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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM -------------------- TO --------------------
COMMISSION FILE NUMBER 1-6117
SOUTHDOWN, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
LOUISIANA 72-0296500
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1200 SMITH STREET
SUITE 2400
HOUSTON, TEXAS 77002-4486
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 650-6200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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<S> <C>
Common Stock, par value $1.25 per share New York Stock Exchange, Inc.
Preferred Stock Purchase Rights New York Stock Exchange, Inc.
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
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. ----
As of February 28, 1999, the number of shares of common stock outstanding
was 38.7 million. As of such date, the aggregate market value of voting stock
held by nonaffiliates, based upon the closing price of these shares on the New
York Stock Exchange, Inc. was approximately $1.8 billion.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended December 31, 1998 are incorporated by reference into Part II of this
report. Portions of the Registrant's definitive proxy statement for its 1999
Annual Meeting of Shareholders to be held on May 20, 1999, which will be filed
within 120 days of the Registrant's fiscal year ended December 31, 1998, are
incorporated by reference into Part III of this report.
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TABLE OF CONTENTS
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PAGE
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<S> <C> <C>
PART I
Item 1. Business
General................................................... 3
Company Operations
Cement Segment......................................... 3
Aggregates Segment..................................... 10
Concrete Products Segment.............................. 12
Environmental Matters..................................... 13
Employees................................................. 17
Segment Information....................................... 17
Item 2. Properties.................................................. 17
Item 3. Legal Proceedings........................................... 17
Item 4. Submission of Matters to a Vote of Security Holders......... 17
PART II
Item 5. Market for Registrant's Common Equity and Related Security 17
Holder Matters............................................
Item 6. Selected Financial Data..................................... 18
Item 7. Management's Discussion and Analysis of Financial Condition 18
and Results of Operations.................................
Item 7a. Quantitative and Qualitative Disclosures about Market 18
Risk......................................................
Item 8. Financial Statements and Supplementary Data................. 18
Item 9. Changes in and Disagreements with Accountants on Accounting 18
and Financial Disclosure..................................
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 18
Item 11. Executive Compensation...................................... 18
Item 12. Security Ownership of Certain Beneficial Owners and 19
Management................................................
Item 13. Certain Relationships and Related Transactions.............. 19
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 19
8-K.......................................................
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PART I
ITEM 1. BUSINESS.
GENERAL
Southdown, Inc. was organized in Louisiana in 1930 and maintains its
principal executive offices at 1200 Smith Street, Suite 2400, Houston, Texas
77002-4486, telephone (713) 650-6200. The Company reorganized its corporate
structure at the end of 1998 to merge most of its recently acquired Medusa
entities with and into Southdown and contribute the Company's California cement,
concrete products and aggregates operations to certain existing and newly
created wholly-owned subsidiaries of the Company. The terms "Southdown" and the
"Company" as used in this report, include subsidiaries of Southdown and also
predecessor corporations.
On June 30, 1998, the Company concluded a merger transaction with Medusa
Corporation. Medusa became a 100% owned subsidiary of the Company at that time.
The Medusa merger converted each outstanding Medusa common share into the right
to receive .88 shares of Company common stock. The Company issued approximately
14.7 million shares of its common stock for all of the outstanding common stock
of Medusa. The Medusa merger also converted Medusa's outstanding employee stock
options the same way, so these Medusa options became options to purchase
approximately 522,000 shares of Company common stock. The exchange of Medusa
shares and options for Company shares and options was tax-free. The transaction
was treated as a "pooling of interests" rather than a purchase of one company by
another. A pooling of interests accounts for a business combination as the
uniting of the ownership interests of companies by an exchange of stock. All
prior period consolidated financial statements presented provide the combined
results of operations, financial position and cash flows of the Company and
Medusa.
The Company operates in three business segments. Southdown is one of the
largest producers of cement in the U.S. The Company operates twelve portland
cement manufacturing plants located in Alabama, California, Colorado, Florida,
Georgia, Kentucky, Michigan, Ohio, Pennsylvania, Tennessee and Texas, plus an
extensive network of cement distribution terminals. The Company also mines,
processes, and sells construction aggregates and specialty mineral products in
the eastern half of the U.S. and in California and operates a subsidiary that
installs highway safety systems such as guardrails, traffic signals, highway
signage and lighting. In addition, the Company markets ready-mixed concrete
products in two of its largest cement markets, California and Florida.
COMPANY OPERATIONS
Information concerning the Company's net sales, operating profit, assets
employed and additional information attributable to each business segment for
each year in the three year period ended December 31, 1998 is included in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 65 through 74 and in Note 4 of Notes to Consolidated
Financial Statements on pages 41 through 43 of the Company's 1998 Annual Report
to Shareholders, which information is incorporated by reference.
CEMENT SEGMENT
Cement is the basic binding agent for concrete, a primary construction
material. The Company's cement products are produced primarily from raw
materials found at or near the Company's plant locations. Depending upon the
process at individual plants, production of one ton of finished product consumes
approximately 1.7 tons of raw material. The principal raw material used in the
production of portland cement is calcium carbonate found in the form of
limestone. The Company's total estimated recoverable reserves of limestone are
approximately 988 million tons located on approximately 26,000 acres, most of
which are owned by the Company in fee. Other raw materials, used in
substantially smaller portions than limestone, include sand, iron ore or other
iron bearing materials, clay and gypsum. When not found in adequate amounts in
the Company's quarries, these materials are purchased from outside suppliers.
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The manufacture of portland cement primarily involves the crushing,
grinding and blending of limestone and other raw materials into a chemically
proportioned mixture which is then processed in a rotary kiln at extremely high
temperatures to produce an intermediate product known as clinker. The clinker is
cooled and interground with a small amount of gypsum to produce finished cement.
As fuel is a major component in the cost of producing clinker, the
pyroprocessing systems of most modern cement plants incorporate some form of the
more fuel efficient "dry process" technology. In preheater/precalciner kilns,
the most modern application of this technology, the raw materials are initially
introduced into a preheater tower that utilizes hot exhaust gases from the kiln
to effect partial calcination of the raw materials before they enter the rotary
kiln. At present, eleven of the twelve plants operated by the Company,
representing approximately 96% of the Company's clinker capacity, utilize some
variation of the dry process manufacturing technology. In contrast, based on
1997 data, the most current information available, the Portland Cement
Association estimates that approximately 73% of the domestic cement industry's
capacity utilizes dry process technology.
Demand for cement is derived from the demand for concrete products which,
in turn, is dependent on the demand for construction. According to estimates of
the Portland Cement Association, the industry's primary trade organization, the
three construction sectors that are the major components of cement consumption
are (1) public works construction, including public buildings, (2) commercial
and industrial construction, and (3) residential construction. Public works
construction, which includes public buildings and infrastructure projects,
comprised 54% of U.S. cement consumption in 1997, the most recent period for
which such data is available. The U.S. Congress passed legislation in 1998 known
as the Transportation Equity Act for the 21st Century. This legislation
authorized $218 billion in federal expenditures on highways, bridges and mass
transit projects over the next six years. This represents a 44% increase over
the previous six-year period, which ended in 1997.
Commercial and industrial construction comprised 18% of U.S. cement
consumption in 1997, while residential construction comprised 22% and other
miscellaneous usage comprised 6%. Construction spending and cement consumption
has historically fluctuated widely. The construction sector, and hence demand
for cement and concrete, is affected by the general condition of the economy and
prevailing interest rates, and can exhibit substantial variations in activity
across the country as a result of the differing cycles and structures of
regional economies. The impact on the Company of regional construction cycles
may be mitigated to some degree by its geographic diversification. Because of
the high fixed-cost nature of the business, however, the overall profitability
of cement manufacturers, including the Company, is sensitive to variations in
sales volumes and shifts in the balance between supply and demand. The Company's
business is seasonal to the extent that construction activity tends to diminish
during the winter months in many areas of the country and during other periods
of inclement weather.
The Company's cement production facilities are located principally in the
eastern half of the U.S. and in certain key southwestern states. These plants
have a combined cement manufacturing capacity of approximately 11.2 million tons
(10.8 million tons, excluding the joint venture interests of others). All of the
facilities are wholly owned except for the Kentucky plant and the smaller plant
in Pennsylvania. These two plants are owned by Kosmos Cement Company, a joint
venture owned 75% by the Company and 25% by Lone Star Industries, Inc. The
Company is the operator of all twelve plants, including the two joint venture
plants.
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The following table shows certain information regarding the Company's
cement plants at December 31, 1998 based on clinker capacity at December 31,
1998 converted to cement at each plant's 1998 product mix. All references to
"tons" in this table and throughout this document are to U.S. short tons (2,000
pounds).
<TABLE>
<CAPTION>
ANNUAL ESTIMATED
NO. CLINKER CEMENT LIFE OF
OF MANUFACTURING CAPACITY LIMESTONE
PLANT LOCATION KILNS PROCESS (IN 000 TONS) RESERVES
-------------- ----- ------------- ------------- ---------
<S> <C> <C> <C> <C>
Victorville, California...... 2 Preheater/precalciner 2,050 70+ years
Long dry kiln
Brooksville, Florida......... 2 Preheater 1,460 90+ years
Charlevoix, Michigan......... 1 Preheater/precalciner 1,440 100+ years
Kosmosdale, Kentucky(1)...... 1 Preheater 875 100+ years
Demopolis, Alabama........... 1 Preheater 840 90+ years
Knoxville, Tennessee......... 1 Preheater/precalciner 800 65+ years
Fairborn, Ohio............... 1 Preheater 750 45+ years
Wampum, Pennsylvania......... 3 Long dry kilns 750 55+ years
Clinchfield, Georgia......... 1 Preheater 660 75+ years
Odessa, Texas................ 2 Preheater 600 100+ years
Long dry kiln
Lyons, Colorado.............. 1 Preheater/precalciner 520 20+ years
Pittsburgh,
Pennsylvania(1)............ 1 Wet 408 30 years(2)
------
11,153
======
</TABLE>
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(1) Owned by Kosmos Cement. The Company owns 75% of the joint venture and
operates the joint venture's plants, sales offices and terminals.
(2) The Company has a long-term supply agreement with an independent third party
to provide limestone for this plant.
As a result of continued high uptime and demand, the ratio of actual
clinker production to rated kiln capacity was approximately 98% in each of the
three years ended 1998. During each of the past three years, the Company has
also purchased cement from others for resale. In 1998, 4.8% of the cement sold
by the Company was acquired from third parties compared with 5.1% in 1997 and
4.1% in 1996.
During 1998, the Company sold approximately 11.4 million tons of cement
compared with 11.1 million tons in 1997 and 10.6 million tons in 1996. Sales
volumes attributable to the joint venture interests of others were approximately
300,000 tons in each of the three years 1998, 1997 and 1996. High levels of
construction activity in most regions of the country during the last several
years has resulted in a more favorable balance in the supply and demand for
cement which, in turn, has allowed sales prices to rise. During 1998, the
industry continued to benefit from demand growth and higher sales prices. As a
consequence of these improvements in market conditions, the Company's Cement
segment revenues and earnings have followed a pattern of continued growth since
1991.
Continued strength in all three construction sectors in 1998 resulted in
the fifth consecutive year of record setting cement consumption in the U.S. The
Portland Cement Association has estimated that total U.S. cement plant capacity
utilization was 96% for 1997, the most recent data available. Even at this high
rate of capacity utilization, the cement industry was required to rely on
readily available foreign cement imports to supplement domestic consumption. The
Portland Cement Association has estimated 1997 U.S. clinker production capacity
at 84 million tons (equivalent to approximately 89 million tons of cement
production capacity) while domestic cement consumption was estimated at 106
million tons. Several years of demand-supply relationships favorable to cement
producers have resulted in increasing cement prices to a level where
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the domestic cement industry has undertaken the capital investment necessary to
expand production capability.
The Portland Cement Association reports that, as of February 1999,
approximately 30 plant modernizations and expansion projects, including four new
cement plants, have been announced or are underway. These projects, if
completed, could add almost 18-20 million tons of new domestic cement
manufacturing capacity and increase existing capacity by 25%. The announced
expansions represent a significant change for the industry, but market forces
and other factors may intervene on plans and the Company does not anticipate
that all of the industry's announced expansions will actually be constructed.
Also, because of the long lead times associated with adding additional capacity,
any increased production capability is expected to be gradual over the next
several years. The Portland Cement Association has predicted U.S. cement use
will grow to 120.4 million tons by 2003, compared with an estimated 113.8
million tons of cement consumption in 1998. The Company, however, can offer no
guarantee regarding this predicted increase in near-term demand. In addition,
the Company does not know how much, if any, old, inefficient cement production
capacity may be retired during this period.
Business Strategy -- To enhance profitability and return on investment, the
Company intends to continue to focus on its core business through internal and
external growth opportunities, improving productivity and enhancing the
Company's market position. The Company plans to continue to take advantage of
opportunities for internal growth by modernizing and expanding certain of its
existing cement plants through innovation, incorporation of latest generation
process equipment and operational improvements. The Company has announced or
undertaken various capital projects to enhance the productivity and
incrementally expand the capacity of existing cement manufacturing facilities.
The table below compares the Company's annual cement capacity at the end of 1996
with the end of 1998 and pro forma at the end of announced expansions, assuming
completion of all Board approved and in-progress projects. Comparisons are based
on clinker capacity converted to cement at each plant's product mix.
<TABLE>
<CAPTION>
ANNOUNCED
PLANNED
ANNUAL CEMENT CAPACITY EXPANSIONS
--------------------------- ----------
DECEMBER 31, DECEMBER 31, PRO FORMA
PLANT LOCATION 1996 1997 1999/2001
-------------- ------------ ------------ ---------
(IN THOUSANDS OF TONS)
<S> <C> <C> <C>
Victorville, CA.......................................... 1,666 2,050 3,100
Brooksville, FL.......................................... 1,304 1,460 1,460
Charlevoix, MI........................................... 1,400 1,440 1,570
Kosmosdale, KY*.......................................... 791 875 1,575
Demopolis, AL............................................ 840 840 940
Knoxville, TN............................................ 729 800 800
Fairborn, OH............................................. 650 750 750
Wampum, PA............................................... 720 750 750
Clinchfield, GA.......................................... 660 660 835
Odessa, TX............................................... 538 600 600
Lyons, CO................................................ 448 520 575
Pittsburgh, PA*.......................................... 408 408 408
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10,154 11,153 13,363
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</TABLE>
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* Owned by Kosmos Cement. The Company owns 75% of the joint venture and operates
the joint venture's plants, sales offices and terminals.
The Company will continue to evaluate other internal and external
opportunities to expand and improve its competitive position and increase
profitability. Further, in an effort to increase the demand for cement and
concrete, the Company has taken a leadership role in the industry's development
of new promotional programs to increase concrete's market share in certain
applications relative to other building products. In addition, the
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Company will continue to pursue antidumping actions, if necessary, to prevent
unfairly priced foreign cement from adversely impacting the Company's markets.
COMPETITION
On the basis of statistics published by the Portland Cement Association, as
of the end of 1997, the most recent period for which such data is available, the
Company believes that, with the addition of the capacity acquired through the
Medusa merger in June 1998, it ranks second in total active cement manufacturing
capacity among the 44 cement producers (including joint ventures) in the U.S.
<TABLE>
<CAPTION>
U.S. CLINKER PERCENT OF
CAPACITY U.S.
RANK (000 TONS) INDUSTRY COMPANY NAME
---- ------------ ---------- ------------
<S> <C> <C> <C>
1...................... 10,699 12.7% Holnam, Inc.
2...................... 10,109 12.0 Southdown, Inc.
3...................... 6,935 8.2 Lafarge Corporation
4...................... 5,648 6.7 Ash Grove Cement Company
5...................... 5,503 6.5 CBR-HCI Construction Materials Corporation
6...................... 4,386 5.2 Blue Circle, Inc.
7...................... 4,135 4.9 Essroc Corporation
8...................... 3,953 4.7 Lone Star Industries, Inc.
9...................... 3,399 4.0 Texas Industries, Inc.
10...................... 3,317 3.9 California Portland Cement Company
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58,084 68.7 Total Top Ten
26,409 31.3 Others
------ -----
84,493 100.0% Total Industry
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</TABLE>
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Source: Portland Cement Association. Clinker capacity for joint venture
operations is based on each company's ownership interest. In general,
one ton of clinker will produce approximately 1.05 tons of cement,
although this conversion varies depending on the type of cement being
produced and other factors.
The cost of transporting cement is high relative to the value of the
product and, therefore, cement markets are generally regional. The market served
by a cement plant may be extended through the use of distribution terminals to
which cement is transferred in bulk and inventoried for sale to customers in
surrounding areas. The majority of the Company's cement sales are made directly
to users of portland and masonry cements, generally within a radius of
approximately 200 miles of each plant. However, access to water transport, which
is less expensive than truck or rail shipment, can effectively expand the market
area of a particular production facility.
The Company's Charlevoix, Michigan Great Lakes shipping location and
water-based terminals in Chicago, Illinois, Cleveland and Toledo, Ohio, Detroit
and Ferrysburg, Michigan, Manitowoc and Milwaukee, Wisconsin and Owen Sound,
Ontario enable about 90% of cement produced at the plant to be shipped by water.
The Company's Demopolis, Alabama plant serves river-based terminals in Nashville
and Chattanooga, Tennessee and in Decatur, Alabama. The Kosmosdale, Kentucky
cement plant serves river-based terminals in Cincinnati, Ohio and Huntington,
West Virginia. The Company's Pittsburgh, Pennsylvania cement plant serves a
river-based terminal in Charleston, West Virginia. The Company also operates
deepwater terminals in Riviera Beach and Tampa, Florida and in Castle Hayne and
Wilmington, North Carolina.
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The following table presents information regarding the market area served
by each of the Company's plants and the Company's estimate of the number of
major producers and import facilities in competition with the Company. Principal
Market Area Served includes markets served by the Company's network of cement
distribution terminals.
<TABLE>
<CAPTION>
PLANT LOCATION PRINCIPAL MARKET AREA SERVED NUMBER OF MAJOR COMPETITORS
-------------- ---------------------------- ---------------------------
<S> <C> <C>
Victorville, California.............. Primarily southern Six cement producers and four
California, and also Arizona deepwater import facilities
and southern Nevada and Utah
Charlevoix, Michigan................. Eastern Wisconsin, Nine cement producers
northeastern Illinois,
Michigan, northern Ohio
Brooksville, Florida................. Florida Three cement producers and
eleven deepwater import
facilities
Demopolis, Alabama................... Primarily Alabama, and also Five cement producers and one
Georgia, Mississippi and deepwater import facility
western Tennessee
Kosmosdale, Kentucky................. Kentucky, West Virginia and Eight cement producers
portions of Ohio, Indiana and
Tennessee
Fairborn, Ohio....................... Central and southern Ohio, Eight cement producers
eastern and southern Indiana
and Nebraska
Clinchfield, Georgia................. Georgia Seven cement producers and
one import facility
Knoxville, Tennessee................. Eastern Tennessee, North Nine cement producers and one
Carolina, and portions of deepwater import terminal
Kentucky, Virginia, South
Carolina, Georgia and Alabama
Wampum, Pennsylvania................. Western Pennsylvania and Nine cement producers
northern Ohio
Odessa, Texas........................ West Texas and Texas Eleven cement producers and
Panhandle, eastern New an import facility
Mexico, western Oklahoma,
southeastern Colorado and
southwestern Kansas
Lyons, Colorado...................... Northern and central Colorado Three cement producers
and southeastern Wyoming
Pittsburgh, Pennsylvania............. Western Pennsylvania and Four cement producers
portions of West Virginia and
Ohio
</TABLE>
Cement is a homogeneous commodity that is manufactured to meet standardized
technical specifications and is marketed primarily in bulk quantities without
special packaging or labeling. The Company's bagged cement products have
historically represented approximately 4 to 5% of the Company's total sales
volume. Although previously marketed under regional brand names, bagged cement
products are also marketed under the "Southdown" label beginning in 1999. The
Company also manufactures limited amounts of premium priced, specialty cement
products. Because of the commodity nature of the product, competition among
suppliers of cement is based primarily on price, with consistency of quality and
service to customers being of lesser significance. The overall demand for cement
is relatively price inelastic, however, since cement represents only a small
portion of total construction costs and cement has few substitutes in many
applications.
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The primary purchasers of cement in each of the Company's regional markets
are ready-mixed concrete companies. Except with respect to certain major
construction projects, it is not common in the industry to enter into long-term
sales contracts. From time-to-time, the Company has entered into annual sales
contracts with other cement manufacturers or distributors, but no one customer
represents 10% or more of the Company's consolidated revenues. Because long-term
contracts generally comprise only a small portion of total sales, the Company
does not believe that the concept of "backlog" is relevant for an understanding
of the cement industry.
As a result of the Company's vertical integration, approximately 36% in
1998 and, in both 1997 and 1996, 38% of the cement sold by the Company's
Brooksville, Florida plant was sold to the Company's Florida ready-mixed
concrete products operations. Approximately 17%, 19% and 18%, respectively, of
the cement sold by the Company's California plant in 1998, 1997 and 1996 was
sold to the Company's California ready-mixed concrete operations. Other
principal customers are manufacturers of concrete products such as blocks, roof
tiles, pipes and prefabricated building components. Sales are also made to
building materials dealers, other cement manufacturers, highway and other public
works project construction contractors and, in some regions, oil well cementing
companies. Approximately 43% in 1998 and, in both 1997 and 1996, 58% of the
Company's Texas plant's cement sales volume consisted of sales to oil well
cementing companies.
The Company's sales efforts are concentrated in its 13 sales offices. In
addition, the Company utilizes a network of cement distribution terminals, which
serves to broaden the Company's marketing area. These cement distribution
terminals and sales offices are located as follows:
CEMENT DISTRIBUTION TERMINALS
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<CAPTION>
STATE CITY STATE CITY STATE CITY
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<S> <C> <C> <C> <C> <C>
Alabama Birmingham Georgia Atlanta Ohio Cincinnati(1)
Alabama Decatur Georgia Bainbridge Ohio Cleveland
Alabama Mobile Georgia Buford Ohio Columbus
Alabama Montgomery Georgia Forest Park Ohio Toledo
Arizona Phoenix Georgia Rockmart Tennessee Chattanooga
California La Mirada Illinois Chicago Tennessee Gray Station
California Sacramento(2) Indiana Evansville(1)(2) Tennessee Kingsport
Colorado Florence Indiana Indianapolis(1) Tennessee Nashville(2)
Florida Freeport(2) Kentucky Lexington(1) Texas Amarillo
Florida Jacksonville Michigan Detroit West Virginia Charleston(1)
Florida Hallendale Michigan Ferrysburg West Virginia Huntington(1)
Florida Riviera Beach North Carolina Castle Hayne Wisconsin Green Bay
Florida Pensacola North Carolina Statesville Wisconsin Manitowoc
Florida Tallahassee North Carolina Wilmington Wisconsin Milwaukee
Florida Tampa Ontario, Canada Owen Sound
</TABLE>
CEMENT SALES OFFICES
<TABLE>
<CAPTION>
STATE CITY STATE CITY
----- ---- ----- ----
<S> <C> <C> <C>
Alabama Birmingham Michigan Detroit
California Brea Ohio Cleveland
Colorado Denver Ohio Fairborn
Florida Brooksville Pennsylvania Pittsburgh(1)
Georgia Clinchfield Tennessee Knoxville
Kentucky Kosmosdale(1) Texas Odessa
Wisconsin Milwaukee
</TABLE>
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(1) Owned by Kosmos Cement. The Company operates the joint venture's plants,
sales offices and terminals.
(2) Under construction with scheduled opening in 1999.
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Import Competition - During the 1980s there was a surge of unfairly priced
cement and clinker imports into the U.S. In response, U.S. industry
participants, including the Company, filed antidumping petitions in 1989 against
imports from Mexico and, in following years, against imports from Japan and
Venezuela. After investigations into the matter, the International Trade
Commission and the Department of Commerce decided in favor of the petitioners
and issued an antidumping order against Mexican cement and clinker in 1990 and
against Japanese cement and clinker in 1991. In addition, in February 1992,
Commerce suspended investigations of dumped and subsidized imports of cement and
clinker from Venezuela, based upon the Venezuelan cement producers' agreement to
change their prices to stop the dumping of gray portland cement and clinker from
Venezuela into the U.S. and the Venezuelan government's agreement not to
subsidize the Venezuelan cement producers.
As a result of legislation passed by the U.S. Congress in 1994, Commerce
and the International Trade Commission will conduct "sunset" reviews of the
antidumping orders and suspension agreements beginning in August 1999 to
determine whether they should be revoked or remain in effect for another five
years. The Company expects the sunset review process to take longer than a year
and believes there are strong arguments and evidence to convince Commerce and
the International Trade Commission to leave the antidumping remedies in effect.
In addition to the sunset reviews, decisions by Commerce, by North American Free
Trade Agreement binational panels or by the U.S. Courts on appeal of Commerce's
decisions in future administrative reviews could meaningfully reduce the
existing antidumping duties. If any of these events were to happen, there could
be a negative impact on the Company's results of operations.
U.S. imports of foreign cement began to increase in the mid-1990's as the
use of cement in the U.S. began to recover. The Portland Cement Association has
estimated that imports represented approximately 22% of cement used in the U.S.
during 1998 as compared with approximately 18% in 1997 and 16% in 1996. Unlike
the imports during the 1980's, however, most of the recent imports have provided
an additional source of supply rather than disrupting the market with unfair
prices. During most of the recent period of strong demand, the prices of cement
imports rose. The increase was attributable, at least in part, to the influence
of the outstanding antidumping orders and suspension agreements. While the
average cost of imported cement rose during 1998, the cost of cement imports
from some countries, particularly those from Southeast Asia, have declined.
Moreover, independently owned cement operators could undertake to construct new
import facilities and begin to purchase large quantities of low-priced cement
from countries not yet subject to antidumping orders, such as those in Asia,
which could compete with domestic producers. The introduction of low-priced
imported cement from such sources could have a negative impact on the Company's
results of operations.
In addition to receiving imported cement into its river based terminal
network, the Company owns or leases a total of four deepwater cement terminals
in locations capable of receiving imported cement directly. To supplement its
production capacity, the Company sought to meet excess demand with limited
purchases of imported cement beginning in 1994 and has increased purchases of
imported cement in each of the subsequent years, pending the Company's ongoing
investments to modernize and expand production capacity. The resumption of
dumping of low-priced imports on a large scale could have an adverse impact on
such pending investments.
AGGREGATES SEGMENT
The Aggregates segment includes mining, processing, packaging and selling
construction and specialty aggregates and also fabricating and installing
highway safety systems. Numerous aggregates acquisitions by Medusa in 1997 and
early 1998 and the merger of Medusa and Southdown in mid 1998 greatly expanded
the Company's market presence in this business.
Construction Aggregates -- These operations mine, crush, screen, wash and
sell various sizes of aggregates to the construction industry, primarily for use
in the manufacture of asphalt and concrete, as well as in such construction
applications as road base, drainage blankets, erosion control and other
applications. The Company estimates its annual capacity at about 11 million
tons. Construction aggregates are marketed as commodities and as such pricing is
the principal method of competition. Most aggregates are sold within a
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<PAGE> 11
35 mile radius of the plant and are shipped to the customer by truck. The
Company's construction aggregates business has approximately 3,000 customers.
The Company believes that it is among the low-cost producers in its primary
markets. The Company maintains its low-cost position through continuous plant
and quarry efficiency improvement programs.
Specialty aggregates -- Specialty aggregates operations include two types
of minerals products: (a) industrial limestone products and (b) lawn and garden
products. For industrial limestone products, white, high calcium limestone is
sold for use in the manufacture of white cement, as a calcium supplement for
livestock and poultry feeds, to treat acidic water conditions, to neutralize
acidic soil for more efficient crop yields, and to scrub sulfur emissions in
coal burning generating plants. The white limestone is also pulverized to a fine
powder and used to produce joint and caulking compounds, carpet backing, vinyl
floor tile, paints, plastics, and PVC pipe. Buff colored limestone is pulverized
and marketed for use in the production of asphalt shingles and other roofing
products.
Commercial markets such as golf courses, lawn care, grounds maintenance,
water conditioning, and agriculture are served with over 200 specialty mineral
products. Lawn and garden operations mine, process, package and distribute to
both consumer and commercial markets throughout the eastern half of the U.S.
Over 150 products for lawn care, gardening, landscaping and do-it-yourself
construction are shipped directly to over 3,500 retail garden centers and home
improvement outlets. Lawn and garden products are marketed under both the
Southdown(R) and Yardright(R) brand names. Limestone is applied to lawns and
agricultural fields to correct soil acidity, primarily in states east of the
Mississippi River, where high soil acidity is a problem. The Company believes it
has approximately a 35-40% share of the pelletized limestone market it serves.
The Company estimates that its three pelletizing operations have combined annual
capacity of over 200,000 tons. In addition to pelleted limestone and other
related liming products, other core products include pelleted gypsum, white
marble chips, natural colored landscaping stone, play sands, packaged concrete
and hydrated lime.
Aggregates Reserves -- Plant by plant, and at current construction
aggregates production levels, 95% of the Company's various aggregates reserves
will last from at least 10 years to over 50 years. At current production levels,
almost 100% of the Company's various mineral reserves will last from 30 years to
over 100 years. The following table indicates the location of the Company's
construction and specialty aggregates operations:
<TABLE>
<CAPTION>
LOCATION LOCATION
-------- --------
<S> <C>
COARSE AND FINE CONSTRUCTION AGGREGATES SPECIALTY AGGREGATES (MINERALS)
Azusa, California Lee, Massachusetts
Moorpark, California Sparta, New Jersey
Bardstown, Kentucky Thomasville, Pennsylvania
Bowling Green, Kentucky Paradise, Pennsylvania
Butler, Kentucky Castlewood, Virginia
Hartford, Kentucky
Columbia, Missouri
Sparta, New Jersey
Lenoir, North Carolina*
West Pittsburg, Pennsylvania
Castlewood, Virginia
</TABLE>
- ---------------
* Sold in January 1999.
Competition in the Aggregates segment includes numerous small and several
large aggregate quarry operators. Competition for sales volume is strong and is
based primarily on price with consistency of quality and service to customers
being of importance, but somewhat lesser significance. The Company's major
competitors are Global Stone, Georgia Marble, J.M. Huber and English China Clay
in specialty aggregates, and Hanson Boone Quarries, Vulcan Materials Company,
Martin Marietta Materials, Inc., Sterling Ventures, and East Fairfield Coal in
the construction aggregates market.
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<PAGE> 12
Highway Safety Construction -- Through the James H. Drew Corporation, a
wholly-owned subsidiary of the Company based in Indianapolis, Indiana, the
Aggregates segment also operates generally in the mid-western states installing
highway safety systems such as guardrails, traffic signals, signs, and highway
lighting. Although Drew functions primarily as a subcontractor to paving and
bridge contractors, approximately 30% of its work is bid directly to state
highway departments and municipalities.
CONCRETE PRODUCTS SEGMENT
Ready-mixed concrete is a versatile, low-cost building material used in
almost all construction applications. Concrete is produced in batch plants by
mixing stone, sand, water and chemical admixtures with cement, the basic binding
agent, and is transported to the customer's job site in mixer trucks. The
Company has vertically integrated its operations in the regional vicinity of its
two largest cement plants, which are located in Florida and in California.
During the last three years, the Florida concrete products operations have
consumed approximately 38% of the cement sold by the Company's Florida cement
plant, while the California concrete products operations have purchased between
17% and 19% of the cement sold by the Company's California cement plant. The
Company believes that this vertical integration into ready-mixed concrete and
concrete products operations enhances its overall competitive position in these
markets, where most cement producers are vertically integrated.
The Company, doing business in both California and in Florida as Southdown
Concrete Products, Inc., is a producer of ready-mixed concrete in each area. The
California operation sells primarily to commercial and industrial builders, as
well as contractors on public construction projects. Southdown Concrete Products
in Florida is a major producer and supplier of ready-mixed concrete and concrete
masonry. Florida sales include a high percentage of sales to residential
builders.
The Company's Concrete Products segment operates a combined total of
approximately 550 ready-mixed concrete trucks, approximately 66 batch plants and
9 concrete block plants. The Company's estimate of its combined annual practical
capacity as of December 31, 1998 is in excess of 4.5 million cubic yards. The
Company's concrete products operations in California and Florida each purchase
most of their cement from the Company's cement plants in California and Florida,
respectively. The California concrete products operations extract their sand and
gravel primarily from the two California aggregate quarries. The Company
currently purchases sand and gravel for use in its Florida ready-mixed concrete
operations under a long-term aggregate supply contract. Alternative supplies of
cement and aggregate are readily available from other sources, if necessary.
Market Conditions
The demand for concrete products is derived from the demand for
construction. The construction sector is subject to the vagaries of weather
conditions, the availability of financing at reasonable interest rates and
cyclical fluctuations in regional economies. The burden of relatively high fixed
costs results in a disproportionate impact on profits from only minor variations
in sales volume. Seasonal factors are not as significant in the market areas
served by the Company's concrete products businesses as in some markets, but
construction activity tends to diminish during prolonged periods of inclement
weather. In 1998, Company sales volumes were 3.6 million cubic yards of
ready-mixed concrete. Ready-mixed concrete sales volumes totaled approximately
3.7 million cubic yards in both 1997 and 1996.
Competition within each market includes numerous small and several large
ready-mixed concrete operators. Competition for sales volume is strong, and is
based primarily on price, with consistency of quality and service to customers
being of lesser significance. In Florida, the Company's principal competitors
include Tarmac Florida, Inc., Rinker Materials Corp. and Florida Rock
Industries, Inc. In California, the Company's principal competitors include
United Ready-Mixed Concrete Co. Inc., A&A Ready-Mixed Concrete, Inc.,
Robertson's Ready Mix, Inc. and Catalina Pacific Concrete, Inc.
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<PAGE> 13
ENVIRONMENTAL MATTERS
The Company is subject to a wide range of federal, state and local laws,
regulations and ordinances dealing with the protection of human health and the
environment. These laws regulate water discharges and air emissions, as well as
the handling, use and disposal of hazardous and non-hazardous waste materials.
These laws also create a shared liability by responsible parties for the cost of
cleaning up or correcting releases to the environment of designated hazardous
substances. The Company or its predecessors have conducted industrial operations
at the Company's cement manufacturing facilities for many years. As was common
in the industry, the Company in the past disposed of various materials used in
its cement manufacturing and concrete products operations in onsite and offsite
facilities. Today, some of these materials may be classified as hazardous
substances. The Company, therefore, may have to remove or mitigate the
environmental effects of the disposal or release of certain substances at the
Company's various operating facilities or elsewhere.
Several of the Company's previously and currently owned facilities have
become the subject of various local, state or federal environmental proceedings
and inquiries. While some of these matters have been settled, others are in
their preliminary stages and may not be resolved for years. The information
developed to date on these matters is not complete. Based on what it knows
currently, however, the Company does not believe it will be required to spend
significantly more on these matters than the amounts already recorded in the
Company's financial statements. However, until all (1) environmental studies and
investigations, (2) remediation work, (3) negotiations with other parties that
may be responsible, or (4) litigation against other potential sources of
recovery have been completed, it is impossible to determine the ultimate cost
that the Company might incur to resolve these environmental matters.
Cement Kiln Dust -- Cement manufacturing plants, depending on their process
design, raw materials characteristics, product specifications and other factors,
may generate a low toxicity by-product known as cement kiln dust or CKD. Most
manufacturing plants in the industry typically disposed of CKD in and around
their plant sites since the inception of cement manufacturing operations. CKD is
currently not regulated as a hazardous waste. The U.S. Environmental Protection
Agency decided in 1995 that some further regulation of CKD was necessary. At the
same time, the U.S. EPA stated that it (1) found no evidence of risks associated
with the use of cement products and (2) believes most secondary uses of CKD do
not present significant risks to people or the environment. The U.S. EPA began a
rulemaking process in order to develop specially tailored CKD management
standards. The Company expects the U.S. EPA to propose new CKD standards by the
end of 1999. Once finalized, these new CKD standards may require the cement
industry to implement new management practices for this waste material.
If CKD becomes saturated with water, liquid that leaches out may have an
alkalinity level high enough to be classified as hazardous. Saturated CKD may
also leach out certain hazardous trace metals if they are present. Discharges of
pollutants have been alleged from two CKD sites in the vicinity of the Company's
Ohio cement plant and one site in the vicinity of its recently acquired Medusa
cement plant in Michigan. For one of the Ohio sites, the Company has previously
recorded remediation charges totaling approximately $13 million where leaching
occurred. The Company is involved in a lawsuit with a private party over the
other Ohio site, but the Company believes it has no liability in the matter
since the Company no longer owns the property and, therefore, should have no
ongoing obligation to obtain a permit for the alleged discharge from the site,
the sole allegation in the lawsuit.
The Company is investigating potential contamination from a total of nine
separate CKD piles at its cement plant in Michigan. The Company is also working
with a consultant and the Michigan Department of Environmental Quality to
develop a new on-site CKD landfill. During 1997, Medusa proposed building a new
landfill on top of one of the identified CKD piles. The new $2 million landfill
is expected to remedy the problems with three existing CKD piles, because the
new landfill will serve to cap one of the existing CKD piles and two others will
be relocated into the new landfill. The new landfill, as permitted, would also
be large enough for the disposal of CKD generated in the future for the next 30
years. The Michigan Department of Environmental Quality gave final approval for
construction of this landfill in April 1998.
The Company's Michigan cement plant has also submitted plans to the
Michigan Department of Environmental Quality concerning the remediation of the
other six identified CKD piles. These plans are
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<PAGE> 14
currently under review by the Michigan Department of Environmental Quality. The
Company estimates total costs associated with these plans are in the range of $5
million to $9 million. In the fourth quarter of 1997, Medusa accrued $3.6
million related to various non-capital costs associated with the nine CKD piles.
As a result of further investigation, the Company accrued an additional $1.6
million in CKD remediation costs in June 1998, based on the most current
information available. The Company does not know when or if the various
remediation proposals will be approved by the Michigan Department of
Environmental Quality. At the present time, the Company does not know the
ultimate cost to resolve these issues or over what period the Company will incur
these costs.
The California Regional Water Quality Control Board required the Company to
investigate the status of two CKD disposal sites at the Company's California
cement plant. The initial phase of the investigation showed no deleterious
impacts to groundwater at one site, but the Company is continuing to monitor the
groundwater at this site. The Company believes there is little likelihood of
groundwater impacts at the second California site because of the great depth to
groundwater aquifers.
The Georgia EPA has required the Company's Clinchfield, Georgia cement
plant to investigate potential groundwater impacts from a landfill at the plant.
Although groundwater monitoring at this plant is in its initial phase, the
results to date do not indicate there were releases from the landfill.
The Company owns a total of approximately 40 CKD disposal sites. The
Company has not had reason to conduct meaningful investigation at any of its
other CKD disposal sites.
Clean Air Act -- Regulations issued under the Clean Air Act Amendments of
1990 May result in increased capital and operational expenses for the Company in
the future. The Company does not know how much of an increase that might be. In
addition, the U.S. EPA is developing air toxics regulations for a broad range of
industrial sectors, including portland cement manufacturing. If enacted, these
new standards would apply to everyone in the industry. However, because of the
age, condition and design of its plants, management believes the Company would
not be at a disadvantage with respect to its competitors.
In July 1997, the U.S. EPA promulgated revisions to two National Ambient
Air Quality Standards under the Clean Air Act -- particulate matter and
photochemical oxidants (ozone). Because of the nature of the Company's
operations, the proposed addition of a particulate matter standard that will
regulate particles 2.5 microns or less in diameter, and the regulation of
nitrogen oxides emissions as the precursor pollutants to ozone, is of potential
concern. Implementation of these new standards will not immediately have an
impact on industrial operations. The first step is a several-year data
collection and analysis activity by the states to determine whether or not the
state will be able to meet the new standards. If a state is unable to
demonstrate that it attains the standards, it will then be required to modify
its air quality implementation plan to describe actions to meet the new
standards. It is presently unknown whether states in which the Company operates
will be able to meet the new standards, how the states will modify their
implementation plans to demonstrate compliance and/or the ultimate technology
and cost impact on the Company's operations.
Another evolving issue of potential significance to the Company is global
warming and the international accord on carbon dioxide stabilization/reduction.
Carbon dioxide is a greenhouse gas many scientists and others believe
contributes to a warming of the Earth's atmosphere. In December 1997, the United
Nations held an international convention in Kyoto, Japan to take further
international action to ensure greenhouse gas stabilization and/or reduction
after the turn of the century. The conference agreed to a protocol to the United
Nations Framework Convention on Climate Change originally adopted in May 1992.
The protocol establishes quantified emission reduction commitments for certain
developed countries, including the U.S., and certain countries that are
undergoing the process of transition to a market economy. These reductions are
to be obtained by 2008-2012. The protocol was made available for signature by
member countries starting in the spring of 1998. The protocol will require
Senate ratification and enactment of implementing legislation before it becomes
effective in the United States.
The consequences of greenhouse gas reduction measures for cement producers
are potentially significant because carbon dioxide is generated from combustion
of fuels such as coal and coke in order to generate the high temperatures
necessary to manufacture cement clinker (which is then ground with gypsum to
make
14
<PAGE> 15
cement). In addition, carbon dioxide is generated in the calcining of limestone
to make cement clinker. Any imposition of raw material or production limitations
or fuel-use or carbon taxes could have a significant impact on the cement
manufacturing industry. It will not be possible to determine the impact on the
Company until governmental requirements are defined and/or the Company can
determine whether emission offsets and/or credits are obtainable, and whether
alternative cementitious products or alternative fuel can be substituted.
The Company's Wampum, Pennsylvania cement plant has received five Notices
of Violation from the U.S. EPA alleging certain air emission violations. The
U.S. EPA has referred these notices to the U.S. Department of Justice for
potential civil enforcement. Three of the notices allege opacity and fugitive
emissions violations of Pennsylvania law and maintain that the provisions are
enforceable by federal authorities. The two remaining notices allege visible
emissions violations related to the provisions of the plant's state operating
permit for burning waste-derived liquid fuel. These notices also maintain that
the state permit provisions are enforceable by federal authorities.
The parties have negotiated a preliminary agreement in principle subject
also to the negotiation of a mutually agreeable consent decree. The Company
anticipates that the consent decree will include future compliance obligations
and penalty payments. The Company does not expect the penalty payments to
materially exceed the amount the Company has already reserved for this matter.
Discussions are still ongoing, however, and therefore, the Company is unable at
this time to provide assurances as to the ultimate liability that may be
associated with these matters.
Waste-Derived Liquid Fuels -- The Company operates two cement plants
(Wampum, Pennsylvania and Demopolis, Alabama) that historically have used
waste-derived liquid fuels as a supplemental fuel source. The use of
waste-derived liquid fuels is subject to emission limits and other requirements
under the Resource Conservation and Recovery Act and regulations issued under
the Act. The regulations apply to plants operating under "interim status" while
the plants go through the process to get a RCRA permit. The regulations are
extremely complex. The Company is required to test periodically for compliance
with the rules and submit certificates of compliance. The tests are subject to
monitoring and review by the U.S. EPA. The Company believes it is complying with
the regulations. The Company cannot say for certain, however, that the U.S. EPA
or other agencies will always agree with the Company or not require additional
tests or levy fines for non-compliance.
Following the merger with Medusa Corporation, the Company thoroughly
evaluated the use of waste-derived liquid fuel at these two plants and decided
the practice is incompatible with the Company's other cement operations because
it reduces productivity, increases compliance costs, and has the potential to
create other liabilities. The Company has already stopped burning waste-derived
liquid fuel at one of the two plants and intends to stop burning waste-derived
liquid fuel at the second plant in early 1999. Environmental regulations require
plants that have used waste-derived liquid fuel to go through "closure
procedures" once the use of these fuels ceases. The Company anticipates it will
have completed closure requirements at both plants by June 30, 1999. Of the
$82.9 million initial estimate of merger related transaction costs, $2.2 million
represents costs related to exiting this incompatible business activity. The
charge includes the estimated cost of the closure procedure and the writedown of
the Company's assets associated with the waste-derived liquid fuel handling.
In April 1998, the Company entered into a Consent Order with the U.S. EPA
that requires the Company to take samples at six of the seven areas the U.S. EPA
has identified as "solid waste management units" at the Kosmosdale cement plant.
The Consent Order itself does not (1) require remediation, (2) provide a
mechanism for remediation, or (3) require any payment by the Company to the U.S.
EPA. If the Company finds no hazardous constituents of concern at the solid
waste management units or if there does not appear to be a threat to human
health or the environment from such constituents, then the U.S. EPA will provide
a "no further action determination." If hazardous constituents are present at
levels of concern at any of the solid waste management units, the Consent Order
provides a way for the U.S. EPA to require in-depth investigation and an
analysis of whether remediation is necessary at any solid waste management
units. In a similar situation, the Company received notice in February 1999 that
no further action is required at the present time at the twenty-five solid waste
management units at the Company's Knoxville, Tennessee cement plant.
15
<PAGE> 16
Concrete Products -- As with the cement operations, the concrete products
operations are presently the subject of extensive local, state or federal
environmental laws and regulations.
Aggregates Acquisitions -- During 1997, Medusa assumed $8.1 million in
estimated environmental liabilities related to three aggregates acquisitions.
Environmental matters related to the acquired properties include (1)
environmental cleanup, (2) containment and compliance matters including waste
lime, coal ash and kiln brick issues, (3) wetland considerations, and (4)
underground and above ground storage tank removal. Although the Company believes
the $8.1 million reserve on its books is adequate to remedy these environmental
problems, it is impossible to know with certainty until all work is complete.
The Company, along with other entities with operations in the San Gabriel
basin in the vicinity of Azusa, California, has received notices of potential
responsibility and requests for information by the U.S. EPA. The Company
presently leases and operates a quarry in the vicinity of Azusa, which the
Company sold, together with a related landfill, to a subsidiary of
Browning-Ferris Industries, Inc. in 1987. Browning-Ferris is contractually
obligated to indemnify the Company for any environmental liability arising from
the Company's prior ownership of the land comprising its current aggregates and
ready-mixed plant and the landfill site. Browning-Ferris is also contractually
obligated to indemnify the Company for any environmental liability arising from
the Company's operation of the Azusa landfill prior to the sale of the property
to Browning-Ferris in 1987. The Company has formally requested that
Browning-Ferris indemnify and defend the Company with respect to these matters,
but is unable to quantify the amount of indemnification being sought.
Recurring Costs of Environmental Compliance -- Management believes that the
Company's current procedures and practices for handling and management of
materials are generally consistent with industry standards and legal
requirements and that appropriate precautions are taken to protect employees and
others from harmful exposure to hazardous materials. However, because of the
complexity of operations and legal requirements, there can be no assurance that
past or future operations will not result in operational errors, violations,
remediation liabilities or claims by employees or others alleging exposure to
toxic or hazardous materials. Owners and operators of industrial facilities may
be subject to fines or other actions imposed by the U.S. EPA and corresponding
state regulatory agencies for violations of laws or regulations relating to
hazardous substances. The Company has incurred fines imposed by various
environmental regulatory agencies in the past.
The Company's compliance with the exacting requirements and varying
interpretations of applicable laws and regulations related to the protection of
human health and the environment requires substantial expenditures and
significant amounts of management time and energy. Although the Company does not
maintain records that segregate such costs from the other costs of on-going
operations, management believes recurring environmental compliance costs are a
material component of total costs. In addition to current period expenses, the
Company typically spends several million dollars a year on capital projects
related to environmental compliance. Approximately $13.6 million, 7% of the
budgeted 1999 capital expenditures, is related to compliance with environmental
regulations.
While the Company commits substantial resources to complying with the laws
and regulations concerning the protection of human health and the environment,
the Company considers this to be an integral part of its business. As a
consequence, management does not believe that environmental compliance
expenditures place the Company at a competitive disadvantage with respect to
other companies engaged in similar lines of business operating in the U.S.
However, because of the complexity and uncertainty of existing and future
environmental requirements, permit conditions, costs of new and existing
technology, potential remedial costs and insurance coverages, and/or
enforcement-related activities and costs, it is difficult for management to
estimate the ultimate level of Company expenditures related to environmental
matters. While amounts accrued and paid in the past have not been material, the
Company's capital expenditures and operational expenses for environmental
matters have increased and are likely to increase in the future. The Company
cannot determine at this time whether capital expenditures and other remedial
action that the Company may be required to undertake to comply with the changing
environmental protection laws will materially affect its capital expenditures or
earnings. With respect to known environmental contingencies, the
16
<PAGE> 17
Company has recorded provisions for estimated probable liabilities and does not
believe that the ultimate resolution of such matters will have a material effect
on the Consolidated Financial Statements.
EMPLOYEES
As of December 31, 1998, the Company employed approximately 3,700 persons,
including approximately 1,750 in the cement manufacturing operations, 1,050 in
the concrete products operations, 750 in the aggregates operations and the
remainder in the corporate office. Approximately 35% of the employees are
represented by collective bargaining units, primarily the International
Brotherhood of Boilermakers. Collective bargaining agreements are in effect at
all the Company's cement plants, except for the non-union facility located in
Florida. Labor agreements with the local union of the United Cement, Lime,
Gypsum and Allied Workers Division (International Brotherhood of Boilermakers,
Iron Ship Builders, Blacksmiths, Forgers and Helpers, AFL-CIO) covering the
hourly workers at the Wampum and Louisville plants and at the Lee plant expire
on April 30, 1999 and May 31, 1999, respectively. Other labor contracts expire
at various dates between March 1, 2000 and May 1, 2004.
SEGMENT INFORMATION
Revenues and earnings before interest expense and income taxes contributed
by each of the Company's industry segments during the periods indicated as well
as identifiable assets, depreciation, depletion and amortization and capital
expenditures by segment are presented in Note 4 of Notes to Consolidated
Financial Statements, which is incorporated by reference.
ITEM 2. PROPERTIES
The material appearing under Item 1 is incorporated hereunder by reference,
pursuant to Rule 12b-23.
ITEM 3. LEGAL PROCEEDINGS
In the ordinary course of business, the Company may from time-to-time be a
named defendant in lawsuits related to various matters including personal
injury, contractual indemnifications, environmental remediation, product
liability and employment matters. Based on the information developed to date and
advice of outside counsel, the Company is of the opinion that any liability
related to these lawsuits that exist as of the date of this report, individually
or in the aggregate, will not materially exceed the amounts accrued on the
Company's books as of December 31, 1998 and will have no material adverse effect
on the consolidated financial statements of the Company.
The information appearing under "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources -- Known Events, Trends and Uncertainties -- Environmental Matters" is
incorporated by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders during the
quarter ended December 31, 1998.
PART II
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS.
The information required by this Item appears under the caption "Market
Prices and Dividends on Common Stock" on Page 76 of the Company's Annual Report
to Shareholders for the year ended December 31, 1998 and such information is
incorporated by reference.
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<PAGE> 18
ITEM 6. SELECTED FINANCIAL DATA.
Selected financial data has been included on page 77 of the Company's
Annual Report to Shareholders for the year ended December 31, 1998 and such data
is incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information required by this Item appears on Pages 65 through 74 of the
Company's Annual Report to Shareholders for the year ended December 31, 1998 and
such information is incorporated by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The information required by this Item appears on Page 74 of the Company's
Annual Report to Shareholders for the year ended December 31, 1998 and such
information is incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following consolidated financial statements and supplementary data of
the Company and its subsidiaries, included in the Annual Report to Shareholders
for the year ended December 31, 1998, are incorporated by reference.
<TABLE>
<CAPTION>
ANNUAL
REPORT
PAGE NO.
--------
<S> <C>
Independent Auditors' Report................................ 31
Statement of Consolidated Earnings for the years ended
December 31, 1998, 1997 and 1996.......................... 32
Consolidated Balance Sheet as of December 31, 1998 and
1997...................................................... 33
Statement of Consolidated Cash Flows for the years ended
December 31, 1998, 1997
and 1996.................................................. 34
Statement of Consolidated Comprehensive Income for the years
ended December 31, 1998, 1997 and 1996.................... 34
Statement of Consolidated Shareholders' Equity for the years
ended December 31, 1998, 1997 and 1996.................... 35
Notes to Consolidated Financial Statements.................. 36
Selected Quarterly Financial Data (unaudited)............... 75
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this Item will be included under the captions
"Board of Directors", "Executive Officers of the Company", and "Compliance with
Section 16(a) of the Exchange Act", in the Company's definitive proxy statement
for its 1999 Annual Meeting of Shareholders to be held on May 20, 1999 (the 1999
Proxy Statement) to be filed not later than 120 days after the close of the
Company's fiscal year. Such information is incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item will be included under the caption
"Executive Compensation and Other Matters" in the 1999 Proxy Statement to be
filed not later than 120 days after the close of the Company's fiscal year. Such
information is incorporated by reference.
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<PAGE> 19
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item will be included under the caption
"Stock Ownership" in the 1999 Proxy Statement to be filed not later than 120
days after the close of the Company's fiscal year. Such information is
incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item will be included under the caption
"Board Compensation Arrangements and Transactions" in the 1999 Proxy Statement
to be filed not later than 120 days after the close of the Company's fiscal
year. Such information is incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(A) 1. FINANCIAL STATEMENTS
Item 8 of this report lists certain consolidated financial statements and
supplementary data of the Company and its subsidiaries incorporated by reference
from the Annual Report to Shareholders for the year ended December 31, 1998,
which list includes a reference to pertinent page numbers in such Annual Report.
2. FINANCIAL STATEMENT SCHEDULES
No schedules are included because they are not applicable or the required
information is shown in the financial statements or notes thereto.
3. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <C> <S> <C>
2.1 -- Agreement and Plan of Merger dated as of March 17, 1998, as amended,
among Medusa Corporation, the Company and Bedrock Merger
Corp. -- incorporated by reference from Exhibit 2.1 to the Company's
Registration Statement on Form S-4 (Registration Statement No.
333-49161) filed April 2, 1998
*3.1 -- Restated Articles of Incorporation of the Company, as amended through
March 4, 1991
*3.2 -- Articles of Amendment to the Restated Articles of Incorporation of the
Company as amended through June 25, 1998
3.3 -- Bylaws of the Company amended as of March 26, 1998 -- incorporated by
reference from Exhibit 3.3 to the Company's Form 8-A/A dated April 1,
1998
4.1 -- Indenture dated as of March 19, 1996 between the Company and State
Street Bank and Trust Company as Trustee as relating to the Company's
10% Senior Subordinated Notes due 2006, Series B -- incorporated by
reference from Exhibit to the Company's Registration Statement on Form
S-4 (Registration No. 333-02585) filed April 17, 1996
4.2 -- Certain instruments defining the rights of holders of long-term debt
instruments representing less than 10% of the consolidated assets of
the Company have not been filed as exhibits to this report. The Company
agrees to furnish a copy of any such instrument to the Commission upon
request
4.3 -- Rights Agreement dated as of March 4, 1991 between the Company and
Chemical Shareholder Services Group, Inc. (formerly Texas Commerce Bank
National Association) as Rights Agent -- incorporated by reference from
Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996
</TABLE>
19
<PAGE> 20
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <C> <S> <C>
+10.1 -- 1987 Stock Option Plan of Southdown, Inc. -- incorporated by reference
from Exhibit 10.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended 1997
*+10.2 -- 1989 Stock Option Plan of Southdown, Inc.
+10.3 -- Form of Nonqualified Stock Option Agreement -- incorporated by
reference from Exhibit 10.3 to the Company's Annual Report on Form 10-K
for the fiscal year ended 1997
*+10.4 -- Form of Special Severance Program dated May 18, 1989
*+10.5 -- Form of Supplemental Pension Agreement and amendment to Supplemental
Pension Agreement
*+10.6 -- Form of Employment Agreements between the Company and certain executive
officers, as more specifically described below:
NAME OF OFFICER DATE OF EMPLOYMENT AGREEMENT
----------------------------------- -----------------------------------
(a) Clarence C. Comer.............. December 19, 1997
(b) J. Bruce Tompkins.............. March 24, 1998
(c) Dennis M. Thies................ January 21, 1999
(d) Stephen R. Miley............... December 19, 1997
+10.7 -- Southdown, Inc. Pension Plan as adopted on May 19, 1994 -- incorporated
by reference from Exhibit 99.1 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1994
+10.8 -- Southdown, Inc. Retirement Savings Plan as amended and restated on July
1, 1990 -- incorporated by reference from Exhibit 99.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994
+10.9 -- Southdown, Inc. Directors' Retirement Plan -- incorporated by reference
from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1995
+10.10 -- First Amendment to the Southdown, Inc. Directors' Retirement Plan
-incorporated by reference from Exhibit 10.10 to the Company's Annual
Report on Form 10-K for the fiscal year ended 1996
+10.11 -- Southdown, Inc. 1991 Nonqualified Stock Option Plan for Non-employee
Directors -- as amended November 21, 1996 -- incorporated by reference
from Exhibit 10.11 to the Company's Annual Report on Form 10-K for the
fiscal year ended 1996
+10.12 -- Southdown, Inc. Phantom Stock and Deferred Compensation Plan for
Non-employee Directors -- incorporated by reference from Exhibit 10.12
to the Company's Annual Report on Form 10-K for the fiscal year ended
1996
+10.13 -- Southdown, Inc. Annual Incentive Plan dated April 11,
1996 -- incorporated by reference from Exhibit 10.13 to the Company's
Annual Report on Form 10-K for the fiscal year ended 1996
+10.14 -- Southdown, Inc. Key Employee Share Option Plan effective December 30,
1997 -- incorporated by reference from Exhibit 10.15 to the Company's
Annual Report on Form 10-K for the fiscal year ended 1997
+10.15 -- Supplemental Executive Retirement Plan effective October 1, 1997 --
incorporated by reference from Exhibit 10.16 to the Company's Annual
Report on Form 10-K for the fiscal year ended 1997 .
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <C> <S> <C>
10.16 -- Third Amended and Restated Credit Agreement as of November 3, 1995
among the Company; Wells Fargo Bank, N.A.; Societe Generale, Southwest
Agency; Credit Suisse First Boston; Caisse National De Credit Agricole;
Banque Paribas; CIBC Inc.; The Bank of Nova Scotia; and BankBoston,
N.A. -- incorporated by reference to Exhibit 99.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995
10.17 -- Letter Agreement dated February 29, 1996, amending the Third Amended
and Restated Credit Agreement as of November 3, 1995, among the Company
and the banks party thereto -- incorporated by reference from Exhibit
99.2 to the Company's Registration Statement on Form S-4 (Registration
No. 333-02585) filed April 17, 1996
10.18 -- Amendment Number Two to Third Amended and Restated Credit Agreement,
dated as of September 30, 1996, among the Company; Wells Fargo Bank,
N.A.; Societe Generale, Southwest Agency; Credit Suisse First Boston;
Caisse National De Credit Agricole; Banque Paribas; CIBC, Inc.; The
Bank of Nova Scotia; and the BankBoston, N.A. -- incorporated by
reference from Exhibit 99.2 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997
10.19 -- Amendment Number Three to the Third Amended and Restated Credit
Agreement, dated as of August 6, 1997, among the Company, Wells Fargo
Bank, N.A.; Societe Generale, Southwest Agency; Credit Suisse First
Boston; Caisse National De Credit Agricole; Banque Paribas; CIBC, Inc.;
The Bank of Nova Scotia; and BankBoston, N.A. -- incorporated by
reference from Exhibit 99.3 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997
10.20 -- Amendment Number Four to the Third Amended and Restated Credit
Agreement, dated as of August 6, 1997, among the Company, Wells Fargo
Bank, N.A.; Societe Generale, Southwest Agency; The Bank of Nova
Scotia; Credit Suisse First Boston; Credit Agricole Indosuez; an
affiliate of Canadian Imperial Bank of Commerce; Bank Paribas and
BankBoston, N.A. -- incorporated by reference from Exhibit 99.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1998
*10.21 -- Amendment Number Five to the Third Amended and Restated Credit
Agreement, dated as of December 18, 1998, among the Company, Wells
Fargo Bank, N.A.; Societe Generale, Southwest Agency; The Bank of Nova
Scotia; Credit Suisse First Boston; Credit Agricole Indosuez; PNC Bank,
N.A.; Bank Paribas and BankBoston, N.A
10.22 -- Agreement dated May 1, 1998 by and between the Company and the Cement,
Lime, Gypsum and Allied Workers Division, International Brotherhood of
Boilermakers, Iron Builders, Blacksmiths, Forgers and Helpers, AFL-CIO,
Local Union D-23 -- incorporated by reference from Exhibit 99.2 to the
Company's Quarterly Report on Form 10-Q for the Quarter ended June 30,
1998
10.23 -- Agreement dated May 1, 1998 by and between the Company and the Cement,
Lime, Gypsum and Allied Workers Division, International Brotherhood of
Boilermakers, Iron Builders, Blacksmiths, Forgers and Helpers, AFL-CIO,
Local Union D-480 -- incorporated by reference from Exhibit 99.3 to the
Company's Quarterly Report on Form 10-Q for the Quarter ended June 30,
1998
10.24 -- Agreement dated March 1,1998 by and between the Company and the
International Brotherhood of Boilermakers, Cement, Lime, Gypsum and
Allied Workers Division, Lodge D-357 -- incorporated by reference from
Exhibit 99.4 to the Company's Quarterly Report on Form 10-Q for the
Quarter ended June 30, 1998
</TABLE>
21
<PAGE> 22
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <C> <S> <C>
10.25 -- Agreement dated May 1, 1996 by and between Kosmos Cement Company and
the International Brotherhood of Boilermakers, Cement, Lime, Gypsum and
Allied Workers Division, Lodge D-595 -- incorporated by reference from
Exhibit 99.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996
10.26 -- Agreement dated August 16, 1993, as amended November 16, 1995, by and
between the Company and the United Paperworkers International Union,
Local 30049 -- incorporated by reference from Exhibit 10.14 to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995
10.27 -- Agreement dated as of December 15, 1997 between Kosmos Cement Company
and International Brotherhood of Boilermakers, Cement, Lime, Gypsum and
Allied Workers Division, Lodge D-592 -- incorporated by reference from
Exhibit 10.23 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997
*10.28 -- Agreement dated May 1, 1996 by and between Medusa Corporation and the
International Brotherhood of Boilermakers, Cement, Lime, Gypsum and
Allied Workers Division, Local Lodge D-79 .
*10.29 -- Agreement dated July 31, 1998 by and between the Company and the United
Cement, Lime, Gypsum and Allied Workers Division, Boilermakers
International Union, A.F.L.-C.I.O., Local D-476
10.30 -- Agreement dated March 1, 1995 by and between the Company and Cement,
Lime and Gypsum Worker's Division Boilermaker's Union, Lodge D-140 --
incorporated by reference from Exhibit 99.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995
10.31 -- Agreement dated June 21, 1995 by and between the Company and the
International Union of Operating Engineers, Local Union No.
9 -- incorporated by reference from Exhibit 99.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995
*10.32 -- Agreement dated May 1, 1996 by and between Medusa Corporation and the
International Brotherhood of Boilermakers, Cement, Lime, Gypsum and
Allied Workers Division, Lodge D-173
*10.33 -- Agreement dated May 1, 1998 by and between Medusa Corporation and the
International Brotherhood of Boilermakers, Cement, Lime, Gypsum and
Allied Workers Division, Lodge D-480
*10.34 -- Agreement dated May 1, 1998 by and between Medusa Corporation and the
International Brotherhood of Boilermakers, Cement, Lime, Gypsum and
Allied Workers Division, Lodge D-23
*11 -- Statement of computation of per share earnings
*13.1 -- Financial Section (pages 31-77) of the Company's Annual Report to
Shareholders for the fiscal year ended December 31, 1998
*21 -- Significant Subsidiaries of Southdown, Inc. as of December 31, 1998
*23 -- Consent of independent auditors
*27 -- Financial Data Schedule
</TABLE>
- ---------------
* Filed herewith
+ Compensatory plan or management agreement.
(B) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed during the quarter ended December 31,
1998.
22
<PAGE> 23
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.
SOUTHDOWN, INC.
(Registrant)
By /s/ CLARENCE C. COMER
------------------------------------
Clarence C. Comer
President and Chief Executive
Officer
Date: March 29, 1999
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES POSITIONS DATE
---------- --------- ----
<C> <S> <C>
/s/ CLARENCE C. COMER President, Chief Executive March 29, 1999
- ----------------------------------------------------- Officer and Director (Principal
Clarence C. Comer Executive Officer)
/s/ DENNIS M. THIES Executive Vice President and March 29, 1999
- ----------------------------------------------------- Chief Financial Officer
Dennis M. Thies (Principal Financial Officer)
/s/ ALLAN KORSAKOV Vice President and Corporate March 29, 1999
- ----------------------------------------------------- Controller (Principal
Allan Korsakov Accounting Officer)
/s/ ROBERT S. EVANS Director March 29, 1999
- -----------------------------------------------------
Robert S. Evans
/s/ ROBERT G. POTTER Director March 29, 1999
- -----------------------------------------------------
Robert G. Potter
/s/ FRANK J. RYAN Director March 29, 1999
- -----------------------------------------------------
Frank J. Ryan
/s/ WHITSON SADLER Director March 29, 1999
- -----------------------------------------------------
Whitson Sadler
/s/ ROBERT J. SLATER Director March 29, 1999
- -----------------------------------------------------
Robert J. Slater
/s/ DAVID J. TIPPECONNIC Director March 29, 1999
- -----------------------------------------------------
David J. Tippeconnic
/s/ J. BRUCE TOMPKINS Director March 29, 1999
- -----------------------------------------------------
J. Bruce Tompkins
/s/ GEORGE E. UDING, JR. Director March 29, 1999
- -----------------------------------------------------
George E. Uding, Jr.
/s/ V. H. VAN HORN, III Director March 29, 1999
- -----------------------------------------------------
V. H. Van Horn, III
/s/ STEVEN B. WOLITZER Director March 29, 1999
- -----------------------------------------------------
Steven B. Wolitzer
</TABLE>
23
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <C> <S> <C>
2.1 -- Agreement and Plan of Merger dated as of March 17, 1998, as amended,
among Medusa Corporation, the Company and Bedrock Merger
Corp. -- incorporated by reference from Exhibit 2.1 to the Company's
Registration Statement on Form S-4 (Registration Statement No.
333-49161) filed April 2, 1998
*3.1 -- Restated Articles of Incorporation of the Company, as amended through
March 4, 1991
*3.2 -- Articles of Amendment to the Restated Articles of Incorporation of the
Company as amended through June 25, 1998
3.3 -- Bylaws of the Company amended as of March 26, 1998 -- incorporated by
reference from Exhibit 3.3 to the Company's Form 8-A/A dated April 1,
1998
4.1 -- Indenture dated as of March 19, 1996 between the Company and State
Street Bank and Trust Company as Trustee as relating to the Company's
10% Senior Subordinated Notes due 2006, Series B -- incorporated by
reference from Exhibit to the Company's Registration Statement on Form
S-4 (Registration No. 333-02585) filed April 17, 1996
4.2 -- Certain instruments defining the rights of holders of long-term debt
instruments representing less than 10% of the consolidated assets of
the Company have not been filed as exhibits to this report. The Company
agrees to furnish a copy of any such instrument to the Commission upon
request
4.3 -- Rights Agreement dated as of March 4, 1991 between the Company and
Chemical Shareholder Services Group, Inc. (formerly Texas Commerce Bank
National Association) as Rights Agent -- incorporated by reference from
Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996
+10.1 -- 1987 Stock Option Plan of Southdown, Inc. -- incorporated by reference
from Exhibit 10.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended 1997
*+10.2 -- 1989 Stock Option Plan of Southdown, Inc.
+10.3 -- Form of Nonqualified Stock Option Agreement -- incorporated by
reference from Exhibit 10.3 to the Company's Annual Report on Form 10-K
for the fiscal year ended 1997
*+10.4 -- Form of Special Severance Program dated May 18, 1989
*+10.5 -- Form of Supplemental Pension Agreement and amendment to Supplemental
Pension Agreement
*+10.6 -- Form of Employment Agreements between the Company and certain executive
officers, as more specifically described below:
NAME OF OFFICER DATE OF EMPLOYMENT AGREEMENT
----------------------------------- -----------------------------------
(a) Clarence C. Comer.............. December 19, 1997
(b) J. Bruce Tompkins.............. March 24, 1998
(c) Dennis M. Thies................ January 21, 1999
(d) Stephen R. Miley............... December 19, 1997
+10.7 -- Southdown, Inc. Pension Plan as adopted on May 19, 1994 -- incorporated
by reference from Exhibit 99.1 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1994
+10.8 -- Southdown, Inc. Retirement Savings Plan as amended and restated on July
1, 1990 -- incorporated by reference from Exhibit 99.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994
</TABLE>
24
<PAGE> 25
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <C> <S> <C>
+10.9 -- Southdown, Inc. Directors' Retirement Plan -- incorporated by reference
from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1995
+10.10 -- First Amendment to the Southdown, Inc. Directors' Retirement Plan
-incorporated by reference from Exhibit 10.10 to the Company's Annual
Report on Form 10-K for the fiscal year ended 1996
+10.11 -- Southdown, Inc. 1991 Nonqualified Stock Option Plan for Non-employee
Directors -- as amended November 21, 1996 -- incorporated by reference
from Exhibit 10.11 to the Company's Annual Report on Form 10-K for the
fiscal year ended 1996
+10.12 -- Southdown, Inc. Phantom Stock and Deferred Compensation Plan for
Non-employee Directors -- incorporated by reference from Exhibit 10.12
to the Company's Annual Report on Form 10-K for the fiscal year ended
1996
+10.13 -- Southdown, Inc. Annual Incentive Plan dated April 11,
1996 -- incorporated by reference from Exhibit 10.13 to the Company's
Annual Report on Form 10-K for the fiscal year ended 1996
+10.14 -- Southdown, Inc. Key Employee Share Option Plan effective December 30,
1997 -- incorporated by reference from Exhibit 10.15 to the Company's
Annual Report on Form 10-K for the fiscal year ended 1997
+10.15 -- Supplemental Executive Retirement Plan effective October 1,
1997 -- incorporated by reference from Exhibit 10.16 to the Company's
Annual Report on Form 10-K for the fiscal year ended 1997 .
10.16 -- Third Amended and Restated Credit Agreement as of November 3, 1995
among the Company; Wells Fargo Bank, N.A.; Societe Generale, Southwest
Agency; Credit Suisse First Boston; Caisse National De Credit Agricole;
Banque Paribas; CIBC Inc.; The Bank of Nova Scotia; and BankBoston,
N.A. -- incorporated by reference to Exhibit 99.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995
10.17 -- Letter Agreement dated February 29, 1996, amending the Third Amended
and Restated Credit Agreement as of November 3, 1995, among the Company
and the banks party thereto -- incorporated by reference from Exhibit
99.2 to the Company's Registration Statement on Form S-4 (Registration
No. 333-02585) filed April 17, 1996
10.18 -- Amendment Number Two to Third Amended and Restated Credit Agreement,
dated as of September 30, 1996, among the Company; Wells Fargo Bank,
N.A.; Societe Generale, Southwest Agency; Credit Suisse First Boston;
Caisse National De Credit Agricole; Banque Paribas; CIBC, Inc.; The
Bank of Nova Scotia; and the BankBoston, N.A. -- incorporated by
reference from Exhibit 99.2 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997
10.19 -- Amendment Number Three to the Third Amended and Restated Credit
Agreement, dated as of August 6, 1997, among the Company, Wells Fargo
Bank, N.A.; Societe Generale, Southwest Agency; Credit Suisse First
Boston; Caisse National De Credit Agricole; Banque Paribas; CIBC, Inc.;
The Bank of Nova Scotia; and BankBoston, N.A. -- incorporated by
reference from Exhibit 99.3 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997
</TABLE>
25
<PAGE> 26
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <C> <S> <C>
10.20 -- Amendment Number Four to the Third Amended and Restated Credit
Agreement, dated as of August 6, 1997, among the Company, Wells Fargo
Bank, N.A.; Societe Generale, Southwest Agency; The Bank of Nova
Scotia; Credit Suisse First Boston; Credit Agricole Indosuez; an
affiliate of Canadian Imperial Bank of Commerce; Bank Paribas and
BankBoston, N.A. -- incorporated by reference from Exhibit 99.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1998
*10.21 -- Amendment Number Five to the Third Amended and Restated Credit
Agreement, dated as of December 18, 1998, among the Company, Wells
Fargo Bank, N.A.; Societe Generale, Southwest Agency; The Bank of Nova
Scotia; Credit Suisse First Boston; Credit Agricole Indosuez; PNC Bank,
N.A.; Bank Paribas and BankBoston, N.A
10.22 -- Agreement dated May 1, 1998 by and between the Company and the Cement,
Lime, Gypsum and Allied Workers Division, International Brotherhood of
Boilermakers, Iron Builders, Blacksmiths, Forgers and Helpers, AFL-CIO,
Local Union D-23 -- incorporated by reference from Exhibit 99.2 to the
Company's Quarterly Report on Form 10-Q for the Quarter ended June 30,
1998
10.23 -- Agreement dated May 1, 1998 by and between the Company and the Cement,
Lime, Gypsum and Allied Workers Division, International Brotherhood of
Boilermakers, Iron Builders, Blacksmiths, Forgers and Helpers, AFL-CIO,
Local Union D-480 -- incorporated by reference from Exhibit 99.3 to the
Company's Quarterly Report on Form 10-Q for the Quarter ended June 30,
1998
10.24 -- Agreement dated March 1,1998 by and between the Company and the
International Brotherhood of Boilermakers, Cement, Lime, Gypsum and
Allied Workers Division, Lodge D-357 -- incorporated by reference from
Exhibit 99.4 to the Company's Quarterly Report on Form 10-Q for the
Quarter ended June 30, 1998
10.25 -- Agreement dated May 1, 1996 by and between Kosmos Cement Company and
the International Brotherhood of Boilermakers, Cement, Lime, Gypsum and
Allied Workers Division, Lodge D-595 -- incorporated by reference from
Exhibit 99.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996
10.26 -- Agreement dated August 16, 1993, as amended November 16, 1995, by and
between the Company and the United Paperworkers International Union,
Local 30049 -- incorporated by reference from Exhibit 10.14 to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995
10.27 -- Agreement dated as of December 15, 1997 between Kosmos Cement Company
and International Brotherhood of Boilermakers, Cement, Lime, Gypsum and
Allied Workers Division, Lodge D-592 -- incorporated by reference from
Exhibit 10.23 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997
*10.28 -- Agreement dated May 1, 1996 by and between Medusa Corporation and the
International Brotherhood of Boilermakers, Cement, Lime, Gypsum and
Allied Workers Division, Local Lodge D-79 .
*10.29 -- Agreement dated July 31, 1998 by and between the Company and the United
Cement, Lime, Gypsum and Allied Workers Division, Boilermakers
International Union, A.F.L.-C.I.O., Local D-476
</TABLE>
26
<PAGE> 27
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <C> <S> <C>
10.30 -- Agreement dated March 1, 1995 by and between the Company and Cement,
Lime and Gypsum Worker's Division Boilermaker's Union, Lodge D-140 --
incorporated by reference from Exhibit 99.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995
10.31 -- Agreement dated June 21, 1995 by and between the Company and the
International Union of Operating Engineers, Local Union No.
9 -- incorporated by reference from Exhibit 99.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995
*10.32 -- Agreement dated May 1, 1996 by and between Medusa Corporation and the
International Brotherhood of Boilermakers, Cement, Lime, Gypsum and
Allied Workers Division, Lodge D-173
*10.33 -- Agreement dated May 1, 1998 by and between Medusa Corporation and the
International Brotherhood of Boilermakers, Cement, Lime, Gypsum and
Allied Workers Division, Lodge D-480
*10.34 -- Agreement dated May 1, 1998 by and between Medusa Corporation and the
International Brotherhood of Boilermakers, Cement, Lime, Gypsum and
Allied Workers Division, Lodge D-23
*11 -- Statement of computation of per share earnings
*13.1 -- Financial Section (pages 31-77) of the Company's Annual Report to
Shareholders for the fiscal year ended December 31, 1998
*21 -- Significant Subsidiaries of Southdown, Inc. as of December 31, 1998
*23 -- Consent of independent auditors
*27 -- Financial Data Schedule
</TABLE>
- ---------------
* Filed herewith
+ Compensatory plan or management agreement.
27
<PAGE> 1
ARTICLES OF AMENDMENT TO
RESTATED ARTICLES OF INCORPORATION
DATED MARCH 4, 1991
<PAGE> 2
ARTICLES OF AMENDMENT
TO RESTATED ARTICLES OF
INCORPORATION OF SOUTHDOWN, INC.
ARTICLES OF AMENDMENT ) STATE OF TEXAS
TO )
RESTATED ARTICLES OF ) COUNTY OF HARRIS
INCORPORATION )
OF ) CITY OF HOUSTON
SOUTHDOWN, INC. )
BE IT KNOWN, That on this 4th day of March, 1991,
BEFORE ME, JoAnn M. Pavlock, a Notary Public, duly commissioned and
qualified in and for the County of Harris, State of Texas, and in the presence
of the witnesses hereinafter named and undersigned:
PERSONALLY CAME AND APPEARED:
CLARENCE C. COMER and WENDELL E. PHILLIPS, II, appearing herein and acting
for Southdown, Inc., (of which Corporation they are, respectively, President
and Secretary), a corporation organized and existing under the laws of the State
of Louisiana, domiciled in the Parish of Orleans, State of Louisiana, organized
by Articles of Incorporation effective April 4, 1930, which Articles, as
amended, were restated pursuant to Restated Articles of Incorporation effective
September 15, 1983, who declared that pursuant to Section 24B(6) and 33A of the
Louisiana Business Corporation Law, Article IIIB of the Restated Articles of
Incorporation of the Corporation, and resolutions of the Board of Directors of
the Corporation adopted at a special meeting of the Board of Directors of the
Corporation held on March 4, 1991, they now appear for the purpose of executing
this act of amendment and putting into authentic form the amendment so adopted
by the Board of Directors of said Corporation.
AND THE SAID APPEARERS further declare that by vote of the Board of
Directors of said Corporation, it was resolved that Article III of the Restated
Articles of Incorporation of Southdown, Inc. be further amended as follows:
1. There is added as a new paragraph E of Article III the following:
E. Of the aforesaid 10,000,000 shares of Preferred Stock, 400,000 shares
shall constitute a separate series of preferred shares designated
<PAGE> 3
"Preferred Stock, Cumulative Junior Participating Series C" (the "Series C
Preferred Stock"). The preferences, limitations and relative rights of the
Series C Preferred Stock are as follows:
PREFERRED STOCK,
CUMULATIVE JUNIOR PARTICIPATING SERIES C
1. Dividends. (A) The holders of the Series C Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors out of the
funds of the Corporation legally available therefor, subject to the prior and
superior rights of the holders of the Corporation's Preferred Stock, $.70
Cumulative Convertible Series A ("Series A Preferred Stock"), the Corporation's
Preferred Stock, $3.75 Convertible Exchangeable Series B ("Series B Preferred
Stock") and any other shares of any series of Preferred Stock ranking senior to
the shares of Series C Preferred Stock as to dividends, but in preference to the
holders of the Common Stock, par value $1.25 per share, of the Corporation (the
"Common Stock") and any other capital stock of the Corporation ranking junior to
the Series C Preferred Stock as to dividends, cumulative preferential dividends
per share of Series C Preferred Stock payable in cash on the last day of March,
June, September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series C Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $2.00 or (b) subject to the provision
for adjustment hereinafter set forth, the Adjustment Number (as defined below)
times the aggregate per share amount of all cash dividends, and the Adjustment
Number times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend or distribution payable
in shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series C Preferred Stock. The "Adjustment Number" shall
initially be 100. In the event the Corporation shall at any time after March 4,
1991 (i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the
Adjustment Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series C Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series C Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such
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<PAGE> 4
shares shall accrue and be cumulative from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series C
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
(C) Each dividend on the Series C Preferred Stock shall be paid to the
holders of record of shares of the Series C Preferred Stock as they appear on
the stock register of the Corporation on such record date, not exceeding 30 days
preceding the payment date thereof, as shall be fixed by the Board of Directors
of the Corporation. Dividends on account of arrears for any past dividend
periods may be declared and paid at any time, without reference to any regular
dividend payment date, to holders of record on such date, not exceeding 45 days
preceding the payment date thereof, as may be fixed by the Board of Directors of
the Corporation. No dividend may be declared on any other series or class of
stock ranking on a parity with the Series C Preferred Stock as to dividends in
respect of any dividend period, unless there shall also be or have been declared
on the Series C Preferred Stock like dividends for all periods in the amounts
provided therefor in paragraph 1(A) above. In the event that full cumulative
dividends on the Series C Preferred Stock have not been declared and paid or set
apart for payment, the Corporation may not declare or pay or set apart for
payment any dividends or make any other distributions on, or make any payment on
account of the purchase, redemption or retirement of, the Common Stock or any
other stock of the Corporation ranking junior to the Series C Preferred Stock as
to dividends or distributions of assets on liquidation, dissolution or winding
up of the Corporation (other than, in the case of dividends or distributions,
dividends or distributions paid in shares of Common Stock or such other junior
ranking stock), until full cumulative dividends on the Series C Preferred Stock
are declared and paid or set apart for payment. Further, the Corporation shall
not declare a dividend or distribution on the Common Stock unless it also
declares a dividend or distribution on the Series C Preferred Stock as provided
in paragraph (A) above immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend or distribution payable in shares of
Common Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $2.00 per share on the Series C Preferred Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment Date.
2. Redemption (A) The Corporation, at its option, may redeem shares of
Series C Preferred Stock in whole at any time and in part from time to time, at
a redemption price equal to the Adjustment Number times the current per share
market price (as such term is hereinafter defined) of the Common Stock on the
date of the mailing of the notice of redemption, together with accrued and
unpaid dividends to the date of such redemption. The "current per share market
price" on any date shall be deemed to be the average of the closing price per
share of such Common Stock for the ten consecutive Trading Days (as such term
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<PAGE> 5
is hereinafter defined) immediately prior to such date; provided, however, that
in the event that the current per share market price of the Common Stock is
determined during a period following the announcement of (A) a dividend or
distribution on the Common Stock other than a regular quarterly cash dividend or
(B) any subdivision, combination or reclassification of such Common Stock and
the ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, shall not have occurred prior
to the commencement of such ten Trading Day period, then, and in each such case,
the current per share market price shall be properly adjusted to take into
account ex-dividend or ex-distribution trading. The closing price for each day
shall be the last sales price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange, or, if the Common Stock is not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Common Stock is listed or admitted to trading or, if the
Common Stock is not listed Or admitted to trading on any national securities
exchange, the last quoted sales price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System or
such other self regulatory organization or registered securities information
processor (as such terms are used under the Securities Exchange Act of 1934, as
amended) that then reports information concerning the Common Stock or, if on any
such date the Common Stock is not quoted by any such entity, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Stock selected by the Board of Directors of the
Corporation. If on any such date no such market maker is making a market in the
Common Stock, the fair value of the Common Stock on such date as determined in
good faith by the Board of Directors of the Corporation shall be used. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Common Stock is listed or admitted to trading is open for
the transaction of business or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, a business day.
(B) In case of the redemption of only part of the Series C Preferred Stock
at the time outstanding, such redemption shall be made pro rata, provided,
however, that the Corporation shall not be required to effect the redemption in
any manner that results in fractional shares being outstanding (unless
immediately prior to such time fractional shares were outstanding, in which case
the Corporation shall not be required to effect the redemption in any manner
that results in fractions of shares, other than one-hundredths of shares, being
outstanding); if full cumulative dividends shall not have been paid or declared
and set apart for payment for all quarterly dividends to and including the last
Quarterly Dividend Payment Date prior to the date fixed for redemption, the
Corporation shall not:
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<PAGE> 6
(i) call for redemption (except for redemptions in accordance with
subparagraph 2(B)(iii) below) any shares of Series C Preferred Stock unless
all such shares then outstanding are called for simultaneous redemption; or
(ii) redeem or purchase or otherwise acquire (except for redemptions,
purchases or acquisitions in accordance with subparagraph 2(B)(iii) below)
for consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with Series C
Preferred Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in exchange
for shares of any stock of the Corporation ranking junior (both as to
dividends and upon dissolution, liquidation or winding up) to Series C
Preferred Stock; or
(iii) redeem or purchase or otherwise acquire (except for redemptions,
purchases or acquisitions in accordance with subparagraphs, 2(B)(i) and
2(B)(ii) above) for consideration any shares of Series C Preferred Stock,
or any shares of stock ranking on a parity with Series C Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares of parity stock and Series C Preferred Stock upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(C) Notice of any proposed redemption of Series C Preferred Stock shall be
given by the Corporation not less than 15 days nor more than 60 days prior to
the date fixed for such redemption to each holder of record of the shares to be
redeemed at his address appearing on the books of the Corporation. Notice of
redemption shall be deemed to have been given when deposited in the United
States mails, by first class mail, whether or not such notice is actually
received. If on or before the redemption date specified in such notice all funds
necessary for such redemption shall have been set aside by the Corporation,
separate and apart from its other funds, in trust for the pro rata benefit of
the holders of the shares so called for redemption, so as to be and continue to
be available therefor, then from and after the date of redemption so designated,
notwithstanding that any certificate representing shares of Series C Preferred
Stock so called for redemption shall not have been surrendered for cancellation,
the shares represented thereby shall no longer be deemed outstanding, the right
to receive dividends thereon shall cease to accrue and all rights with respect
to such shares of Series C Preferred Stock so called for redemption shall
forthwith at the close of business on such redemption date cease and terminate,
except only the right of the holders thereof to receive the redemption price of
such shares so to be redeemed plus an amount equal to accrued and unpaid
dividends (whether or not declared) up to the date fixed for redemption, but
without interest thereon.
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<PAGE> 7
(D) The Corporation may, however, prior to the redemption date specified in
the notice of redemption, deposit in trust for the account of the holders of the
shares of Series C Preferred Stock to be redeemed, with a bank or trust company
in good standing organized under the laws of the United States of America or of
any state thereof, having its principal office located in the continental United
States, and having a capital, surplus and undivided profits aggregating at least
$50 million, designated in such notice of redemption, all funds necessary for
such redemption (including accrued and unpaid dividends up to the date fixed for
redemption), together with irrevocable written instructions authorizing such
bank or trust company, on behalf and at the expense of the Corporation, to cause
the notice of redemption to be mailed as herein provided at least 15 days but
not more than 60 days prior to the redemption date and to include in said notice
of redemption a statement that all funds necessary for such redemption have been
so deposited in trust and are immediately available, and on the redemption date,
notwithstanding that any certificate representing shares of Series C Preferred
Stock called for redemption shall not have been surrendered for cancellation,
all shares of Series C Preferred Stock with respect to which such deposit shall
have been made and which are outstanding on such redemption date shall no longer
be deemed to be outstanding and all rights with respect to such shares of Series
C Preferred Stock shall forthwith at the close of business on such redemption
date cease and terminate, except only the right of the holders thereof to
receive from such bank or trust company, at any time after the redemption date,
the redemption price of such shares so to be redeemed plus accrued and unpaid
dividends up to the date fixed for redemption.
(E) If any shares of Series C Preferred Stock called for redemption are not
issued and outstanding as of the date fixed for redemption, the amount set aside
or deposited for the redemption thereof shall revert to or be paid over to the
Corporation.
(F) Any shares of Series C Preferred Stock which are redeemed or otherwise
purchased or acquired by the Corporation or any subsidiary thereof shall be
cancelled. The number of shares of Series C Preferred Stock shall be reduced by
the number of shares so cancelled and such cancelled shares shall be restored to
the status of authorized but unissued shares of Preferred Stock that are
undesignated as to series. For the purposes of this paragraph, a subsidiary
means a corporation of which a majority of the capital stock having voting power
under ordinary circumstances to elect a majority of the board of directors is
owned by (a) the Corporation, (b) the Corporation and one or more of its
subsidiaries or (c) one or more of the Corporation's subsidiaries.
3. Regarding Voting Rights. The holders of shares of Series C Preferred
Stock shall have the following voting rights:
(A) Each share of Series C Preferred Stock shall entitle the holder thereof
to a number of votes equal to the Adjustment Number for each share held and,
except as otherwise provided herein or by law, the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock and the
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<PAGE> 8
Common Stock (and any other capital stock of the Corporation entitled to vote)
shall vote together as a single class.
(B) Unless the vote of a larger percentage is required by law or the
Restated Articles of Incorporation, the affirmative vote of the holders of a
majority of the outstanding shares of Series C Preferred Stock shall be
sufficient to take any action as to which a class vote of the holders of the
Series C Preferred Stock is required by law or the Restated Articles of
Incorporation.
(C) Whenever, at any time, dividends payable on the Series C Preferred
Stock shall be in arrears for such number of dividend payments as shall include
not less than 540 calendar days, the holders of all Preferred Stock (including
holders of the Series C Preferred Stock) upon which these or like voting rights
have been conferred (without limiting the generality of the foregoing, not
including the Series A Preferred Stock and the Series B Preferred Stock) and are
exercisable (the "Voting Preferred Stock") with dividends in arrears for such
number of dividend payments as shall include not less than 540 calendar days,
shall have the exclusive right, voting separately as a class, irrespective of
series, to elect by a majority of the votes cast two directors of the
Corporation, (i) at the Corporation's next annual meeting of shareholders, (ii)
at a special meeting held in place thereof, (iii) at a special meeting of the
holders of shares of the Voting Preferred Stock called by the Secretary of the
Corporation upon the written request of the holders of record of 25% or more of
the total number of shares of Voting Preferred Stock then outstanding, to be
held within 30 days after delivery of such request, or (iv) by written consent
of the holders of a majority of the issued and outstanding shares of Voting
Preferred Stock in lieu thereof, and at each meeting of shareholders thereafter
at which directors shall be elected until such rights shall terminate as
hereinafter provided. The Board of Directors of the Corporation hereby
unanimously directs the Secretary of the Corporation to give notice of any
special meeting of the shareholders of the Corporation required from time to
time by the provisions of this paragraph, in the manner prescribed by the Bylaws
of the Corporation. Upon the vesting of such voting right in the holders of the
Voting Preferred Stock, the maximum authorized number of members of the Board of
Directors shall automatically be increased by two and the two vacancies so
created shall be filled by vote of the holders of the Voting Preferred Stock as
hereinabove set forth. The right of the holders of the Voting Preferred Stock,
voting separately as a class, to elect members of the Board of Directors of the
Corporation as aforesaid shall continue until such time as all dividends
accumulated on the Series C Preferred Stock shall have been paid in full, at
which time such right shall terminate, except as by law expressly provided,
subject to revesting in the event of each and every subsequent default of the
character above mentioned. Upon any termination of the right of the holders of
the Voting Preferred Stock to vote for directors as herein provided, the term of
office of all directors then in office elected by such Voting Preferred Stock
voting as a class shall terminate immediately. If the office of any director
elected by the holders of the Voting Preferred Stock becomes vacant by reason of
death, resignation, retirement, disqualification, removal from office, or
otherwise, the remaining director elected by the holders of Voting Preferred
Stock voting as a class may choose a successor who shall hold office for the
unexpired
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<PAGE> 9
term in respect of which such vacancy occurred. Whenever the special voting
powers vested in the holders of the Voting Preferred Stock shall have expired,
the number of directors shall become such number as may be provided for in the
Bylaws, or resolution of the Board of Directors thereunder, irrespective of any
increase made pursuant to the provisions of this paragraph 3.
(D) At any time that any shares of Series C Preferred Stock are
outstanding, the Restated Articles of Incorporation, as amended, of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of Series C Preferred Stock so
as to affect them adversely without the affirmative vote of the holders of a
majority or more of the outstanding shares of Series C Preferred Stock, voting
separately as a class.
4. Priority in Event of Dissolution. (A) Upon any liquidation (voluntary or
otherwise), dissolution or winding up of the Corporation, no distribution shall
be made to the holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series C Preferred Stock
unless, prior thereto, the holders of shares of Series C Preferred Stock shall
have received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series C Liquidation Preference"). Following the payment of
the full amount of the Series C Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series C Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have received
an amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series C Liquidation Preference by (ii) the Adjustment Number.
Following the payment of the full amount of the Series C Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Series C
Preferred Stock and Common Stock, respectively, holders of Series C Preferred
Stock and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Series C Preferred Stock and
Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series C Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, that
rank on a parity with Series C Preferred Stock, then such remaining assets shall
be distributed ratably to the holders of such parity shares (including the
Series C Preferred Stock) in proportion to their respective liquidation
preferences.
5. Consolidation, Merger, etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case the shares of Series C
Preferred Stock shall at the same time be similarly exchanged or changed in an
amount per share equal to the Adjustment Number times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
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<PAGE> 10
may be, into which or for which each share of Common Stock is changed or
exchanged.
6. Ranking. The Series C Preferred Stock shall rank junior to the Series A
Preferred Stock and Series B Preferred Stock as to the payment of dividends and
distribution of assets, and shall also rank junior to all other series of the
Corporation's Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide
otherwise.
7. Fractional Shares. The Series C Preferred Stock may be issued in
fractions of a share that shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series C Preferred Stock.
8. Sinking Fund. The Series C Preferred Stock shall not be entitled to any
mandatory redemption or prepayment (except on liquidation, dissolution or
winding up of the affairs of the Corporation) or to the benefit of any sinking
fund.
9. Amount. The number of shares of Series C Preferred Stock may be
increased or decreased by resolution of the Board of Directors; provided,
however, that no decrease shall reduce the number of shares of Series C
Preferred Stock to less than the number of shares then issued and outstanding
plus the number of shares issuable upon exercise of outstanding rights, options
or warrants or upon conversion of outstanding securities issued by the
Corporation.
10. Definition. If the day upon which any payment is to be made or any
other action is to be taken or any event is scheduled to occur pursuant to the
terms of these Articles of Amendment is not a business day, the payment shall be
made or the other action shall be taken on the next succeeding business day. A
"business day" is defined as a day in the City of Houston, County of Harris,
Texas, that is not a legal holiday or a day on which banking institutions are
authorized or obligated by law to close.
11. Notice. Except as otherwise provided herein, any notice, demand or
other communication shall be deemed given and received as of the date of
delivery in person or receipt set forth on the return receipt. The inability to
deliver because of rejection or other refusal to accept any notice, demand or
other communication, shall be deemed to be receipt of such notice, demand or
other communication as of the date of such inability to deliver or rejection or
refusal to accept.
2. Paragraph E of Article III is relettered as paragraph F.
APPEARERS further stated that all of the shares of the Corporation have par
value; that the Corporation is authorized to issue 50,000,000 shares, of which
40,000,000 are common shares of the par value of $1.25 per share and 10,000,000
are preferred shares of the par value of $0.05 per share; that of the
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<PAGE> 11
preferred shares, 1,999,998 shares have been designated as the Series A
Preferred Stock, 960,000 have been designated as the Series B Preferred Stock,
and 400,000 have been designated as the Series C Preferred Stock; and that the
Board of Directors of the Corporation has the authority to amend the Articles to
fix the preferences, limitations, and relative rights of the preferred shares,
and to establish, and fix variations and relative rights and preferences as
between series of preferred shares, all as more fully set out in Article III of
the Restated Articles of Incorporation.
AND SAID APPEARERS having requested me, Notary, to note said amendment in
authentic form, I do by these presents receive said amendment in the form of
this public act to the end that said amendment may be promulgated and recorded
and thus be read into the Restated Articles of Incorporation of Southdown, Inc.,
as hereinabove set forth.
THUS DONE AND PASSED, in my office at Houston, Harris County, State of
Texas, on the day, month and year first above written, in the presence of the
undersigned competent witnesses, who hereunto sign their names with the said
appearers and me, Notary, after a due reading of the whole.
SOUTHDOWN, INC.
By: /s/ CLARENCE C. COMER
------------------------------------
Clarence C. Comer
President
By: /s/ WENDELL E. PHILLIPS, II
------------------------------------
Wendell E. Phillips, II
Secretary
WITNESSES:
/s/ [ILLEGIBLE]
- --------------------------------
/s/ LINDA F. HARRELL
- --------------------------------
/s/ JOANN M. PAVLOCK
----------------------------------------
NOTARY PUBLIC
[SEAL]
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<PAGE> 1
ARTICLES OF AMENDMENT TO
RESTATED ARTICLES OF INCORPORATION
OF SOUTHDOWN, INC.
DATED JUNE 25,1998
<PAGE> 2
ARTICLES OF AMENDMENT TO ) STATE OF TEXAS
RESTATED ARTICLES OF ) COUNTY OF HARRIS
INCORPORATION OF ) CITY OF HOUSTON
SOUTHDOWN, INC. )
BE IT KNOWN, That on this 25th day of June, 1998
BEFORE ME, Linda F. Harrell, a Notary Public, duly commissioned and
qualified in and for the County of Harris, State of Texas, and in the presence
of the witnesses hereinafter named and undersigned:
PERSONALLY CAME AND APPEARED:
CLARENCE C. COMER and PATRICK S. BULLARD, appearing herein and acting for
Southdown, Inc. (of which Corporation they are, respectively, President and
Secretary), a corporation organized and existing under the laws of the State of
Louisiana, domiciled in the Parish of Orleans, State of Louisiana, organized by
Articles of Incorporation effective April 4, 1930, which Articles, as amended,
were restated pursuant to Restated Articles of Incorporation effective September
15, 1983, and further amended as of April 10, 1987, December 2, 1987, April 23,
1988, May 23, 1988, March 4, 1991 and January 25, 1994 ("the Corporation"), who
declared that pursuant to Sections 24B(6) and 33A of the Louisiana Business
Corporation Law, Article IIIB of the Restated Articles of Incorporation of the
Corporation, resolutions of the Board of Directors of the Corporation adopted at
regular and special meetings of the Board of Directors of the Corporation held
on March 17, 1998 and March 26, 1998, and resolutions of its duly authorized
Special Committee unanimously adopted at a special meeting of such committee
held on May 5, 1998, they now appear for the purpose of executing this act of
amendment and putting into authentic form the amendment so adopted by the
Special Committee of the Board of Directors of the Corporation.
AND THE SAID APPEARERS further declare that by a vote of the shareholders
of said Corporation, it was:
RESOLVED, that Article III of the Restated Articles of Incorporation of
Southdown, Inc. be amended so that:
1. Paragraph A. is amended to read in its entirety as follows:
A. The Corporation has authority to issue 200,000,000 shares of Common
Stock of the par value of $1.25 per share (the "Common Stock") and 10,000,000
shares of Preferred Stock of the par value of $.05 per share (the "Preferred
Stock").
- -1-
<PAGE> 3
AND SAID APPEARERS further declare that of the outstanding shares of
capital stock of the Corporation 20,816,924 were represented at said meeting and
that 17,195,420 shares were voted for the said amendment and that 1,034,005
shares were voted against the said amendment or abstained from voting thereon.
APPEARERS FURTHER stated that all of the shares of the Corporation have par
value; that the Corporation is authorized to issue 210,000,000 shares, of which
200,000,000 are common shares of the par value of $1.25 per share and 10,000,000
are preferred shares of the par value of $0.05 per share; and that the Board of
Directors of the Corporation and the Special Committee thereof each has the
authority to amend the articles to fix the preferences, limitations and relative
rights of the preferred shares, and to establish, and fix variations and
relative rights and preferences as between series of preferred shares, all as
more fully set out in Article III of the Restated Articles of Incorporation.
AND SAID APPEARERS having requested me, Notary, to note said amendment in
authentic form, I do by these presents receive said amendments in the form of
this public act to the end that said amendment may be promulgated and recorded
and thus be read into the Restated Articles of Incorporation of Southdown, Inc.,
as hereinabove set forth.
THUS DONE AND PASSED, in my office at Houston, Harris County, State of
Texas, on the day, month and year first above written, in the presence of the
undersigned competent witnesses, who hereunto sign their names with the said
appearers and me, Notary, after a due reading of the whole.
SOUTHDOWN, INC.
By: /s/ CLARENCE C. COMER
------------------------------------
Clarence C. Comer
President and Chief Executive Officer
By: /s/ [ILLEGIBLE]
------------------------------------
Vice President - General Counsel
and Secretary
- -2-
<PAGE> 4
WITNESSES:
/s/ [ILLEGIBLE]
- ---------------------------------
/s/ MICHELLE RAYMOND
- ---------------------------------
/s/ LINDA F. HARRELL
------------------------------
NOTARY PUBLIC
[SEAL]
- -3-
<PAGE> 5
ARTICLES OF AMENDMENT TO
RESTATED ARTICLES OF INCORPORATION
DATED JANUARY 25, 1994
<PAGE> 6
ARTICLES OF AMENDMENT ) STATE OF TEXAS
TO )
RESTATED ARTICLES OF ) COUNTY OF HARRIS
INCORPORATION )
OF ) CITY OF HOUSTON
SOUTHDOWN, INC. )
BE IT KNOWN, That on this 25th day of January, 1994
BEFORE ME, Michelle Raymond, a Notary Public, duly commissioned and
qualified in and for the County of Harris, State of Texas, and in the presence
of the witnesses hereinafter named and undersigned:
PERSONALLY CAME AND APPEARED:
EDGAR J. MARSTON III and WENDELL E. PHILLIPS, II, appearing herein and
acting for Southdown, Inc. (of which Corporation they are, respectively,
Executive Vice President and General Counsel and Secretary), a corporation
organized and existing under the laws of the State of Louisiana, domiciled in
the Parish of Orleans, State of Louisiana, organized by Articles of
Incorporation effective April 4, 1930, which Articles, as amended, were restated
pursuant to Restated Articles of Incorporation effective September 15, 1983, and
further amended as of April 10, 1987, December 2, 1987, April 23, 1988 and March
4, 1991 ("the Corporation"), who declared that pursuant to Sections 24B(6) and
33A of the Louisiana Business Corporation Law, Article IIIB of the Restated
Articles of Incorporation of the Corporation, resolutions of the Board of
Directors of the Corporation adopted at special meetings of the Board of
Directors of the Corporation held on November 22, 1993 and January 20, 1994, and
resolutions of its duly authorized Special Committee unanimously adopted at a
special meeting of such committee held on January 20, 1994, they now appear for
the purpose of executing this act of amendment and putting into authentic form
the amendment so adopted by the Special Committee of the Board of Directors of
the Corporation.
AND THE SAID APPEARERS further declare that by unanimous vote of the duly
authorized Special Committee of the Board of Directors of the Corporation, it
was resolved that Article III of the Restated Articles of Incorporation of the
Corporation be further amended as follows:
1. There is added as a new paragraph F of Article III the following:
F. Of the aforesaid 10,000,000 shares of Preferred Stock, 1,725,000
shares shall constitute a separate series of preferred shares designated
"Preferred Stock, $2.875 Cumulative Convertible Series D" (hereinafter called
the
<PAGE> 7
"Series D Preferred Stock"), which shall have a stated value of $50.00 per
share. The preferences, limitations and relative rights of the Series D
Preferred Stock are as follows:
PREFERRED STOCK, $2.875 CUMULATIVE CONVERTIBLE SERIES D
(1) Dividends. The holders of the Series D Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of the
funds of the Corporation legally available therefor, subject to the prior and
superior rights of the holders of the Corporation's Preferred Stock, $.70
Cumulative Convertible Series A (the "Series A Preferred Stock") and any other
shares of any series or class of stock of the Corporation ranking senior to the
Series D Preferred Stock as to dividends, but pari passu with the Corporation's
Preferred Stock, $3.75 Convertible Exchangeable Series B (the "Series B
Preferred Stock") and any other shares of any series or class of stock of the
Corporation ranking senior to the Series D Preferred Stock as to dividends, but
pari passu with the Corporation's Preferred Stock, $3.75 Convertible
Exchangeable Series B (the "Series B Preferred Stock") and any other shares of
any series or class of stock of the Corporation ranking pari passu with the
Series D Preferred Stock as to dividends, and in preference to the holders of
the Corporation's Preferred Stock, Cumulative Junior Participating Series C (the
"Series C Preferred Stock") that may be issued and the holders of the Common
Stock of the Corporation and any other stock of the Corporation ranking junior
to the Series D Preferred Stock as to dividends, cumulative preferential
dividends per share of Series D Preferred Stock in cash at the rate per annum of
$2.875, and no more, until conversion or redemption. Dividends on the Series D
Preferred Stock will be cumulative, will accrue from the date of original
issuance and will be paid (when and as declared by the Board of Directors of the
Corporation) in cash quarterly, in arrears, on the first day of each April,
July, October and January, commencing on April 1, 1994. Each such regular
dividend on the Series D Preferred Stock shall be paid to the holders of record
of shares of the Series D Preferred Stock as they appear on the stock register
of the Corporation on such record date, not exceeding 30 days preceding the
payment date thereof, as shall be fixed by the Board of Directors of the
Corporation. Dividends on account of arrears for any past dividend periods may
be declared and paid at any time, without reference to any regular dividend
payment date, to the holders of record on such date, not exceeding 45 days
preceding the payment date thereof, as may be fixed by the Board of Directors of
the Corporation. No dividend may be declared on any other series or class of
stock ranking on a parity with the Series D Preferred Stock as to dividends in
respect of any dividend period, unless there shall also be or have been on the
Series D Preferred Stock like dividends for all periods at the dividend rates
fixed therefor. In the event that full cumulative dividends on the Series D
Preferred Stock have not been paid or declared and
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<PAGE> 8
set apart for payment, the Corporation may not declare or pay or set apart for
payment any dividends or make any other distributions on, or make any payment
on account of the purchase, redemption or retirement of, the Common Stock or
any other stock of the Corporation ranking as to dividends or distributions of
assets on liquidation, dissolution or winding up of the Corporation junior to
the Series D Preferred Stock (other than, in the case of dividends or
distributions, dividends or distributions paid in shares of Common Stock or
such other junior ranking stock), until full cumulative dividends on the Series
D Preferred Stock are paid or declared and set apart for payment.
(2) Redemption. (a) Shares of Series D Preferred Stock shall be
redeemable for cash, at the option of the Corporation, in whole or in part at
any time or from time to time on or after January 27, 2001, at a redemption
price of $50 per share of Series D Preferred Stock, plus an amount equal to
accrued and unpaid dividends (whether or not declared) to the date fixed for
redemption. If the date of redemption falls after a dividend payment record
date but before the related payment date, the record holders of the Series D
Preferred Stock on that record date shall be entitled to receive the dividend
payable on the Series D Preferred Stock notwithstanding the redemption thereof.
Except as provided in this subparagraph (2)(a), no payment or allowance shall
be made for accrued dividends on any shares of Series D Preferred Stock called
for redemption.
(b) In case of the redemption of only part of the Series D Preferred
Stock at the time outstanding, such redemption shall be made pro rata or by lot
or in such other manner as the Board of Directors of the Corporation may
determine; provided, however, that the Corporation shall not be required to
effect the redemption in any manner that results in additional fractional
shares being outstanding. If full cumulative dividends on the outstanding
shares of Series D Preferred Stock shall not have been paid or declared and set
apart for payment for all regular dividend payment dates to and including the
last dividend payment date prior to the date fixed for redemption, the
Corporation shall not call for redemption any shares of Series D Preferred
Stock unless all such shares then outstanding are called for simultaneous
redemption.
(c) Notice of any proposed redemption of Series D Preferred Stock shall
be given by the Corporation not less than 30 days nor more than 60 days prior
to the date fixed for such redemption to each holder of record of the shares to
be redeemed at the address appearing on the books of the Corporation. Notice of
redemption shall be deemed to have
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been given when deposited in the United States mails, first class mail, postage
prepaid, whether or not such notice is actually received. If on or before the
redemption date specified in such notice all funds necessary for such
redemption shall have been made available at the office of the transfer agent,
in trust for the pro rata benefit of the holders of the shares so called for
redemption, so as to be and continue to be available therefor, then from and
after the date of redemption so designated, notwithstanding that any
certificate representing shares of Series D Preferred Stock so called for
redemption shall not have been surrendered for cancellation, the shares
represented thereby shall no longer be deemed outstanding, the right to receive
dividends thereon shall cease to accrue and all rights with respect to such
shares of Series D Preferred Stock so called for redemption shall forthwith at
the close of business on such redemption date cease and terminate, except only
the right of the holders thereof to receive the redemption price of such shares
so to be redeemed plus an amount equal to accrued and unpaid dividends (whether
or not declared) to the date fixed for redemption, but without interest thereon.
(d) Any monies so set aside by the Corporation and unclaimed at the end
of three years from the date fixed for redemption shall revert to the general
funds of the Corporation.
(e) The Corporation may, however, prior to the redemption date
specified in the notice of redemption, deposit in trust for the account of
the holders of the shares of Series D Preferred Stock to be redeemed, with a
bank or trust company in good standing organized under the laws of the United
States of America or of any state thereof, having its principal office located
in the continental United States, and having a capital, surplus and undivided
profits aggregating at least $50 million, designated in such notice of
redemption, all funds necessary for such redemption (including accrued and
unpaid dividends up to the date fixed for redemption), together with
irrevocable written instructions authorizing such bank or trust company, on
behalf and at the expense of the Corporation, to cause the notice of redemption
to be mailed as herein provided at least 30 days but not more than 60 days prior
to the redemption date and to include in said notice of redemption a statement
that all funds necessary for such redemption have been so deposited in trust and
are immediately available, and from and after the redemption date,
notwithstanding that any certificate representing shares of Series D Preferred
Stock so called for redemption shall not have been surrendered for cancellation,
the shares represented thereby shall no longer be deemed outstanding and all
rights with respect to such shares of Series D Preferred Stock shall
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<PAGE> 10
forthwith at the close of business on such redemption date cease and terminate,
except only the right of the holders thereof to receive from such bank or trust
company, at any time after the redemption date, the redemption price of such
shares so to be redeemed plus accrued and unpaid dividends (whether or not
declared) to the date fixed for redemption, but without interest thereon. In the
event the holder of any such shares of Series D Preferred Stock shall not,
within three years after the redemption date, claim the amount deposited for the
redemption thereof, the depositary shall, upon the request of the Corporation
expressed in a resolution of its Board of Directors, pay over to the Corporation
such unclaimed amount after which time the holders of the shares so called for
redemption shall look only to the Corporation for the payment thereof.
(f) If any shares of Series D Preferred Stock called for redemption are
not issued and outstanding as of the date fixed for redemption, the amount set
aside or deposited for the redemption thereof shall revert to or be paid over to
the Corporation.
(g) Any shares of Series D Preferred Stock which are redeemed or otherwise
purchased or acquired by the Corporation or any subsidiary thereof shall be
cancelled. The number of shares of Series D Preferred Stock shall be reduced by
the number of shares so cancelled and such cancelled shares shall be restored to
the status of authorized but unissued shares of Preferred Stock, without
designation as to series, and may thereafter be issued but not as shares of
Series D Preferred Stock. For the purposes of this paragraph, a subsidiary means
a corporation of which a majority of the capital stock having voting power under
ordinary circumstances to elect a majority of the board of directors is owned by
(a) the Corporation, (b) the Corporation and one or more of its subsidiaries or
(c) one or more of the Corporation's subsidiaries.
(3) Regarding Voting Rights. (a) Each share of Series D Preferred Stock
shall entitle the holder thereof to one vote and, except as provided herein or
as required by law, the Series D Preferred Stock and the Common Stock (and any
other capital stock of the Corporation at any time entitled to vote) shall vote
together as a single class.
(b) In addition to any provisions herein and any requirement of law, the
Series D Preferred Stock shall vote as a single class with respect to any
proposal (i) to change the dividend rate, liquidation preference, redemption
price, voting rights or conversion rights of the shares of Series D Preferred
Stock or to increase the number of authorized shares of Series D Preferred
Stock; (ii) to increase the authorized
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amount of any series or class of capital stock of the Corporation that ranks
senior to the Series D Preferred Stock as to dividends or distribution of
assets on liquidation; (iii) to authorize, create, issue or sell any shares of
any series or any class of capital stock of the Corporation that ranks senior
to the Series D Preferred Stock as to dividends or assets upon liquidation;
(iv) to change or modify the voting rights of the Series D Preferred Stock and
(v) for the alteration, change or modification of the rights set forth in this
subparagraph (3)(b). The affirmative vote of the holders of at least two-thirds
of the outstanding shares of Series D Preferred Stock shall be required to take
any action on the matters specified in clauses (i) through (v) of this
subparagraph (3)(b).
(c) Unless the vote of a larger percentage is required by law or the
Articles of Incorporation, the affirmative vote of the holders of a majority of
the outstanding shares of Series D Preferred Stock entitled to vote on the
matter shall be sufficient to take any action as to which a class vote of the
holders of the Series D Preferred Stock is required by law or the Articles of
Incorporation.
(d) Whenever, at any time, dividends payable on the Series D Preferred
Stock shall be in arrears for six quarterly dividend periods, the holders of
all classes or series of preferred stock which rank pari passu with the Series
D Preferred Stock as to dividends and which shall specifically state that they
shall vote with the Series D Preferred Stock for the election of two directors
in such a case (specifically excluding the Series A Preferred Stock, the Series
B Preferred stock and the Series C Preferred Stock) (the "Voting Preferred
Stock"), shall have the exclusive right, voting separately as a class,
irrespective of class or series, to elect by a plurality of the votes cast two
directors of the Corporation, who shall be a Class I director and a Class II
director, respectively, (i) at the Corporation's next annual meeting of
shareholders, (ii) at a special meeting held in place thereof, (iii) at a
special meeting of the holders of shares of the Voting Preferred Stock called
by the Secretary of the Corporation upon the written request of the holders of
record of 25% or more of the total number of shares of Voting Preferred Stock
then outstanding, to be held within 30 days after delivery of such request, or
(iv) by written consent of the holders of a majority of the issued and
outstanding shares of Voting Preferred Stock in lieu thereof, and at each
succeeding meeting of shareholders thereafter at which directors shall be
elected until such rights shall terminate as hereinafter provided. The Board of
Directors of the Corporation hereby unanimously directs the Secretary of the
Corporation to give notice of any special meeting of the
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shareholders of the Corporation required from time to time by the provisions of
this paragraph (3), in the manner prescribed by the Bylaws of the Corporation.
At elections for such directors, each holder of the Voting Preferred Stock shall
be entitled to one vote for each share held. Upon the vesting of such voting
right in the holders of the Voting Preferred Stock, the maximum authorized
number of members of the Board of Directors shall automatically be increased by
two and the two vacancies so created shall be filled by vote of the holders of
the Voting Preferred Stock as hereinabove set forth. The right of the holders of
the Voting Preferred Stock, voting separately as a class, to elect members of
the Board of Directors of the Corporation as aforesaid shall continue until such
time as all dividends accumulated on the voting Preferred Stock shall have been
paid in full, at which time such right shall terminate, except as by law
expressly provided, subject to revesting in the event of each and every
subsequent default of the character above mentioned. Upon any termination of the
right of the holders of the Voting Preferred Stock to vote for directors as
herein provided, the term of office of all directors then in office elected by
such Voting Preferred Stock voting as a class shall terminate immediately. If
the office of any director elected by the holders of the Voting Preferred Stock
becomes vacant by reason of death, resignation, retirement, disqualification,
removal from office or otherwise, the remaining director elected by the holders
of Voting Preferred Stock voting as a class may choose a successor who shall
hold office for the unexpired term in respect of which such vacancy occurred.
Whenever the special voting powers vested in the holders of the Voting Preferred
Stock shall have expired, the number of directors shall become such number as
may be provided for in the By-Laws, or resolution of the Board of Directors
thereunder, irrespective of any increase made pursuant to the provisions of this
subparagraph (3)(d).
(4) Priority in Event of Dissolution. In the event of any liquidation,
dissolution, or winding up of the affairs of the Corporation, after payment or
provision for payment of the debts and other liabilities of the Corporation
(including any liquidation preferences payable in respect of the Series A
Preferred Stock and any other capital stock of the Corporation ranking senior
to the Series D Preferred Stock as to assets), the holders of the Series D
Preferred Stock shall be entitled to receive, out of the remaining net assets
of the Corporation, $50.00 in cash for each share of Series D Preferred Stock,
plus an amount equal to all dividends accrued and unpaid on each such share
(whether or not declared) up to the date fixed for distribution, before any
distribution shall be made to the holders of the Common Stock of the
Corporation, the Series C Preferred Stock or any other stock of the
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Corporation ranking junior to the Series D Preferred Stock as to assets. If
upon any liquidation, dissolution or winding up of the affairs of the
Corporation, the assets distributable among the holders of the Series D
Preferred Stock, the Series B Preferred Stock and any other capital stock of
the Corporation ranking on a parity with the Series D Preferred Stock as to
assets shall be insufficient to permit the payment in full to the holders of
all shares of such Series D Preferred Stock, the Series B Preferred Stock and
any other capital stock of the Corporation ranking on a parity with the Series
D Preferred Stock as to assets of all preferential amounts payable to all such
holders, then the entire assets of the Corporation thus distributable shall be
distributed ratably among the holders of the Series D Preferred Stock, the
Series B Preferred Stock and any other capital stock of the Corporation ranking
on a parity with the Series D Preferred Stock as to assets in proportion to the
respective amounts that would be payable per share if such assets were
sufficient to permit payment in full.
(5) Conversion at Option of Holder. (a) Subject to and upon compliance with
the provisions herein, at the option of the holder, shares of Series D Preferred
Stock may at any time be converted into fully paid and nonassessable shares of
common stock at the rate of 1.511 shares of Common Stock for each share of
Series D Preferred Stock to be converted (subject to adjustment as hereinafter
provided) (the "Conversion Rate"); provided, however, that if the Corporation
shall have given notice of redemption of any shares of Series D Preferred Stock
pursuant to paragraph (2) above or notice of conversion at the option of the
Corporation pursuant to paragraph (6) below, such right to convert such shares
shall terminate at 5:00 p.m., New York City time, on the date fixed for
redemption or such conversion, respectively (unless the Corporation shall
default in the payment due upon redemption in which case such conversion rights
shall not expire). The result obtained by dividing $50.00 by the Conversion Rate
in effect from time to time is herein referred to as the "Conversion Price." The
initial conversion Price shall be $33.092. Whenever the Conversion Price is
adjusted pursuant to the provisions of subparagraph (7)(c) below, the Conversion
Rate shall be redetermined by dividing $50.00 by the then adjusted Conversion
Price. The Conversion Rate and the Conversion Price in effect from time to time
shall be calculated to four decimal places and rounded to the nearer
thousandths.
(b) In order to exercise the right to convert, the holder of any shares of
Series D Preferred Stock to be converted shall surrender the certificate
representing such shares of Series D Preferred Stock, accompanied (if so
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required by the Corporation) by the proper instrument or instruments of
transfer, in form satisfactory to the Corporation, duly executed by the
registered holder thereof or by his attorney duly authorized in writing, to the
transfer agent of the Series D Preferred Stock or at such other office or
offices, if any, as the Board of Directors shall designate and shall give
written notice to the Corporation at such office that the holder elects to
convert such Series D Preferred Stock. Such shares of Series D Preferred Stock
surrendered for conversion shall be deemed to have been converted immediately
prior to the close of business on the date of the giving of such notice and of
the surrender of such certificates for conversion in accordance with the
foregoing provisions, and at such time the rights of the holder of such Series D
Preferred Stock as such holder shall cease, and the holder thereof shall be
treated for all purposes as the record holder of Common Stock from and after
such time. As promptly as practicable after receipt of such notice and the
surrender of such certificates as aforesaid, the Corporation shall issue and
deliver at such office a certificate or certificates for the number of full
shares of Common Stock issuable upon conversion.
(6) Conversion at Option of Corporation. (a) On and after January 27, 1997
and until January 27, 2001, shares of Series D Preferred Stock outstanding are
convertible, at the option of the Corporation, in whole but not in part, at any
time, into fully paid and non-assessable shares of Common Stock. The Corporation
may exercise this option only if for at least 20 trading days within any period
of 30 consecutive trading days, including the last trading day of such period,
the Market Price (as defined below) of the Common Stock exceeds 130 percent of
the Conversion Price on such respective dates and only if all dividends on the
Series D Preferred Stock for all dividend periods ending on or prior to the
dividend payment date next preceding the Conversion Date (as defined herein)
have been paid or set aside for payment.
(b) In order to exercise its option to convert shares of the Series D
Preferred Stock, the Corporation must, not fewer than 15 nor more than 60 days
before the date of such conversion (the "Conversion Date"), issue a press
release announcing the conversion and specifying the Conversion Date, which
announcement shall be made prior to 9:00 A.M., New York City time, of the second
trading day after the end of any such 30-day trading period. The Corporation
shall also give notice of such conversion to the holders of record of shares of
Series D Preferred Stock to be converted at the holders' addresses shown on the
books of the Corporation. Notice of such conversion must be given by first class
mail, postage per-paid, not fewer than 15 or more than 60 days before the
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Conversion Date and must state: (i) the Conversion Date; (ii) the Conversion
Rate and the Conversion Price as of the date immediately preceding the date of
the notice; (iii) the place or places where certificates for the shares of
Series D Preferred Stock may be surrendered in exchange for certificates for
shares of the Common Stock; and (iv) that dividends on the shares of the Series
D Preferred Stock to be converted will cease to accrue on the Conversion Date.
Notice is given when deposited in the United States mail, by first class mail,
postage prepaid, whether or not actually received. The Corporation's failure to
mail such notice to a shareholder shall not affect the validity or effectiveness
of the conversion of the shares of Series D Preferred Stock into shares of
Common Stock.
(c) On the date fixed by the Corporation as of the Conversion Date,
the rights of the holders of the shares of Series D Preferred Stock as such
shall cease, the shares of Series D Preferred Stock to be converted shall no
longer be deemed outstanding, dividends thereon shall cease to accrue and
certificates for such shares shall represent (i) the shares of Common Stock
issuable on conversion of the Series D Preferred Stock evidenced thereby and
(ii) the right to receive the amounts payable under Section 7(b) in lieu of the
issuance of any fractional share.
(d) The number of shares of Common Stock issuable for each share of
Series D Preferred Stock so converted shall be equal to the product of the
number of shares of Series D Preferred Stock being converted and the Conversion
Rate in effect as of the Conversion Date.
(7) General Provisions Regarding Conversion. The following provisions
shall be applicable to all conversions of Series D Preferred Stock pursuant to
paragraphs (5) and (6):
(a) If the Conversion Date falls after a dividend payment record
date but before the related payment date, the record holder of the Series D
Preferred Stock on that record date shall be entitled to receive the dividend
payable on the Series D Preferred Stock notwithstanding the conversion
thereof. Except as provided in this subparagraph (a), no payment or allowance
shall be made for accrued dividends on any shares of Series D Preferred
Stock converted or surrendered for conversion.
(b) No fractional share of Common Stock shall be issued upon
conversion of Series D Preferred Stock. Instead of any fractional share of
Common Stock which would otherwise be issuable upon conversion of any Series D
Preferred Stock, the Corporation shall pay a cash adjustment equal to such
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fraction multiplied by the Market Price per share of the Common Stock (as
defined below) on the trading day next preceding the date of conversion. In
determining the number of shares of Common Stock and the payment, if any, in
lieu of fractional shares that a holder of Series D Preferred Stock shall
receive, the total number of shares of Series D Preferred Stock surrendered for
conversion by such holder shall be aggregated.
(c) The number and kind of securities issuable upon the conversion of
the Series D Preferred Stock shall be subject to adjustment from time to time
upon the happening of certain events occurring on or after the date of original
issue of the shares of the Series D Preferred Stock as follows:
(i) In case of any reclassification or change of Common Stock
issuable upon exercise of these conversion rights (other than a change in
par value, or from par value to no par value, or from no par value to par
value or as a result of a subdivision or combination), or in case of any
consolidation or merger of the Corporation with or into another corporation
(other than a merger with another corporation in which the Corporation is
the surviving Corporation and which does not result in any reclassification
or change -- other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision
or combination -- of Common Stock issuable upon exercise of these
conversion rights), or in the case of a sale or conveyance in a single
transaction or in a series of related transactions with the same purchaser
or affiliates thereof of all or substantially all the assets of the
Corporation as an entirety, or a statutory share exchange in which all
shares of Common Stock are exchanged for shares of another corporation or
entity, the holders of the Series D Preferred Stock shall have, and the
Corporation, or such successor entity or purchaser, shall covenant in the
constituent documents effecting any of the foregoing transactions that the
holders of the Series D Preferred Stock do have, the right to obtain upon
the exercise of these conversion rights, in lieu of each share of Common
Stock theretofore issuable upon exercise of these conversion rights, the
kind and amount of shares of stock, other securities, money and property
receivable upon such reclassification, change, consolidation or merger,
conveyance or sale of assets or share exchange by a holder of one share of
Common Stock issuable upon exercise of these conversion rights as if they
had been exercised immediately prior to such reclassification,
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change, consolidation or merger, conveyance or sale of assets or share
exchange. The constituent documents effecting any reclassification, change,
consolidation or merger, or share exchange shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the
adjustments provided in this subparagraph (c). The provisions of this
subparagraph (c)(i) shall similarly apply to successive reclassifications,
changes, consolidations or mergers, conveyances or sales of assets or share
exchanges.
(ii) If the Corporation at any time while any of the Series D
Preferred Stock is outstanding shall subdivide or combine its Common Stock,
the Conversion Price shall be proportionately reduced, in case of
subdivision of shares, as at the effective date of such subdivision, or if
the Corporation shall take a record of holders of its Common Stock for the
purpose of so subdividing, as at such record date, whichever is earlier, or
shall be proportionately increased, in the case of combination of shares,
as at the effective date of such combination or, if the Corporation shall
take a record of holders of its Common Stock for the purpose of so
combining, as at such record date, whichever is earlier.
(iii) If the Corporation at any time while any of the Series D
Preferred Stock is outstanding shall pay to any holders of stock of the
Corporation a dividend payable in, or make any other distribution of,
Common Stock, the Conversion Price shall be adjusted, as of the date the
Corporation shall take a record of the holders of such stock for the
purpose of determining the holders entitled to receive such dividend or
other distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by multiplying the
Conversion Price in effect immediately prior to such record date (or if no
such record is taken, then immediately prior to such payment or other
distribution) by a fraction (1) the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to such
dividend or distribution, and (2) the denominator of which shall be the
total number of shares of Common Stock outstanding immediately after such
dividend or distribution (plus in the event that the Corporation paid cash
for fractional shares, the number of additional shares which would have
been outstanding had the Corporation issued fractional shares in connection
with said dividend, except to the extent such payment of cash is treated as
a dividend payable out of earnings or surplus legally available for
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the payment of dividends under the laws of the State of Louisiana).
(iv) If the Corporation shall issue to all holders of its Common Stock
any warrant, option or other right to subscribe for or purchase shares of
Common Stock at a price per share less than the Market Price of the Common
Stock, the Conversion Price shall be adjusted, as of the date the
Corporation shall take a record of the holders of its Common Stock for the
purpose of receiving such issuance or distribution, to that price
determined by multiplying the Conversion Price by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding on the
date of issuance of such warrants, options or rights plus the number of
shares which the aggregate offering price of the total number of shares so
offered would purchase at such Market Price per share, and the denominator
of which shall be the number of shares of Common Stock outstanding on the
date of issuance of such warrants, options or rights plus the number of
additional shares of Common Stock offered for subscription or purchase.
(v) If the Corporation shall distribute to all holders of its Common
Stock evidences of indebtedness of the Company, shares of capital stock of
the Corporation (other than Common Stock) or assets or rights or warrants
to subscribe for or purchase any of its securities (excluding those
dividends, warrants, options and rights referred to in subparagraph (iv)
above and dividends and other distributions paid in cash out of the profits
or surplus of the Corporation legally available therefor under the laws of
the State of Louisiana) then in each case the Conversion Price shall be
adjusted, as of the date the Corporation shall take a record of the holders
of its Common Stock for the purpose of determining the holders entitled to
receive such issuance or distribution, to that price determined by
multiplying the Conversion Price by a fraction the numerator of which shall
be Market Price per share of the Common Stock less the fair market value
(as determined by the Board of Directors of the Corporation, whose
determination shall be conclusive) of the portion of the assets, evidences
of indebtedness for subscription rights so distributed in respect of one
share of Common Stock and the denominator of which is the Market Price per
share of Common Stock on the record date for such distribution.
(vi) No adjustment of the Conversion Price shall be made in an amount
less than $.05 per share, but any such lesser adjustment shall be carried
forward and shall be
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<PAGE> 19
made at the time together with the next subsequent adjustment which,
together with any adjustments so carried forward, shall amount to $.05 per
share or more.
(vii) The Market Price per share of Common Stock on any day means the
closing price for such shares as reported in The Wall Street Journal's
NYSE-Composite Transactions listing for such day (corrected for obvious
typographical errors), or if such shares are not reported in such listing,
then the closing price for such shares on the largest national securities
exchange (based on the aggregate dollar value of securities listed) on
which such shares are listed or traded, or if such shares are not listed or
traded on any national securities exchange, then the closing price for such
shares in the over-the-counter market, as reported on the National
Association of Securities Dealers Automated Quotations System, or, if such
price shall not be reported thereon, the average between the closing bid
and asked prices so reported, or, if such prices shall not be reported,
then the average closing bid and asked prices reported by the National
Quotation Bureau Incorporated, or, in all other cases, the value
established by the Board of Directors of the Corporation in good faith.
(d) Whenever the Conversion Price and the Conversion Rate are required to
be adjusted as provided herein, the Corporation shall forthwith compute the
adjusted Conversion Price and the adjusted Conversion Rate and shall prepare a
certificate setting forth such adjusted Conversion Price and adjusted Conversion
Rate showing in detail the facts upon which such adjustment is based. A copy of
such certificate shall forthwith be filed with the transfer agent or agents for
the Series D Preferred Stock (if any) and for the Common Stock; and thereafter,
until further adjusted; the adjusted Conversion Price and the adjusted
Conversion Rate shall be as set forth in such certificate, provided that the
computation of such adjusted Conversion Price and such adjusted Conversion Rate
shall be reviewed at least annually by the independent public accountants
regularly employed by the Corporation and said accountants shall file a
corrected certificate, if shall mail or cause to be mailed to the holders of
Series D Preferred Stock at the time of each quarterly dividend payment, a
statement setting forth the adjustments, if any, made in the applicable
Conversion Price and Conversion Rate and not theretofore reported to such
holders, and the reasons for such adjustment.
(e) The Corporation will at all times reserve and keep available, out of
its authorized and unissued Common Stock
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solely for the purpose of issuance upon the conversion of the Series D
Preferred Stock as herein provided, free from preemptive and other subscription
rights, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding Series D Preferred Stock. The Corporation
shall ensure that all shares of Common Stock which shall be so issuable shall
upon issue be duly and validly issued and fully paid and nonassessable.
(f) If any shares of Common Stock required to be reserved for the purposes
of conversion of Series D Preferred Stock hereunder require registration with or
approval of any governmental authority under any federal or state law, or
listing upon any national securities exchange, before such shares may be issued
upon conversion, the Corporation will in good faith and as expeditiously as
possible endeavor to cause such shares to be duly registered, approved or
listed, as the case may be.
(g) The issuance of certificates for shares of Common Stock upon the
conversion of Series D Preferred Stock shall be made without charge to the
holders thereof for any transfer or similar taxes that may be payable in respect
of the issue, delivery or acquisition of such certificates. Such certificates
shall be issued in the respective names of the holders of the Series D Preferred
Stock converted.
(8) Sinking Fund. The Series D Preferred Stock shall not be entitled to
any mandatory redemption or prepayment (except on liquidation, dissolution or
winding up of the affairs of the Corporation) or to the benefit of any sinking
fund.
(9) Definition. If the day upon which any payment is to be made or any
other action is to be taken or any event is scheduled to occur pursuant to the
terms of Articles of Amendment is not a business day, the payment shall be made
or the other action shall be taken on the next succeeding business day. A
"business day" is defined as a day in the City of Houston, County of Harris,
Texas, that is not a legal holiday or a day on which banking institutions are
authorized or obligated by law to close.
2. Existing Paragraph F of Article III is relettered as Paragraph G.
APPEARERS further stated that all of the shares of the Corporation have par
value; that the Corporation is authorized to issue 50,000,000 shares, of which
40,000,000 are common shares of the par value of $1.25 per share and 10,000,000
are preferred shares of the par value of $0.05 per share; and that
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<PAGE> 21
the Board of Directors of the Corporation and the Special Committee thereof each
has the authority to amend the articles to fix the preferences, limitations and
relative rights of the preferred shares, and to establish, and fix variations
and relative rights and preferences as between series of preferred shares, all
as more fully set out in Article III of the Restated Articles of Incorporation.
AND SAID APPEARERS having requested me, Notary, to note said amendment in
authentic form, I do by these presents receive said amendments in the form of
this public act to the end that said amendment may be promulgated and recorded
and thus be read into the Restated Articles of Incorporation of Southdown, Inc.,
as hereinabove set forth.
THUS DONE AND PASSED, in my office at Houston, Harris County, State of
Texas, on the day, month and year first above written, in the presence of the
undersigned competent witnesses, who hereunto sign their names with the said
appearers and me, Notary, after a due reading of the whole.
SOUTHDOWN, INC.
By: /s/ EDGAR J. MARSTON III
---------------------------------
Edgar J. Marston III
Executive Vice President
and General Counsel
By: /s/ WENDELL E. PHILLIPS, II
---------------------------------
Wendell E. Phillips, II
Secretary
WITNESSES:
/s/ LINDA F. HARRELL
- -----------------------------------
/s/ [ILLEGIBLE]
- -----------------------------------
/s/ MICHELLE RAYMOND
-----------------------------------
NOTARY PUBLIC
[NOTARY SEAL]
<PAGE> 22
ARTICLES OF AMENDMENT TO
RESTATED ARTICLES OF INCORPORATION
DATED MAY 23,1988
<PAGE> 23
ARTICLES OF AMENDMENT ) STATE OF TEXAS
TO )
RESTATED ARTICLES OF ) COUNTY OF HARRIS
INCORPORATION )
OF ) CITY OF HOUSTON
SOUTHDOWN, INC. )
BE IT KNOWN, That on this 23rd day of May, 1988, BEFORE ME, Shawna
Chisnell, a Notary Public, duly commissioned and qualified in and for the County
of Harris, State of Texas, and in the presence of the witnesses hereinafter
named and undersigned:
PERSONALLY CAME AND APPEARED:
EDGAR J. MARSTON III and WENDELL E. PHILLIPS, II, appearing herein and
acting for Southdown, Inc. (of which Corporation they are, respectively,
Executive Vice President and Secretary), a corporation organized and existing
under the laws of the State of Louisiana, domiciled in the Parish of Orleans,
State of Louisiana, organized by Articles of Incorporation effective April 4,
1930, which Articles, as amended, were restated pursuant to Restated Articles
of Incorporation effective September 15, 1983, who declared that pursuant to
resolutions of the shareholders of the Corporation adopted at an annual meeting
of the shareholders of the Corporation held on May 19, 1988 at 10:15 a.m., at
the Doubletree Hotel, 400 Dallas Street, Houston, Texas 77002, they now appear
for the purpose of executing this act of amendment and putting into authentic
form the amendment so agreed to by the shareholders of said Corporation, which
amendment shall become effective at 5:00 p.m., Central Daylight Savings Time, on
May 27, 1988.
AND THE SAID APPEARERS further declare that by vote of the shareholders of
said Corporation, it was:
RESOLVED, that Article III of the Restated Articles of Incorporation of
Southdown, Inc. be amended so that:
(1) Paragraph A. is amended to read in its entirety as follows:
The Corporation has authority to issue 40,000,000 shares of
Common Stock of the par value of $1.25 per share (the "Common Stock")
and
<PAGE> 24
10,000,000 shares of Preferred Stock of the par value of $.05 per
share (the "Preferred Stock"). Upon the effectiveness of the
amendments contained in these Articles of Amendment (the "Effective
Date") each share of common stock of the Corporation issued at the
close of business on the Effective Date shall be changed and split-up
into two shares of Common Stock without change in the aggregate amount
of capital represented by the issued shares, such two-for-one split to
be accomplished by issuing to each holder of the Corporation's common
stock of record at the close of business on the Effective Date a
certificate or certificates at the rate of one additional share of
Common Stock for each share of the common stock held of record on the
stock transfer records of the Corporation at the close of business on
the Effective Date.
(2) The first sentence of Paragraph C. is deleted and there is substituted
in its place the following:
Of the aforesaid 10,000,000 shares of Preferred Stock, 1,999,998
shares shall constitute a separate series of preferred shares
designated "Preferred Stock, $.70 Cumulative Convertible Series A"
(hereinafter called the "Series A Preferred Stock"), which shall have
a stated value of $10.00 per share. Upon the Effective Date, in lieu
of any adjustment of the conversion price or conversion rate
applicable to the Corporation's Preferred Stock, $1.40 Cumulative
Convertible Series A (the "Old Series A Preferred Stock") that would
otherwise result from the foregoing two-for-one stock split of the
Corporation's common stock under Article III C. of the Restated
Articles of Incorporation, each share of the Old Series A Preferred
Stock issued at the close of business on the Effective Date shall be
changed and split-up into two shares of Series A Preferred Stock
without change in the aggregate amount of capital represented by the
issued shares, such two-for-one split to be accomplished by issuing to
each holder of Old Series A Preferred Stock of record at the close of
business on the Effective Date a certificate or certificates at the
rate of one additional share of Series A Preferred Stock
-2-
<PAGE> 25
for each share of Old Series A Preferred Stock held of record on the
stock transfer records of the Corporation at the close of business on
the Effective Date.
(3) The first sentence of Subparagraph (1) of Paragraph C. is amended to
read in its entirety as follows:
The holders of the Series A Preferred stock shall be entitled to
receive, when and as declared by the Board of Directors out of the
funds of the Corporation legally available therefor and in preference
to the holders of the Common Stock of the Corporation and any other
capital stock of the Corporation ranking junior to the Series A
Preferred Stock as to dividends, cumulative preferential dividends per
share of Series A Preferred Stock in cash at the rate per annum of
$.70 and no more.
(4) The first sentence of Subparagraph (4) of Paragraph C. is amended to
read in its entirety as follows:
In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, after payment or provision for payment of
the debts and other liabilities of the Corporation (including any
liquidation preferences payable in respect of capital stock of the
Corporation ranking senior to the Series A Preferred Stock as to
assets), the holders of the Series A Preferred Stock shall be entitled
to receive, out of the remaining net assets of the Corporation, $10.00
in cash for each share of Series A Preferred Stock, plus an amount
equal to all dividends accrued and unpaid on each such share (whether
or not declared) up to the date fixed for distribution, before any
distribution shall be made to the holders of the Common Stock of the
Corporation or any other stock of the Corporation ranking junior to
the Series A Preferred stock as to assets.
-3-
<PAGE> 26
(5) The second and third sentences of Subparagraph (5) of Paragraph C. are
amended to read in their entirety as follows:
The result obtained by dividing $5.00 by the conversion rate in effect
from time to time is herein referred to as the "conversion price."
Whenever the conversion price is adjusted pursuant to the provisions
of Subparagraph (d) below, the conversion rate shall be redetermined
by dividing $5.00 by the then adjusted conversion price.
(6) Wherever the phrase "$20.00 stated value" appears in Article III C.,
such phrase be and it hereby is amended to read "$10.00 stated value."
(7) Wherever the term "Preferred Stock, $1.40 Cumulative Convertible
Series A" appears in Article III C., such term shall be and it hereby
is amended to read "Preferred Stock, $.70 Cumulative Convertible
Series A."
AND SAID APPEARERS further declared that of the outstanding shares of
capital stock of the Corporation 5,353,803 were represented at said meeting and
that 4,913,251 shares were voted for the said amendment and that 440,522 shares
were voted against the said amendment or abstained from voting thereon.
AND SAID APPEARERS further declared that 712,000 shares of the Series A
Preferred Stock of the Corporation were represented at said meeting, and that
712,000 shares were voted for the said amendment and that no shares were voted
against the said amendment.
APPEARERS FURTHER stated that all of the shares of the Corporation have
par value; that the Corporation is authorized to issue 50,000,000 shares, of
which 40,000,000 are common shares of the par value of $1.25 per share and
10,000,000 are preferred shares of the par value of $0.05 per share; that of the
preferred shares, 1,999,998 shares have been designated as the Series A
Preferred Stock and 960,000 shares have been designated as the Series B
Preferred Stock; and that the Board of Directors of the Corporation has the
authority to amend the Articles to fix the preferences, limitations, and
relative rights of the preferred shares, and to establish, and fix variations
and
-4-
<PAGE> 27
relative rights and preferences as between, series of preferred shares, all as
more fully set out in Article III of the Articles of Incorporation.
AND SAID APPEARERS having requested me, Notary, to note said amendment in
authentic form, I do by these presents receive said amendments in the form of
this public act to the end that said amendment may be promulgated and recorded
and thus be read into the Restated Articles of Incorporation of Southdown, Inc.,
as hereinabove set forth.
THUS DONE AND PASSED, in my office at Houston, Harris County, State of
Texas, on the day, month and year first above written, in the presence of the
undersigned competent witnesses, who hereunto sign their names with the said
appearers and me, Notary, after a due reading of the whole.
SOUTHDOWN, INC.
By: /s/ EDGAR J. MARSTON III
------------------------------------
Edgar J. Marston III
Executive Vice President
By: /s/ WENDELL E. PHILLIPS, II
------------------------------------
Wendell E. Phillips, II
Secretary
WITNESSES:
/s/ JOANN PAVLOCK
- ---------------------------------
/s/ MICHELLE RAYMOND
- ---------------------------------
/s/ SHAWNA CHISNELL
-----------------------------
NOTARY PUBLIC
[SEAL]
-5-
<PAGE> 28
ARTICLES OF AMENDMENT TO
RESTATED ARTICLES OF INCORPORATION
DATED APRIL 23, 1988
<PAGE> 29
ARTICLES OF AMENDMENT } STATE OF TEXAS
TO }
RESTATED ARTICLES OF } COUNTY OF HARRIS
INCORPORATION }
OF } CITY OF HOUSTON
SOUTHDOWN, INC. }
BE IT KNOWN, That on this 23rd day of April, 1988,
BEFORE ME, W. Cleland Dade, a Notary Public, duly commissioned and
qualified in and for the County of Harris, State of Texas, and in the presence
of the witnesses hereinafter named and undersigned:
PERSONALLY CAME AND APPEARED:
CLARENCE C. COMER and WENDELL E. PHILLIPS, II, appearing herein and
acting for Southdown, Inc. (of which Corporation they are, respectively,
President and Secretary), a corporation organized and existing under the laws
of the State of Louisiana, domiciled in the Parish of Orleans, State of
Louisiana, organized by Articles of Incorporation effective April 4, 1930,
which Articles, as amended, were restated pursuant to Restated Articles of
Incorporation effective September 15, 1983, who declared that pursuant to
Sections 24B(6) and 33A of the Louisiana Business Corporation Law, Article IIIB
of the Restated Articles of Incorporation of the Corporation, and resolutions
of the Board of Directors of the Corporation adopted at a special meeting of
the Board of Directors of the Corporation held on April 22, 1988, they now
appear for the purpose of executing this act of amendment and putting into
authentic form the amendment so adopted by the Board of Directors of said
Corporation.
AND THE SAID APPEARERS further declare that by unanimous vote of the
Board of Directors of said Corporation, it was resolved that Article III of the
Restated Articles of Incorporation of Southdown, Inc. be further amended as
follows:
1. There is added as a new paragraph D. of Article III the following:
D. Of the aforesaid 5,000,000 shares of Preferred Stock, 960,000
shares shall constitute a separate series of preferred shares designated
"Preferred Stock, $3.75 Convertible Exchangeable series B" (hereinafter called
the "Series B Preferred Stock"), which shall have a stated value of $50.00 per
share. The Corporation has fixed April 7,
<PAGE> 30
1988 as the record date for the annual meeting of shareholders scheduled for May
19, 1988 ("Annual Meeting"). The Board of Directors of the Corporation has
approved and has submitted to the shareholders for their approval at the Annual
Meeting a proposal to split up the Corporation's authorized and issued common
stock and preferred stock on a two-for-one basis. If the stock split is approved
by the shareholders it is expected to become effective on May 27, 1988
("Effective Date"). The shares of Series B Preferred Stock will not be split up
on the Effective Date; however, on the Effective Date, the par value of the
Series B Preferred Stock will be reduced from $.10 per share to $.05 per share
and the number of shares of Common Stock issuable upon the conversion thereof
will be increased pursuant to the provisions of paragraph 5(d)(ii) of these
Articles of Amendment. The preferences, limitations and relative rights of the
Series B Preferred Stock are as follows:
PREFERRED STOCK
$3.75 CONVERTIBLE EXCHANGEABLE SERIES B
(1) Dividends. The holders of the Series B Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors out of the
funds of the Corporation legally available therefor, subject to the prior and
superior rights of the holders of the Corporation's Preferred Stock, $1.40
Cumulative Convertible Series A ("Series A Preferred Stock") to the payment of
dividends, but in preference to the holders of the Common Stock of the
Corporation and any other capital stock of the Corporation ranking junior to the
Series B Preferred Stock as to dividends, cumulative preferential dividends per
share of Series B Preferred Stock in cash at the rate per annum of $3.75 and no
more. The Series B Preferred Stock is issuable upon the conversion of the
Corporation's 7 1/2% Special Convertible Subordinated Debentures Due 2013
("Special Debentures"). Dividends on the Series B Preferred Stock will be
cumulative, will accrue from the last date on which interest is paid on the
Special Debentures and will be paid (when and as declared by the Board of
Directors of the Corporation) in cash semiannually, in arrears, on the last day
of each June and December, commencing on the first such date to occur after the
date of original issuance of the Series B Preferred Stock. Each dividend on the
Series B Preferred Stock shall be paid to the holders of record of shares of the
Series B Preferred Stock as they appear on the stock register of the Corporation
on such record date, not exceeding 30 days preceding the payment date thereof,
as shall be fixed by the Board of Directors of the Corporation. Dividends on
-2-
<PAGE> 31
account of arrears for any past dividend periods may be declared and paid at any
time, without reference to any regular dividend payment date, to holders of
record on such date, not exceeding 45 days preceding the payment date thereof,
as may be fixed by the Board of Directors of the Corporation. No dividend may be
declared on any other series or class of stock ranking on a parity with
the Series B Preferred Stock as to dividends in respect of any dividend period,
unless there shall also be or have been declared on the Series B Preferred
Stock like dividends for all periods at the dividend rates fixed therefor. In
the event that full cumulative dividends on the Series B Preferred Stock have
not been declared and paid or set apart for payment, the Corporation may not
declare or pay or set apart for payment any dividends or make any other
distributions on, or make any payment on account of the purchase, redemption or
retirement of, the Common Stock or any other stock of the Corporation ranking
junior to the Series B Preferred Stock as to dividends or distributions of
assets on liquidation, dissolution or winding up of the Corporation (other than,
in the case of dividends or distributions, dividends or distributions paid in
shares of Common Stock or such other junior ranking stock), until full
cumulative dividends on the Series B Preferred Stock are declared and paid or
set apart for payment.
(2) Redemption. Shares of Series B Preferred Stock shall be redeemable, at
the option of the Corporation, in whole or in part at any time or from time to
time after June 30, 1993 at the stated value per share of Series B Preferred
Stock, plus an amount equal to accrued and unpaid dividends (whether or not
declared) to the date fixed for redemption.
In case of the redemption of only part of the Series B Preferred Stock at
the time outstanding, such redemption shall be made pro rata, provided, however,
that the corporation shall not be required to effect the redemption in any
manner that results in additional fractional shares being outstanding; if full
cumulative dividends shall not have been paid or declared and set apart for
payment for all semiannual dividends to and including the last dividend payment
date prior to the date fixed for redemption, the Corporation shall not call for
redemption any shares of Series B Preferred Stock unless all such shares then
outstanding are called for simultaneous redemption.
Notice of any proposed redemption of Series B Preferred Stock shall be
given by the Corporation not less than 30
-3-
<PAGE> 32
days nor more than 60 days prior to the date fixed for such redemption to each
holder of record of the shares to be redeemed at his address appearing on the
books of the Corporation. Notice of redemption shall be deemed to have been
given when deposited in the United States mails, by registered or certified mail
or delivered to a courier service, whether or not such notice is actually
received. If on or before the redemption date specified in such notice all funds
necessary for such redemption shall have been set aside by the Corporation,
separate and apart from its other funds, in trust for the pro rata benefit of
the holders of the shares so called for redemption, so as to be and continue to
be available therefor, then from and after the date of redemption so designated,
notwithstanding that any certificate representing shares of Series B Preferred
Stock so called for redemption shall not have been surrendered for cancellation,
the shares represented thereby shall no longer be deemed outstanding, the right
to receive dividends thereon shall cease to accrue and all rights with respect
to such shares of Series B Preferred Stock so called for redemption shall
forthwith at the close of business on such redemption date cease and terminate,
except only the right of the holders thereof to receive the redemption price of
such shares so to be redeemed plus an amount equal to accrued and unpaid
dividends (whether or not declared) up to the date fixed for redemption, but
without interest thereon.
Any moneys so set aside by the Corporation and unclaimed at the end of
three years form the date fixed for redemption shall revert to the general funds
of the Corporation.
The Corporation may, however, prior to the redemption date specified in the
notice of redemption, deposit in trust for the account of the holders of the
shares of Series B Preferred Stock to be redeemed, with a bank or trust company
in good standing organized under the laws of the United States of America or of
any state thereof, having its principal office located in the continental United
States, and having a capital, surplus and undivided profits aggregating at least
$50 million, designated in such notice of redemption, all funds necessary for
such redemption (including accrued and unpaid dividends up to the date fixed for
redemption), together with irrevocable written instructions authorizing such
bank or trust company, on behalf and at the expense of the Corporation, to cause
the notice of redemption to be mailed as herein provided at least 30 days but
not more than 60 days prior to the redemption date and to include in said notice
of redemption a statement that all
-4-
<PAGE> 33
funds necessary for such redemption have been so deposited in trust and are
immediately available, and on the redemption date, notwithstanding that any
certificate representing shares of Series B Preferred Stock called for
redemption shall not have been surrendered for cancellation, all shares of
Series B Preferred Stock with respect to which such deposit shall have been
made and which are outstanding on such redemption date shall no longer be
deemed to be outstanding and all rights with respect to such shares of Series B
Preferred Stock shall forthwith at the close of business on such redemption date
cease and terminate, except only the right of the holders thereof to receive
from such bank or trust company, at any time after the redemption date, the
redemption price of such shares so to be redeemed plus accrued and unpaid
dividends up to the date fixed for redemption. In the event the holder of any
such shares of Series B Preferred Stock shall not, within three years after the
redemption date, claim the amount deposited for the redemption thereof, the
depositary shall, upon the request of the Corporation expressed in a resolution
of its Board of Directors, pay over to the Corporation such unclaimed amount
after which time the holders of the shares so called for redemption shall look
only to the Corporation for the payment thereof.
If any shares of Series B Preferred Stock called for redemption are not
issued and outstanding as of the date fixed for redemption, the amount set
aside or deposited for the redemption thereof shall revert to or be paid over
to the Corporation.
Any shares of Series B Preferred Stock which are redeemed or otherwise
purchased or acquired by the Corporation or any subsidiary thereof shall be
cancelled. The number of shares of Series B Preferred Stock shall be reduced by
the number of shares so cancelled and such cancelled shares shall be restored
to the status of authorized but unissued shares of Preferred Stock that are
undesignated as to series. For the purposes of this paragraph, a subsidiary
means a corporation of which a majority of the capital stock having voting
power under ordinary circumstances to elect a majority of the board of
directors is owned by (a) the Corporation, (b) the Corporation and one or more
of its subsidiaries or (c) one or more of the Corporation's subsidiaries.
(3) Regarding Voting Rights. Each share of Series B Preferred Stock shall
entitle the holder thereof to one vote for each share held and, except as
provided herein or by
-5-
<PAGE> 34
law, the Series B Preferred Stock and the Common Stock (and any other capital
stock of the Corporation at any time entitled to vote) shall vote together as a
single class.
In addition to any provisions herein and any requirement of law, the
Series B Preferred Stock shall vote as a single class with respect to any
proposal (a) to change the dividend rate, liquidation preference, redemption
price, voting rights or conversion rights of the shares of the Series B
Preferred Stock or to increase the number of authorized shares of Series B
Preferred Stock; (b) to increase the authorized amount, or authorize, issue,
create or sell any shares of any class (or any series of any class) of capital
stock of the Corporation that ranks prior to the Series B Preferred Stock as to
dividends or distribution of assets upon liquidation; and (c) for the
alteration, change or modification of the rights set forth in this paragraph.
The affirmative vote of the holders of two-thirds of the outstanding shares of
Series B Preferred Stock shall be required to take action with respect to any
matter described in clauses (a) through (c) of the foregoing sentence.
Unless the vote of a larger percentage is required by law or the Restated
Articles of Incorporation, the affirmative vote of the holders of a majority of
the outstanding shares of Series B Preferred Stock shall be sufficient to take
any action as to which a class vote of the holders of the Series B Preferred
Stock is required by law or the Restated Articles of Incorporation.
Whenever, at any time, dividends payable on the Series B Preferred Stock
shall be in arrears for more than 180 calendar days, the holders of the Series
B Preferred Stock shall have the exclusive right, voting separately as a class,
to elect by a majority of the votes cast two directors of the Corporation, who
shall be a Class II director and a Class III director, respectively, (i) at the
Corporation's next annual meeting of shareholders, (ii) at a special meeting
held in place thereof, (iii) at a special meeting of the holders of shares of
the Series B Preferred Stock called by the Secretary of the Corporation upon
the written request of the holders of record of 25% or more of the total number
of shares of Series B Preferred Stock then outstanding, to be held within 30
days after delivery of such request, or (iv) by written consent of the holders
of a majority of the issued and outstanding shares of Series B Preferred Stock
in lieu thereof, and at each meeting of shareholders thereafter at which
directors shall be elected until such rights shall terminate as hereinafter
provided.
-6-
<PAGE> 35
The Board of Directors of the Corporation hereby unanimously directs the
Secretary of the Corporation to give notice of any special meeting of the
shareholders of the Corporation required from time to time by the provisions of
this Paragraph (3), in the manner prescribed by the Bylaws of the Corporation.
At elections for such directors, each holder of the Series B Preferred Stock
shall be entitled to one vote for each share held. Upon the vesting of such
voting right in the holders of the Series B Preferred Stock, the maximum
authorized number of members of the Board of Directors shall automatically be
increased by two and the two vacancies so created shall be filled by vote of the
holders of the Series B Preferred Stock as hereinabove set forth. The right of
the holders of the Series B Preferred Stock, voting separately as a class, to
elect members of the Board of Directors of the Corporation as aforesaid shall
continue until such time as all dividends accumulated on the Series B Preferred
Stock shall have been paid in full, at which time such right shall terminate,
except as by law expressly provided, subject to revesting in the event of each
and every subsequent default of the character above mentioned. Upon any
termination of the right of the holders of the Series B Preferred Stock to vote
for directors as herein provided, the term of office of all directors then in
office elected by such series voting as a class shall terminate immediately. If
the office of any director elected by the holders of the Series B Preferred
Stock becomes vacant by reason of death, resignation, retirement,
disqualification, removal from office, or otherwise, the remaining director
elected by the holders of Series B Preferred Stock voting as a class may choose
a successor who shall hold office for the unexpired term in respect of which
such vacancy occurred. Whenever the special voting powers vested in the holders
of the Series B Preferred Stock shall have expired, the number of directors
shall become such number as may be provided for in the ByLaws, or resolution of
the Board of Directors thereunder, irrespective of any increase made pursuant to
the provisions of this Paragraph (3).
(4) Priority in Event of Dissolution. In the event of any liquidation,
dissolution or winding up of the affairs of the Corporation, after payment or
provision for payment of the debts and other liabilities of the Corporation
(including any liquidation preferences payable in respect of the Corporation's
Series A Preferred Stock and any other capital stock of the Corporation
ranking senior to the Series B Preferred Stock as to assets), the holders of
the Series B Preferred Stock shall be entitled to receive, out of the remaining
net assets of the Corporation, $50.00 in
-7-
<PAGE> 36
cash for each share of Series B Preferred Stock, plus an amount equal to all
dividends accrued and unpaid on each such share (whether or not declared) up to
the date fixed for distribution, before any distribution shall be made to the
holders of the Common Stock of the Corporation or any other stock of the
Corporation ranking junior to the Series B Preferred Stock as to assets. If
upon any liquidation, dissolution or winding up of the affairs of the
Corporation, the assets distributable among the holders of the Series B
Preferred Stock (and any other capital stock of the Corporation ranking on a
parity with the Series B Preferred Stock as to assets) shall be insufficient to
permit the payment in full to the holders of all shares of such Series B
Preferred Stock (and any other capital stock of the Corporation ranking on a
parity with the Series B Preferred Stock as to assets) of all preferential
amounts payable to all such holders, then the entire assets of the Corporation
thus distributable shall be distributed ratably among the holders of the Series
B Preferred Stock (and any other capital stock of the Corporation ranking on a
parity with the Series B Preferred Stock as to assets) in proportion to the
respective amounts that would be payable per share if such assets were
sufficient to permit payment in full.
(5) Conversion. (a) Subject to and upon compliance with the
provisions herein, at the option of the holder, shares of Series B Preferred
Stock may, at any time be converted into fully paid and nonassessable shares of
Common Stock at the rate of 1.25 shares of Common Stock for each share of
Series B Preferred Stock to be converted (subject to adjustment as hereinafter
provided) ("conversion rate"); provided, however, that if the Corporation shall
have given notice of redemption of any shares of Series B Preferred Stock
pursuant to Paragraph (2) above, the right to convert such shares shall
terminate at 5:00 p.m., Houston, Texas time, on the date fixed for redemption
(unless the Corporation shall default in the payment due upon redemption in
which case such conversion rights shall not expire). The result obtained by
dividing $50.00 by the conversion rate in effect from time to time is herein
referred to as the "conversion price." Whenever the conversion price is
adjusted pursuant to the provisions of Subparagraph (d) below, the conversion
rate shall be redetermined by dividing $50.00 by the then adjusted conversion
price. The conversion rate and the conversion price in effect from time to time
shall be calculated to four decimal places and rounded to the nearer thousandth.
(b) In order to exercise the right to convert, the holder of any shares
of Series B Preferred Stock to be
-8-
<PAGE> 37
converted shall surrender the certificate representing such Series B Preferred
Stock, accompanied (if so required by the Corporation) by the proper instrument
or instruments of transfer, in form satisfactory to the Corporation, duly
executed by the registered holder thereof or by his attorney duly authorized in
writing, to the Corporation at its principal executive office, and shall give
written notice to the Corporation at such office that the holder elects to
convert such Series B Preferred Stock. No payment or adjustment shall be made
upon any conversion on account of regular cash dividends declared or accrued on
the Common Stock or the Series B Preferred Stock surrendered for conversion.
Series B Preferred Stock shall be deemed to have been converted immediately
prior to the close of business on the later of (i) the date on which all
applicable waiting periods, if any, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations thereunder have expired
or been terminated and (ii) the date of the giving of such notice and of the
surrender of such certificates for conversion in accordance with the foregoing
provisions, and at such time the rights of the holder of such Series B Preferred
Stock as such holder shall cease, and the holder thereof shall be treated for
all purposes as the record holder of Common Stock from and after such time. As
promptly as practicable after receipt of such notice, the surrender of such
certificates and expiration or termination of any applicable waiting period as
aforesaid, the Corporation shall issue and deliver at such office a certificate
or certificates for the number of full shares of Common Stock issuable upon
conversion.
(c) No fractional share of Common Stock shall be issued upon conversion
of Series B Preferred Stock. Instead of any fractional share of Common Stock
which would otherwise be issuable upon conversion of any Series B Preferred
Stock, the Corporation shall pay a cash adjustment equal to such fraction
multiplied by the Price per share of the Common Stock on the trading day next
preceding the date of conversion. In determining the number of shares of Common
Stock and the payment, if any, in lieu of fractional shares that a holder of
Series B Preferred Stock shall receive, the total number of shares of Series B
Preferred Stock surrendered for conversion by such holder shall be aggregated.
(d) The number and kind of securities issuable upon the conversion of the
Series B Preferred Stock shall be subject to adjustment from time to time, upon
the happening of certain events occurring after the date of these Articles of
Amendment as follows:
-9-
<PAGE> 38
(i) In case of any reclassification or change of outstanding securities
issuable upon exercise of the conversion rights (other than a change in par
value, or from par value to no par value, or from no par value (to par value to
par value or as a result of a subdivision or combination) or in case of any
consolidation or as a result of a subdivision or combination), or in case of any
consolidation or merger of the Corporation with or into another corporation
(other than a merger with another corporation in which the Corporation is the
surviving Corporation and which does not result in any reclassification or
change -- other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination -- of outstanding securities issuable upon exercise of these
conversion rights) or in the case of a sale or conveyance in a single
transaction or in a series of related transactions with the same purchaser of
all or substantially all the assets of the Corporation as an entirety, the
holders of the Series B Preferred Stock shall have, and the Corporation, or such
successor corporation or purchaser, shall covenant in the constituent documents
effecting any of the foregoing transactions that the holders of the Series B
Preferred Stock do have, the right to obtain upon the exercise of these
conversion rights, in lieu of each share of Common Stock theretofore issuable
upon exercise of these conversion rights, the kind and amount of shares of
stock, other securities, money and property receivable upon such
reclassification, change, consolidation, merger, or conveyance or sale of assets
by a holder of one share of Common Stock issuable upon exercise of these
conversion rights as if they had been exercised immediately prior to such
reclassification, change, consolidation, merger, or conveyance or sale of
assets. The constituent documents effecting any reclassification, change,
consolidation, merger or conveyance or sale of assets shall provide for any
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided in this Subparagraph (d). The provisions of this
Subparagraph (d)(i) shall similarly apply to successive reclassifications,
changes, consolidations, mergers or conveyances or sales of assets.
(ii) If the Corporation at any time shall subdivide or combine its Common
Stock, the conversion price shall be proportionately reduced, in case of
subdivision of shares, as at the effective date of such subdivision, or if the
Corporation shall take a record of holders of its Common Stock for the purpose
of so
-10-
<PAGE> 39
subdividing, as at such record date, whichever is earlier, or shall be
proportionately increased, in the case of combination of shares, as at the
effective date of such combination or, if the Corporation shall take a record of
holders of its Common Stock for the purpose of so combining, as at such record
date, whichever is earlier.
(iii) If the Corporation shall:
(A) Pay to any holders of securities of the Corporation a dividend
payable in, or make any other distribution of, Common Stock, the conversion
price shall be adjusted, as at the date the Corporation shall take a record
of the holders of its Common Stock for the purpose of receiving such
dividend or other distribution (or if no such record is taken, as at the
date of such payment or other distribution), to that price determined by
multiplying the conversion price in effect immediately prior to such record
date (or if no such record is taken, then immediately prior to such payment
or other distribution) by a fraction (1) the numerator of which shall be
the total number of shares of Common Stock outstanding immediately prior to
such dividend or distribution, and (2) the denominator of which shall be
the total number of shares of Common Stock outstanding immediately after
such dividend or distribution (plus in the event that the Corporation paid
cash for fractional shares, the number of additional shares which would
have been outstanding had the Corporation issued fractional shares in
connection with said dividend, except to the extent such payment of cash is
treated as a dividend payable out of earnings or surplus legally available
for the payment of dividends under the laws of the State of Louisiana); or
(B) Make a distribution of its securities (other than Common Stock
Equivalents as defined below) or assets to the holders of its Common Stock
other than dividends payable in Common Stock or cash dividends from
retained earnings of the Corporation, the Corporation shall reserve and
shall deposit in trust, with a bank or trust company in good standing
organized under the laws of the United States of America or any state
thereof, having it principal office located in
-11-
<PAGE> 40
the United States, and having capital, surplus and undivided profits
aggregating at least $50 million, for distribution to the holders of the
Series B Preferred Stock who shall thereafter elect to convert shares of
Series B Preferred Stock into Common Stock (or for release to the
Corporation, as provided below) the amount and kind of securities or assets
which such holders would have received if all such holders had, immediately
prior to the record date for the distribution of securities or assets,
converted such shares of Series B Preferred Stock into Common Stock. Any
such holder converting shares of Series B Preferred Stock into Common Stock
will receive from such trust upon such conversion, in addition to the
shares of Common Stock to which such holder is entitled, a pro rata portion
of the assets and securities then held in such trust. If after any such
assets are placed in trust the shares of Series B Preferred Stock are
exchanged for Debentures pursuant to Paragraph (6), (such assets shall then
be held by the trustee for distribution to the holders of the Debentures
(as defined in Paragraph (6)) who shall thereafter elect to convert such
Debentures into Common Stock (or for release to the Corporation, as
provided below). To the extent that any shares of Series B Preferred Stock
are redeemed or cancelled, a proportionate portion of such assets held in
trust shall be released to the Corporation and shall no longer be subject
to distribution to the holders of Series B Preferred Stock upon conversion
thereof into Common Stock. Any taxes or expenses related to the assets so
held in trust, the income therefrom, the creation or administration of the
trust, the reasonable compensation of the trustee, or related matters shall
be paid by the trustee from the trust estate.
(iv) If the Corporation shall issue any additional shares of Common Stock
(otherwise than as provided in the foregoing Subparagraphs (i) through (iii)
above) at a price per share less than the average Price per share of Common
Stock for the 20 trading days immediately preceding the date of the
authorization of such issuance by the Corporation's Board of Directors (the
"Market Price") then the conversion price upon each such issuance shall be
adjusted to that price
-12-
<PAGE> 41
determined by multiplying the conversion price by a fraction:
(A) the numerator of which shall be (1) the sum of (i) the number of
shares of Common Stock outstanding immediately prior to the issuance of
such additional shares of Common Stock multiplied by the Market Price, and
(ii) the consideration, if any, received and deemed received by the
Corporation upon the issuance of such additional shares of Common Stock;
divided by (2) the total number of shares of Common Stock outstanding
immediately after the issuance of such additional shares of Common Stock,
and
(B) the denominator of which shall be the Market Price.
No adjustment of the conversion price shall be made in an amount less than
$.05 per share, but any such lesser adjustment shall be carried forward and
shall be made at the time together with the next subsequent adjustment which,
together with any adjustments so carried forward, shall amount to $.05 per share
or more. Further, no adjustments of the conversion price shall be made under
this Subparagraph (d)(iv) upon the issuance of any additional shares of Common
Stock that (x) are issued pursuant to thrift plans, stock purchase plans, stock
bonus plans, stock option plans, employee stock ownership plans and other
incentive or profit sharing arrangements for the benefit of employees, provided
such plans or arrangements have been approved by a majority of either the
disinterested members of the Board of Directors of the Corporation or the
Corporation's shareholders ("Employee Benefit Plans") or (y) are issued pursuant
to any Common Stock Equivalent (as defined in Subparagraph (d)(v) below), if
upon the issuance of any such Common Stock Equivalent, any such adjustments
shall previously have been made pursuant to Subparagraph (d)(v) hereof or if no
adjustment was required pursuant to Subparagraph (d)(v)hereof.
The Price per share of Common Stock on any day means the average (mean) of
the reported "high" and "low" sales prices for such shares as reported in The
Wall Street Journal's NYSE-Composite Transactions listing for such day
(corrected for obvious typographical errors), or if such shares are not reported
in such
-13-
<PAGE> 42
listing, then the average of the reported "high" and "low" sales prices on the
largest national securities exchange (based on the aggregate dollar value of
securities listed) on which such shares are listed or traded, or if such shares
are not listed or traded on any national securities exchange, then the average
of the reported "high" and "low" sales prices for such shares in the
over-the-counter market, as reported on the National Association of Securities
Dealers Automated Quotations System, or, if such prices shall not be reported
thereon, the average of the closing bid and asked prices so reported, or, if
such prices shall not be reported, then the average closing bid and asked prices
reported by the National Quotation Bureau Incorporated, or, in all other cases,
the value established by the Board of Directors of the Corporation in good
faith. The "average" Price per share of the Common Stock for any period shall be
determined by dividing the sum of the Prices determined for the individual days
in such period by the number of days in such period.
(v) In case the Corporation shall issue any security or evidence of
indebtedness which is convertible into or exchangeable for Common Stock
("Convertible Security"), or any warrant, option or other right to subscribe for
or purchase Common Stock or any Convertible Security, other than pursuant to
Employee Benefit Plans, (together with Convertible Securities, "Common Stock
Equivalent"), or if, after any such issuance, the price per share for which
additional shares of Common Stock may be issuable thereunder is amended, then
the conversion price upon each such issuance or amendment shall be adjusted as
provided in Subparagraph (d)(iv) hereof on the basis that (i) the maximum number
of additional shares of Common Stock issuable pursuant to all such Common Stock
Equivalents shall be deemed to have been issued as of the earlier of (a) the
date on which the Corporation shall enter into a firm contract for the issuance
of such Common Stock Equivalent, or (b) the date of actual issuance of such
Common Stock Equivalent; and (ii) the aggregate consideration for such maximum
number of additional shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by the Corporation for the issuance of
such additional shares of Common Stock pursuant to such Common Stock Equivalent;
provided, however, that no adjustment shall be made pursuant to this
Subparagraph (d)(v) unless the consideration
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<PAGE> 43
received and receivable by the Corporation per share of Common Stock for the
issuance of such additional shares of Common Stock pursuant to such Common Stock
Equivalent is less than the Market Price. No adjustment of the conversion price
shall be made under this Subparagraph upon the issuance of any Convertible
Security which is issued pursuant to the exercise of any warrants or other
subscription or purchase rights therefor, if any adjustment shall previously
have been made in the conversion price then in effect upon the issuance of such
warrants or other rights pursuant to this Subparagraph (d)(v).
(vi) The following provisions shall be applicable to making of adjustments
in the conversion price hereinbefore provided in this Subparagraph (d):
(A) The consideration received by the Corporation shall be deemed to
be the following: to the extent that any additional shares of Common Stock
or any Common Stock Equivalents shall be issued for cash consideration, the
consideration received by the Corporation therefor, or, if such additional
shares of Common Stock or Common Stock Equivalents are offered by the
Corporation for subscription, the subscription price, or, if such
additional shares of Common Stock or Common Stock Equivalents are sold to
underwriters or dealers for public offering without a subscription
offering, the initial public offering price, in any such case excluding any
amounts paid or receivable for accrued interest or accrued dividends and
without deduction of any compensation, discounts, commissions or expenses
paid or incurred by the Corporation for and in the underwriting of, or
otherwise in connection with, the issue thereof; to the extent that such
issuance shall be for a consideration other than cash, then, except as
herein otherwise expressly provided, the fair market value of such
consideration at the time of such issuance as determined in good faith by
the Corporation's Board of Directors. The consideration for any additional
shares of Common Stock issuable pursuant to any Common Stock Equivalents
shall be the consideration received by the Corporation for issuing such
Common Stock Equivalents, plus the additional consideration payable to the
Corporation upon the exercise,
<PAGE> 44
conversion or exchange of such Common Stock Equivalents. In case of the
issuance at any time of any additional shares of Common Stock or Common Stock
Equivalents in payment or satisfaction of any dividend upon any class of stock
other than Common Stock, the Corporation shall be deemed to have received for
such additional shares of Common Stock or Common Stock Equivalents a
consideration equal to the amount of such dividend so paid or satisfied. In any
case in which the consideration to be received or paid shall be other than
cash, the Board of Directors of the Corporation shall notify promptly each
holder of the Series B Preferred Stock of its determination of the fair market
value of such consideration.
(B) Upon the expiration of the right to convert, exchange or exercise any
Common Stock Equivalent the issuance of which effected an adjustment in the
conversion price, if any such Common Stock Equivalent shall not have been
converted, exercised or exchanged, the number of shares of Common Stock deemed
to be issued and outstanding by reason of the fact that they were issuable upon
conversion, exchange or exercise of any such Common Stock Equivalent shall no
longer be computed as set forth above, and the conversion price shall forthwith
be readjusted and thereafter be the price which it would have been (but
reflecting any other adjustments in the conversion price made pursuant to the
provisions of Subparagraph (d)(iv) after the issuance of such Common Stock
Equivalent) had the adjustment of the conversion price made upon the issuance
or sale of such Common Stock Equivalent been made on the basis of the issuance
only of the number of additional shares of Common Stock actually issued upon
exercise, conversion or exchange of such Common Stock Equivalent and thereupon
only the number of additional shares of Common Stock actually so issued shall
be deemed to have been issued and only the consideration actually received by
the Corporation (computed as in Subparagraph (A) of this Subparagraph (d)(vi))
shall be deemed to have been received by the Corporation.
(C) The number of shares of Common Stock at any time outstanding shall not
include any shares thereof then directly or indirectly owned or held
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<PAGE> 45
by or for the account of the Corporation or its subsidiaries.
(e) Whenever the conversion price and the conversion rate are required to
be adjusted as provided herein, the Corporation shall forthwith compute the
adjusted conversion price and the adjusted conversion rate and shall prepare a
certificate setting forth such adjusted conversion price and adjusted
conversion rate and showing in detail the facts upon which such adjustment is
based. A copy of such certificate shall forthwith be filed with the transfer
agent or agents for the Series B Preferred Stock (if any) and for the Common
Stock; and thereafter, until further adjusted, the adjusted conversion price
and the adjusted conversion rate shall be as set forth in such certificate,
provided that the computation of such adjusted conversion price and such
adjusted conversion rate shall be reviewed at least annually by the independent
public accountants regularly employed by the Corporation and said accountants
shall file a corrected certificate, if required, with such transfer agent or
agents. The Corporation shall mail or cause to be mailed to the holders of
Series B Preferred Stock at the time of each semiannual dividend payment, a
statement setting forth the adjustments, if any, made in the applicable
conversion price and conversion rate and not theretofore reported to such
holders, and the reasons for such adjustment.
(f) The Corporation will at all times reserve and keep available, out of
its authorized and unissued Common Stock solely for the purpose of issuance
upon the conversion of the Series B Preferred Stock as herein provided, free
from preemptive and other subscription rights, such number of shares of Common
Stock as shall then be issuable upon the conversion of all outstanding Series B
Preferred Stock. The Corporation shall ensure that all shares of Common Stock
which shall be so issuable shall upon issue be duly and validly issued and
fully paid and nonassessable.
(g) If any shares of Common Stock required to be reserved for the purposes
of conversion of Series B Preferred Stock hereunder require registration with or
approval of any governmental authority under any federal or state law, or
listing upon any national securities exchange, before such shares may be issued
upon conversion, the Corporation will in good faith and as expeditiously as
possible endeavor to cause such shares to be duly registered, approved or
listed, as the case may be.
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<PAGE> 46
(h) The issuance of certificates for shares of Common Stock upon the
conversion of Series B Preferred Stock shall be made without charge to the
holders thereof for any transfer or similar taxes that may be payable in
respect of the issue, delivery or acquisition of such certificates. Such
certificates shall be issued in the respective names of the holders of the
Series B Preferred Stock converted.
(6) Exchange. The Series B Preferred Stock outstanding is exchangeable in
whole at the option of the Corporation at any time after July 25, 1990 for the
Corporation's 7 1/3% Convertible Subordinated Debentures due 2013 (the
"Debentures"). Holders of outstanding shares of Series B Preferred Stock will
be entitled to receive $50.00 principal amount of Debentures plus an amount in
cash equal to accrued and unpaid dividends (whether or not declared) to the
date fixed for exchange, in exchange for each share of Series B Preferred Stock
held by them at the time of exchange; provided that the Debentures will be
issuable in denominations of $1,000 and integral multiples thereof and an
amount in cash shall be paid to such holders for any excess principal amount
otherwise issuable. The Corporation will mail to each record holder of the
Series B Preferred Stock written notice of its intention to exchange not less
than 30 nor more than 60 days prior to the date fixed for exchange. The notice
shall specify the effective date of the exchange, the place where certificates
for shares of Series B Preferred Stock are to be surrendered for Debentures and
state that dividends on Series B Preferred Stock will cease to accrue on such
date fixed for exchange. Prior to giving notice of intention to exchange, the
Corporation shall execute and deliver with a bank or trust company selected by
the Corporation an Indenture substantially in the form attached as an exhibit
to the Securities Purchase Agreement dated as of April 18, 1988 among the
Corporation and the purchasers named therein, with such changes as may be
required by law, stock exchange rule or as may be necessary to qualify such
Indenture under the Trust Indenture Act of 1939. The Corporation will cause the
Debentures to be authenticated and such accrued and unpaid dividends to be set
aside, separate and apart from the other funds of the Corporation, in trust for
the benefit of the holders of the Series B Preferred Stock, for payment on the
date on which the exchange is effective; at such time the rights of the holders
of the Series B Preferred stock as shareholders of the Company shall cease and
the shares of Series B Preferred Stock shall no longer be deemed outstanding and
shall represent only the right to receive the Debentures and such accrued and
unpaid dividends but without interest thereon.
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<PAGE> 47
Any moneys set aside by the Corporation and unclaimed at the end of three years
from the date fixed for exchange shall revert to the general funds of the
Corporation. Notwithstanding the foregoing, if notice of exchange has been
given pursuant to this Paragraph (6) and any holder of shares of Series B
Preferred Stock shall, prior to the close of business on the date fixed for
exchange, give written notice to the Corporation pursuant to Paragraph (5) of
the conversion of any or all of the shares to be exchanged held by such holder
(accompanied by a certificate or certificates for such shares, duly endorsed or
assigned to the Corporation), then such exchange shall not become effective as
to such shares to be converted and such conversion shall become effective as
provided in Paragraph (5). The Debentures and such accrued and unpaid dividends
will be delivered to the persons entitled thereto upon surrender to the
Corporation or its agent appointed for that purpose of the certificates for the
share of Series B Preferred Stock being exchanged therefor.
(7) Sinking Fund. The Series B Preferred Stock shall not be entitled to
any mandatory redemption or prepayment (except on liquidation, dissolution or
winding up of the affairs of the Corporation) or to the benefit of any sinking
fund.
(8) Definition. If the day upon which any payment is to be made or any
other action is to be taken or any event is scheduled to occur pursuant to the
terms of these Articles of Amendment is not a business day, the payment shall
be made or the other action shall be taken on the next succeeding business day.
A "business day" is defined as a day in the City of Houston, County of Harris,
Texas, that is not a legal holiday or a day on which banking institutions are
authorized or obligated by law to close.
(9) Notice. Except as otherwise provided herein, any notice, demand or
other communication shall be deemed given and received as of the date of
delivery in person or receipt set forth on the return receipt. The inability to
deliver because of rejection or other refusal to accept any notice, demand or
other communication, shall be deemed to be receipt of such notice, demand or
other communication as of the date of such inability to deliver or rejection or
refusal to accept.
2. Paragraph D. of Article III of the Restated Articles of Incorporation
is designated as paragraph E.
-19-
<PAGE> 48
APPEARERS further stated that all of the shares of the Corporation have par
value; that the Corporation is authorized to issue 25,000,000 shares, of which
20,000,000 are common shares of the par value of $2.50 per share and 5,000,000
are preferred shares of the par value of $0.10 per share; and that the Board of
Directors of the Corporation has the authority to amend the articles to fix the
preferences, limitations, and relative rights of the preferred shares, and to
establish, and fix variations and relative rights and preferences as between
series of preferred shares, all as more fully set out in Article III of the
Restated Articles of Incorporation.
AND SAID APPEARERS having requested me, Notary, to note said amendment in
authentic form, I do by these presents receive said amendments in the form of
this public act to the end that said amendment may be promulgated and recorded
and thus be read into the Restated Articles of Incorporation of Southdown, Inc.,
as hereinabove set forth.
THUS DONE AND PASSED, in my office at Houston, Harris County, State of
Texas, on the day, month and year first above written, in the presence of the
undersigned competent witnesses, who hereunto sign their names with the said
appearers and me, Notary, after a due reading of the whole.
SOUTHDOWN, INC.
By: /s/ CLARENCE C. COMER
--------------------------------------
Clarence C. Comer
President
By: /s/ WENDELL E. PHILLIPS, II
--------------------------------------
Wendell E. Phillips, II
Secretary
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<PAGE> 49
WITNESSES:
/s/ [ILLEGIBLE]
- -----------------------------------
/s/ [ILLEGIBLE]
- -----------------------------------
/s/ W. CLELAND DADE
-----------------------------------
NOTARY PUBLIC
[NOTARY SEAL]
-21-
<PAGE> 50
ARTICLES OF AMENDMENT TO
RESTATED ARTICLES OF INCORPORATION
DATED DECEMBER 2, 1987
<PAGE> 51
ARTICLES OF AMENDMENT )
TO ) UNITED STATES OF AMERICA
RESTATED ) STATE OF TEXAS
ARTICLES OF INCORPORATION ) COUNTY OF HARRIS
OF )
SOUTHDOWN, INC. )
BE IT KNOWN, that on this 2nd day of December, 1987,
BEFORE ME, Margaret Bassett, a Notary Public, duly commissioned and
qualified, in and for the County of Harris, and in the presence of the witnesses
hereinafter named and undersigned:
PERSONALLY CAME AND APPEARED:
Clarence C. Comer and Wendell E. Phillips, II, appearing herein and acting
for Southdown, Inc. (of which corporation they are, respectively, President and
Secretary), a corporation organized and existing under the laws of the State of
Louisiana, domiciled in the Parish of Orleans, State of Louisiana, organized by
Articles of Incorporation executed and acknowledged on April 4, 1930, and
recorded on April 5, 1930 in the records of the Recorder of the Parish of
Orleans and on April 7, 1930, in the Record of Charters Book 130, who declared
that pursuant to resolution of the shareholders of the corporation, adopted at a
special meeting of shareholders of the corporation held on December 2, 1987, at
2:00 p.m., at the offices of the corporation, 1200 Smith Street, Suite 2200,
Houston, Texas, they now appear for the purpose of executing this act of
amendment and putting into authentic form the amendment so agreed to by the
vote of the shareholders of said corporation.
AND THE SAID APPEARERS further declared that by vote of the shareholders of
the corporation, it was resolved that the Articles of Incorporated of the
corporation be amended by adding a new Article XIII as follows:
"No director or officer of this corporation shall be personally liable
to this corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director or officer, except for liability (i) for
breach of the director's or officer's duty of loyalty to this corporation
or its shareholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 92(D) of the Louisiana Business Corporation Law, or (iv) for any
transaction from which the director or officer derived an improper personal
benefit. If the Louisiana
<PAGE> 52
Business Corporation Law is hereafter amended to authorize corporate action
further limiting or eliminating the personal liability of directors or
officers, then the liability of each director and officer of this
corporation shall be limited or eliminated to the full extent permitted by
the Louisiana Business Corporation Law as so amended from time to time.
Neither the amendment nor repeal of this Article, nor the adoption of any
provision of this corporation's Articles of Incorporation inconsistent with
this Article, shall eliminate or reduce the effect of this Article, in
respect of any matter occurring, or any cause of action, suit or claim
that, but for this Article, would accrue or arise, prior to such amendment,
repeal or adoption of any inconsistent provision."
AND THE SAID APPEARERS further declared that 5,615,745 of the shares of the
corporation were represented at said meeting and that 5,214,882 shares voted for
the said amendment and that 400,863 shares voted against the said amendment.
AND THE SAID APPEARERS having requested me, Notary, to note said amendment
in authentic form, I do by these presents receive said amendment in the form of
this public act to the end that said amendment may be promulgated and recorded
and thus be read into the original Restated Articles of Incorporation of
Southdown, Inc., as hereinabove set forth.
THUS DONE AND PASSED, in my office at Houston, Texas, on the day, month and
year first above written, in the presence of the undersigned competent
witnesses, who here unto sign their names with the said appearers and me,
Notary, after a due reading of the whole.
SOUTHDOWN, INC.
By: /s/ CLARENCE C. COMER
-------------------------------------
Clarence C. Comer
President
-2-
<PAGE> 53
By: /s/ WENDELL E. PHILLIPS, II
-------------------------------------
Wendell E. Phillips, II
Secretary
WITNESSES:
/s/ EDGAR J. MARSTON III
- -------------------------------
Edgar J. Marston III
/s/ DENNIS M. THIES
- -------------------------------
Dennis M. Thies
/s/ MARGARET BASSETT
--------------------------------------------
NOTARY PUBLIC
[SEAL]
-3-
<PAGE> 54
ARTICLES OF AMENDMENT TO
RESTATED ARTICLES OF INCORPORATION
DATED APRIL 10, 1987
<PAGE> 55
ARTICLES OF AMENDMENT ) STATE OF TEXAS
TO )
RESTATED ARTICLES OF ) COUNTY OF HARRIS
INCORPORATION )
OF ) CITY OF HOUSTON
SOUTHDOWN, INC. )
BE IT KNOWN, That on this 10th day of April, 1987,
BEFORE ME, Shawna Chisnell, a Notary Public, duly commissioned and
qualified in and for the County of Harris, State of Texas, and in the presence
of the witnesses hereinafter named and undersigned:
PERSONALLY CAME AND APPEARED:
CLARENCE C. COMER and WENDELL E. PHILLIPS, II, appearing herein and acting
for Southdown, Inc. (of which Corporation they are, respectively, President and
Secretary), a corporation organized and existing under the laws of the State of
Louisiana, domiciled in the Parish of Orleans, State of Louisiana, organized by
Articles of Incorporation effective April 4, 1930, which Articles, as amended,
were restated pursuant to Restated Articles of Incorporation effective September
15, 1983, who declared that pursuant to Sections 24B(6) and 33A of the Louisiana
Business Corporation Law, Article IIIB of the Restated Articles of Incorporation
of the Corporation, and resolutions of the Board of Directors of the Corporation
adopted at a special meeting of the Board of Directors of the Corporation held
on April 7, 1987, they now appear for the purpose of executing this act of
amendment and putting into authentic form the amendment so adopted by the Board
of Directors of said Corporation.
AND THE SAID APPEARERS further declare that by unanimous vote of the Board
of Directors of said Corporation, it was resolved that Article III of the
Restated Articles of Incorporation of Southdown, Inc. be further amended as
follows:
1. There is added as a new paragraph C of Article III the following:
C. Of the aforesaid 5,000,000 shares of Preferred Stock, 999,999
shares shall constitute a separate series of preferred shares designated
"Preferred Stock, $1.40 Cumulative Convertible Series A" (hereinafter called
the "Series A
<PAGE> 56
Preferred Stock"), which shall have a stated value of $20.00 per share. The
preferences, limitations and relative rights of the Series A Preferred Stock are
as follows:
PREFERRED STOCK,
$1.40 CUMULATIVE CONVERTIBLE SERIES A
(1) Dividends. The holders of the Series A Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors out of the
funds of the Corporation legally available therefor and in preference to the
holders of the Common Stock of the Corporation and any other capital stock of
the Corporation ranking junior to the Series A Preferred Stock as to dividends,
cumulative preferential dividends per share of Series A Preferred Stock in cash
at the rate per annum of $1.40 and no more. Dividends on the Series A Preferred
Stock will be cumulative, will accrue from the date of original issuance and
will be paid (when and as declared by the Board of Directors of the Corporation)
in cash quarterly, in arrears, on the last day of each March, June, September
and December, commencing on the first such date to occur after the date of
original issuance of the Series A Preferred Stock. Each dividend on the Series A
Preferred Stock shall be paid to the holders of record of shares of the Series A
Preferred Stock as they appear on the stock register of the Corporation on such
record date, not exceeding 30 days preceding the payment date thereof, as shall
be fixed by the Board of Directors of the Corporation. Dividends on account of
arrears for any past dividend periods may be declared and paid at any time,
without reference to any regular dividend payment date, to holders of record on
such date, not exceeding 45 days preceding the payment date thereof, as may be
fixed by the Board of Directors of the Corporation. No dividend may be declared
on any other series or class of stock ranking on a parity with the Series A
Preferred Stock as to dividends in respect of any quarterly dividend period,
unless there shall also be or have been declared on the Series A Preferred Stock
like dividends for all quarters at the dividend rates fixed therefor. In the
event that full cumulative dividends on the Series A Preferred Stock have not
been declared and paid or set apart for payment, the Corporation may not declare
or pay or set apart for payment any dividends or make any other distributions
on, or make any payment on account of the purchase, redemption or retirement of,
the Common Stock or any other stock of the Corporation ranking as to dividends
or distributions of assets on liquidation, dissolution or winding up of the
Corporation junior to the Series A Preferred Stock (other than, in the case of
dividends or
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<PAGE> 57
distributions, dividends or distributions paid in shares of Common Stock or such
other junior ranking stock), until full cumulative dividends on the Series A
Preferred Stock are declared and paid or set apart for payment.
(2) Redemption. Shares of Series A Preferred Stock shall be redeemable, at
the option of the Corporation, in whole or part at any time or from time to time
after April 30, 1989 at the redemption prices set forth below (expressed as
percentages of the $20.00 stated value of each share of Series A Preferred
Stock), plus an amount equal to accrued and unpaid dividends (whether or not
declared) to the date fixed for redemption; provided that shares of Series A
Preferred Stock may also be redeemed by the Corporation prior to May 1, 1989 in
connection with the receipt of a Disapproval Notice (as defined in Paragraph (3)
below) as provided in the third paragraph of this Paragraph (2). After April 30,
1997, the Series A Preferred Stock may be redeemed at 100% of its stated value.
If redeemed during the twelve-month period ending April 30,
<TABLE>
<CAPTION>
YEAR PERCENTAGE YEAR PERCENTAGE
- ---- ---------- ---- ----------
<S> <C> <C> <C>
1990 140.00 1994 120.00
1991 135.00 1995 115.00
1992 130.00 1996 110.00
1993 125.00 1997 105.00
</TABLE>
In the event that the Corporation receives a Disapproval Notice, the
Corporation shall be entitled to give notice of redemption and to redeem all
shares of Series A Preferred Stock held by the holder giving or deemed to have
given such Disapproval Notice at 100% of the stated value of each share of
Series A Preferred Stock, plus an amount equal to accrued and unpaid dividends
(whether or not declared) to the date fixed for redemption. Notice of redemption
in response to a Disapproval Notice must be sent prior to the date of the
meeting to which such Disapproval Notice relates. The Corporation must deposit
the funds necessary to effect such redemption in response to a Disapproval
Notice in a bank or trust company pursuant to the terms of the seventh paragraph
of this Paragraph (2) contemporaneously with the giving of such notice of
redemption and all such funds shall be paid or available for payment at such
bank or trust company to
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<PAGE> 58
holders of the Series A Preferred Stock prior to the consummation of the
transaction to which the Disapproval Notice relates.
In case of the redemption of only part of the Series A Preferred Stock at
the time outstanding (other than a redemption in response to a Disapproval
Notice), such redemption shall be made pro rata; provided, however, that,
except in the case of a redemption in response to a Disapproval Notice, if full
cumulative dividends shall not have been paid or declared and set apart for
payment for all quarterly dividends to and including the last dividend payment
date, the Corporation shall not call for redemption any shares of Series A
Preferred Stock unless all such shares then outstanding are called for
simultaneous redemption.
Notice of any proposed redemption of Series A Preferred Stock shall be
given by the Corporation by mailing by first class mail a copy of such notice
at least 10 days prior to the date fixed for such redemption to each holder of
record of the shares to be redeemed at his address appearing on the books of
the Corporation. Notice of redemption shall be deemed to have been given when
deposited in the United States mails, first class postage prepaid, whether or
not such notice is actually received. If on or before the redemption date
specified in such notice all funds necessary for such redemption shall have been
set aside by the Corporation, separate and apart from its other funds, in trust
for the pro rata benefit of the holders of the shares so called for redemption,
so as to be and continue to be available therefor, then from and after the date
of redemption so designated, notwithstanding that any certificate representing
shares of Series A Preferred Stock so called for redemption shall not have been
surrendered for cancellation, the shares represented thereby shall no longer be
deemed outstanding, the right to receive dividends thereon shall cease to accrue
and all rights with respect to such shares of Series A Preferred Stock so called
for redemption shall forthwith at the close of business on such redemption date
cease and terminate, except only the right of the holders thereof to receive the
redemption price of such shares so to be redeemed plus an amount equal to
accrued and unpaid dividends (whether or not declared) up to the date fixed for
redemption, but without interest thereon.
Any moneys so set aside by the Corporation and unclaimed at the end of
three years from the date fixed for
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<PAGE> 59
redemption shall revert to the general funds of the Corporation.
The Corporation may, however, prior to the redemption date specified in
the notice of redemption, deposit in trust for the account of the holders of the
shares of Series A Preferred Stock to be redeemed, with a bank or trust company
in good standing organized under the laws of the United States of America or of
any state thereof, having its principal office located in the continental United
States, and having a capital, surplus and undivided profits aggregating at least
$50 million, designated in such notice of redemption, all funds necessary for
such redemption (including accrued and unpaid dividends up to the date fixed for
redemption), together with irrevocable written instructions authorizing such
bank or trust company, on behalf and at the expense of the Corporation, to cause
the notice of redemption to be mailed as herein provided at least 10 days prior
to the redemption date and to include in said notice of redemption a statement
that all funds necessary for such redemption have been so deposited in trust and
are immediately available, and on the redemption date, notwithstanding that any
certificate representing shares of Series A Preferred Stock called for
redemption shall not have been surrendered for cancellation, all shares of
Series A Preferred Stock with respect to which such deposit shall have been made
and which are outstanding on such redemption date shall no longer be deemed to
be outstanding and all rights with respect to such shares of Series A Preferred
Stock shall forthwith at the close of business on such redemption date cease and
terminate, except only the right of the holders thereof to receive from such
bank or trust company, at any time after the redemption date, the redemption
price of such shares so to be redeemed plus accrued and unpaid dividends up to
the date fixed for redemption. In the event the holder of any such shares of
Series A Preferred Stock shall not, within three years after the redemption
date, claim the amount deposited for the redemption thereof, the depositary
shall, upon the request of the Corporation expressed in a resolution of its
Board of Directors, pay over to the Corporation such unclaimed amount.
If any shares of Series A Preferred Stock called for redemption are not
issued and outstanding as of the date fixed for redemption, the amount set
aside or deposited for the redemption thereof shall revert to or be paid over
to the Corporation.
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<PAGE> 60
Any shares of Series A Preferred Stock which are redeemed or otherwise
purchased or acquired by the Corporation or any subsidiary thereof shall be
cancelled. The number of shares of Series A Preferred Stock shall be reduced by
the number of shares so cancelled and such cancelled shares shall be restored to
the status of authorized but unissued shares of Preferred Stock that are
undesignated as to series. For the purposes of this paragraph, a subsidiary
means a corporation of which a majority of the capital stock having voting power
under ordinary circumstances to elect a majority of the board of directors is
owned by (a) the Corporation, (b) the Corporation and one or more of its
subsidiaries or (c) one or more of the Corporation's subsidiaries.
(3) Regarding Voting Rights. Each share of Series A Preferred Stock shall
entitle the holder thereof to one vote for each share held and, except as
provided herein, or by law, the Series A Preferred Stock and the Common Stock
(and any other capital stock of the Corporation at any time entitled to vote)
shall vote together as one class.
In addition to any provisions herein and any requirement of law, the Series
A Preferred Stock shall vote as a single class with respect to any proposal (a)
to change the dividend rate, liquidation preference, redemption price, voting
rights or conversion rights of the shares of the Series A Preferred Stock or to
increase the number of authorized shares of Series A Preferred Stock; (b) to
increase the authorized amount of any class of capital stock of the Corporation
unless the same ranks junior to the Series A Preferred Stock as to dividends and
assets; (c) to authorize, create, issue or sell any shares of any class (or any
series of any class) of capital stock of the Corporation that ranks pari passu
with or prior to the Series A Preferred Stock as to dividends or distribution of
assets upon liquidation (collectively, the "Priority Stock"); (d) for the merger
or consolidation of the Corporation with or into, or the sale of substantially
all of the assets of the Corporation to, any other entity; and (e) for the
alteration, change or modification of the rights set forth in this paragraph.
Unless the vote of a larger percentage is required by law or the Restated
Articles of Incorporation, the affirmative vote of the holders of a majority of
the outstanding shares of Series A Preferred Stock shall be sufficient to take
any action as to which a class vote of the holders of the Series A Preferred
Stock is required by law or the
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<PAGE> 61
Restated Articles of Incorporation. In the event that the holders of the Series
A Preferred Stock are entitled to vote as a class with respect to any matter
referred to in clause (d) of the preceding paragraph ("Clause (d) Matter"), the
Corporation shall give the holders of the Series A Preferred Stock at least 30
days' notice of any meeting at which a Clause (d) Matter shall be submitted to
shareholders, and each holder of Series A Preferred Stock shall be obligated to
notify the Corporation in writing (by execution of a proxy or otherwise), by
delivery of such notice to the Corporation, at least ten days prior to the date
of any such meeting whether such holder intends to vote in support of or in
opposition to the Clause (d) Matter. Simultaneously with the delivery of such
notice and if the holder indicates that it intends to vote in support of the
Clause (d) Matter, the holder shall deliver a legally binding and irrevocable
proxy authorizing the Corporation or officers thereof to so vote such holder's
shares of Series A Preferred Stock. Any holder who actually receives the
Corporation's notice of meeting with respect to a Clause (d) Matter and who
indicates that it intends to vote in opposition to the Clause (d) Matter or who
fails to deliver such notice together with such proxy within the required time
period shall be deemed to have given a "Disapproval Notice" to the Corporation.
If the Corporation elects to give notice of redemption and to redeem the Series
A Preferred Stock held by a holder giving a Disapproval Notice as provided in
the third paragraph of Paragraph (2) above, the holder of any such shares of
Series A Preferred Stock shall, effective upon the deposit by the Corporation of
the funds necessary to effect such redemption, be deemed to have granted an
irrevocable proxy to the Corporation to vote all such shares of Series A
Preferred Stock registered in the name of such holder in support of the Clause
(d) Matter and to vote on all other matters in the manner determined by the
Board of Directors of the Corporation at the meeting.
Whenever, at any time, dividends payable on the Series A Preferred Stock
shall be in arrears for such number of dividend periods as shall in the
aggregate contain not less than 540 calendar days, the holders of the Series A
Preferred Stock shall have the exclusive right, voting separately as a class to
elect by a majority of the votes cast two directors of the Corporation, who
shall be a Class I director and a Class II director, respectively, (i) at the
Corporation's next annual meeting of shareholders, (ii) at a special meeting
held in place thereof, (iii) at a special
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<PAGE> 62
meeting of the holders of shares of the Series A Preferred Stock called by the
Secretary of the Corporation upon the written request of the holders of record
of 25% or more of the total number of shares of Series A Preferred Stock then
outstanding, to be held within 30 days after delivery of such request, or (iv)
by written consent of the holders of a majority of the issued and outstanding
shares of Series A Stock in lieu thereof, and at each succeeding meeting of
shareholders thereafter at which directors shall be elected until such rights
shall terminate as hereinafter provided. The Board of Directors of the
Corporation hereby unanimously directs the Secretary of the Corporation to give
notice of any special meeting of the shareholders of the Corporation required
from time to time by the provisions of this Paragraph (3), in the manner
prescribed by the Bylaws of the Corporation. At elections for such directors,
each holder of the Series A Preferred Stock shall be entitled to one vote for
each share held. Upon the vesting of such voting right in the holders of the
Series A Preferred Stock, the maximum authorized number of members of the Board
of Directors shall automatically be increased by two and the two vacancies so
created shall be filled by vote of the holders of the Series A Preferred Stock
as hereinabove set forth. The right of the holders of the Series A Preferred
Stock, voting separately as a class, to elect members of the Board of Directors
of the Corporation as aforesaid shall continue until such time as all dividends
accumulated on the Series A Preferred Stock shall have been paid in full, at
which time such right shall terminate, except as by law expressly provided,
subject to revesting in the event of each and every subsequent default of the
character above mentioned. Upon any termination of the right of the holders of
the Series A Preferred Stock to vote for directors as herein provided, the term
of office of all directors then in office elected by such series voting as a
class shall terminate immediately. If the office of any director elected by the
holders of the Series A Preferred Stock becomes vacant by reason of death,
resignation, retirement, disqualification, removal from office, or otherwise,
the remaining director elected by the holders of Series A Preferred Stock voting
as a class may choose a successor who shall hold office for the unexpired term
in respect of which such vacancy occurred. Whenever the special voting powers
vested in the holders of the Series A Preferred Stock shall have expired, the
number of directors shall become such number as may be provided for in the
By-Laws, or resolution of the Board of Directors
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<PAGE> 63
thereunder, irrespective of any increase made pursuant to the provisions of this
Paragraph (3).
(4) Priority in Event of Dissolution. In the event of any liquidation,
dissolution, or winding up of the affairs of the Corporation, after payment or
provision for payment of the debts and other liabilities of the Corporation
(including any liquidation preferences payable in respect of capital stock of
the Corporation ranking senior to the Series A Preferred Stock as to assets),
the holders of the Series A Preferred Stock shall be entitled to receive, out of
the remaining net assets of the Corporation, $20.00 in cash for each share of
Series A Preferred Stock, plus an amount equal to all dividends accrued and
unpaid on each such share (whether or not declared) up to the date fixed for
distribution, before any distribution shall be made to the holders of the Common
Stock of the Corporation or any other stock of the Corporation ranking junior to
the Series A Preferred Stock as to assets. If upon any liquidation, dissolution
or winding up of the affairs of the Corporation, the assets distributable among
the holders of Series A Preferred Stock (and any other capital stock of the
Corporation ranking on a parity with the Series A Preferred Stock as to assets)
shall be insufficient to permit the payment in full to the holders of all shares
of such Series A Preferred Stock (and any other capital stock of the Corporation
ranking on a parity with the Series A Preferred Stock as to assets) of all
preferential amounts payable to all such holders, then the entire assets of the
Corporation thus distributable shall be distributed ratably among the holders of
the Series A Preferred Stock (and any other capital stock of the Corporation
ranking on a parity with the Series A Preferred Stock as to assets) in
proportion to the respective amounts that would be payable per share if such
assets were sufficient to permit payment in full.
(5) Conversion. (a) Subject to and upon compliance with the provisions
herein, at the option of the holder, shares of Series A Preferred Stock may, at
any time on and after September 1, 1987, be converted into fully paid and
nonassessable shares of Common Stock at the rate of .500 of a share of Common
Stock for each share of Series A Preferred Stock to be converted (subject to the
adjustment as hereinafter provided) ("conversion rate"); provided, however, that
if the Corporation shall have given notice of redemption of any shares of Series
A Preferred Stock pursuant to Paragraph (2) above, the right to convert such
shares shall terminate at 5:00 p.m., Houston, Texas time, on the date fixed for
redemption (unless the Corporation shall default
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in the payment due upon redemption in which case such conversion rights shall
not expire). the result obtained by dividing $10.00 by the conversion rate in
effect from time to time is herein referred to as the "conversion price."
Whenever the conversion price is adjusted pursuant to the provisions of
Subparagraph (d) below, the conversion rate shall be redetermined by dividing
$10.00 by the then adjusted conversion price. The conversion rate and the
conversion price in effect from time to time shall be calculated to four decimal
places and rounded to the nearer thousandths.
(b) In order to exercise the right to convert, the holder of any shares of
Series A Preferred Stock to be converted shall surrender the certificate
representing such Series A Preferred Stock, accompanied (if so required by the
Corporation) by the proper instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder thereof
or by his attorney duly authorized in writing, to the Corporation at its
principal executive office, and shall give written notice to the Corporation at
such office that the holder elects to convert such Series A Preferred Stock. No
payment or adjustment shall be made upon any conversion on account of regular
cash dividends declared or accrued on the Common Stock or the Series A Preferred
Stock surrendered for conversion. Series A Preferred Stock shall be deemed to
have been converted immediately prior to the close of business on the date of
the giving of such notice and of the surrender of such certificates for
conversion in accordance with the foregoing provisions, and at such time the
rights of the holder of such Series A Preferred Stock as such holder shall
cease, and the holder thereof shall be treated for all purposes as the record
holder of Common Stock from and after such time. As promptly as practicable
after receipt of such notice and the surrender of such certificates as
aforesaid, the Corporation shall issue and deliver at such office a certificate
or certificates for the number of full shares of Common Stock issuable upon
conversion.
(c) No fractional share of Common Stock shall be issued upon conversion of
Series A Preferred Stock. Instead of any fractional share of Common Stock which
would otherwise be issuable upon conversion of any Series A Preferred Stock, the
Corporation shall pay a cash adjustment equal to such fraction multiplied by the
Price per share of the Common Stock on the trading day next preceding the date
of conversion. In determining the number of shares of Common
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Stock and the payment, if any, in lieu of fractional shares that a holder of
Series A Preferred Stock shall receive, the total number of shares of Series A
Preferred Stock surrendered for conversion by such holder shall be aggregated.
(d) The number and kind of securities issuable upon the conversion of the
Series A Preferred Stock shall be subject to adjustment from time to time upon
the happening of certain events occurring on or after the date of original
issue of the shares of the Series A Preferred Stock as follows:
(i) In case of any reclassification or change of outstanding
securities issuable upon exercise of the conversion rights (other than a
change in par value, or from par value to no par value, or from no par
value to par value or as a result of a subdivision or combination), or in
the case of any consolidation or merger of the Corporation with or into
another corporation (other than a merger with another corporation in which
the Corporation is the surviving Corporation and which does not result in
any reclassification or change -- other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination -- of outstanding securities
issuable upon exercise of these conversion rights), the holders of the
Series A Preferred Stock shall have, and the Corporation, or such successor
corporation, shall covenant in the constituent documents effecting any of
the foregoing transactions that the holders of the Series A Preferred Stock
do have, the right to obtain upon the exercise of these conversion rights,
in lieu of each share of Common Stock theretofore issuable upon exercise of
these conversion rights, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification,
change, consolidation or merger by a holder of one share of Common Stock
issuable upon exercise of these conversion rights as if they had been
exercised immediately prior to such reclassification, change, consolidation
or merger. The constituent documents effecting any reclassification,
change, consolidation or merger shall provide for any adjustments which
shall be as nearly equivalent as may be practicable to the adjustments
provided in this Subparagraph (d). The provisions of this Subparagraph
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(d)(i) shall similarly apply to successive reclassifications, changes,
consolidations or mergers.
(ii) If the Corporation at any time while any of the Series A
Preferred Stock is outstanding, shall subdivide or combine its Common
Stock, the conversion price shall be proportionately reduced, in case of
subdivision of shares, as at the effective date of such subdivision, or if
the Corporation shall take a record of holders of its Common Stock for the
purpose of so subdividing, as at such record date, whichever is earlier, or
shall be proportionately increased, in the case of combination of shares,
as at the effective date of such combination or, if the Corporation shall
take a record of holders of its Common Stock for the purpose of so
combining, as at such record date, whichever is earlier.
(iii) If the Corporation at any time while any of the Series A
Preferred Stock is outstanding shall:
(A) Pay a dividend payable in, or make any other
distribution of, Common Stock, the conversion price shall be adjusted,
as at the date the Corporation shall take a record of the holders of
its Common Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by
multiplying the conversion price in effect immediately prior to such
record date (or if no such record is taken, then immediately prior to
such payment or other distribution) by a fraction (1) the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to such dividend or distribution, and (2) the
denominator of which shall be the total number of shares of Common
Stock outstanding immediately after such dividend or distribution
(plus in the event that the Corporation paid cash for fractional
shares, the number of additional shares which would have been
outstanding had the Corporation issued fractional shares in connection
with said dividend, except to the extent such payment of cash is
treated as a dividend payable out of earnings or surplus legally
available for the payment of dividends under the laws of the State of
Louisiana); or
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(B) Make a distribution of its assets to the holders of its Common
Stock as a dividend in liquidation or partial liquidation or by way of
return of capital or other than as a dividend payable out of earnings or
surplus legally available for dividends under the laws of the State of
Louisiana, the holders of the Series A Preferred Stock shall, upon exercise
of these conversion rights, be entitled to receive, in addition to the
number of shares of Common Stock receivable thereupon, and without payment
of any consideration therefor, a sum equal to the amount of such assets as
would have been deliverable to them as owners of that number of shares of
Common Stock of the Corporation receivable by exercise of these conversion
rights, had they been the holders of record of such Common Stock on the
record date for such distribution (or if no such record is taken, as of the
date of such distribution); and an appropriate provision therefore shall be
made a part of any such distribution.
(iv) If the Corporation at any time while any of the Series A Preferred
Stock is outstanding shall issue any additional shares of Common Stock
(otherwise than as provided in the foregoing Subparagraphs (i) through (iii)
above) at a price per share less than the average Price per share of Common
Stock for the 20 trading days immediately preceding the date of the
authorization of such issuance by the Corporation's Board of Directors (the
"Market Price") then the conversion price on each such issuance shall be
adjusted to that price determined by multiplying the conversion price by a
fraction:
(A) the numerator of which shall be the sum of (1) the number of
shares of Common Stock outstanding immediately prior to the issuance of
such additional shares of Common Stock multiplied by the Market Price, and
(2) the consideration, if any, received and deemed received by the
Corporation upon the issuance of such additional shares of Common Stock,
divided by (3) the total number of shares of Common Stock outstanding
immediately after the issuance of such additional shares of Common Stock,
and
(B) the denominator of which shall be the Market Price.
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No adjustment of the conversion price shall be made in an amount less than
$.05 per share, but any such lesser adjustment shall be carried forward and
shall be made at the time together with the next subsequent adjustment which,
together with any adjustments so carried forward, shall amount to $.05 per
share or more. Further, no adjustments of the conversion price shall be made
under this Subparagraph (d)(iv) upon the issuance of any additional shares of
Common Stock that (x) are issued pursuant to thrift plans, stock purchase
plans, stock bonus plans, stock option plans, employee stock ownership plans
and other incentive or profit sharing arrangements for the benefit of
employees, provided such plans or arrangements have been approved by a majority
of either the disinterested members of the Board of Directors of the
Corporation or the Corporation's stockholders ("Employee Benefit Plans") or (y)
are issued pursuant to any Common Stock Equivalent (as defined in
Subparagraph (d)(v) below), if upon the issuance of any such Common Stock
Equivalent, any such adjustments shall previously have been made pursuant to
Subparagraph (d)(v) hereof or if no adjustment was required pursuant to
Subparagraph (d)(v) hereof.
The Price per share of Common Stock on any day means the average (mean) of
the reported "high" and "low" sales prices for such shares as reported in The
Wall Street Journal's NYSE-Composite Transactions listing for such day
(corrected for obvious typographical errors), or if such shares are not
reported in such listing, then the average of the reported "high" and "low"
sales prices on the largest national securities exchange (based on the
aggregate dollar value of securities listed) on which such shares are listed or
traded, or if such shares are not listed or traded on any national securities
exchange, then the average of the reported "high" and "low" sales prices for
such shares in the over-the-counter market, as reported on the National
Association of Securities Dealers Automated Quotations System, or, if such
prices shall not be reported thereon, the average between the closing bid and
asked prices so reported, or, if such prices shall not be reported, then the
average closing bid and asked prices reported by the National Quotation Bureau
Incorporated, or, in all other cases, the value established by the Board of
Directors of the Corporation in good faith. The "average" Price per share of
the Common Stock for any period shall be determined by
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<PAGE> 69
dividing the sum of the Prices determined for the individual days in such period
by the number of days in such period.
(v) In case the Corporation shall issue any security or evidence of
indebtedness which is convertible into or exchangeable for Common Stock
("Convertible Security"), or any warrant, option or other right to subscribe for
or purchase Common Stock or any Convertible Security, other than pursuant to
Employee Benefit Plans, ("Common Stock Equivalent"), or if, after any such
issuance, the price per share for which additional shares of Common Stock may be
issuable thereunder is amended, then the conversion price upon each such
issuance or amendment shall be adjusted as provided in Subparagraph (d)(iv)
hereof on the basis that (i) the maximum number of additional shares of Common
Stock issuable pursuant to all such Common Stock Equivalents shall be deemed to
have been issued as of the earlier of (a) the date on which the Corporation
shall enter into a firm contract for the issuance of such Common Stock
Equivalent, or (b) the date of actual issuance of such Common Stock Equivalent;
and (ii) the aggregate consideration for such maximum number of additional
shares of Common Stock shall be deemed to be the minimum consideration received
and receivable by the Corporation for the issuance of such additional shares of
Common Stock pursuant to such Common Stock Equivalent; provided, however, that
no adjustment shall be made pursuant to this Subparagraph (d)(v) unless the
consideration received and receivable by the Corporation per share of Common
Stock for the issuance of such additional shares of Common Stock pursuant to
such Common Stock Equivalent is less than the Market Price. No adjustment of
the conversion price shall be made under this Subparagraph upon the issuance of
any Convertible Security which is issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if any adjustment
shall previously have been made in the conversion price than in effect upon the
issuance of such warrants or other rights pursuant to this Subparagraph (d)(v).
(vi) The following provisions shall be applicable to making of adjustments
in the conversion price hereinbefore provided in this Subparagraph (d):
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<PAGE> 70
(A) The consideration received by the Corporation shall be deemed to be
the following: to the extent that any additional shares of Common Stock or any
Common stock Equivalents shall be issued for cash consideration, the
consideration received by the Corporation therefor, or, if such additional
shares of Common Stock or Common Stock Equivalents are offered by the
Corporation for subscription, the subscription price, or, if such additional
shares of Common stock or Common Stock Equivalents are sold to underwriters or
dealers for public offering without a subscription offering, the initial public
offering price, in any such case excluding any amounts paid or receivable for
accrued interest or accrued dividends and without deduction of any compensation,
discounts or expenses paid or incurred by the Corporation for and in the
underwriting of, or otherwise in connection with, the issue thereof; to the
extent that such issuance shall be for a consideration other than cash, then,
except as herein otherwise expressly provided, the fair market value of such
consideration at the time of such issuance as determined in good faith by the
Corporation's Board of Directors. The consideration for any additional shares of
Common Stock issuable pursuant to any Common stock Equivalents shall be the
consideration received by the Corporation for issuing such Common Stock
Equivalents, plus the additional consideration payable to the corporation upon
the exercise, conversion or exchange of such Common Stock Equivalents. In case
of the issuance at any time of any additional shares of Common Stock or Common
Stock Equivalents in payment or satisfaction of any dividend upon any class of
stock other than Common Stock, the Corporation shall be deemed to have received
for such additional shares of Common Stock or Common stock Equivalents a
consideration equal to the amount of such dividend so paid or satisfied. In any
case in which the consideration to be received or paid shall be other than cash,
the Board of Directors of the Corporation shall notify promptly each holder of
the Series A Preferred Stock of its determination of the fair market value of
such consideration.
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<PAGE> 71
(B) Upon the expiration of the right to convert, exchange or
exercise any Common Stock Equivalent the issuance of which effected an
adjustment in the conversion price, if any such Common Stock
Equivalent shall not have been converted, exercised or exchanged, the
number of shares of Common Stock deemed to be issued and outstanding
by reason of the fact that they were issuable upon conversion,
exchange or exercise of any such Common Stock Equivalent shall no
longer be computed as set forth above, and the conversion price shall
forthwith be readjusted and thereafter be the price which it would
have been (but reflecting any other adjustments in the conversion
price made pursuant to the provisions of Subparagraph (d)(iv) after
the issuance of such Common Stock Equivalent) had the adjustment of
the conversion price made upon the issuance or sale of such Common
Stock Equivalent been made on the basis of the issuance only of the
number of additional shares of Common Stock actually issued upon
exercise, conversion or exchange of such Common Stock Equivalents and
thereupon only the number of additional shares of Common Stock
actually so issued shall be deemed to have been issued and only the
consideration actually received by the Corporation (computed as in
Subparagraph (A) of this Subparagraph (d)(vi)) shall be deemed to have
been received by the Corporation.
(C) The number of shares of Common Stock at any time outstanding
shall not include any shares thereof then directly or indirectly owned
or held by or for the account of the Corporation or its subsidiaries.
(e) Whenever the conversion price and the conversion rate are required to
be adjusted as provided herein, the Corporation shall forthwith compute the
adjusted conversion price and the adjusted conversion rate and shall prepare a
certificate setting forth such adjusted conversion price and adjusted conversion
rate and showing in detail the facts upon which such adjustment is based. A copy
of such certificate shall forthwith be filed with the transfer agent or agents
for the Series A Preferred Stock (if any) and for the Common Stock; and
thereafter, until further adjusted, the
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<PAGE> 72
adjusted conversion price and the adjusted conversion rate shall be as set forth
in such certificate, provided that the computation of such adjusted conversion
price and such adjusted conversion rate shall be reviewed at least annually by
the independent public accountants regularly employed by the Corporation and
said accountants shall file a corrected certificate, if required, with such
transfer agent or agents. The Corporation shall mail or cause to be mailed to
the holders of Series A Preferred Stock at the time of each quarterly dividend
payment, a statement setting forth the adjustments, if any, made in the
applicable conversion price and conversion rate and not theretofore reported to
such holders, and the reasons for such adjustment.
(f) The Corporation will at all times reserve and keep available, out of
its authorized and unissued Common Stock solely for the purpose of issuance
upon the conversion of the Series A Preferred Stock as herein provided, free
from preemptive and other subscription rights, such number of shares of Common
Stock as shall then be issuable upon the conversion of all outstanding Series
A Preferred Stock. The Corporation shall ensure that all shares of Common Stock
which shall be so issuable shall upon issue be duly and validly issued and
fully paid and nonassessable.
(g) If any shares of Common Stock required to be reserved for the purposes
of conversion of Series A Preferred Stock hereunder require registration with
or approval of any governmental authority under any federal or state law, or
listing upon any national securities exchange, before such shares may be issued
upon conversion, the Corporation will in good faith and as expeditiously as
possible endeavor to cause such shares to be duly registered, approved or
listed, as the case may be.
(h) The issuance of certificates for shares of Common Stock upon the
conversion of Series A Preferred Stock shall be made without charge to the
holders thereof for any transfer or similar taxes that may be payable in
respect of the issue, delivery or acquisition of such certificates. Such
certificates shall be issued in the respective names of the holders of the
Series A Preference Stock converted.
(6) Sinking Fund. The Series A Preferred Stock shall not be entitled to any
mandatory redemption or prepayment (except on liquidation, dissolution or
winding up of the
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<PAGE> 73
affairs of the Corporation) or to the benefit of any sinking fund.
(7) Definition. If the day upon which any payment is to be made or any
other action is to be taken or any event is scheduled to occur pursuant to the
terms of Articles of Amendment is not a business day, the payment shall be made
or the other action shall be taken on the next succeeding business day. A
"business day" is defined as a day in the City of Houston, County of Harris,
Texas, that is not a legal holiday or a day on which banking institutions are
authorized or obligated by law to close.
(8) Notice. Any notice, demand or other communication shall be deemed
given and received as of the date of delivery in person or receipt set forth on
the return receipt. The inability to deliver because of rejection or other
refusal to accept any notice, demand or other communication, shall be deemed to
be receipt of such notice, demand or other communication as of the date of such
inability to deliver or rejection or refusal to accept.
2. Paragraph C of Article III is relettered as paragraph D.
APPEARERS further stated that all of the shares of the Corporation have
par value; that the Corporation is authorized to issue 25,000,000 shares, of
which 20,000,000 are common shares of the par value of $2.50 per share and
5,000,000 are preferred shares of the par value of $0.10 per share; and that the
Board of Directors of the Corporation has the authority to amend the articles to
fix the preferences, limitations, and relative rights of the preferred shares,
and to establish, and fix variations and relative rights and preferences as
between series of preferred shares, all as more fully set out in Article III of
the Restated Articles of Incorporation.
AND SAID APPEARERS having requested me, Notary, to note said amendment in
authentic form, I do by these presents receive said amendments in the form of
this public act to the end that said amendment may be promulgated and recorded
and thus be read into the Restated Articles of Incorporation of Southdown, Inc.,
as hereinabove set forth.
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<PAGE> 74
THUS DONE AND PASSED, in my office at Houston, Harris County, State of
Texas, on the day, month and year first above written, in the presence of the
undersigned competent witnesses, who hereunto sign their names with the said
appearers and me, Notary, after a due reading of the whole.
SOUTHDOWN, INC.
By: /s/ CLARENCE C. COMER
-----------------------------
Clarence C. Comer
President
By: /s/ WENDELL E. PHILLIPS, II
-----------------------------
Wendell E. Phillips, II
Secretary
WITNESSES
/s/ WILLIAM CLELAND DADE
- -------------------------
William Cleland Dade
/s/ L. CRAIG CARLETON
- -------------------------
L. Craig Carleton
/s/ SHAWNA CHISNELL
--------------------
NOTARY PUBLIC
[NOTARY SEAL]
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<PAGE> 75
RESTATED ARTICLES OF INCORPORATION
OF SOUTHDOWN, INC.
DATED SEPTEMBER 15, 1983
<PAGE> 76
RESTATED ARTICLES OF INCORPORATION
DATED SEPTEMBER 15, 1983
<PAGE> 77
RESTATED ARTICLES OF INCORPORATION
of
SOUTHDOWN, INC.
Southdown, Inc., a Louisiana corporation (the "corporation"), through its
undersigned President and Secretary and by authority of its Board of Directors,
does hereby certify that:
FIRST: The Restated Articles of Incorporation set forth in Paragraph Fourth
below accurately copies the articles and all amendments and corrections thereto
in effect at the date hereof without any substantive changes.
SECOND: Each amendment and correction has been effected in conformity with
law.
THIRD: The date of incorporation of the corporation was April 4, 1930, and
the date of these Restated Articles is September 15, 1983.
FOURTH: The Restated Articles of Incorporation of the corporation are as
follows:
ARTICLE I
The name of this corporation shall be Southdown, Inc.
ARTICLE II
The corporation's purpose is to engage in any lawful activity for which
corporations may be formed under the Business Corporation Law of Louisiana.
ARTICLE III
A. The Corporation has authority to issue 20,000,000 shares of Common
Stock of the par value of $2.50 per share (the "Common Stock") and 5,000,000
shares of Preferred Stock of the par value of $.10 per share (the "Preferred
Stock").
B. Shares of the Preferred Stock may be issued from time to time in one
or more classes or series, each of which shall have such distinctive designation
or title and such voting rights, preferences and relative, optional or other
special rights (including, without limitation, pre-emptive rights) and
qualifications, limitations or restrictions as shall be fixed by the board of
directors of the corporation prior to the issuance of any shares thereof by
amendment to these Articles of Incorporation adopted by the board of directors.
C. Except to the extent otherwise provided by an amendment adopted by the
board of directors in accordance with the provisions of Article III(B) hereof,
no shareholder of this corporation shall by reason of his holding shares of any
class have any
<PAGE> 78
pre-emptive or preferential right to purchase or subscribe to any shares of any
class of this corporation now or hereafter authorized or any notes, debentures,
bonds, or other securities convertible into or carrying options or warrants to
purchase shares of any class now or hereafter to be authorized, whether or not
the issuance of any shares, or such notes, debentures, bonds or other securities
would adversely affect dividend or voting rights of such shareholder, other than
such rights, if any, as the board of directors in its discretion may fix; and
the board of directors may issue shares of any class of this corporation, or any
notes, debentures, bonds or other securities convertible into or carrying
options or warrants to purchase shares of any class, without offering any such
shares of any class, either in whole or in part, to the existing shareholders of
any class.
ARTICLE IV
All of the corporate powers of this corporation shall be vested in and
exercised by a board of directors consisting of the number of directors
specified in the by-laws of the corporation or determined in the manner
prescribed herein.
The Board of Directors shall be divided into three classes as nearly equal
in number as may be, with the initial term of office of Class I expiring at the
annual meeting of shareholders in 1971, of Class II expiring at the annual
meeting of shareholders in 1972, and of Class III expiring at the annual meeting
of shareholders in 1973.
At each annual meeting of shareholders, directors chosen to succeed those
whose terms then expire shall be elected for a full term of office expiring at
the third succeeding annual meeting of shareholders after their election. When
the number of directors is increased by amendment to the by-laws of the
corporation, and any newly created directorships are filled by the Board of
Directors, there shall be no classification of such additional directors until
the next annual meeting of shareholders. Subject to the foregoing, directors
elected to fill a vacancy shall hold office for a term expiring at the annual
meeting at which the term of the class to which they shall have been elected
expires.
The shareholders, by the affirmative vote or consent of the holders of 80%
of all classes of stock of this corporation entitled to vote in elections of
directors, at any special meeting called for the purpose may remove from office
any one or more of the directors, notwithstanding that his or their terms of
office may not have expired, and may forthwith at such meeting proceed to elect
a successor for the unexpired term.
ARTICLE V
Any director absent from the meeting of the board of directors or any
committee thereof may be represented by any other director or shareholder, who
may cast the absent director's vote according to his written instructions,
general or special.
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<PAGE> 79
ARTICLE VI
The board of directors may make and alter by-laws containing any provisions
with respect to the government of the corporation, subject to the power of the
shareholders to change or repeal any by-laws so made. The by-laws may contain
any provision relating to the business of the corporation, the conduct of its
affairs, its rights or powers, or the rights or powers of its shareholders,
directors or officers, not inconsistent with law or these articles.
ARTICLE VII
No shareholder shall ever be held liable for the contracts, faults or debts
of the corporation in any further sum than the unpaid balance, if any, remaining
due on the stock for which he has subscribed, nor shall any informality in
organization have the effect of rendering any subscriber or shareholder liable
beyond the said unpaid amount, if any, remaining due on his stock.
ARTICLE VIII
Notwithstanding any other provision of this certificate of incorporation or
the by-laws of this corporation (and in addition to any other vote that may be
required by law, the Articles of Incorporation or the by-laws of this
corporation), the affirmative vote of the holders of 80% of all classes of stock
of this Corporation entitled to vote in elections of directors (considered for
this purpose as one class) shall be required to amend, alter, change, or repeal
Articles IV, VIII, VI, IX, X or XI of the Articles of Incorporation.
Except as provided in the Articles of Incorporation, or as required by
statute, the Articles of Incorporation may be amended by the affirmative vote or
consent of the holders of a majority of all classes of stock of this corporation
entitled to vote in elections of directors, taken at an annual or special
meeting of shareholders, the notice of which set forth the proposed amendment or
a summary of the changes to be made thereby. If such an amendment would
adversely affect the holders of shares of any class or series, then in addition
to the vote required by the sentence immediately preceding, the holders of each
class or series of shares so affected by the amendment shall be entitled to vote
as a class upon such amendment, and a majority of the issued and outstanding
shares of each class or series so affected by the amendment shall be necessary
to the adoption thereof.
ARTICLE IX
(A) Except as set forth in Paragraph (D) of this Article IX, the
affirmative vote or consent of the holders of 80% of all classes of stock of
this corporation entitled to vote in elections of directors, considered for the
purposes of this Article IX as one class, shall be required:
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<PAGE> 80
(i) for a merger or consolidation with or into any other corporation,
or
(ii) for any sale or lease of all or any substantial part of the assets
of this corporation to any other corporation, person or other entity, or
(iii) any sale or lease to this corporation or any subsidiary thereof
of any assets (except assets having an aggregate fair market value of less
than $2,000,000) in exchange for voting securities (or securities
convertible into voting securities or options, warrants, or rights to
purchase voting securities or securities convertible into voting
securities) of this corporation or any subsidiary by any other corporation,
person or entity,
if as of the record date for the determination of shareholders entitled to
notice thereof and to vote thereon or consent thereto such other corporation,
person or entity which is party to such a transaction is the beneficial owner,
directly or indirectly, of 5% or more of the outstanding shares of stock of this
corporation entitled to vote in elections of directors, considered for the
purpose of the Article IX as one class. Such affirmative vote or consent shall
be in addition to the vote or consent of the holders of the stock of this
corporation otherwise required by law or any agreement between this corporation
and any national securities exchange.
(B) For purposes of this Article IX any corporation, person or other
entity shall be deemed to be the beneficial owner of any share of stock of this
corporation,
(i) which it owns directly, whether or not of record, or
(ii) which it has the right to acquire pursuant to any agreement or
understanding or upon exercise of conversion rights, warrants or options or
otherwise, or
(iii) which are beneficially owned, directly or indirectly (including
shares deemed to be owned through application of clause (ii) above), by any
"affiliate" or "associate" as those terms are defined in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934 as
in effect on July 1, 1970, or
(iv) which are beneficially owned, directly or indirectly (including
shares deemed owned through application of clause (ii) above), by any other
corporation, person or entity with which it or its "affiliate" or
"associate" has any agreement or arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of stock of this
corporation.
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<PAGE> 81
For the purposes of this Article IX, the outstanding shares of any class of
stock of this corporation shall include shares deemed owned through the
application of clauses (B)(ii), (iii) and (iv) above, but shall not include any
other shares which may be issuable pursuant to any agreement or upon exercise of
conversion rights, warrants, options or otherwise.
(C) The Board of Directors shall have the power and duty to determine for
the purposes of this Article IX on the basis of information known to this
corporation, whether
(i) such other corporation, person or other entity beneficially owns
more than 5% of the outstanding shares of stock of this corporation
entitled to vote in elections of directors,
(ii) a corporation, person, or entity is an "affiliate" or "associate"
(as defined in Paragraph (B) above) of another,
(iii) the assets being acquired by this corporation, or any subsidiary
thereof, have an aggregate fair market value of less than $2,000,000, and
(iv) the memorandum of understanding referred to in paragraph (D)
below is substantially consistent with the transaction covered thereby.
Any such determination shall be conclusive and binding for all purposes of
this Article IX.
(D) The provisions of this Article IX shall not apply to,
(i) any merger or similar transaction with any corporation if the
Board of Directors of this corporation has approved a memorandum of
understanding with such other corporation with respect to such transaction
prior to the time that such other corporation shall have become a
beneficial owner of more than 5% of the outstanding shares of stock of this
corporation entitled to vote in elections of directors; or
(ii) any merger or consolidation of this corporation with, or any sale
or lease to this corporation or any subsidiary thereof of any assets of or
sale or lease by this corporation or any subsidiary thereof of any its
assets to (a) any corporation of which a majority of the outstanding shares
of all classes of stock entitled to vote in elections of directors is owned
of record or beneficially by this corporation and its subsidiaries or (b)
Zapata Norness Incorporated, a Delaware corporation, or any successor,
affiliate, associate or subsidiary.
(E) Except as may be otherwise provided by this Article IX or required by
statute, an agreement of merger or consolidation
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<PAGE> 82
may be approved by a majority vote of the shares issued and outstanding, taken
at a meeting called for the purpose of such approval.
ARTICLE X
Special meetings of shareholders may be called by 80% or more of the Board
of Directors or of the Executive Committee thereof or the President of this
corporation and shall be called upon the written request of the holders of 80%
or more of this corporation's stock outstanding and entitled to vote for
directors as of the date of such request.
ARTICLE XI
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, alter or repeal the
by-laws of the corporation by the affirmative vote of 80% of the entire Board of
Directors. Such by-laws may be adopted, amended or repealed by the affirmative
vote of the holders of 80% of this corporation's stock outstanding and entitled
to vote at the meeting at which any by-law is adopted, amended or repealed. To
the extent not determined by the Articles of Incorporation, the number,
qualification, term of office, manner of election, time and place of meeting,
compensation and powers and duties of the directors may be prescribed from time
to time by the by-laws. The by-laws may contain any other provisions for the
regulation and management of the affairs of the corporation not inconsistent
with statute or the Articles of Incorporation.
ARTICLE XII
Cash, property or share dividends, shares issuable to shareholders in
connection with a reclassification of stock, and the redemption price of
redeemed shares of Preferred Stock, which are not claimed by the shareholders
entitled thereto within one year after the dividend or redemption price became
payable or the shares became issuable, despite reasonable efforts by the
corporation to pay the dividend or redemption price or deliver the certificates
for the shares to such shareholders within such time, shall, at the expiration
of such time, revert to full ownership to the corporation, and the corporation's
obligation to pay such dividend or redemption price or issue such shares, as the
case may be, shall thereupon cease; provided that the board of directors may, at
any time, for any reason satisfactory to it, but need not, authorize (a) payment
of the amount of any cash or property dividend or redemption price, or (b)
issuance of any shares, ownership of which has reverted to the corporation
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<PAGE> 83
pursuant to this Article XII, to the person or entity who or which would be
entitled thereto had such reversion not occurred.
Dated: September 15th, 1983
SOUTHDOWN, INC.
By:/s/ LAWRENCE E. HIRSCH
----------------------------
Lawrence E. Hirsch,
President
By:/s/ E.B. SCHERICH
----------------------------
E.B. Scherich,
Secretary
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<PAGE> 84
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, personally came and appeared Laurence
E. Hirsch and E. B. Scherich to me known to be the President and Secretary of
Southdown, Inc. and the persons who executed the foregoing instrument in such
capacities, and who, being duly sworn, acknowledged in my presence and in the
presence of the undersigned witnesses that they were authorized to and did
execute the foregoing instrument in such capacities for the said corporation, as
its and their free act and deed.
IN WITNESS WHEREOF, the appearers and witnesses and I have hereunto affixed
our signatures on this 15th day of September, 1983.
WITNESSES:
/s/ MICHELLE RAYMOND /s/ LAURENCE E. HIRSCH
- ----------------------------------- ------------------------------------
Laurence E. Hirsch,
President
/s/ MARIE KALISEK
- -----------------------------------
/s/ MICHELLE RAYMOND /s/ E. B. SCHERICH
- ----------------------------------- ------------------------------------
E. B. Scherich,
Secretary
/s/ MARIE KALISEK
- -----------------------------------
/s/ DANA LLOYD
---------------------------
NOTARY PUBLIC
[NOTARY SEAL]
-8-
<PAGE> 1
AMENDED 6/19/98
1989 STOCK OPTION PLAN
OF
SOUTHDOWN, INC.
1. PURPOSE OF PLAN
This 1989 Stock Option Plan (the "Plan") is intended as an employment
incentive (a) to retain in the employ of Southdown, Inc. (the "Company") and
its Affiliates (as defined below) persons of training, experience and ability,
(b) to attract new employees whose services are considered unusually valuable,
(c) to encourage the sense of proprietorship of such persons, and (d) to
stimulate the active interest of such persons in the development and financial
success of the Company. It is further intended that certain options issued
pursuant to this Plan may constitute incentive stock options within the meaning
of Section 422A of the Internal Revenue Code of 1986, as amended ("Code"),
while certain other options granted under this Plan will be nonqualified
options within the meaning of Section 83 of the Code. As used in this Plan, the
term "Affiliates" means any Parent of the Company and any Subsidiary of the
Company within the meaning of Sections 425(e) and (f) of the Code,
respectively.
2. ADMINISTRATION OF PLAN
(a) The Board of Directors shall appoint and maintain as administrator of
this Plan the Employee Compensation and Benefits Committee (the "Committee")
which shall consist of at least three members of the Board of Directors. No
member of the Committee shall have been eligible to participate in this Plan or
any other plan of the Company or its Affiliates which entitles participants to
acquire stock appreciation rights or stock options of the Company or its
Affiliates at any time within one year prior to appointment. No member of such
Committee shall be eligible to receive stock options under this Plan
("Options") or any other plan of the Company or its Affiliates while serving on
the Committee. The limitations set forth in the preceding two sentences shall
not be applicable to participation in any nonemployee director stock option
plan maintained by Company in which the participation of nonemployee directors
is not subject to any nonemployee director discretion and would not adversely
affect any such nonemployee director's status as a disinterested member of the
Committee within the meaning of Rule 16b-3 promulgated by the Securities and
Exchange Commission ("Commission") pursuant to the Securities Exchange Act of
1934, as amended ("Exchange Act"). The members of the Committee shall serve at
the pleasure of the Board of Directors. The Committee shall have full power and
authority to designate participants, to determine the terms and provisions of
respective option agreements (which need not be identical) and to interpret the
provisions and supervise the administration of this Plan. All decisions and
selections made by the Committee pursuant to the provisions of this Plan shall
be made by a majority of its members. Any decision reduced to writing and
signed by all of the members shall be fully effective as if it had been made by
a majority at a meeting duly held.
(b) All Options granted under this Plan are subject to, and may not be
exercised before, the approval of this Plan at the 1990 Annual Meeting, or at a
special meeting of shareholders called for that purpose prior to the 1990
Annual Meeting of Shareholders, by the affirmative vote of the holders of a
majority of the outstanding shares of the Company present, or represented by
proxy, and entitled to vote thereat; provided that if such approval by the
shareholders of the Company at the annual or special meeting is not
forthcoming, all Options previously granted under this Plan shall be void.
(c) The Committee shall have the authority to designate which Options
granted under this Plan shall be incentive stock options and which shall be
nonqualified stock options. The Committee, in its sole discretion, may
determine that all the Options granted under this Plan may be incentive or
nonqualified options.
- 1 -
<PAGE> 2
(d) The Committee shall have the authority to set the number of shares of
the option granted to any one grantee with the limitation that the total number
of shares that may effectively be granted under stock options to any one
grantee in any one calendar year may not exceed 200,000 shares. Such number of
shares is subject to adjustment as provided in Paragraph 9 of this Plan.
3. DESIGNATION OF PARTICIPANTS
The persons eligible for participation in this Plan as recipients of
Options shall include only key employees of the Company and its Affiliates.
Directors of the Company shall not be eligible to participate in this Plan as
directors, but directors otherwise qualified shall be eligible to participate.
An employee who has been granted an Option hereunder ("Optionee") may be
granted an additional Option or Options, if the Committee shall so determine.
4. STOCK RESERVED
Subject to adjustment as provided in Paragraph 9, a total of 5,000,000
shares ("Stock") of Common Stock, par value $1.25 per share, of the Company
("Common Stock") shall be subject to this Plan. The shares of Stock subject to
this Plan shall consist of unissued shares or previously issued shares
reacquired and held by the Company or its Affiliates, and such number of shares
shall be and is hereby reserved for sale for such purpose. Any of such shares
which may remain unsold and which are not subject to outstanding Options at the
expiration of this Plan shall cease to be reserved for the purpose of this
Plan, but until termination of this Plan and the expiration, exercise or lapse
of all Options granted hereunder, the Company shall at all times reserve a
sufficient number of shares to meet the requirements of this Plan. Should any
Option expire or be cancelled prior to its exercise or relinquishment in full,
the shares theretofore subject to such Option may again be subjected to an
Option under this Plan, except that shares subject to purchase pursuant to any
Options or portion thereof relinquished and not required to be issued upon such
relinquishment shall not again be available for Options under this Plan.
5. OPTION PRICE
(a) The purchase price of each share of Stock subject to an incentive stock
option under this Plan shall be 100% of the fair market value of such share on
the date the Option is granted. The purchase price of each share of Stock
subject to a nonqualified stock option under this Plan shall be determined by
the Committee prior to granting the Option. The Committee shall set the
purchase price for each share subject to a nonqualified stock option at either
the fair market value of each share on the date the Option is granted, or at
such other price as the Committee in its sole discretion shall determine;
provided, however, that in no event shall the purchase price of a share subject
to a nonqualified stock option under this Plan be less than 50% of the fair
market value of such share on the date the Option is granted.
(b) The fair market value of a share of Stock on a particular date shall be
deemed to be the average (mean) of the reported "high" and "low" sales prices
for such shares as reported in The Wall Street Journal's NYSE-Composite
Transactions listing for such day (corrected for obvious typographical errors),
or if such shares are not reported in such listing, then the average of the
reported "high" and "low" sales prices on the largest national securities
exchange (based on the aggregate dollar value of securities listed) on which
such shares are listed or traded, or if such shares are not listed or traded on
any national securities exchange, then the average of the reported "high" and
"low" sales prices for such shares in over-the-counter market, as reported on
the National Association of Securities Dealers Automated Quotations System, or,
if such prices shall not be reported thereon, the average between the closing
bid and asked prices so reported, or, if such prices shall not be reported,
then the average closing bid and asked prices reported by the National
Quotation Bureau Incorporated, or, in all other cases, the value established by
the Board of Directors of the Company in good faith.
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<PAGE> 3
6. OPTION PERIOD
Each Option granted under this Plan shall terminate and be of no force and
effect with respect to any shares not previously taken up by the Optionee upon
the expiration of ten years from the date of granting of such Option or such
earlier date as the Committee, in its sole discretion, may prescribe at the
date of grant.
7. EXERCISE OF OPTIONS
(a) The Committee, in granting Options hereunder, shall have discretion to
determine the terms upon which such Options shall be exercisable, subject to
the applicable provisions of this Plan. The Committee may determine to permit
any Option granted hereunder to be exercisable immediately upon the date of
grant or at any time thereafter; provided, however, that no Option granted
hereunder may be exercised within the first six months after the date of grant
except in the event of the death or disability of the Optionee.
(b) Options may be exercised solely by the Optionee during his lifetime or
after his death by the person or persons entitled thereto under this will or
the laws of descent and distribution.
(c) In the event of termination of employment for any reason other than
death, disability or retirement, Options may be exercised only with respect to
the number of shares purchasable at the time of such termination, unless the
Committee shall otherwise approve on a case by case basis.
(d) In the event of the death or disability of the Optionee following the
date of grant and while in the employ of the Company or any of its affiliates,
and while Options granted hereunder are still in force and unexpired under the
terms of Paragraph 6, any unmatured installments of the Options shall be
accelerated. Such acceleration shall be effective as of the date of death or
disability, as the case may be. The Options outstanding in the name of the
Optionee shall thereupon be exercisable in full without regard to any
installment exercise provisions.
(e) In the event the Optionee terminates his employment because of
retirement under any retirement plan of the Company or any of its Affiliates
while Options granted hereunder are still in force and unexpired under the
terms of Paragraph 6, the Committee shall have discretion to permit any
unmatured installments of the Options to be accelerated as of the date of
retirement and the Options shall thereupon be exercisable in full without
regard to any installment exercise provisions.
(f) The purchase price of the shares as to which an Option is exercised
shall be paid in full at the time of the exercise. Such purchase price shall be
payable in cash (including certified check, bank draft and postal or express
money order payable to the order of the Company), or at the option of the
holder of such Option, in Common Stock theretofore owned by such holder (or any
combination of cash and Common Stock). For purposes of determining the amount,
if any, of the purchase price satisfied by payment of Common Stock, such Common
Stock shall be valued at its fair market value on the date of exercise in
accordance with Paragraph 5(b). Any Common Stock delivered in satisfaction of
all or a portion of the purchase price shall be appropriately endorsed for
transfer and assigned to the Company. The Committee may, in its discretion and
to the extent permitted by the laws of the State of Louisiana, determine to
permit the holder of an Option to satisfy the purchase price of the shares as
to which an Option is exercised by delivery of the Option holder's promissory
note, such note to be subject to such terms and conditions as the Committee may
determine. The Committee may, in its discretion and to the extent permitted by
the laws of the State of Louisiana, determine to cause the Company to lend to
the holder of an Option funds, on such terms and conditions as the Committee
may determine to be appropriate, sufficient for the holder of an Option to pay
the purchase price of the shares as to which an Option is to be exercised. No
holder of an Option shall be, or have any of the rights or privileges of, a
shareholder of the Company in respect of any shares purchasable upon the
exercise of any part of an Option unless and until certificates representing
such shares shall have been issued by the Company to such holder.
(g) The option agreement evidencing any incentive stock option granted
under this Plan shall provide that if the Optionee makes a disposition, within
the meaning of Section 425(c) of the Code and the regulations promulgated
thereunder, of any share or shares of Stock issued to him pursuant to his
exercise of an Option granted under this Plan within the two-year period
commencing on the day after the date of the grant of such Option or within a
one-year period commencing on the day after the date of transfer of the share
or shares to him
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<PAGE> 4
pursuant to the exercise of such Option, he shall, within ten days of such
disposition, notify the Company thereof and immediately deliver to the Company
any amount of federal income tax withholding required by law.
8. RELINQUISHMENT OF OPTIONS; ASSIGNABILITY
(a) The Committee, in granting Options hereunder, shall have discretion to
determine whether or not Options shall include a right of relinquishment as
hereinafter provided by this Paragraph 8. The Committee shall also have
discretion to determine whether an option agreement evidencing an Option
initially granted by the Committee without a right of relinquishment shall be
amended or supplemented to include such a right of relinquishment. Neither the
Committee nor the Company shall be under any obligation to incur any liability
to any person by reason of the Committee's refusal to grant or include a right
of relinquishment in any Option granted hereunder or in any option agreement
evidencing the same. Subject to the Committee's determination in any case that
the grant by it of a right of relinquishment is consistent with Paragraph 1
hereof, any Option granted under this Plan, and the option agreement evidencing
such Option, may provide:
(i) That the Optionee, or his heirs or other legal representatives to
the extent entitled to exercise the Option under the terms thereof, in lieu
of purchasing the entire number of shares subject to purchase thereunder,
shall have the right to relinquish all or any part of the then unexercised
portion of the Option (to the extent then exercisable) for a number of
shares of Stock, for an amount of cash or for a combination of Stock and
cash to be determined in accordance with the following provisions of this
clause (i):
(A) The written notice of exercise of such right of relinquishment
shall state the percentage, if any, of the Appreciated Value (as
defined below) that the Optionee elects to receive in cash ("Cash
Percentage"), such Cash Percentage to be in increments of 10% of such
Appreciated Value up to 100% thereof;
(B) The number of shares of Stock of the Company, if any, issuable
pursuant to such relinquishment shall be the number of such shares,
rounded to the next greater number of full shares, as shall be equal to
the quotient obtained by dividing (x) the difference between (I) the
Appreciated Value and (II) the result obtained by multiplying the
Appreciated Value and the Cash Percentage by (y) the then current
market value per share of Stock;
(C) The amount of cash payable pursuant to such relinquishment
shall be an amount equal to the Appreciated Value less the aggregate
current market value of the Stock issued pursuant to such
relinquishment, if any, which cash shall be paid by the Company subject
to such conditions as are deemed advisable by the Committee to permit
compliance by the Company with the withholding provisions applicable to
employers under the Code and any applicable state income tax laws; and
(D) For the purposes of this clause (i), "Appreciated Value" means
the excess of (x) the aggregate current market value of the shares of
Stock covered by the Option or the portion thereof to be relinquished
over (y) the aggregate purchase price for such shares specified in such
Option;
(ii) That such right of relinquishment may be exercised only upon
receipt by the Company of a written notice of such relinquishment which
shall be dated the date of election to make such relinquishment; and that,
for the purposes of this Plan, such date of election shall be deemed to be
the date when such notice is sent by registered or certified mail, or when
receipt is acknowledged by the Company, if mailed by other than registered
or certified mail or if delivered by hand or by any telegraphic
communications equipment of the sender or otherwise delivered; provided,
that, in the event the method just described for determining such date of
election shall not be or remain consistent with the provisions of Section
16(b) of the Exchange Act or the rules and regulations adopted by the
Commission thereunder, as presently existing or as may be hereafter
amended, which regulations exempt from the operation of Section 16(b) of
the Exchange Act in whole or in part any such relinquishment transaction,
then such date of election shall be determined by such other method
consistent with Section 16(b) of the Exchange Act or the rules and
regulations thereunder as the Committee shall in its discretion select and
apply;
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<PAGE> 5
(iii) That the "current market value" of a share of Stock on a
particular date shall be deemed to be its fair market value on that date as
determined in accordance with Paragraph 5(b); and
(iv) That the Option, or any portion thereof, may be relinquished only
to the extent that (A) it is exercisable on the date written notice of
relinquishment is received by the Company, (B) the Committee, subject to
the provisions of Paragraph 8(b), shall consent to the election of the
holder to relinquish such Option in whole or in part for cash as set forth
in such written notice of relinquishment and (C) the holder of such Option
pays, or makes provision satisfactory to the Company for the payment of,
any taxes which the Company is obligated to collect with respect to such
relinquishment.
(b) The Committee shall have sole discretion to consent to or disapprove,
and neither the Committee nor the Company shall be under any liability by
reason of the Committee's disapproval of, any election by a holder of an Option
to relinquish such Option in whole of in part for cash as provided in Paragraph
8(a).
(c) The Committee, in granting Options hereunder, shall have discretion to
determine the terms upon which such Options shall be relinquishable, subject to
the applicable provisions of this Plan, and including such provisions as are
deemed advisable to permit the exemption from the operation from Section 16(b)
of the Exchange Act of any such relinquishment transaction, and Options
outstanding, and option agreements evidencing such Options, may be amended, if
necessary, to permit such exemption. If an Option is relinquished, such Option
shall be deemed to have been exercised to the extent of the number of shares of
Stock covered by the Option or part thereof which is relinquished, and no
further Options may be granted covering such shares of Stock.
(d) Neither any Option nor any right to relinquish the same to the Company
as contemplated by this Paragraph 8 shall be assignable or otherwise
transferable except by will or the laws of descent and distribution.
(e) No right of relinquishment may be exercised within the first six months
after the initial award of any Option containing, or the amendment or
supplementation of any existing option agreement adding, the right of
relinquishment; provided, however, that this limitation shall not apply in the
event of death or disability.
9. STOCK DIVIDENDS, STOCK SPLITS AND CERTAIN OTHER CORPORATION TRANSACTIONS
(a) The existence of this Plan and Options granted hereunder shall not
affect in any way the right or power of the Company or its shareholders to make
or authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures or preferred
or preference stocks ranking prior to or affecting the Common Stock or the
rights attendant thereto, or the dissolution or liquidation of the Company, or
any sale or transfer of all or any part of the Company's assets or business, or
any other corporate act or proceeding, whether of a similar character or
otherwise.
(b) The shares with respect to which Options may be granted hereunder are
shares of Common Stock of the Company as presently constituted. If, and
whenever, prior to the deliver by the Company of all of the shares of the Stock
which are subject to Options granted hereunder, the Company shall effect a
subdivision or consolidation of shares or other capital readjustment, the
payment of a stock dividend, a stock split, a combination of shares, a
recapitalization or other increase or reduction of the number of shares of the
Common Stock outstanding without receiving consideration therefor in money,
services or property, the number of shares of Stock available under this Plan
and the number of shares of Stock with respect to which Options granted
hereunder may thereafter be exercised shall (i) in the event of an increase in
the number of outstanding shares, be proportionately increased, and the cash
consideration payable per share shall be proportionately reduced, and (ii) in
the event of a reduction in the number of outstanding shares, be
proportionately reduced, and the cash consideration payable per share shall be
proportionately increased.
(c) If the Company is reorganized, merged or consolidated or is otherwise a
party to a plan of exchange with another corporation pursuant to which
reorganization, merger, consolidation or plan of exchange shareholders of the
Company receive any shares of common stock or other securities or if the
Company shall distribute ("Spin Off") securities of another corporation to its
shareholders, there shall be substituted for the shares subject to the
unexercised portions of outstanding Options an appropriate number of shares of
(i) each class of stock or other
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<PAGE> 6
securities which were distributed to the shareholders of the Company in respect
of such shares in the case of a reorganization, merger, consolidation or plan
of exchange, or (i) in the case of a Spin Off, the securities distributed to
shareholders of the Company together with shares of Stock, such number of
shares or securities to be determined in accordance with the provisions of
Section 425 of the Code (or other applicable provisions of the Code or
regulations issued thereunder which may from time to time govern the treatment
of incentive stock options in such a transaction); provided, however, that all
such Options may be cancelled by the Company as of the effective date of (x) a
reorganization, merger, consolidation, plan of exchange or Spin Off or (y) any
dissolution or liquidation of the Company, by giving notice to each holder
thereof or his personal representative of its intention to do so and by
permitting the purchase for a period of at least thirty days during the sixty
days next preceding such effective date of all of the shares subject to such
outstanding Options, without regard to the installment provisions set forth in
the option agreements; and provided further that in the event of a Spin Off,
the Company may, in lieu of substituting securities or accelerating and
cancelling Options as contemplated above, elect (i) to reduce the purchase
price for each share of Stock subject to an outstanding Option by an amount
equal to the fair market value, as determined in accordance with the provisions
of Paragraph 5(b), of the securities distributed in respect of each outstanding
share of Common Stock in the Spin Off or (ii) to reduce proportionately the
purchase price per share and to increase proportionately the number of shares
of Stock subject to each Option in order to reflect the economic benefits
inuring to the shareholders of the Company as a result of the Spin Off.
(d) Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into or exchangeable
for shares of stock of any class, for cash or property, or for labor or
services, either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares of obligations of the Company
convertible into or exchangeable for shares of stock of any class shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Stock subject to Options granted hereunder.
(e) The Committee may, in its sole discretion, provide that an Option shall
become fully exercisable upon a Change in Control of the Company (as
defined in the next sentence). "Change in Control" of the Company shall be
conclusively deemed to have occurred if (and only if) any of the following
shall have taken place: (i) a change in control is reported by the Company
in response to either Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act or Item 1 of Form 8-K promulgated under
the Exchange Act; (ii) any "person" (as such term is used in Sections 13(d)
and 14(d) (2) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing forty percent or more of the
combined voting power of the Company's then outstanding securities; or
(iii) following the election or removal of directors, a majority of the
Board consists of individuals who were not members of the Board two years
before such election or removal, unless the election of each director who
was not a director at the beginning of such two-year period has been
approved in advance by directors representing at least a majority of the
directors then in office who were directors at the beginning of the
two-year period. Not withstanding the foregoing, the Committee is
prohibited from exercising its discretion to accelerate the exercisability
of options upon a Change in Control if such action would preclude the use
of the pooling of interests method of accounting for the combination of Not
withstanding the foregoing, the Committee is prohibited from exercising its
discretion to accelerate the exercisability of options upon a Change in
Control if such action would preclude the use of the pooling of interests
method of accounting for the combination of business interests.
Notwithstanding the foregoing, the Committee is prohibited from exercising
its discretion to accelerate the exercisability of options upon a Change in
Control if such action would preclude the use of the pooling of interests
method of accounting for the combination of business interests.
(f) 10. PURCHASE FOR INVESTMENT
Unless the Options and shares of Stock covered by this Plan have been
registered under the Securities Act of 1933, as amended, or the Company has
determined that such registration is unnecessary, each person exercising an
Option under this Plan may be required by the Company to give a representation
in writing that he
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<PAGE> 7
is acquiring such shares for his own account for investment and not with a view
to, or for sale in connection with, the distribution of any part thereof.
11. TAXES
(a) The Company may make such provisions as it may deem appropriate for the
withholding of any taxes which it determines is required in connection with any
Options granted under this Plan.
(b) Notwithstanding the terms of Paragraph 11(a), any Optionee may pay all
or any portion of the taxes required to be withheld by the Company or paid by
him in connection with the exercise of a nonqualified Option by electing to
have the Company withhold shares of Stock, or by delivering previously owned
shares of Common Stock, having a fair market value, determined in accordance
with Paragraph 5(b), equal to the amount required to be withheld or paid. An
Optionee must make the foregoing election on or before the date that the amount
of tax to be withheld is determined ("Tax Date"). All such elections are
irrevocable and subject to disapproval by the Committee. Elections by persons
who are subject to the short-swing profits recapture provisions of Section
16(b) of the Exchange Act ("Covered Optionees") are subject to the additional
restriction that such election may not be made within six months of a grant of
an Option, provided that this limitation shall not apply in the event of death
or disability. Where the Tax Date in respect of an Option is deferred until six
months after exercise and the Covered Optionee elects share withholding, the
full amount of shares of Common Stock will be issued or transferred to him upon
exercise of the Option, but he shall be unconditionally obligated to tender
back to the Company the number of shares necessary to discharge the Company's
withholding obligation or his estimated tax obligation on the Tax Date.
12. EFFECTIVE DATE OF PLAN
This Plan shall be effective as of November 16, 1989.
13. AMENDMENT OR TERMINATION
The Board of Directors may amend, alter or discontinue this Plan, except
that no amendment or alteration shall be made which would impair the rights of
any Optionee under any Option theretofore granted, without his consent, and
except that no amendment or alteration shall be made which, without the
approval of the shareholders, would:
(a) Increase the total number of shares reserved for the purposes of
this Plan or decrease the option price provided for in Paragraph 5, except
in each case as provided in Paragraph 9, or change the class of employees
eligible to participate in this Plan as provided in Paragraph 3;
(b) Extend the option period provided for in Paragraph 6;
(c) Materially increase the benefits accruing to Optionees under this
Plan;
or
(d) Materially modify the requirements as to eligibility of
participation in this Plan.
14. GOVERNMENT REGULATIONS
This Plan, and the grant and exercise of Options thereunder, and the
obligation of the Company to sell and deliver shares under such Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.
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EXHIBIT 10.4
SPECIAL SEVERANCE PROGRAM
1. Employees Covered. The Special Severance Program (the "Program") shall
cover all salaried employees of SOUTHDOWN, INC. (the "Company"), and
its subsidiaries, other than employees covered by individual severance
or employment agreements. For purposes of this Program, the term
"salaried employees" shall mean those employees who are permanent
full-time employees and who are compensated with a salary of a set
amount for a standard number of hours per pay period rather than
hourly. Individuals in this category will include all individuals
designated "exempt" from provisions of the Fair Labor Standards Act as
well as those individuals designated "non-exempt" under that Act who
are paid on a salaried basis, even though eligible for overtime
payments.
2. Condition to Benefits Being Payable. No benefits shall be payable under
the Program unless (i) there shall have been a Change in Control of the
Company, and (ii) the salaried employee's employment with the Company
and its subsidiaries is terminated within eighteen months after the
date of the Change of Control of the Company, for reasons other than
death, Retirement, Disability, Cause or termination by the employee
other than for Good Reason. For purposes of this Program, a Change in
Control of the Company shall be conclusively deemed to have occurred if
(and only if) any of the following shall have taken place: (i) a change
in control is reported by the Company in response to either Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), or Item 1 of Form
8-K promulgated under the Exchange Act; (ii) any "person" (as such term
is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing forty percent or more of the combined voting power of the
Company's then outstanding securities; or (iii) following the election
or removal of directors, a majority of
<PAGE> 2
the Board consists of individuals who were not members of the Board two
years before such election or removal, unless the election of each
director who was not a director at the beginning of such two-year
period has been approved in advance by directors representing at least
a majority of the directors then in office who were directors at the
beginning of the two-year period.
For purposes of this Program, "Retirement" shall mean termination of
employment in accordance with the retirement policy of the Company or
the subsidiary for which the employee works; "Disability" shall mean
the absence of an employee from his or her duties with the Company or
its subsidiaries on a full-time basis for six consecutive months and
the failure of the employee to return to the full-time performance of
his or her duties within thirty days after written notice of
termination is given to the employee; and "Cause" shall mean the
willful and continued failure by an employee to substantially perform
his or her duties with the Company or its subsidiaries (other than any
such failure resulting from the employee's incapacity due to physical
or mental illness) after a demand for substantial performance is
delivered to the employee by his or her appropriate supervisor or the
willful engaging by the employee in conduct which is demonstrably and
materially injurious to the Company or its subsidiaries, monetarily or
otherwise.
For purposes of this Program, "Good Reason" shall mean (i) a
substantial adverse alteration in the nature or status of an employee's
responsibilities from those in effect immediately prior to the Change
in Control of the Company, (ii) a reduction by the Company or its
subsidiaries in the employee's annual base salary or, if applicable,
commission or bonus potential, (iii) the failure of the Company or its
subsidiaries to provide the employee with benefits generally comparable
to those provided to the employee immediately prior to the Change in
Control of the Company, (iv) the relocation of the employee's place of
employment to a place more than 20 miles from where it was immediately
prior to the Change in Control of the Company, or (v) the failure of
the
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<PAGE> 3
Company or its subsidiaries to pay to the employee any amounts due and
owing to him or her or the breach by the Company or its subsidiaries of
any other material legal obligation to such employee.
3. Benefits. A salaried employee whose employment is terminated as
provided in clause (ii) of the first sentence of Section 2, and
provided that a Change in Control has occurred, shall receive the
following benefits:
A. A salaried employee who immediately prior to the Change in
Control of the Company had a base salary of at least $60,000
per year shall continue to receive from the Company or its
subsidiaries amounts equal to his or her base salary as in
effect immediately prior to the Change in Control of the
Company for up to eighteen months from the date of termination
of employment or until the employee begins new employment,
whichever is sooner, and for said period shall continue to be
covered under the medical, dental, life insurance and accident
benefit programs in effect and applicable to the employee
immediately prior to the time of the Change in Control of the
Company. If the new employment pays a base salary less than
the base salary the employee was earning immediately prior to
the Change in Control of the Company, the Company or its
subsidiaries will pay the employee the difference for up to
six months from the commencement of new employment; provided,
however, that the total amount of salary continued and
supplemented (but not including the cost of benefits) shall
not exceed an amount equal to eighteen months' base salary.
B. A salaried employee not covered by Paragraph A above shall be
entitled to receive the same benefits as provided in Paragraph
A above, except that the reference therein to
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<PAGE> 4
"eighteen months" or "eighteen months'" shall be deemed to be
"nine months" or nine months'", respectively.
C. (i) A salaried employee qualifying under Paragraph A shall
also be entitled to individual outplacement service which is
appropriate to the employee's position, as determined from
time to time by the Administrative Committee. (ii) A salaried
employee not covered by (i) above shall be entitled to group
outplacement service which is appropriate to the employee's
position, as determined from time to time by the
Administrative Committee.
D. Benefits provided to any employee under this Section 3 shall
be reduced by any severance payments made by the Company or
its subsidiaries to such employee otherwise than pursuant to
this Program. Unemployment compensation benefits are not
deemed to be payments made by the Company or its subsidiaries.
4. Administration.
A. The general administration of the Program, and the
responsibility for carrying out the provisions hereof, shall
be placed in an Administrative Committee appointed by the
Board of Directors of the Company.
B. The members of the Administrative Committee shall select one
of their members as chairman and shall also elect a secretary
who may, but need not, be a member of the Administrative
Committee; and may authorize one or more of their number or
any agent to execute or deliver any instrument or make any
payment in their behalf, and may employ such clerical
personnel as they may require in carrying out the provisions
of the Program.
4
<PAGE> 5
C. The Administrative Committee shall hold meetings upon such
notice, at such place or places, and at such time or times as
they may from time to time determine. A majority of the
Administrative Committee may act by meeting (whether in person
or by telephone) or by writing executed without a meeting.
D. The Administrative Committee shall have complete control of
the administration of the Program, with all powers necessary
to enable it to properly carry out its duties in that respect.
The Administrative Committee shall be authorized to interpret
this Program and to determine all questions arising in the
administration, construction and application of the Program.
The decision of the Administrative Committee upon all matters
within the scope of its authority shall be conclusive and
binding on all parties.
E. Subject to the limitations of this Section 4, the
Administrative Committee from time to time shall establish
supplemental rules and regulations for the administration of
the Program and the transaction of its business as it deems
necessary.
F. The Administrative Committee shall be responsible for the
preparation and delivery of all reports, notices, plan
summaries and plan descriptions required to be filed with any
governmental office or to be given to any employee or
beneficiary of any employee covered by this Program.
G. Upon request of the Administrative Committee, the Company or
any of its subsidiaries shall furnish such information in its
possession as will aid the Administrative Committee in the
performance of its duties hereunder.
5
<PAGE> 6
5. Claims Procedure.
A. All claims for benefits shall be in writing and shall be filed
with the Administrative Committee.
B. If the Administrative Committee wholly or partially denies a
former employee's claim for benefits, the Administrative
Committee shall give the claimant written notice within sixty
(60) days after the Program's receipt of the claim setting
forth:
(i) the specific reason(s) for the denial;
(ii) specific reference to pertinent Program provisions on
which the denial is based;
(iii) a description of any additional material or information
which must be submitted to perfect the claim, and an
explanation of why such material or information is
necessary; and
(iv) an explanation of the Program's review procedure.
C. In the event of a benefit claim denial, the Company shall
appoint a person who is not a member of the Administrative
Committee to serve as Claim Reviewer. The person designated as
the Claim Reviewer shall be reasonably acceptable to the
claimant. The claimant shall have sixty (60) days after the
day on which such written notice of denial is handed or mailed
to him or her by the Administrative Committee in which to
apply (in person or by authorized representative) in writing
to the Claim Reviewer for a full and fair review of the denial
of his or her claim. In connection with such review, the
claimant (or his or her representative) shall be afforded a
reasonable opportunity to review pertinent documents, and may
submit issues and comments in writing. The Claim Reviewer
shall arrange to meet personally with the claimant and/or
representative within thirty (30) days after the Claim
Reviewer's receipt of such written request for review for
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<PAGE> 7
the purpose of hearing the claimant's contentions and
receiving such relevant evidence as the claimant may wish to
offer.
D. The Claim Reviewer shall issue his decision on review within
sixty (60) days after meeting with the claimant or claimant's
personal representative, unless in the sole discretion of the
Claim Reviewer special circumstances require an extension to
not later than one hundred twenty (120) days after such
meeting. The decision shall be in writing and shall set forth
specific reasons for the decision and specific references to
pertinent Plan provisions on which the decision is based.
E. The Company or its subsidiary shall pay the costs and
expenses, including without limitation, reasonable attorneys'
fees, incurred by an employee in seeking to enforce his or her
rights under the Program.
6. Employment of Professional Assistance. The Administrative Committee is
empowered, on behalf of the Program, to engage accountants, legal
counsel and such other personnel as it deems necessary or advisable to
assist it in the performance of its duties under the Program. The
functions of any such persons engaged by the Administrative Committee
shall be limited to the specific services and duties for which they are
engaged, and such persons shall have no other duties, obligation or
responsibilities under the Program. Such persons shall exercise no
discretionary authority or discretionary control respecting the
management of the Program. All reasonable expenses thereof shall be
borne by the Company.
7. Indemnification of Members of Administrative Committee. To the extent
not insured against by an insurance company pursuant to the provisions
of any applicable insurance policy and to the extent permitted by law,
the Company shall indemnify and hold harmless each member of the
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Administrative Committee against any personal liability or expense
incurred by him as a result of any act or omission in his capacity as a
member of the Administrative Committee, except for his own gross
negligence or willful misconduct.
8. Controlling Law. This Program shall be construed and enforced according
to the internal laws of the State of Texas to the extent not preempted
by federal law, which shall otherwise control.
9. Amendment/Termination. This Program can be amended or terminated, in
whole or in part, by the Company at any time prior to the occurrence of
a Change in Control. Thereafter, this Program cannot be terminated or
amended in any way which adversely affects the rights of any salaried
employee.
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EXHIBIT 10.5
SUPPLEMENTAL PENSION AGREEMENT
AGREEMENT made as of the 1st day of April 1980, by and between
SOUTHDOWN, INC., a Louisiana corporation having its principal place of business
at Two Allen Center, Suite 2200, Houston, Texas 77002 (the "Company"), and
___________, residing at ________________________________________________ (the
"Executive").
W I T N E S S E T H :
WHEREAS, the Executive has been a valued key executive of the Company
with many years of devoted and distinguished service; and
WHEREAS, in order to induce the Executive to continue his employment
with the Company, the Company desires to supplement the retirement income of
the Executive and to provide certain other benefits for the Executive, all on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, the Company and the Executive hereby agree as follows:
1. Termination of Employment At or After Age 65; Survivor's
Benefits
(a) Upon the termination of the Executive's employment
after he attains the age 65 for any reason other than death, the Executive
shall receive a "Supplemental Pension", payable for his life, commencing on the
first day of the calendar month following the month in which the Executive's
employment terminates. For purposes of this Section 1, a "Supplemental
Pension" shall mean monthly pension in an annual amount equal to the excess (if
any) of (1) 60% of Compensation [as defined in Section 11(d)], over (2) Other
Retirement Benefits [as defined in Section 11(f)] expressed as an annual
amount.
(b) Upon the death of the Executive while entitled to
receive a Supplemental Pension pursuant to Section 1(a), and provided the
Executive has not received 120 monthly payments thereunder prior to his death,
the Company shall make the same monthly payments to his Beneficiary that the
<PAGE> 2
Executive was entitled to receive under Section 1(a) until an aggregate of 120
monthly payments have been made to the Executive and/or his Beneficiary.
(c) Upon the death of the Executive after he attains age
65 and while employed by the Company, the Company shall pay to his Beneficiary
a Supplemental Pension calculated in accordance with Section 1(a), payable for
a period of 120 months, commencing on the first day of the calendar month
following the month in which the Executive died.
2. Termination of Employment Prior to Age 65; Survivor's
Benefits.
(a) Upon the termination of the Executive's employment
before he attains age 65 for any reason other than death or Disability, the
Executive shall receive a Supplemental Pension, payable for his life,
commencing on the first day of the calendar month following the month in which
the Executive attains age 65 (the "Deferred Pension Commencement Date"). For
purposes of this Section 2, a "Supplemental Pension" shall mean a monthly
pension in an annual amount equal to the excess (if any) of (1) 60% of
Compensation [as defined in Section 11(d)] multiplied by a fraction, the
numerator of which is the number of full months of completed service by the
Executive in the employ of the Company during the period (the "Vesting Period")
between March 31, 1980 and the date on which the Executive will attain (or, if
the Executive dies before attaining age 65, would have attained) age 65 and the
denominator of which is the number of full months contained in the Vesting
Period, over (2) Other Retirement Benefits [as defined in Section 11(f)]
expressed as an annual amount.
(b) In the event the Executive should die after
termination of his employment but before the Deferred Pension Commencement
Date, then the Company shall pay to his Beneficiary a Supplemental Pension
calculated in accordance with Section 2(a), payable for a period of 120 months,
commencing on the Deferred Pension Commencement Date.
(c) Upon the death of the Executive while receiving a
Supplemental Pension pursuant to Section 2(a), and provided the Executive has
not received 120 monthly payments thereunder prior to his death, the Company
shall make the same monthly payments to his Beneficiary that the
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<PAGE> 3
Executive was entitled to receive under Section 2(a) until an aggregate of 120
monthly payments have been made to the Executive and/or his Beneficiary.
(d) Upon the death of the Executive before he attains age
65 and while employed by the Company, the Company shall pay to his Beneficiary
a Supplemental Pension calculated in accordance with Section 2(a), payable for
a period of 120 months, commencing on the first day of the calendar month
following the month in which the Executive died; provided, however, that in
computing a Supplemental Pension payable pursuant to this Section 2(d), the
fraction referred to in the definition of "Supplemental Pension" in Section
2(a) shall be deemed to be equal to "one".
3. Disability Benefits; Survivor's Benefits.
(a) Upon the termination of the Executive's employment as
a result of a Disability before he attains age 65, the Executive shall receive,
in lieu of any and all amounts receivable by him under Section 1 or 2 hereof, a
Disability Pension, payable for his life, commencing on the first day of the
calendar month following the month in which the Executive's employment
terminates because of his Disability. A "Disability Pension" shall mean a
monthly pension in an annual amount equal to the excess (if any) of (1) 60% of
the greater of (x) Executive's annual base salary (excluding incentive or bonus
compensation and fringe benefits) during the last complete calendar year prior
to his Disability, and (y) Executive's rate of annual base salary (excluding
incentive or bonus compensation and fringe benefits) in effect immediately
prior to his Disability, over (2) the monthly amount of the Executive's Other
Disability Benefits [as defined in Section 11(g)].
(b) Upon the death of the Executive while entitled to
receive a Disability Pension pursuant to Section 3(a), and provided the
Executive has not received 120 monthly payments prior to his death, the Company
shall make the same monthly payments to his Beneficiary that the Executive was
entitled to receive under Section 3(a) until an aggregate of 120 monthly
payments have been made to the Executive and/or his Beneficiary.
4. Administration. This Agreement shall be administered on
behalf of the Company by its Board of Directors. The Board of Directors may
delegate its duties to any committee designated by it for
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<PAGE> 4
such purpose. The Board of any such committee shall have the authority to
interpret, and to determine questions of fact arising under, this Agreement,
including, without limitation, whether a Disability exists, whether the
Executive's employment has been terminated as a result of a Disability and
whether there has been a forfeiture as defined in Section 6, and shall be
entitled to rely on all records of the Company in connection therewith. The
determination of the Board of Directors or any committee administering this
Agreement shall be conclusive and binding upon the Executive, the Beneficiary
and the Company.
5. Cooperation; Estoppel of the Executive and the Beneficiary;
(a) The Executive shall furnish the Company with all
information which the Company may deem necessary or desirable to assist it in
the administration of this Agreement, including, without limitation, any
information necessary or desirable in computing the amount of the Executive's
Plan Benefits payable by any person other than the Company.
(b) The Company, its Board of Directors or any committee
thereof may rely upon any certificate, statement or other representation made
to them by the Executive with respect to age, length of service, designated
Beneficiary, date of commencement or termination of employment, or other fact
required to be determined under any of the provisions of this Agreement, and
shall not be liable on account of the payment of any moneys or the doing of any
act in reliance upon any such certificate, statement or other representation.
Any such certificate, statement of other representation made by the Executive
shall be conclusively binding upon the Executive and his Beneficiary, and the
Executive and his Beneficiary shall thereafter and forever be estopped from
disputing the truth and correctness of such certificate, statement or other
representation.
6. Forfeiture. Notwithstanding anything contained in this
Agreement, if the employment of the Executive is terminated for fraud or
dishonesty, then all rights which the Executive or his Beneficiary may have
under this Agreement shall be forfeited, and any liability of the Company to
make payments hereunder shall terminate.
7. Non-Competition. So long as the Executive is employed by the
Company, and during any period the Executive is receiving a Supplemental
Pension or Disability Pension pursuant to this
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Agreement, the Executive shall not, directly or indirectly, as an officer,
director, employee, consultant, agent, stockholder, partner or otherwise,
participate in or be employed by any person, firm or corporation which is
engaged in any business which competes in any material respect with a material
portion of the business of the Company or any of its subsidiaries or
affiliates; provided, however, that nothing in this Section 7 shall prevent the
Executive from owning not more than 2% of the outstanding equity securities of
any corporation that is listed on any national securities exchange or actively
traded in the over-the-counter market. The provisions of this Section 7 shall
constitute an independent and severable covenant and any court construing the
same shall have the power to modify, alter or reduce the scope of such
provisions in order to make them enforceable under applicable law. In the
event the Executive breaches the provisions of this Section 7, he shall forfeit
all rights which he or his Beneficiary may have under this Agreement, whereupon
the obligation of the Company to make payments hereunder shall terminate.
8. Right to Terminate Employment. Nothing in this Agreement
shall confer upon the Executive the right to continue in the employ of the
Company or affect any right the Company may have to terminate the Executive's
employment.
9. Assignment. The Executive may not assign, pledge or otherwise
encumber his interest in this Agreement without the written consent of the
Company. In the event of any sale or other disposition of all or a substantial
part of the assets of the Company, adequate provision, by a written assumption
agreement or otherwise, shall be made to secure for the Executive all of the
benefits of this Agreement to the same extent to which the Executive would have
been entitled to such benefits had any such disposition not taken place.
10. Rights to Third Parties. The Executive and the Company may
amend this Agreement by a document in writing which may have the effect of
diminishing or eliminating benefits payable to his Beneficiary under the
several provisions of this Agreement.
11. Definitions. Whenever used in this Agreement, the following
terms shall have the meanings ascribed to them in this Section:
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<PAGE> 6
(a) Agreement. "Agreement" shall mean this agreement, as
amended from time to time.
(b) Beneficiary. "Beneficiary" shall mean one or more
beneficiaries (who may be any one or more members of the Executive's family or
other persons, executors, administrators, any trust, foundation or other
entity) designated by the Executive in writing to the Company to receive such
amounts as may be payable under this Agreement after the Executive's death.
The Executive may also, in the same manner, and at any time and from time to
time, change any Beneficiary previously designated by him, without notice to,
or consent of, any previously designated Beneficiary. If the Executive shall
fail validly to designate a Beneficiary, the Beneficiary shall be his surviving
spouse, or if none, his estate. If any individual named as a Beneficiary shall
fail to survive the Executive, the Beneficiary shall be such alternate
Beneficiary as may have been named by the Executive, or, if none, shall be the
Executive's surviving spouse, or, if not spouse survives the Executive, his
estate. No designation by the Executive of any person other than his spouse
shall be valid without the consent of such spouse. For the purposes of the
immediately preceding sentence, a "spouse" shall mean any person who, under
applicable community property laws, shall be required to consent to such
designation in order for such designation to be fully effective.
(c) Company. The "Company" shall mean Southdown, Inc.
and any of its subsidiaries.
(d) Compensation. "Compensation" shall mean the average
of the fixed base annual salary paid by the Company to the Executive (excluding
incentive or bonus compensation and fringe benefits) during each of the five
calendar years of highest fixed base salary during which he was employed by the
Company (whether or not such five calendar years are consecutive and whether or
not the Executive was employed during all or part of any such calendar year).
(e) Disability. "Disability" shall mean an incapacity
which would entitle the Executive to benefits under the Company's group
disability insurance, or, if the opinion of the Board of Directors of the
Company, prevents the Executive from performing his customary duties and is
likely to
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<PAGE> 7
be permanent or of long duration. If the Executive incurs a Disability, his
employment shall be treated as terminated for Disability on the first day on
which he is no longer covered by the Company's group life insurance program (or
any successor program thereto) by reason of his Disability.
(f) Other Retirement Benefits.
(i) With respect to a Supplemental Pension
payable pursuant to Section 1(a) or 1(b), "Other Retirement Benefits" shall
mean (x) all amounts paid to the Executive as Plan Benefits following his
attainment of age 65, and all amounts which, if the Executive had so chosen,
could have been so paid assuming he was then retired from all employment with
all current or former employers, plus (y) the Social Security Benefits payable
beginning at age 65, each expressed as an aggregate annual amount.
(ii) With respect to a Supplemental Pension
payable pursuant to Section 2(a), 2(b) or 2(c), "Other Retirement Benefits"
shall mean (x) all amounts paid to the Executive as Plan Benefits following his
attainment of age 65, and all amounts which, if the Executive had so chosen,
could have been so paid assuming he was then retired from all employment with
all current or former employers (or, if the Executive dies before he attains
age 65, all amounts which, had the Executive been alive and so chosen, could
have been so paid to the Executive at age 65), plus (y) the Social Security
Benefits payable beginning at age 65, each expressed as an aggregate annual
amount.
(iii) With respect to a Supplemental Pension
payable pursuant to Section 1(c) or 2(d), "Other Retirement Benefits" shall
mean (x) all amounts which, had the Executive been alive and so chosen, could
have been paid to the Executive as Plan Benefits following his attainment of
age 65 (computed on the assumption that the Executive's employment with the
Company terminated (for reasons other than his death or Disability) on the
earlier of his attainment of age 65 or the date of his death) plus (y) the
Social Security Benefits payable beginning at age 65, each expressed as an
aggregate annual amount such.
(iv) If any Plan Benefits are paid or payable
otherwise than as a life annuity beginning at age 65 with a ten year certain
provision, then for the purpose of calculating a Supplemental
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<PAGE> 8
Pension, such payments shall be converted into the actuarial equivalent of a
life annuity beginning at age 65 with a ten year certain provision, based on
such assumptions, including assumptions as to interest rate and mortality, as
the Company may determine in its sole discretion.
(g) Other Disability Benefits. "Other Disability
Benefits" shall mean (i) all amounts paid to the Executive as Plan Benefits
following the date his employment terminates because of a Disability, and all
amounts which, had the Executive so chosen, could have been so paid, plus (ii)
the Social Security Benefits payable at the end of any applicable waiting
period; provided, however, that if, at the time the Executive's employment
terminated because of a Disability, he could not, if he so chose, obtain any or
all amounts payable under subclauses (i) of (ii) of this Section 11(g), then
any such amounts shall be deducted commencing as of the first day on which he
would be (or, if the Executive dies while entitled to receive a Disability
Pension hereunder, would have been) entitled to obtain such benefits; it being
further provided that any Plan Benefits or Social Security Benefits that are
limited in duration (other than on account of death) shall cease to be included
as Other Disability Benefits at such time as such benefits cease to be payable.
(h) Plan Benefits. "Plan Benefits" shall mean amounts
payable to the Executive under any disability, pension, profit-sharing,
retirement or deferred compensation plan (other than Social Security Benefits)
contributed to or maintained by the Company or any other prior or subsequent
employer (whether or not related to the Company), including any governmental
plans providing old age, retirement or disability benefits, except to the
extent such amounts are solely attributable to contributions by the Executive
to a defined contribution plan (or to contributions by the Executive to a
defined benefit plan to the extent such contributions provide benefits in the
nature of a defined contribution plan), and any amounts payable as retirement
or disability benefits under a contract between any such person or entity
(other than the Executive) and the Executive.
(i) Social Security Benefits. "Social Security Benefits"
shall mean amounts payable to the Executive under Retirement and Survivors
Insurance and Disability Insurance under the Federal Social Security Act or
corresponding provisions of subsequent law. In applying the definition of
Other
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Retirement Benefits and Other Disability Benefits, the Board of Directors of
the Company or any committee designated by the Board is hereby granted full
authority to adopt all such rules and assumptions which may be necessary or
desirable for purposes of determining the amount of an Executive's Social
Security Benefits, and all rules and assumptions so adopted shall be binding on
the Executive and his Beneficiary. In determining the Executive's Supplemental
Pension, the Board shall compute such benefits by disregarding any event
(including, without limitation, continued employment or earnings, waiver or
failure to claim benefits, failure to survive until age 65, or reduction of
benefits at age 65 because of the earlier commencement thereof) which might
cause the Executive not actually to receive such benefit beginning at age 65.
12. Severability. The provisions of this Agreement are severable,
and if any provision of this Agreement shall be held invalid or unenforceable,
such invalidity or unenforceability shall attach only to such provision and
shall not in any manner affect or render invalid or unenforceable any other
severable provision of this Agreement, and this Agreement shall be carried out
as if any such invalid or unenforceable provision were not contained herein.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas (without regard to
principles of conflict of laws).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SOUTHDOWN, INC.
By______________________________________
Laurence E. Hirsch, President
________________________________________
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<PAGE> 10
FORM OF AMENDMENT TO SUPPLEMENTAL PENSION AGREEMENT
WHEREAS, Southdown, Inc. (the "Company") and __________________________
(the "Executive") have entered into a Supplemental Pension Agreement (the
"Agreement"), dated as of April 1, 1980; and
WHEREAS, the Company and the Executive wish to amend such Agreement to
provide for the acceleration of the commencement of payment of supplemental
pension benefits as hereinafter provided.
NOW, THEREFORE, the Agreement is hereby amended as follows:
1. The first sentence of Section 2(a) of the Agreement is hereby
amended in its entirety to read as follows:
(a) Upon the termination of the Executive's employment
before he attains age 65, Executive shall be entitled to receive a Supplemental
Pension payable for life, which shall commence as follows:
(i) if Executive's employment terminates after he attains
age 61, and if such termination of employment is for any reason other than the
Executive's voluntary termination of employment without the Company's consent
(provided, however, that such consent shall not be required if such resignation
occurs following a breach by the Company of any employment agreement between
the Company and the Executive) his Supplemental Pension shall commence on the
first day of the month following the date on which the Executive's employment
terminates, or
(ii) if (i) above is not applicable and if Executive's
employment terminates for any reason other than death or Disability before he
attains age 65, his Supplemental Pension shall commence on the first day of the
month following the month in which the Executive attains age 65 (in either (i)
or (ii), the date on which his Supplemental Pension commences is referred to as
the "Deferred Pension Commencement Date").
2. This Amendment shall be effective as of January 1, 1985.
3. Except as amended herein, the Agreement is hereby ratified and
confirmed and shall continue in force and effect.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Amendment this _______ day of _________.
SOUTHDOWN, INC.
By:_____________________________________
_____________________________________
Executive
<PAGE> 1
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into between
Southdown, Inc., a Louisiana corporation ("Company"), and [Executive], a
resident of [Address] County, Texas ("Executive"), effective as of [Date]. The
Company and the Executive are sometimes referred to herein as the "Parties."
1. Introduction. In connection with the revision of existing employment
agreements, the Company believes that the assurance of the Executive's continued
employment by the Company and the benefit of his business experience are of
material importance. Therefore, the Company and the Executive intend by this
Agreement to rescind any existing employment agreement and to specify the terms
and conditions of the Executive's continuing employment relationship with the
Company.
2. Employment. The Company hereby employs the Executive and the
Executive hereby accepts continuing employment with the Company upon the terms
and conditions set forth herein.
3. Duties and Responsibilities.
3.1. Extent of Service. The Executive shall, during the term of this
Agreement, devote such of his entire time, attention, energies and business
efforts to his duties as an executive of the Company as are reasonably necessary
to carry out his duties specified in Paragraph 3.2 below. The Executive shall
not, during the term of this Agreement, engage in any other business activity
(whether or not such business activity is pursued for gain, profit or other
pecuniary advantage) if such business activity would impair the Executive's
ability to carry out his duties hereunder. This Paragraph 3.1, however, shall
not be construed to prevent the Executive from investing his personal assets as
a passive investor in such form or manner as will not contravene the Company's
Statement of Policy Regarding Corporate Ethics and Conflicts of Interest
("Policy Statement").
3.2. Position and Duties. Subject to the power of the Board of
Directors of the Company to elect and remove officers, the Executive shall serve
the Company as [Executive Position] (or in such other office of comparable or
greater responsibility as the Board of Directors of the Company may determine)
and shall perform, faithfully and diligently, the services and functions
relating to such office or otherwise reasonably incident to such office as may
be designated from time to time by the Board of Directors of the Company;
provided that all such services and functions shall be reasonable and within the
Executive's area of expertise; and provided further that the Executive shall be
physically capable of performing the essential requirements of the job with or
without reasonable accommodation.
3.3. Place of Employment. During the term of this Agreement, the
Company shall maintain its principal executive offices in the greater Houston,
Texas area, and the Executive's primary place of employment shall be at such
principal executive offices. During the term of this Agreement, the Company will
provide the Executive with a private office, an executive secretary and other
customary staff support services, all as are commensurate with the services and
functions to be performed by him hereunder.
<PAGE> 2
4. Salary and Other Benefits. Subject to the terms and conditions of
this Agreement:
4.1. Salary. As compensation for his services under and during
the term of his employment under this Agreement, the Executive shall be paid an
annual salary of not less than $[Base Salary], payable in accordance with the
then current payroll policies of the Company. Such salary shall be subject to
increase by the Board of Directors of the Company (or the appropriate committee
thereof) from time to time. The annual salary payable from time to time by the
Company to the Executive pursuant to this Paragraph 4.1 is herein sometimes
referred to as his "Base Salary."
4.2. Other Benefits. As long as the Executive is employed by the
Company, the Executive shall be entitled to receive the following benefits in
addition to his Base Salary:
(a) The Executive shall be entitled to participate in the
Company's discretionary bonus plan (the "Bonus Plan") for senior management of
the Company and its consolidated subsidiaries, pursuant to which he shall be
paid each year such additional compensation by way of bonus as the Board of
Directors of the Company (or the appropriate committee thereof) in its sole
discretion shall authorize or agree to pay, payable on such terms and conditions
as it shall determine.
(b) The Executive shall have the right to participate in all
group benefit and applicable retirement plans of the Company (including without
limitation, disability, accident, medical, life insurance, hospitalization and
pension), all in accordance with the Company's regular practices with respect to
its senior officers.
(c) The Executive shall be entitled to reimbursement from
the Company for reasonable out-of-pocket expenses incurred by him in the course
of the performance of his duties hereunder.
(d) The Company shall provide the Executive with an
automobile allowance in the amount of $1,000 per month, subject to statutory
withholdings. Executive shall bear all expenses incurred in connection with
owning or operating his personal automobile.
(e) In order to promote the interests of the Company, the
Company shall reimburse the Executive for the initiation fees and all annual
dues incurred by him in connection with his membership in one luncheon club and
one country club as may be agreed upon by the Executive and the Company (and the
Company agrees to post any bond required by such clubs and each such bond will
remain the property of the Company).
(f) The Company shall reimburse Executive an amount up to
$5,000 per year for personal financial, tax and estate planning.
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(g) The Executive shall be entitled to such vacation,
holidays and other paid or unpaid leaves of absence as are consistent with the
Company's normal policies or as are otherwise approved by the Company's Board of
Directors (or the appropriate committee thereof).
5. Term. The term of this Agreement shall be for one year and shall be
automatically extended each day, from the effective date hereof.
6. Termination and Resignation. The Company shall have the right to
terminate the Executive's employment hereunder at any time and for any reason,
and upon any such termination the Executive shall be entitled to receive from
the Company prompt payment of the amount determined pursuant to the applicable
subparagraph of Paragraph 7 below. The Executive shall have the right to
terminate his employment hereunder at any time by resignation, and he shall
thereupon be entitled to receive from the Company prompt payment of the amount
determined pursuant to the applicable subparagraph of Paragraph 7 below.
7. Payments Upon Termination and Resignation.
7.1. Pro Rata Payment. In the event of the following:
(i) the Company terminates the Executive's employment for Cause (as
defined below),
(ii) the Executive dies or becomes disabled (being the inability of the
Executive to perform the essential requirements of the job with or
without reasonable accommodation),
(iii) the Executive resigns prior to the occurrence of a Change in
Control (as defined below) of the Company at a time when there is no
uncured breach by the Company of any term of this Agreement, or
(iv) the Executive resigns after the occurrence of a Change in Control
for any reason other than for Good Reason (as defined below);
then in each case the Executive shall be entitled to receive only his Base
Salary on a pro rata basis to the date of termination or resignation.
7.2. Base Salary Payment. If prior to the occurrence of a Change in
Control (i) the Company terminates the Executive's employment for any reason
other than for Cause or the Executive's death or disability or (ii) the
Executive resigns because of the breach by the Company of any term of this
Agreement (but only if such breach is not remedied by the Company promptly after
it receives notice thereof from Executive), then in each case the Executive
shall be entitled to receive a lump sum payment equal to two times his Base
Salary.
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7.3. Multiple Base Salary Payment. If after the occurrence of
a Change in Control of the Company, (a) the Company terminates the Executive's
employment hereunder for any reason other than for Cause, or (b) the Executive
voluntarily resigns his employment hereunder for Good Reason within one year (as
defined below) of the Change in Control, then in each case the Company will pay
to the Executive a lump sum termination payment equal to 2.99 times the sum of
his Base Salary and his Target Bonus (as defined below) (collectively, the "Lump
Sum Payment"), subject to adjustment as provided in Paragraph 9 below.
7.4. Certain Definitions.
(a) "Target Bonus" shall mean the target bonus for
Executive specified under the Company's Bonus Plan (as defined in Paragraph
4.2(a)) for the year in which a Change in Control of the Company occurs.
(b) Termination by the Company of the Executive's
employment for "Cause" shall mean termination upon the willful misappropriation
of funds or properties of the Company or the willful contravention of the
standards referred to in the last sentence of Paragraph 10 below. For purposes
of this definition, no act, or failure to act, on the Executive's part shall be
considered "willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive's action or omission
was in the best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the entire
membership of the Board of Directors of the Company at a meeting of the Board
duly called and held (after reasonable notice to the Executive and an
opportunity for the Executive, together with his counsel, to be heard before the
Board) finding that in the good faith opinion of the Board the Executive was
guilty of the conduct set forth above and specifying the particulars thereof in
detail.
(c) A "Change in Control" shall be conclusively deemed to
have occurred if (and only if) any of the following shall have taken place: (i)
a change in control is reported by the Company in response to either Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act
of 1934, as amended ("Exchange Act"), or Item 1 of Form 8-K promulgated under
the Exchange Act, or any similar reporting requirement hereafter promulgated by
the Securities and Exchange Commission; (ii) any person, entity or group (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than
any employee benefit plan sponsored by the Company, is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing forty percent or more of the combined
voting power of the Company's then outstanding securities (as determined under
paragraph (d) of Rule 13d-3 promulgated under the Exchange Act, in the case of
rights to acquire common stock); or (iii) following the election or removal of
directors, a majority of the Board consists of individuals who were not members
of the Board two years before such election or removal, unless the election of
each
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director who was not a director at the beginning of such two-year period
has been approved in advance by directors representing at least a majority of
the directors then in office who were directors at the beginning of the two-year
period.
(d) "Good Reason" shall mean, in any case only if an
action or event described in this Paragraph 7.4(d) is not remedied by the
Company promptly after it receives notice thereof from Executive,
(i) the assignment to the Executive of any duties
substantially inconsistent with the Executive's position
(including offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by
Paragraph 3.2 hereof;
(ii) the failure of the Company to comply with any of the
provisions of Section 4.2 hereof; or
(iii) the Company's requiring the Executive to be based at any
office or location other than as provided in Paragraph 3.3
hereof .
8. Acceleration of Options. Contemporaneously with the occurrence of a
Change in Control of the Company, the Board of Directors of the Company (or the
appropriate committee thereof) will accelerate all outstanding options
previously granted to the Executive under any then existing Company stock
option, stock appreciation or other employee incentive plan that are not
otherwise exercisable by the Executive at the time the Change in Control of the
Company occurs.
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by the Company
or any of its affiliates to or for the benefit of Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise (any such payments or distributions being individually referred to
herein as a "Payment," and any two or more of such payments or distributions
being referred to herein as "Payments"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
("Code") (such excise tax, together with any interest thereon, any penalties,
additions to tax, or additional amounts with respect to such excise tax, and any
interest in respect of such penalties, additions to tax or additional amounts,
being collectively referred herein to as the "Excise Tax"), then Executive shall
be entitled to receive and the Company shall make an additional payment or
payments (individually referred to herein as a "Gross-Up Payment," and any two
or more of such additional payments being referred to herein as "Gross-Up
Payments") in an amount such that after payment by Executive of all taxes (as
defined in Paragraph 9(k) imposed upon the Gross-Up Payment, Executive retains
an amount of such Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
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(b) Subject to the provisions of Paragraph 9(c) through (i),
any determination (individually, a "Determination") required to be made under
Paragraphs 9(a) or 9(b), including whether a Gross-Up Payment is required and
the amount of such Gross-Up Payment, shall initially be made, at the Company's
expense, by nationally recognized tax counsel mutually acceptable to the Company
and Executive ("Tax Counsel"). Tax Counsel shall provide detailed supporting
legal authorities, calculations, and documentation both to the Company and
Executive within 15 business days of the termination of Executive's employment,
if applicable, or such other time or times as is reasonably requested by the
Company or Executive. If Tax Counsel makes the initial Determination that no
Excise Tax is payable by Executive with respect to a Payment or Payments, it
shall furnish Executive with an opinion that no Excise Tax will be imposed with
respect to any such Payment or Payments. Executive shall have the right to
dispute any Determination (a "Dispute") within 15 business days after delivery
of Tax Counsel's opinion with respect to such Determination. The Gross-Up
Payment, if any, as determined pursuant to such Determination shall, at the
Company's expense, be paid by the Company to Executive within five business days
of Executive's receipt of such Determination. The existence of a Dispute shall
not in any way affect Executive's right to receive the Gross-Up Payment in
accordance with such Determination. If there is no Dispute, such Determination
shall be binding, final and conclusive upon the Company and Executive, subject
in all respects, however, to the provisions of Paragraph 9(c) through (i) below.
As a result of the uncertainty in the application of Sections 4999 and 280G of
the Code, it is possible that Gross-Up Payments (or portions thereof) which will
not have been made by the Company should have been made ("Underpayment"), and if
upon any reasonable written request from Executive or the Company to Tax
Counsel, or upon Tax Counsel's own initiative, Tax Counsel, at the Company's
expense, thereafter determines that Executive is required to make a payment of
any Excise Tax or any additional Excise Tax, as the case may be, Tax Counsel
shall, at the Company's expense, determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by the Company to
Executive.
(c) The Company shall defend, hold harmless, and indemnify Executive
on a fully grossed-up after tax basis from and against any and all claims,
losses, liabilities, obligations, damages, impositions, assessments, demands,
judgments, settlements, costs and expenses (including reasonable attorneys',
accountants', and experts' fees and expenses) with respect to any tax liability
of Executive resulting from any Final Determination (as defined in Paragraph
9(j)) that any Payment is subject to the Excise Tax.
(d) If a party hereto receives any written or oral communication
with respect to any question, adjustment, assessment or pending or threatened
audit, examination, investigation or administrative, court or other proceeding
which, if pursued successfully, could result in or give rise to a claim by
Executive against the Company under this Paragraph 9(d) ("Claim"), including,
but not limited to, a claim for indemnification of Executive by the Company
under Paragraph 9(c), then such party shall promptly notify the other party
hereto in writing of such Claim ("Tax Claim Notice").
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(e) If a Claim is asserted against Executive ("Executive
Claim"), Executive shall take or cause to be taken such action in connection
with contesting such Executive Claim as the Company shall reasonably request in
writing from time to time, including the retention of counsel and experts as are
reasonably designated by the Company (it being understood and agreed by the
parties hereto that the terms of any such retention shall expressly provide that
the Company shall be solely responsible for the payment of any and all fees and
disbursements of such counsel and any experts) and the execution of powers of
attorney, provided that:
(i) within 30 calendar days after the Company
receives or delivers, as the case may be, the Tax Claim Notice relating
to such Executive Claim (or such earlier date that any payment of the
taxes claimed is due from Executive, but in no event sooner than five
calendar days after the Company receives or delivers such Tax Claim
Notice), the Company shall have notified Executive in writing
("Election Notice") that the Company does not dispute its obligations
(including, but not limited to, its indemnity obligations) under this
Agreement and that the Company elects to contest, and to control the
defense or prosecution of, such Executive Claim at the Company's sole
risk and sole cost and expense; and
(ii) the Company shall have advanced to Executive on
an interest-free basis, the total amount of the tax claimed in order
for Executive, at the Company's request, to pay or cause to be paid the
tax claimed, file a claim for refund of such tax and, subject to the
provisions of the last sentence of Paragraph 9(g), sue for a refund of
such tax if such claim for refund is disallowed by the appropriate
taxing authority (it being understood and agreed by the parties hereto
that the Company shall only be entitled to sue for a refund and the
Company shall not be entitled to initiate any proceeding in, for
example, United States Tax Court) and shall indemnify and hold
Executive harmless, on a fully grossed-up after tax basis, from any tax
imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and
(iii) the Company shall reimburse Executive for any
and all costs and expenses resulting from any such request by the
Company and shall indemnify and hold Executive harmless, on fully
grossed-up after-tax basis, from any tax imposed as a result of such
reimbursement.
(f) Subject to the provisions of Paragraph 9(e), hereof, the
Company shall have the right to defend or prosecute, at the sole cost, expense
and risk of the Company, such Executive Claim by all appropriate proceedings,
which proceedings shall be defended or prosecuted diligently by the Company to a
Final Determination; provided, however, that (i) the Company shall not, without
Executive's prior written consent, enter into any compromise or settlement of
such Executive Claim that would adversely affect Executive, (ii) any request
from the Company to Executive regarding any extension of the statute of
limitations relating to assessment, payment, or collection of taxes for the
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taxable year of Executive with respect to which the contested issues involved
in, and amount of, the Executive Claim relate is limited solely to such
contested issues and amount, and (iii) the Company's control of any contest or
proceeding shall be limited to issues with respect to the Executive Claim and
Executive shall be entitled to settle or contest, in his sole and absolute
discretion, any other issue raised by the Internal Revenue Service or any other
taxing authority. So long as the Company is diligently defending or prosecuting
such Executive Claim, Executive shall provide or cause to be provided to the
Company any information reasonably requested by the Company that relates to such
Executive Claim, and shall otherwise cooperate with the Company and its
representatives in good faith in order to contest effectively such Executive
Claim. The Company shall keep Executive informed of all developments and events
relating to any such Executive Claim (including, without limitation, providing
to Executive copies of all written materials pertaining to any such Executive
Claim), and Executive or his authorized representatives shall be entitled, at
Executive's expense, to participate in all conferences, meetings and proceedings
relating to any such Executive Claim.
(g) If, after actual receipt by Executive of an amount of a
tax claimed (pursuant to an Executive Claim) that has been advanced by the
Company pursuant to Paragraph 9(e)(ii), hereof, the extent of the liability of
the Company hereunder with respect to such tax claimed has been established by a
Final Determination, Executive shall promptly pay or cause to be paid to the
Company any refund actually received by, or actually credited to, Executive with
respect to such tax (together with any interest paid or credited thereon by the
taxing authority and any recovery of legal fees from such taxing authority
related thereto), except to the extent that any amounts are then due and payable
by the Company to Executive, whether under the provisions of this Agreement or
otherwise. If, after the receipt by Executive of an amount advanced by the
Company pursuant to Paragraph 9(e)(ii), a determination is made by the Internal
Revenue Service or other appropriate taxing authority that Executive shall not
be entitled to any refund with respect to such tax claimed and the Company does
not notify Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of any Gross-Up
Payments and other payments required to be paid hereunder.
(h) With respect to any Executive Claim, if the Company fails
to deliver an Election Notice to Executive within the period provided in
Paragraph 9(e)(i), hereof or, after delivery of such Election Notice, the
Company fails to comply with the provisions of Paragraph 9(e)(ii), and (iii) and
(f) hereof, then Executive shall at any time thereafter have the right (but not
the obligation), at his election and in his sole and absolute discretion, to
defend or prosecute, at the sole cost, expense and risk of the Company, such
Executive Claim. Executive shall have full control of such defense or
prosecution and such proceedings, including any settlement or compromise
thereof. If requested by Executive, the Company shall cooperate, and shall cause
its affiliates to cooperate, in good faith with Executive and his authorized
representatives in order to contest effectively such Executive Claim. The
Company may attend, but not participate in or control, any defense, prosecution,
settlement or compromise of any Executive Claim controlled by Executive pursuant
to this Paragraph 9(h) and shall
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<PAGE> 9
bear its own costs and expenses with respect thereto. In the case of any
Executive Claim that is defended or prosecuted by Executive, Executive shall,
from time to time, be entitled to current payment, on a fully grossed-up after
tax basis, from the Company with respect to costs and expenses incurred by
Executive in connection with such defense or prosecution.
(i) In the case of any Executive Claim that is defended or
prosecuted to a Final Determination pursuant to the terms of this Paragraph
9(i), the Company shall pay, on a fully grossed-up after tax basis, to Executive
in immediately available funds the full amount of any taxes arising or resulting
from or incurred in connection with such Executive Claim that have not
theretofore been paid by the Company to Executive, together with the costs and
expenses, on a fully grossed-up after tax basis, incurred in connection
therewith that have not theretofore been paid by the Company to Executive,
within ten calendar days after such Final Determination. In the case of any
Executive Claim not covered by the preceding sentence, the Company shall pay, on
a fully grossed-up after tax basis, to Executive in immediately available funds
the full amount of any taxes arising or resulting from or incurred in connection
with such Executive Claim at least ten calendar days before the date payment of
such taxes is due from Executive, except where payment of such taxes is sooner
required under the provisions of this Paragraph 9(i), in which case payment of
such taxes (and payment, on a fully grossed-up after tax basis, of any costs and
expenses required to be paid under this Paragraph 9(i) shall be made within the
time and in the manner otherwise provided in this Paragraph 9(i).
(j) For purposes of this Agreement, the term "Final
Determination" shall mean (A) a decision, judgment, decree or other order by a
court or other tribunal with appropriate jurisdiction, which has become final
and non-appealable; (B) a final and binding settlement or compromise with an
administrative agency with appropriate jurisdiction, including, but not limited
to, a closing agreement under Section 7121 of the Code; (C) any disallowance of
a claim for refund or credit in respect to an overpayment of tax unless a suit
is filed on a timely basis; or (D) any final disposition by reason of the
expiration of all applicable statutes of limitations.
(k) For purposes of this Agreement, the terms "tax" and
"taxes" mean any and all taxes of any kind whatsoever (including, but not
limited to, any and all Excise Taxes, income taxes, and employment taxes),
together with any interest thereon, any penalties, additions to tax, or
additional amounts with respect to such taxes and any interest in respect of
such penalties, additions to tax, or additional amounts.
(l) For purposes of this Agreement, the terms "affiliate" and
"affiliates" mean, when used with respect to any entity, individual, or other
person, any other entity, individual, or other person which, directly or
indirectly, through one or more intermediaries controls, or is controlled by, or
is under common control with such entity, individual or person. The term
"control" and derivations thereof when used in the immediately preceding
sentence means the ownership, directly or indirectly, of 50% or more of the
voting securities of an entity or other person or possessing the
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<PAGE> 10
power to direct or cause the direction of the management and policies of such
entity or other person, whether through the ownership of voting securities, by
contract or otherwise.
10. Preservation of Business; Fiduciary Responsibility. The Executive
shall use his best efforts to preserve the business and organization of the
Company and the Company's consolidated subsidiaries (collectively, the
"Consolidated Company"), to keep available to the Consolidated Company the
services of present employees and to preserve the business relations of the
Consolidated Company with suppliers, distributors, customers and others. The
Executive shall not commit any act, or in any way assist others to commit any
act, which would injure the Consolidated Company. So long as the Executive is
employed by the Company, the Executive shall observe and fulfill proper
standards of fiduciary responsibility attendant upon his service and office and
shall comply with the terms of the Company's Statement of Policy Concerning
Corporate Ethics and Conflicts of Interest, as may be amended from time to time.
11. Competitive Activities.
11.1 As an independent covenant, Executive agrees to refrain for
one (1) year after the termination of his employment for any reason, without
written permission from the Company, from becoming involved in any way, within
the boundaries of the United States, in the business of manufacturing or selling
any cement or ready-mix concrete products, or other products or services
competitive at the time of the termination with those sold and furnished by the
Consolidated Company as an employee, director, officer, shareholder, consultant,
partner, proprietor, or in any other capacity, except as a shareholder owning
less than five percent of the shares of a corporation whose shares are publicly
traded.
11.2 As an independent covenant, Executive agrees to refrain during
his employment by the Company, and in the event of the termination of his
employment for any reason, for one (1) year thereafter, without written
permission from the Company, from diverting, taking, soliciting and/or accepting
on his own behalf or on the behalf of another person, firm, or company, the
business of any customer of the Consolidated Company or any potential customer
of the Consolidated Company whose identity became known to Executive through his
employment by the Company.
11.3 As an independent covenant, Executive agrees to refrain during
his employment by the Company, and in the event of the termination of his
employment for any reason for a period of one (1) year, thereafter, from
inducing or attempting to influence any employee of the Consolidated Company to
terminate his employment.
11.4 Executive further agrees that these covenants are made to
protect the legitimate business interests of the Company, including interests in
the Company's "confidential information" as defined in Paragraph 12, and not to
restrict his mobility or to prevent him from
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<PAGE> 11
utilizing his general technical skills. Executive understands as a part of these
covenants that the Company intends to exercise whatever legal recourse against
him for any breach of this Agreement and in particular for any breach of these
covenants.
12. Non-Disclosure of Confidential Information. Executive agrees not to
make any unauthorized use, publication, or disclosure, during or subsequent to
his employment by the Company, of any confidential information, generated or
acquired by him during the course of his employment, except to the extent that
the disclosure of confidential information is necessary to fulfill his
responsibilities as an employee of the Company. Executive understands that
"confidential information" includes confidential or trade information not
generally known by or available to the public about or belonging to the
Consolidated Company or belonging to other companies to whom the Consolidated
Company may have an obligation to maintain information in confidence, and that
authorization for public disclosure may only be obtained through the Company's
written consent. Executive also understands and agrees that the information
protected by this provision includes, but is not limited to, information of a
technical and a business nature such as ideas, discoveries, designs, inventions,
improvements, trade secrets, know-how, manufacturing processes, product
formulae, design specifications, writings and other works of authorship,
computer programs, financial figures, marketing plans, customer lists and data,
business plans or methods and the like, which relate in any manner to the actual
or anticipated business of the Consolidated Company or related to its actual or
anticipated areas of research and development.
13. Notice. All notices, requests, demands and other communications
given under or by reason of this Agreement shall be in writing and shall be
deemed given when delivered in person or when mailed, by certified mail (return
receipt requested), postage prepaid, addressed as follows (or to such other
address as a party may specify by notice pursuant to this provision):
(a) To the Company:
Southdown, Inc.
Attention: Secretary
1200 Smith Street, Suite 2400
Houston, Texas 77002
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<PAGE> 12
(b) To the Executive:
[Name]
[Address]
[City, State Zip]
14. Controlling Law and Performability. The execution, validity,
interpretation and performance of this Agreement shall be governed by the law of
the State of Texas.
15. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled by binding arbitration in
Houston, Texas by one arbitrator appointed in the manner set forth by the
American Arbitration Association. Any arbitration proceeding pursuant to this
Paragraph 15 shall be conducted in accordance with the Employment Dispute
Resolution Rules of the American Arbitration Association. Judgment may be
entered on the arbitrators' award in any court having jurisdiction.
16. Expenses. The Company will pay or reimburse the Executive for all
costs and expenses (including arbitration and court costs and attorneys' fees)
incurred by the Executive as a result of any claim, action or proceeding arising
out of, or challenging the validity, advisability or enforceability of, this
Agreement or any provision thereof.
17. No Obligation to Mitigate. The Executive shall not be required to
mitigate the amount of any payment provided for in Paragraph 7 by seeking other
employment or otherwise, nor shall the amount of any payment provided for in
Paragraph 7 be reduced by any compensation earned by the Executive as a result
of employment by another employer or otherwise.
18. Additional Instruments. The Parties shall execute and deliver any
and all additional instruments and agreements that may be necessary or proper to
carry out the purposes of this Agreement.
19. Entire Agreement and Amendments. This Agreement contains the entire
agreement of the Parties relating to the matters contained herein and supersedes
all prior agreements and understandings, oral or written, between the Parties
with respect to the subject matter hereof; provided, however, that nothing
herein shall affect in any respect the rights and obligations of the Company and
the Executive under any Incentive Agreements implemented prior to the date of
this Agreement and not expressly referred to herein or under any Indemnity
Agreement entered into between the Company and Executive. This Agreement may be
changed only by an agreement in writing signed by the Party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.
20. Separability. If any provision of the Agreement is rendered or
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by the decision of any
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<PAGE> 13
arbitrator or by decree of a court of last resort, the Parties shall promptly
meet and negotiate substitute provisions for those rendered or declared illegal
or unenforceable to preserve the original intent of this Agreement to the extent
legally possible, but all other provisions of this Agreement shall remain in
full force and effect.
21. Assignments. The Company may assign (whether by operation of law or
otherwise) this Agreement only with the written consent of the Executive, which
consent shall not be withheld unreasonably, and in the event of an assignment of
this Agreement, all covenants, conditions and provisions hereunder shall inure
to the benefit of and be enforceable against the Company's successors and
assigns. The rights and obligations of Executive under this Agreement are
personal to him, and no such rights, benefits or obligations shall be subject to
voluntary or involuntary alienation, assignment or transfer.
22. Effect of Agreement. Subject to the provisions of Paragraph 21 with
respect to assignments, this Agreement shall be binding upon the Executive and
his heirs, executors, administrators, legal representatives and assigns and upon
the Company and its respective successors and assigns (whether direct or
indirect, by purchase, merger, consolidation or otherwise).
23. Execution. This Agreement may be executed in multiple counterparts
each of which shall be deemed an original and all of which shall constitute one
and the same instrument.
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24. Waiver of Breach. The waiver by either Party of a breach of any
provision of the Agreement by the other Party shall not operate or be construed
as a waiver by such Party of any subsequent breach by such other Party.
IN WITNESS WHEREOF, the Parties have executed this Agreement effective
as of the date first above written.
"COMPANY"
SOUTHDOWN, INC.
By:
--------------------------------------------
Name: Clarence C. Comer
Title: President and Chief Executive Officer
"EXECUTIVE"
Name:
Title:
<PAGE> 1
EXHIBIT 10.21
AMENDMENT NUMBER FIVE TO THIRD
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDMENT NUMBER FIVE TO THIRD AMENDED AND RESTATED
CREDIT AGREEMENT, dated as of December 18, 1998, is entered into among
SOUTHDOWN, INC., a Louisiana corporation ("Borrower"), the banks and financial
institutions parties hereto that are signatories to the Credit Agreement (as
defined below) (collectively, the "Banks", and individually, a "Bank"), and
WELLS FARGO BANK, N.A., a national Banking association, as Agent for the Banks
hereunder ("Agent").
WHEREAS, Borrower, the Banks, and Agent heretofore have
entered into that certain Third Amended and Restated Credit Agreement, dated as
of November 3, 1995, as amended by (a) that certain Letter Agreement, dated as
of February 29, 1996, (b) that certain Amendment Number Two to Third Amended and
Restated Credit Agreement, dated as of September 30, 1996, (c) that certain
Amendment Number Three to Third Amended and Restated Credit Agreement, dated as
of August 6, 1997, and (c) that certain Amendment Number Four to Third Amended
and Restated Credit Agreement dated as of May 14, 1998 (as amended, the "Credit
Agreement");
WHEREAS, Borrower has requested, among other things, that the
Credit Agreement be amended to (a) permit the transfer of certain assets from
Borrower to certain existing and newly created wholly-owned Subsidiaries of
Borrower, (b) permit the transfer of certain other assets as herein provided,
and (c) make other amendments to the terms and conditions of the Credit
Agreement as set forth herein; and
WHEREAS, subject to the terms and conditions contained herein,
the Banks are willing to so amend such provisions of the Credit Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
conditions, and provisions hereinafter set forth, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions for this Fifth Amendment. Any and all
initially capitalized terms used herein shall have the meanings ascribed thereto
in the Credit Agreement, as amended hereby, unless specifically defined herein.
For purposes of this Fifth Amendment only, the following initially capitalized
terms shall have the following meanings:
"Agent" has the meaning set forth in the introduction to this
Fifth Amendment.
1
<PAGE> 2
"Bank" and "Banks" have the respective meanings set forth in
the introduction to this Fifth Amendment.
"Borrower" has the meaning set forth in the introduction to
this Fifth Amendment.
"Credit Agreement" has the meaning set forth in the
introduction to this Fifth Amendment.
ARTICLE 2
AMENDMENTS TO THE CREDIT AGREEMENT
2.1 Section 1.1 of the Credit Agreement hereby is amended by
adding the following defined terms in alphabetical order:
"Contributed California Assets" means all or a material
portion of Borrower's California assets (including the
Victorville Plant, the concrete and aggregate businesses of
the Borrower located in California and a terminal located in
Phoenix, Arizona) and the SDW Finance Subordinated Note.
"Fifth Amendment" means Amendment Number Five to Third Amended
and Restated Credit Agreement, dated as of December 18, 1998,
among Borrower, the Banks party thereto, and Agent.
"Fifth Amendment Closing Date" means the date on which the
conditions precedent set forth in Article 3 of the Fifth
Amendment shall have been satisfied.
"Medusa Entities" means Medusa and certain of its
Subsidiaries.
"Permitted Transactions" means (a) Borrower's contribution or
other transfer of Contributed California Assets to the SDW
California Subsidiaries, (b) any contribution or other
transfer by SDW Finance of Contributed California Assets to
other SDW California Subsidiaries, (c) the contribution or
other transfer of various intangible property to SDW Finance,
and (d) the merger of the Medusa Entities with and into
Borrower and any merger of the Medusa Entities with any other
of the Medusa Entities prior to the merger of the Medusa
Entities with and into Borrower.
"SDW Aggregates" means Southdown California Aggregates, Inc.,
a Delaware corporation.
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<PAGE> 3
"SDW California Subsidiaries" means SDW Aggregates, SDW
Cement, SDW Concrete, and SDW Finance.
"SDW Cement" means Southdown California Cement LLC, a Delaware
limited liability company.
"SDW Concrete" means City Concrete Products, Inc., a
California corporation.
"SDW Finance" means Southdown Finance, Inc., a Delaware
corporation.
"SDW Finance Subordinated Debt" means the Debt of Borrower to
SDW Finance evidenced by the SDW Finance Subordinated Note.
"SDW Finance Subordinated Note" means a Promissory Note to be
issued by Borrower in the initial principal amount of
$700,000,000 in favor of SDW Finance.
2.2 The definition of "Cement Plant" set forth in Section 1.1
of the Credit Agreement hereby is amended in its entirety to read as follows:
"Cement Plants" means and refers to the Brooksville Plant, the
Fairborn Plant, the Knoxville Plant, the Lyons Plant, and the
Odessa Plant.
2.3 The definition of "Loan Documents" set forth in Section
1.1 of the Credit Agreement hereby is amended in its entirety to read as
follows:
"Loan Documents" shall mean the Agent's Fee Letter, and all
written documents, agreements, or instruments, other than this
Agreement and the Notes, that have been or are entered into
(with the exception of those documents the definition of which
were deleted pursuant to Section 3.1.1 of the Fourth
Amendment) by Borrower, Agent, or Banks, as the case may be,
in connection with the transactions contemplated by this
Agreement.
2.4 The definition of "Person" set forth in Section 1.1 of the
Credit Agreement hereby is amended in its entirety to read as follows:
"Person" means and refers to natural persons, corporations,
limited partnerships, limited liability partnerships, general
partnerships, joint stock companies, limited liability
companies, joint ventures, associations, companies, trusts,
banks, trust companies, land trusts, vehicle trusts, business
trusts, or other organizations, irrespective of whether they
are legal entities, and governments and agencies and political
subdivisions thereof.
3
<PAGE> 4
2.5 Section 4.2(c) the Credit Agreement is hereby amended in
its entirety to read as follows:
(c) NO CONFLICT - BORROWER. The execution, delivery, and
performance by Borrower of this Agreement, the Loan Documents
to which it is a party, and the Notes do not and will not: (a)
violate any provision of federal, state or local law or
regulation (including Regulations T, U, and X of the Federal
Reserve Board) applicable to Borrower, the articles of
incorporation or bylaws (or other charter documents) of
Borrower, or any order, judgment, or decree of any court or
other agency of government binding on Borrower; (b) conflict
with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any Contractual
Obligation or material lease of Borrower; (c) result in or
require the creation or imposition of any Lien of any nature
whatsoever upon any Assets of Borrower, other than Permitted
Liens; or (d) require any approval of stockholders or any
approval or consent of any Person under any Contractual
Obligation of Borrower.
2.6 Section 4.5 of the Credit Agreement is hereby amended in
its entirety to read as follows:
4.5 TITLE TO PROPERTY; LIENS; PROPERTIES. Except as disclosed
in Borrower's Annual Report on Form 10-K for its fiscal year
ended December 31, 1997, or on its Form 10-Q for its fiscal
quarter ended March 31, 1998, and except for the Permitted
Liens, all of the Assets of Borrower and each of its
Subsidiaries are free of all Liens of any nature whatsoever.
Borrower, Mojave, and, after the effectiveness of the
Permitted Transactions, each of the SDW California
Subsidiaries (other than SDW Aggregates and SDW Concrete),
taken as a whole, have good and indefeasible title to each and
all of the material Assets reflected in Borrower's, Mojave's,
and each of the SDW California Subsidiaries' (other than those
of SDW Aggregates and SDW Concrete) books and records as being
owned by them. Borrower, Mojave, and, after the effectiveness
of the Permitted Transactions, each of the SDW California
Subsidiaries (other than SDW Aggregates and SDW Concrete),
taken as a whole, have taken all action necessary to maintain
such good and indefeasible title with respect to such Assets.
2.7 Section 4.10 of the Credit Agreement is hereby amended in
its entirety to read as follows:
4.10 SECURITIES ACTIVITIES. Borrower and its Subsidiaries are
not engaged principally, or as one of their principal
activities, in the business of extending, or arranging for the
extension of, credit, for the purpose of "purchasing" or
"carrying" any margin stock (within the meaning of Regulations
T, U, or X of the Federal Reserve Board) as now or from time
to time in effect. No part of
4
<PAGE> 5
any Borrowing will be used by Borrower to purchase or carry
any such margin stock, or to extend credit to others for the
purpose of purchasing or carrying any such margin stock in
violation of Regulations T, U, or X of the Federal Reserve
Board.
2.8 Section 5.3 of the Credit Agreement is hereby amended in
its entirety to read as follows:
5.3 CORPORATE EXISTENCE, ETC. Except as permitted under
Section 6.7 of this Agreement, Borrower shall, and shall cause
Mojave and, after the effectiveness of the Permitted
Transactions, each of the SDW California Subsidiaries (other
than SDW Aggregates and SDW Concrete), to, at all times,
preserve and keep in full force and effect its and their
corporate existence and any rights and franchises material to
Borrower's businesses.
2.9 Section 5 of the Credit Agreement is hereby amended to
insert immediately after Section 5.15 of the following new Section 5.16:
5.16 MEDUSA MERGER. Prior to or substantially concurrent with
the consummation of the other Permitted Transactions, Borrower
will cause the merger of the Medusa Entities with and into
Borrower.
2.10 Section 6.1(k) of the Credit Agreement is hereby amended
in its entirety to read as follows:
(k) Debt (including Acquired Indebtedness) not otherwise
permitted under this Section 6.1 in an aggregate amount
outstanding at any time less than or equal to One Hundred
Seventy-Five Million Dollars ($175,000,000);
2.11 Section 6.1(m) of the Credit Agreement is hereby amended
in its entirety to read as follows:
(m) [Intentionally omitted]; and
2.12 Section 6.3(n) of the Credit Agreement is hereby amended
in its entirety to read as follows:
(n) any Investments of Medusa or its Subsidiaries as of the
effective date of the Merger and the Permitted Transactions.
2.13 The initial paragraph of Section 6.7 of the Credit
Agreement is hereby amended by deleting the words "or Medusa after the
effectiveness of the Merger" immediately after the word "Mojave" in the second
line thereof, and inserting the words "or, after the effectiveness of the
Permitted Transactions, any of the SDW California Subsidiaries (other than SDW
Aggregates and SDW Concrete)" in replacement thereof.
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<PAGE> 6
2.14 Section 6.7(e) of the Credit Agreement is hereby amended
by deleting the word "and" at the end thereof.
2.15 The period at the end of Section 6.7(f) of the Credit
Agreement is hereby replaced with "; and", and the following new Section 6.7(g)
is inserted in its entirety immediately thereafter:
(g) so long as no Event of Default or Unmatured Event of
Default has occurred and is continuing and so long as no Event
of Default or Unmatured Event of Default would result
therefrom, (i) Borrower and its Subsidiaries may enter into
the Permitted Transactions and (ii) any of the SDW California
Subsidiaries may be merged or consolidated with or into
Borrower or any of its Subsidiaries so long as Borrower or any
such Subsidiary is the surviving entity of such merger or
consolidation.
2.16 Section 6.9 (a) of the Credit Agreement is hereby amended
in its entirety to read as follows:
(a) [Intentionally omitted.]
2.17 Section 6.9 (b) of the Credit Agreement is hereby amended
in its entirety to read as follows:
(b)(i) The interest of Borrower in the capital stock of Mojave
or, after giving effect to the Permitted Transactions, the SDW
California Subsidiaries (other than SDW Aggregates and SDW
Concrete), and (ii) the interest of Borrower in and to the
Cement Plants and the interest of Borrower in KCC;
2.18 Pursuant to Section 2.18 of the Fourth Amendment, former
subparagraph (iii) of Section 6.9 of the Credit Agreement (prior to such Fourth
Amendment) was mistakenly relettered as "(d)", and such "(d") is hereby changed
to "(iii)." Furthermore, (1) the word "and" at the end of such subparagraph
(iii) is hereby deleted, (2) the period at the end of subparagraph (iv) of such
Section 6.9 is hereby replaced with "; and", and (3) the following new clause
(v) is added to such Section 6.9 immediately after such subparagraph (iv):
(v) so long as no Event of Default or Unmatured Event of
Default has occurred and is continuing and so long as no Event
of Default or Unmatured Event of Default would result
therefrom, the consummation of the Permitted Transactions.
2.19 The Credit Agreement is hereby amended to add,
immediately following Section 6.21 thereof, a new Section 6.22 reading as
follows:
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<PAGE> 7
6.22 SDW FINANCE SUBORDINATED DEBT. Unless approved in writing
by the Majority Banks, Borrower shall not, and shall not cause
or permit any of its Subsidiaries to:
(a) pay, prepay, set aside funds for the payment or
prepayment of or redeem, repurchase or otherwise retire for
value the principal of any SDW Finance Subordinated Debt ("SDW
Restricted Transactions"), except that Borrower and its
Subsidiaries may effect SDW Restricted Transactions if the
aggregate amount paid to SDW Finance in connection with such
SDW Restricted Transactions does not exceed the amount of all
cash dividends received by Borrower from SDW Finance prior to
such SDW Restricted Transactions; or
(b) pay any amount with respect to any SDW Finance
Subordinated Debt in violation of the terms of the
subordination provisions thereof; or
(c) permit the transfer or other disposition of the
SDW Finance Subordinated Note by the holder thereof other than
to the Borrower or any of its other Subsidiaries.
2.20 The fourth paragraph of Section 8.1 of the Credit
Agreement is hereby amended to delete the words "Mojave and Medusa" in the sixth
line thereof, and to insert the words "and Mojave" in replacement thereof
ARTICLE 3
CONDITIONS PRECEDENT
3.1 Conditions Precedent to the Effectiveness of this Fifth
Amendment. The effectiveness of the provisions of this Fifth Amendment is
subject to the fulfillment, to the satisfaction of Agent, of each of the
following conditions:
3.1.1 the Agent shall have received a certificate
from a Secretary or Assistant Secretary of Borrower attesting to the resolutions
of Borrower's board of directors or an authorized committee authorizing the
execution and delivery of this Fifth Amendment;
3.1.2 the Agent shall have received counterparts of
signature pages of this Fifth Amendment duly executed and delivered by Borrower
and Banks constituting Majority Banks; and
3.1.3 the Agent shall have received a certificate
from a Responsible Officer certifying that:
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<PAGE> 8
(a) the representations and warranties of
Borrower contained in the Credit Agreement and the Loan
Documents, to the extent that it is a party thereto, are true
and correct in all material respects at and as of the date of
the effectiveness of this Fifth Amendment, as though made on
and as of such date (except to the extent that such
representations and warranties expressly relate solely to an
earlier date);
(b) neither an Event of Default nor an
Unmatured Event of Default has occurred and is continuing on
the date of the effectiveness of this Fifth Amendment;
(c) on the date of the effectiveness of this
Fifth Amendment, no Material Adverse Change has occurred, as a
result of one or more acts or occurrences; and
(d) the Credit Agreement and each of the
Loan Documents to which Borrower is a party are in full force
and effect.
3.1.4 the Agent, on behalf of the Banks, shall have
received a payment of a $5,000 fee payable with respect to each of the Banks
executing this Fifth Amendment on or before December 18, 1998, together with
payment of any other fees due and owing by Borrower.
ARTICLE 4
MISCELLANEOUS
4.1 Execution in Counterparts. This Fifth Amendment may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed an original. All of such counterparts shall constitute
but one and the same instrument. Delivery of an executed counterpart of the
signature pages of this Fifth Amendment by telecopier shall be equally effective
as delivery of a manually executed counterpart. Any party delivering an executed
counterpart of the signature pages of this Fifth Amendment by telecopier
thereafter also shall deliver promptly a manually executed counterpart, but the
failure to deliver such manually executed counterpart shall not affect the
validity, enforceability, or binding effect of this Fifth Amendment.
4.2 No Other Amendment. Except as expressly amended hereby,
the Credit Agreement shall remain unchanged and in full force and effect. To the
extent any terms or provisions of this Fifth Amendment conflict with those of
the Credit Agreement, the terms and provisions of this Fifth Amendment shall
control. This Fifth Amendment shall be deemed a part of and hereby is
incorporated in the Credit Agreement.
8
<PAGE> 9
4.3 Governing Law. This Fifth Amendment shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California.
[Signature page follows.]
9
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Fifth
Amendment to be executed and delivered as of the date first set forth above.
SOUTHDOWN, INC.,
a Louisiana corporation
By
------------------------------------------
Title:
--------------------------------------
WELLS FARGO BANK, N.A.,
a national Banking association, in its
individual capacity and as Agent
By
------------------------------------------
Title:
--------------------------------------
SOCIETE GENERALE, SOUTHWEST AGENCY
By
------------------------------------------
Title:
--------------------------------------
CREDIT SUISSE FIRST BOSTON
(formerly known as Credit Suisse)
By
------------------------------------------
Title:
--------------------------------------
CREDIT AGRICOLE INDOSUEZ
(formerly known as Caisse Nationale De
Credit Agricole)
By
------------------------------------------
Title:
--------------------------------------
By
------------------------------------------
Title:
--------------------------------------
10
<PAGE> 11
PARIBAS
(formerly known as Banque Paribas)
By
------------------------------------------
Title:
--------------------------------------
PNC BANK, NATIONAL ASSOCIATION
By
------------------------------------------
Title:
--------------------------------------
THE BANK OF NOVA SCOTIA
By
------------------------------------------
Title:
--------------------------------------
BANKBOSTON, N.A.
By
------------------------------------------
Title:
--------------------------------------
11
<PAGE> 1
EXHIBIT 10.28
AGREEMENT
between
MEDUSA CEMENT COMPANY
(Division of Medusa Corporation)
and
Cement, Lime, Gypsum
and Allied Workers Division,
International Brotherhood of Boilermakers,
Iron Ship Builders, Blacksmiths,
Forgers, and Helpers,
AFL-CIO
LOCAL LODGE NO. D-79
DEMOPOLIS PLANT
1996- 2000
<PAGE> 2
AGREEMENT
Preamble
This AGREEMENT, covering WAGES, HOURS OF WORK, and WORKING CONDITIONS,
is made and entered into by and between the management of MEDUSA CEMENT COMPANY
(Division of Medusa Corporation), hereinafter called the Company or the
Management and employees of the Company's cement plant located in Demopolis,
Alabama who are members of the CEMENT, LIME, GYPSUM AND ALLIED WORKERS
DIVISION, INTERNATIONAL BROTHERHOOD OF BOILERMAKERS, IRON SHIP BUILDERS,
BLACKSMITHS, FORGERS AND HELPERS, Local Lodge No D-79, affiliated with the
American Federation of Labor and Congress of Industrial Organizations, to be
referred hereinafter as the Union. WITNESS
WHEREAS, the parties hereto desire to cooperate in establishing just
and equitable terms and conditions of employment, and to provide methods for
fair and peaceful adjustment of differences that may arise between them.
NOW THEREFORE, THE PARTIES HERETO HAVE AGREED THAT employment by the
Company shall be under the following terms and conditions of employment.
ARTICLE I
RECOGNITION
Section 1. The Company recognizes the Union as the sole collective
bargaining agency for the employees of the Demopolis Plant. The Company
recognizes and will not interfere with the right of its employees to become
members of a Union. There shall be no discrimination, interference, restraint,
or coercion by the Company or any of its agents against any member because of
membership in the Union. The Union agrees not to solicit membership on Company
time, plant or property, except within the confines of the service room and
during rest hours.
Section 2. It is mutually agreed that the term "employee" shall not
include Foremen or Supervisors in charge of any class of labor, Timekeepers,
Clerks, and other Office employees or any technical employees in the plant or
laboratory who are employed on a salary basis.
Section 3.
(a) Except to the extent expressly abridged by an express and specific
provision of this Agreement, the Company reserves and retains all of its Common
Law or other rights to manage its business as such rights existed prior to the
execution or this or any other previous Agreement with the Union.
The rights of management which are not abridged by this Agreement
shall include but are not limited to:
- the right to determine the price of its product and methods
of financing;
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<PAGE> 3
- to determine the volume of production, methods of operations
and to drop or to add a product;
- to determine and, from time to time, to redetermine the
number, location, relocation and types of its operations, and
the methods, processes, and materials to be employed, to
discontinue processes in whole or in part, to discontinue
operations in whole or in part, or to discontinue their
performance by employees of the Company.
- to determine the number of hours per day or per week that
operations shall be carried on.
- to select and determine the number and types of employees
required.
- to assign work to such employees in accordance with the
requirements determined by management.
- to establish and change work schedules, work shifts and
assignments.
- to transfer, to promote, or to lay off, terminate or
otherwise relieve employees from duty for lack of work or for
any other legitimate reason.
- to make and enforce rules for the maintenance of discipline
and safety.
- to suspend, discharge, or otherwise discipline employees for
just cause.
- to determine the source and purchase of raw materials,
semi-finished and finished goods.
- to contract out, subcontract or exchange work in accordance
with the provisions of Article XX, Section 1.
The listing of specific rights in this Agreement is not intended to
be, nor shall it be, restrictive of, or a waiver of, any of the rights of
management not listed and specifically surrendered herein, whether or not such
rights have been exercised by the Company in the past.
(b) This Agreement constitutes the sole and entire existing Agreement
between the parties hereto, supersedes all prior agreements, oral or written,
between the Company and the Union and expresses all obligations of, and
restrictions imposed on the Company during its term.
Notwithstanding any privileges or benefits currently being received by
employees, no privileges or benefits in excess of those specifically set forth
in this Agreement are required to be continued or to be granted to employees.
However, the Company may voluntarily extend or continue such privileges or
benefits at its sole discretion as it deems proper.
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(c) This Agreement can be altered or amended only by a written Agreement
between the parties hereto.
(d) If any part of this Agreement is rendered or declared invalid by
reason of any existing or subsequently enacted legislation, government
regulation or order, or decree of court, the invalidation of such part of this
Agreement shall not render invalid the remaining parts hereof.
Section 4. A leave of absence may be granted to an employee who is a
delegate or official of the Union to attend a Union convention or other similar
Union meetings. A maximum of two (2) employees from the plant may be granted
such leave for up to thirty (30) days without pay and loss of seniority. The
leave may be extended for an additional thirty (30) day period upon proper
written request from the Union.
Section 5. In case an employee enters the Military Service in the
Armed Forces of the United States, his re-employment shall be in conformity
with the provisions of the Selective Service Law.
Section 6. The parties hereto agree that the provisions of the
Agreement shall be applied to all employees without regard to race, religious
creed, or national origin, handicap, disabled veteran or Vietnam era veteran
status.
Section 7. The masculine pronoun wherever used herein shall include
the feminine pronoun unless a different meaning is plainly required by the
context.
ARTICLE II
MEETINGS
Section 1. Subject to the provisions of the Agreement, the Company is,
at all times, willing to meet any of its employees or their chosen
representatives, not connected with competing companies. in order to
intelligently discuss any matters arising out of this agreement and for the
purpose of discussing wages, hours, and working conditions with the object of
reaching a satisfactory agreement.
ARTICLE III
REPRESENTATION
Section 1. For the purpose of representation within the plant, the
Union shall be entitled to a reasonable and adequate number of Committeemen who
shall restrict their activities to the handling of grievances and other
legitimate Union business, and in this connection, shall be allowed a
reasonable amount of time for this purpose. The Union shall be entitled to have
a maximum of three (3) Committeemen.
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ARTICLE IV
BULLETIN BOARDS
Section 1. The Company agrees to allow the proper officers of the
Union to use designated bulletin boards of the plant for posting notices in the
interest of the Company and the Union, such notices to bear the seal of the
Union and the signature of its proper officials.
ARTICLE V
SENIORITY RIGHTS
Section 1. The Management and the Union recognize the principle of
seniority based upon the length of continuous service in the plant. Seniority
records shall be posted on the Bulletin Board by the Management. The Company
will furnish to the Local Lodge annually on the first day of June, a complete
seniority list which will include hiring date, birth date, and complete
address.
Section 2. An employee shall be considered in a probationary status
until he has been continuously employed for a period of one-hundred (100) days
of work. No probationary employee shall be subject to any of the terms and
provisions of this Agreement, and the Company shall have the right to discharge
or layoff a probationary employee during the probationary period, and such
employee shall not have recourse to the grievance procedure of this Agreement.
At the completion of the probationary period, the employee will have seniority
and such seniority shall be effective as of the employees most recent date of
hire.
Section 3. Seniority is defined as an employee's length of service
starting with his date of hire or most recent date of rehire when he has
experienced a loss of seniority as defined herein. Seniority shall be lost and
an employee shall be considered as having terminated his employment with the
Company if:
(a) the employee quits for any reason.
(b) the employee is discharged and not reinstated through the
grievance - arbitration process.
(c) the employee does not return to work within seven (7) days
after receiving notice of recall either by Certified Mail or
telephone.
(d) the employee is absent for three (3) consecutive working days
without notifying the Company and providing a satisfactory
reason for such absence.
(e) the employee fails to return to work within three (3) days
after the termination of any leave of absence. 5
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<PAGE> 6
(f) the employee is on layoff or disability leave for a period of
three (3) years or 50% of his seniority attained at the start
of such layoff or leave, whichever is less.
(g) the employee is retired under the terms of the parties'
Pension Plan, subject to the provisions of Section 5 (c) of
the Pension Plan, pertaining to disability pensions.
(h) the employee accepts Termination Benefits.
ARTICLE VI
REDUCTION OR INCREASE IN FORCE
Section 1. When it becomes necessary to reduce the working force,
selection of those retained shall be based on:
(a) Requirements of the job.
(b) Experience, individual skill, efficient service, and physical
fitness.
(c) Seniority.
Where qualifications (a) and (b) are relatively equal, in the opinion
of Management, seniority shall govern; however, if the senior employee is not
retained or recalled, the Union Committee shall have the privilege of
presenting its views to the Plant Manager on the qualifications of the
employees to be retained or recalled, for his consideration in making his
decision.
Section 2. Whenever a layoff is planned because of a change or
reduction in plant production requirements of the Company will, not less than
seven (7) calendar days prior to the effective date of the layoff, post a
bulletin stating the expected extent of such layoff, and the expected effect on
the work force. In the event the required notice is not given in accordance
with the above, the Company will pay the laid off employee(s) the scheduled
time lost at the applicable straight-time shift rate. The seven (7) calendar
day period shall commence on the completion of the third shift following the
day in which the notice was posted. The foregoing does not apply to
disciplinary layoffs and layoffs because of curtailment made necessary by
disaster or emergency conditions affecting the ability of the Company to
physically operate the plant.
Section 3. When it becomes necessary to increase the working force,
those laid off shall again be recalled in accordance with the procedure set out
in Section 1 hereof.
Section 4.
(a) Whenever the installation of mechanical equipment, change in
production methods, the installation of new or larger equipment, the combining
of jobs, or the elimination of jobs, will have an effect on the job status of
one or more employees, the Company will give the Union reasonable advance
notice of same, and upon request by the Union, will promptly meet with the
Union to review and explore the effects of such installation or installations
or change or changes upon the working force.
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<PAGE> 7
(b) Employees will not be terminated by the Company as the result of
mechanization, automation, change in production methods, the installation of
new or larger equipment, the combining of jobs or the elimination of jobs.
(c) When an employee is no longer needed on his regular job as a
result of conditions described in paragraph (a) above, the Company may
permanently assign such employee to either an available job opening in the
bargaining unit, irrespective of whether or not such job opening is available
for bidding or to a job on which the incumbent has less plant-wide seniority.
Such placement will be to a job in which the employee is reasonably able to
perform within a thirty (30) day on-the-job training period. The rate of pay
for such employee shall not be less than ninety-five percent (95%) of the job
from which the employee was displaced irrespective of the rate of the job in
which he is placed. The 95% rate protection shall apply for a minimum period of
one (1) year, or a period equal to 1/3 of the employee's seniority up to a
maximum of five (5) years. If an employee on 95% rate protection subsequently
bids off the job in which he was placed by the Company during the foregoing
rate protection period, he shall lose his protected rate.
(d) The provisions of paragraph (c) of this Article do not apply to
displacement or layoffs resulting from production curtailments, except that
employees laid off and not recalled when production is resumed following
curtailment will be entitled to the same rights as employees affected by the
preceding paragraph (c).
(e) Should the Company permanently shut down the present facilities
affording employment to the employees comprising the bargaining unit (the
present facilities shall be deemed to have been permanently shut down if all
productive facilities are abandoned even though the shipping facilities
continue to operate) the Company shall mail a notice informing each affected
employee that his employment with the Company has been terminated because of
the permanent shutdown. The notice shall be mailed at least ninety (90) days
prior to the shutdown to the employee's last address on the company's records.
Each employee who is mailed said notice shall have the following options:
(1) An employee who is not eligible for a normal (excluding 30-year
retirement pension) or late retirement pension may elect to transfer to another
operation of the Company covered by a collective bargaining agreement with the
Union in accordance with Paragraph (f) or Paragraph (g). Any transfer pursuant
to Paragraph (f) or Paragraph (g) will occur not later than three years after
the last day the employee worked. An employee awaiting transfer shall be placed
on layoff and shall receive SUB layoff or reduced layoff benefits provided the
eligibility and other requirements of the SUB Plan are met.* An employee may
void his election to transfer at any time during the three-year period. If the
employee is eligible for an immediate pension at the time he voids his election
to transfer, he shall retire, effective the date he voids his election, under
the Pension Plan in effect at the time of the permanent shutdown. An employee
may also void his election in order to apply for SUB termination benefits.*
(2) An employee who is eligible for an immediate pension at the
date of the permanent shutdown shall retire as of the effective
date of the permanent shutdown, except:
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<PAGE> 8
a. An employee whose combined age and years of service equal
62 or more but less than 65 may elect layoff until his
combined age and years of service equal 65 at which time
the employee shall retire and receive a permanent
shutdown pension. The Pension Plan in effect at the time
of the permanent shutdown shall determine the retirement
benefits payable to the employee. An employee who elects
layoff under these conditions shall receive SUB layoff or
reduced layoff benefits provided the eligibility and
other requirements of the SUB Plan are met.*
b. An employee who is eligible for an immediate pension
other than a normal or late retirement pension and who
elects to transfer to another operation of the Company
shall not retire unless the transfer is not accomplished.
c. An employee shall not be required to retire under a
disability retirement pension earlier than he would
otherwise be required to retire if the Company had not
permanently shut down the facilities.
d. An employee who retires under the Pension Plan may also
be entitled to receive SUB Termination Benefits in
accordance with the terms of the SUB Plan.*
(3) The employee may elect SUB Termination Benefits in accordance
with the terms of the SUB Plan at any time within one year
after notice of termination has been mailed to him.
An employee other than an employee who is eligible for an
immediate pension may elect layoff prior to submitting his
application for SUB Termination Benefits and shall receive SUB
layoff or reduced layoff benefits provided the eligibility and
other requirements of the SUB Plan are met.*
(4) If the facilities which have been permanently shutdown are
reopened by the Company within three years of the date of the
permanent shutdown, an employee who has retired under the
Pension Plan shall be eligible for recall in accordance with
his seniority status at the time of the permanent shutdown. An
employee who has elected SUB Termination benefits shall also be
eligible for recall in accordance with his seniority status at
the time of the permanent shutdown. Any pensioner who has
received SUB Termination Benefits* and accepts recall and any
former employee who has received SUB Termination Benefits* and
accepts recall shall repay said Termination Benefits to the SUB
Trust Fund or the Company, whichever was the source of the
Termination Benefits, in accordance with the SUB Plan
Agreement.* Any employee who accepts recall shall have his
previously accumulated seniority rights, pension, SUB,
insurance and vacation credits as of the last day the employee
worked or at the date of the permanent shutdown, whichever
occurs later, reinstated on the date he returns to work.
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<PAGE> 9
(5) An employee who is not eligible for an immediate pension may
elect layoff and shall receive SUB layoff or reduced layoff
benefits provided the eligibility and other requirements of the
SUB Plan are met.* The employment rights of any employee on
layoff shall terminate three years after the last day the
employee worked and the employee's seniority shall be broken.
(6) An employee's participation in the group insurance program
shall terminate effective the day following the last day the
employee worked and pending claims shall be processed in
accordance with the terms of the existing group insurance
program. No employee shall be eligible for holiday pay or
vacation pay other than vacation pay due after the last day the
employee worked or the date of the permanent shutdown,
whichever occurs later. No employee shall accumulate credited
service under the Pension Plan after the last day the employee
worked or the date of the permanent shutdown, whichever occurs
later.
*The Supplemental Unemployment Benefit (SUB) Plan was terminated
effective July 1. 1990. The funds currently in the Trust Fund of this
plan will be used to pay Layoff Benefits, Workmen's Compensation
Supplemental Benefits and/or Termination Benefits until such funds are
exhausted. At that time, Layoff Benefits will be provided by Article
XX, Section 1 (d) and Termination Benefits provided by Article XVII,
Section 1 of this Agreement.
(f) In the event the Company constructs a new plant that will affect
the employment status of employees in the Company's plant or plants comprising
this bargaining unit, such employees shall be given an opportunity to make
application for employment in the new plant before it starts operation, and
such employees shall be given preferential employment rights for the highest
rated job the employee is capable of performing. Such an employee shall
transfer with him all of his previously accumulated pension, SUB, insurance and
vacation credits. His seniority rights at the former plant shall terminate upon
his establishment of seniority rights in the new plant.
(g) When an employee has been laid off or displaced because of
permanent changes in the working force or because of a plant closing, he may
make written application within fifteen (15) days of layoff or displacement for
employment in another plant of the Company and he shall be given preferential
employment rights of job openings at such other plant, providing such employee
is capable of performing the job that may be available at such other plant of
the Company.
Any employee so transferring from one plant to another of the Company
shall retain his previously accumulated pension,SUB, insurance and vacation
credits. His seniority rights at the former plant shall terminate upon his
establishment of seniority rights in the plant to which he transferred.
(h) Employees transferring from one plant to another as provided in
this Article will receive a moving expense allowance. The Company will
reimburse each employee for actual moving expenses incurred to move furniture
and other household goods up to a maximum of $1,500 per employee.
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ARTICLE VII
PROMOTION
Section 1. It is understood that all vacancies will be filled
immediately by the Management in accordance with the most practical arrangement
at the time of occurrence until applicants have been considered in accordance
with this Agreement.
Section 2.
(a) All new jobs and job vacancies offering permanent promotion,
paying more per hour than the plant base rate, shall be posted promptly and
remain posted for five (5) days to allow any employee to make application in
writing for such jobs. The applications shall be considered in the order of the
seniority of the applicants. If the senior applicant is not selected, the
Company, in consultation with the Union Committee, shall give consideration to
the applications and choose an applicant on the basis of seniority, ability,
experience, and qualifications to fill the requirements of the job. If no
applications are received with necessary qualifications, Management reserves
the right to hire a qualified person.
(b) An employee awarded a job in conjunction with the job bidding
procedures shall be placed on the new job consistent with reasonable
replacement criteria. After being placed on the new job, the employee will be
given a period not to exceed thirty (30) working days within which to qualify
for the job. During the qualifying period, he will receive no less than the
rate of pay for the job he held permanently immediately prior to such
qualifying period. At the conclusion of the qualifying period, and if the
employee is found to be qualified by the Company, the employee will be paid the
rate of pay for the new job. If the employee fails to qualify within the thirty
(30) working day qualifying period, he shall be returned to his former job
without prejudice.
(c) Subject to the foregoing, when transfers into a Classification
result in the classification operating 50% of the time (during a normal 8 hour
work shift) in any seventy-five (75) day period, the classification will be
posted.
Section 3. The Company will furnish the Local Lodge with a copy of the
notice of job vacancy at the time it is posted and copies of the applications
received for such job after the job is awarded to the successful applicant.
Section 4. It is agreed that experience gained through temporary
upgrading will not be used in filling permanent vacancies except that
experience gained through temporary upgrading may be used in qualifying the
most senior bidder in filling permanent vacancies.
Section 5. An employee who has successfully bid on, been awarded a new
job, and has completed his probationary period in the new job shall not be
eligible to bid on another new job for a period of six (6) months from the date
that he was awarded the job. In no event shall an employee be awarded more than
two (2) jobs in any calendar year. No temporary or probationary employee shall
be eligible to bid on any job vacancy. Downward bidding will be permitted one
time every twelve months when a vacancy exists. A person cannot bid on any
other job for one year after bidding down.
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ARTICLE VIII
WORKING CONDITIONS AND HOURS
Section 1.
(a) For the purpose of this Agreement, it is understood that the "Work
Week" constitutes seven (7) consecutive days, beginning each Monday and that
the "Work Day" shall commence with the beginning of the morning shift. The
regular hours of labor shall consist of eight (8) hours within a consecutive
nine (9) hour period in one day and forty (40) hours in one week.
(b) Work schedules for each work week will be posted on Thursday of
the previous week prior to the end of the first shift. If an employee's work
schedule is changed without at least seventy-two (72) hours notice prior to the
beginning of the new shift, the employee shall be compensated by multiplying
the regular straight-time hourly rate by one-half (0.5) for the first eight (8)
hours worked in the new schedule and the premium shall be paid in addition to
whatever compensation the employee is entitled to receive. Notice required for
shift change shall be twenty-four (24) hours when the kiln goes down (when the
fire goes out in the kiln) in the maintenance, electrical and service
departments. If the work schedule is otherwise changed after Thursday,
employees will be paid as provided in this agreement.
(c) It is agreed that all employees will be scheduled to work five (5)
consecutive days in a work week, insofar as practicable and consistent with
efficient operation.
Section 2.
(a) For the purpose of determining overtime, eight (8) hours shall
constitute a day's work, and forty (40) hours a week's work. Time and one-half
shall be paid for all overtime in excess of eight (8) hours in any one day or
for all overtime in excess of forty (40) hours in any one week, provided,
however, that hours paid for at the overtime rate on the daily basis will not
be included or duplicated in figuring the weekly hours on which overtime is
paid. Employees who are called upon to work in excess of their scheduled hours
in any one day shall not be laid off during their regular scheduled working
time to equalize this overtime.
(b) There will be no pyramiding or duplication of overtime or
premiums. Time worked by an employee shall be paid on one basis only. If two or
more premium rates or overtime rates apply to the same hours, the one rate
resulting in the highest pay to the employee shall be used.
Section 3.
(a) Work performed on Sundays shall be paid for at the following rates
times the employee's regular straight time hourly rate:
(1) When the first eight (8) hours are scheduled straight-time
hours:
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<PAGE> 12
<TABLE>
<CAPTION>
Under 8 hours Over 8 hours
------------- ------------
<S> <C>
Time and one-half Double time
(exclusive of shift
differential)
</TABLE>
(2) When the first eight (8) hours are overtime:
<TABLE>
<CAPTION>
Under 8 hours Over 8 hours
------------- ------------
<S> <C>
Double time Double time
</TABLE>
Section 4. In the event an employee works more than sixteen (16) hours
in the work day, he shall be paid for all hours worked in excess of such
sixteen (16) hours at double his regular straight-time hourly rate.
After an employee has been engaged in work for sixteen (16)
consecutive hours, he shall be paid for all consecutive hours worked
immediately succeeding and in excess of such sixteen (16) hours at double his
regular straight-time hourly rate.
If an employee is being paid the rate of double time under the
foregoing paragraphs, his rate of pay shall not be reduced when his work
continues into or overlaps his regular shift. However, the Company may exercise
either of the following options:
(a) The Company may instruct the employee to continue to the end of
the shift at the double time rate, or,
(b) The Company may send the employee home at any time during the
shift, provided the remainder of the shift is paid for at straight time. Such
employee cannot be called back to work until he has been off duty for eight (8)
consecutive hours.
In no event shall the first two provisions of this section be applied
to the same hours of work. The provision which creates the highest earnings
shall be applied.
Section 5. When an employee is scheduled and reports for work and is
not permitted to start work, he shall receive four (4) hours pay at his regular
straight-time hourly rate. In the event an employee commences work on his
scheduled shift and work ceases during his shift for any reason and there is no
other available work for him, he shall be paid a minimum of eight (8) hours at
his regular straight-time hourly rate.
Section 6. An employee who has left the plant and who is called in by
the Company to work outside his regular schedule shall be paid at time and
one-half (1.5) for all hours worked. If the job for which he was called to
perform does not provide at least four (4) hours work, he may be assigned other
work, related to an emergency or production difficulty, for which he is
qualified. If no such assignment of work is made, he shall be paid a minimum of
four (4) hours. If such assignment is made and the employee refuses it, he
shall be paid only for the time actually worked.
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Section 7. When an employee is required to work in excess of his
scheduled hours in any one day, he shall be paid a minimum of one-half (.50)
hour at the applicable overtime rate; provided, however, that at least eight
(8) minutes of work is performed. For each additional one-half (.50) hour
segment during which at least eight (8) minutes of work is performed, the
employee shall be paid the applicable overtime rate for that segment. An
employee will be required to work the full one-half hour if requested. If an
employee declines to work the full one-half hour as requested, the employee
will be paid for time worked.
Section 8. Any employee required to work any part of his scheduled
lunch period by direction of a Foreman, shall receive time and one-half for the
scheduled 1/2 hour lunch period and be allowed necessary time later to eat his
lunch without loss of pay.
Section 9. Overtime shall be equally distributed among employees
within a classification in each department, insofar as it is practicable to do
so over the period of a calendar year. Overtime records will be posted in each
department and updated weekly.
Section 10. It is not the desire or intent of the Company to have
Company personnel excluded from the bargaining unit routinely perform
bargaining unit work. The Company and the Union recognize that in certain
situations it may be necessary for Company personnel to perform work regularly
assigned to bargaining unit employees in order to maintain and/or safeguard the
operation of the facility. The Company supervisory personnel will determine the
necessity for the performance of such work. The Company is willing to meet with
the Union at reasonable times to discuss the reasons for the performance of
such work, if requested.
*Such work shall include:
(a) Work involving corrective action which must be performed
expeditiously or the continuity of operation would be
impaired.
(b) Instruction or training of employees.
(c) Inspection or testing of equipment.
(d) Work of an emergency nature.
(e) Development work for new processes and/or procedures.
(f) Demonstration of equipment.
(g) Relief of regular employees for lunch or break periods.
Section 11. Any regular employee (as distinguished from a probationary
employee) required to perform jury duty on a day he is scheduled to work, shall
be excused from work on that day. The Company shall pay the employee the
difference between the amount received for such jury duty and eight hours at
his regular rate of pay plus shift differential if involved.
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<PAGE> 14
The day or days paid for such jury service shall be counted as eight
(8) hours worked for the purpose of computing weekly overtime.
Section 12.
(a) Employees, upon the notification of the death of his or her
father, mother, spouse, son, daughter, brother, sister, stepfather, stepmother,
stepson, stepdaughter, half brother, half sister, mother-in-law, father-in-law,
brother-in-law, sister-in-law, grandparent, spouse's grandparent, and
grandchild, shall be granted his or her next three (3) scheduled working days
off with pay (four (4) days off with pay if the employee is required to travel
beyond a radius of 500 miles), which will be either the day of the funeral or
days immediately preceding or following the day of the funeral. Payment by the
Company for such time lost shall be on the basis of eight (8) hours per day at
the employee's regular straight-time hourly rate, including shift differential.
(b) The above clause shall not apply to employees on a layoff except
that when an employee is notified to return to work effective on or before the
date of the funeral, he shall be granted full funeral leave with pay.
(c) As used herein, brother-in-law is defined to mean:
(1) the brother of one's husband or wife,
(2) the husband of one's sister,
(3) the husband of the sister of one's spouse.
The sister-in-law is defined to mean:
(1) the sister of one's husband or wife,
(2) the wife of one's brother,
(3) the wife of the brother of one's spouse.
Section 13. Every reasonable effort will be made by the Employer to
avoid requesting any employee to work overtime and employees will not be
penalized for refusing to work overtime if a reasonable excuse is given to the
supervisor. Whenever an employee is on layoff due to lack of work or because of
curtailment of operations, no overtime work will be scheduled on any work which
the laid-off employee is capable of doing and is able to perform, except in
cases of emergency callouts for emergency repair or unscheduled absences of
other employees. The foregoing to the contrary notwithstanding, a laid-off
employee will not be called back to work unless there is at least thirty-two
(32) hours' work within the payroll week for such employee.
Section 14.
(a) Active employees with one year seniority and who are in the
Reserve of any branch of the military service, including the National Guard,
who are required to attend a summer encampment as part of their Reserve
obligation shall receive from the Company the difference between the amount of
pay received for such summer encampment and his regular straight-time hourly
rate of pay for up to a maximum of two (2) weeks per calendar year.
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<PAGE> 15
(b) If a National Guard or Reserve member is required to attend a
National Guard or Reserve Meeting on one of his regular scheduled work shifts,
the Company will try to reschedule the employee as long as the employee gives
the Company sufficient notice (before the next schedule is posted) and there is
no penalty to the Company.
Section 15.
(a) Any employee who becomes incapacitated and, on the basis of
competent medical opinion, cannot perform the duties of his regular job, may
exercise his plant seniority through the bumping procedure to move to another
position within the bargaining unit at the plant for which he could qualify
within a reasonable period of time, but not to exceed ninety (90) days. This in
no way attests the bidding rights of the employee. (The 95% rate protection is
not applicable to bumping under this provision.)
(b) Any employee who is displaced by an incapacitated employee
pursuant to paragraph (a) of this Section may exercise his plant seniority to
bump into another position within the bargaining unit at the plant for which he
is qualified in the same manner as provided for in the job bidding procedures.
Section 16.
(a) When an employee works more than two (2) hours overtime,
consecutive and in addition to his regularly scheduled shift hours, and every
six (6) hours thereafter, the Company will provide a hot meal or payment in
lieu of the meal in the amount of $7.50.
(b) When an employee is called out and reports to work more than two
(2) hours prior to the start of his regularly scheduled shift and continues to
work into his scheduled shift or does not receive at least one (1) hour off
between the start of his regularly scheduled shift and the end of the call-out
work (two (2) hours minimum), the Company shall provide a hot meal or payment
in lieu of the meal in the amount of $7.50 and will provide an additional hot
meal, or payment in lieu of the meal, in the amount of $7.50 every six hours
thereafter.
(c) The above provisions shall not apply if the overtime or call-out
hours worked are scheduled or arranged four (4) or more hours prior to the
start of the employees regularly scheduled shift or if the hours are required
to fill the unscheduled absence of another employee. On non-scheduled days, a
meal will be provided after ten (10) hours of work and every six (6) hours
thereafter.
(d) There shall be no duplication of lunches or payments under (a) and
(b) above.
ARTICLE IX
CHANGE IN RATING
Section 1. An employee normally performs work in both higher and lower
rated jobs when required. When employees are assigned to temporarily perform
work a higher rated job, they
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<PAGE> 16
will receive the higher rate of pay for hours worked in such higher rated jobs.
If an employee is temporarily assigned to such job for four (4) or more hours
in the workday, he will receive the higher rate of pay for the entire workday.
If he is scheduled on the weekly work schedule on a higher rated job in another
classification, he shall receive the higher rate of pay for the entire workday.
An employee's pay rate will not be reduced when the temporarily assigned to
work in a lower rated job. This provision shall not apply to employees
displaced during periods of temporary production curtailments.
Section 2. During periods of plant shutdown when employees are needed
for maintenance, repairs, or work on plant alterations, the rate paid to
employees who are retained for work during the first forty-five (45) days of
the shutdown shall not be less than the regular straight-time hourly rate
normally paid when the plant is on production. After forty-five (45) days, and
subject to paragraphs (a) and (b) of this Section, the regular straight-time
hourly rate paid for all classes of work shall govern for such employees whose
regular straight-time hourly rates are higher or lower.
A plant shutdown, as referred to herein, is defined as a period during
which none of the clinker burning units are in production.
During periods of plant shutdowns, employees retained to perform
necessary work shall be selected on the following basis:
(a) Senior employees, whose regular jobs are not required, shall have
the option of accepting available work for which they are qualified, or
accepting layoff, except that,
(b) The Company has the right to require that senior employees work
during the shutdown if there are no junior employees with the necessary
qualifications to perform the required work.
The foregoing in no way alters the procedure which has been followed
in handling of reductions brought about by production curtailment.
Section 3.
(a) In the event that an employee is required to clean and/or repair
roofs, scale a quarry face, or work inside a silo, the hours worked shall be
compensated for by multiplying the classified hourly wage rate by one-half
(0.5) for each and every hour worked, and this premium shall be paid in
addition to whatever compensation the employee is otherwise entitled to receive
under any other section of this Agreement. Employees will not be required to
work in coolers and/or other equipment until such equipment has been reasonably
cooled so as not to endanger the employee's safety.
(b) In the event an employee is required to work inside the raw mix
tanks (raw silos). coal tanks, sand tanks, chalk tanks, hard rock tanks, scale
house (truck loading) tanks, or when spudding out gypsum tanks, or when a
passenger is in the crane cage, or when working with an asbestos suit, the
hours worked shall be compensated for by multiplying the classified hourly wage
rate by one-half (0.5) for each and every hour worked, this premium shall be
paid in addition to whatever compensation the employee is otherwise entitled to
receive under any other section of this Agreement.
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<PAGE> 17
(c) When unplugging a choked cyclone (including waste cyclone) from the cone
area (and meal valves), mixing box (if door is open) or going inside the
cyclones and duct work, pay as in 4 (a) (b) is applicable.
ARTICLE X
HOLIDAY PAY
Section 1. The following days will be considered holidays for the
purpose of this article:
New Year's Day
Martin Luther King's Birthday
Good Friday
Memorial Day
Independence Day
Labor Day
Veteran's Day
Thanksgiving Day
Day after Thanksgiving
Christmas Eve
Christmas Day
If any of the foregoing holidays fall on Sunday, the following Monday
shall be observed as the holiday. If the Monday involved is also a holiday, the
following Tuesday will be observed as the holiday.
For the purpose of this Section, a holiday is defined as a twenty-four
(24) hour period commencing with the beginning on the morning shift of the
holiday.
Section 2. Employees who do not work on the holidays specified herein
shall receive holiday pay computed as follows:
(a) Hourly employees shall receive eight (8) hours' pay at their
straight-time hourly wage rate, exclusive of shift differential.
Section 3. In order to qualify for holiday pay under Section 2, an
employee must meet all of the following conditions:
(a) The employee shall have one-hundred (100) or more days of work
with the Company immediately prior to the holiday.
(b) The employee shall have worked his last scheduled working day
prior to and his next scheduled working day after such holiday unless excused
therefrom by the Plant Manager on account of sickness, accident, death in the
family, or other excused absence. In no event shall a holiday be paid for
unless an employee has also worked during the thirty (30) day period
immediately preceding or immediately following the holiday except that the
thirty day limitation shall not apply if the employee was temporarily absent
from work because of sickness, accident, or layoff. In any event, the employee
must work at least one day in the calendar year in which the holiday is
granted.
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<PAGE> 18
Section 4. If a holiday occurs during an employee's vacation period,
such employee will receive an additional eight (8) hours pay, provided he meets
the following conditions:
(a) The employee performs his scheduled hours of work on his last
scheduled workday preceding his vacation, and also on his first scheduled
workday following his vacation, except that absence from all or a part of his
scheduled hours on such days shall not disqualify an employee from receiving
holiday pay, if such absence is due to proven personal illness or other proven
unavoidable cause satisfactory to the Plant Manager.
Section 5.
(a) Employees reporting for work on holidays will be guaranteed eight
(8) hours pay at two and one-half (2 1/2) times the regular straight-time
hourly rate.
(b) Callout hours worked outside of an employee's regular holiday
scheduled shift and overtime hours worked on a holiday shall be compensated at
a rate of two (2) times an employee's regular straight-time hourly rate.
(c) Employees scheduled to work on a holiday but failing to report for
and perform such work shall not be entitled to any holiday pay.
Section 6. When a holiday falls on a day on which an employee would
otherwise have been scheduled to work, such time paid for but not worked - not
in excess of eight hours - shall be considered as hours worked for the purpose
of computing weekly overtime.
ARTICLE XI
WAGES
Section 1. The wage scales attached hereto (Appendix A) and made a
part hereof shall be effective for the periods indicated thereon, except in
case of new jobs and job changes made necessary by the installation of new and
different equipment, or changes made necessary in the process of manufacturing.
The Management, at its discretion, may voluntarily increase wages in any class
or to any individual or class without necessitating a change in the wage of any
other individual or class.
Section 2.
(a) In the event the permanent job content of any job classification
is substantially changed, or a new job created, the Company shall set a rate
for same and put it into effect, at the same time notifying the Union of its
action.
(b) The Union shall have the right to file a grievance on this rate,
provided they do so within thirty (30) days after notice was given by the
Company, on the question of whether the rate bears fair relationship to the
rates of other jobs in the plant based on comparable requirements of skill and
effort.
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(c) If, after full consideration and such conferences between the
parties as may be mutually agreed upon, the grievance is not settled, it may,
if application is made within fifteen (15) days after decision of the Company,
be submitted to arbitration in the manner set forth in Article XV, Section 3 of
this Agreement.
Section 3.
(a) No shift differential will be paid to an employee who works on the
first shift and continues to work into the second or third shift unless he
takes the place of an employee regularly assigned to work these shifts, or he
is assigned to a new shift job.
(b) Employees regularly scheduled to work on the second shift shall be
paid in addition to their regular straight-time hourly job rate, $.043 per hour
for all hours worked during their regular schedule.
(c) Employees regularly scheduled to work on the third shift shall be
paid in addition to their regular straight-time hourly job rate, $0.65 per hour
for all hours worked during their regular schedule.
(d) Shift differentials shall be included as part of the employees
"regular straight-time hourly job rate" in the calculation of daily or weekly
overtime.
ARTICLE XII
FIRST AID AND MEDICAL SERVICE
Section 1. The Company agrees to continue furnishing First Aid and
Medical Service to its employees, according to the employee's compensation laws
of the State of Alabama. It is agreed that a complete medical examination be
required before an applicant is employed, also that complete medical
examination of any employee may be made at any time at the discretion of the
Company. Copies of reports of such examinations shall be kept on file by the
Company and shall at all times be available for reference or use by the
physician of the employee examined.
Section 2. If the Company requires an employee to take a physical
examination, the Company agrees to pay for the physical examination and also
agrees to pay the employee at his straight-time hourly rate for all time spent
in the doctor's office taking the physical examination; provided, however,
employees receiving A&S and/or Workmen's Compensation benefits are not entitled
to any compensation under this Section. (Doctor releases for returning to work
are not considered physical examinations and will not be paid under this
Section.)
ARTICLE XIII
SAFETY AND WELFARE
Section 1. The Company, for many years in the past having pursued the
policy of installing safety devices for the protection of the lives and health
of its employees, agrees to make
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no changes in such policy and to continue plant improvements in this respect as
may be mutually agreed upon from time to time by its representatives and Plant
Safety Committee. The Company also agrees to continue maintaining the wash
house with heat, light and plenty of hot water, and keep the toilets and other
fixtures and floors in sanitary condition.
Section 2. It is mutually agreed that the efforts of both the Company
and its employees will be directed to maintain all equipment and tools in a
safe and efficient working order.
Section 3. The wearing of safety shoes is a mandatory condition of
employment and the Company will provide such safety shoes without cost to
regular employees on the following basis:
Safety shoe catalogs will be available in the Storeroom detailing the
selections available to the employees and all safety shoes will be ordered
through these catalogs at the Plant.
Each January during the term of this Agreement, all regular employees
(as distinguished from probationary and/or temporary summer employees) will be
provided two (2) pairs of safety shoes.
Section 4.
(a) The wearing of safety glasses is a mandatory condition of
employment and the Company will provide safety glasses to each employee. Those
employees requiring prescription glasses must obtain the necessary prescription
and present such prescription to the Storekeeper where orders for glasses will
be placed with optional firm selected by the Company. A standard type of safety
glasses and frames will be provided.
(b) The Company will replace all broken or damaged glasses returned to
the storeroom. The employee will be allowed four (4) pairs if no exchange, but
with a reasonable excuse. An amount equal to the Company's cost will be paid by
the employee for pairs in excess of four (4) unexchanged pairs.
Section 5. A Joint Safety and Health Committee shall be established
consisting of four (4) members, two (2) appointed by the Local Lodge. In the
event that a member is absent from a meeting of the Committee, his alternate
may attend and when in attendance shall exercise the duties of the member. The
Safety Director or his designee will be the fifth member and act as Chairman of
the Committee.
The Joint Committee shall meet as often as necessary, but not less
than once each month, at a regularly scheduled time and place, for the purpose
of jointly considering inspecting, investigating, and reviewing health and
safety conditions and practices and investigating accidents, and for the
purpose of jointly and effectively making constructive recommendations with
respect thereto, including but not limited to the implementation of corrective
measures to eliminate unhealthy and unsafe conditions and practices, and to
improve existing help and safety conditions and practices, and to study and
recommend formal safety training programs to Management. All matters considered
and handled by the Committee shall be reduced to writing, and joint minutes of
all meetings of the Committee shall be made and maintained. One Union
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Representative to the Committee will accompany a Federal or State investigator
on a walk-around inspection or investigation if the inspector so requests, and
will attend any pre- or post-inspection conferences.
All time spent in connection with the work of the committee by a Union
Representative including walk-around and in pre- and post-inspection
conferences, time spent in relation to Federal and State inspections and
investigations as provided for above, shall be compensated at the employees
regular straight-time hourly wage rate. Any time spent during the hours the
employee is scheduled to work shall count toward the calculation of any penalty
or premium pay section of this Agreement including but not limited to daily or
weekly overtime. Any time spent outside of the hours the employee is scheduled
to work shall not count toward the calculations of any penalty or premium pay
section of this Agreement. No time spent outside of the hours the employee is
scheduled to work shall be compensated at a rate greater than one (1) times the
employee's straight-time hourly wage rate.
Any employee who believes his job presents a hazard to his safety or
health may request an immediate review of his job by the Joint Safety and
Health Committee. No employee shall be disciplined or discharged for refusing
to work on a job if his refusal is based on a bona fide claim that said job is
not safe or might unduly endanger his health or safety.
ARTICLE XIV
VACATIONS WITH PAY
Section 1.
Effective January 1, 1987, all employees covered by this Agreement
shall be granted vacation with pay in each calendar year provided they have
qualified under the following terms and conditions:
(a) For employees who have been in the continuous service of the
Company for one (1) year or more, the length of vacation shall
be two (2) weeks (10 days).
b) For employees who have been in the continuous service of the
Company for five (5) years or more, the length of vacation
shall be three (3) weeks (15 days).
(c) For employees who have been in the continuous service of the
Company for fifteen (15) years or more, the length of vacation
shall be four (4) weeks (20 days).
(d) For employees who have been in the continuous service of the
Company for twenty-five (25) years or more, the length of
vacation shall be five (5) weeks (25 days).
The foregoing to the contrary notwithstanding, no employee will be
granted less vacation in any calendar year than he was eligible for on December
31, 1986, under the provisions of Article XIV, Section 1 of the prior (expired)
Labor Agreement.
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Section 2.
(a) Employees whose vacation entitlement in any one year is three (3)
weeks or more may elect to receive vacation pay in lieu of time off in
accordance with paragraph (b) following.
(b) Such pay in lieu of time off must be taken in one (l) week
increments not to exceed the maximum according to the following schedule:
<TABLE>
<CAPTION>
Entitlement Pay Maximum
----------- -----------
<S> <C>
3 weeks 1 week
4 weeks 2 weeks
5 weeks 2 weeks
6 weeks 3 weeks
7 weeks 3 weeks
</TABLE>
(c) Request for pay in lieu of time off must be submitted prior to
March 1 of the year during which the vacation is due.
(d) Vacation periods shall be in minimum units of one week (five
regular work days) duration.
Section 3. Vacation pay will be based on a forty (40) hour week at the
rate of the permanently assigned classification on which an employee is working
at the time he takes his vacation. If an employee has held a single higher
rated classification for more than six (6) months during the year preceding his
vacation, he will receive vacation pay computed at the higher rate. Vacation
pay shall include appropriate shift differential for those on fixed shifts.
Employees working on rotating shifts shall be paid an average of the rates for
the rotating shifts involved.
Section 4. Vacation shall be considered by both parties as a period of
recreation and all eligible employees shall receive the benefit of being absent
from work during such period as may be agreed upon, scheduled, and posted prior
to June 1st of each year. Vacations will, as far as possible, be granted at
times most desirable to employees. Seniority shall be given preference in the
selection of vacation periods but the final right of allotment of vacation
period is exclusively reserved to the Management in order to insure the orderly
operation of the plant.
Section 5. Vacations will not be cumulative, but so far as practicable
will be granted at times most desired by employees, but the final right of
allotment, including vacation assignment during periods of shutdown and
curtailment, is exclusively reserved to the Company in order to insure the
orderly operation of the plant.
Where requested vacation periods conflict, preference shall be given
to the employee who is senior in service.
Section 6. An employee with more than one (1) year of seniority shall,
with respect to earned vacation time subsequent to his last employment
anniversary date, be entitled to credit for such time upon termination for any
reason, prorated on the basis of one-twelfth (1/12) for each one
22
<PAGE> 23
hundred (100) compensated hours; but such probation shall not exceed his
maximum allowable annual vacation.
Section 7. In case of termination of an employee for any reason, the
Company shall pay him or, in the event of his death, to the beneficiary of Life
Insurance, any vacation due him.
Section 8. The Company will permit employees to use up to one (1) week
of this vacation on a day-to-day basis for prearranged personal business.
Prearrangement for use of vacation for personal business must provide the
Company with ample time to change work schedules without payment of the change
of schedule penalty.
ARTICLE XV
GRIEVANCE PROCEDURE
HANDLING OF COMPLAINTS
Section 1. The purpose of this Article is to provide an orderly method
for adjustments of differences which may arise between the Company and the
Union.
Section 2. Grievances shall be processed in the following manner:
(a) The employee and/or his Committeeman within a five (5) day period
shall first make an effort to arrive at a satisfactory agreement with the
employee's foreman. The foreman shall answer the grievance within two (2) days
(exclusive of Saturday, Sunday and Holidays). If the grievance is not
satisfactorily settled at Step (a), the grievant or Local Committee may process
the grievance to Step (b) provided, however, they do so within thirty (30) days
from the occurrence or the alleged grievance becomes known.
(b) Failing to arrive at a satisfactory settlement at Step (a), the
grievance may, within thirty (30) days after the occurrence, be reduced to
writing and submitted to the Plant Manager. Such grievance(s) will be discussed
at a meeting to be held monthly, or at any other mutually agreeable time, and
every effort will be made to settle the dispute. The Plant Manager or his
designee shall answer the grievances within five (5) working days of the second
step meeting.
(c) Any grievance(s) not resolved in accordance with Step (b) above
may be referred by the Union Committee to the Director, Employee Relations or
his designee and a Representative of the International Union. The
Representative of the International Union and the Director - Employee Relations
or his designee and the Union Plant Committee shall meet to discuss such
grievances within thirty (30) days after receipt of the written answer in
Section 2 (b). (The time limits may be extended by mutual agreement between the
parties.)
The Director - Employee Relations or his designee shall give his
answer(s) in writing within ten (10) working days after the third step meeting.
23
<PAGE> 24
Section 3. Any grievance which is not resolved in accordance with the
above procedure may be appealed to arbitration upon written notice of either
party to the other within fifteen (15) days exclusive of Saturday, Sunday or
Holidays after receipt of written answer in Section 2(c).
In the event the parties cannot agree upon an impartial arbitrator
within ten (10) days, the party desiring arbitration may request the Federal
Mediation and Conciliation Service to submit a list from which an arbitrator
shall be chosen.
The decision of the arbitrator shall be final and binding upon both
parties. It is understood, however, that the impartial arbitrator shall have no
authority to change, add to, or subtract from any of the provisions of this
Agreement.
(a) It is agreed that no more than four (4) cases will be presented at
one (1) series of hearings.
(b) It is agreed that any expense incurred in connection with
arbitration shall be paid in equal amounts by the Union and the Company.
Section 4. In the event an employee is discharged and desires to take
up the matter as a grievance, then this complaint shall be filed in writing
with the Plant Manager within three (3) days after discharge (excluding
Saturday, Sunday, and Holidays), and shall be promptly carried through the
applicable provisions for the handling of grievances, including arbitration, if
necessary. If no complaint is filed within three (3) days, then the Company
will be deemed to have been within its rights in such discharge.
Section 5. Nothing in the Agreement shall be construed as obligating
the parties to arbitrate any contract negotiations.
(a) Any grievance not processed within the time limits specified in
this Article shall be forfeited without precedent or prejudice with regard to
future cases.
Section 6. The Company agrees that so long as this Agreement is in
effect, there shall be no lockouts. The closing down of the facility or any
part thereof or curtailing any operations or routes for business reasons shall
not be construed to be a lockout.
The Union, its officers, agents, members, and the employees covered by
this Agreement, agree that so long as this Agreement is in effect, there shall
be no strikes, sit-downs, slow-downs, stoppages of work, boycotts, holidays
other than those provided by this Agreement, continuous meetings, concerted
mass sickness or any other acts or denial or services which would interfere
with the Company's operations and it is further agreed that the Union, its
officers, agents, members and the employees covered by this Agreement shall not
encourage, condone, or engage in any sympathy strike nor honor any picket line,
strike, sit-down, slow-down, work stoppage, boycott, labor holiday, continuous
meeting, concerted mass sickness or any other acts or conduct that interfere
with the Company's operations.
The Union, its officers, agents, members and employees agree that if
any acts, conduct or withholding of services prohibited by this Article occur
or are threatened, they shall take all
24
<PAGE> 25
reasonable and necessary steps to prevent and stop any and all such
interference by persons subject to this Agreement. Such reasonable and
necessary steps shall include, but not be limited to, immediately dispatching a
representative to the scene of the interference; removing or restraining all
local Union officers, stewards, and/or committeemen participating in activities
violating this Article, sending, within eight (8) hours, a telegram to each
employee, demanding, exhorting and requiring each employee to immediately cease
any activities violating this Article, and to return to work and honor the
terms and conditions of this Agreement; and in addition, the Union shall
discipline the employees who participated in activities violating this Article.
Any employee subject to the terms of this Agreement who violates
Section 6 of this Article will be subject to disciplinary action by the
Company, including discharge.
There shall be absolutely no interference by the Union, its officers,
agents, employees, or members, to prevent or impede free ingress and/or egress
by any person to and from the Company's property or customer's property or the
free and unhindered use of Company's, customer's or supplier's equipment or
vehicles.
Section 7. An employee shall have the right to see his Union Steward
(Committeemen) or other available member of the Union Committee to discuss any
matter affecting his rights or privileges. A steward or other officer of the
Local Lodge shall, upon request to his supervisor, be granted relief from his
job for a reasonable period of time to investigate or attempt to settle a
dispute. The steward or other officer of the Local Lodge shall not leave his
job without the consent of his supervisor and such request for relief shall not
be unreasonably denied. Local Lodge Officers and Stewards (Committeemen) off
duty, and representatives of the International Union, shall, upon notice to the
Company, be permitted on the Company's premises to investigate grievances.
Section 8. Meetings will be conveniently scheduled so as to complete
all business within the normal working day for day employees. Any employee who
is scheduled to work during the hours the meeting is held and who attends the
meeting will be compensated by multiplying his regular classified hourly wage
rate by the hours he attends the meeting. In addition, if this employee attends
the meeting beyond his normal quitting time, he will be compensated for each
additional hour he attends the meeting by multiplying his regular classified
hourly wage rate by one (1) and said additional hour or hours shall not count
toward daily or weekly overtime.
Section 9. Any member of the Committee who is not scheduled to work
during the hours the meeting is held, who is not scheduled to work the third
shift immediately following the meeting, and who attends the meeting, will be
compensated by multiplying his regular straight-time hourly wage rate by all
hours he attends the meeting. Any hours paid under this paragraph shall not
count toward the calculation of any penalty or premium pay section of this
Agreement including but not limited to daily or weekly overtime. Any employee
who is receiving SUB benefits, sickness and accident benefits, or Workmen's
Compensation benefits for the day of the meeting or who is absent due to
disciplinary layoff shall not receive any compensation under this paragraph.
25
<PAGE> 26
Section 10. When a meeting is scheduled at which a representative of
the International Union and a representative of the Company from Cleveland will
attend, any member of the
Committee who is scheduled to work the third shift immediately preceding the
meeting will be excused from working the third shift and will be compensated by
multiplying eight (8) hours at his regular classified hourly wage rate plus
shift differential if the employee has attended the meeting.
Any member of the Committee who is scheduled to work the second shift
if the employee has attended the meeting for six (6) hours. In the event the
employee is excused from working the second shift, he will be compensated by
multiplying eight (8) hours at his regular classified hourly wage rate plus
shift differential.
Section 11. Unsatisfactory Performance Reports and/or disciplinary
letters will be removed from the employee's personnel file after twelve (12)
consecutive months and will be destroyed.
Section 12. When there is to be a discussion between an hourly
employee and a supervisor that is intended to be a disciplinary measure, the
Union will, if requested by the employee, insure that a Committeeman or other
designated employee be present.
It is not the intent of this Section to expand the total number of
Committeemen as provide in Section 1 of Article III.
ARTICLE XVI
LEAVE OF ABSENCE
Section 1. A leave of absence for the purpose of accepting a position
with the Cement, Lime, Gypsum and Allied Workers Division, International
Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and
Helpers at the local, district or international level or the AFL-CIO or any of
its subordinate bodies, shall be available to not more than three employees
from each plant at any one time. Application for such leave shall be submitted
to the Company in writing thirty (30) days prior to the effective date of such
leave to permit proper provisions to be made to fill the job to be vacated.
Leaves of absence for this purpose shall be for an indefinite period.
During such leave, seniority shall accumulate. Group insurance
coverage shall be suspended after thirty (30) days of such leave. All insurance
coverages will be reinstated upon returning to work with the Company. Upon
returning to work, such employee will be reinstated on his former job,
providing it is still in existence; if not, he shall be eligible to apply for
any job within the bargaining unit by means of the existing bidding procedure
or by bumping.
26
<PAGE> 27
ARTICLE XVII
TERMINATION BENEFIT
Section 1. The Company will pay benefits in amounts equal to those
provided by Section 2 of Article VII of the SUB Plan upon termination of
employment of an employee who is age sixty-five (65) or older, provided such
employee is not eligible for a pension under the current Pension Plan covering
bargaining unit employees.
On or after July 1, 1990, an employee with at least one year of
Credited Service (computed as of the date of his application for a Termination
Benefit) shall be eligible for a Termination Benefit in an amount as provided
in Section 2 of this Article. Upon termination of his employment, provided,
however, that if a terminated employee shall not have applied for such benefit
within one year after the Company shall have mailed notice of his termination
to him at his last address as shown on Company records, his right to such
benefit shall stand forfeited. In no event shall a Termination Benefit be paid
upon normal or disability retirement of an employee under the terms of the
Pension Plan for Hourly Employees of the Company.
But provided further, however, that if a terminated employee shall die
within one year after the Company shall have mailed notice of his termination
to him at his last address as shown on Company records and such employee has
not made application for such benefit prior to his demise, such benefit in the
amount which would have been payable to him in any event shall be paid to the
deceased employee's beneficiary.
"Termination" as used in Sections 1 and 2 of this Article solely means
ceasing employment from the Company by reason of a layoff commencing on or
after the effective date of this Agreement of two or more years duration (or
lesser duration where loss of seniority is involved) or a termination of
employment from the Company resulting from a permanent shutdown of the plants
department or subdivision thereof, which occurs after the effective date of
this Agreement. The term also includes termination of employment from the
company by reason of disability, where such disability occurs on or after
February 1, 1993, where the employee is age sixty-five (65) or older and the
employee is not eligible for an immediate Pension under the Pension Plan
covering bargaining unit employees.
Section 2.
The lump sum Termination Benefit payable on the termination of an
eligible employee who is ineligible for an immediate normal, late, disability
or early retirement benefit under the Pension Plan shall be forty (40) times
the product of the employee's years of Credited Service and his regular
straight-time hourly rate. The lump sum Termination Benefit payable on the
termination of an eligible employee who is eligible for an early retirement
benefit under the Pension Plan shall be twenty (20) times the product of the
employee's years of Credited Service and his regular straight-time hourly rate.
If the Company reopens facilities which had been permanently shut down
within three years of the date of the permanent shutdown, any pensioner, or
former employee who has been paid termination benefits in accordance with the
collective bargaining agreement and who returns to work, shall be required to
reimburse the Company an amount equal to the termination benefits at a rate not
to exceed $25.00 per calendar week.
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<PAGE> 28
ARTICLE XVIII
PAYROLL DEDUCTIONS AND UNION LABEL
Section 1. The Company will deduct from the pay of any employee his
Union membership dues upon presentation of an order signed by such individual;
such authorization to conform with State and Federal laws.
Section 2. The Company will sign a Union Label Agreement when it can
do so in accordance with the terms of such Agreement and in such case, will
place the Union Label of the Cement, Lime, Gypsum and Allied Workers Division,
International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths,
Forgers and Helpers on its cement packages.
Section 3. The Company will withhold amounts as deposits to an
employee's account in a credit union or as repayments of loans to any employee
by a credit union upon written authorization by the employee on a form provided
by the credit union containing an agreement by the employee satisfactory to the
Company releasing the Company from any liability for any amount so withheld.
Section 4. The Company will deduct from each employee's regular
paycheck contributions for the City of Hope upon written authorization by the
employee on a form containing an agreement by the employee satisfactory to the
Company releasing the Company from any liability for any amount so withheld.
Employees contributing to the City of Hope cannot discontinue or
change such contributions for one year.
ARTICLE XIX
GROUP INSURANCE
Section 1. Group medical and dental coverage shall be provided through
The Blue Cross/ Blue Shield Preferred Provider Plan, as agreed upon, and shall
be maintained for the duration of this agreement.
Employees shall be required to make weekly premium payments, which shall be
payroll deducted, to maintain coverage under the group plan as follows:
Effective May 1, 1996 and for the following twelve months premium payments
shall be as follows:
<TABLE>
<S> <C> <C>
Single coverage - $2.97 per week
------------------------------------------------
Employee & Spouse - $5.64 per week
------------------------------------------------
Family - $8.36 per week
------------------------------------------------
</TABLE>
Effective May 1, 1997, employees' premium contributions shall be increased by
the percentage of increase in premium costs. However, an employee's weekly
contributions during the twelve month period beginning May 1, 1997 shall not
exceed the following:
28
<PAGE> 29
<TABLE>
<S> <C> <C>
Single coverage - $3.12 per week
------------------------------------------------
Employee & Spouse - $5.93 per week
------------------------------------------------
Family - $8.77 per week
------------------------------------------------
</TABLE>
Effective May 1, 1998, employees' premium contributions shall be increased by
the percentage of increase in premium costs. However, an employee's weekly
contributions during the twelve month period beginning May 1, 1998 shall not
exceed the following:
<TABLE>
<S> <C> <C>
Single coverage - $3.28 per week
-------------------------------------------------
Employee & Spouse - $6.22 per week
-------------------------------------------------
Family - $9.21 per week
-------------------------------------------------
</TABLE>
Effective May 1, 1999, employees' premium contributions shall be increased by
the percentage of increase in premium costs. However, an employee's weekly
contributions during the twelve month period beginning May 1, 1999 shall not
exceed the following:
<TABLE>
<S> <C> <C>
Single coverage - $3.44 per week
-------------------------------------------------
Employee & Spouse - $6.53 per week
-------------------------------------------------
Family - $9.67 per week
-------------------------------------------------
</TABLE>
A section 125c plan will be made available to enable employees to have premium
payments deducted pre-tax.
ARTICLE XX
CONTRACTORS
Section 1.
(a) Contracting or subcontracting of work by the Company will not directly
result in the layoff or other reduction of employees on the seniority
lists except through attrition of such employees in the respective
bargaining unit by quits, retirements or discharge for cause. The
foregoing to the contrary notwithstanding, manpower reduction
limitations do not apply to contracting arrangements for:
1. new construction, or
2. work involved in major modification(s) during a period when one
or more kilns are not operated, or
3. obtaining raw materials, finished or semi-finished products.
(b) The intent of paragraph (a) above is that the Company will not contract
with other parties for production and maintenance work customarily
performed by bargaining unit employees unless it is more economical or
efficient for the Company to do otherwise.
(c) The Company agrees to notify the Local Lodge of its decision to contract
with other parties for such work, in advance if reasonably possible and
to meet with Local Lodge representative(s) upon request to discuss the
reason(s) causing the Company to decide to contract out such work.
29
<PAGE> 30
(d) If the Company enters into Contract arrangements for obtaining raw
materials, finished or semi-finished products, and such contracting
arrangements directly result in the layoff of bargaining unit employees
the Company will guarantee to an employee with twenty (20) or more years
of credited service twelve (12) consecutive weeks of layoff benefits
following the employee's involuntary layoff, during the term of the
agreement(s). Such layoff benefit will be as defined and determined by
the provisions of Article VIII, Section 1 of the prior (terminated)
S.U.B. Plan.
ARTICLE XXI
SUCCESSOR CLAUSE
Section 1. This Agreement shall be binding upon the parties hereto,
their successors, administrators, executors and assigns. In the event of the
sale or lease by the Company of the plant covered by this Agreement or, in the
event such plant is taken over by sale, lease, assignment, receivership or
bankruptcy proceedings, such operation shall continue to be subject to the
terms and conditions of this Agreement for the life thereof. The Employer shall
give notice of the existence of this Agreement to any purchaser, lessee,
assignee, etc., of this Agreement. Such notice shall be in writing with a copy
to the Union not later than the effective date of sale.
ARTICLE XXII
MISCELLANEOUS
Section 1. The Company agrees to provide each employee with a copy of
the Labor Agreement, Insurance, Pension and Supplemental Unemployment Benefit
Plan in booklet form no larger than 3 1/2" x 6"; said booklets to bear the
Union label on the cover.
Section 2. The Company will continue its existing local practices
regarding the furnishing of gloves.
Employees who are not presently receiving gloves under existing local
practices shall receive one pair of gloves at the beginning or each contract
year, and each such employee shall receive a maximum of one additional pair per
contract year from the Company upon the return of his worn out gloves.
In the event such an employee wears out and returns the two pairs of
gloves provided to him, the Company shall sell him an additional pair of gloves
for each worn out pair of Company provided gloves he returns. Said gloves shall
be sold to the employee at the price paid by the Company.
Section 3.A non-contributing 401-k plan will be made available
effective 9-1-96. Employees will be permitted to contribute the maximum allowed
by law.
30
<PAGE> 31
ARTICLE XXIII
TERMS OF AGREEMENT
Section 1. After ratification by the members of the Local Lodge, this
Agreement shall become effective and remain in full force and effect and be
binding upon the parties hereto from May 1, 1996, to and including April 30,
2000. and it shall continue in full force and effect thereafter from year to
year until either party on or before March 1st of any year beginning March 1,
2000 gives written notice to the other party of its desire or intention either
to alter or modify or to terminate the same. If such notice is given, the
parties hereto shall begin negotiations not later than March 31 in such year
and this Agreement shall continue in full force and effect until completion and
signing of a new Agreement, provided, however, that after such negotiations
have continued without reaching an agreement until May 1 in any year, then
either party may terminate this Agreement at any time thereafter upon notice.
The written notice set forth above by either party shall contain any
changes or amendments desired, and only such changes or amendments as are
contained in the two written notices shall be discussed by the conferees.
Section 2. The proposals and counter proposals made by each party shall
not be used or referred to in any way during or it connection with the
arbitration of any grievance arising under the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
_____ day of _______, 1996.
CEMENT, LIME, GYPSUM AND ALLIED
WORKERS DIVISION
INTERNATIONAL BROTHERHOOD OF
BOILERMAKERS, IRON SHIP BUILDERS
BLACKSMITHS, FORGERS AND HELPERS
AFL-CIO. MEDUSA CEMENT COMPANY
- ---------------------------------- -----------------------------------
J. C. TODD TOM RENFROW
LOCAL LODGE D-79
- ---------------------------------- -----------------------------------
MARVIN FORD ANTHONY M. ZINGALES
- ---------------------------------- -----------------------------------
CHUCK GLASS LAYNE NALL
- ----------------------------------
DAVID McCANTS
31
<PAGE> 32
ATTACHMENT "B"
WAGE RATES AND JOB CLASSIFICATIONS
DEMOPOLIS
<TABLE>
<CAPTION>
Wage Wage
Job Classification & Progression Standards Rate Grade Job Tasks
- ------------------------------------------ ---- ----- ---------
<S> <C> <C> <C>
Serviceman
New Hire Rate $ 10.00 1 Small Mobile Equipment
I @ 61st day worked 10.57 2 Pickup Truck, Forklift
II @ 6 months after D.O.H. 11.12 3 Sweeper, Small Front
III @ 1 year after D.O.H. 11.98 4 End Loader (carscoop)
IV @ 1-1/2 years after D.O.H. and qualified 12.57 5
on all small Mobile Equipment 13.74 6 Vacuum Truck
14.91 7 Barge Loading
Mobile Equipment Operator
Entry Level Rate 13.74 6
I @ 6 months & qualified on specified 14.91 7 Dump Truck, F.E.L. Loader
equipment and tasks
II @ 1 year & qualified on all equipment 16.34 9 Operation of Hydraulic
& actually operating a Crane Crane
Finished Product Handler
Entry Level Rate 13.74 6 Switchman
I @ 6 months and progressing satisfactorily 14.91 7 Trackmobile
II @ 1 year and qualified in all tasks 16.34 9 Bulkloading (certified
including use of computer terminal, weighman)
and assigned to bulkloading
</TABLE>
<PAGE> 33
3
<TABLE>
<CAPTION>
Wage Wage
Job Classification & Progression Standards Rate Grade Job Tasks
- ------------------------------------------ ---- ----- ---------
<S> <C> <C> <C>
Control Room Operator
Entry Level Rate $ 14.91 7 Operation of
II @ 6 months & progressing satisfactorily 16.08 8 Control Room
II @ 1 year & performing as Central Control 17.90 11
Room Operator (Dry Plant)
Mechanical Maintenance Journeyman
Entry Level Rate 13.74 6 Skills: Welder,
I @ 1 year & satisfactory progress in 14.91 7 Machinist, Repairman
program
II @ 2 years & satisfactory progress in 16.08 8
program (1 skill minimum)
III @ 3 years & satisfactory progress in 17.25 10
program (2 skill minimum)
Electrical/Instrument Maintenance Journeyman
Entry Level Rate 13.74 6 Skills: Systems Repair,
I @ 1 year & satisfactory progress in 14.91 7 Electrician,
program Instrument Repair
II @ 2 years & satisfactory progress in 16.08 8
program (1 skill minimum)
III @ 3 years & satisfactory progress in 17.25 10
program
IV @ 4 years & satisfactory progress in 17.90 11
program (2 skill minimum)
</TABLE>
<PAGE> 34
2
<TABLE>
<CAPTION>
Wage Wage
Job Classification & Progression Standards Rate Grade Job Tasks
- ------------------------------------------ ---- ----- ---------
<S> <C> <C> <C>
Storeroom Attendant
Entry Level Rate $ 13.74 6 In order to get to top
I @ 6 months & progressing satisfactorily 14.91 7 level must perform at
II @ 1 year & performing as Central Control 16.34 9 Storekeeper level and
Room Operator (Dry Plant) use computer
Process Equipment Attendant
Entry Level Rate 13.74 6
I @ 6 months & qualified on specified 14.91 7 Oiler
equipment and tasks
II @ 1 year 16.08 8 Utilityman
III @ 2 years and qualified on all tasks, 16.34 9 Above, plus moderate
and assigned to moderate mechanical repairs
repairs.
Quarry Equipment Operator
Entry Level Rate 13.74 6
I @ 3 months & qualified on specified 14.91 7
equipment and tasks
II @ 6 months & qualified on additional 16.08 8
specified equipment and tasks
III @ 1 year & qualified on all equipment 16.34 9 Quarry FEL, Bulldozer,
plus operating the large front end Scraper
loader, bulldozer, or scraper
</TABLE>
<PAGE> 35
4
Job Progression conditions
An employee who is reclassified to one of the above nine (9) classifications,
through either the bidding procedure or by placement, must learn the associated
tasks and progress satisfactorily through Level I of the classification. Any
employee who fails to qualify at Level I of the respective classifications will
be disqualified and demoted to Serviceman. Any employee in the Finished Product
Handler, Storeroom Attendant, Control Room Operator, Mechanical Maintenance
Journeyman and Electrical/Instrument Maintenance Journeyman classifications who
fails to progress to the next wage level (Level 11 or 111) of the respective
classification in the specified time will be disqualified and demoted to
Serviceman. An employee in the Mobile Equipment operator Process Equipment
Attendant, and Quarry Equipment operator classifications who meets the
qualifications for Level I of the respective classification will be paid at
that wage rate level until he meets the qualification for a highest level
(Level 11 or 111) in the classification and is assigned to actually perform a
specific task at the higher level in the classification.
<PAGE> 36
ATTACHMENT "B"
Wage Rates and Effective Dates
Demopolis, Alabama
Local Lodge No. D-79
<TABLE>
<CAPTION>
Wage Rates Effective
-----------------------------------------
Wage
Grade 5/1/96 5/1/97 5/1/98 5/1/99
- ----- ------ ------ ------ ------
<S> <C> <C> <C> <C>
1 10.00 10.45 10.90 11.35
2 10.57 11.02 11.47 11.92
3 11.12 11.57 12.02 12.47
4 11.98 12.43 12.88 13.33
5 12.57 13.02 13.47 13.92
6 13.74 14.19 14.64 15.09
7 14.91 15.36 15.81 16.26
8 16.08 16.53 16.98 17.43
9 l6.34 16.79 17.24 17.69
10 17.25 17.70 18.15 18.60
11 17.90 18.35 18.80 19.25
</TABLE>
* Employees will be upgraded to grade six in the serviceman's bracket
while operating the vacuum truck.
<PAGE> 37
May 1, 1993
Cement, Lime, Gypsum and Allied Workers Division
International Brotherhood of Boilermakers,
Iron ship Builders, Blacksmiths, Forgers and Helpers
Local Lodge No. D-79
P. O. Box 728
Demopolis, Alabama 36732
Gentlemen:
This will confirm our understanding with regard to filling jobs requiring work
on unusual shifts.
It was agreed that when work in a classification is to be regularly scheduled
for an indefinite period on an unusual shift which substantially overlaps
several hours on each of two regular shifts, the Company will schedule an
employee to work such unusual shift in accordance with the following example:
A Mechanical Maintenance Journeyman is to be regularly scheduled to work five
(5) days per week, 7:00 p.m. to 3:00 a.m. for an indefinite period. As this is
an unusual shift overlapping each of the second and third shifts by several
hours, the Company will seek a volunteer from among the classified Mechanical
Maintenance Journeyman; if there are no volunteers, the junior Mechanical
Maintenance Journeyman will be scheduled to work the unusual shift.
Very truly yours,
T.L. Renfrow
Plant Manager
<PAGE> 38
May 1, 1993
Cement, Lime, Gypsum and Allied Workers Division
International Brotherhood of Boilermakers
Iron Ship Builders, Blacksmiths, Forgers and Helpers
Local Lodge No. D-79
P. O. Box 728
Demopolis, Alabama 36732
Gentlemen:
This will confirm our understanding that if an employee is affected by an
incapacitated employee as provided for in Article VIII, Section 15 (a), such
affected employee may bump in accordance with his seniority if qualified to
perform the job after being given the opportunity to perform the job for thirty
days.
Very truly yours,
T.L. Renfrow
Plant Manager
<PAGE> 39
May 1, 1993
Cement, Lime, Gypsum and Allied Workers Division
International Brotherhood of Boilermakers,
Iron Ship Builders, Blacksmiths, Forgers and Helpers
Local Lodge No. D-79
P. O. Box 728
Demopolis, Alabama 36732
Gentlemen:
This will confirm our understanding that in the event of curtailment, the
affected employee can bump to any position to which his seniority will take
him, so long as he is immediately qualified to perform that job.
Very truly yours,
T.L. Renfrow
Plant Manager
<PAGE> 40
May 1, 1993
Cement, Lime, Gypsum and Allied Workers Division
International Brotherhood of Boilermakers
Iron Ship Builders, Blacksmiths, Forgers and Helpers
Local Lodge No. D-79
P. O. Box 728
Demopolis. Alabama 36732
Gentlemen:
This will confirm our understanding with regard to the scheduling of vacation
replacements.
It was agreed that if the Company wishes to fill a job while the incumbent
employee is on vacation, it will schedule (on the schedule board) another
employee to temporarily fill such job for the specified period of time.
Management retaining the right to determine whether or not it is necessary to
fill any job.
Very truly yours,
T.L. Renfrow
Plant Manager
<PAGE> 41
May 1, 1993
Cement, Lime, Gypsum and Allied Workers Division
International Brotherhood of Boilermakers,
Iron Ship Builders, Blacksmiths, Forgers and Helpers
Local Lodge No. D - 79
P. O. Box 728
Demopolis, Alabama 36732
Gentlemen:
This will confirm our understanding with regard to the applicability of
substance abuse testing of employees.
It is our intention to provide our employees, customers, suppliers and visitors
to the plant with a safe environment. It is also our intent to comply with
federal safety laws regarding the introduction, possession, distribution (or
intent to distribute) or use of controlled substances or intoxicating beverages
on company property. Specifically Subpart 56.20001, Intoxicating Beverages and
Narcotics, of the Mine Safety and Health Administration Safety and Health
Standards to Surface Metal and Material Mining and Million Operations, 30 CFR,
Part 56, provides:
Intoxicating beverages and narcotics shall not be permitted or used in or
around mines. Persons under the influence of alcohol or narcotics shall not be
permitted on the job.
Employees suspected with "reasonable cause" of violating the above provision
shall be subjected to the appropriate testing procedures to determine whether
or not such a violation has occurred. The parties shall develop and implement a
procedure to be allowed should such a violation be detected.
Non-employees shall be asked to leave the plant property. A determination will
be made at the time as to whether any other action should be taken regarding
the situation.
Very truly yours,
T.L. Renfrow
Plant Manager
<PAGE> 42
May 1, 1993
Cement. Lime, Gypsum and Allied Workers Division
International Brotherhood or Boilermakers
Iron Ship Builders. Blacksmiths, Forgers and Helpers
Local Lodge No. D-79
P. O. Box 7213
Demopolis, Alabama 36732
Gentlemen:
This will confirm our understanding reached in 1975 contract negotiations with
regard to the following:
EYE EXAMINATION
The Company will pay the usual reasonable and customary charge for the
eye examination of an employee's eyes only for the purpose of determining the
proper prescription for the employee's safety glasses, provided that:
1. such prescription safety glasses are to be used in the course of
employment with the Company and,
2. no more than one (1) such examination shall be covered in any calendar
year.
Very truly yours.
T.L. Renfrow
Plant Manager
<PAGE> 43
May 1, 1993
Cement, Lime, Gypsum and Allied Workers Division
International Brotherhood of Boilermakers,
Iron Ship Builders, Blacksmiths, Forgers and Helpers
Local Lodge No. D-'79
P. O. Box 728
Demopolis, Alabama 36732
Gentlemen:
The following agreement applies with respect to the Control Room Operator
training period:
"After, or during, the first ninety (90) days of a six month period, the
Trainee may be disqualified by the Company or the trainee may elect to
leave classification voluntarily and return to his former
classification. If during the second ninety (90) day period the trainee
is disqualified by the Company, he may bump any less senior employee,
except those in a training program of in maintenance departments. There
shall be no disqualifications after 180 days. It is also understood that
180 days means kiln operating time."
Very truly yours,
T.L. Renfrow
Plant Manager
<PAGE> 44
May 1, 1993
Cement. Lime. Gypsum and Allied workers Division
International Brotherhood of Boilermakers
Iron Ship Builders, Blacksmiths, Forgers and Helpers
Local Lodge No. D-79
P. 0. Box 728
Demopolis, Alabama 36732
Gentlemen:
This will confirm our understanding with respect to the following:
(1) Any settlement made to resolve a grievance will be paid to the
affected employee(s).
(2) With respect to the Control Room Operator Training Period (letter
dated June 11, 1984), it is understood that "no disqualification of
180 days refers to the training period only". Management retains the
right to disqualify for cause at any time.
(3) The fifth shift is reinstated and the agreement to seek volunteers for
specific jobs is canceled.
Very truly yours,
T.L. Renfrow
Plant Manager
<PAGE> 45
May 1, 1993
Cement, Lime, Gypsum and Allied workers Division
International Brotherhood of Boilermakers
Iron Ship Builders, Blacksmiths, Forgers and Helpers
Local Lodge No. D-79
P. O. Box 728
Demopolis, Alabama 36732
Gentlemen:
During our recent contract negotiations the Company agreed to the following
policy statement:
In many instances, the Company does offer the senior man upgrades to higher
rated classifications and will continue to do so depending on the
circumstances. The Company, however, declines the Union's request to make
assignments in this manner a contractual requirement. However, if the Union
determines that a repeated Pattern and practice of ignoring seniority on
upgrades has developed concerning a particular individual or group of
individuals, it may grieve such allegation directly to the Plant Manager.
Very truly yours,
T.L. Renfrow
Plant Manager
<PAGE> 46
May 1, 1993
Cement, Lime, Gypsum and Allied Workers Division
International Brotherhood of Boilermakers
Iron Ship Builders, Blacksmiths, Forgers and Helpers
Local Lodge No. D - 79
P. O. Box 728
Demopolis, Alabama 36732
Gentlemen:
This will confirm the following understandings reached during our recently
completed contract negotiations:
1. The company will make good faith efforts to give as much advance notice as
practical when starting times are to be changed.
2. Under normal circumstances, an employee awarded a job will start on it
within 30 days.
3. The following employees would receive one (1) pair of safety shoes per
year.
- Controlroom Operators
- Two Bulkloaders in the Finish Product Handler Classification
- Storeroom Attendant
- One Mobile Equipment Operator
The following employees would receive two (2) Pairs of safety shoes per year.
- Serviceman
- Mobile Equipment Operator
- Finish Product Handler (Exclude two (2) Bulkloaders)
- Process Attendants
- Quarry Equipment operators
- Mechanical Maintenance Journeymen
- Electrical/instrument Maintenance Journeyman
Quarry employees may get one pair of rubber safety shoes if so desired.
Very truly yours,
T.L. Renfrow
Plant Manager
<PAGE> 1
EXHIBIT 10.29
LABOR CONTRACT
Between
Southdown, Inc. - Odessa Plant
Odessa, Texas
and
United Cement, Lime, Gypsum and Allied Workers
Division, Boilermakers International Union,
(A.F.L.-C.I.O.) Local No. D476
July 31, 1998
<PAGE> 2
AGREEMENT
THIS AGREEMENT, dated July 31, 1998 is made by and between the
SOUTHDOWN, INC.(ODESSA PLANT) and the UNITED CEMENT, LIME, GYPSUM AND ALLIED
WORKERS DIVISION, BOILERMAKERS INTERNATIONAL UNION, A.F.L.-C.I.O., Local No.
D476, referred to respectively as the "Company" and the "Union".
RECOGNITION
The Company recognizes the Union as the exclusive bargaining agency for
all production and maintenance employees at the Odessa, Texas plant of the
Company, excluding all clerical employees, storeroom clerk, professional and
technical employees, guards, and supervisors as defined in the National Labor
Relations Act, as amended.
ARTICLE I - EMPLOYMENT
Section 1. New employees and those hired after a break in continuity of
service will be regarded as probationary employees for the first eighty-five
(85) days worked and will receive no continuous service credit nor benefits of
any kind, including bidding, during such period. Probationary employees shall
not have recourse to the grievance procedure of this agreement and may be laid
off or discharged as exclusively determined by Management. Probationary
employees who continue in the service of the Company, subsequent to the first
eighty-five (85) days worked, shall receive full continuous service credit from
date of original hiring.
Section 2. The parties hereto agree to continue to apply the provisions
of this Agreement to all employees without regard to race, color, sex, age,
religion, creed, national origin, handicap, disabled or Viet Nam Era Veteran.
The Company and the Union will comply with all federal and state laws concerning
the rights of workers, including the Americans with Disabilities Act and the
Family and Medical Leave Act.
Section 3. As used in this Agreement, the word "he" or "his" shall also
be applicable to female employees.
Section 4. A salaried employee may fill any vacant hourly rated job
until an hourly employee in that classification is called in or a determination
is made to let the job remain unfilled. A salaried employee may work on any
hourly rated job to instruct, experiment, inspect, cover an emergency, or
temporarily relieve an hourly rated employee, or when an hourly employee is not
available.
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ARTICLE II - MANAGEMENT
Section 1. The Union agrees and acknowledges that the Company has the
exclusive right and unbounded discretion to hire, determine standards of fitness
for work, to test employees for the presence of drugs and alcohol and to take
appropriate disciplinary or remedial action in the event of positive test
results, discipline or discharge, layoff, rehire, promote, demote, retire or
temporarily assign employees within the bargaining unit. The Union further
recognizes the Company's unlimited right to determine the amount of overtime to
be worked; to create, modify, combine or discontinue job classifications; to
determine and change the size and nature of the work force to hire temporary
employees as may be determined necessary, determine job duties, quality and
workmanship standards, hours of work and other conditions of employment; to
make, change and enforce (after posting) work rules and safety standards, to
promote safety, efficiency, order, and protection of Company property and
operations; to halt work stoppages; and to take effective action against
slowdowns.
The right to manage the business, to distribute work with outside
contractors or sub-contractors, to determine the type of work to be performed,
the job content, the location of work, the schedules of production, the schedule
of working hours, the methods and the processes and means of production.
Section 2. The above list of specific Company rights shall not be
considered restrictive or a waiver of any other rights the Company has not
listed and has not specifically surrendered in this Agreement; regardless of
whether such rights have been exercised in the past.
Section 3. The Union recognizes the Company's exclusive right to
determine partial or permanent discontinuance or shutdown of operations. The
Company's only obligation when exercising this right is to bargain with the
Union over the effects of that decision.
Section 4. The Company shall give notice of the existence of this
Agreement to any purchaser, lessee, assignee, etc. Such notice shall be in
writing with a copy to the Union not later than the effective date of sale.
ARTICLE III - UNION ACTIVITIES/MEETINGS
Section 1. If and when necessary, in the opinion of both the Company
and the Union, the Company agrees to meet with a union grievance committee
normally comprised of two (2) employees for the purposes of discussing matters
of mutual concern or interest (excepting labor negotiations). Not more than one
(1) employee will be excused from any one
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classification unless the release of two employees from a classification will
not adversely impact costs or operations. An agenda of any subjects to be
discussed at such meeting must be submitted to the Plant Manager not less than
seventy-two (72) hours in advance of a scheduled meeting.
Section 2. Meetings will be arranged at a time convenient for both
parties to accomplish the purposes set out in this agreement. Any employee who
is scheduled to work during the hours the meeting is held and who attends the
meeting will be compensated by multiplying his regular classified hourly wage
rate by the hours he attends the meeting.
Section 3. When a meeting is scheduled at which a representative of the
International Union and a representative of the Company from Corporate
Headquarters will attend, any member of the committee who is scheduled to work
the third shift immediately preceding the meeting will be excused from working
the third shift and will be compensated by multiplying eight (8) hours at his
regular classified hourly wage rate plus shift differential of the employee who
has attended the meeting.
Section 4. Any member of the committee who is scheduled to work the
second shift immediately following the meeting will be excused from working the
second shift if the employee has attended the meeting for six (6) hours. In the
event the employee is excused from working the second shift, he will be
compensated by multiplying eight (8) hours at his regular classified hourly wage
rate plus shift differential.
Section 5. The Company will excuse, without reimbursement of any lost
wages, no more than two (2) designated employee members of the Union negotiating
committee for actual time spent in attendance at negotiating meetings on behalf
of the Local Union (D476) in negotiating with the Company at Odessa, Texas.
Section 6. Union activities shall not be conducted during working
hours, except that a member or members of the Union Grievance Committee, with
the consent of the Company, may try to adjust a mutual problem. Such consent
will not be unreasonably withheld or delayed.
a. There shall be one (1) steward on each rotating shift who may, in
the absence of a committee member, try to adjust an existing
problem.
b. Local Union Officers and stewards off duty and representatives of
the International Union shall, upon permission from the Company, be
permitted on the Company's premises to investigate grievances.
Section 7. The Union will attempt to appoint and have available on each
shift a Committeeman, job steward or other employee designated for purposes of
this section who shall be identified to the Company in writing.
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<PAGE> 5
ARTICLE IV - SENIORITY
Section 1. Seniority is defined as the length of continuous service
with the Company at the Odessa plant, provided, however, that an employee shall
have no seniority rights until after eighty-five (85) days worked.
Section 2. The following factors shall apply in the awarding of all
jobs:
a. Experience, individual skill and ability, and efficient service
related to the qualifications of the job. (Employees who have
received repeated disciplinary actions in the twelve (12) months
prior to bidding the job will not be given consideration for
advancement.)
b. Physical fitness of the applicant.
c. Seniority.
d. When a. and b. are relatively equal, c. shall apply.
e. If the employee selected shall fail to qualify in the judgment of
the Company after thirty (30) calendar days or less, he shall be
returned to his former position and the next bidder be given
consideration. When an employee has bid a job in good faith, the
Company will give consideration to the employees' request to be
removed from the job during this period. This 30 day period may be
extended with the mutual written agreement of the Company and
Union. When a job cannot be filled in the above manner because of
the bidder's failing to have the necessary qualifications, the
Company may fill the job from any source.
Section 3. For employees on the payroll when this Agreement becomes
effective, seniority is defined as the length of continuous service with the
Company. Seniority rights, once established, shall start from the date of
employment.
Section 4. An employee's seniority shall be lost only by:
a. Discharge for good cause.
b. Voluntarily quit.
c. Failure to answer recall notice within seven (7) days after
notification is sent by registered mail to the last address the
employee has left on file in the personnel office.
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<PAGE> 6
d. If the employee is absent for three (3) consecutive workdays
without notifying or attaining prior approval from his supervisor
for such absence, he shall be considered as having voluntarily
quit.
e. During a continuous period of absence, an employee absent due to
lay off will retain recall rights for a period equal to his
seniority at the time of lay off not to exceed twenty-four (24)
months.
f. An employee on continuous absence due to disability shall accrue
seniority and retain recall rights for a period not to exceed
sixteen (16) months; however, should such an employee be declared
totally and permanently disabled prior to the sixteen (16) months
such employee's name shall be removed from the payroll and a
certified mail notice to this effect will be sent to his last
address as shown on Company record.
Section 5. If a vacancy occurs, for which a laid off employee is
qualified, he will be sent a certified mail notice of recall to his last address
provided to the Company Personnel Office.
a. If the employee does not respond within a seven (7) day period, or
refuses the recall, he will forfeit all seniority and his
employment will be terminated.
b. If the employee is reinstated, he shall be credited with seniority
as prescribed in Section 3 of this Article.
c. If an employee is absent because of a disability, he shall only be
recalled for a vacancy which occurs after he has recovered and is
physically able to return to work.
Section 6. An employee in the bargaining unit, who is promoted to a
supervisory position outside the coverage of this Agreement and who subsequently
returns to the bargaining unit, will have his previous bargaining unit seniority
reinstated.
Section 7. The Company will furnish the Union with a seniority list
every six (6) months.
Section 8. The Company may at its discretion utilize any hourly
employee to fill a salaried or management position, at any time, without the
employee suffering any loss of seniority or benefits under this agreement,
however, if the employee becomes permanent salaried, he will have no bidding or
bumping rights back to the bargaining unit.
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<PAGE> 7
ARTICLE V - WORK FORCE CHANGES
Section 1. Should the Company reduce the work force due to lay off or
any other reason, the Company will give the Union reasonable advance notice of
same and, upon request by the Union, meet to review such reductions.
Section 2. If the Company determines that the number of employees in
any job classification(s) are to be reduced or eliminated, the decision as to
which employee or employees are to be removed from a job classification, shall
be made by seniority. However, in classifications 5A and above, the Company may
have to deviate from seniority to retain needed skills to ensure efficient
operations.
a. Any employee so removed from a job classification in accordance
with Section 2, above, may exercise his seniority to move into any
other job classification for which he is qualified. Consequently,
if this procedure results in the Company declaring that the number
of employees in the job classification to which the employee has
transferred must be reduced, the same procedure shall be utilized.
Any subsequent transfers as a result of the above procedure will
result with employee(s) being laid off in accordance with Section
2, above.
b. Employees will be recalled in reverse order.
Section 3. In the event the Company declares a temporary reduction in
the work force due to a curtailment or shutdown because of business or any other
conditions, employees retained to perform necessary work shall be selected on
the following basis:
a. Senior employees, whose regular jobs are not required, shall have
the option of accepting available work for which they are qualified
or accepting lay off, except that,
b. The Company has the right to require that senior employees work
during the shutdown, if there are no junior employees with the
necessary qualifications to perform the required work.
c. "Qualified" for purposes of this Section 3, shall mean that an
employee must be able to perform all duties connected with the job
classification without any training. It is further understood that
after a three (3) day re-orientation the Company shall require the
employee(s) to demonstrate his abilities to perform as required
within the next two work days.
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<PAGE> 8
Section 4. The Company's decision concerning qualification as used in
this Article is subject to the grievance procedure.
Section 5. Should the Company permanently shutdown the present
facilities affording employment to the employees comprising the bargaining unit
(the present facilities shall be deemed to have been permanently shutdown if all
productive facilities are abandoned even though shipping facilities continue to
operate) the Company shall mail a notice informing each affected employee that
his employment with the Company has been terminated because of permanent
shutdown. The notice shall be mailed at least one hundred twenty (120) days
prior to the shutdown to the employee's last address on the Company's personnel
record.
ARTICLE VI - PROMOTIONS AND TRANSFERS
Section 1. When the Company determines that a vacancy exists or a new
job is created, other than laborer, the Company will post a notice of such fact;
such notice to remain posted for a period of at least seventy-two (72)
consecutive hours, excluding Saturdays, Sundays, or holidays. This notice shall
state rates of pay, hours, job requirements and qualifications. Employees who
wish the job shall be considered in the manner provided herein in Article IV,
Section 2, and the successful applicant's name will be posted within seven (7)
days after the bids are opened, except where testing is required. Said delay
will not exceed ten (10) days, unless additional time is agreed to between the
Union and the Company. If an absent employee bids on a job and can reasonably
show he will be available for that job within 120 days of the bid, the Company
may delay filling the job until the employee returns, if that employee is the
successful bidder.
The successful bidder will be placed on the job within as reasonable time as
possible from the date of posting award. In the event of the successful
applicant's failure to qualify in the opinion of the Company, within thirty (30)
workdays on the job, it is understood that said employee is to be restored to
his former position and standing. This 30 day period may be extended with the
mutual written agreement of the Company and Union. The Company will give
consideration to the employee's request to be removed from the job during this
period.
a. Laborers who are assigned to fill a job vacancy as a result of no
one being awarded the job through the bid procedure, may
subsequently remove himself from his assigned job by:
(1) Being the successful bidder on a higher classified job posting,
or
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(2) After a period of one (1) year, he may bid on a job of equal
or lower classification or if qualified replace a less senior new
employee upon the completion of that employee's probationary
period.
b. This Section does not preclude the Company from hiring new
employees to fill such a job vacancy, nor does it affect the
Company's right to temporarily assign any employee to such a job
vacancy for a period not to exceed 120 days, unless the Company and
Union mutually agree to a longer period.
Section 2. An employee may bid to any lower classified job provided he
has held his current job classification for a period of at least twelve (12)
months. Employees must remain in said lower classification for at least twelve
(12) months before he can bid again. An exception to this Section may be
permitted with mutual agreement between the Company and the Union.(Any employee
who bids on the positions of Process Control Operator or Assistant Process
Control Operator must agree to commit to remaining in the position for at least
four (4) years if selected as successful bidder.)
Section 3. An employee who is temporarily assigned by his supervisor to
work in a higher paid job classification will be paid the rate of such higher
job classification for all time actually worked. An employee temporarily
assigned by his supervisor to perform work in an equal or lower paid
classification will be paid the base hourly wage rate of his permanent
classification.
Section 4. The Company will treat temporary vacancies caused by
vacations, illnesses, injury or other employee caused absences in the following
manner:
a. Choose not to fill the job(s).
b. Fill the job on a transfer basis.
c. Fill the job on a temporary bid basis. If a job is filled on a
temporary bid basis, a successful bidder(s) will return to their
former classification upon completion of the job. Employees may bid
down only once every 12 months.
d. In the event that the Company determines that a job shall become
permanent, the Company shall post the job as provided in Article
VI, Section 1.
Section 5. The Company at its discretion may create new or additional
jobs on a temporary basis not to exceed one hundred and twenty (120) days.
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a. If a job is filled on a temporary bid basis, a successful bidder(s)
will return to their former classification upon completion of the
job. Employees may bid down only once every 12 months.
b. The foregoing Section 5., a., does not apply to employees whose
regular job(s) have been affected by production curtailment or
temporary shutdown.
Section 6. Knowledge, training, skill and ability gained while holding
a job under the bid system will be given consideration in making promotions,
layoffs, or reductions in work force.
ARTICLE VII - HOURS AND WORK SCHEDULES
Section 1. The workweek of each employee shall start at 8:00 a.m. on
Sunday morning. A workday shall be the twenty-four (24) hour period, commencing
at 8:00 a.m., regardless of when the employee commences work.
Section 2. Each employee shall perform work assigned to him by the
Company, and no employee shall absent himself from his work without consent of
the Company.
Section 3. Nothing in this Agreement shall be construed as a guarantee
of hours of work per day or per week, or of days of work per week.
Section 4. Work schedules will be posted annually. Weekly changes to
work schedules will normally be posted on Thursday before the end of the day
shift, only if there has been a change in hours, shift or days, from the work
schedule.
Section 5. Any vacancies shall be covered as determined by Management,
however:
a. Production (rotating shift) employee vacancies will normally be
covered on an upgrade basis from within the same shift/crew.
b. Production (rotating shift) employees must have the ability to
qualify and perform the duties of all shift classifications to
which they may be upgraded.
c. It is the employee's responsibility to check his work schedule each
week.
Section 6. If an employee's work schedule is changed after the end of
the day shift of the preceding Thursday, he shall be compensated with a
twenty-five dollar ($25.00) premium for the first eight (8) hours worked in his
new schedule and the premium shall be paid in addition to
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whatever compensation the employee is otherwise entitled to receive under any
other section of this Article. The Company may change the schedule at the
request of an employee or employees and the above shall not apply, nor shall any
other penalty, premium, overtime, or shift differential that results from the
employee's request.
Section 7. Unless a regular employee shall be specifically instructed
not to report to work at least eight (8) hours before the starting time of his
regular shift, he shall be considered as having been ordered to report, and
shall be given a minimum of four (4) hours' work, excepting when causes beyond
the control of the Company make it impossible to give the required notice, in
which case no minimum hours of work shall be given. Notices referred to in this
Article shall be deemed to have been given when a reasonable effort has been
made by the Company to give such notice orally or in writing to such employee.
Section 8. If after starting his lunch period, an employee is
interrupted by a work assignment, he shall be compensated one-half (1/2) hour at
time and one half (1-1/2) for his scheduled lunch period. Such employee shall be
granted subsequent reasonable time to complete his lunch without loss of pay.
Section 9. The Company has the right to a twenty-four (24) hour per
day, seven (7) day per week continuous operation; as well as the sole right to
determine work schedules and personnel manning necessary to cover said
schedules.
Section 10. Any employee unable to report for work on account of
sickness or other good reason shall notify his supervisor as soon as possible
before his regular time for beginning work.
a. When an employee has been absent from his job for good cause, he
must notify his supervisor of his intentions to report back for
work before the end of the last shift he would have worked had he
not been absent.
b. If an employee fails to give the above notice, the Company will not
be obligated to provide work nor minimum pay for him.
Section 11. Whenever a lay off is planned because of a change or
reduction in plant production requirements, the Company will give reasonable
notice in accord with applicable law prior to the effective date of the lay off
by posting a bulletin stating the expected extent of such lay off and the
expected effect on the work force. The foregoing does not apply to disciplinary
lay offs and lay offs because of curtailment made necessary by disaster or
emergency conditions affecting the ability of the Company to physically operate
the plant.
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ARTICLE VIII - OVERTIME
Section 1. Overtime is defined as any hours an employee has worked
which are in excess of eight (8) per day or forty (40) hours in a workweek. All
overtime work, as set forth in this section, will be paid at one and one-half
times (1-1/2) the employee's regular straight time hourly rate unless otherwise
specified in this agreement.
Section 2. Double time. Pay for time worked in excess of twelve (12)
hours is defined as follows:
a. In the event an employee works more than twelve (12) hours in his
workday he shall be paid for all hours worked in excess of such
twelve (12) hours at double the straight time hourly rate.
b. After an employee has been engaged in work for twelve (12)
consecutive hours, he shall be paid for all consecutive hours
worked immediately succeeding and in excess of such twelve (12)
hours at double the straight time rate.
c. In no event shall the two (2) immediately preceding provisions of
this section be applied to the same hours of work; however, the
provision which creates the highest earning shall be applied.
d. If an employee is being paid at the rate of double time under the
provisions of this section, and the work continues into the
employees regular shift the Company may elect to continue to pay
the employee double time or send the employee home and pay straight
time pay to the employee for the balance of his/her regularly
scheduled shift.
Section 3. Callouts. If an employee is called and reports for work
after leaving the plant at the completion of his regular shift or on his days
off, he shall be paid a minimum of four (4) hours pay at the applicable call out
rate, providing the call out is not consecutive with or contiguous to his
regular shift of work. In such event, the four (4) hour minimum will not be
paid, but in no event will the call out rate be for less than two (2) hours pay.
It is understood that if an employee is called back to work, he may be required
to perform any duties in connection with breakdowns or emergency situations in
addition to the duties for which he was called out.
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a. Applicable callout rates are as follows:
1. Double time (2X) for holidays (in addition to, not in lieu of
their eight (8) hours holiday pay, if eligible.)
2. Double time (2X) for Sundays.
3. Double time (2X) for Seventh Day worked.
4. Time and one-half (1.5X) in all other circumstances.
b. Hours worked on a call-out in excess of twelve (12) hours will
receive an additional half time to the rates above on Seventh Days
worked and all other circumstances other than Sundays.
c. Hours worked on call-out work on holidays in excess of eight (8)
hours will receive an additional half time to the rates in
paragraph a.
Section 4. Holidays. All overtime hours worked (except as provided for
in Section 3) on a holiday shall be paid as follows:
a) Up to eight (8) hours - One and one-half time (1.5X)
b) Over eight (8) hours - Double time (2X)
Plus eight (8) hours holiday pay if eligible under this agreement.
Section 5. Sunday. All overtime hours worked on a Sunday shall be paid
as follows:
a) Over eight (8) hours - One and one-half time
b) Over twelve (12) hours - Double time
Section 6. Seventh Day. In the event an employee has actually worked
six (6) complete consecutive days in the work week, the employee shall receive
double the straight time hourly rate for hours worked on Saturday, the seventh
day.
Section 7. Any hours paid as other than straight time (excluding the
first eight (8) hours at one and one-half time (1.5X) on Sunday) shall be
considered as paid overtime hours and shall not be used for computation of two
(2) or more types of premium pay, duplicated or accumulated on a daily or weekly
basis. There shall be no pyramiding or duplication of overtime or premium pay.
Notwithstanding any other provisions of this section, if an employee begins his
work week on a Sunday the first eight (8) hours worked on that day if paid at
one and one-half times (1-1/2X) will be used in the computation for consecutive
days in a work week or as part of the 40 hours for overtime purposes.
Section 8. Employees who work in excess of their regular scheduled
working time shall not be laid off to equalize such overtime.
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Section 9. Employees who continue to work in excess of their scheduled
hours in any one (1) day shall receive a minimum of fifteen (15) minutes time at
the applicable overtime rate.
Section 10. The Company's right to require or schedule a reasonable
amount of overtime work will not be affected by layoffs.
Section 11. The Company may schedule overtime as necessary to insure
the continuity of its twenty-four (24) hour, seven (7) day per week continuous
operation as well as overtime necessary to expedite repair of major production
equipment which is down and interrupting production.
Section 12. The company agrees that, over each calendar year, it will
make a reasonable attempt to allocate overtime equally among employees within
the same classification which the overtime occurs. It is agreed that employees
may not refuse to work overtime unless a reasonable excuse is given as
determined by the Company.
Section 13. In filling overtime needs, the Company will contact the
classified employee(s), who is (are) qualified in accordance with the
understanding in Section 9 of this Article.
a. In the following procedure, the employee will only be contacted one
(1) time and he must immediately accept or decline, except as
otherwise determined by subsection c. of this Section 10.
b. An employee working on a job shall be given first consideration if
any overtime is needed to finish the job.
c. When it is determined that overtime work is required in a
classification(s), Management will make every effort to obtain
necessary workers by asking the lowest person(s) in overtime to
work, until a sufficient number(s) has been obtained. If refusals
result in the Company not being able to obtain sufficient employees
in the affected job classification(s), the required number of such
classified employees with the least amount of overtime worked will
be expected to work the necessary overtime or be subject to
progressive discipline.
d. All worked and/or refused overtime will be charged toward
equalization records.
e. All employees are expected to work a reasonable amount of overtime.
f. In the event the overtime procedure fails to obtain the necessary
employee(s) needed to work, the Company may perform the work in any
way it deems necessary.
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Section 14. If an employee does not work a regularly scheduled workday
that day shall not be considered as actually a day worked for all overtime
purposes unless that day is compensated by the Company under any provisions of
this Agreement or the employee is on approved leave of absence for union
business as permitted under this Agreement.
ARTICLE IX - WAGES
Section 1. It is agreed that for the duration of this agreement, the
wage groups, and rates of pay shall be those set forth in Appendix A of this
Agreement.
Section 2.
a. All regularly scheduled work beginning between 6:00 a.m. and 9:00
a.m., inclusive, shall be considered day shift work.
b. All regularly scheduled work beginning between 2:00 p.m. and 5:00
p.m., inclusive, shall be considered middle shift work.
c. All regularly scheduled work beginning between 10:00 p.m. and 1:00
a.m., inclusive, shall be considered night shift work.
Section 3. Each employee regularly scheduled to work on the middle
shift shall be paid a premium of one dollar ($1.00) for each hour worked by him
on that shift. Each employee regularly scheduled to work on the night shift
shall be paid one dollar ($1.00)for each hour worked by him on that shift.
These premium rates do not apply to day workers even though they may work over
into a period of time for which the regular shift workers are paid this premium.
If, however, a day worker is scheduled to take the place of a regular scheduled
shift worker, then the premium rate applies.
Section 4. All consecutive hours (exclusive of meal periods) worked by
an employee who normally begins work at a time specified in the preceding
Section 2, shall be deemed to be worked by him on the shift on which he begins
work.
Section 5. The Company has the prerogative to set the wage rate of any
job not mentioned in this Agreement, or any job with substantial changes in
duties, equipment or requirements, or any new job(s) created. The Company will
advise and meet with the Union at their request to discuss any wage rates
established in accordance with this section. Any such established rates may be
subject to the grievance procedure.
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Section 6. If an employee is scheduled to work on Sunday (the
twenty-four (24) hour period beginning with day shift Sunday) the employee will
receive one and one-half times (1.5X) the straight time hourly rate unless a
higher rate is called for elsewhere in this Agreement.
ARTICLE X - HOLIDAYS
Section 1. The following days shall be considered holidays under this
agreement: New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Veteran's Day, Thanksgiving Day,Day after
Thanksgiving, Christmas Eve Day, and Christmas Day. When a fixed holiday occurs
on Sunday, the following Monday shall be observed as the holiday.
Section 2. Employees who do not work on the holidays specified herein
shall receive as holiday pay, eight (8) hours pay at their regular straight time
hourly rate, exclusive of shift differentials, provided they meet all of the
following conditions:
a. The employee shall not have less than eighty-five (85) days worked
with the Company prior to the holiday.
b. The employee shall have worked his last scheduled working day prior
to and his next scheduled working day after such holiday. Anything
less than eight (8) hours worked will not be considered as a day
worked, unless excused therefrom by the Plant Manager.
c. In no event shall a holiday be paid for unless an employee has also
worked during the thirty (30) day period immediately preceding or
immediately following the holiday, except the thirty (30) day
limitation shall not apply if the employee was temporarily absent
from work because of sickness or accident.
Section 3. Employee(s) scheduled or notified to work on a holiday, but
failing to report for and perform such work, unless excused by the Plant
Manager, shall not be entitled to any holiday pay.
Section 4. If a holiday occurs during an employee's vacation, he shall
receive eight (8) hours pay, in addition to vacation pay, at the straight time
hourly rate of his permanently assigned classification.
Section 5. If an employee is scheduled to work on a holiday, but then
is instructed by the Company not to work without eight (8) hours notice, he
shall receive for that holiday eight (8) hours pay at two (2) times his regular
straight time hourly rate.
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Section 6. The phrase "straight time hourly wage rate" as used solely
in this Article, shall mean the higher of either the employee's regular straight
time hourly wage rate or the highest straight time hourly wage rate for a job on
which the employee worked at least eight (8) consecutive hours on the day before
and the day after the holiday, whether previously scheduled or not.
ARTICLE XI - VACATION
Section 1. An employee will earn vacation as follows:
a. For an employee who has been in the continuous service of the
Company for more than one (1) year, the length of vacation shall be
two (2) weeks.
b. For an employee who has been in the continuous service of the
Company for more than eight (8) years, the length of vacation shall
be three (3) weeks.
c. For an employee who has been in the continuous service of the
Company for more than fifteen (15) years the length of vacation
shall be four (4) weeks.
d. For an employee who has been in the continuous service of the
Company for more than twenty-five (25) years, the length of
vacation shall be five (5) weeks.
Section 2. Vacation pay shall not include shift differential for those
employees on fixed shifts; however, regular scheduled shift workers on rotating
shifts shall be paid the shift differential premium.
Section 3. Vacation pay shall be computed by multiplying the number of
hours in the regularly scheduled workweek by the straight time hourly rate of
pay, but shall in no event be more than forty-eight (48) or less than forty (40)
hours pay subject to the provisions listed in this section below. Vacation pay
will be computed at the rate for the permanently assigned classification on
which an employee is working at the time he takes his vacation.
a. Employees shall be eligible for their full appropriate vacation
rights if they have reached their vacation anniversary date and
have worked 1200 hours or more during the previous calendar year.
Employees who have worked less than 1200 hours during the previous
calendar year shall have their vacation computed on the basis of
l/12th for each 100 hours worked. An employee shall be
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considered as having worked for the purposes of vacation
eligibility, on the basis of an eight (8) hour day and forty (40)
hour week during absence from work because of illness or injury
for a period not to exceed fifty (50) workdays (400 hours).
b. Pro rata vacation shall be paid for the following and shall be
computed as outlined in Section 3 a. of this Article:
1. Retirement
2. Lay Off
3. Illness
4. Voluntary quit with two (2) weeks notice to the Company.
5. In the event of the employee's death to his surviving spouse
or to the estate.
Section 4. Vacations may be taken at any time at the employee's
convenience, provided ample notice is given the Company and provided previous
arrangements with the Company have been made and approved. Vacation requests
must be made by January 31 each year. Where requested vacation schedules
conflict, a senior employee may exercise his seniority preference on a one-time
basis; however, such seniority cannot be exercised after January 31 of any
calendar vacation year. Vacation periods not scheduled prior to February 1,
shall be granted on a first come first granted basis or may be assigned by the
Company. Vacations shall include (without pay) regular days off prior, and
subsequent to the paid days of the vacation periods.
Section 5. The final right to allotment of vacation periods is
exclusively reserved by the Company to insure the orderly operation of the
plant.
Section 6.
a. Employees entitled to vacations shall be permitted to take such
vacations in separate periods of not less than five (5) consecutive
workdays each.
b. One (1) week of vacation can be used one day at a time provided:
1. The employee makes a request at least seventy-two (72) hours in
advance, and;
2. The request is granted by the Plant Manager or his designee.
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3. Employees may use the above said vacation to cover a day of
sickness upon informing his or her supervisor or designee as
soon as possible, prior to the start of his or her scheduled
shift.
c. An additional one (1) week of vacation can be used one day at a time
provided the employee makes a request at least seventy-two (72) hours in advance
and the request is granted by the Plant Manager or his designee.
Section 7. Vacations will not be cumulative and must be taken during
the calendar year.
Section 8. If requested and with Company approval, an employee eligible
for three (3) weeks vacation may receive one (1) week of vacation pay per year
in lieu of time off and an employee eligible for four (4) or more weeks of
vacation may elect to receive one (1) or two (2) weeks of vacation pay per year
in lieu of time off.
ARTICLE XII - JURY DUTY/WITNESS PAY
Section 1. Employees, having seniority (not probationary), who are
called for jury duty and serve as jurors on regularly scheduled workdays, shall
be paid the difference between the amount received for such service and their
straight time hourly rate up to eight (8) hours per day or forty (40) hours per
week.
a. To be eligible for payment, an employee called for jury service
must furnish the Company with evidence of attendance from a court
official stating the date(s) jury service was performed, amount of
payment received and the time of day excused from the court.
b. When excused by the court at a time that would allow an employee to
work (4) hours or more of his normal shift, the employee shall
return to work. Should the employee fail to return to work, he
shall forfeit any jury make-up pay that may be otherwise due him
under the terms of this Article. In such case if an employee does
not return to work he shall be charged under the Absenteeism and
Tardiness Control program.
c. An employee is limited to fifteen (15) days jury makeup pay in any
one (1) calendar year. This fifteen (15) day limitation will not
apply to employees selected to Grand Jury.
d. When an employee is required to report to the court as a
prospective juror and is excused without being seated, he shall
return to work immediately and will be paid make-up pay only for
scheduled time lost from work. Should the employee fail to return
to work, he shall forfeit any jury make-up pay that may be
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otherwise due him under the terms of this Article. In such case if
an employee does not return to work he shall be charged under the
Absenteeism and Tardiness Control Program.
e. In no event will payment be made for any jury duty pay, as set
forth above, for duty performed by an employee on a holiday,
vacation, layoff, sick leave, workman's compensation, or who are
not otherwise working.
Section 2. The Company shall make up the wage loss of an employee who
has been subpoenaed and loses scheduled time testifying as a witness in an
action, where the employee is neither the plaintiff nor defendant.
ARTICLE XIII - FUNERAL LEAVE
Section 1. An employee who has completed his probationary period, shall
upon notification of the death of his father, mother, step-father, step-mother,
spouse, son, son-in-law, daughter, daughter-in-law, brother, half-brother,
brother-in-law, sister, half-sister, sister-in-law, mother-in-law,
father-in-law, grandparents, or grandchildren be granted up to a three (3) day
leave of absence, upon request, and will be paid for up to three (3) (up to four
(4) scheduled shifts, if the employee is required to travel beyond a radius of
500 miles) scheduled shifts (or such fewer shifts as the employee may be absent)
which fall within the next three (3) consecutive regularly scheduled work days
beginning within four (4) days of the date of the death; provided, however, that
one (1) such consecutive day of absence must be the day of the funeral and the
employee must attend the funeral or forfeit any funeral leave pay due. Payment
for such time lost shall be on the basis of eight (8) hours pay per day at the
employee's regular straight time hourly rate, including shift differential.
Section 2. In no event will the payment of funeral leave pay be
duplicated with holiday pay, vacation pay, workman's compensation, or accident
and sickness insurance payments; nor, will employees on layoff or those not
otherwise working be paid funeral leave pay.
Section 3. A "Request for Funeral Leave" form will be furnished by the
Personnel Office and is to be completed by the employee prior to leave.
ARTICLE XIV - MILITARY RESERVE SUMMER CAMP
Active employees with one (1) year seniority and who are in the Reserve
of any branch of the military service, including the National Guard, who are
required to attend a summer encampment as part of their reserve obligation shall
receive from the Company, the difference between
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the amount of pay received for such summer encampment and his regular straight
time hourly rate of pay not to exceed eighty (80) hours pay per calendar year.
ARTICLE XV - SAFETY AND HEALTH
Section 1. A joint Safety and Health Committee shall be established
consisting of four (4) members. At least two (2) members of the committee shall
be hourly employees. A designated alternate shall be appointed for each
committee member. In the event that a member is absent from a meeting of the
Committee, his alternate may attend and when in attendance shall exercise the
duties of the member. The Plant Manager or his designee will be the fifth (5th)
member and act as Chairman of the Committee.
a. The Joint Committee shall meet as often as necessary for the purpose
of jointly considering inspecting, investigating, reviewing health and
safety conditions, making constructive recommendations with respect
thereto; including, but not limited to the implementation of corrective
measures to eliminate unhealthy and unsafe conditions and practices,
and to improve existing health and safety conditions and practices. All
matters considered and handled by the Committee shall be reduced to
writing, and minutes of all meetings of the Committee shall be made and
maintained. One miner's representative from the Committee will
accompany a Federal or State investigator on a walk-around inspection
or investigation and will attend any pre or post inspection conference.
b. All time spent in connection with the work of the Committee
representative, including all time spent in pre or post inspection
conferences and walk-around time spent in relation to Federal and State
inspection and investigations as provided for above, shall be
compensated at the employee's regular straight-time hourly wage rate.
Any time spent during the hours the employee is scheduled to work shall
count toward the calculation of any penalty or premium pay section of
this Agreement including, but not limited to daily or weekly overtime.
Any time spent outside the hours the employee is scheduled to work
shall not count toward the calculation of any penalty or premium pay
section of this Agreement. No time spent outside of the hours the
employee is scheduled to work shall be compensated at a rate greater
than one (1) times the employee's straight-time hourly wage rate.
c. Time spent in connection with MSHA approved monthly employee safety
training meetings shall be compensated at the employee's regular
straight-time hourly wage rate. Such scheduled meetings will not exceed
one hour.
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d. Any employee who believes his job presents a hazard to his safety or
health may request an immediate review of his job by one (1) Company
and one (1) miner's representative of the Joint Safety & Health
Committee.
Section 2. The Company will furnish prescription ground safety glasses
to bargaining unit employees, including the cost of the prescription at an eye
care provider acceptable to the Company. Glasses will not be replaced more
frequently than one (1) per year, unless damaged or broken during the
performance of duties.
Section 3. The wearing of safety shoes manufactured in accordance with
ANSI Standard Z-41.1-1972 is a mandatory condition of employment for all
employees of the Company. Shoes will have a minimum of a six-inch (6") top.
Full-time permanent employees will become eligible for safety shoes'
reimbursement after one (1) year of employment. The Company will issue a check
in the amount of $180.00 each year to each employee for reimbursement of safety
shoes.
Section 4. A medical examination of any employee may be made when, in
the opinion of the Company, an examination is necessary to protect the health or
safety of the employee involved, or the health or safety of other employees.
Section 5. All injuries must be reported to the foreman on the shift
they occur prior to leaving the plant, unless the nature of the injury is such
that the employee is unaware of the injury. If an employee becomes injured on
the job and in the opinion of a qualified medical doctor (M.D.) he is unable to
return to work, he shall be paid for any wages lost that day only.
ARTICLE XVI - LEAVE OF ABSENCE
Section 1. Any employee elected or appointed to a full time position
with the UNITED CEMENT, LIME, GYPSUM, AND ALLIED WORKERS DIVISION, BOILERMAKERS
INTERNATIONAL UNION, AFL-CIO, LOCAL NO. D476 or any of its subordinate bodies
shall be granted an indefinite leave of absence, providing thirty (30) days
notice is given the Company prior to the beginning of such leave. During such
leave seniority shall accumulate. Insurance benefits shall be suspended after
thirty (30) days of such leave and will again be in effect the first day of
returning to work with the Company. Upon returning to work, such employee will
be reinstated on his former job, providing it is still in existence; if not, he
shall be eligible to apply for any job within the bargaining unit by means of
the existing bidding procedure, or by bumping. The Company agrees to consent to
the absence of no more than one (1) employee at any time under this article.
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Section 2. Any employee absent from work in accordance with the
foregoing provisions shall not lose seniority, wage rate, or position, if
physically fit upon return to work. Except as provided for in section 2 of this
article, should an employee accept a position for wages or salary while on leave
of absence, such employee shall lose seniority, and if re-employed, must be
treated as a new employee.
Section 3. A leave of absence will be granted to employees to attend
union conventions or other like union activities without loss of seniority and
other employment rights and benefits. The Union will give the Company written
notice of at least ten (10) days of any anticipated leave. Not more than two (2)
employees may be absent for such purposes at any one (1) time. If two employees
are from the same department, both will be excused only if a qualified
replacement is available in the sole judgement of the Company.
Section 4. An employee who has exhausted all eligible vacation may
request in writing an unpaid personal leave for up to thirty (30) calendar days
for good and significant personal reasons not covered under the Family and
Medical Leave Act. The Company may approve or disapprove any request for a
personal leave of absence.
ARTICLE XVII - OVERTIME MEALS
Section 1. A meal and reasonable time to eat it, or compensation
($8.50) in lieu of such meal and meal period, will be provided when more than
four (4) consecutive overtime hours have been worked beyond the end of an
employee's regular shift. Meals when provided will be at the sole discretion of
the Company.
Section 2. Should an employee be called out on a scheduled off day and
he continues to work for more than ten(10)consecutive hours, Section 1 of this
Article will become applicable.
ARTICLE XVIII - GRIEVANCE PROCEDURE
Section 1. Should differences arise between the Company and the Union,
or an individual employed by the Company, as to the meaning and application of
the provisions of this Agreement, an earnest effort shall be made by the parties
to settle such differences promptly and in the following manner:
STEP I. The complaint, within seven (7) calendar days of its
occurrence, or the occurrence of the matter out of which the complaint
arises, may be taken up by the employee involved, with or without Union
representation, with his foreman. The employee shall state the
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specific article(s) and paragraph(s) of the Contract that is
alleged to have been violated in order for the grievance to be
considered and processed.
STEP II. If no satisfactory settlement is reached in Step I, the matter
shall be reduced to writing and presented to the Plant Manager or his
delegate within five (5) days from the date of the meeting with the
foreman. At the time of presentation, or within thirty (30) days, the
Plant Manager or his delegate will meet with the Grievance Committee to
hear and discuss the grievance. The Company shall answer the grievance
in writing within five (5) days after said meeting. The employee shall
state the specific article(s) and paragraph(s) of the Contract that is
alleged to have been violated in order for the grievance to be
considered and processed.
STEP III. If no agreement is reached in Step II, The Committee may,
within five (5) days of the receipt of the above answer, refer the
matter to higher officials of the Company and the Union who may attend
such a meeting. Upon request by the Union a meeting will be held within
forty-five (45) days of such request. The Company shall answer the
grievance within five (5) days after said meeting.
STEP IV. A grievance arising out of the terms of this Agreement, which
has been properly processed through the Grievance Procedure within the
time limits specified and not settled, may be submitted to arbitration
in accordance with the provisions of Section 5. Arbitration.
Section 2. Except for Section 1, Step I., the time limits referred to
in this Article exclude Saturdays, Sundays and holidays.
Section 3. Any grievance not presented or appealed within the time
limits provided, unless mutually agreed to extend the time, shall be considered
settled on the basis of the decision which was not appealed and shall be final
and binding on the parties involved.
Section 4. Grievances presented in any of the regular steps set forth
and not answered within the time specified or as the same may be extended by
mutual agreement shall be considered appealed to the next step of the grievance
procedure.
Section 5. Arbitration
a. Any grievance not settled in Step III above may be referred to
arbitration. Notice to refer a grievance to arbitration shall be given
in writing within ten (10) days after being notified on the decision
rendered in Step III or the matter will be considered closed. Only one
(1) grievance may be submitted to or under review by any one (1)
Arbitrator at any one time unless by the prior mutual written consent
of the parties.
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b. In the event the parties are unable to agree upon an Arbitrator
within seven (7) days after arbitration is invoked, then they shall
jointly petition the Federal Mediation ad Conciliation Service, which
shall submit a panel of seven (7) qualified arbitrators, and the
parties shall select a single arbitrator from such panel. The
arbitrator shall be appointed by mutual consent of the parties hereto.
If the arbitrators included in this panel are unacceptable to either
party, a second panel shall be requested from the Federal Mediation and
Conciliation Service and a single arbitrator selected from this panel.
The Union shall strike the first name.
c. Any grievance referred to arbitration shall be heard as soon as
possible and a decision rendered within thirty (30) days of the hearing
or the date of postmark of the post hearing briefs. The Arbitrator
shall have no power to add to or subtract from or change, modify or
amend any of the provision of this Agreement. The decision rendered by
the Arbitrator will be final and binding upon the Union, the Company,
the grievant and all employees covered by this Agreement. The
Arbitrator selected pursuant to this Article shall interpret and apply
the terms of this Agreement; he/she shall not substitute his/her
discretion and judgment for that of the Company.
d. It is expressly agreed that no Arbitrator shall have the authority
to decide any matter involving the exercise of a right reserved to
management under this Agreement.
e. Each party hereto shall pay the expense incurred in the presentation
of its own case, and the expenses incident to the services of the
Arbitrator, including the cost of the transcript for the Arbitrator,
shall be shared equally by the Company and the Union. If either party
request a copy of the transcript that copy will be paid for by the
party requesting it.
Section 6. Any grievance growing out of a discharge or suspension must
be submitted in writing by the aggrieved employee directly to the Union and from
the Union to the Director of Industrial Relations or Plant Manager or designee
within forty-eight (48) hours of the discharge or suspension or it will not be
recognized and the action taken shall be final.
ARTICLE XIX - INCAPACITATED EMPLOYEES
Section 1. Any employee who becomes permanently incapacitated and, on
the basis of competent medical opinion, cannot perform the duties of his regular
job may exercise his plant seniority through the bumping procedure to move to
another position within the plant bargaining unit for which he is qualified to
perform in the same manner as provided for Article V, Section 3.
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Section 2. Any employee who is displaced by an incapacitated employee
pursuant to Section 1 of this Article may exercise his plant seniority to bump
into another position within the plant bargaining unit for which he is qualified
in the same manner as provided for in the job bidding procedures.
Section 3. The Company's decision based on competent medical opinion
regarding the employee's incapacitation will be final and binding.
ARTICLE XX - STRIKES AND LOCKOUTS
The Union agrees that there shall be no picketing or strikes by the
Union, or by its members, of any kind or degree whatsoever, or walkout,
suspension of work, slowdowns, limiting of production, or any other interference
or stoppage, total or partial, of the Company's operations for any reason
whatsoever, such reasons including, but not limited to, unfair labor practices
by the Company or any other Employer. It is further agreed that neither the
Union nor its members shall engage in the above prohibited conduct in support of
picketing, strikes or any labor dispute actions engaged in by any other
organization or person. In addition to any other recourse or remedy available to
the Company for violation of the terms of this Article by the Union and/or any
Union member, the Company may discharge or otherwise discipline any employee who
authorizes, causes, engages in, sanctions, recognizes, or assists in any
violation of this Article. The Company will not engage in any lockouts during
the term of this Agreement.
ARTICLE XXI - LEGISLATION
In the event laws are passed which conflict with any provisions of this
Agreement, or any provision or provisions of this Agreement shall be declared
void in whole or in part, or shall be declared not to affect any employee or
employees by law or final decision by competent authority, then such provisions
or parts thereof shall be eliminated here from and the matter covered by such
eliminated provisions may be reopened for negotiation, but the remaining
provisions of the Agreement shall remain in full force and effect.
ARTICLE XXII - COPIES
A copy of the labor agreement will be provided each full time employee
by the Company. Copies of the Pension and Insurance Plans will be provided to
each full time employee by the Company.
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ARTICLE XXIII - PAST PRACTICE
All previous side letters, and ad hoc agreements and informal
understandings or past practices are hereby revoked, withdrawn and canceled and
none shall survive the execution of this contract and no provision shall have
any force or effect whatsoever either as past practice, special written
agreement, oral agreement, informal understanding or otherwise unless expressly
contained herein.
ARTICLE XXIV - SCOPE OF AGREEMENT
This Labor Agreement, Group Insurance Plan and Pension Plan together
contain all the obligations and restrictions imposed upon each of the parties
during their respective terms. It is the intent of the parties that these
documents have settled all issues between them and all collective bargaining
obligations for the terms of the Labor Agreement (and for the terms of the Group
Insurance Plan relative to insurance and the Pension Plan relative to pensions)
and that no change shall be made in the Labor Agreement and these two plans
prior to the expiration thereof except by mutual written consent or as may be
provided within these documents, or as required by law.
ARTICLE XXV - TERMS OF AGREEMENT
After ratification by the members of the Local Union D476, this
Agreement shall become effective and remain in force and effect and be binding
upon the parties hereto from July 31, 1998, to and including July 31, 2003, and
it shall continue to be in full force and effect thereafter from year to year
until either party on or before May 1, of any year, beginning May 1, 2003, gives
written notice to the other party of its desire or intention either to alter and
modify or terminate the same. If such notice is given, the parties hereto shall
begin negotiations not later than June 1 in such year.
26
<PAGE> 28
IN WITNESS WHEREOF, this Agreement between the parties, has been
executed by their duly authorized representatives on this 31st day of July,
1998.
UNITED CEMENT, LIME, GYPSUM
AND ALLIED WORKER, DIVISION
LOCAL LODGE NO. D476 BOILER- SOUTHDOWN, INC.
MAKERS INTERNATIONAL UNION ODESSA PLANT
AFL-CIO
BY: BY:
------------------------------- -------------------------------------
Theodore "Nick"Adams Bernard M. Reuland
BY: BY:
------------------------------- -------------------------------------
David Johnson Stephen M. Bryan
BY: BY:
------------------------------- -------------------------------------
Robert Sherman Kathryn R. Martin
BY:
-------------------------------
Allen Motes
27
<PAGE> 29
APPENDIX A
ODESSA
WAGE SCHEDULE
<TABLE>
<CAPTION>
8/1/98 8/1/00 8/1/01 8/1/02
------ ------ ------ ------
WAGE GROUP ONE
<S> <C> <C> <C> <C>
Laborer* $ 11.14 $ 11.39 $ 11.59 $ 11.75
Shift Laborer
Quarry Laborer
WAGE GROUP ONE A
Packhouse Laborer $ 12.34 $ 12.62 $ 12.83 $ 13.02
WAGE GROUP TWO
Mech/Electrical Trainee $ 12.89 $ 13.18 $ 13.43 $ 13.67
Special General Utility
WAGE GROUP THREE
Bulkloader $ 13.69 $ 14.00 $ 14.29 $ 14.58
Crusher Operator
Equipment Operator-Quarry**
WAGE GROUP FOUR
Equipment Operator (Prod) $ 14.83 $ 15.17 $ 15.52 $ 15.86
Quarry Lube/Mechanic
WAGE GROUP FIVE
Production Utility $ 15.71 $ 16.06 $ 16.46 $ 16.86
Maintenance Mechanic "B"
Quarry Utility
Driller
WAGE GROUP FIVE A
Heavy Equipment Operator*** $ 16.03 $ 16.39 $ 16.82 $ 17.27
</TABLE>
28
<PAGE> 30
<TABLE>
<CAPTION>
WAGE GROUP SIX
<S> <C> <C> <C> <C>
Maintenance Journeyman $ 16.46 $ 16.83 $ 17.27 $ 17.72
Asst. Process Control Oper
WAGE GROUP SEVEN
Mobile Equipment/Mechanic $ 17.00 $ 17.38 $ 17.86 $ 18.36
Maintenance Journeyman/Welder
WAGE GROUP SEVEN A
Process Control Operator $ 17.29 $ 17.68 $ 18.19 $ 18.74
WAGE GROUP EIGHT
Instrument/Electrician/ $ 17.84 $ 18.24 $ 18.79 $ 19.38
Programmer
</TABLE>
Note: In August of 1999 a one thousand dollar ($1,000.00) bonus will be
paid to each permanent employee.
The above wage schedule and corresponding rates shall apply to all new hires and
any employee who bids and is awarded a different job other than the one in which
he was red circled on the effective date of this Agreement.
*Laborers will be hired at a starting rate of $10.00 for the term of their
probationary period.
**Jim Barton, Larry Harper, and Ishmael Ramirez, current Equipment Operators -
Quarry, will be grandfathered in Group 4 as long as they hold the position.
***Oscar Gomez, current Heavy Equipment Operator - Quarry, will be grandfathered
in Group 6 as long as he holds the position.
GAINSHARING
The employees will participate in a gainsharing program developed by
the Company.
29
<PAGE> 31
APPENDIX B
Section 1. Health and Welfare
On a voluntary participation basis, the Company will provide Health and
Welfare Coverage identical to the Southdown, Inc., Plan for Salaried employees
and all amendments thereto during the life of this Agreement. For those
selecting to participate, the cost of employee coverage will be as follows:
<TABLE>
<S> <C>
Employee Only $ 30.00
Employee & Children $ 50.00
Employee & Spouse $ 60.00
Employee & Family $ 70.00
</TABLE>
Southdown employees who retire directly from the Company will be
eligible for retiree medical and life insurance benefits only after reaching age
62 and fifteen (15) years of service. Future increases in retiree health care
costs beyond the 1993 cost levels will be the responsibility of covered
retirees.
The Union and each employee covered by this Agreement will be provided
a copy of the Health and Welfare Plan.
a. Life Insurance - The Company will provide life insurance coverage at
no cost to the employee. An employee's life insurance is an amount equal to
twice (2X) his/her base hourly rate multiplied by 2,080 hours. Adjustments for
life insurance due to wage changes are made once per year at the beginning of
the year.
b. Accidental Death and Dismemberment - The Company will provide
accidental death and dismemberment benefit at no cost to the employee. An
employee's accidental death and dismemberment benefit is an amount equal to
twice (2X) his/her base hourly rate multiplied by 2,080 hours. Adjustments for
accidental death and dismemberment benefit due to wage changes are made once per
year at the beginning of the year.
30
<PAGE> 32
Section 2. - Company Provided Benefits
a. Southdown Inc. Retirement Savings Plan {401(k)}
On a voluntary participation basis, the Company will provide the Southdown, Inc.
Retirement Savings Plan and all amendments thereto during the life of this
Agreement on the same basis the Plan is provided to other Southdown Inc.
employees.
b. Long Term Disability
On a voluntary participation basis, the Company will provide the long term
disability insurance, and all amendments thereto during the life of this
Agreement on the same basis the long term disability insurance is provided to
other Southdown Inc. employees.
31
<PAGE> 33
APPENDIX C
Section 1. - Pension
Normal Retirement Pension.
The monthly amount of the normal retirement pension on a single life
basis for retirements after March 31, 1991 and before April 1, 1996, shall be
the greater of (a) or (b).
(a) $24.00 multiplied by the participant's period of service (in
years and fractions thereof), but only for service prior to
April 1, 1996.
(b) an amount computed as follows:
(i) 1% of the participant's average monthly compensation
multiplied by his period of service (in years and
fractions thereof); plus
(ii) .65% of the participant's average monthly
compensation to the extent that it exceeds covered
compensation multiplied by his period of service (in
years and fractions thereof) to a maximum of 35
years.
Average monthly compensation shall be the result obtained by dividing
total base pay (up to 2,080 hours of base pay each year) received in each of
five consecutive plan years by 60. (Effective 08/01/94 gainsharing earnings will
be included as part of base pay.) Covered compensation for a plan year means
1/12th of the average of the Social Security taxable wage bases for the 35-year
period ending with the last day of the calendar year in which the participant
attains (or will attain) Social Security retirement age (generally age 65).
The monthly amount of the normal retirement pension on a single life
basis for retirements after March 31, 1996 shall be the greater of (a)
calculated only as of July 31, 1996, or (b).
The pension formula used by the Southdown, Inc. Pension Plan adjusts
automatically for wage inflation and is designed to achieve along with social
security a wage replacement percentage of 50% - 60% for a 30-year employee.
Early Retirement
A participant may elect to retire and commence receiving a pension
benefit prior to attainment of normal retirement age as follows:
32
<PAGE> 34
With respect to the minimum benefit calculated in (a) above (the
"Minimum Benefit"), any participant who has 10 years of service and has attained
55 years of age and who elects to retire and commence receiving pension benefits
prior to his 65th birthday shall be entitled to receive a pension amount equal
to his Minimum Benefit reduced by three-tenths of one percent (0.3%) for each
month by which his actual retirement date precedes normal retirement date.
Any participant who has accumulated a minimum of 30 years continuous
years of service may elect to retire and immediately commence receiving pension
benefits equal to the Minimum Benefit without regard to attained age.
With respect to the maximum benefit calculated in (b) above (the
"Maximum Benefit"), any participant who has 5 years of service and has attained
55 years of age and who elects to retire and commence receiving pension benefits
prior to his 65th birthday shall be entitled to receive a pension a Maximum
Benefit reduced by five-ninths of one percent for each month up to 60 months by
which his actual retirement date precedes normal retirement date, and
additionally by five-eighteenths of one percent for each month over 60 months by
which his actual retirement date precedes normal retirement date.
Plan Termination
In the event the plan is terminated, that the accrued benefit of each
participant will become fully vested and nonforfeitable. Assets will be
allocated in accordance with Section 4040(a) of ERISA. Any assets in excess of
amounts allocated in accordance with Section 4044(a) of ERISA would revert to
the Company subject to applicable IRS and PBGC rules.
Subject to ERISA Section 4044(a), and any applicable regulations of the
IRS and PBGC, distribution of benefits to participants on plan termination would
be made, in whole or part, to the extent that no discrimination in value
results, in cash, in securities or other assets in kind, or in nontransferable
annuity contracts.
33
<PAGE> 35
APPENDIX D
SICKNESS AND ACCIDENT BENEFITS
If a permanent employee (non-probationary/non-temporary) is absent from work due
to disability, sickness and accident benefits are payable. The disability must
prevent the employee from performing the duties of the job because of a
non-occupational sickness or injury. This benefit is payable if confined to a
hospital or home.
After a waiting period of five (5) consecutive work days (waived if the employee
is hospitalized as an in-patient or absent five (5) consecutive work days), the
disability benefits are payable at a rate of fifty-five dollars ($55) per day
for a maximum of five days per week. A disabled employee may receive weekly
sickness and accident benefits during the period of disability, not to exceed
five (5) months. It is the employee's responsibility to make application for
this benefit and the attending physician must document the nature of the
disability and expected date of return to work.
No benefits shall be payable for the following:
1. disability which you are not under the direct care of a
licensed physician;
2. sickness or injury which is purposefully self-inflicted while
sane or insane;
3. disability due to an injury arising out of the course of
employment;
4. disability due to disease which benefits are payable under
Worker's Compensation, Occupational Disease or similar law.
This benefit terminates upon retirement or upon termination of employment.
34
<PAGE> 36
B. M. Reuland
Director
Employee Relations
August 26, 1998
Mr. Theodore "Nick" Adams
International Representative - IBB
6619 East 80th Street North
Owasso, Oklahoma 74055
Re: Letter of Understanding
Retirement Medical Insurance
Dear Mr. Adams:
In our previous labor agreement, the Company agreed to increase its monthly
contribution toward future retiree medical benefits by 7.5% over the capped 1993
cost levels. Based on our discussions during the 1998 negotiations, the Company
agrees to increase its contribution up to 2.5% on an annual basis for any
calendar year in which the Company requires an increased contribution for
medical benefits by retirees during the life of the new agreement.
Sincerely,
Bernard M. Reuland
Director, Employee Relations
BMR:km
cc: S.M. Bryan
D.A. Johnson
35
<PAGE> 37
B. M. Reuland
Director
Employee Relations
August 26, 1998
Mr. Theodore "Nick" Adams
International Representative - IBB
6619 East 80th Street North
Owasso, Oklahoma 74055
Re: Letter of Understanding
Holidays Occurring During Vacation
Dear Mr. Adams:
Pursuant to our discussions during 1998 Odessa Labor Contract Negotiations, the
Company agrees to continue the existing practice regarding holidays that occur
during employees' vacation. That practice is, that if an employee takes a week
of vacation during which a holiday occurs and the employee wants the preceding
Friday or following Monday off in lieu of holiday pay, that employee may request
it of his supervisor. If the supervisor grants it, the employee may take it,
otherwise the employee does not get the additional day off for the holiday.
Sincerely,
Bernard M. Reuland
Director, Employee Relations
BMR:km
cc: S. M. Bryan
D. A. Johnson
36
<PAGE> 38
B. M. Reuland
Director
Employee Relations
August 26, 1998
Mr. Theodore "Nick" Adams
International Representative - IBB
6619 East 80th Street North
Owasso, Oklahoma 74055
Re: Letter of Understanding
New Employees Medical Coverage
Dear Mr. Adams:
Pursuant to our discussions during the 1998 Odessa Labor Contract Negotiations,
the Company agrees that new employees hired into the bargaining unit will be
eligible for coverage for medical benefits after they have been employed for 90
consecutive calendar days.
Sincerely,
Bernard M. Reuland
Director, Employee Relations
BMR:km
cc: S. M. Bryan
D. A. Johnson
37
<PAGE> 39
B. M. Reuland
Director
Employee Relations
August 27, 1998
Mr. Theodore "Nick" Adams
International Representative - IBB
6619 East 80th Street North
Owasso, Oklahoma 74055
Re: Letter of Understanding
Eight Hour Rest
Dear Mr. Adams:
Pursuant to our discussion during the 1998 Odessa Labor Contract Negotiations,
the Company agrees to continue the practice of allowing an employee at least
eight (8) hours of rest time prior to reporting to his regular shift from the
time he leaves work on an extended call-out or if he is held over and works in
excess of sixteen (16) continuous hours.
Sincerely,
Bernard M. Reuland
Director, Employee Relations
BMR:km
cc: S. M. Bryan
D. A. Johnson
38
<PAGE> 40
B. M. Reuland
Director
Employee Relations
July 24, 1998
Mr. Theodore "Nick" Adams
International Representative - IBB
6619 East 80th Street North
Owasso, Oklahoma 74055
Re: Letter of Understanding
Alternative Work Schedule
Dear Mr. Adams:
Pursuant to our discussion during 1998 Odessa Labor Contract Negotiations, the
parties may agree to develop, initiate and trial alternative work schedules for
certain employees at the Odessa Plant. Such alternative work schedules may
include, but would not be limited to, four-day week 10-hour day schedules and 4
x 4 continuous 12-hour shift schedules. It is understood that current practices
and contract language regarding practices such as shift premiums, overtime pay
procedures, vacation scheduling, paid time away from work, etc. may have to be
modified for those employees affected by the new schedule(s) and would require
mutual agreement.
Sincerely,
Bernard M. Reuland
Director, Employee Relations
cc: S.M. Bryan
D.A. Johnson
39
<PAGE> 41
B. M. Reuland
Director
Employee Relations
THIS LETTER NOT TO BE INCLUDED IN FINAL PRINTING OF CONTRACT.
August 28, 1998
Mr. Theodore "Nick" Adams
International Representative - IBB
6619 East 80th Street North
Owasso, Oklahoma 74055
Dear Mr. Adams:
During the 1998 Odessa Labor Contract negotiations the company agreed to make
certain changes contingent upon the ratification of the new Labor Agreement by
August 31, 1998. Those changes are listed below:
- Article 8, Section 4 - Overtime pyramiding
- Pay for time lost by negotiation committee up to 40 hours per
week
- $1,000.00 ratification bonus
- Retroactive calculation of base wage increases to August 1,
1998.
This confirms that these tentative agreements will be withdrawn if the union
advises the company that the Agreement failed ratification by August 31, 1998.
We ask that the union committee advise Steve Bryan of the result the week of
August 31, 1998.
Sincerely,
Bernard M. Reuland
Director, Employee Relations
cc: S.M. Bryan
D.A. Johnson
40
<PAGE> 1
EXHIBIT 10.32
AGREEMENT BETWEEN
MEDUSA CEMENT COMPANY
(Division of Medusa Corporation)
WAMPUM, PENNSYLVANIA PLANT
and
THE UNITED CEMENT, LIME GYPSUM
AND ALLIED WORKERS
DIVISION
(INTERNATIONAL BROTHERHOOD OF BOILERMAKERS,
IRON SHIP BUILDERS, BLACKSMITHS, FORGERS,
AND HELPERS, AFL-CIO)
LOCAL UNION NO. D-173
Effective May 1, 1996 to May 1, 1999
<PAGE> 2
ARTICLE I
AGREEMENT AND PURPOSE
(a) This agreement is entered into this 1st day of May, l996 for the purpose
of maintaining the existing harmonious relationship and close cooperation
between the Medusa Cement Company (Division of Medusa Corporation),
hereinafter called the "Company", and members of the United Cement, Lime,
Gypsum and Allied Workers Division (International Brotherhood of
Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers,
AFL-CIO), hereinafter called the "Union", who are employees of the Wampum
Plant of the Medusa Cement Company.
(b) It is the continuing policy of the Company and the Union that the
provisions of this Agreement shall be applied to all employees without
regard to race, color, sex, religious creed, national origin, handicap or
Vietnam era veteran status.
(c) It is agreed that all applicable mutually agreed upon agreements,
policies and practices have been incorporated in this Agreement, and any
additional agreements, policies or practices must be mutually agreed upon
by both parties from this date forward to become applicable. The Appendix
and Letters of Intent, included within this booklet, are considered to be
incorporated as a part of this Agreement.
ARTICLE II
UNION RECOGNITION AND SECURITY
(a) The Company agrees to, recognize the Union as the sole bargaining agent
for the employees of the Company's Wampum Plant insofar as working
conditions, hours of work, and wages are concerned.
(b) As a condition of employment, it is agreed that all eligible employees at
the Wampum Plant shall become members of and remain in good standing with
the Union within thirty (30) days after the signing of this Agreement.
Newly hired employees shall become members of and remain in good standing
with the Union within thirty (30) days from the date of hiring.
(c) The term "employee" as used in this Agreement shall include only those
employed in the job classifications attached in Appendix A.
(d) The Company will deduct from the monthly earnings of any of its employees
his Initiation Fee and Union Membership Dues, and will pay the same to
the party to whom such employee directs the Company in writing. Each such
employee desiring such
2
<PAGE> 3
deduction to be made from his earnings must present to the Company his
signed order, which shall be substantially as follows:
"I hereby authorize and direct the Medusa Cement Company to deduct and
pay from my earnings accumulated to my credit my Initiation Fee and Union
Membership Dues, and pay same to . . . . . I further agree to hold the
Medusa Cement Company harmless on account of the deductions and payments
herein authorized.
Medusa Cement Company (Division of Medusa Corporation)
Signed ___________________________________
Timekeeper _______________________________
Employee Check No._______________________"
This authorization may be canceled by the Union member on any anniversary
date of this Agreement upon thirty (30) days prior notice, in writing, to
the Company and the Union.
(e) The Company is willing at all times to meet its employees' committee and
representatives of the International Union for the purpose of discussing
wages, hours, and working conditions, with the object to reach a
satisfactory agreement.
(f) The Union shall furnish in writing to the Plant Manager the names of
employees who will serve on the committee. The committee shall consist of
not more than seven (7) and not less than three (3) members. If a vacancy
occurs on the committee, the Plant Manager shall be informed, in writing,
of the name of the new member before a meeting is held. No other members
of the Union who are employees at the Wampum Plant are eligible to attend
these meetings unless previously agreed to between the parties hereto.
(g) Notwithstanding the provision of Article II (b) above, any employee who
is a member of and adheres to established and traditional tenets or
teachings of a bona fide religion, body or sect which has historically
held conscientious objections to joining or financially supporting labor
organization shall not be required to join or financially support the
Union as a condition of employment; provided, however, that each such
employee shall, as a condition of his or her employment, in lieu of the
payment of periodic dues and initiation fees to the Union, pay sums equal
to such dues and initiation fees to any one of the following
non-religious charitable funds, which are exempt from taxation under
Section 501 (c) (3) of the Internal Revenue Code:
1. City of Hope
2. American Cancer Society
3
<PAGE> 4
3. American Heart Association
4. National Multiple Sclerosis Society
5. American Red Cross
It is expressly understood that any such employee holding conscientious
objections and choosing not to join or financially support the Union, who
requests the Union to use the grievance - arbitration procedure on the
employee's behalf, shall be required to pay the Union the reasonable
costs of processing any grievance on his or her behalf, including
reasonable costs of arbitration, if any.
(h) Upon receipt from an employee authorizing payroll deduction and
specifying the amount to be deducted, the Company will deduct voluntary
contributions to the City of Hope. All amounts so deducted shall be
remitted by the Company to the City of Hope.
The Company shall be held harmless from any claim demand or action
arising out of such deductions.
Employees contributing to the City of Hope cannot discontinue or change
such contributions for one year.
ARTICLE III
MANAGEMENT
(a) The Union agrees to recognize the Company's right to manage its plant and
direct its working force except as specifically limited by the terms of
this Agreement.
ARTICLE IV
SENIORITY
(a) The seniority unit shall be plant-wide.
(b) Seniority is continuous service which shall be calculated from date of
first employment or re-employment following a break in continuous
service, whichever occurs later.
(c) New employees and those hired after a break in continuity of service will
be regarded as probationary employees for the first ninety (90) days of
work and will receive no continuous service credit during such period.
Probationary employees may file and process grievances under this
Agreement but may be laid off or discharged as exclusively determined by
Management. Probationary employees continued in the service of the
Company subsequent to the first ninety (90) days of work shall receive
full continuous service credit from date of original hiring.
4
<PAGE> 5
(d) Employees covered by this Agreement shall lose their entire seniority if:
(1) They voluntarily quit.
(2) They are discharged for cause and not re-hired within six (6) months
or re-instated.
(3) "During a continuous period of absence, an employee absent because
of layoff or disability shall maintain and accumulate seniority for
three years or for a period equal to 50% of seniority attained at
the start of such absence, whichever is greater, thereafter he will
accrue no further seniority during such period of absence.
Thereafter, when a vacancy occurs, for which a laid off employee is
qualified, he will be given registered mail notice of recall at his
last address as shown on company records, to which he must respond
within seven days of receipt of notice. If the employee is
reinstated, he shall be credited with seniority as prescribed above;
if the employee does not respond or refuses the recall, he will
forfeit all seniority and the company may fill the vacancy with a
new employee. The above procedure shall also apply to an employee
absent because of disability, except that he shall only be recalled
for a vacancy which occurs after he is physically able to return to
work. However, the above shall not modify Article IV (d) (5) or
Article V (a) (7) (e) second paragraph."
Any employee detained from work on account of sickness or for any
other good reason shall notify the Plant Manager or his Foreman,
before the start of his shift. Any employees absenting themselves
from work for five (5) consecutive days without good and
satisfactory reason may be discharged and dropped from the seniority
list and payroll of the Company. Repeated absence of less than five
(5) days shall be subject to a progressive disciplinary program, and
the Local Union will receive communications pertaining to each step
of disciplinary action within one working day excluding Saturdays,
Sundays and holidays of any action taken.
(4) An employee's seniority shall be broken and his employment
terminated effective on the date of his acceptance of Termination
Benefits under the provisions of the Supplemental Unemployment
Benefit Plan Agreement.
(5) In the event the installation of new equipment, or the shutting down
of the plant or a subdivision thereof, results in layoffs which can
be termed of a permanent nature, the employees permanently laid off
shall retain and accumulate seniority for two (2) years: after said
two (2) years such employees shall retain, but not accumulate
seniority until they are terminated in accordance with the Labor
Agreement.
5
<PAGE> 6
(e) A leave of absence for the purpose of accepting a position with the
United Cement, Lime, Gypsum and Allied Workers Division, at the local,
district or international level, or the AFL-CIO or any of its subordinate
bodies, shall be available to not more than three (3) employees from each
plant at any one time. Applications for such leave shall be submitted to
the Company in writing thirty (30) days prior to the effective date of
such leave to permit proper provisions to be made to fill the job to be
vacated. Leaves of absence for this purpose shall be for an indefinite
period. During such leave, seniority shall accumulate. Group insurance
coverage shall be suspended after thirty (30) days of such leave. All
insurance coverages will be reinstated upon returning to work with the
Company. Upon returning to work, such employee will be reinstated on his
former job, providing it is still in existence; if not, he shall be
eligible to apply for any job within the bargaining unit by means of the
existing bidding procedure or bumping.
(f) Subject to the approval of the Company, employees requesting a leave of
absence in writing for personal reasons may be granted leaves of absence
not to exceed thirty (30) Calendar days.
(g) The Company shall attach to the Agreement a list of employees' seniority
rights, in order of the date of hiring, as well as a list of the
probationary employees. (see Appendix A (1))
(h) Temporary summer employees may be employed by the Company from May 1st
through September 30th in order to facilitate filling of vacancies caused
by vacations during these months. Employment of summer employees will be
subject to the following conditions:
(1) No summer employee will be hired when any regular employee is on
layoff or drawing short work week benefits.
(2) All summer employees will be required to join the Union under the
same terms and conditions as required in Article II, Sections (b)
and (c) of the Agreement.
(3) All summer employees must sign an appropriate form which will spell
out the terms of their employment including but not limited to an
agreement to commence their employment on a specified date and
terminate their employment on a specified date.
(4) The term of employment will not be changed, altered or extended
unless mutually agreed to by both the Company and the Local Union
Committee.
6
<PAGE> 7
(5) Summer employees shall not accumulate seniority nor be eligible to
bid on any new job or vacant job which may occur during their term
of employment.
(6) A summer employee will not have any vacation rights.
(7) Summer employees will not participate in the Company's pension, SUB
and insurance programs.
(8) If college students or graduated high school seniors enrolled in a
college are available, temporary summer hires will be limited only
to these students.
The above will be in full force and effect, except that if any portion is
found to be contrary to any Federal, State or local law, it shall be
changed to comply with said law.
ARTICLE V
JOB SECURITY
(a) (1) Whenever the installation of mechanical equipment, change in
production methods, the installation of new or larger equipment, the
combining of jobs or the elimination of jobs, will have an effect on
the job status of one or more employees. the Company will give the
Union reasonable advance notice of same, and upon request by the
Union will promptly meet with the Union to review and explore the
effects of such installation or installations or change or changes
upon the working force.
(2) Employees will not be terminated by the Company as a result of
mechanization, automation, change in production methods, the
installation of new or larger equipment, the combining of jobs or
the elimination of jobs.
(3) Whenever an employee is no longer needed on his regular job as a
result of Circumstances described in (1) above, such employee will
have up to seven (7) days from date of notification to exercise his
right to apply for any jobs within the bargaining unit on which an
incumbent has less seniority, and for which he could reasonably be
expected to qualify within a ninety (9O) day on-the-job training
period, unless the employee applying for such job is disqualified
due to physical reasons. The rate of pay for such employee shall not
be less than ninety-five percent (95%) of the rate for the regular
job from which he was displaced, irrespective of the rate of the job
which he applies for and obtains. The ninety-five percent (95%) of
rate protection shall apply for a minimum period of one (1) year, or
a period equal to one-third (1/3) of an employee's seniority up to a
maximum of five (5) years. If the affected employee is tendered
training for a job
7
<PAGE> 8
which he could be reasonably expected to qualify for within a ninety
(90) day on-the-job training period and refuses, he will not be
entitled to any rate protection unless he has a bona fide reason for
refusing. If an employee on ninety-five percent (95%) rate
protection subsequently bids on and is awarded a lower rated job, he
shall lose his rate protection.
(4) Employees affected by the application of the foregoing procedure
shall have and may exercise and same rights for retention and
on-the-job training in accordance with their seniority status and
the ninety-five percent (95%) rate guarantee shall also be
applicable to them.
(5) Employees who do not apply for and/or obtain a job in accordance
with the provisions of (3), including employees displaced from their
jobs but whose seniority status does not permit then to utilize job
retention rights under the provisions of (3) or (4), will be placed
on layoff status with recall rights in line with their seniority
status for job vacancies which may thereafter occur.
(6) The provisions of (3) of this Section do not apply to displacements
or layoffs resulting from production curtailments, except that
employees laid off and not recalled when production is resumed
following Curtailment will be entitled to the same rights as
employees affected by the preceding (3).
(7) Should the Company permanently shutdown the present facilities
affording employment to the employees comprising the bargaining unit
(the present facilities shall be deemed to have been permanently
shutdown if all productive facilities are abandoned even though the
shipping facilities continue to operate), the Company shall mail a
notice informing each affected employee that his employment with the
Company has been terminated because of the permanent shutdown. The
notice shall be mailed at least ninety (9O) days prior to the
shutdown to the employee's last address on the Company's records.
Each employee who is mailed said notice shall have the following
options:
A. An employee who is not eligible for a normal (excluding 30-year
retirement pension) or late retirement pension may elect to transfer to
another operation of the Company covered by a collective bargaining
agreement with the Union in accordance with paragraph 8 or paragraph 9.
Any transfer pursuant to paragraph 8 or paragraph 9 will occur not later
than three years after the last day the employee worked. An employee
awaiting transfer shall be placed on layoff and shall receive S.U.B.
layoff or reduced layoff benefits provided the eligibility and other
8
<PAGE> 9
requirements of the S.U.B. Plan are met. An employee may void his
election to transfer at any time during the three-year period. If the
employee is eligible for an immediate pension at the time he voids his
election to transfer, he shall retire, effective the date he voids his
election, under the pension plan in effect at the time of the permanent
shutdown. An employee may also void his election in order to apply for
S.U.B. termination benefits.
B. An employee who is eligible for an immediate pension at the date of the
permanent shutdown shall retire as of the effective date of the permanent
shutdown except:
1. An employee whose combined age and years of service equal 62 or more
but less than 65 may elect layoff until his combined age and years
of service equal 65 at which time the employee shall retire and
receive a permanent shutdown pension. The pension plan in effect at
the time of the permanent shutdown shall determine the retirement
benefits payable to the employee. An employee who elects layoff
under these conditions shall receive S.U.B. layoff or reduced layoff
benefits provided the eligibility and other requirements of the
S.U.B. plan are met.
2. An employee who is eligible for an immediate pension other than a
normal or late retirement pension and who elects to transfer to
another operation of the Company shall not retire unless the
transfer is not accomplished.
3. An employee shall not be required to retire under a disability
retirement pension earlier than he would otherwise be required to
retire if the Company had not permanently shutdown the facilities.
An employee who retires under the Pension Plan may also be entitled
to receive S.U.B. Termination Benefits in accordance with the terms
of the S.U.B. Plan.
C. The employee may elect S.U.B. Termination Benefits in accordance with the
terms of the S.U.B. plan at any time within one (1) year after notice of
termination has been mailed to him.
An employee other than an employee who is eligible for an immediate
pension may elect layoff prior to submitting his application for S.U.B.
Termination Benefits and shall receive S.U.B. layoff or reduced layoff
benefits provided the eligibility and other requirements of the S.U.B.
Plan are met.
9
<PAGE> 10
D. If the facilities which have been permanently shutdown are re-opened by
the Company within three (3) years of the date of the permanent shutdown,
an employee who has retired under the Pension Plan shall be eligible for
recall in accordance with his seniority status at the time of the
permanent shutdown. An employee who has elected S.U.B. Termination
Benefits shall also be eligible for recall in accordance with his
seniority status at the time of the permanent shutdown. Any pensioner who
has received S.U.B. Termination Benefits and accepts recall and any
former employee who has received S.U.B. Termination Benefits and accepts
recall shall repay said Termination Benefits to the S.U.B. Trust Fund or
to the Company, whichever was the source of the Termination Benefits, in
accordance with the S.U.B. Plan Agreement. Any employee who accepts
recall shall have his previously accumulated seniority rights, pension,
S.U.B., insurance, and vacation credits as of the last day the employee
worked or at the date of permanent shutdown, whichever occurs later,
reinstated on the date he returns to work.
E. An employee who is not eligible for an immediate pension may elect layoff
and shall receive S.U.B. layoff or reduced layoff benefits provided the
eligibility and other requirements of the S.U.B. Plan are met.
The employment rights of any employee on layoff shall terminate three (3)
years after the last day the employee worked and the employee's seniority
shall be broken.
F. An employee's participation in the group insurance program shall
terminate effective the day following the last day the employee worked
and pending claims shall be processed in accordance with the terms of the
existing group insurance program. No employee shall be eligible for
holiday pay or vacation pay other than vacation pay due after the last
day the employee worked or the date of the permanent shutdown whichever
occurs later. No employee shall accumulate credited service under the
Pension Plan after the last day the employee worked or the date of the
permanent shutdown, whichever occurs later.
(8) In the event the Company constructs a new plant that will affect the
employment status of employees in the Company's plant or plants
comprising this bargaining unit, such employees shall be given an
opportunity to make application for employment in the new plant
before it starts operation, and such employees shall be given
preferential employment rights for the highest rated job the
employee is capable of performing. Such an employee shall transfer
with him all his previously accumulated pension, S.U.B., insurance
and vacation credits. His seniority rights at the former plant shall
terminate upon his establishment of seniority rights in the new
plant.
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<PAGE> 11
(9) When an employee has been laid off or displaced because of permanent
changes in the working force or because of a plant closing, he may
make written application within fifteen (15) days of layoff or
displacement for employment in another plant of the Company and he
shall be given preferential employment rights for job openings at
such other plant, providing such employee is capable of performing
the job that may be available at such other plant of the Company.
Any employee so transferring from one plant to another of the
Company shall retain his previously accumulated pension, S.U.B.,
insurance and vacation credits. His seniority rights at the former
plant shall terminate upon his establishment of seniority rights in
the plant to which he transferred.
(10) Employees transferring from one plant to another as provided in (a)
(7), (8) and (9) of this Article will receive a moving expense
allowance. The Company will reimburse each employee for actual
moving expenses incurred to move furniture and other household goods
up to a maximum of $1,000 per employee.
(b) When a production curtailment or a plant shutdown causes a reduction in
personnel in a department or throughout the plant, a senior employee
whose regular job is not required shall have the option of accepting
available work for which he is qualified or accepting layoff. A senior
employee who is eligible to accept layoff shall be recalled (1) when his
job resumes operation, or (2) when the plant starts up, whichever occurs
sooner providing his seniority permits such recall. A senior employee who
elects to accept available work shall be entitled to:
(1) First, bump any junior employee whose job is in the same department
as the senior employee provided that the senior employee previously
held the job permanently or temporarily pursuant to Article VII,
Section (i) (3), for a sufficient period of time to demonstrate his
ability to satisfactorily perform the job as it is constituted at
the time of the production curtailment or plant shutdown, or if no
jobs are available.
(2) Second, bump any junior employee whose job was previously held by
the senior employee permanently or temporarily pursuant to Article
VII, Section (i) (3), for a sufficient period of time to demonstrate
his ability to satisfactorily perform the job as it is constituted
at the time of the production curtailment or plant shutdown; the
senior employee must attempt to bump into a job that he previously
held in the reverse order of his promotions. In other words, he must
first attempt to bump into the job he held immediately prior to his
present job.
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<PAGE> 12
(3) If step (1) or (2) above would result in an employee becoming a part
of the labor crew, he may exercise the bumping rights set forth in
(4) below prior to entering the labor crew.
(4) Third, a senior employee can bump a junior employee on a plant-wide
basis except for any maintenance job, any laboratory job, or the
control room operator's job, provided he is qualified to perform the
job immediately.
The above bumping procedure must occur in the order designated.
However, an employee may bump the most junior employee in a
particular classification on a particular shift rather than being
forced to bump the most junior employee holding that particular
classification without regard to the shift the employee would have
to work on. Any junior employee who is displaced by a senior
employee shall have the same rights as the senior employee set forth
herein. After the bumping is completed, the Company has the right to
require a senior employee to perform available work during the
curtailment or shutdown if there is no junior employee with the
necessary qualifications to perform the work.
A plant shutdown is defined as a period during which none of the
clinker burning units are producing.
The wage rate paid during a production curtailment shall be the wage
rate of the job performed. An employee who works on two (2) or more-
jobs in one day shall receive the highest wage rate for only the
time worked on the higher rated job. However, should the employee
work on a higher rated job(s) four (4) hours or more in the work day
he shall receive the higher rate of pay for the entire day.
During periods of plant shutdowns when employees are needed for
maintenance, repairs, or work on plant alterations, the wage rate
paid to employees who are retained for work during the first
forty-five (45) days of a plant shutdown shall not be less than the
employee's regular straight-time wage rate normally paid when the
plant is producing. After forty-five (45) days, the wage rate paid
shall be the wage rate of the job performed. An employee who works
on two (2) or more jobs in one day shall receive the highest wage
rate for only the time worked on the higher rated job. However,
should the employee work on a higher rated job(s) four (4) hours or
more in the work day he shall receive the higher rate of pay for the
entire day. The ninety-five percent (95%) rate protection is not
applicable to any bumping under this procedure.
When the Company determines that additional jobs are required during
or following a production curtailment or a plant
<PAGE> 13
shutdown and the work force must be increased, the manner in which
the reduction of forces took place will be reversed in order of
seniority to those employees who previously held the job for a
sufficient period of time to demonstrate his ability to
satisfactorily perform the job as it is constituted at the time of
the production curtailment or plant shutdown.
In the event that during a production curtailment or a plant
shutdown an employee bids for and is awarded another job, he shall
lose all rights pertaining to the job the employee previously held.
Subsection (b) above shall not add to, subtract from or otherwise
modify the maintenance training agreement by and between the Company
and the International and/or Local Union negotiated after the
effective date of this Agreement.
See Appendix C for definitions of departments as applied to this
Article.
(c) (1) The Company agrees to post a notice at least one week in advance of
an intended shutdown. This shall not apply to emergency shutdowns
due to reasons beyond the Company's control: such as power failure,
labor disputes, fire, flood, or acts of God.
(2) The Company will post a notice seven (7) days in advance indicating
when a production curtailment or plant shutdown will end.
(3) Whenever a layoff is planned because of a change or reduction in
plant production requirements, the Company will, not less than seven
(7) calendar days prior to the effective date of the layoff, post a
bulletin stating the expected extent of such layoff, and the
expected effect on the work focus. In the event the required notice
is not given in accordance with the above, the Company will pay the
laid-off employee(s) the scheduled time lost at the applicable
straight time shift rate. The seven (7) calendar day period shall
commence on the completion of the third shift following the day in
which the notice was posted. The foregoing does not apply to
disciplinary layoffs and layoffs because of curtailment made
necessary by disaster or emergency conditions affecting the ability
of the Company to physically operate the plant.
(d) Company personnel excluded from the bargaining unit shall not perform
bargaining unit work except in an emergency, endangering life or
property: for training or instruction purposes for testing, diagnosis,
analysis or when necessary to prevent disruption of the flow of
operations or when necessary to meet the interest of efficient
operations.
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<PAGE> 14
Should a Company person excluded from the bargaining unit violate this
commitment, the Company will be required to pay to the effected worker or
workers double time (his or their) regular straight time hourly rate for
anytime worked by persons not included in the bargaining unit, with a
minimum of four (4) hours pay. If there is no affected worker, the
penalty for such work shall be paid to the worker lowest in overtime in
the classification and/or department.
(e) Any employee who becomes incapacitated and, on the basis of competent
medical opinion, cannot perform the duties of his regular job may
exercise his plant seniority through the bumping procedure to move to
another position within the bargaining unit at the plant for which he
could qualify within a reasonable period of time, but not to exceed
ninety (9O) days. This in no way affects the bidding rights of the
employee. The ninety-five percent (95%) rate protection is not applicable
to bumping under this procedure.
Any employee who is displaced by an incapacitated employee pursuant to
paragraph (e) of this Section may exercise his plant seniority to bump
into another position within the bargaining unit at the plant for which
he is qualified in the same manner as provided for in the job bidding
procedures.
(f) As soon as the Company knows that there will be a job elimination Tit
will notify the Union as to when the elimination will take place.
ARTICLE VI
EMPLOYMENT AND PROMOTION
(a) All vacancies and new jobs created shall be posted no later than the
eighth (8th) day following the date the vacancy occurred or the new job
was created. Said vacancies and new jobs shall be posted for seven (7)
days to allow any employee in a classification whose straight time hourly
rate is less than the bid job to make application in writing for such
job. See Attachment "A". The Company will consider every application in
terms of:
(1) Seniority
(2) The applicant's skill and ability and physical fitness measured
against the requirements of the job.
Where two or more applicant's qualifications in (2) are relatively
the same, seniority shall govern.
If an employee proves unsatisfactory, he shall be reinstated to his
previous job, and the Company will consider the remaining applicants
in accordance with the above.
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<PAGE> 15
This article does not require the Company to award a job to any
applicant if no applicants are qualified to perform the work.
The Company has the right to assign any employee to fill a new job
or to fill a vacancy until the job has been awarded.
The Company will meet with the Local Union Committee to explain its
decision when the Company awards a job to a junior applicant. Any
senior applicant shall have the right to challenge the Company's
award by filing a grievance in a timely manner. Any employee
reinstated to his previous job shall have the right to challenge his
disqualification by filing a grievance in a timely manner.
(b) Prior to the time that bids are removed from the bid box, an employee may
withdraw his bid by placing a withdrawal slip in the bid box.
Bid boxes will contain two (2) locks; one for the Company and one for the
Union.
(c) Any employee can give the Company a letter which lists in order of
preference all jobs that the employee wishes to bid if such jobs become
vacant and are posted while the employee is absent from work because of a
scheduled vacation or due to an illness or an injury. Furthermore, if the
Company creates and posts a new job during such period that an employee
is absent from work due to an illness or an injury, the Company will use
its best efforts to notify the employee about such job no later than the
last day such job is posted to learn whether the employee wishes to bid
on the job.
(d) An employee who bids for and is awarded a permanent job can bid for the
same permanent job even though it is in the same bracket if the
employee's sole reason is to work different days and/or shifts.
(e) If the employee previously held the classification on a bid basis or
temporary basis (including step up or labor fill in) he will have no
option, unless the job has been substantially changed in which case he
will have a five day option. An employee who has not held the
classification on any basis will be given a five day option.
(f) An employee who bids and is awarded a job shall receive the rate of the
new job when he moves on to the job or on the Sunday following two full
weeks subsequent to the date of the award, whichever comes first.
(g) See Appendix F for examples.
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<PAGE> 16
ARTICLE VII
WORKING CONDITIONS
(a) Hours of work
Eight (8) hours shall be the regular work day and forty (40) hours shall
be the regular work week. This shall not constitute a guarantee of work.
The work day shall commence with the beginning of the morning shift and
work week shall commence with the beginning of the morning shift on
Sunday. The starting and quitting times for the shifts shall not be
permanently changed during the term of this Agreement except by written
agreement of the Company and the Union.
(b) Work Schedules
(1) *Work schedules for each work week will be posted on Thursday of the
previous week prior to the end of the first shift. If an employee's
work schedule is changed after the end of the first shift of the
preceding Thursday, he shall be compensated by multiplying the
regular straight time hourly wage rate by one-half (0.5) for the
first eight (8) hours worked in his new schedule and the premium
shall be paid in addition to whatever compensation the employee is
otherwise entitled to receive under any other Section of the
Agreement.
(2) If an employee's work schedule is not posted on Thursday of the
previous week prior to the end of the first shift as provided above
the first eight (8) hours worked the following week shall be
considered out-of-schedule and will be paid accordingly. An
employees work schedule is changed when the employee is required by
a schedule posted after the first shift on the previous Thursday to
work hours in place of the hours the employee was required to work
by the schedule posted prior to the end of the first shift on the
previous Thursday.
* See Attachment "B"
(3) If any employee's schedule is changed after the Thursday posting as
a result of an employee who is absent from the plant not notifying
the Company by 9:00 A.M. on the date of the posting that he will be
available for work the following week, no schedule penalty shall be
paid to the employees so affected including the employee returning
to work.
The above exemption from the scheduling clause penalty shall not
apply to schedules changed as a result of an employee returning from
vacation, a floating holiday, bereavement leave or jury duty.
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<PAGE> 17
(4) If any employee's schedule is changed after the Thursday posting as
a result of an employee exercising his "work option" under Article
VI (e), no schedule penalty shall be paid to that employee
(including the employee who exercises his "work option".
(5) The current practice of scheduling an employee so that the employee
has two consecutive days off work under normal working conditions
shall not be changed during the term of this Agreement except by
written agreement of the Company and the Union.
(6) The Company will not permanently change the work schedule for a job
during the term of this Agreement. If the Company decides that the
work schedule for a job should be permanently changed, the Company
will eliminate the old job and bid the new job. The status of any
employee who is affected by this sub-paragraph (6) will be
determined by the procedures outlined in Article V (b) except that
the bumping procedure outlined in steps (1) through (4) of Article V
(b) need not occur in order set forth, and further provided should
the employee elect to bump under Article V (b) (4), he will be given
a one week break-in if required.
(7) When the Company changes an employee's schedule, the Company will
explain to the employee the reason for the change and the estimated
duration of the change. The estimated duration of the change is
provided the employee solely to assist the employee in personal
planning and does not limit the Company's right to increase or
decrease the duration of the change.
(8) See Appendix E for examples. See Appendix B for normal schedules.
See Appendix D for those jobs normally filled.
(c) Straight Time Work
All hours worked and all hours paid shall be compensated by multiplying
the regular straight-time hourly wage rate by one (1.O) unless expressly
provided otherwise.
(d) Rates of Pay - Overtime
(1) The applicable overtime rate shall be time and one-half (1.5) the
employee's straight time hourly rate except on a Sunday or a
holiday, in which case the applicable overtime rate shall be:
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<PAGE> 18
Sunday
A. Straight Time
1. Up to 8 hours - Article VII, Section (h) 1-1/2X
2. Over 8 hours and up to 12 hours 2X
3. Over 12 hours 2-1/2X
B. Overtime and Callouts*
1. Eight (8) hours or less 2X
2. Over 8 hours and up to 12 hours 2-1/2X
3. Over 12 hours 3X
Holiday
A. Straight Time
1. Up to 8 hours - Article IX, Section (d) 2-1/2X
2. Over 8 hours and up to 12 hours 3X
B. Overtime and Callouts*
1. Up to 8 hours 3X
(2) Over eight (8) hours or over forty (40) hours: The Company agrees to
pay for all times in excess of eight (8) hours per day, forty (40)
hours per week, at the applicable overtime rate.
If an employee does not work a regularly scheduled workday through
action of the Company, excused absence or because of a holiday, that
day shall be considered as actually a day worked for all overtime
purposes.
(3) Callouts and off-days: In case an employee is called for emergency
work during any hour in the day or week, in addition to his regular
schedule, he shall receive a minimum of four (4) hours pay for such
work, at the applicable overtime rate. However, if he is notified
before the end of his regular shift to report early, it shall not be
considered a callout. Callout hours and off-day hours are overtime
hours. All Sunday callouts to be paid a minimum of four (4) hours at
the applicable Sunday rate.
(4)* In the event an employee works more than twelve (12) hours in the
workday, he shall be paid for all hours worked in excess of such
(12) twelve hours at double (2x) his regular straight time hourly
rate.
(* See Attachment "B")
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<PAGE> 19
After an employee has been engaged in work for twelve (12)
consecutive hours, he shall be paid for all consecutive hours worked
immediately succeeding and in excess of such twelve (12) hours at
double (2X) his regular straight time hourly rate. *If an employee
is being paid the rate of double time under the foregoing
paragraphs, his rate of pay shall not be reduced when his work
continues into or overlaps his regular shift. However, the Company
may exercise either of the following options:
A. The Company may instruct the employee to continue to the end of the shift
at the double time rate, or
B. The Company may send the employee home at any time during the shift,
provided the remainder of the shift is paid for at straight time. Such
employee cannot be called back to work until he has been off duty for
eight (8) consecutive hours.
In no event shall the first two provisions of this section be applied to
the same hours of work. The provision which creates the highest earnings
shall be applied.
(5) Lunch period interrupted by work assignment: One-half (0.5) hour at
applicable overtime rate shall be paid for any scheduled lunch
period interrupted by a work assignment and either prior or
subsequent to the regular lunch period, reasonable time for lunch
shall be granted with pay for same at the employee's regular rate.
(6)* Seventh consecutive day: If an employed actually works seven (7)
consecutive workdays in the plant workweek regardless of the number
of hours worked on any workday, the employee shall be compensated by
multiplying the classified hourly wage rate by one (1.O) for each
and every hour worked during the seventh consecutive workday, and
this premium shall be paid in addition to whatever compensation the
employee is otherwise entitled to receive under any other section of
the Agreement.
(7) Overtime paid for on a daily basis shall not be duplicated on a
weekly basis.
(e) Limitations upon Overtime:
(1) Every reasonable effort will be made by the Company to avoid
requesting any employee to work overtime and the Company will
consider under the circumstances involved any reasonable excuse from
an employee for not working the overtime. During the extended period
of scheduled overtime, the Company will give special consideration
to
* See Attachment "B"
19
<PAGE> 20
an employee's request to be excused from overtime work because of
fatigue as long as it is consistent with the Labor Agreement and
plant operational requirements. Whenever an employee is on layoff
due to lack of work or because of curtailment of operations no
overtime work will be scheduled on any work which the laid-off
employee is capable of doing and is able to perform, except in cases
of emergency repair or unscheduled absences of other employees. The
foregoing to the contrary notwithstanding a laid-off employee will
not be called back to work unless; there is at least thirty-two (32)
hours work in the work week for such employee.
(2) Overtime in the various job classifications shall be equally divided
among the employees of the respective job classifications insofar as
it is practical to do so. When an employee is not available for
overtime in his classification, the Company will make every effort
to use another qualified employee in the same department before
going to another department. This will not prevent the Company from
going outside the department where the overtime is required to avoid
the payment of a rate whether penalty or premium of greater than
time and one-half (1.5). The practice of posting overtime will be
continued.
(3) After an employee is transferred or assigned to a classification
other than his own, he shall be eligible for the same overtime
within that classification as would the employee he replaced.
(4) Employees who are called upon to work overtime shall not be laid off
during their regular work time for the purpose of equalizing said
overtime.
(5) The Company will pay overtime in fifteen (15) minute increments
during the first hour of overtime.
(f) (1) Any employee who has not been notified of his overtime assignment at
least twelve (12) hours prior to the commencement of the overtime
assignment and who works more than ten (10) consecutive hours, shall
be provided with a hot lunch. This lunch shall be eaten at the end
of the normally scheduled shift and before the commencement of the
overtime assignment. The Company will allow the employee thirty (30)
minutes away from his/her job to eat his/her lunch. If each employee
works in excess of fourteen (14) consecutive hours he/she shall be
provided with an additional lunch and thirty (30) minute break, and
lunches and breaks will be furnished at the end of every four (4)
consecutive hours worked thereafter. See Attachment "C".
20
<PAGE> 21
(2) Any employee who is called out and works more than four (4)
consecutive hours shall be provided with a hot lunch which shall be
eaten at the end of said four (4) consecutive hours. In addition,
said employee shall be provided with a hot lunch every four (4)
consecutive hours worked thereafter.
There shall be no duplication of hot lunches under provisions (1)
and (2) above. The employee shall be given reasonable time to eat
his lunch without loss of pay.
(g) Eight Consecutive Hours Off-Duty: *
(1) An employee should receive at least eight (8) consecutive hours off
work within the fourteen (14) consecutive hours immediately
preceding the start of his next scheduled shift. In the event an
employee does not receive eight (8) consecutive hours off work
within the fourteen (14) consecutive hours immediately preceding the
start of his next scheduled shift, the Company shall exercise one of
the following options:
A. Instruct the employee to report late for his next scheduled shift by the
number of hours his longest consecutive off-duty period falls below eight
(8) hours and pay the employee the appropriate straight time rate for
those hours not worked between the starting time of his scheduled shift
and the time he reports to work in accordance with the Company's
instructions. The appropriate straight time rate on the workday Sunday
shall be one and one-half (1.5) and on a recognized holiday, two and
one-half (2.5).
B. Instruct the employee to report to work at the starting time of his
scheduled shift. The employee shall receive a premium for those hours
worked which, if added to his longest consecutive off-duty period, equal
eight (8) hours. The premium shall be determined by multiplying the
classified hourly wage rate by one (1.O). The premium shall be in
addition to whatever compensation the employee is otherwise entitled to
receive under any other section of this Article.
(2) If an employee does not receive at least eight (8) consecutive hours
off work within the fourteen (14) consecutive hours immediately
preceding the start of call-out hours worked on an off-day (provided
that any of the call-out hours worked occur within the hours the
employee would have otherwise been scheduled to work had the
employee not been scheduled off), the employee shall receive a
premium for those hours worked which, if added to his longest
consecutive off-duty period, equals eight (8) hours. The premium
shall be determined by multiplying the classified hourly wage rate
by one (1.0). The premium shall be in addition to whatever
compensation the employee is otherwise entitled to receive under any
other Section of this Article.
21
<PAGE> 22
(h) Sunday Work:
All hours worked by an employee on Sunday which are not paid for on a
premium and/or overtime basis shall be paid at the rate of one and
one-half (1.5) times the classified hourly rate, exclusive of shift
differentials. There shall be no duplication or pyramiding of premium day
and/or overtime under this provision.
* See Attachment "B"
(i) Temporary Job Vacancies:
(1) The Company shall not be required to fill temporary job vacancies,
whether scheduled or unscheduled, unless the efficient operation of
the plant requires that said temporary job vacancies be filled.
(2) Consistent with the scheduling clause, the Company will post a list
of all jobs that are to be filled the following week.
In addition, for the sole purpose of facilitating the assignment of
fill-ins for the following week, the Company will post on Monday, a
list of the jobs that, to its knowledge, will be needed to be filled
the following week. If an employee wishes to be considered for any
fill-in for the following week he must notify the Company which job
he desires on a form provided by the Company by 4:00 P.M. the
Wednesday after the Monday posting or he will not be considered for
the fill-in. This Monday posting does not replace the Thursday
posting requirements nor is the Company liable for any penalties for
failure to make such Monday posting.
Laborers who wish to be considered for these assignments must follow
the above procedures. If there are not enough employees signed up to
meet the Company's requirements on this posting, the Company will
assign the junior laborer who is broken in on that job (if it is a
job that requires break-in time).
(3) The Company can assign laborers to fill temporary vacancies,
scheduled or unscheduled, according to the seniority of the
individual provided that he has the skill and ability to perform the
required work. If only one (1) laborer is qualified, he must accept
the assignment. Once
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laborer assignments have been completed, no laborer may be bumped
out of his assigned job, for the week for which the assignment has
been made, by another laborer. Vacancies which are normally filled
are outlined in Appendix D.
(j) Wage Rate - Transfer and Assignments
(1) An employee regularly scheduled to work on two (2) or more jobs
having different wage rates shall receive the highest rate of the
entire week. If a job is regularly scheduled to be performed each
week at least one work day in the work week, the employee filling
that job shall receive the highest wage rate for the entire week. An
employee who is scheduled to work five (5) work days during the work
week on a job or jobs having a higher straight time hourly wage rate
or wage rates than the employee's regular straight time hourly rate,
shall be paid at the higher straight time hourly wage rate for the
entire week. An employee who works on two or more jobs in one day
shall receive the highest wage rate for only the time worked on the
higher rated job. However, should the employee work on a higher
rated job(s) for four (4) hours or more in the workday, he will
receive the higher rate of pay for the entire day. The term "entire
week" used in this section shall mean the 168 consecutive hours
beginning at 7:00 A.M. on Sunday and ending at 7:00 A.M. on Sunday.
The term "entire day" used in this section shall mean the 24
consecutive hours beginning at 7:00 A.M. and ending the following
day.
(2) Employees temporarily transferred shall be paid the classified
hourly rate of the job being performed or the classified hourly rate
of his regular job, whichever is greater.
(k) (1) The Company shall have the right to utilize employees to perform any
job: provided, however, overtime and callouts in any classification
shall be offered to the available employees in that classification
before other employees are assigned such work. See Attachment "C"
for Letter of Understanding concerning transfers.
(2) The Company will consider a request from a fixed shift employee to
replace an employee on the day shift in his classification when the
day shift employee is on vacation or extended illness in excess of
one week provided however, that the laborer used to replace the
offshift employee has been previously trained in that
classification. The Company retains the right to decline these
requests, but will not unreasonably withhold such permission.
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(1) Reporting Pay:
Any employee who is required to report for work shall be given at least
four (4) hours pay at the classified hourly rate, and shall receive full
time pay for all time thereafter that he is required to remain on the
premises ready for work. Any employee put to work on his regular working
day shall receive a full day's pay at the classified hourly rate.
The above does not apply to an employee who is returning to work from a
medical absence who has not given the company 24 hours advance notice of
his return.
(m) Funeral Leave
An employee upon the notification of the death of his or her father,
mother, spouse, son, son-in-law, daughter, daughter-in-law, brother,
sister, stepfather, stepmother, stepson, stepdaughter, grandson,
granddaughter, half-sister, half-brother, mother-in-law, father-in-law,
brother-in-law, sister-in-law, grandparents, and spouses grandparents
shall be granted his or her next three (3) scheduled working days off
with pay (four (4) days off with pay if the employee is required to
travel beyond a radius of 500 miles).
The foregoing to the contrary notwithstanding no bereavement payment will
be made unless the employee attends the funeral nor will payment be made
if there are more than fourteen calendar days between the date of death
and the next scheduled workday .
Payment by the Company for such time lost shall be on the basis of eight
(8) hours per day at the employee's regular straight time hourly rate,
including shift differential.
As used herein, brother-in-law is defined to mean (1) the brother of
one's husband or wife, (2) the husband of ones sister, (3) the husband of
the sister of one's spouse: and sister-in-law is defined to mean (1) the
sister of one's husband or wife, (2) the wife of one's brother, (3) the
wife of the brother of one's spouse.
The above clause shall not apply to an employee who is laid off, except
that when an employee is notified to return to work on or before the date
of the funeral, he shall be granted full funeral leave with pay. -
(n) Jury Duty
Any regular employee (as distinguished from a probationary employee)
required to perform jury duty on a day he is scheduled to work, shall be
excused from work on that day. The
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Company shall pay the employee the difference between the amount received
from such jury duty and eight (8) hours at his regular rate of pay plus
shift differential if involved.
The day or days paid for such jury service shall be counted as eight (8)
hours worked for the purpose of computing weekly overtime.
(o) Shift Change
(1) The end of the shift whistles will be combined to one whistle,
twenty (20) minutes before the end of the shift. This will allow
ample time to put tools away and shower. As soon as employees' tools
are put away, they may immediately proceed to the showers. Employees
should stay on their job until this whistle blows.
(2) An employee who does receive a paid lunch period and whose job is
set forth in the list below shall not clock out prior to the end of
his shift. Providing he will not work past the end of his shift on
an overtime assignment, he shall be permitted to leave his place of
work 15 minutes prior to the end of the shift to enable him to clean
up and change clothes. Should the employee elect to spend additional
time in cleaning up following the actual end of the shift, he shall
be paid as though he had clocked out at the actual shift change
time.
Any employee who works past the end of his shift on an overtime
assignment, except in those cases where an employee is filling a
vacancy, shall clock out no more than 15 minutes after he leaves his
place of work. This 15 minute allowance shall not apply to an
employee filling a vacancy on overtime, an employee staying over
less than one hour nor to an employee on call out.
Should the employee miss any part or all of his 15 minute wash up
time, there is no penalty. However, if said employee is regularly
denied his wash-up time, he may file a grievance in a timely manner.
(3) An employee not receiving a paid lunch period who works past the end
of his shift on an overtime assignment shall clock out no more than
fifteen (15) minutes after he leaves his place of work. This fifteen
(15) minute allowance shall not apply to an employee staying over
less than one (1) hour nor to an employee on call-out.
(p) Rest Breaks
(1) An employee who does not receive a paid lunch period will be allowed
a fifteen (15) minute rest break away from his job during the first
four (4) hours of his shift. Break times shall be determined by the
employees foremen, and
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the efficient operation of the plant shall be controlling. The
fifteen (15) minute break shall be strictly construed to be the
total time away from the job. Should any employee regularly be
denied a break, he may file a grievance in a timely manner.
(2) Any employee who does receive a paid lunch period and whose job is
set forth in the list below shall be entitled to 15 minutes away
from his job to eat lunch. Lunch breaks for all employees in this
group shall be scheduled so that there is no interruption of
operations. (The Company shall have the right to stagger lunch
breaks.) Should the employee miss any part of or all of this 15
minute lunch break, there is no penalty. However, if said employee
is regularly denied his lunch break, he may file a grievance in a
timely manner.
(q) If after the Thursday posting and prior to Sunday, it is determined that
an employee is to be scheduled to work in another classification, he
shall share overtime rights in that classification starting on Sunday.
This sub paragraph (q) shall not void the requirement of Article VII (b).
(The schedule change clause.)
(r) The Company will not require an employee to clock out and then require
him to clock back in for the sole purpose of avoiding penalties provided
for in Article VII.
(s) Any other provisions of this labor agreement to the contrary
notwithstanding, no employee shall receive pay for any hour worked or
unworked which singly or in any combination, exceeds triple his regular
straight time hourly rate.
ARTICLE VIII
VACATIONS WITH PAY
(a) Any employee who works and receives earnings during at least thirteen
(13) weeks in each calendar year shall be granted a vacation off work
without loss of pay, according to the following schedule.
(b) All employees hired prior to May 1, 1996 shall be subject to the
following vacation eligibility schedule:
(1) All employees who have completed one (1) or more anniversary years
of service, but less than three (3) years of service, will be
entitled to two (2) weeks of vacation, provided they meet all other
requirements of this Article. Employees who have completed three (3)
or more anniversary years of service, but less than ten (10) years
of service will be entitled to
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three (3) weeks of vacation, provided they meet all other
requirements of this Article. Employees who have completed ten (10)
or more anniversary years of service, but less than twenty (20)
years of service, will be entitled to four (4) weeks of vacation,
provided they meet all other requirements of this Article. Employees
who have completed twenty (20) or more anniversary years of service,
but less than thirty (30) years of service will be entitled to five
(5) weeks of vacation, provided they meet all other requirements of
this Article. Employees who have completed 30 or more anniversary
years of service, but less than thirty-five (35) years of service,
will be entitled to six (6) weeks of vacation, provided they meet
all other requirements of this Article. Employees who have completed
thirty-five (35) or more anniversary years of service will be
entitled to seven (7) weeks of vacation, provided they meet all
other requirements of this Article.
(2) Employees hired after May 1, 1996 shall be subject to the following
vacation schedule:
(1) All employees who have completed one (1) or more anniversary years
of service, but less than five (5) years of service, will be
entitled to two (2) weeks of vacation, provided they meet all other
requirements of this Article. Employees who have completed five (5)
or more anniversary years of service, but less than fifteen (15)
years of service will be entitled to three (3) weeks of vacation,
provided they meet all other requirements of this Article. Employees
who have completed fifteen (15) or more anniversary years of
service, but less than twenty-five (25) years of service, will be
entitled to four (4) weeks of vacation, provided they meet all other
requirements of this Article. Employees who have completed
twenty-five (25) or more anniversary years of service, will be
entitled to five (5) weeks of vacation.
(c) Vacation pay will be based on a forty (40) hour week at the rate of the
permanently assigned classification on which an employee is working at
the time he takes his vacation. If an employee has held a single higher
rated classification for more than six (6) months during the year
preceding his vacation, he will receive vacation pay computed at the
higher rate. Vacation pay shall include appropriate shift differential
for those on fixed shifts. Employees working on rotating shifts shall be
paid an average of the rates for the rotating shifts involved. Upon
sufficient notice given to the Personnel Clerk, the Company will give an
employee his vacation pay on his last shift prior to the beginning of his
vacation.
(d) (1) Vacations will not be cumulative, but so far as practical, be
granted at times most desired by employees, but the final right to
allotment of vacation periods is exclusively reserved to the Company
in order to insure the orderly operation of the plant. In exercising
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its right to allot vacation periods, the Company will not require
any employee who is on layoff to take his vacation during periods of
plant shutdown or curtailment of operation. Where requested vacation
periods conflict, preference shall be given to the older employee in
point of service.
(2) It is further agreed that if any employees have previously selected
their vacation period so that it occurs during an unforeseen
shut-down, such vacation period shall not be changed. Vacations
shall be taken by the employee within the calendar year in which it
is granted.
(3) The Company shall submit appropriate application blanks to the
employees within the first week of November, and they are to be
returned to the Company within one (1) month. In the event an
employee fails to return this form to the Company, then, after this
one (1) month period, the Company shall designate the employee's
vacation period, and notify the employee who fails to return this
application to the Company and the Union of the vacation period
designated for the employee. All vacation blanks received from
employees or issued by the Company shall be returned to the
employees not later than January 1st.
(4) (a) An employee with four (4) or more weeks of vacation can take pay in
lieu of vacation for a maximum of two (2) weeks of his total
vacation eligibility. The above employee may request his payment at
any time from January 1st till the date he turns in his application
blank for his vacation selection. He will receive payment the next
pay period following the date he makes the request.
(b) However, if the above employee does not request two weeks pay in
lieu of time off, he may request up to two weeks pay in lieu of time
off during the calendar year during periods of plant shutdown or
curtailment of operations. Such payment will be made the next pay
period following the date he makes such request.
(c) An employee with four or more weeks vacation, may change two of his
scheduled weeks of vacation and reschedule them during a plant
shutdown or production curtailment provided that the departmental
vacation rules will allow him to be absent from the department.
(5) Any change in an employee's selected and designated vacation period
must be approved by the Company and the Union committee, except as
provided in (4) (b) and (c) above.
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(6) Employees entitled to two (2) or more weeks of vacation may be
permitted to take such vacations in two (2) separate periods of not
less than one (1) week each. seniority preference, however, can be
exercised in only (1) of such vacation periods.
In addition to the vacation general rules that are now in effect,
the following procedure, which indicates how subparagraph (d) will
be applied, shall be followed:
(e) Step I
The most senior employee in a department will be asked to choose his
preference period which must be a period of one or more consecutive
weeks. After the aforementioned weeks have been selected, each man in
terms of descending seniority will be asked to select his preference
period until all employees in the department have made their preference
choice.
Step II
Next, the most senior employee in the department will again be asked to
make a selection for those weeks remaining that have not been earmarked
as a preference period. He will now have made a selection for all weeks
for which he is eligible. After the aforementioned weeks have been
selected, each man in terms of descending seniority will be asked to
select his "other than preference" weeks until the least senior man had
made his selection. The procedure for this department is now complete.
(f) Employees who have one (1) or more years of service and who are separated
from service for any reason will receive vacation pay due them on the
following basis: One-twelfth (1/12) vacation credit for each one hundred
(100) hours worked in his current calendar year.
(g) In the event the employment of any such employee is terminated for any
reason, the Company shall pay to the employee, or to his beneficiary in
the event of his death, all vacation pay due.
(h) If an employee enters military service and is not expected to return
before the end of the calendar year, the Company shall pay to the
employee, all vacation pay due.
(i) Employees who wish to have a separate vacation check issued must give the
Company two weeks notice and they will be only issued on payroll weeks.
(j) An employee will be allowed to take one (1) week of vacation on a day to
day basis for prearranged time off with at least seven (7) days prior
notice. The Company will maintain the corresponding percentage of
employees for vacation purposes at 14.5% plus two extra employees off
during May, June, July, August and September.
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Vacation taken on a day to day basis, as noted in (j) above, shall not be
included in the calculation in section (j) above, of the percentage of
employees permitted off for vacation purposes.
The final right of allotment of vacation periods is exclusively reserved
to the Company in order to ensure the orderly operation of the plant.
ARTICLE IX
HOLIDAYS
(a) New Year's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Veteran's Day, Thanksgiving Day, the first day of Pennsylvania Deer
Season, the day before Christmas, Christmas Day and one floating holiday
are recognized as "holidays".
(b) If any such holiday falls on Sunday, the following Monday shall be the
recognized holiday. The holiday hours shall be those hours within the 24
hour period, commencing with the beginning of the first shift on the
morning of the holiday and ending at the beginning of the first shift the
following day.
(c) If any holiday falls on Saturday, the preceding Friday shall be the
recognized holiday.
(d) Employees who are scheduled to work on a holiday shall be paid two and
one half (2.5) times the classified hourly rate.
(e) Hours worked on a holiday in excess of eight (8) in a work day, in excess
of forty (40) in a work week, on off days, and on callouts shall be paid
for at the applicable overtime rate.
(f) If no work is required of an employee on the above holidays, he will
receive eight (8) hours pay at his regular straight time rate, provided
he meets the following qualifications:
(1) The employee shall have been employed by the Company for at least
thirty (30) Calendar days prior to the holiday.
(2) The employee shall have worked his last scheduled working day prior
to and his next scheduled working day after such holiday unless
excused therefrom by the Plant Manager on account of sickness,
accident, death in the family, or other excused absence. In no event
shall a holiday be paid for unless an employee has also worked
during the thirty (30) day period immediately preceding or
immediately following the holiday except that the thirty (30) day
limitation shall not apply if the employee was temporarily absent
from work because of sickness, accident, or layoff. In any event,
the employee must work at least one (1) day in the calendar year in
which the holiday is granted.
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(g) If an employee is scheduled to work on a holiday and fails to work, he
shall not receive holiday pay.
(h) If an employee works on a holiday, the holiday shall be counted as a day
worked for computing his weekly overtime. Paid holiday is to count as day
worked for overtime purposes, provided holiday falls on one of employee's
scheduled work days and he would have worked that day except for holiday
observance.
(i) An employee not scheduled to work the holiday and who subsequently
performs work on a holiday will be considered as being on callout and
will be paid eight (8) hours at his regular straight time hourly rate in
addition to three (3) times his regular straight time hourly rate for all
time worked with a minimum of four (4) hours at triple time.
(j) Work schedules for each work week which include a holiday will be posted
prior to the end of the first shift on Thursday of the previous week. If
an employee is scheduled to work on a holiday, but then is instructed by
the Company not to work he shall receive for that holiday eight (8) hours
pay at two and one-half (2.5) times his regular straight time hourly
rate.
(k) The phrase "straight time hourly wage rate" as used solely in Article IX,
Holidays, shall mean the higher of either the employee's regular straight
time hourly wage rate or the highest straight time hourly wage rate for a
job on which the employee works at least eight (8) consecutive hours in
the work week in which the holiday falls provided (1) that the eight (8)
hours had been previously scheduled or (2) the hours are worked the day
before or the day after the holiday whether previously scheduled or not.
(l) In any week in which a schedule or floating holiday falls while an
employee is on layoff and he does not receive a S.U.B. benefit solely
because funds are not available, such employee shall be paid for the
holiday provided he worked his last scheduled work day before the holiday
unless excused from working such day under Article IX (f) (2). Such
payment will be paid with the next paid period immediately following the
holiday.
Should the employee receiving the above payment subsequently terminate or
be terminated for any reason prior to his recall from that layoff, the
amount of holiday pay received under this section shall be deducted from
any monies due him from the Company .
(m) The Company will consider the request by an employee to take his
"floating holiday" the day before or the day after a scheduled holiday.
This request must be designated when the employee turns in his annual
vacation request. The efficient
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operation of the plant and its departments will be the first
consideration and the Company reserves the right to decline any
individual request. If there is a scheduling conflict between two or more
employees, when the Company grants a request which those employee have
made for the same floating holiday, seniority will govern.
ARTICLE X
WAGES
(a) Considered a part of this Agreement but contained as a separate manual
are the Job Description and Job Classification sheets for all permanent
jobs in the plant, and the administrative procedures governing the
Cooperative Wage Study Program. Any new job to be evaluated or an
existing job to be re-evaluated should be done within ninety (90) days
whenever possible. Any changes in rates shall be retroactive to the date
the Committee requests the Plant Manager to evaluate or re-evaluate the
job. The current Job Classification and Rate List is attached as Appendix
A.
When a job requested to be reevaluated by the evaluation process the
Local will submit the Job Evaluation Request form IR-74-2. The form is
provided to allow for a reasonable amount of information explaining the
justification for the job evaluation request. The Company will meet with
the Committee to discuss the merits of a new job or additional duties of
present jobs. Weigh the factors and try to come to a mutual agreement on
the rate. If we can't agree, the grievance procedure can be used. The
Company is willing to meet to evaluate a job within 90 days of changes.
Agreed upon changes will be retroactive to the date on the Form IR-74-2.
(b) (1) Scheduled shift workers on the first shift shall receive the
classified hourly rate.
(2) Scheduled shift workers on the second shift shall receive the
regular straight time hourly rate plus 47 cents per hour.
(3) Scheduled shift workers on the third shift shall receive the regular
straight time hourly rate plus 70 cents per hour.
(4) These premium rates do not apply to day workers even though they may
work over into premium paid shifts.
(5) If a day worker is scheduled to take the place of a regular
scheduled shift worker then the premium rate for the shift shall
apply.
(6) The premium pay does not alter the provisions covered in Article
VII, Working Conditions.
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(7) Shift differentials shall be included as part of the regular rate in
the calculation of overtime compensation.
(c) When changing from standard to daylight time, those employees on the 11-7
shift scheduled for seven (7) hours and actually working seven (7) hours
shall receive eight (8) hours pay.
(d) The Company may at its discretion increase wages in any class or to an
individual in any class without necessitating a change in the rate of any
individual or class.
ARTICLE XI
BULLETIN BOARDS
The Company agrees to allow the proper officers of the Union who are
employees of the Wampum Plant of the Company to use one designated
section of the plant bulletin board for posting notices in the interest
of the Company and its employees.
ARTICLE XII
HANDLING OF COMPLAINTS
(a) All employees shall at all times make an effort to perform their duties
in such a manner as to promote safe and efficient operation of their
department and the plant as a whole.
(l) Should a difference arise between an employee and the Company as to
the meaning and application of this Agreement, or should a
difference arise as to the meaning and application of a recognized
practice, the employee with or without his steward shall present his
complaint to his foreman within ten (10) working days after the date
of the alleged wrong or within ten (10) days (the grievant's
scheduled work days) after the date the employee received his
payroll check, whichever is later.
(2) The foreman shall orally reply to the employee within five (5)
working days after the date the employee presented his complaint in
Section (1).
(3) If the employee is not satisfied with the foreman's reply, the
employee may request his steward to present the grievance in writing
to the Union Grievance Committee. If the Union Grievance Committee
believes that the complaint is justified, it may submit the
complaint in writing to the Plant Manager within five (5) working
days of the date of the foreman's reply in section (2). Within five
(5) working days of the date the Union Grievance Committee submitted
the complaint to the Plant Manager, he shall schedule a meeting with
the Union Grievance Committee and
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any member or members of his staff that he desires to have present.
This meeting will take place within fourteen (14) working days of
the date the meeting was scheduled.
(4) The parties shall use their best efforts to settle the complaint. If
the parties agree upon the disposition of the grievance, they shall
reduce their understanding to writing and the grievance shall be
settled. If the parties are unable to agree, the Union Grievance
Committee may at the employee's request and within thirty (30) days
of the date of the meeting between the Plant Manager and the Union
Grievance Committee submit the grievance in writing to the Director
of Industrial Relations or his representative with copies to the
International Vice President or District Council Representative and
the Plant Manager. Once ten (10) grievances have been submitted to
the third step, the Director of Industrial Relations shall contact
the International Vice-President or District Council Representative
to schedule a meeting. The parties shall use their best efforts to
schedule the meeting within thirty (30) days.
(5) After full consideration, and such conferences as may be mutually
agreed upon with an International or District Council Representative
of the Union, the grievance shall be considered settled when the
employees representative and the Company's representative shall have
reached an agreement.
(6) If the parties are unable to settle the grievance, either party can
notify the other party in writing that it intends to submit the
grievance to arbitration. This notice must be given within ten (10)
working days of the receipt of written confirmation of verbal
answers given at the last meeting in Section (5). The consent of the
other party is not required to arbitrate a grievance.
(b) When an issue is referred to arbitration, the parties shall select an
arbitrator by mutual agreement within ten (10) days. Failing to reach an
agreement upon the selection of an arbitrator, the parties shall request
the appointment of an arbitrator by the Federal Mediation and
Conciliation Service.
After receipt of the list of a panel of arbitrators, acceptable to the
parties, from the Federal Mediation and Conciliation Service, the
grievances to be presented to the arbitrator selected must be heard by
that arbitrator within six (6) months of the receipt of the panel.
Grievances heard by the arbitrator must be presented in chronological
order based on the date the grievances were written except in discharge
cases which may be presented out-of-chronological order or in cases where
the parties have mutually agreed in writing to waive the chronological
order requirement.
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If the arbitrator should cancel or postpone a hearing date after it has
been agreed to by the parties, the time necessary to obtain a new date
shall not be included in the six month time limit mentioned above.
The six month time limit may be waived with the mutual consent of the
parties.
(c) All time limits set forth in (a) and (b) shall be strictly observed: time
limits can be extended by a written agreement between the parties.
Failure to observe any time limit shall cause the grievance to be
considered settled in favor of the employee if the Company has failed to
observe the time limit or in favor of the Company if the employee and/or
the Union has failed to observe the time limit. Any grievance considered
settled under conditions of this paragraph (c) shall be without
precedent.
(d) The arbitrator shall consider only the grievance appealed to him and
shall have jurisdiction and authority only to interpret, apply, or
determine compliance with the provisions of this Agreement and only to
the extent necessary to determine the grievance. The arbitrator shall not
have jurisdiction or authority to add to, modify, detract from or alter
in any way the provisions of this Agreement,
(e) The arbitrator's decision shall, at the request of either party, be in
writing and shall be final and binding on both parties. The fees and
expenses of the arbitration proceedings, except fees for witnesses
brought in by either party and legal counsel's fees, shall be borne
equally by the Company and the Union. Bargaining unit employees including
Committeemen who participate in arbitration proceedings shall not be
compensated by the Company,
(f) Grievances involving the provision of the collective bargaining agreement
and occurring so as to be processed to arbitration at the same time will
be at the request of either party arbitrated before the same arbitrator.
However, it is agreed that not more than four (4) cases will be heard at
one (1) series of hearings.
(g) Local Union officers and stewards off duty and representatives of the
International Union and District Council shall, upon notice to the
Company, be permitted on the Company's premises to investigate
grievances.
(h) Meetings will be conveniently scheduled so as to complete all business
within the normal working day for day employees. Any employee who is
scheduled to work during the hours the meeting is held and who attends
the meeting will be compensated by
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multiplying his regular classified hourly wage rate by the hours he
attends the meeting. In addition, if this employee attends the meeting
beyond his normal quitting time, he will be compensated for each
additional hour he attends the meeting by multiplying his regular
classified hourly wage rate by one (1.0) and said additional hour or
hours shall not count toward daily or weekly overtime.
Any member of the Committee who is not scheduled to work during the hours
the meeting is held, who is not scheduled to work the third shift
immediately preceding the meeting, or who is not scheduled to work the
second shift immediately following the meetings, and who attends the
meeting, will be compensated by multiplying his regular straight time
(1X) hourly wage rate by all hours he attends the meeting. Any hours paid
under this paragraph shall not count toward the calculation of any
penalty or premium pay section of this Agreement including but not
limited to daily or weekly overtime. Any employee who is receiving S.U.B.
benefit, sickness and accident benefits, or Workmen's Compensation
Benefits for the day of the meeting or who is absent due to disciplinary
layoff shall not receive any compensation under this paragraph.
When a meeting is scheduled at which a representative of the
International Union and a representative of the Company from Cleveland
will attend, any member of the Committee who is scheduled to work the
third shift immediately preceding the meeting will be excused from
working the third shift and will be compensated by multiplying eight (8)
hours at his regular classified hourly wage rate plus shift differential
if the employee has attended the meeting .
Any member of the committee who is scheduled to work the second shift
immediately following the meeting will be excused from working the second
shift if the employee has attended the meeting for six (6) hours. In the
event the employee is excused from working the second shift, he will be
compensated by multiplying eight (8) hours at his regular classified
hourly wage rate plus shift differential.
(i) Where there is a discussion between an hourly employee and a supervisor
that is intended as a disciplinary measure, the Company requests that a
grievance Committeeman, job steward or other designated employee be
present.
A "disciplinary measure" shall be limited to the issuing of a reprimand
or the imposition of a penalty to an employee about which a notation,
letter or unsatisfactory performance report is subsequently made part of
the employee's personnel file.
It shall be the responsibility of the Union to appoint and have available
on each shift a committeeman, job steward or other employee designated
for purposes of this Section who shall be identified to the Corporation
in writing.
36
<PAGE> 37
All written notations or reprimands that an employee receives can only be
used for the twelve month period following the issuance of the notice in
any future disciplinary actions.
It is not the intent of this Section to expand the total number of
committeemen as provided for in Article II (f).
ARTICLE XIII
STRIKES AND LOCKOUTS
(a) Having provided an orderly procedure for settling all disputes, the
Company agrees not to lock-out its employees and the Union agrees that
there will be no strikes or work stoppages during the term of this
Agreement.
(b) The Company agrees not to hold the Union liable when such activities are
not authorized by the Union, provided that the Union, within forty-eight
(48) hours, orders its members to cease and desist from such activities.
(c) It shall not be a violation of this Agreement or cause for disciplinary
action, including discharges if an employee refuses to cross a picket
line that has been established in full compliance with existing laws.
Picket lines established as a result of jurisdictional disputes, picket
lines established for the purpose of organizing in-plant non-bargaining
unit personnel, and/or informational picket lines are excluded from this
protection.
Notwithstanding the above, employees will not honor any picket line
unless authorized by the International Union. The International Union
will not be held liable for any subsequent damage to the Corporation
resulting from refusal of employees' to cross an unauthorized picket
line.
ARTICLE XIV
SAFETY
(a) The Company will, according to its established practice, continue to
install such safety devices for the protection of the lives and health of
its employees as are required by the Workmen's Compensation laws of the
Commonwealth of Pennsylvania. The Company will maintain the washhouse
with heat, light, and plenty of hot water, and keep the toilets,
fixtures, and floors in a sanitary condition, and will supply good
drinking water wherever necessary about the plant. Sufficient equipment
and tools shall be maintained in a safe and efficient working order, and
the regulations and safety codes adopted by the Department of Labor,
Commonwealth of Pennsylvania,
37
<PAGE> 38
in the interest of protecting the safety and health of industrial
employees as they affect this industry, shall be strictly observed by
both parties.
(b) The Company agrees to furnish first aid and medical service to its
workers in any cases originating out of their work in the Company plant,
in compliance with the Workmen's Compensation laws of the Commonwealth of
Pennsylvania. Medical Services shall be performed by a doctor to be
agreed upon by the Company and the plant Safety Committee, but at the
request of the injured, and the approval of the Plant Manager, and
Director of Industrial Relations, other medical aid may be called in at
the expense of the Company for consultation or treatment of any cases. It
is agreed that a complete medical examination may be required before an
applicant is employed. Also, that complete medical examination of any
employee may be made annually or any time at the discretion of the
Company. Copies of such reports and examinations will be kept on file by
the Company and shall at all times be available for inspection to such
employees. Copies thereof shall be furnished to such employees'
designated physician upon request.
(c) A supervisor plus two hourly representatives on the Safety Committee will
be granted a period not to exceed four (4) hours in which to conduct a
safety tour through the plant.
Another safety tour not exceeding two (2) hours will be granted to
inspect the Quarry. The safety tour will have the sole purpose of
inspecting the plant and identifying existing and potential safety and
health hazards. The tours are to be conducted once per month, both of
them prior to a plant safety meeting .
(d) A Joint Safety and Health Committee shall be established Consisting of
four (4) members, two (2) appointed by the Company and two (2) appointed
by the Local Union. In the event that a member is absent from a meeting
of the Committee, his alternate may attend and when in attendance shall
exercise the duties of the member. The Plant Manager or his designee will
be the fifth member and act as Chairman of the Committee.
The Joint Committee shall meet as often as necessary, but no less than
once each month, at a regularly scheduled time and place, for the purpose
of jointly considering, inspecting, investigating and reviewing health
and safety conditions and practices and investigating accidents, and for
the purpose of jointly and effectively making constructive
recommendations with respect thereto, including but not limited to the
implementation of corrective measures to eliminate unhealthy and unsafe
conditions and practices and to improve existing health and safety
conditions and practices. All matters considered and handled by the
Committee shall be reduced to writing, and joint minutes of all meetings
of the Committee
38
<PAGE> 39
shall be made and maintained. One union representative of the Committee
will accompany a Federal or State investigator on a walk-around
inspection or investigation and will attend any pre or post-inspection
conferences. All time spent in connection with the work of the Committee
by a union representative including all time spent in pre or
post-inspection conferences and walk-around time spent in relation to
Federal and State inspections and investigations as provided for above,
shall be compensated at the employee's regular straight-time hourly wage
rate. Any time spent during the hours the employee is scheduled to work
shall count toward the calculation of any penalty or premium pay section
of this Agreement including, but not limited to daily or weekly overtime.
Any time spent outside of the hours the employee is scheduled to work
shall not count toward the calculation of any penalty premium pay section
of this Agreement. No time spent outside of the hours the employee is
scheduled to work shall be compensated at a rate greater than one (1)
times the employees straight-time hourly wage rate.
Any employee who believes his job presents a hazard to his safety or
health may request an immediate review of his job by the Joint Safety and
Health Committee.
No employee shall be disciplined or discharged for refusing to work on a
job if his refusal is based on bona fide claim that said job is not safe
or might unduly endanger his health or safety.
(e) Safety and health problems may be resolved in accordance with the
provision of the grievance procedures, including arbitration.
(f) (1) In the event that an employee is required to clean roofs, clean
silos, coal tanks or scale a quarry face under conditions that
require specialized safety equipment or precautions, the hours
worked shall be compensated for by multiplying the classified hourly
wage rate by one-half (0.5) for each and every hour worked that
requires specialized safety equipment or precautions, and this
premium shall be paid in addition to whatever compensation the
employee is otherwise entitled to receive under any other section of
this Agreement. If the parties disagree as to whether or not the
work in question warrants the premium payment it shall be taken up
by the Safety Committee. Employees will not be required to work in
coolers and/or other equipment until such equipment has been
reasonably cooled so as not to endanger the employee's safety.
(2) When an employee cleans a precipitator, he will be paid one and
one-half (1.5) times his classified hourly rate.
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<PAGE> 40
(3) If an employee is required to work in a kiln that has been shutdown
for less than ten hours, he shall be paid one and one-half (1.5)
times his classified hourly rate for all hours worked prior to the
ten hour period.
The ten hour period shall commence with starting of the I.D. fan.
(4) An employee who is required to work within a cooler during the first
four (4) hours that the cooler has been shutdown after it has been
operating at a normal level shall be paid at one and one-half (1.5)
times his classified rate for all hours worked prior to the four
hour period. This shall apply only to the "hot-zone", i.e. the first
thirteen rows of grates starting from the feed end.
Working within the cooler is defined as working above the grate
area.
(g) Should the Company require an employee to wear foot protection, the
Company will furnish such protection without cost to the employee. The
liability of the Company with regard to safety shoes will be limited to
not more than (2) two pairs in any one year. A new pair of shoes will
only be provided to an employee when the worn out pair is turned in for
replacement.
(h) The Company will pay the cost of the eye examination if safety glasses
with corrective lenses are required. The Company will pay for safety
glasses whether or not glasses require corrective lenses. Safety glasses
with or without corrective lenses will not be replaced more than once a
year unless broken or otherwise destroyed on the job.
(i) The Company will continue its existing local practices regarding the
furnishing of gloves.
Employees who are not presently receiving gloves under existing local
practices shall receive one pair of gloves at the beginning of each
contract year, and each such employee shall receive a maximum of one
additional pair per contract year from the Company upon return of his
worn out gloves.
In the event such an employee wears out and returns the two pairs of
gloves provided to him the Company shall sell him an additional pair of
gloves for each worn out pair of Company gloves he returns. Said gloves
shall be sold to the employee at the price paid by the Company.
(j) If the Company requires an employee to take a physical examination, the
Company agrees to pay for the physical examination and also agrees to pay
the employee at his straight time hourly rate for all time spent in the
doctor's office taking the physical examination; provided however,
employees receiving A, & S. and/or Workmen's Compensation Benefits are
40
<PAGE> 41
not entitled to any compensation under this section. (Doctors' releases
for returning to work are not considered physical examinations and will
not be paid under this section.)
(k) The Company will comply with State and Federal regulations concerning
interlock operations. In addition, when conditions warrant, the Company
will have two burners present when safety interlocks are not in
operation.
The Company will pay the cost of independent lab tests when requested by
the Union, however, the maximum payment by the Company for these tests
shall be limited to $1,000 in any calendar year.
ARTICLE XV
MILITARY SERVICE
(a) The Company and the Union shall comply with the Universal Military
Training and Service Act of l950, as amended.
(b) Active employees with one (1) year seniority and who are in the Reserve
of any branch of the military service, including the National Guard, who
are required to attend a summer encampment as part of their Reserve
obligation, shall receive from the Company the difference between the
amount of pay received for such summer encampment and his regular
straight time hourly rate of pay for up to a maximum of two (2) weeks per
calendar year.
ARTICLE XVI
SUPPLEMENTAL UNEMPLOYMENT BENEFIT PLAN
(a) The Company agrees to pay out of its funds (and not out of the Trust Fund
established under Article III of the Plan) benefits in amounts equal to
those provided by Section 2 of Article VIII of the Plan upon termination
of employment on or after May 1, 1965, after an employee (as defined in
Section 6, Article II of the Plan) is sixty-five (65) years old, provided
such employee is not eligible for a pension under the current Pension
Plan for Hourly Employees of the Company.
ARTICLE XVII
SUBCONTRACTING
(a) The Company will not contract for production or maintenance work
customarily performed by its own employees unless it is more economical,
expeditious, and/or efficient to do otherwise.
(b) The Company may enter into contract arrangements for obtaining raw
materials, semi-finished or finished products.
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<PAGE> 42
(c) Notwithstanding the above, the Company will not contract or subcontract
work covered by Paragraphs (a or (b) above if it will directly result in
the, 1. laving off of (or failure to recall) bargaining unit employees,
or 2. the reduction of hours of bargaining unit employees below 40 hours
a week; or 3. reduction of employees to a lower rated classification.
(d) Further (a), (b) and (c) above does not apply to new construction or to
construction involved in major modification work.
(e) The Company agrees to notify the Local Union in writing with a copy to
the International or District Representative who services the Local
Union, sent by registered mail, at least fourteen (14) days in advance if
reasonably possible, and to meet with the Union, upon request by the
Union, for explanation of the reasons causing the Company to decide to
contract any production and maintenance work. The parties agree that
while notification is an important part of the working relationship
between the parties and should be adhered to in order to reduce the
number of disputes concerning sub-contracting the parties also recognize
and agree that this Section of the Contract does not require any penalty
when the Company fails to give proper written notice of its intention to
sub-contract.
ARTICLE XVIII
WORK PRACTICES
The Company will provide training for one laborer when manning requirements of
the plant provide ample resources to man required operational jobs.
(a) The following rules shall govern the training of laborers for the purpose
of filling vacancies.
(1) Management will, one week in advance, announce and post the job for
which training will be provided.
(2) Laborers must notify the Company, starting with the senior laborer,
of their intent to accept the training in 1 above. If no one
applies, the junior laborer may be required to train.
(3) Management will determine the number of laborers who will be trained
for each classification.
(4) Management will determine the classifications for which laborers
will be trained for the purposes of filling vacancies.
a. Management will attempt to balance the number of jobs the
laborers are to be trained in.
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<PAGE> 43
(5) The Company shall, before offering training in any job higher than
bracket nine (9), to a laborer hired after 10/1/77, give the
laborers hired prior to 10/1/77 the opportunity to train for a job
higher than bracket nine (9) subject to the following conditions:
a. The opportunity must be offered in order of seniority.
b. The laborer shall have the choice of accepting or rejecting the
training.
(6) During the time when temporary summer laborers are working at the
plant, the following rules shall apply when training is offered to
the Labor Department for the purpose of filling vacancies:
a. Permanent laborers must accept training for purposes of filling
vacancies. They shall be selected by canvassing the labor crew in
order of seniority.
If no permanent laborers voluntarily accept the training, the
least senior one is compelled to do so.
b. Temporary summer laborers can be used to fill vacancies as long
as all permanent laborers are already working in that capacity.
(7) During the transition period before an additional packing crew is
put on or taken off, it is recognized that a reasonable amount of
overtime will be required. The Company will secure as much
information from sales as possible so that this overtime can be held
to a minimum and the addition of or removal of a shift is consistent
with a continuing increase or decrease in package business.
(8) It is understood and agreed to by the Local Union No. 173 and the
Local Management at the Medusa Wampum Plant that the amount of
overtime that an employee has been charged is not a factor that
Management must consider when it is making a choice as to who will
be scheduled to work on a holiday or premium hours other than
overtime hours.
This means that the equalization of overtime is not a controlling
factor over, and has no connection with, which employee is asked to
work hours that are to be paid for at a premium rate. Contractual
distribution of overtime requirements will be followed in all
overtime cases.
(9) Production Utility shall be considered a classified employee for
overtime purposes on the day he fills each classification. Once one
of these classifications is exhausted on any other day, than those
where he fills in, he would be eligible for overtime before going
into the department.
(10) If an employee's job requires a drivers license and he loses said
license, said employee shall return to the laborer crew at labor
rate with all rights and privileges of a Laborer.
(11) The Company will maintain all Plant restrooms in a clean and orderly
condition. This work will be assigned to a Mill Janitor and/or
Laborer as required.
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<PAGE> 44
ARTICLE XIX
MISCELLANEOUS
(a) The Company will enter into a Union label agreement for the Company's
package products.
(b) Any hand tool that the employee uses in the performance of his job duties
will be replaced in the event that the tool is rendered not usable during
the course of the employee's work. The tool must be presented to the
Company prior to replacement.
(c) The normal time for distribution of pay checks to all employees shall
begin with the start of the day shift every other Friday, except that
Quarry employees and any employee starting the second shift will receive
his pay check on the Thursday preceding the normal pay day.
(d) Gloves will be made available for purchases to employees at cost on a
cash basis.
(e) When the Company decides that an interview between the Company and an
employee regarding job qualification is to be conducted, a Committeeman
chosen by the Company will attend the interview for the purpose of
affirming that said interviews are conducted with a reasonable degree of
uniformity.
(f) Printing of Agreement - The Basic, Supplemental, Pension, S.U.B. and
Insurance Agreements will be printed at Company expense and each copy
will bear the Union label. The Company will provide each local with a
supply of the booklets.
ARTICLE XX
TERM OF AGREEMENT
(a) This Agreement shall be binding upon the parties hereto, their
successors, administrators, executors and assigns. In the event of the
sale or lease by the Company of the Wampum Plant, or in the event the
Company is taken over by sale, lease, assignment, receivership, or
bankruptcy proceedings, such operation shall continue to be subject to
the terms and conditions of this Agreement for the life thereof. The
Company shall give notice of the existence of this Agreement to any
purchaser, lessee, or assignee of said plant. Such notice shall be in
writing with a copy to the Union not later than the effective date of the
sale.
(b) After ratification by the members of the Local Union, this Agreement
shall become effective and remain in full force and effect and be binding
upon the parties hereto from May 1, 1996 to and including April 30, 1999,
and it shall continue in full force and effect thereafter from year to
year until either party on or before March 1st, of any year, beginning
March 1, 1999, gives written notice to the other party of its desire or
intention
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<PAGE> 45
either to alter or modify or to terminate the same. If such notice is
given, the parties hereto shall begin negotiations not later than March
31st in such year and this Agreement shall continue in full force and
effect until completion and signing of a new Agreement, provided,
however, that after such negotiations have continued without reaching an
agreement until May 1st, in any year, then either party may terminate
this Agreement, at any time thereafter upon notice.
(c) The written notices set forth above by either party shall contain any
changes or amendments desired, and only such changes or amendments as are
contained in the two (2) written notices shall be discussed by the
conferees,
(d) The proposals and counter proposals made by each party shall not be used,
or referred to, in any way during or in connection with the arbitration
of any grievance arising under the provisions of this Agreement.
MEDUSA CEMENT COMPANY
Division of Medusa Corporation
- --------------------------------------------
- --------------------------------------------
- --------------------------------------------
UNITED CEMENT, LIKE , GYPSUM AND
ALLIED WORKERS DIVISION, LOCAL
173
- ---------------------------------------------
- ---------------------------------------------
- ---------------------------------------------
- ---------------------------------------------
- ---------------------------------------------
INTERNATIONAL UNION
- ---------------------------------------------
- ---------------------------------------------
- ---------------------------------------------
45
<PAGE> 46
<TABLE>
<CAPTION>
APPENDIX "A"
JOB CLASSIFICATIONS AND WAGE RATES - WAMPUM PLANT
BRACKET JOB TITLE 5/1/96 5/1/97 5/1/98
- ------- --------- ------- ------- -------
<S> <C> <C> <C> <C>
1 Utility Janitor $ 13.86 $ 14.41 $ 14.96
2 * Laborer 14.02 14.77 15.32
3 - 14.18 14.73 15.28
4 - 14.34 14.89 15.44
5 Unloading Attendant 14.50 15.05 15.60
6 - 14.66 15.21 15.76
7 - 14.82 15.37 15.92
8 Storekeeper 14.98 15.53 16.08
*10 Painting 15.30 15.85 16.40
11 Lubeman A 15.46 16.01 16.56
Maintenance
12 Physical Chemist 15.62 16.17 16.72
Pack & Load
13 Equipment Operator 15.78 16.33 16.88
14 Mix Chemist 15.94 16.49 17.04
Truck Mechanic A
Utility Chemist
Repairman A
Production Utility
Quarry Mechanic A
Quarry Specialist
Process Control/Maintenance
15 Rotating Repairman A 16.10 16.65 17.20
16 Machinist A 16.26 16.81 17.36
Instrumentman A
Electrician A
Mechanic Leader
17 - 16.42 16.97 17.52
18 Electrical Leader 16.58 17.13 17.68
Instrument Leader -
19 Control Room Operator 16.90 17.45 18.00
</TABLE>
*(1) Painting - Rate purposes only
(Bracket 1O)
(2) The loader used to load stone into trucks at the quarry face will be placed
in Bracket 15 for pay purposes only and without precedence for any other
classification in the job evaluation program.
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<PAGE> 47
* Laborer*
Laborers hired after the date of ratification shall be paid in accordance
with the following schedule:
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3
------ ------ ------
<S> <C> <C> <C>
New Hire Rate $ 8.55 $ 9.10 $ 9.65
I 61st day worked $ 9.05 $ 9.60 $10.15
II 6 months after D.O.H $ 9.55 $10.10 $10.65
III 1 year after D.O.H $10.31 $11.07 $11.83
IV 2 years after D.O.H. Current Labor Rate
</TABLE>
APPENDIX A (1)
SENIORITY LIST
Wampum AS OF 08/01/96
<TABLE>
<CAPTION>
NAME DATE HIRED
---- ----------
<S> <C>
Altman, Robert J. 02/29/56
Miller, Robert E. 05/27/63
Eversole, Robert S. 06/11/65
Davis, Jeffrey 04/16/66
Kosior, Charles M. 05/10/66
Stelter, Richard L. 05/01/67
Generao, John R. 08/30/67
Leslie, Clarence T. 04/17/68
Ferrucci, Frank M. 04/29/68
Druschel, Robert L. 05/21/68
Franus, Thomas 05/27/68
McDonald, Glenn E. 06/17/68
Butera, James S. 03/10/69
Loughhead, John W 03/17/69
Olayer, Joseph A 05/01/69
Kosior, Theodore S. 05/12/69
Radich, Raymond R. 05/19/69
Argiro, David P. 07/21/69
Householder, Harold 03/30/70
Harris, Arvine Jr. 04/01/70
Cory, John L. Jr. 04/13/71
Reid, Gerald W. 04/13/71
Pavkovich, George A. 04/15/71
Schotsch, David L. 04/15/71
Ciletti, Joseph L. 04/16/71
Cwynar, Raymond L. 04/16/71
Valentino, Rudolph Jr. 04/16/71
Chandler. Rubin 04/19/71
Cooke, Donald 04/19/71
Hairhoger, Charles L. 04/19/71
Johnson, Ernest F. 04/19/71
Wrona, Walter J. 04/19/71
Baker, Thomas 0. 05/05/71
Isabella, Joseph B. 05/17/71
</TABLE>
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<PAGE> 48
<TABLE>
<CAPTION>
NAME DATE HIRED
- ----- ----------
<S> <C>
Flumer, Daniel 06/07/71
Kravos, John III 06/07/71
Senatore, Vernon J. 08/23/71
Durbin, Francis B. 08/30/71
Borst, Richard P. 10/12/71
Guy, David J. 10/13/71
Moore, Oval E. 09/18/72
Presnar, John 09/25/72
Blackwell, Alva C. 11/13/72
Babick, Stanley Jr. 07/30/73
Kinard, Paul W. 07/30/73
Curry, Frederick 08/06/73
Hall, James D. 09/17/73
Yoho, Phillip A. 09/17/73
Procopio, Samuel A. 09/24/73
Smialowski, John Jr. 09/24/73
Davis, Robert J. 10/01/73
Babel, George J. 04/29/74
Barber, Eugene I. 04/29/74
Hunter, Theodore E. 04/29/74
Ippolito, John 04/29/74
Russo, Dominick 09/16/74
Micklish, Sheila 10/11/77
Brua, Judy 03/20/78
Rutter, Gary 03/20/78
Bober, Richard 03/27/78
Niemi, Ron 03/27/78
Bates Don 04/03/78
Shoup, Karl 04/17/78
Pezzi, Samuel 05/22/78
Crans, Gregory 08/21/78
Patterson, Randy 08/23/78
Leonhardt, Robert 08/28/78
Osborne, Donald 08/28/78
Schlemmer, Donald 08/28/78
Turok, Charles 08/28/78
Mallary, George Jr. 09/18/78
DiFrischia, Joseph 09/l9/78
Lutz, William Jr. 09/20/78
Allison, Denise 03/12/79
Bekoski, Frank 09/24/79
Herb, Thomas 09/24/79
Kriegisch, Randy 09/24/79
Palagallo, James 09/24/79
Hackett, James 10/01/79
Hackett, Randy 10/01/79
Haswell, Larry 10/01/79
Himes, David 10/01/79
Houk, Willard 10/01/79
Halulko, Mike 10/09/79
</TABLE>
48
<PAGE> 49
<TABLE>
<CAPTION>
NAME DATE HIRED
---- ----------
<S> <C>
Bellissimo, Bruce 12/17/79
Hairhoger, Eugene 12/17/79
Kinard, Paul W. 12/17/79
Kroll, Patty 12/17/79
Williamson, Rick 12/17/79
Chappell, Bruce 01/02/80
Martin, William 01/02/80
Poland, Robert L. 09/03/85
Bennett, Robert 06/02/86
Herman, Larry 06/02/86
King, Randy 06/02/86
Kirkwood, Gary 06/02/86
Krueger, William J. 06/02/86
Marich, Steve 06/02/86
Moore, Dan 06/02/86
Stelter, Randy 06/02/86
Ferrucci, Frank Jr. 06/18/87
Allen, John D. 06/08/87
Barger, Rodney 06/08/87
Rader, William Jr. 06/08/87
Stelter, Frederick 06/08/87
Colundrello, Salvatore Jr. 08/12/87
Grymes, Ronald A. 08/12/87
Lutz, Bryan D. 08/12/87
Duda, Mark S. 03/13/88
Bessell, Samuel Jr. 06/13/88
Cracraft, Edwin L. 06/13/88
Sklenchar, Edward J. 06/13/88
Doutt, Richard J. 10/02/89
Rooney, Patricia A. 10/02/89
Strickler, Richard C. 10/02/89
Capalbo, James M. 04/22/91
Davis, Matthew D. 04/22/9l
McDonald, Raymond G. 04/22/9l
Miller, Douglas E. 04/22/91
Lysiak, Craig W. 04/30/9l
Chappell, Thomas M. 09/21/92
Huber, Rex C. 09/21/92
Krueger, Robert E. 09/21/92
Schlemmer, Timothy J. 09/21/92
Strickler, Daniel W. 09/21/92
Bright, James CL. 09/28/92
Sysmosko, Kirk 01/04/93
Allen, Darl J. 05/10/93
Caminiti, James 05/10/93
Grymes, Rodney 05/10/93
Harper, Donald L. 09/27/93
Herb, Robert E. 09/27/93
Micco, Anthony 09/27/93
Gibbons, Michael K. 10/04/93
Welsh, Mark W. 10/04/93
</TABLE>
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<PAGE> 50
APPENDIX B
BURNING - GRINDING SCHEDULE
SCHEDULES ARE SUBJECT TO CHANGE PURSUANT TO ARTICLE VII(b)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C><C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHIFT S M T W T F S S M T W T F S S M T W T F S S M T W T F S
7:00- 3:00 2 25 1 1 1 1 1 1 25 2 2 2 2 2 2 25 3 3 3 3 3 3 25 4 4 4 4 4
3:00-11:00 3 3 3 4 4 4 4 4 4 4 1 1 1 1 1 1 1 2 2 2 2 2 2 2 3 3 3 3
11:00- 7:00 2 2 2 2 2 3 3 3 3 3 3 3 4 4 4 4 4 4 4 1 1 1 1 1 1 1 2 2
SHIFT S M T W T F S S M T W T F S S M T W T F S S M T W T F S
7:00- 3:00 11 5 5 6 6 25 6 6 7 7 7 7 26 7 7 9 9 9 9 25 9 9 11 11 11 11 25 11
3:00-11:00 9 9 9 11 11 11 11 11 11 11 5 5 6 5 6 6 5 7 7 7 7 7 7 7 9 9 9 9
11:00- 7:00 7 7 7 7 7 9 9 9 9 9 9 9 11 11 11 11 11 11 11 5 5 5 5 5 5 5 7 7
SHIFT S M T W T F S S M T W T F S S M T W T F S S M T W T F S
7:00- 3:00 12 6 6 6 25 6 6 6 8 8 8 36 9 8 8 10 10 10 25 10 10 10 12 12 12 25 12 12
3:00-11:00 10 10 10 12 12 12 12 12 12 12 6 6 6 6 6 6 6 8 8 8 8 8 8 8 10 10 10 10
11:00- 7:00 6 8 8 8 8 10 10 10 10 11 10 10 12 12 12 12 12 12 12 6 6 6 6 6 6 6 6 8
SHIFT S M T W T F S S M T W T F S S M T W T F S S M T W T F S
7:00- 3:00 16 12 13 13 13 13 13 13 - 14 14 14 14 14 14 - 15 15 15 15 15 15 - 16 16 16 16 16
3:00-11:00 15 15 15 16 16 16 16 16 16 16 13 13 13 13 13 13 13 14 14 14 14 14 14 14 15 15 15 15
11:00- 7:00 14 14 14 14 14 15 15 15 15 15 15 15 15 15 16 16 16 16 16 13 13 13 13 13 13 13 14 14
SHIFT S M T W T F S S M T W T F S S M T W T F S S M T W T F S
7:00- 3:00 23 17 25 17 17 17 17 17 19 25 19 19 19 18 19 21 25 21 21 21 21 21 23 25 23 23 23 23
3:00-11:00 21 21 21 23 23 23 23 23 23 23 17 17 17 17 17 17 17 19 19 19 19 19 19 19 21 21 21 21
11:00- 7:00 19 19 19 19 19 21 21 21 21 21 21 21 23 23 23 23 23 23 23 17 17 17 17 17 17 17 19 19
SHIFT S M T W T F S S M T W T F S S M T W T F S S M T W T F S
7:00- 3:00 24 18 18 25 18 18 18 16 20 20 25 20 20 20 20 22 22 25 22 22 22 22 24 24 25 24 24 24
3:00-11:00 22 22 22 24 24 24 24 24 24 24 18 18 18 18 18 18 18 20 20 20 20 20 20 20 22 22 22 22
11:00- 7:00 20 20 20 20 20 22 22 22 22 22 22 22 24 24 24 24 24 24 24 18 18 18 18 18 18 18 20 20
</TABLE>
<TABLE>
<CAPTION>
KEY JOB KEY JOB KEY JOB
NUMBER JOB NUMBER JOB NUMBER JOB
- ------- ---- ------ --- ------- ----
<S> <C> <C> <C> <C> <C>
1 Control Room Operator 10 Rotating Repairman A 18 Process Control Maint.
2 Control Room Operator 11 Rotating Repairman A 19 Process Control Maint.
3 Control Room Operator 12 Rotating Repairman A 20 Process Control Maint.
4 Control Room Operator 13 Equipment Operator 21 Process Control Maint.
5 Rotating Repairman A 14 Equipment Operator 22 Process Control Maint.
6 Rotating Repairman A 15 Equipment Operator 23 Process Control Maint.
7 Rotating Repairman A 16 Equipment Operator 24 Process Control Maint.
8 Rotating Repairman A 17 Process Control Maint. 25 Production Utility
9 Rotating Repairman A
</TABLE>
LABORATORY SCHEDULE
<TABLE>
<CAPTION>
SHIFT S M T W T F S S M T W T F S S M T W T F S S M T W T F S
<S> <C><C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C><C> <C> <C>
8:00-4:00 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
8:00-4:00 2 2 2 2 2 2 2 2 2 2 2 2
8:00-4:00 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3
SHIFT S M T W T F S S M T W T F S S M T W T F S S M T W T F S
7:00- 3:00 6 6 6 6 2 6 4 4 4 4 4 2 4 5 5 5 5 5 2 5 7 7 7 7 7 2 7 6
3:00-11:00 6 6 7 7 7 7 7 7 7 6 6 6 6 6 6 6 4 4 4 4 4 4 4 5 5 5 5 5
11:00-7:00 4 4 4 4 5 5 5 5 5 5 5 7 7 7 7 7 7 7 6 6 6 6 6 6 6 4 4 4
</TABLE>
50
<PAGE> 51
<TABLE>
<CAPTION>
KEY JOB KEY JOB KEY JOB
NUMBER JOB NUMBER JOB NUMBER JOB
- ------- ---- ------ --- ------- ----
<S> <C> <C> <C> <C> <C>
1 Utility Chemist 3 Physical Chemist 5 Mix Chemist
2 Utility Chemist 4 Mix Chemist 6 Mix Chemist
7 Mix Chemist
</TABLE>
APPENDIX B
SCHEDULES ARE SUBJECT TO CHANGE PURSUANT TO ARTICLE VII(b)
PACKHOUSE MAINTENANCE
--------- -----------
MONDAY through FRIDAY MONDAY through FRIDAY
8:00 a.m. to 4:00 p.m. 7:00 a.m. to 3:00 p.m.
8 - Pack & Loader 11 - Repairman A
PACKHOUSE MAINTENANCE
--------- -----------
MONDAY through FRIDAY MONDAY through FRIDAY
4:00 p.m. to 12 midnight 7:00 a.m. to 3:00 p. m.
7 - Pack & Loader 2 - Lube Man
1 - Machinist
1 - Storekeeper
PACKHOUSE MAINTENANCE
--------- -----------
TUESDAY through SATURDAY MONDAY through FRIDAY
7:00 a.m. to 3:00 p.m. 8:00 a.m. to 4:00 p.m.
5 - Repairman A 1 - Mechanic Leader
1 - Lube Man 2 - Truck Mechanic A
1 - Electrician A
PACKHOUSE MAINTENANCE
--------- -----------
MONDAY through FRIDAY MONDAY through FRIDAY
3:00 p.m. to 11:00 p.m. 4:00 p. m. to 12 midnight
7 - Repairman A 1 - Truck Mechanic A
2 - Electrician A
51
<PAGE> 52
MAINTENANCE
------------
MONDAY through FRIDAY
7:00 a.m. to 3:00 P.M.
1 - Electrical Leader
2 - Electrician A
1 - Instrument Leader
2 - Instrument Man
APPENDIX B
SCHEDULES ARE SUBJECT TO CHANGE PURSUANT TO ARTICLE VII(b)
TRANSPORTATION TRANSPORTATION
-------------- --------------
MONDAY through FRIDAY MONDAY through FRIDAY
8:00 a.m. to 4:00 p.m. 4 p.m. to 12 midnight
2 - Unloading Attendant 2 - Unloading Attendant
1 - Equipment Operator 1 - Equipment Operator
LABOR DEPARTMENT QUARRY
---------------- ------
MONDAY through FRIDAY MONDAY through FRIDAY
7:00 a.m. to 3:00 p.m. 7:00 a.m. to 3:00 p.m.
Laborers 2 - Quarry Spec. - Crusher
3 - Equipment Operator 2 - Quarry Spec. - Truck Driver "B"
3 - Quarry Spec. - Blaster/Driller/Utility
1 - Quarry Spec. - Loader Operator
QUARRY QUARRY
------ ------
MONDAY through FRIDAY MONDAY through FRIDAY
6:00 a.m. to 2:00 p.m. 4:00 p.m. to 12 midnight
1 - Quarry Mechanic 1 - Quarry Mechanic
QUARRY
------
MONDAY through FRIDAY
3:00 p.m. to 11:00 p.m.
1 - Quarry Spec. - Loader Operator
1 - Quarry Spec. - Blaster/Driller/Utility
2 - Quarry Spec. - Crusher
2 - Quarry Spec. - Truck Driver "B"
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<PAGE> 53
APPENDIX C
JOB SECURITY
DEPARTMENT DEFINITIONS FOR BUMPING
LABORERS STONE PACKHOUSE
- -------- ----- ---------
Janitor Unloading Attendant Pack & Loader
Laborer
Storekeeper
Equipment Operator
MECH. MAINT. MILL OPERATING LABORATORY
- ------------ -------------- ----------
Lubrication Man A Process Control Main. Physical Chemist
Repairman A Production Utility Mix Chemist
Machinist Rotating Repairman A Utility Chemist
Control Room Operator
ELEC. - INST. QUARRY
- ------------- -------
Electrician A Truck Driver "B" - Quarry Spec.
Instrument Man Crusher Attendant - Quarry Spec.
Electrical Leader Blaster/Driller/Utility - Quarry Spec.
Instrument Leader Loader Operator - Quarry Spec.
MOBILE EOUIP. MAINT.
- --------------------
Truck Mechanic A
Quarry Mechanic
Mechanic Leader
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<PAGE> 54
APPENDIX D
JOBS NORMALLY FILLED
(a) Providing the Company determines that sufficient work is available, it
will normally fill the following jobs on a daily and weekly basis:
Janitor Utility Chemist
Unloading Attendant Production Utility
Storekeeper Quarry Specialist
Lubrication Maintenance Process Control Maintenance
Physical Chemist Rotating Repairman A
Pack & Loader Control Room Operator
Equipment Operator
Mix Chemist
(b) The balance of the classifications are filled as circumstances require
and as necessary to maintain the efficient operation of the Plant.
APPENDIX E
EXAMPLES OF WORK SCHEDULE CLAUSE
The new work schedule clause is a significant change from the past practices at
the Wampum Plant. The new work schedule clause gives the Company the right to
change an employee's work schedule any time. If the change is made no later
than the end of the first shift on Thursday for the following week there is no
premium. If the work schedule change is made after the first shift on Thursday
for the following week, there is a premium.
EXAMPLE An employee normally works Monday through Friday from 7:00 a.m. to 3:00
p.m. Prior to the end of the first shift on Thursday, the employee is notified
that he will work Tuesday through Saturday from 3:00 p.m. to 11:00 p.m. the
following week. All hours the following week are paid at straight time. There
is no schedule change premium.
EXAMPLE Instead of being notified before the end of the first shift on
Thursday, the employee is told on Sunday that he will work Tuesday through
Saturday from 3:00 p.m. to 11:00 p.m. The eight hours worked on Tuesday are
paid at time and one half (1.5), the additional one-half time representing the
schedule change premium. All other hours worked during the week (Wednesday
through Saturday) are paid at straight time.
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<PAGE> 55
EXAMPLE An employee is scheduled to work Monday through Friday from 3:00 p.m.
to 11:00 p.m. On Tuesday, the employee is told that he will work from 3:00 p.m.
to 3:00 a.m. on Wednesday. This is not a schedule change. He is paid on
Wednesday as follows: First eight hours ace paid at straight time and the last
four hours are paid at time and one-half, the additional one-half tine
representing hours worked in excess of eight hours in the workday. A schedule
change takes place only when an employee is directed to work new hours in place
of, but not in addition to, his old hours.
This letter sets forth examples which illustrate various applications of the
work schedule clause as it will be applied at Wampum.
Those examples involving the filling of a vacancy assume the Company has
determined that sufficient work is available and that the vacancy must be
filled.
Examples
1. Situation
Packhouse Pumpman quits Monday 6:00 p.m. How do we fill this example?
Options
Do not fill on Monday night, overtime in the classification is used on
Tuesday, Laborer with schedule change premium on Wednesday, and same
Laborer with straight time Thursday and Friday.
2. Situation
During the hot summer months, Repairmen are going to be required on the
No. 1 Kiln Discharge Pier for two (2) weeks, and working conditions will
be poor.
Options
Change 4 - Repairman "A" on 8:00 a.m. - 4:30 p.m. to 6:00 a.m. to 2:30
p.m. No work schedule change premium when change posted on Thursday.
3. Situation
Front-End Loader is loading stone on first two shifts and bucket needs
extensive welding for five (5) days.
Options
Change the schedule of two (2) 8:00 a.m. to 4:30 p.m. Repairmen to work
Monday through Friday 11:30 p.m. to 8:00 a.m. No work schedule change
premium when change is posted on Thursday.
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<PAGE> 56
4. Situation
Must resurface road from tipple to plant and work will be done on day
shift only but road will be passable on second and third shift.
Options
Schedule all people involved from Stone Shovel to Unloader "B" from an
8:00 a.m. - 4:00 p.m. schedule to midnight to 8:00 a.m. No work schedule
change premium is involved when the change is posted on Thursday.
5. Situation
On Wednesday during the middle of a bumping chain, we realize that the
bumping will not be completed so that all moves can be made at the start
of the week.
Options
The chain is stopped - creating a vacancy in the Operating Utility's
classification. The Thursday posting will show a Laborer filling in the
Operating Utility's job during the following week. No work schedule
change premium is involved.
6. Situation
Have (4) Regrind Millers working a rotating 20 shift Sunday through
Saturday schedule. During the months of December through April, Type III
Shipments require 15 shifts of regrind operation.
Options
Curtail a Regrind Millers job for four (4) months and require three (3)
Regrind Millers to work a rotating fifteen (15) shift schedule. At the
end of four (4) months, revert to the rotating twenty (20) shift
schedule. No work change premium.
7. Situation
Rod mill needs relining and job is to start Tuesday morning and worked on
around the clock. How to schedule men?
Options
Schedule three (3) 4:00 p.m. - 12:30 a.m. Repairmen to 11:30 p.m. - 8:00
a.m. on Tuesday, Wednesday and Thursday and back on their regular
schedule on Friday. Pay would be Tuesday - schedule change premium;
Wednesday, Thursday, Friday would be at straight tine.
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<PAGE> 57
8. Situation
Duplication of above, but the job runs over one (1) extra day and the
Repairmen must work 11:30 p.m. to 8:00 a.m. on Friday, also.
Options
Pay for Friday would be at schedule change premium because this would be
second change in same week.
9. Situation
Emergency brick job on Thursday and Friday and job is worked around the
clock.
Options
Schedule four (4) Repairmen to work 11:30p.m. - 8:00 a.m. Thursday and
Friday. Pay on Thursday would be at schedule change premium and Friday at
straight tine.
10. Situation
Repairmen who works 8:00 a.m. - 4:30 p.m. Monday through Friday requests
Monday off for doctors appointment and all Repairmen are needed that
week.
Options
Thursday posting would change said Repairman's schedule to Tuesday
through Saturday and a Tuesday through Saturday Repairman to Monday
through Friday. No schedule change premium applies.
11. Situation
Newly awarded Dozer Operator need to be trained on job. His schedule is:
S M T W T F S
11-7 11-7 11-7 11-7 11-7 OFF OFF
Company wants other Dozer Operator to train new man and trainees schedule
is:
S M T W T F S
7-3 OFF OFF 3-11 3-11 3-11 3-11
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<PAGE> 58
Options
On Thursday posting, move new man to trainers schedule and qualified
laborer to new man's schedule. No schedule change premium applies.
12. Situation
Will the Company schedule the same 8:00 a.m. to 4:30 p.m. Repairmen to
work 11:30 p.p. to 8:00 a.m. every other week solely to provide permanent
routine repair coverage at night, and call the change temporary rather
than permanent?
Options
No.
13. Situation
Will the Company post a schedule on Thursday which schedules a Pumpman to
work Monday through Friday from 8:00 a.m. to 4:30 p.m. and subsequent to
posting, tell the Pumpman that his schedule is Monday, Wednesdays,
Thursday and Friday? No day it substituted for Tuesday. The Pumpman is
scheduled and works thirty-two (32) hours at straight tine.
Options
The Company does not intend to use the work schedule clause in the manner
describe above.
14. Situation
The Company plans to reschedule an employee to work hours other than his
normal hours the following week. The employee has made personal plans
that will conflict with the hours the Company plans to reschedule the
employee and which, if canceled, would work a hardship on the employee.
There is another employee qualified to perform the same work. The
employee asks the Company to reschedule the other employee rather than
him explaining to the Company the conflict with his personal plans. The
change front one employee to another employee will not cause the Company
to incur any penalty or premium. Will the Company make every effort to
comply with the employees request?
Options
Yes.
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<PAGE> 59
15. Situation
The Company determines that around-the-clock repair work on the kiln is
necessary. The Company estimates that tile work will take four (4) weeks
and some first (1st) shift Repairmen and some second (2nd) shift
Repairmen will be scheduled to work the third (3rd) shift to provide
around-the-clock coverage during the kiln repair. Will the Company rotate
repairmen to perform the required work so that the same repairmen are not
rescheduled for all four weeks?
Options
The Company is willing to rotate Repairmen into the schedule required for
the above work provided sufficient qualified men are available.
16. Situation
An employee is scheduled to work Monday through Friday from 3:00 p.m. to
11:00 p.m. On Tuesday, the employee is told that he will work from 3:00
p.m. to 3:00 a.m. on Wednesday.
Options
This is not a schedule change. He is paid on Wednesday as follows: First
eight (8) hours are paid at straight time and the last four (4) hours are
paid at time and one-half, the additional one-half time representing
hours worked in excess of eight (8) hours in the work day. A schedule
change takes place only when an employee is directed to work new hours in
place of, but not in addition to his old hours.
The above examples are not all inclusive of every occasion when schedules may
be changed.
In addition, the method of filling vacancies in the examples are not intended
to imply that these are the only methods of filling vacancies or that the
option used in a particular example is the method the Company is required to
use.
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<PAGE> 60
APPENDIX F
EXAMPLES OF PROMOTION CLAUSE
Interpretation of Article VI(a): If there are no applicants or if there are no
applicants qualified to perform the work, the Company at its option (1) can
hire a new employee who is qualified to perform the work for the vacant or new
job, or (2) can award the job to the laborer with the least seniority and train
the labors except that in the case of any vacant or new job that requires
nominal on-the-job training (jobs other than skilled jobs), the company intends
to award the job to an applicant rather than hire a new employee. This
statement of intent shall not limit the Company's right to disqualify the
employee if the employee fails to perform all of the duties of the job within a
reasonable period of time.
Interpretation of Article VI (d): John Smith bids for and is awarded on January
2, 1975 a Packer's job that normally is scheduled to work 12:00 noon to 8:30
p.m. Monday through Friday.
The Packer's job that normally is scheduled to work 7:00 a.m. to 3:30 p.m.
Monday through Friday becomes vacant and is posted for bids on April 15, 1975.
John Smith can bid on this job if his sole reason for bidding is to work hours
that normally ace different.
Another example of Article VI (d): The Company will consent to bidding from a
job that normally is a rotating shift job to the same job that normally is a
fixed shift job if the sole reason is to work hours that are normally
different.
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APPENDIX G
PANEL DECISIONS - MAY 14 AND 15, 1974 PANEL MEETING
TO: R.L. Everhart
P.H. Geis
B. Eversole, President Local No. 173
A. Harris, Jr., Recording Sec'y Local No. 173
FROM: A. Clavier, Jr.
W.M. Troutman
GRIEVANCE #7
Facts - The Company posted second shift laborer jobs to perform winter
maintenance. On the bids it stated that the jobs were required for only the
extent of the winter maintenance and upon completion of the program, the jobs
would be eliminated, there would be no 95% rate protection and the incumbents
would have bumping rights. Upon completion of the work, the employees were
directed to return to day shift laborer jobs or other jobs which they bumped
to.
Issue - Did the Company violate the contract by not posting a notice in
advance of the elimination and are the employees entitled to out-of-schedule
pay for the time worked after the jobs were eliminated?
Decision - The panel determined that each employee understood when he was
awarded the second shift laborer job that his job would be terminated when the
winter maintenance program was completed. Under these circumstances, written
notice is not required by the labor agreement. The grievance, therefore, is
denied.
GRIEVANCE #8
Facts - A Mechanic Leader quit to find other employment. His job was posted
and eventually filled by a currently employed Mechanic "A". Because of changes
in the work load requirement, the Company did not rebid the repair "A" job and
left the job vacant.
Issue - Did the Company violate the contract by leaving the Repair "A"
vacant and not bidding the job?
Decision - The panel has decided that testimony regarding the elimination of
this job is conflicting and, therefore, directed the Company to officially
notify the Local Union within thirty days from this date whether the job has
been eliminated.
GRIEVANCE #9
Facts - A number or Repair "A" jobs were bid on the second shift. The Plant
Manages interviewed each candidate individually and over a period of time in
excess of thirty days.
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<PAGE> 62
Issue - (1) Did the Company violate the contract by not immediately awarding
the job?
(2) Did the Company violate the contract by not having the full
Local Union present while these interviews took place?
Decision - (1) The panel decided that the contract does not establish any
time period within which the Company must act. While the panel believes that
the Company should act within a reasonable period of time, The panel does not
have the authority to establish a time period. This is a subject for contract
negotiations.
(2) The panel determined that the Plant Manager can interview
employees about their skill and ability without any Union representative
present during the interviews. However, the panel interprets the contract to
determine that the Plant Manager must meet with the Local Union before he
awards jobs to a junior employee on the basis of skill and ability 80 the Union
has an opportunity to discuss the qualifications of each and every bidder.
However, the panel points out that the Company makes the final decisions as to
whom the job is to be awarded and an unsuccessful bidder has the right to
challenge the Company's decision through the grievance procedure.
GRIEVANCE #10
Facts - on an overtime day the Company was using both a front end loader and
a bulldozer to push stone and coal around the unloading station. After ten
hours the dozer operator declined to work any further overtime and went home.
The front end loader operator was also unable to stay any further on that day.
The Company then had a quarry utility operator operate the front end loader for
the balance of the time necessary to push the stoat and coal.
Issue - Did the Company violate the contract by using the front end loader
to push coal rather than the bulldozes?
Decision - The panel determined that the Company has the right to use either
the dozer or the front end loader to push coal. The quarry utility operator was
present and it is within his job description to operate the front end loader.
There was no violation of the contract. Therefore, the grievance is denied.
GRIEVANCE #11
Facts - At 9:30 a.m. the foreman asked the grievant to work overtime from
4:00 p.m. to 8:00 p.m. The employee refused. The foreman made other arrangements
to fill the job. At 12:45 p.m. the grievant told the foreman that he had changed
his mind and that he could work. The grievant was made aware that the 4:00 p.m.
to 8:00 p.m. slot had already been filled, but he was offered the 8:00 p.m. to
12:00 a.m. slot. The employee declined to work the offered overtime.
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<PAGE> 63
Issue - Did the Company violate the contract by not allowing the employee to
work the 4:00 p.m. to 8:00 p.m. overtime assignment?
Decision - The panel has decided that an employee who refuses overtime
cannot subsequently change his mind if the Company has made arrangements to
have another employee perform the work. The grievance is denied.
GRIEVANCE #12
Facts - The 4600 dragline crew was scheduled to work overtime on a Saturday
night. The grievant was to work overtime from 11:00 p.m. to 7:00 a.m. with the
dragline crew. In addition, he had been awarded a new job which would commence
at 7:00 a.m. on Sunday. Solely because he was beginning a new job on Sunday at
7:00 a.m., the Company changed the overtime assignment and only had the
employee work from 3:00 a.m. on Sunday and then his new shift 7:00 a.m. to 3:00
p.m. on Sunday.
Issue - Did the Company violate the contract by not working the employee the
hours he had been previously assigned to work?
Decision - Under these, particular circumstances, the panel has decided that
the employee is entitled to four hours overtime pay at the rate of his old job.
GRIEVANCE #13
Facts - On a Sunday there was need to push clinker in the covered clinker
storage area. The day shift dozer operator was a very experienced operator and
the second shift operator had only been on the job about two weeks. The
superintendent determined that on the particular day, the work assignment posed
special safety precautions and scheduled the experienced dozer operator to work
on that day.
Issue - Did the Company violate the contract by not working the grievant
overtime since he was the low man in overtime in that classification?
Decision - The panel has decided the Company is not required to equalize
overtime among employees holding the same job classification on a daily basis.
The Company is required only to equalize overtime "insofar as it is practical
to do so.
Evidence supported the Company's position that it was not practical to
equalize overtime in these circumstances because the employee with the fewest
number of overtime hours in the classification had been on the job for only two
weeks and the overtime assignment required work of a specialized nature which
had to be assigned to a more experienced operator. The grievance is denied.
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GRIEVANCE #14
Facts - There are two employees in the Truck Driver "C" classification. One
of the employees was called out on overtime on the day in question. The
grievant who was lowest man in overtime in the classification had already
worked twelve hours on that day and to have him perform the work would have
required the Company to work him over twelve hours.
Issue - Did the Company violate the contract by not working the employee who
was lowest in overtime on the day in question?
Decision - Again, the panel points out that the Company is not required to
equalize overtime on a daily basis, The employee with the fewest hours of
overtime had already worked overtime in the workday. The Company correctly
selected another employee for the callout. The grievance is denied.
GRIEVANCE #15
Facts - The Company performed repair work on the 4600 dragline on an
overtime day. Repairmen were used to perform this work.
Issue - Did the Company violate the contract by not having the 4600 Dragline
Operator and Pitman perform the work in question?
Decision - The Company and the Union acknowledged that four different
classifications can perform repair work on the 4600 dragline: the Repairmen,
the Quarry Utility, the 4600 Operator and the 4600 Pitman. The panel agreed
that under these circumstances the Company did not violate the Labor Agreement.
GRIEVANCE #16
Facts - On Friday night the transfer chain on the Marion No. 3 shovel came
off. The Operator and Pitman put it back on. Three hours later the chain came
off again and it was the Company's determination that repair of a once
permanent nature must be made. The shovel was shutdown. On Saturday, two "A"
Repairmen made the necessary repairs.
Issue - Did the Company violate the Contract by not having the Shovel
Operator and Pitman work on that Saturday to perform the repair work rather
than the Repairmen?
Decision - The panel has determined that the ruling in Grievance No. 15 is
also applicable in this instance. Repairman is one of the four classifications
which can and do perform repair work on the shovel. Therefore, the grievance is
denied.
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GRIEVANCE #17
Facts - Immediately prior to 3:00 p.m. the 7:00 to 3:00 shift began having
trouble with the coal feeding through the feeder in one of the kilns. The
foreman held over a day shift repairman for four hours and said he would call
out the other shift repairman, but then changed his mind and then held the
employee over for eight hours.
Issue - Did the Company violate the contract by holding the employee over
eight hours and not calling the off-man as had been the practice?
Decision - The panel determined that there was no violation of the contract,
however since the foreman said he would call out the off-shift repairman and
then proceeded not to, a four hour call-out is granted due to these particular
circumstances without precedent.
The panel further determined that the Local Union must assume the burden of
proof to show that the Company did not intend to divide overtime equally,
"insofar as it is practical to do so" among employees within the same job
classification by establishing a continuing pattern of assignment of overtime
to an employee other than the employee with the lowest overtime in the
classification without good cause.
The panel directs the Company and Local Union to meet to establish written
guidelines for the purpose of interpreting the language in the overtime section
which states "insofar as it is practical to do so." Such guidelines must
recognize that overtime is not required to be equalized on a daily basis, since
the contract does not require this. Therefore, the guidelines must recognize
that there are reasons for using an employee other than the lowest in overtime
on a particular day such as experience, skills, qualification, overtime already
worked on that particular day, etc.
GRIEVANCE #18
Facts - The grievant was asked earlier during the week of October 16th
whether he would work on Sunday, October 21st. The grievant declined. Later in
the week, the grievant was asked whether he would work Friday, October 19 and
Saturday, October 20th. The grievant declined to work either of these days but
he was not asked on this second occasion whether he would work on Sunday.
Issue - Did the Company violate the contract by not asking the employee to
work Sunday the second time when he was approached later in the work week and
asked to work Friday and Saturday?
Decision - The panel has decided that the grievant was offered overtime work
on each day in question and, therefore, the grievance is denied.
65
<PAGE> 66
GRIEVANCE #19
Facts - A Mix Chemist who was scheduled to work did nor report for work. The
Plant Chemist filled the vacancy by holding over the Mix Chemist who was
working the prior shift and calling out Mix Chemist working the next shift four
hours earlier rather than calling out the off-man which had been the normal
procedure.
Issue - Did the Company violate the contact by not calling out the off-man?
Decision - While there was no violation of the contact, the Plant Chemist
admitted that he did not follow the established procedure. Therefore, four
hours callout is granted without precedent for any future grievances. however,
the panel points out as it did in Grievance #13 and #17 that the Company is not
required to equalize overtime on a daily basis. The Union must prove that the
Company does not intend to divide overtime equally insofar as it is practical
to do so among employees within the same Job classification by establishing a
continuing pattern of assignment of overtime to an employee other than the
employee with the lowest overtime in the classification without good cause.
This principle shall control the disposition of all future cases until such
time as the Company and Local Union agree to reasonable guidelines mentioned in
grievance settlement No. 13.
GRIEVANCE #20
Facts - Two laborers assisted the 7400 Dragline Operator and the Pitman in
cleaning out the tub of the dragline because of the substantial amount of
cleaning out work required.
Issue - Did the Company violate the contract by not paying the Laborers
Pitman rate and not calling off-work Pitman?
Decision - Because of the amount of work and the nature of the work
involved, the panel determined that under these circumstances there was no
violation of the contract. Grievance is denied.
66
<PAGE> 67
APPENDIX H
PANEL DECISION - APRIL 22, 1974 PANEL MEETING
TO: R.L. Everhart
P.H. Geis
B. Eversole, Pres. Local No. 173
A. Harris, Jr., Recording Sec'y. Local No. 173
FROM: A. Clavier, Jr.
W.M. Troutman
GRIEVANCE #1
Facts - Three Quarry Mechanics were told by the foreman that they were to
report for work one hour early each morning until further notice to start and
warm up the mobile equipment in the quarry including the shovel.
Issue - Did the Company violate the contract by not paying the Quarry
Mechanic a call-out?
Decision - The panel determined that the Quarry mechanics were not entitled
to a callout and that there was no violation of the contract. The panel decided
that the Company had the right under the contract to require that employees
report early on an "until further notice" basis and were not required to notify
them each day. The panel agreement on the "standing order" then makes the
Company in accord with Article VII (d. (3)) which specifically states that "if
an employee is notified before the end of his regular scheduled shift, it shall
not be considered a call-out." The panel determined also that the employees who
were reporting one hour early did not have their schedules changed. A schedule
change is defined as a notification by the Company to an employee that he will
be required to work one or more hours, shifts, and/or days, in place of but not
in addition to the regular schedule. The one hour the Quarry Mechanics worked
was in addition to their regular schedule, and therefore, was not a schedule
change.
GRIEVANCE #2
Facts - Because of a truckers strike of about two weeks, the Company did not
operate the second shift packhouse crew on a full production basis. The packing
crew was used elsewhere in the plant as needed.
Issue - Did the Company violate the contact by not giving them the right to
bump?
Decision - The panel determined that the Company did not violate the
contract by denying the employees the right to bump. It
67
<PAGE> 68
was determined that an employees job is not eliminated until the Company
notifies him that his job has been eliminated and gives him a bump slip.
GRIEVANCE #3
Facts - The Plant Manager was measuring bolts on the new kiln mult-o-ring by
unscrewing the bolts and then replacing them and labeling them. There were no
bargaining unit employees with the Plant Manager at the time he was measuring
the bolts.
Issue - Was the Plant Manager performing bargaining unit work and,
therefore, violating the contract?
Decision - The Company violated the contract in the circumstances described
in this particular case. The Plant Manager should have had an hourly employee
with him who later would use this system which he was preparing and the hourly
employee should have physically measured the bolts. However, the panel decided
that this decision was without precedent for any other grievance since each
grievance under this contract clause must be taken on a case-by-case basis .
Award - Four hours pay at double time (2x) to the repairman lowest in
overtime.
GRIEVANCE #4
Facts - The Company posted six laborer jobs on the second shift to brick a
kiln during a planned shutdown. On this posting, it was stated that the jobs
were to run only as long as necessary to brick the kiln and when they were
eliminated that there would be no 95% rate protection.
Issue - (1) Did the Company violate the contract by not paying the employees
95% rate protection when the jobs were eliminated?
(2) Did the Company violate the contract by not giving the employees
written advance notice that their jobs wore being eliminated and should the
Company pay the employee out-of-schedule penalty since the time of the
elimination?
Decision - The panel has decided that there was no violation of the contract
on either issue No. 1 or No. 2 but prior to giving this decision, the Local
Union dropped the grievance.
68
<PAGE> 69
ATTACHMENT "A"
May 1, 1996
Mr. Frank Ferrucci, President
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
LOCAL 173
Wampum, Pennsylvania
The Company's final position on Article VI (a) restricts bidding to any
employee in a classification whose straight time hourly rate is less than the
bid job, effective May 1, 1996.
This letter will confirm the Company's agreement to allow each employee in the
bargaining unit to bid on an equal or lower rated classification once during
the life of the new labor agreement which will take effect May 1, 1996.
This letter will also confirm the Company's agreement to allow each employee in
the bargaining unit to bid on any newly created job, or on a job created
through the combination of other jobs, during the term of the labor agreement
which takes effect May 1, 1996.
Anthony M. Zingales
Director, Employee Relations and EEO
69
<PAGE> 70
5/19/93
ATTACHMENT "B"
The most efficient and productive method of operating a cement plant is on a
continuing process basis. Any time major equipment is shutdown due to operating
difficulties, the plant is at its weakest position. At this point it is in the
interest of both the Company and its employees that the equipment be returned
to normal operation in the shortest period of time, using the most efficient
and least costly methods available.
However, when major equipment must be shutdown due to operating problems, the
present contract severely limits the ability of the Company to make efficient
and productive use of its employees and equipment and even economically
penalizes the Company when it attempts to do so.
Continued application of these restrictions and penalties when operating
difficulties occur threaten the viability of each plant. This also encourages
the entrant into the market place of non union or other competitors who do not
have these contract language barriers and ace able to use their labor cost
advantages in their relationships with our customers.
In light of the above fact, the parties agree to the following language:
* * * * * * * * * * *
The eight hour rest penalties, scheduling penalties, double time after twelve
hours in a day, or double time into next shift penalties (however, double time
after 12 consecutive hours shall apply,) and seventh consecutive day penalties,
provisions of the current Collective Bargaining Agreement, shall not apply
whenever one or more of the unscheduled shutdowns listed below are present, and
the Company is in the process of returning the equipment to operation. The
kilns must be down sixteen (16) hours and the finish mill down eight (8) hours
because of operating difficulties before the above exemptions become effective.
1. If any kiln is shutdown because of operating difficulties.
2. a. One or more finish grinding mills are shutdown because of operating
difficulties.
b. One or more raw grinding mills are shutdown because of operating
difficulties and would result in the shutdown of the kiln in the
immediate future*.
3. One or more crushers arc shutdown because of operating difficulties, and
would result in the shutdown of the kiln in the immediate future*.
70
<PAGE> 71
"Immediate future" means that the Company cannot bring the equipment that
is shutdown back into operation at straight time in sufficient time to
prevent the kiln from running out of the inventory provided by the disabled
equipment such as raw-grind kiln feed, stone, etc.
The penalty exemptions shall commence when the equipment in, 1, 2, or 3, above
is shutdown and will not continue in effect for more than twenty-four (24)
hours after the equipment which has been shutdown has been returned to
operation; however, the seventh consecutive day penalty exemption will continue
until the seventh day of the plant workweek in the week the work was completed.
This seventh day exemption shall only apply to those employees used to return
the equipment to operation.
In addition, if a holiday or Sunday falls when one or more of the above
conditions are present, all employees who work on these days shall be
considered as scheduled to work for premium purposes under Article VII (d) (1)
regardless of whether or not they have been previously scheduled to work.
In addition, the penalty exemptions listed in this attachment shall not apply
to employees of the Packhouse or Quarry unless they are used to perform
maintenance on the equipment while it is being returned to operation or are
used to replace employees who are used to perform such maintenance.
If their work under these conditions would result in the application of any of
the penalties listed in this attachment, the penalties shall not apply.
The foregoing to the contrary notwithstanding, the above penalty exemptions
shall not apply during a scheduled plant shutdown.
71
<PAGE> 72
ATTACHMENT "C"
June 2, l993
Mr. Frank Ferrucci, President
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
LOCAL 173
Wampum, Pennsylvania
During our recent contract negotiations the Company agreed that the last
paragraph of Article VII (f) (lunches) concerning reasonable time to eat a
lunch, will also apply to the situation where an employee has received twelve
hours notice prior to the commencement of the overtime assignment and is not
provided a lunch by the Company.
The Company will allow the employee thirty (30) minutes away from his job to
eat his lunch. However, it is understood that shift workers will continue to
eat their lunches on the job as they have done in the past.
In addition, the Company will not call an employee's home after ten o'clock at
night for the sole purpose of meeting the twelve hour notice requirement to
avoid providing an overtime lunch.
Peter H. Geis
Director Labor Relations and EEO
72
<PAGE> 73
ATTACHMENT "D"
May 1, 1996
Mr. Frank Ferrucci, President
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
LOCAL 173
Wampum, Pennsylvania
When a new Pension Plan is signed by Company, the International Union and Local
173, the plan will include changes in the pension unit benefit as agreed in the
negotiations and ratified by the membership. These changes are as follows:
Pension benefit for each year of credited service
<TABLE>
<CAPTION>
Normal Disability
Retirement Retirement
---------- ----------
<S> <C> <C>
May 1, 1996 $27.50 $28.50
May 1, 1997 $28.50 $29.50
May 1, 1998 $29.00 $30.00
</TABLE>
Anthony M. Zingales
Director, Employee Relations and EEO
73
<PAGE> 74
ATTACHMENT "F"
VOLUNTARY LAYOFF
This letter will confirm that the Union recognizes that the first paragraph of
Article V (b) of the Contract requires the most senior employees to perform
work in their classification when a production curtailment or plant shutdown
causes a reduction in the personnel in that classification.
The foregoing to the contrary notwithstanding, the Company, without precedence,
will consider the request from a senior employee to take voluntary layoff when
there is a reduction in personnel in his classification during a plant shut
down. The Company retains the right to decline these requests, but will not
unreasonably withhold such permission.
Whenever the request is granted by the Company, the Union acknowledges by its
signature below that the granting of each request is without precedence for any
future requests.
The requests will only be considered during a plant shutdown in which employees
are laid-off. The employee who requests and is granted voluntary layoff
consistent with this letter, will be recalled (1) when the Company needs the
employee for work in his classification or (2) when the plant starts up,
whichever occurs sooner, providing his seniority permits such recall.
-------------------------------------
Wampum Plant Manager
Medusa Cement Company
-------------------------------------
-------------------------------------
Local D-173 of the United Cement,
Lime, Gypsum and Allied Workers
Division
74
<PAGE> 75
ATTACHMENT "G"
June 2, 1993
Mr. Frank Ferrucci, President
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
LOCAL 173
Wampum Pennsylvania
LETTER OF UNDERSTANDING
In exercising its right to temporarily transfer employees in accordance with
the provisions of the labor agreement, it is not the Company's intent that
these transferees to be used as a method of discipline or to punish any
employee.
If the Union determines that this is the purpose of a particular transfer of
transferees, the Union may file a grievance concerning such transfer commencing
with the third step of the grievance procedure .
Any grievance filed in accordance with this letter of understanding will not be
counted against the limit of five grievance that may be presented to the panel
each year.
Peter H. Geis
Director, Labor Relations and EEO
75
<PAGE> 76
May 15, 1981
Mr. Frank Ferrucci
Local 173
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
Wampum, Pennsylvania
When an increment increase is applied at the Wampum Plant, the employees on 95%
rate protection receive the full increment increase granted to the wage bracket
from which they were eliminated.
Peter H. Geis
Director, Labor Relations and EEO
76
<PAGE> 77
April 13, 1971
Letter of Intent
Mr. Robert Eversole, President
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
LOCAL 173
Wampum, Pennsylvania
The Company will not lay off any employee (who has seniority as of April 1,
1971) during the life of the current Labor Agreement as a result of the
installation of mechanical equipment strange in production methods, the
installation of new or larger equipment, the combining of jobs or the
elimination of jobs.
This protection will not apply to employees hired after April 1, 1971.
This protection does not apply to layoffs resulting from production
curtailments, inventory or plant maintenance shutdown, disciplinary action nor
any layoffs which are not a result of the changes mentioned above.
P. Schena
Plant Manager
77
<PAGE> 78
May 15, 1981
Mr. Frank Ferrucci
Local 173
UNITED CEMENT, LINE , GYPSUM AND
ALLIED WORKERS DIVISION
Wampum, Pennsylvania
It is understood and agreed to by the Union and the Company that the following
will satisfy the requirements of Article VII, section (f) regarding hot
lunches:
1. The Company will furnish a frozen food freezer or coin operated vending
machines and a microwave oven to supply a lunch to an employee who
satisfies the overtime requirements. The employee will be furnished
$6.00 effective May 1, 1997 and $6.50 on May 1, 1998 to be used for the
purchase of his hot lunch. The employee shall receive the money as
stated, even if he chooses not to purchase a lunch.
2. The Plant Manager and Local Union Committee will agree in writing on
the various types or kinds of food to be available.
3. The Company will allow the employee thirty (30) minutes away from his
job to eat his lunch. However, it is understood that shift workers will
continue to eat their lunches on the job as they have done in the past.
4. In the event an employee is unable to obtain a sandwich, soup and a
beverage from a machine because one of them is empty, the Company will
furnish a lunch provided a local restaurant is open.
5. Sandwiches will be dated as to the date they should be removed from the
machine.
Peter H. Geis
Director, Labor Relations and EEO
78
<PAGE> 79
June 29, 1975
LETTER OF INTENT
Mr. Robert Eversole, President
UNITED CEMENT, LINE , GYPSUM AND
ALLIED WORKERS DIVISION
LOCAL 173
Wampum, Pennsylvania
It is understood by both the Union and the Company that the Director of
Industrial Relations will contact the payroll department of the plant to make
arrangements that will allow for S.U.B. payments to be made by the end of the
second week an employee is laid off. This arrangement will be made within a six
(6) week period following the ratification of the 1975 contracts by the local
Unions.
It is further understood that any S.U.B. payments made in advance of meeting
the requirements of the existing S.U.B. agreement between the parties will
remain subject to Section 7, Recovery of Overpayments, of the S.U.B. Agreement.
Robert L. Everhart
Plant Manager
79
<PAGE> 80
May 15, 1981
Mr. Robert Eversole, President
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
LOCAL 173
Wampum, Pennsylvania
It is understood by both Local 173 and the Company that the Job Evaluation
Request Form IR-74-2 in no way changes the Company policy pertaining to the
Wampum plant job evaluation program. The form is provided to allow for a
reasonable amount of information explaining the justification for a job
evaluation request when it is submitted to the plant management by an employee
so the request can be properly considered and validated.
Items one (1) through four (4), and ten (10), and eleven (11) will be filled in
by an hourly employee prior to submitting the form to the plant management. If
the request is deemed valid by management, the Union and management evaluation
committees will schedule a meeting and fill in items five (5) through nine (9)
on the evaluation form and perform an evaluation according to the current
evaluating policy.
Peter H. Geis
Director, Labor Relations & EEO
80
<PAGE> 81
May 15, 1981
Mr. Robert Eversole, President
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
LOCAL 173
Wampum, Pennsylvania
This letter is intended to spell out the understanding reached between the
Company and the Union on how shift differential is to be paid.
1. Shift workers will be paid shift differential at the rate as required in
the Labor Agreement for hours worked within the designated shift hours
for their department.
2. Day workers scheduled by Thursday posting to work hours other than day
shift will be paid shift premium. The premium shall be included as part
of the regular rate in the calculation of overtime compensation for all
hours worked.
3. For purposes of determining shift premium to be paid to day workers as
set forth in (2), the shifts will be as follows:
a. First shift - 7:00 a.m. to 3:00 p.m. or
8:00 a.m. to 4:00 p.m.
b. Second shift - 3:00 p.m. to 11:00 p.m. or
4:00 p.m. to 12:00 midnight
c. Third shift - 11:00 p.m. to 7:00 a.m. or
12:00 midnight to 8:00 a.m.
Peter H. Geis
Director of Labor relations and EEO
81
<PAGE> 82
May 15, 1981
Ms. Robert Eversole, President
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
LOCAL 173
Wampum, Pennsylvania
Union committee members will be allowed a maximum of forty (40) hours to proof
read the new contract during normal working hours. A maximum of three (3)
employees may be involved.
Peter H. Geis
Director of Labor Relations and EEO
82
<PAGE> 83
May 15, 1981
Mr. Robert Eversole, President
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
LOCAL 173
Wampum, Pennsylvania
The overtime list will be posted in descending order of overtime.
Peter H. Geis
Director of Labor Relations and EEO
83
<PAGE> 84
May 15, 1981
Mr. Robert Eversole, President
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
LOCAL 173
Wampum, Pennsylvania
When conditions warrant, the Company will consider calling-out an additional
Control Room Operator to assist in starting up a kiln after it has been
shutdown.
Peter H. Geis
Director, Labor Relations and EEO
84
<PAGE> 85
June 2, 1993
Mr. Frank Ferrucci
Local 173
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
Wampum, Pennsylvania
The Company will pay for required truck inspection licenses, Blasters licenses
and CDL licenses, however, the Company will determine the maximum number of
licenses it feels must be available to properly fill the classification which
requires a license. The Company will pay for the renewal of those currently
holding licenses.
Peter H. Geis
Director, Labor Relations & E.E.O.
85
<PAGE> 86
April 25, 1996
Mr. Frank Ferrucci
Local 173
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
Wampum, Pennsylvania
In exercising its right to temporarily transfer an employee, the company will
not backfill the created vacancy for the purpose of maintaining a lower pay
classification. The company will maintain overtime within the classification of
the original planned job vacancy. Does not apply to unplanned vacancies.
Anthony M. Zingales
Director, Employee Relations and EEO
86
<PAGE> 1
EXHIBIT 10.33
BASIC AGREEMENT
BETWEEN
MEDUSA CEMENT COMPANY
(Division of Medusa Corporation)
AND
THE CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
(INTERNATIONAL BROTHERHOOD OF BOILERMAKERS, IRON
BUILDERS, BLACKSMITHS, FORGERS AND HELPERS, AFL-CIO)
ACTING ON BEHALF OF ITS
LOCAL UNION
Charlevoix, Michigan, Local D480
EFFECTIVE
May 1, 1998 to May 1, 2003
1
<PAGE> 2
BASIC AGREEMENT
<TABLE>
<S> <C> <C>
I Agreement and Purpose 1
II Union Recognition and Security 2
III Seniority 4
IV Job Security 7
V Working Conditions 16
Rates of Pay - Overtime 17
Callouts and Off-Days 18
Limitations Upon Overtime 20
Eight Consecutive Hour Rest Premium 22
Wage Rate - Transfer and Assignments 23
Sunday Work 24
Reporting Pay 24
Funeral Leave 24
Jury Duty 25
Shift Changes 25
Wash Time and Rest Breaks 25
VI Vacations with Pay 26
VII Holidays 28
VIII Wages 30
IX Handling of Complaints 31
X Strikes and Lockouts 37
XI Safety 38
XII Military Service 42
XIII Supplemental Unemployment Benefit Plan 42
XIV Subcontracting 43
XV Miscellaneous 44
XVI Term of Agreement 44
Attachment A 47
Attachment B 49
Attachment C 50
</TABLE>
2
<PAGE> 3
AGREEMENT BETWEEN
MEDUSA CEMENT COMPANY
(Division of Medusa Corporation)
and
THE UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
(International Brotherhood of Boilermakers, Iron Ship
Builders, Blacksmiths, Forgers and Helpers, AFL-CIO)
and Local D-480
Effective May 1, 1998 thru May 1, 2002
ARTICLE I
AGREEMENT AND PURPOSE
(a) This Agreement is by and between Medusa Cement Company, a Division of
Medusa Corporation, hereinafter called the "Company", and the Cement,
Lime, Gypsum and Allied Workers Division (International Brotherhood of
Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers,
AFL-CIO), hereinafter called the "Union", acting on behalf of its Local
Unions, whose members are employees of Medusa Cement Company.
(b) The Company and the Local Union at each plant have negotiated a Local
Agreement. Each Local Agreement has the same effective date and the same
expiration date as this Basic Agreement. Local Supplemental Agreements
shall not conflict or serve to modify provisions of this Basic
Agreement.
(c) It is the policy of the Company and the Union that the provisions of
Agreement shall be applied to all employees without regard to race,
color, sex, age, religious creed, national origin, handicap or Vietnam
Era Veteran status.
The Masculine words "he", "his" and "him" as used in this Agreement also
shall mean the feminine words, "she" and "her".
3
<PAGE> 4
ARTICLE II
UNION RECOGNITION AND SECURITY
(a) The Company recognizes the Union as the exclusive representative for all
hourly rated production, maintenance, quarry and laboratory employees,
excluding all office employees and all supervisors as defined by the
National Labor Relations Act, as amended, for the purposes of collective
bargaining in respect to wages, hours and working conditions at its
plants located at:
Charlevoix, Michigan, Local D480
(b) It shall be a condition of employment that all employees of the Company
covered by this Agreement who are members of the Union in good standing
on the execution date of this Agreement shall remain members in good
standing and those who are not members in good standing on the execution
date of this Agreement shall on the thirtieth (30th) day following the
execution date of this Agreement become and remain members in good
standing in the Union. It shall also be a condition of employment that
all employees covered by this Agreement and hired on or after its
execution date shall on the thirtieth (30th) day following the beginning
of such employment become and remain members in good standing in the
Union.
(c) The term "employee" as used in this Agreement refers only to an employee
whose job is set forth in the Job Classification list attached to each
Local Agreement or any subsequent job added to the list during the term
of the Agreement.
(d) The Company will deduct from the monthly earnings of any of its
employees his Initiation Fee and Union Membership Dues and will pay the
same to the party to whom such employee directs the Company in writing.
Each such employee desiring such deduction to be made from his earnings
must present to the Company his signed order, which shall be
substantially as follows:
"I hereby authorize and direct the Medusa Cement Company to deduct and
pay from my earnings accumulated to my credit my Initiation Fee and
Union Membership Dues, and pay same to ............ I further agree to
hold the Medusa Cement Company harmless on account of deductions and
payment herein authorized."
Medusa Cement Company ...
-----------------------------
Timekeeper
Employee Clock No.
-----------
4
<PAGE> 5
This authorization may be canceled by the Union member on any
anniversary date of this Agreement upon thirty (30) days prior written
notice to the Company and the Union.
(e) The union shall furnish to the Plant Manager a written list of the names
of employees who will serve on the committee. The number employees on
the committee shall be defined by each Local Agreement. If a vacancy
occurs on the committee, the Plant Manager, shall be informed by letter
of the name of the new member before a meeting is held. No other members
of the Union who are employees at the Plants are eligible to attend
these meetings unless previously agreed to by the parties hereto.
(f) Notwithstanding the provisions of Article II (b) above, any employee,
who is a member of and adheres to established and traditional tenets or
teachings of a bona fide religion, body or sect which has historically
held conscientious objections to joining or financially supporting labor
organizations shall not be required to join or financially support the
Union as a condition of employment; provided, however, that each such
employee shall, as a condition of his or her employment, in lieu of the
payment of periodic dues and initiation fees to the Union, pay sums
equal to such dues and initiation fees to any one of the follow
nonreligious charitable funds, which are exempt from taxation under'
Section 501(C)(3) of the Internal Revenue Code:
1. City of Hope
2. American Cancer Society
3. American Heart Association
4. National Multiple Sclerosis Society
5. American Red Cross
It is expressly understood that any such employee holding conscientious
objections and choosing not to join or financially support the Union,
who requests the Union to use the grievance arbitration procedure on the
employee's behalf, shall be required to pay to the Union the reasonable
cost of processing any grievance on his or her behalf including
reasonable cost of arbitration if any. (Because of State law this does
not apply to Local D23 at Clinchfield, Georgia.)
(g) Upon receipt from an employee authorizing payroll deduction and
specifying the amount to be deducted, the Company will deduct voluntary
contribution to the City of Hope. All amounts so deducted shall be
remitted by the Company to the City of Hope.
The Company shall be held harmless from any claim, demand or action
arising out of such deductions.Employees contributing to the City of
Hope a cannot discontinue or change such contributions for one year.
5
<PAGE> 6
ARTICLE III
SENIORITY
(a) The seniority unit shall be plant-wide.
(b) Seniority is continuous service which shall be calculated from date of
first employment or re-employment following a break in continuous
service, whichever occurs later.
When two or more employees are hired on the same day, the employee with
the lowest last four (4) digits in their social security number shall be
senior to the employee with the highest last four (4) digits. This
paragraph is effective May 10, 1978.
(c) New employees and those hired after a break in continuity of service
will be regarded as probationary employees for the first sixty (60) days
of wor and will receive no continuous service credit during such period.
Probationary employees may file and process grievances under this
Agreement, but may be laid off or discharged as exclusively determined
by the Company. Probationary employees who continue in the service of
the Company subsequent to the first sixty (60) days of work shall
receive full continuous service credit from date of the most recent
hiring.
THE PROBATIONARY PERIOD MAY BE EXTENDED AN ADDITIONAL THIRTY (30) DAYS
OF WORK BY MUTUAL AGREEMENT OF THE COMPANY AND THE UNION.
(d) An employee covered by this Agreement shall lose his entire seniority if:
(1) He voluntarily quit;
(2) He is discharged for cause and not rehired within six (6) months
or reinstated;
(3) An employee's seniority shall be broken and his employment
terminated effective on date of his acceptance of Termination
benefits under the provisions of the Supplemental Unemployment
Benefit Plan Agreement;
(4) The employee is on layoff or disability for a period of three
years or 50% of his seniority attained at the start of such
absence, whichever is less.
(e) A leave of absence for the purpose of accepting a position with The
Cement, Lime, Gypsum and Allied Workers Division at the Local, district,
or international level, or the AFL-CIO or any of its subordinate bodies,
shall be available to not more than three (3) employees from each plant
at any one time. Applications for such leave shall be submitted to the
Company in writing thirty (30) days prior to the effective date of such
leave to permit proper provisions to be made to fill the job to be
vacated. Leaves of absence for this purpose shall be for an indefinite
period. During such leave, seniority shall accumulate. Group insurance
coverage shall be suspended after thirty (30) days of such leave.
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All insurance coverages will be reinstated upon returning to work with
the Company. Upon returning to work such employee will be reinstated on
his former job, providing it is still in existence; if not, he shall be
eligible to apply for any job within the bargaining unit by means of the
existing bidding procedure or by bumping.
(f) The Company shall attach to each Local Agreement a list of employee's
seniority dates in order of hiring and a list of the probationary
employees.
(g) Temporary summer employees may be employed by the Company from May 1st
through September 30th in order to facilitate filling of vacancies
caused by vacations during these months. Employment of summer employees
will be subject to the following conditions:
(1) No summer employee will be hired when any regular employee is on
layoff or drawing short workweek benefits.
(2) All summer employees will be required to join the Union under the
same terms and conditions as required in Article II, Sections (b)
and (d) of the Basic Agreement.
(3) All summer employees must sign an appropriate form which will
spell out the terms of their employment including but not limited
to an agreement to commence their employment on a specified date
and terminate their employment on a specified date. Such dates
must be in accordance with the time period specified in this
section.
(4) The term of employment will not be changed, altered or extended
unless mutually agreed to by both the Company and the Local Union
Committee.
(5) Summer employees shall not accumulate seniority nor be eligible
to bid on any new job or vacant job which may occur during their
terms of employment.
(6) A summer employee will not become eligible for a floating
holiday and will not have any vacation rights.
(7) Summer employees will not participate in the Company's pension,
S.U.B. and insurance programs.
The above will be in full force and effect, except that if any portion
is found to be contrary to any federal, state or local law, it shall be
changed to comply with said law.
ARTICLE IV
JOB SECURITY
(a) (1) Whenever the installation of mechanical equipment, change in
production methods, the installation of new or larger
equipment, the combining of jobs or the elimination
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<PAGE> 8
of jobs, will have an effect on the job status of one or more
employees, the Company will give the Union reasonable advance
notice of same and, upon request by the Union, will promptly
meet with the Union to review and explore the effects of such
installation or installations or change or changes upon the
working force.
(2) Employees will not be terminated by the Company as the result of
mechanization, automation, change in production methods, the
installation of new or larger equipment, the combining of jobs or
the elimination of jobs.
(3) Whenever an employee is no longer needed on his regular job as a
result of circumstances described in (1) above, such employee may
apply for any job or jobs within the bargaining unit on which an
incumbent has less seniority, and for which he could reasonably
be expected to qualify within a ninety (90) day on-the-job
training period unless the employee applying for such job is
disqualified due to physical reasons.
The rate of pay for such employee shall not be less than
ninety-five percent (95%) of the rate for the regular job from
which he was displaced, irrespective of the rate of the job which
he applies for and obtains.
The ninety-five percent (95%) of rate protection shall apply for
a minimum period of one (1) year, or a period equal to one-third
(1/3) of an employee's seniority up to a maximum of two (2)
years. If the affected employee is tendered training for a job
which he could be reasonably expected to qualify for with a
ninety (90) day on-the-job training period and refuses, he will
not be entitled to any rate protection unless he has a bona fide
reason for refusing. If an employee on ninety-five (95%) percent
rate protection subsequently bids on and is awarded a lower rated
job, he shall lose his rate protection.
(4) Employees affected by the application of the foregoing procedures
shall have and may exercise the same rights for retention and
on-the-job training in accordance with their seniority status and
the ninety-five percent (95%) rate guarantee shall also be
applicable to them.
(5) Employees who do not apply for and/or obtain a job in accordance
with the provisions of (3), including employees displaced from
their jobs but whose seniority status does not permit them to
utilize job retention rights under the provisions of (3) or (4)
will be placed on layoff status with recall rights in line with
their seniority status for job vacancies which may thereafter
occur.
(6) The provisions of (3) of this Section do not apply to
displacements or layoffs resulting from production curtailments,
except that employees laid off and not recalled when production
is resumed following curtailment will be entitled to the same
rights as employees affected by the preceding (3).
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<PAGE> 9
(7) Should the Company permanently shutdown the present facilities
affording employment to the employees comprising the bargaining
unit (the present facilities shall be deemed to have been
permanently shutdown if all productive facilities are abandoned
even though the shipping facilities continue to operate), the
Company shall mail a notice informing each affected employee that
his employment with the Company has been terminated because of
the permanent shutdown. The notice shall be mailed at least
ninety (90) days prior to the shutdown to the employee's last
address on the Company's records. Each employee who is mailed
said notice shall have the following options:
A. An employee who is not eligible for a normal (excluding thirty
(30) year retirement pension) or late retirement pension may
elect to transfer to another operation of the Company covered by
a collective bargaining agreement with the Union in accordance
with paragraph 8 or paragraph 9.
Any transfer pursuant to paragraph 8 or 9 will occur not later
than three (3) years after the last day the employee worked. An
employee awaiting transfer shall be placed on layoff and shall
receive S.U.B. Layoff or reduced layoff benefit provided the
eligibility and other requirements of the S.U.B. Plan are met. An
employee may void his election to transfer at any time during the
three (3) year period. If the employee is eligible for an
immediate pension at the time he voids his election to transfer,
he shall retire, effective the date he voids his election, under
the pension plan in effect at the time of the permanent shutdown.
An employee may also void his election in order to apply for
S.U.B. Termination benefits.
B. An employee who is eligible for an immediate pension at the date
of the permanent shutdown shall retire as of the effective date
of the permanent shutdown, except
1. An employee whose combined age and years of service equal
62 or more but less than 65 may elect layoff until his
combined age and years of service equal 65 at which time
the employee shall retire and receive a permanent shutdown
pension. The pension plan in effect at the time of the
permanent shutdown shall determine the retirement benefits
payable to the employee. An employee who elects layoff
under these conditions shall receive S.U.B. Layoff or
reduced layoff benefits provided the eligibility and other
requirements of the S.U.B. Plan are met.
2. An employee who is eligible for an immediate pension other
than a normal or late retirement pension and who elects to
transfer to another operation of the Company shall not
retire unless the transfer is not accomplished.
3. An employee shall not be required to retire under a
disability retirement pension earlier than he would
otherwise be required to retire if the Company had not
permanently shut down the facilities.
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An employee who retires under the Pension Plan may also be
entitled to receive S.U.B. Terminations benefits in accordance
with the terms of the S.U.B. Plan.
C. The employee may elect S.U.B. Termination Benefits in accordance
with the terms of the S.U.B. Plan at any time within one (1) year
after notice of termination has been mailed to him.
An employee other than an employee who is eligible for an
immediate pension may elect layoff prior to submitting his
application for S.U.B. Termination Benefits and shall receive
S.U.B. Layoff or reduced layoff benefits provided the eligibility
and other requirements of the S.U.B. Plan are met.
D. If the facilities which have been permanently shut down are
reopened by the Company within three (3) years of the date of the
permanent shutdown, an employee who has retired under the Pension
Plan shall be eligible for recall in accordance with his
seniority status at the time of the permanent shutdown. An
employee who has elected S.U.B. Termination benefits shall also
be eligible for recall in accordance with his seniority status at
the time of the permanent shutdown. Any pensioner who has
received S.U.B. Termination benefits and accepts recall and any
former employee who has received S.U.B. Termination benefits and
accepts recall shall repay said Termination benefits to the
S.U.B. Trust Fund or to the Company, whichever was the source of
the Termination benefits, in accordance with the S.U.B. Plan
Agreement. Any employee who accepts recall shall have his
previously accumulated seniority rights, pension, S.U.B.,
insurance and vacation credits as of the last day the employee
worked or at the date of permanent shutdown, whichever occurs
later, reinstated on the date he returns to work.
E. An employee who is not eligible for an immediate pension may
elect layoff and shall receive S.U.B. Layoff or reduced layoff
benefits provided the eligibility and other requirements of the
S.U.B. Plan are met.
The employment rights of any employee on layoff shall terminate
three (3) years after the last day the employee worked and the
employee's seniority shall be broken.
F. An employee's participation in the group insurance program shall
terminate effective the day following the last day the employee
worked and pending claims shall be processed in accordance with
the terms of the existing group insurance program. No employee
shall be eligible for holiday pay or vacation pay other than
vacation pay due after the last day the employee worked or the
date of the permanent shutdown, whichever occurs later. No
employee shall accumulate credited service under the pension plan
after the last day the employee worked or the date of the
permanent shutdown, whichever occurs later.
(G) THE COMPANY WILL ESTABLISH A 401(K) PLAN TO BEGIN AUGUST 1, 1998
WITH EMPLOYEE CONTRIBUTIONS UP TO 4% TO BE MATCHED 50% BY THE
COMPANY. BEGINNING MAY 1,
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2000, EMPLOYEE CONTRIBUTIONS UP TO 5% TO BE MATCHED 50% BY THE
COMPANY, AND MAY 1, 2002 EMPLOYEE CONTRIBUTIONS UP TO 6% TO BE
MATCHED 50% BY THE COMPANY.
(8) In the event the Company constructs a new plant that will affect
the employment status of employees in the Company's plant or
plants comprising a bargaining unit, such employees shall be
given an opportunity to make application for employment in the
new plant before it starts operation, and such employees shall be
given preferential employment right for the highest rated job the
employee is capable of performing. Such an employee shall
transfer with him all of his previously accumulated pension,
S.U.B., insurance and vacation credits. His seniority rights at
the former plant shall terminate upon his establishment of
seniority rights in the new plant.
(9) When an employee has been laid off or displaced because of
permanent changes in the working force or because of a plant
closing, he may make written application within fifteen (15) days
of layoff or displacement for employment in another plant of the
Company, and he shall be given preferential employment rights for
job openings at such other plant, providing such employee is
capable of performing the job that may be available at such other
plant of the Company. Any employee so transferring from one plant
to another of the Company shall retain his previously accumulated
pension, S.U.B., insurance and vacation credits. His seniority
rights at the former plant shall terminate upon his establishment
of seniority rights in the plant to which he transferred.
(10) Employees transferring from one plant to another as provided in
(a) (7), (8) and (9) of this Article will receive a moving
expense allowance. The Company will reimburse each employee for
actual moving expenses incurred to move furniture and other
household goods up to a maximum of $1,000 per employee.
(b) When a production curtailment or a plant shutdown causes a reduction in
personnel in a department or throughout the plant, a senior employee
whose regular job is not required shall have the option of accepting
available work for which he is qualified or accepting layoff. A Senior
employee who elects to accept available work shall be entitled to:
(1) Bump any junior employee whose job was previously held by the
senior employee on a permanent basis for a sufficient period of
time to demonstrate his ability to satisfactorily perform the job
as it is constituted at the time of the production curtailment or
plant shutdown. The senior employee must attempt to bump into a
job that he previously held in the reverse order of his
promotions. In other words, he must first attempt to bump into
the job he held immediately prior to his present job, except each
employee may select one job that he had previously held on a
permanent basis or is qualified to perform immediately, and for
purposes of this section only, consider it to be the job he held
immediately prior to his present job. Each employee
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<PAGE> 12
may make such selection and this selection shall be updated
effective on May 1, of each contract year at the employee's
discretion.
If the above procedure would result in an employee becoming a
part of the labor crew, he may exercise his bumping rights set
forth in (2) prior to entering the labor crew.
(2) An employee can bump a junior employee on a plant-wide basis
except for any maintenance job, any laboratory job, or those in
the control room operator classification, provided he is
qualified to perform the job immediately.
Employees who hold utility or vacation-relief jobs where the
employee actually works on several different jobs on a scheduled
basis shall be considered as having held those classifications on
a permanent basis for purposes of this section (b).
Any junior employee who is displaced by a senior employee shall
have the same rights as the senior employee set forth herein.
After the bumping is completed, the Company has the right to
require a senior employee to perform available work during the
curtailment or shutdown if there is no junior employee with the
necessary qualifications to perform the work.
A plant shutdown is defined as a period during which none of the
clinker burning units are producing.
The wage rate paid during a production curtailment shall be the
wage rate of the job performed. An employee who works on two or
more jobs in one day shall be paid in accordance with Article V
(j) (2).
During periods of plant shutdowns when employees are needed for
maintenance, repairs or work on plant alterations, the wage rate
paid to employees who are retained for work during the first
forty-five (45) days of plant shutdown shall not be less than the
employee's regular straight time wage rate nominally paid when
the plant is producing. After forty-five (45) days, the wage rate
paid shall be the wage rate of the job performed. An employee who
works on two or more jobs in one day shall be paid in accordance
with Article V (j) (2).
The ninety-five (95%) percent rate protection is not applicable
to any bumping under this procedure.
(c) When the Company determines that additional jobs are required during or
following a production curtailment or a plant shutdown in order to
maintain or increase the work force, the manner in which the reduction
of forces took place pursuant to Article IV, Section (b) will be
reversed.
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In the event that during a production curtailment or a plant shutdown an
employee bids for and is awarded another job, he shall lose all rights
pertaining to the job the employee previously held.
Sections (b) and (c) of Article IV shall not add to, subtract from, or
otherwise modify any maintenance training agreement by and between the
Company and the International and/or Local Unions negotiated before or
after the effective date of this Basic Agreement.
(d) The Company agrees to post a notice at least one week in advance of an
intended shutdown. Whenever a layoff is planned because of a change or
reduction in plant production requirements, the Company will, not less
than seven (7) calendar days prior to the effective date of the layoff,
post a bulletin stating the expected extent of such layoff, and the
expected effect on the work force. In the event the required notice is
not given in accordance with the above, the Company will pay the laid
off employee(s) the scheduled time lost at the applicable straight-time
hourly rate. The seven (7) calendar day period shall commence on the
completion of the third shift following the day in which the notice was
posted. The foregoing does not apply to disciplinary layoffs and layoffs
because of curtailment made necessary by disaster or emergency
conditions affecting the ability of the Company to physically operate
the plant.
(e) Company personnel excluded from the bargaining unit shall not regularly
perform bargaining unit work except temporarily in an emergency; for
training or instruction purposes, for testing, diagnosis, analysis or
when necessary to prevent disruption of the flow of operations or when
necessary to meet the interest of efficient operations.
Should a Company person excluded from the bargaining unit violate this
commitment the Company will be required to pay to the effected worker or
workers double time (his or their) regular straight time hourly rate for
anytime worked by person not included in the bargaining unit, with a
minimum of four (4) hours pay. If there is no affected worker, the
penalty for such work shall be paid to the worker lowest in overtime in
the classification and/or department.
(f) Any employee who becomes incapacitated and on the basis of competent
medical opinion cannot perform the cubes of his/her regular job may
exercise his/her plant seniority through the bumping procedure to move
to any position within the bargaining unit at the plant for which he/she
could qualify within a reasonable period of time but not to exceed 90
days. This in no way affects the bidding right of the employee.
(g) Any employee who is displaced by an incapacitated employee pursuant to
paragraph (f) of this section, may exercise his/her plant seniority to
bump into another position within the bargaining unit at the plant for
which he/she is qualified in the same manner as covered in the job
bidding procedure. The 95% rate protection is not applicable to bumping
under paragraphs (f) and (g).
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(h) All vacancies and new jobs created shall be posted no later than the
eighth day following the date the vacancy occurred or the new job was
created. Said vacancies and new jobs shall be posted for seven (7) days
to allow any employee to make application in writing for such job. The
Company will consider every application in terms of:
(1) Seniority
(2) The applicant's skill and ability and physical fitness measured
against the requirements of the job.
Where two or more applicants' qualifications in (2) are
relatively the same, seniority shall govern.
If an employee proves unsatisfactory, he shall be reinstated to
his previous job.
An employee who bids for and is awarded a job, excluding any
employee who is disqualified subsequent to the award, may not bid
any job in the same or lower bracket for six (6) months from the
date he was awarded his new job without the consent of the
Company; except that an employee may bid from an operating job to
a maintenance job or a laboratory job, from a maintenance job to
an operating job or a laboratory job, or from a laboratory job to
an operating job or a maintenance job even though the employee is
bidding a job in the same or lower bracket within six (6) months.
This Section does not require the Company to award a job to any
applicant if no applicants are qualified to perform the work.
The Company has the right to assign any employee to fill a new
job or to fill a vacancy until the job has been awarded.
The Company will meet with the Local Union Committee to explain
its decision when the Company awards a job to a junior applicant.
Any senior applicant shall have the right to challenge the
Company's award by filing a grievance in a timely manner. Any
employee reinstated to his previous job shall have the right to
challenge his disqualification by filing a grievance in a timely
manner.
(3) Once a job has been awarded, the Company will make every effort
to place the successful bidder on the job as soon as possible,
but within thirty (30) calendar days from the date of the job
award. Should the Company fail to place the successful applicant
on the job in the 30 day period, the applicant shall receive the
rate of pay for the new job commencing with the 31st day, until
such time as he is placed on the new job. At that time, he will
be paid in accordance with this Basic Agreement, Local
Supplemental Agreement, or plant practice, whichever is
applicable.
<PAGE> 15
This shall not apply if the delay beyond thirty (30) days is
caused by multiple bidding to fill the original vacancy.
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ARTICLE V
WORKING CONDITIONS
(a) Eight (8) hours shall be the regular workday and forty (40) hours shall
be the regular work week. The workday shall commence with the beginning
of the morning shift and workweek shall commence with beginning of the
morning shift on Sunday (Monday at Clinchfield, Georgia).
(b) Work schedules for each workweek will be posted on Thursday of the
previous week prior to the end of the first shift. If an employee's
work schedule is changed after the end of the first shift of the
preceding Thursday he shall be compensated by multiplying the regular
straight-time hourly wage rate by one-half (0.5) hr the first eight (8)
hours worked in his new schedule and the premium shall be paid in
addition to whatever compensation the employee is otherwise entitled to
receive under any other Section of this Agreement. An employee's work
schedule is changed and the premium is paid when the employee is
required by a schedule posted after the first shift on the previous
Thursday to work hours in place of the hours the employee was required
to work by the schedule posted prior to the end of the first shift on
the previous Thursday.
If an employee's work schedule is not posted on Thursday of the previous
week prior to the end of the first shift as provided above, the first
eight (8) hours worked the following week shall be considered
out-of-schedule and will be paid accordingly.
(c) All hours worked and all hours paid shall be compensated by multiplying
the regular straight-time hourly rate by one (1.0) unless expressly
provided otherwise.
(d) Hours worked in excess of eight (8) hours in the workday and forty (40)
hours in the workweek shall be paid for at the applicable overtime rate.
(e) THE ABOVE NAMED PARTIES HAVE AGREED THAT AN ADDITIONAL 1/2 TIME PREMIUM
WILL BE PAID TO EMPLOYEES WORKING IN SITUATIONS DESCRIBED IN THE BASIC
AGREEMENT I.E., ALL HOURS WORKED IN THE KILN AND CLINKER COOLER BAG
HOUSE.
(f) Rates of Pay - Overtime:
(1) The applicable overtime rate shall be time and one half (1.5) the
regular straight time hourly wage rate except on a Sunday or a
holiday in which case the applicable overtime rate shall be:
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Sunday
A. Straight-Time
1. Up to eight (8) hours 1-1/2X
2. Over eight (8) hours and up
to twelve (12) hours 2X
3. Over twelve (12) hours 2-1/2X
B. Overtime and Callouts*
1. Eight (8) hours or less 2X
2. Over eight (8) hours and up
to 12 hours 2-12X
3. Over twelve (12) hours 3X
Holiday
A. Straight-time
1. Up to eight (8) hours 2-1/2X
2. Over eight (8) hours and up
to twelve (12) hours 3X
B. Overtime and Callouts*
1. For all hours worked 3X
(2)* In the event an employee works more than twelve (12) hours in the
workday, he shall be paid for all hours worked in excess of such
twelve (12) hours at double the regular straight time hourly
rate.
After an employee has been engaged in work for twelve (12)
consecutive hours, he shall be paid for all consecutive hours
worked immediately succeeding and in excess of such twelve (12)
hours at double the regular straight time hourly rate.
* If an employee is being paid the rate of double time under the
foregoing paragraphs, his rate of pay shall not be reduced when
his work continues into or overlaps his regular shift. However,
the Company may exercise either of the following options:
A. The Company may instruct the employee to continue to the end of
the shift at the double time rate, or
B. The Company may send the employee home at any time during the
shift, provided the remainder of the shift is paid for at
straight time, subject to a maximum payment of four (4) hours at
straight time. Such employee cannot be called back to work until
he has been off duty for eight (8) consecutive hours.
In no event shall the first two provisions of the Section be
applied to the same hours of work. The provision which creates
the highest earnings shall be applied.
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(3) Callouts and Off-days: In case an employee is called for work
during any hour in the day or week in addition to his regular
schedule he shall receive a minimum of four (4) hours' pay for
such work at the applicable overtime rate. However, if he is
notified before the end of his regular shift to report early, it
shall not be considered a callout. Callout hours and off-day
hours are overtime hours. All Sunday callouts to be paid a
minimum of four (4) hours at the applicable Sunday rate.
(4) Lunch period interrupted by work assignments: One-half (1/2) hour
at the applicable overtime rate shall be paid for any scheduled
lunch period interrupted by a work assignment and either prior or
subsequent to the regular lunch period, reasonable time for lunch
shall be granted with pay for same at the employee's regular
rate.
(5)* If an employee actually works seven consecutive workdays in the
plant workweek, regardless of the number of hours worked on any
workday, the employee shall be compensated by multiplying the
regular straight-time hourly rate by one (1) for each and every
hour worked during the seventh consecutive workday, and this
premium shall be paid in addition to whatever compensation the
employee is otherwise entitled to receive under any other Section
of this Article.
(f) Overtime paid on a daily basis shall not be duplicated on a weekly basis.
(g) If an employee does not work a regularly scheduled workday through
action of the Company, excused absence or because of a holiday, that day
shall be considered as actually a day worked for all overtime purposes.
(h) Limitations Upon Overtime:
(1) Every reasonable effort will be made by the Company to avoid
requesting any employee to work overtime and the Company will
consider under the circumstances involved any reasonable excuse
from an employee for not working the overtime. Whenever an
employee is laid off due to lack of work or because of
curtailment of operations, no overtime work shall be scheduled on
any work which the laid-off employee is capable of doing and is
able to perform, except in cases of emergency repair or
unscheduled absences of other employees. The foregoing to the
contrary notwithstanding, a laid-off employee will not be called
back to work unless there is at least thirty-two (32) hours work
in the workweek for such employee.
(2) Overtime in the various job classifications shall be equally
divided as defined by the Local Agreement insofar as it is
practical to do so. Any employee who is contacted and cannot work
the overtime including callouts will be charged with the number
of hours actually worked or paid, whichever is greater or
according to the Local Agreement. Overtime worked or charged
shall be posted weekly in each department by the foreman.
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(3) Employees who are called upon to work overtime shall not be laid
off during their regular work time for the purpose of equalizing
said overtime.
(4) The Company will continue its practice of allowing a fifteen
minute paid wash-up time on continuous overtime beyond the end of
his shift. In addition, the Company will continue its practice of
paying overtime in fifteen (15) minute increments.
(5) A. Any employee who has not been notified of his overtime
assignment at least twelve (12) hours prior to the
commencement of the overtime assignment and who works more
than ten (10) consecutive hours, shall be provided with a
hot lunch which shall be eaten at the end of said ten (10)
consecutive hours, or as soon as practical thereafter but no
later than 30 minutes after the ten hours. Any employee who
works in excess of fourteen (14) consecutive hours shall be
provided with an additional lunch, and lunches will be
furnished at the end of every four (4) consecutive hours
worked thereafter.
B. Any employee who is called out and works more than four (4)
consecutive hours shall be provided with a hot lunch which
shall be eaten at the end of said four (4) consecutive hours.
In addition, said employee shall be provided with a hot lunch
every four (4) consecutive hours worked thereafter.
There shall be no duplication of hot lunches under provisions A
and B above. The employees shall be given reasonable time to eat
his lunch without loss of pay.
(6) THE COMPANY AGREES THAT THE ALLOWANCE FOR OVERTIME MEALS WILL BE
INCREASED TO $6.00 EFFECTIVE MAY 1, 1998, TO $6.50 EFFECTIVE MAY
1, 2000 AND TO $7.00 EFFECTIVE MAY 1, 2002.
(6) The purpose and intent of this Agreement is to refrain from
working an employee beyond sixteen (16) consecutive hours
excluding lunch periods. The Company agrees that they will not
work any employee beyond sixteen (16) consecutive hours excluding
lunch periods unless no other classified employee is available to
do the work.
However, in the event that a vacancy occurs that would require a
classified employee to work more than sixteen (16) consecutive
hours, the Company will fill that vacancy with another classified
employee who has primary overtime rights, an employee with
secondary overtime rights, or other qualified employee in the
stated order.
This Agreement does not absolve an employee from the requirement
to stay on the job until properly relieved. However, the Company
is required to make a diligent effort to provide a relief at the
end of the sixteen (16) hour period. The Company will not use the
eight (8) hour rest clause as an excuse to require an employee to
continue working after sixteen (16) hours.
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(i) Eight Consecutive Hour Rest Premium *
(1) An Employee should receive at least eight (8) consecutive hours
off work within the fourteen (14) consecutive hours immediately
preceding the start of his next scheduled shift. In the event an
employee does not receive eight (8) consecutive hours off work
within the fourteen (14) consecutive hours immediately preceding
the start of his next scheduled shift, the Company shall exercise
one of the following options:
A. Instruct the employee to report late for his next scheduled
shift by the number of hours his longest consecutive off-duty
period falls below eight (8) hours and pay the employee the
appropriate straight-time rate for those hours not worked
between the starting time of his scheduled shift and the time
he reports to work in accordance with the Company's
instructions. The appropriate straight time rate on the
workday Sunday shall be one and one-half (1.5) and on a
recognized holiday, two (2.0).
B. Instruct the employee to work at the starting time of his
scheduled shift. The employee shall receive a premium for
those hours worked which, if added to his longest consecutive
off-duty period, equal eight (8) hours. The premium shall be
determined by multiplying the regular straight-time hourly
rate by one (1). The premium shall be in addition to whatever
compensation the employee is otherwise entitled to receive
under any other Section of this Article.
(2) If an employee does not receive at least eight (8) consecutive
hours off work within the fourteen (14) consecutive hours
immediately preceding the start of callout hours worked on an
off-day (provided that any of the callout hours worked occur
within the hours the employee would have otherwise been scheduled
to work had the employee not been scheduled off), the employee
shall receive a premium for those hours worked which, if added to
his longest consecutive off-duty period, equal eight (8) hours.
The premium shall be determined by multiplying the regular
straight time hourly rate by one (1). The premium shall be in
addition to whatever compensation the employee is otherwise
entitled to receive under any other section of this Article.
(j) Wage Rate - Transfer and Assignments
(1) Employees temporarily transferred shall be paid the regular
straight time hourly rate of the job being performed or the
regular straight time hourly rate of his regular job, whichever
is greater.
(2) An employee regularly scheduled to work on two or more jobs
having different wage rates shall receive the highest rate for
the entire week. If a job is regularly scheduled to be performed
each week at least one workday in the workweek, the employee
filling that job shall receive the highest wage rate for the
entire week. An employee who is scheduled to work five workdays
during the workweek on a job or jobs having a higher straight
time hourly wage rate or wage rates than the employee's regular
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straight time hourly rate, shall be paid at the higher straight
time hourly wage rate for the entire week. An employee who works
on two or more jobs in one day shall receive the highest wage
rate for only the time worked on the higher rated job. However,
should the employee work on a higher rated job(s) for four (4) or
more hours in the workday he will receive the higher rate of pay
for the entire day. The term "entire week" used in this section
shall mean the 168 consecutive hours beginning at 7:00 a.m. on
Sunday and ending at 7:00 a.m. on Sunday. The term "entire day"
used in this Section shall mean the 24 consecutive hours
beginning at 7:00 a.m. and ending the following day.
The 168 consecutive hours mentioned above shall begin at 7:00
a.m. Monday and ending at 7:00 a.m. Monday, at Local D23,
Clinchfield, Georgia.
(3) The Company shall have the right to utilize employees to perform
any job; provided, however, overtime and callouts in any
classification shall be offered to the available classified
employees in that classification before other employees are
assigned such work. See Attachment "B" for Letter of
Understanding concerning transfers.
(k) Sunday Work
All hours worked by an employee on Sunday which are not paid for on a
premium and/or overtime basis shall be paid at the rate of one and
one-half (1-1/2) times the regular straight time hourly rate exclusive
of shift differentials. There shall be no duplication or pyramiding of
premium pay and/or overtime under this provision.
(l) Reporting Pay
Any employee who is required to report for work shall be given at least
four (4) hours pay at the regular straight time hourly rate, and shall
receive full pay for all time thereafter that he is required to remain
on the premises ready for work. Any employee put to work on his regular
working day shall receive full day's pay at the regular straight time
hourly rate.
(m) Funeral Leave
An employee, upon the notification of the death of his or her father,
mother, spouse, son, daughter, brother, sister, stepfather, stepmother,
stepson, stepdaughter, half sister, half brother, mother-in-law,
father-in-law, brother-in-law, sister-in-law, grandchild, grandparent,
or spouse's grandparent, shall be granted his or her next three (3)
scheduled working days off with pay (four (4) days off with pay if the
employee is required to travel beyond a radius of 500 miles). Payment by
the Company for such time lost shall be on the basis of eight (8) hours
per day at the employee's regular straight time hourly rate, including
shift differential.
As used herein, brother-in-law is defined to mean (1) the brother of
one's husband or wife, (2) the husband of one's sister, (3) the husband
of the sister of one's spouse, and sister-in-
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law is defined to mean (1) the sister of one's husband or wife, (2) the
wife of one's brother, (3) the wife of the brother of one's spouse.
The above clause shall not apply to an employee who is laid off, except
when an employee is notified to return to work effective on or before
the day of the funeral he shall be granted full funeral leave with pay.
The Company will notify a local union official of a death of an
employee's relative as defined above as soon as the Company has been
advised by the employee.
The foregoing to the contrary notwithstanding, no bereavement payment
will be made unless the employee attends the funeral nor will payment be
made if there are more than fourteen calendar days between the date of
death and the next scheduled workday.
(n) Jury Duty
Any regular employee (as distinguished from a probationary employee
required to perform jury duty on a day he is scheduled to work, shall be
excused from work on that day. The Company shall pay the employee the
difference between the amount received for such jury duty and eight (8)
hours at his regular rate of pay plus shift differential if involved.
The day or days paid for such jury service shall be counted as eight (8)
hours worked for the purpose of computing weekly overtime.
(o) Shift Changes
A shift employee may clock in up to 30 minutes prior to the actual
starting time of his shift and relieve the employee that he is to
replace. When properly relieved within this 30 minute period, the
employee being relieved may clock out and leave the plant.
Under such circumstances the pay received by the relieving and relieved
employees shall be computed as though both employees had clocked in and
out at the actual shift change time.
(p) The Company agrees to resolve problems with employee parking at the
Charlevoix Plant (and Clinchfield Plant).
(p) Wash Time and Rest Breaks
(1) An employee who does not receive a paid lunch period shall dock
out prior to the regular quitting time for his shift. However, he
shall be permitted to leave his place of work 15 minutes prior to
the regular quitting for his shift to wash provided that the
employee is not required to work overtime. An employee does not
receive 15 minutes away from the job to wash because he has been
required by the Company to work up to but not after the regular
quitting time for his shift, shall be compensated
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for lost wash time by multiplying his regular straight time
hourly rate by fifteen minutes (.25 hour). If the employee uses
additional time to clean following the regular quitting time for
his shift, he shall be paid as though he had clocked out at the
regular quitting time.
(2) An employee who does not receive a paid lunch period and who is
required to work overtime after the regular quitting time for his
shift shall clock out no more than 15 minutes after he leaves his
place of work. This shall not apply to an employee on call out.
(3) An employee who does not receive a paid lunch period will be
allowed a 15 minute rest break away from his job during the first
four hours of his regular shift. Break times shall be determined
by the employee's foreman and the efficient operation of the
plant shall be controlling. The 15 minute break shall be strictly
construed to be the total time away from the job. Should any
employee regularly be denied a break, he may file a grievance in
a timely manner.
(4) The Company is not required to grant any employee who does
receive a paid lunch period any wash-up time and any rest break.
Furthermore, said employee shall eat his lunch "on-the-job" so
that there is no interruption of operations.
(q) Any other provisions of this labor agreement to the contrary not
withstanding, no employee shall receive pay for any hour worked or
unworked which singly or in any combination, exceeds triple his regular
straight time hourly rate.
ARTICLE VI
VACATIONS WITH PAY
(a) Any employee who works during at least thirteen (13) weeks in either
each calendar year or each anniversary year, as defined in the Local
Agreements, shall be granted a vacation off work without loss of pay,
according to the following schedule:
(b) All employees who have completed one or more anniversary years of
service but less than five (5) years of service will be entitled to two
(2) weeks of vacation, provided they meet all other requirements of this
Article.
Employees who have completed five (5) or more anniversary years of
service but less than fifteen (15) years of service will be entitled to
three (3) weeks of vacation, provided they meet all other requirements
of this Article.
Employees who have completed fifteen (15) or more anniversary year of
service, but less than twenty-five (25) years of service, will be
entitled to four (4) weeks of vacation, provided they meet all other
requirements of this Article.
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Employees who have completed twenty-five (25) or more anniversary years
of service will be entitled to five (5) weeks of vacation, provided they
meet all other requirements of this Article.
Article VI (b) above to the contrary notwithstanding, no employee (who
meets all the other requirements of this Article Vl) shall be entitled
any fewer weeks of vacation than he was entitled to take in 1984.
(c) Vacation pay will be based on a forty (40) hour week at the rate of the
permanently assigned classification on which an employee is working at
the time he takes his vacation. If an employee has held a single higher
rated classification for more than six (6) months during the year
preceding his vacation, he will receive vacation pay computed at the
higher rate. Vacation pay shall include appropriate shift differential
for those on fixed shift. Employees working on rotating shifts shall be
paid an average of the rates for the rotating shifts involved.
(d) Vacations will not be cumulative, but so far as practicable, be granted
at times most desired by the employees, but the final right to allotment
of vacation period is exclusively reserved to the Company in order to
insure the orderly operation of the plant. In exercising its right to
allot vacation periods, the Company will not require any employee who is
on layoff to take his vacation during periods of plant shutdown or
curtailment of operation. Where requested vacation periods conflict,
preference shall be given to the older employee in point of service.
(e) It is further agreed that if any employees have previously selected
their vacation period so that it occurs during an unforeseen shutdown
such vacation period shall not be changed.
Vacation shall be taken by the employee within the calendar year in
which it is granted as determined by the Local Agreements.
(f) No employee will be required and/or requested to work during his seven
day vacation period. The only exception will be when a classification
has two or fewer employees, no qualified personnel are available except
the employee on vacation, and an emergency situation exists. In that
event an employee on vacation may be requested to work.
(g) The rules governing the submission of appropriate vacation application
blanks shall be defined by the Local Agreement.
(h) Upon two weeks written notice by an employee to the Personnel Clerk, the
Company will give him his vacation pay on the employee's last shift
prior to the beginning of his vacation.
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ARTICLE VII
HOLIDAYS
(a) The Company will grant eleven (11) paid holidays; these holidays shall
be listed in each Local Agreement.
(b) If any such holiday falls on Sunday, the following Monday shall be the
recognized holiday. The holiday hours shall be those hours within the 24
hour period commencing with the beginning of the first shift on the
morning of the holiday and ending at the beginning of the first shift
the following day.
(c) Employees who are scheduled to work on a holiday shall be paid two
and one-half (2.5) times the regular straight time hourly rate.
(d) Hours worked on a holiday in excess of eight (8) in a workday, in excess
of forty (40) in a workweek, on off-days, and on callouts shall be paid
for at the applicable overtime rate.
(e) If no work is required of an employee on the above holidays, he will
receive eight (8) hours pay at the regular straight time hourly rate,
provided he meets the following qualifications.
(1) The employee shall have been employed by the Company for at least
thirty (30) calendar days prior to the holiday.
(2) The employee shall have worked his last scheduled working day
prior to and his next scheduled working day after such holiday
unless excused therefrom by the Plant Manager on account of
sickness, accident, death in the family, or other excused
absence. In no event shall a holiday be paid for unless employee
has also worked during the thirty (30) day period immediately
preceding or immediately following the holiday except that the
thirty (30) day limitation shall not apply if the employee was
temporarily absent from work because of sickness, accident or
layoff. In any event, the employee must work at least one day in
the calendar year in which the holiday is granted.
(f) If an employee is scheduled to work on a holiday and fails to work, he
shall not receive holiday pay, unless excused therefrom by the Plant
Manager.
(g) If an employee works on a holiday, the holiday shall be counted as a day
worked for computing weekly overtime. Paid holiday is to count as a day
worked for overtime purposes, provided holiday falls on one of
employee's scheduled workdays and he would have worked that day except
for holiday observance.
(h) An employee not scheduled to work the holiday and who subsequently
performs work on a holiday will be considered as being on callout and
will be paid eight (8) hours at the regular
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straight time hourly rate in addition to two (2) times the regular
straight time hourly rate for all time worked with a minimum of four (4)
hours at double time.*
(i) Work schedules for each workweek which include a holiday will be posted
prior to the end of the first shift on Thursday of the previous week. If
an employee is scheduled to work on a holiday, but then instructed by
the Company not to work, he shall receive for that holiday eight (8)
hours pay at two and one-half (2.5) times the regular straight time
hourly rate.
(j) The phrase "regular straight time hourly rate" as used solely in Article
Vll, Holidays, shall mean the higher of either the employee's regular
straight time hourly rate or to the highest straight time hourly rate
for a job on which the employee works at least eight (8) consecutive
hours in the workweek in which the holiday falls provided (1) that the
eight hours had been previously scheduled or (2) the hours are worked
the day before or the day after the holiday whether previously scheduled
or not.
ARTICLE VIII
WAGES
(a) Considered a part of the Local Agreements are the current Job
Classifications and Rate Lists.
(b) (1) Scheduled shift workers on the first shift shall receive the
regular straight time hourly rate.
(2) Scheduled shift workers on the second shift shall receive the
regular straight time hourly rate plus 52(CENT) PER hour.
(3) Scheduled shift workers on the third shift shall receive the
regular straight time hourly rate plus 75(CENT)PER Hour.
(4) These premium rates do not apply to day workers even though they
may work over into premium paid shift.
(5) If a day worker is scheduled to take the place of a regular
scheduled shift worker, then the premium rate for the shift shall
apply.
(6) The premium pay does not alter the provisions covered in this
contract under the head of "Working Conditions".
(c) Shift differentials shall be included as part of the regular rate in the
calculation of overtime compensation.
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(d) The Company may at its discretion increase wages in any class or to an
individual in any class without necessitating a change in the rate of
any individual or class.
(e) Any job not mentioned in this Agreement or any job with substantial
changes in duties, equipment or requirements, or any new job created in
the plant, shall be open for negotiations by the Company and the Union
as to wages upon written notice from either party to the other party. If
no agreement can be reached during the above negotiations, the matter
shall be subject to the grievance procedure.
ARTICLE IX
HANDLING OF COMPLAINTS
(a) All employees shall at all times make an effort to perform their duties
in such a manner as to promote safe and efficient operation of their
department and the plant as a whole.
(1) Should a difference arise between an employee and the Company as
to the meaning and application of this Agreement or should a
difference arise as to the meaning and application of a
recognized practice, the employee with or without his steward
shall present his complaint to his foreman within ten (10)
working days after the date of the alleged wrong or within ten
(10) working days after the date the employee received his
payroll check, whichever is later. Failure by the employee and/or
the Union to observe this time limit shall cause the grievance to
be considered settled in favor of the Company.
(2) The foreman shall orally reply to the employee within five (5)
working days after the date the employee presented his complaint
in Section (1). Failure by the Company to observe this time limit
shall cause the grievance to be considered settled in favor of
the employee.
(3) If the employee is not satisfied with the foreman's reply, the
employee may request his steward to present the grievance in
writing to the Union Grievance Committee. If the Union Grievance
Committee believes that the complaint is justified, it may submit
the complaint in writing to the Plant Manager within five (5)
working days of the date of the foreman's reply in Section (2).
The Plant Manager shall schedule a meeting with the Union
Grievance Committee and any member or members of the staff that
the Plant Manager desires to have present. This meeting shall
take place within fifteen (15) working days of the date the Union
Grievance Committee submits the grievance to the Plant Manager.
Failure to observe any time limit shall cause the grievance to be
considered settled in favor of the employee if the Company has
failed to observe the time limit or in favor of the Company if
the employee and/or the Union has failed to observe the time
limit.
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(4) The parties shall use their best efforts to settle the complaint.
If the parties agree upon the disposition of the grievance, they
shall reduce their understanding to writing and the grievance
shall be settled. If the parties are unable to agree, the Union
Grievance Committee may at the employee's request and within
thirty (30) days of the date of the meeting between the Plant
Manager and the Union Grievance Committee submit the grievance in
writing to the Director of Industrial Relations or his
representative with copies to the International Vice President or
District Council Representative and the Plant Manager. The
Director of Industrial Relations shall contact the International
Vice President or District Council Representative within seven
(7) days after receipt of the grievance to schedule a meeting.
The parties shall use their best efforts to schedule the meeting
within thirty (30) days. Failure to observe any time limit shall
cause the grievance to be considered settled in favor of the
employee if the Company has failed to observe the time limit or
in favor of the Company if the employee and/or the Union has
failed to observe the time limit.
(5) After full consideration, and such conference as may be mutually
agreed upon with an International or District Council
Representative of the Union, the grievance shall be considered
settled when the employee's and the Company's representative
shall have reached an agreement.
(6) If the parties are unable to settle the grievance, either party
can notify the other party in writing that it intends to submit
the grievance to arbitration. This notice must be given within
ten (10) days FROM THE RECEIPT OF THE WRITTEN RESPONSE FROM THE
COMPANY. The consent of the other party is not required to
arbitrate a grievance.
The foregoing to the contrary notwithstanding, either party may
exercise the following option:
For the purpose of expediting and facilitating the resolution of
a grievance which has been processed through step (5) of the
grievance procedure and which would otherwise be submitted to
arbitration, either the Company or the Union may elect to submit
said grievance to a panel which will consist of a Vice President
of the International Union or his representative and the Vice
President of Operations of the Company or his representative,
provided that no member of the panel can be a party to any
discussion of the grievance during an earlier step of the
grievance procedure. Each party can submit a maximum of five (5)
grievances to the panel during any calendar year. Only a
grievance about the interpretation of contract language in the
Basic or Local Agreement can be submitted to the panel. A party
electing to submit said grievance to the panel must notify the
panel and the other party within ten (10) days after a decision
has been made at step (5). The authority of said panel shall be
no greater than the authority of the arbitrator as set forth in
(d) of the grievance procedure. The panel shall meet at the Plant
where the grievance arose.
A maximum of two members of the Union Grievance Committee can
attend a panel meeting. The decision of the said panel shall be
final and binding upon the Company
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and the Union. In the event the Union representative on the panel
and the Company representative on the panel are unable to agree,
either the Union or the Company may elect to submit such
grievance to arbitration as provided in step (6) of the grievance
procedure. The party electing to arbitrate the grievance must
give notice to the other party within ten (10) days after the
Union representative on the panel and the Company representative
on the panel have jointly informed the parties that the panel is
unable to make a decision. Failure to observe any time limit
shall cause the grievance to be considered settled in favor of
the employee if the Company has failed to observe the time limit
or in favor of the Company if the employee and/or the Union has
failed to observe the time limit.
(b) If either party does not notify the other within ninety (90) days of the
notice of its intent in (a) (6) above, that it now wishes to mutually
select an arbitrator and schedule a hearing date, then the parties shall
consider the grievance to have been withdrawn by the moving party.
When the moving party notifies the other of its wish to mutually select
an arbitrator, the parties shall select an arbitrator within ten (10)
days. Failing to reach an agreement upon the selection of an arbitrator,
the moving party may request the appointment of an arbitrator by either
the Federal Mediation and Conciliation Service or the American
Arbitration Association.
Grievances heard by the arbitrator must be presented in chronological
order based on the date the grievances were written except in discharge
cases which may be presented out of chronological order or in cases
where the parties have mutually agreed in writing to waive the
chronological order requirement.
(c) All time limits set forth in (a) and (b) shall be strictly observed;
time limits can be extended by a written agreement between the parties.
Whenever the term "working days" occurs in the grievance procedure, it
shall be defined by the parties to mean plant work days, Monday through
Friday.
Whenever the term "days" is used in this section, it shall be defined by
the parties to mean calendar days.
(d) The arbitrator shall consider only the grievance appealed to him and
shall have jurisdiction and authority only to interpret, apply, or
determine compliance with the provisions of this Agreement, and only the
extent necessary to determine the grievance. The arbitrator shall not
have jurisdiction or authority to add to, modify, detract from, or alter
in any way the provisions of this Agreement.
(e) The arbitrator's decision shall, at the request of either party, be in
writing and shall be final and binding on both parties. The fees and
expenses of the arbitration proceeding, except fees for witnesses
brought in by either party and legal counsel's fees, shall be borne
equally
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by the Company and the Union. Bargaining unit employees including
Committeemen who participate in arbitration proceedings shall not be
compensated by the Company.
(f) Grievances involving the provisions of the collective bargaining
agreement and occurring so as to be processed to arbitration at the same
time will be at the request of either party arbitrated before the same
arbitrator. However, it is agreed that not more than four (4) cases will
be heard at one series of hearings.
(g) Local Union officers and stewards off-duty and representatives of the
International Union and District Council shall, upon notice to the
Company, be permitted on Company's premises to investigate grievances.
(h) Meetings will be conveniently scheduled so as to complete all business
within the normal working day for day employees. Any employee who is
scheduled to work during the hours the meeting is held and who attends
the meeting will be compensated by multiplying the regular straight time
hourly rate by the hours he attends the meeting. In addition, if the
employee attends the meeting beyond his normal quitting time, he will be
compensated for each additional hour he attends the meeting by
multiplying the regular straight time hourly rate by one (1) and said
additional hour or hours shall not count toward daily or weekly
overtime.
Any member of the Committee who is not scheduled to work during the
hours the meeting is held, who is not scheduled to work the third shift
immediately preceding the meeting, or who is not scheduled to work the
second shift immediately following the meeting, and who attends the
meeting, will be compensated by multiplying his regular straight time
hourly rate by all hours he attends the meeting. Any hours paid under
this paragraph shall not count toward the calculation of any penalty or
premium pay section of this Agreement including but not limited to daily
or weekly overtime. Any employee who is receiving S.U.B. benefits,
sickness and accident benefits, or Workmen's Compensation benefits for
the day of the meeting or who is absent due to disciplinary layoff shall
not receive any compensation under this paragraph.
When a meeting is scheduled at which a representative of the
International Union and a representative of the Company from Cleveland
will attend, any member of the committee who is scheduled work the third
shift immediately preceding the meeting will be excused from working the
third shift and will be compensated by multiplying eight (8) hours at
the regular straight time hourly rate plus shift differential if the
employee has attended the meeting.
Any member of the committee who is scheduled to work the second shift
immediately following the meeting will be excused from working the
second shift if the employee has attended the meeting for six (6) hours.
In the event the employee is excused from working the second shift, he
will be compensated by multiplying eight (8) hours at the regular
straight time hourly rate plus shift differential.
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(i) The Company will reimburse no more than two (2) members of the Union's
bargaining Committee from each Local Union for scheduled time lost due
to attendance at and travel to and from Basic Agreement Negotiations.
One day travel time shall be allowed the day before such meeting, and
one day travel time shall be allowed after such meeting. The rate of pay
will be the regular straight time hourly rate including Sunday premium,
if applicable.
(j) Disciplinary letters issued to employees will remain in the Company's
employee file for twelve (12) months. At the end of the twelve (12)
month period, the disciplinary letters will not be used against the
employee in the future for purposes of progressive discipline.
This provision shall not apply if the discipline letter refers to a
disciplinary suspension of one week or more.
(k) Where there is a discussion between an hourly employee and a supervisor
that is intended as a disciplinary measure, the Company requests that a
grievance committeeman, job steward or other designated employee be
present.
A "disciplinary measure" shall be limited to the issuing of a reprimand
or the imposition of a penalty to an employee about which a notation,
letter or unsatisfactory performance report is subsequently made part of
the employee's personnel file.
It shall be the responsibility of the Union to appoint and have
available on each shift a committeeman, job steward or other employee
designated for purposes of this section who shall be identified to the
Corporation in writing.
It is not the intent of this Section to expand the total number
committeemen as provided for in each Local Supplemental Agreement.
(l) DISCIPLINE OF ONE WEEK OR MORE WILL NOT BE USED AFTER FIVE YEARS.
(l) When a grievance involving pay is settled in favor of the Union, the
employee entitled to such pay shall be paid by the second pay following
the settlement.
ARTICLE X
STRIKES AND LOCKOUTS
(a) Having provided an orderly procedure for settling all disputes, the
Company agrees not to lock-out its employees and the Union agrees that
there will be no strikes or work stoppages during the term of this
Agreement.
(b) The Company agrees not to hold the Union liable when such activities are
not authorized by the Union, provided that the Union within forty eight
(48) hours orders its members to cease and desist from such activities.
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(c) It shall not be a violation of this Agreement or cause for disciplinary
action including discharge if an employee refuses to cross a picket line
that has been established in full compliance with existing laws. Picket
lines established as a result of jurisdictional disputes, picket lines
established for the purpose of organizing in-plant non-bargaining unit
personnel, and/or informational picket lines are excluded from this
protection.
Notwithstanding the above, employees will not honor any picket line
unless authorized by the International Union. The International Union
will not be held liable for any subsequent damage to the Corporation
resulting from refusal of employees to cross an authorized picket line.
ARTICLE XI
SAFETY
(a) The Company will, according to its established practice, continue to
install such safety devices for the protection of the lives and health
of its employees as are required by the Workmen's Compensation laws of
the State in which the plants covered by this Agreement are located. The
Company will maintain the washhouse with heat, light and plenty of hot
water, and keep the toilets, fixtures and floors in a sanitary
condition, and will supply good drinking water wherever necessary about
the plant. Sufficient equipment and tools shall be maintained in a safe
and efficient working order, and the regulations and safety codes
adopted by the Department of Labor of the applicable state, in the
interest of protecting the safety and health of industrial employees as
they affect this industry, be strictly observed by both parties.
(b) The Company agrees to furnish first aid and medical service to its
workers in any cases originating out of their work in the Company plant,
in compliance with the Workmen's Compensation laws of the applicable
state. Medical services shall be performed by a doctor to be agreed
upon by the Company and the plant safety committee, but at the request
of the injured, and the approval of the Plant Manager and Director of
Industrial Relations, other medical aid may be called in at the expense
of the Company for consultation or treatment of any cases. It is agreed
that a complete medical examination may be required before an applicant
is employed. Also, that complete medical examination may be made
annually or at any time at the discretion of the Company. Copies of such
reports and examinations will be kept on file by the Company and shall
at all times be available for inspection to such employees. Copies
thereof shall be furnished to such employee's designated physician upon
request.
(c) A Joint Safety and Health Committee shall be established consisting of
four members, two appointed by the Company and two appointed by the
Local Union. In the event that a member is absent from a meeting of the
Committee, his alternate may attend and when in attendance shall
exercise the duties of the member. The Safety Director or his designee
will be the fifth member and act as Chairman of the Committee.
32
<PAGE> 33
The Joint Committee shall meet as often as necessary, but not less than
once each month at a regularly scheduled time and place for the purpose
of jointly considering, inspecting, investigating and reviewing health
and safety conditions and practices and investigating accidents and for
the purpose of jointly and effectively making constructive
recommendations with respect thereto, including but not limited to the
implementation of corrective measures to eliminate unhealthy and unsafe
conditions and practices and to improve existing health and safety
conditions and practices. All matters considered and handled by the
Committee shall be reduced to writing, and joint minutes of all meetings
of the Committee shall be made and maintained. One union representative
to the Committee will accompany a Federal or State investigator on a
walk-around inspection or investigation, and will attend any pre-or
post-inspection conferences. All time spent in connection with the work
of the Committee by a Union Representative including all time spent in
pre-or post-inspection conferences and walk-around time spent in
relation to Federal and State inspections and investigations as provided
for above, shall be compensated at the employee's regular straight time
hourly rate. Any time spent during the hours the employee is scheduled
to work shall count toward the calculation of any penalty or premium pay
section of this Agreement including, but not limited to daily or weekly
overtime. Any time spent outside of the hours the employee is scheduled
to work shall not count toward the calculation of any penalty or premium
pay section of this Agreement. No time spent outside of the hours the
employee is scheduled to work shall be compensated at a rate greater
than one (1) times the employee's regular straight-time hourly rate.
Any employee who believes his job presents a hazard to his safety or
health may request an immediate review of his job by the Joint Safety
and Health Committee.
No employee shall be disciplined or discharged for refusing to work on a
job if his refusal is based on a bona fide claim that said job is not
safe or might unduly endanger his health or safety.
(d) (1) An employee shall be paid a premium when he is required to:
A. work within a kiln during the first ten (10) hours that the kiln
has been shutdown after it has been operating at a normal level;
B. work within a cooler during the first two (2) hours that the
cooler has been shut down after it has been operating at a normal
level;
C. work within a kiln precipitator during the first four (4) hours
following the shut down of the kiln providing the precipitator
was handling the kiln gases at the time of kiln shutdown;
D. work within a section of a kiln precipitator or a kiln baghouse
while the kiln is in operation and the other sections of the
baghouse or the precipitator are in use.
33
<PAGE> 34
The premium shall be calculated by multiplying the regular
straight time hourly rate by one-half (0.5) for each and every
hour worked up to the 10, 2, and 4 hours mentioned in A, B and C
above and for 1/2 the hours worked in D above. Said premium shall
be paid in addition to whatever compensation the employee is
otherwise entitled to receive under any other section of this
Agreement.
(2) Each Plant Safety Committee will meet to determine those areas of
the Plant where an employee is subject to excessive radiant heat
for extended periods of time. The Committee will consider all
conditions which affect the level of heat encountered including
ambient air temperature. Upon making said determination, the
Committee will decide what the Company shall provide as
reasonable protective apparel against excessive radiant heat.
(3) In the event that an employee is required to work on top of
roofs, silos, scale a quarry face or work in a silo under
conditions that are hazardous to an employee's safety, the hours
worked shall be compensated for by multiplying the regular
straight time hourly rate by one-half (0.5) for each and every
hour worked that is deemed hazardous, and this hazardous work
premium shall be paid in addition to whatever compensation the
employee is otherwise entitled to receive under any other section
of this Agreement.
(e) Should the Company require an employee to wear foot protection, the
Company will furnish such protection without cost to the employee. The
liability of the Company with regard to safety shoes will be limited to
not more than two (2) pair in any one year. A new pair of shoes will
only be provided an employee when the worn out pair is turned in for
replacement.
(f) If a mandatory eye protector program is adopted: (1) the Company will
pay for the cost of the eye examination if safety glasses with
corrective lenses are required; (2) the Company will pay for safety
glasses whether or not the glasses require corrective lenses. Safety
glasses with or without corrective lenses will not be replaced more than
once a year unless broken or otherwise damaged on the job.
(f) THE COMPANY AGREES TO ALLOW AN $80 REIMBURSEMENT FOR SAFETY SHOES
BEGINNING MAY 1, 1998. THIS ALLOWANCE IS TO BE INCREASED BY $2.50 ON THE
ANNIVERSARY DATE EACH YEAR OF THE AGREEMENT.
(g) The Company shall furnish all tools and equipment for its employees
except to repairmen and other skilled trades, in which case these
employees shall furnish their own hand tools. "Hand tools" as used
herein shall not include socket sets, wrenches more than twelve (12)
inches long, and all other specialized tools incident to the work of
the mechanical, maintenance and skilled trades. Any hand tool that the
employee uses in the performance of his job duties will be replaced by
the Company if they are broken, worn out, lost or stolen. Unusable tools
will be presented to the Company prior to replacement. Lost or stolen
tools must be immediately reported to the Company for replacement
approval.
34
<PAGE> 35
Employees temporarily transferred to maintenance classifications shall
be supplied with necessary tools.
(h) The Furnishing of Gloves: The Company will continue its existing local
practices regarding the furnishing of gloves.
Employees who are not presently receiving gloves under existing local
practices shall receive one pair of gloves at the beginning of each
contract year, and each such employee shall receive a maximum of one
additional pair per contract year from the Company upon return of his
worn out gloves.
In the event such an employee wears out and returns the two pairs of
gloves provided to him, the Company shall sell him an additional pair of
gloves for each worn out pair of Company provided gloves he returns.
Said gloves shall be sold to the employee at the price paid by the
Company.
(i) If the Company requires an employee to take a physical examination, the
Company agrees to pay for the physical examination and also agrees to
pay the employee at his straight time hourly rate for all time spent in
the doctor's office taking the physical examination; provided, however,
employees receiving S & A and/or Workmen's Compensation benefits are not
entitled to any compensation under this section. (Doctor releases for
returning to work are not considered physical examinations and will not
be paid under this section).
ARTICLE XII
MILITARY SERVICE
(a) The Company and the Union shall comply with the Universal Military
Training and Service Act of 1950, as amended.
(b) Active employees with one year seniority and who are in the Reserve of
any branch of the military service, including the National Guard, who
are required to attend a summer encampment as part of their Reserve
obligation shall receive from the Company the difference between the
amount of pay received for such encampment and his regular straight time
hourly rate of pay for up to a maximum of two (2) weeks per calendar
year.
ARTICLE XIII
SUPPLEMENTAL UNEMPLOYMENT BENEFIT PLAN
The Company agrees to pay out of its funds (and not out of the Trust Fund
established under Article III of the Plan) benefits in amounts equal to those
provided by Section 2 of Article VIII of the Plan upon termination of
employment on or after May 1, 1965, after an employee (as defined
35
<PAGE> 36
in Section 6, Article II of the Plan) is sixty-five years old, provided such
employee is not eligible for a pension under the current Pension Plan for
Hourly Employees of the Company.
The foregoing to the contrary notwithstanding, the above payment shall not be
paid directly by the Company until termination benefits paid from the Trust and
Contingent Funds exhaust those funds.
ARTICLE XIV
SUBCONTRACTING
(a) The Company will not contract for production or maintenance work
customarily performed by its own employees unless it is more economical,
expeditious, and/or efficient to do otherwise.
(b) The Company may enter into contract arrangements for obtaining raw
materials, semi-finished or finished products.
(c) Notwithstanding the above, the Company will not contract or subcontract
work covered by Paragraphs (a.) or (b.) above if it will directly result
in the 1) laying off of (or failure to recall qualified) bargaining unit
employees, or 2) the reduction of hours of bargaining unit employees
below 40 hours a week; or 3)
reduction of employees to a lower rated classification.
It is understood that layoffs attributable to such things as inventory
or production adjustments, changes in methods, processes or
technologies, and/or break downs or failure of equipment power failure
or any conditions beyond the control of the Company, are specifically
exempted from this commitment.
(d) Further, (a), (b) and (c) above does not apply to new construction or to
construction involved in major modification work.
(e) The Company agrees to notify the Local Union in writing with a copy to
the International or District Representative who services the Local
Union, sent by registered mail, at least fourteen (14) days in advance
if reasonably possible, and to meet with the Union, upon request by the
Union, for explanation of the reasons causing the Company to decide to
contract any production and maintenance work. The parties agree that
while notification is an important part of the working relationship
between the parties and should be adhered to in order to reduce the
number of disputes concerning sub-contracting the parties also recognize
and agree that this Section of the Contract does not require any penalty
when the Company fails to give proper written notice of its intention to
sub-contract.
36
<PAGE> 37
ARTICLE XV
MISCELLANEOUS
(a) The Company will enter into a Union label agreement for the Company's
packaged products.
(b) All basic, supplemental, pension, S.U.B. and insurance agreements will
be printed at the Company's expense and will bear the Union label. The
Company will provide each local with a supply of the booklets. The
Company will print all Agreement booklets in large and legible type.
(c) If the Union alleges that a Leadman or Temporary Foreman is exceeding or
abusing his authority or that his actions violate the Contract, the
Union may grieve their allegations directly to the Plant Manager. The
Company will notify the employees involved whenever a Leadman or
Temporary Foreman is being assigned.
ARTICLE XVI
TERM OF AGREEMENT
(a) This Agreement shall be binding upon the parties hereto, their
successors, administrators, executors and assigns. In the event of the
sale or lease by the Company of any of the plants covered by this
Agreement, or in the event the Company is taken over by sale, lease,
assignment, receivership or bankruptcy proceeding, such operations shall
continue to be subject to the terms and conditions of this Agreement for
the life thereof.
The Company will notify the Union immediately prior to any Company press
release concerning the intended sale or completed sale of a Plant.
The Company shall give notice of the existence of this Agreement to any
purchaser, lessee or assignee of said plant. Such notice shall be in
writing with a copy to the Union not later than the effective date of
the sale.
(b) After ratification by the members of the Local Unions this Agreement
shall become effective and remain in full force and effect and be
binding upon the parties hereto from the date ratification is certified
by the International Union to and including April 30, 1998, and it shall
continue in full force and effect thereafter from year to year until
either party on or before March 1st of any year, beginning March 1, 1998
gives written notice to the other party of its desire or intention
either to alter or modify or to terminate the same. If such notice is
given, the parties hereto shall begin negotiations not later than March
31st in such year and this Agreement shall continue in full force and
effect until completion and signing a new Agreement, provided, however,
that after such negotiations have continued without reaching an
agreement until May 1st in any year, then either party may terminate
this Agreement, at any time thereafter upon notice.
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<PAGE> 38
(c) The written notice set forth in (b) above by either party shall contain
any changes or amendments desired, and only such changes or amendments
as are contained in the two written notices shall be discussed by the
conferees.
(d) The proposals and counter-proposals made by each party shall not be
used, or referred to, in any way during or in connection with the
arbitration of any grievance arising under the provisions of the
Agreement.
Ratification of this Basic Agreement and the Local Agreements was certified by
J.C. Todd. International Union Representative, on May 7. 1994.
FOR THE MEDUSA CEMENT COMPANY FOR THE UNITED CEMENT, LIME
(DIVISION OF MEDUSA CORPORATION) GYPSUM AND ALLIED WORKERS
DIVISION (Boilermakers Union)
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
/98 /98
FOR THE CLINCHFIELD PLANT FOR LOCAL D-23
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
/98 /98
FOR THE CHARLEVOIX PLANT FOR LOCAL D-480
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
/98 /98
38
<PAGE> 39
August 5, 1987
Dear Mr. Clavier:
Mr. August Clavier
THE CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
Alpena, Michigan 49707
Dear Mr. Clavier:
This letter will confirm that the Company has not entered into any secret
agreements with any sub-contractors for the purpose of making reductions in
employment at the plants nor does it have any plan to enter into any agreements
the effect of which would be in violation of the sub-contracting clause of the
labor agreement.
Sincerely,
Peter H. Geis
Corporate Director of
Labor Relations
39
<PAGE> 40
AGREEMENT BETWEEN
MEDUSA CEMENT COMPANY (Division of Medusa Corporation)
and
THE CEMENT, LIME, GYPSUM AND ALLIED WORKERS DIVISION
(INTERNATIONAL BROTHERHOOD OF BOILERMAKERS, IRON SHIP
BUILDERS, BLACKSMITHS, FORGERS AND HELPERS, AFL-CIO)
LOCAL NO. D480 - CHARLEVOIX, MICHIGAN
LOCAL SUPPLEMENTAL AGREEMENT
EFFECTIVE MAY 1, 1998 TO MAY 1, 2003
40
<PAGE> 41
LOCAL UNION NO. D480 - CHARLEVOIX, MICHIGAN
LOCAL SUPPLEMENTAL AGREEMENT
<TABLE>
<S> <C> <C>
I Agreement and Purpose 1
II Union Recognition and Security 2
III Management 2
IV Seniority 2
V Employment and Promotion 3
VI Working Conditions 4
VII Vacations with Pay 5
VIII Holidays 7
IX Bulletin Boards 7
X Miscellaneous 7
XI Term of Agreement 10
Job Classifications and Wage Rates 11
Local Agreements 24
Charlevoix Seniority List 27
</TABLE>
41
<PAGE> 42
AGREEMENT BETWEEN
MEDUSA CEMENT COMPANY (Division of Medusa Corporation)
and
THE CEMENT, LIME, GYPSUM AND ALLIED WORKERS DIVISION
(International Brotherhood of Boilermakers, Iron Ship
Builders, Blacksmiths, Forgers and Helpers, AFL-CIO)
LOCAL UNION NO. D480 - CHARLEVOIX, MICHIGAN
LOCAL SUPPLEMENTAL AGREEMENT
42
<PAGE> 43
ARTICLE I
AGREEMENT AND PURPOSE
(B.A. Article 1)
(a) This Agreement is by and between the Medusa Cement Company, Division of
Medusa Corporation, hereinafter called the "Company" and the Cement,
Lime, Gypsum and Allied Workers Division No. 480 affiliated with the
Cement, Lime, Gypsum and Allied Workers Division (International
Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers
and Helpers, AFL-CIO) hereinafter called the "Union" and is supplemental
to and a part of the Basic Agreement dated May 1, 1998 by and between
the Company and the said Division.
(b) All Agreements reached between the Union and the Company shall be
reduced to writing and signed by the parties.
ARTICLE II
UNION RECOGNITION AND SECURITY
(B.A. Article II)
(a) The Company is willing at all times to meet its employees' committee and
representatives of the International Union for the purpose of discussing
wages, hours, and working conditions, with the object to reach a
satisfactory agreement.
(b) The committee shall consist of not more than five (5) and not less than
three (3) members.
(c) Union dues will be deducted as close as the system permits, from the
weekly paycheck after the first full week of the month for that given
month. The Personnel Clerk will cooperate with the Financial Secretary
of the Union if individual collection problems arise.
ARTICLE III
MANAGEMENT
(a) The Union agrees to recognize the Company's right to manage its plant
and direct its working force except as specifically limited by the terms
of this Agreement.
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<PAGE> 44
ARTICLE IV
SENIORITY
(B.A. Article III)
(a) Any employee detained from work on account of sickness or for any other
good reason shall notify the Plant Manager or his Foreman, before the
start of his shift. Any employees absenting themselves from work for
five (5) consecutive days without good and satisfactory reasons may be
discharged and dropped from the seniority list and payroll of the
Company. Repeated absence of less than five (5) days shall be subject to
a progressive disciplinary program, and the Local Union will receive
communications pertaining to each step disciplinary action within one
working day excluding Saturdays, Sundays, and holidays of any action
taken.
(b) Subject to the approval of the Company, employees requesting a leave of
absence in writing for personal reasons may be granted leaves of absence
not to exceed thirty (30) calendar days.
ARTICLE V
EMPLOYMENT AND PROMOTIONS
(a) When considering applicants for a vacant job pursuant to Article IV
Section (h) of the Basic Agreement, an employee who has previously held
and worked on a job permanently for one year or more in the THREE years
prior to the bid in question shall have preference over an employee who
has not previously held that bid job. When the Company elects to award a
job to an applicant who will require training to satisfactorily perform
the work, the employee to whom the job was awarded will receive the rate
of pay for the job he previously held or the rate of pay for the job he
was awarded, whichever is less. It is understood that when the Company
trains an employee, the employee in training will not work in place of
an employee whose job is the same as the employee in training. When an
employee's training is completed, the employee will be paid the rate of
the job he was awarded. This section does not apply to an employee who
bids for a maintenance job.
ARTICLE Vl
WORKING CONDITIONS
(B.A. Article V)
(a) In accordance with Article (V)(h)(2) of the Basic Agreement overtime in
the various job classifications will be reasonably equally divided among
the employees of the respective job classification insofar as it is
practical to do so.
(b) Temporary Job Vacancies: The Company shall not be required to fill
temporary job vacancies, whether scheduled or unscheduled, unless the
efficient operation of the plant requires that said temporary job
vacancies be filled.
(c) When the Company determines that a temporary vacancy, scheduled or
unscheduled, is to be filled by a laborer, the assignment will be made
in the best interest of the efficient
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<PAGE> 45
operation of the Plant. In many instances, the company will offer the
senior laborer an upgrade to higher rated classifications and will
continue to do so depending on the circumstances, but not as a
contractual requirement. However, if the Union determines that a
repeated pattern and Practice of ignoring seniority on upgrades has
developed concerning a particular individual or group of individuals, it
may grieve such allegation directly to the Plant Manager.
If the Union determines that evidence indicates that the Company is
pre-training certain laborers so that employees are being
discriminatorily selected for a particular job opening, it may present
this allegation in the form of a grievance which will commence at the
third step of the grievance procedure.
Experience gained in a temporary job assigned or awarded in accordance
with this Section shall not be considered in the awarding of any job.
This Section does not alter or change the terms and provisions of
Section (b).
(d) The Normal schedule for day shift laboratory employees shall be 7:00
A.M. to 3:00 P.M. with a paid lunch period. This agreement does not
limit the Company's right to change schedules under the scheduling
clause.
(e) The Company is willing to post changes in an employee's schedule if it
changed after the Thursday posting. The parties recognize that this is
for information purposes only, there are no time requirements and that
no penalties are required if such posting does not take place.
(f) The Company will ensure that only properly trained individuals are
assigned to operate the Mobile Crane.
(g) Under normal circumstances, if the Company requires an employee in the
Quarry to go to the Plant to obtain parts or supplies, it will provide
transportation to and from the Plant.
ARTICLE VII
VACATIONS WITH PAY
(B.A. Article Vl)
(a) In accordance with Article Vl(a) of the Basic Agreement any employee who
works during at least thirteen (13) weeks in each calendar year shall be
granted vacation off work without loss of pay, according to the schedule
in Section (b) of Article Vl of the Basic Agreement.
(b) The Company shall submit appropriate application blanks to the employee
within the first week of the calendar year, and they are to be returned
to the Company within one month. In the event an employee fails to
return this form to the Company, then after this one month period, the
Company shall designate the employee's vacation period, and notify the
employee who fails to return this application to the Company and the
Union of the vacation period designated for the employee. All vacation
blanks received from employees or issued by the Company shall be
returned to the employees not later than the first week in March.
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<PAGE> 46
(c) Any change in an employee's selected and designated vacation period
must be approved by the Company and the Union Committee.
(d) (1) Employees entitled to two (2) or more weeks of vacation may
be permitted to take such vacations in two (2) separate periods
of not less than one (1) week each. Seniority preference, however
can be exercised in only one (1) such vacation period.
(2) At the option of the employee, one week of his vacation may be
taken in single days, provided that he states his intentions when
selecting his vacation at the start of the calendar year.
When making the final selection of the single vacation days, the
employee shall give as much notice as possible but not less than
72 hours and request approval by the Plant Manager to take the
vacation days chosen. This request shall not be unreasonably
withheld.
If an employee's schedule is changed after the Thursday posting
as a result of another employee taking a vacation day one day at
a time, there shall be no schedule penalty paid to such employee.
(e) Vacations shall be taken within the calendar year in which it is granted.
(f) Employees who have one (1) or more years of service and who are
separated from service for any reason will receive vacation pay due them
on the following basis: One-twelfth (1/12) vacation credit for each one
hundred (100) hours worked in his current calendar year.
(g) In the event the employment of any such employee is terminated for any
reason, the Company shall pay to the employee, or to his beneficiary in
the event of his death, all vacation due.
(h) THE BALANCE OF AN EMPLOYEE'S SINGLE DAY VACATION WHICH IS NOT SCHEDULED
AND APPROVED BY SEPTEMBER 1 OF EACH YEAR WILL BE SCHEDULED BY MANAGEMENT.
46
<PAGE> 47
ARTICLE VIII
HOLIDAYS
(B.A. Article VII)
(a) New Year's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
First Day of Michigan Deer Season, Thanksgiving Day, Christmas Day, and
three floating holidays are recognized as "Holidays".
(b) AN EMPLOYEE REGULARLY SCHEDULED ON A ROTATING SHIFT THAT HAS A HOLIDAY
OBSERVED DURING THEIR NORMAL WORK WEEK WOULD HAVE THE FOLLOWING OPTIONS:
A. THE EMPLOYEE COULD WORK THE HOLIDAY AND PRESENT CONTRACT LANGUAGE
WOULD APPLY.
B. THE EMPLOYEE WILL NOTIFY THE COMPANY ONE (1) WEEK PRIOR TO THE
HOLIDAY THAT HE ELECTS TO WORK THE HOLIDAY AS A " NON HOLIDAY " AT
THE APPROPRIATE RATE AS THOUGH IT WAS A REGULAR WORKDAY AND
RECEIVE AN ADDITIONAL FLOATING HOLIDAY.
THE ABOVE WOULD APPLY TO HOLIDAYS OCCURRING PRIOR TO SEPTEMBER 1ST
OF THE AFFECTED YEAR.
THE COMPANY WILL REVIEW THIS DURING THE FIRST TWO CALENDAR YEARS
OF THE CONTRACT AND NOTIFY THE UNION IF THIS PRACTICE WILL CONTINUE THE
REMAINDER OF THE CONTRACT TERM BY 31 DECEMBER 1999 OF THE SECOND YEAR.
ARTICLE IX
BULLETIN BOARDS
(a) The Company agrees to allow the proper officers of the Union who are
employees of the Charlevoix Plant of the Company to use one designated
section of the plant bulletin board for posting notices in the interest
of the Company and its employees.
ARTICLE X
MISCELLANEOUS
(B.A. Article XV)
(a) The Company will post a copy of the job description when a new job is
bid.
(b) As has been the practice, classified employees will be assigned to
assist servicemen engaged by the Company to work on Company-owned
equipment during regular or overtime hours whenever their services are
required. THE COMPANY WILL NOT BE REQUIRED TO ASSIGN CLASSIFIED
PERSONNEL TO ASSIST SERVICEMAN PERFORMING ROUTINE LUBRICANTS AND FLUIDS
SERVICE REQUIRED TO MAINTAIN WARRANTY CONDITIONS.
(c) The Company will meet with the Union Committee as soon as practical
after disciplinary action has been taken against an employee which
results in loss of pay to explain the reasons for the discipline given.
47
<PAGE> 48
Under certain circumstances the Company may notify the Union of such
action prior to the time action is actually taken.
(d) If an employee's paycheck is short in excess of $25.00, the Company ill
make up the shortage in cash or check prior to the completion of his
next scheduled shift (excluding weekends and holidays).
(e) In the event that an endloader is used to replace the shovel for the
purpose of digging and loading stone at the quarry face, the endloader
operator shall be paid the regular classified hourly rate of the shovel
operator. A man classified as a shovel operator may only operate a front
end loader when loading shot rock, shale or sand.
(f) If the Company requires an employee to work overtime without at least
one (1) day's notice, and the employee is unable to obtain
transportation to his house, the Company will provide transportation for
the employee.
(g) Mowing lawns with power-driven equipment: Service equipment operators
rate.
(h) Painters - Bracket 11 (painting walls, floors, etc., with brushes,
mixing, aesthetic qualities, etc. are important) and Bracket 8
(machinery and equipment, railings, steps, guards, etc. - using brushes
or spray guns - industrial painting). Does not limit right to contract
out work. Rate only.
(i) The Company will continue to supply protective leathers and coveralls
for the jobs it has in the past and make sure adequate quantities of
same are available for on the job use.
(j) An overtime list shall be posted weekly and shall include total hours
worked and refused. Call-out sheets will be posted each day, Monday
through Friday.
(k) The Company will initiate a program to provide specific training courses
for specific cement plant equipment. These programs will be reviewed by
the Maintenance Training Committee by August 15, 1978.
The Committee will meet thereafter as required to review progress of
trainees and course content.
The maintenance training program shall be modified to limit the number
of trainees to a maximum of forty percent (40%) in the electrical and
instrument areas.
When job openings occur such that the number of trainees would exceed
this percentage the job opening will be bid for qualified electrician or
instrumentman rather than for a trainee.
The maintenance training committee shall use their efforts to improve
the course content in these two areas to improve the skill and knowledge
levels.
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<PAGE> 49
(l) The Company has purchased a 3-1/2 yard bucket endloader which will be
assigned to the Service Equipment Classification.
(m) Maintenance Training Committee shall meet at least once every month.
(n) For purposes of overtime distribution, when probationary employees are
added to a job classification they will enter the classification at the
highest number of overtime hours existing in the classification plus
one.
(o) It is understood by both the Union and the Company that the Director of
Industrial Relations will contact the payroll department of each plant
to make arrangements that will allow for S.U.B. payments to be made by
the end of the second week an employee is laid off. This arrangement
will be made within a six (6) week period following the ratification of
the 1975 contracts by the Local Unions.
It is further understood that any S.U.B. payments made in advance of
meeting the requirements of the existing S.U.B. agreement between
the parties will remain subject to Section 7, Recovery of Overpayments,
of the S.U.B. Agreement.
ARTICLE XI
TERM OF AGREEMENT
(B.A. Article XVI)
(a) This Agreement shall have the same effective date and term and is
subject to the same conditions and expiration provisions as the Basic
Agreement.
IN WITNESS WHEREOF, this Agreement between the parties has been executed
by their duly authorized representatives this __ day of May, 1998.
FOR THE MEDUSA CEMENT COMPANY FOR THE UNITED CEMENT, LIME
(DIVISION OF MEDUSA CORPORATION) GYPSUM AND ALLIED WORKERS
DIVISION (Boilermakers Union)
- -------------------------------- ------------------------------------
- -------------------------------- ------------------------------------
- -------------------------------- ------------------------------------
98 98
FOR THE CHARLEVOIX PLANT FOR LOCAL D-480
- ------------------------------------- ------------------------------------
49
<PAGE> 50
WAGE RATES - CHARLEVOIX PLANT
<TABLE>
<CAPTION>
EFFECTIVE
---------
BRACKET JOB TITLE 05/01/98 05/01/99 05/01/00 05/01/01 05/01/02
- ------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1 Laborer (1) $13.99 $14.59 $15.14 $15.69 16.24
2 Janitor 16.16 16.76 17.31 17.86 18.41
3 - 16.31 16.91 17.46 18.01 18.56
4 - 16.46 17.06 17.61 18.16 18.71
5 - 16.61 17.21 17.76 18.31 18.86
6 - 16.76 17.36 17.91 18.46 19.01
7 - 16.91 17.51 18.06 18.61 19.16
8 - 17.06 17.66 18.21 18.76 19.31
9 - 17.21 17.81 18.36 18.91 19.46
10 - 17.36 17.96 18.51 19.06 19.61
11 Stockman 17.51 18.11 18.66 19.21 19.76
12 Lubeman 17.66 18.26 18.81 19.36 19.91
Repairman B
Mechanic B
Service Equipment Operator
Truck Driver - Quarry
Driller - Blaster
13 - 17.81 18.41 18.96 19.51 20.06
14 Mobile Crane Operator 17.96 18.56 19.11 19.66 20.21
Instrument B
Electrician B
Diesel Mechanic B
15 Machinist B 18.11 18.71 19.26 19.81 20.36
Cement Loader
16 Laboratory Technician 18.26 18.86 19.41 19.96 20.51
17 Repairman A 18.41 19.01 19.56 20.11 20.66
Combination Quarry Operator
Premo
Mechanic A
18 - 18.56 19.16 19.71 20.26 20.81
19 Electrician A 18.71 19.31 19.86 20.41 20.96
Machinist A
Instrument A
Mechanic A - Deisel
Analytical Chemist
Physical Chemist
Utility Chemist
Shovel Operator
20 - 18.86 19.46 20.01 20.56 21.11
21 Control Room Operator 19.51 20.36 21.16 21.71 22.26
Shift Breaker
</TABLE>
(1) Laborers hired after May 1, 1998 shall be paid in accordance with the
following schedule:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
New Hire Rate $10.49 11.09 11.36 11.77 12.18
I 6 months after D.O.H. 11.19 11.67 12.11 12.55 12.99
II 1 year after D.O.H. 12.59 13.13 13.63 14.12 14.62
III 1-1/2 years after D.O.H. 13.99 14.59 15.14 15.69 16.24
</TABLE>
50
<PAGE> 51
May 20, 1981
Mr. Thomas Oleksy
President, Local D480
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS INTERNATIONAL UNION
Charlevoix, Michigan 49720
Dear Mr. Oleksy:
The following understanding has been agreed to by the Company and the Local
Union:
PROCEDURE FOR OVERTIME-CHARGING OF REFUSAL
1. A weekly overtime list will be posted as a guide to equally divide
overtime in the respective job classifications.
2. Under normal circumstances all calls for callouts shall be verified by a
bargaining unit member.
3. Overtime will be charged as long as contact is made at the employees
home.
4. Refused overtime will be charged at 1 X's the time worked or paid,
whichever is greater. If an employee has no phone, he will be charged as
if refused. Grievance pay in regards to OT, foreman working, etc., will
be charged as overtime worked.
5. Refused overtime is not to be charged when an employee is on vacation,
on sick & accident, workmen's compensation, on funeral leave, or leave
of absence.
6. Overtime refused once in a 24-hour period does not mean the employee has
refused all overtime for that period. Contacts or callouts will not be
made in less than four (4) hour intervals.
7. When an employee returns to work after being off on S & A or Workmen's
Comp., he shall have his overtime brought up to one (1) hour below the
lowest man in the classification. Leave of absence, etc.
Sincerely,
Peter H. Geis
Director of Labor Relations & E.E.O.
51
<PAGE> 52
April 23, 1979
Mr. Thomas Oleksy
President, Local D480
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS INTERNATIONAL UNION
Charlevoix, Michigan 49720
Dear Mr. Oleksy:
OVERTIME DISTRIBUTION FOR REFRACTORY REPAIR
POLICY AND GUIDELINES
PLANED SHUTDOWN OF KILN
Overtime to be distributed first among the following classifications:
Control Operator
Process Repair - Mobile Equipment Oper.
Laboratory Technician
Those regularly scheduled to work will work overtime if required. Those
scheduled off, will remain off, unless additional help is needed, in which case
the man with the lowest number of overtime hours in the above classifications
will be called first.
UNPLANNED (EMERGENCY) SHUTDOWN FOR BRICK REPAIR
Overtime divided first among the following classifications:
Control Operator
Process Repair- Mobile Equip. Oper.
Laboratory Technician
1. No overtime will be created for the purpose of equalizing overtime.
2. Unless specific circumstances require that additional hours be worked,
four hours overtime in addition to the regularly scheduled eight hours
shall be considered maximum, as well as eight hours overtime on an off
day.
This shall not constitute a guarantee for those hours.
Sincerely,
Peter H. Geis
Director of Labor Relations & E.E.O.
52
<PAGE> 53
July 13, 1978
Mr. Thomas Oleksy
President, Local D480
UNITED CEMENT, LIME GYPSUM AND
ALLIED WORKERS INTERNATIONAL UNION
Charlevoix, Michigan 49720
Dear Mr. Oleksy:
The following understanding has been agreed to by the Company and the Local
Union.
FILLING VACANCIES ON SHIFT (applies to full 8 hour shift)
If low overtime individual in classification is on off day when vacancy occurs,
he will be offered the full 8 hour shift. If he refuses or if off individual is
not low overtime, then the shift will be split in 4 hour increments between
individuals on shift either side of the vacant shift.
No penalty payment is required if this procedure is not followed.
Sincerely,
Peter H. Geis
Director of Labor Relations & E.E.O.
53
<PAGE> 54
August 28, 1980
Mr. Thomas Oleksy
President, Local D480
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS INTERNATIONAL UNION
Charlevoix, Michigan 49720
Dear Mr. Oleksy:
The following understanding has been agreed to by the Company and the Local
Union:
AGREEMENT CONCERNING DUTIES OF PROCESS REPAIR-MOBILE
EQUIP. OPERATOR
As part of their duties the Process Repair - Mobile Equipment Operators use
endloaders of 4 or more cubic yards capacity and other small mobile equipment.
The use of small endloaders is limited to the work necessary to provide access
to production machinery, the movement of materials necessary to keep production
machinery operating, and other uses related to their shift operations. Use of
small endloaders for general clean up and house keeping falls within the
Service Equipment Operators classification.
Operation of all other small equipment is limited to the use necessary to
perform their primary function of their job, i.e., such as the use of a fork
lift to handle brick.
Sincerely,
Peter H. Geis
Director of Labor Relations & E.E.O.
54
<PAGE> 55
September 4, 1980
Mr. Thomas Oleksy
President, Local D480
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS INTERNATIONAL UNION
Charlevoix, Michigan 49720
Dear Mr. Oleksy:
The following understanding has been agreed to by the Company and the Local
Union.
This letter is written in conjunction with the combination of the PAR, PU, and
Endloader Operator jobs into one job title - Process Repair - Mobile Equipment
Operator.
The operation of the 50 ton quarry trucks by the Process Repair- Mobile
Equipment Operator will be limited to the handling of kiln dust. This includes
pugging, hauling and clean-up of this total area.
The scraper will be limited to Quarry Utility classification wherever it is
used.
The operation of endloaders involved in quarrying, stripping, road building and
land reclamation belongs to the quarry classifications.
Sincerely,
Peter H. Geis
Director of Labor Relations & E.E.O.
55
<PAGE> 56
11/21/78 (Revised as to Job Title 8/29/80)
Mr. Thomas Oleksy
President, Local D480
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS INTERNATIONAL UNION
Charlevoix, Michigan 48720
Dear Mr. Oleksy:
The following understanding has been agreed to by the Company and the Local
Union:
MOBILE CRANE OPERATOR
The mobile crane (cherry picker) is operated by the repairmen, mechanics,
quarry utility, and Service Equipment Operator classifications.
Quarry Utility operation of the crane is limited to activities associated with
the quarry other than repair work.
When the crane is being used, and the repairman, mechanics or quarry utility
are working on overtime, and the overtime actually worked on the job exceeds 2
hours, the qualified Service Equipment Operators shall be offered the job of
operating the crane.
Operation of the crane, when not involved in the above procedures, shall be in
the Service Operators classification.
Sincerely,
Peter H. Geis
Director of Labor Relations & E.E.O.
56
<PAGE> 57
May 18, 1976
Mr. Thomas Oleksy
President, Local D480
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS INTERNATIONAL UNION
Charlevoix, Michigan 49720
Dear Mr. Oleksy:
The following protection clause is still in effect:
"Employees who are classified as "day maintenance" personnel as of June
1, 1969, will not have their schedules changed to require them to work five (5)
days at straight time other than Monday through Friday, first shift, except
past practice in regard to a plant shutdown remains unchanged. The Company can
establish new jobs that historically have been "day maintenance" jobs, and
schedule these jobs to work days and shifts other than Monday through Friday,
first shift. However, the job held by an employee who is classified as "day
maintenance" as of June 1, 1969, cannot be eliminated until the job is vacated
by the employee.
Sincerely,
Peter H. Geis
Director of Labor Relation & E.E.O.
57
<PAGE> 58
May 18, 1979
Mr. Thomas Oleksy
President, Local D480
UNITED CEMENT, LIME GYPSUM AND
ALLIED WORKERS INTERNATIONAL UNION
Charlevoix, Michigan 49720
Dear Mr. Oleksy:
The following understanding has been agreed to by the Company and the Local
Union:
Floating holidays will be administered under the same guidelines as present
vacations. A senior employee may not bump a junior employee from his/her
selection once the selection has been approved.
Sincerely,
Peter H. Geis
Director of Labor Relations & E.E.O.
58
<PAGE> 59
March 28, 1980
Mr. August Clavier
UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS INTERNATIONAL UNION
Alpena, Michigan 49707
Dear Mr. Clavier
This letter is to confirm the Company's position and action taken by the
parties at our meeting with Local 480 at our Charlevoix Plant on March 25,
1980.
GRIEVANCES SCHEDULED FOR ARBITRATION
GRIEVANCE #47-78 - When the Company determines that it is necessary to require
an employee or employees in a classification to work overtime, it will go to
the qualified employee lowest in overtime in the classification who has not
voluntarily accepted that overtime, who is present in the plant. If sufficient
manning is not obtained at the Plant for the overtime required, the Company
will go to the employee lowest in overtime in the classification who is off, to
work the required overtime.
As circumstances permit, the Company will go outside the classification to
attempt to obtain another qualified employee before requiring an employee in
the classification to work overtime.
In the settlement of the grievance, the Company will reduce the three-day
disciplinary layoff to one day and the two applicable grievants will be paid
sixteen (16) hours at straight time.
Sincerely,
Peter H. Geis
Director of Labor Relations & E.E.O.
59
<PAGE> 60
November 4, 1981
Mr. Gary Loder, Recording Sec'y.
United Cement, Lime & Gypsum
Workers International
329 Meech Street
Charlevoix, Michigan 49720
Dear Gary:
Subject: Operating Shift Brkr. Overtime
Per our agreement at the Third Step meeting on 10-21-81 concerning Grievance
#59-81 and #66-81 the following:
The OPERATING SHIFT BREAKER will be included in both the Control Room Operator
classification and PREMO classification for overtime purposes. His overtime
total will be incorporated in both these classifications.
Very truly yours,
Ed Pierce
Production Supt.
EP:s
cc: T. Thimm
T. Curtis
P. Geis
K. Pack
W. Krueger
Shift Foreman
File
60
<PAGE> 61
MEMORANDUM OF UNDERSTANDING - 5/20/87
CHARLEVOIX PLANT
Should the Machinist classification be in a position where there is only one
person in the classification and he has not completed the Maintenance
Progression Program, and the Company determines another person should be added
to the classification, it will take the following steps:
1. It will post for a Machinist "A" and will review those who bid on the
job. If no one is qualified to fill the duties of a Machinist "A" then,
2. The Company may hire a Machinist "A" to fill the position.
The parties recognize that this is an exception to the current terms of the
Maintenance Progression Agreement and is without precedence for any future
situations in any other classification covered by that Agreement.
For Local D480, Cement, Lime, Gypsum
and Allied Division (International
Brotherhood of Boilermakers, Iron
For the Medusa Cement Ship Builders) BLACKSMITHS,
Company (Division of FORGERS AND HELPERS (AFL-CIO)
Medusa Corporation AFL-CIO)
- -------------------------------- ------------------------------------
61
<PAGE> 62
CHARLEVOIX PLANT
<TABLE>
<CAPTION>
NAME SENIORITY DATE
---- --------------
<S> <C>
Michael Borths 6/12/66
Jim Zeitler 6/5/67
Drew Young, Jr. 6/12/67
John Bascom 7/24/67
Gary Loder 7/24/67
Dick Mitchell 7/24/67
Joseph McCann 7/25/67
Roger Kerr 7/31/67
Lenard Nelson 8/7/67
Gerald Bell 8/7/67
Harold Archey 8/28/67
Dennis Spence 9/5/67
Al Towsley 9/7/67
Richard Elzinga 9/10/67
Tony Resch 9/28/67
Tom Oleksy 12/4/67
Tracy Curtis 12/11/67
Stanley Johnston 5/27/68
Howard Herriman 7/22/68
John Borths 8/26/68
Gary Zipp 9/30/68
Richard Putman 6/2/69
Floyd Genia 2/11/70
Patrick Kerr 8/31/70
Paul Parrish 9/14/70
Gary Nelson 9/22/70
Robert Holtzman 9/24/70
Nathaniel Herriman 4/12/71
David Coen 6/17/71
Randall Williams 11/16/71
John Leadabrand 5/25/72
Tom Browe 7/10/73
Eugene Towsley 10/8/73
Kenneth Balch 11/19/73
Jeffrey Pines 11/19/73
Chester Drenth 1/2/74
William Novotny 1/2/74
Edmond Drew 3/12/75
Gary Field 8/18/75
Jerry Drost 1/6/76
Ray Dixon 2/9/76
</TABLE>
<TABLE>
<CAPTION>
NAME SENIORITY DATE
---- --------------
<S> <C>
Curtis Meixsell 9/14/76
Delbert Batdorff 8/22/77
Bruce Meggison 11/21/77
Ronald Celaschi 11/22/77
Glenn Alexander 2/12/79
James Parrish 2/19/79
Clyde Allison 2/19/79
Robert Wirgau 2/19/79
Gabriel Campbell 2/19/79
Michael Bales 5/7/79
Brian Price 5/8/79
Loren Purvis 5/8/79
Dan Gillespie 5/8/79
James Klooster 5/14/79
Bejamin Drost 7/23/79
Lindsay Thayer 7/23/79
Vernon Matthews 7/30/79
Mike Raecke 7/30/79
Robert Geer 9/17/79
Clinton Blanchard 9/17/79
Mary McDonough 9/17/79
Carol Hobbs 9/24/79
Nathan Himebauch 11/26/79
Nathan Klooster 11/26/79
Dennis Daly 12/10/79
William Webster 3/31/80
Daniel Hutterer 4/14/80
Steven Zwolanek 4/14/80
John Fritsch 4/14/80
Richard Seibert 5/15/80
Dennis Kohlbeck 6/23/80
George McClellan 9/8/80
Jesse Salinas 9/8/80
Walter Holm 9/8/80
Gerald Johnson 1/28/81
Henry Archey 1/28/81
Larry Swanson 2/11/81
Timothy Carey 2/26/81
Louis Raymond 4/22/85
David Storm 5/13/85
James Shooks 8/12/85
</TABLE>
62
<PAGE> 63
CHARLEVOIX PLANT
<TABLE>
<CAPTION>
NAME SENIORITY DATE
---- --------------
<S> <C>
Gary Spencley 11/3/86
James Herriman 1/26/87
Bernie DeVries 2/23/87
Bruce Wood 9/21/87
Byron Ingalls 7/25/88
Richard Elzinga, Jr. 3/13/89
Cash Clark 12/20/89
John Coates 12/26/89
Dennis Dominic 2/25/91
Dennis Looze 2/25/91
Kevin Deming 2/25/91
Anthony Kleiber 5/28/91
Joe Left 4/27/92
Andrew Johnson 10/4/93
Michael Whitley 10/25/93
Gregg Swanson 4/24/94
Jeffrey Novotny 4/25/94
Tom Allen 3/6/95
Kevin Deschermeier 3/6/95
Larry Cross 3/13/95
John Peebles 10/9/95
Curtis Rhodes 10/9/95
Archie Cole 2/12/96
Tom Herriman 2/12/96
Matt Johnson 2/12/96
Julie Blanchard 3/11/96
Jeff Smith 11/18/96
Ryan Celaschi 11/18/96
Jason Parrish 11/3/97
Randy Zipp 11/3/97
Pat Martin 1/26/98
Maryanne Pfister 2/16/98
Michael Anderson 6/11/98
</TABLE>
2
<PAGE> 1
EXHIBIT 10.34
BASIC AGREEMENT
BETWEEN
MEDUSA CEMENT COMPANY
(Division of Medusa Corporation)
AND
THE CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
(INTERNATIONAL BROTHERHOOD OF BOILERMAKERS, IRON
BUILDERS, BLACKSMITHS, FORGERS AND HELPERS, AFL-CIO)
ACTING ON BEHALF OF ITS
LOCAL UNION
Clinchfield, Georgia, Local D23
EFFECTIVE
May 1, 1998 to May 1, 2004
<PAGE> 2
BASIC AGREEMENT
<TABLE>
<S> <C> <C>
I Agreement and Purpose 3
II Union Recognition and Security 4
III Seniority 6
IV Job Security 7
V Working Conditions 14
Rates of Pay - Overtime 15
Callouts and Off-Days 16
Limitations Upon Overtime 16
Eight Consecutive Hour Rest Premium 18
Wage Rate - Transfer and Assignments 18
Sunday Work 19
Reporting Pay 19
Funeral Leave 19
Jury Duty 20
Shift Changes 20
Wash Time and Rest Breaks 20
VI Vacations with Pay 21
VII Holidays 22
VIII Wages 24
IX Handling of Complaints 25
X Strikes and Lockouts 29
XI Safety 29
XII Military Service 32
XIII Supplemental Unemployment Benefit Plan 33
XIV Subcontracting 33
XV Miscellaneous 34
XVI 401(K) 34
XVII Term of Agreement 34
</TABLE>
2
<PAGE> 3
AGREEMENT BETWEEN
MEDUSA CEMENT COMPANY
(Division of Medusa Corporation)
and
THE UNITED CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
(International Brotherhood of Boilermakers, Iron Ship
Builders, Blacksmiths, Forgers and Helpers, AFL-CIO)
and Local D23
Effective May 1, 1998 to May 1, 2004
ARTICLE I
AGREEMENT AND PURPOSE
(a) This Agreement is by and between Medusa Cement Company, a Division of
Medusa Corporation, hereinafter called the "Company", and the Cement,
Lime, Gypsum and Allied Workers Division (International Brotherhood of
Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers,
AFL-CIO), hereinafter called the "Union", acting on behalf of its Local
Union, whose members are employees of Medusa Cement Company.
(b) The Company and the Local Union at each plant have negotiated a Local
Agreement. Each Local Agreement has the same effective date and the same
expiration date as this Basic Agreement. Local Supplemental Agreements
shall not conflict or serve to modify provisions of this Basic
Agreement.
(c) It is the policy of the Company and the Union that the provisions of
Agreement shall be applied to all employees without regard to race,
color, sex, age, religious creed, national origin, handicap or Vietnam
Era Veteran status.
The Masculine words "he", "his" and "him" as used in this Agreement also
shall mean the feminine words, "she" and "her".
3
<PAGE> 4
ARTICLE II
UNION RECOGNITION AND SECURITY
(a) The Company recognizes the Union as the exclusive representative for all
hourly rated production, maintenance, quarry and laboratory employees,
excluding all office employees and all supervisors as defined by the
National Labor Relations Act, as amended, for the purposes of collective
bargaining in respect to wages, hours and working conditions at its
plants located at:
Clinchfield, Georgia, Local D23
(b) It shall be a condition of employment that all employees of the Company
covered by this Agreement who are members of the Union in good standing
on the execution date of this Agreement shall remain members in good
standing and those who are not members in good standing on the execution
date of this Agreement shall on the thirtieth (30th) day following the
execution date of this Agreement become and remain members in good
standing in the Union. It shall also be a condition of employment that
all employees covered by this Agreement and hired on or after its
execution date shall on the thirtieth (30th) day following the beginning
of such employment become and remain members in good standing in the
Union. (Because of State law, the above does not apply to Local D23 at
Clinchfield, Georgia).
(c) The term "employee" as used in this Agreement refers only to an employee
whose job is set forth in the Job Classification list attached to each
Local Agreement or any subsequent job added to the list during the term
of the Agreement.
(d) The Company will deduct from the monthly earnings of any of its
employees his Initiation Fee and Union Membership Dues and will pay the
same to the party to whom such employee directs the Company in writing.
Each such employee desiring such deduction to be made from his earnings
must present to the Company his signed order, which shall be
substantially as follows:
"I hereby authorize and direct the Medusa Cement Company to deduct and
pay from my earnings accumulated to my credit my Initiation Fee and Union
Membership Dues, and pay same to ............ I further agree to hold the
Medusa Cement Company harmless on account of deductions and payment
herein authorized."
Medusa Cement Company ...
-----------------------------
Timekeeper
Employee Clock No.
------------
4
<PAGE> 5
This authorization may be canceled by the Union member on any
anniversary date of this Agreement upon thirty (30) days prior written
notice to the Company and the Union.
(e) The union shall furnish to the Plant Manager a written list of the names
of employees who will serve on the committee. The number of employees on
the committee shall be defined by each Local Agreement. If a vacancy
occurs on the committee, the Plant Manager, shall be informed by letter
of the name of the new member before a meeting is held. No other members
of the Union who are employees at the Plants are eligible to attend
these meetings unless previously agreed to by the parties hereto.
(f) Notwithstanding the provisions of Article II (b) above, any employee, who
is a member of and adheres to established and traditional tenets or
teachings of a bona fide religion, body or sect which has historically
held conscientious objections to joining or financially supporting labor
organizations shall not be required to join or financially support the
Union as a condition of employment; provided, however, that each such
employee shall, as a condition of his or her employment, in lieu of the
payment of periodic dues and initiation fees to the Union, pay sums equal
to such dues and initiation fees to any one of the following nonreligious
charitable funds, which are exempt from taxation under Section 501(C)(3)
of the Internal Revenue Code:
1. City of Hope
2. American Cancer Society
3. American Heart Association
4. National Multiple Sclerosis Society
5. American Red Cross
It is expressly understood that any such employee holding conscientious
objections and choosing not to join or financially support the Union,
who requests the Union to use the grievance arbitration procedure on the
employee's behalf, shall be required to pay to the Union the reasonable
cost of processing any grievance on his or her behalf including
reasonable cost of arbitration if any. (Because of State law this does
not apply to Local D23 at Clinchfield, Georgia.)
(g) Upon receipt from an employee authorizing payroll deduction and
specifying the amount to be deducted, the Company will deduct voluntary
contribution to the City of Hope. All amounts so deducted shall be
remitted by the Company to the City of Hope.
The Company shall be held harmless from any claim, demand or action
arising out of such deductions.
Employees contributing to the City of Hope cannot discontinue or change
such contributions for one year.
5
<PAGE> 6
ARTICLE III
SENIORITY
(a) The seniority unit shall be plant-wide.
(b) Seniority is continuous service which shall be calculated from date of
first employment or re-employment following a break in continuous
service, whichever occurs later.
When two or more employees are hired on the same day, the employee with
the lowest last four (4) digits in their social security number shall be
senior to the employee with the highest last four (4) digits. This
paragraph is effective May 10, 1978.
(c) New employees and those hired after a break in continuity of service
will be regarded as probationary employees for the first sixty (60) days
of work and will receive no continuous service credit during such
period. Probationary employees may file and process grievances under
this Agreement, but may be laid off or discharged as exclusively
determined by the Company. Probationary employees who continue in the
service of the Company subsequent to the first sixty (60) days of work
shall receive full continuous service credit from date of the most
recent hiring. (PROBATIONARY PERIOD MAY BE INCREASED THIRTY (30)
ADDITIONAL WORK DAYS SUBJECT TO APPROVAL BY THE UNION.)
(d) An employee covered by this Agreement shall lose his entire seniority if:
(1) He voluntarily quits;
(2) He is discharged for cause and not rehired within six (6) months
or reinstated;
(3) An employee's seniority shall be broken and his employment
terminated effective on date of his acceptance of Termination
benefits under the provisions of the Supplemental Unemployment
Benefit Plan Agreement;
(4) The employee is on layoff or disability for a period of three
years or 50% of his seniority attained at the start of such
absence, whichever is less.
(e) A leave of absence for the purpose of accepting a position with The
Cement, Lime, Gypsum and Allied Workers Division at the Local, district,
or international level, or the AFL-CIO or any of its subordinate bodies,
shall be available to not more than three (3) employees from each plant
at any one time. Applications for such leave shall be submitted to the
Company in writing thirty (30) days prior to the effective date of such
leave to permit proper provisions to be made to fill the job to be
vacated. Leaves of absence for this purpose shall be for an indefinite
period. During such leave, seniority shall accumulate. Group insurance
coverage shall be suspended after thirty (30) days of such leave.
All insurance coverages will be reinstated upon returning to work with
the Company. Upon returning to work such employee will be reinstated on
his former job, providing it is
6
<PAGE> 7
still in existence; if not, he shall be eligible to apply for any job
within the bargaining unit by means of the existing bidding procedure or
by bumping.
(f) The Company shall attach to each Local Agreement a list of employee's
seniority dates in order of hiring and a list of the probationary
employees.
(g) Temporary summer employees may be employed by the Company from May 1st
through September 30th in order to facilitate filling of vacancies
caused by vacations during these months. Employment of summer employees
will be subject to the following conditions:
(1) No summer employee will be hired when any regular employee is on
layoff or drawing short workweek benefits.
(2) All summer employees will be required to join the Union under the
same terms and conditions as required in Article II, Sections (b)
and (d) of the Basic Agreement.
(3) All summer employees must sign an appropriate form which will
spell out the terms of their employment including but not limited
to an agreement to commence their employment on a specified date
and terminate their employment on a specified date. Such dates
must be in accordance with the time period specified in this
section.
(4) The term of employment will not be changed, altered or extended
unless mutually agreed to by both the Company and the Local Union
Committee.
(5) Summer employees shall not accumulate seniority nor be eligible
to bid on any new job or vacant job which may occur during their
terms of employment.
(6) A summer employee will not become eligible for a floating holiday
and will not have any vacation rights.
(7) Summer employees will not participate in the Company's pension,
S.U.B. and insurance programs.
The above will be in full force and effect, except that if any portion
is found to be contrary to any federal, state or local law, it shall be
changed to comply with said law.
ARTICLE IV
JOB SECURITY
(a) (1) Whenever the installation of mechanical equipment, change in
production methods, the installation of new or larger equipment,
the combining of jobs or the elimination of jobs, will have an
effect on the job status of one or more employees, the Company
will give the Union reasonable advance notice of same and, upon
request by the Union, will promptly meet with the Union to review
and explore the effects of such installation or installations or
change or changes upon the working force.
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(2) Employees will not be terminated by the Company as the result of
mechanization, automation, change in production methods, the
installation of new or larger equipment, the combining of jobs or
the elimination of jobs.
(3) Whenever an employee is no longer needed on his regular job as a
result of circumstances described in (1) above, such employee may
apply for any job or jobs within the bargaining unit on which an
incumbent has less seniority, and for which he could reasonably
be expected to qualify within a ninety (90) day on-the-job
training period unless the employee applying for such job is
disqualified due to physical reasons.
The rate of pay for such employee shall not be less than
ninety-five percent (95%) of the rate for the regular job from
which he was displaced, irrespective of the rate of the job which
he applies for and obtains.
The ninety-five percent (95%) of rate protection shall apply for
a minimum period of one (1) year, or a period equal to one-third
(1/3) of an employee's seniority up to a maximum of two (2)
years. If the affected employee is tendered training for a job
which he could be reasonably expected to qualify for with a
ninety (90) day on-the-job training period and refuses, he will
not be entitled to any rate protection unless he has a bona fide
reason for refusing. If an employee on ninety-five (95%) percent
rate protection subsequently bids on and is awarded a lower rated
job, he shall lose his rate protection.
(4) Employees affected by the application of the foregoing procedures
shall have and may exercise the same rights for retention and
on-the-job training in accordance with their seniority status and
the ninety-five percent (95%) rate guarantee shall also be
applicable to them.
(5) Employees who do not apply for and/or obtain a job in accordance
with the provisions of (3), including employees displaced from
their jobs but whose seniority status does not permit them to
utilize job retention rights under the provisions of (3) or (4)
will be placed on layoff status with recall rights in line with
their seniority status for job vacancies which may thereafter
occur.
(6) The provisions of (3) of this Section do not apply to
displacements or layoffs resulting from production curtailments,
except that employees laid off and not recalled when production
is resumed following curtailment will be entitled to the same
rights as employees affected by the preceding (3).
(7) Should the Company permanently shutdown the present facilities
affording employment to the employees comprising the bargaining
unit (the present facilities shall be deemed to have been
permanently shutdown if all productive facilities are abandoned
even though the shipping facilities continue to operate), the
Company shall mail a notice informing each affected employee that
his employment with the Company has been terminated because of
the permanent shutdown. The notice shall be mailed at least
ninety (90) days prior to the shutdown to the employee's last
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address on the Company's records. Each employee who is mailed
said notice shall have the following options:
A. An employee who is not eligible for a normal (excluding thirty
(30) year retirement pension) or late retirement pension may
elect to transfer to another operation of the Company covered by
a collective bargaining agreement with the Union in accordance
with paragraph 8 or paragraph 9.
Any transfer pursuant to paragraph 8 or 9 will occur not later
than three (3) years after the last day the employee worked. An
employee awaiting transfer shall be placed on layoff and shall
receive S.U.B. Layoff or reduced layoff benefit provided the
eligibility and other requirements of the S.U.B. Plan are met. An
employee may void
his election to transfer at any time during the three (3) year
period. If the employee is eligible for an immediate pension at
the time he voids his election to transfer, he shall retire,
effective the date he voids his election, under the pension plan
in effect at the time of the permanent shutdown. An employee may
also void his election in order to apply for S.U.B. Termination
benefits.
B. An employee who is eligible for an immediate pension at the date
of the permanent shutdown shall retire as of the effective date
of the permanent shutdown, except
1. An employee whose combined age and years of service equal
62 or more but less than 65 may elect layoff until his
combined age and years of service equal 65 at which time
the employee shall retire and receive a permanent shutdown
pension. The pension plan in effect at the time of the
permanent shutdown shall determine the retirement benefits
payable to the employee. An employee who elects layoff
under these conditions shall receive S.U.B. Layoff or
reduced layoff benefits provided the eligibility and other
requirements of the S.U.B. Plan are met.
2. An employee who is eligible for an immediate pension other
than a normal or late retirement pension and who elects to
transfer to another operation of the Company shall not
retire unless the transfer is not accomplished.
3. An employee shall not be required to retire under a
disability retirement pension earlier than he would
otherwise be required to retire if the Company had not
permanently shut down the facilities.
An employee who retires under the Pension Plan may also be
entitled to receive S.U.B. Terminations benefits in accordance
with the terms of the S.U.B. Plan.
C. The employee may elect S.U.B. Termination Benefits in accordance
with the terms of the S.U.B. Plan at any time within one (1) year
after notice of termination has been mailed to him.
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An employee other than an employee who is eligible for an
immediate pension may elect layoff prior to submitting his
application for S.U.B. Termination Benefits and shall receive
S.U.B. Layoff or reduced layoff benefits provided the eligibility
and other requirements of the S.U.B. Plan are met.
D. If the facilities which have been permanently shut down are
reopened by the Company within three (3) years of the date of the
permanent shutdown, an employee who has retired under the Pension
Plan shall be eligible for recall in accordance with his seniority
status at the time of the permanent shutdown. An employee who has
elected S.U.B. Termination benefits shall also be eligible for
recall in accordance with his seniority status at the time of the
permanent shutdown. Any pensioner who has received S.U.B.
Termination benefits and accepts recall and any former employee
who has received S.U.B. Termination benefits and accepts recall
shall repay said Termination benefits to the S.U.B. Trust Fund or
to the Company, whichever was the source of the Termination
benefits, in accordance with the S.U.B. Plan Agreement. Any
employee who accepts recall shall have his previously accumulated
seniority rights, pension, S.U.B., insurance and vacation credits
as of the last day the employee worked or at the date of permanent
shutdown, whichever occurs later, reinstated on the date he
returns to work.
E. An employee who is not eligible for an immediate pension may
elect layoff and shall receive S.U.B. Layoff or reduced layoff
benefits provided the eligibility and other requirements of the
S.U.B.
Plan are met.
The employment rights of any employee on layoff shall terminate
three (3) years after the last day the employee worked and the
employee's seniority shall be broken.
F. An employee's participation in the group insurance program shall
terminate effective the day following the last day the employee
worked and pending claims shall be processed in accordance with
the terms of the existing group insurance program. No employee
shall be eligible for holiday pay or vacation pay other than
vacation pay due after the last day the employee worked or the
date of the permanent shutdown, whichever occurs later. No
employee shall accumulate credited service under the pension plan
after the last day the employee worked or the date of the
permanent shutdown, whichever occurs later.
(8) In the event the Company constructs a new plant that will affect
the employment status of employees in the Company's plant or
plants comprising a bargaining unit, such employees shall be
given an opportunity to make application for employment in the
new plant before it starts operation, and such employees shall be
given preferential employment right for the highest rated job the
employee is capable of performing. Such an employee shall
transfer with him all of his previously accumulated pension,
S.U.B., insurance and vacation credits. His seniority rights at
the former plant shall terminate upon his establishment of
seniority rights in the new plant.
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(9) When an employee has been laid off or displaced because of
permanent changes in the working force or because of a plant
closing, he may make written application within fifteen (15) days
of layoff or displacement for employment in another plant of the
Company, and he shall be given preferential employment rights for
job openings at such other plant, providing such employee is
capable of performing the job that may be available at such other
plant of the Company. Any employee so transferring from one plant
to another of the Company shall retain his previously accumulated
pension, S.U.B., insurance and vacation credits. His seniority
rights at the former plant shall terminate upon his establishment
of seniority rights in the plant to which he transferred.
(10) Employees transferring from one plant to another as provided in
(a) (7), (8) and (9) of this Article will receive a moving
expense allowance. The Company will reimburse each employee for
actual moving expenses incurred to move furniture and other
household goods up to a maximum of $1,000 per employee.
(b) When a production curtailment or a plant shutdown causes a reduction in
personnel in a department or throughout the plant, a senior employee
whose regular job is not required shall have the option of accepting
available work for which he is qualified or accepting layoff. A Senior
employee who elects to accept available work shall be entitled to:
(1) Bump any junior employee whose job was previously held by the
senior employee on a permanent basis for a sufficient period of
time to demonstrate his ability to satisfactorily perform the job
as it is constituted at the time of the production curtailment or
plant shutdown. The senior employee must attempt to bump into a
job that he previously held in the reverse order of his
promotions. In other words, he must first attempt to bump into
the job he held immediately prior to his present job, except each
employee may select one job that he had previously held on a
permanent basis or is qualified to perform immediately, and for
purposes of this section only, consider it to be the job he held
immediately prior to his present job. Each employee may make such
selection and this selection shall be updated effective on May 1,
of each contract year at the employee's discretion.
If the above procedure would result in an employee becoming a
part of the labor crew, he may exercise his bumping rights set
forth in (2) prior to entering the labor crew.
(2) An employee can bump a junior employee on a plant-wide basis
except for any maintenance job, any laboratory job, or those in
the control room operator classification, provided he is
qualified to perform the job immediately.
Employees who hold utility or vacation-relief jobs where the
employee actually works on several different jobs on a scheduled
basis shall be considered as having held those classifications on
a permanent basis for purposes of this section (b).
Any junior employee who is displaced by a senior employee shall
have the same rights as the senior employee set forth herein.
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After the bumping is completed, the Company has the right to
require a senior employee to perform available work during the
curtailment or shutdown if there is no junior employee with the
necessary qualifications to perform the work.
A plant shutdown is defined as a period during which none of the
clinker burning units are producing.
The wage rate paid during a production curtailment shall be the
wage rate of the job performed. An employee who works on two or
more jobs in one day shall be paid in accordance with Article V
(j) (2).
During periods of plant shutdowns when employees are needed for
maintenance, repairs or work on plant alterations, the wage rate
paid to employees who are retained for work during the first
forty-five (45) days of plant shutdown shall not be less than the
employee's regular straight time wage rate normally paid when the
plant is producing. After forty-five (45) days, the wage rate
paid shall be the wage rate of the job performed. An employee who
works on two or more jobs in one day shall be paid in accordance
with Article V (j) (2).
The ninety-five (95%) percent rate protection is not applicable to
any bumping under this procedure.
(c) When the Company determines that additional jobs are required during or
following a production curtailment or a plant shutdown in order to
maintain or increase the work force, the manner in which the reduction
of forces took place pursuant to Article IV, Section (b) will be
reversed.
In the event that during a production curtailment or a plant shutdown an
employee bids for and is awarded another job, he shall lose all rights
pertaining to the job the employee previously held.
Sections (b) and (c) of Article IV shall not add to, subtract from, or
otherwise modify any maintenance training agreement by and between the
Company and the International and/or Local Unions negotiated before or
after the effective date of this Basic Agreement.
(d) The Company agrees to post a notice at least one week in advance of an
intended shutdown. Whenever a layoff is planned because of a change or
reduction in plant production requirements, the Company will, not less
than seven (7) calendar days prior to the effective date of the layoff,
post a bulletin stating the expected extent of such layoff, and the
expected effect on the work force. In the event the required notice is
not given in accordance with the above, the Company will pay the laid off
employee(s) the scheduled time lost at the applicable straight-time
hourly rate. The seven (7) calendar day period shall commence on the
completion of the third shift following the day in which the notice was
posted. The foregoing does not apply to disciplinary layoffs and layoffs
because of curtailment made necessary by disaster or emergency conditions
affecting the ability of the Company to physically operate the plant.
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(e) Company personnel excluded from the bargaining unit shall not regularly
perform bargaining unit work except temporarily in an emergency; for
training or instruction purposes, for testing, diagnosis, analysis or
when necessary to prevent disruption of the flow of operations or when
necessary to meet the interest of efficient operations.
Should a Company person excluded from the bargaining unit violate this
commitment the Company will be required to pay to the effected worker or
workers double time (his or their) regular straight time hourly rate for
anytime worked by person not included in the bargaining unit, with a
minimum of four (4) hours pay. If there is no affected worker, the
penalty for such work shall be paid to the worker lowest in overtime in
the classification and/or department.
(f) Any employee who becomes incapacitated and on the basis of competent
medical opinion cannot perform the duties of his/her regular job may
exercise his/her plant seniority through the bumping procedure to move
to any position within the bargaining unit at the plant for which he/she
could qualify within a reasonable period of time but not to exceed 90
days. This in no way affects the bidding right of the employee.
(g) Any employee who is displaced by an incapacitated employee pursuant to
paragraph (f) of this section, may exercise his/her plant seniority to
bump into another position within the bargaining unit at the plant for
which he/she is qualified in the same manner as covered in the job
bidding procedure. The 95% rate protection is not applicable to bumping
under paragraphs (f) and (g).
(h) All vacancies and new jobs created shall be posted no later than the
eighth day following the date the vacancy occurred or the new job was
created. Said vacancies and new jobs shall be posted for seven (7) days
to allow any employee to make application in writing for such job. The
Company will consider every application in terms of:
(1 ) Seniority
(2) The applicant's skill and ability and physical fitness measured
against the requirements of the job.
Where two or more applicants' qualifications in (2) are relatively
the same, seniority shall govern.
If an employee proves unsatisfactory, he shall be reinstated to
his previous job. An employee who bids for and is awarded a job,
excluding any employee who is disqualified subsequent to the
award, may not bid any job in the same or lower bracket for six
(6) months from the date he was awarded his new job without the
consent of the Company; except that an employee may bid from an
operating job to a maintenance job or a laboratory job, from a
maintenance job to an operating job or a laboratory job, or from
a laboratory job to an operating job or a maintenance job even
though the employee is bidding a job in the same or lower bracket
within six (6) months.
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This Section does not require the Company to award a job to any
applicant if no applicants are qualified to perform the work.
The Company has the right to assign any employee to fill a new
job or to fill a vacancy until the job has been awarded.
The Company will meet with the Local Union Committee to explain
its decision when the Company awards a job to a junior applicant.
Any senior applicant shall have the right to challenge the
Company's award by filing a grievance in a timely manner. Any
employee reinstated to his previous job shall have the right to
challenge his disqualification by filing a grievance in a timely
manner.
(3) Once a job has been awarded, the Company will make every effort
to place the successful bidder on the job as soon as possible,
but within thirty (30) calendar days from the date of the job
award. Should the Company fail to place the successful applicant
on the job in the 30 day period, the applicant shall receive the
rate of pay for the new job commencing with the 31st day, until
such time as he is placed on the new job. At that time, he will
be paid in accordance with this Basic Agreement, Local
Supplemental Agreement, or plant practice, whichever is
applicable.
This shall not apply if the delay beyond thirty (30) days is
caused by multiple bidding to fill the original vacancy.
ARTICLE V
WORKING CONDITIONS
(a) Eight (8) hours shall be the regular workday and forty (40) hours shall
be the regular work week. The workday shall commence with the beginning
of the morning shift and workweek shall commence with beginning of the
morning shift on Sunday (Monday at Clinchfield, Georgia).
(b) Work schedules for each workweek will be posted on Thursday of the
previous week prior to the end of the first shift. If an employee's work
schedule is changed after the end of the first shift of the preceding
Thursday he shall be compensated by multiplying the regular straight-time
hourly wage rate by one-half (0.5) hr the first eight (8) hours worked in
his new schedule and the premium shall be paid in addition to whatever
compensation the employee is otherwise entitled to receive under any
other Section of this Agreement. An employee's work schedule is changed
and the premium is paid when the employee is required by a schedule
posted after the first shift on the previous Thursday to work hours in
place of the hours the employee was required to work by the schedule
posted prior to the end of the first shift on the previous Thursday.
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If an employee's work schedule is not posted on Thursday of the previous
week prior to the end of the first shift as provided above, the first
eight (8) hours worked the following week shall be considered
out-of-schedule and will be paid accordingly.
(c) All hours worked and all hours paid shall be compensated by multiplying
the regular straight-time hourly rate by one (1.0) unless expressly
provided otherwise.
(d) Hours worked in excess of eight (8) hours in the workday and forty (40)
hours in the workweek shall be paid for at the applicable overtime rate.
(e) Rates of Pay - Overtime:
(1) The applicable overtime rate shall be time and one half (1.5) the
regular straight time hourly wage rate except on a Sunday or a
holiday in which case the applicable overtime rate shall be:
Sunday
A. Straight-Time
1. Up to eight (8) hours 1-1/2X
2. Over eight (8) hours and up
to twelve (12) hours 2X
3. Over twelve (12) hours 2-1/2X
B. Overtime and Callouts
1. Eight (8) hours or less 2X
2. Over eight (8) hours and up
to twelve (12) hours 2-1/2X
3. Over twelve (12) hours 3X
Holiday
A. Straight-time
1. Up to eight (8) hours 2-1/2X
2. Over eight (8) hours and up
to twelve (12) hours 3X
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B. Overtime and Callouts
1. For all hours worked 3X
(2) In the event an employee works more than twelve (12) hours in the
workday, he shall be paid for all hours worked in excess of such
twelve (12) hours at double the regular straight time hourly
rate.
After an employee has been engaged in work for twelve (12)
consecutive hours, he shall be paid for all consecutive hours
worked immediately succeeding and in excess of such twelve (12)
hours at double the regular straight time hourly rate.
If an employee is being paid the rate of double time under the
foregoing paragraphs, his rate of pay shall not be reduced when
his work continues into or overlaps his regular shift. However,
the Company may exercise either of the following options:
A. The Company may instruct the employee to continue to the end of
the shift at the double time rate, or
B. The Company may send the employee home at any time during the
shift, provided the remainder of the shift is paid for at
straight time, subject to a maximum payment of four (4) hours at
straight time. Such employee cannot be called back to work until
he has been off duty for eight (8) consecutive hours.
In no event shall the first two provisions of the Section be
applied to the same hours of work. The provision which creates
the highest earnings shall be applied.
(3) Callouts and Off-days: In case an employee is called for work
during any hour in the day or week in addition to his regular
schedule he shall receive a minimum of four (4) hours' pay for
such work at the applicable overtime rate. However, if he is
notified before the end of his regular shift to report early, it
shall not be considered a callout. Callout hours and off-day
hours are overtime hours. All Sunday callouts to be paid a
minimum of four (4) hours at the applicable Sunday rate.
(4) Lunch period interrupted by work assignments: One-half (1/2) hour
at the applicable overtime rate shall be paid for any scheduled
lunch period interrupted by a work assignment and either prior or
subsequent to the regular lunch period, reasonable time for lunch
shall be granted with pay for same at the employee's regular
rate.
(5) If an employee actually works seven consecutive workdays in the
plant workweek, regardless of the number of hours worked on any
workday, the employee shall be compensated by multiplying the
regular straight-time hourly rate by one (1) for each and every
hour worked during the seventh consecutive workday, and this
premium shall be paid in addition to whatever compensation the
employee is otherwise entitled to receive under any other Section
of this Article.
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(f) Overtime paid on a daily basis shall not be duplicated on a weekly basis.
(g) If an employee does not work a regularly scheduled workday through
action of the Company, excused absence or because of a holiday, that day
shall be considered as actually a day worked for all overtime purposes.
(h) Limitations Upon Overtime:
(1) Every reasonable effort will be made by the Company to avoid
requesting any employee to work overtime and the Company will
consider under the circumstances involved any reasonable excuse
from an employee for not working the overtime. Whenever an
employee is laid off due to lack of work or because of
curtailment of operations, no overtime work shall be scheduled on
any work which the laid-off employee is capable of doing and is
able to perform, except in cases of emergency repair or
unscheduled absences of other employees. The foregoing to the
contrary notwithstanding, a laid-off employee will not be called
back to work unless there is at least thirty-two (32) hours work
in the workweek for such employee.
(2) Overtime in the various job classifications shall be equally
divided as defined by the Local Agreement insofar as it is
practical to do so. Any employee who is contacted and cannot work
the overtime including callouts will be charged with the number
of hours actually worked or paid, whichever is greater or
according to the Local Agreement. Overtime worked or charged
shall be posted weekly in each department by the foreman.
(3) Employees who are called upon to work overtime shall not be laid
off during their regular work time for the purpose of equalizing
said overtime.
(4) The Company will continue its practice of allowing a fifteen
minute paid wash-up time on continuous overtime beyond the end of
his shift. In addition, the Company will continue its practice of
paying overtime in fifteen (15) minute increments.
(5) A. Any employee who has not been notified of his overtime
assignment at least twelve (12) hours prior to the
commencement of the overtime assignment and who works more
than ten (10) consecutive hours, shall be provided with a
hot lunch which shall be eaten at the end of said ten (10)
consecutive hours, or as soon as practical thereafter but
no later than 30 minutes after the ten hours. Any employee
who works in excess of fourteen (14) consecutive hours
shall be provided with an additional lunch, and lunches
will be furnished at the end of every four (4) consecutive
hours worked thereafter.
B. Any employee who is called out and works more than four (4)
consecutive hours shall be provided with a hot lunch which
shall be eaten at the end of said four (4) consecutive
hours. In addition, said employee shall be provided with a
hot lunch every four (4) consecutive hours worked
thereafter.
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There shall be no duplication of hot lunches under
provisions A and B above. The employees shall be given
reasonable time to eat his lunch without loss of pay.
(C) THE COMPANY AGREES THAT THE ALLOWANCE FOR OVERTIME MEALS WILL BE
INCREASED TO $6.00 EFFECTIVE MAY 1, 1998, TO $6.50 EFFECTIVE MAY
1, 2000 AND TO $7.00 EFFECTIVE MAY 1, 2002.
(6) The purpose and intent of this Agreement is to refrain from
working an employee beyond sixteen (16) consecutive hours
excluding lunch periods. The Company agrees that they will not
work any employee beyond sixteen (16) consecutive hours excluding
lunch periods unless no other classified employee is available to
do the work.
However, in the event that a vacancy occurs that would require a
classified employee to work more than sixteen (16) consecutive
hours, the Company will fill that vacancy with another classified
employee who has primary overtime rights, an employee with
secondary overtime rights, or other qualified employee in the
stated order.
This Agreement does not absolve an employee from the requirement
to stay on the job until properly relieved. However, the Company
is required to make a diligent effort to provide a relief at the
end of the sixteen (16) hour period. The Company will not use the
eight (8) hour rest clause as an excuse to require an employee to
continue working after sixteen (16) hours.
(i) Eight Consecutive Hour Rest Premium
(1) An Employee should receive at least eight (8) consecutive hours
off work within the fourteen (14) consecutive hours immediately
preceding the start of his next scheduled shift. In the event an
employee does not receive eight (8) consecutive hours off work
within the fourteen (14) consecutive hours immediately preceding
the start of his next scheduled shift, the Company shall exercise
one of the following options:
A. Instruct the employee to report late for his next scheduled
shift by the number of hours his longest consecutive off-duty
period falls below eight (8) hours and pay the employee the
appropriate straight-time rate for those hours not worked
between the starting time of his scheduled shift and the time
he reports to work in accordance with the Company's
instructions. The appropriate straight time rate on the
workday Sunday shall be one and one-half (1.5) and on a
recognized holiday, two (2.0).
B. Instruct the employee to work at the starting time of his
scheduled shift. The employee shall receive a premium for
those hours worked which, if added to his longest consecutive
off-duty period, equal eight (8) hours. The premium shall be
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determined by multiplying the regular straight-time hourly
rate by one (1). The premium shall be in addition to whatever
compensation the employee is otherwise entitled to receive
under any other Section of this Article.
(2) If an employee does not receive at least eight (8) consecutive
hours off work within the fourteen (14) consecutive hours
immediately preceding the start of callout hours worked on an
off-day (provided that any of the callout hours worked occur
within the hours the employee would have otherwise been scheduled
to work had the employee not been scheduled off), the employee
shall receive a premium for those hours worked which, if added to
his longest consecutive off-duty period, equal eight (8) hours.
The premium shall be determined by multiplying the regular
straight time hourly rate by one (1). The premium shall be in
addition to whatever compensation the employee is otherwise
entitled to receive under any other section of this Article.
(j) Wage Rate - Transfer and Assignments
(1) Employees temporarily transferred shall be paid the regular
straight time hourly rate of the job being performed or the
regular straight time hourly rate of his regular job, whichever
is greater.
(2) An employee regularly scheduled to work on two or more jobs
having different wage rates shall receive the highest rate for
the entire week. If a job is regularly scheduled to be performed
each week at least one workday in the workweek, the employee
filling that job shall receive the highest wage rate for the
entire week. An employee who is scheduled to work five workdays
during the workweek on a job or jobs having a higher straight
time hourly wage rate or wage rates than the employee's regular
straight time hourly rate, shall be paid at the higher straight
time hourly wage rate for the entire week. An employee who works
on two or more jobs in one day shall receive the highest wage
rate for only the time worked on the higher rated job. However,
should the employee work on a higher rated job(s) for four (4) or
more hours in the workday he will receive the higher rate of pay
for the entire day. The term "entire week" used in this section
shall mean the 168 consecutive hours beginning at 7:00 a.m. on
Sunday and ending at 7:00 a.m. on Sunday. The term "entire day"
used in this Section shall mean the 24 consecutive hours
beginning at 7:00 a.m. and ending the following day.
The 168 consecutive hours mentioned above shall begin at 7:00
a.m. Monday and ending at 7:00 a.m. Monday, at Local D23,
Clinchfield, Georgia.
(3) The Company shall have the right to utilize employees to perform
any job; provided, however, overtime and callouts in any
classification shall be offered to the available classified
employees in that classification before other employees are
assigned such work. See Attachment "B" for Letter of
Understanding concerning transfers.
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(k) Sunday Work
All hours worked by an employee on Sunday which are not paid for on a
premium and/or overtime basis shall be paid at the rate of one and
one-half (1-1/2) times the regular straight time hourly rate exclusive
of shift differentials. There shall be no duplication or pyramiding of
premium pay and/or overtime under this provision.
(l) Reporting Pay
Any employee who is required to report for work shall be given at least
four (4) hours pay at the regular straight time hourly rate, and shall
receive full pay for all time thereafter that he is required to remain
on the premises ready for work. Any employee put to work on his regular
working day shall receive full day's pay at the regular straight time
hourly rate.
(m) Funeral Leave
An employee, upon the notification of the death of his or her father,
mother, spouse, son, daughter, brother, sister, stepfather, stepmother,
stepson, stepdaughter, half sister, half brother, mother-in-law,
father-in-law, brother-in-law, sister-in-law, grandchild, grandparent,
or spouse's grandparent, shall be granted his or her next three (3)
scheduled working days off with pay (four (4) days off with pay if the
employee is required to travel beyond a radius of 500 miles). Payment by
the Company for such time lost shall be on the basis of eight (8) hours
per day at the employee's regular straight time hourly rate, including
shift differential.
As used herein, brother-in-law is defined to mean (1) the brother of
one's husband or wife, (2) the husband of one's sister, (3) the husband
of the sister of one's spouse, and sister-in-law is defined to mean (1)
the sister of one's husband or wife, (2) the wife of one's brother, (3)
the wife of the brother of one's spouse.
The above clause shall not apply to an employee who is laid off, except
when an employee is notified to return to work effective on or before
the day of the funeral he shall be granted full funeral leave with pay.
The Company will notify a local union official of a death of an
employee's relative as defined above as soon as the Company has been
advised by the employee.
The foregoing to the contrary notwithstanding, no bereavement payment
will be made unless the employee attends the funeral nor will payment be
made if there are more than fourteen calendar days between the date of
death and the next scheduled workday.
(n) Jury Duty
Any regular employee (as distinguished from a probationary employee)
required to perform jury duty on a day he is scheduled to work, shall be
excused from work on that day. The Company shall pay the employee the
difference between the amount received for such jury duty and eight (8)
hours at his regular rate of pay plus shift differential if involved.
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The day or days paid for such jury service shall be counted as eight (8)
hours worked for the purpose of computing weekly overtime.
(o) Shift Changes
A shift employee may clock in up to 30 minutes prior to the actual
starting time of his shift and relieve the employee that he is to
replace. When properly relieved within this 30 minute period, the
employee being relieved may clock out and leave the plant.
Under such circumstances the pay received by the relieving and relieved
employees shall be computed as though both employees had clocked in and
out at the actual shift change time.
(p) Wash Time and Rest Breaks
(1) An employee who does not receive a paid lunch period shall not
clock out prior to the regular quitting time for his shift.
However, he shall be permitted to leave his place of work 15
minutes prior to the regular quitting time for his shift to wash
provided that the employee is not required to work overtime. An
employee who does not receive 15 minutes away from the job to
wash because he has been required by the Company to work up to
but not after the regular quitting time for his shift, shall be
compensated for lost wash time by multiplying his regular
straight time hourly rate by fifteen minutes (.25 hour). If the
employee uses additional time to clean following the regular
quitting time for his shift, he shall be paid as though he had
clocked out at the regular quitting time.
(2) An employee who does not receive a paid lunch period and who is
required to work overtime after the regular quitting time for his
shift shall clock out no more than 15 minutes after he leaves his
place of work. This shall not apply to an employee on call out.
(3) An employee who does not receive a paid lunch period will be
allowed a 15 minute rest break away from his job during the first
four hours of his regular shift. Break times shall be determined
by the employee's foreman and the efficient operation of the
plant shall be controlling. The 15 minute break shall be strictly
construed to be the total time away from the job. Should any
employee regularly be denied a break, he may file a grievance in
a timely manner.
(4) The Company is not required to grant any employee who does
receive a paid lunch period any wash-up time and any rest break.
Furthermore, said employee shall eat his lunch "on-the-job" so
that there is no interruption of operations.
(q) Any other provisions of this labor agreement to the contrary not
withstanding, no employee shall receive pay for any hour worked or
unworked which singly or in any combination, exceeds triple his regular
straight time hourly rate.
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ARTICLE Vl
VACATIONS WITH PAY
(a) Any employee who works during at least thirteen (13) weeks in either
each calendar year or each anniversary year, as defined in the Local
Agreements, shall be granted a vacation off work without loss of pay,
according to the following schedule:
(b) All employees who have completed one or more anniversary years of
service but less than five (5) years of service will be entitled to two
(2) weeks of vacation, provided they meet all other requirements of this
Article.
Employees who have completed five (5) or more anniversary years of
service but less than fifteen (15) years of service will be entitled to
three (3) weeks of vacation, provided they meet all other requirements
of this Article.
Employees who have completed fifteen (15) or more anniversary years of
service, but less than twenty-five (25) years of service, will be
entitled to four (4) weeks of vacation, provided they meet all other
requirements of this Article.
Employees who have completed twenty-five (25) or more anniversary years
of service will be entitled to five (5) weeks of vacation, provided they
meet all other requirements of this Article.
Article Vl (b) above to the contrary notwithstanding, no employee (who
meets all the other requirements of this Article Vl) shall be entitled
to any fewer weeks of vacation than he was entitled to take in 1984.
(c) Vacation pay will be based on a forty (40) hour week at the rate of the
permanently assigned classification on which an employee is working at
the time he takes his vacation. If an employee has held a single higher
rated classification for more than six (6) months during the year
preceding his vacation, he will receive vacation pay computed at the
higher rate. Vacation pay shall include appropriate shift differential
for those on fixed shift. Employees working on rotating shifts shall be
paid an average of the rates for the rotating shifts involved.
(d) Vacations will not be cumulative, but so far as practicable, be granted
at times most desired by the employees, but the final right to allotment
of vacation period is exclusively reserved to the Company in order to
insure the orderly operation of the plant. In exercising its right to
allot vacation periods, the Company will not require any employee who is
on layoff to take his vacation during periods of plant shutdown or
curtailment of operation. Where requested vacation periods conflict,
preference shall be given to the older employee in point of service.
(e) It is further agreed that if any employees have previously selected
their vacation period so that it occurs during an unforeseen shutdown
such vacation period shall not be changed.
Vacation shall be taken by the employee within the calendar year in
which it is granted as determined by the Local Agreements.
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(f) No employee will be required and/or requested to work during his seven
day vacation period. The only exception will be when a classification
has two or fewer employees, no qualified personnel are available except
the employee on vacation, and an emergency situation exists. In that
event an employee on vacation may be requested to work.
(g) The rules governing the submission of appropriate vacation application
blanks shall be defined by the Local Agreement.
(h) Upon two weeks written notice by an employee to the Personnel Clerk, the
Company will give him his vacation pay on the employee's last shift
prior to the beginning of his vacation.
ARTICLE VII
HOLIDAYS
(a) The Company will grant eleven (11) paid holidays; these holidays shall be
listed in each Local Agreement.
(b) If any such holiday falls on Sunday, the following Monday shall be the
recognized holiday. The holiday hours shall be those hours within the 24
hour period commencing with the beginning of the first shift on the
morning of the holiday and ending at the beginning of the first shift
the following day.
(c) Employees who are scheduled to work on a holiday shall be paid two and
one-half (2.5) times the regular straight time hourly rate.
(d) Hours worked on a holiday in excess of eight (8) in a workday, in excess
of forty (40) in a workweek, on off-days, and on callouts shall be paid
for at the applicable overtime rate.
(e) If no work is required of an employee on the above holidays, he will
receive eight (8) hours pay at the regular straight time hourly rate,
provided he meets the following qualifications.
(1) The employee shall have been employed by the Company for at least
thirty (30) calendar days prior to the holiday.
(2) The employee shall have worked his last scheduled working day
prior to and his next scheduled working day after such holiday
unless excused therefrom by the Plant Manager on account of
sickness, accident, death in the family, or other excused
absence. In no event shall a holiday be paid for unless an
employee has also worked during the thirty (30) day period
immediately preceding or immediately following the holiday except
that the thirty (30) day limitation shall not apply if the
employee was temporarily absent from work because of sickness,
accident or layoff. In any event, the employee must work at least
one day in the calendar year in which the holiday is granted.
(f) If an employee is scheduled to work on a holiday and fails to work, he
shall not receive holiday pay, unless excused therefrom by the Plant
Manager.
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(g) If an employee works on a holiday, the holiday shall be counted as a day
worked for computing weekly overtime. Paid holiday is to count as a day
worked for overtime purposes, provided holiday falls on one of
employee's scheduled workdays and he would have worked that day except
for holiday observance.
(h) An employee not scheduled to work the holiday and who subsequently
performs work on a holiday will be considered as being on callout and
will be paid eight (8) hours at the regular straight time hourly rate in
addition to two (2) times the regular straight time hourly rate for all
time worked with a minimum of four (4) hours at double time.
(i) Work schedules for each workweek which include a holiday will be posted
prior to the end of the first shift on Thursday of the previous week. If
an employee is scheduled to work on a holiday, but then is instructed by
the Company not to work, he shall receive for that holiday eight (8)
hours pay at two and one-half (2.5) times the regular straight time
hourly rate.
(j) The phrase "regular straight time hourly rate" as used solely in Article
Vll, Holidays, shall mean the higher of either the employee's regular
straight time hourly rate or to the highest straight time hourly rate
for a job on which the employee works at least eight (8) consecutive
hours in the workweek in which the holiday falls provided (1) that the
eight hours had been previously scheduled or (2) the hours are worked
the day before or the day after the holiday whether previously scheduled
or not.
ARTICLE VIII
WAGES
(a) Considered a part of the Local Agreements are the current Job
Classifications and Rate Lists.
(b) (1) Scheduled shift workers on the first shift shall receive the
regular straight time hourly rate.
(2) Scheduled shift workers on the second shift shall receive the
regular straight time hourly rate plus 52(cent) per hour.
(3) Scheduled shift workers on the third shift shall receive the
regular straight time hourly rate plus 75(cent)per hour.
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(4) These premium rates do not apply to day workers even though they
may work over into premium paid shift.
(5) If a day worker is scheduled to take the place of a regular
scheduled shift worker, then the premium rate for the shift shall
apply.
(6) The premium pay does not alter the provisions covered in this
contract under the head of "Working Conditions".
(c) Shift differentials shall be included as part of the regular rate in the
calculation of overtime compensation.
(d) The Company may at its discretion increase wages in any class or to an
individual in any class without necessitating a change in the rate of
any individual or class.
(e) Any job not mentioned in this Agreement or any job with substantial
changes in duties, equipment or requirements, or any new job created in
the plant, shall be open for negotiations by the Company and the Union
as to wages upon written notice from either party to the other party. If
no agreement can be reached during the above negotiations, the matter
shall be subject to the grievance procedure.
ARTICLE IX
HANDLING OF COMPLAINTS
(a) All employees shall at all times make an effort to perform their duties
in such a manner as to promote safe and efficient operation of their
department and the plant as a whole.
(1) Should a difference arise between an employee and the Company as
to the meaning and application of this Agreement or should a
difference arise as to the meaning and application of a
recognized practice, the employee with or without his steward
shall present his complaint to his foreman within ten (10)
working days after the date of the alleged wrong or within ten
(10) working days after the date the employee received his
payroll check, whichever is later. Failure by the employee and/or
the Union to
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observe this time limit shall cause the grievance to be considered
settled in favor of the Company.
(2) The foreman shall orally reply to the employee within five (5)
working days after the date the employee presented his complaint
in Section (1). Failure by the Company to observe this time limit
shall cause the grievance to be considered settled in favor of
the employee.
(3) If the employee is not satisfied with the foreman's reply, the
employee may request his steward to present the grievance in
writing to the Union Grievance Committee. If the Union Grievance
Committee believes that the complaint is justified, it may submit
the complaint in writing to the Plant Manager within five (5)
working days of the date of the foreman's reply in Section (2).
The Plant Manager shall schedule a meeting with the Union
Grievance Committee and any member or members of the staff that
the Plant Manager desires to have present. This meeting shall
take place within fifteen (15) working days of the date the Union
Grievance Committee submits the grievance to the Plant Manager.
Failure to observe any time limit shall cause the grievance to be
considered settled in favor of the employee if the Company has
failed to observe the time limit or in favor of the Company if
the employee and/or the Union has failed to observe the time
limit.
(4) The parties shall use their best efforts to settle the complaint.
If the parties agree upon the disposition of the grievance, they
shall reduce their understanding to writing and the grievance
shall be settled. If the parties are unable to agree, the Union
Grievance Committee may at the employee's request and within
thirty (30) days of the date of the meeting between the Plant
Manager and the Union Grievance Committee submit the grievance in
writing to the Director of Industrial Relations or his
representative with copies to the International Vice President or
District Council Representative and the Plant Manager. The
Director of Industrial Relations shall contact the International
Vice President or District Council Representative within seven
(7) days after receipt of the grievance to schedule a meeting.
The parties shall use their best efforts to schedule the meeting
within thirty (30) days. Failure to observe any time limit shall
cause the grievance to be considered settled in favor of the
employee if the Company has failed to observe the time limit or
in favor of the Company if the employee and/or the Union has
failed to observe the time limit.
(5) After full consideration, and such conference as may be mutually
agreed upon with an International or District Council
Representative of the Union, the grievance shall be considered
settled when the employee's and the Company's representative
shall have reached an agreement.
(6) If the parties are unable to settle the grievance, either party
can notify the other party in writing that it intends to submit
the grievance to arbitration. This notice must be given within
ten (10) days of the last meeting in Section (5) OR AFTER TEN
(10) DAYS WRITTEN RESPONSE FROM THE COMPANY. The consent of the
other party is not required to arbitrate a grievance.
The foregoing to the contrary notwithstanding, either party may
exercise the following option:
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For the purpose of expediting and facilitating the resolution of
a grievance which has been processed through step (5) of the
grievance procedure and which would otherwise be submitted to
arbitration, either the Company or the Union may elect to submit
said grievance to a panel which will consist of a Vice President
of the International Union or his representative and the Vice
President of Operations of the Company or his representative,
provided that no member of the panel can be a party to any
discussion of the grievance during an earlier step of the
grievance procedure. Each party can submit a maximum of five (5)
grievances to the panel during any calendar year. Only a
grievance about the interpretation of contract language in the
Basic or Local Agreement can be submitted to the panel. A party
electing to submit said grievance to the panel must notify the
panel and the other party within ten (10) days after a decision
has been made at step (5). The authority of said panel shall be
no greater than the authority of the arbitrator as set forth in
(d) of the grievance procedure. The panel shall meet at the Plant
where the grievance arose.
A maximum of two members of the Union Grievance Committee can
attend a panel meeting. The decision of the said panel shall be
final and binding upon the Company and the Union. In the event
the Union representative on the panel and the Company
representative on the panel are unable to agree, either the Union
or the Company may elect to submit such grievance to arbitration
as provided in step (6) of the grievance procedure. The party
electing to arbitrate the grievance must give notice to the other
party within ten (10) days after the Union representative on the
panel and the Company representative on the panel have jointly
informed the parties that the panel is unable to make a decision.
Failure to observe any time limit shall cause the grievance to be
considered settled in favor of the employee if the Company has
failed to observe the time limit or in favor of the Company if
the employee and/or the Union has failed to observe the time
limit.
(b) If either party does not notify the other within ninety (90) days of the
notice of its intent in (a) (6) above, that it now wishes to mutually
select an arbitrator and schedule a hearing date, then the parties shall
consider the grievance to have been withdrawn by the moving party.
When the moving party notifies the other of its wish to mutually select
an arbitrator, the parties shall select an arbitrator within ten (10)
days. Failing to reach an agreement upon the selection of an arbitrator,
the moving party may request the appointment of an arbitrator by either
the Federal Mediation and Conciliation Service or the American
Arbitration Association.
Grievances heard by the arbitrator must be presented in chronological
order based on the date the grievances were written except in discharge
cases which may be presented out of chronological order or in cases
where the parties have mutually agreed in writing to waive the
chronological order requirement.
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(c) All time limits set forth in (a) and (b) shall be strictly observed;
time limits can be extended by a written agreement between the parties.
Whenever the term "working days" occurs in the grievance procedure, it
shall be defined by the parties to mean plant work days, Monday through
Friday.
Whenever the term "days" is used in this section, it shall be defined by
the parties to mean calendar days.
(d) The arbitrator shall consider only the grievance appealed to him and
shall have jurisdiction and authority only to interpret, apply, or
determine compliance with the provisions of this Agreement, and only the
extent necessary to determine the grievance. The arbitrator shall not
have jurisdiction or authority to add to, modify, detract from, or alter
in any way the provisions of this Agreement.
(e) The arbitrator's decision shall, at the request of either party, be in
writing and shall be final and binding on both parties. The fees and
expenses of the arbitration proceeding, except fees for witnesses
brought in by either party and legal counsel's fees, shall be borne
equally by the Company and the Union. Bargaining unit employees
including Committeemen who participate in arbitration proceedings shall
not be compensated by the Company.
(f) Grievances involving the provisions of the collective bargaining
agreement and occurring so as to be processed to arbitration at the same
time will be at the request of either party arbitrated before the same
arbitrator. However, it is agreed that not more than four (4) cases will
be heard at one series of hearings.
(g) Local Union officers and stewards off-duty and representatives of the
International Union and District Council shall, upon notice to the
Company, be permitted on Company's premises to investigate grievances.
(h) Meetings will be conveniently scheduled so as to complete all business
within the normal working day for day employees. Any employee who is
scheduled to work during the hours the meeting is held and who attends
the meeting will be compensated by multiplying the regular straight time
hourly rate by the hours he attends the meeting. In addition, if the
employee attends the meeting beyond his normal quitting time, he will be
compensated for each additional hour he attends the meeting by
multiplying the regular straight time hourly rate by one (1) and said
additional hour or hours shall not count toward daily or weekly
overtime.
Any member of the Committee who is not scheduled to work during the
hours the meeting is held, who is not scheduled to work the third shift
immediately preceding the meeting, or who is not scheduled to work the
second shift immediately following the meeting, and who attends the
meeting, will be compensated by multiplying his regular straight time
hourly rate by all hours he attends the meeting. Any hours paid under
this paragraph shall not count toward the calculation of any penalty or
premium pay section of this Agreement including but not limited to daily
or weekly overtime. Any employee who is receiving S.U.B. benefits,
sickness and accident benefits, or Workmen's Compensation benefits for
the day of the meeting or who is absent due to disciplinary layoff shall
not receive any compensation under this paragraph.
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When a meeting is scheduled at which a representative of the
International Union and a representative of the Company from Cleveland
will attend, any member of the committee who is scheduled work the third
shift immediately preceding the meeting will be excused from working the
third shift and will be compensated by multiplying eight (8) hours at
the regular straight time hourly rate plus shift differential if the
employee has attended the meeting.
Any member of the committee who is scheduled to work the second shift
immediately following the meeting will be excused from working the
second shift if the employee has attended the meeting for six (6) hours.
In the event the employee is excused from working the second shift, he
will be compensated by multiplying eight (8) hours at the regular
straight time hourly rate plus shift differential.
(i) The Company will reimburse no more than two (2) members of the Union's
bargaining Committee from each Local Union for scheduled time lost due
to attendance at and travel to and from Basic Agreement Negotiations.
One day travel time shall be allowed the day before such meeting, and
one day travel time shall be allowed after such meeting. The rate of pay
will be the regular straight time hourly rate including Sunday premium,
if applicable.
(j) Disciplinary letters issued to employees will remain in the Company's
employee file for twelve (12) months. At the end of the twelve (12)
month period, the disciplinary letters will not be used against the
employee in the future for purposes of progressive discipline.
DISCIPLINE OF ONE WEEK OR MORE WILL NOT BE USED AFTER FIVE YEARS.
This provision shall not apply if the discipline letter refers to a
disciplinary suspension of one week or more.
(k) Where there is a discussion between an hourly employee and a supervisor
that is intended as a disciplinary measure, the Company requests that a
grievance committeeman, job steward or other designated employee be
present.
A "disciplinary measure" shall be limited to the issuing of a reprimand
or the imposition of a penalty to an employee about which a notation,
letter or unsatisfactory performance report is subsequently made part of
the employee's personnel file.
It shall be the responsibility of the Union to appoint and have
available on each shift a committeeman, job steward or other employee
designated for purposes of this section who shall be identified to the
Corporation in writing.
It is not the intent of this Section to expand the total number of
committeemen as provided for in each Local Supplemental Agreement.
(l) When a grievance involving pay is settled in favor of the Union, the
employee entitled to such pay shall be paid by the second pay following
the settlement.
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ARTICLE X
STRIKES AND LOCKOUTS
(a) Having provided an orderly procedure for settling all disputes, the
Company agrees not to lock-out its employees and the Union agrees that
there will be no strikes or work stoppages during the term of this
Agreement.
(b) The Company agrees not to hold the Union liable when such activities are
not authorized by the Union, provided that the Union within forty eight
(48) hours orders its members to cease and desist from such activities.
(c) It shall not be a violation of this Agreement or cause for disciplinary
action including discharge if an employee refuses to cross a picket line
that has been established in full compliance with existing laws. Picket
lines established as a result of jurisdictional disputes, picket lines
established for the purpose of organizing in-plant non-bargaining unit
personnel, and/or informational picket lines are excluded from this
protection.
Notwithstanding the above, employees will not honor any picket line
unless authorized by the International Union. The International Union
will not be held liable for any subsequent damage to the Corporation
resulting from refusal of employees to cross an authorized picket line.
ARTICLE XI
SAFETY
(a) The Company will, according to its established practice, continue to
install such safety devices for the protection of the lives and health of
its employees as are required by the Workmen's Compensation laws of the
State in which the plants covered by this Agreement are located. The
Company will maintain the washhouse with heat, light and plenty of hot
water, and keep the toilets, fixtures and floors in a sanitary condition,
and will supply good drinking water wherever necessary about the plant.
Sufficient equipment and tools shall be maintained in a safe and
efficient working order, and the regulations and safety codes adopted by
the Department of Labor of the applicable state, in the interest of
protecting the safety and health of industrial employees as they affect
this industry, be strictly observed by both parties.
(b) The Company agrees to furnish first aid and medical service to its
workers in any cases originating out of their work in the Company plant,
in compliance with the Workmen's Compensation laws of the applicable
state. Medical services shall be performed by a doctor to be agreed upon
by the Company and the plant safety committee, but at the request of the
injured, and the approval of the Plant Manager and Director of Industrial
Relations, other medical aid may be called in at the expense of the
Company for consultation or treatment of any cases. It is agreed that a
complete medical examination may be required before an
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applicant is employed. Also, that complete medical examination may be
made annually or at any time at the discretion of the Company. Copies of
such reports and examinations will be kept on file by the Company and
shall at all times be available for inspection to such employees. Copies
thereof shall be furnished to such employee's designated physician upon
request.
(c) A Joint Safety and Health Committee shall be established consisting of
four members, two appointed by the Company and two appointed by the
Local Union. In the event that a member is absent from a meeting of the
Committee, his alternate may attend and when in attendance shall
exercise the duties of the member. The Safety Director or his designee
will be the fifth member and act as Chairman of the Committee.
The Joint Committee shall meet as often as necessary, but not less than
once each month at a regularly scheduled time and place for the purpose
of jointly considering, inspecting, investigating and reviewing health
and safety conditions and practices and investigating accidents and for
the purpose of jointly and effectively making constructive
recommendations with respect thereto, including but not limited to the
implementation of corrective measures to eliminate unhealthy and unsafe
conditions and practices and to improve existing health and safety
conditions and practices. All matters considered and handled by the
Committee shall be reduced to writing, and joint minutes of all meetings
of the Committee shall be made and maintained. One union representative
to the Committee will accompany a Federal or State investigator on a
walk-around inspection or investigation, and will attend any pre-or
post-inspection conferences.
All time spent in connection with the work of the Committee by a Union
Representative including all time spent in pre-or post-inspection
conferences and walk-around time spent in relation to Federal and State
inspections and investigations as provided for above, shall be
compensated at the employee's regular straight time hourly rate. Any
time spent during the hours the employee is scheduled to work shall
count toward the calculation of any penalty or premium pay section of
this Agreement including, but not limited to daily or weekly overtime.
Any time spent outside of the hours the employee is scheduled to work
shall not count toward the calculation of any penalty or premium pay
section of this Agreement. No time spent outside of the hours the
employee is scheduled to work shall be compensated at a rate greater
than one (1) times the employee's regular straight-time hourly rate.
Any employee who believes his job presents a hazard to his safety or
health may request an immediate review of his job by the Joint Safety
and Health Committee.
No employee shall be disciplined or discharged for refusing to work on a
job if his refusal is based on a bona fide claim that said job is not
safe or might unduly endanger his health or safety.
(d) (1) An employee shall be paid a premium when he is required to:
A. work within a kiln during the first ten (10) hours that the kiln
has been shutdown after it has been operating at a normal level;
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B. work within a cooler during the first two (2) hours that the
cooler has been shut down after it has been operating at a normal
level;
C. work within a kiln precipitator during the first four (4) hours
following the shut down of the kiln providing the precipitator
was handling the kiln gases at the time of kiln shutdown;
D. work within a section of a kiln precipitator or a kiln baghouse
while the kiln is in operation and the other sections of the
baghouse or the precipitator are in use.
The premium shall be calculated by multiplying the regular
straight time hourly rate by one-half (0.5) for each and every
hour worked up to the 10, 2, and 4 hours mentioned in A, B, C,
AND D above. Said premium shall be paid in addition to whatever
compensation the employee is otherwise entitled to receive under
any other section of this Agreement.
(2) Each Plant Safety Committee will meet to determine those areas of
the Plant where an employee is subject to excessive radiant heat
for extended periods of time. The Committee will consider all
conditions which affect the level of heat encountered including
ambient air temperature. Upon making said determination, the
Committee will decide what the Company shall provide as
reasonable protective apparel against excessive radiant heat.
(3) In the event that an employee is required to work on top of
roofs, silos, scale a quarry face or work in a silo, UNDER
CONDITIONS WHERE A PREMIUM HAS CUSTOMARILY BEEN PAID, the hours
worked shall be compensated for by multiplying the regular
straight time hourly rate by one-half (0.5) for each and every
hour worked UNDER THESE CONDITIONS and this work premium shall be
paid in addition to whatever compensation the employee is
otherwise entitled to receive under any other section of this
Agreement.
(e) Should the Company require an employee to wear foot protection, the
Company will furnish such protection without cost to the employee. The
liability of the Company with regard to safety shoes will be limited to
not more than two (2) pair in any one year. A new pair of shoes will
only be provided an employee when the worn out pair is turned in for
replacement. THE COMPANY AGREES TO ALLOW AN $80 REIMBURSEMENT FOR SAFETY
SHOES BEGINNING MAY 1, 1998. THIS ALLOWANCE IS TO BE INCREASED BY $2.50
ON THE ANNIVERSARY DATE EACH YEAR OF THE AGREEMENT.
(f) If a mandatory eye protection program is adopted: (1) the Company will
pay for the cost of the eye examination if safety glasses with
corrective lenses are required; (2) the Company will pay for safety
glasses whether or not the glasses require corrective lenses. Safety
glasses with or without corrective lenses will not be replaced more than
once a year unless broken or otherwise damaged on the job.
(g) The Company shall furnish all tools and equipment for its employees
except to repairmen and other skilled trades, in which case these
employees shall furnish their own hand tools.
32
<PAGE> 33
"Hand tools" as used herein shall not include socket sets, wrenches more
than twelve (12) inches long, and all other specialized tools incident to
the work of the mechanical, maintenance and skilled trades. Any hand tool
that the employee uses in the performance of his job duties will be
replaced by the Company if they are broken, worn out, lost or stolen.
Unusable tools will be presented to the Company prior to replacement.
Lost or stolen tools must be immediately reported to the Company for
replacement approval. Employees temporarily transferred to maintenance
classifications shall be supplied with necessary tools.
(h) The Furnishing of Gloves: The Company will continue its existing local
practices regarding the furnishing of gloves.
Employees who are not presently receiving gloves under existing local
practices shall receive one pair of gloves at the beginning of each
contract year, and each such employee shall receive a maximum of one
additional pair per contract year from the Company upon return of his
worn out gloves.
In the event such an employee wears out and returns the two pairs of
gloves provided to him, the Company shall sell him an additional pair of
gloves for each worn out pair of Company provided gloves he returns.
Said gloves shall be sold to the employee at the price paid by the
Company.
(i) If the Company requires an employee to take a physical examination, the
Company agrees to pay for the physical examination and also agrees to
pay the employee at his straight time hourly rate for all time spent in
the doctor's office taking the physical examination; provided, however,
employees receiving S & A and/or Workmen's Compensation benefits are not
entitled to any compensation under this section. (Doctor releases for
returning to work are not considered physical examinations and will not
be paid under this section).
ARTICLE XII
MILITARY SERVICE
(a) The Company and the Union shall comply with the Universal Military
Training and Service Act of 1950, as amended.
(b) Active employees with one year seniority and who are in the Reserve of
any branch of the military service, including the National Guard, who
are required to attend a summer encampment as part of their Reserve
obligation shall receive from the Company the difference between the
amount of pay received for such encampment and his regular straight time
hourly rate of pay for up to a maximum of two (2) weeks per calendar
year.
33
<PAGE> 34
ARTICLE XIII
SUPPLEMENTAL UNEMPLOYMENT BENEFIT PLAN
The Company agrees to pay out of its funds (and not out of the Trust Fund
established under Article III of the Plan) benefits in amounts equal to those
provided by Section 2 of Article VIII of the Plan upon termination of
employment on or after May 1, 1965, after an employee (as defined in Section 6,
Article II of the Plan) is sixty-five years old, provided such employee is not
eligible for a pension under the current Pension Plan for Hourly Employees of
the Company.
The foregoing to the contrary notwithstanding, the above payment shall not be
paid directly by the Company until termination benefits paid from the Trust and
Contingent Funds exhaust those funds.
ARTICLE XIV
SUBCONTRACTING
(a) The Company will not contract for production or maintenance work
customarily performed by its own employees unless it is more economical,
expeditious, and/or efficient to do otherwise.
(b) The Company may enter into contract arrangements for obtaining raw
materials, semi-finished or finished products.
(c) Notwithstanding the above, the Company will not contract or subcontract
work covered by Paragraphs (a.) or (b.) above if it will directly result
in the 1) laying off of (or failure to recall qualified) bargaining unit
employees, or 2) the reduction of hours of bargaining unit employees
below 40 hours a week; or 3)
reduction of employees to a lower rated classification.
It is understood that layoffs attributable to such things as inventory
or production adjustments, changes in methods, processes or
technologies, and/or break downs or failure of equipment power failure
or any conditions beyond the control of the Company, are specifically
exempted from this commitment.
(d) Further, (a), (b) and (c) above does not apply to new construction or to
construction involved in major modification work.
(e) The Company agrees to notify the Local Union in writing with a copy to
the International or District Representative who services the Local
Union, sent by registered mail, at least fourteen (14) days in advance if
reasonably possible, and to meet with the Union, upon request by the
Union, for explanation of the reasons causing the Company to decide to
contract any production and maintenance work. The parties agree that
while notification is an important part of the working relationship
between the parties and should be adhered to in order to reduce the
number of disputes concerning sub-contracting the parties also recognize
and agree that this Section of the Contract does not require any penalty
when the Company fails to give proper written notice of its intention to
sub-contract.
34
<PAGE> 35
ARTICLE XV
MISCELLANEOUS
(a) The Company will enter into a Union label agreement for the Company's
packaged products.
(b) All basic, supplemental, pension, S.U.B. and insurance agreements will
be printed at the Company's expense and will bear the Union label. The
Company will provide each local with a supply of the booklets. The
Company will print all Agreement booklets in large and legible type.
(c) If the Union alleges that a Leadman or Temporary Foreman is exceeding or
abusing his authority or that his actions violate the Contract, the
Union may grieve their allegations directly to the Plant Manager. The
Company will notify the employees involved whenever a Leadman or
Temporary Foreman is being assigned.
ARTICLE XVI
401(K)
THE COMPANY WILL ESTABLISH A 401(k) PLAN TO BEGIN AUGUST 1, 1998 WITH
EMPLOYEE CONTRIBUTIONS UP TO 4% TO BE MATCHED 50% BY THE COMPANY.
BEGINNING MAY 1, 2000, EMPLOYEE CONTRIBUTIONS UP TO 5% TO BE MATCHED 50%
BY THE COMPANY, AND MAY 1, 2002 EMPLOYEE CONTRIBUTIONS UP TO 6% TO BE
MATCHED 50% BY THE COMPANY.
ARTICLE XVII
TERM OF AGREEMENT
(a) This Agreement shall be binding upon the parties hereto, their
successors, administrators, executors and assigns. In the event of the
sale or lease by the Company of any of the plants covered by this
Agreement, or in the event the Company is taken over by sale, lease,
assignment, receivership or bankruptcy proceeding, such operations shall
continue to be subject to the terms and conditions of this Agreement for
the life thereof.
The Company will notify the Union immediately prior to any Company press
release concerning the intended sale or completed sale of a Plant.
The Company shall give notice of the existence of this Agreement to any
purchaser, lessee or assignee of said plant. Such notice shall be in
writing with a copy to the Union not later than the effective date of
the sale.
35
<PAGE> 36
(b) After ratification by the members of the Local Unions this Agreement
shall become effective and remain in full force and effect and be binding
upon the parties hereto from the date ratification is certified by the
International Union to and including April 30, 2004 and it shall continue
in full force and effect thereafter from year to year until either party
on or before March 1st of any year, beginning March 1, 2004 gives written
notice to the other party of its desire or intention either to alter or
modify or to terminate the same. If such notice is given, the parties
hereto shall begin negotiations not later than March 31st in such year
and this Agreement shall continue in full force and effect until
completion and signing a new Agreement, provided, however, that after
such negotiations have continued without reaching an agreement until May
1st in any year, then either party may terminate this Agreement, at any
time thereafter upon notice.
(c) The written notice set forth in (b) above by either party shall contain
any changes or amendments desired, and only such changes or amendments
as are contained in the two written notices shall be discussed by the
conferees.
(d) The proposals and counter-proposals made by each party shall not be
used, or referred to, in any way during or in connection with the
arbitration of any grievance arising under the provisions of the
Agreement.
Ratification of this Basic Agreement and the Local Agreements was certified by
J.C. Todd, International Union Representative, on ______________________.
36
<PAGE> 37
FOR THE MEDUSA CEMENT COMPANY FOR THE UNITED CEMENT, LIME
(DIVISION OF MEDUSA CORPORATION) GYPSUM AND ALLIED WORKERS
DIVISION (Boilermakers Union)
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
FOR THE CLINCHFIELD PLANT FOR LOCAL D-23
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
37
<PAGE> 38
August 5, 1987
Mr. August Clavier
THE CEMENT, LIME, GYPSUM AND
ALLIED WORKERS DIVISION
Alpena, Michigan 49707
Dear Mr. Clavier:
This letter will confirm that the Company has not entered into any secret
agreements with any sub-contractors for the purpose of making reductions in
employment at the plants nor does it have any plan to enter into any agreements
the effect of which would be in violation of the sub-contracting clause of the
labor agreement.
Sincerely,
Peter H. Geis
Corporate Director of
Labor Relations
38
<PAGE> 39
AGREEMENT BETWEEN
MEDUSA CEMENT COMPANY
(Division of Medusa Corporation)
and
THE CEMENT, LIME, GYPSUM AND ALLIED WORKERS DIVISION
(INTERNATIONAL BROTHERHOOD OF BOILERMAKERS, IRON SHIP
BUILDERS, BLACKSMITHS, FORGERS AND HELPERS, AFL-CIO)
LOCAL UNION NO. D23 - CLINCHFIELD, GEORGIA
LOCAL SUPPLEMENTAL AGREEMENT
EFFECTIVE MAY 1, 1998 TO MAY 1, 2004
<PAGE> 40
LOCAL UNION NO. D23
CLINCHFIELD, GEORGIA
<TABLE>
<S> <C>
I Agreement and Purpose 1
II Union Recognition and Security 1
III Management 2
IV Seniority 2
V Working Conditions 3
VI Shift Differentials 4
VII Vacations with Pay 4
VIII Holidays 6
IX Miscellaneous 6
X Term of Agreement 9
Wage Rates 10
Clinchfield Seniority List 22
</TABLE>
<PAGE> 41
AGREEMENT BETWEEN
MEDUSA CEMENT COMPANY
(Division of Medusa Corporation)
and
THE CEMENT, LIME, GYPSUM
AND ALLIED WORKERS DIVISION
(International Brotherhood of Boilermakers, Iron Ship
Builders, Blacksmiths, Forgers and Helpers, AFL-CIO)
LOCAL UNION NO. D23
CLINCHFIELD, GEORGIA
ARTICLE I
AGREEMENT AND PURPOSE
(B.A. Article 1)
(A) This Agreement is by and between the Medusa Cement Company, hereinafter
called the "Company" and the Cement, Lime, Gypsum and Allied Workers
Division, Local Union No. D23 affiliated with the Cement, Lime, Gypsum
and Allied Workers Division (International Brotherhood of Boilermakers,
Iron Ship Builders, Blacksmiths, Forgers and Helpers, AFL-CIO)
hereinafter called the "Union" and is supplemental to and a part of the
Basic Agreement dated May 1, 1998 by and between the Company and the
said Division.
ARTICLE II
UNION RECOGNITION AND SECURITY
(B.A. Article II)
Section 1. The Plant Committee shall consist of employees designated by the
Union. The Committee shall consist of six members regardless of the number of
departments. However, no more than two members from any one department nor more
than one member from a single classification in any one department may be a
member, unless there are ten or more employees in a single classification, in
which case, two members may be from that classification.
Section 2. The Company is willing to meet, at any time, that will not interfere
with the operation of the mill, any of its employees or representatives of its
employees not connected with competitive companies for the purpose of
discussing wages, hours, and working conditions with the object of reaching a
satisfactory agreement. It is understood, however, that requests for meetings
by either party and the items to be discussed will be presented in writing to
the proper officials of either party a reasonable time prior to the date of the
meeting.
1
<PAGE> 42
Section 3. The Company will mark and provide two (2) Bulletin Boards (one at
Plant and one at Quarry) to be used by the Union only and will provide the
Union with a lock and key for the boards, provided the information posted is
limited to notices of bona fide activities and meetings of the Union. Other
information or postings shall be approved by the Company.
ARTICLE III
MANAGEMENT
(A) The Agreement recognizes the inherent right of the Company to conduct
its business in all particulars, except as modified herein and in the
Basic Agreement.
(B) The Management of the plant and direction of the working force, and the
right to hire and discharge are vested exclusively in the Company. The
Company agrees to show reasonable cause for discharge if requested to do
so within ten (10) days.
ARTICLE IV
SENIORITY
(B.A. Article 111)
Section 1. Any employee detained from work on account of sickness or for any
other good reason shall notify the Supervisor of Safety and Employee Relations,
or his Foreman, as soon as possible. Any employee on leave shall notify his
foreman at least eight (8) hours prior to returning to work.
Section 2. Postings and "bids" for Laboratory positions, above "Mixmen" shall
be limited to qualified Mixmen. Similarly, employees in such higher
classifications shall not be subject to being "rolled" by plant employees,
other than qualified Mixmen, nor may they "roll" other Mixmen.
Section 3. Clerical employees shall be considered a separate seniority group.
Such employees shall not be subject to displacement, during periods of
temporary plant shutdown or layoff, by other plant employees, nor shall they,
under similar circumstances, displace other plant people.
Section 4. Clerical employees' daily schedules shall be eight (8) hours and the
weekly schedule five (5)
days, Monday through Saturday, with alternating Saturdays off.
Section 5. An employee in the Store Room Clerk Classification may not bid out
of that classification prior to completing five years in the classification
without the Company's permission.
Section 6. Any employee absenting themselves from work for five (5) consecutive
days without good and satisfactory reasons may be discharged and dropped from
the seniority list and payroll of the Company.
2
<PAGE> 43
ARTICLE V
WORKING CONDITIONS
(B.A. Article V)
Section 1. The Company reserves the right to call out the quarry employees on
any or all six working days.
Section 2. Any charge of favoritism in promotions or in any other matter,
supported by proof, shall be considered a grievance under this contract.
Section 3. Overtime in the various departments shall be equally distributed,
insofar as is practicable, among the employees on the classified jobs involved,
providing such employees are working on such jobs at the time the overtime is
required.
Section 4. The Company will allow an employee in a higher or equal rated job to
bid for the Relief Mixman job, however, when a higher rated employee who has
been awarded the job performs such work, he will be paid at the Mixman's rate
of pay.
Section 5. If an employee who does not receive a paid lunch is notified prior
to the end of his shift that he is to return prior to the start of his next
scheduled shift, he shall receive a break no earlier than four hours after he
returned to work. The timing of this break shall be determined by the
employee's foreman and the efficient operation of the plant shall be
controlling. The 15 minute break shall be strictly construed to be the total
time away from the job. Under no circumstances can this break occur more than
24 hours after he originally started work on the day in question.
3
<PAGE> 44
ARTICLE VI
SHIFT DIFFERENTIALS
(B.A. Article VIII)
Section 1. Any employee beginning work on a scheduled shift and who works into
the succeeding shift shall receive the shift differential applicable to the
shift on which the additional hours are worked. No differential will be paid
for work on the day shift.
Section 2. An employee who begins to work at a time not specified as a
designated shift shall be paid a differential of 52 cents per hour for all
hours worked by him during the scheduled second shift, and a differential of 75
cents per hour for all hours worked by him during the scheduled third shift.
Section 3. For the purpose of this Article:
(a) All shifts beginning between 7:00 a.m. and 11:00 a.m. inclusive
shall be considered day shifts.
(b) All shifts beginning between 3:00 p.m. and 7:00 p.m. inclusive
shall be considered the second shift.
(c) All shifts beginning between 11:00 p.m. and 2:00 a.m. inclusive
shall be considered the third shift.
ARTICLE VII
VACATIONS WITH PAY
(B.A. Article Vl)
Section 1. In accordance with Article Vl(a) of the Basic Agreement, any
employee who works during at least thirteen (13) weeks of the next previous
contract year shall be granted a vacation off work without loss of pay,
according to the schedule in Section (b) of Article Vl of the Basic Agreement.
Section 2. An employee absent for a full workweek solely because of illness or
injury shall be considered to have received pay in that workweek and provided,
further, that no more than four and one-half (4-1/2) such workweeks of absence
shall be so counted in the next previous contract year in determining vacation
eligibility.
Section 3. Vacation will not be cumulative but may be arranged at any time
between January 1 and December 31st, at the option of the Company management,
and they shall be scheduled to agree with the employee's wishes insofar as is
possible if he expresses a choice in writing. In cases of conflict, seniority
shall determine priority of choice. In exercising its rights to schedule
vacation periods, the Company will not require any employee who is on layoff to
take his vacation during period of plant shutdowns or curtailment of
operations.
4
<PAGE> 45
Section 4. All vacations shall start at the beginning of the workweek as
defined. The Company will pay vacation compensation to an employee at the start
of his vacation upon written request to the Plant Manager.
Section 5. Employees entitled to two (2) or more weeks of vacation may be
permitted to take such vacation in separate periods of not less than one (1)
week each.
Vacation preference can be exercised by the following procedure:
A. Each employee will be allowed to select an initial vacation
period of not more than two (2) weeks. In case of conflict,
seniority shall determine priority of choice.
B. Each employee will be allowed to select subsequent vacation
periods of not more than one (1) week. In case of conflict,
seniority shall determine priority of choice.
C. AT THE OPTION OF THE EMPLOYEE, ONE WEEK OF HIS VACATION MAY BE
TAKEN IN SINGLE DAYS, PROVIDED THAT HE STATES HIS INTENTIONS WHEN
SELECTING HIS VACATION AT THE START OF THE CALENDAR YEAR.
WHEN MAKING THE FINAL SELECTION OF THE SINGLE VACATION DAYS, THE
EMPLOYEE SHALL GIVE AS MUCH NOTICE AS POSSIBLE BUT NOT LESS THAN
72 HOURS AND REQUEST APPROVAL BY THE PLANT MANAGER TO TAKE THE
VACATION DAYS CHOSEN. THIS REQUEST SHALL NOT BE UNREASONABLY
WITHHELD.
IF AN EMPLOYEE'S SCHEDULE IS CHANGED AFTER THE THURSDAY POSTING
AS A RESULT OF ANOTHER EMPLOYEE TAKING A VACATION DAY ONE DAY AT
A TIME, THERE SHALL BE NO SCHEDULE PENALTY PAID TO SUCH EMPLOYEE.
SINGLE DAY VACATION WHICH IS NOT SCHEDULED AND APPROVED BY
SEPTEMBER 1 OF EACH YEAR WILL BE SCHEDULED BY MANAGEMENT.
It is understood and agreed that the Company will begin requesting
vacation preference selections no sooner than one (1) month prior to the
beginning of the calendar year when such vacations become due, and the Company
will be allowed to schedule any vacation periods requested from an employee for
which the employee fails to submit a selection within three (3) days following
the notification of the request for the vacation selection.
This agreement does not modify or limit the Company's right to
schedule vacations contained in Article VI(D) of the Basic Agreement between
the Company and the International Union.
Section 6. Employees who have one (1) or more years of service and who are
separated from service for any reason will receive vacation pay due them on the
following basis: One-twelfth (1/12) vacation credit for each one hundred (100)
hours worked in his current calendar year.
In the event the employment of any such employee is terminated for any
reason, the Company shall pay to the employee, or to his beneficiary in the
event of his death, all vacation pay due.
5
<PAGE> 46
Section 7. Company scheduled vacations may be canceled at the employee's option
during periods of layoff due to plant shutdown or curtailment of operation.
Employees so involved shall lose seniority selection for rescheduled vacation
weeks.
Section 8. Eligibility to bid on and hold vacation relief jobs:
Classified employees can hold one (1) bid relief job of equal or
greater pay.
Laborers can hold two (2) bid relief jobs.
(Relief jobs as referred to here are jobs which are held by an
employee in addition to his classified job and does not refer to jobs such as
Quarry Vacation Relief Man, Relief Man-Raw, Relief Man-Burning, Relief
Man-Yard, and Relief Man-Quarry).
Section 9. Scheduling of vacation during week of Christmas:
Senior employees will not be allowed to take Christmas week every year
if they are junior employees desiring to have this week off who have not had it
since the senior employees have.
Section 10. Assignment of Vacations:
Whenever it is necessary to assign vacations, assignments will be made
on the basis of one (1) week to each employee beginning with the junior
employee.
Section 11. Rate of pay for Quarry Vacation Relief Man during his personal
vacation periods and holidays:
The employee permanently classified as Quarry Vacation Relief will be
paid Bracket 12 whenever he is on vacation and for holidays not worked.
ARTICLE VIII
HOLIDAYS
(B.A. Article VII)
Section 1. Holidays recognized are New Year's Day, Washington's Birthday,
Martin Luther King's Birthday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veteran's Day, Thanksgiving Day, December 24th, Christmas Day.
When Christmas Eve falls on Sunday, holidays will be observed on Saturday and
Monday.
ARTICLE IX
MISCELLANEOUS
(B.A. Article XV)
Section 1. Requirement that maintenance employees progressing to Repairman be
able to weld:
6
<PAGE> 47
All upgrading Maintenance Helpers are expected to learn to weld as
part of their training toward Repairman classification.
Section 2. Filling of vacancies in clerical group:
While vacancies in clerical group are not subject to bidding
procedure, the Company will post a notice so hourly employees can express a
desire to be considered for any vacancy in the group.
Section 3. The parties reaffirm the understanding that the manning of the plant
and the job duties of each job are determined solely by the Company.
Section 4. The installation of a Hydra-Life Truck Classification to the Job
Classification and Wage Rate Schedule does not permit the Company to replace
maintenance personnel with laborer without paying maintenance rates.
Section 5. The Company normally requires a Doctor's statement based on an
employee's past record and the particular circumstances involved in the
particular absence. Should the Company's supervisor demand a Doctor's statement
under circumstances the Local Committee feels unjustified, this complaint shall
be brought directly to the attention of the Plant Manager who shall review the
complaint for appropriate action.
Section 6. The classifications assigned to operate the Vulcanizing machine will
be either a plant or quarry maintenance person. No less than Job Class 17 will
be paid to such employee.
Section 7. On a particular assignment, if conditions exist which would pose an
immediate threat to the employee's health or safety, he should bring the
condition to his supervisor's attention for his review and appropriate action.
Section 8. The parties to this Supplemental Agreement agree to modify Article V
(o) of the Basic Agreement, first paragraph, to read 15 minutes rather than 30
minutes.
Section 9. The amount of hours spent on Dust Collector premium will be updated
and posted weekly.
Section 10. The Company will ensure that the individual(s) who operate the
Lorain Crane are qualified.
Section 11. The Company and Union agreed to continue local agreements, #75-1,
76-2, 77-1, 80-1, 80-2 and modified 76-3.
Section 12. The annual posting of attendance records on the plant bulletin
board is for information purposes.
Section 13. The Company representatives and plant management will continue to
discuss individual overtime problems with the International Union and Local
Union representatives to continue to resolve problems where applicable.
7
<PAGE> 48
Section 14. When an employee on a bid job is assigned to replace an employee
who is off work on extended disability, he may request to be returned to his
bid classification after six months and the Company will not refuse such
request without good and sufficient reason.
Section 15. The Company will review an employee's original disqualification if
he should rebid that job or upon request of the local committee.
Section 16. The Company will post job bids in the main office.
Section 17. The Supervisor will ensure that the phones are answered properly
during Plant shutdowns.
Section 18. When an employee turns in his worn out safety shoes for
replacement, he may receive rubber safety boots in place of safety shoes if he
so requests.
Section 19. The parking lot will be maintained in satisfactory condition.
Section 20. The Company will continue to work with individuals concerning
accommodating their specific problems involving advance scheduling consistent
with the interest of efficient plant operations.
Section 21. The Company will notify the Union concerning any substantial change
in its waste fuel permit status prior to any Company public announcement of the
change.
Section 22. The Company will provide some sort of ground cover to prevent
laying in mud when working on mobile equipment in the Quarry.
Section 23. The Company will continue its efforts to remove pigeons and will
review removal of accumulated pigeon waste in the power house, and other areas
of the plant.
8
<PAGE> 49
ARTICLE X
TERM OF AGREEMENT
(B.A. Article XVI)
This Agreement shall have the same effective date and term and is subject to
the same conditions and expiration provisions as the Basic Agreement.
IN WITNESS WHEREOF, this Agreement between the parties has been executed by
their duly authorized representatives ,1998.
FOR THE MEDUSA CEMENT COMPANY FOR THE UNITED CEMENT, LIME
(DIVISION OF MEDUSA CORPORATION) GYPSUM AND ALLIED WORKERS
DIVISION (Boilermakers Union)
- ------------------------------------- ------------------------------------
- ------------------------------------- ------------------------------------
- ------------------------------------- ------------------------------------
FOR THE CLINCHFIELD PLANT FOR LOCAL D-23
- ------------------------------------- ------------------------------------
- ------------------------------------- ------------------------------------
9
<PAGE> 50
WAGE RATES - CLINCHFIELD PLANT
<TABLE>
<CAPTION>
EFFECTIVE
BRACKET JOB TITLE 5/1/98 5/1/99 5/1/00 5/1/01 5/1/02 5/1/03
- ------- --------- --------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
1 (1) Laborer $13.74 $14.34 $14.89 $15.44 $15.99 $16.64
2 TIRE HANDLER-LABOR 15.91 16.51 17.06 17.61 18.16 18.81
3 Coal Unloader 16.06 16.66 17.21 17.76 18.31 18.96
Floorman
Beltman
Gypsum Unloader
Quarry Vacation Relief
4 Vacant 16.21 16.81 17.36 17.91 18.46 19.11
5 Pump and Binman 16.36 16.96 17.51 18.06 18.61 19.26
Sampler
Raw Bin Man
Oiler/Laborer
NO. 830 SWEEPER
6 Oiler 16.51 17.11 17.66 18.21 18.76 19.41
7 Bulk Weigher 16.66 17.26 17.81 18.36 18.91 19.56
Checker
Truck Driver (yard)
Fork Lift Operator
Helper
Shipping Clerk
Storeroom Clerk - Progressive
Lube Man Maintenance - Progressive
Supersucker Operator
8 Small Payloader Operator 16.81 17.41 17.96 18.51 19.06 19.71
9 Miller 16.96 17.56 18.11 18.66 19.21 19.86
Reliefman - Raw
Hydra-Lift Truck
10 Motor Tender 17.11 17.71 18.26 18.81 19.36 20.01
Packers
Relief Operator - Packing
Control Attendant Bulk
</TABLE>
10
<PAGE> 51
WAGE RATES - CLINCHFIELD PLANT
<TABLE>
<CAPTION>
EFFECTIVE
BRACKET JOB TITLE 5/1/98 5/1/99 5/1/00 5/1/01 5/1/02 5/1/03
- ------- --------- -------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
11 Clinker Craneman $17.26 $17.86 $18.41 $18.96 $19.51 $20.16
Locomotive Craneman
Driller
Reliefman - Yard
Storeroom Clerk **
Crusher Feeder & Cleanup
Payloader Operator
12 Motor Scraper Operator 17.41 18.01 18.56 19.11 19.66 20.31
Road Grader Operator
TRUCK DRIVER - DIESEL
TRUCK-MOTOR SCRAPER OPERATOR
13 BULLDOZER OPERATOR 17.56 18.16 18.71 19.26 19.81 20.46
14 Raw Craneman 17.71 18.31 18.86 19.41 19.96 20.61
15 Mixman 17.86 18.46 19.01 19.56 20.11 20.76
Prelmo
16 Vacant 18.01 18.61 19.16 19.71 20.26 20.91
17 Shovel Operator 18.16 18.76 19.31 19.86 20.41 21.06
Loader Operator (Quarry)
Repairman
Truck Mechanic (Non-Diesel)
Dragline Operator
Lube Man Maintenance
Quarry Utility
Relief Operator - Packing
Bricklayer
Excavator Operator
18 Electric Repair 18.31 18.91 19.46 20.01 20.56 21.21
19 Maintenance Electrician 18.46 19.06 19.61 20.16 20.71 21.36
Physical Tester
Laboratory Assistant
Truck Mechanic (Diesel)
Machinist
Analyst
Instrumentman
Physical Tester & Relief
</TABLE>
11
<PAGE> 52
WAGE RATES - CLINCHFIELD PLANT
<TABLE>
<CAPTION>
EFFECTIVE
BRACKET JOB TITLE 5/1/98 5/1/99 5/1/00 5/1/01 5/1/02 5/1/03
- ------- --------- --------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
20 Vacant $18.61 $19.21 $19.76 $20.31 $20.86 $21.51
21(2) Control Room Attendant 18.76 19.36 19.91 20.46 21.01 21.66
(2) Relief Man - Burning
</TABLE>
When an End Loader is used in the Quarry loading as a supplement to the shovel
or is used at any time in the production process, wage Grade 17 shall apply.
When Small Payloader Operator (less than 4 1/2 Yards) is used, wage Grade 8
shall apply.
When Hydra-Lift Truck is used, Wage Grade 9 shall apply.
(1) Laborers hired after May, 1998 shall be paid in accordance with the
following schedule:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
New Hire Rate $10.30 10.76 11.17 11.58 11.99 12.48
I 6 Months after D.O.H. 10.99 11.47 11.91 12.35 12.79 13.31
II 1 Year after D.O.H. 12.37 12.91 13.40 13.90 14.39 14.98
III 1-1/2 Years after D.O.H. 13.74 14.34 14.89 15.44 15.99 16.64
</TABLE>
THE COMPANY AGREES TO INCREASE THE NEW HIRE RATE FOR LABORERS TO BEGIN 75% OF
BRACKET 1, AFTER SIX MONTHS SERVICE, 80% OF BRACKET 1, AFTER 12 MONTHS OF
SERVICE, 90% OF BRACKET 1, AFTER 18 MONTHS OF SERVICE, 100% OF BRACKET 1.
(2) WAGE RATE FOR CONTROL ROOM ATTENDANT AND RELIEF MAN BURNING EFFECTIVE:
<TABLE>
<CAPTION>
5/1/98 5/1/99 5/1/00 5/1/01 5/1/02 5/1/03
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
$19.26 20.11 20.91 21.46 22.01 22.66
</TABLE>
** Future holders of this classification shall progress from Bracket 7 to 11
in twenty four (24) months if performance is satisfactory. Review will be
made every six months.
12
<PAGE> 53
MEMORANDUM OF UNDERSTANDING
When an employee is notified before the end of his shift but before he has
clocked out, to return to work, he shall be considered to be on call-out for
pay purposes when he returns to work.
This shall not apply when an employee reports late for such assignment and
sufficient work on that assignment is not available to complete four hours of
work.
This shall also not apply when an employee is told to report early for his next
shift and does not modify Article V(e)(3) of the Basic Agreement.
13
<PAGE> 54
Mr. Thomas Hawkins
Chairman, Local D23
UNITED CEMENT, LIME GYPSUM AND
ALLIED WORKERS' INTERNATIONAL UNION
Clinchfield Plant
Dear Mr. Hawkins:
It is understood by both the Union and the Company that the Director of
Industrial Relations will contact the payroll department of each plant to make
arrangements that will allow for S.U.B. payments to be made by the end of the
second week an employee is laid off. This arrangement will be made within a six
(6) week period following the ratification of the 1975 contracts by the Local
Union.
It is further understood that any S.U.B. payments made in advance of meeting the
requirement of the existing S.U.B. agreement between the parties will remain
subject to Section 7, Recovery of Overpayments, of the S.U.B. Agreement.
Very truly yours,
Peter H. Geis
Director of Labor
Relations & E.E.O.
14
<PAGE> 55
MEMORANDUM OF CLINCHFIELD LOCAL AGREEMENT NO. 75-1
IT IS UNDERSTOOD AND AGREED BY THE MEDUSA CEMENT COMPANY AND THE UNITED CEMENT,
LIME AND GYPSUM WORKERS' LOCAL NO. 23 THAT A JOB CLASSIFICATION OF GYPSUM
UNLOADER WILL BE ESTABLISHED AT THE CLINCHFIELD PLANT IN PAY GRADE (3). IT IS
FURTHER UNDERSTOOD AND AGREED THAT THIS JOB CLASSIFICATION IS ESTABLISHED FOR
RATE PURPOSES ONLY AND IS NOT TO BE POSTED FOR BIDS.
THE CONDITIONS OF THIS AGREEMENT WILL BECOME EFFECTIVE ON THE DATE SIGNED BY
BOTH PARTIES.
MEDUSA CEMENT COMPANY LOCAL NO. 23
- ------------------------------- ------------------------------
- ------------------------------- ------------------------------
- ------------------------------- ------------------------------
15
<PAGE> 56
MEMORANDUM OF CLINCHFIELD LOCAL AGREEMENT 76-2
IT IS UNDERSTOOD AND AGREED BY THE MEDUSA CEMENT COMPANY AND THE UNITED CEMENT,
LIME, AND GYPSUM WORKERS' LOCAL NO. 23 THAT WHEN AN EMPLOYEE IS INSTRUCTED BY
MANAGEMENT TO RETURN TO WORK AFTER THE EMPLOYEE HAS PUNCHED OUT, SUCH EMPLOYEE
SHALL BE CONSIDERED TO BE ON CALL-OUT UNDER THE CONDITIONS OF ARTICLE V (e) (3)
OF THE BASIC AGREEMENT. THIS SHALL SUPERSEDE AND VOID THE PRIOR UNDERSTANDING
AND PAST PRACTICE WHERE AN EMPLOYEE HAD TO HAVE BOTH FEET ON THE GROUND AT THE
BOTTOM OF THE STEPS AT THE TIME CLOCK BEFORE HE WAS ENTITLED TO RECEIVE
CALL-OUT PAY IF ASKED TO STAY.
THE CONDITIONS OF THIS AGREEMENT WILL BECOME EFFECTIVE ON THE DATE SIGNED BY
BOTH PARTIES.
MEDUSA CEMENT COMPANY LOCAL NO. 23
DATE DATE
- ----------------------- ------- ----------------------- -------
DATE DATE
- ----------------------- ------- ----------------------- -------
DATE DATE
- ----------------------- ------- ----------------------- -------
16
<PAGE> 57
MEDUSA CEMENT COMPANY
CLINCHFIELD PLANT
LOCAL AGREEMENT NO. 76-3
It is agreed and understood by the Medusa Cement Company and the United Cement,
Lime and Gypsum Workers' Local No. 23 that in the awarding of all future
permanent vacancies, qualifications (skill and ability) gained through
temporary assignment to a job will not be considered in determining the
successful bidder for the job bid. It is further agreed and understood that the
above interpretation will apply only to the initial job posted for bid, and
will not apply to subsequent jobs posted for bid which result from the vacancy
created by the initial job award.
The conditions of this agreement become effective on September 10, 1976.
MEDUSA CEMENT COMPANY LOCAL NO. 23
- ----------------------------- -----------------------------
- ----------------------------- -----------------------------
- ----------------------------- -----------------------------
17
<PAGE> 58
Additional Language - Local Agreement 76-3
Experience gained through temporary assignment to a job will not be considered
in determining the successful bidder in job brackets 1 through 10, regardless
of whether or not it is an initial bid or subsequent bid.
If the Union determines that evidence indicates that the Company is
pre-training certain employees so that employees are being discriminatorily
selected for a particular job opening, it may present this allegation in the
form of a grievance which will commence at the third step of the grievance
procedure.
If an employee wishes to meet with the Administrative Assistant to exercise his
wish to be trained on another classification, he may do so, and his request
will be given careful consideration.
- --------------------------
Peter H. Geis
18
<PAGE> 59
12-13-77
AGREEMENT # 77-1
RE: Filling Overtime Needs
It is hereby agreed and understood that when overtime work is needed for
non-shift workers, company management will ask available qualified persons in
the job class involved to do the work. And if no qualified person accepts the
overtime, then the lowest man in overtime qualified to do the work will be
required to fill the overtime need.
In the case of shift workers, they will still be required to stay on overtime
if necessary until they are relieved.
<TABLE>
<CAPTION>
Date For the Union Date For the Company
- ---- ------------- ---- ---------------
<S> <C> <C> <C>
- ------ ----------------------- ------ -----------------------
- ------ ----------------------- ------ -----------------------
</TABLE>
This letter is not intended by the parties to change the plant's overtime
equalization procedures.
4/24/94
19
<PAGE> 60
MEMORANDUM OF CLINCHFIELD LOCAL AGREEMENT 80-1
It is understood and agreed by the Medusa Cement Company and the United Cement,
Lime and Gypsum Workers' Local No. 23 that historically and customarily the
delivery of parts and supplies to the Clinchfield, Georgia plant has been
performed by both bargaining unit and non-bargaining unit employees as well as
numerous vendors, truck drivers, salespersons, suppliers, etc. This agreement
is to recognize this fact and to reduce the incidents of parts and supplies
being delivered by non-bargaining unit Medusa employees.
It is understood and agreed that the following conditions will become effective
on the date signed by both parties:
Whenever it is necessary for a Medusa employee to travel beyond a
fifteen (15) mile radius of the Clinchfield, Georgia plant to pick
up parts and supplies, a bargaining unit employee will be utilized
to operate the vehicle except when:
A. It is necessary for a non-bargaining unit employee to select or
identify the needed parts and supplies.
B. A non-bargaining unit employee is already in the vicinity of the
location where the parts and supplies are to be acquired.
UNION COMPANY
- ---------------------------- -----------------------------
- ----------------------------- -----------------------------
- ----------------------------- -----------------------------
20
<PAGE> 61
MEMORANDUM OF CLINCHFIELD LOCAL AGREEMENT 80-2
It is understood and agreed by the Medusa Cement Company and the United Cement,
Lime and Gypsum Workers' Local 23 that a job classification of "SUPERSUCKER
OPERATOR" will be established at the Clinchfield Plant in Pay Grade Seven (7).
It is further understood and agreed that this classification is established for
rate purposes only and is not to be posted for bids.
The conditions of this agreement will become effective on the date signed by
both parties.
MEDUSA CEMENT COMPANY LOCAL 23
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
----------------------------
21
<PAGE> 62
CLINCHFIELD PLANT
<TABLE>
<CAPTION>
SENIORITY SENIORITY
NAME DATE NAME DATE
- ---- ---- ---- ----
<S> <C> <C> <C>
Marvin Fowler 02/11/56 James Felder, Jr. 01/21/74
Richard Tharpe 01/25/65 Tom Earl Dean 01/22/74
Charles A. Boswell III 03/17/66 Alton F. Johnson 01/22/74
Kerney E. Hair 02/16/68 Tommy Earl Hawkins 01/28/74
Wayne Earl Sanders 02/19/68 Thomas C. White 01/28/74
Willie B. Sparks 02/19/68 George W. Law 03/14/74
Bobby Ray Law 02/26/68 Arzell Jackson 03/26/74
Mike Lamar Goslin 02/28/68 Kelly A. Hammock 04/01/74
Jimmy Roy Law, Jr. 07/10/69 Ruben Smith 04/02/74
Tyrone Mizell 11/20/69 Kenneth R. Brannen 04/10/74
James Askew 08/24/70 Eddie B. Radford 04/22/74
Linton A. Brannen 11/16/70 Richard Brooks 05/14/74
George F. Johnson 11/16/70 Robert C. Semple 01/10/78
Larry G. Walton 11/27/70 William T. Whiggum 01/16/78
John W. Lockerman 12/14/70 Steve A. Harris 01/17/78
James Q. Kemp, Jr. 02/01/71 George Taylor, Jr. 01/23/78
Marvin Peavy 02/16/71 Fred B. Graham 01/23/78
Stephen Thompson 02/16/71 Randy Lee Cannon 01/23/78
Jesse W. Lucas 06/29/71 Ronnie D. Thompson 01/23/78
Joseph E. Goodroe 08/09/71 Tim F. Yawn 01/23/78
Jerry Clarington 08/31/71 Billy L. Barrett, Jr. 02/02/78
Arthur C. Singletary 10/12/71 Clayton D. Bryant 02/13/78
Kenneth Collier 11/03/71 Larry B. Peacock 02/21/78
Rayford S. Fendley 03/19/73 Jordan Cainion 02/27/78
Michael Witherington 03/19/73 Edward Simon 02/27/78
Johnnie J. Gilbert 04/23/73 Milton Woolfolk 02/27/78
William Kendrick 08/28/73 James Gary Giles 03/06/78
Warren L. Talton 11/05/73 Joann Wimberly 03/06/78
Bobby E. Davis 11/13/73 Perry T. Streetman, III 03/27/78
Willard F. Carter 01/02/74 Milton McWilliams 04/03/78
Bobby W. Doherty 01/21/74 Robert Rice 05/30/78
</TABLE>
22
<PAGE> 63
CLINCHFIELD PLANT
<TABLE>
<CAPTION>
SENIORITY SENIORITY
NAME DATE NAME DATE
- ---- ---- ---- ----
<S> <C> <C> <C>
Donald R. Williams 10/30/78 James D. Holmes, III 05/12/87
Jason Dave Harpe 04/15/79 Jeffrey T. Preston 05/12/87
Leon Holmes 10/13/79 Randall S. Dean 06/02/87
Donald R. Holder 09/25/84 Charles W. Walters 09/30/87
David Middlebrooks 09/25/84 Donald Wright 09/30/87
Danny Benton 09/28/84 John Scott, Jr. 04/11/89
Buddy M. Sheffield 05/21/85 Lonnie F. McClintic 02/27/90
Joe S. Davis 05/21/85 Kyle S. Ellis 02/26/91
Danny Solomon 05/21/85 Ernest F. Holmes, Jr. 04/02/91
Ernest G. Hardy 05/21/85 Calvin Dennis 04/02/91
Donald R. Ussery 09/04/85 Andrew R. Kistler 09/18/91
Calvin A. Sheppard 09/04/85 Frank Howell, Jr. 03/16/93
Robert Wayne Smith 09/24/85 Ralph Brooks 03/16/93
Billy E. Henry 09/24/85 Charles F. Lewis, Jr. 03/16/93
Milton Taylor 11/19/85 Corey Norwood 04/06/93
Joseph L. Adams 11/19/85 Matthew L. Karros 03/21/95
Andy L. Moss 02/05/86 Bettina K. Marshall 03/21/95
Lamar W. Mobley 02/05/86 Oscar P. Small 03/21/95
Joseph Spivey 02/05/86 *Jaime Rullan, Jr. 03/01/96
Ralph J. Carroll 05/20/86 Sammy Page 04/08/96
Gary W. Bramlett 07/22/86 Eric E. Thiele 12/10/96
Rodney Norwood 07/22/86
Robert G. Layson 09/02/86
Jimmy Harris 09/02/86
Benjamin F. Ussery 09/22/86
Gregory M. Dunn 10/06/86
* Company Seniority Date 08/01/79
</TABLE>
23
<PAGE> 1
EXHIBIT 11
SOUTHDOWN, INC. AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
(In millions, except per share amounts - Unaudited)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------------------
1998 1997
------------- ------------
<S> <C> <C>
Earnings (loss) for basic earnings per share:
Earnings from continuing operations before preferred stock dividends $ 125.0 $ 153.7
Preferred stock dividends - (2.5)
-------- --------
Earnings from continuing operations 125.0 151.2
Loss from discontinued operations, net of income taxes (1.6) -
-------- --------
Net earnings for basic earnings per share $ 123.4 $ 151.2
======== ========
Earnings (loss) for diluted earnings per share
Earnings from continuing operations $ 125.0 $ 153.7
Loss from discontinued operations, net of income taxes (1.6) -
-------- --------
Net earnings for diluted earnings per share $ 123.4 $ 153.7
======== ========
Average common stock shares outstanding: 38.2 36.9
Other potentially dilutive securities:
- common stock equivalents from assumed exercise of stock options 0.6 0.5
- assumed conversion of the Series D convertible
preferred stock at 1.51 shares of common stock - 1.6
-------- --------
Total for diluted earnings per share $ 38.8 $ 39.0
======== ========
Earnings (loss) per common share:
Basic
Earnings from continuing operations $ 3.27 $ 4.10
Loss from discontinued operations, net of income taxes (0.04) -
-------- --------
$ 3.23 $ 4.10
======== ========
Diluted
Earnings from continuing operations $ 3.22 $ 3.94
Loss from discontinued operations, net of income taxes (0.04) -
-------- --------
$ 3.18 $ 3.94
======== ========
</TABLE>
<PAGE> 1
EXHIBIT 13.1
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of Southdown, Inc.
We have audited the accompanying consolidated balance sheet of Southdown, Inc.
and subsidiary companies as of December 31, 1998 and 1997, and the related
statements of consolidated earnings, shareholders' equity, cash flows and
comprehensive income for each of the three years in the period ended December
31, 1998. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Southdown, Inc. and subsidiary
companies as of December 31, 1998 and 1997, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1998 in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Houston, Texas
January 27, 1999
<PAGE> 2
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED EARNINGS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Years ended December 31, (in millions, except per share amounts) 1998 1997 1996
- -----------------------------------------------------------------------------------------------------
Revenues $ 1,184.7 $ 1,095.2 $ 987.8
=====================================================================================================
Costs and expenses:
Operating 717.6 698.3 643.4
Depreciation, depletion and amortization 71.1 64.1 55.8
Selling and marketing 27.8 24.7 22.8
General and administrative 71.4 65.6 55.4
Acquisition charge (Note 3) 75.2 -- --
Other income, net (4.8) (6.7) (2.8)
- -----------------------------------------------------------------------------------------------------
958.3 846.0 774.6
- -----------------------------------------------------------------------------------------------------
Earnings from continuing operations before interest,
income taxes, minority interest and extraordinary charge 226.4 249.2 213.2
Interest income 5.9 3.3 3.4
Interest expense, net of amounts capitalized (16.5) (15.5) (23.5)
- -----------------------------------------------------------------------------------------------------
Earnings from continuing operations before income taxes,
minority interest and extraordinary charge 215.8 237.0 193.1
Income tax expense (86.2) (78.3) (63.6)
- -----------------------------------------------------------------------------------------------------
Earnings from continuing operations before minority interest
and extraordinary charge 129.6 158.7 129.5
Minority interest, net of income taxes (4.6) (5.0) (4.0)
- -----------------------------------------------------------------------------------------------------
Earnings from continuing operations before
extraordinary charge 125.0 153.7 125.5
Loss from discontinued operations, net of
income taxes (Note 17) (1.6) -- --
Extraordinary charge, net of income taxes (Note 12) -- -- (13.3)
- -----------------------------------------------------------------------------------------------------
Net earnings $ 123.4 $ 153.7 $ 112.2
=====================================================================================================
Dividends on preferred stock (Note 18) $ -- $ (2.5) $ (7.7)
=====================================================================================================
Earnings attributable to common stock $ 123.4 $ 151.2 $ 104.5
=====================================================================================================
Earnings (loss) per common share:
Basic
Earnings from continuing operations $ 3.27 $ 4.10 $ 3.65
Loss from discontinued operations, net of income taxes
(Note 17) (0.04) -- --
Extraordinary charge, net of income taxes (Note 12) -- -- (0.41)
- -----------------------------------------------------------------------------------------------------
$ 3.23 $ 4.10 $ 3.24
=====================================================================================================
Diluted
Earnings from continuing operations $ 3.22 $ 3.94 $ 3.21
Loss from discontinued operations, net of income taxes
(Note 17) (0.04) -- --
Extraordinary charge, net of income taxes (Note 12) -- -- (0.33)
- -----------------------------------------------------------------------------------------------------
$ 3.18 $ 3.94 $ 2.88
=====================================================================================================
Average shares outstanding:
Basic 38.2 36.9 32.3
=====================================================================================================
Diluted 38.9 39.0 39.7
=====================================================================================================
</TABLE>
<PAGE> 3
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, (in millions) 1998 1997
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (Note 5) $143.8 $98.9
Short-term investments (Note 11) 14.8 4.0
Accounts and notes receivable, net (Note 6) 120.0 108.5
Inventories (Note 7) 107.7 97.2
Prepaid expenses and other 18.4 13.6
- -----------------------------------------------------------------------------------------------------
Total current assets 404.7 322.2
Property, plant and equipment, less accumulated depreciation,
depletion and amortization (Note 8) 819.9 770.2
Goodwill 105.5 116.1
Other long-term assets (Notes 9 and 16) 70.3 58.5
- -----------------------------------------------------------------------------------------------------
$1,400.4 $1,267.0
=====================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt (Notes 11 and 12) $ 0.6 $ 13.6
Accounts payable and accrued liabilities (Note 10) 139.3 115.3
- -----------------------------------------------------------------------------------------------------
Total current liabilities 139.9 128.9
Long-term debt (Notes 11 and 12) 167.3 187.0
Deferred income taxes (Note 13) 139.4 123.6
Minority interest in consolidated joint venture (Note 14) 27.7 27.7
Long-term portion of postretirement benefit obligation (Note 16) 91.5 96.1
Other long-term liabilities and deferred credits (Note 15) 30.4 28.8
- -----------------------------------------------------------------------------------------------------
596.2 592.1
- -----------------------------------------------------------------------------------------------------
Commitments and contingent liabilities (Notes 15, 16 and 17)
Shareholders' equity (Notes 18 and 19):
Common stock, $1.25 par value, 200,000,000 shares authorized, 39,849,000 and
38,683,000 shares issued and outstanding, respectively, in 1998 and
41,133,000 and 38,241,000 shares issued and outstanding,
respectively, in 1997 49.8 51.4
Capital in excess of par value 370.6 352.0
Reinvested earnings 431.6 386.1
Unearned restricted common shares -- (8.8)
Currency translation adjustment (1.5) (1.2)
Treasury stock, at cost (46.3) (104.6)
- -----------------------------------------------------------------------------------------------------
804.2 674.9
- -----------------------------------------------------------------------------------------------------
$1,400.4 $1,267.0
=====================================================================================================
</TABLE>
<PAGE> 4
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31, (in millions) 1998 1997 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Earnings from continuing operations $125.0 $153.7 $125.5
Adjustments to reconcile earnings from continuing
operations to cash provided by (used in)
operating activities:
Depreciation, depletion and amortization 71.1 64.1 55.8
Deferred income tax expense 6.2 14.5 9.2
Other non-cash charges 9.7 3.0 3.6
Changes in operating assets and liabilities:
(Increase) decrease in accounts and notes receivable (11.1) 6.1 1.1
(Increase) decrease in inventories (10.2) (1.9) 5.9
(Increase) decrease in prepaid expenses and other 2.6 -- (3.8)
Increase in other long-term assets (11.2) (6.1) (1.6)
Increase in accounts payable and accrued liabilities 33.4 0.5 25.0
Decrease in other liabilities and deferred credits (5.1) (0.6) (5.9)
Other adjustments 2.6 4.7 2.7
Net cash used in discontinued operations (0.4) (1.0) (1.4)
- --------------------------------------------------------------------------------------------
Net cash provided by operating activities 212.6 237.0 216.1
- --------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Additions to property, plant and equipment (116.4) (94.6) (78.8)
Acquisitions, net of cash acquired (6.0) (30.2) (6.2)
Purchase of short-term investments (18.7) (6.9) (11.8)
Maturity of short-term investments 7.9 14.7 --
Proceeds from asset sales 13.9 8.6 6.7
Other investing activities (0.1) -- (0.6)
- --------------------------------------------------------------------------------------------
Net cash used in investing activities (119.4) (108.4) (90.7)
- --------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Additions to long-term debt (Note 12) 30.0 -- 125.0
Reductions in long-term debt (Note 12) (63.6) (7.2) (168.3)
Purchase of treasury stock -- (59.9) (19.2)
Dividends (Note 18) (19.4) (22.9) (26.7)
Distributions to minority interest (7.0) (7.8) (9.2)
Exercise of warrants to purchase common stock -- -- 20.0
Premium on early extinguishment of debt (Note 12) -- -- (13.7)
Other financing activities 11.7 (2.3) (3.8)
- --------------------------------------------------------------------------------------------
Net cash used in financing activities (48.3) (100.1) (95.9)
- --------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 44.9 28.5 29.5
Cash and cash equivalents at the beginning of the year 98.9 70.4 40.9
- --------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $143.8 $ 98.9 $ 70.4
============================================================================================
</TABLE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Years ended December 31, (in millions) 1998 1997 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net earnings $123.4 $153.7 $112.2
Foreign currency translation
adjustments, net of income taxes (0.3) (0.3) --
- --------------------------------------------------------------------------------------------
Comprehensive income $123.1 $153.4 $112.2
============================================================================================
</TABLE>
<PAGE> 5
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(in millions)
----------------------------------------------------------------------------------------------
Cumulative
Preferred Stock Common Stock Capital Unearned Foreign
----------------- -------------- in excess of Reinvested Restricted Currency Treasury
Shares Amount Shares Amount Par Value Earnings Common Stock Translation Stock
-------- -------- ------- ------ ------------ ---------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995
as previously reported 4.6 $151.9 17.3 $21.6 $127.0 $74.5 $ -- $ -- $ --
Adjustment for pooling of
interests -- -- 15.1 18.9 4.5 97.5 (5.7) (0.9) (18.8)
- -------------------------------------------------------------------------------------------------------------------------------
Adjusted balance at
December 31, 1995 4.6 151.9 32.4 40.5 131.5 172.0 (5.7) (0.9) (18.8)
Net earnings -- -- -- -- -- 112.2 -- -- --
Dividends on preferred stock -- -- -- -- -- (7.7) -- -- --
Dividends paid on common stock -- -- -- -- -- (17.3) -- -- --
Issuance of restricted stock -- -- 0.1 0.1 2.6 -- (2.7) -- --
Exercise of warrants to
purchase common stock -- -- 1.3 1.6 18.4 -- -- -- --
Conversion of Series A and B
Preferred stock and
subordinated notes into
common stock (2.9) (65.6) 4.0 5.0 87.3 -- -- -- --
Exercise of stock options -- -- 0.2 0.3 4.2 (1.2) -- -- (2.4)
Tax benefit from exercise of
warrants and stock options -- -- -- -- 6.4 -- -- -- --
Amortization of restricted
stock vesting -- -- -- -- -- -- 0.9 -- --
Purchase of treasury stock -- -- -- -- -- -- -- -- (19.2)
- -------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996 1.7 $86.3 38.0 47.5 $250.4 $258.0 $ (7.5) $(0.9) $(40.4)
Net earnings -- -- -- -- -- 153.7 -- -- --
Dividends on preferred stock -- -- -- -- -- (2.5) -- -- --
Dividends paid on common stock -- -- -- -- -- (19.2) -- -- --
Issuance of restricted stock -- -- 0.1 0.1 3.9 -- (4.0) -- --
Exercise of stock options -- -- 0.4 0.5 5.6 (3.9) -- -- (4.3)
Conversion of Series D
Preferred stock into
common stock (1.7) (86.3) 2.6 3.3 83.0 -- -- -- --
Tax benefit from exercise
of stock options -- -- -- -- 9.8 -- -- -- --
Forfeiture of restricted
common shares -- -- -- -- (0.7) -- 0.7 -- --
Amortization of restricted
stock vesting -- -- -- -- -- -- 2.0 -- --
Purchase of treasury stock -- -- -- -- -- -- -- -- (59.9)
Foreign currency
translation adjustment -- -- -- -- -- -- -- (0.3) --
- -------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 -- $ -- 41.1 $51.4 $352.0 $386.1 $(8.8) $(1.2) $(104.6)
Net earnings -- -- -- -- -- 123.4 -- -- --
Dividends paid on
common stock -- -- -- -- -- (19.4) -- -- --
Retirement of Medusa treasury
stock at combination date -- -- (1.7) (2.2) -- (57.0) -- -- 59.2
Lapse of restrictions on
restricted common stock -- -- -- -- -- -- 8.8 -- --
Exercise of stock options -- -- 0.4 0.6 13.8 (1.5) -- -- (0.9)
Tax benefit from exercise
of stock options -- -- -- -- 4.8 -- -- -- --
Foreign currency translation
adjustment -- -- -- -- -- -- -- (0.3) --
- -------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 -- $ -- 39.8 $49.8 $370.6 $431.6 $ -- $(1.5) $(46.3)
===============================================================================================================================
</TABLE>
<PAGE> 6
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[1] THE COMPANY AND BASIS OF PRESENTATION:
Southdown, Inc. is one of the largest producers of cement in the U.S. The
Company operates twelve portland cement manufacturing plants located in Alabama,
California, Colorado, Florida, Georgia, Kentucky, Michigan, Ohio, Pennsylvania,
Tennessee and Texas, plus an extensive network of cement distribution terminals.
The Company also mines, processes, and sells construction aggregates and
specialty mineral products in the eastern half of the U.S. and in California. In
addition, the Company markets ready-mixed concrete products in two of its
largest cement markets, California and Florida. For more information describing
the Company's operations and the relative importance of the Company's business
segments, see Note 4 of Notes to Consolidated Financial Statements.
The consolidated balance sheet of Southdown as of December 31, 1998 and 1997 and
the related statements of consolidated earnings, shareholders' equity, cash
flows and comprehensive income for each of the three years in the period ended
December 31, 1998 are presented on the basis of generally accepted accounting
principles. On June 30, 1998, the Company concluded a merger transaction with
Medusa Corporation. Medusa became a 100% owned subsidiary of the Company at that
time. The Company treated the transaction as a "pooling of interests" rather
than a purchase of one company by another. A pooling of interests accounts for a
business combination as the uniting of the ownership interests of companies by
an exchange of stock. (See also Note 3 of Notes to Consolidated Financial
Statements.)
Southdown was organized in Louisiana in 1930 and maintains its principal
executive offices at 1200 Smith Street, Suite 2400, Houston, Texas 77002-4486,
telephone (713) 650-6200. The Company reorganized its corporate structure at the
end of 1998 by merging most of its recently acquired Medusa entities into
Southdown and contributing the Company's California cement, concrete products
and aggregates operations to certain existing and newly created wholly-owned
subsidiaries of the Company. The terms "Southdown" and the "Company" as used in
this report, include subsidiaries of Southdown and also predecessor
corporations.
[2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
USE OF ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. These estimates and assumptions also affect the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
CONSOLIDATION -- The consolidated financial statements of the Company include
the accounts of its divisions, its wholly-owned subsidiaries and its
majority-owned joint venture after elimination of significant intercompany
transactions and balances. All prior period consolidated financial statements
presented provide the combined results of operations, financial position and
cash flows of the Company and Medusa. Certain data for prior years have been
reclassified for purposes of comparison.
<PAGE> 7
CASH AND STATEMENT OF CONSOLIDATED CASH FLOWS SUPPLEMENTAL DISCLOSURES -- The
Company considers short-term investments, which have an original maturity of
three months or less, to be cash equivalents for purposes of the Statement of
Consolidated Cash Flows. Cash payments for income taxes totaled $71.7 million in
1998, $57.1 million in 1997 and $35.7 million in 1996. Interest paid, net of
amounts capitalized, was $16.4 million, $14.3 million and $20.8 million in 1998,
1997 and 1996. Interest capitalized was $1.7 million in 1998, $2.9 million in
1997 and $2 million in 1996.
There were no non-cash financing activities in 1998. Non-cash financing
activities in 1997 included the conversion of 1.7 million shares of preferred
stock with a carrying value of $86.3 million into 2.6 million shares of common
stock. Non-cash financing activities in 1996 included the conversion of 2.9
million shares of preferred stock with a carrying value of $65.6 million and the
conversion of $26.7 million in Medusa's convertible subordinated notes into a
total of 4 million shares of common stock.
In 1998, non-cash investing activities included the assumption of $1.4 million
in liabilities in connection with Medusa's acquisition of an aggregate operation
and a highway safety systems company. Non-cash investing activities in 1997
included the assumption of liabilities in Medusa's various acquisitions as
discussed in Note 4 of Notes to Consolidated Financial Statements.
INVESTMENTS -- In addition to cash equivalents, the Company has investments in
debt securities that mature in more than three months but no more than one year.
The Company expects to hold all such investments to maturity and, therefore,
carries these investments at amortized cost. The Company does not recognize
gains or losses on these investments, which the Company deems to be temporary,
because the Company has both the intent and the ability to hold these
investments until they mature. As of December 31, 1998 and 1997, the Company's
investments consist primarily of commercial paper maturing within one year. The
fair value of these investments approximates their amortized cost. (See also
Note 11 of Notes to Consolidated Financial Statements.)
INVENTORIES -- The Company values inventories at the lower of cost or market.
Cost includes material, labor and manufacturing overhead. The Company values
cement inventories on the last-in, first-out method. The valuation of the
remaining inventories, primarily parts and supplies, is determined on the
first-in, first-out or average cost method. (See also Note 7 of Notes to
Consolidated Financial Statements.)
PROPERTY, PLANT AND EQUIPMENT -- The Company capitalizes all direct and certain
indirect expenditures incurred in conjunction with the acquisition or
construction of major facilities. Depreciation and amortization of these
capitalized costs commence when the completed facility is placed in service.
Depreciation and amortization of property, plant and equipment are computed
primarily on a straight-line basis over estimated useful lives of the related
assets, ranging from three to 50 years. On average, the Company depreciates
buildings and improvements based on a 50 year life; machinery and equipment over
lives ranging from ten to 35 years; office furniture, fixtures and equipment
over lives ranging from five to ten years and mobile equipment over lives
ranging from four to 25 years. The Company computes depletion of mineral rights
on the units-of-production method.
The Company reviews long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of those assets may not be
recoverable. If the sum of the expected future undiscounted cash flows is less
than the carrying amount of the asset, a loss is recognized for the difference
between the fair value and the carrying value of the asset. Gain or loss is
generally reflected in earnings upon the retirement or sale of property, plant
and equipment. (See also Note 8 of Notes to Consolidated Financial Statements.)
<PAGE> 8
ENVIRONMENTAL EXPENDITURES -- The Company bases its estimates of environmental
liabilities on the nature or extent of contamination, methods of remediation
required, existing technology, presently enacted laws and regulations and prior
Company experience in remediation of contaminated sites. The Company capitalizes
environmental expenditures that extend the life, increase the capacity, or
improve the safety or efficiency of property owned by the Company, mitigate or
prevent environmental contamination that has yet to occur, or that are incurred
in anticipation of a sale of property. Expenditures that relate to an existing
condition caused by past operations, and which do not contribute to current or
future revenue generation, are expensed. The Company's policy is to accrue
environmental and clean-up related costs of a non-capital nature when it is both
probable that a liability has been incurred and the amount can be reasonably
estimated, whether or not a claim has been asserted or this coincides with the
completion of a remediation investigation/feasibility study or the Company's
commitment to a formal plan of action. The Company revises such estimates as
additional information becomes known. (See also Note 17 of Notes to Consolidated
Financial Statements.)
GOODWILL -- The Company amortizes the excess of cost over the fair value of net
assets of businesses acquired, on a straight-line basis, over periods ranging
from 15 to 40 years. Such amortization amounted to $3.7 million in 1998, $3.5
million in 1997 and $3 million in 1996. Accumulated amortization of goodwill was
$38.6 million and $34.9 million as of December 31, 1998 and 1997. The Company
utilizes estimates of undiscounted future cash flows of the acquired operations
to evaluate any possible impairment of the related goodwill.
REVENUE RECOGNITION -- The Company generally recognizes revenue on the sale of
products or services when the products are shipped or the services delivered,
all significant contractual obligations have been satisfied and the collection
of the resulting receivable is reasonably assured.
OTHER INCOME, NET -- Other income, net consists primarily of gains and losses on
miscellaneous asset sales and insurance recoveries.
INTEREST INCOME -- Interest income, earned primarily on investments in
short-term securities, totaled $5.9 million in 1998 compared with $3.3 million
in 1997 and $3.4 million in 1996. The Company also recognizes interest income on
impaired loans using a combination of the cost recovery and the cash basis
methods. The Company recognized no material amounts of interest income on
impaired notes receivable during 1998 and 1997, but recognized approximately
$1.1 million of such interest income during 1996.
STOCK-BASED COMPENSATION -- As permitted by Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation", the Company
continues to account for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees." Accordingly, no compensation expense has been
recognized for the Company's employee stock option plans. The disclosure-only
provisions of SFAS No. 123 have been included in Note 19 of Notes to
Consolidated Financial Statements.
INCOME TAXES -- In computing its federal and state income tax liabilities, the
Company uses accelerated depreciation and deducts currently certain expenditures
that are capitalized for financial reporting purposes. Deferred income taxes are
provided on these and other temporary differences between the tax bases of
assets and liabilities and their bases for financial statement purposes.
Investment tax credit carryforwards are accounted for under the flow-through
method and, accordingly, reduce federal income taxes in the years in which their
utilization is assured. (See also Note 13 of Notes to Consolidated Financial
Statements.)
<PAGE> 9
EARNINGS PER SHARE -- The Company computed basic earnings per share using
average number of common shares outstanding in each of the three years ended
1998. Earnings used to compute basic per share earnings in 1997 and 1996 were
net of preferred stock dividends of approximately $2.5 million in 1997 and $7.7
million in 1996, respectively. Diluted earnings for 1998 assume the dilutive
impact of options. Diluted earnings for 1997 and 1996 assume the dilutive impact
of options and warrants and the conversion of all shares of pr eferred stock to
common stock. Diluted earnings for 1996 also assume the conversion of the then
outstanding Medusa convertible subordinated notes into shares of common stock.
(See also Note 18 of Notes to Consolidated Financial Statements.)
NEW ACCOUNTING STANDARDS -- Effective January 1, 1998, the Company adopted three
new Statements of Financial Accounting Standards: Statement No. 130, "Reporting
Comprehensive Income", Statement No. 131, "Disclosures About Segments of an
Enterprise and Related Information" and Statement No. 132, "Employers'
Disclosures About Pensions and Other Postretirement Benefits". Adoption of these
three new standards had no material effect on the Company's consolidated results
of operations, financial position, or cash flows.
SFAS No. 130 establishes standards for reporting and displaying comprehensive
income and its components. The Company elected to report the components of
comprehensive income in a separate Statement of Consolidated Comprehensive
Income.
SFAS No. 131 establishes standards for the way that public companies report
information about operating segments in interim and annual financial statements.
An operating segment is somewhat the same as a "line of business". The technical
definition is "a component of a business, for which separate financial
information is available that management regularly evaluates in deciding how to
allocate resources and assess performance". The Company's reporting of
information about its operating segments already conformed with SFAS No. 131
prior to adopting this new standard. Medusa, which adopted SFAS No. 131 in 1997,
had two segments, cement and aggregates, which the Company considers to be
reportable. After the merger, the Company's California aggregates operations,
which were previously included in the Concrete Products segment, are now
included in the Aggregates segment along with the aggregates operations of
Medusa.
In an effort to standardize disclosure requirements for pensions and other
postretirement benefits to the extent practicable, the Financial Accounting
Standard Board issued SFAS No. 132. SFAS No. 132 revises employers' disclosures
about pension and other postretirement benefits, but does not change the
measurement or recognition of those plans. These revised disclosures may be
found in Note 16 of Notes to Consolidated Financial Statements.
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities". A derivative is a financial instrument that
takes or "derives" its value from the value of some other financial instrument.
SFAS No. 133 requires that a company recognize all derivatives as either assets
or liabilities on its balance sheet and measure those instruments at fair value.
Fair value is the amount for which an object would currently change hands
between a willing buyer and an independent willing seller. SFAS No. 133 is
effective for years beginning after June 15, 1999 and management is currently
evaluating what, if any, impact this new accounting standard may have on the
Company's consolidated financial statements. The Company held no derivative
financial instruments during the three year period ending December 31, 1998.
<PAGE> 10
[3] Medusa Merger:
On June 30, 1998, Medusa became a wholly-owned subsidiary of the Company. The
Medusa merger converted each outstanding Medusa common share into the right to
receive .88 shares of Company common stock. The Company issued approximately
14.7 million shares of its common stock for all of the outstanding common stock
of Medusa. The Medusa merger also converted Medusa's outstanding employee stock
options the same way, so these Medusa options became options to purchase
approximately 522,000 shares of Company common stock. The exchange of Medusa
shares and options for Company shares and options was tax-free. The Company
accounted for the merger as a pooling of interests as allowed by Accounting
Principles Board Opinion No. 16, "Business Combinations."
The Company recorded second quarter charges to operating expenses totaling $82.9
million ($73.9 million after taxes, or $1.90 per common share, diluted) for
direct and other merger related transaction costs. These transaction costs
include severance related costs for approximately 150 former employees at the
Medusa corporate office, professional fees, financial printing, and anticipated
closure of duplicate corporate office facilities and incompatible business
practices, processes and activities. A significant portion of the severance
costs accrued was related to certain performance based restricted stock grants
that had been awarded to Medusa executive officers. Severance cost related to
these restricted stock awards was estimated based on the market price of the
Company's common stock as of the June 30, 1998 merger date.
Because the market price of the Company's common stock, like that of many other
companies' common stock, declined between the merger date and the August 1998
date the restrictions on the stock awards actually lapsed, the cost of Medusa
executive severance was less than originally estimated. Accordingly, the Company
recorded a third quarter 1998 credit of $6.7 million to estimated severance
expense. On the other hand, the Company revised upward its initial estimate of
other merger transaction and closure costs. The net effect was a $4 million
third quarter 1998 reduction in estimated transaction costs.
In the fourth quarter of 1998, the Company recognized a $3.7 million further
reduction in estimated transaction costs as a result of curtailment gains on
Medusa pension and other postretirement benefit plans directly related to the
Medusa corporate office that is to be closed. (See also Note 16 of Notes to
Consolidated Financial Statements.)
At December 31, 1998, current liabilities related to transaction costs were $7.4
million. The Company expects the closure of the Medusa corporate office to be
complete and the last of the Medusa corporate office personnel to terminate by
the end of the first quarter of 1999. Details of the merger related costs are as
follows:
<TABLE>
<CAPTION>
(in millions) Accrued Merger Costs Amounts Paid Adjustments Current Balance at 12/31/98
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Merger transaction
costs and
professional fees $ 18.4 $ 18.7 $ 0.9 $ 0.6
Severance costs 54.3 46.5 (6.7) 1.1
Closure costs 10.2 2.6 (1.9) 5.7
- ------------------------------------------------------------------------------------------------
Total $ 82.9 $ 67.8 $ (7.7) $ 7.4
================================================================================================
</TABLE>
<PAGE> 11
For comparative purposes, the revenues and results of operations, excluding the
second quarter 1998 charge for direct and other merger related transaction
costs, for the separate companies and the combined amounts for the six months
and two years prior to the consummation of the combination are presented below:
<TABLE>
<CAPTION>
(in millions)
--------------------------------------------------------------------------------
Six months ended Year ended Year ended
June 30, 1998 December 31, 1997 December 31, 1996
-------------------- ------------------- ----------------------------------
(unaudited)
Net Net Extraordinary Net
Revenues earnings Revenues earnings Revenues charge earnings
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Southdown $357.9 $47.4 $ 719.2 $ 96.7 $664.4 $11.5 $ 59.7
Medusa 184.7 19.1 376.0 57.0 323.4 1.8 52.5
- ------------------------------------------------------------------------------------------------
Combined $542.6 $66.5 $1,095.2 $153.7 $987.8 $13.3 $112.2
================================================================================================
</TABLE>
For interim reporting purposes, the Company recorded adjustments to conform the
accounting practices of Medusa to those of the Company. The adjustments related
primarily to Medusa's deferral of maintenance costs and use of standard cost
accounting for inventory. However, because the deferral of maintenance costs and
the use of the standard cost method of valuing inventory impacts only interim
reporting periods, there are no differences in previously reported Medusa assets
and net earnings for the full years ended December 31, 1997 and 1996.
[4] BUSINESS SEGMENT INFORMATION:
While all operations of the Company are related to some degree and share certain
internal services, the Company has identified three business segments, each of
which is managed separately along product lines. The Cement segment includes the
operations of eleven quarrying sites, twelve manufacturing facilities and a
network of 44 cement storage and distribution terminals for the production,
importation and distribution of portland and masonry cement. The Concrete
Products segment includes primarily the production and sale of ready-mixed
concrete in two of the Company's largest cement markets, southern California and
Florida, and to a lesser extent, the sale of concrete block in Florida. The
Aggregates segment mines, processes and sells construction aggregates in the
eastern half of the U.S. and in southern California and specialty mineral
products in the eastern half of the U.S. It also operates a subsidiary that
installs highway safety systems such as guardrails, traffic signals, highway
signage and lighting. After the Medusa merger, the Company's California
aggregates operations, which the Company previously included in the Company's
Concrete Products segment, were transferred to the Aggregates segment. The
Company has restated the presentation of prior year segment information below to
reflect this change. Operating results and certain other financial data for the
Company's principal business segments for and at the end of each year presented
are as follows:
<PAGE> 12
<TABLE>
<CAPTION>
(in millions) 1998 1997 1996
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Contributions to revenues:
Cement
Sales to customers $ 819.9 $ 758.5 $ 691.2
Freight to customers and other 41.9 43.6 40.4
- -----------------------------------------------------------------------------------
Total cement revenues 861.8 802.1 731.6
Concrete Products 240.8 238.6 233.7
Aggregates 147.9 119.0 81.4
Intersegment sales (65.8) (64.5) (58.9)
- -----------------------------------------------------------------------------------
$ 1,184.7 $ 1,095.2 $ 987.8
===================================================================================
Contributions to earnings before interest,
income taxes and minority interest:
Operating profit
Cement $ 311.0 $ 267.3 $ 228.4
Concrete Products 20.5 9.5 12.2
Aggregates 25.0 20.6 11.8
- -----------------------------------------------------------------------------------
356.5 297.4 252.4
Corporate overhead (54.9) (48.2) (39.2)
Acquisition charge (75.2) -- --
- -----------------------------------------------------------------------------------
$ 226.4 $ 249.2 $ 213.2
===================================================================================
Identifiable assets, end of year:
Cement $ 878.9 $ 810.0 $ 783.2
Concrete Products 104.7 119.3 127.5
Aggregates 149.3 137.1 54.8
Other, unallocated corporate assets 267.5 200.6 184.7
- -----------------------------------------------------------------------------------
$ 1,400.4 $ 1,267.0 $1,150.2
===================================================================================
Depreciation, depletion and amortization:
Cement $ 49.7 $ 44.5 $ 40.3
Concrete Products 8.3 8.7 8.3
Aggregates 7.9 5.5 3.3
Other 6.0 6.4 6.6
- -----------------------------------------------------------------------------------
$ 71.9 $ 65.1 $ 58.5
===================================================================================
Capital expenditures:
Cement $ 102.1 $ 77.6 $ 64.8
Concrete Products 2.1 4.8 4.7
Aggregates 8.3 8.0 6.5
Other 3.9 4.2 2.8
- -----------------------------------------------------------------------------------
$ 116.4 $ 94.6 $ 78.8
===================================================================================
</TABLE>
Corporate overhead is generally not allocated to the operating segments. Other
unallocated corporate assets consist primarily of cash, goodwill, prepaid
pension costs and office furniture, fixtures and equipment. Substantially all of
the Company's operations are conducted in the U.S. Intersegment sales occur
primarily between the Company's Florida cement manufacturing plant and the
related Florida concrete products operations and the Company's southern
California cement manufacturing plant and the related California concrete
products operations. The Company accounts for intersegment sales at prices which
approximate market prices, but eliminates these sales for purposes of preparing
consolidated financial statements. Depreciation, depletion and amortization
shown above includes $.8 million of amortization of debt issuance costs in 1998
compared with $1 million of such amortization in 1997 and $2.7 million of
amortization of debt issuance costs in 1996. Capital expenditures shown above
exclude capital acquisitions of $6 million in 1998, $30.2 million in 1997 and
$6.2 million in 1996.
<PAGE> 13
AGGREGATES ACQUISITIONS -- During 1997, Medusa completed two cash acquisitions
at a cost of $30.2 million, net of cash and liabilities assumed of $19.4
million. In January 1997, Medusa acquired Lime Crest Corporation, a leading
producer of home and garden products, industrial limestone and construction
aggregates based in Sparta, New Jersey. In October 1997, Medusa acquired Lee
Lime Corporation, a producer of limestone, quicklime, hydrated lime, packaged
cement mixes and a leading producer of home and garden products based in Lee,
Massachusetts.
In August 1997, Medusa also purchased all of the capital stock of White Stone
Company of Southwest Virginia. This company is a producer of industrial
limestone and aggregates in Castlewood, Virginia with a limestone pelletizing
plant in Paradise, Pennsylvania. In consideration of the purchase price of $34.7
million as well as an election by Medusa to step up the basis of the assets
acquired for income tax purposes, Medusa assumed liabilities of $3.2 million and
issued notes to the selling shareholders for $31.5 million. The notes to the
selling shareholders were paid in full prior to Medusa's merger with the
Company.
Medusa accounted for all three 1997 acquisitions by the purchase method. Medusa
allocated the purchase prices to assets acquired and liabilities assumed based
on fair market value at the dates of acquisition. Medusa included the results of
operations for all three acquisitions in the financial statements from their
respective dates of purchase. On an unaudited proforma basis, assuming Medusa
had completed the three acquisitions as of the beginning of 1996, net sales for
1997 and 1996 would have increased $20.3 million and $36.1 million,
respectively, whereas net income and net income per common share would not have
been significantly different from reported amounts for either period.
[5] CASH AND CASH EQUIVALENTS:
<TABLE>
<CAPTION>
December 31, (in millions) 1998 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Cash on hand and demand deposits $ 16.0 $ 13.5
Commercial paper, certificates of deposit, and auction market
preferreds - at cost, which approximates market value 127.8 85.4
- -----------------------------------------------------------------------------------------
$ 143.8 $ 98.9
=========================================================================================
</TABLE>
There is no requirement for the Company to maintain compensating balances under
any of the agreements with the Company's lending banks.
[6] ACCOUNTS AND NOTES RECEIVABLE:
<TABLE>
<CAPTION>
December 31, (in millions) 1998 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Trade accounts and notes receivable $ 122.5 $ 111.0
Allowance for doubtful accounts (4.9) (5.0)
- -----------------------------------------------------------------------------------------
117.6 106.0
Other receivables 2.4 2.5
- -----------------------------------------------------------------------------------------
$ 120.0 $ 108.5
=========================================================================================
</TABLE>
SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK -- A majority of the Company's
receivables are from users of portland cement, such as ready-mixed concrete
producers and manufacturers of concrete products such as blocks, roof tile, pipe
and prefabricated building components. Sales are also made to building materials
dealers, other cement manufacturers, construction contractors and, particularly
from the Texas plant, oil well cementing
<PAGE> 14
companies. During the three years ended December 31, 1998, approximately 43%,
58% and 58% of the Company's Texas plant's cement sales volume consisted of oil
well cement sales. The Company is a major producer of ready-mixed concrete in
California and is also a major producer and supplier of such products in
Florida. The Company's California plant made approximately 17%, 19% and 18% of
its cement sales in the three years ended December 31, 1998 to the Company's
ready-mixed concrete operations in California. Approximately 36%, 38% and 38% of
the cement sold by the Company's Florida plant in three years ended December 31,
1998 was sold to the Company's Florida concrete products operations. Aggregates
sales, both construction and specialty aggregates, are to a wide spectrum of
customers including national home improvement warehouse chains, large industrial
concerns and individual local small businesses. Construction aggregates are sold
to the construction industry primarily for use in the manufacture of concrete
and asphalt as well as a variety of construction applications such as road base,
drainage blankets, erosion control and other applications. Specialty aggregates
sells over 200 products with many different uses including, among others, lawn
care, gardening, landscaping, grounds maintenance, water conditioning,
agriculture and in the manufacture of joint compounds, caulk, paints, plastics
and paper. There were no sales to any single third-party customer in any of the
Company's business lines, which totaled in excess of 10% of consolidated
revenues for 1998, 1997 or 1996.
An analysis of the activity in the allowance for doubtful accounts follows:
<TABLE>
<CAPTION>
Years ended December 31, (in millions) 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Beginning balance $ 5.0 $ 7.8 $ 9.2
Additions charged to expense 0.1 1.3 2.7
Accounts written off (0.4) (3.2) (4.2)
Recoveries 0.2 (0.9) 0.1
- --------------------------------------------------------------------------------
Ending balance $ 4.9 $ 5.0 $ 7.8
================================================================================
</TABLE>
In the opinion of management, the Company is adequately reserved for credit
risks related to its potentially uncollectible receivables. However, the Company
continues to assess its allowance for doubtful accounts and may increase or
decrease its periodic provision as additional information regarding the
collectibility of these and other accounts becomes available.
[7] INVENTORIES:
<TABLE>
<CAPTION>
December 31, (in millions) 1998 1997
- -----------------------------------------------------------------------------
<S> <C> <C>
Finished goods $ 36.1 $ 33.6
Work in process 14.7 10.8
Raw materials 7.1 8.4
Parts and supplies 49.8 44.4
- -----------------------------------------------------------------------------
$ 107.7 $ 97.2
=============================================================================
</TABLE>
Inventories valued on the "Last In, First Out" method were $46.3 million at
December 31, 1998 and $40.4 million at December 31, 1997 compared with current
costs of $63.2 million and $58.7 million, respectively.
<PAGE> 15
[8] PROPERTY, PLANT AND EQUIPMENT:
<TABLE>
<CAPTION>
December 31, (in millions) 1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C>
Land (at cost):
Cement $ 36.0 $ 41.4
Concrete Products 16.1 20.5
Aggregates 8.9 9.1
Corporate and other 0.2 2.9
- ------------------------------------------------------------------------------
61.2 73.9
- ------------------------------------------------------------------------------
Plant and Equipment (at cost):
Cement 1,228.1 1,128.3
Concrete Products 72.3 79.8
Aggregates 107.6 93.0
Corporate and other 29.7 26.1
- ------------------------------------------------------------------------------
1,437.7 1,327.2
- ------------------------------------------------------------------------------
Less accumulated depreciation, depletion
and amortization (679.0) (630.9)
- ------------------------------------------------------------------------------
$ 819.9 $ 770.2
==============================================================================
</TABLE>
[9] Other Long-Term Assets:
<TABLE>
<CAPTION>
December 31, (in millions) 1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C>
Prepaid pension costs (Note 16) $ 42.5 $ 33.3
Land held for sale 9.8 6.5
Unamortized debt issuance costs 3.7 4.5
Net present value of purchased supply contracts 2.3 3.4
Other 12.0 10.8
- ------------------------------------------------------------------------------
$ 70.3 $ 58.5
==============================================================================
</TABLE>
Land held for sale includes various non-income producing real estate parcels
offered for sale. Unamortized debt issuance costs are costs and expenses
associated with the issuance of certain of the Company's senior debt and senior
subordinated notes. Debt issuance costs are being amortized over the respective
terms of the debt. In conjunction with the purchase of Moore McCormack
Resources, Inc. in 1988, the Company acquired two contracts to supply flyash
through 1999 and 2004, respectively. The supply contracts were recorded at their
net present values at the date of acquisition and are being amortized over the
respective lives of the contracts.
[10] ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
December 31, (in millions) 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C>
Trade accounts payable $ 46.9 $ 39.8
Accrued compensation and benefits 30.0 31.6
Accrued liabilities, trade 20.5 16.7
Acquisition charge liabilities 7.4 -
Accrued interest payable 4.3 5.0
Accrued taxes, other 5.1 5.6
Current portion of postretirement benefit obligation 4.0 4.3
Accrued environmental remediation costs 2.8 3.7
Other accrued liabilities 18.3 8.6
- -------------------------------------------------------------------------------
$ 139.3 $ 115.3
===============================================================================
</TABLE>
<PAGE> 16
[11] DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
The Company considers investments with maturities between three and twelve
months as short-term. Short-term investments consist of debt securities such as
commercial paper, time deposits and certificates of deposit. The Company
classified all of its short-term investments as of December 31, 1998 as
held-to-maturity in accordance with Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities."
Because of the short duration of these investments, changes in market interest
rates would not have a significant impact on their fair value. Accordingly, the
fair market value of these investments approximates their amortized cost of
$14.8 million and $4 million as of December 31, 1998 and 1997.
The carrying amounts of the Company's other assets and liabilities which are
considered to be financial instruments approximate their value, except for
long-term debt. The Company determined the estimated fair value amounts for the
Company's long-term debt as of December 31, 1998 and 1997 by using appropriate
valuation methodologies and information currently available to management.
Considerable judgment is required in developing these estimates and,
accordingly, the Company can not guarantee that the estimated values shown
indicate the amounts that would be realized if the Company were to replace its
long-term debt in a free market exchange. The fair value of the Company's
long-term debt was estimated based on the quoted market prices for similar
issues or on the current rates available to the Company for debt with similar
terms and remaining maturities.
<TABLE>
<CAPTION>
December 31, (in millions)
-----------------------------------------------------------
1998 1997
---------------------------- ----------------------------
Carrying Amount Fair Value Carrying Amount Fair Value
--------------- ---------- --------------- ----------
<S> <C> <C> <C> <C>
Long-term debt $ 167.9 $ 183.7 $ 200.6 $ 212.7
================================================================================
</TABLE>
The Company held no derivative financial instruments as of December 31, 1998 or
1997
[12] LONG-TERM DEBT:
<TABLE>
<CAPTION>
December 31, (in millions) 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Senior debt:
Revolving credit facility $ -- $ --
Industrial development and pollution control bonds 41.3 42.3
Notes payable -- 31.5
Other 1.6 1.8
Subordinated debt:
10% senior subordinated notes 125.0 125.0
- --------------------------------------------------------------------------------
167.9 200.6
Less current maturities (0.6) (13.6)
- --------------------------------------------------------------------------------
$ 167.3 $ 187.0
================================================================================
</TABLE>
REVOLVING CREDIT FACILITY -- The Company's revolving credit facility is with
Wells Fargo Bank, N.A., in its individual capacity and as agent; Societe
Generale, Southwest Agency; The Bank of Nova Scotia; Credit Suisse First Boston;
Credit Agricole Indosuez; PNC Bank, N.A.; Banque Paribas and BankBoston, N.A. In
May 1998, the Company amended this $200 million revolving credit facility to
permit (1) the Medusa merger, (2) assumption of the existing indebtedness of
Medusa of up to $100 million, and (3) the guarantee of a $15 million lease
obligation associated with the Medusa merger. The Company also obtained from its
bank group a release of the bank group's liens on the collater-
<PAGE> 17
al security, including the security interest in five of the Company's cement
plants and the Company's interest in the Kosmos joint venture. In December 1998,
the Company again amended its credit agreement to permit (1) the contribution or
other transfer of certain California assets to certain existing and newly
created wholly-owned subsidiaries of the Company and (2) the merger of Medusa
entities with and into the Company.
In early June 1998, Medusa reduced the borrowing capacity under its unsecured,
five-year revolving credit facility from $180 million to the $40 million then
outstanding. The Company paid off the outstanding balance on the Medusa credit
facility on June 30, 1998. There were no amounts outstanding on Medusa's
unsecured $25 million bank lines of credit on June 30, 1998. Medusa's bank group
cancelled both credit facilities as of June 30, 1998.
The Company's revolving credit facility matures in June 2002. The credit
facility permits the issuance of up to $95 million in standby letters of credit
in lieu of borrowings. Borrowings under the facility bear interest at margins
either at or above a prime rate or above the London Interbank Offered Rate as
selected by the Company from time to time. As of December 31, 1998, the Company
had $67 million in letters of credit outstanding under this facility, but no
borrowings, leaving $133 million available. The revolving credit facility limits
the Company's additional indebtedness, but allows the Company to borrow up to
$175 million, as well as certain other amounts, from other lenders.
Under the revolving credit facility, the Company must maintain the following
financial ratios: (1) leverage ratio (funded debt compared with consolidated
earnings before interest, tax and depreciation), (2) minimum current ratio
(current assets compared with net current liabilities), and (3) free cash flow
ratio (free cash flow compared with the sum of interest, dividends, current tax
provision and current portion of funded debt). In addition, the Company must
maintain a minimum tangible net worth (shareholders' equity minus intangible
assets such as goodwill).
Under the terms of the Company's 10% Senior Subordinated Notes Indenture, the
Company may borrow up to $255 million under bank credit facilities, plus $50
million of additional debt and certain other additional amounts. Under the
indenture, the Company may borrow more than those amounts if the Company's
consolidated fixed charge coverage ratio is more than 2.25 to 1. The fixed
charge coverage ratio is the ratio of after tax earnings, excluding interest
charges, to the amount of interest due on all indebtedness. As of December 31,
1998, the Company's consolidated fixed charge coverage ratio was significantly
higher than 2.25 to 1. That indenture also limits "Purchase Money Obligations"
and/or "Capitalized Lease Obligations" to not more than $25 million at any one
time and restricts, among other things, certain sales of assets, certain mergers
and consolidations, dividends and distributions and redemptions and repurchases
of equity securities.
The Company is in compliance with the revolving credit facility and indenture
ratios and covenants. Generally, the revolving credit facility is more
restrictive than the indenture and would limit the Company's additional
borrowings before covenants in the indenture would impede the Company's ability
to incur additional debt.
INDUSTRIAL DEVELOPMENT AND POLLUTION CONTROL BONDS -- The industrial development
and pollution control bonds were issued by various state or local financing
authorities and are due on various dates through the year 2017. The obligations
bear interest, which is nontaxable to the payees, at varying rates that
approximate 50% of the prevailing prime rate. The obligations are secured by
irrevocable letters of credit issued under the Company's revolving credit
facility. During the first quarter of 1998, the Company negotiated an extension
of $17.8 million of the pollution control bonds until 2013. The Company refunded
bonds totaling $7.5 million during 1997, extending their maturity until 2017.
<PAGE> 18
10% SENIOR SUBORDINATED NOTES -- On March 19, 1996, the Company issued an
aggregate of $125 million principal amount of 10% Senior Subordinated Notes in a
private placement. The net proceeds of the Notes and other funds were used to
retire $125 million in principal amount of the Company's 14% Senior Subordinated
Notes, which the Company had offered to repurchase. The total cost to the
Company was $136.9 million plus accrued interest. The Company recorded a $11.5
million net of tax extraordinary charge in 1996 to reflect the prepayment
premium and other costs incurred in the repurchase.
The Company issued the Notes pursuant to an indenture dated as of March 19, 1996
between the Company and State Street Bank and Trust Company, as Trustee. During
1996, all of the Notes were exchanged in a registered exchange offer for $125
million aggregate principal amount of the Company's 10% Senior Subordinated
Notes pursuant to a registration rights agreement entered into at the time of
the private placement. The 10% Notes were also issued under the indenture, and
the terms of the 10% Notes are substantially identical to those of the Notes.
The 10% Notes pay interest semiannually, mature on March 1, 2006 and are
noncallable until March 1, 2001, after which the 10% Notes are callable at the
option of the Company, in whole or in part, at any time at 105% of the principal
amount, declining ratably in annual increments to par on or after March 1, 2004.
The 10% Notes are subordinate in right of payment to all existing and future
senior debt, as defined, of the Company, rank on a parity with all existing and
future senior subordinated debt, as defined, of the Company, and rank senior to
all other existing and future subordinated debt of the Company. The indenture
includes affirmative and negative covenants, which in certain instances
restrict, among other things, additional indebtedness, sales of assets, mergers
and consolidations, dividends and distributions and redemptions and repurchases
of equity securities.
MEDUSA 6% CONVERTIBLE SUBORDINATED NOTES -- Also in 1996, Medusa redeemed its 6%
convertible subordinated notes. Medusa note holders converted $26.7 million in
Medusa notes into 805,161 Medusa common shares. The other note holders were
redeemed for $30.8 million. This redemption, including the write -off of
unamortized debt issuance costs, was $1.8 million net of income tax benefit of
$.8 million and also was reflected as an extraordinary item in 1996.
ANNUAL TOTAL MATURITIES OF LONG-TERM DEBT -- The expected maturity dates, the
approximate total principal payments due in future years and the average
interest rate on long-term debt as of December 31, 1998 are as follows:
<TABLE>
<CAPTION>
Expected Principal Payments Average
Maturity Date (in millions) Interest Rate
- --------------------------------------------------------------------------------
<S> <C> <C>
1999 $ 0.6 5.7%
2000 0.5 5.6%
2001 0.2 7.0%
2002 0.1 6.2%
2003 -- --
Thereafter 166.5 8.4%
- --------------------------------------------------------------------------------
Total $ 167.9 8.4%
================================================================================
</TABLE>
<PAGE> 19
[13] INCOME TAXES:
The following table provides a breakdown of the current and deferred components
of the provisions for federal and state income taxes attributable to the
earnings before income taxes, minority interest and extraordinary charge.
<TABLE>
<CAPTION>
Years ended December 31, (in millions) 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal income tax expense:
Current $ 68.5 $ 55.8 $ 49.4
Deferred 6.2 13.8 8.7
State income tax expense:
Current 11.5 8.0 5.0
Deferred -- 0.7 0.5
- --------------------------------------------------------------------------------
$ 86.2 $ 78.3 $ 63.6
================================================================================
</TABLE>
The tax benefits allocated to the 1998 discontinued operation loss and the 1996
extraordinary charge were $.8 and $6.2 million, respectively. The tax benefits
allocated to minority interest earnings for 1998, 1997 and 1996 were $2.5, $2.5
and $2.2 million.
A reconciliation between the income tax expense recognized in the Company's
Statement of Consolidated Earnings and the income tax expense computed by
applying the statutory federal income tax rate to the earnings from continuing
operations before income taxes, minority interest and extraordinary charge
follows:
<TABLE>
<CAPTION>
Years ended December 31, (in millions)
-----------------------------------------------------------------------
1998 1997 1996
-------------------- --------------------- ----------------------
Amount Percent Amount Percent Amount Percent
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earnings from continuing operations before
income taxes, minority interest
and extraordinary charge $ 215.8 $ 237.0 $ 193.1
=======================================================================================================================
Income tax expense
computed at statutory rate $ 75.5 35.0% $ 83.0 35.0% $ 67.6 35.0%
Benefit of statutory depletion (11.9) (5.5) (10.8) (4.6) (8.8) (4.6)
Effect of non-deductible goodwill .9 .4 .7 .3 .8 .4
Effect of state income tax
expense 7.4 3.4 5.72.4 3.7 1.9
Non-deductible merger costs 14.5 6.7 -- -- -- --
Other (.2) (.1) (.3) (.1) .3 .2
- -----------------------------------------------------------------------------------------------------------------------
$ 86.2 39.9% $ 78.3 33.0% $ 63.6 32.9%
=======================================================================================================================
</TABLE>
The provision for deferred income taxes represents the change in the Company's
deferred income tax liability during each year, including the effect of any
enacted tax rate changes. The Company recognizes a deferred income tax liability
or asset for the net effect of (1) temporary differences between the tax bases
of assets and liabilities and their reported amounts in the financial statements
after applying enacted statutory tax rates and laws in effect for the year in
which the differences are expected to reverse and, in certain instances, (2) the
deferred tax effects of tax net operating loss and tax credit carryforwards.
<PAGE> 20
Significant components of the Company's net deferred tax liability as of
December 31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
December 31, (in millions) 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Differences between book and tax bases of
property, plant and equipment $ 167.8 $ 163.4
Assets of overfunded pension plan 16.6 12.7
Other 9.1 9.3
- --------------------------------------------------------------------------------
193.5 185.4
- --------------------------------------------------------------------------------
Deferred tax assets:
Postretirement benefit obligation 37.9 37.1
Reserves not currently deductible 22.9 15.5
Deferred state income taxes 4.8 4.4
AMT credit carryforwards -- 6.5
Other -- 2.6
- --------------------------------------------------------------------------------
65.6 66.1
- --------------------------------------------------------------------------------
Net deferred tax liability $ 127.9 $ 119.3
================================================================================
</TABLE>
The consolidated federal income tax returns of the Company for 1993 through 1995
and various state income tax returns are currently under examination. In the
opinion of management, the Company has made adequate provision at December 31,
1998 for income taxes that might be due as a result of these audits and any
resulting assessments will have no material effect on the Company's consolidated
earnings.
[14] MINORITY INTEREST IN CONSOLIDATED JOINT VENTURE:
Kosmos Cement Company is a partnership, which owns a cement plant located in
Louisville, Kentucky and a cement plant located near Pittsburgh, Pennsylvania
along with related terminals and facilities. The partnership is 25% owned by
Lone Star Industries, Inc. and operated and 75% owned by the Company. The
Company's Consolidated Balance Sheet includes 100% of the assets and liabilities
of Kosmos. Lone Star's 25% interest in Kosmos and the earnings therefrom have
been reflected as "Minority interest in consolidated joint venture" and
"Minority interest, net of income taxes" on the Company's Consolidated Balance
Sheet and Statement of Consolidated Earnings, respectively.
[15] OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS:
<TABLE>
<CAPTION>
December 31, (in millions) 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Environmental liabilities (Note 17) $ 10.9 $ 9.9
Deferred payment obligation 8.1 8.2
Supplemental pension liabilities (Note 16) 5.3 4.2
Estimated liabilities on discontinued operations 4.9 4.2
Other 1.2 2.3
- --------------------------------------------------------------------------------
$ 30.4 $ 28.8
================================================================================
</TABLE>
DEFERRED PAYMENT OBLIGATION -- In connection with the July 1990 purchase of a
hazardous waste processing facility from an affiliate of Browning-Ferris
Industries, Inc., the Company assumed a conditional payment obligation payable
to the former shareholders of the Browning-Ferris subsidiary. The expected
timing of payments related to the estimated liabilities on discontinued
operations and the deferred payment obligation is uncertain.
<PAGE> 21
DISCONTINUED OPERATIONS -- The Company has accrued loss provisions for certain
environmental issues under the indemnification provisions of sales agreements
associated with the environmental services operations discontinued in 1994 and
for which the Company remains contingently liable. In addition, as part of the
acquisition of Moore McCormack in 1988, the Company assumed certain fixed and
contingent liabilities pursuant to certain guarantees and undertakings related
to operations that had been previously discontinued by Moore McCormack.
[16] PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS:
PENSION -- The Company has a defined benefit pension plan covering substantially
all employees. The benefits are based on years of service and the employee's
compensation and are integrated with Social Security. The Company's policy is to
fund its pension plan in accordance with sound actuarial principles.
To determine the funded status of the Company's pension plan, the Company's
actuaries compare the market value of the plan's assets at the end of the year
with actuarial estimates of the projected benefit obligation. Differences in
estimates used and actual experience along with changes in assumptions from
year-to-year are included in net deferred gains or losses. The Company amortizes
the unrecognized net gains or losses whenever such amount exceeds 10% of the
greater of the projected benefit obligation or the market value of plan assets.
The unrecognized net obligation or net asset, unrecognized net gain or loss and
prior service costs were amortized over periods of 5 to 13 years for 1998, over
periods of 5 to 12 years for 1997 and over periods of 6 to 15 years for 1996,
which approximated the estimated average remaining service periods of employees
expected to receive benefits under the plan.
The Company recognized pension income of approximately $6 million, $3.1 million
and $1.7 million in 1998, 1997 and 1996, respectively, under such
Company-sponsored plans. The 1998 amount excludes the $3.7 million curtailment
gain on the Medusa pension and postretirement benefits. In addition to the
Company-sponsored plan, certain union employees of the Company's Colorado cement
operations, the Great Lakes shipping company, the Butler, Kentucky aggregates
operation and the highway safety systems company are covered under a
multi-employer defined benefit plan administered by its union. Amounts
contributed to the multi-employer plans and included in pension expense were
$1.5 million in 1998, $0.8 million in 1997 and $1.2 million in 1996.
The Company acquired Medusa on June 30, 1998, including its pension and
postretirement benefit plans. As a result of the closing of the Medusa corporate
office, the expected years of future service under the Medusa pension and
postretirement plans have been reduced for a significant number of employees.
Under the provisions of Statement of Financial Accounting Standard No. 88,
"Accounting for Settlements and Curtailments of Defined Benefit Pensions Plans
and for Terminated Benefits", and Statement of Financia l Accounting Standard
No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pension",
the curtailment of the Medusa plans resulted in the recognition of $3.7 million
in gains in 1998. Because the curtailment is directly related to the merger
transaction, the Company recognized the gain as a reduction in estimated
transaction costs. (See also Note 3 of Notes to Consolidated Financial
Statements.) The remaining Medusa plans will be amended to establish parity with
the benefits provided by the Company.
DIRECTORS PENSION PLAN -- The Company also has an unfunded defined benefit
pension plan covering the members of its Board of Directors who have five years
of service and are not participants in any of the Company's qualified pension
plans. Eligible directors are entitled to a monthly benefit equal to two-thirds
of their average monthly fee. The benefit is payable over a number of months
equal to such director's service on the Board. During 1998, 1997 and 1996, the
Company included in expense $535,000, $151,000 and $154,000, respectively, to
provide for benefits accrued under the plan.
<PAGE> 22
RETIREMENT SAVINGS PLAN -- The Company maintains a retirement savings plan in
which substantially all employees are eligible to participate. The savings plan
is designed to qualify under Sections 401(a) and 401(k) of the Internal Revenue
Code. Under the savings plan, a participating employee may elect to defer
taxation on a portion of his or her eligible earnings up to a maximum amount
defined by the Code, by directing the Company to contribute such earnings to the
savings plan on the employee's behalf. A participating employee may also make
after-tax contributions to the savings plan. The Company contributes an amount
to the savings plan equal to 50% of an employee's contributions, subject to
certain limitations. The Company's matching contributions are invested solely in
its common stock acquired in open market purchases. All employee contributions
and Company matching contributions are fully vested when made. Amounts held by
the savings plan for the account of a participating employee are distributable
as a lump-sum upon termination of employment for any reason. Subject to certain
conditions and restrictions, a participating employee may receive a distribution
or a loan of a portion of his account balance while employed by the Company. The
Company contributed $3 million in 1998, $2.7 million in 1997 and $2.5 million in
1996, in matching contributions that were charged to compensation expense and
invested in the Company's common stock.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN -- Effective October 1, 1997, the Company
adopted a non-qualified supplemental retirement plan for a group of senior line
and staff management personnel. Under this plan, participants will receive an
additional monthly retirement benefit. The additional benefit is equal to the
difference between the amount calculated under the Company's qualified defined
pension benefit plan discussed above and the amount that would be calculated
assuming there were no limitations imposed by the Internal Revenue Code on
compensation, including incentive compensation earned pursuant to the Company's
Annual Incentive Plan.
The plan is unfunded. The annual amount charged to pension expense and accrued
as a pension liability under the plan for financial reporting purposes is the
sum of (1) the present value of the actuarially determined projected benefit
obligation, using an assumed weighted average discount rate of 6.875% and an
assumed rate of increase in future compensation levels of 4.5%, and (2) the
amortization of the unrecognized prior service cost over a period of 8 years,
which approximates the estimated average remaining service period of those
certain senior employees expected to receive benefits under the plan. The
Company recognized pension expense under this plan of $612,000 and $146,000
during 1998 and 1997. As of December 31, 1998, the unrecognized prior service
cost and the projected benefit obligation for the plan were $1.8 million and $3
million, respectively. As of December 31, 1997, the unrecognized prior service
cost and the projected benefit obligation for the plan were $2.1 million and
$2.5 million, respectively.
SUPPLEMENTAL PENSION LIABILITIES -- A small number of former employees and
retirees of the Company are eligible for payments under non-qualified
supplemental pension agreements. Under such arrangements, the Company accrued
the present value of probable future cash outlays during the expected service
life of the employee and charged that amount against earnings for financial
reporting purposes.
HEALTH CARE AND LIFE INSURANCE BENEFITS -- The Company offers health care
benefits to active employees and their dependents. Certain retirees under the
age of sixty-five and their dependents are also offered health care benefits,
which consist primarily of medical and life insurance benefits. However, the
Company reduces benefit payments for covered retirees sixty-five years of age or
older by benefits paid by Medicare.
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation for general health care and prescription drugs
was approximately 8%, 8.5% and 9% as of December 31, 1998, 1997 and
<PAGE> 23
1996, respectively. For all three years, the Company assumed rates would
decrease each successive year until it reaches rates ranging from 5% to 6% in
2004 and thereafter. The health care cost trend rate assumption has a
significant effect on the amount of the obligation and periodic cost reported.
For example, a one-percentage-point change in assumed health care cost trend
rates would have the following effects:
<TABLE>
<CAPTION>
1-Percentage- 1-Percentage-
Point Increase Point Decrease
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Effect on total of service and interest cost components 8.8% 7.6%
Effect on postretirement benefit obligation 8.5% 7.5%
</TABLE>
Most of the Company's health care benefits are self-insured and administered on
cost plus fee arrangements with a major insurance company or provided through
health maintenance organizations. Claims, premiums and administrative costs paid
for active employees and their dependents were $16.6 million, $14.5 million and
$13 million in 1998, 1997 and 1996, respectively. For retirees and their
dependents these costs were $3.7 million in 1998, $3.8 million in 1997 and $4.2
million in 1996.
The Company provides life insurance benefits to its active and retired
employees. Generally, life insurance benefits for retired employees are reduced
over a number of years from the date of retirement to a minimum level. Costs
paid for life insurance benefits for employees were approximately $1.1 million
in 1998, $910,000 in 1997 and $742,000 in 1996. The costs of providing such
benefits for retired employees were de minimis in each of the three years in the
period ended December 31, 1998.
<PAGE> 24
The pension plan's assets exceeded the accumulated benefit obligation as of both
December 31, 1998 and 1997. None of the Company's accumulated postretirement
benefit obligation has been funded. The following table provides a
reconciliation of benefit obligations, plan assets, funded status of the plans
and amounts recognized in the Company's Consolidated Balance Sheet at December
31, 1998 and 1997:
<TABLE>
<CAPTION>
(in millions)
-----------------------------------------------------
Pension Benefits Other Benefits
------------------------- -----------------------
1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $ (181.8) $ (162.4) $ (52.9) $ (51.5)
Service cost (4.7) (3.9) (0.9) (0.8)
Interest cost (12.2) (11.8) (3.5) (3.7)
Curtailment gain 2.6 -- 1.3 --
Actuarial gain (loss) (0.4) (10.8) 1.5 (0.7)
Acquisition -- (3.4) -- --
Benefits paid 11.1 10.5 3.7 3.8
- ---------------------------------------------------------------------------------------------------
Benefit obligation at end of year (185.4) (181.8) (50.8) (52.9)
- ---------------------------------------------------------------------------------------------------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning
of year 254.4 218.5 --
Actual return on plan assets 23.7 41.6 --
Acquisition -- 3.5 --
Employer contribution 0.7 1.3 --
Benefits paid (11.1) (10.5) --
Fair value of plan assets at end of year 267.7 254.4 --
Funded status 82.3 72.6 (50.8) (52.9)
Unrecognized net actuarial gain (43.0) (43.1) (20.5) (20.9)
Unrecognized prior service cost 3.2 3.8 (24.2) (26.6)
Prepaid (accrued) benefit cost $ 42.5 $ 33.3 $ (95.5) $ (100.4)
===================================================================================================
WEIGHTED-AVERAGE ASSUMPTIONS AS OF
DECEMBER 31
Discount rate 6.875% 6.875% to 7% 6.875% 6875 to 7%
Expected return on plan assets 8.5% 8.5% N/A N/A
Rate of compensation increase 4.5 to 5% 4.5 to 5% N/A N/A
</TABLE>
<TABLE>
<CAPTION>
(in millions)
--------------------------------------------------------------
Pension Benefits Other Benefits
---------------------------- -----------------------------
1998 1997 1996 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPONENTS OF NET PERIODIC BENEFIT INCOME
Service cost $ 4.7 $ 3.9 $ 3.7 $ 0.9 $ 0.8 $ 0.8
Interest cost 12.2 11.8 11.4 3.5 3.7 3.6
Actual return on plan assets (23.7) (41.6) (25.5) -- -- --
Asset gain deferred 2.4 23.5 8.7 -- -- --
Curtailment (gain) loss -- -- 0.3 -- -- --
Amortization of prior service cost 0.5 0.6 0.6 (2.4) (2.4) (2.4)
Recognized net actuarial gain (2.1) (1.3) (0.9) (2.0) (2.3) (2.3)
- -------------------------------------------------------------------------------------------------------------
Net periodic benefit income $ (6.0) $ (3.1) $ (1.7) $ -- $ (0.2) $ (0.3)
=============================================================================================================
</TABLE>
<PAGE> 25
[17] COMMITMENTS AND CONTINGENT LIABILITIES:
OPERATING LEASES -- Rental expense covering manufacturing, transportation and
certain other facilities and equipment for the years 1998, 1997 and 1996 totaled
$23.7 million, $21.9 million and $19.1 million, respectively. Minimum annual
rental commitments as of December 31, 1998 under noncancellable leases are set
forth as follows:
<TABLE>
<CAPTION>
(in millions)
--------------------------------------------
Mobile Manufacturing
equipment equipment and other Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1999 $ 13.2 $ 4.1 $ 17.3
2000 12.1 3.8 15.9
2001 8.8 3.4 12.2
2002 5.8 3.0 8.8
2003 3.7 2.8 6.5
Thereafter 2.6 12.5 15.1
- --------------------------------------------------------------------------------
$ 46.2 $ 29.6 $ 75.8
================================================================================
</TABLE>
ENVIRONMENTAL MATTERS -- The Company or its predecessors have conducted
industrial operations at some of the Company's facilities for almost 100 years.
Many of the raw materials, products and by-products associated with the
operation of any industrial facility, including those for the production of
cement, concrete products, or aggregates contain chemical elements or compounds
that are designated as hazardous substances. The Company's operations involving
such materials are regulated by federal, state and local laws and regulations
pertaining to the protection of human health and the environment. In the past,
in accordance with industry practice, the Company disposed of various materials,
both onsite and offsite, in a manner, which in some cases would not be permitted
under current environmental regulations. Certain of these materials, if
discarded today, might be categorized as hazardous substances or wastes.
Remediation under environmental clean-up rules can be costly. Federal
environmental laws, as well as analogous laws in certain states, create joint
and several liability for the cost of cleaning up or correcting releases into
the environment of designated hazardous substances. Among those who may be held
jointly and severally liable are those who generated the hazardous substances,
those who arranged for disposal of the hazardous substances, those who owned or
operated the disposal site or facility at the time of disposal, and subsequent
owners and operators. With regard to the discontinued environmental services
business, the Company has both given indemnification to and received
indemnification from others for properties previously owned, although a few
courts have held that indemnification for such environmental liabilities is
unenforceable. No estimate of the extent of contamination, remediation cost or
recoverability of cost from prior owners, if any, is currently available
regarding these discontinued operations except as noted below.
While several of the Company's facilities are the subject of various local,
state or federal environmental proceedings and inquiries, most of these
investigations are in their preliminary stages and final results may not be
determined for years. In certain instances, the Company has been named as one of
several potentially responsible parties charged with clean-up liability pursuant
to CERCLA. This disclosure is a statement of fact and is intended as general
cautionary advice that events of this kind are a reasonable possibility in the
cement industry, as well as in many other industries. The mere designation of an
entity as a potentially responsible party does not necessarily imply that it is
probable that an asset has been impaired or a liability has been incurred. In
fact, management considers all three of the Superfund sites in which the Company
has been identified as a potentially responsible party as of January 27, 1999 to
be of de minimus consequence to the Company.
<PAGE> 26
Despite the fact that current law imposes joint and several liability on all
parties at any Superfund site, the Company's accrual for estimated liability in
these instances reflects only the Company's expected share based on the
Company's assessment of (1) its proportionate volumetric contribution to the
waste material, (2) whether responsibility is being disputed, (3) the terms of
any existing agreements, (4) the solvency of other parties and (5) experience
regarding similar matters. While some of these matters have been, or are
expected to be, settled for de minimis amounts, others are in their preliminary
stages and final results may not be determined for years. The Company accrues a
charge for an environmental reserve when it is probable that a liability has
been incurred and the amount of the liability is reasonably estimable, whether
or not claims have been asserted. All environmental accruals have been recorded
without giving effect to any possible future recoveries from insurance or other
third parties. It is often difficult to estimate the future impact of
environmental matters and accruals are adjusted as further information develops
or circumstances change.
Accrued liabilities specifically related to environmental matters were, in
total, $13.7 million, $13.6 million and $3.4 million at December 31, 1998, 1997
and 1996. Additional amounts related to closure, remediation and other
environmental related liabilities were included in the charge accrued in
conjunction with the 1994 loss on disposal of the discontinued environmental
services operations. Cash expenditures often lag by a number of years the period
in which an accrual is recorded. Based on the information developed to date, the
Company does not believe it will be required to spend significant sums on these
matters in excess of the amounts already provided for in the Company's financial
statements. Until all environmental studies, investigations, remediation work
and negotiations with or litigation against potential sources of recovery have
been completed, however, the ultimate cost that might be incurred by the Company
to resolve these environmental issues cannot be assured.
Additions to and expenditures charged against the Company's environmental
accruals related to continuing operations during the past three years were as
follows:
<TABLE>
<CAPTION>
Years ended December 31, (in millions) 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Beginning balance $ 13.6 $ 3.4 $ 4.6
Expense provisions 2.2 5.1 0.4
Assumed in Aggregates acquisitions -- 8.1 --
Expenditures (2.1) (3.0) (1.6)
- --------------------------------------------------------------------------------
Ending balance $ 13.7 $ 13.6 $ 3.4
================================================================================
</TABLE>
Based solely upon the information developed to date, which is subject to change
as additional information becomes available, management of the Company believes
that known matters can be successfully resolved in cooperation with local, state
and federal regulating agencies. However, because the Company's results of
operations vary considerably with construction activity and other factors, it is
at least reasonably possible that future charges for environmental contingencies
could, depending on their timing and magnitude, have a material adverse impact
on the Company's results of operations in a particular period.
Amendments to the Clean Air Act in 1990 provided comprehensive federal
regulation of various sources of air pollution, and established a new federal
operating permit and fee program for virtually all manufacturing operations. The
Clean Air Act Amendments may result in increased capital and operational
expenses for the Company in the future, the amounts of which are not presently
determinable. As mandated by the Clean Air Act, beginning in late 1995, the
Company commenced submitting Federal operating permit applications and paying
annual fees for its cement manufacturing plants. In addition, the U.S.
Environmental Protection Agency is developing air toxics regulations for a
<PAGE> 27
broad spectrum of industrial sectors, including portland cement manufacturing.
Management has no reason to believe, however, that these new standards would
place the Company at a disadvantage with respect to its competitors.
In July 1997, the EPA promulgated revisions to two National Ambient Air Quality
Standards under the Clean Air Act -- particulate matter and photochemical
oxidants (ozone). Because of the nature of the Company's operations, the
proposed addition of a particulate matter standard that will regulate particles
2.5 microns or less in diameter, and the regulation of nitrogen oxides emissions
as the precursor pollutants to ozone, is of potential concern. Implementation of
these new standards will not immediately have an impact on industrial
operations. The first step is a several-year data collection and analysis
activity by the states to determine whether or not the state will be able to
meet the new standards. If a state is unable to demonstrate that it attains the
standards, it will then be required to modify its air quality implementation
plan to describe actions to meet the new standards. This initial phase will take
several years to complete. It is presently unknown whether states in which the
Company operates will be able to meet the new standards, how the states will
modify their implementation plans to demonstrate compliance or the ultimate
technology and cost impact on the Company's operations.
Another evolving issue of potential significance to the Company is global
warming and the international accord on carbon dioxide stabilization/reduction.
Carbon dioxide is a greenhouse gas many scientists and others believe
contributes to a warming of the Earth's atmosphere. In December 1997, the United
Nations held an international convention in Kyoto, Japan to take further
international action to ensure greenhouse gas stabilization or reduction after
the turn of the century. The conference agreed to a protocol to the United
Nations Framework Convention on Climate Change originally adopted in May 1992.
The protocol establishes quantified emission reduction commitments for certain
developed countries, including the U.S., and certain countries that are
undergoing the process of transition to a market economy. These reductions are
to be obtained by 2008-2012. The protocol was made available for signature by
member countries starting in the spring of 1998. The protocol will require U.S.
Senate ratification and enactment of implementing legislation before it becomes
effective in the United States.
The consequences of greenhouse gas reduction measures for cement producers are
potentially significant because carbon dioxide is generated from combustion of
fuels such as coal and coke in order to generate the high temperatures necessary
to manufacture cement clinker (which is then ground with gypsum to make cement).
In addition, carbon dioxide is generated in the calcining of limestone to make
cement clinker. Any imposition of raw material or production limitations or
fuel-use or carbon taxes could have a significant impact on the cement
manufacturing industry. It will not be possible to determine the impact on the
Company until governmental requirements are defined or the Company can determine
whether emission offsets or credits are obtainable, and whether alternative
cementitious products or alternative fuel can be substituted.
The Company's Wampum, Pennsylvania cement plant has received five Notices of
Violation from the U.S. EPA, alleging certain air emission violations. The U.S.
EPA has referred these notices to the U.S. Department of Justice for potential
civil enforcement. Three of the notices allege opacity and fugitive emissions
violations of Pennsylvania law and maintain that the provisions are enforceable
by federal authorities. The two remaining notices allege visible emissions
violations related to the provisions of the plant's state operating permit for
burning waste-derived liquid fuel. These notices also maintain that the state
permit provisions are enforceable by federal authorities. The parties have
negotiated a preliminary agreement in principle subject also to the negotiation
of a mutually agreeable consent decree. The Company anticipates that the consent
decree will include future
<PAGE> 28
compliance obligations and penalty payments. The Company does not expect the
penalty payments to materially exceed the amount the Company has already
reserved for this matter. Discussions are still on going, however, and
therefore, the Company is unable at this time to provide assurances as to the
ultimate liability that may be associated with these matters.
CLAIMS FOR INDEMNIFICATION -- The Mineral Management Service of the Department
of the Interior claimed that the Company's former oil and gas subsidiary, Pelto
Oil Company, owed royalties on two separate gas contract settlement payments
that Pelto received. When the Company sold Pelto in 1989, the Company agreed to
protect the purchaser from any future claims related to these two payments. In a
March 10, 1998 letter, the MMS advised that it was withdrawing its royalty claim
in the amount of $1.35 million on one of the settlement payments because of a
court ruling in July 1997, which prohibited further claims against the current
owner of Pelto and that owner's affiliates. The MMS, however, reserved its right
to possibly reassert the claim at a later date.
The Company also disagrees with MMS' claim that an unspecified amount of
royalties are owed on the second gas contract settlement payment of $5.9
million. If one or both of MMS claims against Pelto are ultimately successful,
the Company could have liability for royalties, plus late payment charges, in
amounts which are not currently determinable. Such expenditures would result in
a charge to discontinued operations.
KOSMOS CEMENT JOINT VENTURE SEVERANCE TAX AUDIT -- Kosmos Cement Company is a
partnership operated and 75% owned by the Company. In late 1997, the State of
Kentucky proposed a deficiency assessment against Kosmos for severance tax
payments related to limestone mined at its Battletown, Kentucky quarry. The
total assessment is approximately $3.7 million, including penalty and interest.
Kosmos is contesting the assessment. Kosmos met with the Kentucky Revenue
Cabinet in January 1998 to discuss the disputed assessments. Discussions are
ongoing and the Company is unable to evaluate whether an unfavorable outcome is
either probable or remote.
In addition to limestone mined for the production of cement, Kosmos mines
limestone specifically for use by a local electric utility company. The Company
believes that, under the terms of a supply agreement, the utility company is
responsible for severance taxes on limestone provided to it. A major portion of
the Kentucky severance tax assessment relates to this specifically mined
limestone. For the amounts not paid by the local electric utility, the Company
would indirectly bear 75% of any settlement and legal costs through its
ownership interest in Kosmos.
DISCONTINUED ENVIRONMENTAL SERVICES SEGMENT -- The Company has both given and
received environmental and other indemnifications related to properties the
Company previously owned. A few courts have held that such promises to protect
other parties from loss for environmental liabilities are unenforceabl e. At
present, the Company is not able to estimate the extent of contamination,
remediation cost or recoverability of cost from prior owners, if any, regarding
these discontinued operations.
In late 1994 and the first quarter of 1995, the Company learned of some soil and
groundwater contamination at its former Alabama hazardous waste processing
facility. Although the Company sold the facility in April 1995, the Company
agreed to keep some liability for soil and groundwater contamination at the
facility prior to that time. The Company's investigation has not yet determined
the extent of the contamination or what sort of cleanup, if any, will be
required. It is too early to determine the amount of the Company's exposure to
loss with any degree of certainty.
The Company has agreed to remediate the soil and groundwater contamination at
the Alabama facility to the extent required by law, but filed a lawsuit against
the former owner of the facility. Claims against the prior owner and
<PAGE> 29
other potentially responsible parties could significantly reduce or eliminate
the Company's own loss exposure. Nevertheless, to cover the estimated cost of
investigating the amount of contamination present, conducting a ten year
monitored remediation program and pursuing the claim against the prior owner and
other potentially responsible parties, the Company recorded an additional $2.4
million expense ($1.6 million, after-tax) in the third quarter of 1998. The
charge is reflected as a "loss from discontinued operations" on the Company's
Statement of Consolidated Earnings.
OTHER -- In addition to those matters separately disclosed above, the Company
has incurred in the regular course of business certain other commitments and
contingent liabilities including, among other things, (1) personal injury
lawsuits, (2) indemnity and other hold harmless agreements, (3) environmental
remediation liabilities, (4) product liability claims, and (5) claims by
disgruntled employees. These various commitments and contingent liabilities, in
the judgment of management, do not total more than 10% of current assets and
will not result in losses that would materially affect the Company's
consolidated balance sheet. However, because the Company's results of operations
vary considerably with construction activity and other factors, it is at least
reasonably possible that charges for contingencies in the future could,
depending on when they occur and how large they are relative to results of
operations or cash flows for a particular period, have a material negative
impact on the Company's results of operations or cash flows for that period.
[18] CAPITAL STOCK:
In June 1998, the shareholders of the Company voted to amend the Company's
Restated Articles of Incorporation, as amended, to increase the authorized
number of shares of common stock. The authorized capital stock of the Company
comprises 200,000,000 shares of Common Stock, $1.25 par value and 10,000,000
shares of Preferred Stock, $.05 par value. American Stock Transfer & Trust
Company, serves as the registrar and transfer agent for the Common Stock.
COMMON STOCK
At December 31, 1998, there were approximately 39,849,000 shares of common stock
issued and approximately 38,683,000 shares of common stock outstanding and held
of record by approximately 4,268 shareholders, and approximately 4.7 million
shares were reserved for future issuance upon exercise of options granted under
employee benefit plans and stock issued under phantom stock plans. The Company
paid a quarterly dividend of $.10 per share of common stock from March 1997 to
September 1998. In December 1998, the quarterly dividend was increased to $.15
per share of common stock.
<PAGE> 30
A reconciliation of the income available to common shareholders and share
amounts used in the computation of basic and diluted earnings per share follows:
<TABLE>
<CAPTION>
(in millions except per share amounts) 1998 1997 1996
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Earnings from continuing operations
before preferred stock dividends $ 125.0 $ 153.7 $ 125.5
Less: preferred stock dividends -- (2.5) (7.7)
- ------------------------------------------------------------------------------------------------
Earnings available to common shareholders
for basic earnings per share 125.0 151.2 117.8
Effect of dilutive securities:
Convertible preferred stock -- 2.5 7.7
Interest on convertible subordinated notes,
net of taxes -- -- 2.1
- ------------------------------------------------------------------------------------------------
Earnings available to common shareholders
for diluted earnings per share $ 125.0 $ 153.7 $ 127.6
================================================================================================
Average outstanding common shares for basic
earnings per share 38.2 36.9 32.3
Effect of dilutive securities:
Stock options and warrants 0.7 0.5 0.7
Convertible preferred stock -- 1.6 5.3
Convertible subordinated notes -- -- 1.4
- ------------------------------------------------------------------------------------------------
Total outstanding shares for diluted earnings
per share 38.9 39.0 39.7
Earnings per share from continuing operations
Basic $ 3.27 $ 4.10 $ 3.65
================================================================================================
Diluted $ 3.22 $ 3.94 $ 3.21
================================================================================================
</TABLE>
COMMON STOCK REPURCHASE PROGRAM
On November 22, 1996, the Board of Directors approved a common stock repurchase
program under which the Company was authorized to repurchase up to 1.5 million
shares of the Company's outstanding common stock. As of December 31, 1997,
1,166,000 shares of common stock had been purchased in open market transactions
at a cost of $46.3 million. Medusa's Board of Directors also previously
authorized the purchase of outstanding common shares under which Medusa, in its
discretion, made open market purchases from time to time. Medusa purchased
approximately 500,000 shares of its then outstanding common stock for $19.2
million in 1997 and 455,000 shares for $13.6 million during 1996. On March 17,
1998, both companies' Board of Directors cancelled their respective common stock
repurchase program and neither company repurchased shares of common stock in
1998.
SHAREHOLDER RIGHTS PLAN
The Company has a shareholder rights plan pursuant to which each holder of
common stock has one Right per share to purchase initially a Unit consisting of
one one-hundredth of a share of Preferred Stock, Junior Participating Series C,
at a purchase price of $60 per Unit, subject to adjustment. The Rights are not
exercisable generally until the earlier of (1) ten days following a public
announcement that a person or group has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares of common
stock or (2) ten business days following the commencement of a tender offer or
exchange offer that would result in a person's becoming an acquiring person.
<PAGE> 31
With certain exceptions, in the event a person becomes an acquiring person, each
Right (except those held by the acquiring person or certain related persons,
which become void) will then entitle the holder to purchase a number of shares
of common stock of the Company having a current market price of twice the
purchase price. In the event that any time on or after the stock acquisition
date, (1) the Company is acquired in a merger or other business combination,
with certain exceptions, or (2) 50% or more of the Company's assets or earning
power is sold or transferred, each Right (except those held by the acquiring
person or certain related persons, which become void) will then entitle the
holder to purchase a number of shares of common stock of the acquiring company
(or in certain cases its controlling person) having a current market price of
twice the purchase price.
The Rights expire at the close of business on March 14, 2001. At any time until
ten days following a stock acquisition date, the Company may redeem the Rights
in whole, but not in part, at a price of $.01 per Right, payable, at the option
of the Company, in cash, shares of common stock, or other consideration. The
provisions of the shareholder rights plan are intended to discourage, or may
have the effect of discouraging, partial tender offers, front-end loaded
two-tier tender offers and certain other types of coercive takeover tactics and
inadequate takeover bids and to encourage persons seeking to acquire control of
the Company first to negotiate with the Company. The Company believes that these
provisions on balance provide benefits to the Company's shareholders by
enhancing the Company's potential ability to negotiate an improvement in terms
with the proponent of an unfriendly or unsolicited proposal to take over or
restructure the Company.
PREFERRED STOCK
The Board of Directors is authorized to designate series of preferred stock and
fix the powers, preferences and rights of the shares of such series and the
qualifications, limitations or restrictions on these powers, preferences and
rights.
SERIES A AND B PREFERRED STOCK -- In 1987, the Company issued 1,999,998 shares
of Preferred Stock, $.70 Cumulative Convertible Series A. In 1988, the Company
issued 960,000 shares of Preferred Stock, $3.75 Convertible Exchangeable Series
B. In late 1996, substantially all of the Series A and Series B Preferred Stock
were converted into 3.3 million shares of common stock. Dividends paid or
accrued on the Series A and B Preferred Stock amounted to approximately $2.7
million in 1996.
SERIES C PREFERRED STOCK -- In connection with the distribution of the Rights on
March 14, 1991, the Board of Directors of the Company authorized 400,000 shares
of Series C Preferred Stock, none of which are outstanding. The Series C
Preferred Stock would be issued only upon the exercise of Rights and only if the
Rights were exercised. The Rights are not exercisable as of the date of this
annual report. See "Shareholder Rights Plan."
SERIES D PREFERRED STOCK -- In 1994, the Company issued 1,725,000 shares of
Preferred Stock, $2.875 Cumulative Convertible Series D. Dividends paid on the
Series D Preferred Stock were approximately $2.5 million during 1997. Dividends
paid or accrued on the Series D Preferred Stock were approximately $5 million in
1996. In the third quarter of 1997, all of the outstanding shares of the Series
D Preferred Stock were converted into approximately 2.6 million shares of common
stock.
<PAGE> 32
[19] STOCK OPTION PLANS:
EMPLOYEE STOCK OPTION PLANS -- As of December 31, 1998, there are two stock
option plans for officers and certain key employees of the Company. Both the
1987 Stock Option Plan and the 1989 Stock Option Plan each had initially
available for award up to 2,000,000 shares of the Company's common stock. In
June 1998, shareholders of the Company voted to approve an amendment to the
Company's 1989 Stock Option Plan to increase the number of shares of Company
Common Stock available for grant to 5 million. As of December 31, 1998,
1,980,047 options for the 1987 Plan and 1,716,680 options for the 1989 Plan had
been awarded. The Employee Compensation and Benefits Committee of the Board of
Directors may permit any option granted under the plans to be exercisable
immediately upon the date of grant or at any time thereafter. However, no option
granted under the plans may be exercised within the first six months after the
date of grant except in the event of the death or disability of the optionee.
Since August 1994, options granted have typically become exercisable over four
equal annual installments at the end of each year after the date of grant of
continued employment with the Company. Options granted are exercisable at the
fair market value of the stock at the date of grant and typically expire ten
years from the date of grant. Unoptioned shares available for grant as of
December 31, 1998 were 19,953 and 3,283,320 under the 1987 Plan and 1989 Plan.
MEDUSA LONG-TERM INCENTIVE PLAN -- In conjunction with the Medusa merger,
options granted under the Medusa long-term incentive plan to purchase
approximately 592,000 shares of Medusa common stock were converted into options
to purchase approximately 522,000 shares of Company common stock. The options
are exercisable at the fair market value of the stock at the date of grant,
adjusted for the merger conversion ratio, and expire ten years from the date of
grant. Of these 522,000 options, approximately 195,200, all of which are
exercisable, remain outstanding as of December 31, 1998.
NON-EMPLOYEE DIRECTORS' PLAN -- Under the 1991 Nonqualified Stock Option Plan
for Non-Employee Directors, options for a total of up to 400,000 shares of the
Company's common stock are available for grant to directors of the Company who
are not employed by the Company or any of the Company's subsidiaries. The 1991
Director's Plan provides that: (1) options to acquire 10,000 shares of the
Company's common stock are automatically granted to each non-employee director
on the date of the director's first election to the Board, (2) 2,000 options are
automatically granted to each non-employee director on the date of each annual
meeting of shareholders where he or she continues to serve as a director of the
Company, (3) options granted are exercisable at the fair market value of the
common stock at the date of grant and expire ten years from the date of grant,
(4) all options granted are exercisable six months after the date of the grant,
and (5) upon the termination of service as a director on the Board by a
non-employee director who is eligible for benefits under the Southdown, Inc.
Directors' Retirement Plan, any of such director's options outstanding as of the
date of such termination of service on the Board shall be exercisable for ten
years from the date of grant of such options. As of December 31, 1998, a total
of 224,000 options had been awarded under the 1991 Directors' Plan. Unoptioned
shares available for grant as of December 31, 1998 under the 1991 Director's
Plan were 176,000.
<PAGE> 33
Summary information with respect to all of the Company's stock option plans is
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------------------- ------------------------- -------------------------
Number of Weighted Number of Weighted Number of Weighted
Shares Average Price Shares Average Price Shares Average Price
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January 1: 1,338,892 $ 29.28 1,682,288 $ 23.95 1,758,693 $ 20.97
Granted 275,280 62.06 508,440 37.46 586,340 27.12
Exercised (514,174) 32.46 (805,776) 22.84 (618,705) 18.55
Canceled (96,255) 35.74 (46,060) 35.70 (44,040) 24.32
- ---------------------------------------------------------------------------------------------------------------
Outstanding at December 31: 1,003,743 $ 36.02 1,338,892 $ 29.28 1,682,288 23.95
===============================================================================================================
Options Exercisable at
December 31: 479,913 388,547 761,558
===============================================================================================================
</TABLE>
The following table summarizes information about stock options outstanding as of
December 31, 1998:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- ---------------------------------------------------------------------------------------- -------------------------------------
Range of Number Outstanding Weighted-Average Weighted-Average Number Exercisable Weighted-Average
Exercise Prices at 12/31/98 Remaining Contractual Life Exercise Price at 12/31/98 Exercise Price
- ---------------------------------------------------------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C>
$11.00 to 20.50 151,206 5.1 $16.72 121,106 $15.99
21.562 to 40.875 519,897 7.2 28.31 258,522 28.77
41.335 to 71.782 332,640 9.0 56.85 100,285 45.67
- ---------------------------------------------------------------------------------------- -------------------------------------
$11.00 to 71.782 1,003,743 $36.02 479,913 $29.08
================================================================================================================================
</TABLE>
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" encourages, but does not require companies to record compensation
cost for employee stock-based compensation plans at fair value. Because of the
inexact and subj ective nature of deriving the fair value of stock-based
compensation, the Company has adopted the disclosure-only provisions of SFAS No.
123 and continues to account for stock-based compensation as it has in the past
using the intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees." Accordingly, because
the exercise price of stock-based compensation equals the market price of the
underlying stock on the date of grant, no compensation expense has been
recognized for the Company's stock plans.
As permitted by SFAS No. 123, the Company has estimated the pro forma fair value
of its stock-based compensation for disclosure purposes by using the
Black-Scholes model, a generally recognized option pricing model. Had
compensation cost for the Company's stock-based compensation plans been
determined based on the fair value at the grant date for awards consistent with
the provisions of SFAS No. 123, the Company's net earnings and diluted earnings
per share would have been reduced by $3 million or $.08 per share, $3 million or
$.08 per share and $2.2 million or $.07 per share in 1998, 1997 and 1996. The
pro forma fair value of options at date of grant was estimated using the
following assumptions:
<TABLE>
<CAPTION>
1998 1997 1996
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Expected life (years) 5 5 5
Interest rate (U.S. Treasury 5 year notes) 5.70% 6.20% 6.45 %
Volatility 30.901% 30.341% 31.077%
Dividend yield .99% 1.27% 1.67%
- ---------------------------------------------------------------------------------
Weighted average fair value at grant date $ 17.09 $ 8.88 $ 6.54
=================================================================================
</TABLE>
The Black-Scholes model was originally developed for use in estimating the fair
value of traded options, which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the use of subjective
assumptions including the expected life of the option and expected stock price
volatility. Because the Company's
<PAGE> 34
stock-based compensation has characteristics different from those of traded
options and because of the subjective nature of certain assumptions used the
Company can not guarantee that the weighted average fair value amounts reflected
in the table above will be achieved. Also, the computed pro forma impact only
includes the effects of grants since January 1, 1994. Because it is likely that
additional options will be granted in future years and will vest ratably, the
reported pro forma results are not necessarily representative of the effects on
reported pro forma results for future years.
PHANTOM STOCK PLAN -- Effective January 1, 1997, the Board of Directors adopted
the Phantom Stock and Deferred Compensation Plan for Non-Employee Directors,
which was approved by the shareholders at the 1997 Annual Meeting. This plan
calls for the non-employee directors to receive on a deferred basis, in lieu of
cash, 50% of their monthly directors' fees in fair market value of Common Stock.
The fair market value is determined based upon the average of the high and low
prices of the Common Stock on the last New York Stock Exchange trading day of
the month the fee is payable. The non-employee director may elect to receive on
a deferred basis his total monthly fee in fair market value of Common Stock. The
plan defers the recognition of compensation by the director by deferring the
issuance of Common Stock to the director until he or she leaves the Board. The
director's account will also be credited with fair market value of Common Stock
equal to cash dividends on Common Stock that would have been received had the
Common Stock been issued when earned. A total of 250,000 shares of Common Stock
have been reserved for issuance under this plan. As of December 31, 1998,
approximately 1,300 shares, and 13,000 stock equivalent units have been issued.
MEDUSA RESTRICTED STOCK AWARD PLANS -- Prior to the merger, Medusa had
restricted stock award plans, which provided for awards of common stock to
officers and non-employee directors of Medusa. These awards were subject to
resale restrictions. The terms of the plans provided the resale restrictions
would lapse in the event of a change in control of Medusa and, accordingly, the
recipients of these restricted stock awards were allowed to sell their shares in
conjunction with the merger transaction. Compensation expense of $8.5 million
related to these plans has been included in estimated merger related transaction
costs. (See also Note 3 of Notes to Consolidated Financial Statements.)
<PAGE> 35
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Southdown, Inc. is one of the largest producers of cement in the U.S. The
Company operates twelve portland cement manufacturing plants located in Alabama,
southern California, Colorado, Florida, Georgia, Kentucky, Michigan, Ohio,
Pennsylvania, Tennessee and Texas, plus an extensive network of cement
distribution terminals. The Company also mines, processes, and sells
construction aggregates and specialty mineral products in the eastern half of
the U.S. and in southern California. In addition, the Company markets
ready-mixed concrete products in two of its largest cement markets, southern
California and Florida. The discussion and analysis that follows reflects
management's assessment of the financial condition and results of operations of
Southdown and subsidiary companies and should be read in conjunction with the
audited consolidated financial statements on pages 32 through 64.
Earnings from continuing operations for 1998 increased 22% to $186.9 million or
$4.81 per diluted share, excluding a one-time, after tax charge of $61.9 million
or $1.59 per share related to the merger with Medusa Corporation. The Company
produced record 1998 revenues and record operating earnings, before acquisition
charges, of $1.185 billion and $301.6 million, respectively, which represent
increases of 8% and 21% compared with 1997 results. Net earnings for 1998 were
$123.4 million, or $3.18 per share, on a diluted basis. Net earnings included an
after tax loss of $1.6 million, $.04 per share, from discontinued operations.
For 1997, the Company reported net earnings of $153.7 million or $3.94 per
share, diluted. Prior year results have been restated to include the results of
Medusa's operations.
All three of the Company's operating segments showed improvements. In absolute
dollars, the Cement segment showed the largest improvement, rising $43.7 million
or 16% to $311 million in operating earnings for 1998 compared with $267.3
million in 1997. Even excluding the $3.7 million gain realized in 1998 on the
sale of certain Florida west coast facilities, the Concrete Products segment
showed the largest percentage improvement, increasing 77% to $16.8 million in
operating earnings compared with $9.5 million for 1997. The Aggregates segment
rose 21% to $25 million in operating earnings for 1998 compared with $20.6
million for 1997.
Net earnings for 1997 were significantly higher than the $112.2 million, $2.88
per share, diluted, earned in 1996. Net earnings for 1996 included an after-tax
extraordinary charge of $13.3 million, $.33 per diluted share, for prepayment
premium and other costs incurred on the early retirement of 14% Senior
Subordinated Notes and the Medusa 6% Convertible Subordinated Notes.
Consolidated revenues in 1997 improved 11% over 1996 because of higher sales
prices in all three of the Company's operating segments and improved cement
sales volumes and aggregate sales volumes. The year-over-year improvement in
operating results includes a 17% increase in Cement segment earnings. An almost
75% increase in Aggregate segment earnings and a 34% reduction in interest
expense also contributed to the year-over-year improvement, offsetting a 22%
decline in the Concrete Products segment and higher Corporate overhead. Interest
expense in 1997 declined compared with 1996, because of the refinancing of the
Company's 14% Notes with 10% Senior Subordinated Notes in March 1996 and lower
borrowings on Medusa's revolving credit facility.
<PAGE> 36
SEGMENT OPERATING EARNINGS
CEMENT -- The cement operating margin rose to 37.4% as average selling prices
were up at all of the Company's plants in 1998, with an overall increase of
4.9%, or $3.37 per ton. The Company's largest plant, located in Victorville,
California, led the cement group in both pricing and demand growth as robust
construction activity was apparent in all of the plant's principal marketing
regions of southern California, Arizona and Nevada. Overall, demand was strong
in the Company's principal markets as total cement sales volumes increased
approximately 3% for the year. The Company expects cement demand to remain
strong in 1999, primarily related to anticipated increases in Federal and state
infrastructure spending. While average cement prices are expected to rise in
1999, the rate of increase is expected to slow as U.S. cement prices approach
competitive world pricing levels.
Average cement unit costs of sales in 1998 increased only $.18 per ton, or .4%,
as a result of a 447,000 ton or 4.6% increase in clinker production levels and
lower fuel and raw materials costs, partially offset by increased power and
maintenance costs.
Cement segment operating earnings in 1997 were 17%, or almost $39 million better
than the $228.4 million earned in 1996. The segment had a 448,000 ton increase
in 1997 cement sales volumes and a 5.3% improvement in average sales prices over
1996. The higher 1997 sales volumes and sales prices reflected continuation of
growing demand for cement, which began in the early 1990's.
The table below shows sales volumes and average unit sales prices, unit
manufacturing and other plant operating costs and unit margins relating to
cement plant operations for the past three years. Manufacturing and other plant
operating costs include fixed and variable manufacturing costs, cost of
purchased cement, selling expenses, plant general and administrative costs,
other plant overhead and miscellaneous costs.
<TABLE>
<CAPTION>
Cement Segment Operating Summary 1998 1997 1996
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tons of cement sold (thousands) 11,388 11,051 10,603
========================================================================================
Weighted average per ton data:
Sales price (net of freight) $ 71.99 $ 68.62 $ 65.18
Manufacturing and other plant operating costs 45.04 44.86 43.71
- ----------------------------------------------------------------------------------------
Margin$ 26.95 $ 23.76 $ 21.47
========================================================================================
</TABLE>
CONCRETE PRODUCTS -- Concrete Products earnings improved to $20.5 million in
1998 from the $9.5 million earned in 1997. Results for 1998 include $5.7 million
in gains on asset sales compared with $2 million in gains from such sales in
1997. Concrete Products revenues for 1998 were essentially unchanged from the
prior year as a 4.8% improvement in average selling prices offset a
weather-impacted decline in sales volumes in the Florida operations. Both the
southern California and Florida operations benefited from a manageme nt
reorganization in 1998, which has reduced overhead costs and improved operating
efficiencies.
The Concrete Products segment's operating earnings for 1997 were 22% lower than
the $12.2 million earned in 1996. Earnings were lower compared with the prior
year primarily because of a 28% decline in the Florida concrete block
operations. The higher cost of purchased inventory and the loss of a large
customer hurt block operations in 1997. Despite improved ready-mixed concrete
sales prices in California, 1997 operating results from the ready-mixed concrete
operation declined because of higher raw material and strike-related costs.
<PAGE> 37
The table below shows sales volumes and average unit sales prices, unit
operating costs and unit margins relating to the Company's ready-mixed concrete
operations for the past three years. Operating costs include plant costs,
delivery, selling, general and administrative and miscellaneous operating costs.
<TABLE>
<CAPTION>
Concrete Products Segment Operating Summary 1998 1997 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cubic yards of ready-mixed concrete sold (thousands) 3,560 3,656 3,704
===========================================================================================
Weighted average per cubic yard data:
Sales price(1) $ 57.64 $ 54.99 $ 53.06
Operating costs 54.59 53.95 51.45
- -------------------------------------------------------------------------------------------
Margin(2) $ 3.05 $ 1.04 $ 1.61
===========================================================================================
</TABLE>
(1) Excludes $5.7 million, $2 million and $1.5 million in gains from asset sales
for 1998, 1997 and 1996, respectively.
(2) Does not include concrete block and other related products, which totaled
$4 million, $3.5 million and $4.7 million of operating earnings for 1998,
1997 and 1996, respectively.
AGGREGATES -- Operating earnings for the Aggregates segment increased to $25
million in 1998, up 21% compared with 1997. Revenues for the segment increased
24% for 1998 compared with 1997 as both sales volumes and average sales prices
improved. The Company sold one million more tons of aggregates in 1998 than in
1997. The improvement resulted primarily from higher sales volumes at both the
Midwest and the southern California construction aggregates operations.
Specialty minerals volumes increased because of the full year contribution of
two operations acquired in late 1997, but poor weather during the 1998 peak
Spring gardening season adversely impacted lawn and garden products sales
volumes. Average sales prices increased 17% due, in part, to a favorable mix of
aggregate products sold during 1998 compared with 1997. Year-over-year operating
costs for the segment increased an average of $1.13 per ton resulting in a net
10% margin improvement for 1998.
Aggregates segment net sales for 1997 rose 46% over 1996. Approximately 32% of
the increase was attributable to three acquisitions made during the year.
Including the acquisitions, unit volume increased 27% with a 26% average unit
price increase. Without the acquisitions, 1997 aggregate sales from the eastern
quarries and the specialty aggregate operations increased 13% over 1996 with a
14% increase in volume and essentially flat prices. Partial realization of price
increases implemented during the previous twelve months and higher sales volumes
favorably impacted 1997 earnings from the California construction aggregates
operation.
The table below shows sales volumes, average unit sales price and cost data and
unit operating profit margins relating to the Company's aggregates operations.
Operating costs include variable and fixed plant costs, delivery, selling,
general and administrative and miscellaneous operating costs.
<TABLE>
<CAPTION>
Aggregates Segment Operating Summary 1998 1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tons of aggregates sold (thousands) 11,802 10,802 8,501
=======================================================================================
Weighted average per ton data:
Sales price $ 8.80 $ 7.50 $ 5.93
Operating costs 6.88 5.75 4.68
- ---------------------------------------------------------------------------------------
Margin $ 1.92 $ 1.75 $ 1.25
=======================================================================================
</TABLE>
CORPORATE OVERHEAD, INTEREST INCOME AND INCOME TAX EXPENSE -- Corporate overhead
consists primarily of costs attributable to the Company's Houston, Texas office
and miscellaneous other income and expense items. These costs are generally not
allocated to the business segments. Corporate overhead expenses increased in
1998 by $6.7 million, or 14% compared with last year, primarily because of the
transfer of various operating segment administrative functions to the Corporate
office and because of merger related transition costs, higher consulting fees
for special marketing and tax studies and increased incentive compensation
resulting from the Company's
record performance. The Company expects a 12-15% decline in Corporate overhead
costs in 1999, primarily related to cost savings associated with the Medusa
merger. Corporate overhead expenses for 1997 exceeded 1996 by $9 million, or
23%, primarily because of higher administrative costs.
Interest income in 1998 was $5.9 million compared with $3.3 million in 1997 as a
result of the significantly higher levels of invested cash maintained throughout
1998, particularly in the fourth quarter. Interest income in 1997 was
essentially level with 1996.
The effective tax rate, which includes state taxes, is greater than the federal
statutory rate of 35% for 1998 because of the non-deductibility for tax purposes
of certain of the merger related transaction costs. (See also Note 13 of Notes
to Consolidated Financial Statements.) The Company expects a slight reduction in
the effective tax rate for 1999. The Company's effective tax rate was lower than
the federal statutory rate for both 1997 and 1996, primarily because of the
favorable impact of permanent differences related to statutory depletion in
excess of cost depletion applicable to the Company's limestone mining
operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company's business segments require a large amount of capital, particularly
the Cement segment, which has been expanding its production capacity. When these
capital requirements cannot be met internally, the Company borrows under its
outstanding credit facilities or sells debt or equity securities. The Company
has a $200 million revolving credit facility that matures in June 2002. The
facility permits standby letters of credit up to a maximum of $95 million in
lieu of borrowings. At December 31, 1998, there were no borrowings and $67
million in letters of credit outstanding under the revolving credit facility,
leaving $133 million of unused capacity. The Company is in compliance with the
financial ratios and covenants in the revolving credit agreement and the
Company's 10% Senior Subordinated Notes Indenture.
In connection with the Medusa merger, the Company in May 1998 amended its
revolving credit agreement to permit (1) the Medusa merger, (2) the assumption
of the existing indebtedness of Medusa of up to $100 million, and (3) the
guarantee of a $15 million lease obligation associated with the Medusa merger.
The Company also obtained a release of the bank group's liens on the collateral
security, including the security interest in five of the Company's cement plants
and the Company's interest in the Kosmos joint venture. In December 1998, the
Company again amended its credit agreement to permit (1) the contribution or
other transfer of certain California assets to certain existing and newly
created wholly-owned subsidiaries of the Company and (2) the merger of Medusa
entities with and into the Company.
CASH FLOWS
In 1998, the Company generated $212.6 million in cash provided by operating
activities. This was only 10% less than the $237 million generated in 1997,
despite the payment of approximately $59.3 million of Medusa acquisition costs
during 1998. At the end of 1998, the balance of cash and cash equivalents was
$143.8 million, an increase of almost $45 million from the prior year balance.
Likewise, 1997 cash provided by operations was approximately 10% greater than in
1996 because of a significant increase in earnings from continuing operations,
partially offset by the timing of payments on normal trade, tax and other
obligations.
<PAGE> 38
Net cash used for investing activities in 1998 was $119.4 million. Expenditures
in 1998 included $116.4 million of additions to property, plant and equipment,
offset by $13.9 million in proceeds from miscellaneous asset sales and $7.9
million in net proceeds from the maturity of short-term investments. Investing
activities in 1997 of $108.4 million included approximately $94.6 million of
capital additions and the acquisition of two specialty minerals operations for
$30.2 million. Investing activities for 1996 included approximately $78.8
million of capital expenditures and $6.2 million in acquisitions.
Net cash used in financing activities in 1998 was $48.3 million, primarily
utilized to reduce long-term debt by $33.6 million and pay dividends of $19.4
million on capital stock. In the third quarter of 1997, all of the outstanding
shares of the Company's Series D Preferred Stock were converted into
approximately 2.6 million shares of common stock. Conversion of the Series D
Preferred Stock has improved the Company's annual cash flow by the difference
between preferred and common stock dividends of approximately $3.9 million per
year. In 1997, net cash used in financing activities was $100.1 million,
primarily related to the repurchase of $59.9 million of common stock and the
payment of $22.9 million of dividends on capital stock. Both Medusa and the
Company discontinued the stock repurchase programs in early 1998.
The Company utilized the proceeds from the issuance of $125 million of 10% Notes
combined with other borrowings in 1996 to repurchase $125 million of the 14%
Notes and to pay the related prepayment premium and other costs. The Company
used cash in 1996 to repurchase $19.2 million of common stock and pay $26.7
million of dividends on capital stock. In 1996, the Company converted
substantially all of the shares of its Series A Preferred Stock and Series B
Preferred Stock into 3.3 million shares of common stock. This conversion of
preferred stock into common stock reduced fixed charges and improved the
Company's annual cash flow by the difference between preferred and common stock
dividends of approximately $3.5 million per year. In 1996, $26.7 million of
Medusa's 6% convertible subordinated notes were converted into .7 million shares
of Medusa common stock. The conversion of the Medusa notes reduced annual
interest payments by approximately $1.6 million. The 1996 exercise of 1.25
million warrants to purchase Company common stock provided $20 million in cash
from financing activities.
CHANGES IN FINANCIAL CONDITION
The change in the financial condition of the Company between December 31, 1997
and December 31, 1998 reflected the utilization of short-term investments plus
internally generated cash flow to fund capital expenditures, Medusa acquisition
costs, working capital requirements and capital stock dividends. Accounts and
notes receivable increased reflecting the additional sales activity occurring in
late 1998 relative to the prior year. The increase in inventories reflects
higher clinker and cement production levels during 1998 compared with the prior
year. The decrease in goodwill reflects the continuing amortization of goodwill
and the reclassification of $11.2 million to property, plant and equipment based
on final appraisals received related to 1997 acquisitions. The increase in other
long-term assets reflects higher prepaid pension costs. Accounts payable and
accrued liabilities increased because of the timing of payments on normal trade
and other obligations. The decrease in the long-term portion of postretirement
benefit obligation reflects the continuing amortization of the Company's
unrecognized prior service credit and unrecognized net gain related to the
benefit plan.
<PAGE> 39
CAPITAL EXPENDITURES
The Company invested approximately $116 million in property, plant and equipment
in 1998 including approximately $102 million for the Cement operations, $2
million for Concrete Products and $8 million for Aggregates. It is projected
that the Company's capital expenditures in 1999 will increase to slightly more
than $200 million. Capital expenditures for the Cement segment are expected to
exceed $175 million in 1999 (before consideration of joint venture partner
capital contributions) as a result of several capacity expansion projects in
progress at the Company's Louisville, Kentucky, Clinchfield, Georgia, and
Victorville, California plants. Capital expenditures for the Concrete Products
and Aggregates segments in 1999 are budgeted primarily for projects relating to
replacement and modernization of equipment, quarry development and expansion,
and for environmental compliance projects. Budgeted 1999 capital expenditures
include approximately $11 million related to compliance with environmental
regulations. The Company believes its expected cash flow from operating
activities will be sufficient to fund these capital expenditures. If necessary,
the Company has sufficient borrowing capacity available under its revolving
credit facility to supplement these expected future operating cash flows.
KNOWN EVENTS, TRENDS AND UNCERTAINTIES
ENVIRONMENTAL MATTERS
The Company is subject to a wide range of federal, state and local laws,
regulations and ordinances dealing with the protection of human health and the
environment. These laws regulate water discharges and air emissions, as well as
the handling, use and disposal of hazardous and non-hazardous waste materials.
These laws also create a shared liability by responsible parties for the cost of
cleaning up or correcting releases to the environment of designated hazardous
substances. The Company, therefore, may have to remove or mitigate the
environmental effects of the disposal or release of certain substances at the
Company's various operating facilities or elsewhere.
Several of the Company's previously and currently owned facilities have become
the subject of various local, state or federal environmental proceedings and
inquiries. While some of these matters have been settled, others are in their
preliminary stages and may not be resolved for years. The information developed
to date on these matters is not complete. Based on what it knows currently,
however, the Company does not believe it will be required to spend significantly
more on these matters than the amounts already recorded in the Company's
financial statements. However, until all (1) environmental studies and
investigations, (2) remediation work, (3) negotiations with other parties that
may be responsible, or (4) litigation against other potential sources of
recovery have been completed, it is impossible for the Company to determine the
ultimate cost that it might incur to resolve these environmental matters.
The Company or its predecessors have conducted industrial operations at the
Company's cement manufacturing facilities for many years. As was common in the
industry, the Company in the past disposed of various materials used in its
cement manufacturing, concrete products and aggregates operations in onsite and
offsite facilities. Today, some of these materials may be classified as
hazardous substances. In addition, revisions to air quality standards may result
in increased capital and operational expenses for a broad range of industrial
sectors, including portland cement manufacturing. Yet another evolving issue of
potential significance to the Company is global warming and the international
accord to move toward greenhouse gas stabilization or reduction after the turn
of the century.
<PAGE> 40
While the Company commits substantial resources to complying with the laws and
regulations concerning the protection of human health and the environment, the
Company considers this to be an integral part of its business. Management
believes that the Company's current procedures and practices for handling and
management of materials are generally consistent with industry standards and
legal requirements and that the Company takes appropriate precautions to protect
employees and others from harmful exposure to hazardous materials. However,
because of the complexity of operations and legal requirements, there can be no
assurance that past or future Company operations will not result in operational
errors, violations, remediation liabilities or claims by employees or others
alleging exposure to toxic or hazardous materials. Regulatory changes,
enforcement activities or other factors could alter environmental compliance
costs at any time. In addition, future changes in regulatory requirements
related to the protection of human health and the environment may require the
Company and others engaged in industrial operations to modify various facilities
and alter methods of operations at costs that may be substantial. Management,
however, does not believe that the Company would be placed at a competitive
disadvantage with respect to other companies engaged in similar lines of
business in the U.S.
OTHER CONTINGENCIES
IMPORT COMPETITION -- During the 1980s there was a surge of unfairly priced
cement and clinker imports into the U.S. In response, U.S. industry
participants, including the Company, filed antidumping petitions in 1989 against
imports from Mexico and, in following years, against imports from Japan and
Venezuela. After investigations into the matter, the International Trade
Commission (ITC) and the Department of Commerce (Commerce) decided in favor of
the petitioners and issued an antidumping order against Mexican cement and
clinker in 1990 and against Japanese cement and clinker in 1991. In addition, in
February 1992, Commerce suspended investigations of dumped and subsidized
imports of cement and clinker from Venezuela, based upon the Venezuelan cement
producers' agreement to change their prices to stop the dumping of gray portland
cement and clinker from Venezuela into the U.S. and the Venezuelan government's
agreement not to subsidize the Venezuelan cement producers.
As a result of legislation passed by the U.S. Congress in 1994, Commerce and the
ITC will conduct "sunset" reviews of the antidumping orders and suspension
agreements beginning in August 1999 to determine whether they should be revoked
or remain in effect for another five years. The Company expects the sunset
review process to take longer than a year and believes there are strong
arguments and evidence to convince Commerce and the ITC to leave the antidumping
remedies in effect. In addition to the sunset reviews, decisions by Commerce, by
NAFTA binational panels or by the U.S. Courts on appeal of Commerce decisions in
future administrative reviews could meaningfully reduce the existing antidumping
duties. If any of these events were to happen, there could be a material
negative impact on the Company's results of operations.
U.S. imports of foreign cement began to increase in the mid-1990's as the use of
cement in the U.S. began to recover. The Portland Cement Association has
estimated that imports represented approximately 22% of cement used in the U.S.
during 1998 as compared with approximately 18% in 1997 and 16% in 1996. Unlike
the imports during the 1980's, however, most of the recent imports have provided
an additional source of supply rather than disrupting the market with unfair
prices. During most of the recent period of strong demand, the prices of cement
imports rose. The increase is attributable, at least in part, to the influence
of the outstanding antidumping orders and suspension agreements. While the
average cost of imported cement rose during 1998, the cost of cement imports
from some countries, particularly those from Southeast Asia, have declined.
Moreover, independently owned cement import operators could undertake to
construct new import facilities and begin to purchase large quantities of
low-priced
<PAGE> 41
cement from countries not yet subject to antidumping orders, such as those in
Asia, which could compete with domestic producers. The introduction of
low-priced imported cement from such sources could have a negative impact on the
Company's results of operations.
YEAR 2000 COMPLIANCE -- The Company, like most companies relying on automated
data processing and other microprocessor controlled equipment, is faced with the
task of assuring that these systems are capable of distinguishing 21st century
dates from 20th century dates and that they will continue to function properly
after the Year 2000. The Company is actively engaged in, but has not yet
completed, reviewing, correcting and testing all of its Year 2000 compliance
issues. To determine the Company's current exposure, corporate personnel, along
with an outside consulting firm specializing in Year 2000 problems, conducted a
formal assessment to quantify the task of becoming compliant.
Based on the results of that assessment, the Company is currently at various
stages in the processes of modifying or replacing some of its internally
developed and purchased software and its manufacturing process control systems
and assessing the need to modify or replace embedded microprocessor controlled
equipment. The Company is also taking steps designed to verify the Year 2000
readiness of key third party suppliers, service providers and customers by
contacting them and attempting to assess and validate the compliance efforts of
these third party sources. As of December 31, 1998, the Company believes it has
made significant progress toward resolving its Year 2000 compliance issues. The
Company believes that the majority of its financial applications are now Year
2000 compliant, or soon will be. The Company has shifted its main focus to
embedded processors in cement, concrete products and aggregates facilities and
equipment and assessing potential Year 2000 compliance problems with the
Company's material external suppliers of goods, services and data. The Company
is conducting internal investigations of its manufacturing plant control
systems, its mobile equipment and its other field equipment and devices with
embedded microprocessor controls. In some, but not all instances, the Company
has already upgraded or replaced time sensitive programs or microprocessors. The
Company expects to have all modifications completed by mid-1999.
Costs incurred relating to making the Company Year 2000 compliant are expensed
in the period in which they are incurred. The Company currently estimates that
the total additional cost to comply with Year 2000 requirements will be
approximately $2 million to $3 million, including the cost of outside
consultants, accelerated software replacement beyond the normal upgrade cycle
and the replacement or modification of equipment with embedded microprocessor
controls. It is not certain, however, that these esti mates are correct or that
Year 2000 compliance can be fully achieved. The Company expects that it will not
experience a disruption of its operations, but actual results could differ
greatly from the Company's plans. Some of the specific problem areas that might
cause material differences to occur are (1) the availability and cost of
personnel trained in this area, (2) the ability to identify and correct all
relevant computer codes, (3) the ability to identify and correct non-complying
microprocessors embedded in other digitally controlled equipment, and (4) the
significant degree of interdependence with third party suppliers, service
providers and customers. Conditions outside of the Company's control such as
problems in the transportation, postal, banking or telecommunication systems,
may have a material disruptive effect on the Company's ability to process
orders, effect delivery of materials or finished goods, invoice customers or
disburse or receive funds.
With respect to the Company's own internal operations, the most reasonably
likely worst case scenario would be a shut down of a production system because
of some unforeseen problem with an automated monitoring or control device. The
Company intends to formulate a Year 2000 contingency plan by mid-1999 to address
risks and possible
<PAGE> 42
countermeasures that are expected to include plans for manual intervention of
control systems and equipment and may also entail replacement of certain
equipment on an emergency basis. It may not be possible, however, to adequately
plan for all contingencies. The Company is presently unable to determine the
impact on its business if it and the other companies on which it relies do not
achieve Year 2000 compliance, or that the impact will not have a material
adverse affect on the Company's financial condition or results of operations.
KOSMOS JOINT VENTURE SEVERANCE TAX AUDIT -- Kosmos Cement Company is a
partnership operated and 75% owned by the Company. In late 1997, the State of
Kentucky proposed a deficiency assessment against Kosmos for severance tax
payments related to limestone mined at its Battletown, Kentucky quarry. The
total assessment is approximately $3.7 million, including penalty and interest.
Kosmos is contesting the assessment. Kosmos met with the Kentucky Revenue
Cabinet in January 1998 to discuss the disputed assessments. Discussions are
still ongoing and the Company is unable to evaluate whether an unfavorable
outcome is either probable or remote.
In addition to limestone mined for the production of cement, Kosmos mines
limestone specifically for use by a local electric utility company. The Company
believes that, under the terms of a supply agreement, the utility company is
responsible for severance taxes on limestone provided to it. A major portion of
the Kentucky severance tax assessment relates to this specifically mined
limestone. For the amounts not paid by the local electric utility, the Company
would indirectly bear 75% of any settlement and legal costs through its
ownership interest in Kosmos.
CLAIMS FOR INDEMNIFICATION -- The Mineral Management Service of the Department
of the Interior claimed that the Company's former oil and gas subsidiary, Pelto
Oil Company, owed royalties on two separate gas contract settlement payments
that Pelto received. When the Company sold Pelto in 1989, the Company agreed to
protect the purchaser from any future claims related to these two payments. In a
1998 letter, the MMS advised that it was withdrawing its royalty claim in the
amount of $1.35 million on one of the settlement payments because of a 1997
court ruling, which prohibited further claims against the current owner of Pelto
and that owner's affiliates. The MMS, however, reserved its right to possibly
reassert the claim at a later date.
The Company also disagrees with MMS' claim that an unspecified amount of
royalties are owed on the second gas contract settlement payment of $5.9
million. If one or both of MMS' claims against Pelto are ultimately successful,
the Company could have liability for royalties, plus late payment charges in
amounts which are not currently determinable. Such expenditures would result in
a charge to discontinued operations.
DISCONTINUED ENVIRONMENTAL SERVICES SEGMENT -- The Company has both given and
received environmental and other indemnifications related to properties the
Company previously owned. A few courts have held that such promises to protect
other parties from loss for environmental liabilities are unenforceabl e. At
present, the Company is not able to estimate the extent of contamination,
remediation cost or recoverability of cost from prior owners, if any, regarding
these discontinued operations, except as noted below.
In late 1994 and the first quarter of 1995, the Company learned of some soil and
groundwater contamination at its former Alabama hazardous waste processing
facility. Although the Company sold the facility in April 1995, the Company
agreed to keep some liability for soil and groundwater contamination at the
facility prior to that time. The Company's investigation has not yet determined
the extent of the contamination or what sort of cleanup, if any, will be
required. It is too early to determine the amount of the Company's exposure to
loss with any degree of certainty. The Company has agreed to remediate the soil
and groundwater contamination at the Alabama facility to the extent required by
law, but it has filed a lawsuit against the former owner of the facility. Claims
against the prior owner and other potentially responsible parties could
significantly reduce or eliminate the Company's own loss exposure.
<PAGE> 43
OTHER -- In addition to those matters separately disclosed above, the Company
has incurred in the regular course of business certain other commitments and
contingent liabilities including, among other things, (1) personal injury
lawsuits, (2) indemnity and other hold harmless agreements, (3) environmental
remediation liabilities, (4) product liability claims, and (5) claims by
disgruntled employees. These various commitments and contingent liabilities, in
the judgment of management, do not total more than 10% of current assets and
will not result in losses that would materially affect the Company's
consolidated balance sheet. However, because the Company's results of operations
vary considerably with construction activity and other factors, it is at least
reasonably possible that charges for contingencies in the future could,
depending on when they occur and how large they are relative to results of
operations or cash flows for a particular period, have a material negative
impact on the Company's results of operations or cash flows for that period.
INFLATION AND CHANGING PRICES
Inflation has become less of a factor in the U. S. economy as the rate of
increase has moderated during the last several years. The Consumer Price Index
rose approximately 1.6% in 1998, and approximately 2% in 1997 and 3% in 1996.
The impact of inflation and changing prices on the Company's net sales and
revenues and on net earnings, however, has been significant as a general firming
of cement and concrete prices throughout the industry during the three years
ended December 31, 1998 has enabled the Company to increase its Cement segment
per unit profit margin in each successive year. The Company expects the rate of
price increase to slow as U.S. cement prices approach competitive world pricing
levels.
MARKET RISK
The Company does not enter into derivatives or other financial instruments for
trading or speculative purposes. Because of the short duration of the Company's
investments, changes in market interest rates would not have a significant
impact on their fair value. For expected maturity dates and average interest
rates of long-term debt, see Note 12 of Notes to Consolidated Financial
Statements, "Long-term Debt- Annual Total Maturities of Long-term Debt". See
also Note 2 of Notes to Consolidated Financial Statements for the impact of the
new accounting standard for derivative instruments and hedging activities.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
This document includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The Company based these statements on current
expectations, estimates and projections about the general economy and the
Company's lines of business. These statements are generally identifiable by
phrases containing words such as "expects," "believes," "anticipates,"
"estimates" or similar expressions. Statements related to future performance
involve certain assumptions, risks and uncertainties, many of which are beyond
the control of the Company, and cannot be guaranteed.
Although the Company believes that the expectations reflected in such forward
looking statements are based upon reasonable assumptions, it can not say with
certainty that what it expects will actually happen. Important factors that
could cause actual results to differ materially from the Company's expectations
include, among others, (1) significant excess cement production capacity in
other parts of the world, specifically Asia, (2) foreign and domestic price
competition, (3) the loss or material negative change of existing antidumping
orders, (4) cost effectiveness, (5) changes in environmental regulation, and (6)
general economic and market conditions such as interest rates, the availability
of capital and the cyclical nature of the construction industry. The Company
cautions the reader to consider these disclosures when reading the
forward-looking statements included in this report. Subsequent written and oral
forward looking statements made by the Company or by persons acting on behalf of
the C ompany are completely qualified by these cautionary disclosures.
<PAGE> 44
SELECTED QUARTERLY FINANCIAL DATA
(UNAUDITED)
The Company's businesses are seasonal to the extent that construction activity
and hence, the demand for cement, concrete products, and construction
aggregates, tends to diminish during the winter months and other periods of
inclement weather. Specialty aggregates lawn and garden products have a peak
selling season in the Spring of the year. The following tables show certain
unaudited selected quarterly financial data for each of the last two years.
Gross profit shown is revenues less operating expense and depreciation expense
relating to cost of sales. Depreciation expense relating to cost of sales was
$15.9 million, $18 million, $15.2 million and $16.9 million in each of the
quarterly periods of 1998. Depreciation expense relating to 1997 cost of sales
was $14.3 million, $14.1 million, $14.7 million and $15.7 million in each of the
quarterly periods. Because of the dilutive effect of the acquisition charge in
the second quarter, the sum of the earnings per share for the four quarters of
1998 does not equal the earnings per share for the twelve months ended December
31, 1998.
<TABLE>
<CAPTION>
Year ended December 31, 1998
(in millions, except per share amounts)
---------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 224.9 $ 317.7 $ 341.4 $ 300.7
=========================================================================================================
Gross profit $ 52.8 $ 107.4 $ 128.0 $ 111.3
=========================================================================================================
Acquisition charge (credit) $ -- $ 82.9 $ (4.0) $ (3.7)
=========================================================================================================
Earnings (loss) before interest and income taxes $ 28.1 $ (0.5) $ 110.0 $ 88.8
=========================================================================================================
Earnings (loss) from continuing operations $ 15.7 $ (23.1) $ 73.1 $ 59.3
Loss from discontinued operations,
net of income taxes -- -- (1.6) --
- ---------------------------------------------------------------------------------------------------------
Net earnings (loss) $ 15.7 $ (23.1) $ 71.5 $ 59.3
=========================================================================================================
Earnings (loss) per share:
Basic
Earnings (loss) from continuing operations $ 0.41 $ (0.60) $ 1.90 $ 1.54
Loss from discontinued operations,
Net of income taxes -- -- (0.04) --
- ---------------------------------------------------------------------------------------------------------
$ 0.41 $ (0.60) $ 1.86 $ 1.54
=========================================================================================================
Diluted
Earnings (loss) from continuing operations $ 0.41 $ (0.60) $ 1.88 $ 1.52
Loss from discontinued operations,
Net of income taxes -- -- (0.04) --
- ---------------------------------------------------------------------------------------------------------
$ 0.41 $ (0.60) $ 1.84 $ 1.52
=========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31, 1998
(in millions, except per share amounts)
---------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 208.2 $ 290.4 $ 316.3 $ 280.3
=========================================================================================================
Gross profit $ 40.9 $ 97.5 $ 110.7 $ 89.0
=========================================================================================================
Earnings before interest and income taxes $ 21.5 $ 72.5 $ 92.5 $ 62.7
=========================================================================================================
Net earnings $ 12.1 $ 44.4 $ 58.0 $ 39.2
=========================================================================================================
Earnings per share:
Basic $ 0.30 $ 1.20 $ 1.56 $ 1.03
=========================================================================================================
Diluted $ 0.30 $ 1.14 $ 1.48 $ 1.01
=========================================================================================================
</TABLE>
<PAGE> 45
MARKET PRICES AND DIVIDENDS
ON COMMON STOCK AND SHAREHOLDER INFORMATION
The Company's common stock trades on the New York Stock Exchange (Symbol: SDW).
The following table shows the high and low sales prices of the stock for the
indicated periods as reported by the NYSE.
<TABLE>
<CAPTION>
Fiscal Year 1998 High Low Dividend
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter, ended March 1998 $ 72.50 $ 55.31 $ 0.10
Second Quarter, ended June 1998 74.00 63.06 0.10
Third Quarter, ended September 1998 73.75 42.25 0.10
Fourth Quarter, ended December 1998 61.06 36.44 0.15
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year 1997 High Low Dividend
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter, ended March 1997 $ 36.88 $ 29.00 $ 0.10
Second Quarter, ended June 1997 44.63 33.13 0.10
Third Quarter, ended September 1997 54.63 41.63 0.10
Fourth Quarter, ended December 1997 59.44 51.75 0.10
</TABLE>
For information describing the Company's capital stock, rights plan and change
in control provisions, see Note 18 of Notes to Consolidated Financial
Statements.
On March 12, 1999, there were approximately 4,250 holders of record of the
Company's common stock and the closing price of the stock was $49.1875.
<PAGE> 46
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years ended December 31,
(in millions, except per share amounts) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 1,184.7 $ 1,095.2 $ 987.8 $ 889.4 $ 836.6
===================================================================================================================================
Acquisition charge (1) $ 75.2 $ -- $ -- $ -- $ --
===================================================================================================================================
Earnings from continuing operations $ 125.0 $ 153.7 $ 125.5 $ 90.7 $ 60.0
Loss from discontinued environmental services
operations, net of income taxes (2) (1.6) -- -- -- (5.9)
Loss on disposition of discontinued environmental
services operations, net of income taxes (2) -- -- -- -- (21.6)
Extraordinary charge, net of income taxes (3) -- -- (13.3) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net earnings $ 123.4 $ 153.7 $ 112.2 $ 90.7 $ 32.5
===================================================================================================================================
Basic earnings (loss) per share-
Continuing operations $ 3.27 $ 4.10 $ 3.65 $ 2.58 $ 1.61
Loss from discontinued environmental services
operations, net of income taxes (2) (0.04) -- -- -- (0.19)
Loss on disposition of discontinued environmental
services operations, net of income taxes (2) -- -- -- -- (0.69)
Extraordinary charge, net of income taxes (3) -- -- (0.41) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net earnings $ 3.23 $ 4.10 $ 3.24 $ 2.58 $ 0.73
===================================================================================================================================
Diluted earnings (loss) per share --
Continuing operations $ 3.22 $ 3.94 $ 3.21 $ 2.37 $ 1.55
Loss from discontinued environmental services
operations, net of income taxes (2) (0.04) -- -- -- (0.16)
Loss on disposition of discontinued environmental
services operations, net of income taxes (2) -- -- -- -- (0.58)
Extraordinary charge, net of income taxes (3) -- -- (0.33) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net earnings $ 3.18 $ 3.94 $ 2.88 $ 2.37 $ 0.81
===================================================================================================================================
Total assets $ 1,400.4 $ 1,267.0 $ 1,150.2 $ 1,095.1 $ 1,099.6
===================================================================================================================================
Capital expenditures (4) $ 116.4 $ 94.6 $ 78.8 $ 58.2 $ 43.5
===================================================================================================================================
Depreciation, depletion and amortization (5) $ 71.9 $ 65.1 $ 58.5 $ 57.7 $ 56.2
===================================================================================================================================
Total debt $ 167.9 $ 200.6 $ 169.7 $ 236.9 $ 282.4
===================================================================================================================================
Shareholders' equity $ 804.2 $ 674.9 $ 593.3 $ 470.5 $ 397.1
===================================================================================================================================
Ratio of debt to total capitalization (6) 17.3% 22.9% 22.2% 33.5% 41.6%
===================================================================================================================================
Cash dividends paid per share of
common stock $ 0.45 $ 0.40 $ 0.40 $ -- $ --
===================================================================================================================================
</TABLE>
(1) On June 30, 1998, the Company acquired Medusa Corporation in a merger
accounted for as a pooling of interests. (See Note 3 of Notes to
Consolidated Financial Statements.)
(2) In November 1994, the Company decided to exit the environmental services
business. These business activities are presented as discontinued operations
for 1994. The loss in 1998 is an environmental remediation charge.
(3) Premium on early extinguishment of debt.
(4) Excluding acquisition expenditures of $6 million, $30.2 million, $6.2
million, $12.6 million and $16.1 million in 1998, 1997, 1996, 1995, and
1994, respectively.
(5) Includes amortization of debt issuance costs.
(6) Total capitalization is the sum of total debt and shareholders' equity.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS APPEARS ON PAGE 65
OF THIS REPORT.
<PAGE> 1
EXHIBIT 21
SIGNIFICANT SUBSIDIARIES OF SOUTHDOWN, INC.
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
STATE OF
SUBSIDIARY * ORGANIZATION
---------- ------------
<S> <C>
SOUTHDOWN FINANCE, INC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DELAWARE
SOUTHDOWN CALIFORNIA CEMENT LLC (A SUBSIDIARY OF SOUTHDOWN FINANCE, INC. . . . . . . . . . DELAWARE
KOSMOS CEMENT COMPANY (A PARTNERSHIP) . . . . . . . . . . . . . . . . . . . . . . . . . . . KENTUCKY
</TABLE>
_________________
* CONDUCTS BUSINESS UNDER ITS NAME.
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-23328 on Form S-8, Registration Statement No. 33-35011 on Form S-8,
Registration Statement No. 33-45144 on Form S-8 and Registration Statement No.
333-59349 on Form S-8, of our report dated January 27, 1999 on the consolidated
financial statements of Southdown, Inc. and subsidiary companies incorporated
by reference in this Annual Report on Form 10-K for the year ended December 31,
1998.
DELOITTE & TOUCHE LLP
Houston, Texas
March 26, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's consolidated balance sheet as of December 31, 1998 and the related
statement of consolidated earnings and is qualified in its entirety by reference
to such statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 144
<SECURITIES> 15
<RECEIVABLES> 125
<ALLOWANCES> 5
<INVENTORY> 108
<CURRENT-ASSETS> 405
<PP&E> 1,499
<DEPRECIATION> 679
<TOTAL-ASSETS> 1,400
<CURRENT-LIABILITIES> 140
<BONDS> 167
0
0
<COMMON> 50
<OTHER-SE> 754
<TOTAL-LIABILITY-AND-EQUITY> 1,400
<SALES> 1,185
<TOTAL-REVENUES> 1,185
<CGS> 784
<TOTAL-COSTS> 958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17
<INCOME-PRETAX> 216
<INCOME-TAX> 86
<INCOME-CONTINUING> 125
<DISCONTINUED> 2
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 123
<EPS-PRIMARY> 3.23
<EPS-DILUTED> 3.18
</TABLE>
