAL BONUS. (a) In addition to his base salary, the Executive
shall be eligible to receive an annual bonus (the "Annual Bonus"). Annual Bonus
amounts payable to the Executive shall be determined in the sole discretion of
the CEO and those members of the Board of Directors who were nominated and
elected at the request of Blackstone. Subject to the foregoing, the Annual Bonus
shall be determined in accordance with the Company's customary procedures and
practices regarding bonus awards to senior executives, which procedures and
practices, for example, shall include an evaluation of the Company's progress in
meeting its cash flow targets during the relevant period; notwithstanding the
foregoing, the Annual Bonus shall not be less than Seventy-Five Thousand Dollars
($75,000) for the fiscal years ending December 31, 1999 and December 31, 2000
(the "Minimum Bonus"). A pro rata amount will be added to the 1999 bonus for the
period October 1, 1998 through December 31, 1998. In addition, Company shall pay
Executive a bonus for 1998 equal to nine-twelfths (9/12ths) of the bonus that
Executive would have received under his employment agreement with Bar
Technologies that is otherwise superseded by this Agreement. If EBITDA (as such
term is defined in paragraph (c) below) equals or exceeds the EBITDA targets
hereafter set by the CEO and/or the Board in consultation
2
<PAGE> 3
with Executive for any fiscal year under this Agreement (except 1998), the
Annual Bonus shall be at least One Hundred Twenty-Five Thousand Dollars
($125,000) (the "Target Bonus"); provided, however, that such methodology for
the determination of the Annual Bonus shall only be utilized until such time as
a formula based on increase in shareholder value is mutually agreed upon by the
parties hereto; provided, further, if due to conditions beyond the Executive's
control, the EBITDA targets are not met for any fiscal year during the Term of
this Agreement, or targets are not met under such other methodology as is being
utilized for any fiscal year during the Term of this Agreement, the CEO and the
Board, in their sole discretion, may override such targets, and award the
Executive an Annual Bonus irrespective of the achievement of such targets.
"Blackstone" shall mean, collectively, Blackstone Capital Partners II Merchant
Banking Fund L.P., Blackstone Offshore Capital Partners II L.P., Blackstone
Family Investment Partnership II L.P., The Blackstone Group L.P. and their
affiliates.
(b) The Annual Bonus shall be payable as soon as practicable after
December 31 of each calendar year in which such Annual Bonus was earned (the
"Bonus Term"); but in any event, the Annual Bonus shall be paid no later than 90
business days following the end of the Bonus Term; provided, however, no Annual
Bonus shall be payable unless the Executive is employed on the last day of each
such Bonus Term. The proviso in the previous sentence shall not apply if the
Executive's employment is terminated pursuant to Section 6.1 or 6.4 of this
Agreement.
(c) For purposes of this Section 3.2 "EBITDA" shall mean the
consolidated net income of the Company for the bonus period plus, to the extent
deducted in computing such consolidated net income, without duplication, the sum
of (a) income tax expense, (b) interest expense, (c) depreciation and
amortization expense, (d) any special charges (including, without limitation,
any noncash fees or expenses incurred in connection with the Transactions) and
any extraordinary or non-recurring losses, (e) monitoring and management fees
paid to any of the funds, the Veritas Entities and/or their respective
Affiliates, (f) dividend payments on and mandatory redemptions of the Bethlehem
Preferred Stock, in each case made in accordance with the terms thereof and to
the extent permitted by Section 6.06(d), (g) noncash expenses incurred in
connection with an employee stock ownership plan and (h) other noncash items
reducing consolidated net income, minus, to the extent added in computing such
consolidated net income, without duplication, (i) interest income, (ii)
extraordinary or nonrecurring gains and (iii) other noncash items increasing
consolidated net income.
All terms and section references in the above definition of EBITDA shall have
the same meaning as in the Credit Agreement by and between Bar Technologies,
Inc., Bliss & Laughlin Steel Company, the Lenders named therein and Chemical
Bank Delaware dated as of April 2, 1996.
4. EMPLOYEE BENEFITS.
4.1 STOCK OPTIONS. The Executive shall be eligible to receive
through an option plan one and one-quarter percent (1.25%) of the total
available authorized and outstanding common shares plus options on a fully
diluted basis (including all equity or options of the entire management team) of
the survivor entity of the business combination between Bar Technologies,
3
<PAGE> 4
Inc. and Republic Engineered Steels, Inc. Such option shall be subject to
dilution that may result from any other action or transaction involving shares
of Company. The Executive shall receive the benefits of an Option Agreement (the
"Option Agreement"), which Option Agreement shall be drafted subsequent to the
signing of this Agreement and which Option Agreement shall contain terms
substantially similar to the Option Term Sheet, a copy of which is attached
hereto as Appendix A. The Executive shall also be eligible to participate in a
performance stock plan on a pro rata basis like other key executives, said plan
to be developed at a later date.
4.2 EMPLOYEE WELFARE BENEFIT PROGRAMS, PLANS AND PRACTICES. The
Company shall provide the Executive while employed hereunder with coverage under
all welfare benefit programs, plans and practices (commensurate with his
position in the Company and to the extent permitted under any employee benefit
plan) in accordance with the terms thereof, which the Company makes available to
its senior executives.
4.3 VACATION. The Executive shall be entitled to twenty (20)
business days paid vacation each calendar year, which shall be taken at such
times as are consistent with the Executive's responsibilities hereunder. Any
vacation days not taken by March 31 of the following year, unless approved by
the CEO, shall be forfeited without pay.
4.4 ADDITIONAL PERQUISITES. During the Executive's employment
hereunder, the Company shall provide the Executive with (i) term life insurance
in an amount equal to two (2) times Base Salary; (ii) payment for initiation
fees at a social, dining, athletic or country club that the CEO has approved for
use by Executive for priority business entertainment purposes; (iii) the right
to participate in the 401(k) plan; (iv) long-term disability coverage providing
a monthly benefit of Twelve Thousand Five Hundred Dollars ($12,500); and (v) a
one-thousand dollar ($1,000) annual allowance for tax return preparation
expenses. Executive shall provide documentation of expenses under item (v) as
requested by Company.
5. EXPENSES. Subject to prevailing Company policy or such guidelines as
may be established by the CEO, the Company will reimburse the Executive for all
reasonable expenses incurred by the Executive in carrying out his duties.
6. TERMINATION OF EMPLOYMENT.
6.1 TERMINATION NOT FOR CAUSE OR FOR GOOD REASON. (a) The Company or
Executive may terminate the Executive's Term of Employment at any time for any
reason by written notice. If the Executive's employment is terminated (i) by the
Company at the end of the Initial or any Renewal Term by giving notice of
nonrenewal under Section 2, or by the Company prior to the end of the Initial
Term or any Renewal Term, for any reason other than Cause (as defined in Section
6.2(b) hereof), Disability (as defined in Section 6.3 hereof) or death or (ii)
by the Executive for Good Reason (as defined in Section 6.1(b) hereof) the
Company shall continue to pay Executive's Base Salary and the Minimum Bonus or
the Target Bonus, as applicable, for the longer of (i) the remainder of the
Initial Term or any Renewal Term, if applicable, in effect immediately prior to
the termination or (ii) one year, with such payments to be made in accordance
with the terms of Sections 3.1 and 3.2. In addition, Executive shall, during the
period
4
<PAGE> 5
that he continues to be compensated under this Agreement, continue participation
and benefits under Company's welfare benefit plans and programs that he is
otherwise participating in prior to cessation of employment; provided that, if
such participation and benefits cannot be provided under the terms of the
applicable plans or programs, the Company shall pay or reimburse Executive his
costs for substantially equivalent coverage.
(b) For purposes of this Agreement, "Good Reason" shall mean any of
the following (without Executive's express prior written consent):
(i) A reduction by the Company in Executive's Base Salary, a
reduction of the Minimum Bonus or Target Bonus, or a material change to the
formula used to determine bonus awards, provided that a change to such formula
that is mutually agreed to by the parties as contemplated under Section 3.2
shall not be "Good Reason" for this purpose; or
(ii) A substantial diminution or material adverse change in the
Executive's duties, responsibilities or reporting responsibility, unless due to
a promotion or increased responsibility; or
(iii) Relocation of Executive's primary work site to a location
more than fifty (50) miles from the Company's headquarters in Seven Hills, Ohio;
provided, however, that a relocation of the Company's headquarters within the
State of Ohio shall not constitute "Good Reason" for this purpose.
6.2 VOLUNTARY TERMINATION BY THE EXECUTIVE; DISCHARGE FOR CAUSE. (a)
In the event that the Executive's employment is terminated (i) by the Company
for Cause, as hereinafter defined or (ii) by the Executive other than for Good
Reason, Disability or death, the Executive shall only be entitled to receive (i)
any Base Salary accrued but unpaid prior to such termination, (ii) any earned
but unpaid bonus from a prior Bonus Term, and (iii) any benefits provided under
the employee benefit programs, plans and practices referred to in Section 4.2
hereof, in accordance with their terms. After the termination of the Executive's
employment under this Section 6.2, the obligations of the Company under this
Agreement to make any further payments, or provide any benefit specified herein,
to the Executive shall thereupon cease and terminate, except any benefits that
may be required by federal or state law.
(b) As used herein, the term "Cause" shall be limited to (i)
willful gross misconduct by the Executive in the performance of his duties
hereunder, (ii) willful gross neglect by the Executive of his duties hereunder
(other than due to Disability, as such term is defined in Section 6.3 hereof) or
repeated and willful failure to follow reasonable instructions of the CEO, (iii)
any breach of the provisions of Section 11 of this Agreement by the Executive or
(iv) conviction or plea of guilty or nolo contendere by the Executive to any
felony (or indictable offense). Termination of the Executive pursuant to this
Section 6.2 shall be made by delivery to the Executive of written notice, given
at least 30 days prior to such Termination, from the CEO specifying the
particulars of the conduct by the Executive set forth in any of clauses (i)
through (iv) above. Termination shall be effective on the date set forth in the
notice, unless within 30 days after receiving such notice, the Executive shall
have cured Cause to the reasonable satisfaction of
5
<PAGE> 6
the Board of Directors; provided, however, that no cure shall be possible for
(A) any breach of Section 11 of this Agreement by the Executive or (B) a
conviction or plea of nolo contendere by the Executive to any felony (or
indictable offense); and provided further that Executive may be required to
vacate Company premises prior to the effective date of termination in those
instances.
6.3 DISABILITY. In the event that Executive is unable to perform his
duties under this Agreement on account of a disability which continues for one
hundred eighty (180) consecutive days or more, or for an aggregate of one
hundred eighty (180) days in any period of twelve (12) months, Company may, in
its discretion, terminate Executive's employment hereunder and Company's
obligation to make payments under Section 3 shall, except for earned but unpaid
salary and bonuses, cease immediately upon such termination, or, if later, shall
cease on the date Executive becomes entitled to benefits under the Company's
long-term disability program. The Company may, in its discretion, require
written confirmation from a physician of Disability during any extended absence.
For purposes of this Agreement, "Disability," shall be defined by the terms of
the Company's long-term disability policy, or, in the absence of such policy, as
a physical or mental disability that prevents Executive from performing
substantially all of his duties under this Agreement and which is expected to be
permanent. The commencement date and expected duration of any physical or mental
condition that prevents Executive from performing his duties hereunder shall be
determined by a medical doctor selected by mutual agreement between Executive
and the Company.
6.4 DEATH. In the event of the Executive's death during his Term of
Employment hereunder or at any time thereafter while payments are still owing to
the Executive under the terms of this Agreement, all obligations of the Company
to make any further payments, other than the obligation to pay any accrued but
unpaid Base Salary and a pro rata share of the prior year's Annual Bonus, shall
terminate upon the Executive's death, and benefits shall become payable under
the Company's life and accidental death insurance program in accordance with its
terms.
6.5 NO FURTHER NOTICE, COMPENSATION OR INDEMNITY. (a) The Executive
understands and agrees that he shall not be entitled to any further notice,
compensation or indemnity upon Termination of Employment under this Agreement
other than amounts specified in this Section 6 and the Option Shares as set
forth in Appendix A hereto. Executive shall not have any obligation to seek
comparable employment following such termination or resignation. However, any
payment hereunder shall be offset by any compensation the Executive earns with a
new employer or from self-employment, but no such offset shall apply to any
compensation earned by Executive if his employment with Company is terminated
within twelve (12) months of a Change in Control (i) by the Company or successor
other than for Cause (as defined in Section 6.2) or (ii) by Executive for Good
Reason (as defined in Section 6.1).
(b) A "Change in Control" occurs on the first date on which the
holdings of Blackstone (as defined in Section 3.2 above) or Veritas, or the
combined holdings of Blackstone and Veritas, do not represent more than 50% of
the voting control of the Company. "Veritas" means "Veritas Entities or their
respective Affiliates", as that term is defined in the Credit
6
<PAGE> 7
Agreement by and between Bar Technologies, Inc., Bliss & Laughlin Steel
Company, the Lenders named therein and Chemical Bank Delaware dated as of April
2, 1996.
6.6 THE EXECUTIVE'S DUTY TO PROVIDE MATERIALS. Upon the termination
of the Term of Employment for any reason, the Executive or his estate shall
surrender to the Company all correspondence, letters, files, contracts, mailing
lists, customer lists, advertising material, ledgers, supplies, equipment,
checks, and all other materials and records of any kind that are the property of
the Company or any of its subsidiaries or affiliates, that may be in the
Executive's possession or under his control, including all copies of any of the
foregoing; provided, however, the Executive shall not be required to surrender
his personal rolodex, telephone book and personal materials.
6.7 CERTAIN REDUCTION OF PAYMENTS.
(a) Anything in this Agreement to the contrary notwithstanding,
if it is determined that any portion of the sum of (i) the amounts paid or
payable to the Executive or for the Executive's benefit under the Agreement (the
"Agreement Benefits") and (ii) the amount of all other payments, and the value
of all other benefits received or to be received by the Executive or for the
Executive's benefit (collectively, along with Agreement Benefits, referred to as
"Benefits"), is likely to result in the imposition of a tax to the Executive or
his estate under Code Section 4999 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code"), the aggregate present value of the
Agreement Benefits yet to be paid to the Executive shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this Agreement, "Reduced
Amount" shall be an amount expressed as a single sum that maximizes the
aggregate present value of Agreement Benefits previously paid and yet to be paid
to the Executive without causing the aggregate of any Benefits previously paid
and yet to be paid to the Executive to be subject to taxation to the Executive
or his estate under Section 4999 of the Code. The provisions of this subsection
(a) and subsection (b) shall be applied in a manner that is consistent with the
provisions of subsection (c) below, and to the extent required, the provisions
of subsection (c) shall supersede the provisions of this subsection (a) and
subsection (b) to permit such consistency.
(b) If, determined in a manner consistent with subsection (a)
above, Agreement Benefits in excess of the Reduced Amount are paid to the
Executive or for his benefit, or the Internal Revenue Service asserts that the
amount of Benefits received by the Executive or for his benefit are in excess of
the amounts not subject to tax under Section 4999 of the Code, and such
assertion is determined to have a high probability of being successful, such
excess amounts (hereinafter referred to as "Overpayments") shall be treated for
all purposes as a loan to the Executive. The amount treated as a loan, together
with interest at the applicable federal rate provided for in Section 1274(d) of
the Code, shall be paid by the Executive to the Company as soon as practicable
following the date the Executive is notified in writing of such Overpayments.
(c) In the event that payment of any Benefits would result in
all or a portion of such payment to be subject to excise tax under Section 4999
of the Code, then the Executive's payment shall be either (i) the full payment
or (ii) such lesser amount which would result in no portion of the payment being
subject to excise tax under Section 4999 of the Code, whichever of
7
<PAGE> 8
the foregoing amounts, taking into account the applicable federal, state and
local employment taxes, income taxes, and the excise tax imposed by Section 4999
of the Code, results in the Executive's receipt, on an after-tax basis, of the
greatest amount of the payment notwithstanding that all or some portion of the
payment may be taxable under Section 4999 of the Code.
(d) All determinations required to be made under this Amendment
shall be made by a nationally recognized accounting firm selected by the Company
(the "Accounting Firm"). The Company shall cause the Accounting Firm to provide
detailed supporting calculations of its determinations to the Executive and the
Company. All fees and expenses of the Accounting Firm shall be borne equally by
the Executive and the Company.
7. NOTICES. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company: Bar Technologies, Inc. and
Republic Engineered Steels, Inc.
c/o Suite 100
5700 Lombardo Center Drive
Seven Hills, Ohio 44131-2545
Attention: Thomas N. Tyrrell
with a copy to: R. Jeffrey Pollock, Esq.
McDonald, Hopkins, Burke &
Haber Co., L.P.A.
600 Superior Avenue, Suite 2100
Cleveland, OH 44114
To Executive: Robert L. Meyer
8810 Lanes End
Novelty, Ohio 44072
with a copy to: Douglas A. Neary, Esq.
Calfee, Halter & Griswold LLP
1400 McDonald Investment Center
Cleveland, Ohio 44114
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
8. SEPARABILITY; LEGAL FEES. If any provision of this Agreement shall
be declared to be invalid or unenforceable, in whole or in part, such invalidity
or unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. Each party shall bear
8
<PAGE> 9
the costs of any legal fees and other fees and expenses which may be incurred in
respect of enforcing its respective rights under this Agreement.
9. ASSIGNMENT. This contract shall be binding upon and inure to the
benefit of the heirs and representatives of the Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by the Executive (except by will or, in the case of the Options, by trust for
the benefit of the Executive's spouse and/or children or by operation of the
laws of intestate succession) or by the Company, except that the Company may
assign this Agreement to any successor (whether by merger, purchase or
otherwise) to all or substantially all of the stock, assets or business of the
Company. If this Agreement is not assumed by a successor to Company, the
Agreement may be terminated by Executive under the terms of Section 6.1(a) as a
termination for Good Reason.
10. AMENDMENT. This Agreement may only be amended by written agreement
of the parties hereto.
11. NONDISCLOSURE OF CONFIDENTIAL INFORMATION; NON-COMPETITION. (a) The
Executive shall not, without the prior written consent of the Company, use,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information pertaining to the
business of the Company or any of its affiliates, except (i) while employed by
the Company, in the business of and for the benefit of the Company, or (ii) when
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof) with
jurisdiction to order the Executive to divulge, disclose or make accessible such
information. For purposes of this Section 11(a), "Confidential Information"
shall mean non-public information concerning the financial data, strategic
business plans, product development (or other proprietary product data),
customer lists, marketing plans and other non-public, proprietary and
confidential information of the Company, Bliss & Laughlin Industries Inc. or
their respective affiliates or customers, that, in any case, is not otherwise
available to the public (other than by the Executive's breach of the terms
hereof).
(b) In consideration of the Company's obligations under this
Agreement the Executive agrees that during the period of his employment
hereunder and for a period of twelve (12) months thereafter, without the prior
written consent of the Board, (i) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner, investor,
lender or employee or in any other capacity, carry on, be engaged in or have any
financial interest in, any business which is in competition with the business of
the Company and (ii) he shall not, on his own behalf or on behalf of any person,
firm or company, directly or indirectly, solicit or offer employment to any
person who has been employed by the Company at any time during the 12 months
immediately preceding such solicitation.
(c) For purposes of this Section 11, a business shall be deemed to
be in competition with the Company if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the
9
<PAGE> 10
Company as a part of the business of the Company within the same geographic area
in which the Company effects such purchases, sales or dealings or renders such
services. Nothing in this Section 11 shall be construed so as to preclude the
Executive from investing in any publicly or privately held company, provided the
Executive's beneficial ownership of any class of such company's securities does
not exceed 1% of the outstanding securities of such class.
(d) The Executive agrees that this covenant not to compete is
reasonable under the circumstances and will not interfere with his ability to
earn a living or to otherwise meet his financial obligations. The Executive and
the Company agree that if in the opinion of any court of competent jurisdiction
such restraint is not reasonable in any respect, such court shall have the
right, power and authority to excise or modify such provision or provisions of
this covenant as to the court shall appear not reasonable and to enforce the
remainder of the covenant as so amended. The Executive agrees that any breach of
the covenants contained in this Section 11 would irreparably injure the Company.
Accordingly, the Executive agrees that the Company may, in addition to pursuing
any other remedies it may have in law or in equity, cease making any payments
otherwise required by this Agreement and obtain an injunction against the
Executive from any court having jurisdiction over the matter restraining any
further violation of this Agreement by the Executive. Notwithstanding the
expiration of the term of this Agreement, the provisions of this Section 11
hereunder shall remain in effect as long as is necessary to give effect thereto.
12. BENEFICIARIES; REFERENCES. The Executive shall be entitled to
select (and change, to the extent permitted under any applicable law) a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following the Executive's death, and may change such election, in
either case by giving the Company written notice thereof. In the event of the
Executive's death or a judicial determination of his incompetence, reference in
this Agreement to the Executive shall be deemed, where appropriate, to refer to
his beneficiary, estate or other legal representative. Any reference to the
masculine gender in this Agreement shall include, where appropriate, the
feminine.
13. SURVIVORSHIP. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 13 are in addition to the survivorship provisions of
any other section of this Agreement.
14. ARBITRATION. Except as otherwise provided in Section 11(d) hereof,
any dispute or controversy arising under or in connection with this Agreement
shall be resolved by binding arbitration held in the City of Cleveland, Ohio and
conducted in accordance with the commercial arbitration rules of the American
Arbitration Association in effect at the time of the arbitration. Each party
shall bear its own expenses in connection with any such arbitration and joint
expenses shall be borne by both parties in equal portions.
15. GOVERNING LAW. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Ohio without reference to
rules relating to conflicts of law.
10
<PAGE> 11
16. EFFECT ON PRIOR AGREEMENTS. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding, both written and oral, between the
Company, any affiliate of the Company or any predecessor of the Company or
affiliate of the Company and the Executive.
17. WITHHOLDING. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
19. INDEMNIFICATION. Executive shall be provided with the same
indemnifications and directors and officers insurance coverages as apply to the
key officers and directors of the Company.
COMPANY
/s/ Thomas N. Tyrrell
---------------------------------
Thomas N. Tyrrell, CEO
EXECUTIVE
/s/ Robert L. Meyer
---------------------------------
Robert L. Meyer
11
<PAGE> 12
APPENDIX A
OPTION TERM SHEET
EQUITY OWNERSHIP
- ----------------
STOCK OPTIONS Upon the effective date of the Agreement pursuant
to a stock option agreement including, among other
provisions, the terms set forth below, the Company
shall grant the Executive nonqualified options (or
at Company's discretion, incentive stock options
with or without nonqualified options) to purchase
one and one-quarter percent (1.25%) of the total
Available Common Stock of Company. "Available
Common Stock" of the Company shall be defined as
the authorized and outstanding common shares plus
options on a fully diluted basis (including all
equity or options of the entire management team),
taking into account the effects of the
contemplated merger and any related transactions
to the merger.
OPTION TERM The option term shall be 10 years; provided,
however, that exercisable options shall expire
earlier upon termination of employment as follows:
Termination for Cause/Quit w/o Good Reason:
Immediately upon termination of employment.
Termination w/o Cause/Quit w/Good Reason: the
remaining term of the Agreement (i.e. during the
applicable salary continuation period) plus three
months.
A termination of employment at the expiration of
the Agreement on account of the Company's notice
of nonrenewal, or a termination during the term by
mutual agreement of the parties: One year after
termination of employment.
Death/Disability: One year after termination of
employment.
Unexercisable options will terminate upon
termination of employment, unless vesting
acceleration is explicitly provided for.
<PAGE> 13
OPTION EXERCISE PRICE Options shall be granted at an exercise price
which is equal to the price per share paid by
Blackstone.
EXERCISABILITY OF OPTIONS
--VESTING Options shall become exercisable with respect to
33 1/3% of the shares subject to such options on
each September 30, 1999, 2000, 2001 respectively,
if the Executive's Term of Employment continues
through and includes such dates.
Options shall expire and no longer be exercisable
following termination of employment by the Company
for Cause, resignation by the Executive without
Good Reason, or nonrenewal by Executive, but shall
accelerate and become fully exercisable upon the
earliest of (i) death, (ii) disability, (iii)
termination without Cause or resignation for Good
Reason (collectively, a "Good Termination"), or
(iv) on the first date on which the holdings of
Blackstone (as defined in Section 3.2 above) or
Veritas, or the combined holdings of Blackstone
and Veritas, do not represent more than 50% of the
voting control of the Company. "Veritas" means
"Veritas Entities or their respective Affiliates",
as that term is defined in the Credit Agreement by
and between Bar Technologies, Inc., Bliss &
Laughlin Steel Company, the Lenders named therein
and Chemical Bank Delaware dated as of April 2,
1996. If the Company gives notice of nonrenewal at
the expiration of the Initial or any renewal
terms, unvested options shall vest in accordance
with the schedule set forth above during the
applicable salary continuation period; options
that do not vest by that date shall terminate.
DILUTION OF STOCK OPTIONS The Executive's exercisable and unexercisable
options shall be subject to the same dilution as
may apply to all common stockholders, provided
that the anticipated transaction referred to in
Section 4.1 of the Agreement shall not have a
dilutive effect on the one and one-quarter percent
(1.25%) discussed herein.
ADJUSTMENTS In the event of any change in the outstanding
common stock by reason of a stock split, spin-off,
stock dividend, stock combination or
reclassification, recapitalization, consolidation
or merger, or similar event, the Board shall
adjust appropriately the number of shares subject
to options under
2
<PAGE> 14
this Term Sheet and make other revisions as it
deems are equitably required.
NONTRANSFERABILITY Except as otherwise provided herein, the Executive
cannot sell or otherwise transfer the options and
shares purchased upon exercise of an option
("Option Shares") prior to a Public Offering that
includes Blackstone shares. Any sale of Option
Shares shall in all cases be completed in
compliance with applicable securities laws.
Transfers of Option Shares shall be permitted in
the event of death to beneficiaries of the estate,
and during lifetime to trusts, the beneficiaries
of which are the Executive, a charitable
institution or institutions selected by Executive,
or members of his family, and options may, in the
event of death, be exercised by beneficiaries or
the estate, subject in all cases to agreeing to be
bound by the same terms as the Executive. As a
condition to exercising options, the Executive
must agree to be bound by the terms of the
stockholders' agreement that will be drafted
subsequent to the Employment Agreement.
RIGHTS The Executive shall have the same voting, dividend
and other rights with respect to Option Shares as
the Company's other common stockholders.
REGISTRATION RIGHTS/PUBLIC
OFFERING OPTION SHARES: It is expected that the stockholder
agreement will provide piggyback rights.
OPTIONS: Immediately following the first Public
Offering that includes Blackstone shares, the
Company shall file, at its own expenses, an S-8 to
register the shares subject to option, which
shares shall be subject to an applicable "standard
underwriter lock-up agreement."
TAGALONG/DRAGALONG RIGHTS It is expected that the stockholder's agreement
will provide tagalong and dragalong rights.
PUTS AND CALLS Puts and calls for the options and Option Shares
shall be as set forth in Appendix B; PROVIDED,
HOWEVER, if there is a Change in Control prior to
a Public Offering, any Option Shares or
exercisable Options (i) may be put to the Company
at the difference between FMV and the exercise
price, but (ii) the Company shall not have a call;
PROVIDED, FURTHER, no put or call shall be
consummated if such put or
3
<PAGE> 15
call would result in a violation of applicable law
or the terms of any financing documents. There
shall be no puts or calls subsequent to a Public
Offering. An exercise period (e.g., one year after
termination of employment) will otherwise be
specified for puts and calls.
- --FAIR MARKET VALUE ("FMV") If there is no public trading market for the
shares of the Company, the FMV of the shares will
be the per share price, as determined by the Board
in good faith; PROVIDED, HOWEVER, if the Executive
or Executive's beneficiaries or estate disagree
with the Board's determination, the FMV shall be
determined by an independent nationally
recognized, full service investment banker who
follows the Company and is reasonably acceptable
to both the Company and the Executive or
Executive's beneficiaries or estate.
- --PUBLIC OFFERING Public offering shall mean the sale of the shares
of any class of the Company's stock to the public
pursuant to an effective registration statement
(other than a registration statement on Form S-4
or S-8 or any similar or successor form) filed
under the Securities Act of 1933, as amended.
4
<PAGE> 16
APPENDIX B
PUTS AND CALLS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
BAD TERMINATIONS GOOD TERMINATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
FIRED FOR QUIT W/O FIRED W/O "CAUSE"/ QUIT DEATH/DISABILITY
"CAUSE" "GOOD REASON" WITH "GOOD REASON"
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPTION SHARES Any Option Any Option Shares Any Option Shares can be Called at May put Option Shares to Company at
Shares can be can be Called at FMV prior to a Public Offering. FMV prior to a Public Offering.
Called at the the lesser of
lesser of cost cost or FMV. Any Option Shares may be put to
or FMV. the Company at FMV prior to a
No put. Public Offering. No put or call subsequent to a
No Put. Public Offering.
No put or call subsequent
to a Public Offering.
- ---------------------------------------------------------------------------------------------------------------------------------
OPTIONS All Options All Options Options shall remain outstanding Options shall remain outstanding
terminate terminate without until termination of the Agreement until termination of employment
without any any payment. plus 3 months. plus one year.
payment.
May put Options to the Company at May put Options to Company at the
the difference between FMV and the difference between FMV and the
exercise price prior to a Public exercise price prior to a Public
Offering. Offering.
No put or call subsequent to a No put or call subsequent to a
Public Offering. Public Offering.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Options at Expiration of Employment Term: If employment terminates because
the Executive gives notice of intent not to renew, all options shall
terminate without payment at termination of employment in that event. If
employment is terminated because the Company elects not to renew the
Agreement, Executive shall vest in options during the applicable salary
continuation period under Section 6.1. Unvested options at the end of such
period shall terminate.
<PAGE> 1
Exhibit 10.48
EMPLOYMENT AGREEMENT
AGREEMENT, made October 1, 1998 by and between BAR TECHNOLOGIES, INC.,
REPUBLIC ENGINEERED STEELS, INC., AND RES ACQUISITION CORP., Delaware
corporations, (hereinafter "Company" shall refer to these entities and to the
survivor entity in any combination of such entities) and JOHN G. ASIMOU (the
"Executive").
RECITALS
--------
In order to induce the Executive to serve as the Executive Vice
President and General Manager, Cold Finished Bar Division of the Company, the
Company desires to provide the Executive with compensation and other benefits on
the terms and conditions set forth in this Agreement.
The Executive is willing to accept such employment and perform services
for the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. EMPLOYMENT.
1.1 Subject to the terms and conditions of this Agreement, the
Company agrees to employ Executive during the term hereof as the Executive Vice
President and General Manager, Cold Finished Bar Division. In this capacity, the
Executive shall report to the President of the Company (the "President") and
shall have the customary powers, responsibilities and authorities of Executive
Vice President and General Manager, Cold Finished Bar Division of corporations
of the size, type and nature of the Company, as it exists from time to time, and
as are assigned by the President. It is understood by the parties that the size,
type, and nature of the Company is expected to expand rapidly via acquisition or
other business combination and that Executive's duties will be commensurate with
the duties of an Executive Vice President and General Manager, Cold Finished Bar
Division of such expanded enterprise.
1.2 Subject to the terms and conditions of this Agreement, the
Executive hereby accepts employment as the Executive Vice President and General
Manager, Cold Finished Bar Division of the Company commencing as of October 1,
1998, and agrees to devote his full business time and efforts to the performance
of services, duties and responsibilities in connection therewith, subject at all
times to review and control of the President. During the term of Employment, the
Executive also agrees to serve, if elected, as an officer and/or director of any
Subsidiary of the Company, without the payment of any additional compensation
therefor.
1.3 Nothing in this Agreement shall preclude the Executive from
engaging in charitable and community affairs, from managing any passive
investment (I.E., an investment with respect to which the Executive is in no way
involved with the management or operation of the entity in which the Executive
has invested) made by him in publicly traded equity securities or other property
(provided that no such investment may exceed 1% of the equity of any entity,
without the prior approval of the
<PAGE> 2
President) or from serving, subject to the prior approval of the President, as a
member of boards of directors or as a trustee of any other corporation,
association or entity, to the extent that any of the above activities do not
interfere with the performance of his duties hereunder. For purposes of the
preceding sentence, any approval by the President required herein shall not be
unreasonably withheld.
2. TERM OF EMPLOYMENT. The Executive's term of employment under this
Agreement (the "Term of Employment") shall commence on October 1, 1998 and,
subject to the terms hereof, shall terminate on the earlier of (i) September 30,
2001 (the "Initial Term") or (ii) termination of the Executive's employment
pursuant to this Agreement; provided, however, that subsequent to the Initial
Term, the Executive's Term of Employment under this Agreement shall
automatically renew annually each October 1 for one year renewal terms (the
"Renewal Term"); unless the Company shall deliver to the Executive or the
Executive shall deliver to the Company written notice, at least 90 days prior to
the expiration of the Initial Term or any Renewal Term, that the Term of
Employment shall not be extended, in which case the Term of Employment will end
at its then scheduled expiration date and shall not be further extended except
by written agreement of the Company and the Executive.
3. COMPENSATION.
3.1 SALARY. During the Initial Term of the Executive's employment
under the terms of this Agreement, the Company shall pay Executive a base salary
("Base Salary") at the rate of not less than Two Hundred Twenty-Five Thousand
Dollars ($225,000) per annum. Base Salary shall be payable in accordance with
the ordinary payroll practices of the Company. During the Term of Employment,
the CEO shall, in good faith, review and, if determined by the CEO to be
appropriate, increase the Executive's salary at least annually and in accordance
with the Company's customary procedures and practices regarding the salaries of
senior executives, which procedures and practices, for example, will include a
review of the performance of the Company and the Executive, and any increase in
the cost of living during the relevant period. Increases in the rate of salary,
once granted, shall not be subject to revocation or decrease thereafter.
3.2 ANNUAL BONUS. (a) In addition to his base salary, the Executive
shall be eligible to receive an annual bonus (the "Annual Bonus"). Annual Bonus
amounts payable to the Executive shall be determined in the sole discretion of
the CEO and those members of the Board of Directors who were nominated and
elected at the request of Blackstone. Subject to the foregoing, the Annual Bonus
shall be determined in accordance with the Company's customary procedures and
practices regarding bonus awards to senior executives, which procedures and
practices, for example, shall include an evaluation of the Company's progress in
meeting its cash flow targets during the relevant period; notwithstanding the
foregoing, the Annual Bonus shall not be less than Seventy-Five Thousand Dollars
($75,000) for the fiscal years ending December 31, 1999 and December 31, 2000
(the "Minimum Bonus"). A pro rata amount will be added to the 1999 bonus for the
period October 1, 1998 through December 31, 1998. In addition, Company shall pay
Executive a bonus for 1998 equal to nine-twelfths (9/12ths) of the bonus that
Executive would have received under his employment agreement with Bar
Technologies that is otherwise superseded by this Agreement. If EBITDA (as such
term is defined in paragraph (c) below)
2
<PAGE> 3
equals or exceeds the EBITDA targets hereafter set by the CEO and/or the Board
in consultation with Executive for any fiscal year under this Agreement (except
1998), the Annual Bonus shall be at least One Hundred Twenty-Five Thousand
Dollars ($125,000) (the "Target Bonus"); provided, however, that such
methodology for the determination of the Annual Bonus shall only be utilized
until such time as a formula based on increase in shareholder value is mutually
agreed upon by the parties hereto; provided, further, if due to conditions
beyond the Executive's control, the EBITDA targets are not met for any fiscal
year during the Term of this Agreement, or targets are not met under such other
methodology as is being utilized for any fiscal year during the Term of this
Agreement, the CEO and the Board, in their sole discretion, may override such
targets, and award the Executive an Annual Bonus irrespective of the achievement
of such targets. "Blackstone" shall mean, collectively, Blackstone Capital
Partners II Merchant Banking Fund L.P., Blackstone Offshore Capital Partners II
L.P., Blackstone Family Investment Partnership II L.P., The Blackstone Group
L.P. and their affiliates.
(b) The Annual Bonus shall be payable as soon as practicable
after December 31 of each calendar year in which such Annual Bonus was earned
(the "Bonus Term"); but in any event, the Annual Bonus shall be paid no later
than 90 business days following the end of the Bonus Term; provided, however, no
Annual Bonus shall be payable unless the Executive is employed on the last day
of each such Bonus Term. The proviso in the previous sentence shall not apply if
the Executive's employment is terminated pursuant to Section 6.1 or 6.4 of this
Agreement.
(c) For purposes of this Section 3.2 "EBITDA" shall mean the
consolidated net income of the Company for the bonus period plus, to the extent
deducted in computing such consolidated net income, without duplication, the sum
of (a) income tax expense, (b) interest expense, (c) depreciation and
amortization expense, (d) any special charges (including, without limitation,
any noncash fees or expenses incurred in connection with the Transactions) and
any extraordinary or non-recurring losses, (e) monitoring and management fees
paid to any of the funds, the Veritas Entities and/or their respective
Affiliates, (f) dividend payments on and mandatory redemptions of the Bethlehem
Preferred Stock, in each case made in accordance with the terms thereof and to
the extent permitted by Section 6.06(d), (g) noncash expenses incurred in
connection with an employee stock ownership plan and (h) other noncash items
reducing consolidated net income, minus, to the extent added in computing such
consolidated net income, without duplication, (i) interest income, (ii)
extraordinary or nonrecurring gains and (iii) other noncash items increasing
consolidated net income.
All terms and section references in the above definition of EBITDA shall have
the same meaning as in the Credit Agreement by and between Bar Technologies,
Inc., Bliss & Laughlin Steel Company, the Lenders named therein and Chemical
Bank Delaware dated as of April 2, 1996.
4. EMPLOYEE BENEFITS.
4.1 STOCK OPTIONS. The Executive shall be eligible to receive
through an option plan one and one-quarter percent (1.25%) of the total
available authorized and outstanding common shares plus options on a fully
diluted basis (including all equity or options of the entire
3
<PAGE> 4
management team) of the survivor entity of the business combination between Bar
Technologies, Inc. and Republic Engineered Steels, Inc. Such option shall be
subject to dilution that may result from any other action or transaction
involving shares of Company. The Executive shall receive the benefits of an
Option Agreement (the "Option Agreement"), which Option Agreement shall be
drafted subsequent to the signing of this Agreement and which Option Agreement
shall contain terms substantially similar to the Option Term Sheet, a copy of
which is attached hereto as Appendix A. The Executive shall also be eligible to
participate in a performance stock plan on a pro rata basis like other key
executives, said plan to be developed at a later date.
4.2 EMPLOYEE WELFARE BENEFIT PROGRAMS, PLANS AND PRACTICES. The
Company shall provide the Executive while employed hereunder with coverage under
all welfare benefit programs, plans and practices (commensurate with his
position in the Company and to the extent permitted under any employee benefit
plan) in accordance with the terms thereof, which the Company makes available to
its senior executives. In addition, Company shall provide substantially similar
benefits as are provided under The Birmingham Steel Corporation Management
Security Plan (the "MSP") dated July 27, 1993; provided, however, that such
benefits shall be subject to the same terms and conditions as under the MSP;
provided, further, that Executive shall be given credit for his Years of
Employment (as such term is defined in the MSP) at Birmingham Steel, which such
employment began January 1, 1994, without contribution by the Executive for
years prior to the commencement of his employment hereunder; and provided
further, that such benefit shall continue to accrue through December 31, 1998,
but no additional benefits shall accrue to Executive under this provision for
services provided after December 31, 1998.
4.3 VACATION. The Executive shall be entitled to twenty (20)
business days paid vacation each calendar year, which shall be taken at such
times as are consistent with the Executive's responsibilities hereunder. Any
vacation days not taken by March 31 of the following year, unless approved by
the Chief Executive Officer of the Company (the "CEO"), shall be forfeited
without pay.
4.4 ADDITIONAL PERQUISITES. During the Executive's employment
hereunder, the Company shall provide the Executive with (i) term life insurance
in an amount equal to two (2) times Base Salary; (ii) payment for initiation
fees at a social, dining, athletic or country club that the CEO has approved for
use by Executive for priority business entertainment purposes; (iii) the right
to participate in the 401(k) plan; (iv) long-term disability coverage providing
a monthly benefit of Twelve Thousand Five Hundred Dollars ($12,500); and (v) a
one-thousand dollar ($1,000) annual allowance for tax return preparation
expenses. Executive shall provide documentation of expenses under item (v) as
requested by Company.
5. EXPENSES. Subject to prevailing Company policy or such guidelines as
may be established by the CEO, the Company will reimburse the Executive for all
reasonable expenses incurred by the Executive in carrying out his duties.
4
<PAGE> 5
6. TERMINATION OF EMPLOYMENT.
6.1 TERMINATION NOT FOR CAUSE OR FOR GOOD REASON. (a) The Company or
Executive may terminate the Executive's Term of Employment at any time for any
reason by written notice. If the Executive's employment is terminated (i) by the
Company at the end of the Initial or any Renewal Term by giving notice of
nonrenewal under Section 2, or by the Company prior to the end of the Initial
Term or any Renewal Term, for any reason other than Cause (as defined in Section
6.2(b) hereof), Disability (as defined in Section 6.3 hereof) or death or (ii)
by the Executive for Good Reason (as defined in Section 6.1(b) hereof) the
Company shall continue to pay Executive's Base Salary and the Minimum Bonus or
the Target Bonus, as applicable, for the longer of (i) the remainder of the
Initial Term or any Renewal Term, if applicable, in effect immediately prior to
the termination or (ii) one year, with such payments to be made in accordance
with the terms of Sections 3.1 and 3.2. In addition, Executive shall, during the
period that he continues to be compensated under this Agreement, continue
participation and benefits under Company's welfare benefit plans and programs
that he is otherwise participating in prior to cessation of employment; provided
that, if such participation and benefits cannot be provided under the terms of
the applicable plans or programs, the Company shall pay or reimburse Executive
his costs for substantially equivalent coverage.
(b) For purposes of this Agreement, "Good Reason" shall mean any of
the following (without Executive's express prior written consent):
(i) A reduction by the Company in Executive's Base Salary, a
reduction of the Minimum Bonus or Target Bonus, or a material change to the
formula used to determine bonus awards, provided that a change to such formula
that is mutually agreed to by the parties as contemplated under Section 3.2
shall not be "Good Reason" for this purpose; or
(ii) A substantial diminution or material adverse change in the
Executive's duties, responsibilities or reporting responsibility, unless due to
a promotion or increased responsibility; or
(iii) Relocation of Executive's primary work site to a location
more than fifty (50) miles from the Company's headquarters in Seven Hills, Ohio;
provided, however, that a relocation of the Company's headquarters within the
State of Ohio shall not constitute "Good Reason" for this purpose.
6.2 VOLUNTARY TERMINATION BY THE EXECUTIVE; DISCHARGE FOR CAUSE. (a)
In the event that the Executive's employment is terminated (i) by the Company
for Cause, as hereinafter defined or (ii) by the Executive other than for Good
Reason, Disability or death, the Executive shall only be entitled to receive (i)
any Base Salary accrued but unpaid prior to such termination, (ii) any earned
but unpaid bonus from a prior Bonus Term, and (iii) any benefits provided under
the employee benefit programs, plans and practices referred to in Section 4.2
hereof, in accordance with their terms. After the termination of the Executive's
employment under this Section 6.2, the obligations of the Company under this
Agreement to make any further payments,
5
<PAGE> 6
or provide any benefit specified herein, to the Executive shall thereupon cease
and terminate, except any benefits that may be required by federal or state law.
(b) As used herein, the term "Cause" shall be limited to (i) willful
gross misconduct by the Executive in the performance of his duties hereunder,
(ii) willful gross neglect by the Executive of his duties hereunder (other than
due to Disability, as such term is defined in Section 6.3 hereof) or repeated
and willful failure to follow reasonable instructions of the CEO, (iii) any
breach of the provisions of Section 11 of this Agreement by the Executive or
(iv) conviction or plea of guilty or nolo contendere by the Executive to any
felony (or indictable offense). Termination of the Executive pursuant to this
Section 6.2 shall be made by delivery to the Executive of written notice, given
at least 30 days prior to such Termination, from the CEO specifying the
particulars of the conduct by the Executive set forth in any of clauses (i)
through (iv) above. Termination shall be effective on the date set forth in the
notice, unless within 30 days after receiving such notice, the Executive shall
have cured Cause to the reasonable satisfaction of the Board of Directors;
provided, however, that no cure shall be possible for (A) any breach of Section
11 of this Agreement by the Executive or (B) a conviction or plea of nolo
contendere by the Executive to any felony (or indictable offense); and provided
further that Executive may be required to vacate Company premises prior to the
effective date of termination in those instances.
6.3 DISABILITY. In the event that Executive is unable to perform his
duties under this Agreement on account of a disability which continues for one
hundred eighty (180) consecutive days or more, or for an aggregate of one
hundred eighty (180) days in any period of twelve (12) months, Company may, in
its discretion, terminate Executive's employment hereunder and Company's
obligation to make payments under Section 3 shall, except for earned but unpaid
salary and bonuses, cease immediately upon such termination, or, if later, shall
cease on the date Executive becomes entitled to benefits under the Company's
long-term disability program. The Company may, in its discretion, require
written confirmation from a physician of Disability during any extended absence.
For purposes of this Agreement, "Disability," shall be defined by the terms of
the Company's long-term disability policy, or, in the absence of such policy, as
a physical or mental disability that prevents Executive from performing
substantially all of his duties under this Agreement and which is expected to be
permanent. The commencement date and expected duration of any physical or mental
condition that prevents Executive from performing his duties hereunder shall be
determined by a medical doctor selected by mutual agreement between Executive
and the Company.
6.4 DEATH. In the event of the Executive's death during his Term of
Employment hereunder or at any time thereafter while payments are still owing to
the Executive under the terms of this Agreement, all obligations of the Company
to make any further payments, other than the obligation to pay any accrued but
unpaid Base Salary and a pro rata share of the prior year's Annual Bonus, shall
terminate upon the Executive's death, and benefits shall become payable under
the Company's life and accidental death insurance program in accordance with its
terms. 1.1
6
<PAGE> 7
6.5 NO FURTHER NOTICE, COMPENSATION OR INDEMNITY. (a) The Executive
understands and agrees that he shall not be entitled to any further notice,
compensation or indemnity upon Termination of Employment under this Agreement
other than amounts specified in this Section 6 and the Option Shares as set
forth in Appendix A hereto. Executive shall not have any obligation to seek
comparable employment following such termination or resignation. However, any
payment hereunder shall be offset by any compensation the Executive earns with a
new employer or from self-employment, but no such offset shall apply to any
compensation earned by Executive if his employment with Company is terminated
within twelve (12) months of a Change in Control (i) by the Company or successor
other than for Cause (as defined in Section 6.2) or (ii) by Executive for Good
Reason (as defined in Section 6.1).
(b) A "Change in Control" occurs on the first date on which the
holdings of Blackstone (as defined in Section 3.2 above) or Veritas, or the
combined holdings of Blackstone and Veritas, do not represent more than 50% of
the voting control of the Company. "Veritas" means "Veritas Entities or their
respective Affiliates", as that term is defined in the Credit Agreement by and
between Bar Technologies, Inc., Bliss & Laughlin Steel Company, the Lenders
named therein and Chemical Bank Delaware dated as of April 2, 1996.
6.6 THE EXECUTIVE'S DUTY TO PROVIDE MATERIALS. Upon the termination
of the Term of Employment for any reason, the Executive or his estate shall
surrender to the Company all correspondence, letters, files, contracts, mailing
lists, customer lists, advertising material, ledgers, supplies, equipment,
checks, and all other materials and records of any kind that are the property of
the Company or any of its subsidiaries or affiliates, that may be in the
Executive's possession or under his control, including all copies of any of the
foregoing; provided, however, the Executive shall not be required to surrender
his personal rolodex, telephone book and personal materials.
6.7. CERTAIN REDUCTION OF PAYMENTS.
(a) Anything in this Agreement to the contrary notwithstanding,
if it is determined that any portion of the sum of (i) the amounts paid or
payable to the Executive or for the Executive's benefit under the Agreement (the
"Agreement Benefits") and (ii) the amount of all other payments, and the value
of all other benefits received or to be received by the Executive or for the
Executive's benefit (collectively, along with Agreement Benefits, referred to as
"Benefits"), is likely to result in the imposition of a tax to the Executive or
his estate under Code Section 4999 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code"), the aggregate present value of the
Agreement Benefits yet to be paid to the Executive shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this Agreement, "Reduced
Amount" shall be an amount expressed as a single sum that maximizes the
aggregate present value of Agreement Benefits previously paid and yet to be paid
to the Executive without causing the aggregate of any Benefits previously paid
and yet to be paid to the Executive to be subject to taxation to the Executive
or his estate under Section 4999 of the Code. The provisions
7
<PAGE> 8
of this subsection (a) and subsection (b) shall be applied in a manner that is
consistent with the provisions of subsection (c) below, and to the extent
required, the provisions of subsection (c) shall supersede the provisions of
this subsection (a) and subsection (b) to permit such consistency.
(b) If, determined in a manner consistent with subsection (a)
above, Agreement Benefits in excess of the Reduced Amount are paid to the
Executive or for his benefit, or the Internal Revenue Service asserts that the
amount of Benefits received by the Executive or for his benefit are in excess of
the amounts not subject to tax under Section 4999 of the Code, and such
assertion is determined to have a high probability of being successful, such
excess amounts (hereinafter referred to as "Overpayments") shall be treated for
all purposes as a loan to the Executive. The amount treated as a loan, together
with interest at the applicable federal rate provided for in Section 1274(d) of
the Code, shall be paid by the Executive to the Company as soon as practicable
following the date the Executive is notified in writing of such Overpayments.
(c) In the event that payment of any Benefits would result in
all or a portion of such payment to be subject to excise tax under Section 4999
of the Code, then the Executive's payment shall be either (i) the full payment
or (ii) such lesser amount which would result in no portion of the payment being
subject to excise tax under Section 4999 of the Code, whichever of the foregoing
amounts, taking into account the applicable federal, state and local employment
taxes, income taxes, and the excise tax imposed by Section 4999 of the Code,
results in the Executive's receipt, on an after-tax basis, of the greatest
amount of the payment notwithstanding that all or some portion of the payment
may be taxable under Section 4999 of the Code.
(d) All determinations required to be made under this Amendment
shall be made by a nationally recognized accounting firm selected by the Company
(the "Accounting Firm"). The Company shall cause the Accounting Firm to provide
detailed supporting calculations of its determinations to the Executive and the
Company. All fees and expenses of the Accounting Firm shall be borne equally by
the Executive and the Company.
7. NOTICES. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company: Bar Technologies, Inc. and
Republic Engineered Steels, Inc.
c/o Suite 100
5700 Lombardo Center Drive
Seven Hills, Ohio 44131-2545
Attention: Thomas N. Tyrrell
with a copy to: R. Jeffrey Pollock, Esq.
McDonald, Hopkins, Burke &
Haber Co., L.P.A.
600 Superior Avenue, Suite 2100
Cleveland, OH 44114
8
<PAGE> 9
To Executive: John G. Asimou
31910 Lake Road
Avon Lake, Ohio 44012
with a copy to: Douglas A. Neary, Esq.
Calfee, Halter & Griswold LLP
1400 McDonald Investment Center
Cleveland, Ohio 44114
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
8. SEPARABILITY; LEGAL FEES. If any provision of this Agreement shall
be declared to be invalid or unenforceable, in whole or in part, such invalidity
or unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. Each party shall bear the costs of any legal
fees and other fees and expenses which may be incurred in respect of enforcing
its respective rights under this Agreement.
9. ASSIGNMENT. This contract shall be binding upon and inure to the
benefit of the heirs and representatives of the Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by the Executive (except by will or, in the case of the Options, by trust for
the benefit of the Executive's spouse and/or children or by operation of the
laws of intestate succession) or by the Company, except that the Company may
assign this Agreement to any successor (whether by merger, purchase or
otherwise) to all or substantially all of the stock, assets or business of the
Company. If this Agreement is not assumed by a successor to Company, the
Agreement may be terminated by Executive under the terms of Section 6.1(a) as a
termination for Good Reason.
10. AMENDMENT. This Agreement may only be amended by written agreement
of the parties hereto.
11. NONDISCLOSURE OF CONFIDENTIAL INFORMATION; NON-COMPETITION. (a) The
Executive shall not, without the prior written consent of the Company, use,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information pertaining to the
business of the Company or any of its affiliates, except (i) while employed by
the Company, in the business of and for the benefit of the Company, or (ii) when
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof) with
jurisdiction to order the Executive to divulge, disclose or make accessible such
information. For purposes of this Section 11(a), "Confidential Information"
shall mean non-public information concerning the financial data, strategic
business plans, product development (or other proprietary product data),
customer lists, marketing plans and other non-public, proprietary and
confidential information of the Company,
9
<PAGE> 10
Bliss & Laughlin Industries Inc. or their respective affiliates or customers,
that, in any case, is not otherwise available to the public (other than by the
Executive's breach of the terms hereof).
(b) In consideration of the Company's obligations under this
Agreement the Executive agrees that during the period of his employment
hereunder and for a period of twelve (12) months thereafter, without the prior
written consent of the Board, (i) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner, investor,
lender or employee or in any other capacity, carry on, be engaged in or have any
financial interest in, any business which is in competition with the business of
the Company and (ii) he shall not, on his own behalf or on behalf of any person,
firm or company, directly or indirectly, solicit or offer employment to any
person who has been employed by the Company at any time during the 12 months
immediately preceding such solicitation.
(c) For purposes of this Section 11, a business shall be deemed to
be in competition with the Company if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Company as a part of the business
of the Company within the same geographic area in which the Company effects such
purchases, sales or dealings or renders such services. Nothing in this Section
11 shall be construed so as to preclude the Executive from investing in any
publicly or privately held company, provided the Executive's beneficial
ownership of any class of such company's securities does not exceed 1% of the
outstanding securities of such class.
(d) The Executive agrees that this covenant not to compete is
reasonable under the circumstances and will not interfere with his ability to
earn a living or to otherwise meet his financial obligations. The Executive and
the Company agree that if in the opinion of any court of competent jurisdiction
such restraint is not reasonable in any respect, such court shall have the
right, power and authority to excise or modify such provision or provisions of
this covenant as to the court shall appear not reasonable and to enforce the
remainder of the covenant as so amended. The Executive agrees that any breach of
the covenants contained in this Section 11 would irreparably injure the Company.
Accordingly, the Executive agrees that the Company may, in addition to pursuing
any other remedies it may have in law or in equity, cease making any payments
otherwise required by this Agreement and obtain an injunction against the
Executive from any court having jurisdiction over the matter restraining any
further violation of this Agreement by the Executive. Notwithstanding the
expiration of the term of this Agreement, the provisions of this Section 11
hereunder shall remain in effect as long as is necessary to give effect thereto.
12. BENEFICIARIES; REFERENCES. The Executive shall be entitled to
select (and change, to the extent permitted under any applicable law) a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following the Executive's death, and may change such election, in
either case by giving the Company written notice thereof. In the event of the
Executive's death or a judicial determination of his incompetence, reference in
this Agreement to the Executive shall be deemed, where appropriate, to refer to
his beneficiary, estate or other legal representative. Any reference to the
masculine gender in this Agreement shall include, where appropriate, the
feminine.
10
<PAGE> 11
13. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 13 are in addition to the survivorship provisions of
any other section of this Agreement.
14. ARBITRATION. Except as otherwise provided in Section 11(d) hereof,
any dispute or controversy arising under or in connection with this Agreement
shall be resolved by binding arbitration held in the City of Cleveland, Ohio and
conducted in accordance with the commercial arbitration rules of the American
Arbitration Association in effect at the time of the arbitration. Each party
shall bear its own expenses in connection with any such arbitration and joint
expenses shall be borne by both parties in equal portions.
15. GOVERNING LAW. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Ohio without reference to
rules relating to conflicts of law.
16. EFFECT ON PRIOR AGREEMENTS. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding, both written and oral, between the
Company, any affiliate of the Company or any predecessor of the Company or
affiliate of the Company and the Executive.
17. WITHHOLDING. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
19. INDEMNIFICATION. Executive shall be provided with the same
indemnifications and directors and officers insurance coverages as apply to the
key officers and directors of the Company.
COMPANY
/s/ Thomas N. Tyrrell
---------------------------------
Thomas N. Tyrrell, CEO
EXECUTIVE
/s/ John G. Asimou
---------------------------------
John G. Asimou
11
<PAGE> 12
APPENDIX A
OPTION TERM SHEET
EQUITY OWNERSHIP
- ----------------
STOCK OPTIONS Upon the effective date of the Agreement pursuant
to a stock option agreement including, among other
provisions, the terms set forth below, the Company
shall grant the Executive nonqualified options (or
at Company's discretion, incentive stock options
with or without nonqualified options) to purchase
one and one-quarter percent (1.25%) of the total
Available Common Stock of Company. "Available
Common Stock" of the Company shall be defined as
the authorized and outstanding common shares plus
options on a fully diluted basis (including all
equity or options of the entire management team),
taking into account the effects of the
contemplated merger and any related transactions
to the merger.
OPTION TERM The option term shall be 10 years; provided,
however, that exercisable options shall expire
earlier upon termination of employment as follows:
Termination for Cause/Quit w/o Good Reason:
Immediately upon termination of employment.
Termination w/o Cause/Quit w/Good Reason: the
remaining term of the Agreement (i.e. during the
applicable salary continuation period) plus three
months.
A termination of employment at the expiration of
the Agreement on account of the Company's notice
of nonrenewal, or a termination during the term by
mutual agreement of the parties: One year after
termination of employment.
Death/Disability: One year after termination of
employment.
Unexercisable options will terminate upon
termination of employment, unless vesting
acceleration is explicitly provided for.
<PAGE> 13
OPTION EXERCISE PRICE Options shall be granted at an exercise price
which is equal to the price per share paid by
Blackstone.
EXERCISABILITY OF OPTIONS
- -------------------------
--VESTING Options shall become exercisable with respect to
33 1/3% of the shares subject to such options on
each September 30, 1999, 2000, 2001 respectively,
if the Executive's Term of Employment continues
through and includes such dates.
Options shall expire and no longer be exercisable
following termination of employment by the Company
for Cause, resignation by the Executive without
Good Reason, or nonrenewal by Executive, but shall
accelerate and become fully exercisable upon the
earliest of (i) death, (ii) disability, (iii)
termination without Cause or resignation for Good
Reason (collectively, a "Good Termination"), or
(iv) on the first date on which the holdings of
Blackstone (as defined in Section 3.2 above) or
Veritas, or the combined holdings of Blackstone
and Veritas, do not represent more than 50% of the
voting control of the Company. "Veritas" means
"Veritas Entities or their respective Affiliates",
as that term is defined in the Credit Agreement by
and between Bar Technologies, Inc., Bliss &
Laughlin Steel Company, the Lenders named therein
and Chemical Bank Delaware dated as of April 2,
1996. If the Company gives notice of nonrenewal at
the expiration of the Initial or any renewal
terms, unvested options shall vest in accordance
with the schedule set forth above during the
applicable salary continuation period; options
that do not vest by that date shall terminate.
DILUTION OF STOCK OPTIONS The Executive's exercisable and unexercisable
options shall be subject to the same dilution as
may apply to all common stockholders, provided
that the anticipated transaction referred to in
Section 4.1 of the Agreement shall not have a
dilutive effect on the one and one-quarter percent
(1.25%) discussed herein.
ADJUSTMENTS In the event of any change in the outstanding
common stock by reason of a stock split, spin-off,
stock dividend, stock combination or
reclassification, recapitalization, consolidation
or merger, or similar event, the Board shall
adjust appropriately the number of shares subject
to options under
2
<PAGE> 14
this Term Sheet and make other revisions as it
deems are equitably required.
NONTRANSFERABILITY Except as otherwise provided herein, the Executive
cannot sell or otherwise transfer the options and
shares purchased upon exercise of an option
("Option Shares") prior to a Public Offering that
includes Blackstone shares. Any sale of Option
Shares shall in all cases be completed in
compliance with applicable securities laws.
Transfers of Option Shares shall be permitted in
the event of death to beneficiaries of the estate,
and during lifetime to trusts, the beneficiaries
of which are the Executive, a charitable
institution or institutions selected by Executive,
or members of his family, and options may, in the
event of death, be exercised by beneficiaries or
the estate, subject in all cases to agreeing to be
bound by the same terms as the Executive. As a
condition to exercising options, the Executive
must agree to be bound by the terms of the
stockholders' agreement that will be drafted
subsequent to the Employment Agreement.
RIGHTS The Executive shall have the same voting, dividend
and other rights with respect to Option Shares as
the Company's other common stockholders.
REGISTRATION RIGHTS/PUBLIC
OFFERING OPTION SHARES: It is expected that the stockholder
agreement will provide piggyback rights.
OPTIONS: Immediately following the first Public
Offering that includes Blackstone shares, the
Company shall file, at its own expenses, an S-8 to
register the shares subject to option, which
shares shall be subject to an applicable "standard
underwriter lock-up agreement."
TAGALONG/DRAGALONG
RIGHTS It is expected that the stockholder's agreement
will provide tagalong and dragalong rights.
PUTS AND CALLS Puts and calls for the options and Option Shares
shall be as set forth in Appendix B; PROVIDED,
HOWEVER, if there is a Change in Control prior to
a Public Offering, any Option Shares or
exercisable Options (i) may be put to the Company
at the difference between FMV and the exercise
price, but (ii) the Company shall not have a call;
PROVIDED, FURTHER, no put or call shall be
consummated if such put or
3
<PAGE> 15
call would result in a violation of applicable law
or the terms of any financing documents. There
shall be no puts or calls subsequent to a Public
Offering. An exercise period (e.g., one year after
termination of employment) will otherwise be
specified for puts and calls.
- --FAIR MARKET VALUE ("FMV") If there is no public trading market for the
shares of the Company, the FMV of the shares
will be the per share price, as determined by
the Board in good faith; PROVIDED, HOWEVER,
if the Executive or Executive's beneficiaries
or estate disagree with the Board's
determination, the FMV shall be determined by
an independent nationally recognized, full
service investment banker who follows the
Company and is reasonably acceptable to both
the Company and the Executive or Executive's
beneficiaries or estate.
- --PUBLIC OFFERING Public offering shall mean the sale of the shares
of any class of the Company's stock to the public
pursuant to an effective registration statement
(other than a registration statement on Form S-4
or S-8 or any similar or successor form) filed
under the Securities Act of 1933, as amended.
4
<PAGE> 16
APPENDIX B
PUTS AND CALLS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
BAD TERMINATIONS GOOD TERMINATIONS
- ---------------------------------------------------------------------------------------------------------------------------------
FIRED FOR QUIT W/O FIRED W/O "CAUSE"/ QUIT DEATH/DISABILITY
"CAUSE" "GOOD REASON" WITH "GOOD REASON"
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPTION SHARES Any Option Any Option Shares Any Option Shares can be Called at May put Option Shares to Company at
Shares can be can be Called at FMV prior to a Public Offering. FMV prior to a Public Offering.
Called at the the lesser of
lesser of cost cost or FMV. Any Option Shares may be put to
or FMV. the Company at FMV prior to a
No put. Public Offering. No put or call subsequent to a
No Put. Public Offering.
No put or call subsequent
to a Public Offering.
- ---------------------------------------------------------------------------------------------------------------------------------
OPTIONS All Options All Options Options shall remain outstanding Options shall remain outstanding
terminate terminate without until termination of the Agreement until termination of employment
without any any payment. plus 3 months. plus one year.
payment.
May put Options to the Company at May put Options to Company at the
the difference between FMV and the difference between FMV and the
exercise price prior to a Public exercise price prior to a Public
Offering. Offering.
No put or call subsequent to a No put or call subsequent to a
Public Offering. Public Offering.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Options at Expiration of Employment Term: If employment terminates because
the Executive gives notice of intent not to renew, all options shall
terminate without payment at termination of employment in that event. If
employment is terminated because the Company elects not to renew the
Agreement, Executive shall vest in options during the applicable salary
continuation period under Section 6.1. Unvested options at the end of such
period shall terminate.
<PAGE> 1
Exhibit 10.49
EMPLOYEE LEASING AND OVERHEAD ALLOCATION AGREEMENT
THIS EMPLOYEE LEASING AND OVERHEAD ALLOCATION AGREEMENT ("Agreement")
is made in Massillon, Ohio as of this 8th day of March 1999, between REPUBLIC
ENGINEERED STEELS, INC., a Delaware corporation ("Republic") and BAR
TECHNOLOGIES, INC., a Delaware corporation ("BarTech").
PRELIMINARY RECITALS
WHEREAS, Republic and BarTech are leading producers of special bar
quality steel, i.e. higher quality hot-rolled and cold-finished carbon and alloy
steel bars used primarily in automotive and industrial equipment.
WHEREAS, in order to gain cost and operating efficiencies, Republic and
BarTech are currently sharing certain Shared Common Expenses (as hereinafter
defined), including, without limitation, expenses related to (i) sales and
marketing services, administrative services, and plant overhead services, and
(ii) the operation of certain common facilities;
WHEREAS, certain salaried employees of BarTech and Republic are
currently providing services to both BarTech and Republic;
WHEREAS, BarTech and Republic desire to more accurately allocate the
costs for such Shared Common Expenses between the two companies.
WHEREAS, BarTech wishes to terminate the employment of certain salaried
employees and thereafter to lease-back the employment services provided by these
employees and coincident with such termination all such salaried employees will
thereafter become employees of Republic.
WHEREAS, BarTech wishes to engage Republic, under the terms and
conditions stated in this Agreement, to provide BarTech with the administrative
services and common facilities as required by BarTech and such other services
currently rendered by certain of its salaried employees.
WHEREAS, Republic and BarTech believe and agree that the proper and
most accurate method to allocate the cost of the Shared Common Expenses and
other services rendered by Republic employees should be a proration of the
actual costs incurred by Republic based upon total periodic trade revenues of
Republic and BarTech.
In consideration of these mutual premises and the covenants contained
in this Agreement, the parties agree as follows:
SECTION 1 - SERVICES.
<PAGE> 2
(a) Republic hereby agrees to furnish to BarTech, and BarTech
agrees to lease from Republic, the services of the personnel
necessary to fill the positions set forth on Schedule 1,
attached hereto and incorporated herein by reference. BarTech
acknowledges and agrees that the services rendered by such
Republic personnel shall be on a non-exclusive basis and that
such personnel may continue to render certain services to
Republic during the Term of this Agreement. BarTech shall have
the right to amend Schedule 1 upon reasonable notice to
Republic in order to change the level of services or the
number of employees provided to BarTech pursuant to this
Agreement; provided that parties agree to negotiate in good
faith a change in the fees payable to Republic hereunder
commensurate with the change in the employment services to be
rendered pursuant to this Agreement.
(b) To the extent practicable, Republic shall accommodate
BarTech's reasonable recommendations regarding the
discontinuation of services of any particular Republic
employee; provided, however, the determination to hire or
terminate any Republic employee shall be in Republic's sole
discretion. BarTech shall not be responsible for any of
Republic's financial obligations to any Republic employee
accruing after such discontinuation becomes effective by
reason of the services performed hereunder.
SECTION 2 - SHARED COMMON EXPENSES. During the term of this Agreement,
BarTech and Republic shall share common overhead expenses related to (i) sales
and marketing services, administrative services, and plant overhead services,
and (ii) the operation of certain common facilities, as further described on
Schedule 2 attached hereto and incorporated herein (collectively the "Shared
Common Expenses"). BarTech and Republic shall establish an accounting method
which assigns costs and expenses to various "cost centers." For purposes of this
Agreement, "Cost Centers" shall mean various services, facilities, groups of
employees, management and other functions, wherein such functions or facilities
are performed or used jointly by or for the benefit of both BarTech and Republic
(e.g., payroll and accounting).
SECTION 3 - TERM. With respect to the sharing of common overhead
expenses as set forth in Section 2 above, this Agreement shall be effective as
of October 1, 1998. With respect to the services leased by BarTech pursuant to
Section 1 above, this Agreement shall be effective as of January 1, 1999 (the
"Effective Date"). Subject to earlier termination pursuant to Section 12 below,
this Agreement shall remain in effect for a period of one (1) year from the
Effective Date and unless earlier terminated by either party, shall
automatically renew and be extended for additional terms of one (1) year each.
Notwithstanding the foregoing, either party may terminate this Agreement upon
thirty (30) days prior written notice. The parties agree and acknowledge that
BarTech shall have terminated the employment of certain specialized personnel as
agreed upon by BarTech and Republic effective as of the close of business on
December 31, 1998 and that the same personnel shall become employees of Republic
as of the Effective Date. Unless otherwise set forth in an employment agreement,
Republic shall have no obligation to employ such personnel for any period of
time in excess of sixty (60) days.
-2-
<PAGE> 3
SECTION 4 - BARTECH PAYMENTS.
(a) Every month during the term of this Agreement,
BarTech shall pay Republic for the services rendered
to BarTech by Republic employees and the Shared
Common Expenses incurred by Republic on behalf of
BarTech in an amount equal in the aggregate to the
following:
(i) with respect to each position or service
provided by Republic to BarTech which are set
forth on Schedule 1, an amount equal to one
hundred percent (100%) of the total cost of
expense related thereto; plus
(ii) with respect to the Shared Common Expenses
incurred by Republic on behalf of BarTech,
an amount equal to: (i) the BarTech
Allocation Percentage (as hereinafter
defined) multiplied by (ii) all costs and
expenses, including salaries, benefits,
fixed overhead expenses and other general
administrative expenses charged to such Cost
Center for the applicable period. The
parties agree and acknowledge that the exact
allocation of expenses for the Cost Centers
is not capable of determination with
mathematical precision and that the
allocation set forth above is good faith
estimate of the cost actually incurred by
Republic on behalf of BarTech; plus
(iii) a monthly administrative services fee equal
to Two Thousand Five Hundred Dollars
($2,500.00) ("Administrative Fee").
(b) Within thirty (30) days after the end of each month,
Republic shall provide BarTech with an invoice for
the fees set forth in Section 4(a) above. Republic
must receive payment in full at its office no later
than thirty (30) days following the date on which
BarTech receives such invoice. Time is of the essence
in making such payments to Republic. Neither the
failure of BarTech to perform any covenant,
obligation, or term in this Agreement nor the
termination of this Agreement by either party shall
affect or limit Republic's obligations to pay the
salaries of the employees leased to BarTech pursuant
to this Agreement as required by law. However,
BarTech agrees that interest may accrue, at
Republic's option, on all overdue payments due
Republic hereunder at a rate equal to up to ten
percent (10%) per annum. Republic reserves the right,
in its sole discretion, to layoff or terminate some
or all of the employees leased to BarTech pursuant to
this Agreement.
(c) Republic shall determine, in its sole and absolute
discretion, the salary to be paid to each Republic
employee; provided that such salary shall in no event
be less than the current salary paid to such employee
by BarTech. Fringe benefits to be provided to said
employees shall be determined by
-3-
<PAGE> 4
Republic. In the event that seniority is a factor for
eligibility and/or vesting purposes in any benefit,
Republic employees shall be credited with their
service with BarTech prior to being employed by
Republic, unless such credit is inconsistent or
prohibited by any plan document governing such fringe
benefits. Notwithstanding anything herein to the
contrary, Republic hereby reserves the right to amend
or terminate any of the fringe benefits from time to
time, as determined by Republic in its sole and
absolute discretion.
(d) The "BarTech Allocation Percentage" shall equal the
following quotient (expressed as a percentage): the
amount of steel shipped to trade customers by BarTech
divided by the sum of the (i) the amount of steel
shipped to trade customers by BarTech, plus (ii) the
amount of steel shipped to trade customers by
Republic. The BarTech Allocation Percentage shall be
calculated monthly based on the shipments of the
parties for the current calendar month.
(e) Republic agrees to permit BarTech to offset the
amounts due Republic pursuant to this Section 5
against the amounts due Republic pursuant to Section
6 below.
SECTION 5 - REPUBLIC PAYMENTS.
(a) Every month during the term of this Agreement,
Republic shall pay BarTech for the Shared Common
Expenses incurred by BarTech on behalf of Republic in
an amount equal in the aggregate to the following:
(i) the Republic Allocation Percentage (as
hereinafter defined) multiplied by (ii) all costs and
expenses, including salaries, benefits, fixed
overhead expenses and other general administrative
expenses charged to such Cost Center for the
applicable period. The parties agree and acknowledge
that the exact allocation of expenses for the Cost
Centers is not capable of determination with
mathematical precision and that the allocation set
forth above is good faith estimate of the cost
actually incurred by BarTech on behalf of Republic.
(b) Within thirty (30) days after the end of each month,
BarTech shall provide Republic with an invoice for
the fees set forth in Section 5(a) above. BarTech
must receive payment in full at its office no later
than thirty (30) days following the date on which
Republic receives such invoice. Time is of the
essence in making such payments to BarTech. Republic
agrees that interest may accrue, at BarTech's option,
on all overdue payments due BarTech hereunder at a
rate equal to up to ten percent (10%) per annum.
(c) The "Republic Allocation Percentage" shall equal the
following quotient (expressed as a percentage): the
amount of steel shipped to trade
-4-
<PAGE> 5
customers by Republic divided by the sum of the (i)
the amount of steel shipped to trade customers by
BarTech, plus (ii) the amount of steel shipped to
trade customers by Republic. The Republic Allocation
Percentage shall be calculated monthly based on the
shipments of the parties for the current calendar
month.]
(d) BarTech agrees to permit Republic to offset the
amounts due BarTech pursuant to this Section 6
against the amounts due Republic pursuant to Section
5 above.
SECTION 6 - PLACE OF PERFORMANCE.
(a) All work and services to be performed for BarTech
shall be performed by Republic employees at BarTech
or Republic facilities identified by BarTech.
(b) To the extent that any work or services are performed
at BarTech facilities, BarTech shall comply with all
health and safety laws, regulations, ordinances,
directives, and rules imposed by controlling federal,
state and local government. BarTech shall promptly
report any accidents and injuries to Republic.
(c) BarTech agrees to comply within a reasonable period
of time, at its expense, with any specific and
reasonable health and safety directives from
Republic, Republic's workers' compensation carrier,
or any government agency having jurisdiction over
work place health and safety.
SECTION 7 - OBLIGATIONS.
(a) The parties acknowledge and agree that Republic is an
independent contractor, and that all of the personnel
assigned by Republic to provide services to BarTech
are employees of Republic and only of Republic.
Republic acknowledges that it is responsible for the
payment of federal, state and local payroll taxes,
workers' compensation insurance, unemployment
compensation, salaries and fringe benefits for its
employees and for the preparing and filing of all
returns and reports concerning all of its employees,
including without limitation the employees leased to
BarTech pursuant to this Agreement. Republic shall
indemnify and hold BarTech harmless for any penalty,
claim, liability, deficiency or damages, including,
without limitation reasonable attorneys fees, arising
as a result of Republic's failure to fulfill its
duties as set forth in the preceding sentence;
provided, however, BarTech expressly acknowledges,
however, that Republic shall not be liable for
BarTech's loss of business goodwill, lost profits or
other consequential, special or incidental damages.
At Republic's request, BarTech may assist in
-5-
<PAGE> 6
recruiting, hiring, evaluating, replacing,
supervising, disciplining and firing Republic
employees; however, Republic shall retain ultimate
control over such matters.
(b) In order to carry out its obligations hereunder,
Republic may designate one or more "on-site
supervisors" from among the employees assigned to
provide services to BarTech. The on-site supervisors
shall oversee administrative and managerial matters
relating to Republic's leased employees and shall be
under the direct supervision of the officers of
Republic. If Republic does not designate on-site
supervisors, Republic's leased employees who are
assigned to BarTech shall be responsible to the
officers of Republic. The on-site supervisors or the
management team shall determine the policies and
procedures to be followed by Republic's leased
employees regarding the time and performance of their
duties. BarTech shall cooperate with Republic in the
formation of such policies and procedures and shall
permit Republic to implement the same.
(c) All Republic employees who are engaged in
Environmental Activities (as hereinafter defined) at
or in facilities, vessels or vehicles owned, operated
or occupied by BarTech shall conduct such
Environmental Activities under the policy,
supervision and direction of the Board of Directors
of BarTech. "Environmental Activities" shall mean the
handling, storage, maintenance, treatment, disposal,
emission, spill or release of substances or materials
regulated by Governmental Requirements (as
hereinafter defined). "Governmental Requirements"
shall mean all laws, ordinances, rules, statutes, and
regulations of the United States, of the state in
which each BarTech facility, vessel or vehicle is
located, and of any other political subdivision,
agency or instrumentality exercising jurisdiction
over a particular BarTech facility, vessel or
vehicle, which laws, ordinances, statutes, rules and
regulations govern, regulate, or otherwise pertain to
health, industrial hygiene or the environment,
including without limitation, the Comprehensive
Environmental Response Compensation and Liability Act
of 1980 ("CERCLA") (42 U.S.C. Section 9601 et.
seq.), the Resource, Conservation and Recovery Act of
1976 ("RCRA") (42 U.S.C. Section 6901 et. seq.), the
Toxic Substance Control Act ("TSCA") (15 U.S.C.
Section 2601 et. seq.), the Clear Water Act ("CWA")
(33 U.S.C. Section 1251 et. seq.), the Clear Air Act
("CAA") (42 U.S.C. Section 7401 et. seq..) as well as
any other federal, state or local "Superfund" or
"Superlien" statutes, laws or regulations.
SECTION 8 - BILLING INFORMATION. All invoices provided to either party
shall be accompanied by a detailed summary of information used to calculate the
amounts due thereunder, including, when applicable, detailed calculations
setting forth the new Allocation Percentage for each calendar month. In the
event that either fails to provide written notice to the other within thirty
(30) days of receipt of such invoice, such party shall be precluded from
-6-
<PAGE> 7
questioning the correctness of the invoice or the calculations used to support
the invoice. In addition and notwithstanding the foregoing, within ninety (90)
days after the end of each calendar year during the term of this Agreement, both
parties shall provide the other with a detailed statement of all revenues and
costs necessary to calculate the amounts due the other during the previous
calendar year, or portion thereof. If the annual report reveals any
underpayments by either party, the parties agree to make the appropriate
payments to the other within fifteen (15) days of notice thereof. Additionally,
BarTech shall provide periodic reports concerning the quality of performance of
each of Republic's employees, as BarTech deems necessary or as Republic may
reasonably request. BarTech and Republic shall also make available to each other
such other employee information in their possession as may be reasonably
requested from time to time by the other party.
SECTION 9 - INDEMNIFICATION.
(a) To the extent permitted by applicable law, BarTech
shall indemnify, defend, and hold Republic and its
officers, directors, employees, agents and
representatives harmless from all claims arising out
of the rendering of services for BarTech by Republic
employees and the incurrence of the Shared Common
Expenses on behalf of BarTech. BarTech shall
indemnify, defend, and hold Republic harmless from
all claims arising out of the incurrence of the
Shared Common Expenses on behalf of Republic.
(b) To the extent permitted by applicable law, such
indemnification shall extend to any and all
liabilities, expenses, costs, damages and/or losses
of any kind, including reasonable attorneys' fees and
all expenses in connection with defending against any
claim arising out of any and all acts or omissions in
connection with the performance of services rendered
for either party by the employees of the other party.
(c) To the extent permitted by applicable law and except
as set forth in Section 9(d) herein, BarTech shall
not, in the aggregate, sue, make any claim or demand,
or otherwise seek any damages from Republic for any
injuries arising out of any and all acts or omissions
of any Republic employee in connection with the
performance of services rendered for BarTech in
excess of the total Administrative Service Fees
received by Republic pursuant to this Agreement.
-7-
<PAGE> 8
SECTION 10 - INSURANCE.
(a) Republic shall furnish and keep in full force and
effect, at all times during the term of this
Agreement, workers' compensation insurance covering
all of Republic's leased employees who are providing
services to BarTech hereunder. Republic shall furnish
BarTech with a "Certificate of Insurance" naming
BarTech as Certificate Holder. Republic shall also
obtain a policy providing disability insurance
coverage for the same employees.
(b) Republic shall maintain, at all times, the following
policies of insurance for actions arising out of acts
of Republic's leased employees occurring during the
course of their employment:
(i) general liability; and
(ii) automobile liability related to the use of
automobiles by employees while on the job.
(c) Each such policy shall provide liability coverage of
at least $1,000,000 per actionable occurrence.
(d) Each such policy shall insure BarTech, Republic and
Republic's employees who perform services for BarTech
against any and all claims of any nature whatsoever,
regardless of the type of injury alleged, arising
from any act attributable to any Republic employee.
(e) Each such policy shall be on an "occurrence" basis.
However, if an "occurrence" policy is not available,
Republic shall maintain an equivalent "claims made"
policy until the expiration of all statutes of
limitation applicable to any claim that could arise
under this Agreement by virtue of the acts of
Republic's leased employees.
(f) BarTech shall be named as an insured on all such
policies of insurance. All such policies shall
require the insurer to provide BarTech with notice of
impending cancellation, in the same manner as it is
required to provide such notice to Republic. If
Republic shall fail to pay any premium when due,
BarTech, in its sole discretion, may pay the same,
and Republic shall reimburse BarTech for the full
amount of such premium within five (5) business days
after BarTech's payment. If reimbursement is not made
within such period, BarTech may deduct the full
amount from the next payment(s) BarTech is required
to make to Republic under Section 4 hereunder.
(g) In the event that either party currently maintains a
policy of insurance covering employment practices
liability, such party shall continue to
-8-
<PAGE> 9
maintain such policy at all times during the term of
this Agreement at its own cost and take any steps
reasonably necessary to ensure that such policy be
amended or extended to cover the employees leased to
BarTech pursuant to this Agreement.
SECTION 11 - CONFIDENTIALITY. The parties agree and acknowledge that in
order to successfully provide the services as contemplated by this Agreement,
either party may from time to time disclose to the other its confidential and
proprietary information. The parties further agree and acknowledge that but for
this Agreement, neither would disclose such confidential and proprietary
information which had been developed at such party's expense and which contains
such party's trade secrets. Accordingly, the parties agree as follows with
respect to all confidential and proprietary information disclosed to the other
pursuant to this Agreement:
(a) Identification of Confidential Information. Confidential
information for the purposes of this Agreement shall mean any
information (i) identified by either party in writing as
confidential information and (ii) not generally known to the
public. The restrictions contained in this Section 11 shall
not be enforceable against a party and such party shall not be
liable for disclosures if such party can demonstrate that the
Confidential Information so disclosed: (i) is already known to
such party and has properly been obtained as of the date of
this Agreement, as shown by contemporaneous written records;
(ii) is already in the possession of the public or becomes
publicly available without breach hereof by such party; (iii)
is lawfully acquired by such party from a person not under any
confidentiality obligation to the other party with respect to
disclosure of any Confidential Information; (iii) is disclosed
to any third party by or with the permission of the other
party without confidentiality restrictions; or (iv) is
independently developed by such party as shown by
contemporaneous written records, and was not acquired directly
or indirectly from the other party.
(b) Nondisclosure. The parties agree not to disclose any
Confidential Information of the other to any third party
without the prior consent of the disclosing party.
(c) Non-Interference. The parties agree that the Confidential
Information that they receive from the other party constitutes
valuable business information which could be unfairly used in
competition with the other party and which could give such
party a competitive advantage in the marketplace that it
otherwise would not possess. Accordingly, the parties agree
that they will not, directly or indirectly, whether acting on
their own behalf or in any other capacity, in concert with, or
on behalf of, any third party or entity, use the Confidential
information to interfere in any way with the business
operations, business relationships, contract rights, or
business opportunities of the other party.
-9-
<PAGE> 10
(d) Breach. In the event of a breach or threatened breach of the
provisions of this Section 11, the parties agree that the
non-breaching party shall be entitled to injunctive relief
restraining and enjoining the other party from violating any
provision of this Section 11. In addition, the non-breaching
party shall be entitled to any and all additional and
alternative legal and equitable remedies available to it,
including the recovery of attorney's fees incurred in the
enforcement of this Agreement.
SECTION 12 - DEFAULT AND TERMINATION. Upon the occurrence of any event
of default, the non-defaulting party may, at its option, and without waiving its
rights under this Agreement or any other rights available at law or in equity,
including its rights to damages, terminate this Agreement effective immediately
upon the occurrence of an event of default or upon the lapse of the specified
period following an event of default.
(a) TERMINATION BY REPUBLIC. The occurrence of any one or more of
the following events shall constitute an event of default and
grounds for termination of this Agreement by Republic:
(i) Upon written notice, if BarTech makes a general
assignment for the benefit of creditors, or, unless
otherwise prohibited by law, if a petition in
bankruptcy is filed by BarTech, or such a petition is
filed against and consented to by BarTech or not
dismissed within thirty (30) days of filing, or if a
bill in equity or other proceeding for the
appointment of a receiver of BarTech or other
custodian for BarTech's business or assets is filed
and consented to by BarTech, or if a receiver or
other custodian (permanent or temporary) of BarTech's
assets or property, or any part of BarTech's assets
or property, is appointed; or
(iii) Upon written notice, if BarTech violates any covenant
of confidentiality or non-competition obligation
contained in this Agreement or otherwise discloses,
uses, permits the use of, copies, duplicates,
records, transmits or otherwise reproduces any
materials, or information designated by Republic as
confidential without Republic's prior written
approval; or
(iii) If BarTech fails to perform or breaches any covenant,
obligation, or term in this Agreement and fails to
cure such non-compliance or deficiency within thirty
(30) days after Republic's written notice of such
non-compliance or deficiency.
(b) TERMINATION BY BARTECH. The occurrence of the following events
shall constitute an event of default and grounds for
termination of this Agreement by BarTech:
-10-
<PAGE> 11
(i) Upon written notice, if Republic makes a general
assignment for the benefit of creditors, or, unless
otherwise prohibited by law, if a petition in
bankruptcy is filed by Republic, or such a petition
is filed against and consented to by Republic or not
dismissed within thirty (30) days of filing, or if a
bill in equity or other proceeding for the
appointment of a receiver of Republic or other
custodian for Republic's business or assets is filed
and consented to by Republic, or if a receiver or
other custodian (permanent or temporary) of
Republic's assets or property, or any part of
Republic's assets or property, is appointed;
(ii) Upon written notice, if Republic violates any
covenant of confidentiality or non-competition
obligation contained in this Agreement or otherwise
discloses, uses, permits the use of, copies,
duplicates, records, transmits or otherwise
reproduces any materials, or information designated
by BarTech as confidential without BarTech's prior
written approval; or
(iii) If Republic fails to perform or breaches any
covenant, obligation, or term in this Agreement and
fails to cure such non-compliance or deficiency
within thirty (30) days after Republic's written
notice of such non-compliance or deficiency.
(c) The rights and obligations set forth in Sections 9 and 11
shall survive the termination or expiration of this Agreement
without limitation.
SECTION 13 - COMPLIANCE WITH LAWS. Both Republic and BarTech shall
comply with all applicable labor laws and laws regarding equal employment
opportunities, whether federal, state or local. Neither Republic nor BarTech
shall discriminate on the basis of national origin, race, color, religion, age,
handicap or sex.
SECTION 14 - GOVERNING LAW & ARBITRATION. This Agreement shall be
governed by and construed in accordance with the domestic laws of the State of
Ohio without giving effect to any choice or conflict of law provision or rule
(whether of the State of Ohio or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Ohio. Except
for any claim, controversy or dispute arising from or relating to this Agreement
for which a party is seeking, in whole or in part, any type of equitable remedy,
which may be brought against any of the parties in the courts of the State of
Ohio, County of Stark, or, if it has or can acquire jurisdiction, in the United
States District Court for the Northern District of Ohio, any claim, controversy
of dispute arising from or relating to this Agreement shall be heard and
resolved exclusively by binding arbitration in Cleveland, Ohio, under the
then-prevailing Commercial Arbitration Rules of the American Arbitration
Association (an "Arbitration"). For any Arbitration, each party shall use good
faith efforts to choose one (1) arbitrator who is experienced in commercial
arbitration. If the parties cannot agree upon one (1) arbitrator within fifteen
(15) days after a claim is submitted to Arbitration, each party shall have
fifteen (15) days to choose one (1) arbitrator who is experienced in
-11-
<PAGE> 12
commercial arbitration, and such arbitrators shall collectively agree upon a
third arbitrator. The costs related to Arbitration, other than costs directly
attributable to either Republic or BarTech, shall be paid equally by the parties
provided, however, that if a claim presented to Arbitration by a party, or the
complete defense offered at Arbitration by a party, is not colorable or is
brought or offered solely to cause delay, obstruction or vexation, such party
shall be responsible for all of the other party's costs related to the
Arbitration, including reasonable attorney's fees. Any award of an Arbitration
may be entered into judgment in any court of competent jurisdiction. This
provision shall survive any termination of this Agreement. Process in any action
or proceeding referred to in this Section 14 may be served on any party anywhere
in the world.
SECTION 15 - ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the parties to
this Agreement. No waiver by any party of any default, misrepresentation, or
breach of warranty or covenant under this Agreement, whether intentional or not,
shall be deemed to extend to any prior or subsequent default, misrepresentation,
or breach of warranty or covenant under this Agreement or affect in any way any
rights arising by virtue of any prior or subsequent occurrence.
SECTION 16 - NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any person other than the parties and their
respective successors and permitted assigns.
SECTION 17 - HEADINGS. Headings in this Agreement are for convenience
only and shall not be used to interpret or construe its provisions.
SECTION 18 - COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
together shall constitute one and the same instrument.
SECTION 19 - SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions of
this Agreement or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
SECTION 20 - CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.
SECTION 21 - NO PARTNERSHIP OR JOINT VENTURE. Republic does not, in any
way or for any purpose, become a partner of BarTech in the conduct of BarTech's
business or otherwise, or a joint venturer or member of a joint enterprise with
BarTech by reason or connection with this Agreement.
-12-
<PAGE> 13
SECTION 22 - EMPLOYMENT AGREEMENTS. The parties agree and acknowledge
that with respect to employees of BarTech that currently have valid and binding
employment agreements with BarTech, this Agreement shall be subject to BarTech
obtaining the appropriate consents to the novation and/or assignment of such
employment agreement. Unless otherwise set forth in a written employment
agreement, nothing contained herein shall be construed to guarantee employment
for any individual for any specific period or length of time, or to modify,
limit, or waive the right of either party to terminate employment with or
without cause or notice; employment for such employees shall at all times remain
at will.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
REPUBLIC
ENGINEERED STEELS, INC.,
a Delaware corporation
By:
-------------------------------------
Signature
-------------------------------------
Print Name
Its:
-------------------------------------
Title
BAR TECHNOLOGIES, INC.,
a Delaware corporation
By:
-------------------------------------
Signature
-------------------------------------
Print Name
Its:
-------------------------------------
Title
-13-
<PAGE> 14
SCHEDULE 1
Employment Positions
<TABLE>
<S> <C>
Casting Supervisor Manager, Utilities & Environmental
Chief Chemist Manager, Warehouse
Compressed Air & Steam Supervisor Mechanical Engineer
Electrical Engineer Melter
Electronics Technician Metallurgical Engineer
Fuel/Environmental Engineer Metallurgical Practices Engineer
General Manager Operations Coordinator
Instrumentation Engr./Maint. Planner P-30 Coordinator
Intern Primary Operations Metallurgist
Lab Technician Process Control Engineer
Ladle Met Supervisor Process Engineer
Load Coordinator/Dispatcher Process Metallurgist
Maintenance Coordinator Production Controller
Maintenance Engineer Project Engineer
Maintenance Supervisor Purchased Fuel Administrator
Manager, Billet Yard Purchaser
Manager, Continuous Casting Quality Assurance Technician
Manager, Maintenance Roller
Manager, Manufacturing Services Scrap Coordinator
Manager, Mill Scrapyard Supervisor
Manager, Primary Operations Tech. Shipper
& Development Shipping Supervisor
Manager, Process Controls Supervisor Electrical Maintenance
Manager, Product End Supervisor, Electronic Technicians
Manager, Production Supervisor, Product End
Planning & Inventory Control Supervisor, System Development & Outside Processing
Manager, Project Engineering Supervisor, Warehouse
Manager, Roll Shop and Systems Technician
Roll Build-Up
Manager, Safety Services
Manager, Shop Operations
Manager, Traffic
</TABLE>
-14-
<PAGE> 15
SCHEDULE 2
Shared Common Expenses:
Purchasing
Safety
Environmental
Quality
Technical Services
Production Planning
Human Resources
Information Technology
Executive Management
Finance and Accounting
Sales and Marketing
Customer Service
Headquarters Expense
Advertising
-15-
<PAGE> 1
Exhibit 10.50
PLANT SPECIFIC AND
HARMONIZATION AGREEMENT
Between
BAR TECHNOLOGIES INC.,
on behalf of its
Johnstown, Pennsylvania and
Lackawanna, New York facilities
and
UNITED STEELWORKERS OF AMERICA
August 1, 1998
<PAGE> 2
AGREEMENT
THIS PLANT SPECIFIC AND HARMONIZATION AGREEMENT between BarTech Inc.,
on behalf of its JOHNSTOWN, PENNSYLVANIA, AND LACKAWANNA, NEW YORK (hereinafter
referred to as the "Company") and UNITED STEELWORKERS OF AMERICA, AFL-CIO
(hereinafter referred to as the "Union") shall modify, add to, or replace any
conflicting language contained in the Master Agreement and shall be for the
Johnstown, Pennsylvania and Lackawanna, New York plants shall be considered a
part of the 1998 Master Agreement. Accordingly, the Company and the Union have
agreed to the following:
I. LENGTH OF VACATION PERIOD.
The amount of vacation eligible Employees may take will be determined
by length of their employment service with the Company. The prior
Bethlehem service of former employees of the Division will be counted
toward vacation entitlement under this Agreement, up to a maximum of
then (10) years and effective March 1, 2001 up to a maximum of
seventeen (17) years.
II. The Bethlehem continuous service credit was intended to be
used in determining the order in which employment opportunities with
the Company would be offered to qualified employees who were actively
employed or on layoff subject to recall, in the Division on January 29,
1992 as outlined in the Seniority Units contained in Appendix A of the
Agreement.
For administrative purposes, due to the nature in which the
Johnstown operations restarted, continuous service for seniority
purposes only (layoff, recall, promotions, vacation scheduling), shall
be determined as follows:
Production employees hired on or prior to the commencement of
operations date (September 13, 1996) shall have a continuous service
date of September 13, 1996. The seniority order of Employees with equal
amounts of continuous service will be determined by the their service
in the
1
<PAGE> 3
plant on January 29, 1992, if any, secondly by the chronological order
of their dates of birth, and then lastly, by the alphabetical order of
their last names.
For seniority purposes, the continuous service date of
Production Employees hired after September 13, 1996 and all Maintenance
and Service Employees will be their employment date with the Company.
The seniority order of Employees with equal amounts of continuous
service will be determined by their service in the plant on January 29,
1992, if any, secondly by the chronological order of their dates of
birth, and then lastly, by the alphabetical order of their last names.
III. NEW OR REEMPLOYED.
(A) Introductory Period. New Employees (excluding those hired
pursuant to Paragraph (B) below and those hired after a break
in continuity of service with the Company) will not acquire
seniority and will receive no continuous service credit for
the first five our hundred twenty (520) hours of actual work
(the "Introductory Period"). During their Introductory Period,
Employees may file and process disputes in accordance with
grievance or arbitration procedures of the Master Agreement
but shall not have recourse to that procedure for a layoff or
discharge because such decisions are exclusively determined by
the Company. No decision of the Company will be for purposes
of discrimination based on any legally protected
characteristic or because of membership in the Union. Upon the
successful completion of their Introductory Period, Employees
will receive full continuous service credit from the date of
original hiring.
(B) Reemployment. Former Bethlehem employees, who were actively
employed or on layoff subject to recall, in the Division on
January 29, 1992, will be offered the available positions with
the Company for which they are qualified based on their (i)
seniority within their former Bethlehem seniority units as
indicated in Appendix B of this Agreement, and (ii) job at the
Division as of that date. If they do not accept the offer of
employment within ten (10) days of receipt of their offer by
registered mail, then they will forfeit any right to be hired
by the Company based on their former Bethlehem employment.
2
<PAGE> 4
(C) Continuous Improvement. Any former Bethlehem employee who is
hired pursuant to Paragraph (B) above and decides that he is
not suited for employment under the new continuous improvement
concept must notify the Company in writing within thirty (30)
calendar days after he is hired by the Company. The Company
will as soon as it is reasonable and practical, so as not to
interfere with the orderly operation of the business,
permanently lay-off such employee who shall thereupon cease to
be entitled to any employee benefits provided by the Company.
Employees who exercise this option waive any future recall
rights to employment with the Company.
IV. PROMOTION.
(A) Posting. When the Company decides that a position needs to be
filled, a notice to that effect will be posted by the Company
for seven (7) working days in the Plant having the open
position. Employees who apply will be considered in the
following category order:
(1) the Department where the vacancy exists;
(2) the Plant where the vacancy exists;
provided, however, if there is no qualified Employee applicant
the Company will consider former Bethlehem employees who were
in that category in the Division on January 29, 1992 in
accordance with section III (B) above.
(B) New Applicants. If a position is not filled after following
the procedure set forth in Paragraph (A) above, the Company
may hire applicants off the street. If the Company selects an
applicant who was formerly a Bethlehem employee and a member
of the Union whose employment with Bethlehem was terminated as
a result of a Plant closing prior to September 1, 1993, then
he will receive continuous service credit for up to ten (10)
years of his former Bethlehem service after successful
completion of the Introductory Period under section III (A)
above.
V. DISCIPLINARY RECORDS.
3
<PAGE> 5
Written records of disciplinary action against the Employee involved
for the violation of a safety rule but not involving a penalty of time
off shall not be used by the Company in any arbitration proceeding
where such action occurred four (4) or more years prior to the date of
the event which is the subject of such arbitration.
VI. HARMONIZATION SCHEDULE.
ISSUE EFFECTIVE DATE
- ----- --------------
Bereavement Leave 3/1/01
Jury Duty 3/1/01
Military Leave 3/1/01
SUB BarTech Effective Date
Safety Equipment BarTech Effective Date
Dental 3/1/01
Vision 3/1/01
Reporting Pay BarTech Effective Date
ESOP BarTech Effective Date
Holidays BarTech Schedule
Vacation 3/1/01
401(k) Plan 3/1/01, Contributions
discontinued and plan is
merged with DB
Defined Benefit Plan 3/1/01
Medical 3/1/01
Life Insurance (Active) Harmonized to RESI in
three equal increments with
effective dates of 3/1/01,
3/1/02, 3/1/03
4
<PAGE> 6
AD&D 3/1/02 discontinued
Long Term Disability 3/1/02 plan is discontinued
Short Term Disability Harmonized to RESI in
three equal increments with
effective dates of 3/1/01,
3/1/02, 3/1/03
Sunday Premium 3/1/02, 1.5X rate
Employees at Johnstown, Pennsylvania, and Lackawanna, New York shall
continue to receive the fringe benefits as set forth on the predecessor labor
agreement until such fringe benefits are harmonized in accordance with the above
schedule.
This Plant Specific and Harmonization Agreement shall terminate on
October 31, 2003.
UNITED STEELWORKERS OF AMERICA BAR TECHNOLOGIES INC.
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
5
<PAGE> 7
APPENDIX A
The five (5) production and maintenance job classifications covered by
this Agreement and their respective standard hourly wage rates shall be as
follows for this Agreement and are set forth thereafter in the Master Agreement.
<TABLE>
<CAPTION>
JOB EFFECTIVE EFFECTIVE EFFECTIVE
CLASSIFICATIONS 3/1/98 3/1/99 3/1/00
- --------------- ------ ------ ------
<S> <C> <C> <C>
Group Five $12.95 $15.90 $16.85
Group Four $12.20 $15.15 $16.10
Group Three $11.20 $14.15 $15.10
Group Two $ 9.95 $12.90 $13.85
Group One $ 8.70 $11.65 $12.60
</TABLE>
Group Five shall generally include, but not be limited to, the duties
that were previously performed for the Division by the following positions:
Mechanical Technician A, Electrical Technician A, Roller - 46", Roller
- 34", RBU Leader, Turn Maintenance Leader, Craft Leader,
Lineman/Wireman/Motor Inspector/Welder, Ironworker A, First Helper,
Asst. Roller - 13".
Group Four shall generally include, but not be limited to, the duties
that were previously performed for the Division by the following positions:
Roll Turner, Asst. Roller 11", Heater, Head Roll/Guideman, Assistant
Roller - 21", Manipulator - 46", Pit Craneman, Grinder Operator, Billet
Director, Inspection Machine Operator, Mill Operator, Maintenance
Technician A, Heater/Mill Adjuster, Motor Inspector A/Welder,
Lineman/Wireman, Rigger A/Welder, Pipefitter A/Welder, Boilermaker
A/Welder, Car Repairman A/Welder, Mechanic A/Welder, Sheetmetal Worker
A/Welder, Millwright A/Welder, Bricklayer A/Carpenter, Carpenter
A/Bricklayer, Car Repairman/Leader, Steel Pourer, Degasser Operator,
Ladle Furnace Operator, Furnace Helper, Lineman/Wireman/Welder, Mobile
Equipment Mechanic A/Welder, Welder
6
<PAGE> 8
A/Rigger, Welder A/Pipefitter, Welder A/Sheetmetal Worker, Welder
A/Boilermaker, Shearman 21", Material Shifter, Charging Craneman, Mill
Operator/Pulpit, Loader, Millwright/Leader (Roll Shop), Caster
Operator.
Group Three shall generally include, but not be limited to, the duties
that were previously performed for the Division by the following positions:
Mill Operator/Mill, Mill Operator/#26 Crane, Mill Operator/Hot Bed,
Loader/Dispatcher, Shearman, Inspectors, Daylight Stocker, Youngstown
Lathe Operator, Crush Grinder Operator, Millwright A, Motor Inspector
A, Rougher - 21", Manipulator - 34", Rougher - 30", Hot Scarfer
Operator, Shearman - 34", Recorder/Utility - 46", Bloom Shear Operator,
Pit Recorder, Recorder/Utility - 30" & 21", Craneman - 480, Craneman -
475 & 478, Craneman - 461, 462, 463, 466, Craneman - 440 & 445,
Craneman - 485 & 486, Craneman 431 & 432, Craneman - 441 & 450,
Recorder/Utility - 34", Ingot Distributor, Inspector/Loader, Loader
Steel Prep., GAG Straightener, Operator - Unscrambler, Leader/Stocker,
Mill Adjuster/Stand Builder, Stand Builder/Mill Adjuster, ST/Loader,
Annealer, Pickler, Maintenanceman (Coils), Loader/Crane Operator,
Loader/ST, Labor Leader - 13" Mill, Maintenanceman (Labor), Mechanical
Tech B, Electrical Tech B, Millwright (Roll Shop),
Inspector/Sparktester, General Sparktester, Coil Leader, Bricklayer,
Rigger, Sheet Metal Worker, Pipefitter, Inspector/Craneman, Mechanic,
Mobile Crane Operator, Welder, Carpenter, Car Repairman - MUS,
Boilermaker, Platform Man, Conveyorman Leader, N.G. Engineer, Mobile
Equipment Mechanic, Scrap Preparation Leader, Ladle Liner, Chem
Spectro/Analyst, Backhoe Operator, Dozer Operator, Tractor-Trailer
Driver, Scrapyard Operator, Stacker Crane.
Group Two shall generally include, but not be limited to, the duties
that were previously performed for the Division by the following positions:
Shear Operator, Shear Helper, Stocker/Chainman, Production Recorder,
Crane/Truck Operator, Furnace Recorder, Roll/Guideman, Motor Inspector
B, Millwright B, Labor Leader - Primary Mills, Craneman - 434 & 435,
Craneman - 467 & 484, Hot Bed Burnerman, Mobile Equipment
Operator/Utility, Hot Bed Operator - 21", Pulpitman - 34", Bar
Turner-Burner, Hot Bed Sorter - 21"/Utility, Leverman - 34", Stamper
Mill - 34", Stamper - Burner, Stamper Mechanic - 21", Stockyard
Checker, Stockyard Crane, Furnace Shearman, Asst. Stand Builder, Guide
Assembler, Craneman/Burner, Cooling Bed Operator, Shear Operator,
Bundle Bed Operator, Slipmaker, Deliveryman, Utilityman (13" Mill),
Shear
7
<PAGE> 9
Blademan, OH Crane (F&S), Process Stocker, Checker/RR/Scrap, Shot Blast
Operator, Straightener Operator, Saw Operator, Coil Storage Operator,
Utilityman (Anneal), Asst. Pickler, Utilityman (Pickle), Utilityman
(Retrim), Crane Operator (Labor), NC Lathe Operator, Tester, Bar
Inspector, Bench Inspector, Billet Audit, Equipment Operator, Fork Lift
Truck Operator, Payloader Operator, Scoop Truck Operator, Gradall
Operator, Truck Driver, Tool Repairman, Handyman, Scrap Preparer,
Moldman, Mobile Equipment Operator, Ingot Coordinator, Pit Utilityman,
Baghouse Attendant, Utilityman (Refiner), Stockyard Craneman,
Mold/Ingot Craneman, N.G. Brakeman, Car Repairman - EFM, Stripper
Craneman, Locomotive Repairman Helper, Steelmaking Observer, Billet
Yard Craneman, Concreter.
Group One shall generally include, but not be limited to, the duties
that were previously performed for the Division by the following positions:
Chainman, Cradleman, Charger, Coil Handler, Laborer, Sorter-Tester,
Chainman - 34", Chainman - Steel Prep., Laborer-Steel Prep.,
Laborer/Utility, Millwright Learner, Motor Inspector Learner, Learner,
Furnace Charger, Truck Assembly, Str Stocker, Storage Helper, General
Laborer, Mech/Elec Helper, Utilityman, Parts/Tool Room Attendant,
Oiler/Greaser, Conveyorman Helper, Unloader, Car Repair & Burnerman,
Scrap Preparation Helper.
The four office and technical job classifications covered by this
Agreement and their respective standard hourly wage rates shall be as follows
for each period of this Agreement:
<TABLE>
<CAPTION>
JOB EFFECTIVE EFFECTIVE EFFECTIVE
CLASSIFICATIONS 3/1/98 3/1/99 3/1/00
- --------------- ------ ------ ------
<S> <C> <C> <C>
Group Four $14.20 $17.15 $18.10
Group Three $13.20 $16.15 $17.10
Group Two $10.20 $13.15 $14.10
Group One $ 8.70 $11.65 $12.60
</TABLE>
Group Four shall generally include, but not be limited to, the duties
that were previously performed for the Division by the following positions:
8
<PAGE> 10
- Steel Coordinator
- Inventory Controller
- Utilities Analyst
Group Three shall generally include, but not be limited to, the duties
that were previously performed for the Division by the following positions:
- Controls Analyst
- Steel Provider
- Specifications Analyst
- Chemical Analyst
- Metlog Analyst
- Claim Analyst
Group Two shall generally include, but not be limited to, the duties
that were previously performed for the Division by the following positions:
- HVAC Technician
- Scheduler Steel Prep
- Shipment Coordinator
- Material Clerk
- Inventory Clerk
- Statistical Recorder
- NDT Technician
- Chemical Technician
- Accounting Clerk
- Claims Clerk
Group One shall generally include, but not be limited to, the duties
that were previously performed for the Division by the following positions:
- Utility Clerk
- Manifest Clerk
9
<PAGE> 11
APPENDIX B
FORMER BETHLEHEM SENIORITY UNITS
1. STEELMAKING
UNIT 11-2 - FLOOR
FIRST HELPER
DEGASSER OPERATOR
LADLE FURNACE OPERATOR
FURNACE HELPER
UTILITYMAN (REFINER)
UNIT 11-3 - PIT
STEEL POURER
PLATFORM MAN
PIT UTILITYMAN
UNIT 11-4 - MOULD YARD
CONVEYORMAN LEADER
MOBILE EQUIPMENT OPERATOR
MOLDMAN
INGOT COORDINATOR
CONVEYORMAN HELPER
UNLOADER
LABORER
BAGHOUSE ATTENDANT
UNIT 11-5 - LADEL/LINERS
LADLE LINERS
UNIT 11-6 - STD/NG LOCO'S
N.G. ENGINEER
MATERIAL SHIFTER
MOBILE EQUIPMENT MECHANIC
N.G. BRAKEMAN
LOCOMOTIVE REPAIRMAN HLPR
CAR REPAIRMAN
CAR REPAIR & BURNERMAN
MOBILE EQUIPMENT MECHANIC
A/WELDER
UNIT 11-7 - CRANEMEN
PIT CRANEMAN
CHARGING CRANEMAN
MOLD/INGOT CRANEMAN
STRIPPER CRANEMAN
STOCKYARD CRANEMAN
UNIT 11-8 - MECH. MAINT.
MECHANICAL TECHNICIAN A
MILLWRIGHT A
MILLWRIGHT B
MILLWRIGHT LEARNER
MILLWRIGHT A/WELDER
UNIT 11-9 - ELEC. MAINT.
ELECTRICAL TECHNICIAN A
MOTOR INSPECTOR A
MOTOR INSPECTOR B
MOTOR INSPECTOR LEARNER
MOTOR INSPECTOR A/WELDER
UNIT 11-22 - LOCO CRANE
UNIT 11-23 - WILLIAMS FARM
SCRAP PREPARATION LEADER
SCRAP PREPARER
SCRAP PREPARATION HELPER
SCRAPYARD OPERATOR
UNIT 5-04 - MET
STEELMAKING OBSERVER
10
<PAGE> 12
2. PRIMARY MILLS
UNIT 12-1 - MILLS
ROLLER - 46"
ROLLER - 34"
ASST ROLLER - 21"
HEATER
MANIPULATOR
ROUGHER - 21"
MANIPULATOR - 34"
ROUGHER - 30"
HOT SCARFER OP
SHEARMAN - 21"
SHEARMAN - 34"
RECORDER/UTILITY - 46"
BLOOM SHEAR OP
PIT RECORDER
RECORDER/UTILITY - 21"
RECORDER/UTILITY - 34"
INGOT DISTRIBUTOR
LABOR LEADER
HOT BED SORTER 21"/UTILITY
MOBILE EQ OP/UTILITY
HOT BED OP
PULPITMAN - 34"
LEVERMAN - 34" STAMPER - 34"
STAMPER MECHANIC - 21"
CHAINMAN - 34"
LABORER/UTILITY
LEARNER
UNIT 12-4 - STEEL PREP
GRINDER OPERATOR
BILLET DIRECTOR
LOADER STEEL PREP
GAG STRAIGHTENER
OPERATOR UNSCRAMBLER
BAR TURNER BURNER
CHAINMAN PREP
LABORER-STEEL PREP
LEARNER
UNIT 12-5 - MECH. MAINT.
MECHANICAL TECHNICIAN A
MILLWRIGHT A
MILLWRIGHT B
MILLWRIGHT LEARNER
MILLWRIGHT A/WELDER
UNIT 12-6 - ELECT. MAINT.
ELECTRICAL TECHNICIAN A
MOTOR INSPECTOR A
MOTOR INSPECTOR B
MOTOR INSPECTOR LEARNER
MOTOR INSPECTOR A/WELDER
UNIT 12-7 - CRANEMEN
CRANEMAN 480
CRANEMAN 475 & 478
CRANEMAN 461, 462, 463, 466
CRANEMAN 440, 445
CRANEMAN 485, 486
CRANEMAN 431, 432
CRANEMAN 441, 450
CRANEMAN 434, 435
CRANEMAN 467, 484
PIT CRANEMAN
3. METALLURGICAL
UNIT 5-04 - CHEM LAB EFM
CHEM SPECTRO/ANALYST
LEARNER
UNIT 5-06 - MET'L P.M. INSPECTORS
INSPECTION MACHINE OP
INSPECTOR LOADER
HOT BED BURNERMAN
STAMPER/BURNER - 34" MILL
SORTER TESTER
11
<PAGE> 13
4. 11" MILL
UNIT 13-1 - LR ROLL SHOP**
ROLL TURNERS
YOUNGSTOWN OPERATOR
CRUSHGRINDER OPERATOR
UNIT 13-11 - SHIPPING**
LDR/DISPATCH
UNIT 13-13 - MILL
ASST. ROLLER
HEATER
HEAD ROLL/GUIDEMAN
MILL OPERATOR/MILL
MILL OPERATOR/PULPIT
MILL OPERATOR/26 CRANE
MILL OP HOTBED
SHEARMAN
DAY LIGHT STOCKER
SHEAR OPERATOR
SHEAR HELPER
STOCKER/CHAINMAN
PRODUCTION RECORDER
CRANE TRUCK OPERATOR
FURNACE RECORDER
ROLL/GUIDEMAN
CRADLEMAN
CHARGER
COIL HANDLER
LABORER
CHAINMAN
BILLET YARD CRANEMAN
UNIT 13-24 - MECH. MAINT.
MECHANICAL TECHNICIAN A
MILLWRIGHT A
MILLWRIGHT A WELDER
UNIT 13-25 - ELEC. MAINT.
ELECTRICAL TECHNICIAN A
MOTOR INSPECTOR A
MOTOR INSPECTOR A/WELDER
UNIT 5-02 - MET'L 11" INSPECTORS**
INSPECTORS
** Combined with Gautier Units
12
<PAGE> 14
5. M U S
DEPT. 6 GENERAL
CRAFT LEADER
UNIT 6-01 - GENERAL LABOR
BACKHOE OPERATOR
FORK LIFT TRUCK OPER
PAYLOADER OPERATOR
SCOOP TRUCK OPERATOR
GRADALL OPERATOR
DOZER OPERATOR
CONCRETER
UTILITYMAN
UNIT 6-02 - BRICKLAYERS
BRICKLAYER A/CARPENTER
BRICKLAYER
HANDYMAN
UNIT 6-03 - RIGGERS
IRONWORKER A
RIGGER A/WELDER
RIGGER
MOBILE CRANE OPERATOR
TOOL REPAIRMAN
UNIT 6-05 - BOILERMAKERS
IRONWORKER A
BOILERMAKER A/WELDER
BOILERMAKER
UNIT 6-06 - PIPEFITTERS
IRONWORKER A
PIPEFITTER A/WELDER
PIPEFITTER
HANDYMAN
UNIT 6-07 - CARPENTERS
CARPENTER A/BRICKLAYER
CARPENTER
UNIT 6-09 - WELDERS
IRONWORKER A
RIGGER/WELDER A
BOILERMAKER/WELDER A
PIPEFITTER/WELDER A
SHEETMETAL WKR/WELDER A
WELDER
UNIT 6-11 - CAR REPAIR
CAR REPAIRMAN A/WELDER
CAR REPAIRMAN/LEADER
INSPECTOR/CRANEMAN
CAR REPAIRMAN
HANDYMAN
UNIT 6-13 - SHEETMETAL
IRONWORKER A
SHEETMETAL WORKER A/WELDER
SHEETMETAL WORKER
HANDYMAN
UNIT 6-21 - LINE & CONSTRUCTION
LINEMAN/WIREMAN/WELDER
LINEMAN/WIREMAN/MOTOR
INSP/WELDER
LINEMAN/WIREMAN
UNIT 6-23 - CRANE REPAIR
MOTOR INSP A/WELDER
MOTOR INSPECTOR
ELECTRICAL TECHNICIAN A
13
<PAGE> 15
M U S - Continued
UNIT 6-24 - WMS FARM MOTOR INSP
MOTOR INSP A/WELDER
MOTOR INSPECTOR
ELECTRICAL TECHNICIAN A
UNIT 6-25 - POWER SYS MOTOR INSP
MOTOR INSP A/WELDER
MOTOR INSPECTOR
MOTOR INSPECTOR A/
LINEMAN/WIREMAN/WELDER
UNIT 6-31 - GARAGE
TRUCK DRIVER
TRACTOR-TRAILER DRIVER
UNIT 6-33 - MOBILE EQPT MECH.
MECHANIC A/WELDER
MECHANIC
PARTS/TOOL RM ATTENDANT
OILER/GREASER
UNIT 6-34 - FUEL MILLWRIGHTS
MILLWRIGHT A/WELDER
MILLWRIGHT
HANDYMAN
MECHANICAL TECHNICIAN A
UNIT 6-35 - MUS SUPPLEMENTAL
FUEL MILLWRIGHT
BRICKLAYER
PIPEFITTER
14
<PAGE> 16
6. 13" BAR MILL
UNIT 03-A - WAREHOUSE & SHIP
General
OH CRANE
STACKER CRANE
PROCESS STOCKER
CHECKER/SCRAP
Truck Loading
LOADER
ST/LOADER
TRUCK ASSEMBLY
Finishing
#21 SHOT BLAST
#23 STRAIGHTNER
#30 SAW
STR STOCKER
Storage
COIL LEADER
COIL STORAGE OPERATOR
STORAGE HELPER
Anneal
ANNEALER
UTILITYMAN
Pickle
PICKLER
MAINTENANCEMAN
ASST PICKLER
UTILITYMAN
Retrim
UTILITYMAN
Shipping
LOAD/CRANE
LOAD/ST
Labor Gang
LABOR LEADER
MAINTENANCEMAN
EQUIPMENT OPERATOR
CRANE OPERATOR
GENERAL LABORER
UNIT 03-B - MILL
RBU LEADER
MILL OPERATOR
ASSISTANT ROLLER
HEATER/MILL ADJ
STD BLDR/MILL ADJ
MILL ADJ/STD BLDR
LEADER/STOCKER
STOCKYARD CHECKER
STOCKYARD CRANE
FURNACE RECORDER
FURNACE SHEARMAN
ASST STD BLDR
GUIDE ASSEMBLER
CRANEMAN/BURNER
COOLING BED OPER
SHEAR OPERATOR
BNDL BED OPERATOR
SLIPMAKER
DELIVERYMAN
UTILITYMAN
SHEAR BLADEMAN
FURNACE CHARGER
UNIT 03-C - ROLL SHOP
MILLWRIGHT
NC LATHE OPERATOR
MILLWRIGHT/LEADER
UNIT 03-D - MECH. MAINT.
TURN MAINT LEADER
MAINT. TECH "A"
MECH. TECH "B"
MECH. HELPER
UNIT 03-E - ELECT MAINT.
TURN MAINT LEADER
MAINT. TECH "A"
ELECT. TECH "B"
ELECT. HELPER
15
<PAGE> 17
13" BAR MILL - Continued
UNIT 03-F - METALLURGICAL
GENERAL ST
INSP/SPARKTESTER
TESTER
BAR INSPECTOR
BENCH INSPECTOR
BILLET AUDIT
16
<PAGE> 18
7. JOHNSTOWN OFFICE & TECHNICAL
METALLURGICAL - UNIT 05
SPECIFICATIONS ANALYST
CHEMICAL ANALYST
METLOG ANALYST
CLAIMS CLERK
M U S - UNIT 06
CONTROLS ANALYST
CHEMICAL ANALYST
(ENVIRONMENTAL)
HVAC TECHNICIAN
INVENTORY CLERK
CHEMICAL TECHNICIAN
(ENVIRONMENTAL)
UTILITIES ANALYST
E F M - UNIT 11
INVENTORY CONTROLLER
CONTROLS ANALYST
STATISTICAL RECORDER
PRIMARY MILLS - UNIT 12
CONTROLS ANALYST
SCHEDULER STEEL PREP
SHIPMENT COORDINATOR
MATERIAL CLERK
NDT TECHNICIAN
11" - UNIT 13
CONTROLS ANALYST
UTILITY CLERK
MATERIAL CLERK
PROD. SCHEDULING - UNIT 32
STEEL COORDINATOR
STEEL PROVIDER
MANIFEST CLERK
ACCOUNTING - UNIT 30
ACCOUNTING CLERK
17
<PAGE> 19
APPENDIX C
FORMER BETHLEHEM EMPLOYEES
EXCESS BENEFIT ALLOCATION BONUS
Employees who have been employed by the Company and who are former
employees of Bethlehem and are eligible for health benefits pursuant to any
Bethlehem benefit plan for retirees, shall be entitled to an annual bonus
payable at the end of each calendar year. The actual amount of such bonus shall
be determined using the hourly amount remaining from the $1.03 per hour Company
benefit allocation for each such Employee after deductions for all mandatory and
Employee selected optional health and related benefit costs, and optional 401(k)
plan contributions, have been subtracted but excluding all pension costs.
18
<PAGE> 20
Exhibit 10.50
PLANT SPECIFIC AND
HARMONIZATION AGREEMENT
Between
BLISS & LAUGHLIN STEEL COMPANY,
on behalf of its
Harvey, Illinois Plant
and
UNITED STEELWORKERS OF AMERICA
AFL-CIO
ON BEHALF OF ITS LOCAL NO. 1050
August , 1998
<PAGE> 21
AGREEMENT
THIS PLANT SPECIFIC AND HARMONIZATION AGREEMENT between the Bliss &
Laughlin Company on behalf of its Harvey, Illinois Plant (hereinafter
"Company"), and the UNITED STEELWORKERS OF AMERICA, AFL-CIO ("USWA") shall
modify, amend, or replace any conflicting language contained in the 1998 Master
Agreement and shall, for the Harvey, Illinois Plant, shall be considered a part
of the 1998 Master Agreement. Accordingly, the Company and the USWA have agreed
to the following:
I. Supervisors shall not perform production work which may be performed by
available production workers except in case of emergency, for purpose
of instruction or to correct for quality. An emergency shall be limited
to those conditions where equipment is tested after a breakdown, or for
safety purposes. In the event a supervisor fails to follow the
limitation of this Section, if the Chairman of the Grievance Committee
or Local Union President will report to the Plant Superintendent the
time and place of such failure, the Superintendent will take immediate
steps to correct the failure.
II. When an employee is being considered for discipline, records of his
prior conduct when they are more than twenty-four (24) months old, will
not be considered.
III. Seniority is an employee's length of continuous service in years,
months and days. In the event of promotion (except to the supervisory
staff) and increase or decrease of forces, preference shall be given to
employees on a plant-wide seniority basis plus the ability to do the
work available.
IV. The procedure for filling job vacancies shall be as follows:
(A) In the event there is a permanent vacancy (a job
lasting ten (10) or more working days) the same will be posted
on the bulletin board, with a copy to the designated Union
Representative, for two (2) working days and all bids for the
job shall be in writing and turned in to the timekeepers
office. A copy of the bids will be furnished to the designated
Union Representative. An employee who goes off on a leave of
absence or vacation may leave a written notice (on a standard
1
<PAGE> 22
form for this purpose) with the timekeepers office that he
wants to be considered to have bid on a particular job (or
jobs), if it is posted for bid during his absence.
On job posting sheets the title of the Job
classification concerned and the number of the machine or
piece of equipment at which the opening then exists will be
included on the job posting. Although in normal circumstances
this will be the piece of equipment within his classification
at which the successful bidder works, this shall not confer
exclusive machine or job rights or jurisdiction.
(B) Selection will be made from those who have bid in
accordance with the terms of the above paragraph. Should the
successful bidder fail on the job or leave the job, the other
bidders shall first be considered providing the vacancy was
not posted more than 90 days prior.
V. The designated Union Representative will be notified in the
event any senior bidder is rejected because of the ability factor and
an opportunity shall be afforded a bidder who has more seniority than
the employee selected to try out on the job for a period not to exceed
ten (10) working days provide, however, that such trial period will not
be afforded to any employee who bids for a recognized craft or
technical job unless such employee has had experience or educational
training for the job.
VI. A bargaining unit employee who is promoted to a supervisory
position shall accumulate seniority for an additional 180 days after
said promotion; thereafter, shall have no bargaining unit seniority, if
he is ever transferred back into the bargaining unit.
VII. The Company agrees to provide three (3) bulletin boards for
the Union. It is understood and agreed that only bulletins pertaining
to Union meeting and official Union business shall be posted thereon.
VIII. The Company will continue its practice of replacing worn out
tools at no charge to the employee. Such replacement will be made
within two workdays of the employee's request for it, if it is in stock
on the Company
2
<PAGE> 23
premises; and if the particular tool is not so in stock, it will be
ordered immediately.
IX. New hires shall be paid $3.00 per hour less than the rate for
the classification to which assigned and to be restored over two years
from each employee's individual date of hire, excluding days laid off.
$.75 per hour increase at six month intervals from date of hire.
Exception: Employees currently in two tier status will restore at the
rate of $.65 per hour at six month intervals. Last interval increase
will result in the rate for the classification.
Effective on or after May 30, 1988, newly hired Craftsmen will
begin at the applicable wage rate of the current Labor Agreement
without regard to the existing two tier wage structure established for
all other Non-Craft New Hires.
X. The objective of apprenticeship training is to provide the
Company with qualified craft personnel and to provide a full and fair
opportunity for achievement of full craft status to qualified employees
of the Company.
(A) TRAINING PERIODS -- JOB CLASSES.
Qualified applicants shall proceed through the job
classes by successfully completing the courses and hours
outlined for their particular craft as follows:
MTE
Job Class 10* 17 hours
Job Class 12* 11 Hours
Job Class 16* 11 Hours
Job Class 19*
MTM
Job Class 10* 20 Hours
Job Class 12* 12 Hours
Job Class 16* 10 Hours
Job Class 19*
3
<PAGE> 24
The required courses and/or number of hours are subject to
change, based on job requirements and/or availability.
*This list of classifications may be modified by the job
classification consolidation process.
(B) POSTING AND FILLING APPRENTICESHIP VACANCIES.
Apprenticeship vacancies shall be filled on the same
basis as other permanent vacancies and shall be subject to the
posting practices at the plant.
Apprenticeship applicants will be tested by Prairie
State University and the senior employee of those who passed
the qualification test will be selected for the apprenticeship
program. The remaining qualified employees will remain in the
queue and will be selected for apprenticeship training as
openings come available in order of longest seniority first.
When all of the available qualified employees in the queue
have been afforded the opportunity to train in the program, a
new bid will be posted and qualified employees will be
selected in like fashion.
The parties agree that the purpose of an
apprenticeship training program is to train and qualify
individuals to perform the assignments of a given craft and
that an applicant for apprenticeship must have the ability to
absorb the appropriate training.
The Company may allow advance credit in any
apprenticeship training program based on related training and
experience achieved prior to entry into such program.
(C) COMPANY PAID TUITION AND FEES.
The Company will pay tuition and fees for those
employees selected for apprenticeship training. Classes are
available during the day and evening and will be scheduled by
the employee to conform with his work schedule, that is on his
own time and he will not be
4
<PAGE> 25
further compensated by the Company.
(D) CRAFT STATUS.
Each apprentice, upon satisfactory completion of the
apprenticeship program in which he is enrolled, shall be
assigned to craft status and rate. Knowledge and on-the-job
performance testing for the purposes of such assignment or
subsequent advancement to the intermediate or standard rate
shall not exceed the subject matter and skills for which
on-the-job or other training is afforded by the applicable
Apprenticeship Training Program.
XI Work Schedules
The Company will post each employee's work schedule
for the following week by 3:00 P.M. on Wednesday of the
current week.
XII. HARMONIZATION SCHEDULE
- --------------------------------------------------------------------------------
ISSUE EFFECTIVE DATE*
- --------------------------------------------------------------------------------
Bereavement Leave 12/1/98
- --------------------------------------------------------------------------------
Shift Premium 12/1/00
- --------------------------------------------------------------------------------
Jury Duty BarTech Effective Date
- --------------------------------------------------------------------------------
Military Leave BarTech Effective Date
- --------------------------------------------------------------------------------
SUB BarTech Effective Date
- --------------------------------------------------------------------------------
Safety Equipment BarTech Effective Date
- --------------------------------------------------------------------------------
Dental 12/1/98
- --------------------------------------------------------------------------------
Vision 12/1/98
- --------------------------------------------------------------------------------
Holidays 1/1/01
- --------------------------------------------------------------------------------
Vacation 1/1/02
- --------------------------------------------------------------------------------
401(k) Plan 12/1/98, Contributions discontinued
- --------------------------------------------------------------------------------
5
<PAGE> 26
- --------------------------------------------------------------------------------
and plan is merged with DB
- --------------------------------------------------------------------------------
Defined Benefit Plan 12/1/98
- --------------------------------------------------------------------------------
Medical 12/1/98
- --------------------------------------------------------------------------------
Life Insurance (Active) Harmonized to RESI in five equal increments with
effective dates of 3/1/99, 3/1/00, 3/1/01, 3/1/02,
3/1/03
- --------------------------------------------------------------------------------
AD&D 3/1/01 discontinued
- --------------------------------------------------------------------------------
Short Term Disability Harmonized to RESI in five equal increments with
effective dates of 3/1/99, 3/1/00, 3/1/01, 3/1/02,
3/1/03
- --------------------------------------------------------------------------------
Sunday Premium 12/1/98 2X to 1.5X
- --------------------------------------------------------------------------------
* The language contained in the Harvey Predecessor Labor Agreement will continue
in effect until the individual item is harmonized.
Employees at Harvey, Illinois shall continue to receive the fringe
benefits as set forth in the predecessor labor agreement until such fringe
benefits are harmonized in accordance with the above schedule.
This Plant Specific and Harmonization Agreement shall terminate on
October 31, 2003.
UNITED STEELWORKERS OF AMERICA BLISS & LAUGHLIN STEEL COMPANY
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
6
<PAGE> 27
1998 SETTLEMENT AGREEMENT
BETWEEN
UNITED STEELWORKERS OF AMERICA, AFL-CIO
AND
BARTECH AND RES ACQUISITION CORPORATION
WHEREAS, the controlling stockholders of Bar Technologies Inc.
(hereinafter "BarTech") who are affiliated with Blackstone Management Partners
L.P. ("Blackstone") have formed a corporation ("RES Acquisition Corporation")
which has made a friendly proposal to Republic Engineered Steels, Inc. ("RESI")
to acquire all of the shares of RESI (such acquisition, the "RESI Acquisition")
and RESI and RES Acquisition Corporation have entered into an Agreement and Plan
of Merger (the "Merger Agreement") dated as of July 23, 1998 pursuant to such
proposal. As soon as practicable following consummation of the RESI Acquisition,
it is intended that BarTech and RES Acquisition Corporation engage in a business
combination transaction (the "Transaction"), with the resulting combined entity
currently expected to be known as NuBar (the closing of such Transaction the
"Closing"); and
WHEREAS, in the event that the Transaction is completed, the combined
entity NuBar would own the following plants represented by the United
Steelworkers of America (the "USWA" or "Union"): from BarTech, the plants in
Johnstown, Pennsylvania, and Lackawanna, New York; from BarTech's subsidiary
Bliss & Laughlin Steel Company ("B&L") and Canadian Drawn Steel Company
("Canadian Drawn"), the plants in Harvey, Illinois, and Hamilton, Ontario
(Canada) respectively; and from RESI, Massillon Cold Finish, Massillon Hot Roll,
Special Metals (Massillon), all in Massillon, Ohio, and Canton Eighth Street in
Canton, Ohio, the plant in Chicago, Illinois, the cold-finished plants in Beaver
Falls, Pennsylvania, Willimantic, Connecticut, Seventh Avenue and Dunes Highway,
both in Gary, Indiana, and a stainless plant in Baltimore, Maryland. In
addition, NuBar would own B&L's cold-finished plants in Batavia, Illinois,
Cartersville, Georgia (both non-union), and Medina, Ohio (Machinists Union); and
WHEREAS, if the Transaction is consummated, NuBar will build a bar mill
-1-
<PAGE> 28
and processing facility(ies) in Stark County to be manned with USWA-represented
employees. At the same time, the NuBar business plan calls for a significant
reduction of RESI plant support and administrative personnel, the closing of the
Canton 12" mill, the ingot route at the #4 melt shop and blooming mill, the
Massillon 18" mill, associated processing operations, and a reduction in the
number of the combined entity's cold finishing operations. Overall, a decline in
the net hourly headcount of about 1,400 is expected during the four (4) years of
transition/consolidation after the consummation of the Transaction; and
WHEREAS, in discussions with BarTech and RES Acquisition Corporation,
the Union has emphasized its objectives of, among other things, encouraging the
contemplated new construction in Stark County, providing a decent and humane set
of retirement options for employees affected by headcount reductions, and
assuring that any NuBar transaction preserve as many bargaining units jobs as
possible; and
WHEREAS, RES Acquisition Corporation has indicated that it will not
enter into the Merger Agreement unless this Settlement Agreement has first been
entered into by the Union and will not consummate the acquisition of a majority
of the outstanding RESI shares unless the Master Agreement (as defined below)
has first been ratified by the Union's members affected thereby, the
effectiveness of this Settlement Agreement and the Master Agreement conditional
upon the acquisition of a majority of the outstanding RESI shares by RES
Acquisition Corporation and RES Acquisition Corporation having elected a
majority of the RESI directors (the "RESI Control Position") for those employees
currently employed by RESI ("RESI Employees"); and the Closing (or earlier as
described below) for these employees currently employed by BarTech/B&L/Canadian
Drawn ("BarTech Employees"); RES Acquisition Corporation will use all reasonable
efforts to promptly following its acquisition of a majority of the outstanding
RESI shares to elect a majority of the RESI directors; and
WHEREAS, while RES Acquisition Corporation is under no obligation
pursuant hereto to complete the RESI Acquisition, it is understood that the RESI
Acquisition and subsequent Transaction would, if consummated, necessitate
customary steps, including, among others, the negotiation and ratification of a
complete labor agreement for RESI and/or for NuBar, approval by the RESI
employee-owners and stockholders, clearance under applicable antitrust
standards,
-2-
<PAGE> 29
and, after completion of the foregoing, refinancing of outside indebtedness to
facilitate the Closing of the Transaction.
NOW THEREFORE IT IS AGREED that:
The parties to this Settlement Agreement shall be BarTech, RES
Acquisition Corporation and the Union. This Settlement Agreement sets forth the
new Master Labor Agreement ("Master Agreement") and the plant-specific
agreements and will be the basis for the benefit agreements (together the "1998
BLA") to be agreed upon by BarTech, RES Acquisition Corporation, and the Union
prior to obtaining the RESI Control Position. This Settlement Agreement and the
1998 BLA shall only become effective upon obtaining the RESI Control Position
for the RESI Employees ( the "RESI Effective Date") and upon the earlier to
occur of: (i) the Closing of the Transaction; and (ii) the date that is five (5)
months after the closing of the RESI Acquisition for the BarTech Employees (the
"BarTech Effective Date"). The parties enter into this Settlement Agreement as
of August 2, 1998.
I. BARGAINING STRUCTURE, HARMONIZATION OF AGREEMENTS, AND ECONOMICS
A. Bargaining Structure/Single Agreement/Expiration Dates
1. Upon obtaining the RESI Control Position and, where
applicable, the BarTech Effective Date, RES
Acquisition Corporation/NuBar and any and all of its
present and future portfolio companies, subsidiaries,
Affiliates (as defined below), and/or parent
corporations (other than Blackstone, Veritas, any
other private equity fund or their respective
successor(s)-in-interest and their respective
existing or future affiliates) shall be jointly and
severally obligated to the Union under a single new
1998 BLA applicable to all USWA-represented
facilities of NuBar other than Canadian Drawn Steel
which shall be covered by a separate collective
bargaining agreement which shall be coterminous with
the agreement covering the other plants. The 1998 BLA
shall address certain subjects on a "Master
Agreement" basis and other issues on the basis of the
former corporate identity of the plants in question
or a plant-
-3-
<PAGE> 30
specific basis (hereinafter "Plant-Specific
Agreement").
The current labor agreements (exclusive of their benefits agreements) between
RESI and the Union, BarTech and the Union, and Bliss & Laughlin and the Union,
(each a "Predecessor Labor Agreement" or "PLA" and collectively, "the
Predecessor Labor Agreements") shall:
(1) remain in effect until the RESI Effective Date or BarTech
Effective Date, as applicable;
(2) with respect to the BarTech and B&L PLA's continue in effect
thereafter for items to be harmonized up to and through their
complete harmonization
(3) otherwise be replaced by the Master and Plant-Specific
Agreements as well as this Settlement Agreement.
The benefits agreements associated with the PLA's shall continue in effect until
merged or harmonized together pursuant to new NuBar benefits agreements to be
adopted by the parties in accordance with this Settlement Agreement and the
Master and Plant-Specific Agreements.
The formerly separate bargaining units under the PLA's shall, upon the BarTech
Effective Date be merged into a single bargaining unit. The termination dates
previously established by the PLA's shall be amended and extended to give the
1998 BLA a termination date of October 31, 2003.
Wherever this Settlement Agreement sets forth an understanding not described as
plant-specific, such understanding shall be included in the Master portions of
the 1998 BLA. Any language in the Plant-Specific Agreements which conflicts with
the master portion of the 1998 BLA shall displace the master provisions of the
1998 BLA.
2. In the negotiation of a successor agreement to the
1998 BLA, bargaining shall begin with plant-level
representatives negotiating over the topics covered
in their agreements on plant-specific issues. After
an appropriate interval of such bargaining, Master
bargaining shall commence, and all issues still
unresolved in the plant-specific bargaining shall be
referred to the Master bargaining for resolution.
-4-
<PAGE> 31
B. Harmonization and Extension of Terms and Conditions of
Employment
1. B&L Harvey, Illinois Plant - The parties agree upon
the following:
(a) Harmonization Process - The parties shall
negotiate to harmonize all economic items
applying to the Harvey, Illinois plant of
NuBar so as to match those items in all
material respects to those applicable to the
former RESI facilities (as amended in the
1998 BLA). With respect to pensions, such
harmonization shall take effect on November
30, 1998. With respect to wages, effective
December 1, 1998 all hourly rates shall be
adjusted to the same hourly wage rates as
the applicable hourly wage rates for RESI
Cold Rolled Bar classifications. In
recognition of the classification rate
adjustments, the Company will implement a
production based incentive plan (the "Harvey
Incentive Plan" or "HIP"). The production
based incentive plan will be designed to
provide an earnings opportunity equal to the
average earnings opportunity of the RESI
Cold Rolled Bar production based incentive
plans (adjusted for straightline
harmonization). Such plan will provide an
earnings opportunity (approximate average of
$2.29 per/hr) equal to the difference
between the adjusted B&L Harvey hourly
classification rates and the total (hourly
rates and incentive earnings) hourly
earnings of similar classification of RESI
Cold Rolled Bar rates. At a minimum the HIP
shall guarantee the difference between the
B&L Harvey classifications in effect on
November 30, 1998 and the new adjusted
rates. The guarantee and remaining earnings
opportunity of the HIP will be paid in the
regular payroll periods. On November 1, 1999
and each succeeding November 1st of the BLA
the B&L Harvey classification rates will be
-5-
<PAGE> 32
adjusted to the RESI Cold Rolled Bar
classification rates. A mutually acceptable
reduction of job classes to five (rolling up
rates) shall be developed prior to December
1, 1998. All other economic items shall be
harmonized on a relatively straight line
basis with effective dates between November
30, 1998, and February 28, 2003, with full
harmonization to be effective on the latter
date. Once harmonization on any item is
achieved, that item shall remain fully
harmonized for the balance of the 1998 BLA.
(b) Extension Process - Representatives of the
parties shall identify local and other
appropriate issues to be resolved and to be
included in this Settlement Agreement.
2. BarTech (Johnstown and Lackawanna) - The parties
agree upon the following:
(a) Harmonization Process - effective
February 28, 2001:
(i) There shall be adopted a
production-based bonus plan expected
to yield at target the same payout
as the former RESI facilities'
then-current average incentive
yield;
(ii) The job class of each BarTech job
shall be harmonized to the job class
to which similar RESI jobs are
assigned; and
(iii) There shall be full harmonization
to the RESI pension plan with full
credit for BarTech service.
(iv) In accordance with the 1994 BarTech
Collective Bargaining Agreement,
all hourly wage rate increases for
BarTech classifications shall be
implemented as scheduled. However,
on March 1,
-6-
<PAGE> 33
2001 the classification wage rates
shall be adjusted to the same
hourly wage rates as the applicable
hourly wage rates for RESI Hot
Rolled Bar classifications. In
recognition of the classification
rate adjustments, the Company will
implement a production based
incentive plan (the "BarTech
Incentive Plan" or "BIP"). The
production based incentive plan
will be designed to provide an
earnings opportunity equal to the
average earnings opportunity of the
RESI Hot Rolled Bar production
based incentive plans (adjusted for
straightline harmonization). Such
plan will provide an earnings
opportunity (approximate average of
$2.16 per/hr) equal to the
difference between the adjusted
BarTech hourly classification rates
and the total (hourly rates and
incentive earnings) hourly earnings
of similar classifications of RESI
Hot Rolled Bar rates. At a minimum
the BarTech Incentive Plan shall
guarantee the difference between
the BarTech classifications in
effect on February 28, 2001 and the
new adjusted rates, plus $.25. The
guarantee and remaining earnings
opportunity of the BIP will be paid
in the regular payroll periods. On
November 1, 2002 the BarTech
classification rates will be
adjusted to the just increased RESI
Hot Rolled Bar classification
rates. The BIP will guarantee the
difference between the November 1,
2002 classification rates and the
classification rates in effect on
February 28, 2001, plus $.75. The
guarantee and remaining earnings
opportunity (at target $2.80
per/hr) of BIP will be paid in the
regular payroll periods. With
respect to all other economic items
applying to the Johnstown and
Lackawanna plants, the parties
shall negotiate to harmonize such
items so as to match those items in
all material respects to those
applicable to the former RESI
facilities (as
-7-
<PAGE> 34
amended in the 1998 BLA). Such
harmonization shall be achieved on
a relatively straight line basis on
effective dates between February
28, 2001, and February 28, 2003,
with full harmonization to be
effective on the latter date. Once
harmonization on any item is
achieved, that item shall remain
fully harmonized for the balance of
the 1998 BLA.
(b) Extension Process - Representatives of the
parties shall identify local and other
appropriate issues to be resolved and to be
included in this Settlement Agreement. In
addition, the parties have agreed that,
effective March 1, 2001, for vacation
entitlement, to credit BarTech employees
with their former Bethlehem Service, to a
maximum of seventeen (17) years of former
Bethlehem service.
3. Canadian Drawn Steel - Hamilton, Ontario: The parties
have reached a Settlement Agreement for Canadian
Drawn Steel. Such Settlement Agreement includes the
portions of this Settlement Agreement which shall be
applicable to Canadian Drawn Steel in addition to the
economics and terms and conditions of employment.
C. RESI CBA Economic Modifications
1. The new 1998 BLA shall provide for the following
economic provisions applicable to former RESI Hot
Rolled Bar facilities:
(a) On the RESI Effective Date: $.25 across the
board in SHWR for both non-incentive and
incentive workers
(b) November 1, 1999: $.25 across the board in
SHWR for both non-incentive and incentive
workers
(c) November 1, 2000: $.50 across the board in
SHWR for both non-incentive and incentive
workers
-8-
<PAGE> 35
(d) November 1, 2001: $.50 across the board in
SHWR for non-incentive and incentive workers
(e) November 1, 2002: $.75 across the board in
SHWR for non-incentive and incentive workers
2. The new 1998 BLA shall also provide for the following
economic provisions applicable to former RESI Cold
Finished Bar facilities:
(a) On the RESI Effective Date: $.25 across the
board in SHWR for both non-incentive and
incentive workers
(b) November 1, 1999: $.25 across the board in
SHWR for both non-incentive and incentive
workers
(c) November 1, 2000: $.25 across the board in
SHWR for both non-incentive and incentive
workers
(d) November 1, 2001: $.25 across the board in
SHWR for both non-incentive and incentive
workers
(e) November 1, 2002: $.25 across the board in
SHWR for both non-incentive and incentive
workers
3. A mutually acceptable reduction of Job Classes to
five (rolling up rates) to be agreed to prior to the
RESI Effective Date.
4. $1,000 Signing Bonus immediately following the RESI
Effective Date for all employees accruing continuous
service. In return for such payment, the Union agrees
to withdraw all grievances and related NLRB charges
concerning the issue of Target 60 implementation, and
the triggering of Employment Security as it relates
to Functional Analysis.
D. NuBar Profit Sharing Plan
-9-
<PAGE> 36
1. Effective for BarTech Employees, the BarTech
Effective Date and for RESI Employees effective the
first fiscal quarter following the RESI Effective
Date, the Company shall implement a Profit Sharing
Plan as described herein.
2. Level of Payout
The Company agrees that it will create a
Profit-Sharing Pool (the "Pool"). The Pool will be
determined on a quarterly basis as follows:
NuBar will pay into the Pool 4% of all Profits (as
defined below) that amount to greater than 12% of
NuBar sales revenue and less than 20% of NuBar sales
revenue;
NuBar will pay into the Pool 6% of all Profits (as
defined below) that amount to greater than or equal
to 20% of NuBar sales revenue.
3. Calculation of Profits
Profits shall be calculated in accordance with
generally accepted accounting principles as used by
the Company in the preparation of its financial
statements for reporting to NuBar's shareholders.
For the purposes of this Plan, Profit shall be
defined as Net Earnings, excluding:
(a) The amount by which total compensation and
related expenses for any individual exceeds
5X the total actual compensation for the
average USWA-represented employee.
(b) Any one-time payments to non-bargaining unit
employees.
-10-
<PAGE> 37
(c) The costs of OSHA, MSHA, EPA, SEC or other
civil and criminal penalties and the cost of
correcting any regulatory or other
violations of law.
(d) Cumulative effect on prior years of a change
in accounting principles.
(e) Income or loss related to any charges or
credits (whether or not identified as
special credits or charges) for unusual,
infrequently occurring or extraordinary
items.
(f) Any expense recorded for any income or other
taxes.
(g) Any fees or other similar charges directly
or indirectly paid to individuals or
entities for goods or services priced on
other than an arms-length basis.
(h) Any costs, or the expense associated with
this Plan or any other profit-sharing or
similar plan.
Notwithstanding anything to the contrary contained in
this Agreement, post-retirement employee benefit
expenses will be taken into account in the
calculation of Profit in the same manner that they
would have been taken into account prior to the
adoption of FASB 106.
4. Distribution
The Profit Sharing Pool (the "Pool") shall be
distributed as follows:
The Pool shall be sub-divided based on total
participant hours worked, into two sub-pools (i) one
for the former RESI employees and NuBar new hire USWA
represented employees working at former RESI
facilities (the "RESI Pool") and (ii) one for the
former BarTech production and maintenance represented
and non-represented employees and NuBar new hire
production
-11-
<PAGE> 38
and maintenance represented and non-represented
employees working at former BarTech/B&L/Canadian
Drawn facilities (the "BarTech Pool").
The RESI Pool shall be divided as follows:
(a) 20% of the RESI Pool shall be distributed to
the group of RESI/NuBar retirees who
retire(d) or otherwise terminated prior to
the effective date of the 1998 BLA, or after
the effective date of the 1998 BLA on a
non-ERB pension, in proportion to their
Restoration Account Balances.
(b) 40% of the RESI Pool shall be distributed to
active former RESI employees in proportion
to their Restoration Account Balances.
(c) 40% of the RESI Pool shall be distributed to
active former RESI employees and NuBar new
hire employees at former RESI facilities in
proportion to their hours paid, (including
paid union time) with a cap for this
purpose, of 2,080 hours per employee.
After the Restoration Account obligations in (a)
and/or (b) above have been extinguished, funds
designated for (a) and/or (b) will be allotted to (c)
above.
The BarTech Pool shall be distributed to former
BarTech employees and NuBar new hire employees
working at former BarTech/B&L facilities in
proportion to their hours paid (including paid union
time), with a cap for this purpose of 2,080 hours per
employee.
5. Administration of the Plan
The Plan will be administered by the Company in
accordance with its terms and the costs of
administration shall be the
-12-
<PAGE> 39
responsibility of the Company. Upon determination of
each Profit Sharing calculation, such calculation
shall be forwarded to the chairman of the Union
negotiating committee accompanied by a Certificate of
Officer signed by the Vice-President, Finance of the
Company, stating that the Profit Sharing Calculation
was made in accordance with generally accepted
accounting principles and the definition of Profit
described herein.
The Union, through its Negotiating Committee Chairman
or his/her designee, shall have the right to review
the calculations used to derive Profit under the
Plan. The Company shall provide said designee with
any information requested in connection with such
review.
In the event that a disagreement exists between the
Company's Profit Sharing calculation and the results
obtained by the Union designee's review, the Company
Chairman and the Union Chairman of the respective
Negotiating Committees shall attempt to reach an
agreement regarding the disagreement. In the event
that they cannot resolve the dispute, either party
may submit such dispute to final and binding
arbitration under the Grievance Procedure outlined in
this Labor Agreement.
E. Pension Plan Modifications
NUBAR PENSION PROGRAM
EFFECTIVE AT FORMER RESI PLANTS 11/1/96 (AS DEFINED IN PENSION TERM SHEET)
EFFECTIVE AT B&L 12/01/98, AND AT BARTECH 03/01/01
1. Monthly Benefit Amount
(a) Floor Multiplier of $35 for each year of
continuous service.
(b) Effective May 1, 2003, increase Floor
Multiplier to $46.
-13-
<PAGE> 40
(c) Offsets to Monthly Benefit Amount
Deductions made for annuity value/pension
benefit of (where applicable):
LTV DB, LTV DC, RESI DC (exclusive of its
401(k) component), BarTech 401(k) (exclusive
of employee contribution).
Offset for above amounts only when benefits
paid under Defined Benefit Plan.
Workers' Compensation, Public Pension or
Severance Allowance will not be offset.
2. Special Payment- a flat dollar amount, based on the
1998 average of all employees' vacation allotment,
increased by 3% per year during the term of this
agreement. Such payment shall be reduced by the value
of the employee's vacation taken in the year of
entitlement.
3. $400 Monthly Supplement
Applicable to Permanent Incapacity, 70/80 and
Rule-of-65 Retirements.
The increase in pension will be payable until the
participant becomes eligible for Public Pension or
dies.
For Rule-of-65 Retirements only, traditional earnings
offset for supplement with earnings threshold equal
to Age 65-69 earnings amount under Social Security
Act and indexed thereafter.
4. Retirement Eligibility
Traditional steel industry eligibility requirements
for:
-14-
<PAGE> 41
- Normal Retirement - Age 65/5
- 62/15 Retirement
- 30-Year Retirement
- Reduced --60/15 Retirement
- Permanent Incapacity Retirement
- 70/80 Retirement
- Rule-of-65 Retirement
- Deferred Vested Retirement
Use traditional steel industry reduction factors for
60/15 and Deferred Vested Retirements.
Under the Rule-of-65 Retirement, the parties have
agreed to the following Suitable Long Term Employment
(SLTE) Plant Groupings:
I. Willimantic, CT
Lackawanna, NY
II. Lackawanna, NY
Beaver Falls, PA
Johnstown, PA
Massillon, OH
Canton, OH
III. Harvey, IL
Chicago, IL
Gary, IN
IV. Johnstown, PA
Baltimore, MD
5. Continuous Service
All service with LTV/RESI, B&L, Canadian Drawn and
BarTech will be recognized under the plan for
purposes of determining eligibility, vesting and
benefit accrual. All service
-15-
<PAGE> 42
with Bethlehem will be recognized under the plan for
purposes of determining eligibility and vesting.
Use traditional steel industry rules for crediting
continuous service.
6. Payment Forms
(a) Automatic Five-Year Term Certain.
(b) Automatic 50% Spouse Option.
(c) Co-Pensioner Options (50% and 100%)
Traditional steel industry rules for calculation and
eligibility with steel industry upgraded and
simplified percentages tables.
7. Survivor Benefits
(a) Retirement Equity Act (REACT) Pre-Retirement
Annuity Coverage.
(b) Surviving Spouses' Benefits with minimum of
$350/$200.
Traditional steel industry rules for calculation and
eligibility with steel industry upgraded and
simplified percentages table for REACT coverage.
8. Other Pension Provisions
The supplement will be continued beyond age 62 for
those participants born in 1938 or later so that the
future maximum reduction from the amount at full
Social Security retirement age (67 in the year 2022)
is the same percentage as currently applicable (20%)
at age 65 for the full Social Security retirement
amount.
-16-
<PAGE> 43
9. Other Benefit Plans - Effective upon closing of the
RESI Acquisition
(a) Discontinue contributions to RESI DC.
(Discontinue BarTech DC effective 03/01/01)
(b) Discontinue new contributions to Disability
Income Benefit Plan. Maintain for current
recipients at present benefit levels.
(c) ABA/IMF provisions.
It is the intent of the parties for the NuBar pension
and welfare benefit plans ("NuBar Plans") to replace
and/or be merged with the corresponding plans
maintained by RESI. In the period prior to the
closing of the RESI Acquisition, representatives of
the parties will address and resolve the issues
raised by the change over to the NuBar plans
("change-over").The objective of the parties will be
to provide a smooth transition from current RESI
program coverage to that provided under the NuBar
Plans. Issues to be resolved include, but are not
limited to, how employees and/or retirees under
current RESI plans will be affected by the
change-over, and the disposition of such programs as
Extended SUB, the Disability Income Benefits plan,
the Income Maintenance Fund, and the Additional
Benefits Account (including its relationship to the
retiree insurance program). In no event shall any
employee or retiree be made worse off as a result of
the changeover.
10. Bethlehem Service Recognition Payment
(a) Eligibility:
() Former Bethlehem employees who meet
the eligibility requirements for
re-employment rights under the
BarTech PLA; and
-17-
<PAGE> 44
(ii) Have at least five years of
BarTech/NuBar continuous service.
(b) Benefit - such eligible employees shall
receive an additional monthly benefit to
their NuBar Pension. The benefit will equal
their years of Bethlehem service, as used to
calculate Bethlehem continuous service for
pension purposes, multiplied by $7.00.
11. Lag Date
The Pension Agreement will remain in effect for five
(5) months after the termination of the collective
bargaining agreement.
F. Insurance
1. Amend Section 7.4 of the RESI Program of Insurance
Benefits to provide for vision examination every 12
months.
2. Amend Section 7.3 of the RESI Program of Insurance
Benefits to increase frame allowance to $50.
3. Amend Section 11.3 of the RESI Program of Hospital
and Medical Benefits for eligible Pensioners and
Surviving Spouses to increase life insurance for
future retirees to $5000 effective February 28, 2001.
II. EARLY RETIREMENT BUYOUT PACKAGE ("ERB") AND VOLUNTARY SEVERANCE
PLAN ("VSP")
The RESI and B&L (Harvey) plant-specific portion of the 1998 BLA will
include the following Early Retirement Buyout Package:
A. Purpose:
The Company and Union agree that significant reductions in
manning levels at the former RESI facilities are essential to
enable NuBar to
-18-
<PAGE> 45
become competitive and thereby improve job security. In order
to lessen the impact on employees, the parties have agreed to
the following:
1. Present facilities covered by the 1993 RESI BLA and
the B&L (Harvey) BLA shall be covered by this ERB
program.
2. The Company's business plan calls for a reduction in
the net number of bargaining unit jobs at former RESI
facilities by approximately fourteen hundred (1400)
during the approximately four (4) years of the
transition/consolidation. This net reduction in
bargaining unit jobs will be accomplished through the
shutdown of plant(s) (or departments or subdivisions
thereof), capital investments and productivity
improvements due to work rule and job classification
improvements.
3. Over the term of the Agreement, in lieu of any other
facility closure benefits payable to ERB recipients
under the 1998 BLA, NuBar will offer an additional
type of pension under the pension agreement to be
called an Early Retirement Buyout (ERB) in accordance
with the following:
Number of ERB's:
(a) The Company shall offer one ERB for each net
job eliminated due to:
(i) changes in work practices and/or
job classification; or
(ii) new capital investment; or
(iii) facility closures, including plants,
departments, or subdivisions thereof
(hereinafter, any one of (i), (ii)
or (iii) referred to as
-19-
<PAGE> 46
a "Headcount Reduction,") minus;
(iv) the number of RESI and B&L Harvey
bargaining unit employees who quit,
die, are terminated for cause,
voluntarily transfer, or retire (on
other than an ERB);
(b) the number of ERB's offered shall be the greater of;
(i) 1000; or
(ii) the number which results from the process
described in Section A-3(a) above.
B. Amount of ERB Package:
An ERB package shall consist of:
1. An unreduced Pension calculated in accordance with
the pension agreement; and
2. At the option of the employee, either:
(a) a $15,000 lump sum payment upon retirement;
or
(b) For a retiree who retires prior to reaching
age 61, a total pension supplement of $700
per month (without any earnings offset),
beginning with the individual's last day
worked. Such pension supplement shall cease
when the retiree attains an age sufficient
to be eligible for 80% of full social
security old age insurance benefit at social
security retirement; and
3. Retiree health and life insurance; and
4. A $10,000 lump sum cash payment in full satisfaction
of the employee's Restoration Account.
-20-
<PAGE> 47
C. ERB Eligibility:
To be eligible for an ERB, a bargaining unit employee must:
1. Satisfy the age and service requirements of at least
a Rule of 65, 70/80, 65/5, 62/15, or 30 year
retirement pension.
2. Have the greatest continuous service among a group of
employees eligible to apply for ERB's under the
priority rules set forth below in Subsection D.
D. Distribution of ERB's: Priority and Procedures
1. During the term of the 1998 BLA, the respective
Chairmen of the Negotiating Committee shall meet on
at least a quarterly basis to:
(a) discuss and develop the implementation of an
annual Headcount Reduction Plan for each one
(1) of three (3) Regions. Such Regions shall
be:
(i) Region 1 (all RESI plants in
Illinois and Indiana and B&L
Harvey); and
(ii) Region 2 (all RESI plants in Ohio
and Pennsylvania); and
(iii) Region 3 (all other RESI plants);
(b) receive updates and progress reports on the
Headcount Reduction Plan and the number of
ERB's that have been offered and accepted in
the affected plants, departments and
Regions; and
(c) no more than twice per/year, determine and
notify each plant management and Local Union
President and/or Unit Chairperson of the
number of Headcount Reductions that have
been assigned to each plant in accordance
with the
-21-
<PAGE> 48
Headcount Reduction Plan.
2. There shall be a Joint Implementation Committee (JIC)
in each Region composed of three representatives of
the Company and three representatives of the Union.
The JIC members shall be appointed by each of the
party's respective Negotiating Committee Chairmen.
The JIC shall award ERB's, with each plant having
initially allocated to it the number of Headcount
Reductions indicated in the notification referred to
in paragraph 1 above. The JIC shall be authorized to
oversee the allocation and awarding of ERB's in
accordance with this Memorandum, the new 1998 BLA,
and rules of implementation adopted by mutual
agreement of the JIC. Among the subjects such rules
may address are the rules for applying for and
accepting an ERB, and the effect of changing one's
mind, etc.
3. Unless the JIC mutually agrees otherwise, ERB's shall
be granted with the following priority:
(a) First, among eligible affected employees in
the affected Plant;
(b) Next, among eligible employees in the
affected Plant;
(c) Next, among eligible employees throughout
the Region.
Within any of the priority tiers listed
above, the eligible employee with the
greatest corporate continuous service shall
have first right to an ERB.
4. If an ERB-eligible employee chooses not to accept an
offer of an ERB, that employee shall retain all
seniority rights under the applicable collective
bargaining agreement. To meet operational needs, the
Company may retain an employee who accepts an ERB for
up to six (6) months, or a period of time not to
exceed twelve (12) months as mutually agreed to by
the employee and the Company.
-22-
<PAGE> 49
E. Additional Duties of JIC
Among the tasks of the JIC shall be the administration of
specific rules regarding the job-related movement of employees
within the plant.
F. Voluntary Severance Plan
In the event that the ERB's outlined above do not provide the
necessary work force reductions, the JIC shall institute a
Voluntary Severance Plan ("VSP") in order to achieve the
necessary work force reductions as determined in the Annual
Headcount Reduction Plan. The VSP participants will have the
option of:
1. A single lump sum payment of $50,000; or
2. 36 monthly payments of $1,666; or
3. 36 monthly payments of $1,333 and continuation of all
health and medical benefits;
VSP Eligibility: Employees not meeting the age and service
requirements for an ERB shall be eligible for a VSP in
accordance with this Section F.
VSP's will be offered to VSP eligible employees in the same
order as outlined above in paragraph D-3.
VSP's will be limited to the difference between the number of
headcount reductions as determined in the particular Headcount
Reduction Plan and the accepted ERB's associated with such
Plan.
When an accumulated total of eight hundred (800) ERB's have
been accepted, the Company may offer up to an additional two
hundred (200) VSP's. However, such VSP's will be restricted to
the acceptance of one (1) VSP for each two (2) ERB's offered.
-23-
<PAGE> 50
Employees who decline offered ERB's shall not be eligible for
VSP's.
G. Limited Exception to Employment Security Plan
If at any given time, after offering ERBs and VSPs to achieve
targeted Headcount Reductions, the number of (a) targeted
Headcount Reductions within the facilities exceeds (b) the
total of:
1. Voluntary terminations as outlined in Section
A-3(a)(iv) above; and
2. Accepted ERB's; and
3. Accepted VSP's;
(the difference between (a) and (b) above herein called an
"Excess"), then the Company may, notwithstanding the
Employment Security Plan, lay off and have on layoff a number
of employees equal to the lesser of
(i) 300; or
(ii) the Excess.
H. Special Provision for Certain Non-ERB-Eligible Employees
Affected by a Possible Plant Shutdown at Willimantic
If an employee:
1. Experiences the permanent shutdown of his or her
plant; and
2. Is not eligible for an ERB; and
then such employee shall have the option of either exercising
any right to a job to which he or she qualifies by virtue of
the BLA or receiving a VSP. Such VSP's are in addition to the
VSP's described in Section F.
-24-
<PAGE> 51
III. The parties hereby adopt the following:
A. A Master Agreement set forth in Appendix A.
B. Letter of Understanding covering the Corporate Structure of
NuBar as set forth in Appendix B.
C. Letter of Understanding modifying the Employment Security
Article of the Master Agreement as set forth in Appendix C.
D. Letter of Understanding covering the merger of the Gary Dunes
and 7th Avenue Plants of RESI as set forth in Appendix D.
E. Letter of Understanding covering the Interest Arbitration
Award (1997) as set forth in Appendix E.
F. Letter of Understanding covering the merger of the RESI DCP
and DBP as set forth in Appendix F.
G. Letter of Understanding modifying the Neutrality Article of
the Master Agreement as set forth in Appendix G.
H. Letter of Understanding covering the NuBar Share Purchase as
set forth in Appendix H.
I. Letter of Understanding covering the Ratification Process in
Negotiations in year 2003 as set forth in Appendix I.
J. Letter of Understanding covering the Reimbursement to Local
Unions for Negotiations as set forth in Appendix J.
K. Letter of Understanding covering the RESI Share Sale as set
forth in Appendix K.
-25-
<PAGE> 52
L. Letter of Understanding modifying the Successorship regarding
the Cold Finished Plants as set forth in Appendix L.
M. Letter of Understanding covering Retiree Health Care costs as
set forth in Appendix M.
N. Letter of Understanding covering C&BL Railroad as set forth in
Appendix N.
O. Letter of Understanding covering BarTech Employee Equity
Interest as set forth in Appendix O.
P. Letter of Understanding covering Incentive Plan Redevelopment
as set forth in Appendix P.
Q. Letter of Understanding covering Job Classification
Consolidation as set forth in Appendix Q.
R. Letter of Understanding covering deletions from the RESI
predecessor Labor Agreement.
IV. The termination date of the new agreement shall be October 31, 2003.
The termination date of the benefits agreements shall be extended to
expire on February 28, 2004.
Executed this _____ day of August, 1998.
United Steelworkers of America AFL-CIO RES Acquisition Corporation
________________________________ _____________________________
Bar Technologies Inc.
_____________________________
Bliss & Laughlin Steel Company
-26-
<PAGE> 53
_____________________________
Canadian Drawn Steel Company
_____________________________
-27-
<PAGE> 54
Exhibit 10.50
SETTLEMENT AGREEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
I. BARGAINING STRUCTURE, HARMONIZATION OF AGREEMENTS, AND ECONOMICS PAGE 3
A. Bargaining Structure/Single Agreement/Expiration Dates 3
B. Harmonization and Extension of Terms and Conditions of Employment 5
C. RESI CBA Economic Modifications 8
D. NuBar Profit Sharing 10
E. Pension Plan Modifications 14
F. Insurance 18
II. EARLY RETIREMENT BUYOUT PACKAGE ("ERB") AND VOLUNTARY SEVERANCE PLAN
("VSP") 19
A. Purpose 19
B. Amount of ERB Package 20
C. ERB Eligibility 21
D. Distribution of ERB's: Priority and Procedures 21
E. Additional Duties of JIC 23
F. Voluntary Severance Plan 23
G. Limited Exception to Employment Security Plan 24
H. Special Provision for Certain Non-ERB-Eligible Employees Affected
by a Possible Plant Shutdown at Willimantic 25
III. APPENDICES
A. A Master Agreement set forth in Appendix A 1
Article I - Purpose, Scope, And Recognition 1
Article II - Union Security and Check-off 2
Article III - Management Rights 3
Article IV - Responsibilities of the Parties 3
Article V - Workforce Flexibility 4
Article VI - Partnership 6
Article VII - Capital Spending Plan, Upstreaming and Management Fees 18
Article VIII - Employment Security Plan 20
Article IX - Neutrality 23
Article X - Successorship 29
Article XI - Contracting Out 30
Article XII - New Employee Orientation 42
Article XIII - Hiring Preference 44
Article XIV - Board of Directors 44
Article XV - Institute for Career Development 45
Article XVI - Manning of New Operations 49
Article XVII - Right to Bid 53
</TABLE>
<PAGE> 55
<TABLE>
<S> <C>
Article XVIII - Union Role In Negotiation of Benefits 55
Article XIX - Printing of Contracts 56
Article XX - SOAR/PAC 56
Article XXI - Family and Medial Leave Act 57
Article XXII - Leave of Absence Policy for Union Employees 62
Article XXIII- Grievance and Arbitration Procedure 63
Article XXIV - Suspension and Discharge 67
Article XXV - Safety and Health 68
Article XXVI - Allowance for Funeral Leave 73
Article XXVII - Hours of Work 74
Article XXVIII - Holidays 76
Article XXIX - Vacation 77
Article XXX - Jury Duty 78
Article XXXI - Employees in Military Service 79
Article XXXII - Savings Clause 81
Article XXXIII - Seniority 81
Article XXXIV - Severance 86
Article XXXV - Substance Abuse 89
Article XXXVI - Wages 93
Article XXXVII - Termination Date 96
B. Letter of Understanding covering the Corporate Structure of NuBar
as set forth in Appendix B 97
C. Letter of Understanding Modifying the Employment Security Article
of the Master Agreement as set forth in Appendix C 99
D. Letter of Understanding covering the merger of the Gary Dunes and
7th Avenue Plants of RESI as set forth in Appendix D 100
E. Letter of Understanding covering the Interest Arbitration Award
(1997) as set forth in Appendix E 101
F. Letter of Understanding covering the merger of the RESI DCP and DBP
as set forth in Appendix F 102
G. letter of Understanding modifying the Neutrality Article of the
Master Agreement as set forth in Appendix G 103
H. Letter of Understanding covering the NuBar Share Purchase as set
forth in Appendix H 104
I. Letter of Understanding covering the Ratification Process in
Negotiations in year 2003 as set forth in Appendix I 105
J. Letter of Understanding covering the Reimbursement to Local Union
for Negotiations as set forth in Appendix J 106
K. Letter of Understanding covering the RESI Share Sale as set forth
in Appendix K 107
L. Letter of Understanding modifying the Successorship regarding the
Cold Finished Plans as set forth in Appendix L 108
M. Letter of Understanding covering Retiree Health Care costs as set
forth in Appendix M 110
N. Letter of Understanding covering C&BL Railroad as set forth in
</TABLE>
<PAGE> 56
<TABLE>
<S> <C>
Appendix N 111
O. Letter of Understanding covering BarTech Employee Equity Interest
as set forth in Appendix O 112
P. Letter of Understanding covering Incentive Plan Redevelopment as
set forth in Appendix P 113
Q. Letter of Understanding covering Job Classification Consolidation
as set forth in Appendix Q 114
R. Letter of Understanding covering Deletions from RESI Predecessor
Labor Agreement as set forth in Appendix R 120
</TABLE>
<PAGE> 57
Exhibit 10.50
APPENDIX A
AGREEMENT
THIS AGREEMENT, made and entered into by and between RES Acquisition
Corporation and/or NuBar(hereinafter referred to as the "Company"), and the
United Steelworkers of America, AFL-CIO (hereinafter referred to as "Union").
ARTICLE I
PURPOSE, SCOPE, AND RECOGNITION
SECTION 1 - PURPOSE
It is the intent and purpose of the parties hereto to set forth herein
the agreement covering rates of pay, hours of work, and conditions of employment
to be observed between the parties hereto for the Employees of the Company in
the bargaining units of the Company set forth in this Article.
SECTION 2 - RECOGNITION
The Union having been designated the exclusive collective bargaining
representative of the Employees of the Company as defined in this Article, the
Company recognizes the Union as such exclusive representative. Accordingly, the
Union makes this Agreement in its capacity as the exclusive collective
bargaining representative of such Employees. The provisions of this Agreement
constitute the sole procedure for the processing and settlement of any claim by
an Employee or the Union of a violation by the Company of this Agreement. As the
representative of the Employees, the Union may process complaints and grievances
through the complaint and grievance procedure, including arbitration, in
accordance with this Agreement or adjust or settle the same.
SECTION 3 - COVERAGE
In accordance with and subject to the provisions of the Labor
Management Relations Act, 1947, as amended, the Company recognizes the Union as
the exclusive bargaining agency of the production and maintenance Employees
(with the exceptions hereinafter specified in this Article) of the Company's
steel manufacturing and finishing
-1-
<PAGE> 58
facilities for which units the Union is certified by the National Labor
Relations Board or may be, during the life of this Agreement, recognized by the
Company as the exclusive collective bargaining representative of the Company for
the purpose of collective bargaining in respect to rates of pay, hours of work,
and conditions of employment.
SECTION 4 - EMPLOYEE DEFINED
The term "Employee," as used in this Agreement, shall mean the
production and maintenance Employees, but shall not include executives, foremen,
assistant foremen, supervisors who do not work with tools, draftsmen,
timekeepers, first-aid men and nurses, plant protection, office and salaried
employees and, bricklayers at the steel manufacturing and finishing plants.
(Except Gary and Johnstown O&T employees that have been agreed to by the
parties.)
ARTICLE II
UNION SECURITY AND CHECK-OFF
Each employee, who fails voluntarily to acquire or maintain membership
in the Union, shall be required as a condition of employment, on and after the
thirtieth (30th) day following the beginning of employment or the effective date
of this provision, whichever is later, to pay to the Union each month an agency
fee as a contribution towards the Union's expenses as a collective bargaining
representative. The agency fee for the first month shall be in an amount equal
to the Union's regular and usual monthly dues, including an initiation fee if
applicable, and for each month thereafter in an amount equal to the regular and
usual monthly dues.
During the life of this contract, the Company agrees to deduct from an
employee's pay monthly dues, assessments, and initiation fees as designated by
the International Secretary/Treasurer of the Union and as authorized by a signed
voluntary check-off request. Such proceeds will be mailed to the International
Secretary/Treasurer of the United Steelworkers of America, or its successor,
Five Gateway Center, Pittsburgh, PA, 15222.
The Union agrees to save the Company harmless from any action growing
out of these deductions commenced by or on behalf of any employee or by any
agency of the Federal or State or Local government against the Company, the
Union assumes full
-2-
<PAGE> 59
responsibility for the disposition of the funds so deducted once they have been
turned over to the International Secretary/Treasurer of the Union.
ARTICLE III
MANAGEMENT RIGHTS
All rights of management not bargained away by the expressed terms of
this Agreement, are reserved and retained by the Company. The reserved and
retained rights of management shall include, but not be limited to the right to
plan and direct the work force and plant operations; to maintain discipline; to
discipline, suspend or discharge employees for just cause; to assign or demote;
to hire employees and to release employees from duty so long as not inconsistent
a with the express provisions of this Agreement; to introduce new or reasonably
modified production and bonus standards, to discontinue or alter existing
facilities; to establish and schedule shifts, to determine the products to be
manufacture, the location at which they will be manufactured, the services to be
performed, the scheduling of production, the size and composition of work crews
and of the work force, and decide to the processes and methods employed in
production; to establish and implement reasonable rules and regulations.
ARTICLE IV
RESPONSIBILITIES OF THE PARTIES
SECTION 1 - RESPONSIBILITIES AND NONDISCRIMINATION
Each of the parties hereto acknowledges the rights and responsibilities
of the other party and agrees to discharge its responsibilities under this
Agreement.
There shall be no discrimination, restraint or coercion against any
employee because of membership in the Union.
It is the continuing policy of the Company and the Union that the
provisions of this Agreement and the actions of these parties shall be
consistent with all local, state, and federal employment laws. Neither party
shall retaliate against any employee who exercises his rights thereunder.
-3-
<PAGE> 60
SECTION 2 - CIVIL RIGHTS COMMITTEE
A joint Committee on Civil Rights shall be established at each plant.
The Union representation on the committee shall be no more than three members of
the Union, in addition to the Local Union President/Unit Chairperson and
Chairman of the Grievance Committee. The Union members shall be certified to the
plant manager by the Union and the Company members shall be certified to the
Union.
SECTION 3 - NO STRIKE - NO LOCKOUT
During the term of this Agreement, the Union, its agents, members,
representatives and employees of the Company shall not instigate, promote,
sponsor, encourage, condone or engage in any strike, sympathy strike, picketing,
slowdown, stoppage of work, withholding of services, honoring the picket line of
this or any other Union at the Company's facility, or other interruption or
interference of any sort with the business of the Company for any reason under
any circumstance. The Company shall have the right to discharge or otherwise
discipline any employee who does engage in any form of the foregoing described
conduct during the term of this Agreement, and any employee so disciplined will
have recourse to the grievance procedure solely to determine whether such
employee engaged in the conduct herein prohibited. The Arbitrator will have no
authority to modify the discipline. The Company shall not lockout during the
term of this Agreement.
ARTICLE V
WORKFORCE FLEXIBILITY
The parties recognize that employment security and productivity
improvement is inseparably linked to attaining sustained profitability. These
issues must be addressed on balance and in relationship to each other.
Accordingly, the parties agree to jointly maximize the effective
utilization of the workforce and equipment and achieve continuous improvement by
implementing new and innovative approaches to the way work is performed.
The parties further recognize that one of the major barriers to
productivity is the continued application of restrictive and unnecessary past
practices, local agreements, and local working conditions ("practices"). Based
on the Company's agreement to the
-4-
<PAGE> 61
Employment Security provisions of this Agreement, the Union commits to eliminate
those "practices" which are inconsistent with the parties' desire to redesign
and restructure work so that it can be performed in the most efficient and
effective manner. Accordingly, the parties commit to eliminate those
"practices."
The parties further agree that in order to maximize productivity goals
and achieve a philosophy of continuous improvement the manner in which work has
historically been performed must be changed to adopt new innovative work
methods, job responsibilities, and assignments of work. Trade and Craft
positions must change into a multicraft approach. Training requirements and
programs must be developed and implemented to obtain competitiveness in the
maintenance forces. Those employees unable to achieve full Multicraft status
will still be expected to perform in a more flexible, expanded role consistent
with safety and their qualifications and abilities. Non-craft employees may,
consistent with standardized safety practices and the employee's qualifications
and abilities, assist Trade and Craft employees in maintenance duties.
It is the agreed-upon goal of the parties to achieve a rapid conversion
to Maintenance Technician Mechanical ("MTM") and Maintenance Technician
Electrician ("MTE") positions during the term of this agreement. In addition,
production employees must broaden their skills, become more flexible, and work
as assigned to achieve world class competitive status. Training programs will be
developed for each identified need.
The parties agree to reduce the number of job classifications by the
process of elimination and/or combination. The consolidation of job
classifications shall take place in the most expeditious manner possible and
without putting an undue work burden on employees or increasing the inherent
hazards of the job. All past practices, local agreements, and local working
conditions (other than overtime equalization agreements) will be eliminated that
conflict with the stated goal. All overtime equalization agreements shall
include provisions that require participants to be qualified for the overtime
opportunity. The local parties shall also develop a method to share the
administrative duties associated with the equalization process. Where overtime
equalization agreements do not exist, such agreements shall be negotiated within
sixty (60) days of the effective date of the 1998 Agreement.
Within ninety (90) days of the effective date of this Agreement each
Local Union will prepare a list of past practices, local agreements and/or local
working conditions, which it believes do not restrict the productivity,
flexibility or efficiency of the plant but
-5-
<PAGE> 62
produce a material benefit to bargaining unit employees. The parties agree to
adopt any such past practices, local agreements or local working conditions
which meet the standard set forth in the preceding sentences. Such new
agreements, if any, must be reduced to writing and signed by an authorized
representative of each party. Any disputes arising from this process may be
submitted to the grievance and arbitration procedure.
Nothing in this Agreement will be considered as limiting the Company's
ability to change job duties or assign employees to duties. The Company may
assign employees to any duty for which they are qualified and for any length of
time consistent with the other terms and conditions of the Agreement. The
ability of the Company to maintain a stable work force and an efficient and
profitable operation is dependent upon workforce flexibility. An employee may
not refuse to perform work or to take an assignment (consistent with the safety
relief provisions), which the employee is qualified to perform. The Company will
not assign an employee in a discriminatory or arbitrary manner.
The Company may adopt alternative work schedules consisting of a ten
(10) or twelve (12) hour per day scheduling with the approval of the Local Union
President/Unit Chairperson . No overtime pay shall be required except for hours
worked in excess of forty (40) hours per week or for hours worked beyond the
alternative scheduled daily hours. There will be no duplication or pyramiding of
overtime.
ARTICLE VI
PARTNERSHIP
SECTION 1 - PURPOSE AND INTENT
The Union and the Company agree that their goal is to attain the
objectives set forth in this Article. They also agree that these goals can best
and perhaps only be accomplished if decision-making authority is shared at all
levels of the enterprise. Accordingly, the parties have agreed to work toward
the objective of establishing a strategic partnership. The purposes of this
Article are to provide a framework for Union and employee participation for full
and continuing access by appropriate Union representatives to all books,
records, and information relevant to the purpose and objectives of this
-6-
<PAGE> 63
memorandum, and for the establishment of a comprehensive training and education
program, all as further described herein.
Further, the parties recognize that the changes contemplated by this
Article must evolve, especially at the plant level. Accordingly, the local
parties must have the flexibility to design participative structures that best
meet their needs at any given time and that can change as changed circumstances
and experience warrant.
SECTION 2 - OBJECTIVES
In furtherance of their understanding on long-term employment security,
the parties have agreed to pursue the following objectives and commitments:
(A) Increasing the quality, profitability, and
competitiveness of the enterprise and its products;
(B) Assuring that Union representatives and employees receive full
and early access to information concerning Company decisions
affecting their working lives, including early notification
concerning significant Company transactions, such as mergers,
acquisitions, dispositions, joint ventures, etc.;
(C) Creating a less authoritarian, safer, fairer, more equitable
and less stressful work environment;
(D) Responding to technological change through joint mechanisms
which will cause technology to serve the interest of both the
enterprise and the workers affected by the change;
(E) Reduction of all costs;
(F) Increasing worker responsibility and control over the
workplace;
(G) Continual training, education, and up-grading of the
skills of the work force;
(H) Creation of better jobs through the development of higher
skills;
-7-
<PAGE> 64
(I) Ensuring that the Company operates responsibly with respect to
the environment and other areas of public policy; and
(J) Acceptance and support by the Company of the Union and
acknowledgment of its role as an essential vehicle in
attaining these objections.
SECTION 3 - FULL AND CONTINUING ACCESS TO INFORMATION
Appropriate Union representatives (including consultants and advisors)
shall have access to financial and operational information that is relevant to
the development and implementation of the Business Plan as well as access to
Company employees and advisors who are responsible for such information.
As used in this Article, the term "Business Plan" shall refer to the
Company's short-term Business Plan and long-term strategic and operating plan,
including such elements as those involving products, pricing, markets, capital
spending, short and long-term cash flow forecasts, and the method and manner of
funding or financing the Business Plan. Without limiting the foregoing, the
Company shall provide the Union with early notification of any contemplated
significant transactions involving mergers, acquisitions, and continuing updates
regarding dispositions, joint ventures, and new facilities to be constructed or
established by the Company, its subsidiaries, joint ventures, or other entities
in which the Company has a financial interest.
For its part the Union will provide the Company with appropriate
information regarding Union activities, organizational changes, bargaining and
political objectives, and other plans or developments that might affect the
Company.
The use of the information contemplated by this section, will be
covered by a confidentiality agreement in form and substance satisfactory to the
parties.
SECTION 4 - COMPREHENSIVE TRAINING AND EDUCATION PROGRAM FOR COMMITTEE
MEMBERS.
The parties recognize that the goals of this Article can be attained
only by a commitment to comprehensive and ongoing training and education.
Accordingly, the Partnership Committee and Joint Leadership Committees
(established below) shall take rigorous steps to establish training programs
necessary to the purposes of this Article.
-8-
<PAGE> 65
All training shall be focused on the following objectives: the long-range
goals of the Company and Union; problem-solving techniques; communication
activities; skills, attitudes, behaviors and techniques for increasing the
effectiveness of participation and involvement activities; and methods for
determining and achieving joint goals. Without in any way limiting the
comprehensiveness or continuity of the training and education required by
this Article, such activities will include at least the following minimum
standards and guidelines.
(A) Both Company and Union representatives shall receive
appropriate training by their respective organizations in how
they can accomplish their organization's goals and joint goals
through participation and involvement activities, and such
training shall not exceed the following levels:
(1) All members of Joint Leadership Committees and
Coordinators and Assistants: five (5) days per
year.
(2) All members of the Joint Advisory Committees and the
Joint Problem Solving Teams: five (5) days per year.
(3) All other leadership figures of the local parties to
this Article: five (5) days per year.
(B) The Partnership Committee shall sponsor a program for at least
annual orientation and appropriate training of all members of
joint committees created under this Article.
(C) Each Joint Leadership Committee shall develop a training
program designed to increase the skills of bargaining
unit and non-bargaining unit employees concerning the
subjects identified in this Section 4. The training
programs shall be jointly developed and shall commence
with instruction on how best to pursue organizational
objectives through use of the partnership mechanisms
described in Section 5, such instruction to satisfy the
following minimum levels: for bargaining unit employees,
a one-day Union-taught orientation session; for front
line supervisors, managers, and other excluded personnel,
a one-day Management-taught orientation session.
-9-
<PAGE> 66
(D) The Company shall fund all training programs referred to in
this Section, including employee time spent in such training,
as though it were time worked and such time shall be paid at
the employee's average rate of earnings as determined for
vacation pay.
(E) Training referred to in this Section, other than Union
training, shall be jointly developed and implemented.
(F) The Union shall notify the Company of its intent to provide
Union training and shall review the objectives of Union
training with the Company.
SECTION 5 - PARTNERSHIP MECHANISMS
(A) Joint Strategic Partnership Committee
(1) Appointment and Composition
A Joint Strategic Partnership Committee ("Partnership
Committee") shall be established, consisting of
members appointed by the Chairman of the Union
Negotiating Committee and an equal number of
Management representatives appointed by the Company.
Members of this Committee shall be active employees
of the USWA or the Company.
(2) Meetings
The Partnership Committee shall meet at least
quarterly.
(3) Information
The Partnership Committee shall receive detailed and
in-depth reports regarding all significant business
and labor matters relating to: the Business Plan,
technological changes and plans; manpower planning;
safety and health measures; customer evaluation;
major organizational issues; facilities utilization;
-10-
<PAGE> 67
and other significant issues and concerns raised by
the members of the Committee.
(4) Reports
The Partnership Committee shall report to Local Union
and Management personnel (including all members of
Joint Leadership or Joint Advisory Committees) on
matters such as: activities of the Partnership
Committee, major issues being considered by the
Partnership Committee and information relevant
thereto; other information to keep the Local Union
leadership and Management informed and capable of
further discussion of issues related to the
enterprise.
(5) Access to Board of Directors
The Union members of the Partnership Committee (and
their advisors) may appear before and be heard by the
Board of Directors at appropriate times on matters of
concern to the Partnership Committee, and such access
shall be given prior to the Board reaching a decision
on such matters.
(6) Role of the Partnership Committee
(a) The Partnership Committee shall have the
authority and responsibility to reach
agreement on issues relating to:
the objectives set forth in Section 2 of
this Article; issues or programs arising
under Section 5- B(4) of this Article.
(b) Identify areas and activities for special
emphasis on improvement, and work with the
appropriate Joint Leadership Committees in
implementing plans for such improvements.
(c) Identify and address inter-department or
inter-divisional barriers which are impeding
improvement.
-11-
<PAGE> 68
(d) Monitor the management of employees
available as a result of productivity
improvements and the value received from
their efforts.
(B) Joint Leadership Committees
(1) Appointment and Composition
Joint Leadership Committees shall include at least
three (3) union representatives (the Local Union
President/Unit Chairperson and two (2) other members
as he/she shall appoint) and three (3) Management
representatives.
(2) Meetings
The Joint Leadership Committee shall meet at least
monthly. At all Joint Leadership Committee meetings,
the parties shall engage in an open and candid
exchange of information and ideas.
(3) Information
At each meeting, the Joint Leadership Committee
shall review reports and activities of the Joint
Strategic Partnership Committee and aspects of
the Business Plan as it impacts the areas of
responsibility of the Joint Leadership
Committee, such as each month's performance of
the plant, including cost performance; quality
performance, and shipments; the production plan
for the next month; manpower planning;
investment plans and performance compared to
those plans; safety and health performance;
activities and needs of any Joint Advisory
Committees or Problem Solving Teams; and other
issues or concerns of interest to the parties.
(4) Scope of Responsibility
(a) Technological Change
-12-
<PAGE> 69
As used herein, the term "technology" shall include machinery,
equipment, controls, materials, and software; the phrase "technological
change" shall refer to introductions of new technology, changes in
existing technology, or both.
A Joint Leadership Committee shall establish a new technology
development and implementation program (Technological Change Program)
which shall include the following elements:
(i) Advance Notice
The Company shall provide the Joint Leadership Committee
advance notice of any proposed technological change no later
than the beginning of the Company's process for evaluating
such a proposal. Such notice shall be in writing, shall to the
extent and when available contain supporting information
outlined below, and shall include updates of new or revised
information necessary for full and current understanding of
the proposed change. In the case of emergency technological
changes, the Company shall give the maximum notice and
information possible under the circumstances.
(ii) Within the time periods noted above, the Company shall
give the Joint Leadership Committee the following information:
A description of the purpose and function of the technological
change, and how it would fit into existing operations and
processes; the estimated cost of the technology, a cost
justification of it; and the proposed timetable for it;
disclosure of any service or maintenance warranties or
contracts provided or required by the vendor (if any);
-13-
<PAGE> 70
the number of type of jobs (both inside and outside the
bargaining unit) which would be changed, added, or eliminated
by the technological change;
the anticipated impact on the skill requirements of the work
force;
details of any training programs connected with the new
technology (including duration, content, and who will perform
the training);
an outline of other options which may be considered before
formulating proposed changes; and
the expected impact of the change on job content, pace of
work, safety and health, training needs, and contracting out.
Union representatives on the Joint Leadership Committee may
request and receive access to Company personnel knowledgeable
about any proposed technological change (including outside
consultants) to review, discuss, and receive follow-up
information concerning any technological changes proposed by
the Company or Union or their effects on the bargaining unit.
The use of the information contemplated by this subsection
will be covered by a confidentiality agreement in form and
substance satisfactory to the parties.
(iii) With respect to any Company decision whether to make a
technological change, Union representatives on the Joint
Leadership Committee may initiate discussion and consideration
of technological changes that are new or different from those
proposed by the Company. The
-14-
<PAGE> 71
view expressed by the Union members of the Joint Leadership
Committee shall be considered by the Company.
(b) Joint Advisory Committees
(i) Joint Advisory Committees shall be developed in each
operating area. The Joint Advisory Committee
co-chairs shall be the Grievance Committee-persons
responsible for the Area in which the Joint Advisory
Committee is established and Manager with
responsibilities for operations. The Joint Advisory
Committee shall, in addition, include other as the
co-chairs deem appropriate. The Joint Advisory
Committees may, by agreement, invite additional
persons as the Committee may deem helpful to its
purposes. The Local Union President/Unit Chairperson
and the Company Vice President with operational
responsibility for the Area involved may attend Joint
Advisory Committee meetings as they deem necessary.
(ii) Joint Advisory Committees shall study matters
assigned to them by the Joint Leadership Committee or
as they may agree upon and shall report any findings
back to the Joint Leadership Committee. Such matters
may relate to, among other things, continuous
improvement in quality, customer satisfaction, costs,
job enrichment/enhancement, safety, and improved
worklife. Upon direction of a Joint Leadership
Committee, Joint Advisory Committees may: (i) devise
measurements and goals to meet plans adopted by the
Joint Leadership Committee; and (ii) be responsible
for communicating plans, results, business
information, and overall employee involvement updates
to the employees in their Area and to the Joint
Leadership Committee.
-15-
<PAGE> 72
(iii) Joint Advisory Committees shall receive the resources
(including problem solving training and information)
necessary for them to determine the best solution to
specific problems. They shall not have the authority
to modify, detract, add to or delete any portion of
the Agreement.
(c) Problem Solving Teams
By joint agreement, the Joint Leadership Committees and the
Joint Advisory Committees may create one or more Problem
Solving Teams to study and report back on specific problem.
They shall receive the resources (including problem solving
training and information) necessary for them to determine the
best solution to specific problems.
SECTION 6 - EMPLOYEE COMMUNICATIONS
Critical to the accomplishment of the objectives of this Article is
timely, ongoing, and unimpeded communication between and among the committees
created by this Agreement and employees. Accordingly, the parties agree as
follows:
The results of any meetings of Joint Committees created by this Article
including the information and opinions exchanged, the conclusions reached, and
the level of participation achieved may be conveyed, where appropriate, to all
employees through their working groups by the Union representatives and
department supervision.
SECTION 7 - SAFEGUARDS AND RESOURCES
(A) Except as may be approved by the Partnership Committee, no
joint committee may amend or modify the Agreement.
(B) No committee authorized by this Article may affect any action
with respect to contractual grievances.
(C) Services on any Joint Leadership, Joint Advisory, or Problem
Solving Committee or Team created under this Article shall be
voluntary.
-16-
<PAGE> 73
(D) The Union will strive to be a full participant in the
processes and mechanisms established by this Article and
bargaining unit employees will be encouraged and expected to
perform their duties within the parameters established
hereunder. However, no employee may be disciplined or
discharged for lack of commitment to participate in the
involvement processes.
(E) Employee participation and training shall normally occur
during the normal work hours and the employees shall suffer no
loss of earnings as a result thereof.
(F) No committee established under this memorandum may recommend
or effect the hiring, discipline, or discharge of any
employee.
(G) At the joint invitation of the Co-chairs of any committee
created hereunder, the following Union representative may
attend a committee meeting: the Union's District Director for
the district in which the committee is located or his
designee; Union headquarters personnel or otherwise Union
experts. All outside experts, advisors or consultants shall be
jointly requested.
(H) All meeting time and necessary and reasonable expenses of
joint committees shall be paid for by the Company and no
employee attending such meetings shall suffer a loss of
earnings as a result. The parties will develop procedures for
handling expenses.
(i) Union members on joint committees shall be entitled to:
adequate opportunity on Company time to caucus for purposes of
study, preparation, consultation, and review, and shall,
consistent with sub-paragraph 7-H, have their expenses
defrayed by the Company. Requests for caucus time shall be
made to the appropriate Company Management representative in a
timely manner, and such requests shall not be unreasonably
denied.
(J) Joint committees may agree to employ experts from within or
outside the Company as consultants, advisors, instructors,
etc., and such experts shall be jointly selected and assigned.
ARTICLE VII
-17-
<PAGE> 74
CAPITAL SPENDING PLAN, UPSTREAMING AND MANAGEMENT FEES
SECTION 1 The Company intends to implement the following Capital plan:
CUMULATIVE CAPITAL SPENDING BY FACILITY GROUP AND YEAR
($ in Millions)
<TABLE>
<CAPTION>
YEAR JOHNSTOWN LACKAWANNA COLD RES RES
MELT SHOP ROLLING MILL FINISHED MELT ROLLING
AND SHOP MILLS
PROCESSING
<S> <C> <C> <C> <C> <C>
Year 1 $9 $11 $10 $9 $54
Year 2 $13 $15 $36 $14 $88
Year 3 $19 $19 $61 $20 $122
Year 4 $25 $24 $81 $27 $156
Year 5 $32 $29 $93 $34 $176
</TABLE>
SECTION 2
During the term of this Agreement, the Company will not directly or
indirectly:
(A) declare or pay any dividend or make any other distribution in
respect of any of its capital stock; or
(B) purchase or otherwise acquire or retire any shares of its
capital stock or any other right to acquire shares of such
stock or set aside any amount for any such purpose;
in an amount (the aggregate payments made under clauses (a) and (b)
above) greater than 50% of net income, provided, however, that if the
Company has failed to meet the cumulative capital expenditure
commitment as described above, it shall make no such dividend,
distribution, purchase, acquisition, retirement or set aside
whatsoever.
-18-
<PAGE> 75
SECTION 3 - FEES
During the term of this Agreement, no fees of any kind whatsoever shall
be charged to the Company by any direct or indirect stockholder. Notwithstanding
the restrictions set forth in this Article, the Company shall be permitted to
pay to Blackstone (with a portion agreed to by Blackstone to be paid to Veritas)
(i) a transaction fee based upon 1% of total enterprise value, (ii) monitoring
or management fees in an aggregate amount in any fiscal year of up to $2.0
million and (iii) financial advisory, financing, underwriting, placement, merger
and acquisition and other investment banking or transaction fees in customary
amounts.
-19-
<PAGE> 76
ARTICLE VIII
EMPLOYMENT SECURITY PLAN
SECTION 1 - EFFECTIVE DATE
This Employment Security Plan (ESP) shall become effective for eligible
employees, as defined in Paragraph C below, the first full week following the
effective date of this Agreement.
SECTION 2 - GUARANTEE
(A) Employees eligible for this ESP may not be laid off during the
term of this Agreement except as provided below. If a disaster
occurs, the ESP will be terminated. For the purposes of this
agreement, disaster is defined as:
(1) A petition in bankruptcy for reorganization or
liquidation is filed, and the Court finds that it is
necessary to reject this agreement and issues an
order under the bankruptcy laws authorizing such
rejection.
(2) Severe financial difficulties short of bankruptcy
filing. Such financial difficulties must represent a
clear and present danger to the Company's viability.
Termination can occur under this paragraph only by
mutual agreement of the parties.
(3) An unexpected or unplanned major plant and/or
facility outage which is anticipated to necessitate a
cessation of operations in excess of thirty (30)
days. Such disaster shall only affect the employment
security guarantee for those employees directly
impacted by the outage at the plant in which it
occurs.
(B) In addition, in the event of a strike, or work stoppage by
employees covered by the Agreement, the ESP will be suspended
for the duration of such strike or work stoppage.
-20-
<PAGE> 77
(C) The guarantee provided to active eligible employees by this
ESP is defined as the opportunity to earn forty (40) hours of
pay (including hours paid for but not worked, work
opportunities declined by the employee, disciplinary time off,
absenteeism, report-off for Union business, overtime pay and
premium pay), during any payroll week. An eligible employee on
approved leave of absence or medically laid off during any
payroll week shall be considered as having been provided
employment security during that week, it being understood that
the pay, if any, that such an employee is entitled to receive
while on approved leave of absence or medical layoff is that
provided by applicable law or the labor agreement, not the
earning opportunity set forth in the ESP.
SECTION 3 - ELIGIBILITY
(A) All employees with at least two years of corporate continuous
service and who are active as of the effective date of this
Agreement are eligible for the protections of this ESP. An
active employee who does not have at least two years of
continuous service as of the effective date of this Agreement
shall be eligible for this ESP upon attaining two years of
continuous service, unless he is on layoff at that time, in
which case he shall become eligible when he returns to active
employment. An employee with two years of service and who is
inactive as of the effective date of this Plan shall become
eligible for this ESP upon his return to active status.
(B) Any full-time employee hired after the effective date of this
ESP shall be eligible for this ESP under its provisions upon
attaining two years of continuous service, unless he is on
layoff at that time, in which case he shall become eligible
when he returns to active employment.
(C) Employees eligible for employment security must continue to
fully satisfy the terms and conditions of employment.
SECTION 4 - IMPLEMENTATION
The local parties will meet for the purpose of reaching agreement on
the implementation of this ESP, including the placement of employees who would
have been laid off but for this ESP. Those agreements shall become part of this
ESP, and shall be
-21-
<PAGE> 78
consistent with the workforce flexibility provisions of the Agreement. Such
agreements may not be changed except as agreed to by the local plant
implementation committee.
SECTION 5 - RATE OF PAY
An employee who would have been laid off but for this ESP and who is
working in a new job assignment shall receive the higher of:
(A) the established rate of pay, including applicable incentives
or bonuses, of the job performed, or
(B) the regular rate of pay for the employee's incumbent job,
including applicable incentives or bonus.
SECTION 6 - SAFEGUARDS
If the Plan is temporarily, partially or permanently terminated or if
any employee is laid-off as a result of an ESP exception during the term of this
Agreement, the following shall apply:
(A) a SUB Plan identical to the SUB Plan referenced in the 1993
RESI BLA shall be deemed to exist and be 100% funded as of the
date of such an event;
(B) the Company shall be required to begin to accrue liability and
make cash contributions as required by the SUB Plans; and
(C) the SUB plan shall be amended to allow eligibility for all
employees who may be laid-off.
SECTION 7 - EXISTING RIGHTS
Except as expressly provided in this ESP, nothing in the ESP shall
interfere with, limit, detract from, or adversely affect in any way the rights
and obligations of the parties set forth in other provisions of the Agreement.
The Union recognizes, however, that management may assign work without
contractual limitations to employees who would have been laid-off for this ESP
and in accordance with Section 4 of this Article.
-22-
<PAGE> 79
ARTICLE IX
NEUTRALITY
SECTION 1 - INTRODUCTION
Over the years, the Company and the Union have developed a constructive
and harmonious relationship built on trust, integrity and mutual respect. The
Company places a high value on the continuation and improvement of its
relationship with the Union.
SECTION 2 - NEUTRALITY
To underscore the Company's commitment in this matter, it agrees to
adopt a position of neutrality in the event that the Union seeks to represent
any non-represented employees of the Company.
Neutrality means that, except as explicitly provided herein, the
Company will not in any way, directly or indirectly, involve itself in efforts
by the Union to represent its employees, or efforts by its employees to
investigate or pursue unionization.
The Company's commitments to remain neutral as outlined above shall
cease if the Company demonstrates to an Arbitrator under Section 11 herein that
during the course of an organizing campaign, the Union or its agents is
intentionally or repeatedly (after having the matter called to the Union's
attention) materially misrepresenting to the employees the facts surrounding
their employment or is conducting a campaign demeaning the integrity or
character of the Company or its representatives.
SECTION 3 - NOTICE POSTING
Upon written notification by the Union that an organizing campaign is
in progress, the Company shall post on all bulletin boards where notices are
customarily posted a notice which shall read as follows:
"NOTICE TO EMPLOYEES
-23-
<PAGE> 80
We have been formally advised that the United Steelworkers of
America is conducting an organizing campaign among certain of our
employees. This is to advise you that:
1. The Company does not oppose collective bargaining or
the unionization of our employees.
2. The choice of whether or not to be represented by a
union is yours alone to make.
3. We will not interfere in any way with your exercise
of that choice."
SECTION 4 - HIRING
(A) For all hiring in a Covered Workplace in any unit(s)
appropriate for bargaining (prior to the existence of a
collective bargaining agreement), the Company shall treat any
job opportunities in the unrepresented unit(s) at such
facility as though they were permanent vacancies under the
Agreement and fill them in accordance with the principles
embodied in the Agreement's Seniority Article.
(B) In determining whether to hire any applicant at a Covered
Workplace (whether or not such applicant is an employee
covered by this Labor Agreement), the Company shall refrain
from using any selection procedure which has the effect of
disadvantaging applicants based on their attitudes or behavior
toward unions or collective bargaining.
SECTION 5 - SCOPE OF THE UNIT
As soon as practicable after notification by the Union that it intends
to seek recognition at a Covered Workplace, the parties will meet to attempt to
reach an agreement on the appropriate unit. In the event that the Company and
the Union are unable to agree on an appropriate unit, either party may refer the
matter to the Dispute Resolution Procedure contained in Section 11 of this
Article.
SECTION 6 - ACCESS TO COMPANY FACILITIES
-24-
<PAGE> 81
Upon written request, the Company shall grant access to its facilities
to the Union for the purpose of distributing literature and meeting with
unrepresented Company employees. Distribution of Union literature shall not
compromise safety or production. Distribution of Union literature inside Company
facilities and meetings with unrepresented Company employees inside Company
facilities shall be limited to non-work areas during non-work time.
SECTION 7 - ACCESS TO EMPLOYEE LIST
Upon written request, the Company shall immediately provide the Union
with a complete list of all of its employees who are eligible for union
representation. Such list shall include each employee's name and their home
address. Thereafter, the Company will provide updated lists monthly.
SECTION 8 - UNION RECOGNITION
(A) If, at any time following the existence at a Covered Workplace
of a representative complement of employees in any unit
appropriate for collective bargaining, the Union demands
recognition, the parties will request that a mutually
agreeable third party, or the American Arbitration Association
("AAA") if no agreement on a neutral can be reached, conduct a
card check within five days of the making of the request. The
neutral shall compare the authorization cards submitted by the
Union against original handwriting exemplars of the entire
bargaining unit furnished by the Company and shall determine
if a simple majority of eligible employees has signed cards.
The list of eligible employees shall be jointly prepared by
the Union and the Company.
(B) If the Union secures a simple majority of authorization cards
of the employees in an appropriate bargaining unit, the
Company shall recognize the Union as the exclusive
representative of such employees without a secret ballot
election conducted by the National Labor Relations Board. The
authorization cards must unambiguously state that the signing
-25-
<PAGE> 82
employees desire to designate the Union as their exclusive
representatives for collective bargaining purposes.
SECTION 9 - SCOPE OF THIS AGREEMENT
(A) Rules with Respect to Affiliates and Parent Companies
For purposes of this agreement, the Company also includes (in
addition to the Company): (i) any entity which directly or
indirectly controls the Board of Directors of the Company (a
"Parent Company"); (ii) any Affiliate of either the Company or
a Parent Company; and the obligations and commitments in this
Agreement which are applicable to the Company, are applicable
to them.
For purposes of this Article, Affiliate means any business
entity in which the Company directly or indirectly: (i) owns
more than 50% of the voting power or (ii) exercises de facto
control, meaning the power to direct the management and
policies of such business entity.
(B) Rules with Respect to a New Parent Company
The Company agrees that it will not consummate a transaction,
the result of which would cause the Company to come under the
control of another Company (a New Parent Company) without
first ensuring that said New Parent Company, any Affiliate of
said New Parent Company and any entity with which said New
Parent Company has a Covered Relationship agrees to be bound
by this Article.
(C) Rules with Respect to Other Covered Entities
(1) For purposes of this Article, an Other Covered Entity
means any business entity (not an Affiliate within
the meaning of Section 9(A) above): (i) which is
engaged in: (a) the mining, refining, production or
transportation of raw materials used in the making of
steel; (b) the making, finishing, processing or
fabricating of steel; or (c) other similar
businesses; and (ii) in which the Company either: (a)
-26-
<PAGE> 83
currently has a material interest; or (b) in the
future acquires a material interest. It is understood
that the relationship between the Company and any
Other Covered Entity shall be a Covered Relationship.
(2) The Company shall not enter into a Covered
Relationship without first ensuring that the Other
Covered Entity adopts this Article.
(3) With respect to any entity with which the Company
currently has a Covered Relationship, the Company
shall cause the Other Covered Entity to become a
party to this Article and achieve compliance with its
provisions.
(D) Covered Workplace
For purposes of this Article a Covered Workplace shall mean
any workplace which: (i) is controlled by either the Company
or an Other Covered Entity; and (ii) employs or intends to
employ employees who are eligible to become represented by a
labor organization.
SECTION 10 - BARGAINING IN NEWLY-ORGANIZED UNITS
Where the Company recognizes the Union pursuant to the above
procedures, the collective bargaining agreement applicable to the new bargaining
unit will be determined as follows:
(A) Substantially Similar Unit: If the facility in which the
bargaining unit is located is engaged in operations
substantially similar to any of those already covered by the
Agreement, the new bargaining unit shall become part of the
bargaining unit covered by such agreement, and the terms and
conditions of that agreement shall be extended to it.
(B) Other Units
(1) Where the newly-recognized unit is at a facility not
substantially similar to any operation already
covered by such agreement, the
-27-
<PAGE> 84
parties shall negotiate a new collective bargaining
agreement covering the new bargaining unit, bearing
in mind the wages, benefits, and working conditions
in the most comparable operations of the Company and
those of USWA-represented competitors to the facility
in which the newly-recognized unit is located.
(2) If, after thirty days from the commencement of such
negotiations, the parties are unable to reach
agreement, the matter shall be submitted to interest
arbitration in accordance with procedures to be
developed by the parties. In any such proceeding, the
arbitrator shall be governed by the standard
described in this Section.
SECTION 11 - DISPUTE RESOLUTION
Any alleged violation or dispute involving the terms of this Article
may be brought to a joint committee of one representative of each of the Company
and the Union by either party. If the alleged violation or dispute cannot be
satisfactorily resolved by the parties, either party may request that an
Arbitrator resolve such dispute. A hearing shall be held within ten (10) days of
the making of the request and the Arbitrator shall issue a decision within five
days thereafter. Such decision shall be in writing but need only succinctly
explain the basis for the findings. All decisions by an Arbitrator pursuant to
this Article shall be based on the terms of this Article and the applicable
provisions of the law. The Arbitrator's remedial authority shall include the
power to issue an order requiring the Company to recognize the Union where, in
all the circumstances, such an order would be appropriate.
The Arbitrator's award shall be final and binding on the parties and
all employees covered by this provision. Each party expressly waives its right
to seek judicial review of said award, and such award by any court of competent
jurisdiction.
ARTICLE X
SUCCESSORSHIP
The Company agrees that it will not sell, convey, assign or otherwise
transfer any plant or significant part thereof covered by the then existing
Basic Labor Agreement
-28-
<PAGE> 85
between the Company and the Union to any other party
(hereinafter referred to as "Buyer") who intends to continue
to operate the business as the Company had, unless the
following conditions have been satisfied prior to the closing
date of the sale:
(A) the Buyer shall have entered into an agreement with the Union
recognizing it as the bargaining representative for the
employees within the then existing bargaining units,
(B) the Buyer shall have entered into an agreement with the Union
establishing the terms and conditions of employment to be
effective as of the closing date, and
(C) if requested by the Company, the Union will enter into
negotiations with the Company on the subject of releasing and
discharging the Company from any obligations, responsibilities
and liabilities to the Union and the Employees and/or
applicable individuals, except as the parties otherwise
mutually agree.
This Article is not intended to apply to any transactions solely
between the Company and any of its subsidiaries or affiliates, or its parent
company including any of its subsidiaries or affiliates; nor is it intended to
apply to transactions involving the sale of stock of the Company or a merger of
the Company, except if a plant or operation or significant part thereof, which
is covered by such Labor Agreement(s), is sold to a third party pursuant to a
transaction involving the sale of stock of a subsidiary of the Company. This
provision shall not apply to a public offering of registered securities.
ARTICLE XI
CONTRACTING OUT
SECTION 1
The parties have existing rights and contractual understandings with
respect to contracting out. These include the existing rights and obligations of
the parties which arose before the parties included specific language in their
collective bargaining agreement, the arbitration precedents which have been
established before and since the parties included specific provisions addressing
contracting out in their collective
-29-
<PAGE> 86
bargaining agreement. In addition, the following provisions shall be applicable
to all new contracting out issues arising on or after the effective date of this
Agreement.
(A) Basic Prohibition
The parties acknowledge the guiding principle that work
capable of being performed by bargaining unit employees shall be
performed by such employees. Accordingly, the Company will not contract
out any work for performance inside or outside the plant unless it
demonstrates that such work meets one of the following exceptions.
(B) Exceptions
(1) Work in the Plant
(a) Production, service, all maintenance and repair
work, all installation, replacement and
reconstruction of equipment and productive
facilities, other than that listed in Subparagraph
B-1-b below, all within a Plant, may be contracted
out if (a) the consistent practice has been to have
such work performed by employees of contractors and
(b) it is more reasonable (within the meaning of
paragraph C below) for the Company to contract out
such work than to use its own employees.
(b) Major new construction, including major
installation, major replacement and major
reconstruction of equipment and productive
facilities, at any plant may be contracted out
subject to any rights and obligations of the parties
which, as the beginning of the period commencing
August 1, 1963, are applicable at that plant in the
case of any plant which was in operation on or before
August 1, 1958. With respect to any other plant, the
period commencing date shall be the date five years
after the date on which the plant started operations.
No project shall be deemed to be "major" so
as to fall within the scope of this exception, unless
the Company proves that the project is of so large or
grand a scale, measured in man hours, that bargaining
unit employees could not reasonably be expected to
-30-
<PAGE> 87
perform the work in question. The scale and type of
this project shall be considered in relation to the
scale and type of projects which bargaining unit
employees have completed in the past at the same
location. In addition, man hours for the project at
issue shall be considered in comparison to other
projects performed by bargaining unit forces. Total
cost of the project shall be of no relevance
whatsoever.
As regards the term "new construction"
above, except for work done on equipment or systems
pursuant to a manufacturer's warranty, work that is
of a peripheral nature to major new construction,
including major installation, major replacement and
major reconstruction of equipment and productive
facilities and which does not concern the main
component of work shall be assigned to employees
within the bargaining unit unless it is more
reasonable to contract out such work taking into
consideration the factors set forth in paragraph (C)
or it is otherwise mutually agreed. For purposes of
this provision, the term "work of a peripheral
nature" shall include but not be limited to
demolition, site preparation, road building, utility
hook-ups, pipe lines and any work which is not
integral to the main component.
(2) Work Outside the Plant
(a) Should the Company contend that maintenance or
repair work to be performed outside the plant or work
associated with the fabricating of goods, materials
or equipment purchased or leased from a vendor or
supplier should be excepted from the prohibitions of
this Section, the Company must demonstrate that it is
more reasonable (within the meaning of paragraph C
below) for the company to contract for such work
(including the purchase or lease of the item) than to
use its own employees to perform the work or to
fabricate the item.
Notwithstanding the above, the Union
recognizes that as part of the Company's normal
business, it may purchase standard components or
parts or supply items, produced for sale generally
-31-
<PAGE> 88
("shelf items"). No item shall be deemed a standard
component or part or supply item if:
(i) its fabrication requires the use of
prints, sketches or detailed manufacturing
instructions supplied by the Company or
another company engaged in producing or
finishing steel or producing iron ore or
supplied at the Company's behest or it is
otherwise made according to detailed Company
specifications or those of another company
engaged in producing or finishing steel or
producing iron ore;
(ii) it involves a unit exchange;
(iii) it involves the purchase of motors,
transmissions, convertors or other items
under a core exchange, replacement or
trade-in transaction (whether or not title
to the unit passes to the vendor/purchaser
as part of the transaction).
It is further provided that the performance
of work in connection with the purchase of a shelf
item including, but not limited to, cutting to
length, cable splicing, attaching fixtures and making
adjustments in the size or shape of the item shall be
deemed, for purposes of this Section, to be
maintenance, repair or fabrication work performed
outside the plant and such work shall not fall within
the meaning of "shelf item."
With respect to shelf items, the Company may
purchase goods, materials, and equipment, where the
design of manufacturing expertise involved is
supplied by the vendor as part of the sale.
(b) Production work may be performed outside the plant only
where the Company demonstrates that is unable because of lack
of capital to invest in necessary equipment or facilities, and
that it has a continuing commitment to the steel-making
business. In determining whether there is capital to invest in
particular equipment or facilities, the Company is entitled to
make reasonable judgments about the allocation of scarce
capital resources among its plants represented by the Union
and their supporting facilities.
-32-
<PAGE> 89
(3) Mutual Agreement
Work contracted out by mutual agreement of the
parties pursuant to paragraph F below.
(4) Work contracted out, whether inside or outside of the
Plant, may be contracted out provided the contractor employer
is a signatory to this Agreement.
(C) Reasonableness
In determining whether it is more reasonable for the
Company to contract out work than use its own employees the
following factors shall be considered:
(1) Impact on the bargaining unit.
(2) The necessity for hiring new employees shall not be deemed
a negative factor except for work of a temporary nature.
(3) Desirability of recalling employees on layoff.
(4) Availability of qualified employees (whether active or on
layoff) for a duration long enough to complete the work.
(5) Availability of adequate qualified supervision.
(6) Availability of required equipment either on hand or by
lease or purchase, provided that either the capital outlay for
the purchase of such equipment, or the expense of leasing such
equipment, is not an unreasonable expenditure in all the
circumstances at the time the proposed decision is made.
(7) The expected duration of the work and the time constraints
associated with the work.
-33-
<PAGE> 90
(8) Whether the decision to contract out the work is made to
avoid any obligation under the collective bargaining agreement
or benefits agreements associated therewith.
(9) Whether the work is covered by a warranty necessary to
protect the Company's investment. For purposes of this
subparagraph, warranties are intended to include work
performed for the limited time necessary to make effective the
following seller guarantees:
(a) Manufacturer guarantees that new or rehabilitated
equipment or systems will perform at stated levels of
performance and/or efficiency subsequent to installation.
(b) Manufacturer guarantees that new or rehabilitated
equipment or systems will perform at stated levels of
performance and/or efficiency subsequent to installation.
Warranties are commitments associated with a
particular product or service in order to assure that seller
representations will be honored at no additional cost to the
Company. Long term service contracts are not warranties for
the purposes of this subparagraph.
(10) In the case of work associated with leased equipment,
whether such equipment is available without a commitment to
use the employees of outside contractors or lessors for its
operation and maintenance.
(11) Whether, in connection with the subject work or
generally, the local union is willing to waive or has waived
restrictive working conditions, practices or jurisdictional
rules (all within the meaning of "local working conditions"
and the authority provided by this Agreement).
(D) Contracting Out Committee
(1) At each plant a regularly constituted committee consisting
of not more than four persons (except that the committee may
be enlarged to six persons by local agreement), half of whom
shall be members of the bargaining unit and designated by the
Union in writing to the Plant
-34-
<PAGE> 91
management and other half designated in writing to the Union
by the Plant management, shall attempt to resolve problems in
connection with the operation, application and administration
of the foregoing provisions.
(2) In addition to the requirements of paragraph E below, such
committee may discuss any other current problems with respect
to contracting out brought to the attention of the committee.
(3) Such committee shall meet at least one time each month,
unless mutually agreed otherwise.
(E) Notice and Information
Before the Company finally decides to contract out an item of
work as to which it claims the right to contract out, the Union
committee members will be notified. Except as provided in paragraph I
below (Shelf Item Procedure), or in certain cases of production work,
such notice will be given in sufficient time to permit the Union to
invoke the Expedited Procedure described in paragraph H below, unless
emergency situations prevent it. Such notice shall be in writing and
shall be sufficient to advise the Union members of the committee of the
location, type, scope, duration and timetable of the work to be
performed so that the Union members of the committee can adequately
form an opinion as to the reasons for such contracting out. Such notice
shall generally contain the information set forth below:
(1) Location of work.
(2) Type of work:
(a) Service
(b) Maintenance
(c) Major Rebuilds
(d) New Construction
-35-
<PAGE> 92
(e) Production
(3) Detailed description of the work.
(4) Crafts or occupations involved.
(5) Estimated duration of work.
(6) Anticipated utilization of bargaining unit forces
during the period.
(7) Effect on operations if work not completed in timely
fashion.
Either the Union members of the committee or the Company
members of the committee may convene a prompt meeting of the committee.
Should the Union committee members believe discussion to be necessary,
they shall so request the Company members in writing within five (5)
days (excluding Saturdays, Sundays and holidays) after receipt of such
notice and such a discussion shall be held within three (3) days
(excluding Saturdays, Sundays and holidays) thereafter. When
insufficient time is available to meet the time limits above, either
party may request a meeting to discuss the issues in an attempt to
resolve them. The Union members of the committee may include in the
meeting the Union representative from the area in which the problem
arises. At such meeting, the parties should review in detail the plans
for the work to be performed and the reasons for contracting out such
work. Upon their request, the Union members of the committee will be
provided any and all information in the Company's possession relating
to the reasonableness factors set forth in Paragraph C above. Included
among the information to be made available to the committee shall be
the opportunity to review copies of any relevant proposed contracts
with the outside contractor. The Management members of the committee
shall give full consideration to any comments or suggestions by the
Union members of the committee and to any alternate plans proposed by
Union members for the performance of the work by bargaining unit
personnel. Except in emergency situations, such discussions, if
requested, shall take place before any final decision is made as to
whether or not such work will be contracted out.
Should the Company committee members fail to give notice as
provided above, then not later than thirty (30) days from the date of
the commencement of
-36-
<PAGE> 93
the work a grievance relating to such matter may be filed under the
grievance and arbitration procedure. Should it be found in the
arbitration of a grievance alleging a failure of the Company to provide
the notice or information required under this paragraph E that such
notice or information was not provided, that the failure was not due to
an emergency requirement, and that such failure deprived the Union of a
reasonable opportunity to suggest and discuss practicable alternatives
to contracting out, the Arbitrator shall have the authority to fashion
a remedy, at the Arbitrator's discretion, that the Arbitrator deems
appropriate to the circumstances of the particular case. Such remedy,
if afforded, may include earnings to grievants who would have performed
the work, if they can be reasonably identified.
(F) Remedy for Repeated Notice Violations
Notwithstanding any other provision of this Agreement, where,
at a particular location, it is found that the Company (i) committed
violations of paragraph E on more than three occasions in any period of
three consecutive years or (ii) violated a cease and desist order
previously issued by the Arbitrator in connection with a violation of
paragraph E, the Arbitrator's remedy shall include the following:
(1) earnings and benefits to employees who would have
performed the work if they can reasonably be identified and, if not,
then to employees who might arguably have performed the work; and
(2) an award of costs to the Union, including but not limited
to, reasonable attorney's fees, if any lost time expenses reasonably
incurred by the Union in preparing and presenting the case, the Union's
share of the Arbitrator's fees, the Union's transcript expenses, if
any; and
(3) where a cease and desist order had previously issued, a
contempt charge of sufficient amount, in the Arbitrator's judgment, to
bring the Company into compliance with the Arbitrator's order.
(G) Mutual Agreement and Disputes
The committee may resolve the matter by mutually agreeing that
the work in question either shall or shall not be contracted out. Any
such resolution shall be
-37-
<PAGE> 94
final and binding but only as to the matter under consideration and
shall not affect future determinations under this Section.
If the matter is not resolved, or if no discussion is held,
the dispute may be processed further in accordance with either of the
following:
(1) By filing, within thirty (30) days of receipt of the
Company's notice, a grievance relating to such matter under the
grievance and arbitration procedure.
(2) By submitting the matter to the Expedited Procedure set
out in paragraph H below.
(H) Expedited Procedure
In the event that either the Union or Company members of the
committee request an expedited resolution of any dispute arising under
this Section, except paragraph I (Shelf Item Procedure), it shall be
submitted to the Expedited Procedure in accordance with the following:
(1) In all cases except those involving day-to-day maintenance
and repair work and service, the Expedited Procedure shall be
implemented prior to letting a binding contract.
(2) Within three (3) days (excluding Saturdays, Sundays and
holidays) after either the Union or Company members of the committee
determine that the committee cannot resolve the dispute, either party
(chairman of the grievance committee in the case of the local union and
the manager of labor relations in the case of the Company) may advise
the other in writing that it is invoking this expedited procedure.
(3) An expedited arbitration must be scheduled within three
(3) days (excluding Saturdays, Sundays and holidays) of such notice and
heard at a hearing commencing within five (5) days (excluding
Saturdays, Sundays and holidays) thereafter. The Arbitrator shall hear
the dispute and, if no Arbitrator is available to hear the dispute
within five (5) days, another arbitrator shall be selected by mutual
agreement of the District Director of the Union and the Vice President
Human Resources of the Company.
-38-
<PAGE> 95
(4) The arbitrator must render a decision within forty-eight
(48) hours (excluding Saturdays, Sundays and holidays) of the
conclusion of the hearing. Such decision shall not be cited as a
precedent by either party in any future contracting out disputes.
(5) Notwithstanding any provision of this Agreement any case
heard in the Expedited Procedure before the work in dispute was
performed may be reopened by the Union in accordance with this
paragraph if such work, as actually performed, varied in any material
respect from the description presented in arbitration. The request to
reopen the case must be submitted within 7 days of the date on which
the Union learned of the variance and shall contain a summary of the
ways in which the work as actually performed differed from the
description presented in arbitration. Upon receipt of a request to
reopen, the Arbitrator shall schedule a hearing in accordance with
these procedures. In a case reopened pursuant to this paragraph, the
Arbitrator shall determine whether the work in dispute, as it actually
was performed, violated the provisions of this Article and, if so, the
remedy. No prior decision in the matter shall be given any weight.
(I) Shelf Item Procedure
(1) No later than June 1, 1999, and except as provided herein,
annually thereafter, the Company shall provide the Union members of the
committee with a list and description of anticipated ongoing purchases
of each item which the Company asserts to be a shelf item within the
meaning of paragraph B-2-a above. If the Union members of the committee
so request, the list shall not include any item included on a previous
list where the status of that item as a shelf item has been expressly
resolved. Within sixty (60) days of the submission of the list, either
the Union members or the Company members may convene a meeting of the
committee to discuss and review the list of items and, if requested,
the facts underlying the Company's assertion that such items are shelf
items.
(2) The committee may resolve the matter by mutually agreeing
that the item in question either is or is not a shelf item. With
respect to any item as to which the Union members of the committee
agree with the Company's claim that it is a shelf item, the Company
shall be relieved of any obligation to furnish a contracting out notice
until the May 1 next following such agreement.
-39-
<PAGE> 96
(3) If the matter is not resolved, any dispute may be
processed further by filing, within thirty ( 30) days of the date of
the last discussion, a grievance in Step 2 of the complaint and
grievance procedure. Such a grievance shall include all items in
dispute. However, where a number of items raise the same or similar
issues, those items may be grouped in a single class or category.
(4) An item which the Company claims to be a shelf item, but
which was not included on the list referred to above because no
purchase was anticipated, shall be listed and described on a
contracting out notice provided to the Union not later than the
regularly scheduled meeting of the contracting out committee next
following purchase of the item. Thereafter, the parties shall follow
the procedures set forth in paragraphs 2 and 3 above.
(5) The Union may file a grievance in accordance with
paragraphs F or G of this Article with respect to any item of
maintenance, repair work or work associated with the fabrication of
goods, material or equipment performed outside the plant
notwithstanding the inclusion of such item on the shelf item list
previously furnished to the Union by the Company.
(J) Annual Review
Commencing on or before October 1 of each year the Company
Committee members shall meet with the Union Committee members for the
purpose of (i) reviewing all work whether inside or outside the plant
which the Company anticipates may be performed by outside contractors
or vendors at some time during the following calendar year, (ii)
determining such work which should be performed by bargaining unit
employees and (iii) identifying situations where the elimination of
restrictive practices would promote the performance of any such work by
bargaining unit employees. The Union Committee members shall be
entitled in conducting this study to review any current or proposed
contracts concerning items of work performed for the company by outside
contractors and vendors and shall keep such information confidential.
By no later than November 1 of each year these Local Union and
Company Committee members shall jointly submit a written report to the
Co-Chairmen of the Negotiating Committee or their designees describing
the results of this review. Specifically, the report should list (a)
all items of work which the parties agree
-40-
<PAGE> 97
will be performed by bargaining unit employees during the following
year, (b) all items of work which the parties agree should be performed
by outside contractors and vendors, and (c) those items on which the
parties disagree. If the parties disagree, the report will state the
reason for such disagreements.
As to individual items of work, the Co-Chairmen of the
Negotiating Committee may (a) affirm the plant recommendation, (b)
disagree with respect to the plant recommendation as to specific items
and either (i) refer their dispute to arbitration under a procedure to
be established by the parties and the Arbitrator or (ii) refer the
matters back to the plant without resolution in which event the
specific disputes will be handled under the provisions of this section
at the time they may arise.
The Union agrees that during the term of this Agreement, the
Company may purchase billets, blooms, bars, ingots and rods, provided
the purchase of such materials/products is for sound business reasons,
and/or the Company cannot produce such materials/products or cannot
produce such product at acceptable levels of quality.
(K) District Director/Vice-President Human Resources
It is the intent of the parties that the members of the joint
plant contracting out committee shall engage in discussions of the
problem involved in this field in a good-faith effort to arrive at
mutual understanding so that disputes and grievances can be avoided. If
either the Company or the Union members of the committee feel that this
is not being done, they may appeal to the District Director of the
Union who has jurisdiction of the plant in questions and the
appropriate representative of the company headquarters for review of
the complaint about the failure of the committee to properly function.
Such appeal shall result in a prompt investigation by the District
Director or his designated representative and the Company's Vice
President of Human Resources or his designated representative for such
review. This provision should in no way affect the rights of the
parties in connection with the processing of any grievance relating to
the subject of contracting out.
(L) No testimony offered by an outside contractor may be considered in
any proceeding alleging a violation of this Article unless:
-41-
<PAGE> 98
(1) The party calling the contractor provides the other party
with a copy of each contractor document to be offered at least
forty-eight (48) hours (excluding Saturdays, Sundays and
holidays) before the commencement of the hearing; and
(2) The party calling the contractor provides or causes the
contractor to provide the other party, upon request, with
copies of all relevant documents in the contractor's
possession.
ARTICLE XII
NEW EMPLOYEE ORIENTATION
The United Steelworkers of America and the Company will develop a joint
New Bargaining Unit Employee Orientation Program which shall entail the
following:
(1) An introduction of Plant Management officials, International
Union officials, and Local Union Representatives.
(2) Distribution and discussion of the USWA Labor Agreement
including any relevant local agreements, the probationary
period, and the grievance procedure.
(3) Discussion of Safety and Health programs and Safe Working
procedures.
(4) Presentation on and discussion of the history and achievements
of the United Steelworkers of America and the Local Union.
(5) Presentation on and discussion of the structure of the United
Steelworkers of America and the Local Union, and the services
that are provided by the various offices and committees.
(6) Presentation on the history of the Company and plant.
-42-
<PAGE> 99
(7) Review of the markets in which the Company participates; the
products produced and the customers serviced.
(8) Discussion of the structure of the Company, the plant
organization, and the functions and services that are provided
by the various departments.
Each new employee, either individually or as part of a small
group shall, within 10 days of their being hired, be given a
presentation of the above Program by Company and Union officials.
At the conclusion of the presentation, Union officials shall
be given an opportunity to meet with the new employee(s) for up to two
(2) hours without the presence of management representatives.
All costs associated with developing this Program, including
lost-time for Union officials who participate in its development, and
the costs, including lost-time for individuals participating in the
presentation, shall be borne by the Company.
ARTICLE XIII
HIRING PREFERENCE
In all hiring for bargaining unit positions, the Company shall, subject
to its obligations under applicable equal employment laws and regulations and to
the full extent of interest, give first preference to the direct relatives
(children, children-in-law, step-children, spouse, siblings, grandchildren,
nieces and nephews) of bargaining unit employees who have the ability to perform
the job and the aptitude to absorb training reasonably required for and related
to meeting current and future job requirements. Joint guidelines may be
established at each plant by mutual agreement of the Company and the Union.
In all events, such hiring shall conform to applicable lines of
progression, bidding and promotion, and other requirements under this Agreement.
-43-
<PAGE> 100
It is understood and agreed by the parties that the Company shall,
subject to these and other applicable provisions, have the final responsibility
for accepting or rejecting a particular applicant for employment.
ARTICLE XIV
BOARD OF DIRECTORS
The International President (the "President") of the United
Steelworkers of America may designate to the CEO of the Company an individual
for appointment as a Director of the Company. The individual so designated will
be an individual with recognized experience and competence in public service,
labor, education or business, who meets the antitrust and conflict of interest
requirements applicable to all Directors. The CEO of the Company shall have the
right to approve the President's designee, such approval to not be unreasonably
withheld; and shall recommend such person (the "Nominee") to the Board. The
Board shall consider the matter at a regularly scheduled meeting within 90 days
of the President's designation of the nominee, and if the Board approves the
Nominee as provided above, the Board shall appoint the Nominee as a Director.
If for any reason the Nominee is unable or unwilling to serve, or after
appointment becomes unable or unwilling to serve, or in anticipation of the
expiration of a regular term, the President will designate another nominee (or
renominate the current designee) and the same procedures will be followed to
consider such designation. It is understood that an individual who serves as
Director and subsequently, for any reason, ceases to be a Director, shall
thereafter not be eligible to serve as a Director. Only one Nominee so
designated by the President shall serve as a Director at any one time.
Upon appointment, and thereafter, the Nominee shall stand for election
as a Director as do all Directors and shall have all of the responsibilities and
duties of a Director under Delaware law. S/he shall agree in writing to any
reasonable affirmation of his or her fiduciary obligations to the Company,
provided that all directors execute identical affirmations. The Nominee shall
comply with applicable laws governing the ownership and trading in the
securities of the Company, and recommend his or her election by the
Stockholders.
-44-
<PAGE> 101
ARTICLE XV
INSTITUTE FOR CAREER DEVELOPMENT
SECTION 1
In recognition of the worldwide competitive challenges that confront the
Company and the entire workforce, the Union and the Company have agreed to
enroll in a major new venture in training and educating workers -- the
USWA/Company Institute for Career Development (the "Institute").
The purpose of the Institute is to provide resources and support services
for the education, training and personal development of the employees of the
Company, including upgrading the basic skills and educational levels of active
employees in order to enhance their ability to absorb craft and non-craft
training, their ability to progress in the workplace, their ability to perform
their assigned work tasks to the full extent of their potential, and their
knowledge and understanding of the workplace and of new and innovative work
systems. Further purposes will include education, training and counseling which
will enable employees to have more stable and rewarding personal and family
lives, alternative career opportunities in the event that their Steelworker
careers are subject to dislocation, and long, secure and meaningful retirements.
This will also enable the USWA and the Company to expand their pioneering
efforts, in conjunction with federal, state and local governments, in support of
the victims of shutdowns, layoff, restructuring, economic policies and unfair
trade practices.
The Institute will be financed by a contribution from the Company,
beginning upon closing, in the amount of 10 cents per actual hour worked by
Steelworker represented employees covered by the Agreement. The parties will, of
course, also seek and use funds from federal, state and local governmental
agencies.
Consistent with this understanding, it would be appropriate for the
Institute to allocate funds to certain programs that may be offered by the
Company and that are consistent with the goals and limitations of this Article.
While the primary goal of the USWA and the Company establishing this
landmark Program in the steel and steel-related sectors of American industry, is
to advance the interest of the Company and its employees, the parties believe
that other employers are
-45-
<PAGE> 102
similarly interested in upgrading the skills, lives and career potential of
their employees. Accordingly, it is understood that the proceeds generated by
this agreement may be administered by an Institute sponsored by USWA, the
Company, and other employers who agree with the USWA to join and contribute
financially to the goals of the Institute. The Company will be represented in
the policy formulation of the Institute, and its financial contributions to the
Program will be separately tracked.
The Institute will be under the joint supervision of the USWA and
participating employers. The Supervisory Board shall consist of an equal number
of USWA and employer appointees. The Board shall include representation from the
workers who may benefit from the Career Development Program. The Board has
selected a professional directorate which has, in turn, staffed the Institute
and established educational, training, counseling and guidance programs. The
directorate and staff will seek out and make use of the most effective and
modern methods and educational technologies.
Apprenticeship, craft training and training for position-rated jobs are
separately provided for in the collective bargaining agreement. The Company may,
however, contract with the Career Development Program to provide services and
resources in support of such training.
It is understood by the parties that if for any reason the USWA/ Company
Career Development Program is terminated, or if the scope of the program is
modified to the extent that all existing and committed funds are not required,
the unused contributions and commitments shall be allocated to another employee
benefit designated by the USWA, the choice of employee benefit to be subject to
review with and approval by the Company.
In establishing this Program, the USWA and the Company are implementing a
shared vision that workers must play a significant role in the design and
development of their jobs, their training and education, and their working
environment. In a world economy many changes are unforeseen and unpredictable.
Corporate success, worker security and employee satisfaction all require that
the workforce and individual workers be capable of reacting to change, challenge
and opportunity, which in turn requires ongoing training, education and growth.
Experience has shown that worker growth and development are stunted when
programs are mandated from above, but flourish in an atmosphere of voluntary
participation in self-designed and self-directed training and
-46-
<PAGE> 103
education. These shared beliefs shall be the guiding principles of the USWA/
Company Career Development Program.
The parties recognize that the obligations of the Company to the Career
Development Program will grow to be substantial and continue to climb. When
combined with those of other steel companies participating in the ICD, these
obligations add up to tens of millions of dollars. Given that the source of this
funding is in the deferred wages of employees, the parties agree that the Career
Development Program warrants a set of policies and practices concerning
financial reporting, accountability, and oversight. Accordingly, the Company
shall cooperate with the Union and the ICD in establishing such systems whose
minimum guidelines satisfy at least the following.
SECTION 2 - REPORTING
For each calendar year quarter, and within 30 days of the close of such
quarter, the Company shall account to the ICD for all changes in the financial
condition of its Career Development Program, and such reporting shall include at
least the following information pertaining to such quarter:
(A) The Company's 10 cents per-actual-hour-worked credits;
(B) With respect to all programs operating in such quarter, a listing of
such programs showing when ICD-approved, the date of such approvals,
and a detailed breakdown of actual program expenditures;
(C) The date on which the program expenditures being reported were
approved by the Local Joint Committee;
(D) The cumulative balance of credits available for still-to-be-approved
Career Development programs, reconciled against the information
described above.
(E) Such reports shall be broken down by plant, local union, and where
possible, by approved program and major vendor. The Company agrees
to make its reports on a form or in a format developed by the ICD
with the approval of its governing board.
-47-
<PAGE> 104
The first report of the above information shall be made by the Company to
the ICD no later than January 1, 1999, and shall cover by quarter and year the
period from the date the program was established through December 31, 2003. For
subsequent reporting periods, the Company shall submit quarterly reports to the
ICD showing year-to-date results as well.
SECTION 3 - AUDITING
Upon request of either the Company or Union, an audit of Company ICD
reports and underlying Career Development Program activities shall be made in
accordance with the following guidelines. The Company and Union shall jointly
select an outside, independent auditor (who may include a qualified professional
employed by the ICD, if available). The reasonable fees and expenses of the
auditor shall be borne by the Company. Audits may be on a company-wide,
plant-specific, or other appropriate basis. Absent cause for more frequent
audits, Company-wide Career Development audits shall be conducted no more than
once every three years.
SECTION 4 - APPROVAL AND OVERSIGHT
The Company and Union agree that a Local Joint Committee must submit a
proposed training or education program or plan to the ICD and obtain ICD
approval of it before the LJC may incur in connection with that plan or program
any expenditures chargeable against the Company's ICD obligations. The Company
and Union affirm their further understanding that a Career Development
expenditure may be charged against the Company's ICD obligations only when that
expenditure is actually made.
In the administration of their Career Development Program, the Company and
Union agree to abide by uniform standards promulgated by the ICD for trainer
certification, bidding processes for vendors, vendor certification, or similar
practices.
The Company and Union agree that, consistent with the foregoing
requirements, an ICD-approved expenditure may be made as soon as a Local Joint
Committee gives its authorization for such expenditure and need not await
compliance with the Company's internal policies concerning purchasing and
procurement.
ARTICLE XVI
-48-
<PAGE> 105
MANNING OF NEW OPERATIONS
SECTION 1
In the manning of jobs in new facilities, the jobs shall be filled by
qualified Employees who apply for such jobs in the order of length of plant
continuous service from the following categories in the following order but
subject to the other provisions of this Section:
(A) Employees displaced from any facility being replaced in the plant by
the new facilities;
(B) Employees being displaced as the result of the installation of the
new facilities;
(C) Employees presently employed on like facilities in the plant;
(D) Employees presently on layoff from like facilities in the plant;
(E) Employees in the plant with two (2) or more years of plant
continuous service, provided that if sufficient qualified applicants
from this source are not available, Management shall fill the
remaining vacancies as it deems appropriate.
SECTION 2
The local parties shall meet to seek agreement on the standards to be used
to determine the qualifications entitling Employees otherwise eligible to be
assigned to the jobs in question. It shall be the objective of such meetings to
reach agreements on manning which reflect the parties' mutual intent to
facilitate efficient manning and preserve job security for longer service
Employees.
SECTION 3
Should the local parties fail to agree on the standards for determining
qualifications, an applicant otherwise eligible shall have:
-49-
<PAGE> 106
(A) The necessary qualifications for performing the job.
(B) The ability to absorb such training for the job as is to be offered
and is necessary to enable the Employee to perform the job
satisfactorily.
(C) The necessary qualifications to progress in the promotional sequence
involved to the next higher job to the extent that Management needs
Employees for such progression. In determining the necessary
qualifications to advance in the promotional sequence involved, the
normal experience acquired by Employees in such sequence shall be
taken into consideration. However, it is recognized that Management
can require that a sufficient number of occupants of each job in a
promotional sequence be available to assure an adequate number of
qualified replacement for the next higher job.
SECTION 4
An applicant who is disqualified under Section 3 above shall have the
right to apply for another job for which he believes he can qualify.
SECTION 5
When new facilities are to be manned pursuant to this Article, the local
parties shall meet and may establish, in appropriate circumstances, rules for
allowing an Employee not placed initially a second opportunity to elect transfer
to the new facility consistent with its efficient operation. In establishing
such rules, the local parties shall consider matters such as:
(A) The job level in the promotional sequence in the new unit up to
which an Employee will be allowed a second opportunity to elect
transfer.
(B) The date on which the second opportunity must be exercised following
start-up of the new facility, but not more than three (3) years
thereafter. (In determining such date, the parties shall give due
consideration to possible
-50-
<PAGE> 107
Management abandonment of the old facility or an extended period of
its nonuse.)
In lieu of or in addition to the foregoing, the local parties may develop
a method for filling permanent vacancies in the new facility between the time of
initial manning and the final election to transfer.
SECTION 6
Should Management deem it necessary to assign an Employee to his regular
job on the old facility in order to continue its efficient operation, it may do
so on the basis of establishing such Employee on the new job and temporarily
assigning him to his former job until a suitable replacement can be trained for
the job or its performance is no longer required. In such event, such Employee
shall be entitled to earnings not less than what he would have made had he been
working on the job on which he has been established.
SECTION 7
Where new facilities replace facilities or more than one plant in the same
general locality, appropriate representatives of the Company and the
International Union shall meet in conjunction with the local parties for the
purpose of seeking an agreement on manning consistent with the parties' mutual
intent to facilitate efficient manning and preserve job security for longer
service Employees. In such situations, Company service may be considered in
addition to plant service.
SECTION 8
All applicants shall go through the following selection process:
(A) Drug and Alcohol Test - Any person applying for a position at a new
operation will be required to pass a drug and alcohol test in
accordance with agreed-upon standards.
(B) General Aptitude Test - Any person applying for a position at a new
operation must meet the minimum threshold on an aptitude test,
measuring their ability to work within a team-based work system.
-51-
<PAGE> 108
(C) Job Skills Aptitude Test - This test will measure a person's skills
in the areas of production and maintenance, to include the ability
to perform the essential functions of the position including basic
math, reading, etc. The test will consist of both a written
examination and practical or "hands-on" examination.
(D) All Test(s):
(1) shall be fair in their make-up and in their administration;
(2) shall be free of cultural, racial or ethnic bias;
(3) results will be reviewed with employees including an offer to
counsel the employee as how to overcome deficiencies; and
(4) all interview procedures shall be mutually developed and
agreed to by the Company and the Union.
(E) Interview - Each qualified applicant shall be interviewed for a
position at a new operation. Based on their composite score on (b)
through (d) above, each applicant meeting the minimum threshold
shall be considered for a position at a new operation.
SECTION 9
Employees at new operations shall be multi-skilled and multi-functional.
Job responsibilities at new operations shall encompass duties which include
operator and maintenance duties. The Workforce Flexibility provisions of the
Agreement shall be applicable to all new operations.
ARTICLE XVII
RIGHT TO BID
SECTION 1
-52-
<PAGE> 109
Should (a) the Company decide (a "Company Decision") or (b) be presented
with an offer (an "Unsolicited Offer") to sell or otherwise transfer (other than
a sale lease-back transaction conducted purely as a financing transaction and
involving an unrelated third party): (i) a controlling interest in the corporate
entity which owns its assets (a "Controlling Interest"); or (ii) all or a
portion of its facilities ("Facilities"), (either or both, the "Assets") it will
so advise the USWA in writing and grant to the USWA the right to organize a
transaction to purchase the Assets (a "Transaction").
SECTION 2
The Company will provide the USWA with any information needed to determine
whether it wishes to pursue a Transaction. All such information shall be subject
to an executed Confidentiality Agreement.
SECTION 3
The Company shall notify the USWA of the schedule and/or timetable for
consideration by the Company of any possible transaction. In case of an
Unsolicited Offer or if the Company is considering a possible sale or
transaction, the Company will provide the USWA with the greater of (i) thirty
days and (ii) the time provided by the schedule and/or timetable given to any
other interested party to submit an offer for the Assets. In the case of a
Company Decision, the USWA will be provided with the same time as that given to
any other interested party.
SECTION 4
During the period described in Section 3 above, the Company will not enter
into any contract regarding the Assets with another party.
SECTION 5
In the event that the USWA submits an offer pursuant to the above, the
Company shall not be under any obligation to accept such offer. However, the
Company shall be entitled to enter into an agreement with regard to the Assets
with an entity other than the USWA only if that transaction is superior to the
USWA offer. The Company may deem a proposed transaction superior if, in the
reasonable judgment of its Directors, it is more
-53-
<PAGE> 110
favorable on balance to the Company and/or its shareholders, taking into
consideration price, certainty of payment (or risk of nonpayment), financial
strength of the proposed purchaser, conditions precedent to closing and other
factors affecting the value of the transaction to the Company and its
shareholders.
SECTION 6
This agreement shall not be deemed to cover any public offering of equity.
SECTION 7
The rights granted to the USWA herein may be transferred or assigned by
the USWA, but only to an entity a material portion of whose equity is or will be
beneficially owned by employees of the Company.
-54-
<PAGE> 111
ARTICLE XVIII
UNION ROLE IN NEGOTIATION OF BENEFITS
Most wage and benefits programs provided lack any established
administrative practice by which bargaining unit members are informed, at the
time of payment, that such benefits were the result of negotiation between the
Company and Union. In recognition of the Union's role in achieving the goals of
the enterprise, the Company agrees to adopt such a practice in the manner
detailed in this Article.
This understanding shall apply to payments of the following: profit
sharing; retroactivity payments made pursuant to wage increases; lump sum
payments; severance pay; special payments under the pension plan; Pension Plan
payments; Supplemental Unemployment Benefits; Sickness and Accident benefits (in
each of the last two cases, only to the first check in any stream of payments);
and wage increases (provided that, in the case of wage increases, this
understanding shall apply only to the first payroll period following the
effective date of such increase).
In the administration of the wage and benefit programs identified above,
the Company agrees that it shall give recognition to the role of the Union in
negotiating such items as follows:
The form of such recognition will vary depending on whether the Company
makes a communication of its own with or in conjunction with such benefit
payment:
(i) If the Company does not make its own communication, the Union shall
be given a reasonable opportunity to include its own communication
with the payment being provided by the Company;
(ii) If the Company does make such a communication, then the Union shall
be given a reasonable opportunity to insert within the first three
paragraphs of such Company communication a paragraph briefly
reporting the role played by the Union in bargaining such payment or
benefit. If the communication is in other than written form, the
parties shall devise a system consistent with the spirit and intent
of this Article.
-55-
<PAGE> 112
In all events, the following legend shall be included on the check stub or
other similar document for all payments or benefits made by the Company to its
employees or retirees: "This payment is being made pursuant to an agreement
negotiated on your behalf by your Union -- the United Steelworkers of America,
AFL-CIO-CLC." This obligation shall not extend to payments issued by third party
vendors such as Workers' Compensation carriers, health plan administrators, etc.
The understandings set forth herein shall become effective on January 1,
1999.
ARTICLE XIX
PRINTING OF CONTRACTS
Immediately upon ratification of the new Collective Bargaining Agreement,
the parties will create mutually acceptable new Agreements.
Said Agreements shall, at the expense of the Company, be printed (by a
union printer) in a form (size, paper stock, etc.) and distributed in a manner
designated by the Union and approved by the Company (such approval not to be
unreasonably withheld).
Said distribution of the Collective Bargaining Agreement booklet shall
occur within three (3) months of the closing. The distribution of Benefit
booklets shall occur within six (6) months of the closing.
The Company shall provide the Union with electronic versions of all of the
Agreements.
ARTICLE XX
SOAR/PAC
The Company will implement a dues and PAC deduction program for retirees
who are members of the Steelworker Organization of Active Retirees (SOAR) and
who have submitted authorization for such deductions from their pension on a
form acceptable to the Company.
-56-
<PAGE> 113
The Company will implement a PAC deduction program for active employees
who have submitted authorization for such deductions from their wages on a form
acceptable to the Company.
The Union shall indemnify and save the Company harmless against any and
all claims, demands, suits, or other forms of liability that shall arise out of
or by reason of action taken or not taken by the Company for the purpose of
complying with any of the provisions of these understandings, or in reliance on
any list, notice or assignment furnished under any of such provisions.
ARTICLE XXI
FAMILY AND MEDICAL LEAVE ACT
The Company and the Union affirm their compliance with and implementation
of the Family and Medical Leave Act of 1993 (FMLA) and further agree to the
following particulars regarding employee eligibility and entitlement.
SECTION 1 - GENERAL
(A) The FMLA provides for up to 12 weeks of unpaid leave each year for
eligible employees to take care of a serious health condition of
certain family members or of employees themselves, and for the
birth, adoption or foster placement of a child. The law also
requires the continuation of certain benefits under certain
conditions while on leave, and includes certain notice requirements
in order to obtain the leave.
(B) A copy of a summary of the law and employee rights thereunder is
available at the Human Resources Office, and will be issued upon
request and at the time any FMLA leave is requested. The required
posting under the FMLA will be maintained by the Company.
(C) FMLA under this Article shall be available to any employee who has
six months or more of continuous service as calculated pursuant to
Seniority Sections of the Agreements.
-57-
<PAGE> 114
(D) This Article shall become effective on August 1, 1998. Any covered
employee then on leave of absence which would otherwise be covered
under the FMLA will be designated on FMLA leave beginning August 1,
1998.
SECTION 2 - ELIGIBILITY AND ENTITLEMENT
(A) There shall be no hours-worked requirement for the twelve (12)
months preceding the start of the leave.
(B) The twelve (12) weeks unpaid leave entitlement under the FMLA shall
be measured on a calendar year basis.
(C) In the event an employee should exhaust the FMLA entitlement due to
their own serious health condition, such employee shall be entitled
to an additional unpaid leave of up to four (4) weeks in connection
with the birth, adoption or placement of a child, or the need to
care for a family member with a serious health condition, should
such an event occur within the calendar year as defined above.
SECTION 3 - INTERMITTENT OR REDUCED LEAVE SCHEDULING
(A) An employee seeking leave in other than continuous weeks must
certify to Management why such schedule is necessary, and must
schedule the time off in the manner least disruptive to the Plant's
operating needs.
(B) Where leave is sought other than in full-day increments, the
employee may agree to assignment by Management to any available
position consistent with the collective bargaining agreement. The
employee will be paid at the rate of the job regularly held or the
assigned job, whichever is higher, for the portion of the shift
actually worked.
(C) Where leave is sought in increments of less than a full work week,
if Management, consistent with the collective bargaining agreement,
is able to accommodate the need for time off by adjusting the
employee's work schedule (including, but not limited to altering the
shift assignment or the
-58-
<PAGE> 115
scheduled work days), and the employee agrees to such scheduling, no
leave need be provided.
(D) Where leave is requested other than continuous weeks, and the
employee agrees, the employee may be assigned to an open comparable
position, consistent with the employee's own seniority, for the
period of time during which intermittent leave may be required.
SECTION 4 - NOTICE
(A) In the case of unforeseeable leave sought for care of the serious
health condition of the employee or a family member, the Department
Head and Human Resources Office shall be notified as soon as
possible (within forty-eight hours) of learning of the need for
leave, and explain the need, expected duration, and schedule of the
leave.
(1) In the case of such leave, following the initial notice
provided above, a written notice shall be provided as soon as
possible, but in no event more than fifteen (15) calendar days
from the time the need for the leave arises. This notice shall
be accompanied by a certification signed by the attending
physician or other health care provider, and shall include:
(a) the date on which the condition commenced;
(b) the probable duration of the condition;
(c) appropriate medical information regarding diagnosis,
regimen of treatment and need for hospitalization,
sufficient to enable the Company to reasonably review
the request; and
(d) medical information for employee's serious health
condition that he is unable to perform work, or for
family member, why it is necessary for the employee to
provide care to the family member, and an estimate of
the amount of the employee's time which is necessary for
that care.
-59-
<PAGE> 116
(2) Where the leave is to be taken in other than a single
continuous period of time, the notice shall also include:
(a) the dates on which the medical treatment is expected to
be given;
(b) the duration of such treatment;
(c) the medical necessity for leave to be granted on an
intermittent basis;
(d) the expected duration of the need for an intermittent
schedule.
(3) Certification forms can be obtained from the Human Resources
Office.
SECTION 5 - PAY DURING FMLA LEAVE
(A) Employees seeking FMLA leave under this Article may utilize paid
vacation during the FMLA leave time.
(B) Except for the substitution of paid vacation and the utilization of
Sickness and Accident, Sick Leave (O&T employees only), or Workers'
Compensation benefits, all time off provided shall be unpaid. Time
off without pay granted pursuant to the FMLA shall be considered as
time not worked through choice of the employee, and may not be
utilized in connection with a claim by the employee under any
provision of this Agreement for any wages, benefit, or entitlement,
eligibility for which is related to hours worked, unless the
employee otherwise meets the eligibility requirements for such wage,
benefit or entitlement. This exclusion includes, but is not limited
to, such matters as reporting pay, overtime, profit-sharing, rate
retention, guaranteed hours, holiday pay, service bonus, earnings
protection or short week benefit.
SECTION 6 - TERMINATION OF LEAVE
-60-
<PAGE> 117
(A) The anticipated duration of the leave sought shall be established at
the time the leave is granted. Upon termination of a leave, the
employee shall be reinstated to the same or an equivalent position
as that held at the time the leave commenced, consistent with his
seniority, unless there was an intervening event including but not
limited to a reorganization or force reduction. In the latter event,
the employee shall be reinstated to the same position or status
which would have been held after the intervening event if leave had
not been taken.
(B) An employee who wishes to return from leave prior to the scheduled
return date must give the Department Head and Human Resources Office
five (5) business days notice of his desire to return, unless the
Human Resources Office agrees to a shorter period in a particular
case.
(C) An employee on a leave under this Article is not eligible for
Lay-Off Allowance Payments in the event of a layoff, until following
the termination of the leave, but upon reinstatement to work, shall
be credited for Lay-off allowance purposes for the time on leave.
SECTION 7 - CONTINUOUS SERVICE
Leaves of absence under this program shall not constitute a break in the
employee's length of continuous service, and the period of such leave shall be
included in his length of continuous service under the Labor and Benefit
Agreements.
SECTION 8 - BENEFIT CONTINUATION
(A) All employees will continue in benefit coverage during such leave,
provided the employee is otherwise eligible for such coverage under
provisions of the FMLA, and the employee continues making any
normally-required premium or other payments in a manner acceptable
to the Company. In the event the employee fails to make such
payments, all benefit coverage shall not be terminated, and the
Company shall advance any necessary payments which the employee
shall be obligated to repay upon returning to work.
(B) In the event an employee fails to return to work or quits after the
employee's FMLA leave period has been concluded, the Company will
waive its right
-61-
<PAGE> 118
to seek to recover health insurance premiums for health insurance
coverage provided by the Company during such leave, notwithstanding
the provision of the FMLA which permits recovery of health insurance
premiums under specified circumstances.
SECTION 9 - GOOD FAITH EFFORTS
In the event problems develop in implementing this Article, whether as a
result of changes in the law or regulations or otherwise, the parties
agree to use their best efforts to resolve them in a manner designed to
assure minimal disruption to the operation, minimize absenteeism, and
provide an employee the time necessary to meet family and personal
emergencies and obligations.
ARTICLE XXII
LEAVE OF ABSENCE POLICY FOR UNION EMPLOYEES
SECTION 1 - LOCAL UNION LEAVE.
Leaves of absence for the purpose of accepting positions with Local Unions
shall be available to a reasonable number of Employees. Adequate notice of
intent to apply for leave shall be afforded local Plant Management to enable
proper provision to be made to fill the job to be vacated.
Leaves of absence for the purpose of accepting an elective office with the
Local Union shall be for a period not in excess of three (3) years and may be
renewed for further periods of three (3) years each.
SECTION 2 - INTERNATIONAL UNION LEAVE.
The parties have reached the following agreement with respect to any
person who leaves their employment with the Company to become an employee or
elected official of the International Union:
(A) First becomes an Officer or Director of the International Union
After July 1, 1998, or
-62-
<PAGE> 119
(B) Becomes an employee of the International Union and whose
probationary period expires on or after July 1, 1998; or
(C) Was an Officer or Director or employee of the International Union
prior to August 1, 1996 but was not as of that date accruing service
for Company pension purposes (for time spent as an Officer, Director
or employee of the International Union) pursuant to a valid
agreement providing for such accrual.
An individual described in this Section shall be granted a leave of
absence from the Company concurrent with the period of his permanent employment
with the International Union.
Once an individual described in this Section is made a permanent employee
of the International Union (by completing his probationary period) that person
shall, from that point forward and while he retains his leave of absence status
with the Company, not receive any service credit for Company pension purposes.
Such person shall accumulate continuous service for purposes of recall to
employment and for all other purposes under the Labor Agreement, except
pensions, provided that he shall not be entitled to receive any contractual
benefits during the period of his leave of absence or receive retiree health
care benefits from the Company if he is eligible for coverage in the
International Union health care plan for retirees.
ARTICLE XXIII
GRIEVANCE AND ARBITRATION PROCEDURE
SECTION 1 - DEFINITION AND PROCEDURE
-63-
<PAGE> 120
A grievance is a claim by any employee or group of employees, or by the
Union against the Company with respect to the meaning or application of the
terms of this Agreement. Grievances shall be processed in the following manner:
Step 1. The aggrieved employee and/or the committeeman shall discuss the
matter with his supervisor within fifteen (15) days after the date of the
occurrence giving rise to the grievance or within fifteen (15) days of the date
he should have reasonably known of the incident. Appropriate management people
will be available for the purpose of handling grievances at this Step. Any
grievance settled by the parties at this first Step shall not be a binding
precedent on either party and shall not be admissible as evidence at any
arbitration. The supervisor's oral answer in this Step 1 shall be final unless
the grievance is reduced to writing and presented in the second Step.
Step 2. If the grievance is not settled in Step 1, it may be reduced to
writing on forms furnished by the Company and submitted to the Operating Unit
Manager or his designee within ten (10) working days of the supervisor's oral
response in Step 1. The grievance shall set forth the nature of the dispute, the
provision of the contract violated and relief sought. It shall be signed by the
employee and/or in the case of a grievance brought by the Union, it shall be
signed by a member of the Grievance Committee. A second step meeting shall be
held between the grievant, the grievance committee and an appropriate management
representative within five (5) working days following the day on which the
written grievance is presented to the Operating Unit Manager. Within fifteen
(15) working days after the meeting, the Operating Unit Manager or his designee
shall give a written answer.
Step 3. The Step 2 answer shall be final unless the grievance is submitted
to Step 3 by the Grievance chairman (or his designee) to the Plant General
Manager within five (5) working days after receiving the Operating Unit
Manager's Step 2 answer. A meeting will be scheduled between the International
Staff Representative and appropriate management representative at a mutually
agreed time. Within five (5) working days of said meeting, the Company will
provide the International Staff Representative with a written answer, a copy of
this answer will be given to the Grievance Committee Chairman of the Local
Union.
Step 4. The Step 3 answer shall be final unless the International Staff
Representative, within thirty (30) days of the delivery of the Company's answer
in Step 3, appeals the grievance by a notice in writing delivered to the General
Manager of
-64-
<PAGE> 121
Human Resources. The parties may mutually agree to the selection of an
arbitrator. If the parties cannot agree on the selection of permanent
arbitrators, either party may request the Federal Mediation and Conciliation
Service to send a panel of seven (7) arbitrators for each case (all of which
must be members of the National Academy of Arbitrators). If the parties cannot
agree on a selection, a "strike" method of selection shall be implemented with
the last remaining name to be the arbitrator. The decision of the arbitrator
shall be final and binding on both parties and any costs and expenses of the
arbitrator shall be borne equally by both parties. The arbitrator may consider
and decide only the particular issue presented to him by the grievance and his
decision must be based upon an interpretation of the express language of this
Agreement. The arbitrator shall not have the right to amend, take away, add to
or change any of the provisions of this Agreement.
SECTION 2 - UNION REPRESENTATION
The number of grievance committeemen at each plant shall be mutually
agreed upon between Management and the Union. The grievance committeemen shall
be selected by the Union from the plant areas they are to represent; however,
there shall be no more than one grievance committeeman selected from any one
plant area. Plant areas, or grievance representation units, for the purposes of
this Section shall be determined by mutual agreement between Management and the
Union, and existing plant areas, or grievance representation units, shall
continue in effect unless Management and the Union otherwise agree.
A grievance committeeman will be permitted to visit departments at
reasonable times for the purpose of transacting legitimate business as a
grievance committeeman, including the presentation, investigation, hearing or
settling of alleged complaints or grievances. If then at work, the grievance
committeeman will be granted time off, without pay, for such purpose after
obtaining permission (which shall not be unreasonably withheld) from his own
department head or his designated representative and reasonable notice to the
head of the department to be visited or his designated representative.
If not at work, the grievance committeeman will be permitted to visit
departments for the purpose as described above after reasonable notice to the
head of the department to be visited or his designated representative.
-65-
<PAGE> 122
Departmental Representatives may be designated by the Union at any plant
to aid the Grievance Committee.
SECTION 3 - PLANT ACCESS
The District Director and the International representative of the Union
who customarily handles grievances at a plant shall have access to the plant,
subject to established rules of the plant, at reasonable time to investigate
grievances with which they are concerned.
The Local Union President/Unit Chairperson will be permitted access to the
plant at reasonable times when necessary to transact legitimate union business
pertaining to the administration of the applicable agreements between the
parties after notice to the Company.
SECTION 4 - MINI-ARBITRATION PROCEDURE
Notwithstanding any other provision of this Agreement, the following
mini-arbitration procedure is designed to provide prompt and efficient handling
of routine grievances, including certain grievances concerning discipline of
less than four (4) days, supervisor's working and vacation scheduling.
(A) The mini-arbitration procedure shall be implemented in light of the
circumstances existing in each plant, with due regard to the
following:
(1) In accordance with the understanding made by the staff
representative of the Union designated pursuant to this
Agreement and his Company counterpart, the local union and the
local management shall appeal the grievance to an arbitrator
under this mini-arbitration procedure by mutual agreement of
the parties.
(2) The appeal shall be made within ten (10) calendar days of
receipt of the Step 2 minutes.
(3) As soon as it is determined that a grievance is to be
processed under this procedure, the local parties shall notify
the Administrative Secretary of the area panel. The appeal
shall include the date, time
-66-
<PAGE> 123
and place for the hearing. Thereafter, the rules of Procedure
for Mini-Arbitration shall apply.
(B) The hearing shall be conducted in accordance with the following:
(1) The hearing shall be informal.
(2) No briefs shall be filed or transcripts made.
(3) There shall be no formal evidence rules.
(4) Each party's case shall be presented by a previously
designated local representative.
(5) The arbitrator shall have the obligation of assuring that all
necessary facts and considerations are brought before him by
the representatives of the parties. In all respects, he shall
assure that the hearing is a fair one.
(6) If the arbitrator or the parties conclude at the hearing that
the issues involved are of such complexity or significance as
to require further consideration by the parties, the case
shall be referred to Step 3 and it shall be processed as
though appealed on such date.
(C) The arbitrator shall issue a decision no later than 48 hours after
conclusion of the hearing (excluding Saturdays, Sundays and
holidays). His decision shall be based on the records developed by
the parties before and at the hearing and shall include a brief
written explanation of the basis for his conclusion. These decisions
shall not be cited as a precedent in any discussion at any step of
the complaint and grievance or arbitration procedure. The authority
of the arbitrator shall be the same as that provided in Section 1 of
this Article.
ARTICLE XXIV
SUSPENSION AND DISCHARGE
-67-
<PAGE> 124
No permanent, full-time employee shall be pre-emptorily discharged. Where
the Company concludes that an employee's conduct may justify suspension or
discharge, he shall be first suspended. Such initial suspension shall be in
writing and for not more than five (5) calendar days. A copy of such notice
shall be given to the Grievance Committeeman. During this period of initial
suspension the employee may, if he believes that he has been unjustly dealt
with, request a hearing and a statement of the offense before the General
Manager of the plant with or without his Union Representative present as he may
choose. The Union Representative shall be notified of the hearing in any event.
At such hearing the facts concerning the case shall be made available to both
parties. After such hearing, or if no such hearing is requested, the Company may
conclude whether the suspension shall be covered into a discharge, or, dependent
upon the facts in the case, that such suspension should be extended or revoked.
The suspension may be revoked or modified with or without pay. The Company's
answer shall be made within five (5) calendar days from the date of this
Hearing. The employee, within five (5) calendar days after such disposition,
other than by mutual agreement, may allege a grievance which shall be handled in
accordance with the procedure of the Grievance and Arbitration Procedure
Section.
If a grievance is filed, it shall be heard by the Grievance Committeeman
and General Manager of the plant within five (5) calendar days after the
grievance is filed. The Arbitration Hearing on discharge cases must be held
within ninety (90) days of the notice of discharge.
ARTICLE XXV
SAFETY AND HEALTH
SECTION 1 - GENERAL PROVISIONS
The Company shall make reasonable provisions for the safety and health of
its employees at the plants during the hours of their employment. The Company,
the Union and the employees recognize their obligations and/or rights under
existing federal and state laws with respect to safety and health matters.
Where the Company uses toxic materials, it shall inform the affected
employees what hazards, if any, are involved and what precautions shall be taken
to insure the safety and health of the employees. Upon the request of the Union
Co-Chairman of the
-68-
<PAGE> 125
Joint Safety and Health Committee, the Company shall provide in writing
requested information from material safety data sheets or their equivalent on
toxic substances to which employees are exposed in the work place; provided that
when the information is considered proprietary, the Company shall so advise the
Union Co-Chairman, and provide sufficient information for the Union to make
further inquiry.
The Company shall provide adequate first aid for all employees during
their working hours.
An employee who, as a result of an industrial accident, is unable to
return to his assigned job for the balance of the shift on which he was injured,
will be paid for any wages lost on that shift.
Protective devices, wearing apparel, and other equipment necessary to
properly protect employees from injury shall be provided by the Company in
accordance with practices now prevailing in each separate plant or as such
practices may be improved from time to time by the Company. Goggles, hard hat,
hearing protection, prescription safety glasses (one pair every twelve months),
face shields, respirators, special purpose gloves, fire retardant, water
resistant or acid resistant protective clothing when necessary and required
shall be provided by the Company without cost, except that the Company may
assess a fair charge to cover loss or willful destruction thereof by the
employees. Where any such equipment or clothing is now provided, the present
practice concerning charge for loss or willful destruction by the employee shall
continue.
SECTION 2 - UNUSUAL CONDITIONS
If an employee shall believe that there exists an unsafe condition,
changed from the normal hazards inherent in the operation, so that the employee
is in danger of injury, he shall notify his foreman of such danger and of the
facts thereof. Thereafter, unless there shall be a dispute between the Company
and the employee as to the existence of such unsafe condition, the employee
shall have the right, subject to reasonable steps for protecting other employees
and the equipment from injury, to be relieved from duty on the job in respect of
which he has complained and to return to such job when such unsafe condition
shall be remedied.
The Company may, in its discretion, assign such employee to other
available work in the plant. If the existence of such alleged unsafe condition
shall be disputed, the
-69-
<PAGE> 126
Chairman of the Grievance Committee of the union in the plant and the Human
Resources Manager in the plant, or is representative, shall immediately
investigate such alleged unsafe condition and determine whether it exists. If
they shall not agree and if the Chairman of the Grievance Committee is of the
opinion that such alleged unsafe condition exists, the employee shall have the
right to present a grievance in writing in Step 2 of the Grievance and
Arbitration procedure and thereafter to be relieved from duty on the job as
stated above. Such grievance shall be presented without delay directly to an
arbitrator under the provisions of this Agreement, who shall determine whether
such employee was justified in leaving the job because of the existence of such
alleged unsafe condition.
Should either the Company or an arbitrator conclude that an unsafe
condition within the meaning of this Section 2 existed and should the employee
not have been assigned to other available equal or higher rated work, he shall
be paid for the earnings he otherwise would have received.
It is recognized that emergency circumstances may exist, and the local
parties are authorized to make mutually satisfactory arrangements for immediate
arbitration to handle such situations in an expeditious manner.
SECTION 3 - JOINT SAFETY AND HEALTH COMMITTEE
(A) A joint Safety and Health Committee consisting of not less than
three (3) nor more than ten (10) employees designated by the Union
and an equal number of Company members, if the Company so desires,
designated by the Company shall be established in each plant. The
Union and the Company shall designate their respective Co-Chairmen
and shall certify to each other in writing such Co-Chairmen and
committee members. The committee shall hold monthly meetings at
times determined by the Co-Chairmen who may also agree to hold
special meetings. Prior to such monthly meeting the Co- Chairmen or
their designees shall engage in an inspection of mutually selected
areas of the plant. At the conclusion of the inspection, a written
report shall be prepared by the Company setting forth their
findings. One copy of the report shall be furnished to the Union
Co-Chairman. Time consumed on Joint Committee work by committee
members designated by the Union shall be considered hours worked to
be compensated by the Company. The function of the committee shall
be to advise with plant
-70-
<PAGE> 127
management concerning safety and health and to discuss legitimate
safety and health matters, but not to handle complaints or
grievances.
(B) In the event the Company requires an employee to testify at the
formal investigation in to the causes of a disabling injury, the
employee may arrange to have the Union Co-Chairman of the joint
Safety and Health Committee or the Union member of such committee
designated by the Union Co-Chairman to act in his absence, present
as an observer at the proceedings for the period of time required to
take the employee's testimony. The Union Co-Chairman will be
furnished with a copy of such record as is made of the employee's
testimony. In addition, in the case of accidents which resulted in
disabling injury or death or accidents which could have resulted in
disabling injury or death and require a fact-finding investigation,
the Company will, as soon as is practicable after such accident,
notify the Union Co-Chairman of the Joint Safety and Health
Committee, or the Union member of such committee designated by the
Union Co-Chairman to act in his absence, who shall have the right to
visit the scene of the accident promptly upon such notification, if
he so desires, accompanied by the Company Co-Chairman or his
designated representative and the Company will add the Union
Co-Chairman of the Joint Safety and Health Committee, or the Union
member of such committee designated by the Union Co-Chairman to act
in his absence, to the notification list for such accidents. After
making its investigation, the Company will supply to the Union
Co-Chairman of the Joint Safety and Health Committee a statement of
the nature of the injury, the circumstances of the accident, and any
recommendations available at that time and will consider any
recommendations he may wish to make regarding the report. In such
cases, when requested by the Union Co-Chairman, the Company
Co-Chairman of the Joint Safety and Health Committee or his
designated representative will review the statement with the Union
Co-Chairman. Also, in such cases, the Company Co-Chairman of the
Joint Safety and Health Committee or his designated representative,
when requested by the Union Co-Chairman, will visit the scene of the
accident with the Union Co-Chairman or, in his absence, his
designated substitute.
-71-
<PAGE> 128
(C) The Company will, form a single source at the Company headquarters
level, provide the International Union Safety and Health Department
with prompt notification of any accident resulting in a fatality to
a union member.
SECTION 4 - USE OF DISCIPLINARY RECORDS
Written records of disciplinary action against the employee involved for
the violation of a safety rule but not involving a penalty of time off will not
be used by the Company in any arbitration proceeding where such action occurred
one or more years prior to the date of the event which is the subject of such
arbitration.
When an employee has completed 36 consecutive months of work without
discipline involving a penalty of time off for violation of a safety rule, prior
disciplinary penalties for such offenses not exceeding four (4) days' suspension
shall not be used for further disciplinary action.
When an unsafe practice report is made involving a violation of a safety
procedure or rule by an employee which does not involve discipline, a copy of
that report will be given to the employee.
SECTION 5 - ALCOHOLISM AND DRUG ABUSE
Alcoholism and drug abuse are recognized by the parties to be treatable
conditions. Without detracting from the existing rights and obligations of the
parties recognized in the other provisions of this Agreement, the Company and
the Union agree to cooperate at the plant level in encouraging employee
afflicted with alcoholism or drug abuse to undergo a coordinated program
directed to the objective of their rehabilitation.
SECTION 6 - SAFETY AND HEALTH TRAINING
The Company recognizes the special need to provide appropriate safety and
health training to all employees. The Company presently has safety and health
training that provides either the training described below or the basis for such
training as it relates to the needs of the Company and its various plants.
-72-
<PAGE> 129
Training programs shall recognize that there are different needs for
safety and health training for newly hired employees, employees who are
transferred or assigned to a new job and employees who require periodic
retaining. The Joint Safety and Health Committee may make recommendations on
these and other safety education matters.
The Union Co-Chairman of the Joint Safety and Health Committee and the
International Union Safety and Health Department or a designee shall, upon
request, be afforded the opportunity to review the training program for
employees at the plant level.
The training of employees shall be directed to the hazards of the job or
jobs on which they are required to work. Such training shall include hazard
recognition, safe working procedures, purpose, use and limitations of special
personal protective equipment required and any other appropriate specialized
instruction.
SECTION 7 - MEDICAL RECORDS
The Company shall maintain the confidentiality of reports of medical
examinations of its employees and shall only furnish such reports to a physician
designated by the employee upon the written authorization of the employee;
provided, that the Company may use or supply medical examination reports of its
employees in response to subpoenas, requests to the Company by any governmental
agency authorized by law to obtain such reports, and in arbitration or
litigation of any claim or action involving the Company. Whenever the company
physician detects a medical condition which, in his judgment, requires further
medical attention, the Company physician shall advise the employee of such
condition or to consult with his personal physician.
ARTICLE XXVI
ALLOWANCE FOR FUNERAL LEAVE
When death occurs to an Employee's legal spouse, mother, father,
mother-in-law, father-in-law, son, daughter, brother, sister, grandparents or
grandchildren (including stepfather, stepmother, stepchildren, stepbrother or
stepsister when they have lived with the Employee in an immediate family
relationship), brother-in-law, sister-in-law, an
-73-
<PAGE> 130
Employee, upon request, will be excused and paid for up to a maximum of three
(3) scheduled shifts (or for such fewer shifts as the Employee may be absent)
which fall within a seven (7) consecutive-calendar-day period; beginning with
the date of the death and it is established that the Employee attended the
funeral. Payment shall be eight (8) times his average straight-time hourly
earnings (as computed for jury pay). An Employee will not receive funeral pay
when it duplicates pay received for time not worked for any other reason. Time
thus paid will be counted as hours worked for purposes of determining overtime
or premium pay liability.
ARTICLE XXVII
HOURS OF WORK
SECTION 1 - NORMAL WORK WEEK
Normally forty (40) hours of work per week shall constitute a weeks' work.
While the normal work week is forty (40) hours, the Company may reduce the work
week, with the mutual agreement of the Union, in which event the reduced work
hours shall constitute the normal work week. Nothing in this Section, however,
should be construed as a guarantee of hours of work in excess of forty (40)
hours per week.
SECTION 2 - SCHEDULES
Schedules showing Employees' workdays will be posted no later than the
last scheduled operating turn, but in any event, no later than Friday, 2:00 p.m.
of the week preceding the calendar week in which the schedule becomes effective.
Should the Company have to change the schedule, the Union Grievance Committeeman
will be notified.
SECTION 3 - OVERTIME
This Section provides the basis for the calculation of, and payment for,
overtime.
(A) The normal workday shall be 8 hours of work in a 24-hour period. The
hours of work shall be consecutive. The work week shall consist of
seven
-74-
<PAGE> 131
(7) consecutive days beginning at 12:01 a.m., Sunday or at the
turn-changing hour nearest to that time.
(B) Overtime at the rate of time and one-half the regular rate of pay
shall be paid for all hours worked in excess of forty (40) hours in
a work week; or for hours worked beyond eight (8) in a work day, or
those Employees scheduled to work eight (8) hours, ten (10) hours in
a work day for those Employees scheduled to work ten (10) hours, and
twelve (12) hours in a work day for those Employees who are
scheduled to work twelve (12) hours. Such ten (10) and twelve (12)
hour schedules are subject to the provisions of the Workforce
Flexibility Article. There will be no duplication or pyramiding of
overtime.
SECTION 4 - HOURS PAID FOR TIME NOT WORKED
Hours paid for time not worked in accordance with the express provisions
of this Agreement will be considered as hours worked for purposes of qualifying
for overtime premiums under this Article; however, pay for time not worked will
always be at base rates. Adjusted to include average incentive earnings. There
shall be no pyramiding of overtime.
SECTION 5 - SHOW UP TIME
If an Employee has been regularly scheduled or notified to report for work
and is not thereafter given notice by the Company that work is not available,
and report for work, the Company will guarantee four (4) hours of work, or four
(4) hours of pay at the Employee's base hourly rate for his scheduled work. It
is the responsibility of each Employee to keep the Company advised of his
telephone number.
The foregoing shall not apply in the event of strikes, work stoppages in
connection with labor disputes, failure of utilities beyond the control of
Management, or Acts of God interfering with the work being provided.
-75-
<PAGE> 132
ARTICLE XXVIII
HOLIDAYS
The Company will pay eight (8) hours pay at the individual Employee's
base hourly rate of pay, adjusted to include his average hourly incentive for
the previous quarter, for those Employees who have completed their probationary
period and who are on the regular active payroll at the time of the following
Holidays:
New Year's Day Thanksgiving Day
Good Friday Day after Thanksgiving
Memorial Day Christmas Eve
Independence Day Christmas Day
Labor Day
If one (1) of the above listed Holidays falls on Saturday or Sunday,
the Company, at its option, may celebrate the Holiday on the day on which it
falls or on the preceding Friday or subsequent Monday. In order to be paid for
such Holiday, Employees who are otherwise eligible, must have worked on the last
scheduled work day before and the first scheduled work day following the Holiday
unless their failure to do so is a result of:
(A) absence for which the Employee is paid in accordance with the
express provisions of this Agreement;
(B) a layoff or job-related injury within five (5) work days
preceding the Holiday; or
(C) sickness or other similar good cause.
An eligible Employee who would otherwise be entitled to pay for an
unworked Holiday and who is on a vacation schedule in accordance with the
provisions of this Article when a Holiday occurs shall be paid for the unworked
Holiday in addition to his vacation pay.
Employees scheduled to work on any of the above-named Holidays shall be
paid at one and one-half times their regular rate of pay including applicable
incentive
-76-
<PAGE> 133
earnings for all work performed on such Holiday in addition to their Holiday
pay. Any Employee scheduled to work on one of the foregoing Holidays who fails
to report for work shall not be eligible to receive Holiday pay unless failure
to do so is a result of (A), (B), or (C) above. There shall be no pyramiding of
overtime pay under this or any other Article of the Agreement.
ARTICLE XXIX
VACATION
SECTION 1 - AMOUNT
An Employee who, on the anniversary date of his most recent employment
by the Company has attained the years of continuous service with the Company as
indicated in the following table and who otherwise qualifies, shall receive
vacation with pay as follows:
<TABLE>
<CAPTION>
Years of Continuous Service Amount of Paid Vacation
--------------------------- -----------------------
<S> <C>
One (1) Year One (1) Week
Three (3) Years Two (2) Weeks
Ten (10) Years Three (3) Weeks
Seventeen (17) Years Four (4) Weeks
Twenty-five (25) Years Five (5) Weeks
</TABLE>
SECTION 2 - ELIGIBILITY
To be eligible for a vacation in any calendar year during the term of
this Agreement, the Employee must have one year of continuous service credit
with the Company and have been actively employed at the Company for twenty-six
(26) regular work weeks of the preceding fifty-two (52) work weeks.
SECTION 3 - COMPUTATION OF VACATION PAY
Pay for the vacation week shall amount to forty (40) times the
Employee's base hourly rate of pay, adjusted to include his average hourly
incentive for the previous quarter, for each full week of vacation or two
percent (2%) of the Employee's previous
-77-
<PAGE> 134
year's W-2 form earnings, whichever is highest. Vacation will be taken in weekly
(seven (7) consecutive calendar days) increments only. Provided vacation is
scheduled and approved at least thirty (30) days in advance, vacation pay will
be paid no later than the last work day prior to the Employee's vacation.
SECTION 4 - SCHEDULING
The date allotted to an Employee for a vacation shall be established by
the Company so as to cause a minimum of interference with the Company's
operations. The Company reserves the right to schedule either a one (1) or two
(2) week(s) vacation shutdown, or schedule staggered vacations.
In the event the Company decides on a vacation shutdown, it shall
notify the Union in writing, at least sixty (60) days prior to such shutdown,
Vacation period requests by Employees will be indicated by written application
of each Employee during the month of December. (Applications will be provided by
the Company.) Either a vacation schedule or a vacation shutdown notice will be
posted after the end of December. To the extent practicable, Employees shall be
given preference for the desired vacation periods in accordance with their
seniority subject to the right of the Company to determine the number of
Employees from any Operating Unit or Wage Group, to be on vacation at any one
time and to schedule vacations so as to minimize interference with the Company's
operations.
SECTION 5 - ACCUMULATION OF VACATION
Vacations may not be accumulated.
ARTICLE XXX
JURY DUTY
An Employee who is on active payroll of the Company, who is summoned
for jury service or subpoenaed as a witness shall be excused from work on the
days on which he is called for service, and he shall receive for each such day
on which he was regularly scheduled to work the difference between eight (8)
times his base hourly rate of pay
-78-
<PAGE> 135
including applicable incentive earnings, not to exceed forty (40) hours per
week, and the payment he receives for such jury or witness service. The employee
will present proof of service and of the amount of pay received therefore.
ARTICLE XXXI
EMPLOYEES IN MILITARY SERVICE
SECTION 1 - REEMPLOYMENT
The Company shall accord to each Employee who applies for reemployment
after conclusion of his military service with the United States such
reemployment rights as he shall be entitled to under then existing statutes.
SECTION 2 - TRAINING PROGRAMS
Reasonable programs of training shall be employed in the event
Employees do not qualify to perform the work on the job which they might have
attained except for absence in the military service.
SECTION 3 - LEAVE OF ABSENCE
Any Employee entitled to reinstatement under this Article shall be
granted, upon request, a leave of absence without pay not to exceed sixty (60)
days before he shall be required to return to work.
SECTION 4 - DISABLED VETERANS
Any Employee entitled to reinstatement under this Article who returns
with service-connected disability incurred during the course of his service
shall be assigned to any vacancy which shall be suitable to such impaired
condition during the continuance of such disability irrespective of seniority;
provided, however, that such impairment is of such a nature as to render the
veteran's returning to his own job or department onerous or impossible; and
provided, further, that the veteran meets the minimum physical requirements for
the job available or for the job as Management may be able to adjust it to meet
the veteran's impairment.
-79-
<PAGE> 136
SECTION 5 - VACATION
(A) An Employee who at the time of leaving active employment to
enter military service of the United States has qualified for
a vacation in the year of such entrance and who has not
received a vacation or vacation allowance shall be granted
such allowance.
(B) Any Employee reemployed under the terms of this Article and
who, under the terms of the Vacation Article of this
Agreement, except for his absence due to such military
service, would have been entitled to receive a vacation or
vacation allowance, shall receive such vacation or vacation
allowance for the calendar year in which he is reemployed,
without regard to any requirement other than an adequate
record of continuous service.
SECTION 6 - MILITARY ENCAMPMENT ALLOWANCE
An Employee with one (1) or more years of continuous service who is
required to attend an encampment of the Reserve of the Armed Forces or the
National Guard shall be paid, for a period not to exceed two (2) weeks in any
calendar year, the difference between the amount paid by the Government (not
including travel, subsistence and quarters allowance) and the amount calculated
by the Company in accordance with the following formula. Such pay shall be based
on the number of days such Employee would have worked had he not been attending
such encampment during such two weeks (plus any holiday in such two (2) weeks
which he would not have worked) and the pay for each such day shall be eight (8)
times his average straight-time hourly rate of earnings (including applicable
incentive earnings but excluding shift differentials and Sunday and overtime
premiums) during the last pay period worked prior to the encampment. If the
period of such encampment exceeds two weeks in any calendar year, the period on
which such pay shall be based shall be the first two weeks he would have worked
during such period.
-80-
<PAGE> 137
ARTICLE XXXII
SAVINGS CLAUSE
If any provision of this Agreement is in conflict with applicable law
or regulation, such provision shall become null and void and no longer be
effective; however, the remainder of this Agreement shall not be affected
thereby and will continue in full force and effect. In the event any provision
of this Agreement is rendered ineffective, due to a conflict with applicable
law, either party, upon the request of the other, shall meet and negotiate on
the limited subject of the provision rendered ineffective by applicable law.
However, the No Strike - No Lockout provisions of this Agreement shall continue
in full force and effect regardless of whether the parties are able to reach
Agreement.
ARTICLE XXXIII
SENIORITY
SECTION 1 - FACTORS AFFECTING
Except where a local seniority agreement provides for some greater
measure of service length than Plant continuous service, Plant continuous
service shall be used for all purposes in which a measure of continuous service
is utilized. In the promotion of Employees to non-supervisory positions and for
the purpose of demotions, or layoffs in connection with the decreasing of the
working force and of the recalling to work of Employees so laid off, the
following factors shall be considered, and if factors (B) and (C) are relatively
equal, length of continuous service shall govern:
(A) Length of continuous service;
(B) Ability to perform the work; and
(C) Physical fitness.
-81-
<PAGE> 138
SECTION 2 - CONTINUOUS SERVICE RECORD
The continuous service record of any Employee shall be determined as
follows:
(A) Each Employee shall have such continuous service record as is
shown on the employment records of the Company for such
Employee, and he shall accumulate additional continuous
service in accordance with Subparagraph (C) below, until his
continuous service record shall be broken in which event his
continuous service record shall end and be canceled.
(B) Each new Employee and each person rehired after the
cancellation of his continuous service record shall accumulate
continuous service from the date of such hiring or rehiring,
until his continuous service record is broken, in which event
his continuous service record shall end and be canceled.
(C) The continuous service record of an Employee shall be
considered to be broken so that no prior period or periods of
employment shall be counted and his seniority shall cease in
the following instances:
(1) Employee voluntarily quits employment;
(2) Employee is discharged;
(3) Employee fails to return to work upon expiration of
an approved leave of absence where forty-eight (48)
hour notice to return has been given by the Company
to the Employee and to the Union;
(4) Employee is absent due to either layoff or disability
or both which continues for more than two (2) years
(however; (i) for three (3) years thereafter, upon
written medical certification to the Company of his
fitness to return to duty, the Employee will be
eligible for recall to any position for which he is
qualified which is not filled pursuant to Section 4,
Paragraph (A) based on his previously accumulated
service; and (ii) Employees unable to work due to an
on-duty injury shall accumulate credit for continuous
service until the end of the period for which
statutory Workers' Compensation is payable, plus
thirty (30) days;
-82-
<PAGE> 139
(5) Unauthorized absence from scheduled work for three
(3) consecutive working days;
(6) Employee fails to report for and begin work within
seven (7) calendar days after receipt by Employee of
notice of recall from layoff. Employees who are
employed elsewhere will, upon a request made to the
Company within this period and with reasonable proof
of such employment, be given an additional seven (7)
calendar days to report for and begin work, to allow
the Employee to give reasonable notice to his current
employer.
SECTION 3 - PROBATIONARY EMPLOYEES
New Employees and those hired after a break in continuous of service
will be regarded as probationary Employees for the first five hundred twenty
(520) hours of actual work and will receive no continuous service credit during
such period. Probationary Employees may initiate complaints under this Agreement
but may be laid off or discharged as exclusively determined by Management;
provided that this will not be used for purposes of discrimination because of
race, color, religious creed, national origin, sex, age or disability as defined
under the ADA of 1990, or because of membership in the Union. Probationary
Employees continued in the service of the Company subsequent to the first five
hundred twenty (520) hours of actual work shall receive full continuous service
credit from date of original hiring.
SECTION 4 - PROMOTION
(A) Posting
When the Company decides that a position needs to be filled, a
notice to that effect will be posted by the Company for seven (7)
working days in the Plant having the open position. Employees who apply
will be considered in the following category order:
(1) the department where the vacancy exists;
(2) the Plant where the vacancy exists;
-83-
<PAGE> 140
provided, however, if there is no qualified Employee applicant, the
Company may hire a new employee.
(B) Selection
The primary criteria for selecting among Employees who apply
under Paragraph (a) above will be the Company's assessment of an
Employee's qualifications. Length of continuous service will be
considered only in the event the Company finds that two (2) or more
applicants possess substantially the same qualifications for the job to
be filled. All promotions are subject to a ninety (90) day
qualification period in the new job. Employees selected for a new job
will be entitled to return to their previous job in the event the
Company determines their performance during the qualification period is
not satisfactory, subject to the dispute resolution procedure.
(C) Period Between Promotions
To promote efficient and economical operations, the parties
agree that continuity for a period of time in a position is important.
Therefore, the following limitations shall apply to Employees applying
for new jobs or vacancies:
(1) Employees who apply for a position may strike their
name from the posting at any time during the seven
(7) working day period that the position is posted.
If an Employee leaves his name in consideration and
is selected for a position but refuses to take it, he
cannot apply for another position for six (6) months
after the date on which he was selected for the
position.
(2) If an Employee applies, is selected, and then works
in the position, he cannot apply for another position
for six (6) months after the date he begins working
in that position, following any training period.
SECTION 5 - TEMPORARY VACANCIES
Temporary vacancies will be filled at the Company's discretion. If two
(2) Employees are equally qualified to do the work, the Company will take
seniority into consideration.
-84-
<PAGE> 141
SECTION 6 - TEMPORARY TRANSFERS
In the event an employee is temporarily transferred to a higher rated
job, the employee shall receive the higher rate. If an employee is temporarily
transferred to a lower rated job, the employee shall continue to receive the
employee's regular rate.
SECTION 7 - UNION OFFICERS
When Management decides that the workforce in any seniority unit in any
plant is to be reduced, the member of the plant Grievance Committee, if any, in
that unit shall, if the reduction in force continues to the point at which he
would otherwise be laid off, be retained at work and for such hours per week as
may be scheduled in the work area in which he is employed, provided he can
perform the work of the job to which he must be demoted. The intent of this
provision is to retain in active employment the plant grievance committeemen for
the purpose of continuity in the administration of the labor agreement in the
interest of Employees so long as a workforce is at work; provided that no
grievance committeeman shall be retained in employment unless work which he can
perform is available to him in the designated work area which he represents. The
Local Union shall designate and advise the Company of such area of
representation.
This provision shall apply also to Employees who hold any of the
following offices in the Local Union or Unions in which the Employees of the
plant are members: President, General Grievance Committeeman, Unit Chairperson,
Vice President, Recording Secretary, Financial Secretary, and Treasurer unless
legally prohibited.
SECTION 8 - CONTINUOUS SERVICE LISTS
The Company shall make available to the Local Union concerned lists
showing the relative continuous service of each Employee in each seniority unit.
Such lists shall be revised by the Company from time to time, as necessary, but
at least every six (6) months, to keep them reasonably up to date. The seniority
right of individual Employees shall in no way be prejudiced by errors,
inaccuracies, or omission in such lists.
-85-
<PAGE> 142
ARTICLE XXXIV
SEVERANCE ALLOWANCE
SECTION 1 - PERMANENT CLOSING
When, in the sole judgment of the Company and subject to the provisions
of the Employment Security Plan, it decides to close permanently a plant or
discontinue permanently a department of a plant or substantial portion thereof
and terminate the employment of individuals, an Employee whose employment is
terminated either directly or indirectly as a result thereof because he was not
entitled to other employment with the Company under the provisions of the
Seniority Article of this Agreement and Section 3 of this Article, shall be
entitled to a severance allowance in accordance with and subject to the
provisions hereinafter set forth in this Article.
Before the Company shall finally decide to close permanently a plant or
discontinue permanently a department of a plant or substantial portion thereof,
it shall give the Union advance written notification of its intention. Such
notification shall be given at least ninety (90) days prior to the proposed
closure date. Along with it, the Company shall provide the Union with a detailed
statement of the reasons for the proposed action and the information on which it
is based. Without limiting the information to be provided under this paragraph,
the Company shall furnish the Union, where available, and on a confidential
basis, profit and loss statements for the operations that are the subject of the
proposed action for the last twenty-four (24) months of operations preceding it,
any studies or evaluations assessing the feasibility of continuing the
operations, and a detailed breakdown of the costs of maintaining the operations.
Thereafter, the Company will meet with appropriate Union representatives in
order to provide them with an opportunity to discuss the Company's proposed
course of action and to provide information to the Company and suggest
alternative courses. Upon conclusion of such meetings, which in no event shall
be less than thirty (30) days prior to the proposed closure or partial closure
date, the Company shall advise the Union of its final decision. The final
closure decision shall be the exclusive function of the Company. This
notification provision shall not be interpreted to offset the Company's right to
lay off or in any other way reduce or increase the working force in accordance
with its presently existing rights as set forth in the Management Rights Article
of this Agreement.
-86-
<PAGE> 143
SECTION 2 - ELIGIBILITY
An Employee, to be eligible for a severance allowance, must have
accumulated three (3) or more years of continuous Company service as computed in
accordance with the Seniority Article of this Agreement.
SECTION 3 - OTHER JOB
In lieu of severance allowance the Company may offer an eligible
Employee a job in the same job class for which he is qualified, in the same
general locality. The Employee shall have the option of either accepting such
new employment or requesting his severance allowance. If an Employee accepts
such other employment, his continuous service record shall be as provided in the
Seniority Article of this Agreement, except that for the purpose of severance
pay under this Article and for the purposes of the Vacation Article of this
Agreement, his previous continuous service record shall be maintained and not be
deemed to have been broken by the transfer.
SECTION 4 - TRANSFER
As an exception to Section 3 of this Article, an Employee otherwise
eligible for severance pay who is entitled under the Seniority Article of this
Agreement to a job in the same job class in another part of the same plant shall
not be entitled to severance pay whether he accepts or rejects the transfer. If
such transfer results directly in the permanent displacement of some other
Employee, the latter shall be eligible for severance pay provided he otherwise
qualifies under the terms of this Article.
SECTION 5 - BENEFITS
An eligible individual shall receive severance allowance based upon the
following weeks for the corresponding continuous Company service:
<TABLE>
<CAPTION>
Weeks of Severance
Continuous Company Service Allowance
- -------------------------- ---------
<S> <C>
3 years but less than 5 years 4
5 years but less than 7 years 6
7 years but less than 10 years 7
10 years or more 8
</TABLE>
-87-
<PAGE> 144
A week's severance allowance shall be determined in accordance with the
provisions for calculation of vacation allowance as set forth in the Vacation
Article of this Agreement.
SECTION 6 - DUPLICATION
Severance allowance shall not be duplicated for the same severance,
whether the other obligation arises by reason of contract, law, any ERB or VSP
if applicable under this Agreement, or otherwise. If an individual is or shall
become entitled to any discharge, liquidation, severance or dismissal allowance
or payment of similar kind by reason of any law of the United States of America
or any of the states, districts, or territories thereof subject to its
jurisdiction, the total amount of such payments shall be deducted from the
severance allowance to which the individual may be entitled under this Article,
or any payment made by the Company under this Article may be offset against such
payments. Statutory unemployment payments shall be excluded from the
non-duplication provisions of this Section.
SECTION 7 - ELECTION CONCERNING LAYOFF STATUS
Notwithstanding any other provision of this Agreement, an Employee who
could otherwise have been terminated in accordance with the applicable
provisions of this Agreement and under the circumstances specified in Section 1
of this Article may, at such time, elect to be placed on layoff status for
thirty (30) days or to continue on layoff status for an additional thirty (30)
days if he had already been on layoff status. At the end of such thirty (30) day
period he may elect to continue on layoff status or be terminated and receive
severance allowance if he is eligible for any such allowance under the
provisions of this Article; provided, however, if he elects to continue on
layoff status after the thirty (30) day period specified above and is unable to
secure employment with the Company within an additional sixty (60) day period,
at the conclusion of such additional sixty (60) day period he may elect to be
terminated and receive severance allowance if he is eligible for such allowance.
Any Supplemental Unemployment Benefit payment received by him for any period
after the end of such thirty (30) day period shall be deducted from any such
initial severance allowance to which he would have been otherwise eligible at
the beginning of such thirty (30) day period.
-88-
<PAGE> 145
If an Employee elects to continue on layoff status, he shall continue
to be in such status notwithstanding the expiration or termination of this
Agreement.
In the event of a strike, nothing in this Agreement shall be
interpreted as extending the benefits beyond the term otherwise provided for in
the Agreement.
SECTION 8 - PAYMENT OF ALLOWANCE
Payment shall be made in a lump sum at the time of termination.
Acceptance of severance allowance shall terminate employment and continuous
service for all purposes under this Agreement.
ARTICLE XXXV
SUBSTANCE ABUSE
SECTION 1 - GENERAL STATEMENT
The Company recognizes its obligation to provide all Employees with a
safe healthful work environment, free from the risks created by Employee alcohol
and drug abuse. The Company prohibits using, possessing, or being under the
influence of drugs or alcohol while Employees are providing service to the
company. To that end, the Company will provide for substance abuse testing of
all job applicants and, where appropriate, existing Employees. The Company is
committed to take all necessary steps to exclude alcohol and drugs from its
workplace.
The Company maintains the right to conduct drug and/or alcohol testing
for cause. In addition, Employees will be tested for drugs and/or alcohol under
any of the following circumstances: (1) where it is required by law, or (2)
where an Employee has a work-related injury where there is cause to believe that
an Employee is under the influence of drugs and/or alcohol on Company property
or on Company business. A refusal to submit to drug or alcohol testing under any
of the foregoing circumstances or a positive test result may be proper cause for
discipline. Any testing shall be in accordance with the USWA drug and alcohol
testing policy.
SECTION 2 - SUBSTANCE ABUSE TESTING OF EMPLOYEES
-89-
<PAGE> 146
The Company may require Employees to submit to a substance abuse screen
under the following circumstances:
(A) As part of all physical examinations when Employees are
recalled following a layoff in excess of sixty (60) calendar
days.
(B) Where there is reason to believe, based on observable facts,
that an Employee may be under the influence of drugs and/or
alcohol, and this observation has been verified and documented
by the Company.
(C) When an Employee is involved in or has contributed to an
unsafe practice, accident, or injury and there is a reasonable
basis, based upon the Employee's behavior or physical
condition or on the specific nature and circumstances of the
unsafe practice, accident or injury to suspect that the unsafe
practice, accident, or injury may have resulted from or been
contributed to by the Employee being impaired by alcohol or
drugs.
(D) Where an Employee has tested positive for the presence of
drugs or alcohol within the prior twelve (12) month period.
(E) Where there exists, in the opinion of the Company's physician
or similarly designated representative, a condition or
situation based on verifiable medical documentation that an
Employee may not be immediately fit to return to work, a
substance abuse drug screen may be required as part of the
return-to-work physical examination.
(F) The Company will use the following procedure for the drug,
alcohol screen:
(1) Drug Screen - A urine specimen will be collected. If
the drug screen reveals a positive result, a test
from the original specimen will automatically be
verified through a second more detailed test. All
tests shall be performed under the supervision of
trained personnel. All test samples shall be kept
secure. Portions of all positive test samples shall
be maintained and shall be available to the tested
Employee for a period of six (6) months following the
date of the initial test.
-90-
<PAGE> 147
(2) Alcohol Screen - A breath alcohol test will be
administered. The positive result of 0.04 percent or
greater for alcohol from a breath alcohol test will
constitute impairment. An Employee may avoid a
finding of impairment by voluntarily providing a
blood sample within one (1) hour of the time the
breath alcohol test sample is collected. If a blood
sample is provided within one (1) hour and proven
negative or below the 0.04 percent level, that will
be sufficient to overcome a finding of impairment
from a positive breath alcohol test. Employees found
to have tested 0.04 percent or greater for alcohol
through the breath alcohol test and who have not
voluntarily provided a blood sample within one (1)
hour of that breath alcohol test will be considered
to have violated the Substance Abuse Policy.
SECTION 3 - REHABILITATION
The purpose of this Article is to eliminate the presence of alcohol and
illegal drugs at the Company in order to make it a satisfactory and safe
environment for all Employees. In connection with this purpose, it is the
Company's goal to rehabilitate, if reasonably possible, all substance abusers.
Therefore, the first time any Employee tests positively for the presence of
alcohol or illegal or illicit drugs, or otherwise is found to be in violation of
this Policy, he shall be given the opportunity to participate in a
rehabilitation program. An Employee participating in rehabilitation shall be
given an unpaid leave of absence by the Company for a reasonable period of time;
the fact that it is unpaid leave shall not be construed to affect any coverage
that may exist pursuant to sickness and accident or other Employee benefit
coverage. All Employees who wish to be rehabilitated are encouraged to
voluntarily participate in rehabilitation by making a confidential request to a
designated representative of the Company. Participation in the rehabilitation
program will be confidential. Requesting help through the rehabilitation program
shall neither cause nor prevent discipline for reported violations of this
Policy, nor shall it relieve the Employee from job expectation requirements. If
an Employee successfully completes rehabilitation, he/she will be offered the
opportunity to return to work at the Company with the understanding that: (i)
any future violations of this Policy shall subject the Employee to immediate
discharge without additional opportunity for rehabilitation; and (ii) he/she
shall be subject to random testing for a period of one(1) year following his/her
return to work.
SECTION 5 - LEGAL DRUGS OR MEDICATION
-91-
<PAGE> 148
The foregoing provisions on substance abuse testing do not apply to the
use of controlled substances taken as legally prescribed by a licensed
physician. These provisions will apply to any abuse of prescription drugs. Any
Employee on such medication (or an over-the-counter medication that they believe
may affect their job performance or present a safety risk to themselves or
others) must, however, immediately report such use to their supervisor. Company
officials will determine whether the Employee can remain at work and/or whether
work restrictions are necessary.
SECTION 6 - ADDITIONAL PROHIBITIONS RELATING TO ALCOHOL AND DRUGS
In addition to these provisions on substance abuse testing, the
following Employee conduct is strictly prohibited:
(A) The use or possession of alcohol or illegal drugs in any
amount or in any manner on company premises or in
Company-owned or leased vehicles at any time. This provision
will not apply to the possession of unopened alcohol
containers in private vehicles.
(B) The transfer or trafficking of alcohol or drugs in any amount
or in any manner on Company premises or in Company-owned or
leased vehicles at any time.
(C) The use in any way of Company property or the Employee's
position within the Company to make or traffic alcohol or
drugs.
Employees who engage in such conduct will be subject to discipline, up
to and including discharge. The Company further reserves the right to notify
appropriate law enforcement officials regarding Employees who engage in such
conduct.
SECTION 7 - VIOLATIONS
Employees who violate any provision of this Article are subject to
appropriate disciplinary action up to and including discharge from employment.
Nothing in this Article shall be construed so as to limit or in any way detract
from the Company's pre-existing right to suspend or discharge Employees.
-92-
<PAGE> 149
The violations identified in this Article are not meant to be all
inclusive of various offenses that could lead to discipline under this Article.
SECTION 8 - APPLICATION TO NON-EMPLOYEES
Vendors, contractors, and visitors shall be expected to observe the
provisions of this Article with regard to an alcohol and drug free workplace
while on Company property, in Company offices, and in Company-owned or leased
vehicles and/or on Company assignment. Failure to observe the provisions of this
Article may result in, but is not limited to, eviction and banning form Company
property and offices.
SECTION 9 - LEGAL AND CONTRACTUAL OBLIGATIONS
All legal and contractual obligations, where applicable, shall be
adhered to in the administration of this Article. This Article may be revised
and/or modified to include the substance abuse screening of safety sensitive
positions as basic steel companies implement such policy. The Company reserves
the right to modify the program and/or testing to comply with any future
governmental regulations. The Company must notify in advance and discuss with
the Union any change to comply with government regulations. If the Union
believes that the Company exceeded what was required to comply with government
regulations, the Union shall have the right to pursue the issue through the
grievance procedure.
ARTICLE XXXVI
WAGES
SECTION 1 - Standard Hourly Wage Scales
(A) The standard hourly wage scales of rates for the respective
job classes and the effective date thereof shall be those set
forth in Appendix A of this Agreement.
(B) As of the effective date of any increases made in the job
class increments in the standard hourly wage scale rates, the
cumulative amount in each job
-93-
<PAGE> 150
class resulting from any increased increment shall be used, in
whole or in part, as the case may be, to reduce or eliminate
any out-of-line differentials identified with specific
Employees on specific jobs in each job class.
SECTION 2
In the event that an Employee who receives such an out-of-line
differential is promoted within a defined seniority unit for regular assignment
to a job of higher job class, or is transferred within an established line of
progression to a job of equal job class, and the standard hourly wage scale rate
in Appendix A of the Master Agreement plus the Employee's out-of-line
differential on the job from which promoted or transferred, a new differential
shall be determined and applied as follows:
(A) The new out-of-line differential shall equal: (i) the standard
hourly wage scale rate in Appendix A of the Master Agreement
of the job from which promoted or transferred plus the
Employee's out-of-line differential on such job; minus (ii)
the standard hourly wage scale rate in Appendix A of the
Master Agreement, of the job to which promoted or transferred.
(B) Such new out-of-line differential shall be identified with the
Employee and apply only to such Employee while on such job,
and continue in effect, subject to adjustment in accordance
with above, until the expiration of this Agreement or until
terminated by the parties to this Agreement.
(C) The new out-of-line differential multiplied by hours paid for
on the job shall be added to earnings of the Employee.
SECTION 3 - Correction of Errors
Notwithstanding any provisions of this Article __ of the Master Wage
Agreement, errors in application of rates of pay shall be corrected.
SECTION 4 - Shift Differentials
(A) For hours worked on the afternoon shift there shall be paid a
premium rate of 20 cents per hour. For hours worked on the
night shift there shall be paid a premium rate of 30 cents per
hour.
-94-
<PAGE> 151
(B) Shifts shall be identified as follows:
(i) Day shift includes all shifts scheduled to commence
between 6:00 a.m. and 8:00 a.m., inclusive;
(ii) Afternoon shift includes all shifts scheduled to
commence between 2:00 p.m. and 4:00 p.m., inclusive;
(iii) Night shift includes all shifts scheduled to commence
between 10:00 p.m. and 12:00 midnight, inclusive.
(C) Any hours worked by an Employee on a shift which commences at
a time not provided for in Subsection B of this Section 4
shall be paid as follows:
(i) For hours worked which would fall in the prevailing
day shift of the department no shift differential
shall be paid;
(ii) For hours worked which would fall in the prevailing
afternoon shift of the department the afternoon shift
differential shall be paid;
(iii) For hours worked which would fall in the prevailing
night shift of the department the night shift
differential shall be paid.
(D) Shift differential hall be included in the calculation of
overtime compensation. Shift differential shall not be
included in the calculation of incentive earnings but shall be
computed by multiplying the hours worked by the applicable
differential and the amount so determined added to earnings.
(E) Shift differential shall be paid for allowed time or reporting
time provided for in the Hours of Work Section of this
Agreement when the hours for which payment is made would have
called for a shift differential if worked.
SECTION 5 - Sunday Premium
-95-
<PAGE> 152
All hours worked by an Employee on Sunday, which are not paid for on an
overtime basis, shall be paid for at 1 1/2 times the Employee's regular rate.
For purpose of this provision. Sunday shall be deemed to be the 24
hours beginning with the turn-changing hour nearest to 12:01 a.m. Sunday.
Sunday premium based on the standard hourly wage scale rate shall be
paid for reporting allowance hours.
ARTICLE XXXVII
TERMINATION DATE
SECTION 1. Except as otherwise-provided below, this Agreement shall
terminate at the expiration of sixty (60) days after either party shall be given
written notice of termination to the other party but in any event shall not
terminate earlier than October 31, 2003, at 11:59 P.M.
SECTION 2. If either party gives such notice, the parties shall meet
within thirty (30) days thereafter to negotiate. If the parties shall not agree
with respect to such matters by the end of sixty (60) days after the giving of
such notice, either party may; thereafter resort to strike or lockout as the
case may be in support of its position.
SECTION 3. Any notice to be given under this Agreement shall be given
by registered mail; to be completed by and at the time of mailing; and, if by
the Company, be addressed to: United Steelworkers of America, 5 Gateway Center,
Pittsburgh, Pennsylvania, 15222 and if by the Union addressed to RES Acquisition
Corporation [address]. Either party may, by like written notice, change the
address to which registered mail notice to it shall be given.
-96-
<PAGE> 153
APPENDIX B
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Corporate Structure of NuBar
Dear Director Vickers:
As part of our discussions, Blackstone Management Partners II, L.L.C.
("Blackstone") has informed the USWA that its proposed acquisition of RESI by a
company formed by Blackstone would consist of (i) a fully financed agreement to
acquire for cash 100% of RESI's outstanding common shares (the "RESI purchase
financing") followed by (ii) a fully financed merger of RESI and BarTech (the
"takeout financing") (the company resulting from such financings, "NuBar").
Blackstone also has informed the USWA that it intends to be the lead
investor in the RESI purchase financing and the takeout financing, meaning that
it will own at least a majority of the stock of NuBar upon closing of the
takeout financing and will control NuBar's Board of Directors. For purposes of
this Settlement Agreement, Blackstone includes entities affiliated with or
controlled by Blackstone or its Partners/Principals/Managing Directors.
Blackstone agrees that prior to the commencement of the RESI
acquisition it will provide the USWA with a description of the intended RESI
purchase financing and takeout financing (the "Proposed Structure") and afford
the USWA the right to approve such Proposed Structure, such approval not to be
unreasonably withheld.
In the event that the actual structure of the RESI purchase financing
or the takeout financing (the "Closing Structure") involves materially less
equity that the amount in the Proposed Structure and/or Blackstone is not the
lead investor in such financings, then the USWA shall be given the right to
approve the Closing Structure, such approval not to be unreasonably withheld.
In addition, Blackstone agrees to retain at least 80% of its original
investment until (i) in the case of a private sale of Blackstone's investment,
the earlier of (a) three years from the closing of the takeout financing or (b)
such time as at least 70% of the aggregate amounts of capital expenditures
provided for in the "NuBar Steel Company-Five Year Operations Capital Plan" (the
"CapEx Schedule") have been spent or irrevocably committed to be spent, and (ii)
in the case of a public sale of Blackstone's
-97-
<PAGE> 154
investment in a secondary public offering, the earlier of (a) two years from the
closing of the takeout financing or (b) such time as at least 50% of the
aggregate amounts of capital expenditures provided for in the CapEx Schedule
have been spent or irrevocably committed to be spent.
In addition, in the event NuBar engages in an initial public offering
within three years from the closing of the takeout financing, Blackstone will
not voluntarily relinquish control of the NuBar Board of Directors until the
earlier of (i) three years from the closing of the takeout financing or (ii)
such time as Blackstone is permitted to sell its investment under either clause
(i) or (ii) of the preceding paragraph.
Sincerely yours,
David A. Stockman
Senior Managing Director
Blackstone Management Partners II, L.L.C.
by ________________________________
Agreed:_________________________
Frank Vickers, Director
USWA, District 1
-98-
<PAGE> 155
APPENDIX C
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Employment Security
Dear Director Vickers:
This will confirm our understanding reached in the 1998 negotiations on
the above topic.
Notwithstanding anything to the contrary contained in the 1998 NuBar
BLA, the Company may lay off up to forty (40) Lackawanna Bargaining Unit
employees for the period ending on April 1, 2000, provided that the Company will
provide SUB for any employees who are in fact laid off.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed:_______________________________
Frank Vickers, Director
USWA District 1
-99-
<PAGE> 156
APPENDIX D
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Gary Dunes and 7th Avenue Plants
Dear Director Vickers:
This will confirm our understanding concerning the Gary Dunes and 7th
Avenue Plants of RESI. Effective with 1998 NuBar BLA the subject Plants will be
merged for all purposes relative to the BLA.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed:__________________________
Frank Vickers, Director
USWA District 1
-100-
<PAGE> 157
APPENDIX E
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Interest Arbitration Award - 1997
Dear Director Vickers:
This will confirm the understanding reached during our 1998
negotiations with regard to the status of arbitrator Valtin's 1997 RESI Interest
Arbitration Award ("Award"). Based upon the wage and benefit agreement contained
in the 1998 NuBar BLA, those aspects of the Award that have not been implemented
as if the date of this letter will not be implemented and will become null and
void.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed:__________________________
Frank Vickers, Director
USWA District 1
-101-
<PAGE> 158
APPENDIX F
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Merger of RESI DCP & DBP
Dear Director Vickers:
This will confirm our understanding that the Union agrees that the
existing account balances attributable to Company contributions under the
defined contribution plan and the existing defined benefit plan may be converted
into a single plan.
In the event that the Company subsequently elects to merge the defined
contribution and defined benefit components of the single plan, the Union will
provide its full assistance and cooperation to accomplish such merger.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed:___________________________
Frank Vickers, Director
USWA District 1
-102-
<PAGE> 159
APPENDIX G
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Neutrality
Dear Director Vickers:
This will confirm our understanding that, notwithstanding the
provisions of the Neutrality Article of the Master Agreement,
(i) the provisions of said Article shall not be applicable to currently
unrepresented eligible office, technical and professional employees
until two (2) years from the Closing; and
(ii) the provisions of said Article shall not become applicable at all for a
maximum of fifty (50) employees employed at NuBar's corporate
headquarters, such number to be exclusive of all employees who would
not be eligible for representation under the Act.
(iii) the provisions of said Article shall not be applicable to Blackstone,
Veritas, other private equity funds, or their respective successor(s)
in-interest and their respective existing or future affiliates (any of
the foregoing, an "Excluded Entity"); provided, however, that, in the
event that an Excluded Entity directly or indirectly either: (i)
currently owns or controls; or (ii) in the future acquires,
establishes, or gains control of any operations(s) that produces
products either currently or in the future produced by any NuBar
facility, then such operations(s) shall be subject to the provisions of
this Article.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed:__________________________
Frank Vickers, Director
USWA District 1
-103-
<PAGE> 160
APPENDIX H
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane, Suite J
Columbus, OH 43085
RE: NuBar Share Purchase
Dear Director Vickers:
This will confirm our understanding that each employee covered by the
NuBar BLA will be offered the option to purchase shares of NuBar common stock
("Employee Shares") following the business combination of RESI and BarTech (the
"Transaction").
The purchase price per Employee Share will be the same price per share
attributable to the NuBar common stock directly and indirectly acquired by the
Blackstone Investors in connection with the Transaction.
A maximum of $15 million worth of Employee Shares will be offered in
the aggregate (with oversubscriptions to be reduced on a pro rata basis). Such
offering, subject to applicable requirements under the Federal and state
securities laws, will occur no later than six months after the closing of the
Transaction.
Employee Shares will be transferable upon the earlier of: (i) an
initial underwritten public offering of NuBar, and (ii) the sale by the
Blackstone Investors of at least 80% of their NuBar shares, except that
employees will be given the right, prior to such initial public offering, upon
their retirement, to put their shares to the Company for fair value.
Holders of Employee Shares will be granted "piggyback" registration
rights entitling them to registration of their shares under the Security Act in
an underwritten initial public offering of NuBar, subject to customary
provisions that, among other things, permitted the managing underwriter of such
offering to cut back the number of Employee Shares registered if in the
underwriter's opinion the number of shares requested to be registered in such
offering by shareholders of NuBar exceeds the number which can be sold without
having an adverse effect on the price per share received by NuBar in such
offering; provided that the Employee Shares registered in such offering shall in
no event be cut back more than on a pro rata basis with shares requested to be
registered in such offering by the Blackstone Investors.
Sincerely,
Agreed:_______________________
Frank Vickers, Director Thomas N. Tyrrell
USWA, District 1 CEO, NuBar
-104-
<PAGE> 161
APPENDIX I
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
Re: Ratification Process in Negotiations in Year 2003
Dear Director Vickers:
This will confirm an understanding reached in our 1998 negotiations.
In return for NuBar's agreement to a single bargaining unit and master
agreement, the Union agrees with respect to contract negotiations in the year
2003 that any required membership ratification will be conducted by pooling all
bargaining unit members' votes into a single overall count. This commitment by
the Union shall not be in derogation of any other ratification requirements
(approval by USWA President, Executive Board, etc.).
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed:___________________________
Frank Vickers, Director
USWA District 1
-105-
<PAGE> 162
APPENDIX J
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Reimbursement to Local Unions for Negotiations
Dear Director Vickers:
This will confirm our understanding reached in the 1998 negotiations
concerning the above referenced topic.
Irrespective of whether or not the parties are able to reach agreement
for a 1998 BLA; the company will instruct each employer to reimburse up to a
maximum of two (2) Local Union Representatives who participated in the
discussions from each Plant covered by the NuBar BLA. The Local Union President
(or where appropriate the Unit President/Chairperson) will select the individual
Local Union Negotiating Committee Representatives and the employer will
reimburse the Local Union for lost time, travel and hotel expenses and a maximum
of $45.00 per/day for per diem.
This arrangement will be applicable for the 1998 BLA negotiations and
its Successor Agreement.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed:____________________________
Frank Vickers, Director
USWA District 1
-106-
<PAGE> 163
APPENDIX K
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: RESI Share Sale
Dear Director Vickers:
This will confirm our understanding that in the proposed transaction
pursuant to which the shares of RESI are acquired, the same price per share will
be paid for all RESI shares, regardless of whether the holder is an ESOP or a
non-ESOP holder. Additionally, in recognition of the 1998 NuBar BLA, the share
of special preferred stock will be canceled.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed:__________________________
Frank Vickers, Director
USWA District 1
-107-
<PAGE> 164
APPENDIX L
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
Re: Successorship - Cold Finished Plants
Dear Director Vickers:
This will confirm our understanding reached in the 1998 negotiations on
the above topic.
Notwithstanding anything to the contrary contained in the 1998 NuBar
BLA, the following understandings on Successorship shall apply in the event a
cold finished plant covered by the NuBar BLA is transferred.
The Company agrees that it will not sell, convey, assign or otherwise
transfer any cold-finished plant(s) or substantial portion thereof covered by
the then existing basic labor agreement between the Company and the Union to any
other party (hereinafter referred to as "Buyer") who intends to continue to
operate the business as the Company had, unless the following conditions have
been satisfied prior to the closing date of the sale:
1. The Buyer shall have entered into an agreement with the Union
recognizing it as the bargaining representative for the
employees within the then existing bargaining unit;
2. The Buyer shall have assumed the basic labor agreement (as it
may be amended pursuant to paragraph 3 below) and all benefits
agreements applying at the plant to be sold;
3. In the event that the date of sale precedes the expiration
date of the basic labor agreement ("original expiration date")
by less than three years, the Union may, at its sole option,
extend the original expiration date to fall three years from
the date of sale and, during each year or partial year that
the basic labor agreement is so extended, there shall be a
wage increase(s) equal to the increase(s) in the year
preceding the original expiration date;
4. In the event of a sale pursuant to the conditions described
above, and in the further event of a subsequent permanent
shutdown of the plant so sold within five (5) years of such a
sale, the Company shall guarantee that each former Company
employee at the plant so
-108-
<PAGE> 165
sold will receive from the purchaser, the Company, the PBGC,
and/or the Company's pension and welfare benefit plans, the
same severance pay, pension (including supplement), special
pension payment, and retiree health and life insurance that
would have been received had the plant so sold been shut down
as of the date of sale.
Sincerely yours,
Thomas N. Tyrrell
CEO, NuBar
Agreed:___________________
Frank Vickers, Director
USWA District 1
-109-
<PAGE> 166
APPENDIX M
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Retiree Healthcare Costs
Dear Director Vickers:
This will confirm our understanding reached during 1998 NuBar BLA
negotiations concerning the above referenced subject.
The Company shall maintain its program of medical benefits for post
Closing retirees and surviving spouses provided that the per capita costs of
benefits paid for by the Company under the program for periods after April 30,
2004 shall be limited to the per capita cost occurring during the 12 month
period ending April 30, 2004. When appropriate, a separate per capita cost will
be determined for medicare eligible retirees an ineligible medicare retirees.
In the event that the average per capita Company contribution for any
subgroup exceeds the amount established above in any calendar year, the excess
shall be allotted to and paid by each covered person on a pro rata basis. The
group of covered persons includes those who retired or otherwise became eligible
for benefits after Closing. Notwithstanding the forgoing, no covered person
shall be required, solely by reason of this limitation, to make any additional
contribution toward the costs of the program coverage until May 1, 2004.
The parties agree that any dispute over such limitation shall be a
mandatory subject of bargaining in any future negotiations.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed:__________________________
Frank Vickers, Director
USWA District 1
-110-
<PAGE> 167
APPENDIX N
Frank Vickers, Director
District 1
United Steel Workers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: C&BL Railroad
Dear Director Vickers:
In the event the Company seeks to acquire the C&BL Railroad, which is
not contemplated at this time, the Union agrees to give due consideration and
put forth its best efforts to combine the C&BL bargaining unit into NuBar's
overall production and maintenance unit and to cover the C&BL production and
maintenance employees under the 1998 Master Agreement.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed: __________________________
Frank Vickers, Director
USWA District 1
-111-
<PAGE> 168
APPENDIX O
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: BarTech Employee Equity Interest
Dear Director Vickers:
This will confirm our understanding that each present active BarTech
employee will be entitled to a lump sum payment in exchange for the union's
agreement to eliminate and in complete satisfaction of the Employee Equity
Interest Commitment made by BarTech during the 1994 Collective Bargaining
Agreement negotiations and in a letter commitment dated March 28, 1996.
NuBar will establish a 1.6 million dollar fund ("the fund"). Within
thirty (30) days of the effective date of the 1998 NuBar BLA with respect to
BarTech, each active employee with at least six (6) months of continuous service
will receive a minimum of $1,000.00 from the fund.
In addition, the remainder of the fund ("the pool") will be distributed
by dividing the total value of the pool by the total number of months worked
(partial months being counted as a full month for this purpose) by all employees
who have had or have six (6) months of continuous service at BarTech ("a
Share"). Each individual employee's payment will then be determined by
multiplying his/her individual months worked at BarTech by the value of a Share.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed: _____________________________
Frank Vickers, Director
USWA District 1
-112-
<PAGE> 169
APPENDIX P
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Incentive Plan Redevelopment
Dear Director Vickers:
This will confirm our understanding reached during the 1998
negotiations on the above topic.
The Company and the Union have committed to redesign current incentive
plans to more accurately relate to the demands of customers (whether internal or
external) and market conditions. Such design efforts may include the conversion
of individual incentive plans to group plans, and to change determinants
including customer service, quality and productivity to meet key performance
objectives.
The parties agree that the earnings opportunity obligations of the new
redesigned incentive plans shall be in accordance with the August 1, 1969
Incentive Arbitration Award.
Where production based incentive plans do not exist, the parties have
agreed to design and implement such plans in accordance with this letter and the
harmonization sections of the 1998 RES Acquisition Corporation Settlement
Agreement.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed: __________________________
Frank Vickers, Director
USWA District 1
-113-
<PAGE> 170
APPENDIX Q
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Job Classification Consolidation
Dear Director Vickers:
This will confirm our understanding reached during the 1998
negotiations on the above topic.
The parties have agreed to consolidate the various job classifications
within the former RESI and B&L facilities into five (5) new Labor Grades. Such
consolidation shall be implemented within thirty days of the ratification of the
1998 Basic Labor Agreement.
Within the Hot Rolled facilities the consolidated Labor Grades shall
be:
<TABLE>
<CAPTION>
Job Classes Labor Grade upon Ratification
===============================================================================================================
<S> <C> <C>
1 thru 4 1 $12.09
5 thru 10 2 $12.98
11 thru 17 3 $14.02
18 thru 25 4 $15.22
26 thru 34 5 $16.56
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Within the Cold Finished facilities the consolidated Labor Grades shall
be:
<TABLE>
<CAPTION>
Job Classes Labor Grade upon Ratification
===============================================================================================================
<S> <C> <C>
1 thru 5 1 $12.23
6 thru 13 2 $13.43
14 thru 21 3 $14.62
22 thru 30 4 $15.96
31 thru 34 5 $16.56
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
-114-
<PAGE> 171
The parties have agreed that any employee whose present rate is above
the agreed to rates will maintain the same relationship between the present
rates and any future wage increases. In addition, the parties have agreed that a
job classification review (review) of all Labor Grades will occur within six (6)
months of the effective date of the BLA. Such review will compare the job
assignments and job duties of the various Labor Grades at all the Company's USWA
represented facilities (including the former BarTech facilities). This review
process is intended to provide equity among the Labor Grades across the Company
at similar facilities for employees who are performing like functions. As a
result of the review, the Labor Grades for a particular job may be increased or
decreased utilizing mutually agreeable criteria for purposes of determining job
equity. If a particular job's Labor Grade is increased as a result of the
review, such increase shall be retroactive to the effective date of the BLA. In
the event the review results in the decrease of a particular job's Labor Grade
the decrease will be effective upon the conclusion of the review, however no
employee will be negatively impacted as a result of the review.
Any disputes which arise under this provision may be processed through
the Grievance and Arbitration Article of the Master Agreement.
Attached to this letter are the applicable wage rates for the former
RESI, BarTech, and B&L Harvey facilities.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed: ______________________________
Frank Vickers, Director
USWA District 1
-115-
<PAGE> 172
APPENDIX A
(APPLICABLE AT FORMER HOT ROLLED RESI FACILITIES)
<TABLE>
<CAPTION>
JC PRESENT AT RATIFICATION 11/1/99 11/1/00 11/1/01 11/1/02 ICR
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1/2 $11.53
3 $11.69 $12.09 $12.34 $12.84 $13.34 $14.09 $4.838
4 $11.84
5 $11.98
6 $12.13
7 $12.28
8 $12.43 $12.98 $13.23 $13.73 $14.23 $14.98 $5.552
9 $12.58
10 $12.73
11 $12.88
12 $13.03
13 $13.18
14 $13.33 $14.02 $14.27 $14.77 $15.27 $16.02 $6.385
15 $13.48
16 $13.62
17 $13.77
18 $13.92
19 $14.07
20 $14.22
21 $14.37 $15.22 $15.47 $15.97 $16.47 $17.22 $7.337
22 $14.52
23 $14.68
24 $14.82
25 $14.97
26 $15.11
27 $15.27
28 $15.41
29 $15.56
30 $15.71
31 $15.86 $16.56 $16.81 $17.31 $17.81 $18.56 $8.408
32 $16.01
33 $16.16
34 $16.31
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-116-
<PAGE> 173
APPENDIX A
(APPLICABLE AT FORMER COLD FINISHED RESI FACILITIES)
<TABLE>
<CAPTION>
JC PRESENT AT RATIFICATION 11/1/99 11/1/00 11/1/01 11/1/02 ICR
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1/2 $11.53
3 $11.69
4 $11.84 $12.23 $12.48 $12.73 $12.98 $13.23 $4.957
5 $11.98
6 $12.13
7 $12.28
8 $12.43
9 $12.58 $13.43 $13.68 $13.93 $14.15 $14.43 $5.909
10 $12.73
11 $12.88
12 $13.03
13 $13.18
14 $13.33
15 $13.48
16 $13.62
17 $13.77 $14.62 $14.87 $15.12 $15.37 $15.62 $6.861
18 $13.92
19 $14.07
20 $14.22
21 $14.37
22 $14.52
23 $14.68
24 $14.82
25 $14.97 $15.96 $16.21 $16.46 $16.71 $16.96 $7.932
26 $15.11
27 $15.27
28 $15.41
29 $15.56
30 $15.71
31 $15.86
32 $16.01
33 $16.16 $16.56 $16.81 $17.06 $17.31 $17.56 $8.408
34 $16.31
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-117-
<PAGE> 174
APPENDIX A
(APPLICABLE AT FORMER BARTECH FACILITIES)
<TABLE>
<CAPTION>
LABOR PRESENT 3/1/99 3/1/00 3/1/01 11/1/02 ICR
GRADE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 8.70 $11.65 $12.60 $12.84* $14.09** $4.838
2 $ 9.95 $12.90 $13.85 $13.73* $14.98** $5.552
3 $11.20 $14.15 $15.10 $14.77* $16.02** $6.385
4 $12.20 $15.15 $16.10 $15.97* $17.22** $7.337
5 $12.95 $15.90 $16.85 $17.31* $18.56** $8.408
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
*ON 3/1/01 A PRODUCTION BASED BARTECH INCENTIVE PLAN (BIP) WILL BE
DEVELOPED AND INSTALLED. THE BIP WILL HAVE AN EARNINGS OPPORTUNITY OF $2.16
PER/HOUR WITH A GUARANTEE OF THE DIFFERENCE (IF ANY) BETWEEN THE RATES IN EFFECT
ON 3/1/00 AND THE RATES IN EFFECT ON 3/1/01 PLUS $.25 PER/HOUR.
**THE EARNINGS OPPORTUNITY OF THE BIP WILL BE INCREASED TO $2.80
PER/HOUR WITH A GUARANTEE OF $.75 PER/HOUR.
-118-
<PAGE> 175
APPENDIX A
(APPLICABLE AT B&L HARVEY FACILITY)
<TABLE>
<CAPTION>
JC PRESENT 12/1/98 11/1/99 11/1/00 11/1/01 11/1/02 ICR
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2 $13.16
3 $13.30
4 $13.43 $12.23* $12.48* $12.73* $12.98* $13.23* $4.957
5 $13.56
6 $13.69
7 $13.82
8 $13.95 $13.43* $13.68* $13.93* $14.15 $14.43 $5.909
9 $14.08
10 $14.21
11 $14.34 $14.62* $14.87 $15.12 $15.37 $15.62 $6.861
12 $14.47
13 $14.60
14 $14.73
15 $14.86 $15.96* $16.21 $16.46 $16.71 $16.96 $7.932
16 $14.99
17 $15.12
18 $15.25
19 $15.38 $16.56* $16.81 $17.06 $17.31 $17.56 $8.408
20 $15.51
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
*ON 12/1/98 A PRODUCTION BASED HARVEY INCENTIVE PLAN (HIP) WILL BE DEVELOPED AND
INSTALLED. THE HIP WILL HAVE AN EARNINGS OPPORTUNITY OF $2.29 PER/HOUR (ADJUSTED
FOR STRAIGHT LINE HARMONIZATION) WITH A GUARANTEE OF THE DIFFERENCE (IF ANY) OF
THE PRESENT RATE AND THE APPLICABLE RATE.
-119-
<PAGE> 176
APPENDIX R
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Deletions from the RESI Predecessor Labor Agreement
Dear Director Vickers:
This will confirm our understanding reached during the 1998
negotiations on the above topic.
The Company and the Union have agreed that the following Appendices and
agreements from the RESI Predecessor Labor Agreement shall be deleted from the
1998 BLA:
Appendix B Employee Stock Programs
Appendix C Neutrality Agreement (superseded)
Appendix F Memorandum of Understandings on
Miscellaneous Matters Section 6 only.
Appendix I Memorandum of Understandings on Contracting
Out Matters
Appendix J Memorandum of Understanding on Profit
Sharing (Superseded)
Appendix M New Target 60 Program
Appendix N Functional Analysis
Appendix P Pre tax Income Pool
Appendix U Termination Incentive Payments
Appendix V Letter Agreement on Worker Ownership
Institute
Appendix W Preferred Stock Repurchase
Appendix Z Implementation of RESI/USWA Partnership
-120-
<PAGE> 177
Appendix BB Family and Medical Leave (Superseded)
Appendix HH Memorandum of Understanding on Bargaining
Unit Crew Chiefs for Production and Service
Units
Appendix LL Memorandum of Understanding Stark County
Area
Appendix MM Letter Agreement on Shape ups
Appendix QQ Letter Agreement on Best and NBU Trusts
Appendix TT Letter Agreement on Reversion of the BEST
Appendix TT-1 Financial Restructuring Bonus
Pioneer Collective Bargaining Agreement
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed: _____________________________
Frank Vickers, Director
USWA District 1
-121-
<PAGE> 178
Exhbit 10.50
BASIC
AGREEMENT
BETWEEN
CANADIAN DRAWN STEEL COMPANY INC.
AND
UNITED STEELWORKERS OF AMERICA
<PAGE> 179
TABLE OF CONTENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
SECTION DESCRIPTION PAGE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
1 INTENT AND PURPOSE 3
- -----------------------------------------------------------------------------------------
2 RECOGNITION OF UNION 4
- -----------------------------------------------------------------------------------------
3 RESERVATION OF MANAGEMENT FUNCTIONS 5
- -----------------------------------------------------------------------------------------
4 WAGES 5
- -----------------------------------------------------------------------------------------
5 HOURS OF WORK AND OVERTIME 10
- -----------------------------------------------------------------------------------------
6 STATUTORY HOLIDAYS 12
- -----------------------------------------------------------------------------------------
7 VACATIONS 12
- -----------------------------------------------------------------------------------------
8 SENIORITY 15
- -----------------------------------------------------------------------------------------
9 ADJUSTMENT OF DISPUTES 18
- -----------------------------------------------------------------------------------------
10 LEAVE OF ABSENCE 23
- -----------------------------------------------------------------------------------------
11 HEALTH AND SAFETY 24
- -----------------------------------------------------------------------------------------
12 DEDUCTION OF UNION DUES 29
- -----------------------------------------------------------------------------------------
13 JURY SERVICE AND BEREAVEMENT PAY 30
- -----------------------------------------------------------------------------------------
14 STRIKES AND LOCKOUTS 31
- -----------------------------------------------------------------------------------------
15 EMPLOYEE TRAINING/TECHNOLOGICAL CHANGE 31
- -----------------------------------------------------------------------------------------
16 DURATION 33
- -----------------------------------------------------------------------------------------
APPENDIX A STANDARD HOURLY WAGE SCALE 34
- -----------------------------------------------------------------------------------------
APPENDIX A-1 STANDARD HOURLY WAGE SCALE 35
- -----------------------------------------------------------------------------------------
APPENDIX B SCHEDULE OF APPRENTICESHIP JOB CLASSES 36
- -----------------------------------------------------------------------------------------
ITEM 1 LETTER OF AGREEMENT RE: SAFETY BOOTS AND SHOES 37
- -----------------------------------------------------------------------------------------
ITEM 2 LETTER OF AGREEMENT RE: TEMPORARY EMPLOYEES 37
- -----------------------------------------------------------------------------------------
ITEM 3 LETTER OF AGREEMENT RE: MEDICAL EXAMINATIONS 38
- -----------------------------------------------------------------------------------------
ITEM 4 LETTER OF AGREEMENT RE: VACATION SCHEDULING 38
- -----------------------------------------------------------------------------------------
ITEM 5 LETTER OF AGREEMENT RE: EMPLOYEE ABSENCES 39
- -----------------------------------------------------------------------------------------
ITEM 6 LETTER OF AGREEMENT RE: CONTRACTING OUT 39
- -----------------------------------------------------------------------------------------
ITEM 7 LETTER OF AGREEMENT RE: JOINT EMPLOYEE REFERRAL PROGRAM 51
- -----------------------------------------------------------------------------------------
ITEM 8 LETTER OF AGREEMENT RE: HUMANITY FUND 51
- -----------------------------------------------------------------------------------------
ITEM 9 LETTER OF AGREEMENT RE: TUITION SCHOLARSHIPS 52
- -----------------------------------------------------------------------------------------
ITEM 10 LETTER OF AGREEMENT RE: WORKCLOTHES 52
- -----------------------------------------------------------------------------------------
ITEM 11 WORKFORCE FLEXIBILITY 52
- -----------------------------------------------------------------------------------------
ITEM 12 PARTNERSHIP 54
- -----------------------------------------------------------------------------------------
ITEM 14 NEUTRALITY 68
- -----------------------------------------------------------------------------------------
ITEM 15 NEW EMPLOYEE ORIENTATION 73
- -----------------------------------------------------------------------------------------
ITEM 16 HIRING PREFERENCE 74
- -----------------------------------------------------------------------------------------
ITEM 17 MANNING OF NEW OPERATIONS 75
- -----------------------------------------------------------------------------------------
ITEM 18 RIGHT TO BID 78
- -----------------------------------------------------------------------------------------
ITEM 19 UNION ROLE IN NEGOTIATION OF BENEFITS 80
- -----------------------------------------------------------------------------------------
ITEM 20 PRINTING OF CONTRACTS 81
- -----------------------------------------------------------------------------------------
ITEM 21 FAMILY AND MEDICAL LEAVE 81
- -----------------------------------------------------------------------------------------
ITEM 22 LEAVE OF ABSENCE POLICY FOR UNION EMPLOYEES 86
- -----------------------------------------------------------------------------------------
ITEM 23 NUBAR PROFIT SHARING PLAN 87
- -----------------------------------------------------------------------------------------
ITEM 24 PENSION PLAN IMPROVEMENTS 90
- -----------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 180
SECTION 1
INTENT AND PURPOSE
1.01 It is the intent and purpose of this agreement to set forth wages,
hours of work and conditions of employment to be observed and to
provide a procedure for the prompt and equitable adjustment of
grievances, to the end that there shall be no interruption or other
interference with production during the life of this Agreement.
1.02 CDSC's Mission
Our mission is to manufacture cold finished bars for the North American
market; bars that conform to specification, produced in a safe
environment, by proud employees, at a reasonable profit.
We Will Achieve This Mission Through:
- a commitment to safety,
- serving our customers' needs,
- being the quality leader in the markets we serve,
- involving an ever-widening circle of employees and the local Union
in decision making,
- commitment to a process of continuing improvement, that
systematically seeks to enhance all aspects of conducting our
business,
- embracing change, and
- delivering the business plan results.
3
<PAGE> 181
SECTION 2
RECOGNITION OF UNION
2.01 The Company recognizes USWA Local 1031 (the Union) as the certified
collective bargaining agency for all the permanent/temporary
hourly-rated employees of the Company at 155 Chatham Street, Hamilton,
Ontario but excepting:
(a) Salaried employees.
(b) Officials and other persons acting in a supervisory or
confidential capacity or having authority to employ, discharge
or discipline employees.
2.02 The term "employee" or "employees" as used herein shall mean only such
persons as are included in the above defined bargaining unit. Wherever
the words referring to masculine gender are used herein, such as "he",
"his", or "him", the same shall include and cover females and males.
2.03 The Parties agree that:
(a) There shall be no intimidation of, and there shall be no
discrimination against any employee either by the Company or
the Union by reason of any activity or lack of activity, past,
present, or future, with respect to Union affairs or
membership.
(b) No meeting for any purpose of the Union shall be held on the
Company's premises except as permitted by the Company.
(c) The Company shall maintain bulletin boards for the exclusive
use of the Union. The Union shall not post, distribute or
cause to be distributed any material except as permitted by
the Company.
2.04 Supervisors will not do work ordinarily performed by hourly paid
employees except for:
(a) Instructions and training of employees, and
4
<PAGE> 182
(b) Emergency work when employees are absent or not available when
required.
SECTION 3
RESERVATION OF MANAGEMENT FUNCTIONS
3.01 The management of the plant, the direction of the working forces
including, but without limiting, the generality of the foregoing, the
right to hire, suspend, discipline, discharge for reasonable cause,
transfer, make and enforce from time to time reasonable rules and
regulations consistent with the terms of this Agreement governing its
employees and the conduct of the Company's business and production and
to manage the plant is vested exclusively in the Company.
SECTION 4
WAGES
Joint Job Analysis Committee
4.01 The Company and the Union agree that new job descriptions will be
developed by the Joint Job Analysis Committee for new or existing jobs
in compliance with section 4.14 of the Basic Agreement. The evaluation
will not necessarily be limited solely to the use of the conventional
C.W.S.
system.
4.02 Each job shall be described and classified and a rate of pay applied to
each employee on such job in accordance with the provisions of this
agreement.
Standard Hourly Wage Scale
4.03 The Standard Hourly Rates for all employees are shown in Appendix A.
Employees who were incumbent on jobs in the range JC1 to JC7 inclusive
as of July 31 1996 will be "red circled".
Entry Level Wages
5
<PAGE> 183
4.04 New employees other than skilled trades (welders, machinist, and
maintenance employees) will start at a wage $4.00 per hour less than
the normal job class assigned to the work. After 1040 hours, the
employee's wage will increase so that it will be $3.00 per hour less
than the normal job class assigned to the work. After 2080 hours, the
wage will be $2.00 per hour less than the normal job class assigned to
the work. After 3120 hours, the wage will be $1.00 per hour less than
the normal job class assigned to the work. After 4160 hours, the wage
will be equal to the normal job class assigned to the work.
Apprentice Jobs
4.05 Employees with the requisite qualifications are eligible to be enrolled
in apprenticeship courses in trade or craft jobs, in addition to
persons who may be hired directly as apprentices. All apprentices shall
sign an Apprenticeship Agreement as prescribed by the Company but in
case of any conflict between such Agreement and the Basic Agreement,
the latter shall govern. If upon completion of the apprenticeship
period, the Company is satisfied that the employee is qualified for the
trade or craft job, he shall receive a certificate certifying that he
has successfully completed the apprenticeship training.
4.06 An employee training through an Apprenticeship Course in a given trade
or craft shall commence his training at the beginning of the first
1040-hour period and be paid the standard hourly rate for Job Class 1,
unless assigned by the Company to a different 1040-hour period, in
which case, he shall be paid the standard hourly rate appropriate to
that period and shall thereafter, at the conclusion of each training
period of 1040 hours of actual experience with the Company, be advanced
to the standard hourly rate for the job class of the succeeding period
as set out in the schedule of apprentice training contained in Appendix
"B".
Hours during which an apprentice attends classes of instruction
prescribed by the Company as part of his apprenticeship training will
be credited as hours of actual experience towards the accumulation of
1,040-hour periods. However, an apprentice will not be considered to
have completed the last 1,040-hour period of his apprenticeship course
until he has successfully completed all of the prescribed classes of
instruction for such Trade and Craft.
6
<PAGE> 184
4.07 Rate changes as determined by the 1040-hour periods as provided in 4.06
shall be made at the beginning of the pay period closest to the
completion of the 1040 hours.
4.08 When a vacancy in the said trade or craft job exists, after the
employee has satisfactorily completed the apprenticeship course of the
Company, the employee shall, subject to the provisions of Section 8 -
Seniority, be assigned to the vacant job and paid the established
starting rate of the respective trade or craft; and
(a) thereafter accede to the intermediate rate at the end of 1040
hours of actual work experience with the company in the given
trade or craft; and
(b) thereafter accede to the standard rate at the end of an
additional 1040 hours of actual work experience with the
Company in the given trade or craft.
Learner Rates
4.09 Learner Rates apply to all having Code 2 (training) above (a) base.
4.10 The schedule of Learner Rates shall be determined on the basis of
Factor 2 (Employment Training and Experience) of the Job Classification
as follows:
(a) Jobs in Code B.4
One (1) learner period of 240 hours at $0.50 per hour below
the standard hourly rate of the job
(b) Jobs in Code C.8
One (1) learner period of 520 hours at $0.50 per hour below
the standard hourly rate of the job.
(c) Jobs in Codes D1.2 and E1.6
Two (2) learner periods, each of 520 hours, the first at $1.00
per hour and the second at $0.50 per hour below the standard
hourly rate of the
7
<PAGE> 185
job.
(d) Jobs in Codes F2.0 and Higher
Three (3) learner periods, each of 520 hours, the first at
$1.50 per hour, and the second at $1.00 per hour, and the
third at $0.50 per hour below the standard hourly rate of the
job.
4.11 An employee assigned to a job with a schedule of learner rates shall
receive credit for all time previously worked on such job in
determining the appropriate rate level in the learner schedule.
4.12 Before hiring a new employee for a learner job, the Company shall
consider any present employee's request recorded by the Plant Manager's
office for transfer to such job. Such records shall be verified by the
employee and be available to the Union.
Description and Classification of New or Changed Jobs
4.13 Whenever the Company establishes a new job or changes the job content
of an existing job to the extent of one full job class or more, upwards
or downwards, a new job description and classification for the new or
changed job shall be established in accordance with the following
procedure.
(a) The Company will develop a description and classification of
the job in accordance with the provisions of 4.01.
(b) The proposed description and classification will be submitted
to the Union, for approval. Each member of the Joint Job
Analysis Committee will be paid at his standard hourly rate
for attendance at meetings held by the Company, up to but not
exceeding a total of six (6) hours in any calendar month for
the whole Committee and the hours may be cumulative during the
term of this Agreement.
(c) The applicable standard hourly rate for the job shall become
effective on the date the new job was established or on the
date the job content of an existing job was changed.
(d) Any change in job class shall become effective in accordance
with
8
<PAGE> 186
4.14 (c) provided, however, that retroactivity shall not apply
for more than ninety (90) days prior to the date the Union
notifies the Company of an alleged change.
4.14 Should the Joint Job Analysis Committee be unable to agree upon the
description and classification, the following shall be the procedure:
(a) The Company shall install the proposed classification and the
standard hourly rate for the job class to which the job is
assigned.
(b) The Union may within thirty (30 days) thereafter refer an
allegation that the job is improperly described in writing
directly to Step 3 of the Grievance Procedure (Section 9).
4.15 An employee who is temporarily transferred to another job paying a
different standard hourly rate shall be paid either his incumbency
hourly rate or the rate for the job to which he has been transferred,
whichever is greater.
A temporary transfer shall not exceed twenty (20) working days unless
by mutual agreement.
4.16 Except as otherwise provided herein, no basis shall exist for an
employee to allege that a wage rate inequity exists, and no grievance
on behalf of an employee alleging a wage rate inequity shall be filed
or processed during the term of this Agreement.
Shift Premiums
4.17 Shift premiums will be paid as follows:
(a) 1. For hours worked by an employee on his regularly
scheduled afternoon shift -- twenty-five (25) cents
per hour.
2. For hours worked by an employee on his regularly
scheduled midnight shift - thirty (30) cents per
hour.
3. The second shift of the ten (10) hour shift pattern
will be paid a
9
<PAGE> 187
shift premium of twenty-eight (28) cents per hour.
(b) The appropriate shift premium under (a) shall be paid to an
employee who works a full overtime afternoon or midnight
shift.
4.18 A premium of seventy-five (75) cents per hour shall be paid to each
employee for all hours worked during the twenty-four (24) hour period
between 11:01 p.m. Saturday and 11:00 pm Sunday.
4.19 In no case will a shift premium be paid at an overtime rate.
SECTION 5
HOURS OF WORK AND OVERTIME
5.01 This Section is intended only for the purpose of computing overtime and
shall not be construed as a guarantee of hours of work per day or week,
or a guarantee of days of work per week.
5.02 (a) The work week shall be the seven (7) day period commencing at
11:00 pm on Sunday.
(b) The standard working shift for single or double turn
operations can be eight (8) or ten (10) hours commencing 7:00
a.m. Monday or 7:00 a.m. Tuesday.
(c) The standard working shift for triple turn operations will be
eight (8) hours commencing 11:00 p.m. Sunday.
5.03 The Company shall post the work schedule before 3:00 p.m. on Wednesday
of the preceding week.
5.04 An employee on three (3) shift or the first shift of two (2) shift
operations shall not cease work until relieved on his job, or otherwise
instructed by his supervisor. Employees may be relieved early up to a
limit of thirty (30) minutes.
5.05 On each shift of two (2) or three (3) shift production operations,
there will
10
<PAGE> 188
be one (1) thirty-minute paid break period when employees may leave
their place of work for rest or the eating of lunch. No other periods
will be provided and no time will be allowed for washing up.
5.06 Overtime at the rate of time and one-half shall be paid for all hours
worked in excess of forty (40) hours in any work week.
5.07 Overtime at the rate of time and one-half shall be paid for all hours
worked between the hours of 11:00 p.m. Saturday to 11:00 p.m. Sunday,
or whenever an employee is scheduled to "double back".
5.08 The following hours will be considered as hours worked in computing the
forty (40) per week necessary to be eligible for overtime:
(a) Hours paid for Statutory Holiday provided the employee was
normally scheduled to work such hours.
(b) Justified absence.
5.9 No employee shall be required to take time off to offset overtime
worked or to be worked.
5.10 When an employee reports for work after having been scheduled or
notified to report and the work for which he is usually employed is not
available, he shall be offered alternate work (paid as a TT under
Section 4.20) or be allowed a justified absence without pay.
5.11 An employee called in to work after he has left the plant shall be paid
either a minimum allowance of four (4) hours at the regular rate of the
job or one and one-half times the rate of the job for the time worked,
whichever shall be greater. However, if the employee is called in to
work prior to the start of his scheduled shift and works until the
commencement of his shift, he shall not be entitled to the minimum
allowance but will be paid at the rate of time and one-half only for
the time worked prior to the commencement of his shift.
SECTION 6
STATUTORY HOLIDAYS
11
<PAGE> 189
6.01 An employee having at least thirty (30) days service shall receive
Statutory Holiday pay for the day on which New Year's Day, Good Friday,
Victoria Day, Canada Day, Civic Holiday, Labour Day, Thanksgiving Day,
Christmas Day and Boxing Day is celebrated.
In addition two (2) Floating Statutory Holidays will be scheduled by
mutual agreement in and around the Christmas/New Year's week.
6.02 Statutory Holiday pay shall be computed by multiplying eight (8) times
the standard hourly rate of the job to which he would have been
scheduled to work had it not been a Statutory Holiday. When ten (10)
hour shifts are scheduled, the allowance is ten (10) times the standard
hourly rate.
6.03 An employee who qualifies for Statutory Holiday pay and is scheduled to
work and works the hours for which he is scheduled on any such day,
shall be paid for the time worked on such a day at one and one-half
times his regular rate of pay in addition to Stat Holiday pay. Hours
worked by such an employee in excess of eight (8) hours (or in excess
of ten (10) hours where scheduled) worked in such day shall be paid at
the rate of double time.
SECTION 7
VACATIONS
7.01 (a) Effective from August 1, 1993, an employee whose company
start date is before August 1, 1993 shall be entitled to an
annual vacation with pay in accordance with the following
schedule, on the basis of his service at July 1st in each
year:
One (1) year of service but less than Five (5) years
- Two (2) weeks
Five (5) years of service but less than Nine (9)
years - Three (3) weeks
Nine (9) years of service but less than Fifteen (15)
years - Four
12
<PAGE> 190
(4) weeks
Fifteen (15) years of service but less than
Twenty-two (22) years - Five (5) weeks
Twenty-two (22) years of service or more - Six (6)
weeks (One (1) of which will be banked for
pre-retirement leave).
7.01 (b) Effective from August 1, 1993, an employee whose company
start date is after August 1, 1993 shall be entitled to an
annual vacation with pay in accordance with the following
schedule, on the basis of his service at July 1st in each
year:
One (1) year of service but less than Four (4) years
- Two (2) Weeks
Four (4) years of service but less than nine (9)
years - Three (3) weeks
Nine (9) years of service but less than Twenty-five
(25) years Four (4) Weeks
Twenty-five (25) years of service or more - Five (5)
weeks
7.02 For the purpose of this section "vacation year" is defined as the
period July 1st to June 30th.
7.03 (a) Except as provided in (b) hereof, vacation pay for each
week of vacation shall be established by multiplying the
employee's standard hourly rate at the start of his vacation
by forty (40) except that if he was on temporary transfer for
less than ten (10) working days prior to the start of his
vacation, his vacation pay shall be based on the standard
hourly rate of his incumbent job.
(b) Vacation pay for each week of vacation shall be 2% of the
employee's earnings during the vacation year, if the employee:
(i) has been on leave of absence for reasons other than
disability or Union business directly related to the
bargaining unit, for
13
<PAGE> 191
more than a combined total of 350 hours during the
vacation year, or
(ii) has worked less than 1040 hours during the vacation
year for any reason, or
Hours not worked during the vacation year while on Union
business directly related to the Bargaining Unit shall also be
deemed to be hours worked for the purpose of this provision.
7.04 An employee with three (3) months of seniority but less than one (l)
year at July lst shall be paid as vacation pay 4% of his earnings from
the date of his employment to July lst.
7.05 An employee whose employment is terminated shall be paid vacation pay
in the amount of 2% of his earnings since the preceding July lst in
respect of each week of vacation to which he was entitled on such July
lst.
7.06 An employee who has not completed one (1) year of service as of July 1,
will be entitled upon completion of his probationary period to one (1)
day of vacation for each month of completed service as of July 1, to a
maximum of five (5) days of vacation.
Payment for such vacation shall be in accordance with Clause 7.04. The
time at which vacation shall be taken shall be prescribed by the
Company.
7.07 An employee with more than two (2) weeks vacation entitlement, may
apply to take one week of vacation entitlement as pay in each year at
the discretion of management. One or two weeks per year of vacation
entitlement may be deferred and taken as either pre-retirement leave or
extended vacation. Such extended vacation may only be taken in blocks
of four(4) weeks or more.
7.08 An employee with more than two (2) weeks vacation entitlement, may be
allowed one (1) week to be taken as single-day vacations. Any employee
with such vacation requests shall give a minimum of five (5) working
days notice to the Company for each single vacation day. Management
will not unduly withhold permission to schedule such single days of
vacation.
14
<PAGE> 192
SECTION 8
SENIORITY
8.01 (a) For the purpose of this Agreement, Company Service for
vacation entitlement and pensions includes all time worked at
Stelco Inc. and Canadian Drawn Steel Company Inc. Seniority is
the sum of the time worked at C.D.S.C. (a unit of Stelco Inc.)
and C.D.S.C. Inc. When two (2) or more employees have the same
seniority, the employee with the longest service shall be
considered to have the highest seniority.
(b) A permanent employee will be considered on probation and will
not be placed on the service list or be entitled to any
service or seniority provision until after he has completed a
probationary period of 1440 hours. Up to 960 hours of work for
the Company as a temporary employee will be credited toward
the 1440 hour total.
(c) The parties agree that a probationary employee is not entitled
to the right of the grievance procedure. However, probationary
employees shall be afforded representation by the Union in
discussions with the Company.
8.02 The Company shall supply the Union with a copy of an Employee Service
list upon request.
8.03 Service and employment shall be terminated when an employee:
(a) resigns;
(b) is discharged for justifiable cause;
(c) is laid off for lack of work;
(d) is unjustifiably absent for more than three (3) consecutive
working days;
(e) is absent due to a disability not compensable under the
Worker's Compensation Act, for a period exceeding the limits
set forth in 8.05
15
<PAGE> 193
(b) and (c) relating to length of service and recall
entitlement;
(f) is absent due to a disability compensable under the Workers'
Compensation Act, for a period exceeding either, the period in
respect of which weekly compensation payments are made to him
under the said Act, or for a period the limits set forth in
8.05 (b) and (c) relating to length of service and recall
entitlement, except that in the case of an employee with ten
(10) or more years of service, for a period of five (5) years,
whichever is the greater.
8.04 In dealing with promotions, demotions, layoffs and recall of employees
within the bargaining unit, precedence shall be given to employees
having the greatest seniority provided the employee or employees
concerned possess the ability and physical fitness necessary to perform
the work.
8.05 When an employee has been laid off for lack of work, he shall be
entitled to recall for the appropriate period as provided in (b) and
(c) below subject to 8.04 and in the event he is subsequently recalled
and rehired, his service shall be reinstated provided that:
(a) the employee has completed his probationary period prior to
layoff,
(b) in the case of an employee with less than three (3) years
seniority at the date of layoff, he is rehired within eighteen
(18) months. In such case, the period of layoff will be added
to his previous service.
(c) in the case of any employee with three (3) or more years
seniority at the date of his layoff, he is rehired within
thirty (30) months. In such cases, the period of layoff will
be added to his previous service.
(d) the former employee returns to work within ten (10) days after
notice to return to work is given to him by the Company by
registered letter addressed to the last address on the
employment records.
8.06 Except as provided in 8.07, in the event that a permanent vacancy
occurs on any job, notice of the vacancy will be posted on the bulletin
board for a period of five (5) working days. Any employee may apply in
writing to his supervisor within such five-day period. The job will be
filled in accordance with Clause 8.04 from among the applicants for the
job.
16
<PAGE> 194
8.07 When operations are increased following a decrease of working force, an
employee, displaced from a job under Clause 8.09, will, whenever
practicable, be returned to the job previously held by him. This
provision shall not apply in the event that such employee has been
appointed to a permanent vacancy formerly occupied by other than a
displaced employee and has designated in writing at the time of his
appointment, his intention to remain on the job when operations are
increased.
8.08 In applying the provisions of Clause 8.06, only an employee who has
occupied his job for a minimum period of six (6) months or is occupying
a job as a result of a decrease in working force, will be considered
for a job vacancy which carries an equal or lower standard hourly rate
than the job which he occupies.
8.09 Subject to the provisions of Clause 8.04, whenever the working force is
decreased, probationary employees will be laid off first and then an
employee displaced from his job will be assigned by the Company to the
highest paying job for which he is qualified, held by an employee with
less seniority.
When an employee has exercised his entitlement to these displacement
provisions and would otherwise be laid off work, such employees will be
entitled to be considered for assignment to a job as follows:
The job held by the employee having the least seniority in the plant
provided such job is equal to or lower in job class than the displaced
employee's incumbent job, and provided that such senior employee has
the basic knowledge to absorb the necessary training so as to become
qualified to perform such job within a three (3) week period.
It is understood and agreed that no other employee may file a grievance
with respect to the application of these provisions and in any event
such grievance will not be arbitrable.
8.10 The following Union Officers - President, Vice-President, Financial
Secretary and Chief Plant Steward shall hold top service regarding
layoffs during their term of office.
17
<PAGE> 195
8.11 When an employee leaves the bargaining unit for a salaried position, he
will cease to accumulate seniority for the purpose of job bidding and
vacation selection after 1040 hours worked out of the bargaining unit.
SECTION 9
ADJUSTMENT OF DISPUTES
Union Representative
9.01 The Union shall be entitled to select one (1) Chief Steward for the
plant, and also three (3) Stewards.
9.02 The Union may elect, appoint or otherwise select a Grievance Committee
of three (3) members, one (1) of whom shall be Chairman.
9.03 Employees so selected to represent the Union shall at the time of their
appointment have at least two (2) years of service. The Union shall
advise the Company in writing of all employees so selected.
9.04 (a) The duties of the Chief Steward, Stewards and Grievance
Committee shall be to assist in manning the plant in
accordance with the terms of this Agreement.
(b) Discipline resulting in time off will not begin until after
two (2) full working days have passed, except in cases
involving safety or insubordination.
9.05 The Grievance Committee shall be afforded such time off without pay
(except as hereinafter provided) as may be required for attendance at
meetings with Management, which the Union requests. Each member of the
Grievance Committee will be paid at his standard hourly rate for
attendance at meetings held for the processing of grievances at Steps
No, 2 and 3 of this Section 9, up to but not exceeding a total of
twelve (12) hours in any calendar month for the whole committee, and
the hours may be cumulative during the term of this Agreement. Union
members shall be paid at their standard hourly rates for attendance at
meetings called by Management.
18
<PAGE> 196
9.06 A representative of the Union shall obtain the permission of his
Supervisor before leaving his work to deal with a grievance. Such
permission shall not be unreasonably withheld.
Grievance Procedure
9.07 Step No. 1
Any employee who has a grievance may discuss and attempt to settle same
with his Foreman, with or without a Steward being present, as the
employee may elect. The foreman will make known his decision to the
employee within two (2) days. Grievances not adjusted in this way may
be appealed to Step No. 2.
9.08 Step No. 2
Grievances not settled at Step 1 may be referred to the General Foreman
(Operations) within seven (7) days of the incident giving rise to the
grievance. The Chief Steward and the General Foreman will discuss the
issue and attempt to settle it verbally. The General Foreman will make
his decision known to the Chief Steward within five (5) days.
9.09 Step No. 3
Notice of Appeal must be given to the Plant Manager in writing within
five (5) days of the response by the General Foremen who shall within
five (5) days meet with the Grievance Committee which may be
accompanied by an International Representative of the Union,
investigate the grievance and attempt to settle it. A written decision
shall be given by the Plant Manager or his delegate within four (4)
days of the date of such meeting.
Grievances not presented within the times specified for each of the
three steps shall not be considered under the Grievance Procedure and
in any event are not arbitrable.
9.10 A grievance which has been disposed of under the Grievance Procedure
shall not again be deemed the subject of a grievance during the life of
this
19
<PAGE> 197
Agreement. A grievance once processed at any step of the Grievance
Procedure will not again be considered except by way of appeal taken
within the times therein provided.
9.11 No employee other than a probationary employee shall be discharged
without first being given seven (7) days notice except in cases of
serious misconduct when discharge shall be effective immediately. The
Company shall notify the Chief Steward of all immediate discharges or
notice of discharge given to employees, excepting probationary
employees, within forty-eight (48) hours after such discharge or notice
of discharge has been affected. Grievances relating to discharge may be
initiated at Step No. 2 of the Grievance Procedure.
9.12 (a) The Union shall make available forms for presentation of
grievances.
(b) Saturdays, Sundays and Statutory Holidays shall not be counted
in determining the time within which any action is to be taken
or completed in any of the foregoing steps.
9.13 (a) In the event that more than one (l) employee is directly
affected by one specified incident and each such employee
would be entitled to process a grievance, the Chief Steward
may sign the statement of the grievance, the Chief Steward may
sign the statement of the grievance on behalf of the aggrieved
employees and shall identify the grievance as a "Group
Grievance". Where retroactive wages are claimed, the names of
such employees shall be attached to the grievance.
(b) If the Company is alleged to have violated any provisions of
this Agreement and such violation affects the interests of the
Union as a party to the Agreement, the Union may file a
grievance, beginning at Step No. 2, which shall be signed on
behalf of the Union by the Chairman of the Grievance Committee
and shall be identified as a "Union Policy Grievance".
9.14 The Grievance and Arbitration Procedure may be invoked by the Company.
Such grievances may be initiated by the Company at Step No. 2 of the
Grievance Procedure by filing with the Chairman of the Grievance
Committee.
20
<PAGE> 198
Arbitration
9.15 Grievances not adjusted in Step No. 3 relating to the interpretation,
application, administration, or alleged violation of this Agreement,
including any question as to whether a matter is arbitrable, may be
referred to a Board of Arbitration, hereinafter called the Board, by
notice in writing to the Plant Manager within fifteen (l5) working days
from the date of his written decision. Such notice shall specify the
agreement clauses involved.
Within fifteen (15) days from the date of a grievance is referred to
arbitration, the Union shall meet with the Company to review the issue
in dispute. At such meeting, the Company will submit a statement of
facts which the parties will review for the purpose of determining
which facts are agreed to and which are still in dispute. The parties
will attempt to reconcile the differences. The agreed to statement of
facts will be submitted at the arbitration hearing.
The Union's representative at such meeting will be the Plant Grievance
Committee Chairman (or his delegate) and an International
Representative and the Company's representatives will be the Plant
Manager (or his delegate) and one (1) other.
In special circumstances, and by agreement by both parties, persons
directly involved in the incident may be invited to attend such meeting
for the purpose of clarifying any facts which may be in dispute. An
employee who is invited shall be paid for time lost from work at his
standard hourly rate.
9.16 Within ten (10) days from the date on which the grievance is referred
to arbitration, the Union shall notify the Company in writing of the
appointment of a representative to the Board and the Company shall,
within five (5) days thereafter, notify the Union in writing of the
appointment of a representative. No person shall be appointed as a
representative who has participated in prior efforts to settle the
grievance to the arbitrated.
9.17 The two (2) appointees so selected shall, within five (5) days of the
appointment of the second of them, appoint a third person who shall be
the
21
<PAGE> 199
Chairman.
The parties may agree that the Arbitrator selected will act as a single
arbitrator. In such cases, the provisions of Clauses 9.19 and 9.20
shall be read and construed with the necessary changes.
9.18 Where the representative of the Union has been appointed in accordance
with 9.16 and the Company fails to appoint a representative as therein
provided, or where the two (2) representatives fail to agree upon a
Chairman within the time specified, the appointment shall be made by
the Minister of Labour for Ontario, upon the request of either party.
9.19 The Board shall have no jurisdiction to adjudicate any matter not
specifically hereby assigned to it, or to alter, change or amend any of
the provisions of this Agreement or to make any decision inconsistent
with the provisions of this Agreement, or to deal with the wages except
as provided in this Agreement, but, save as aforesaid, the decision of
the Board or of a majority of the arbitrators shall be final and
binding upon the parties hereto and upon any employee or employees
concerned.
The Board may nevertheless decide whether or not retroactive wages are
payable because an employee has been deprived of wages as a result of a
violation of the Agreement by the Company and, where such violation
involves disciplinary action resulting in loss of wages, whether the
disciplinary action should be modified if in the opinion of the Board
the extent of the discipline is unreasonable in relation to the
offence. Except as otherwise provided in this Agreement, the Board may
not award such retroactive pay for a period in excess of sixty (60)
days immediately preceding the date of the discussion at Step No. 2 of
the Grievance Procedure.
9.20 At the Arbitrator's discretion an oral decision can be issued at the
completion of the hearing. In such cases, a written award will be
prepared at the request of either party.
Each of the parties hereto will bear the expense of the arbitrator
appointed by it and the parties hereto will jointly share alike the
expense of the Chairman of the Arbitration Board.
22
<PAGE> 200
SECTION 10
LEAVE OF ABSENCE
10.1 Leave of absence shall mean an absence from work requested by the
employee and consented to by the Company in writing covering a
specified period of time.
10.2 Special Leave of Absence for Elected and Appointed Officials
(a) An employee who becomes a candidate or the senior campaign
manager of a candidate for election to the office of
provincial or federal member of parliament, or to the
political office of Mayor or Regional Chairman, will be
granted a leave of absence for such purpose. In the event that
any employee is appointed to or elected to any of the offices
as set out above, the leave of absence for such employee will
be extended for the period of time he serves in such office.
(b) In the event that an employee is elected as an official of the
United Steelworkers of America or appointed by the District
Director of the United Steelworkers of America as a staff
representative of the Union, the employee, upon written
request by the International Office of the Union, will be
granted a special leave of absence for the term of his elected
office or appointment.
(c) Company Service for any such employee as specified in (a) or
(b) above shall be retained for the period prior to his leave
of absence and, shall accumulate during such leave.
(d) The Company will extend group insurance benefits (except
weekly indemnity and L.T.D.) provided that any such employee
pays the full premiums for such coverage.
(e) Credited Service for purposes of the Pension Plan shall not
include any calendar month during the whole of which any such
employee is on such Leave of Absence as provided in (a) or (b)
above. Pension
23
<PAGE> 201
benefits for an employee granted a leave of absence under (b) above,
who is elected as an official or appointed by the Union as a
representative and who subsequently returns to full time permanent
employment with the Company, will be calculated based on his
accumulated Credited Service and the pension formula in effect at the
date of his retirement on pension.
SECTION 11
HEALTH AND SAFETY
11.01 General Provisions
The Company shall make reasonable provisions for the safety and health
of its employees at the plants during the hours of their employment.
The Company, the Union and the employees recognize their obligations
and/or rights under existing federal and state laws with respect to
safety and health matters.
Where the Company uses toxic materials, it shall inform the affected
employees what hazards, if any, are involved and what precautions shall
be taken to insure the safety and health of the employees. Upon the
request of the Union Co-Chairman of the Joint Safety and Health
Committee, the Company shall provide in writing requested information
from material safety data sheets or their equivalent on toxic
substances to which employees are exposed in the work place; provided
that when the information is considered proprietary, the Company shall
so advise the Union Co-Chairman, and provide sufficient information for
the Union to make further inquiry.
The Company shall provide adequate first aid for all employees during
their working hours.
An employee who, as a result of an industrial accident, is unable to
return to his assigned job for the balance of the shift on which he was
injured, will be paid for any wages lost on that shift.
24
<PAGE> 202
Protective devices, wearing apparel, and other equipment necessary to
properly protect employees from injury shall be provided by the Company
in accordance with practices now prevailing in each separate plant or
as such practices may be improved from time to time by the Company.
Goggles, hard hat, hearing protection, prescription safety glasses (one
pair every twelve months), face shields, respirators, special purpose
gloves, fire retardant, water resistant or acid resistant protective
clothing when necessary and required shall be provided by the Company
without cost, except that the Company may assess a fair charge to cover
loss or willful destruction thereof by the employees. Where any such
equipment or clothing is now provided, the present practice concerning
charge for loss or willful destruction by the employee shall continue.
11.02 Unusual Conditions
If an employee shall believe that there exists an unsafe condition,
changed from the normal hazards inherent in the operation, so that the
employee is in danger of injury, he shall notify his foreman of such
danger and of the facts thereof. Thereafter, unless there shall be a
dispute between the Company and the employee as to the existence of
such unsafe condition, the employee shall have the right, subject to
reasonable steps for protecting other employees and the equipment from
injury, to be relieved from duty on the job in respect of which he has
complained and to return to such job when such unsafe condition shall
be remedied.
The Company may, in its discretion, assign such employee to other
available work in the plant. If the existence of such alleged unsafe
condition shall be disputed, the Chairman of the Grievance Committee of
the union in the plant and the Human Resources Manager in the plant, or
his representative, shall immediately investigate such alleged unsafe
condition and determine whether it exists. If they shall not agree and
if the Chairman of the Grievance Committee is of the opinion that such
alleged unsafe condition exists, the employee shall have the right to
present a grievance in writing in Step 2 of the Grievance and
Arbitration procedure and thereafter to be relieved from duty on the
job as stated above. Such grievance shall be presented without delay
directly to an arbitrator under the provisions of this Agreement, who
shall determine whether such employee was justified in leaving the job
because of the existence of such alleged unsafe condition.
25
<PAGE> 203
Should either the Company or an arbitrator conclude that an unsafe
condition within the meaning of this Section 2 existed and should the
employee not have been assigned to other available equal or higher
rated work, he shall be paid for the earnings he otherwise would have
received.
It is recognized that emergency circumstances may exist, and the local
parties are authorized to make mutually satisfactory arrangements for
immediate arbitration to handle such situations in an expeditious
manner.
11.03 Joint Safety and Health Committee
(a) A joint Safety and Health Committee consisting of not less
than three (3) nor more than ten (10) employees designated by
the Union and an equal number of Company members, if the
Company so desires, designated by the Company shall be
established in each plant. The Union and the Company shall
designate their respective Co-Chairmen and shall certify to
each other in writing such Co-Chairmen and committee members.
The committee shall hold monthly meetings at times determined
by the Co-Chairmen who may also agree to hold special
meetings. Prior to such monthly meeting the Co-Chairmen or
their designees shall engage in an inspection of mutually
selected areas of the plant. At the conclusion of the
inspection, a written report shall be prepared by the Company
setting forth their findings. One copy of the report shall be
furnished to the Union Co-Chairman. Time consumed on Joint
Committee work by committee members designated by the Union
shall be considered hours worked to be compensated by the
Company. The function of the committee shall be to advise with
plant management concerning safety and health and to discuss
legitimate safety and health matters, but not to handle
complaints or grievances.
(b) In the event the Company requires an employee to testify at
the formal investigation in to the causes of a disabling
injury, the employee may arrange to have the Union Co-Chairman
of the joint Safety and Health Committee or the Union member
of such committee designated by the Union Co-Chairman to act
in his absence, present as an observer at the proceedings for
the period of
26
<PAGE> 204
time required to take the employee's testimony. The Union Co-
Chairman will be furnished with a copy of such record as is
made of the employee's testimony. In addition, in the case of
accidents which resulted in disabling injury or death or
accidents which could have resulted in disabling injury or
death and require a fact-finding investigation, the Company
will, as soon as is practicable after such accident, notify
the Union Co-Chairman of the Joint Safety and Health
Committee, or the Union member of such committee designated by
the Union Co-Chairman to act in his absence, who shall have
the right to visit the scene of the accident promptly upon
such notification, if he so desires, accompanied by the
Company Co- Chairman or his designated representative and the
Company will add the Union Co-Chairman of the Joint Safety and
Health Committee, or the Union member of such committee
designated by the Union Co- Chairman to act in his absence, to
the notification list for such accidents. After making its
investigation, the Company will supply to the Union
Co-Chairman of the Joint Safety and Health Committee a
statement of the nature of the injury, the circumstances of
the accident, and any recommendations available at that time
and will consider any recommendations he may wish to make
regarding the report. In such cases, when requested by the
Union Co-Chairman, the Company Co-Chairman of the Joint Safety
and Health Committee or his designated representative will
review the statement with the Union Co-Chairman. Also, in such
cases, the Company Co-Chairman of the Joint Safety and Health
Committee or his designated representative, when requested by
the Union Co-Chairman, will visit the scene of the accident
with the Union Co-Chairman or, in his absence, his designated
substitute.
(c) The Company will, form a single source at the Company
headquarters level, provide the International Union Safety and
Health Department with prompt notification of any accident
resulting in a fatality to a union member.
11.04 Use of Disciplinary Records
Written records of disciplinary action against the employee involved
for the violation of a safety rule but not involving a penalty of time
off will not be used by the Company in any arbitration proceeding where
such action
27
<PAGE> 205
occurred one or more years prior to the date of the event which is the
subject of such arbitration.
When an employee has completed 36 consecutive months of work without
discipline involving a penalty of time off for violation of a safety
rule, prior disciplinary penalties for such offenses not exceeding four
(4) days' suspension shall not be used for further disciplinary action.
When an unsafe practice report is made involving a violation of a
safety procedure or rule by an employee which does not involve
discipline, a copy of that report will be given to the employee.
11.05 Alcoholism and Drug Abuse
Alcoholism and drug abuse are recognized by the parties to be treatable
conditions. Without detracting from the existing rights and obligations
of the parties recognized in the other provisions of this Agreement,
the Company and the Union agree to cooperate at the plant level in
encouraging employee afflicted with alcoholism or drug abuse to undergo
a coordinated program directed to the objective of their
rehabilitation.
11.06 Safety and Health Training
The Company recognizes the special need to provide appropriate safety
and health training to all employees. The Company presently has safety
and health training that provides either the training described below
or the basis for such training as it relates to the needs of the
Company and its various plants.
Training programs shall recognize that there are different needs for
safety and health training for newly hired employees, employees who are
transferred or assigned to a new job and employees who require periodic
retaining. The Joint Safety and Health Committee may make
recommendations on these and other safety education matters.
The Union Co-Chairman of the Joint Safety and Health Committee and the
International Union Safety and Health Department of a designee shall,
upon request, be afforded the opportunity to review the training
program for
28
<PAGE> 206
employees at the plant level.
The training of employees shall be directed to the hazards of the job
or jobs on which they are required to work. Such training shall include
hazard recognition, safe working procedures, purpose, use and
limitations of special personal protective equipment required and any
other appropriate specialized instruction.
11.07 Medical Records
The Company shall maintain the confidentiality of reports of medical
examinations of its employees and shall only furnish such reports to a
physician designated by the employee upon the written authorization of
the employee; provided, that the Company may use or supply medical
examination reports of its employees in response to subpoenas, requests
to the Company by any governmental agency authorized by law to obtain
such reports, and in arbitration or litigation of any claim or action
involving the Company. Whenever the company physician detects a medical
condition which, in his judgment, requires further medical attention,
the Company physician shall advise the employee of such condition or to
consult with his personal physician.
SECTION 12
DEDUCTION OF UNION DUES
12.01 Each permanent employee, within thirty (30) days after commencement of
his full-time employment, shall become and shall remain a member of the
Union in good standing, as a condition of employment.
12.02 For each temporary employee within thirty (30) days worked after
commencement of his employment, shall become and shall remain a member
of the Union in good standing, as a condition of employment.
12.03 The Union Dues deducted from each employee per bi-weekly pay will be
the lesser of the following two calculations, subject to a minimum
deduction of $2.30 per pay.
29
<PAGE> 207
1. Total earnings multiplied by 1.3%.
or
2. Total earnings divided by associated hours, multiplied by 1.1538.
12.04 Such Union dues will be remitted within 15 days after the end of the
pay period to the International Treasurer United Steelworkers of
America.
SECTION 13
JURY SERVICE AND BEREAVEMENT PAY
13.01 The Company shall pay to any employee who may be required to serve as a
juror or as a subpoenaed crown witness in any court of law in the
Country in which he resides, the difference, if any, between the amount
paid to him for his jury or crown witness services and the amount he
would have received for services normally rendered to the Company
during the same period of time.
13.02 An employee shall be permitted time off from work up to a maximum of
three (3) days for the purpose of arranging and attending the funeral
of a member of his immediate family, or where he does not attend the
funeral, one (l) day. Where any of such days fall on a scheduled
working day, the employee shall be paid a bereavement allowance for
each day equivalent to eight (8) or ten (10) times the average hourly
rate earned by him in the preceding pay period. Immediate family shall
mean spouse, son, daughter, mother, father, sister, brother,
grandmother, grandfather, grandchild, mother-in-law, father-in-law,
sister-in-law or brother-in-law, or, a common law spouse and mother,
father, sister, or brother of such common law spouse. For the purpose
of this clause, the terms "sister-in-law" and "brother-in-law" shall be
defined as the brother or sister of the employee's spouse and the wife
or husband of the employee's brother or sister.
SECTION 14
30
<PAGE> 208
STRIKES AND LOCKOUTS
14.01 There shall be no lockout by the Company and no interruption, work
stoppage, strike, sitdown, slowdown, or any other interference with
production by any employee or employees during the term of this
Agreement.
14.02 Any employee who participates in any interruption, work stoppage,
strike, sitdown, slowdown, or any other interference with production
may be disciplined or discharged by the Company.
SECTION 15
EMPLOYEE TRAINING/TECHNOLOGICAL CHANGE
The Company has always recognized the importance of providing training
opportunities for employees so that they could improve their skills and advance
to jobs of greater responsibility and higher pay.
The following training programmes are available:
Apprenticeship
If practical and subject to operational requirements, the training of journeymen
will be accomplished through an approved Apprenticeship Programme.
Production
Training opportunities for employees will take place as follows:
An employee who wishes to move to a different line of work within the plant may
apply in writing to the Plant Manager for the necessary training. If the
employee has the basic qualifications for such training, he will be accepted for
training in order of seniority at such time as may be determined by the Plant
Manager. To the extent that it is practicable, the employee and the Chief
Steward will be told when he might expect the training to commence. If he is
successful in such training in a reasonable period of time, his qualifications
will be posted and he will return to
31
<PAGE> 209
his previous job pending a permanent vacancy.
Rates of pay for such training will be in accordance with the learner provisions
of the Basic Agreement.
Trainee Requirements
An employee who receives training on production or other occupations will be
required to:
(a) Complete the prescribed number of learner periods, and
(b) Apply for any posted job vacancy in the job for which he has
been successfully trained, provided such posted job is higher
in job class than his current incumbency.
Technological Change
Both parties recognize the importance of lessening as much as reasonably
possible the effects of technological change upon the job security and the
earnings of employees older in service who may be displaced from their jobs as a
result of such change. If any such employee incurs any substantial loss of
earnings because of lack of training, the Company will give special
consideration to re-training him with a view to attaining as closely as possible
the job classification level which he held before displacement.
Outside Education Courses - Tuition Reimbursement Programme
Employees are encouraged to improve their vocational development in the company
through educational courses. Where the employee attends such a course with
advance approval by the Company, he will be reimbursed to the extent of one half
of the regular tuition fees upon evidence that he has satisfactorily completed
the course. Where the Company instructs the employee to take a course as part of
his job duties, all expenses will be paid by the Company.
Extension courses offered by accredited universities, high schools, technical
training centres, and professional associations are eligible. To be approved by
the Company, the course must be of a type that can reasonably be expected to
improve
32
<PAGE> 210
the performance and development of employees in relation to their careers in the
Company but is not required to be wholly vocational.
Governmental Training Assistance & Educational Programmes
The company will explore the feasibility of providing programmes of instruction
to facilitate any required upgrading of basic educational qualifications.
Various levels of government have in recent years increasingly concerned
themselves with industrial training. The Company commits itself to investigating
the various training facilities of the Ontario and Federal Governments and
utilize such facilities and services to the extent that it is practicable.
SECTION 16
DURATION
16.01 This Agreement shall remain in force until 31st October 2003 and shall
continue in force from year to year thereafter unless in any year not
more than sixty (60) days before the anniversary date either party
shall furnish the other with notice of termination of, or proposed
revision of this Agreement.
Signed this ____ day of August 1998
FOR: FOR:
Canadian Drawn Steel Company Inc. United Steelworkers of America
- ----------------------------- -----------------------------------
- ----------------------------- -----------------------------------
- ----------------------------- -----------------------------------
- ----------------------------- -----------------------------------
33
<PAGE> 211
APPENDIX "A"
STANDARD HOURLY WAGE SCALE
<TABLE>
<CAPTION>
JOB CLASS AUG 1 AUG 1 AUG 1 New
1998 1999 2000 Labor Grade
<S> <C> <C> <C> <C>
1 13.000 13.000 13.000 1
- ------ ------ ------ -
2 13.790 13.810 13.810
3 14.580 14.620 14.620
4 15.420 15.480 15.480
5 16.310 16.390 16.390
6 17.150 17.250 17.250
7 18.040 18.160 18.160
8 20.138 20.278 20.278 2
- ------ ------ ------ -
9 20.433 20.593 20.593
10 20.728 20.908 20.908
11 21.023 21.223 21.223 3
- -- ------ ------ ------ -
12 21.318 21.538 21.538
13 21.613 21.853 21.853
14 21.908 22.168 22.168
15 22.203 22.483 22.483
16 22.498 22.798 22.798
17 22.793 23.113 23.113 4
- -- ------ ------ ------ -
18 23.088 23.428 23.428
19 23.383 23.743 23.743
20 23.678 24.058 24.058
21 23.973 24.373 24.373
22 24.268 24.688 24.688
23 24.563 25.003 25.003 5
------ ------ ------
</TABLE>
34
<PAGE> 212
APPENDIX "A-1"
STANDARD HOURLY WAGE SCALE
Effective on the BarTech Effective Date, the job classifications will be
consolidated as set forth below. Employees whose rates will increase due to the
job combinations will be rolled in one-half on the BarTech effective date and
one-half twelve (12) months later.
<TABLE>
<CAPTION>
JOB AUG 1 AUG 1 AUG 1 NOV 1 NOV 1
CLASS 1998 1999 2000 2001 2002
<S> <C> <C> <C> <C> <C>
1 13.000 13.000 13.000 13.250 13.500
2 20.138 20.278 20.278 20.528 20.778
3 21.023 21.223 21.223 21.473 21.723
4 22.793 23.113 23.113 23.363 23.613
5 24.563 25.003 25.003 25.253 25.503
</TABLE>
35
<PAGE> 213
APPENDIX "B"
SCHEDULE OF APPRENTICESHIP JOB CLASSES
<TABLE>
<CAPTION>
Trade of Craft 1040 Hour Periods
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Job Class. 1 2 3 4 5 6 7 8 9 10 11 12
21 1 2 4 6 8 10 12 14 16 18 20 21
18 1 2 3 4 6 8 10 12 14 16 18
</TABLE>
36
<PAGE> 214
ITEM 1
LETTER OF AGREEMENT RE: SAFETY BOOTS AND SHOES
The Company will subsidize the cost of Safety Boots or Safety Shoes of a kind
required to be worn by the Company to the extent that an employee may purchase
safety boots or safety shoes at either (a) 25% of the cost of safety boots with
metatarsal protectors (excluding the cost of the protectors) or (b) 50% of the
cost of regular safety boots or safety shoes. In order to purchase a new pair of
boots or shoes, an employee must return his worn out pair.
Safety Equipment
The Company will continue to supply other Safety Equipment, as well as gloves,
when such equipment is required for the performance of the job. His worn out
equipment must be returned before new equipment will be supplied.
ITEM 2
LETTER OF AGREEMENT RE: TEMPORARY EMPLOYEES
The company and the union have agreed to the hiring of temporary employees
during strong business conditions. Such temporary employees will be used to
cover any remaining shifts after overtime has been offered to permanent
employees and as vacation relief. When dealing with unplanned overtime (e.g.
scratch vacancies, rush orders etc) the scheduled operator (temporary or
permanent) will be first eligible for the following shift as per established
past practice.
Notwithstanding the above, temporary employees may be scheduled to work weekend
shifts (Saturday 3-11, 11-7 and Sunday 3-11) before offering the work as
overtime to permanent employees. However, other than specified above, overtime
opportunity will be offered the permanent employees prior to temporary
employees.
Such temporary employees will have no guaranteed hours of work and will be
entitled only to those benefits mandated by the Ontario Employment Standards
Act.
Notwithstanding the provisions of Section 8 of the Basic Agreement, persons
hired as temporary employees will not acquire service and may be terminated by
the Company at any time.
37
<PAGE> 215
It is not the company's intention to use temporary employees as replacements for
full time employees and the number of temporary employees will at no time exceed
twenty percent (20%) of the permanent workforce.
ITEM 3
LETTER OF AGREEMENT RE: MEDICAL EXAMINATIONS
Results of any completed available studies on in-plant air and water quality
control will be reviewed with the Joint Health and Safety Committee at their
regular meetings. Results of medical examination will be made available to an
employee's family physician at the request of the employee.
ITEM 4
LETTER OF AGREEMENT RE: VACATION SCHEDULING
The Company recognizes the desirability of scheduling vacations during the
summer months of the year and the objective will be to schedule as many weeks of
vacation as practical during July and August.
The number of vacation weeks to be scheduled, business conditions, and the
availability of qualified employees for vacation relief are factors which must
be considered in establishing vacation schedules.
The Company, however, will schedule two (2) weeks vacation entitlements during
the period which will commence with the beginning of the week of June 3 and will
end with the week beginning September 16 for all employees having five (5)
years' service or more. If conditions beyond the Company's control prevent it
from carrying out this commitment the Company will discuss the matter with the
Union with the objective of working out suitable alternative arrangements.
38
<PAGE> 216
ITEM 5
LETTER OF AGREEMENT RE: EMPLOYEE ABSENCES
It is an employee's obligation to justify any absence. If sickness is claimed
the Company may require the employee to produce a doctor's certificate.
Failure to notify the Company in advance of any absence shall constitute an
unjustifiable absence.
It is understood that this Letter of Agreement shall apply in all cases of
absence including those absences specifically dealt with under various
provisions of the Basic Agreement.
ITEM 6
LETTER OF AGREEMENT RE: CONTRACTING OUT
SECTION 1
The parties have existing rights and contractual understandings with
respect to contracting out. These include the existing rights and obligations of
the parties which arose before the parties included specific language in their
collective bargaining agreement, the arbitration precedents which have been
established before and since the parties included specific provisions addressing
contracting out in their collective bargaining agreement. In addition, the
following provisions shall be applicable to all new contracting out issues
arising on or after the effective date of this Agreement.
(A) Basic Prohibition
The parties acknowledge the guiding principle that work
capable of being performed by bargaining unit employees shall be
performed by such employees. Accordingly, the Company will not contract
out any work for performance inside or outside the plant unless it
demonstrates that such work meets one of the following exceptions.
(B) Exceptions
39
<PAGE> 217
(1) Work in the Plant
(a) Production, service, all maintenance and repair
work, all installation, replacement and
reconstruction of equipment and productive
facilities, other than that listed in Subparagraph
B-1-b below, all within a Plant, may be contracted
out if (a) the consistent practice has been to have
such work performed by employees of contractors and
(b) it is more reasonable (within the meaning of
paragraph C below) for the Company to contract out
such work than to use its own employees.
(b) Major new construction, including major
installation, major replacement and major
reconstruction of equipment and productive
facilities, at any plant may be contracted out
subject to any rights and obligations of the parties
which, as the beginning of the period commencing
August 1, 1963, are applicable at that plant in the
case of any plant which was in operation on or before
August 1, 1958. With respect to any other plant, the
period commencing date shall be the date five years
after the date on which the plant started operations.
No project shall be deemed to be "major" so
as to fall within the scope of this exception, unless
the Company proves that the project is of so large or
grand a scale, measured in man hours, that bargaining
unit employees could not reasonably be expected to
perform the work in question. The scale and type of
this project shall be considered in relation to the
scale and type of projects which bargaining unit
employees have completed in the past at the same
location. In addition, man hours for the project at
issue shall be considered in comparison to other
projects performed by bargaining unit forces. Total
cost of the project shall be of no relevance
whatsoever.
As regards the term "new construction"
above, except for work done on equipment or systems
pursuant to a manufacturer's warranty, work that is
of a peripheral nature to major new construction,
including major installation, major replacement and
major reconstruction of equipment and productive
facilities and which does not concern the main
component of work shall be assigned to
40
<PAGE> 218
employees within the bargaining unit unless it is
more reasonable to contract out such work taking into
consideration the factors set forth in paragraph (C)
or it is otherwise mutually agreed. For purposes of
this provision, the term "work of a peripheral
nature" shall include but not be limited to
demolition, site preparation, road building, utility
hook-ups, pipe lines and any work which is not
integral to the main component.
(2) Work Outside the Plant
(a) Should the Company contend that maintenance or
repair work to be performed outside the plant or work
associated with the fabricating of goods, materials
or equipment purchased or leased from a vendor or
supplier should be excepted from the prohibitions of
this Section, the Company must demonstrate that it is
more reasonable (within the meaning of paragraph C
below) for the company to contract for such work
(including the purchase or lease of the item) than to
use its own employees to perform the work or to
fabricate the item.
Notwithstanding the above, the Union
recognizes that as part of the Company's normal
business, it may purchase standard components or
parts or supply items, produced for sale generally
("shelf items"). No item shall be deemed a standard
component or part or supply item if:
(i) its fabrication requires the use of
prints, sketches or detailed manufacturing
instructions supplied by the Company or
another company engaged in producing or
finishing steel or producing iron ore or
supplied at the Company's behest or it is
otherwise made according to detailed Company
specifications or those of another company
engaged in producing or finishing steel or
producing iron ore;
(ii) it involves a unit exchange;
(iii) it involves the purchase of motors,
transmissions, convertors or other items
under a core exchange, replacement or
trade-in transaction (whether or not title
to the unit passes to
41
<PAGE> 219
the vendor/purchaser as part of the
transaction).
It is further provided that the performance
of work in connection with the purchase of a shelf
item including, but not limited to, cutting to
length, cable splicing, attaching fixtures and making
adjustments in the size or shape of the item shall be
deemed, for purposes of this Section, to be
maintenance, repair or fabrication work performed
outside the plant and such work shall not fall within
the meaning of "shelf item."
With respect to shelf items, the Company may
purchase goods, materials, and equipment, where the
design of manufacturing expertise involved is
supplied by the vendor as part of the sale.
(b) Production work may be performed outside the plant only
where the Company demonstrates that is unable because of lack
of capital to invest in necessary equipment or facilities, and
that it has a continuing commitment to the steel-making
business. In determining whether there is capital to invest in
particular equipment or facilities, the Company is entitled to
make reasonable judgments about the allocation of scarce
capital resources among its plants represented by the Union
and their supporting facilities.
(3) Mutual Agreement
Work contracted out by mutual agreement of the
parties pursuant to paragraph F below.
(4) Work contracted out, whether inside or outside of the
Plant, may be contracted out provided the contractor employer
is a signatory to this Agreement.
(C) Reasonableness
In determining whether it is more reasonable for the
Company to contract out work than use its own employees the
following factors shall be considered:
(1) Impact on the bargaining unit.
(2) The necessity for hiring new employees shall not be deemed
a
42
<PAGE> 220
negative factor except for work of a temporary nature.
(3) Desirability of recalling employees on layoff.
(4) Availability of qualified employees (whether active or on
layoff) for a duration long enough to complete the work.
(5) Availability of adequate qualified supervision.
(6) Availability of required equipment either on hand or by
lease or purchase, provided that either the capital outlay for
the purchase of such equipment, or the expense of leasing such
equipment, is not an unreasonable expenditure in all the
circumstances at the time the proposed decision is made.
(7) The expected duration of the work and the time constraints
associated with the work.
(8) Whether the decision to contract out the work is made to
avoid any obligation under the collective bargaining agreement
or benefits agreements associated therewith.
(9) Whether the work is covered by a warranty necessary to
protect the Company's investment. For purposes of this
subparagraph, warranties are intended to include work
performed for the limited time necessary to make effective the
following seller guarantees:
(a) Manufacturer guarantees that new or rehabilitated
equipment or systems will perform at stated levels of
performance and/or efficiency subsequent to installation.
(b) Manufacturer guarantees that new or rehabilitated
equipment or systems will perform at stated levels of
performance and/or efficiency subsequent to installation.
Warranties are commitments associated with a
particular product or service in order to assure that seller
representations will be honored at no additional cost to the
Company. Long term service contracts are not warranties for
the purposes of this subparagraph.
43
<PAGE> 221
(10) In the case of work associated with leased equipment,
whether such equipment is available without a commitment to
use the employees of outside contractors or lessors for its
operation and maintenance.
(11) Whether, in connection with the subject work or
generally, the local union is willing to waive or has waived
restrictive working conditions, practices or jurisdictional
rules (all within the meaning of "local working conditions"
and the authority provided by this Agreement).
(D) Contracting Out Committee
(1) At each plant a regularly constituted committee consisting
of not more than four persons (except that the committee may
be enlarged to six persons by local agreement), half of whom
shall be members of the bargaining unit and designated by the
Union in writing to the Plant management and other half
designated in writing to the Union by the Plant management,
shall attempt to resolve problems in connection with the
operation, application and administration of the foregoing
provisions.
(2) In addition to the requirements of paragraph E below, such
committee may discuss any other current problems with respect
to contracting out brought to the attention of the committee.
(3) Such committee shall meet at least one time each month,
unless mutually agreed otherwise.
(E) Notice and Information
Before the Company finally decides to contract out an item of
work as to which it claims the right to contract out, the Union
committee members will be notified. Except as provided in paragraph I
below (Shelf Item Procedure), or in certain cases of production work,
such notice will be given in sufficient time to permit the Union to
invoke the Expedited Procedure described in paragraph H below, unless
emergency situations prevent it. Such notice shall be in writing and
shall be sufficient to advise the Union members of the committee of the
location, type, scope, duration and timetable of the work to be
performed so that the Union members of the committee can adequately
form an opinion as to the reasons for such contracting out. Such notice
shall generally contain the information set forth
44
<PAGE> 222
below:
(1) Location of work.
(2) Type of work:
(a) Service
(b) Maintenance
(c) Major Rebuilds
(d) New Construction
(e) Production
(3) Detailed description of the work.
(4) Crafts or occupations involved.
(5) Estimated duration of work.
(6) Anticipated utilization of bargaining unit forces
during the period.
(7) Effect on operations if work not completed in timely
fashion.
Either the Union members of the committee or the Company
members of the committee may convene a prompt meeting of the committee.
Should the Union committee members believe discussion to be necessary,
they shall so request the Company members in writing within five (5)
days (excluding Saturdays, Sundays and holidays) after receipt of such
notice and such a discussion shall be held within three (3) days
(excluding Saturdays, Sundays and holidays) thereafter. When
insufficient time is available to meet the time limits above, either
party may request a meeting to discuss the issues in an attempt to
resolve them. The Union members of the committee may include in the
meeting the Union representative from the area in which the problem
arises. At such meeting, the parties should review in detail the plans
for the work to be performed and the reasons for contracting out such
work. Upon their request, the Union members of the committee will be
provided any and all information in the
45
<PAGE> 223
Company's possession relating to the reasonableness factors set forth
in Paragraph C above. Included among the information to be made
available to the committee shall be the opportunity to review copies of
any relevant proposed contracts with the outside contractor. The
Management members of the committee shall give full consideration to
any comments or suggestions by the Union members of the committee and
to any alternate plans proposed by Union members for the performance of
the work by bargaining unit personnel. Except in emergency situations,
such discussions, if requested, shall take place before any final
decision is made as to whether or not such work will be contracted out.
Should the Company committee members fail to give notice as
provided above, then not later than thirty (30) days from the date of
the commencement of the work a grievance relating to such matter may be
filed under the grievance and arbitration procedure. Should it be found
in the arbitration of a grievance alleging a failure of the Company to
provide the notice or information required under this paragraph E that
such notice or information was not provided, that the failure was not
due to an emergency requirement, and that such failure deprived the
Union of a reasonable opportunity to suggest and discuss practicable
alternatives to contracting out, the Arbitrator shall have the
authority to fashion a remedy, at the Arbitrator's discretion, that the
Arbitrator deems appropriate to the circumstances of the particular
case. Such remedy, if afforded, may include earnings to grievants who
would have performed the work, if they can be reasonably identified.
(F) Remedy for Repeated Notice Violations
Notwithstanding any other provision of this Agreement, where,
at a particular location, it is found that the Company (i) committed
violations of paragraph E on more than three occasions in any period of
three consecutive years or (ii) violated a cease and desist order
previously issued by the Arbitrator in connection with a violation of
paragraph E, the Arbitrator's remedy shall include the following:
(1) earnings and benefits to employees who would have
performed the work if they can reasonably be identified and, if not,
then to employees who might arguably have performed the work; and
(2) an award of costs to the Union, including but not limited
to, reasonable attorney's fees, if any lost time expenses reasonably
incurred by the Union in preparing and presenting the case, the Union's
share of the Arbitrator's
46
<PAGE> 224
fees, the Union's transcript expenses, if any; and
(3) where a cease and desist order had previously issued, a
contempt charge of sufficient amount, in the Arbitrator's judgment, to
bring the Company into compliance with the Arbitrator's order.
(G) Mutual Agreement and Disputes
The committee may resolve the matter by mutually agreeing that
the work in question either shall or shall not be contracted out. Any
such resolution shall be final and binding but only as to the matter
under consideration and shall not affect future determinations under
this Section.
If the matter is not resolved, or if no discussion is held,
the dispute may be processed further in accordance with either of the
following:
(1) By filing, within thirty (30) days of receipt of the
Company's notice, a grievance relating to such matter under the
grievance and arbitration procedure.
(2) By submitting the matter to the Expedited Procedure set
out in paragraph H below.
(H) Expedited Procedure
In the event that either the Union or Company members of the
committee request an expedited resolution of any dispute arising under
this Section, except paragraph I (Shelf Item Procedure), it shall be
submitted to the Expedited Procedure in accordance with the following:
(1) In all cases except those involving day-to-day maintenance
and repair work and service, the Expedited Procedure shall be
implemented prior to letting a binding contract.
(2) Within three (3) days (excluding Saturdays, Sundays and
holidays) after either the Union or Company members of the committee
determine that the committee cannot resolve the dispute, either party
(chairman of the grievance committee in the case of the local union and
the manager of labor relations in the case of the Company) may advise
the other in writing that it is invoking this expedited procedure.
47
<PAGE> 225
(3) An expedited arbitration must be scheduled within three
(3) days (excluding Saturdays, Sundays and holidays) of such notice and
heard at a hearing commencing within five (5) days (excluding
Saturdays, Sundays and holidays) thereafter. The Arbitrator shall hear
the dispute and, if no Arbitrator is available to hear the dispute
within five (5) days, another arbitrator shall be selected by mutual
agreement of the District Director of the Union and the Vice President
Human Resources of the Company.
(4) The arbitrator must render a decision within forty-eight
(48) hours (excluding Saturdays, Sundays and holidays) of the
conclusion of the hearing. Such decision shall not be cited as a
precedent by either party in any future contracting out disputes.
(5) Notwithstanding any provision of this Agreement any case
heard in the Expedited Procedure before the work in dispute was
performed may be reopened by the Union in accordance with this
paragraph if such work, as actually performed, varied in any material
respect from the description presented in arbitration. The request to
reopen the case must be submitted within 7 days of the date on which
the Union learned of the variance and shall contain a summary of the
ways in which the work as actually performed differed from the
description presented in arbitration. Upon receipt of a request to
reopen, the Arbitrator shall schedule a hearing in accordance with
these procedures. In a case reopened pursuant to this paragraph, the
Arbitrator shall determine whether the work in dispute, as it actually
was performed, violated the provisions of this Article and, if so, the
remedy. No prior decision in the matter shall be given any weight.
(I) Shelf Item Procedure
(1) No later than June 1, 1999, and except as provided herein,
annually thereafter, the Company shall provide the Union members of the
committee with a list and description of anticipated ongoing purchases
of each item which the Company asserts to be a shelf item within the
meaning of paragraph B-2-a above. If the Union members of the committee
so request, the list shall not include any item included on a previous
list where the status of that item as a shelf item has been expressly
resolved. Within sixty (60) days of the submission of the list, either
the Union members or the Company members may convene a meeting of the
committee to discuss and review the list of items and, if requested,
the facts underlying the Company's assertion that such items are shelf
items.
48
<PAGE> 226
(2) The committee may resolve the matter by mutually agreeing
that the item in question either is or is not a shelf item. With
respect to any item as to which the Union members of the committee
agree with the Company's claim that it is a shelf item, the Company
shall be relieved of any obligation to furnish a contracting out notice
until the May 1 next following such agreement.
(3) If the matter is not resolved, any dispute may be
processed further by filing, within thirty ( 30) days of the date of
the last discussion, a grievance in Step 2 of the complaint and
grievance procedure. Such a grievance shall include all items in
dispute. However, where a number of items raise the same or similar
issues, those items may be grouped in a single class or category.
(4) An item which the Company claims to be a shelf item, but
which was not included on the list referred to above because no
purchase was anticipated, shall be listed and described on a
contracting out notice provided to the Union not later than the
regularly scheduled meeting of the contracting out committee next
following purchase of the item. Thereafter, the parties shall follow
the procedures set forth in paragraphs 2 and 3 above.
(5) The Union may file a grievance in accordance with
paragraphs F or G of this Article with respect to any item of
maintenance, repair work or work associated with the fabrication of
goods, material or equipment performed outside the plant
notwithstanding the inclusion of such item on the shelf item list
previously furnished to the Union by the Company.
(J) Annual Review
Commencing on or before October 1 of each year the Company
Committee members shall meet with the Union Committee members for the
purpose of (i) reviewing all work whether inside or outside the plant
which the Company anticipates may be performed by outside contractors
or vendors at some time during the following calendar year, (ii)
determining such work which should be performed by bargaining unit
employees and (iii) identifying situations where the elimination of
restrictive practices would promote the performance of any such work by
bargaining unit employees. The Union Committee members shall be
entitled in conducting this study to review any current or proposed
contracts concerning items of work performed for the company by outside
contractors and vendors and shall keep such information confidential.
49
<PAGE> 227
By no later than November 1 of each year these Local Union and
Company Committee members shall jointly submit a written report to the
Co-Chairmen of the Negotiating Committee or their designees describing
the results of this review. Specifically, the report should list (a)
all items of work which the parties agree will be performed by
bargaining unit employees during the following year, (b) all items of
work which the parties agree should be performed by outside contractors
and vendors, and (c) those items on which the parties disagree. If the
parties disagree, the report will state the reason for such
disagreements.
As to individual items of work, the Co-Chairmen of the
Negotiating Committee may (a) affirm the plant recommendation, (b)
disagree with respect to the plant recommendation as to specific items
and either (i) refer their dispute to arbitration under a procedure to
be established by the parties and the Arbitrator or (ii) refer the
matters back to the plant without resolution in which event the
specific disputes will be handled under the provisions of this section
at the time they may arise.
The Union agrees that during the term of this Agreement, the
Company may purchase billets, blooms, bars, ingots and rods, provided
the purchase of such materials/products is for sound business reasons,
and/or the Company cannot produce such materials/products or cannot
produce such product at acceptable levels of quality.
(K) District Director/Vice-President Human Resources
It is the intent of the parties that the members of the joint
plant contracting out committee shall engage in discussions of the
problem involved in this field in a good-faith effort to arrive at
mutual understanding so that disputes and grievances can be avoided. If
either the Company or the Union members of the committee feel that this
is not being done, they may appeal to the District Director of the
Union who has jurisdiction of the plant in questions and the
appropriate representative of the company headquarters for review of
the complaint about the failure of the committee to properly function.
Such appeal shall result in a prompt investigation by the District
Director or his designated representative and the Company's Vice
President of Human Resources or his designated representative for such
review. This provision should in no way affect the rights of the
parties in connection with the processing of any grievance relating to
the subject of contracting out.
50
<PAGE> 228
(L) No testimony offered by an outside contractor may be considered in
any proceeding alleging a violation of this Article unless:
(1) The party calling the contractor provides the other party
with a copy of each contractor document to be offered at least
forty-eight (48) hours (excluding Saturdays, Sundays and
holidays) before the commencement of the hearing; and
(2) The party calling the contractor provides or causes the
contractor to
provide the other party, upon request, with copies of all
relevant documents in the contractor's possession.
ITEM 7
LETTER OF AGREEMENT RE:
JOINT EMPLOYEE REFERRAL PROGRAM
The Union and the Company wish to foster and maintain an attitude of assistance
towards problems when encountered by an employee, or member of his/her immediate
family. Therefore, the parties agree to establish and maintain an employee
assistance program designed to direct the appropriate outside resources to:
1. Prevent or resolve personal, social or health problems which may have a
negative impact on work performance.
2. Enable employees to improve their quality of life, and
3. Assist troubled employees in arranging for appropriate outside
resources.
ITEM 8
LETTER OF AGREEMENT RE: HUMANITY FUND
The Company will contribute one (1) cent per hour worked to the United
Steelworkers of America Humanity Fund and such contribution will be made for
straight time hours worked only and will not be made for overtime hours or
premium hours. Hours not worked, even though compensated in accordance with a
specific provision of the
51
<PAGE> 229
agreement and deemed to be hours worked for other purposes, shall not be
considered to be hours worked for the purpose of this Fund. Contributions to the
Fund will be made quarterly, in the middle of the month immediately following
completion of each calendar quarter year, and such contributions remitted to the
United Steelworkers of America National Office.
This Fund is to be utilized strictly for the purposes specified in the
Steelworkers Humanity Fund Inc. Letters Patent, dated March 12, 1986.
ITEM 9
LETTER OF AGREEMENT RE: TUITION SCHOLARSHIPS
The Company agrees to provide up to $4000 total per year to be used for
scholarships for employees' dependent children enrolled in an accredited
Canadian post secondary institution. A joint Company/Union Committee will (the
Scholarship Committee) will allocate the fund.
ITEM 10
LETTER OF AGREEMENT RE: WORKCLOTHES
The Company will provide and launder workclothes for all permanent employees
(shirt, pants or coveralls).
ITEM 11
WORKFORCE FLEXIBILITY
---------------------
The parties recognize that employment security and productivity
improvement is inseparably linked to attaining sustained profitability. These
issues must be addressed on balance and in relationship to each other.
Accordingly, the parties agree to jointly maximize the effective
utilization of the workforce and equipment and achieve continuous improvement by
implementing new and innovative approaches to the way work is performed.
52
<PAGE> 230
The parties further recognize that one of the major barriers to
productivity is the continued application of restrictive and unnecessary past
practices, local agreements, and local working conditions ("practices"). Based
on the Company's agreement to the Employment Security provisions of this
Agreement, the Union commits to eliminate those "practices" which are
inconsistent with the parties' desire to redesign and restructure work so that
it can be performed in the most efficient and effective manner.
Accordingly, the parties commit to eliminate those "practices."
The parties further agree that in order to maximize productivity goals
and achieve a philosophy of continuous improvement the manner in which work has
historically been performed must be changed to adopt new innovative work
methods, job responsibilities, and assignments of work. Trade and Craft
positions must change into a multicraft approach. Training requirements and
programs must be developed and implemented to obtain competitiveness in the
maintenance forces. Those employees unable to achieve full Multicraft status
will still be expected to perform in a more flexible, expanded role consistent
with safety and their qualifications and abilities. Non-craft employees may,
consistent with standardized safety practices and the employee's qualifications
and abilities, assist Trade and Craft employees in maintenance duties.
It is the agreed-upon goal of the parties to achieve a rapid conversion
to Maintenance Technician Mechanical ("MTM") and Maintenance Technician
Electrician ("MTE") positions during the term of this agreement. In addition,
production employees must broaden their skills, become more flexible, and work
as assigned to achieve world class competitive status. Training programs will be
developed for each identified need.
The parties agree to reduce the number of job classifications by the
process of elimination and/or combination. The consolidation of job
classifications shall take place in the most expeditious manner possible and
without putting an undue work burden on employees or increasing the inherent
hazards of the job. All past practices, local agreements, and local working
conditions (other than overtime equalization agreements) will be eliminated that
conflict with the stated goal. All overtime equalization agreements shall
include provisions that require participants to be qualified for the overtime
opportunity. The local parties shall also develop a method to share the
administrative duties associated with the equalization process. Where overtime
equalization agreements do not exist, such agreements shall be negotiated within
sixty (60) days of the effective date of the 1998 Agreement.
Within ninety (90) days of the effective date of this Agreement each
Local Union will prepare a list of past practices, local agreements and/or local
working conditions,
53
<PAGE> 231
which it believes do not restrict the productivity, flexibility or efficiency of
the plant but produce a material benefit to bargaining unit employees. The
parties agree to adopt any such past practices, local agreements or local
working conditions which meet the standard set forth in the preceding sentences.
Such new agreements, if any, must be reduced to writing and signed by an
authorized representative of each party. Any disputes arising from this process
may be submitted to the grievance and arbitration procedure.
Nothing in this Agreement will be considered as limiting the Company's
ability to change job duties or assign employees to duties. The Company may
assign employees to any duty for which they are qualified and for any length of
time consistent with the other terms and conditions of the Agreement. The
ability of the Company to maintain a stable work force and an efficient and
profitable operation is dependent upon workforce flexibility. An employee may
not refuse to perform work or to take an assignment (consistent with the safety
relief provisions), which the employee is qualified to perform. The Company will
not assign an employee in a discriminatory or arbitrary manner.
The Company may adopt alternative work schedules consisting of a ten
(10) or twelve (12) hour per day scheduling with the approval of the Local Union
President/Unit Chairperson . No overtime pay shall be required except for hours
worked in excess of forty (40) hours per week or for hours worked beyond the
alternative scheduled daily hours. There will be no duplication or pyramiding of
overtime.
ITEM 12
PARTNERSHIP
-----------
SECTION 1 - PURPOSE AND INTENT
The Union and the Company agree that their goal is to attain the
objectives set forth in this Article. They also agree that these goals can best
and perhaps only be accomplished if decision-making authority is shared at all
levels of the enterprise. Accordingly, the parties have agreed to work toward
the objective of establishing a strategic partnership.
The purposes of this Article are to provide a framework for Union and
employee participation for full and continuing access by appropriate Union
representatives to all books, records, and information relevant to the purpose
and objectives of this memorandum, and for the establishment of a comprehensive
training and education
54
<PAGE> 232
program, all as further described herein.
Further, the parties recognize that the changes contemplated by this
Article must evolve, especially at the plant level. Accordingly, the local
parties must have the flexibility to design participative structures that best
meet their needs at any given time and that can change as changed circumstances
and experience warrant.
SECTION 2 - OBJECTIVES
In furtherance of their understanding on long-term employment security,
the parties have agreed to pursue the following objectives and commitments:
(A) Increasing the quality, profitability, and competitiveness of
the enterprise and its products;
(B) Assuring that Union representatives and employees receive full
and early access to information concerning Company decisions
affecting their working lives, including early notification
concerning significant Company transactions, such as mergers,
acquisitions, dispositions, joint ventures, etc.;
(C) Creating a less authoritarian, safer, fairer, more equitable
and less stressful work environment;
(D) Responding to technological change through joint mechanisms
which will cause technology to serve the interest of both the
enterprise and the workers affected by the change;
(E) Reduction of all costs;
(F) Increasing worker responsibility and control over the
workplace;
(G) Continual training, education, and up-grading of the skills of
the work force;
(H) Creation of better jobs through the development of higher
skills;
(I) Ensuring that the Company operates responsibly with respect to
the environment and other areas of public policy; and
55
<PAGE> 233
(J) Acceptance and support by the Company of the Union and
acknowledgment of its role as an essential vehicle in
attaining these objections.
SECTION 3 - FULL AND CONTINUING ACCESS TO INFORMATION
Appropriate Union representatives (including consultants and advisors)
shall have access to financial and operational information that is relevant to
the development and implementation of the Business Plan as well as access to
Company employees and advisors who are responsible for such information.
As used in this Article, the term "Business Plan" shall refer to the
Company's short-term Business Plan and long-term strategic and operating plan,
including such elements as those involving products, pricing, markets, capital
spending, short and long-term cash flow forecasts, and the method and manner of
funding or financing the Business Plan. Without limiting the foregoing, the
Company shall provide the Union with early notification of any contemplated
significant transactions involving mergers, acquisitions, and continuing updates
regarding dispositions, joint ventures, and new facilities to be constructed or
established by the Company, its subsidiaries, joint ventures, or other entities
in which the Company has a financial interest.
For its part the Union will provide the Company with appropriate
information regarding Union activities, organizational changes, bargaining and
political objectives, and other plans or developments that might affect the
Company.
The use of the information contemplated by this section, will be
covered by a confidentiality agreement in form and substance satisfactory to the
parties.
SECTION 4 - COMPREHENSIVE TRAINING AND EDUCATION PROGRAM FOR COMMITTEE MEMBERS.
The parties recognize that the goals of this Article can be attained
only by a commitment to comprehensive and ongoing training and education.
Accordingly, the Partnership Committee and Joint Leadership Committees
(established below) shall take rigorous steps to establish training programs
necessary to the purposes of this Article. All training shall be focused on the
following objectives: the long-range goals of the Company and Union;
problem-solving techniques; communication activities; skills, attitudes,
behaviors and techniques for increasing the effectiveness of participation and
involvement activities; and methods for determining and achieving joint goals.
Without in any way limiting the comprehensiveness or continuity of the training
and education required by this Article, such activities will include at least
the following minimum
56
<PAGE> 234
standards and guidelines.
(A) Both Company and Union representatives shall receive
appropriate training by their respective organizations in how
they can accomplish their organization's goals and joint goals
through participation and involvement activities, and such
training shall not exceed the following levels:
(1) All members of Joint Leadership Committees and
Coordinators and Assistants: five (5) days per year.
(2) All members of the Joint Advisory Committees and the
Joint Problem Solving Teams: five (5) days per year.
(3) All other leadership figures of the local parties to
this Article: five (5) days per year.
(B) The Partnership Committee shall sponsor a program for at least
annual orientation and appropriate training of all members of
joint committees created under this Article.
(C) Each Joint Leadership Committee shall develop a training
program designed to increase the skills of bargaining unit and
non-bargaining unit employees concerning the subjects
identified in this Section 4. The training programs shall be
jointly developed and shall commence with instruction on how
best to pursue organizational objectives through use of the
partnership mechanisms described in Section 5, such
instruction to satisfy the following minimum levels: for
bargaining unit employees, a one-day Union-taught orientation
session; for front line supervisors, managers, and other
excluded personnel, a one-day Management-taught orientation
session.
(D) The Company shall fund all training programs referred to in
this Section, including employee time spent in such training,
as though it were time worked and such time shall be paid at
the employee's average rate of earnings as determined for
vacation pay.
(E) Training referred to in this Section, other than Union
training, shall be jointly developed and implemented.
(F) The Union shall notify the Company of its intent to provide
Union
57
<PAGE> 235
training and shall review the objectives of Union training
with the Company.
SECTION 5 - PARTNERSHIP MECHANISMS
(A) Joint Strategic Partnership Committee
(1) Appointment and Composition
A Joint Strategic Partnership Committee ("Partnership
Committee") shall be established, consisting of
members appointed by the Chairman of the Union
Negotiating Committee and an equal number of
Management representatives appointed by the Company.
Members of this Committee shall be active employees
of the USWA or the Company.
(2) Meetings
The Partnership Committee shall meet at least
quarterly.
(3) Information
The Partnership Committee shall receive detailed and
in-depth reports regarding all significant business
and labor matters relating to: the Business Plan,
technological changes and plans; manpower planning;
safety and health measures; customer evaluation;
major organizational issues; facilities utilization;
and other significant issues and concerns raised by
the members of the Committee.
(4) Reports
The Partnership Committee shall report to Local Union
and Management personnel (including all members of
Joint Leadership or Joint Advisory Committees) on
matters such as: activities of the Partnership
Committee, major issues being considered by the
Partnership Committee and information relevant
thereto; other information to keep the Local Union
58
<PAGE> 236
leadership and Management informed and capable of
further discussion of issues related to the
enterprise.
(5) Access to Board of Directors
The Union members of the Partnership Committee (and
their advisors) may appear before and be heard by the
Board of Directors at appropriate times on matters of
concern to the Partnership Committee, and such access
shall be given prior to
the Board reaching a decision on such matters.
(6) Role of the Partnership Committee
(a) The Partnership Committee shall have the
authority and responsibility to reach
agreement on issues relating to: the
objectives set forth in Section 2 of this
Article; issues or programs arising under
Section 5 B(4) of this Article.
(b) Identify areas and activities for special
emphasis on improvement, and work with the
appropriate Joint Leadership Committees in
implementing plans for such improvements.
(c) Identify and address inter-department or
inter-divisional barriers which are impeding
improvement.
(d) Monitor the management of employees
available as a result of productivity
improvements and the value received from
their efforts.
(B) Joint Leadership Committees
(1) Appointment and Composition
Joint Leadership Committees shall include at least
three (3) union representatives (the Local Union
President/Unit Chairperson and two (2) other members
as he/she shall appoint) and three (3) Management
representatives.
59
<PAGE> 237
(2) Meetings
The Joint Leadership Committee shall meet at least
monthly. At all Joint Leadership Committee meetings,
the parties shall engage in an open and candid
exchange of information and ideas.
(3) Information
At each meeting, the Joint Leadership Committee shall
review reports and activities of the Joint Strategic
Partnership Committee and aspects of the Business
Plan as it impacts the areas of responsibility of the
Joint Leadership Committee, such as each month's
performance of the plant, including cost performance;
quality performance, and shipments; the production
plan for the next month; manpower planning;
investment plans and performance compared to those
plans; safety and health performance; activities and
needs of any Joint Advisory Committees or Problem
Solving Teams; and other issues or concerns of
interest to the parties.
(4) Scope of Responsibility
(a) Technological Change
As used herein, the term "technology" shall
include machinery, equipment, controls,
materials, and software; the phrase
"technological change" shall refer to
introductions of new technology, changes in
existing technology, or both.
A Joint Leadership Committee shall establish
a new technology development and
implementation program (Technological Change
Program) which shall include the following
elements:
(i) Advance Notice
The Company shall provide the Joint
Leadership Committee advance notice
of any proposed technological change
no later than the beginning of the
60
<PAGE> 238
Company's process for evaluating such a
proposal. Such notice shall be in writing,
shall to the extent and when available
contain supporting information outlined
below, and shall include updates of new or
revised information necessary for full and
current understanding of the proposed
change. In the case of emergency
technological changes, the Company shall
give the maximum notice and information
possible under the circumstances.
(ii) Within the time periods noted above, the
Company shall give the Joint Leadership
Committee the following information:
A description of the purpose and function of
the technological change, and how it would
fit into existing operations and processes;
the estimated cost of the technology, a cost
justification of it; and the proposed
timetable for it;
disclosure of any service or maintenance
warranties or contracts provided or required
by the vendor (if any);
the number of type of jobs (both inside and
outside the bargaining unit) which would be
changed, added, or eliminated by the
technological change;
the anticipated impact on the skill
requirements of the work force;
details of any training programs connected
with the new technology (including duration,
content, and who will perform the training);
an outline of other options which may be
considered before formulating proposed
changes; and
the expected impact of the change on job
content, pace of work, safety and health,
training needs, and contracting out.
61
<PAGE> 239
Union representatives on the Joint
Leadership Committee may request and receive
access to Company personnel knowledgeable
about any proposed technological change
(including outside consultants) to review,
discuss, and receive follow-up information
concerning any technological changes
proposed by the Company or Union or their
effects on the bargaining unit.
The use of the information contemplated by
this subsection will be covered by a
confidentiality agreement in form and
substance satisfactory to the parties.
(iii) With respect to any Company decision whether
to make a technological change, Union
representatives on the Joint Leadership
Committee may initiate discussion and
consideration of technological changes that
are new or different from those proposed by
the Company. The view expressed by the Union
members of the Joint Leadership Committee
shall be considered by the Company.
(b) Joint Advisory Committees
(i) Joint Advisory Committees shall be developed
in each operating area. The Joint Advisory
Committee co-chairs shall be the Grievance
Committee-persons responsible for the Area
in which the Joint Advisory Committee is
established and Manager with
responsibilities for operations. The Joint
Advisory Committee shall, in addition,
include other as the co-chairs deem
appropriate. The Joint Advisory Committees
may, by agreement, invite additional persons
as the Committee may deem helpful to its
purposes. The Local Union President/Unit
Chairperson and the Company Vice President
with operational responsibility for the Area
involved may attend Joint Advisory Committee
meetings as they deem necessary.
62
<PAGE> 240
(ii) Joint Advisory Committees shall
study matters assigned to them by
the Joint Leadership Committee or
as they may agree upon and shall
report any findings back to the
Joint Leadership Committee. Such
matters may relate to, among other
things, continuous improvement in
quality, customer satisfaction,
costs, job enrichment/enhancement,
safety, and improved worklife. Upon
direction of a Joint Leadership
Committee, Joint Advisory
Committees may: (i) devise
measurements and goals to meet
plans adopted by the Joint
Leadership Committee; and (ii) be
responsible for communicating
plans, results, business
information, and overall employee
involvement updates to the
employees in their Area and to the
Joint Leadership Committee.
(iii) Joint Advisory Committees shall
receive the resources (including
problem solving training and
information) necessary for them to
determine the best solution to
specific problems. They shall not
have the authority to modify,
detract, add to or delete any
portion of the Agreement.
(c) Problem Solving Teams
By joint agreement, the Joint Leadership
Committees and the Joint Advisory Committees
may create one or more Problem Solving Teams
to study and report back on specific
problem. They shall receive the resources
(including problem solving training and
information) necessary for them to determine
the best solution to specific problems.
SECTION 6 - EMPLOYEE COMMUNICATIONS
Critical to the accomplishment of the objectives of this Article is
timely, ongoing, and unimpeded communication between and among the committees
created by this Agreement and employees. Accordingly, the parties agree as
follows:
The results of any meetings of Joint Committees created by this Article
including
63
<PAGE> 241
the information and opinions exchanged, the conclusions reached, and the level
of participation achieved may be conveyed, where appropriate, to all employees
through their working groups by the Union representatives and department
supervision.
SECTION 7 - SAFEGUARDS AND RESOURCES
(A) Except as may be approved by the Partnership Committee, no
joint committee may amend or modify the Agreement.
(B) No committee authorized by this Article may affect any action
with respect to contractual grievances.
(C) Services on any Joint Leadership, Joint Advisory, or Problem
Solving Committee or Team created under this Article shall be
voluntary.
(D) The Union will strive to be a full participant in the
processes and mechanisms established by this Article and
bargaining unit employees will be encouraged and expected to
perform their duties within the parameters established
hereunder. However, no employee may be disciplined or
discharged for lack of commitment to participate in the
involvement processes.
(E) Employee participation and training shall normally occur
during the normal work hours and the employees shall suffer no
loss of earnings as a result thereof.
(F) No committee established under this memorandum may recommend
or effect the hiring, discipline, or discharge of any
employee.
(G) At the joint invitation of the Co-chairs of any committee
created hereunder, the following Union representative may
attend a committee meeting: the Union's District Director for
the district in which the committee is located or his
designee; Union headquarters personnel or otherwise Union
experts. All outside experts, advisors or consultants shall be
jointly requested.
(H) All meeting time and necessary and reasonable expenses of
joint committees shall be paid for by the Company and no
employee attending such meetings shall suffer a loss of
earnings as a result. The parties will develop procedures for
handling expenses.
64
<PAGE> 242
(I) Union members on joint committees shall be entitled to:
adequate opportunity on Company time to caucus for purposes of
study, preparation, consultation, and review, and shall,
consistent with sub-paragraph 7-H, have their expenses
defrayed by the Company. Requests for caucus time shall be
made to the appropriate Company Management representative in a
timely manner, and such requests shall not be unreasonably
denied.
(J) Joint committees may agree to employ experts from within or
outside the Company as consultants, advisors, instructors,
etc., and such experts shall be jointly selected and assigned.
ITEM 13
EMPLOYMENT SECURITY PLAN
SECTION 1 - EFFECTIVE DATE
This Employment Security Plan (ESP) shall become effective for eligible
employees, as defined in Paragraph C below, the first full week following the
effective date of this Agreement.
SECTION 2 - GUARANTEE
(A) Employees eligible for this ESP may not be laid off during the
term of this Agreement except as provided below. If a disaster
occurs, the ESP will be terminated. For the purposes of this
agreement, disaster is defined as:
(1) A petition in bankruptcy for reorganization or
liquidation is filed, and the Court finds that it is
necessary to reject this agreement and issues an
order under the bankruptcy laws authorizing such
rejection.
(2) Severe financial difficulties short of bankruptcy
filing. Such financial difficulties must represent a
clear and present danger to the Company's viability.
Termination can occur under this paragraph only by
mutual agreement of the parties.
(3) An unexpected or unplanned major plant and/or
facility outage which
65
<PAGE> 243
is anticipated to necessitate a cessation of
operations in excess of thirty (30) days. Such
disaster shall only affect the employment security
guarantee for those employees directly impacted by
the outage at the plant in which it occurs.
(B) In addition, in the event of a strike, or work stoppage by
employees covered by the Agreement, the ESP will be suspended
for the duration of such strike or work stoppage.
(C) The guarantee provided to active eligible employees by this
ESP is defined as the opportunity to earn forty (40) hours of
pay (including hours paid for but not worked, work
opportunities declined by the employee, disciplinary time off,
absenteeism, report-off for Union business, overtime pay and
premium pay), during any payroll week. An eligible employee on
approved leave of absence or medically laid off during any
payroll week shall be considered as having been provided
employment security during that week, it being understood that
the pay, if any, that such an employee is entitled to receive
while on approved leave of absence or medical layoff is that
provided by applicable law or the labor agreement, not the
earning opportunity set forth in the ESP.
SECTION 3 - ELIGIBILITY
(A) All employees with at least two years of corporate continuous
service and who are active as of the effective date of this
Agreement are eligible for the protections of this ESP. An
active employee who does not have at least two years of
continuous service as of the effective date of this Agreement
shall be eligible for this ESP upon attaining two years of
continuous service, unless he is on layoff at that time, in
which case he shall become eligible when he returns to active
employment. An employee with two years of service and who is
inactive as of the effective date of this Plan shall become
eligible for this ESP upon his return to active status.
(B) Any full-time employee hired after the effective date of this
ESP shall be eligible for this ESP under its provisions upon
attaining two years of continuous service, unless he is on
layoff at that time, in which case he shall become eligible
when he returns to active employment.
(C) Employees eligible for employment security must continue to
fully satisfy
66
<PAGE> 244
the terms and conditions of employment.
SECTION 4 - IMPLEMENTATION
The local parties will meet for the purpose of reaching agreement on
the implementation of this ESP, including the placement of employees who would
have been laid off but for this ESP. Those agreements shall become part of this
ESP, and shall be consistent with the workforce flexibility provisions of the
Agreement. Such agreements may not be changed except as agreed to by the local
plant implementation committee.
SECTION 5 - RATE OF PAY
An employee who would have been laid off but for this ESP and who is
working in a new job assignment shall receive the higher of:
(A) the established rate of pay, including applicable incentives
or bonuses, of the job performed, or
(B) the regular rate of pay for the employee's incumbent job,
including applicable incentives or bonus.
SECTION 6 - SAFEGUARDS
If the Plan is temporarily, partially or permanently terminated or if
any employee is laid-off as a result of an ESP exception during the term of this
Agreement, the following shall apply:
(A) a SUB Plan identical to the SUB Plan referenced in the 1993
RESI BLA shall be deemed to exist and be 100% funded as of the
date of such an event;
(B) the Company shall be required to begin to accrue liability and
make cash contributions as required by the SUB Plans; and
(C) the SUB plan shall be amended to allow eligibility for all
employees who may be laid-off.
SECTION 7 - EXISTING RIGHTS
Except as expressly provided in this ESP, nothing in the ESP shall
interfere with,
67
<PAGE> 245
limit, detract from, or adversely affect in any way the rights and obligations
of the parties set forth in other provisions of the Agreement. The Union
recognizes, however, that management may assign work without contractual
limitations to employees who would have been laid-off for this ESP and in
accordance with Section 4 of this Article.
ITEM 14
NEUTRALITY
----------
SECTION 1 - INTRODUCTION
Over the years, the Company and the Union have developed a constructive
and harmonious relationship built on trust, integrity and mutual respect. The
Company places a high value on the continuation and improvement of its
relationship with the Union.
SECTION 2 - NEUTRALITY
To underscore the Company's commitment in this matter, it agrees to
adopt a position of neutrality in the event that the Union seeks to represent
any non-represented employees of the Company.
Neutrality means that, except as explicitly provided herein, the
Company will not in any way, directly or indirectly, involve itself in efforts
by the Union to represent its employees, or efforts by its employees to
investigate or pursue unionization.
The Company's commitments to remain neutral as outlined above shall
cease if the Company demonstrates to an Arbitrator under Section 11 herein that
during the course of an organizing campaign, the Union or its agents is
intentionally or repeatedly (after having the matter called to the Union's
attention) materially misrepresenting to the employees the facts surrounding
their employment or is conducting a campaign demeaning the integrity or
character of the Company or its representatives.
SECTION 3 - NOTICE POSTING
Upon written notification by the Union that an organizing campaign is
in progress, the Company shall post on all bulletin boards where notices are
customarily posted a notice which shall read as follows:
"NOTICE TO EMPLOYEES
68
<PAGE> 246
We have been formally advised that the United Steelworkers of
America is conducting an organizing campaign among certain of our
employees. This is to advise you that:
1. The Company does not oppose collective bargaining or
the unionization of our employees.
2. The choice of whether or not to be represented by a
union is yours alone to make.
3. We will not interfere in any way with your exercise
of that choice."
SECTION 4 - HIRING
(A) For all hiring in a Covered Workplace in any unit(s)
appropriate for bargaining (prior to the existence of a
collective bargaining agreement), the Company shall treat any
job opportunities in the unrepresented unit(s) at such
facility as though they were permanent vacancies under the
Agreement and fill them in accordance with the principles
embodied in the Agreement's Seniority Article.
(B) In determining whether to hire any applicant at a Covered
Workplace (whether or not such applicant is an employee
covered by this Labor Agreement), the Company shall refrain
from using any selection procedure which has the effect of
disadvantaging applicants based on their attitudes or behavior
toward unions or collective bargaining.
SECTION 5 - SCOPE OF THE UNIT
As soon as practicable after notification by the Union that it intends
to seek recognition at a Covered Workplace, the parties will meet to attempt to
reach an agreement on the appropriate unit. In the event that the Company and
the Union are unable to agree on an appropriate unit, either party may refer the
matter to the Dispute Resolution Procedure contained in Section 11 of this
Article.
SECTION 6 - ACCESS TO COMPANY FACILITIES
Upon written request, the Company shall grant access to its facilities
to the Union
69
<PAGE> 247
for the purpose of distributing literature and meeting with unrepresented
Company employees. Distribution of Union literature shall not compromise safety
or production. Distribution of Union literature inside Company facilities and
meetings with unrepresented Company employees inside Company facilities shall be
limited to non- work areas during non-work time.
SECTION 7 - ACCESS TO EMPLOYEE LIST
Upon written request, the Company shall immediately provide the Union
with a complete list of all of its employees who are eligible for union
representation. Such list shall include each employee's name and their home
address. Thereafter, the Company will provide updated lists monthly.
SECTION 8 - UNION RECOGNITION
(A) If, at any time following the existence at a Covered Workplace
of a representative complement of employees in any unit
appropriate for collective bargaining, the Union demands
recognition, the parties will request that a mutually
agreeable third party, or the American Arbitration Association
("AAA") if no agreement on a neutral can be reached, conduct a
card check within five days of the making of the request. The
neutral shall compare the authorization cards submitted by the
Union against original handwriting exemplars of the entire
bargaining unit furnished by the Company and shall determine
if a simple majority of eligible employees has signed cards.
The list of eligible employees shall be jointly prepared by
the Union and the Company.
(B) If the Union secures a simple majority of authorization cards
of the employees in an appropriate bargaining unit, the
Company shall recognize the Union as the exclusive
representative of such employees without a secret ballot
election conducted by the National Labor Relations Board. The
authorization cards must unambiguously state that the signing
employees desire to designate the Union as their exclusive
representatives for collective bargaining purposes.
SECTION 9 - SCOPE OF THIS AGREEMENT
(A) Rules with Respect to Affiliates and Parent Companies
70
<PAGE> 248
For purposes of this agreement, the Company also includes (in
addition to the Company): (i) any entity which directly or
indirectly controls the Board of Directors of the Company (a
"Parent Company"); (ii) any Affiliate of either the Company or
a Parent Company; and the obligations and commitments in this
Agreement which are applicable to the Company, are applicable
to them.
For purposes of this Article, Affiliate means any business
entity in which the Company directly or indirectly: (i) owns
more than 50% of the voting power or (ii) exercises de facto
control, meaning the power to direct the management and
policies of such business entity.
(B) Rules with Respect to a New Parent Company
The Company agrees that it will not consummate a transaction,
the result of which would cause the Company to come under the
control of another Company (a New Parent Company) without
first ensuring that said New Parent Company, any Affiliate of
said New Parent Company and any entity with which said New
Parent Company has a Covered Relationship agrees to be bound
by this Article.
(C) Rules with Respect to Other Covered Entities
(1) For purposes of this Article, an Other Covered Entity
means any business entity (not an Affiliate within
the meaning of Section 9(A) above): (i) which is
engaged in: (a) the mining, refining, production or
transportation of raw materials used in the making of
steel; (b) the making, finishing, processing or
fabricating of steel; or (c) other similar
businesses; and (ii) in which the Company either: (a)
currently has a material interest; or (b) in the
future acquires a material interest. It is understood
that the relationship between the Company and any
Other Covered Entity shall be a Covered Relationship.
(2) The Company shall not enter into a Covered
Relationship without first ensuring that the Other
Covered Entity adopts this Article.
(3) With respect to any entity with which the Company
currently has a
71
<PAGE> 249
Covered Relationship, the Company shall cause the
Other Covered Entity to become a party to this
Article and achieve compliance with its provisions.
(D) Covered Workplace
For purposes of this Article a Covered Workplace shall mean
any workplace which: (i) is controlled by either the Company
or an Other Covered Entity; and (ii) employs or intends to
employ employees who are eligible to become represented by a
labor organization.
SECTION 10 - BARGAINING IN NEWLY-ORGANIZED UNITS
Where the Company recognizes the Union pursuant to the above
procedures, the collective bargaining agreement applicable to the new bargaining
unit will be determined as follows:
(A) Substantially Similar Unit: If the facility in which the
bargaining unit is located is engaged in operations
substantially similar to any of those already covered by the
Agreement, the new bargaining unit shall become part of the
bargaining unit covered by such agreement, and the terms and
conditions of that agreement shall be extended to it.
(B) Other Units
(1) Where the newly-recognized unit is at a facility not
substantially similar to any operation already
covered by such agreement, the parties shall
negotiate a new collective bargaining agreement
covering the new bargaining unit, bearing in mind the
wages, benefits, and working conditions in the most
comparable operations of the Company and those of
USWA-represented competitors to the facility in which
the newly-recognized unit is located.
(2) If, after thirty days from the commencement of such
negotiations, the parties are unable to reach
agreement, the matter shall be submitted to interest
arbitration in accordance with procedures to be
developed by the parties. In any such proceeding, the
arbitrator shall be governed by the standard
described in this Section.
72
<PAGE> 250
SECTION 11 - DISPUTE RESOLUTION
Any alleged violation or dispute involving the terms of this Article
may be brought to a joint committee of one representative of each of the Company
and the Union by either party. If the alleged violation or dispute cannot be
satisfactorily resolved by the parties, either party may request that an
Arbitrator resolve such dispute. A hearing shall be held within ten (10) days of
the making of the request and the Arbitrator shall issue a decision within five
days thereafter. Such decision shall be in writing but need only succinctly
explain the basis for the findings. All decisions by an Arbitrator pursuant to
this Article shall be based on the terms of this Article and the applicable
provisions of the law. The Arbitrator's remedial authority shall include the
power to issue an order requiring the Company to recognize the Union where, in
all the circumstances, such an order would be appropriate.
The Arbitrator's award shall be final and binding on the parties and
all employees covered by this provision. Each party expressly waives its right
to seek judicial review of said award, and such award by any court of competent
jurisdiction.
ITEM 15
NEW EMPLOYEE ORIENTATION
------------------------
The United Steelworkers of America and the Company will develop a joint
New Bargaining Unit Employee Orientation Program which shall entail the
following:
(1) An introduction of Plant Management officials, International
Union officials, and Local Union Representatives.
(2) Distribution and discussion of the USWA Labor Agreement
including any relevant local agreements, the probationary
period, and the grievance procedure.
(3) Discussion of Safety and Health programs and Safe Working
procedures.
(4) Presentation on and discussion of the history and achievements
of the United Steelworkers of America and the Local Union.
73
<PAGE> 251
(5) Presentation on and discussion of the structure of the United
Steelworkers of America and the Local Union, and the services
that are provided by the various offices and committees.
(6) Presentation on the history of the Company and plant.
(7) Review of the markets in which the Company participates; the
products produced and the customers serviced.
(8) Discussion of the structure of the Company, the plant
organization, and the functions and services that are provided
by the various departments.
Each new employee, either individually or as part of a small
group shall, within 10 days of their being hired, be given a
presentation of the above Program by Company and Union officials.
At the conclusion of the presentation, Union officials shall
be given an opportunity to meet with the new employee(s) for up to two
(2) hours without the presence of management representatives.
All costs associated with developing this Program, including
lost-time for Union officials who participate in its development, and
the costs, including lost- time for individuals participating in the
presentation, shall be borne by the Company.
ITEM 16
HIRING PREFERENCE
-----------------
In all hiring for bargaining unit positions, the Company shall, subject
to its obligations under applicable equal employment laws and regulations and to
the full extent of interest, give first preference to the direct relatives
(children, children-in-law, step-children, spouse, siblings, grandchildren,
nieces and nephews) of bargaining unit employees who have the ability to perform
the job and the aptitude to absorb training reasonably required for and related
to meeting current and future job requirements. Joint guidelines may be
established at each plant by mutual agreement of the Company and the Union.
In all events, such hiring shall conform to applicable lines of
progression, bidding and promotion, and other requirements under this Agreement.
74
<PAGE> 252
It is understood and agreed by the parties that the Company shall,
subject to these and other applicable provisions, have the final responsibility
for accepting or rejecting a particular applicant for employment.
ITEM 17
MANNING OF NEW OPERATIONS
-------------------------
SECTION 1
In the manning of jobs on new facilities in existing plants, the jobs
shall be filled by qualified Employees who apply for such jobs in the order of
length of plant continuous service from the following categories in the
following order but subject to the other provisions of this Section:
(A) Employees displaced from any facility being replaced in the
plant by the new facilities;
(B) Employees being displaced as the result of the installation of
the new facilities;
(C) Employees presently employed on like facilities in the plant;
(D) Employees presently on layoff from like facilities in the
plant;
(E) Employees in the plant with two (2) or more years of plant
continuous service, provided that if sufficient qualified
applicants from this source are not available, Management
shall fill the remaining vacancies as it deems appropriate.
SECTION 2
The local parties shall meet to seek agreement on the standards to be
used to determine the qualifications entitling Employees otherwise eligible to
be assigned to the jobs in question. It shall be the objective of such meetings
to reach agreements on manning which reflect the parties' mutual intent to
facilitate efficient manning and preserve job security for longer service
Employees.
75
<PAGE> 253
SECTION 3
Should the local parties fail to agree on the standards for determining
qualifications, an applicant otherwise eligible shall have:
(A) The necessary qualifications for performing the job.
(B) The ability to absorb such training for the job as is to be
offered and is necessary to enable the Employee to perform the
job satisfactorily.
(C) The necessary qualifications to progress in the promotional
sequence involved to the next higher job to the extent that
Management needs Employees for such progression. In
determining the necessary qualifications to advance in the
promotional sequence involved, the normal experience acquired
by Employees in such sequence shall be taken into
consideration. However, it is recognized that Management can
require that a sufficient number of occupants of each job in a
promotional sequence be available to assure an adequate number
of qualified replacement for the next higher job.
SECTION 4
An applicant who is disqualified under Section 3 above shall have the
right to apply for another job for which he believes he can qualify.
SECTION 5
When new facilities are to be manned pursuant to this Article, the
local parties shall meet and may establish, in appropriate circumstances, rules
for allowing an Employee not placed initially a second opportunity to elect
transfer to the new facility consistent with its efficient operation. In
establishing such rules, the local parties shall consider matters such as:
(A) The job level in the promotional sequence in the new unit up
to which an Employee will be allowed a second opportunity to
elect transfer.
(B) The date on which the second opportunity must be exercised
following start-up of the new facility, but not more than
three (3) years thereafter. (In determining such date, the
parties shall give due consideration to possible
76
<PAGE> 254
Management abandonment of the old facility or an extended
period of its nonuse.)
In lieu of or in addition to the foregoing, the local parties may
develop a method for filling permanent vacancies in the new facility between the
time of initial manning and the final election to transfer.
SECTION 6
Should Management deem it necessary to assign an Employee to his
regular job on the old facility in order to continue its efficient operation, it
may do so on the basis of establishing such Employee on the new job and
temporarily assigning him to his former job until a suitable replacement can be
trained for the job or its performance is no longer required. In such event,
such Employee shall be entitled to earnings not less than what he would have
made had he been working on the job on which he has been established.
SECTION 7
Where new facilities replace facilities or more than one plant in the
same general locality, appropriate representatives of the Company and the
International Union shall meet in conjunction with the local parties for the
purpose of seeking an agreement on manning consistent with the parties' mutual
intent to facilitate efficient manning and preserve job security for longer
service Employees. In such situations, Company service may be considered in
addition to plant service.
SECTION 8
All applicants shall go through the following selection process:
(A) Drug and Alcohol Test - Any person applying for a position at
a new operation will be required to pass a drug and alcohol
test in accordance with agreed-upon standards.
(B) General Aptitude Test - Any person applying for a position at
a new operation must meet the minimum threshold on an aptitude
test, measuring their ability to work within a team-based work
system.
(C) Job Skills Aptitude Test - This test will measure a person's
skills in the areas of production and maintenance, to include
the ability to perform the
77
<PAGE> 255
essential functions of the position including basic math,
reading, etc. The test will consist of both a written
examination and practical or "hands-on" examination.
(D) All Test(s):
(1) shall be fair in their make-up and in their
administration;
(2) shall be free of cultural, racial or ethnic bias;
(3) results will be reviewed with employees including an
offer to counsel the employee as how to overcome
deficiencies; and
(4) all interview procedures shall be mutually developed
and agreed to by the Company and the Union.
(E) Interview - Each qualified applicant shall be interviewed for
a position at a new operation. Based on their composite score
on (b) through (d) above, each applicant meeting the minimum
threshold shall be considered for a position at a new
operation.
SECTION 9
Employees at new operations shall be multi-skilled and
multi-functional. Job responsibilities at new operations shall encompass duties
which include operator and maintenance duties. The Workforce Flexibility
provisions of the Agreement shall be applicable to all new operations.
ITEM 18
RIGHT TO BID
------------
SECTION 1
Should (a) the Company decide (a "Company Decision") or (b) be
presented with an offer (an "Unsolicited Offer") to sell or otherwise transfer
(other than a sale lease-back transaction conducted purely as a financing
transaction and involving an unrelated third party): (i) a controlling interest
in the corporate entity which owns its assets (a "Controlling Interest"); or
(ii) all or a portion of its facilities ("Facilities"), (either or
78
<PAGE> 256
both, the "Assets") it will so advise the USWA in writing and grant to the USWA
the right to organize a transaction to purchase the Assets (a "Transaction").
SECTION 2
The Company will provide the USWA with any information needed to
determine whether it wishes to pursue a Transaction. All such information shall
be subject to an executed Confidentiality Agreement.
SECTION 3
The Company shall notify the USWA of the schedule and/or timetable for
consideration by the Company of any possible transaction. In case of an
Unsolicited Offer or if the Company is considering a possible sale or
transaction, the Company will provide the USWA with the greater of (i) thirty
days and (ii) the time provided by the schedule and/or timetable given to any
other interested party to submit an offer for the Assets. In the case of a
Company Decision, the USWA will be provided with the same time as that given to
any other interested party.
SECTION 4
During the period described in Section 3 above, the Company will not
enter into any contract regarding the Assets with another party.
SECTION 5
In the event that the USWA submits an offer pursuant to the above, the
Company shall not be under any obligation to accept such offer. However, the
Company shall be entitled to enter into an agreement with regard to the Assets
with an entity other than the USWA only if that transaction is superior to the
USWA offer. The Company may deem a proposed transaction superior if, in the
reasonable judgment of its Directors, it is more favorable on balance to the
Company and/or its shareholders, taking into consideration price, certainty of
payment (or risk of nonpayment), financial strength of the proposed purchaser,
conditions precedent to closing and other factors affecting the value of the
transaction to the Company and its shareholders.
SECTION 6
This agreement shall not be deemed to cover any public offering of
equity.
79
<PAGE> 257
SECTION 7
The rights granted to the USWA herein may be transferred or assigned by
the USWA, but only to an entity a material portion of whose equity is or will be
beneficially owned by employees of the Company.
ITEM 19
UNION ROLE IN NEGOTIATION OF BENEFITS
-------------------------------------
Most wage and benefits programs provided lack any established
administrative practice by which bargaining unit members are informed, at the
time of payment, that such benefits were the result of negotiation between the
Company and Union. In recognition of the Union's role in achieving the goals of
the enterprise, the Company agrees to adopt such a practice in the manner
detailed in this Article.
This understanding shall apply to payments of the following: profit
sharing; retroactivity payments made pursuant to wage increases; lump sum
payments; severance pay; special payments under the pension plan; Pension Plan
payments; Supplemental Unemployment Benefits; Sickness and Accident benefits (in
each of the last two cases, only to the first check in any stream of payments);
and wage increases (provided that, in the case of wage increases, this
understanding shall apply only to the first payroll period following the
effective date of such increase).
In the administration of the wage and benefit programs identified
above, the Company agrees that it shall give recognition to the role of the
Union in negotiating such items as follows:
The form of such recognition will vary depending on whether the Company
makes a communication of its own with or in conjunction with such benefit
payment:
(i) If the Company does not make its own communication, the Union
shall be given a reasonable opportunity to include its own
communication with the payment being provided by the Company;
(ii) If the Company does make such a communication, then the Union
shall be
80
<PAGE> 258
given a reasonable opportunity to insert within the first
three paragraphs of such Company communication a paragraph
briefly reporting the role played by the Union in bargaining
such payment or benefit. If the communication is in other than
written form, the parties shall devise a system consistent
with the spirit and intent of this Article.
In all events, the following legend shall be included on the check stub
or other similar document for all payments or benefits made by the Company to
its employees or retirees: "This payment is being made pursuant to an agreement
negotiated on your
behalf by your Union -- the United Steelworkers of America, AFL-CIO-CLC." This
obligation shall not extend to payments issued by third party vendors such as
Workers' Compensation carriers, health plan administrators, etc.
The understandings set forth herein shall become effective on January
1, 1999.
ITEM 20
PRINTING OF CONTRACTS
---------------------
Immediately upon ratification of the new Collective Bargaining
Agreement, the parties will create mutually acceptable new Agreements.
Said Agreements shall, at the expense of the Company, be printed (by a
union printer) in a form (size, paper stock, etc.) and distributed in a manner
designated by the Union and approved by the Company (such approval not to be
unreasonably withheld).
Said distribution of the Collective Bargaining Agreement booklet shall
occur within three (3) months of the closing. The distribution of Benefit
booklets shall occur within six (6) months of the closing.
The Company shall provide the Union with electronic versions of all of
the Agreements.
ITEM 21
FAMILY AND MEDICAL LEAVE
------------------------
81
<PAGE> 259
The Company and the Union affirm their compliance with and
implementation of the Family and Medical Leave (FML) and further agree to the
following particulars regarding employee eligibility and entitlement.
SECTION 1 - GENERAL
(A) The FML provides for up to 12 weeks of unpaid leave each year
for eligible employees to take care of a serious health
condition of certain family members or of employees
themselves, and for the birth, adoption or foster placement of
a child. The law also requires the continuation of certain
benefits under certain conditions while on leave, and includes
certain notice requirements in order to obtain the leave.
(B) A copy of a summary of the law and employee rights thereunder
is available at the Human Resources Office, and will be issued
upon request and at the time any FML leave is requested. The
required posting under the FML will be maintained by the
Company.
(C) FML under this Article shall be available to any employee who
has six months or more of continuous service as calculated
pursuant to Seniority Sections of the Agreements.
(D) This Article shall become effective on August 1, 1998. Any
covered employee then on leave of absence which would
otherwise be covered under the FML will be designated on FML
leave beginning August 1, 1998.
SECTION 2 - ELIGIBILITY AND ENTITLEMENT
(A) There shall be no hours-worked requirement for the twelve (12)
months preceding the start of the leave.
(B) The twelve (12) weeks unpaid leave entitlement under the FML
shall be measured on a calendar year basis.
(C) In the event an employee should exhaust the FML entitlement
due to their own serious health condition, such employee shall
be entitled to an additional unpaid leave of up to four (4)
weeks in connection with the birth, adoption or placement of a
child, or the need to care for a family member with a serious
health condition, should such an event occur within the
82
<PAGE> 260
calendar year as defined above.
SECTION 3 - INTERMITTENT OR REDUCED LEAVE SCHEDULING
(A) An employee seeking leave in other than continuous weeks must
certify to Management why such schedule is necessary, and must
schedule the time off in the manner least disruptive to the
Plant's operating needs.
(B) Where leave is sought other than in full-day increments, the
employee may agree to assignment by Management to any
available position consistent with the collective bargaining
agreement. The employee will be paid at the rate of the job
regularly held or the assigned job, whichever is higher, for
the portion of the shift actually worked.
(C) Where leave is sought in increments of less than a full work
week, if Management, consistent with the collective bargaining
agreement, is able to accommodate the need for time off by
adjusting the employee's work schedule (including, but not
limited to altering the shift assignment or the scheduled work
days), and the employee agrees to such scheduling, no leave
need be provided.
(D) Where leave is requested other than continuous weeks, and the
employee agrees, the employee may be assigned to an open
comparable position, consistent with the employee's own
seniority, for the period of time during which intermittent
leave may be required.
SECTION 4 - NOTICE
(A) In the case of unforeseeable leave sought for care of the
serious health condition of the employee or a family member,
the Department Head and Human Resources Office shall be
notified as soon as possible (within forty-eight hours) of
learning of the need for leave, and explain the need, expected
duration, and schedule of the leave.
(1) In the case of such leave, following the initial
notice provided above, a written notice shall be
provided as soon as possible, but in no event more
than fifteen (15) calendar days from the time the
need for the leave arises. This notice shall be
accompanied by a certification signed by the
attending physician or other health care provider,
and
83
<PAGE> 261
shall include:
(a) the date on which the condition commenced;
(b) the probable duration of the condition;
(c) appropriate medical information regarding
diagnosis, regimen of treatment and need for
hospitalization, sufficient to enable the
Company to reasonably review the request;
and
(d) medical information for employee's serious
health condition that he is unable to
perform work, or for family member, why it
is necessary for the employee to provide
care to the family member, and an estimate
of the amount of the employee's time which
is necessary for that care.
(2) Where the leave is to be taken in other than a single
continuous period of time, the notice shall also
include:
(a) the dates on which the medical treatment is
expected to be given;
(b) the duration of such treatment;
(c) the medical necessity for leave to be
granted on an intermittent basis;
(d) the expected duration of the need for an
intermittent schedule.
(3) Certification forms can be obtained from the Human
Resources Office.
SECTION 5 - PAY DURING FML LEAVE
(A) Employees seeking FML leave under this Article may utilize
paid vacation during the FML leave time.
(B) Except for the substitution of paid vacation and the
utilization of Sickness and Accident, or Workers' Compensation
benefits, all time off provided
84
<PAGE> 262
shall be unpaid. Time off without pay granted pursuant to the
FMLA shall be considered as time not worked through choice of
the employee, and may not be utilized in connection with a
claim by the employee under any provision of this Agreement
for any wages, benefit, or entitlement, eligibility for which
is related to hours worked, unless the employee otherwise
meets the eligibility requirements for such wage, benefit or
entitlement. This exclusion includes, but is not limited to,
such matters as reporting pay, overtime, profit-sharing, rate
retention, guaranteed hours, holiday pay, service bonus,
earnings protection or short week benefit.
SECTION 6 - TERMINATION OF LEAVE
(A) The anticipated duration of the leave sought shall be
established at the time the leave is granted. Upon termination
of a leave, the employee shall be reinstated to the same or an
equivalent position as that held at the time the leave
commenced, consistent with his seniority, unless there was an
intervening event including but not limited to a
reorganization or force reduction. In the latter event, the
employee shall be reinstated to the same position or status
which would have been held after the intervening event if
leave had not been taken.
(B) An employee who wishes to return from leave prior to the
scheduled return date must give the Department Head and Human
Resources Office five (5) business days notice of his desire
to return, unless the Human Resources Office agrees to a
shorter period in a particular case.
(C) An employee on a leave under this Article is not eligible for
Lay-Off Allowance Payments in the event of a layoff, until
following the termination of the leave, but upon reinstatement
to work, shall be credited for Lay-off allowance purposes for
the time on leave.
SECTION 7 - CONTINUOUS SERVICE
Leaves of absence under this program shall not constitute a break in
the employee's length of continuous service, and the period of such leave shall
be included in his length of continuous service under the Labor and Benefit
Agreements.
SECTION 8 - BENEFIT CONTINUATION
85
<PAGE> 263
(A) All employees will continue in benefit coverage during such
leave, provided the employee is otherwise eligible for such
coverage under provisions of the FML, and the employee
continues making any normally-required premium or other
payments in a manner acceptable to the Company. In the event
the employee fails to make such payments, all benefit coverage
shall not be terminated, and the Company shall advance any
necessary payments which the employee shall be obligated to
repay upon returning to work.
(B) In the event an employee fails to return to work or quits
after the employee's FML leave period has been concluded, the
Company will waive its right to seek to recover health
insurance premiums for health insurance coverage provided by
the Company during such leave, notwithstanding the provision
of the FML which permits recovery of health insurance premiums
under specified circumstances.
SECTION 9 - GOOD FAITH EFFORTS
In the event problems develop in implementing this Article, whether as
a result of changes in the law or regulations or otherwise, the parties
agree to use their best efforts to resolve them in a manner designed to
assure minimal disruption to the operation, minimize absenteeism, and
provide an employee the time necessary to meet family and personal
emergencies and obligations.
ITEM 22
LEAVE OF ABSENCE POLICY FOR UNION EMPLOYEES
-------------------------------------------
SECTION 1 - LOCAL UNION LEAVE.
Leaves of absence for the purpose of accepting positions with Local
Unions shall be available to a reasonable number of Employees. Adequate notice
of intent to apply for leave shall be afforded local Plant Management to enable
proper provision to be made to fill the job to be vacated.
Leaves of absence for the purpose of accepting an elective office with
the Local Union shall be for a period not in excess of three (3) years and may
be renewed for further periods of three (3) years each.
SECTION 2 - INTERNATIONAL UNION LEAVE.
86
<PAGE> 264
The parties have reached the following agreement with respect to any
person who leaves their employment with the Company to become an employee or
elected official of the International Union:
(A) First becomes an Officer or Director of the International
Union After July 1, 1998, or
(B) Becomes an employee of the International Union and whose
probationary period expires on or after July 1, 1998; or
(C) Was an Officer or Director or employee of the International
Union prior to August 1, 1996 but was not as of that date
accruing service for Company pension purposes (for time spent
as an Officer, Director or employee of the International
Union) pursuant to a valid agreement providing for such
accrual.
An individual described in this Section shall be granted a leave of
absence from the Company concurrent with the period of his permanent employment
with the International Union.
Once an individual described in this Section is made a permanent
employee of the International Union (by completing his probationary period) that
person shall, from that point forward and while he retains his leave of absence
status with the Company, not receive any service credit for Company pension
purposes.
Such person shall accumulate continuous service for purposes of recall
to employment and for all other purposes under the Labor Agreement, except
pensions, provided that he shall not be entitled to receive any contractual
benefits during the period of his leave of absence or receive retiree health
care benefits from the Company if he is eligible for coverage in the
International Union health care plan for retirees.
ITEM 23
NUBAR PROFIT SHARING PLAN
-------------------------
SECTION 1. Effective for BarTech Employees, the BarTech Effective Date
and for RESI Employees effective the first fiscal quarter
following the closing of the RESI Acquisition, the Company
shall implement a Profit Sharing Plan as described herein.
87
<PAGE> 265
SECTION 2. LEVEL OF PAYOUT
The Company agrees that it will create a
Profit-Sharing Pool (the "Pool"). The Pool will be
determined on a quarterly basis as follows:
NuBar will pay into the Pool 4% of all Profits (as
defined below) that amount to greater than 12% of
NuBar sales revenue and less than 20% of NuBar sales
revenue;
NuBar will pay into the Pool 6% of all Profits (as
defined below) that amount to greater than or equal
to 20% of NuBar sales revenue.
SECTION 3. CALCULATION OF PROFITS
Profits shall be calculated in accordance with
generally accepted accounting principles as used by
the Company in the preparation of its financial
statements for reporting to NuBar's shareholders.
For the purposes of this Plan, Profit shall be
defined as Net Earnings, excluding:
(a) The amount by which total compensation and
related expenses for any individual exceeds
5X the total actual compensation for the
average USWA- represented employee.
(b) Any one-time payments to non-bargaining unit
employees.
(c) The costs of OSHA, MSHA, EPA, SEC or other
civil and criminal penalties and the cost of
correcting any regulatory or other
violations of law.
(d) Cumulative effect on prior years of a change
in accounting principles.
(e) Income or loss related to any charges or
credits (whether or not identified as
special credits or charges) for unusual,
infrequently occurring or extraordinary
items.
(f) Any expense recorded for any income or other
taxes.
88
<PAGE> 266
(g) Any fees or other similar charges directly
or indirectly paid to individuals or
entities for goods or services priced on
other than an arms-length basis.
(h) Any costs, or the expense associated with
this Plan or any other profit-sharing or
similar plan.
Notwithstanding anything to the contrary contained in
this Agreement, post-retirement employee benefit
expenses will be taken into account in the
calculation of Profit in the same manner that they
would have been taken into account prior to the
adoption of FASB 106.
SECTION 4. DISTRIBUTION
The Profit Sharing Pool (the "Pool") shall be
distributed as follows:
The Pool shall be sub-divided based on total
participant hours worked, into two sub-pools (i) one
for the former RESI employees and NuBar new hire USWA
represented employees working at former RESI
facilities (the "RESI Pool") and (ii) one for the
former BarTech production and maintenance represented
and non- represented employees and NuBar new hire
production and maintenance represented and
non-represented employees working at former
BarTech/B&L/Canadian Drawn facilities (the "BarTech
Pool").
The RESI Pool shall be divided as follows:
(a) 20% of the RESI Pool shall be distributed to
the group of RESI/NuBar retirees who
retire(d) or otherwise terminated prior to
the effective date of the 1998 BLA, or after
the effective date of the 1998 BLA on a
non-ERB pension, in proportion to their
Restoration Account Balances.
(b) 40% of the RESI Pool shall be distributed to
active former
89
<PAGE> 267
RESI employees in proportion to their
Restoration Account Balances.
(c) 40% of the RESI Pool shall be distributed to
active former RESI employees and NuBar new
hire employees at former RESI facilities in
proportion to their hours paid, (including
paid union time) with a cap for this
purpose, of 2,080 hours per employee.
After the Restoration Account obligations in (a)
and/or (b) above have been extinguished, funds
designated for (a) and/or (b) will be allotted to (c)
above.
The BarTech Pool shall be distributed to former
BarTech employees and NuBar new hire employees
working at former BarTech/B&L facilities in
proportion to their hours paid (including paid union
time), with a cap for this purpose of 2,080 hours per
employee.
SECTION 5. ADMINISTRATION OF THE PLAN
The Plan will be administered by the Company in
accordance with its terms and the costs of
administration shall be the responsibility of the
Company. Upon determination of each Profit Sharing
calculation, such calculation shall be forwarded to
the chairman of the Union negotiating committee
accompanied by a Certificate of Officer signed by the
Vice-President, Finance of the Company, stating that
the Profit Sharing Calculation was made in accordance
with generally accepted accounting principles and the
definition of Profit described herein.
The Union, through its Negotiating Committee Chairman
or his/her designee, shall have the right to review
the calculations used to derive Profit under the
Plan. The Company shall provide said designee with
any information requested in connection with such
review.
In the event that a disagreement exists between the
Company's Profit Sharing calculation and the results
obtained by the Union designee's review, the Company
Chairman and the Union Chairman of the respective
Negotiating Committees shall attempt to reach an
agreement regarding the disagreement. In the event
that they cannot
90
<PAGE> 268
resolve the dispute, either party may submit such
dispute to final and binding arbitration under the
Grievance Procedure outlined in this Labor Agreement.
ITEM 24
PENSION PLAN IMPROVEMENTS
-------------------------
The Pension Plan in effect on the effective date of this agreement shall remain
in effect and the pension benefit multiplier shall be increased to $41 effective
November 1, 1999, $43 effective November 1, 2000, and $46 effective May 1, 2003.
91
<PAGE> 1
Exhibit 10.51
EMPLOYMENT SEPARATION AND
-------------------------
GENERAL RELEASE
---------------
This Confidential Separation Agreement and General Release ("Agreement")
is made by and between BAR TECHNOLOGIES, INC., a Delaware corporation (the
"Company") and FREDERICK L. DEICHERT (the "Executive"). The parties enter into
this Agreement to set forth the terms of their understanding regarding the
termination of Executive's employment with the Company and the good faith
settlement of all claims or causes of action by or on behalf of Employee.
NOW, THEREFORE, in consideration of the premises and mutual promises
herein contained, it is agreed as follows:
SECTION 1 - TERMINATION OF EMPLOYMENT. Executive shall cease to be an
employee of the Company on November 20, 1998 ("Termination Date"). Until his
Termination Date, Executive shall endeavor to assist in the conduct of the
Company's business as is reasonably required by the Company. On his Termination
Date, Executive shall deliver to the Company all of the Company's property in
Executive's custody or control, including without limitation, all credit cards,
records and documents, physical and electronic files, computers, software, and
any other office equipment, furniture and supplies.
SECTION 2 - SEVERANCE PACKAGE. For and in consideration of this
Agreement, including without limitation, the release set forth in Section 3 of
this Agreement, the Company shall provide and Executive shall receive the
following severance package:
(a) SALARY AND BONUS. Executive shall continue to receive
through the Termination Date his current salary and
benefits. All earned but unpaid salary shall be paid no
later than the first regular payroll date following the
Termination Date. Executive shall also receive the
minimum bonus for 1998 of Fifty-Five Thousand Dollars
($55,000), payable within 90 days after the close of
the year, but in no event later than the date that
minimum bonuses are paid to other executive employees
for 1998.
(b) VACATION. Pursuant to the parties' Employment Agreement
dated December 2, 1996, Executive is entitled to twenty
(20) business days paid vacation in calendar year 1998.
The Company agrees to pay Executive by December 31,
1998 for any vacation days not used prior to the
Termination Date.
(c) SEVERANCE BENEFIT. Executive shall be entitled to
receive a severance payment from Company in the amount
of One Hundred and Forty-Five Thousand Dollars
($145,000), which amount equals
<PAGE> 2
one (1) year of Executive's base salary as of the
Termination Date. This severance payment shall be paid
in twenty-four (24) consecutive, equal semi-monthly
installments of Six Thousand Forty-One Dollars and
66/100 ($6,041.66) beginning on a pro rata basis on
November 30, 1998. Pursuant to the parties' December 2,
1996 Employment Agreement, payments to Executive under
this subsection shall be offset by any compensation the
Executive earns with a new employer or from
self-employment. The Company agrees that if Executive
does become employed before November 20, 1999,
Executive's first Thirty Thousand Dollars ($30,000) in
wages from his new employer will not be subject to this
setoff requirement.
(d) Executive will also be entitled to a lump sum severance
payment of Twenty-Six Thousand Dollars ($26,000)
payable on December 31, 1998 if he remains employed
with the Company through his Termination Date.
(e) During the period November 21, 1998 through November
20, 1999, the Company agrees to provide Executive at
Company expense with the following benefits at coverage
levels comparable to the coverage levels provided to
Executive as of the Termination Date: health insurance
under the Company's Salaried Employees' Health Care
Plan (or under a plan providing substantially similar
benefits and coverage) and life insurance. Such
coverage will terminate sooner if, and when, Executive
secures employment with another employer who provides
health and/or life insurance benefits for which
Executive is eligible at no cost to Executive. If such
replacement coverage is not equivalent to coverage
provided by the Company, then Company will provide
secondary coverage to Executive to November 20, 1999.
(f) REIMBURSEMENT BONUS. The Company agrees that the
Executive is not responsible for reimbursement of any
portion of the signing bonus as described in Section
3.3 of the parties' December 2, 1996 Employment
Agreement.
(g) STOCK OPTIONS. Executive shall receive Twenty-Five
Thousand Dollars ($25,000) in lieu of any rights to
purchase shares of company pursuant to Appendix A of
the parties' December 2, 1996 Employment Agreement or
any other document pertaining to options on Company
stock. Payment under this subsection (g) shall be made
on the first to occur of June 30, 1999 or the date on
which Bar Technologies, Inc. and Republic Engineered
Steels, Inc. are merged into a single business entity.
-2-
<PAGE> 3
(h) PERFORMANCE BONUS. The Company shall pay Executive a
performance bonus in the amount of Twenty Thousand
Dollars ($20,000) within sixty days of the Termination
Date.
(i) GENERAL LIMITATIONS. Executive acknowledges that except
as set forth in this Section 2, the Company shall have
no further obligations for compensation payments or
benefit payments under the Employment Agreement or
Appendix A to the Employment Agreement. Executive shall
be responsible for all income taxes applicable to the
payments, compensation, and benefits provided to
Executive under this Section 2. Company shall have the
right to deduct Executive's portion of Social Security
taxes and all federal, state, and municipal taxes from
the payments due under this Section 2. Executive
acknowledges that the majority of the compensation and
benefits provided herein are given in consideration of
the general release contained in this Agreement; that
Executive would not otherwise be entitled to such
compensation and benefits; that such compensation and
benefits are offered in the spirit of promoting the
good faith settlement of all matters between the
parties; and that payment of such compensation and
benefits does not constitute an admission by Company of
any liability to Executive in connection with any of
the matters that are the subject of the general
release.
SECTION 3 - GENERAL RELEASE OF CLAIMS.
(a) In consideration of the benefits provided herein,
Executive hereby releases and discharges the Company,
its officers, directors, employees, representatives,
agents, shareholders, successors and assigns, including
RES Acquisition Corporation and Republic Engineered
Steels, Inc. from any and all claims, demands, actions,
causes of action, liabilities, costs, damages,
expenses, and attorneys fees, whether known or unknown
arising in any way out of, or relating in any manner to
the employment of Executive by the Company, the
termination of such employment, or any condition or
benefit of employment, including but not limited to,
claims for breach of contract, breach of promise, loss
of income, backpay, reinstatement, frontpay, impairment
of earning capacity, discrimination under state law
and/or under federal law, wrongful termination, damage
to reputation, fraud, violation of public policy,
violation of statute, infliction of mental or emotional
distress, intentional tort, or any other claim or
damage. Executive agrees to refrain from instituting,
maintaining or prosecuting a claim, action, suit,
charge or other cause of action against the Company
arising
-3-
<PAGE> 4
out of his employment, termination of employment, or
any condition or benefit of employment. The release
given under this section includes but is not limited
to, claims arising from any alleged violation by the
Company and/or its affiliates of any federal, state, or
local statutes, rules, regulations, ordinances or
common loss, including but not limited to, the Age
Discrimination in Employment Act of 1967, as amended
(including the Older Workers Benefit Protection Act),
the Employee Retirement Income Security Act of 1974, as
amended, Title VII the Civil Rights Act of 1964, as
amended, the Civil Rights Act of 1866, as amended, the
National Labor Relations Act, as amended, the Ohio
Revised Code Section 4112 et seq and Section 4101.17,
as amended, or claims growing out of legal
restrictions, if any, on an employer's right to
terminate its employees.
(b) Executive expressly acknowledges that this Agreement is
intended to include in its effect. without limitations,
all claims which have arisen in Executive's favor prior
to the Termination Date and that this Agreement
contemplates the extinguishment of any and all claims
including, without limitation, any such claims which
Executive does not know to exist even though Executive
has no reason to know or suspect that they may exist.
Further, it is the intention of Executive, in executing
this Agreement, that the same shall be effective as a
bar to each and every claim, demand and cause of
action, including those herein above specified.
Executive acknowledges that he may hereafter discover
claims or facts in addition to or different from those
which he now knows or believes to exist with respect to
the subject matter of this Agreement, and which, if
known or suspected at the time of executing this
Agreement, may have materially affected this
settlement.
(c) Executive represents and certifies that he has
carefully read and fully understands all provisions and
effects of this Agreement, and has been advised by the
Company to discuss thoroughly all aspects of this
Agreement with Executive's private attorney if he
chooses; that Executive is voluntarily entering into
this Agreement; that neither the Company nor employees,
officers, agents, representatives or attorneys have
made any promises. representations or statements
concerning the terms of effects of this Agreement other
than those expressly contained herein.
SECTION 4 - NON-DISCLOSURE/NON-COMPETITION. Executive agrees to abide
by the terms of this Section 11 of his December 2. 1996 Employment Agreement
with the Company regarding non-disclosure of confidential information and
non-competition. In addition, the Executive covenants and agrees not to use or
disclose to any third parry any confidential. proprietary information pertaining
to the business, processes, or systems of the Company without
-4-
<PAGE> 5
the prior written consent of the Company. Executive further covenants and agrees
that he shall refrain from:
(a) Making any critical or derogatory public statements
concerning the Company, its officers, directors, or
employees;
(b) Taking any other action which would adversely effect
the Company's reputation or business prospects.
The Company covenants and agrees that it shall refrain from making any
critical or derogatory public statements concerning the Executive or taking any
other action which would adversely effect the Executive's reputation or business
prospects.
SECTION 5 - GENERAL PROVISIONS
(a) Executive hereby acknowledges that he has been advised
to consult with his attorney and given at least
twenty-one (21) days to review and consider all of the
terms, conditions, and covenants entered into herein
and has consulted his attorney in connection with such
negotiations, review, and consideration prior to the
execution of this Agreement.
(b) This Agreement shall be deemed to have been made and
entered into in the State of Ohio and shall, in all
respects, be interpreted, enforced, and governed under
the laws of the State of Ohio and the United States,
and the parties consent to exclusive venue and
jurisdiction in the courts of the State of Ohio for the
resolution of any dispute arising under this Agreement.
(c) The severance benefit payable under this Agreement
shall not be deemed to be salary or other compensation
to Executive for purposes of computing benefits to
which he may be entitled under any pension or other
arrangement of Company for the benefit of its
employees.
(d) Any and all obligations of the Company, its successors,
and assigns. shall be relieved and discharged after the
date of the death of Executive except for those
payments and benefits owed to Executive's survivors
pursuant to the terms and conditions of any qualified
retirement plan maintained by the Company; and except
for payments or benefits under Sections 2(a), (b), (c).
(d), (g), and (h) above, which payments will be made to
Executive's estate,
(e) Should any provision of this Agreement be declared or
be determined by any court to be illegal or invalid,
the validity of the remaining parts, terms, or
provisions shall not be affected thereby
-5-
<PAGE> 6
and said illegal or invalid part, term, or provision
shall be deemed not to be a part of this Agreement.
(f) This Agreement sets forth the entire agreement between
the parties hereto, and fully supersedes any and all
prior agreements or understandings between the parties
pertaining to the subject matter of this Agreement.
(g) Executive may rescind this Agreement for a period of
seven (7) days following the date of Executive's
signature set forth below by providing written notice
to the Company of his intention to rescind this
Agreement. This Agreement shall become fully effective
and enforceable upon the expiration of such seven (7)
day period, in which case both parties shall be fully
bound by the terms hereof.
IN WITNESS WHEREOF the Executive and Company have executed this
Agreement.
12/23/98 /s/ Frederick L. Deichert
- ---------------------------- -----------------------------
Date Frederick L. Deichert
"Executive"
BAR TECHNOLOGIES, INC.
10/25/98 By: /s/ Thomas N. Tyrrell
- ---------------------------- -----------------------------
Date its: Chief Executive Officer
-------------------------
"Company"
-6-
<PAGE> 1
EXHIBIT 21
BAR TECHNOLOGIES INC.
SUBSIDIARIES OF THE REGISTRANT
The following are subsidiaries of Bar Technologies Inc. as of January 2, 1999:
<TABLE>
<CAPTION>
STATE OR OTHER
JURISDICTION OF PERCENT
NAME INCORPORATION OWNERSHIP
- ---- ------------- ---------
<S> <C> <C>
Bliss & Laughlin Industries Inc. Delaware 100%
Canadian Drawn Steel Company* Canada 100%
</TABLE>
* Canadian Drawn Steel Company is a wholly-owned subsidiary of Bliss & Laughlin
Industries Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-START> JAN-04-1998
<PERIOD-END> JAN-02-1999
<CASH> 2,188
<SECURITIES> 0
<RECEIVABLES> 29,191
<ALLOWANCES> 1,104
<INVENTORY> 74,168
<CURRENT-ASSETS> 107,119
<PP&E> 103,082
<DEPRECIATION> 12,983
<TOTAL-ASSETS> 222,501
<CURRENT-LIABILITIES> 168,569
<BONDS> 128,962
5,500
0
<COMMON> 2
<OTHER-SE> (91,441)
<TOTAL-LIABILITY-AND-EQUITY> (91,439)
<SALES> 271,851
<TOTAL-REVENUES> 271,851
<CGS> 262,462
<TOTAL-COSTS> 289,530
<OTHER-EXPENSES> (2,663)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,959
<INCOME-PRETAX> (41,975)
<INCOME-TAX> 3
<INCOME-CONTINUING> (41,978)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (41,978)
<EPS-PRIMARY> (33.14)
<EPS-DILUTED> (33.14)
</TABLE>
