<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For Fiscal Year Ended June 30, 1995
OR
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ________________________________________________
to _________________________________________
Commission File Number
0 - 9403
NBI, INC.
State of Incorporation IRS Employer I.D. Number
Delaware 84 - 0645110
1880 Industrial Circle, Suite F
Longmont, Colorado 80501
(303) 684-2700
Securities registered pursuant Name of each exchange
to section 12(b) of the Act: on which registered:
Common Stock ($.01 par value) NASDAQ - Over the counter
Securities registered pursuant to Section 12(g) of the Act: None
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
[X] YES [ ] NO
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. [X]
Revenues for the year ended June 30, 1995, are $2,850,000.
The aggregate market value of voting stock held by non-affiliates of the
registrant is approximately $4,505,000 as of market close on September 14, 1995.
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [X] YES [ ] NO
Common stock ($.01 Par Value) 6,497,234 shares outstanding as of September 16,
1995.
<PAGE>
PART I
ITEM 1. BUSINESS
DOMESTIC OPERATIONS
NBI was incorporated in 1973 to develop and market a proprietary word processing
system. The Company was the first to introduce a software-based word processing
system and within a few years, became known as a leading provider of dedicated
word processing and office automation systems. Because of the declining interest
in purchasing entire system solutions, it was necessary to restructure the
Company in October, 1989 and shift its focus from manufacturing to customer
service and support and into development and marketing of word processing
software products for personal computers including Legacy(R), an advanced word
processing software product for Microsoft(R) Windows(tm). On August 7, 1992, NBI
sold its domestic customer service and support division to a majority owned
subsidiary of Gores Enterprises, Inc., a holding company of various computer-
based service businesses.
In 1990, NBI formed its domestic systems integration division to transition the
existing customer base from its proprietary hardware platforms to today's open
platforms exemplified by the personal computer Local Area Network. Because of
the low margins, intense competition and long sales cycle, NBI closed this
business on June 15, 1994.
Due to low sales volumes of Legacy 2.0 during fiscal 1992, the Company
discontinued development of Legacy 2.1 on June 5, 1992. In August 1992, the
Company sold the source code and product rights of Legacy in connection with a
domestic software licensing agreement. However, NBI continued to have rights to
royalties resulting from a non-exclusive licensing agreement for Legacy
technology with an international software developer. NBI retained a small
staff of software personnel during fiscal 1993 to support the existing Legacy
licensing agreements and to assist in the transition away from Legacy software
development. In fiscal 1994, these personnel began research and development
work on a new software product which was completed in fiscal 1995. Because the
Company did not want to commit significant funds to sales and marketing of the
product, it began searching for a marketing partner early in 1995. As of June
30, 1995, the Company has been unsuccessful in finding a marketing partner and
consequently it discontinued all software development activities.
NBI continues to operate its AlphaNet division which is a network infrastructure
business acquired by NBI late in fiscal 1994. AlphaNet is located in southern
Ohio. AlphaNet's market focus is on the physical cable layer of networks,
including utilization of fiberoptic technology. AlphaNet sells primarily in the
Ohio River Valley Region.
Effective January 1, 1995, the Company acquired a majority interest in a small
novelty toy manufacturer, Krazy Colors, Inc. located in Las Vegas, Nevada which
manufacturers roll-on and dot-on paints for children. Krazy Colors, Inc.
distributes its products primarily through national toy distributors. See also
Note 16 to the consolidated Financial Statements.
On August 4, 1995, NBI, Inc. acquired 100% of the outstanding capital stock of
the Belle Vernon Motel Corporation. The Belle Vernon Motel Corporation owns and
operates an 81 room Holiday Inn in Southwestern Pennsylvania, (the "Belle
Vernon Holiday Inn"). The Company received approval as an authorized Holiday
Inn franchisee prior to the purchase transaction. The property and equipment
acquired will continue to be operated as a Holiday Inn Hotel.
On August 14, 1995, a recently formed, wholly-owned subsidiary of NBI, Inc.,
closed on its purchase of a majority of the assets, including the name, of L.E.
Smith Glass Company of Mount Pleasant, Pennsylvania, pursuant to an asset
purchase and sale agreement, with the effective date being the close of business
on July 31, 1995. L.E. Smith Glass Company is a manufacturer of handmade fine
glass giftware and lighting fixtures and has been in business since 1907. The
property, plant and equipment acquired will continue to be used in the
manufacture of handmade fine glass giftware and lighting fixtures. The company
sells its products through in-house sales managers and manufacturers
representatives. The giftware products are sold primarily to retailers and home
show distributors, whereas the lighting fixture products are sold to
manufacturers and retailers.
2
<PAGE>
INTERNATIONAL OPERATIONS
NBI, Ltd. is a wholly owned subsidiary of NBI, Inc. that sold integrated
document management solutions, workflow and COLD (Computer Output to Laser Disk)
to central and local government departments and commercial organizations
throughout the United Kingdom. Due to continuing losses incurred by the
subsidiary, NBI, Inc. decided to sell the operation in fiscal 1995.
On April 28, 1995, NBI, Ltd. completed a sale of certain assets of the company,
including its customer base. Under the terms of this agreement, NBI, Ltd.
retained certain assets and liabilities. NBI, Ltd. is managing the disposition
of these assets and liabilities until such time as it can complete an orderly
disposition of the entity.
COMPETITION
AlphaNet: The company's primary competitors are telephone switch installers,
local and regional cable companies and electrical contractors in the Ohio River
Valley Region. AlphaNet is one of a limited number of companies in the region
that specializes in fiber optic technology.
Krazy Colors, Inc.: The company's primary competitors are children's finger
paint, paint and crayon manufacturers. Krazy Colors' competitive advantage is a
unique patented bottle design that allows children to use non-toxic, washable
paint with little cleanup.
Belle Vernon Holiday Inn: The hotel has limited competition in its class in a
relatively wide-spread area. The local market includes several non-competitive
motels in a different class as to price and amenities.
L.E. Smith Glass Company: The glass company's main competition in giftware is
from imports, primarily from Europe, South America and the Orient. Most of the
competitive glass from overseas is twenty-four percent leaded crystal, even
though L.E. Smith Glass Company's giftware is unleaded crystal, because foreign
manufacturers are able to produce leaded glass less expensively due to
significantly less environmental restrictions and labor costs. The main
competition for the glass lighting fixtures is also imports from Europe, South
America and the Orient. There are also a few domestic companies that have
competing products to certain portions of L.E. Smith Glass Company's giftware
and lighting fixtures product lines. L.E. Smith Glass Company is able to
compete with other domestic and foreign glass companies for many reasons. The
company is one of only a few hand pressed glass manufacturers remaining in the
United States. They produce a large variety of unique designs using twelve
different colors of glass and they have a solid reputation for their quality and
reliability. In addition, they are price competitive with other domestic
manufacturers. The Company can compete with foreign competitors because it has
the flexibility to meet shorter lead times without the restrictive minimum
quantities required by most foreign manufacturers.
SIGNIFICANT CUSTOMERS
The Company had no significant customers in fiscal 1995 or 1994. However, the
newly acquired L.E. Smith Glass Company currently has one significant customer
that comprises over 10% of its gross revenues. The Company estimates that
sales to this customer will exceed 10% of NBI's consolidated revenues in fiscal
1996. The loss of this customer's business would have a material adverse effect
on NBI; however, L.E. Smith Glass Company is currently focusing its sales
efforts on expanding its customer base to lessen the impact this customer has on
its business. In addition, the Company's management believes that its
relationship with this customer will continue into the foreseeable future.
PRODUCT DEVELOPMENT AND ENGINEERING
In fiscal 1994, NBI began research and development work on a new software
product which was completed in fiscal 1995. For the years ended June 30, 1995
and 1994, the Company had expenditures for product development and engineering
of $278,000 and $229,000 respectively. As of June 30, 1995, the Company
discontinued all software development activities.
3
<PAGE>
BANKRUPTCY PROCEEDINGS
On February 6, 1991, NBI, Inc. filed a petition for reorganization under Chapter
11 of the United States Bankruptcy Code in the United States Bankruptcy Court
for the District of Colorado. On January 21, 1992, the Bankruptcy Court entered
an order confirming the Company's Plan of Reorganization ("Plan"). NBI emerged
from Chapter 11 bankruptcy on February 3, 1992, the effective date of the Plan
("Effective Date").
EMPLOYEES
The Company currently employs 174 full time employees and 220 total employees.
A total of 193 of these employees are related to its recently acquired
businesses. Currently, 128 of the employees are covered by collective
bargaining agreements.
ITEM 2. PROPERTIES
NBI leases approximately 6,400 square feet of office space for administrative
personnel at its corporate headquarters in Longmont, Colorado. This lease
expires in October 1997. The Company leases 4,000 square feet of
office/warehouse space in Ohio for its AlphaNet division under a lease expiring
in March 1998. The Company also leases approximately 2,200 square feet of
warehouse space in Las Vegas, Nevada for its Krazy Colors, Inc. manufacturing
operation under a lease expiring in October 1995. The Company believes its
leased facilities are adequate to meet its needs for the next several years and
anticipates that it would encounter little difficulty in locating alternative or
additional suitable facilities should its requirements change.
The Company's international subsidiary has outstanding commitments under an
office lease for 7,540 square feet of office space in Slough in the United
Kingdom under a lease that expires in March 1998. (See Note 12 to the
consolidated Financial Statements.)
The Company acquired the building and improvements of the Belle Vernon Holiday
Inn Hotel in Southwestern Pennsylvania as a result of its business acquisition
on August 4, 1995. The building is approximately 21,000 square feet and sits on
approximately 5.8 acres of land which is leased under an acquired lease expiring
in 2026 with an option to extend the lease for an additional twenty-five year
term.
Effective August 1, 1995, the Company acquired the land and buildings held by
the L.E. Smith Glass Company, including a total of approximately 194,000 square
feet of manufacturing, warehousing and office space on approximately 11.1 acres
of land in Mount Pleasant, Pennsylvania.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
4
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
STOCK PROFILE: At June 30, 1995, there were 6,497,234 common shares of $.01 par
value common stock outstanding. To date, no dividends have been paid on the
$.01 par value common stock and it is anticipated that future earnings will be
retained for operating purposes.
COMMON STOCK ACTIVITY: On December 7, 1994, the Company's common stock was
delisted from the Pacific Stock Exchange due to its inability to meet certain
minimum stockholders' equity requirements. The Company's common stock is now
traded over-the-counter under the symbol NBII. The following table sets forth
for the fiscal periods specified the high and low sales prices for the common
stock. The quotations of the Company's common stock reflect inter-dealer
prices, without any retail mark-up, mark-down or commissions, and may not
necessarily represent actual transactions.
<TABLE>
<CAPTION>
Fiscal 1995 High Low
----------- ----- ----
<S> <C> <C>
First Quarter 3/8 1/8
Second Quarter 3/8 1/16
Third Quarter 3/16 1/25
Fourth Quarter 7/32 3/32
Fiscal 1994 High Low
----------- ---- ----
First Quarter 1/2 3/8
Second Quarter 3/4 3/8
Third Quarter 11/16 7/16
Fourth Quarter 1/2 1/4
</TABLE>
The approximate number of stockholders of the Company was 3,000 as of September
16, 1995. This includes shares held in nominee or "street" accounts.
5
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS 1995 - 1994 COMPARISON
The Company incurred a net loss of $483,000 in fiscal 1995, compared to a net
loss of $3.0 million recorded in fiscal 1994. The improved performance resulted
primarily from a substantial net gain on investments recorded for the year ended
June 30, 1995, compared to a significant net loss on investments recorded in
fiscal 1994. In addition, the Company experienced a significant reduction in
operating costs and expenses during fiscal 1995 resulting from the closure of
its domestic systems integration operation in June 1994. These improvements
were partially offset by the absence of an income tax benefit in fiscal 1995, as
compared to a benefit of $2.6 million included in fiscal 1994 resulting from the
favorable outcome of a court case.
Sales revenues of $1.9 million for the year ended June 30, 1995 decreased
slightly as compared to sales revenues of $2.0 million for the year ended June
30, 1994. The decline resulting from the absence of sales revenues from the
Company's domestic systems integration division was significantly offset by an
increase related to the addition of sales revenues from Krazy Colors, Inc.
acquired effective January 1, 1995, and the inclusion of a full year of sales
revenues from the Company's AlphaNet division, acquired in March 1994.
Software revenues totaling $37,000 recorded in fiscal 1995 consisted primarily
of a final royalty payment related to the settlement of a completed licensing
agreement for Legacy software. No software revenues were recorded in fiscal
1994.
Service revenues declined $383,000, or 28.6%, to $957,000 in fiscal 1995. The
decline resulted primarily from continued erosion in the international
proprietary maintenance base, as expected, as these revenues declined $554,000
to $136,000 for the year ended June 30, 1995. In addition, a decline of
$186,000 was experienced in fiscal 1995 due to the absence of domestic systems
integration service revenues. However, these declines were partially offset by
an increase of $248,000 in Alphanet's services revenues to $329,000 for the year
ended June 30, 1995, due to the inclusion of a full year of AlphaNet's
operations in fiscal 1995. Additionally, an increase of $109,000 was
experienced in international systems integration service revenues in fiscal
1995.
Total revenues are expected to increase significantly in fiscal 1996 as compared
to fiscal 1995, due to the Company's acquisition of the L.E. Smith Glass Company
and Belle Vernon Holiday Inn in August 1995. However, this increase will be
partially offset by a decline in revenues resulting from the absence of
international operations in fiscal 1996.
Cost of sales as a percentage of sales revenues for the years ended June 30,
1995 and 1994 was 74.2% and 88.9%, respectively. The improved margin resulted
from the closure of the Company's domestic systems integration division, which
produced unfavorable margins on its product sales, and the inclusion of sales
from Krazy Colors, Inc. at a higher margin rate than the total average sales
margin rate experienced in fiscal 1994, as the cost of sales as a percentage of
sales revenues from Krazy Colors was 82.6% in fiscal 1995. These improvements
in margin were partially offset by a reduced margin on international systems
integration sales as cost of sales increased from 65.3% in fiscal 1994, to 69.4%
in fiscal 1995, due to an increasingly competitive market and the focus on
disposition activities. Cost of sales as a percentage of sales for the AlphaNet
division remained constant at 77% in fiscal 1995 and 1994.
Cost of service as a percentage of service revenue was 78.0% and 119.7% for
fiscal year 1995 and 1994, respectively. The related increased margin occurred
primarily due to the absence of fixed costs related to the domestic systems
integration technical operations group, resulting from the closure of this
division. In addition, the Company experienced improved margins on AlphaNet's
service revenues, primarily due to increased volumes. These improvements were
partially offset by reduced margins on the international proprietary maintenance
revenues, as cost reductions continued to be insufficient to cover the decline
in related revenue, as well as a decline in the margin on international systems
integration services.
Cost of sales, service and rentals as a percentage of total revenues is expected
to decline again in fiscal 1996 as compared to fiscal 1995, due to the inclusion
of revenues from L.E. Smith Glass Company and the Belle Vernon Holiday Inn at
slightly higher average margins.
6
<PAGE>
Product development and engineering expenses totaled $278,000 and $229,000 in
fiscal 1995 and 1994, respectively, and included no capitalized software
development amortization. In addition, no software development costs were
capitalized in 1995 or 1994. The increased expenses in fiscal 1995 resulted
from increased software development activity on a new software product which was
completed during fiscal 1995. Because the Company did not want to commit
significant funds to sales and marketing of the product, it began searching for
a marketing partner early in 1995. As of June 30, 1995, the Company had been
unsuccessful in finding a marketing partner and consequently it discontinued all
software development activities.
Marketing, general and administrative expenses totaled $2.6 million for the year
ended June 30, 1995, compared to $4.9 million for the previous fiscal year.
The decline is primarily related to substantial savings realized in labor,
facilities and travel expenses associated with the domestic systems integration
division, due to its closure. These savings were partially offset by an
increase in sales and administrative expenses related to the addition of Krazy
Colors, Inc. effective January 1, 1995, and the inclusion of a full year of
expenses for the Company's AlphaNet division, acquired in March 1994.
Total marketing, general and administrative expenses are expected to increase
significantly in fiscal 1996, compared to fiscal 1995, due to the addition of
marketing, general and administrative expenses related to the business
acquisitions completed in August, 1995, partially offset by a decline resulting
from the absence of international operations in fiscal 1996. However,
marketing, general and administrative expenses as a percentage of total revenues
are expected to decline significantly in fiscal 1996.
Interest income totaling $194,000 for the fiscal year ended June 30, 1995,
reflected a decrease of $324,000 compared to the year ended June 30, 1994. The
decrease in interest income was primarily due to a lower level of average cash
and investments held during the current year, as well as variances in the mix of
debt and equity securities held.
The Company recorded a net gain on investments of $2,210,000 in fiscal 1995,
compared to a net loss on investments of $290,000 for fiscal 1994. For the year
ended June 30, 1995, the Company recorded a net unrealized gain on investments
of $2.6 million, all of which was recorded during the fourth quarter of fiscal
1995, and a net realized loss on investments of $399,000. This compares to a net
unrealized loss on investments of $2.6 million and a net realized gain on
investments of $2.3 million recorded in fiscal 1994. During the first quarter of
fiscal 1996, the Company sold a majority of its trading securities held at June
30, 1995, and recorded a moderate net gain on the sale of these investments.
No income tax expense or benefit was recorded in fiscal 1995; however, the
Company recorded an income tax benefit of $2.6 million for the year ended June
30, 1994, resulting from the reversal of long-term income tax liabilities
related to the favorable outcome of a court case.
FINANCIAL CONDITION
Total current assets and total assets of the Company decreased $2.3 million, or
24.4% and 23.0%, respectively, during fiscal year 1995. The decline in assets
was primarily due to the sale of the Company's international operation and
funding principal payments on the IRS debt, short-term borrowings and notes
payable during fiscal 1995.
Current liabilities decreased $910,000 to $2.7 million at June 30, 1995, from
$3.6 million at June 30, 1994. This resulted primarily from reductions in
short-term borrowings and accrued liabilities during fiscal 1995 of $600,000 and
$400,000, respectively.
Stockholders' deficit increased $593,000 to a deficit of $854,000 at June 30,
1995, primarily reflecting the net loss for fiscal 1995 of $483,000 and treasury
stock purchases totaling $117,000 during fiscal 1995.
7
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased $777,000 during fiscal 1995. Net cash flow
provided by operating activities in fiscal 1995 was $224,000, as cash provided
by the Company's trading and marketable securities activities offset cash used
to fund the operating loss. Net cash used in investing activities totaled
$164,000 and included $288,000 paid for a business acquisition. Cash used in
financing activities during fiscal 1995 of $843,000 consisted primarily of net
payments on short-term borrowings.
The Company had working capital of $4.5 million at June 30, 1995, a decrease of
$1.4 million from $5.9 million at June 30, 1994. The reduction in working
capital resulted primarily from principal payments made on the IRS debt and the
net loss incurred during fiscal 1995. On October 13, 1995, the Company entered
into an agreement in principle with the Internal Revenue Service (IRS),
effective October 1, 1995, revising the payment terms provided in its settlement
agreement with the IRS dated June 12, 1991. The new agreement provides for
accrued interest through September 30, 1995, at the original stated rate, plus a
principal payment of $250,000 to be paid upon execution of the definitive
agreement. Thereafter, quarterly interest payments are due from January 1, 1996
through October 1, 1997. Interest will accrue on the outstanding principal
balance at the rate of 7.5% for the period October 1, 1995 through March 31,
1996. The interest rate for April 1, 1996 through October 1, 1997 will be
reevaluated in April 1996 based upon NBI's ability to pay the statutory rate,
but in no event will the interest rate for this period exceed the lesser of the
statutory rate or 10%. The remaining principal balance is due in full on October
1, 1997. The balance sheet at June 30, 1995 reflects these revised payment
terms.
In conjunction with the new agreement, the Company has agreed to grant the IRS a
security interest in all of the real and personal property of the L.E. Smith
Glass Company which is owned by American Glass, Inc., a recently formed, wholly-
owned subsidiary of NBI, Inc., providing that the Company can obtain the
necessary approvals from the existing security holders. If the necessary
approvals cannot be obtained, NBI, Inc. has agreed to grant the IRS a security
interest in all of the capital stock of American Glass, Inc. as well as all of
the capital stock of the Belle Vernon Motel Corporation. The security interest
will automatically terminate upon full payment by NBI of all principal and
interest owed to the IRS under the agreement. The agreement also provides for
accelerated principal payments to be made within forty-five days after the end
of any fiscal quarter in which NBI Inc.'s unconsolidated cash and cash
equivalents, excluding restricted cash, exceeds $1.3 million. The Company is
required to pay to the IRS fifty percent of the amount by which such cash and
cash equivalents exceed $1.3 million. Any such payment shall be applied to and
shall reduce the outstanding principal balance.
The Company expects its working capital requirements in the next year, including
the working capital requirements related to two business acquisitions closed in
August 1995, as previously discussed, to be met by existing working capital at
June 30, 1995 and internally generated funds. The Company used $4.6 million of
cash and marketable securities for these acquisitions, resulting in a net
decrease in working capital of $3.7 million. During the next fiscal year, the
Company expects to perform renovations on the Belle Vernon Holiday Inn which are
anticipated to cost approximately $1.0 million. The Company plans on funding
these renovations by obtaining a mortgage on the property.
TAX LOSS CARRYFORWARDS
As discussed in Note 7 to the accompanying consolidated financial statements,
the Company has approximately $60 million of tax loss carryforwards. A
valuation allowance of $23 million has been established for the net deferred tax
assets arising from the tax loss carryforwards because, in the Company's
assessment, it is more likely than not that the net deferred tax assets will not
be realized. See also Note 7 to the Consolidated Financial Statements.
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS
During fiscal 1995, the Company implemented Financial Accounting Standards Board
Statement No. 112, "Employers' Accounting for Postemployment Benefits" ("FAS
112"), effective July 1, 1994. The cumulative effect, as of July 1, 1994, of
adopting this standard increased the Company's fiscal 1995 net loss by $271,000.
This resulted from accruing the present value of the expected disability
benefits to be paid out, under the Company's prior self-insured disability
benefits program, over the next 12 years to a maximum of $12,000 per quarter.
The Company's current disability plan is fully insured.
The Company adopted the provisions of Financial Accounting Standards Board
Statement No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" for investments held as of or acquired after July 1, 1994. In
accordance with the Statement, prior period financial statements were not
restated to reflect the change in accounting principle. There was no effect as
of July 1, 1994 from implementation of this standard, as the carrying value of
all of the Company's securities held at that date approximated market value.
INFLATION AND CHANGING PRICES
The impact of inflation on the Company's activities is minimal.
8
<PAGE>
ITEM 7. CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of NBI, Inc.
We have audited the accompanying consolidated balance sheet of NBI, Inc. and
subsidiaries as of June 30, 1995, and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of NBI, Inc. and
subsidiaries at June 30, 1995, and the results of their operations and their
cash flows for the year, then ended, in conformity with generally accepted
accounting principles.
As discussed in the notes to the consolidated financial statements, the Company
changed its method of accounting for investment securities and accounting for
postemployment benefits in fiscal 1995 by adopting Statement of Financial
Accounting Standard No. 112, "Employees' Accounting for Postemployment Benefits"
and No. 115, "Accounting for Certain Investments in Debt and Equity Securities".
BDO Seidman, LLP
Denver, Colorado
September 10, 1995, except for Notes 7 and 17
which are as of October 13, 1995
9
<PAGE>
REPORT OF INDEPENDENT AUDITOR
To the Board of Directors and Stockholders of NBI, Inc.
We have audited the accompanying consolidated statement of operations,
stockholders' equity (deficit) and cash flows of NBI, Inc. for the year ended
June 30, 1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of NBI, Inc.'s operations and
its cash flows for the year ended June 30, 1994, in conformity with generally
accepted accounting principles.
Ernst & Young LLP
Denver, Colorado
August 30, 1994
10
<PAGE>
<TABLE>
<CAPTION>
NBI, INC.
CONSOLIDATED BALANCE SHEET
June 30, 1995
(Amounts in thousands, except share data)
ASSETS
- ------
<S> <C>
Current assets:
Cash and cash equivalents $ 1,931
Trading securities 4,324
Accounts receivable, less allowance for doubtful accounts of $13 371
Inventories 196
Other current assets 391
-------
Total current assets 7,213
Property and equipment, net 55
Other assets 289
-------
$ 7,557
========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
- ----------------------------------------------
Current liabilities:
Current portion of income taxes $ 864
Short-term borrowings and current portion of notes payable 925
Accounts payable 384
Accrued liabilities 544
-------
Total current liabilities 2,717
Long-term income taxes 5,404
Notes payable 56
Long-term postemployment disability benefits 234
-------
Total liabilities 8,411
========
Commitments and contingencies
Stockholders' equity (deficit):
Common stock - $.01 par value (20,000,000 shares
authorized; 10,001,270 shares issued) 100
Capital in excess of par value 5,769
Accumulated deficit (5,517)
Foreign currency translation adjustment 311
-------
663
Less treasury stock, at cost (3,504,036 shares) (1,517)
-------
Total stockholders' equity (deficit) (854)
-------
$ 7,557
========
</TABLE>
See accompanying notes to consolidated financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
NBI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended June 30, 1995 and 1994
(Amounts in thousands, except per share data)
1995 1994
---- ----
<S> <C> <C>
Revenues:
Sales $ 1,856 $ 2,001
Service 957 1,340
Software 37 --
------- -------
2,850 3,341
Costs and expenses:
Cost of sales 1,377 1,778
Cost of service 746 1,604
Cost of software 8 --
Product development and engineering 278 229
Marketing, general and administrative 2,583 4,889
------- -------
4,992 8,500
------- -------
Loss from operations (2,142) (5,159)
------- -------
Other income (expense):
Interest income 194 518
Net gain (loss) on investments 2,210 (290)
Other income 252 64
Interest expense (741) (715)
------- -------
1,915 (423)
------- -------
Loss before income taxes, minority interest and
cumulative effect of change in accounting method (227) (5,582)
Income tax benefit -- 2,600
------- -------
Net loss before minority interest and cumulative
effect of change in accounting method (227) (2,982)
Minority interest 15 --
------- -------
Net loss before cumulative effect of change in
accounting method (212) (2,982)
Cumulative effect of change in accounting method (271) --
------- -------
Net loss $ (483) $(2,982)
======= =======
Loss per common share:
Net loss before income taxes and cumulative
effect of change in accounting method $ (.03) $ (.74)
Income tax benefit -- .34
------- -------
Net loss before cumulative effect of change
in accounting method (.03) (.40)
Cumulative effect of change in accounting method (.04) --
------- -------
Net loss $ (.07) $ (.40)
======= =======
Weighted average number of common and
common equivalent shares outstanding 6,743 7,537
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
12
<PAGE>
NBI, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Years Ended June 30, 1995 and 1994
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
Common Foreign
Number of Stock Capital in Currency
Common (Par Value Excess of Accumulated Translation Treasury
Shares $.01) Par Value Deficit Adjustment Stock Total
---------- ---------- ---------- ----------- ----------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance July 1, 1993 10,001,270 $100 $5,769 $(2,038) $289 $ (673) $ 3,447
Stock options exercised -- -- -- (14) -- 27 13
Foreign currency translation
adjustment -- -- -- -- 15 -- 15
Treasury stock purchases -- -- -- -- -- (754) (754)
Net loss for the year
ended June 30, 1994 -- -- -- (2,982) -- -- (2,982)
---------- ---- ------ ------- ---- ------- -------
Balance June 30, 1994 10,001,270 100 5,769 (5,034) 304 (1,400) (261)
Foreign currency translation
adjustment -- -- -- -- 7 -- 7
Treasury stock purchases -- -- -- -- -- (117) (117)
Net loss for the year
ended June 30, 1995 -- -- -- (483) -- -- (483)
---------- ---- ------ ------- ---- ------- -------
Balance June 30, 1995 10,001,270 $100 $5,769 $(5,517) $311 $(1,517) $ (854)
========== ==== ====== ======= ==== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
13
<PAGE>
NBI, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in Thousands)
<TABLE>
<CAPTION>
Year Ended
June 30,
1995 1994
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................................ $ (483) $(2,982)
Adjustments to reconcile net loss to net cash
flow provided by (used in) operating activities:
Depreciation and amortization.................................. 131 186
Provision for (reduction in) bad debt allowance................ (27) 39
Provision for writedown of inventory........................... 23 64
Provision for collectibility of notes receivable............... -- 198
Provision for impairment of property and equipment............. 14 146
Loss (gain) on sales of property and equipment................. 6 (48)
Net realized gain on investments............................... ** (2,289)
Net unrealized loss (gain) on investments...................... (2,609) 2,580
Gain on sale of subsidiary..................................... (279) --
Cumulative effect of accounting change......................... 271 --
Other.......................................................... 32 51
Changes in assets -- decrease (increase):
Accounts receivable.......................................... 482 (37)
Inventories.................................................. (37) (37)
Trading securities........................................... (1,715) --
Marketable securities........................................ 5,086 --
Other current assets......................................... 386 139
Changes in liabilities -- (decrease) increase:
Accounts payable and accrued liabilities..................... (391) 385
Income tax related accounts.................................. (666) (2,600)
------- -------
Net cash flow provided by (used in) operating activities.. 224 (4,205)
------- -------
Cash flows from investing activities:
Proceeds from sales of property and equipment..................... 55 53
Purchases of property and equipment............................... (20) (215)
Collections from notes receivable................................. 350 452
Issuance of notes receivable...................................... (350) --
Sales or redemption of marketable securities...................... ** 6,197
Sales of long-term treasury investments........................... ** 10,801
Purchases of marketable securities................................ ** (9,730)
Purchases of long-term treasury investments....................... ** (5,189)
Proceeds from sale of subsidiary.................................. 89 --
Payments for business acquisitions................................ (288) (147)
------- -------
Net cash flow provided by (used in) investing activities..... (164) 2,222
------- -------
</TABLE>
(continued on following page)
** With the Company's adoption of FAS 115 as of July 1, 1994, activity related
to trading securities is now classified as operating rather than investing.
See accompanying notes to consolidated financial statements.
14
<PAGE>
NBI, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in Thousands)
<TABLE>
<CAPTION>
Year Ended
June 30,
1995 1994
------- -------
<S> <C> <C>
Cash flows from financing activities:
Issuance of treasury stock................................... $ -- $ 14
Purchases of treasury stock.................................. (117) (754)
Payments on short-term borrowings and notes payable.......... (3,996) (19)
Short-term borrowings........................................ 3,270 1,500
------- -------
Net cash flow provided by (used in) financing activities.. (843) 741
------- -------
Effects of exchange rates on cash.............................. 6 18
------- -------
Net decrease in cash and cash equivalents...................... (777) (1,224)
Cash and cash equivalents at beginning of year................. 2,708 3,932
------- -------
Cash and cash equivalents at end of year....................... $ 1,931 $ 2,708
======= =======
Supplemental schedule of non-cash investing and financing
activities:
Net transfers of inventory from property and equipment....... $ -- $ (18)
======= =======
Supplemental disclosures of cash flow information:
Interest paid................................................ $ 749 $ 547
======= =======
Income taxes paid............................................ $ 666 $ --
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
15
<PAGE>
NBI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995 and 1994
1. Summary of Significant Accounting Policies
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of the Company and its wholly owned and majority owned subsidiaries.
All significant intercompany accounts, transactions and profits have been
eliminated.
CONCENTRATIONS OF CREDIT RISK: Financial instruments which potentially subject
the Company to concentrations of credit risk consist principally of cash, cash
equivalents and investment securities. The Company places its cash and
temporary cash investments with financial institutions. At times, such
investments may be in excess of federally insured limits.
INVESTMENTS IN SECURITIES: In May 1993, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" "(FAS 115"). The Company
adopted the provisions of the new standard for investments held as of or
acquired after July 1, 1994. In accordance with the Statement, prior period
financial statements have not been restated to reflect the change in accounting
principle. There was no material effect as of July 1, 1994 from implementation
of this standard, as the carrying value of all of the Company's securities held
at that date approximated market value.
The Company's accounting policies for investments in securities are as follows:
Trading securities: Trading securities are held for resale in anticipation of
short-term market movements. These types of securities, consisting of marketable
debt and equity securities, are stated at fair market value. Gains and losses,
both realized and unrealized, are included in net gain (loss) on investments and
other income (expense) when incurred. All dividends, interest and discount or
premium amortization is included in interest income as earned. Cash flows from
purchases and sales of trading securities are classified as cash flows from
operating activities rather than from investing activities.
Securities held-to-maturity: Debt securities are classified as held-to-maturity
when the company has the positive intent and ability to hold the securities to
maturity. Held-to-maturity securities are stated at amortized cost. Interest
earned on securities classified as held-to-maturity, including any discount or
premium amortization, is included in interest income as earned.
Available for Sale: Marketable equity securities and debt securities not
classified as either trading or held-to-maturity are classified as
available-for-sale. Available-for-sale securities are carried at fair market
value, with the unrealized gains and losses, net of tax, reported as a separate
component of stockholders' equity. Realized gains and losses and declines in
value judged to be other-than-temporary on available-for-sale securities are
included in net gain (loss) on investments and other income (expense) when
incurred. The cost of securities sold is based on the specific identification
method. Interest and dividend earned on securities classified as available-for-
sale, including any discount or premium amortization, are included in interest
income as earned.
Management determines the appropriate classification of debt securities at the
time of purchase and reevaluates such designation as of each balance sheet date.
INVENTORIES: Inventories are stated at the lower of cost (first-in, first-out
method) or market and are comprised of the following at June 30, 1995:
<TABLE>
<CAPTION>
<S> <C>
Raw Materials $ 61,000
Work in Process 26,000
Finished Goods 109,000
--------
$196,000
========
</TABLE>
16
<PAGE>
RESEARCH AND DEVELOPMENT COSTS: Product development and engineering costs are
expensed as incurred, with the exception of certain software development costs.
The Company had no capitalized software development costs at June 30, 1995,
because no software development activity in fiscal 1995 or 1994 qualified for
capitalization.
DEPRECIATION AND AMORTIZATION: Capital assets are depreciated on a straight-line
basis over the following lives:
Asset Type Life
---------- ----
Machinery and equipment 3-10 years
Furniture and fixtures 5-7 years
INCOME TAXES: Effective July 1, 1993, the Company changed its method of
accounting for income taxes from the deferred method to the liability method
required by Financial Accounting Standards Board Statement No. 109, "Accounting
for Income Taxes" ("FAS 109"). This change in accounting method had no material
effect on the Company's accounting for income taxes. In accordance with fresh-
start accounting, which was adopted as of April 30, 1992, as a result of the
Company's reorganization under Chapter 11 of the United States Bankruptcy Code,
for financial statement purposes, future utilization, if any, of the Company's
loss carryforward will be accounted for as additional paid-in-capital.
TRANSLATION OF FOREIGN CURRENCIES: Accounts of foreign subsidiaries are
maintained in the currencies of the countries in which they operate and are
translated to U.S. dollars in conformity with generally accepted accounting
principles. Adjustments resulting from the translation of foreign currency
financial statements are deferred and classified as a separate component of
stockholders' equity.
NET INCOME (LOSS) PER SHARE: Net income (loss) per share is computed by
dividing net income (loss) by the weighted average number of common shares and,
if dilutive, common equivalent shares outstanding during the period. Common
equivalent shares recognize the potential dilutive effects of the future
exercise of stock options, convertible debt and convertible preferred shares.
For the years ended June 30, 1995 and 1994, the Company had no preferred stock
or convertible debt. In 1995 and 1994, the common equivalent shares were not
included in the computation because their effect was anti-dilutive.
RECLASSIFICATIONS: Certain items in the 1994 financial statements have been
reclassified to conform to the 1995 manner of presentation.
2. Cash and Cash Equivalents
-------------------------
Cash and cash equivalents include investments that are readily convertible to
known amounts of cash and have original maturities of three months or less.
Included in cash and cash equivalents at June 30, 1995, was restricted cash of
$111,000, representing amounts held in trust for payments under self insurance
plans.
3. Investments in Securities
-------------------------
During the year ended June 30, 1995, all of the Company's securities were
classified as trading securities; no securities were classified as held-to-
maturity or available-for-sale. The Company recorded a net realized loss of
$399,000 and a net unrealized gain of $2,609,000 on investments for the year
ended June 30, 1995.
The Company's investment portfolio may, at any point in time, include a
concentrated position in one security. As a result of this, the financial
results may fluctuate significantly and have larger fluctuations than with a
more diversified portfolio. Trading securities at June 30, 1995 did include a
concentrated position in one equity security from the airline industry, for
which the Company recorded a significant unrealized gain during the year ended
June 30, 1995.
4. Other Current Assets
--------------------
Other current assets, totaling $391,000 at June 30, 1995, includes $200,000 of
earnest deposit funds related to the Company's acquisition of a majority of the
assets of the L.E. Smith Glass Company. (See Note 17.)
17
<PAGE>
5. Property and Equipment
----------------------
<TABLE>
<CAPTION>
1995
-----
(Amounts in thousands)
<S> <C>
Machinery and equipment $ 396
Furniture and fixtures 286
-----
682
Accumulated depreciation (627)
-----
$ 55
=====
</TABLE>
Total depreciation expense was $117,000 and $179,000 for the years ended June
30, 1995, and 1994, respectively. Total amortization expense was $14,000 and
$7,000 for the years ended June 30, 1995 and 1994, respectively.
6. Other Assets
------------
Included in other assets of $289,000 at June 30, 1995, is $277,000 of goodwill
and other intangibles related to the acquisition of 80% of the outstanding stock
of a novelty toy manufacturing company during fiscal 1995. The goodwill and
other intangibles are net of accumulated amortization totaling $15,000 at June
30, 1995, and are being amortized on a straight-line basis over ten years. The
carrying value of goodwill will be periodically reviewed by the Company, and
impairments, if any, will be recognized when expected future discounted cash
flows derived from goodwill is less than its carrying value.
7. Income Taxes
------------
The Company accounts for income taxes in conformity with FAS 109. Under the
provisions of FAS 109, a deferred tax liability or asset (net of a valuation
allowance) is provided in the financial statements by applying the provisions of
applicable tax laws to measure the deferred tax consequences of temporary
differences which result in net taxable or deductible amounts in future years as
a result of events recognized in the financial statements in the current or
preceding years.
The tax loss carryforward at June 30, 1995, is approximately $60,000,000 of
which $18,000,000, $14,000,000, $14,000,000, $7,000,000, $4,000,000 and
$3,000,000 expire in fiscal years 2004, 2005, 2006, 2008, 2009 and 2010,
respectively. For financial statement purposes, future utilization, if any, of
the loss carryforward will be accounted for as additional paid-in capital.
The reconciliation of income taxes attributable to domestic operations at the
U.S. federal statutory tax rate to income tax expense is as follows:
<TABLE>
<CAPTION>
1995 1994
------ --------
<S> <C> <C>
Tax expense (benefit) computed at 35% $ (54) $(1,847)
Tax (benefit) related to settlement of industry
issue with Internal Revenue Service -- (2,600)
Change in the balance of the valuation
allowance for deferred tax assets 54 1,571
Other -- 276
----- -------
Total income tax expense (benefit) $ -- $(2,600)
===== =======
</TABLE>
18
<PAGE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets as of June 30, 1995 are as
follows:
<TABLE>
<CAPTION>
1995
-----------------------
(Amounts in thousands)
<S> <C>
Deferred tax assets:
Current
Other - net $ 333
Noncurrent
Net operating loss carryforwards 21,137
Interest portion of IRS Settlement amount 1,119
Capital loss carryforwards 393
Other - net 4
--------
Total deferred tax assets 22,986
Valuation allowance for deferred tax assets (22,951)
--------
Net deferred tax assets 35
--------
Deferred tax liabilities:
Current
Other - net 10
Noncurrent
Other - net 25
--------
Total deferred tax liabilities: 35
--------
Net deferred taxes $ --
========
</TABLE>
The valuation allowance of $22,951,000 for the year ended June 30, 1995 was
established because, in the Company's assessment, it is more likely than not
that the net deferred tax assets will not be realized.
On June 12, 1991, the Company reached a settlement with the IRS as to NBI's
federal income tax liabilities for the fiscal years ended June 30, 1980 through
1988. The full amount of the settlement for these years was $12,795,000, which
consists of approximately $6,325,000 in taxes, and $6,470,000 in interest.
Included in the $12,795,000 was approximately $2,600,000 which related to a
computer industry-wide issue being litigated by another taxpayer. In 1993, the
Tax Court ruled in favor of the taxpayer in this case. On June 22, 1994, the
Eighth Circuit Court of Appeals confirmed the Tax Court's decision. Since the
case was no longer subject to appeal, the Company reversed $2.6 million from its
long-term income taxes as of June 30, 1994. The agreement with the IRS provided
for payment of the liabilities over a six-year period. Principal payments
totaling $4,052,000 have been made as of June 30, 1995. As of June 30, 1995, NBI
had approximately $6,268,000 of tax liabilities and accrued interest remaining
on its balance sheet, $6,143,000 of which is related to the agreement with the
IRS.
19
<PAGE>
On October 13, 1995, the Company entered into an agreement in principle with the
IRS, effective October 1, 1995, revising the payment terms provided in its
settlement agreement with the IRS dated June 12, 1991. The new agreement
provides for accrued interest through September 30, 1995, at the original stated
rate, plus a principal payment of $250,000 to be paid upon execution of the
definitive agreement. Thereafter, quarterly interest payments are due from
January 1, 1996 through October 1, 1997. Interest will accrue on the outstanding
principal balance at the rate of 7.5% for the period October 1, 1995 through
March 31, 1996. The interest rate for April 1, 1996 through October 1, 1997 will
be reevaluated in April 1996 based upon NBI's ability to pay the statutory rate,
but in no event will the interest rate for this period exceed the lesser of the
statutory rate or 10%. The remaining principal balance is due in full on October
1, 1997. The balance sheet at June 30, 1995 reflects these revised payment
terms.
In conjunction with the new agreement, the Company has agreed to grant the IRS a
security interest in all of the real and personal property of the L.E. Smith
Glass Company which is owned by American Glass, Inc., a recently formed, wholly-
owned subsidiary of NBI, Inc., providing that the Company can obtain the
necessary approvals from the existing security holders. If the necessary
approvals can not be obtained, NBI, Inc. has agreed to grant the IRS a security
interest in all of the capital stock of American Glass, Inc. as will as all of
the capital stock of the Belle Vernon Motel Corporation. The security interest
will automatically terminate upon full payment by NBI of all principal and
interest owed to the IRS under the agreement. The agreement also provides for
accelerated principal payments to be made within forty-five days after the end
of any fiscal quarter in which NBI Inc's unconsolidated cash and cash
equivalents, excluding restricted cash, exceeds $1.3 million. The Company is
required to pay to the IRS fifty percent of the amount by which such cash and
cash equivalents exceed $1.3 million. Any such payment shall be applied to and
shall reduce the outstanding principal balance. There is no accelerated
principal amount payable in the first quarter of fiscal 1996 in accordance with
the original agreement, based upon the Company's cash, cash equivalents and
treasury investments at June 30, 1995. Furthermore, any accelerated principal
payments due in fiscal 1996, in accordance with the new agreement, based upon
fiscal 1996 quarter-end cash and cash equivalent positions are not determinable
at June 30, 1995. Therefore, only the scheduled principal payments due in fiscal
1996 have been classified as current at June 30, 1995.
8. Accrued Liabilities
-------------------
<TABLE>
<CAPTION>
1995
----
(Amounts in thousands)
<S> <C>
Accrued interest 155
Payroll and related benefits and taxes 182
Property and sales taxes 50
Other 157
----
$544
====
</TABLE>
9. Short-term Borrowings and Current Portion of Notes Payable
----------------------------------------------------------
Included in short-term borrowings and current portion of notes payable totaling
$925,000 at June 30, 1995, were short-term borrowings of $900,000 which were
repaid in July 1995. These borrowings were collateralized by the Company's
trading securities. The interest rate charged on the short-term borrowings is
equal to our broker's call rate plus 1/2%. Our broker's call rate is based upon
the brokers' call rates posted by various money center banks and other
representative brokers' call rates.
10. Notes Payable
-------------
Long-term debt of $56,000 at June 30, 1995, consists of 10% unsecured notes
payable issued in conjunction with the Plan of Reorganization. Principal and
interest payments on notes are payable quarterly through September 30, 1997.
Included in short-term borrowings and current portion of notes payable at June
30, 1995, was $25,000 related to the current portion of these notes.
11. Postemployment Benefits
-----------------------
During the second quarter of fiscal 1995, the Company adopted the provisions of
Statements of Financial Accounting Standards No. 112, "Employers' Accounting For
Postemployment Benefits" ("FAS 112"). This standard was effective July 1, 1994,
however, its implementation was not recorded until October 1, 1994. The
cumulative effect as of July 1, 1994 of adopting this standard, which was
recorded in the second quarter of fiscal 1995, reduced net income by $271,000.
The Company provides health care, life insurance, and disability benefits for
eligible active employees. Prior to adoption of FAS No. 112, the Company
recognized and funded the cost of these benefits over the employees' working
lives, except for self-insured long-term disability costs which were recognized
monthly as the disability continued. FAS No. 112 requires the Company to accrue
the expected costs over the employee service period.
As required by the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"), the Company allows terminated employees who wish to continue health
care coverage to pay the expected cost to be incurred, as determined by the
insurance company administering the claims. However, because the Company is
self-insured for health care cost, it is liable for any actual cost incurred in
excess of the expected costs. As of June 30, 1995, there were no such known
amounts.
20
<PAGE>
The Company's current life insurance and disability benefits are fully insured.
Accordingly, the Company has no further liability and no accrual is needed.
However, the Company previously had a disability benefit plan that was self-
insured, under which payments are still being made. In accordance with FAS No.
112, the Company has accrued the present value of the expected payments, as of
July 1, 1994, of $271,000, and recorded this as a cumulative effect of change in
accounting method. The expected payments were calculated based upon the expected
duration of each individual's disability or the time remaining until the
individual reaches the age of 65, at which time the benefits cease if the
individual is expected to remain disabled. The total liability outstanding at
June 30, 1995, is $252,000, of which $234,000 is classified as long-term.
12. Commitments and Contingencies
-----------------------------
The Company leases various office facilities and equipment. The office
facilities leases have expiration dates that extend through March 1998. The
equipment leases have expiration dates that extend through fiscal 1998. Total
rental expense for facilities and equipment was $416,000 and $718,000 for the
years ended June 30, 1995 and 1994, respectively, including $229,000 and
$307,000, respectively, related to the Company's wholly-owned international
subsidiary, NBI, Ltd. At June 30, 1995, minimum rental commitments by fiscal
year under non-cancelable leases, excluding NBI, Ltd. leases discussed below,
are: 1996 - $87,000; 1997 - $82,000; 1998 - $29,000.
On April 28, 1995, NBI, Ltd. completed a sale of certain assets of the company,
including its customer base. Under the terms of this agreement, NBI, Ltd.
retained all cash, accounts receivable, accounts payable and certain accrued
liabilities. NBI, Ltd. is managing the disposition of these accounts until such
time as it can complete an orderly dissolution of the entity and has ceased all
operating activities. NBI, Ltd. has outstanding commitments under an office
lease and various equipment and auto leases, which are currently sublet to the
purchaser on a month-to-month basis. The office lease expires in March 1998 and
has aggregate future minimum rentals of $438,000 at June 30, 1995. The various
equipment and auto leases have expiration dates from fiscal year 1996 to fiscal
year 1998 and have aggregate future minimum rentals of $145,000 at June 30,
1995. These lease commitments are not included in accrued liabilities at June
30, 1995, because the subsidiary does not have sufficient assets to satisfy the
commitments. Because the liabilities of the subsidiary, excluding the lease
commitments, exceed its assets, the company anticipates that the subsidiary will
be required to file for a voluntary liquidation during fiscal 1996. NBI, Inc.
has no liability related to the subsidiary's leases.
In conjunction with NBI's acquisition of a small novelty toy manufacturer in
February 1995 (see Note 16), the stock purchase agreement provides for royalty
payments based upon gross margin performance. Royalties are calculated based
upon gross margin in excess of $150,000 in any calendar year and will be earned
at the rate of twenty percent when the gross margin is greater than $150,000 and
less than or equal to $300,000, twenty-five percent when the gross margin is
greater than $300,000 and less than or equal to $450,000, and thirty percent
when the gross margin is greater than $450,000.
13. Stockholders' Equity
--------------------
The Company has authorized 20,000,000 shares of $.01 par value common stock. At
June 30, 1995, 10,001,270 shares were issued including 3,504,036 held in
treasury. Therefore, the Company had 6,497,234 shares issued and outstanding at
June 30, 1995.
In February 1995, the Company issued warrants to purchase 1.7 million shares of
its common stock at $.89 per share in conjunction with an acquisition. (See Note
16.) These warrants are exercisable from December 31, 1995 through December 31,
2002.
21
<PAGE>
14. Stock Options
-------------
The Employee Stock Option Plan was established pursuant to the Company's Plan of
Reorganization. At June 30, 1995, 900,000 shares were reserved under the
Employee Stock Option Plan. The employee options are exercisable for a period
of five years from the date of the grant. The options granted under this plan
are intended to be non-qualified stock options.
Options to purchase 150,000 shares of stock are outstanding at June 30, 1995,
that were issued to directors of the Company during fiscal 1993. These options
were not issued pursuant to an existing stock option plan and were immediately
exercisable on the grant date. These options are exercisable for a period of
five years from the date of grant.
Options to purchase 400,000 shares of stock were issued to the Chief Executive
Officer during fiscal 1994. These options were not issued pursuant to an
existing stock option plan. These options vest over four years at 25% per year
with vesting continuing as long as the optionee is employed as Chief Executive
Officer.
At June 30, 1995, 550,000 shares were reserved for options issued outside of the
Stock Option Plan.
The following table summarizes, by number of shares, option transactions under
all plans:
<TABLE>
<CAPTION>
Employee Other Option Price
Plan Options Total Per Share Aggregate
-------- ------- ----- ------------ -----------
(Amounts in
thousands)
<S> <C> <C> <C> <C> <C>
Outstanding July 1, 1993 384,000 205,000 589,000 $.25 - $.38 $197
Granted 150,000 400,000 550,000 .38 - .77 365
Exercised -- (55,000) (55,000) .25 (14)
Forfeited (103,000) -- (103,000) .38 (39)
-------- ------- -------- ----
Outstanding June 30, 1994 431,000 550,000 981,000 .25 - .77 509
Granted 125,000 -- 125,000 .38 48
Exercised -- -- -- --
Forfeited (311,000) -- (311,000) .38 (118)
-------- ------- -------- ----
Outstanding June 30, 1995 245,000 550,000 795,000 $.25 - $.77 $439
======== ======= ======= ====
Options exercisable
at June 30, 1995 207,500 250,000 457,500
======= ======= =======
</TABLE>
22
<PAGE>
15. Segment Information
-------------------
During fiscal 1995 and 1994, the Company operated primarily in the computer
sales and services industry in various geographic areas as summarized below.
Sales to the Company's foreign subsidiaries are priced on a "cost plus" basis.
<TABLE>
<CAPTION>
Year Year
ended ended
June 30, 1995 June 30, 1994
-------------- --------------
(Amounts in thousands)
<S> <C> <C>
Revenue of domestic operations:
Unaffiliated customers $ 1,218 $ 1,204
Foreign subsidiaries 0 0
------- -------
1,218 1,204
Revenue of foreign subsidiaries 1,632 2,137
Less intercompany revenue 0 0
------- -------
Net revenue from operations $ 2,850 $ 3,341
======= =======
Operating loss:
Domestic operations $(1,547) $(4,794)
Foreign subsidiaries (595) (365)
------- -------
$(2,142) $(5,159)
======= =======
Identifiable assets:
Domestic operations $ 7,293 $ 9,116
Foreign subsidiaries 264 695
------- -------
$ 7,557 $ 9,811
======= =======
</TABLE>
16. Related Party Transactions
--------------------------
In February 1995, the Company entered into an agreement to acquire 80% of the
outstanding stock of a small novelty toy manufacturing company, effective as of
January 1, 1995. Prior to this agreement the Company's Chief Executive Officer
(CEO) owned 55% of the outstanding stock of the manufacturer. Under the
purchase agreement, the Company paid $288,000 in cash for the stock, including
$158,000 paid to NBI's CEO. In addition, the sellers are eligible for royalty
payments based upon gross margin performance in excess of specified amounts.
(See Note 12.) NBI's CEO will receive 55% of any such royalty payments. In
conjunction with the purchase agreement, the sellers were issued warrants to
purchase a total of 1.7 million shares of NBI's common stock, including
warrants to purchase 935,000 shares issued to the Company's CEO, at a price of
$.89 per share. These warrants are exercisable from December 31, 1995 through
December 31, 2002.
In addition, in December 1994, the Company advanced $100,000 to the acquired
Company under the terms of a revolving line of credit, which expires on December
31, 1995. The debt bears interest at 1% per month. A portion of the funds
advanced in December 1994 were used by the borrower to paydown $85,000 of an
outstanding loan it had with NBI's CEO. The balance due under the line of
credit at June 30, 1995, was eliminated in consolidation.
In November 1994, the Company loaned its CEO $350,000 under the terms of a
promissory note. The note provided for interest at the rate of 10% per annum
and was paid in full in March 1995.
During fiscal 1995, the Company utilized a stock brokerage firm, which is 100%
owned by its CEO, to execute certain transactions on its behalf. However, NBI
uses another unrelated company to act as custodian and clearing
23
<PAGE>
firm for its investment assets. Gross revenues earned by the brokerage firm
related to investment transactions by NBI in fiscal 1995, totaled $37,268 on
purchase and sale transactions totaling $6,248,964 before fees.
17. Subsequent Events
-----------------
On August 4, 1995, NBI, Inc. acquired 100% of the outstanding capital stock of
the Belle Vernon Motel Corporation for $2,430,000 in cash pursuant to a stock
purchase agreement. The Belle Vernon Motel Corporation owns and operates an 81
room Holiday Inn in Southwestern Pennsylvania. The primary assets held by the
acquired corporation consist of cash, accounts receivable, property and
equipment. The Company received approval as an authorized Holiday Inn
franchisee prior to the purchase transaction. The property and equipment
acquired will continue to be operated as a Holiday Inn Hotel.
On August 14, 1995, a recently formed, wholly-owned subsidiary of NBI, Inc.
closed on its purchase of a majority of the assets of L.E. Smith Glass Company
of Mount Pleasant, Pennsylvania, pursuant to an asset purchase and sale
agreement. L.E. Smith Glass Company is a manufacturer of handmade fine glass
giftware and lighting fixtures and has been in business since 1907. An
involuntary bankruptcy petition had been filed against the parent company of
L.E. Smith Glass and a Chapter 11 trustee was appointed with the mandate to sell
the assets of the various subsidiaries. The sale of the assets of L.E. Smith
Glass Company to the Company was approved by an order of the United States
Bankruptcy Court in Pittsburgh, Pennsylvania on July 25, 1995, and closed on
August 14, 1995, with the effective date being the close of business on July
31, 1995. The assets purchased consist primarily of accounts receivable,
inventory, property, plant and equipment, goodwill and other intangibles. The
property, plant and equipment acquired will continue to be used in the
manufacture of handmade fine glass giftware and lighting fixtures. The purchase
price of $5,875,745 was paid through the assumption of $3,508,190 of certain
liabilities at July 31, 1995, cash and cash proceeds from the liquidation of
other current assets held by the Company.
On October 13, 1995, the Company entered into an agreement in principle with the
IRS, effective October 1, 1995, revising the payment terms provided in its
settlement agreement with the IRS dated June 12, 1991. The new agreement
provides for accrued interest through September 30, 1995, at the original stated
rate, plus a principal payment of $250,000 to be paid upon execution of the
definitive agreement. Thereafter, quarterly interest payments are due from
January 1, 1996 through October 1, 1997. Interest will accrue on the outstanding
principal balance at the rate of 7.5% for the period October 1, 1995 through
March 31, 1996. The interest rate for April 1, 1996 through October 1, 1997 will
be reevaluated in April 1996 based upon NBI's ability to pay the statutory rate,
but in no event will the interest rate for this period exceed the lesser of the
statutory rate or 10%. The remaining principal balance is due in full on October
1, 1997. The balance sheet at June 30, 1995 reflects these revised payment
terms.
In conjunction with the new agreement, the Company has agreed to grant the IRS a
security interest in all of the real and personal property of the L.E. Smith
Glass Company which is owned by American Glass, Inc., a recently formed, wholly-
owned subsidiary of NBI, Inc., providing that the Company can obtain the
necessary approvals from the existing security holders. If the necessary
approvals cannot be obtained, NBI, Inc. has agreed to grant the IRS a security
interest in all of the capital stock of American Glass, Inc. as well as all of
the capital stock of the Belle Vernon Motel Corporation. The security interest
will automatically terminate upon full payment by NBI of all principal and
interest owed to the IRS under the agreement. The agreement also provides for
accelerated principal payments to be made within forty-five days after the end
of any fiscal quarter in which NBI Inc.'s unconsolidated cash and cash
equivalents, excluding restricted cash, exceeds $1.3 million. The Company is
required to pay to the IRS fifty percent of the amount by which such cash and
cash equivalents exceed $1.3 million. Any such payment shall be applied to and
shall reduce the outstanding principal balance.
24
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.
On August 11, 1995, NBI, Inc., as approved by its Board of Directors, dismissed
the firm of Ernst & Young, LLP and on August 17, 1995, engaged the firm of BDO
Seidman, LLP as its principal accountant.
During the two fiscal years ended June 30, 1994, and the subsequent period
preceding the dismissal of Ernst & Young, LLP, there were no disagreements on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure.
The reports of Ernst & Young, LLP on the financial statements of the Company at
and for the years ended June 30, 1993 and 1994 did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles.
The Company has received a letter from Ernst & Young, LLP addressed to the SEC
stating whether it agrees with the above statements. A copy of this letter,
dated August 17, 1995, was filed as Exhibit 16.1 to the related Form 8-K dated
August 11, 1995.
PART III
Items 9, 10, 11, and 12 are hereby incorporated by reference to the Annual
Meeting Proxy Statement filed pursuant to Regulation 14A.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3. Articles of Incorporation and Bylaws
a. Restated Certificate of Incorporation/(7)/
b. Restated Bylaws/(7)/
10. Material Contracts
a. Agreement in Principle dated October 13, 1995 between NBI, Inc.
and the Internal Revenue Service/(7)/
b. Belle Vernon Motel Corporation Land Lease Agreement/(7)/
c. Agreement between L.E. Smith Glass Company and The American Flint
Glass Workers' Union/(7)/
d. Stock Purchase Agreement with Romaine Gilmour and Rose B.
Calderone dated August 4, 1995/(5)/
e. Asset Purchase and Sale Agreement between Lawrence F. Ranallo,
Trustee in Bankruptcy of Pittsburgh Food & Beverage Company, Inc.,
L.E. Smith Glass Company and American Glass, Inc. dated June 29,
1995/(5)/
f. Krazy Colors, Inc. Stock Purchase Agreement/(4)/
g. Krazy Colors, Inc. Shareholder Agreement/(4)/
h. Jay H. Lustig Warrant Certificate/(4)/
i. Krazy Colors, Inc. Revolving Line of Credit/(4)/
j. NBI, Inc. Employee and Director Stock Option Plan/(2)/
k. Form of NBI, Inc. Director Non-Qualified Stock Option
Agreement/(2)/
l. Form of NBI, Inc. Chief Executive Officer Non-Qualified Stock
Option Agreement/(2)/
16. Letter on Change in Certifying Accountant/(6)/
21. Subsidiaries of Registrant
a. See Item 1 - Business, herein
27. Financial Data Schedule/(7)/
25
<PAGE>
(b) Reports on Form 8-K:
The following Forms 8-K were filed with the Commission during the quarter
ended June 30, 1995 and subsequently:
1. Form 8-K dated July 25, 1995, Item 5 - Other Events:
The Company was the successful bidder for a majority of the assets of
L.E. Smith Glass Company of Mount Pleasant, Pennsylvania.
2. Form 8-K dated August 4, 1995, Item 2 - Acquisition and Disposition
of Assets:
I. The Company acquired 100% of the outstanding capital stock of the
Belle Vernon Motel Corporation on August 4, 1995.
II. The Company's recently formed, wholly-owned subsidiary, American
Glass, Inc., closed on its purchase of a majority of the assets
of L.E. Smith Glass Company of Mount Pleasant, Pennsylvania on
August 14, 1995.
3. Form 8-K dated August 11, 1995, Item 4 - Changes in the Company's
Certifying Accountant:
On August 11, 1995, NBI dismissed the firm of Ernst & Young LLP and
on August 17, 1995, engaged the firm of BDO Seidman LLP as its
principal accountant.
4. Form 8-K/A dated September 28, 1995, Item 7 - Financial Statements
and Proforma Financial Information:
I. Audited financial statements of the Belle Vernon Motel
Corporation as of December 31, 1994 and 1993 and for the years
then ended, and unaudited interim financial statements as of June
30, 1995 and for the six months then ended.
II. Audited financial statements of L.E. Smith Glass Company as of
March 31, 1995, 1994 and 1993, and for the years then ended, and
unaudited interim financial statements as of June 30, 1995 and
for the three months then ended.
III. Proforma financial statements as of June 30, 1995 and for the
year then ended.
-----------------------------------
(1) Incorporated by reference to the Company's report on Form 10-K for the
two months ended June 30, 1992 and the ten months ended April 30, 1992.
(2) Incorporated by reference to Registration Statement No. 33-73334.
(3) Incorporated by reference to the Company's report on Form 10-KSB for the
year ended June 30, 1994.
(4) Incorporated by reference to the Company's report on Form 10-QSB for the
quarter ended December 31, 1994.
(5) Incorporated by reference to the Company's report on Form 8-K dated
August 4, 1995.
(6) Incorporated by reference to the Company's report on Form 8-K dated
August 14, 1995.
(7) Filed herewith.
26
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NBI, Inc.
October 13, 1995 By: /s/ JAY H. LUSTIG
- ---------------- --------------------------------------
Chairman of the Board
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ MARJORIE A. COGAN Corporate Controller, Secretary October 13, 1995
- --------------------- ----------------
Marjorie A. Cogan (Principal Financial and Accounting Officer)
/s/JAY H. LUSTIG Director October 13, 1995
- ---------------- ----------------
Jay H. Lustig
/s/ MARTIN J. NOONAN Director October 13, 1995
- -------------------- ----------------
Martin J. Noonan
</TABLE>
27
<PAGE>
EXHIBIT 3.A.
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
NBI, INC.
We, the undersigned, President and Assistant Secretary, respectively,
of NBI, INC., a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware (the "Corporation"), do hereby
certify as follows:
FIRST. The Board of Directors of the Corporation duly adopted
resolutions containing the amendments to the Certificate of Incorporation of the
Corporation set forth below, declaring such amendments to be advisable and
calling for the consent of the stockholders of the Corporation to such
amendment.
SECOND. A majority of the outstanding stock entitled to vote thereon,
and a majority of the outstanding stock of each class entitled to vote thereon
as a class has been voted in favor of the amendments at the Annual Meeting of
Shareholders, held January 12, 1995. The amendments were in all respects duly
adopted in accordance with the provisions of Section 242 of the Delaware General
Corporation Law.
THIRD. Article FIFTH, Paragraph A of the Certificate of Incorporation
of the Corporation is hereby amended to read in its entirety as follows:
A. The number of directors shall be fixed by, or in the manner
provided in, the Bylaws.
FOURTH: Article EIGHTH of the Certificate of Incorporation of the
Corporation is hereby amended in its entirety to read as follows:
EIGHTH: A. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by the Delaware General
Corporation Law, and all rights conferred on stockholders herein are
granted subject to this reservation.
B. The Board of Directors is expressly authorized and empowered to
make, alter and repeal the bylaws of the Corporation, subject to the
power of the stockholders
-28-
<PAGE>
of the Corporation to alter or repeal any Bylaw made by the Board of
Directors.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Jay H. Lustig, its President, and John G. Lewis, its Assistant
Secretary, this 27th day of February, 1995.
NBI, INC.
By: /s/ Jay H. Lustig
--------------------------------------
Jay H. Lustig, Chief Executive Officer
ATTEST:
/s/ John G. Lewis
- ----------------------------------
John G. Lewis, Assistant Secretary
-29-
<PAGE>
EXHIBIT 3.B.
AMENDMENT TO THE BYLAWS OF NBI, INC.
(a Delaware Corporation)
At the 1994 Annual Meeting of Shareholders, NBI, Inc., a Delaware
corporation (the "Company"), held on January 12, 1995, the shareholders duly
voted in favor of amending the Bylaws of the Company. Pursuant to such vote,
the Bylaws of the Company have been amended as follows:
1. Section 3.3 of the Bylaws of the Company is amended to read in its
entirety as follows:
Section 3.3 Number, Tenure and Qualifications. The number of
directors shall be not less than three nor more than seven. Within
these limits, the number of directors shall be determined by
resolution of the Board of Directors. The directors may be elected by
written ballot if the Board so determines, and shall be elected at
each annual meeting of stockholders. The persons receiving the
greatest number of votes, up to the number of directors to be elected,
shall be the directors. Each director shall hold office until the
next annual meeting of stockholders and thereafter until his or her
successor shall have been elected and qualified. Directors shall be
18 years of age or older, but need not be residents of Delaware or
stockholders of the Corporation.
2. Section 3.6 of the Bylaws of the Company is amended in its
entirety to read as follows:
Section 3.6 Vacancies. Newly created directorships resulting from
any increase in the number of directors and any vacancies on the Board
of Directors resulting from death, resignation, disqualification,
removal or other cause shall be filled only by an affirmative vote of
a majority of the remaining directors then in office, even though less
than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the
unexpired portion of the term of the director whose place he or she
has been elected to fill and until such Director's successor shall
have been elected and qualified.
3. Section 3.11(b) of the Bylaws of the Company is deleted.
4. Section 8.4 of the Bylaws of the Company is deleted.
The foregoing amendments to the Bylaws of the Company are effective as
of January 12, 1995.
-30-
<PAGE>
EXHIBIT 10.A.
AGREEMENT IN PRINCIPLE
On this date, NBI, Inc., a Delaware corporation ("NBI"), and the
Internal Revenue Service, Department of the Treasury, United States of America
("IRS"), have reached an agreement in principle revising the terms of a
Stipulation and Agreement Re Internal Revenue Service Tax Claim and Tax
Liabilities dated June 12, 1991 (the "Stipulation"), as follows:
a) NBI will pay to the IRS $250,000 principal amount plus all accrued interest
through September 30, 1995, at the rate stated in the Stipulation, upon the
execution of a final written agreement with the IRS. The remaining
outstanding principal amount shall be due and payable in one principal
payment on October 1, 1997.
b) NBI shall make quarterly interest payments beginning on January 1, 1996,
with interest accruing on the outstanding principal amount from October 1,
1995, with subsequent interest payments due on April 1, 1996, July 1, 1996,
October 1, 1996, January 1, 1997, April 1, 1997 and July 1, 1997. Interest
will accrue on the outstanding principal balance at the rate of 7.5% for the
period of October 1, 1995 through March 31, 1996. The interest rate for
April 1, 1996 through October 1, 1997 will be reevaluated in April 1996
based upon NBI's ability to pay the statutory rate, but in no event will the
interest rate for this period exceed the lesser of the statutory rate or
10%. All remaining accrued interest on the outstanding principal amount
herein shall be paid with the payment of the remaining outstanding principal
amount on October 1, 1997.
c) NBI shall have no further obligation with respect to the "Coverage Test" as
defined in paragraph 17 of the Stipulation.
d) NBI will use every reasonable effort to obtain the required approvals from
Integra Bank and Libbey Glass Company to enable it to grant the IRS a third
security interest in the real and personal assets of the L.E. Smith Glass
Company, owned by American Glass, Inc., a wholly-owned subsidiary of NBI,
Inc., within thirty days of the date of this agreement. If NBI is unable to
obtain the approvals within this time period, NBI will grant the IRS a first
security interest in all of the capital stock of American Glass, Inc. and
all of the capital stock of the Belle Vernon Motel Corporation, as evidenced
by the related physical stock certificates which will be delivered to the
IRS by October 24, 1995.
e) If on the last day of any fiscal quarter commencing after September 30,
1995, NBI Inc.'s unconsolidated cash and cash equivalents (less any and all
"Restricted Cash") shall exceed $1,300,000, NBI shall pay to the IRS within
forty-five days after the end of such fiscal quarter, fifty percent (50%) of
the amount by which such cash and cash equivalents exceed $1,300,000. Any
such payment shall be applied to and shall reduce the outstanding principal
balance. For these purposes, "Restricted Cash" means cash and cash
equivalents held in segregated accounts for employee benefits.
<PAGE>
f) In the event of a failure of NBI to make any payment provided in paragraphs
(a) or (b) above, an Event of Default shall have occurred fifteen days after
written notice and demand from IRS to NBI in respect of such payment unless
NBI has previously (a) cured the default by payment of the amount due plus
additional interest on the amount of such payment for the period running
from the due date of the payment to the date of actual payment (which may be
estimated by NBI) or (b) given written notice to IRS that it disputes the
existence of the default with a recitation of the reasons why, with
supporting documentation. In the event of a failure of NBI to take any
action required by this Agreement, an Event of Default shall have occurred
thirty days after written notice and demand from IRS to NBI in respect of
such failure unless NBI had previously (a) cured the default or (b) given
written notice to IRS that it disputes the existence of the default with a
recitation of the reasons why, with supporting documentation. In the event
of a continuing Event of Default, IRS may by written notice to NBI declare
the remaining principal amount due and payable with accrued interest to the
day of payment and the IRS shall be entitled to pursue against NBI the
remedies provided by the Internal Revenue Code for the payment of assessed
taxes. Nothing herein shall limit the rights and remedies of the IRS or the
taxpayer with respect to post-effective date taxes.
In the event NBI incurs undisputed post-petition Federal Tax Liabilities, an
Event of Default under this agreement shall have occurred fifteen days after
written notice and demand from IRS to NBI for payment of such undisputed
liabilities unless NBI has previously (a) paid the undisputed liability,
with undisputed interest and penalties, if any, or (b) given written notice
to IRS that it disputes the existence of the default, with a recitation of
the reasons why, with supporting documentation. In the case of an Event of
Default or a dispute, the provisions of the preceding paragraph shall apply.
INTERNAL REVENUE SERVICE
Date: 10/13/95
-----------------------------------
By: /s/ P.E. Callahan
-------------------------------------
P.E. Callahan
Chief - Special Procedures Staff
Denver District
NBI, INC.
Date: 10/13/95
-----------------------------------
By: /s/ Jay H. Lustig
-------------------------------------
Jay H. Lustig, Chairman
<PAGE>
EXHIBIT 10.B.
LEASE AGREEMENT
---------------
THIS LEASE made and entered into this 16th day of May, 1969, by and between
William F. Sullivan and Rosemary C. Sullivan, his wife, of the City of
McKeesport, County of Allegheny and Commonwealth of Pennsylvania, and James L.
Smith and Thelma W. Smith, his wife of the Township of Rostraver, County of
Westmoreland and Commonwealth of Pennsylvania, hereinafter referred to as
"LESSOR",
AND
BELLE VERNON MOTEL CORPORATION, a Pennsylvania Corporation, hereinafter referred
to as "LESSEE".
WHEREAS, Lessor is the owner of a certain parcel of real estate in
Rostraver Township, Westmoreland County, Pennsylvania, and more particularly
described as follows:
BEGINNING at a point which is common to George Baron and William F.
Sullivan of Ramp C of Interstate Route 70 which is marked by a pipe; thence
South 14/o/ 53' West a distance of 220.00 feet to a point in the centerline of
Finley Road a Township Road; thence North 76/o/ 59' West a distance of 535.74
feet; thence along centerline of Finley Road in a Southwesterly direction a
distance of 450 feet, more or less, to a point, thence North 10/o/ 42' West a
distance of 230 feet, more or less, to a point on the right of way line of
Interstate 70; thence by and along Interstate to right of way line in a
Northeasterly direction a distance of 625 feet, more or less, to a point; thence
still along the right of way line Interstate 70 an arc distance of 150 feet,
more or less; thence still along Interstate 70 right of way line a distance of
330 feet, more or less, to the place of beginning.
WHEREAS, Lessor is desirous of leasing the real estate to Lessee, and
WHEREAS, Lessee is desirous of leasing the real estate from Lessor,
NOW, THEREFORE, In consideration of the promises and other good and
valuable consideration the parties hereto, intending to be legally bound hereby,
mutually agree as follows:
1. The Lessee convanants and agrees that on the real estate hereinabove
described, and which is the subject of this Lease Agreement, he will
construct or cause to be constructed thereon a Motel, with a minimum of
eight (80) motel units, a swimming pool and a commercial building
containing a restaurant, kitchen, banquet and/or club rooms and related
facilities (said restaurant, kitchen, banquet and/or club rooms and
related facilities begin hereinafter collectively referred to as the
related facilities" together with sufficient parking to adequately serve
the aforesaid motel units and commercial building. The aforesaid motel
and related facilities to be constructed and operational within a period
of eighteen (18) months from the date that the Lessor herein
-34-
<PAGE>
has on record in the Office of the Recorder of Deeds of Westmoreland
County, Pennsylvania, a deed indicating that the said Lessor has good and
marketable title to the real estate herein above described.
2. The Lessee shall pay to the Lessor as rental the sum of One Hundred
($100.00) Dollars per year per motel unit or a minimum rental of Eight
Thousand ($8,000.00) Dollars per year. The Lessor shall have the option
of collecting and demanding as rent, in lieu of the rental heretofore
referred to; a sum of money which would be equal to three (3%) per cent of
the yearly gross revenue derived by the Lessee from the motel units and in
addition one (1%) per cent of the yearly gross revenue derived by the
Lessee from the operation of what has been heretofore referred to as the
related facilities. The rental heretofore referred to shall be paid by
the Lessee to the Lessor on a monthly basis. It is to be expressly
understood however that no rental whatsoever shall be due and owing by the
Lessee to the Lessor and the Lessee shall not be obligated to pay rent to
the Lessor until such time as the motel and related facilities has been
constructed and is operational. The Lessee, however, covenants and agrees
that the motel and related facilities shall be constructed and operational
within a period of eighteen (18) months from the date that the Lessor
herein has on record in the Office of the Recorder of Deeds of
Westmoreland County, Pennsylvania, a deed indicating that the said Lessor
has good and marketable title to the real estate hereinabove described.
3. The term of this Lease Agreement shall be for a period of fifty-five (55)
years provided; that, if the Lessee has faithfully performed all the
covenants and agreements contained herein, then in that event, he shall
have the right at the expiration of his initial fifty-five (55) year
period, to renew this lease for an additional period of twenty-five (25)
years upon, and under, the same terms and agreements as set forth herein.
The initial term shall commence upon the day that the aforesaid motel and
related facilities shall be constructed and operational; provided,
however, that the day the initial term commences shall not be later than
eighteen (18) months from the date that the Lessor herein has on record in
the Office of the Recorder of Deeds of Westmoreland County a deed
indicating that the said Lessor has a good and marketable title to the
real estate hereinabove described.
4. The Lessee herein reserves to himself the right to assign this lease for
the purpose of effecting the necessary financing to construct and furnish
the aforesaid motel and related facilities; provided, however that any
assignee of this Lease Agreement shall be bound by all the terms and
conditions herein contained.
5. Lessee, at its cost and expense, has obtained (and is presently the owner
and holder of) a Letter of Commitment for a Holiday Inn Franchise covering
the motel site and Motel, Letter of Commitment is in full force and
effect. During the term of this lease and any renewal and extension
thereof, Lessee shall be entitled to all of the rights and benefits which
accrue to the Franchise, which will be issued. It is understood and
agreed that
-35-
<PAGE>
Lessee will abide by all of the terms of said Letter of Commitment in so
far as they pertain to him.
6. Lessee, at its sole cost and expense, agrees to operate and maintain the
Motel in such manner that it will, at all times, qualify for a Holiday Inn
Franchise and be in keeping with the highest standards of motel operation.
Lessee, at its sole cost and expense, will take good care of the Motel,
its approaches and parking areas, and will keep the same in good order and
condition, ordinary wear and tear excepted, pay all operating charges and
expenses and make all necessary repairs thereto, interior and exterior,
structural and non-structural, ordinary and extraordinary, and foreseen
and unforeseen, so that the rent shall be completely not to Lessor without
deduction abatement or set-off.
7. Lessee agrees that it will indemnify and save Lessor harmless from any and
all liability, damages, expenses, causes of action, suits, claims or
judgements arising from injury to person or property on the Motel, or upon
the approaches or parking areas. In order to assure such indemnity,
Lessee, and also the sub-tenant, if any sub-letting is approved by Lessor
hereunder, shall carry and keep in full force and effect for such Motel,
at all times during the term of this lease, for the protection of Lessor
and Lessee, public liability insurance, with limits of not less that Five
Hundred Thousand Dollars ($500,000) for injury to any one individual and
One Million Dollars ($1,000,000) for any one accident and not less than
Fifty Thousand Dollars ($50,000) for property damage, and shall deliver to
Lessor a copy of said policies. In the event Lessee or the sub-tenant
shall fail to keep in force and maintain such policies of insurance,
Lessor shall have the option to purchase such insurance, to pay the
premiums therefor and the amounts so paid, with interest thereon at the
highest legal rate, shall forthwith become additional rent hereunder.
8. The lessee shall have the right to assign this Lease or to sub-let the
premises herein demised provided; however, that any assigned or sub-leasee
shall be bound by all the terms and conditions set forth in this Lease
Agreement.
9. If Lessee shall so elect, Lessor agrees that this lease shall be subject
and subordinate to the lien of any institutional bona fide mortgages,
deed of trust or security deeds (including chattel mortgages and
conditional sales contracts) that may now, or at any time hereafter, be
placed against the demised premises by Lessee, and Lessor agrees, at any
time hereafter, on demand, to execute any instruments, releases or other
documents that may be required by any such mortgages, or mortgagors, for
the purpose of subjecting and/or subordinating this lease to the lien of
any mortgage, deed of trust, or security deed, whether original or
substituted.
10. It is further agreed that in the event the Motel, or any part thereof,
shall be partially damaged by an insurable casualty, the same shall be
restored by Lessee, out of insurance proceeds or otherwise, with
reasonable diligence, due allowance being made for the time taken for the
settlement of insurance claims and for Lessee's obtaining
-36-
<PAGE>
proper governmental permission to repair. Such restoration shall be made
as nearly as possible to the character of the buildings and improvements,
and the equipment therein, existing immediately prior to such occurrence.
The rent hereunder shall not abate (except such portion of said rent as is
not covered by insurance, which portion shall abate) by reason of such
casualty, but in the event restoration shall not be made by Lessee within
a reasonable time after the occurrence of such casualty Lessor shall have
the right to cancel this lease. If, however, the damage shall be so
extensive as to make untenantable sixty (60%) per cent or more of the
Motel units, Lessee shall within sixty (60) days after the occurrence of
such damage notify Lessor of its intention either to rebuild and restore
the Motel or to terminate this lease. In the event Lessee shall elect to
rebuild and restore the Motel and shall within such sixty (60) day period
notify Lessor of such election, Lessee shall proceed with reasonable
diligence (due allowance being made for the time taken for the settlement
of insurance claims and for Lessor's obtaining proper governmental
permission) to restore and rebuild the Motel out of insurance proceeds or
otherwise, and the rent hereunder shall not abate (except such portion of
said rent as is not covered by insurance, which portion shall abate,) but
in the event such rebuilding and restoration shall not be made by Lessee
within a reasonable time after the occurrence of such damage, Lessor shall
have the right to cancel this lease. In the event Lessee shall elect not
to restore and rebuild the Motel, this lease shall fully cease and
terminate as of the date of the occurrence of the damage.
11. Lessee, at its cost and expense, (1) shall keep the Motel constantly
insured against loss or damage by fire and extended coverage hazards and
contingencies by policies in an amount equal to not less than eighty (80%)
per cent of the full insurable replacement cost of the Motel above
foundation walls, but in any event in an amount sufficient to prevent
coinsurance on the part of Lessee, (11) shall keep the Motel constantly
insured against malicious mischief and vandalism, and (111) shall (if
Lessor so requests) keep in force and effect rent insurance covering the
full amount of rent (including real estate taxes and all other expenses
payable by Lessee under the provisions hereof) called for by this lease.
All insurance required to be maintained under the foregoing or any other
provisions of this lease shall be in recognized and responsible companies;
shall provide that loss thereunder shall be payable to Lessor and Lessee
as their interests may appear, with a standard-form mortgage clause in
favor of the mortgage of the demised premises; and shall, to the extent
obtainable, contain an agreement by the insurer that such policy or
policies shall not be cancelled for any cause without at least ten (10)
days prior written notice from the insurer to Lessor, giving Lessor an
opportunity to cure any default.
12. It is further covenanted and agreed by and between the parties hereto
that in the event Lessee in possession shall be finally adjudicated
bankrupt, or a receiver or trustee shall be appointed for its property and
assets, and if Lessee shall make an assignment or other conveyance in
trust for the benefit of creditors, or if Lessee shall offer or permit a
final judgement or decree for the payment of money to be entered against
it and execution to issue thereon and be levied upon its interest in this
lease, and such
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<PAGE>
execution and levy be not dismissed within thirty (30) days after the date
of such execution and levy, then, upon the happening of any such event,
the term hereby demised shall, at the option of Lessee, cease and
determine.
13. It is further covenanted and agreed that if the Lessee shall fail to pay
rent when due, as aforesaid, although no demand may have been made for
the same, or in the event Lessee violates any of the terms, covenants or
conditions of this lease on its part to be performed and such violation
continues for twenty (20) days after written notice to Lessee in the case
of non-payment of rent or money, or sixty (60) days after written notice
to Lessee in the case of any other violation, then and in any such case,
unless the default is such (other than non-payment of rent or money) that
it absolutely cannot be cured within a thirty (30) day period, Lessee's
right to possession of the Motel shall, if Lessor so elects but not
otherwise, thereupon terminate upon Lessor giving Lessee twenty (20) days
written notice of such election.
14. Lessor covenants and agrees that if the covenants and agreements on the
part of Lessee shall be kept, performed and observed by Lessee, as in this
lease provided, Lessee shall have the quiet, peaceable and uninterrupted
possession and enjoyment of said premises.
15. Notice, wherever provided for herein, shall be in writing, and be given
by registered or certified mail, return receipt requested, postage
prepaid, to the following address (unless a different address has been
furnished by the party receiving such notice to the party giving such
notice, in which case the letter address shall be used):
For the Lessor:
For the Lessee:
16. It is agreed that the time specified in any provision of this lease
within which a party shall construct, restore, replace, rebuild or repair
the Motel shall be extended for a period equal to that during which the
party may actually be delayed or hindered by strikes, lockouts, acts of
God, fire, injuction or other restraint by law, unusual action in the
elements, or any other causes reasonably beyond the control of such party.
17. In the event of any change in grade of any adjoining streets, alleys or
highways, or in the event the demised premise, or any part thereof, shall
be taken by or pursuant to any governmental authority or through the
exercise of the right of the eminent domain, or if a part only of the
said premises is taken and the balance of the said premises, in the
opinion of the Lessee, is not suitable for the operation of the aforesaid
motel and related facilities, this Lease, at the option of the Lessee,
shall terminate without further liability on the part of the Lessee, or
the Lessee may continue in possession of the remaining portion of the
demised premises, in which event the rent hereunder shall be reduced in
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proportion to the reduction in the area of the premises, but nothing
herein shall be deemed a waiver of the sole rights of the Lessee to any
award for damages to it or to its leasehold interest caused by such taking
where separately or as part of a general award.
19. Lessee shall, for each and every year during the term hereof, furnish
Lessor with a written detailed operating statement in respect of all
aspects of the demised premises.
20. It is further understood and agreed by and between the parties that this
lease contains the final and entire agreement between the parties hereto
and that they shall not be bound by any terms, statements, conditions or
representations, oral or written, not herein contained; and upon
acceptance of delivery of the premises, Lessee shall be deemed to have
accepted the same.
21. It is further understood and agreed that the convents, agreements and
conditions herein contained shall be binding upon Lessee and upon Lessor
and upon their respective legal representatives, successors, and assigns.
22. This lease shall be construed and enforced in accordance with the laws of
the State of Pennsylvania.
23. If Lessee defaults under or fails to carry out and abide by its
obligations to make any and all payments hereunder, including without
limitation real estate taxes and premiums on insurance policies, Lessor
shall have the right forthwith to do and carry out and perform such
obligations of Lessee and the cost and expenses incurred by Lessor in so
doing, carrying out and performing such obligations shall be charged
against Lessee as additional rent and/or additional required payments due
from Lessee, plus interest at the highest legal rate authorized by the
State of Pennsylvania.
24 If any provision of this lease shall be held invalid, the same shall be
separable, and shall not affect the validity of the other provisions
hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed and sealed these
presents, and intending to be legally bound hereby, on this date first
hereinabove written.
WITNESS:
/s/ William F. Sullivan (SEAL)
--------------------------
/s/ Charles Stimp
- -------------------
/s/ Rosemary C. Sullivan (SEAL)
--------------------------
/s/ James L. Smith (SEAL)
--------------------------
/s/ Thelma W. Smith (SEAL)
--------------------------
ATTEST: BELLE VERNON MOTEL CORPORATION
By: /s/ Walter J. King
- ------------------- ---------------------------------
Secretary Walter J. King President
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<PAGE>
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF
On this 16th day of May, 1969, before me a Notary Public the undersigned
officer, personally appeared William F. Sullivan and Rosemay C. Sullivan, his
wife, known to me (or satisfactorily proven) to be the persons whose names are
subscribed to the within instrument and acknowledged that they executed the same
for the purposes therein contained.
IN WITNESS WHEREOF I hereunto set my hand and official seal
-------------------------------
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF
On this, the 19th day of May, 1969 before me the undersigned officer,
personally appeared James L. Smith and Thelma W. Smith, his wife, known to me
(or satisfactorily proven) to be the person whose names are subscribed to the
within instrument and acknowledged and that they executed the same for the
purposes therein contained.
IN WITNESS WHEREOF I hereunto set my and official seal
-------------------------------
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<PAGE>
COMMON WEALTH OF PENNSYLVANIA
COUNTY OF
On this 16th day of May, A.D. 1969, before me a Notary Public the
undersigned officer, personally appeared WALTER J. KING who acknowledged himself
to be the PRESIDENT OF BELLE VERNON MOTEL CORPORATION, a corporation, and that
he as such President, being authorized to do so, executed the foregoing
instrument for the purposes therein contain by signed the name of the
corporation by himself as President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal:
----------------------------------
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<PAGE>
AMENDMENT TO LEASE
------------------
Amendment to lease from WILLIAM F. SULLIVAN and ROSEMARY C. SULLIVAN, his wife,
and JAMES L. SMITH and THELMA W. SMITH; his wife, dated May 16, 1969, to BELLE
VERNON HOTEL CORPORATION; of record in the Recorder's Office of Westmoreland
County in Deed Book Vol. 2015, page 378.
KNOW ALL MEN BY THESE PRESENTS, that the above named WILLIAM F. SULLIVAN
and ROSEMAY C. SULLIVAN, his wife, and JAMES L. SMITH and THELMA W. SMITH, his
wife, as LESSORS,
and
BELLE VERNON HOTEL CORPORATION, as LESSEE, do hereby amend their lease
dated May 16, 1969 and recorded as aforesaid in Deed Book Vol. 2015 page 378, by
deleting therefrom the description of the said property, and substituting
therefor, the following:
ALL that certain tract of land situate in Rostraver Township, Westmoreland
County, Pennsylvania, bounded and described as follows, to-wit:
BEGINNING at an iron pipe at the dividing line between the property herein
described and that now or late of George Baron et ux, thence along said line
South 14/o/ 53' West 220 feet to a point in Finley Road (a township road),
thence by a lien North 77/o/ 26' West in said road and away from said road
513.66 feet to a point; thence by a line North 79/o/ 50' West 109.56 feet to a
point, thence by a line North 70/o/ 06' West 156.91 feet to a point, thence by a
line South 89/o/ 10' West 47.52 feet to a point, thence by a line South 36' West
124 feet to a point in Finley Road aforementioned, thence by a line in said road
South 79/o/ 29' 40" West 190.10 feet to a point; thence by a line North 11/o/
35' West 226.45 feet to a point in the southerly line of right of way for
Interstate Route 70; thence along the same North 78/o/ 25' East 650.20 feet to a
point of tangent; thence continuing along the same by the arc of a circle
curving to the right having a radius of 252.51 feet, an arc distance of 154.91
feet to a point; thence continuing along the same South 66/o/ 26' East 327.18
feet to a point; thence leaving said right of way by a line south 17/o/ 55' East
19.28 feet to the iron pipe at the place of beginning.
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<PAGE>
The above description is in accordance with survey dated June 27, 1969,
prepared by Albert J. Bordy, Registered Engineer of Rostraver Township,
Westmoreland County, Pennsylvania - his File No. 92-92A.
In paragraph 2 of said lease, the following shall be inserted on the third line
after the end of the first sentence:
"This minimum to be increased proportionately as new units are added."
On line 13 of paragraph 2, page 2, the period of "18 months" shall be
deleted and the period of "20 months" shall be inserted, together with the
following:
"As consideration for the extension of time, the tenants agree to pay
the minimum rental for the period commencing November, 1970, until
the motel is in operation."
IN WITNESS WHEREOF, the parties hereto have set their hands and seals this
14th day of October, A.D. 1970.
/s/ William F. Sullivan (SEAL)
- ----------------------------
/s/ Rosemary C. Sullivan (SEAL)
- ----------------------------
/s/ James L. Smith (SEAL)
- ----------------------------
/s/ Thelma W. Smith (SEAL)
- ----------------------------
BELLE VERNON MOTEL CORPORATION
By /s/ Walter J. King
----------------------------
President
ATTEST:
- ----------------------------
Secretary
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<PAGE>
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF WESTMORELAND
On this, the 14th day of October, 1970, before me, a Notary Public, in and
for said Commonwealth and County, personally appeared WILLIAM F. SULLIVAN and
ROSEMARY C. SULLIVAN, his wife, known to me (or satisfactorily proven) to be the
persons whose names are subscribed to the within instrument, and acknowledged
that they executed the same for the purposes therein contained, to the end that
it may be recorded as such.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
----------------------------------
Notary Public
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<PAGE>
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF ALLEGHENY
On this, the 14th day of October, 1970, before me, a Notary Public, in and
for said Commonwealth and County, personally appeared JAMES L. SMITH and THELMA
W. SMITH, his wife, know to me (or satisfactorily proven) to be the persons
whose names are subscribed to the within instrument, and acknowledge that they
executed the same for the purposes therein contained, to the end that it may be
recorded as such.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------------
Notary Public
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<PAGE>
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF ALLEGHONY
On this, the 14th day of October, 1970, before me, the undersigned officer,
personally appeared WALTER J. KING, who acknowledged himself to be the President
of Belle Vernon Corporation, a corporation, and that he as such President, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
------------------------------------
Notary Public
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<PAGE>
EXHIBIT 10.C.
AGREEMENT BETWEEN
THE L.E. SMITH GLASS COMPANY
OF MOUNT PLEASANT, PA
AND
THE AMERICAN FLINT
GLASSWORKERS' UNION
LOCAL UNION NUMBERS 102 AND 537
EFFECTIVE JUNE 1, 1995
TO SEPTEMBER 7, 1998
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<PAGE>
PREAMBLE
- --------
This agreement, made and entered into by and between the L. E. Smith
Glass Company and the American Flint Glassworkers' Union, A.F.L. &
C.I.O., on behalf of Local Unions No. 102 and No. 537 (hereinafter
referred to as the Union) shall be known as the "General Agreement"
between said parties. This Agreement and such supplemental provisions
that may be later agreed to between said parties shall constitute the
complete Agreement between the Company and the Union and shall apply to
those employees, members of the Union and employed by the Company, as per
Article I of the Agreement.
ARTICLE I - RECOGNITION
-----------
The Company recognizes the Union as the sole and exclusive bargaining
agency for all hourly paid production and maintenance employees in the
above specified plant, except plant executives, office employees,
technical staff (including laboratory, engineering, and mechanical
development), janitors who clean the offices, rest rooms, cafeteria, show
room, water fountains, plant guards,salaried special and final
inspectors, factory clerks(including shipping and receiving clerks),
Foreman and Assistant Foreman who have the authority to recommend the
hiring and discharging of production and maintenance workers.
ARTICLE 2 - INTENT AND PURPOSE
------------------
Section 1 - It is the intent and purpose of this Agreement to promote and
improve the relationship between the Company and the Union and
to set forth the basic rules regarding working conditions
affecting employees covered by this agreement.
Section 2 - In furtherance of this intention, the Company, through its
representatives, agrees to meet the Shop Committees representing
The American Flint Glass Workers' Union whenever necessity
requires to discuss grievances which may arise and the
interpretation of terms of the contract. Such meetings are to
suit the reasonable convenience of both parties, but either
party may demand that such a meeting be held within five (5)
days from the date of the request in accordance with the
grievance procedure. The Company or the Union may require a
written statement listing the subjects to be discussed.
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<PAGE>
Section 3 - The right of the employer to choose any new employees is hereby
acknowledged. In the event of the employer being unable to
secure competent glassworkers, the management shall request the
factory committee to supply competent glassworkers as soon as
possible.
ARTICLE 3 - UNION SHOP
----------
Section 1 - The Labor-Management Relationship Act of 1947, having been
complied with and the Company having received notice from the
Union negotiating committee which makes this Agreement, that a
substantial majority of the employees covered by this Agreement
desire that Union membership be made a condition of employment,
the following Union Shop clause is adopted:
A) It is a continuing condition of employment that all employees engaged in
the performance of work covered by this contract shall, on and after the
sixtieth (60)day of employment or sixty (60) days after the effective
date of this contract or sixty (60) days after it is signed, whichever is
later, become and remain members of the Union in good standing during the
life of the contract subject to the provisions of Section 8(a)(3) of the
Labor Management Relations Act of 1947 as amended.
B) The Union, when notifying the Company that an employee is not in good
standing in the Union, shall do so in writing and state the reason
therefore. If the reason is the failure to tender the regular initiation
fees and/or membership dues required by the Union, the employer, if
requested by the Union, shall discharge such employee within two (2)
weeks unless he is reinstated in the Union within that time or otherwise
entitled to employment under the provisions of existing State or Federal
Laws.
C) The first sixty (60) days of employment will be probationary; however,
provisions of this contract will apply to new employees with regard to
all matters except that the discharge of a new employee unsatisfactory to
the Company during this sixty (60) day probationary period shall not be a
matter for grievance.
D) The sixty (60) day clause, referred to above, is not applicable to a call
back from a temporary layoff, if such person has previously worked for
the Company for a period of sixty (60) days or more. In case of a rehire,
it will be necessary for the employee to signa new Union Dues
Authorization Deduction Card to authorize payroll deduction.
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<PAGE>
ARTICLE 4 - CHECK-OFF OF UNION DUES
-----------------------
Section 1 - The Company agrees to deduct regular Union membership dues from
the wages of those employees who are members of the Union and
who so authorize it by written assignment of their wages on a
form provided by the Union and acceptable to the Company.
Section 2 - The assignments, once executed, shall be irrevocable for a
period of one year from the date of the execution or until the
termination date of this Agreement whichever occurs first, but
may continue in effect thereafter unless revoked in accordance
with the Labor-Management Relations Act.
Section 3 - The Union is responsible for forwarding the Union assessments
deduction authorization card to the Company office. No
deductions for Union assessments will be made by the Company
until receipt of the assessments deduction authorization card
duly executed.
Section 4 - It is mutually agreed between the Company, Local No. 102 and
Local No. 537 that the following rules will be followed when
deducting Union dues:
a) Dues will be credited to the appropriate Union based on the job
worked - Skilled or Industrial.
b) When one employee performs both Industrial jobs and Skilled jobs
during the same week, the entire dues will be credited to only one
Union based on the most hours worked - whether it be Skilled or
Industrial.
ARTICLE 5 - GRIEVANCE PROCEDURE
-------------------
The Union and the Company agree that if a dispute arises in the plant, it
shall be settled in the manner provided for in this article. Pending the
settlement of such matter, there shall be no change in working
conditions; that is, work shall be continued just as if no cause for a
controversy had arisen, and pending final settlement of the matter, there
shall be no lockouts, slow-downs, sit-downs, strike or cessation of work
by either employer, Union or employee.
A) If an employee has a grievance, he shall first confer with his Foreman
for adjustment of the matter.
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<PAGE>
B) If a satisfactory settlement is not made with the Fore-man, the matter
shall be referred by the employee to the Shop Committee for
investigation. If the Shop Committee considers the grievance to be
justified, it will confer with the Foreman and Department Head.
C) Should no agreement be reached, the matter shall then be jointly
presented to the Department Head affected by the Shop Committee, the
Personnel Director, and the Foreman.
D) Should no agreement be reached, the matter shall be jointly presented to
the Plant Manager and/or his representative by the Union Committee, the
Personnel Director, and the Department Head affected.
E) Should no agreement be reached, the matter shall be re-ferred by the
local Union Officers to the International President, if circumstances
warrant, requesting that an International Officer be assigned to further
process the grievance with the Plant Manager and such Company
representatives as he desires to have participate.
F) Should no agreement be reached, the matter shall be referred to the
National President of the American Flint Glass Workers' Union and the
proper executives of the Company for consideration.
G) If no agreement is reached through the above steps, the matter may be
referred to arbitration in the following manner:
If the Union and the Company do not agree on an arbitrator to settle the
grievance, he shall be chose from a list of nine arbitrators proposed by
the American Arbitration Association. The Director of Labor Relations of
the Company, or his designated representative, shall alternately strike
one name from the list of nine until only one name remains. The right to
strike the first name shall be determined by lot.
ARTICLE 6 - UNION RESPONSIBILITIES
----------------------
Section 1 - Recognizing that the welfare of its members and the
opportunities to earn a living depend upon the success and
prosperity of the Company, the Union hereby pledges for itself
and all its members (the employees of the Company) that they
will perform their work efficiently and to the best of their
ability to the end that the Company
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<PAGE>
may adequately meet competitive conditions and maintain maximum
employment.
Section 2 - The Union further pledges for itself and its members that they
will fully co-operate in the following: the reduction of
shrinkages of all kinds, the saving of materials, tools,
machinery, equipment, and all the Company property by means of
careful handling and use, minimizing breakage and losses of any
kind caused by careless handling, maintaining a high standard
of quality in all products through efficient and careful
workmanship aiding in the enforcement of all safety, good
housekeeping and health measures, and co-operating to the best
interests of the Union and the Company.
Section 3 - The Company will provide bulletin board space for exclusive
Union business, with the under-standing that the Union shall
post no notices elsewhere on Company property.
Section 4 - In case of sickness or inability to work, the employee shall
make every reasonable effort to notify this foreman as far as
possible prior to the time to go to work.
ARTICLE 7 - MANAGEMENT RESPONSIBILITIES
---------------------------
Section 1 - The Company is responsible, as the Union recog-nizes, for the
management and operation of the plant, direction, order and
discipline of the working forces, and it agrees that the
Company may hire, promote, transfer, layoff for lack of work,
and suspend or discharge employees for proper causes provided
that no action so taken shall be in violation of any other
provision of this Agreement, and that the Company shall not use
this right for the purpose of discrimination against any
employee because of his or her membership or legitimate
activity in the Union.
Section 2 - Nothing in the above paragraph shall be construed so as to
prevent the management from discharging employees on sight and
without notice for intoxication, disorderly conduct, refusal to
carry out proper orders, carelessness, endangering life or
property, or for the
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violation of Plant Rules made a part hereof. However, should
the Union disagree with any decision rendered by the Company
with regard to the above rules, it shall become a matter of
grievance and processed accordingly.
Section 3 - The management shall endeavor to establish work schedules,
starting and quitting times that are mutually satisfactory to
both the Company and the employees. The Shop Committee affected
shall be notified in advance of any changes in schedules
involving other days of the week not previously worked or
changes in starting and quitting times. Note: Nothing in this
section shall be construed to supersede rules outlined in
Department Supplements.
ARTICLE 8 - NO DISCRIMINATION
-----------------
There shall be no discrimination on the part of either Company or Union
on account of age, race, color, sex, national origin or religious belief of
any employee.
This contract will also be administered in accordance with applicable
laws preventing discrimination as to qualified handicapped individuals and as
to qualified disabled veterans of the Vietnam era.
ARTICLE 9 - HOLIDAYS
--------
The following days shall be recognized as holidays:
New Year's 36 Hour Period
(7 P.M. December 31 to 7 A.M January 2)
Memorial Day 24 Hour Period
(7 A.M Memorial Day to 7 A.M. Following Day)
July 4th 24 Hour Period
(7 A.M. July 4 to 7 A.M. July 5)
Labor Day 24 Hour Period
(7 A.M. Monday to 7 A.M. Tuesday)
Good Friday 24 Hour Period
(7 A.M. Friday to 7 A.M. Saturday)
Easter Monday 24 Hour Period
(7 A.M. Monday to 7 A.M. the following day)
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Thanksgiving & Day After 48 Hour Period
(7 A.M. Thursday to 7 A.M. Saturday)
Christmas 36 Hour Period
(7 P.M. December 24 to 7 A.M. December 26)
When any of the previous named holidays occur on Sunday, the following Monday
shall be observed as the holiday, and the actual holiday (Sunday) will be
considered as a regular Sunday and will not be considered a holiday.
A paid holiday shall be paid at the rate the employee worked at the last
scheduled day before the holiday. If the employee worked at a different rate
after lunch than before, an average of the two rates shall be used.
PAID HOLIDAY QUALIFYING RULES
-----------------------------
A) All full-time employees who have been on the manufacturer's payroll
continuously for sixty (60) days shall be paid for one regular shift, not to
exceed eight hours, at their hourly rate of pay for each of the presently
recognized eight paid holidays when no work is preformed, provided such
employee:
1. Must have worked during the 15 calendar days next preceding the holiday
or during the 15 calendar days next following the holiday, and
2. Must work or be available to work on his last regularly scheduled working
day before the holiday and on his first regularly scheduled working day
after the holiday.
3. The company will consider sickness with a doctor's excuse as a non-
scheduled work day in regards to the qualification of the day before or
the day after the holiday.
B) It is recognized that both the Union and the Company realize that there
must be some guidelines controlling holiday pay and that an employee must work
his full scheduled day before and after the holiday. However, certain
circumstances may warrant an employee not working the full scheduled day
before and after the holiday and still be considered for holiday pay.
If an employee must leave work because of illness or an emergency during
either of these work days, he or she must report the exact reason to his
foreman or other responsible management personnel. In case of illness, the
Company reserves the right to send the employee to the doctor at that time, or
in the case of night shift, at the earliest possible time to determine the
extent and nature of illness. If the doctor confirms illness, the employee
will be paid. If the employee does not make himself available or does not go
to the doctor upon request, he or she will not be paid.
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C) Employees normally scheduled to work on a holiday, such as Furnacemen and
Tankmen, must work as scheduled in order to qualify for holiday pay.
If a Tankman is not scheduled to work on a holiday, the employee will qualify
for eight hour add-on for the holiday provided that all other qualifying rules
are met.
D) When a holiday falls on Saturday, it shall be paid forwhether the employee
would be scheduled to work or not, subject to the qualifying rules.
E) No payment will be made for holidays not worked to employees on sick
leave, leave of absence for any reason, furlough, or on layoff except as
otherwise provided herein.
F) The recognized eight (8) paid Holidays are:
New Years's
Good Friday
Easter Monday
Memorial Day
Labor Day
Thanksgiving Day
Day After Thanksgiving
Christmas
G) In cases where it is necessary and when work is performed on any of the
above holidays, time and one-half plus holiday pay shall be paid.
ARTICLE 10 - SHIFT DIFFERENTIAL
------------------
The second shift shall be paid a differential of 12 cents per hour.
Third shift shall be paid a differential of 15 cents per hour which is
not applicable to producing labor (shops). The above amounts are not
reflected in computation of other premium time, vacation (unless worked)
or other similar payments except as required by law.
ARTICLE 11 - PAY DAY
-------
Section 1 - Workers shall receive a check covering their earnings in full
(less authorized deductions) every week and shall be paid
within one week after the close of the payroll period.
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Section 2 - When the Pay Day falls on a Holiday, the Company shall distribute
the checks on the preceding day, if possible.
ARTICLE 12 - MERIT WAGE ADJUSTMENTS
----------------------
Nothing in this contract shall be construed to prevent the Company from giving
increased compensation to employees of particular merit or to those deserving an
increase or promotion or who are promoted during the period that this contract
covers.
ARTICLE 13 - INVALIDITY
----------
In the event any of the terms or provisions of this Agreement shall be or become
invalid or unenforceable by reason of any Federal or State Law, directive order,
rule or regulation now existing or hereinafter enacted or issued, or any
decision of a court of last resort, such invalidity or unenforceability shall
not affect or impair any other terms or provisions hereof.
ARTICLE 14 - FULL POWER
----------
The American Flint Glass Workers' Union, A.F.L. - C.I.O., represents to the
Company that the officers and/or representatives who sign this agreement in its
name have full power and authority to make this agreement on behalf of the Union
and the employees of the Company (members of Local Union No. 102 and No. 537).
ARTICLE 15 - WAGES
-----
1) Effective June 1, 1995, all existing hourly base wage rates in effect
will be increased by TEN (10) cents per hour.
Effective September 4, 1995, all existing hourly wage rates in effect
will be increased by FIFTEEN (15) cents per hour.
Effective September 2, 1996, all existing hourly wage rates in effect
will be increased by TWENTY-FIVE (25) cents per hour.
Effective September 1, 1997, all existing hourly wage rates in effect
will be increased by TWENTY-FIVE (25) cents per hour.
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Effective September 2, 1996, a FIVE (5) cents per hour skill adjustment will be
added to the hourly base wage rates of all Local 102 employees.
2) All newly hired non-skilled employees shall be paid a base rate of 85% of
the job classification in which he or she works during the first year of
employment.
During the second year of employment this rate to increase to 95%.
During the third year of employment this rate to increase to 100%.
3) Any former employees who are rehired and have a minimum of two (2) years
previous service, shall be paid the full job rate immediately upon rehire.
Any former employees who are rehired and have less than two (2) years
previous service shall be given credit for such previous service toward the
full job rate and will be paid the full job rate when the length of such
previous service plus subsequent service equals two (2) years.
4) SEVERANCE PAY
The company proposes severance pay in the event the plant closes down on a
total and permanent basis as defined under the federal plant closing
regulation. Severance pay would be payable on the following schedule:
0 - 4 years 0
5 - 15 years 4 weeks
16 - 25 years 8 weeks
over 25 years 12 weeks
To qualify for severance pay, employees must work 400 hours within the
previous twelve (12) months.
ARTICLE 16 - VACATION WITH PAY
-----------------
SECTION 1 - ELIGIBILITY - All hourly paid employees who, during the life of this
contract, worked 400 hours or more per year between January 1 and December 31,
are eligible for a vacation with pay in line with the following provisions and
schedule:
VACATION PAY - MEMBERS LOCAL 102 AND 537
Years Service Days Vacation
------------- -------------
1 year or more 5 days (40 hrs)
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5 years or more 10 days (80 hrs)
10 years or more 15 days (120 hrs)
20 years or more 20 days (160 hrs)
Local 102 Only - The base rate for vacation pay will be determined by the base
rate worked more than 50% of the time during the month of October the previous
year. The base rates referred to above are the rates in force at the time the
vacation is taken, the October reference intended only to set the type of rates.
Under no circumstances will the rate be less than Press and Blow. The normal
Power Press Operator and Gatherer will receive "Shades over 12" Dia." base rate
for vacation pay.
General Provisions - Partial Vacations
- --------------------------------------
A. Any employee who has been continuously employed by the company for a period
of time as specified by the qualifying rules, and who has worked more than
four hundred (400) hours but less than one thousand (1000) hours during the
qualifying year shall receive vacation with pay on the basis of two and one
half percent (2 1/2%) of his base rate times the total hours worked for
each week of vacation entitled. Any employee who has worked 1000 hours or
more shall receive one full weeks pay for each week entitled.
SECTION 2 - QUIT OR DISCHARGED
- ------------------------------
Where a person's service with the Company is severed by a quit or discharge
and on furlough or leave of absence, he automatically begins a new service
record insofar as the vacation plan is concerned, provided he is later
rehired or returns to his job.
SECTION 3 - ILLNESS
- -------------------
Time lost by employees due to accidents in the plant, and such accident is
recognized by the State Workmen's Insurance Fund, will count as time worked
not to exceed a twelve month period.
SECTION 4 - VACATION SCHEDULES
- ------------------------------
The plant will be closed down the first week in July or 4th of July week
and all employees will take their first week's vacation and the second
(2nd) week may be taken between the last Saturday in June until the last
Saturday in September with the understanding that not more than one-fourth
(1/4) of the employees shall be off at one time or arrangements can be made
by your supervisor after considering the wishes
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of each employee and the best operation of the plant. However, if or when
it occurs during the time the plant is shutdown for repairs or inventory,
all employees who are eligible for two weeks vacation with pay must take
their second week's vacation at that time.
SECTION 5 - VACATION PAY
- ------------------------
The first and second weeks of vacation pay, when earned and due, will be paid to
the employee on the Friday preceding vacation.
(a) Vacation pay is subject to withholding tax and social security tax or any
other tax in effect at time of payment.
SECTION 6
- ---------
Any employee who has been called in the Armed Forces and who has worked the
required number of hours during the period covered by this contract, will be
eligible for vacation pay in accordance with the foregoing eligibility rules.
SECTION 7
- ---------
American Flint Glassworkers' Union National Executive and Elected Delegates to
the Annual or Biannual American Flint Glassworkers' Union National Convention
shall be given credit as time worked for vacation purposes, the time lost from
work due to attendance at said Convention and Annual General Wage Conferences.
SECTION 8 - PAID VACATION HOURS
- -------------------------------
Non-worked hours paid for under Company policy at base rate for holiday,
vacation, funeral leave, and jury duty will be credited as hours worked for
calculating vacation earned.
SECTION 9
- ---------
For the third and fourth week of vacation, management has the right to limit the
number of employees off in any one week to what, in management's opinion,
maintains proper continuity of operations. The fourth week vacation may be taken
one day at a time with two weeks notice, except during periods between July 15
and November 15. In cases where more employees want off than is proper to
maintain continuity of operations, management will consult with the individuals
involved and attempt to provide vacations at another time acceptable to the
individual. If this is not possible, the vacation will be assigned according to
seniority.
If an employee is sick, the third and fourth week of vacation can be taken a day
at a time in lieu of lost time. Payroll must be
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notified of any such request by the Monday following the week of absence for
timely payment.
It is further understood and agreed that any employee who wishes to work any
portion of his vacation may do so if the company requests it and agrees to pay
him his regular vacation pay in addition to pay for the time worked.
SECTION 10
- ----------
A) Employees with one or more years of service who work the hours necessary to
qualify for a vacation but die or retire or are disabled prior to the
vacation period will receive vacation pay. In case of death, payment will
be made to the insurance beneficiary last designated under the Company's
group insurance plan or, in the absence of such designation, to the proper
heir as determined by the Company's legal counsel.
B) Any employee who quits after qualifying under the provision of the vacation
plan shall be paid vacation pay earned.
ARTICLE 17 - REST PERIODS
- -------------------------
Rest periods shall be as follows in the Hot Metal Department, applied to
operating personnel only.
The Company will provide relief for a thirty (30) minute unpaid lunch period
between the hours of 10:30 a.m. and 1:30 p.m. on the first shift and 7:00 p.m.
and 10:00 p.m. on the second shift. Also during the scheduled lunch periods, the
Company will provide required relief so that employees will not work more than
one hour without a ten minute relief. During all other scheduled hours, the
Company will provide twelve minutes relief during each hour.
ARTICLE 18 - HOSPITALIZATION AND LIFE INSURANCE
- -----------------------------------------------
(1) The Company shall establish and maintain a comprehensive Group
Hospitalization, Life Insurance, and Weekly Accident and Sickness
Health Program for all covered employees.
(2) The Company shall be responsible for the administration of the
Program.
(3) Effective June 1, 1995, the employee contribution for Hospitalization
will be at 15% of the premium.
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Employee contribution for the first 12 months are as shown:
<TABLE>
<CAPTION>
Full Rate 15%
--------- ------
<S> <C> <C> <C>
Family $313.38 $47.02
Husband & Wife $299.39 $44.91
*Parent & Children $273.91 $41.09 * 34.18
Single $128.53 $19.28
Dental (Emp. Only) $ 13.24 $ 1.99
</TABLE>
* Parent and children - a special rate for anyone presently this category.
Any new employees in this category will pay $41.09.
(4) Life Insurance - Hourly employees will be eligible for Life
Insurance and Accident and Sickness Insurance according to the
following schedule:
Accident & Sickness
Life Insurance (18 weeks) Employee Cost
- -------------- ------------- -----------------
$6,000 $110.00 $4.16
(5) New Hires - Newly hired employees shall be offered full insurance
coverage after attaining six (6) months of Company Service.
ARTICLE 19 - FUNERAL LEAVE
- --------------------------
In case of the death of a spouse, child or step-child, an eligible employee
shall be paid for regular scheduled time lost through the third day after
interment, not in excess of five (5) eight-hour shifts at his or her regular
base wage rate.
In order for an eligible employee to attend the funeral of a parent, step-
parent, brother or sister, the employee shall be paid for regular scheduled time
lost through the day after interment, not in excess of three eight (8) hour
shifts at his regular base wage rate. If an employee's grandparent, grandchild,
mother-in-law or father-in-law should die, the employee may be absent on the day
of the funeral to attend the funeral and shall be paid for regular scheduled
time lost not in excess of eight (8) hours at his regular base wage rate.
In order for an employee to be eligible, he must be a full time employee who has
been on the manufacturer's payroll continuously for sixty (60) days.
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ARTICLE 20 - RETIREMENT
- -----------------------
1. Employee shall be subject to mandatory retirement according to current
federal law.
2. Employees will become eligible to participate in a 401K Retirement
Savings Plan on the first day of the month following completion of SIX
(6) months service and attainment of age 21.
3. Effective September 4, 1995 no cap on hours worked toward 401-K.
4. Company will contribute to each participant in the 401K Retirement
Savings Plan on the following basis:
Prior to September 2, 1996:
A) Less than 10 years service - SEVEN (.07) cents per actual hours
worked.
B) Service of 10 years and over - FOURTEEN (.14) cents per actual
hours worked.
Effective September 2, 1996:
A) Less than 10 years service TWELVE (.12) cents per actual hours
worked.
B) Service of 10 years and over - NINETEEN (.19) cents per actual
hours worked.
ARTICLE 21 - JURY DUTY
- ----------------------
Employees shall be paid the difference between eight (8)times their regular
hourly base wage rate and the payment they receive for Jury Duty for a maximum
of ten (10) working days each calendar year, subject to the following
requirements:
A) Payment will be made only for Service on a Petit Jury in Federal, State or
County Court and the employee must notify the Company within fortyeight (48)
hours after receipt of summons.
B) The employee must present to the Company proof of Jury Duty and the amount
of pay received therefore.
C) This provision shall not apply where an employee voluntarily seeks Jury
service, and the Company reserves the right to request that an employee be
excused from Jury Duty.
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D) Employees who are excused from Jury Duty before 12:00 o'clock noon shall be
required to report for work for the full shift should they be employed on
the second or third shifts.
E) Hours on Jury Duty will not be counted in computing overtime.
ARTICLE 22 - LOST TIME
- ----------------------
It is mutually agreed between the Company and the Union that any lost time at
the start of a turn of 15 minutes or more, for any of the reasons shown below,
will be compensated for at the hourly rate of each job, providing that the four
(4) hour skilled move is packed.
Applicable reasons for lost time of 15 minutes or more areas follows:
1. Delay in setting in press. A press is considered ready when set in,
leveled, and the air hooked up.
2. Glass not ready to work in day tanks due to excessive melting time.
Delay time will end when molds are taken out of mold oven.
3. Effective mold equipment the requires repair prior to starting the
turn. Delay will end when mold equipment is delivered back to the
press.
4. Glory holes, glaziers, and sputniks not set in at start of turn. Delay
ends when such equipment is set in place and shop can begin making
ware.
5. If cold molds are used due to a schedule change at the start of a
turn, delay time will be allowed to heat up molds. This applies only
to molds that come directly from storage instead of the mold oven.
The Foreman on each shift will be responsible for determining the amount of lost
time in accordance with this agreement.
ARTICLE 23 - LOST TIME DUE TO ON-THE-JOB ACCIDENTS
- --------------------------------------------------
When an employee is involved in an accident on the job and requires medical aid
from a doctor, the Company will pay at the hourly rate worked from any lost time
on the day of the accident. Such lost time must be authorized by the examining
doctor.
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ARTICLE 24 - HOSPITALIZATION RATES FOR EMPLOYEES AWAY FROM WORK
- ---------------------------------------------------------------
It is mutually agreed between the Company and the Locals No. 102 and No. 537
that employees can be charged the full rate for hospitalization after six (6)
months of continuous layoff. If an employee is unable to pay the required
premium, the coverage will be terminated. If coverage is terminated, it can be
reinstated only when the employee is called back to work.
If an employee is called back to work from layoff status and does not return,
all benefits will be terminated.
After 30 months away from work, employees on worker's compensation or off due to
sickness can be charged the full rate for hospitalization insurance. If the
employee is unable to pay the required premium, the coverage will be terminated.
ARTICLE 25 - SECONDS AND STONES
- -------------------------------
All seconds selected over the move and kept to be sold in the company store or
other outlets shall be paid for at 50% of that paid for first quality ware.
In cases where the move is not met with first quality ware, any seconds will be
counted the same as first quality ware up to the move for pay purposes.
ARTICLE 26 - GATHERERS
- ----------------------
It is mutually agreed between the Company and the Locals No. 102 and No. 53 that
non-card gatherers will be assigned to shops based on overall past performance
of ability and dependability as determined by the foreman.
ARTICLE 27 - GENERAL
- --------------------
1. Any employee in this department caught throwing any article or in any
way molesting another employee or willfully destroying Company
property, will be subject to discharge.
2. Employees are expected to be familiar will Rules and Regulations as
provided in this contract and any supplemental agreement mutually
agreed upon.
3. This contract provides the procedure by which complaints or grievances
of employers or employees are to be handled. We will recognize and
follow it, and we expect all members of the American Flint Glass
Workers' to do the same.
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4. Any employee caught stealing or destroying Company property is subject
to immediate dismissal.
5. The Company reserves the right to handle, in the following manner,
employees who break department rules, fail to follow instructions or
in anyway fail to live up to any written agreement: For the first
offense, employee shall be given a warning slip. For the second
offense, employee shall be given a second slip and may be laid off a
maximum of five (5) operating days. The third offense may mean
dismissal of employee. These slips shall be made out in triplicate,
one copy to be given the employee, one to the Union, and one retained
by the Company. These slips shall contain the infraction of rules,
instructions, or contract involved and shall be signed by the
employee's immediate foreman and at least one of the Company
officials. If there is any discussion concerning a slip, it must be
made within 24 hours of the time the employee and Union are handed the
slips. When a slip is issued and the employee has a clean record for a
period of one (1) year, Management will withdraw the slip.
6. No agreement shall be changed or new agreement made without mutual
consent of the Union and the Company.
ARTICLE 28 - NO MALE/FEMALE WAGE DIFFERENTIAL
- ---------------------------------------------
Whenever there is a reference to the masculine or feminine gender in this
agreement, such reference is used solely for the convenience of the draftsman
and, in all cases, use of the masculine or feminine gender is intended to refer
to employees of either sex. There will be no difference in rates of pay for
males and females who do equal work on jobs the performance of which requires
equal skill, effort, and responsibility and which are performed under similar
working conditions.
ARTICLE 29 - LEAVES OF ABSENCE
- ------------------------------
Upon written application, leaves of absence for good cause may be granted
employees. Such leave shall be in writing and approved by the Plant Manager. A
copy will be given to the Union. Employees who do not return at the expiration
date or who engage in other employment while on leave, shall be deemed to have
quit.
MATERNITY DISABILITY:
---------------------
1) Maternity disability leave shall be treated the same as all other non-
occupational medical disability leaves. Hospital and medical benefits
will be paid the same as for any other disability.
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2) Weekly sickness and accident benefits will only be paid to employees
who commence their maternity disability leaves when "disabled", as
established by medical documentation approved by the Company or
insurer, and it will only be paid for the actual disability period
which, absent medical documentation approved by the Company or
insurer, will be presumed to cease no more than six weeks following
delivery or other termination of the pregnancy.
3) Employees who commence their maternity disability leaves when disabled
and who return to work within six (6) weeks after delivery or other
termination of the pregnancy (or who disability period after delivery
or other pregnancy termination is extended on the basis of Company
approved medical documentation) will be guaranteed reinstatement to
their former job classification or those of like pay and status,
provided they would otherwise be entitled to work.
4) Any employee:
A) Who commences her maternity leave before she is disabled, or
B) Who fails to return to work within six (6) weeks after delivery
(or whose disability period after delivery is not extended on the
basis of Company approved medical documentation), or
C) Who fails to return to work within a reasonable recovery period
after a miscarriage or other termination of pregnancy will be
considered a voluntary quit with no entitlement to reinstatement
to her former job classification or one of like pay and status.
5) Any dispute that may develop over this policy is subject to the
grievance procedure.
ARTICLE 30 - PREMIUM TIME
- -------------------------
Section 1- The Company agrees to pay time and one-half for the following:
A) All hours of work in excess of eight (8) hours during any one work
day.
B) All hours of work during the designated 24 hour Sunday period.
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C) All hours of work in excess of 40 hours in any week.
D) Tank tenders holiday add-on pay for holiday hours not worked shall
not be counted as time worked in figuring premium time under
paragraph (c) above.
Section 2 - There shall be no duplication of pyramiding of premium time or
overtime. Exception: Holiday hours Monday through Friday paid
for but not worked shall be counted as time worked in figuring
premium time under paragraph (C) above.
Saturday holiday hours will not be counted as time worked in
figuring weekly overtime.
Section 3 - The working of overtime shall be mutually acceptable to the
individual employee and the Company. That is to say, the
Company cannot require an employee to work overtime nor
can an employee demand the Company to give him overtime.
Section 4 - A .10 per hour Premium will be paid for all hours worked on
Sunday. This is to be a straight .10 per hour add on
and will not be computed in calculation of overtime payments
or bonus earnings.
Section 5 - An employee who is called to work after leaving the factory will
be given an opportunity to earn at least four (4) hours pay at
his regular base rate. If the employee chooses to return
home after completing the task for which he was called
he shall be paid for the time worked, with a minimum of two (2)
hours pay at his regular base rate.
It is understood that if a greater amount of earnings would
result from application of any of the overtime provisions of
the contract to the time worked, the employees will be paid
the greater amount. Such minimum guarantees do not apply in
case of work immediately prior to the employee's scheduled
shift.
Section 6 - WEATHER CONDITIONS
------------------
When weather conditions indicate the need for heat within the plant, the
Company will make every possible effort to adjust the temperature, making it
possible for all employees to work in comfort.
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ARTICLE 31 - GENERAL RULES - LOCAL 537
- --------------------------------------
Section 1 - Working hours in the Cold Metal Department are from 7:00 a.m. to
3:30 p.m. on first shift and from 3:30 p.m. to 12:00 midnight on second shift.
Hours in the Hot Metal Department are from 7:00a.m. to 3:30 p.m. on first
shift and 3:30 p.m. to 12:00 midnight on second shift.
Employees are to be in their places and ready to work at the starting hour
or a reasonable period thereafter and to continue their duties through-out
the full working period, the only exception being for interruptions beyond
their control or for unavoidable personal reasons.
Section 2 - All employees on the time clock must punch their own card, it being
a violation of the Federal Wage and Hour Law for one employee to punch another
employee's time card.
Section 3 - Employees from one department are not allowed in another
department unless in the performance of their duties or with permission from
their Foreman.
Section 4 - TANK TENDERS
------------
Tank Tenders will work a three (3) shift, twenty (20) week rotating schedule.
Tank tenders work schedule will begin on Sunday (11:00 p.m. Saturday night)
instead of Monday.
This change will result in Saturday work at time and one-half if it is the sixth
day of the week and all other qualifying rules for overtime are met. The
schedule repeats itself every twenty (20) weeks and each employee will have had
a sixth work day fall on Saturday five times during this period.
Tank Tenders are to understand that they have responsibility for all phases of
the operation of all melting units as assigned by the Foreman and the practices
which are consistent with proper melting and tank operations.
Section 5 - TURNING OUT
-----------
All turning out jobs will be advertised and each shop assigned a permanent
turning out employee who cannot be bumped unless there is a temporary or
permanent reduction in forces in Local #537. A temporary reduction in forces
is any layoff lasting more than one (1) week.
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Job rights for turning out will be governed as follows:
If either a permanent or temporary cutback occurs, a permanent turning out
employee can be bumped by another employee holding more seniority only if there
is no other work available. If bumping does occur, the youngest turning out
employee will be the first one bumped.
If a presser retires and is replaced by a new presser, the turning out employee
of the old shop will be considered as the permanent turning out worker of the
new shop.
If a presser retires and is replaced by a presser from another shift or shop,
seniority will rule in determining whether the retired pressers turning out
employee or the replacement pressers previous turning out employee will be
considered as the permanent turning out employee of the new shop.
Turn out employee on low shop shall receive the same base rate as the glazer and
warming-in base rate on low shop.
Section 6 - MOULD CLEANERS
--------------
A. The mould cleaning room shall be manned as shown below unless the
employee has to be pulled to keep a shop working.
B. When running five (5) or more shops two (2) persons will be
assigned to the mould cleaning operation.
C. When running four (4) or more shops (with a power press in
operation), two (2) persons will be assigned to the mold operation.
D. When running four (4) shops or less (no power press), the Company
will evaluate the work load and determine the crew size accordingly.
E. When working two (2) shifts, there shall be a head mould cleaner
and an assistant on each shift.
Section 7 - WARMING IN WORKERS
------------------
Warming in workers will assist the Finisher on punch sets by rolling the snaps
when making plates. Whenever Management considers it necessary, the Warming in
workers will also roll the snaps when making punch bowls.
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Section 8 - LABOR GANG
----------
Laborers will be set up on a permanent basis and cannot be bumped. In overtime
work, the laborers will have priority and if additional help is needed,
seniority in the Hot End will prevail.
Section 9 - BASE RATES OF PAY
-----------------
Base rates for jobs not covered by the current base rate wage list shall be set
up by the Company after making a comparison with other jobs in the plant and by
giving proper weight to skill, effort, responsibility, and job conditions. In
any instance where the union feels the rate to be in error, the matter shall be
subject to the Grievance Procedure and if subsequently it is found that a
correction should be made in a new base rate, such adjustment shall be
retroactive to the date of the written protest but in no event before the
effective date of this contract.
Where inequalities or inequities in base rates exist or arise, adjustments may
be made by the Union and the Company.
Section 10 - SENIORITY - LOCAL 537
---------------------
A. For the purpose of determining layoffs and other factors surrounding
seniority, there shall be two recognized departments, namely, Hot
Metal and Cold Metal. The Hot Metal Department embracing those
operations in the production of ware in what is commonly known as the
Hot End. The Cold Metal Department embracing all operations other than
those done in the Hot End.
B. When work becomes slack, the available work shall be delegated to the
employee having most seniority with the Company within their
respective departments providing they are physically fit and competent
through knowledge, training, skill and efficiency to perform the
available work.
C. New workers shall not be hired in any department while regular (Union)
workers of that department are laid off.
D. The seniority of an employee shall start when he or she starts to work
in the department to which they are assigned.
E. An employee's service and seniority shall be cancelled after a layoff
of two (2) years.
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Restoration of Service - A former employee who has two (2) or more years of
continuous service with the Company, and who has been or is re-employed by the
Company, shall be given credit toward vacation for prior service with the
Company, after he has been re-employed for a period of three (3) years.
F. Cold End Seniority Protection Agreement
---------------------------------------
1. Any person who has been on layoff continuously for a period of six (6)
months shall have bumping rights on any job posted under the Seniority
Protection Agreement.
2. The jobs of SAWING (1st and 2nd Shifts) and GRINDING (1st and 2nd
Shifts) are covered by this agreement. All jobs posted in the future
will be looked at by the Company and the Union, and if applicable will
be subject to this agreement.
3. Anyone laid off shall have the right to bump onto lehr work with their
full seniority but must stay on lehr work until work becomes available
on their signed job. Such bumping will be limited to full days and
will not apply to partial days.
If any questions arise concerning the qualifications of those bumping,
the Cold End Committee will be consulted to help solve the problem.
G. Members of the Union shall be given the preference of work over non-union
employees in conformity with conference agreements and understandings.
H. If an employee is asked by the management to transfer from one department
to another and the transfer is made, they shall retain their seniority
rights in their former department for ninety (90) days.
I. In the event a shop is off, the senior employee in that department employed
on said shop shall be entitled to work before new or employees with less
seniority.
J. All open jobs to be listed for seven (7) days on the bulletin board for
publication so that all members will know of the opening and that the
foreman and committee shall give full consideration as to who shall be
placed on the job; said jobs having been left open for one week for
discussion and consideration, after publication. After a trial period of
one week, it shall be agreed between management and committee as to
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whether the employees shall remain on the job or return to his old job. Any
person who passes up the opportunity to take this job thereby forfeits any
later claim to this position.
K. In the restoration of forces, if any employee fails to report to work
within seven (7) days after proper notification, he or she shall lose all
seniority rights.
L. The Company will post a list every six (6) months showing the seniority of
all employees in both the Hot and Cold Metal Departments. The Union
Secretary shall provide a list of Union Officials and Committee Members.
M. In case am employee is drafted or enlists because he is eligible to be
drafted into Military Service in time of War or Peace, they shall retain
their seniority, providing they return to work within ninety (90) days
after they receive their discharge.
The Company's records shall be final.
Section 11 - IMPROVED METHODS
----------------
This department pledges for itself and all its members that they will cooperate
in the introduction of advanced methods of machine production so that the
Company may adequately meet competitive conditions and maintain employment.
Questions relating to Cold End Department Operations, incentives, and
productivity will be referred to the Cold End Labor-Management Productivity
Committee comprised of no more than three Local 537 employees and if not
resolved, shall be a matter for the Grievance Procedure.
Section 12 - TEMPORARY TRANSFER
------------------
A. Employees temporarily transferred to any other job paying a lower rate
shall be paid his regular rate if work is available for him on his
regular job.
B. Employees transferred to a job paying a higher rate shall be paid the
job rate of the work performed.
C. Such temporary transfer or assignment of an employee to a lower rated
job, at the base rate of the high job, shall not constitute a change
in rate for the lower rated job.
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Section 13 - REPORTING FOR WORK PAY
----------------------
A. Any worker holding a regular position, reporting for work at his usual
time, will be guaranteed at least four (4) hours' pay for four (4)
hours' work at this regular rate, unless he has been instructed not to
report. This policy will not apply during floods, fires, tornadoes,
power or fuel failures, machine breakdowns, or other emergencies
beyond Company control. Any service call shall be for not less than
four (4) hours' pay.
B. The Company assumes no responsibility for individuals appearing in the
hope or expectation that work may be available.
Section 14 - GLOVES
------
A. All employees handling hot, sharp, or any tool or article that may be
injurious to the hands shall be furnished with gloves.
B. New gloves to be issued upon return of the old and worn out gloves.
Section 15 - FIRST AID
---------
Although every possible effort has been made to aid in accident cases, we feel
that adequate space should be made where cleanliness could be maintained and in
case of serious accidents, employees injured could be placed or moved where
first aid could be rendered with readiness and cleanliness.
Section 16 - SAMPLE ROOM
-----------
The job of the employee who packs samples, less-than-carton lots and odds-and-
ends orders, will be advertised according to our present written agreement for
advertising jobs which become open. When an employee has been assigned the job
according to the above agreement, no employee can bump that worker so long as
the assigned employee wants the job.
It is understood that if there is not enough work available for a complete day,
this employee can complete the day by assignment to any work available. If the
worker is caught up with available sample room work is employee will not be
called out until at least part of a day is available or is eligible for work
according to general seniority.
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Section 17 - ETCHING ROOM
------------
The Company will provide x-rays to all permanently assigned and regularly
scheduled etching room employees according to applicable law.
Section 18 - MISCELLANEOUS WORKERS SKILLED CARDS
-----------------------------------
Miscellaneous workers who get skilled cards will be given protection on their
miscellaneous seniority for a period of three (3) years from the date of their
skilled card. If a cutback in operations should be necessary during the three
(3) year period, the worker will be permitted to do miscellaneous work
according to his seniority.
It is not the intent of this agreement to permit employees with skilled cards
to get overtime on miscellaneous work.
Section 19 - TANK TENDER TRAINEE
-------------------
When a tank tender is needed to be trained as a future tank tender replacement
and for emergency use, the job will be advertised and awarded based on
workmanship and seniority.
The individual selected can sign for other job openings but when a tank tender
is needed in an emergency or on a full time basis, this employee is obligated
to perform the tank tending job. If the selected employee is needed on a full
time basis, this individual will become a permanent tank tender and relinquish
all rights to other jobs held for a period of four (4) years. A tank tender
cannot be bumped.
Section 20 - INDUSTRIAL WORKERS-SHOP KNOCKOFFS
---------------------------------
If a shop works three (3) hours or more on first or second shift and is
knocked off by the foreman, due to no fault of the shop, the industrial
workers will receive four (4) hours' pay.
If a shop works 2 1/4 hours or more on third shift and is knocked off by the
foreman due to no fault of the shop, the industrial workers will receive three
(3 hours' pay.
The usual shift differential on all shifts will continue to be paid on a
proportionate basis as in the past, based on the number of hours worked.
Section 21 - COLD END INCENTIVE
------------------
All incentive jobs in the Cold End will be paid for by the job and not
averaged by the day or half day if proper and accurate times can be recorded
for each job. When accurate times cannot
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or are not recorded, incentives will continue to be based on the average for the
full day or half day as is presently done.
This is subject to mutually resolving the proper and accurate recording of times
on each job by the lehr tenders and associated relief people.
Section 22 - SPRAY DECORATING IN HOT END
---------------------------
It is mutually agreed between the Company and local #527 that the job of Spray
Decorating in the Hot End be handled as follows:
A. The job will be posted for Hot End employees only.
B. Rate as per rate sheet.
C. Sprayer must work with the shops. If less than four (4) hours spraying
is scheduled, the spraye must work where assigned by foreman for the
balance of the turn but will be paid the sprayer's hourly rate. It is
not the intent of this agreement to guarantee work if a shop knocks
off.
D. Sprayer must spray when required by supervision. When spraying is not
required, the sprayer can bump any non-posted job based on seniority
and ability to do the job at the start of a turn.
E. The individual selected for the sprayer position will relinquish
rights to any previously owned job after a 30 calender day trial
period.
Section 23 - INCENTIVE PROGRAM
-----------------
Incentive programs will be as per the various separate incentive agreements and
Article 32, Section 11 of this contract.
ARTICLE 32 - SUPPLEMENTARY AGREEMENT - Local #102 Excluding Mould Makers
- ------------------------------------------------------------------------
The following agreement applies to those Union employees in the Pressed and
Blown Department of Local Union #102 working at the L. E. Smith Glass Company
located at Mount Pleasant, Pennsylvania and is a part of and supplementary to
the General Agreement entered into by and between the Company and the Union.
1) POWER PRESS GATHERERS
---------------------
A) All articles weighing six (6) pounds or over, up to seven and one half
(7 1/2) pounds shall pay pressers'
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rate and all articles measuring fifteen (15) inches or over in
diameter up to seven and one half (7 1/2) pounds shall pay pressers'
rate of pay.
If an item weighs 11 3/4 pounds or more, the Company agrees to pay
pressers wages to the first gatherer and to use this weight limit as a
guideline in determining gatherers wages on future items where weight
is the determining factor. In no case where weight is the determining
factor will the first gatherer receive pressers wages if the item
weighs less than 11 3/4 pounds.
Two (2) gatherers are required for jobs weighing seven (7) pounds or
more.
B) It is mutually agreed between the Company and Local 102 that the
regular second gatherer on the power press (crystal) must be capable
of moving up to first gatherer when the regular first gatherer is not
available for work.
If single gathering jobs are scheduled on the power press and the
regular gatherer is not available for work, the second regular
gatherer will automatically move in to fill that vacancy. Any refusal
by the second gatherer to temporarily move to first gatherer will mean
that the person involved has given up his rights to be second
gatherer.
2) GLOVES
------
The Company shall furnish the pressers with one (1) pair of gloves every week;
the gatherers, finishers, and handlers one (1) pair every two (2) weeks. The old
gloves must be returned.
3) ROTARY PRESS
------------
All articles eight (8) inches and larger made on Rotary Press will be made at
regular side lever press moves.
4) REPAIR PRESS
------------
The Company agrees to repair all presses and put them into A-1 condition or in
good working order so as to make a better production unit. Also, the Company
agrees to repair or replace wind pipes and air lines as required.
5) FANS CLEANED
------------
The Company agrees to keep the fans clean.
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6) REST ROOMS
----------
The Company agrees to keep the rest rooms clean.
7) PUNTY HEAD MAKER
----------------
The Company agrees to have someone in at all times to make punty heads, keep
clay in order and to do what-ever is necessary to make better production.
8) LAYOFF OVER ONE MONTH - LOCAL 102
---------------------------------
If a layoff lasts more than one month, the Company shall meet with the Local
and discuss the Seniority plus qualification of those individuals involved.
9) The Company agrees to stamp all cartons "Buy Union, American, Handmade
Glassware."
10) The Company agrees to sign all Local Agreements and list established
sheets as soon as possible and return them to the Secretary of the Local
Union.
11) MOVES AND INCENTIVES
--------------------
All semi-automatic moves will be 40% higher than side lever moves. The rate
of participation will be the same as side lever moves.
The rate of participation for incentive purposes shall be at the same rate as
in the previous contract.
Management will establish moves for all new items. Settingmoves for new items
will be made so that a qualified operator shall have the expectancy of
exceeding a standard by an average of 25%.
All current moves will be reviewed and adjusted so that aqualified operator
shall have the expectancy of exceeding a standard by an average of 25%.
Questions relating to moves may be taken to the Labor Management Productivity
Committee comprised of not more than four (4) local 102 members and if not
resolved shall be a matter for the Grievance Procedure.
12) Management agrees to furnish graphite and wax at Company expense where
needed as an aid to production as determined by the foreman.
13) The Company will furnish gathering tools.
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14) WAGES - MACHINE GATHERERS
-------------------------
Machine Gatherers will be paid for overage on the average of the pressers' and
gatherers' rate.
15) REPORTING FOR WORK
------------------
A presser, gatherer, finisher, blower or blocker holding a regular position,
reporting for work at his usual time, will be guaranteed at least four (4)
hours' pay for four (4) hours' work at his regular rate, unless he has been
instructed not to report. This policy will not apply during floods, fires,
tornadoes, power or fuel failures, machine breakdowns, or other emergencies
beyond Company control.
16) SKILLED WORKERS - SHOP KNOCKOFFS
--------------------------------
If a shop works 3 1/2 hours or more on first and second shift and is knocked
off by the foreman, due to no fault of the shop, the skilled workers will
receive four (4) hours pay. If a shop works 2 hours 35 minutes or more on
third shift and is knocked off by the foreman, due to no fault of the shop,
the skilled workers will receive three (3) hours pay.
The usual shift differential will continue to be paid on a proportionate basis
as in the past based on the number of hours worked.
17) THIRD SHIFT - FILLING IN FOR ABSENT PRESSER
-------------------------------------------
It is mutually agreed between the Company and Local #102 that if the third
shift presser is absent from work on a temporary basis, the Company has the
right to assign a dauber to fill in pressing subject to the following rules:
A) All skilled card holding employees or assigned apprentices must be
given first preference.
B) Such assignment shall in no way interfere with the
established sequence of putting on new pressers when
needed.
C) The intent of this agreement is to provide a method
of keeping shops working on the third shift, and not
essentially to break in new pressers.
18) EQUIPMENT
---------
The Company will provide all Union Card Holding pressers employed at Smith
with a new pair of shears if needed contingent upon return of old shears for
replacement.
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19) SHADES WITH CENTER HOLES
------------------------
The hole in all shades will be started in the Hot End. If the shop is having
trouble with checks, the foreman has the responsibility to either solve the
problem or send the ware in without starting the hole. Such ware will be
designated for drilling in the Cold End. Every attempt must be made to
properly start the hole in the Hot End. If it cannot be done, the shades can
be drilled in the Cold End until the proper method is worked out in the Hot
End.
While management desires to resolve particular productions problems such as
this, management still retains its prerogative to make the determination as to
the most effective manufacturing procedures.
20) SKILLED RELIEF
--------------
If an employee relieves two (2) or three (3) people, 100% participation for
incentive will apply if breaks are given accordingly.
ARTICLE 33 - SUPPLEMENTARY AGREEMENT #2 (MOULD MAKING DEPARTMENT)
- -----------------------------------------------------------------
The following Agreement applies to those Union employees in the Mould Making
Department Local #102 working at the L. E. Smith Glass Company located at Mount
Pleasant, Pennsylvania and is part of and supplementary to the General Agreement
entered into by and between the Company and the Union.
1) The Company agrees to recognize the Rules of Government or
Mould Making Work, Press Branch, as agreed to for the period
covered by this contract.
2) Vacation period for Mould Making Department shall be agreed to between
the foreman and employees of the Mould Shop. Eligibility rules shall be
the same as the Press Ware Department.
3) The Company agrees that the Mould Shop shall be swept and cleaned at least
once each week.
4) MOULD MAKING DEPARTMENT HOURLY MINIMUM RATE
-------------------------------------------
The Company agrees to pay the hourly wage rates for Journeymen and
Apprentice Mould Makers that is negotiated in the wage conference between
the G.C.I.R.C. Group and on the same dates as specified in the National
Mould Makers Agreement.
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5) In the case of Mould Makers physically unable to perform an average
day's work, the rate shall be set by the Local Union, the Manufacturer,
and the individual worker involved.
6) VACATION PAY
------------
All Mould Makers and Apprentices shall be paid their base hourly wage
rate for Vacation Pay.
A) Mould Makers will receive their first week's vacation pay on the
last pay day preceding the vacation period. If not eligible for a
second week's vacation pay, said Mould Maker will be paid the week
before vacation pay the second week of vacation.
B) Vacation pay is subject to all taxes in effect at the time of
payment.
7) HOLIDAY PAY
-----------
All Mould Makers and Apprentices shall be paid their base rate of pay for
each of the following Holidays: New Year's, Good Friday, Easter Monday,
Memorial Day, Labor Day, Thanksgiving Day, Day After Thanksgiving,
Christmas.
Whenever it would occur that a Mould Maker or Apprentice would be called
in to work on a paid Holiday, he would be paid double time plus holiday
pay. Work on a Holiday shall be voluntary with the Mould Makers and
Apprentices.
8) PAID HOLIDAYS
-------------
When a Holiday falls on Saturday, it shall be paid for whether the
employee would be scheduled to work or not.
9) CALL IN PAY
-----------
A Mould Maker who is called to work after leaving the factory will be
given an opportunity to earn at least four (4) hours pay at his regular
base rate. If the employee chooses to return home after completing the
task for which he was called, he shall be paid for the time worked, with
a minimum of two (2) hours pay at his regular base rate. It is
understood that if a greater amount of earnings would result from
application of any of the overtime provisions of the contract to the time
worked, the employees will be paid the greater amount. Such minimum
guarantees do not apply in case of work immediately prior to the
employee's scheduled shift.
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<PAGE>
10) MULTIPLE WORK ASSIGNMENTS
-------------------------
Mould Makers and Apprentices shall not be assigned to operate two
machines simultaneously or to operate a machine and do bench work, etc.
while the machine is in cycle, except work of a nature that machine
operators have performed in the industry in the past during machine
cycle, if the cycle time is sufficient. No manufacturer shall be
required to change its present practice of assigning work.
Nothing herein shall be construed as placing any limitations upon a
manufacturer's right to make work assignments not involving dual or
multiple operations or from introducing new processes, equipment,
materials, or methods of operation, from time to time as it deems
desirable.
Both the Union and the L. E. Smith Glass Company recognize that new
techniques in manufacturing moulds which are substantially different from
existing machines and methods may be developed in the future which
involve dual or multiple operations. Therefore, during the term of the
contract, a joint meeting shall be held with the negotiating committee of
the Company and the Union within thirty (30) days following a written
request by either the International President of the Union or the Company
to the other for the purpose of exploring and making recommendations if
possible concerning procedures to be followed so that the introduction of
such new machines or methods can be carried out in a harmonious manner,
giving due consideration to the interest of both the employee and the
Company.
The Company will operate new substantially different equip-ment involving
dual or multiple operations under the provisions of Section until the
Joint Committee has had an opportunity to meet. Failing agreement by the
Joint Committee, the Company shall have the right to operate the
equipment or install the new methods in such a manner as they deem
desirable, and any dispute concerning same shall be referred as the
Committee shall direct or to the next conference.
ARTICLE 34 - DURATION
- ---------------------
The above shall constitute the complete Agreement which shall continue in
effect until the first Monday in September 1998, and thereafter so long as
negotiation for a new or modified agreement shall continue.
Signed this 1st day of June, 1995, by the duly authorized
representatives of the parties hereto:
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THE L. E. SMITH GLASS COMPANY:
Michael C. Miller - President
L. E. Smith Glass Co.
Forrest L. Kastner - Plant Manager
THE AMERICAN FLINT GLASSWORKERS UNION:
Lawrence Bankowski - International President
Ivan T. Uncapher - International Sec'y/Treas.
Paul W. Myers - National Representative
LOCAL #102
Alvin Rosensteel - President
Joseph Michalczyk - Vice President
Milton Clawson - Financial Secretary
LOCAL #537
Barbara Hurst - President
Sylvester Lubovinsky - Vice President
Stephen Postlethwait - Treasurer
Lawrence DePalma - Hot End Committee
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<TABLE>
<CAPTION>
HOT METAL HOURLY RATES
EFFECTIVE JUNE 1, 1995
SHADES MED. MED. LOW LOW
OVER HEAD SHOP SHOP BRAC. BRAC. BLOW
12" DIA SHOP PR & BL PRESS PR & BL PRESS SHOP
<S> <C> <C> <C> <C> <C> <C> <C>
01 Presser 10.095 9.99 9.69 9.62 9.50 9.46 9.295
02 Gatherer 9.72 9.64 9.37 9.32 9.20 9.17 8.95
03 Finisher 9.99 9.685 9.44 9.36 9.25 9.215 9.39
15 Gatherer 2nd 9.64 9.64
16 Gatherer (SA) 9.815 9.465 9.35 9.32
17 Presser (SA) 9.815 9.465 9.35 9.32
13 Handler 9.99 9.99
04 Turn Out 8.07 8.07 7.77 7.985 7.995 7.985
05 Warm-In 8.07 8.07 7.985 7.985 7.995 7.985
06 Glazer 8.07 8.07 7.985 7.985 7.995 7.985
07 Carry-Over 7.89 7.89 7.83 7.83 7.83 7.83
08 Spare 7.89 7.89 7.83 7.83 7.83 7.83
09 Handle Gatherer 8.115 8.115
10 Straighten 7.89 7.89 7.83 7.83 7.83 7.83
11 Catch Out 7.995 7.995 7.925 7.925 7.925 7.925
12 Carry In 7.89 7.89 7.83 7.83 7.83 7.83
14 Ring Lifter 7.89 7.89 7.83 7.83 7.83 7.83
18 Sprayer 8.07 8.07 7.985 7.985 7.985 7.985
</TABLE>
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<TABLE>
<CAPTION>
HOT METAL HOURLY RATES
EFFECTIVE SEPTEMBER 4, 1995
SHADES MED. MED. LOW LOW
OVER HEAD SHOP SHOP BRAC. BRAC. BLOW
12" DIA SHOP PR & BL PRESS PR & BL PRESS SHOP
<S> <C> <C> <C> <C> <C> <C> <C>
01 Presser 10.245 10.14 9.84 9.65 9.65 9.61 9.445
02 Gatherer 9.87 9.79 9.52 9.47 9.35 9.32 9.10
03 Finisher 10.14 9.835 9.59 9.51 9.40 9.365 9.54
15 Gatherer 2nd 9.79 9.79
16 Gatherer (SA) 9.965 9.615 9.50 9.47
17 Presser (SA) 9.965 9.615 9.50 9.47
13 Handler 10.14 10.14
04 Turn Out 8.22 8.22 7.92 8.135 8.145 8.135
05 Warm-In 8.22 8.22 8.135 8.135 8.145 8.135
06 Glazer 8.22 8.22 8.135 8.135 8.145 8.135
07 Carry-Over 8.04 8.04 7.98 7.98 7.98 7.98
08 Spare 8.04 8.04 7.98 7.98 7.98 7.98
09 Handle Gatherer 8.265 8.265
10 Straighten 8.04 8.04 7.98 7.98 7.98 7.98
11 Catch Out 8.145 8.145 8.075 8.075 8.075 8.075
12 Carry In 8.04 8.04 7.98 7.98 7.98 7.98
14 Ring Lifter 8.04 8.04 7.98 7.98 7.98 7.98
18 Sprayer 8.22 8.22 8.135 8.135 8.135 8.135
</TABLE>
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<TABLE>
<CAPTION>
HOT METAL HOURLY RATES
EFFECTIVE SEPTEMBER 2, 1996
SHADES MED. MED. LOW LOW
OVER HEAD SHOP SHOP BRAC. BRAC. BLOW
12" DIA SHOP PR & BL PRESS PR & BL PRESS SHOP
<S> <C> <C> <C> <C> <C> <C> <C>
01 Presser 10.545 10.44 10.14 9.95 9.95 9.91 9.745
02 Gatherer 10.17 10.09 9.82 9.77 9.65 9.62 9.40
03 Finisher 10.44 10.135 9.89 9.81 9.70 9.665 9.84
15 Gatherer 2nd 10.09 10.09
16 Gatherer (SA) 10.265 9.915 9.80 9.77
17 Presser (SA) 10.265 9.915 9.80 9.77
13 Handler 10.44 10.44
04 Turn Out 8.47 8.47 8.17 8.385 8.395 8.385
05 Warm-In 8.47 8.47 8.385 8.385 8.395 8.385
06 Glazer 8.47 8.47 8.385 8.385 8.395 8.385
07 Carry-Over 8.29 8.29 8.23 8.23 8.23 8.23
08 Spare 8.29 8.29 8.23 8.23 8.23 8.23
09 Handle Gatherer 8.515 8.515
10 Straighten 8.29 8.29 8.23 8.23 8.23 8.23
11 Catch Out 8.395 8.395 8.325 8.325 8.325 8.325
12 Carry In 8.29 8.29 8.23 8.23 8.23 8.23
14 Ring Lifter 8.29 8.29 8.23 8.23 8.23 8.23
18 Sprayer 8.47 8.47 8.385 8.385 8.385 8.385
</TABLE>
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HOT METAL HOURLY RATES
EFFECTIVE SEPTEMBER 1, 1997
<TABLE>
<CAPTION>
SHADES MED. MED. LOW LOW
OVER HEAD SHOP SHOP BRAC. BRAC. BLOW
12" DIA SHOP PR & BL PRESS PR & BL PRESS SHOP
<S> <C> <C> <C> <C> <C> <C> <C>
01 Presser 10.795 10.69 10.39 10.20 10.20 10.16 9.995
02 Gatherer 10.42 10.34 10.07 10.02 9.90 9.87 9.65
03 Finisher 10.69 10.385 10.14 10.06 9.95 9.95 10.09
15 Gatherer 2nd 10.34 10.34
16 Gatherer (SA) 10.515 10.165 10.05 10.02
17 Presser (SA) 10.515 10.165 10.05 10.02
13 Handler 10.69 10.69
04 Turn Out 8.72 8.72 8.42 8.635 8.645 8.635
05 Warm In 8.72 8.72 8.635 8.635 8.645 8.635
06 Glazer 8.72 8.72 8.635 8.635 8.645 8.635
07 Carry-Over 8.54 8.54 8.48 8.48 8.48 8.48
08 Spare 8.54 8.54 8.48 8.48 8.48 8.48
09 Handle Gatherer 8.765 8.765
10 Straighten 8.54 8.54 8.48 8.48 8.48 8.48
11 Catch Out 8.645 8.645 8.575 8.575 8.575 8.575
12 Carry In 8.54 8.54 8.48 8.48 8.48 8.48
14 Ring Lifter 8.54 8.54 8.48 8.48 8.48 8.48
18 Sprayer 8.72 8.72 8.635 8.635 8.635 8.635
</TABLE>
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HOT METAL HOURLY WAGES
<TABLE>
<CAPTION>
Effective 6/1/95 9/4/95 9/2/96 9/1/97
------ ------ ------ ------
<S> <C> <C> <C> <C>
18 Spraying................................. 7.985 8.135 8.385 8.635
19 Head Sprayer............................. 8.27 8.42 8.67 8.92
22 Labor.................................... 8.315 8.465 8.715 8.965
23 Head Maintenance......................... 9.29 9.44 9.69 9.94
24 Batch Mix (Head)......................... 8.825 8.975 9.225 9.475
25 Batch Mix (Assistant).................... 8.65 8.80 9.05 9.30
26 Tank Filler.............................. 8.25 8.40 8.65 8.90
27 Tank Tender.............................. 8.445 8.595 8.845 9.095
28 Head Mold Cleaner........................ 8.385 8.535 8.785 9.035
29 Mold Cleaning (Chuck).................... 8.07 8.22 8.47 8.72
30 General Labor (Forming).................. 7.83 7.98 8.23 8.48
32 Floor (Forming).......................... 8.07 8.22 8.47 8.72
33 Maintenance Helper (Level 2)............. 8.61 8.76 9.01 9.26
34 Maintenance Helper (Level 1)............. 8.185 8.335 8.585 8.835
80 General Labor (Polishing Room)........... 7.83 7.98 8.23 8.48
81 Permanent Labor (Batch & Furnace)........ 8.185 8.335 8.585 8.835
82 General Labor (Batch & Furnace).......... 7.83 7.98 8.23 8.48
84 General Labor (Warehouse & Shipping)..... 7.83 7.98 8.23 8.48
</TABLE>
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COLD METAL HOURLY WAGES
<TABLE>
<CAPTION>
Effective 6/1/95 9/4/95 9/2/96 9/1/97
------ ------ ------ ------
<S> <C> <C> <C> <C>
39 Pack-Station............................. 7.75 7.90 8.15 8.40
40 Floor Worker............................. 7.75 7.90 8.15 8.40
41 Order Picker............................. 7.75 7.90 8.15 8.40
42 Par Jars................................. 7.785 7.935 8.185 8.435
43 Grinding................................. 7.795 7.945 8.195 8.445
44 Lehr Tender.............................. 7.985 8.135 8.385 8.635
45 Shipper.................................. 8.13 8.28 8.53 8.78
46 Truck Driver............................. 8.10 8.25 8.50 8.75
47 Head Carton.............................. 8.805 8.955 9.205 9.455
48 Grinder Jars............................. 8.18 8.33 8.58 8.83
49 Grinder Jars............................. 8.18 8.33 8.58 8.83
50 Grinder Jars............................. 8.18 8.33 8.58 8.83
51 Decorating & Glueing..................... 7.785 7.935 8.185 8.435
52 Samples & UPS............................ 7.985 8.135 8.385 8.635
53 Driller.................................. 8.095 8.245 8.495 8.745
54 Hand Truck............................... 7.95 8.10 8.35 8.60
55 Town Motor............................... 8.025 8.175 8.425 8.675
METAL BANDING
61 Metal Banding (Beginning)................ 7.785 7.935 8.185 8.435
62 After 2 Months Experience................ 7.835 7.985 8.235 8.485
HAND DECORATING
62 Beginning Rate........................... 7.835 7.985 8.235 8.485
63 After 2 Months........................... 7.90 8.05 8.30 8.55
64 After 4 Months........................... 8.015 8.165 8.415 8.665
65 After 6 Months........................... 8.13 8.28 8.53 8.78
66 After 12 Months.......................... 8.25 8.40 8.65 8.90
67 Sprayer.................................. 8.095 8.245 8.495 8.745
69 Sand Blast............................... 8.095 8.245 8.495 8.745
83 Carton Helper............................ 8.095 8.245 8.495 8.745
85 Abrasive Cutting......................... 8.13 8.28 8.53 8.78
86 Romance Light Glue....................... 7.75 7.90 8.15 8.40
87 Etcher................................... 8.095 8.245 8.495 8.745
91 Assembly Line............................ 7.75 7.90 8.15 8.40
92 Utility.................................. 7.75 7.90 8.15 8.40
93 Sawing................................... 7.795 7.945 8.195 8.445
94 Washing.................................. 7.75 7.90 8.15 8.40
95 Polishing................................ 7.795 7.945 8.195 8.445
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