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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-9843
MORGAN PRODUCTS LTD.
(Exact name of registrant as specified in its charter)
DELAWARE 06-1095650
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
469 McLaws Circle, Williamsburg, Virginia 23185
(Address of principal executive offices, including zip code)
(804) 564-1700
(Registrant's telephone number, including area code)
-------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
The number of shares outstanding of registrant's Common Stock, par value $.10
per share, at July 27, 1996 was 8,648,988; 2,386 shares are held in treasury.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MORGAN PRODUCTS LTD.
<TABLE>
Consolidated Balance Sheets
($000 except shares outstanding)
<CAPTION>
June 29, July 1, December 31,
1996 1995 1995
(Unaudited)(Unaudited)
<S> <C> <C> <C>
ASSETS
CURRENTS ASSETS:
Cash and cash equivalents $ 2,105 $ 2,489 $ 5,135
Accounts receivable, net 32,906 32,741 20,801
Inventories 52,924 55,859 53,422
Other current assets 804 1,214 22
Total current assets 88,739 92,303 79,780
OTHER ASSETS 4,211 6,178 6,235
PROPERTY, PLANT & EQUIPMENT, net 19,490 22,037 23,500
TOTAL ASSETS $112,440 $120,518 $109,515
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $ 221 $ 0 $ 0
Current maturities of long-term debt 928 1,002 954
Accounts payable 16,060 14,629 11,121
Accrued compensation and
employee benefits 6,231 6,535 5,625
Income tax payable 123 147 111
Other current liabilities 3,857 2,671 3,295
Total current liabilities 27,420 24,984 21,106
LONG-TERM DEBT 32,057 41,456 35,574
STOCKHOLDERS' EQUITY:
Common stock, $.10 par value,
8,648,822, 8,642,788 and
8,647,483 shares outstanding,
respectively 865 864 865
Paid-in capital 33,779 33,743 33,771
Retained earnings 18,632 20,017 18,629
53,276 54,624 53,265
Treasury stock, 2,386 shares, at cost (48) (48) (48)
Unamortized value of restricted stock (265) (498) (382)
TOTAL STOCKHOLDERS' EQUITY 52,963 54,078 52,835
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $112,440 $120,518 $109,515
The accompanying notes are an integral part of the financial statements.
</TABLE>
MORGAN PRODUCTS LTD.
<TABLE>
Consolidated Income Statements
($000, except earnings per share amounts
and weighted average shares outstanding)
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
(Unaudited)(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $95,208 $ 84,262 $169,744 $164,926
Cost of goods sold 80,829 72,709 144,867 141,405
Gross profit 14,379 11,553 24,877 23,521
Operating expenses:
Sales & marketing 8,553 8,909 16,641 17,927
General & administrative 3,634 2,434 6,071 5,158
Provision for
restructuring 881 0 881 9
Total 13,068 11,343 23,593 23,094
Operating income (loss) 1,311 210 1,284 427
Other income (expense):
Interest (776) (984) (1,369) (1,866)
Other 57 75 137 260
Total (719) (909) (1,232) ( 1,606)
Income (loss) before
income taxes 592 (699) 52 (1,179)
Provision for income taxes 30 30 49 60
Net income (loss) $ 562 $ (729) $ 3 $ (1,239)
Income (loss) per share $ 0.06 $ (0.08) $ 0.00 $ (0.14)
Weighted average number
of common shares
outstanding 8,697,176 8,642,173 8,684,274 8,641,620
The accompanying notes are an integral part of the financial statements.
</TABLE>
MORGAN PRODUCTS LTD.
<TABLE>
Consolidated Statements of Cash Flow
($000's)
<CAPTION>
For the Six Months Ended
June 29, July 1,
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
CASH GENERATED (USED) BY OPERATING ACTIVITIES:
Net income (loss) $ 3 $(1,239)
Add (deduct) noncash items included in income:
Depreciation and amortization 1,842 1,967
Provision for doubtful accounts 57 0
(Gain) loss on sale of property,
plant, & equipment (17) (50)
Provision for restructuring 881 9
Other 117 (142)
Cash generated (used) by changes in
components of working capital:
Accounts receivable (12,162) (8,380)
Inventories 431 (902)
Accounts payable 4,939 3,119
Other working capital 869 (3,739)
NET CASH GENERATED (USED) BY OPERATING ACTIVITIES (3,040) (9,357)
CASH GENERATED (USED) BY INVESTING ACTIVITIES:
Acquisition of property, plant, & equipment (1,518) (2,117)
Proceeds from disposal of property, plant,
& equipment 4,127 43
Proceeds from surrender of life insurance
policies 925 0
Acquisition of other assets, net (210) (291)
NET CASH GENERATED (USED) BY INVESTING ACTIVITIES 3,324 (2,365)
CASH GENERATED (USED) BY FINANCING ACTIVITIES:
Proceeds from issuance of debt 496 26
Increase in revolving credit debt, net (3,223) 8,330
Payments on debt (565) (318)
Common stock issued for cash 8 10
Other (30) ( 32)
NET CASH GENERATED (USED) BY FINANCING ACTIVITIES (3,314) 8,016
NET DECREASE IN CASH AND CASH EQUIVALENTS (3,030) (3,706)
CASH AND CASH EQUIVALENTS:
Beginning of period 5,135 6,195
End of period $ 2,105 $2,489
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 1,702 $1,428
Income taxes 37 116
The accompanying notes are an integral part of the financial statements.
</TABLE>
MORGAN PRODUCTS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 29, 1996
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS - Morgan Products Ltd. (the "Company") manufactures
and purchases products (virtually all of which are considered to be millwork)
which are sold to the residential and light commercial building materials
industry and are used for both new construction and improvements, maintenance
and repairs. In view of the nature of its products and the method of
distribution, management believes that the Company's business constitutes a
single industry segment.
CONSOLIDATION - The consolidated financial statements include the accounts of
all business units of Morgan Products Ltd. All intercompany transactions,
profits and balances are eliminated.
BASIS OF PRESENTATION - The financial statements at June 29, 1996 and July 1,
1995, and for the three and six months then ended, are unaudited; however, in
the opinion of management, all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the financial position at these
dates and the results of operations and cash flows for these periods have been
included. The results for the three and six months ended June 29, 1996 are not
necessarily indicative of the results that may be expected for the full year or
any other interim period.
NOTE 2 - INVENTORIES
Inventories consisted of the following at (in thousands of dollars):
<TABLE>
<CAPTION>
June 29, July 1, December 31,
1996 1995 1995
(unaudited) (unaudited)
<S> <C> <C> <C>
Raw material $ 8,756 $ 9,409 $ 9,120
Work-in-process 7,222 7,234 6,536
Finished goods 36,946 39,216 37,766
$ 52,924 $ 55,859 $ 53,422
</TABLE>
Inventories are valued at the lower of cost or market. Cost is determined
on the first-in, first-out (FIFO) method.
NOTE 3 - PROVISION FOR RESTRUCTURING
An $11.3 million restructuring charge was incurred in the second quarter of
1994. The original restructuring charge covered the cost of closing the
Springfield, Oregon plant, the Weed, California veneer operation and other cost
reductions and consolidations within Morgan Products. During the third and
fourth quarters of 1994, the Company reviewed the charges reserved for in the
restructuring and determined that certain estimated costs would not be as high
as originally anticipated. At that time, certain other cost reduction and
restructuring actions were approved and provided for, which offset the lower
expenses. The additional expenses related to the restructuring of the Morgan
Distribution operations and costs associated with the relocation of the
Corporate headquarters. At the end of 1994, $4.9 million of the original $11.3
million had been used and the closing of the two plants was substantially
complete. The remaining reserve at the end of 1994 related primarily to other
cost reductions and consolidation to be taken within the Company, and the
Corporate headquarters relocation.
During the first quarter of 1995, management again evaluated its restructuring
reserves and determined that certain estimated costs would not be as high as had
been expected and adjusted the reserve appropriately. In addition, incremental
restructuring activities for Morgan Distribution (as described below) were
approved during the first quarter of 1995.
Since his arrival in September 1994, the Company's new Chief Executive Officer
and other members of senior management have been evaluating what actions are
necessary to improve Morgan Distribution's profitability. A multi-year plan
involving necessary management structure changes, a new management information
system and future facility requirements was developed. The first phase of this
restructuring plan was implemented during the first quarter of 1995. A new
organizational structure was announced that eliminated several management
positions including the unit president. The costs of severance and certain
other cost reductions were provided for during the first quarter which more than
offset the lower than originally anticipated expenses of the 1994
restructuring. No charges were made for changes in physical facilities
since no actions were implemented in 1995 with respect to these.
The Company completed the relocation of the Corporate headquarters from
Lincolnshire, Illinois to Williamsburg, Virginia during the third quarter of
1995. Most, but not all, of the expenses relating to the relocation were
charged against the restructuring reserve in that period.
During the fourth quarter, no significant activity occurred in the reserve. At
December 31, 1995, a $3.8 million reserve balance remained.
During the first quarter of 1996, restructuring expenses charged against the
restructuring reserve totaled $279,000, substantially all of which were employee
benefits resulting from severances.
In the second quarter of 1996, the Company sold its Lexington, North Carolina
door manufacturing facility for $4.1 million. The entire product line of doors
previously manufactured in Lexington will be shifted to the Company's Oshkosh,
Wisconsin door manufacturing facility during the third and fourth quarters of
1996. The Company recorded an additional restructuring charge in the second
quarter of $356,000 related to the sale of the Lexington facility. It is
expected that the Company will incur additional aggregate restructuring expenses
of approximately $1.6 million in the third and fourth quarters of 1996 related
to the sale.
Also in the second quarter, a $470,000 reserve was recorded for incremental
costs related to the 1994 plant closings in Springfield, Oregon and Weed,
California and the 1995 reorganization of the Manufacturing Division Office in
Oshkosh, Wisconsin (due to changes in cost estimates). At June 29, 1996, the
reserve balance was $3.774 million.
NOTE 4 - CREDIT AGREEMENT
The Company maintains a credit agreement with Fleet Capital which provides for a
revolving credit facility of up to $65 million through July 13, 1998, and
includes a letter of credit facility of up to $9 million through July 13, 1998.
During the second quarter, the Company and Fleet Capital signed an amendment
extending the existing agreement. The amendment became effective June 30, 1996
and has terms similar to or more favorable to the Company than those previously
in effect. At June 29, 1996 the Company had borrowings of $25.0 million under
the revolving credit facility. The credit agreement requires the Company, among
other things, to maintain minimum tangible net worth, leverage and interest
coverage ratios.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Three Months Ended June 29, 1996 vs
Three Months Ended July 1, 1995
The Company's net sales for the second quarter of 1996 were $95.2 million,
representing a 13.0% increase over the same period in 1995, when sales were
$84.3 million. The increase in sales reflects an 11.8% increase in sales of
distributed products and a 21.0% improvement in sales of manufactured products.
The second quarter of 1995 had single family housing starts at an annual rate of
1.116 million. This increase is a reflection of an increase in construction
activity. For April and May of 1996 (June data is not yet available), F.W.
Dodge shows single family housing starts at 1.332 million units on an annual
basis, a 19.4% increase. However, the Northeast region, where the Company
derives a significant portion of its business, experienced only a 6% increase.
Cahners Building and Construction Marketing Fore-cast is projecting a slowdown
in the second half of 1996, with the year as a whole showing only a 3.1% rise in
single family housing starts.
For the second quarter of 1996, the Company reported net income of $.6 million
or $0.06 per share compared to a net loss of $.7 million or $0.08 per share for
the same period in 1995, on average shares outstanding of 8,648,970 and
8,642,173, respectively. As discussed in Note 3, included in the second quarter
1996 results is a restructuring charge of $.9 million to cover the costs of
closing the Company's Lexington, North Carolina manufacturing plant and
incremental exit costs at the previously discontinued operations at Springfield,
Oregon and Weed, California. Excluding the $.9 million restructuring charge for
1996, the Company reported net income of $1.5 million or $.17 per share. The
increase in net income, exclusive of the restructuring charge, was primarily
caused by higher sales volume and improved profit margins. The 1995 second
quarter included a $.5 unfavorable inventory adjustment at the Company's
distribution center in Virginia.
The gross profit increase of $2.8 million from the second quarter of 1995 to the
corresponding period of 1996 was primarily the result of the aforementioned
sales volume increase, cost reductions, material cost improvements, and the
impact of the 1995 inventory losses at Virginia.
Operating expenses for the second quarter of 1996 were $12.2 million, excluding
the restructuring charge, or 12.8% of net sales, compared to 1995 second quarter
operating expenses of $11.3 million, or 13.5% of net sales, excluding the
aforementioned inventory losses. The increase in operating expenses was
primarily related to employment related costs. However, operating expenses as a
percentage of net sales for the second quarter of 1996 has declined from the
same period in 1995 due to net sales increasing at a greater rate than the
operating expenses.
The provision for income taxes in both years relates to the recording of state
taxes. The provision for federal taxes is offset by the Company's net operating
loss position.
Six Months Ended June 29, 1996 vs
Six Months Ended July 1, 1995
The Company's net sales for the 1996 six-month period were $169.7 million,
representing a 2.9% increase from the 1995 six-month period, when net sales were
$164.9 million. The increase in net sales was primarily the result of a 1.5%
increase in the sales of distributed products and a 7.3% increase in the sales
of manufactured products. This increase is a reflection of an increase in
construction activity. Single family housing starts for the first five months
of 1996 (June data is not yet available) were 19% greater than for the same
period in 1995. However, the Northeast region, where the Company derives a
significant portion of its business, experienced only a 6% increase.
The Company reported year-to-date breakeven net earnings in 1996 compared to a
net loss of $1.2 million or $.14 per share for 1995 on average shares
outstanding of 8,648,319 and 8,641,620 respectively. Excluding the $.9 million
restructuring charge in 1996, the Company reported earnings of $.9 million or
$.10 per share. The increase in net income, exclusive of the restructuring
charge, was primarily caused by the impact of a higher sales volume, material
and other cost reductions, and the 1995 inventory losses at Virginia on gross
profit, as well as reduced operating expenses and lower interest expense. These
favorable items were somewhat offset by less favorable pricing and mix and
higher overhead costs.
The gross profit increase of $1.4 million from the first half of 1995 to the
corresponding period of 1996 was primarily the result of the effect of the
aforementioned increase in sales at both the manufacturing and distribution
divisions, in addition to the impact of the 1995 inventory losses in the
Company's Virginia distribution center. The gross profit percentage improved
from 14.3% in the first half of 1995 to 14.7% in 1996. Excluding the
restructuring charges in both periods, operating expenses for the six-month
period decreased $.4 million from 1995 to 1996. Operating expenses for 1996
were $22.7 million or 13.4% of net sales, compared to 1995 expenses of $23.1
million or 14.0% of net sales, excluding the restructuring charges in both
periods. The decline in operating expenses was a consequence of tighter cost
controls on non-personnel costs and lower salaries. These were partially offset
by higher 1996 accruals for incentive bonuses and profit sharing. Due to the
losses in 1995, these accruals were not appropriate in the prior year.
Year-to-date 1996 interest expense was $.5 million lower than for the similar
period of 1995. Of this, $.3 million was due to the capitalization of interest
incurred in connection with the door manufacturing expansion. The remainder was
a result of lower bank debt levels and lower interest rates in 1996.
The provision for income taxes in both years relates to the recording of state
taxes. The provision for federal taxes is offset by the Company's net operating
loss position.
Significant Business Trends/Uncertainties
Management believes that housing starts have a significant influence on the
Company's level of business activity. Early indications are that housing starts
for single family dwellings will improve in 1996 over 1995, particularly in the
Midwest region. For the first five months, F.W. Dodge has single family housing
starts 19% higher than the similar period of 1995 for the total U.S. and 23%
higher in the Midwest. Dodge indicated that the rise in interest rates
contributed to the surge, as buyers, suspecting the year-long decline in rates
was ending, rushed to build. The expectation is that industry growth will
moderate as the year progresses.
Management also believes that the Company's ability to continue to penetrate the
residential repair and remodeling markets through sales to home center
improvement chains may have a significant influence on the Company's level of
business activity. Management believes this market will continue to grow in
importance to the Company.
In the past, raw material prices have fluctuated substantially for pine and fir
lumber. Fir prices at 1995 year-end remained at record high levels, while pine
lumber prices declined by 18.5% during 1995. Due to intense competitive
pricing, this has resulted in reduced selling prices rather than increased
profit margins. For the first six months of 1996, fir prices continued to
remain unchanged at the record level, while pine prices escalated 6.5% from the
1995 year-end price. As a result, the Company continues its efforts to expand
the utilization, where appropriate, of engineered materials in wood door
components and to switch to alternate wood species. In addition, the Company
has established reliable offshore material resources. Management believes that
these actions, together with aggressive pricing increases where competitive
factors allow, will partially offset the impact of the high cost of raw
material.
Liquidity and Capital Resources
The Company's working capital requirements are related to its sales which,
because of its dependency on housing starts and the repair and remodeling
market, are seasonal and, to a degree, weather dependent. This seasonality
affects the need for working capital inasmuch as it is necessary to carry larger
inventories and receivables during certain months of the year.
Working capital at June 29, 1996 was $61.3 million with a current ratio of 3.2
to 1.0, while at December 31, 1995 working capital was $58.7 million with a
current ratio of 3.8 to 1.0. The increase in working capital was primarily the
result of a $12.1 million increase in receivables reflecting the aforementioned
seasonality of the Company's operations. This increase was partially offset by
inventories which were lower by $.4 million, a $5.8 million increase in current
liabilities, and improved cash planning and management.
Long-term debt, net of cash, decreased to $30.0 million at June 29, 1996, from
$30.4 million at December 31, 1995. The Company's ratio of long-term debt, net
of cash, to total capitalization decreased from 36.6% at December 31, 1995 to
36.1% at June 29, 1996. These decreases since December 31, 1995 are primarily
due to the $.5 million decrease in long-term debt, net of cash and higher
stockholders' equity. The higher working capital requirements were more than
offset by the $4.1 million proceeds from the sale of the Lexington plant.
Cash used by operating activities amounted to $3.0 million for the six months
ended June 29, 1996, primarily to support the higher level of receivables. By
comparison, the six months ended July 1, 1995, reflected cash used by operating
activities of $9.4 million. Investing activities in the first six months of
1996 generated $3.3 million, compared to the corresponding period in 1995, when
investing activities used $2.4 million. The 1996 investing activities included
$.9 million in cash provided by the surrender of life insurance policies on
former executives, $1.5 million expended for asset acquisitions, and $4.1
million generated by asset disposals. Financing activities used $3.3 million
through June 29, 1996, primarily to repay debt. During the same period in 1995,
financing activities provided $8.0 million in cash. The $11.1 million
difference in the financing requirements between the first six months of 1995
and of 1996 primarily reflects the need to finance the cash used by operating
activities, which was $5.9 million greater in 1995 due to higher working
capital, as well as a $.6 million decline in capital spending in 1996, proceeds
of $.9 million from the surrender of life insurance policies, and $4.1 million
from the disposal of property and equipment.
The Company was in compliance with the specific financial covenants in its
amended credit agreement with Fleet Capital at June 29, 1996.
The Company executed an amended credit agreement with Fleet Capital effective
June 30, 1996. The terms are similar to or more favorable to the Company than
the terms previously in effect. The amendment extends the revised credit
agreement through July 13, 1998.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
At the Company's Annual Meeting of Stockholders on May 15, 1996, a vote was
taken for the election of directors for a one-year term. All directors were re-
elected by the following common stock vote:
<TABLE>
<CAPTION>
For Withhold Authority
<S> <C> <C>
F.J. Hawley, Jr. 7,916,447 32,437
L.R. Robinette 7,918,150 30,734
J.S. Crowley 7,917,449 31,435
H.G. Haas 7,917,949 30,935
W.R. Holland 7,916,651 32,233
A.F. Doody, Jr. 7,918,651 30,233
E.T. Tokar 7,913,359 35,525
B.H. Stebbins 7,916,151 32,733
P.J. McDonough, Jr. 7,918,150 30,734
</TABLE>
The second item on the ballot was the ratification of the selection of Price
Waterhouse LLP as independent accountants for the Company for the 1996 fiscal
year. The ratification passed by a common stock vote as follows: For
7,591,786; Against 350,084; Abstain 7,014.
ITEM 5. OTHER INFORMATION
The Company signed an agreement July 22, 1996 to purchase, subject to certain
contingencies, the assets and assume certain liabilities of Tennessee Building
Products and its subsidiary, Titan Building Products. The companies to be
acquired are distributors of windows, doors, kitchen cabinets, and other
millwork and glass products, with facilities in Nashville, TN; Chattanooga, TN;
Charlotte, NC; and Greenville, SC.
The purchase, which is currently in the statutory waiting period under the
federal Hart-Scott-Rodino Act, is currently expected to be consummated in the
third quarter. The acquired entities had actual 1995 net sales of slightly more
than $47 million.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
10.1 Purchase agreement with JELD-WEN, inc.
for the Lexington, North Carolina door
manufacturing facility.
10.2 Agreement between Local 705, International Brotherhood of
Teamsters, Chauffeurs, Warehousemen and Helpers of America,
AFL-CIO and Morgan Distribution at West Chicago, IL.
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter.
Signatures
Pursuant to the requirements 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.
MORGAN PRODUCTS LTD.
Date: August 13, 1996 By /s/ Douglas H. MacMillan
Douglas H. MacMillan
Vice President, Secretary and
Chief Financial Officer
(For the Registrant and as
Principal Finance Officer)
EXHIBIT INDEX
Exhibit No. Page No.
10.1 Purchase agreement with JELD-WEN, inc. for the Lexington,
North Carolina door manufacturing facility.
10.2 Agreement between Local 705, International Brotherhood of
Teamsters, Chauffeurs, Warehousemen and Helpers of
America, AFL-CIO and Morgan Distribution at West Chicago,
IL.
27 Financial Data Schedule
Exhibit 10.1
PURCHASE AGREEMENT
1. PARTIES AND PROPERTY. JELD-WEN, inc., an Oregon corporation ("Purchaser")
agrees to buy, and the undersigned ("Seller") agrees to sell, on the terms and
conditions set forth in this Agreement, the following described real estate in
the county of Davidson, and known as the MORGAN PRODUCTS LTD. production plant
located at 1224 Hargrave Road, Lexington, North Carolina, consisting of
approximately 20 acres of land and approximately 216,000 square feet of
buildings, together with all interest of Seller in vacated streets and alleys
adjacent thereto, all easements, and other appurtenances thereto, all land and
building improvements thereon and all attached fixtures thereon, except as
herein excluded, and called the "Property".
A. Inclusions. The purchase price includes, without limitation, the
following items whether attached to the Property or not on the date of this
Agreement: all lighting, heating, plumbing, ventilating, electrical and air
conditioning equipment, systems and fixtures; smoke/
fire/burglar alarms, security devices, propane tanks, separators, inside
telephone, fax or computer wiring and connecting blocks/jacks/panels; floor
coverings, intercom systems; built-in cabinets, bookcases, appliances, and
landscape sprinkler systems and controls; all dust handling ducts, fans,
and other equipment or systems relating to main trunk dust collecting,
filtering, storage, handling or management systems; all air systems and
related equipment; all pump houses, hydrants, compressors, valves, engines,
generators, batteries, plumbing fixtures, control/monitoring equipment,
fire extinguishers, hoses, tools, etc. that pertain to fire sprinklers or
protection systems; all humidification systems; and all tracks, switches,
gates, alarms and other equipment that relate to railroad facilities or
equipment; all landscaping; all fencing, signage, outdoor lighting and all
pipes, valves, fittings, hoses and compressors that pertain to compressed
air operations.
The above described items ("Inclusions") are to be conveyed to Purchaser by
Seller by Bill of Sale at the Closing, free and clear of all taxes, liens
and encumbrances, except as provided in section 8.
The following attached fixtures are excluded from this sale:
NONE
2. PURCHASE PRICE AND TERMS. The purchase price shall be Four Million, One
Hundred Thousand and no/100ths dollars ($4,100,000.00), payable in U.S. dollars
by Purchaser as follows:
A. Earnest Money. One Hundred Thousand and no/100ths Dollars
($100,000.00) in the form of a check, as earnest money deposit and part
payment of the purchase price payable to and to be deposited by Chicago
Title Insurance Company, ("Escrow Agent") in Escrow Agent's trust account
on behalf of both Seller and Purchaser. The earnest money shall be
deposited by Purchaser to Escrow Agent no later than three (3) business
days following the final execution of this agreement by Purchaser and
Seller or this Agreement shall become "null and void". The earnest money
deposit including any interest earned or accrued thereon shall hereinafter
be referred to as the "Earnest Money". The Escrow Agent is authorized to
deliver the Earnest Money to the closing agent, if any, at or before
Closing.
B. Balance of purchase price to be paid by Purchaser in cash at the
Closing.
3. GOOD FUNDS, All payments required at Closing shall be made in funds which
comply with all applicable (state) laws.
4. NOT ASSIGNABLE. This contract shall not be assignable by Purchaser without
Seller's prior written consent unless assigned to an affiliated company of
Purchaser. Except as so restricted, this Agreement shall inure to the benefit
and be binding upon the heirs, personal representatives, successors, and assigns
of the parties.
5. EVIDENCE OF TITLE. Seller has furnished to Purchaser, at Purchaser's
expense, a current commitment from Escrow Agent to issue an ALTA form owner's
policy of title insurance with extended coverage dated as of the Closing in an
amount equal to the purchase price. Seller shall also furnish to Purchaser, at
Purchaser's expense, copies of all instruments (or abstracts of instruments)
listed in the schedule of exceptions ("Exceptions") in the title insurance
commitment. This requirement shall pertain only to instruments shown of record
in the office of the clerk and recorder of the designated county or counties.
The title insurance commitment, together with any copies or abstracts of
instruments furnished pursuant to this Section 5, constitute the title documents
("Title Documents"). Seller will have the title insurance policy delivered to
Purchaser as soon as practicable after Closing and Purchaser shall pay the
premium at Closing.
6. TITLE.
A. Title Review. Purchaser shall have the right to inspect the Title
Documents. Provided there are no changes to the Title Documents provided
Purchaser, written notice by Purchaser of unmerchantability of title or of
any other unsatisfactory title condition shown by the Title Documents shall
be signed by or on behalf of Purchaser and given to Seller on or before May
15, 1996. If Seller does not receive Purchaser's notice by the date(s)
specified above, Purchaser shall be deemed to have accepted the condition
of title as disclosed by the Title Documents as satisfactory.
B. Matters Not Shown by the Public Records. Seller shall deliver to
Purchaser, on or before 10 days after execution of this Agreement by Seller
and Purchaser, true copies of all lease(s) and survey(s) in Seller's
possession pertaining to the Property and shall disclose to Purchaser all
easements, liens, or other title matters not shown by the public records of
which Seller has actual knowledge. If Purchaser determines that any third
party(ies) has any right in the Property not shown by the public records
(such as an unrecorded easement, unrecorded lease, or boundary line
discrepancy), written notice of any unsatisfactory condition(s) disclosed
by Seller or revealed by such inspection shall be signed by or on behalf of
Purchaser and given to Seller on or before twenty (20) days after receipt
of such documents or information. If Seller does not receive Purchaser's
notice by said date, Purchaser shall be deemed to have accepted title
subject to such rights, if any, of third parties of which Purchaser has
actual knowledge.
C. Right to Cure. If Seller receives notice of unmerchantability of
title or any other unsatisfactory title condition(s) as provided in
subsection A or B above, Seller shall use reasonable effort to correct said
unsatisfactory title condition(s) prior to the date of Closing. If Seller
fails to correct said unsatisfactory title condition(s) on or before the
date of Closing, this Agreement shall then terminate, and Purchaser shall
be entitled to receive any and all Earnest Money paid by Purchaser
hereunder, subject to Section 15. However, Purchaser may, by written notice
received by Seller on or before Closing, waive objection to said
unsatisfactory title condition(s).
7. DATE OF CLOSING. The "Closing" shall be on or before June 3, 1996, or by
mutual agreement at an earlier date. The hour and place of Closing shall be as
designated by mutual agreement of Purchaser and Seller. Absent agreement, the
Closing shall be at 1:00 pm. at the Chicago Title Insurance Co., Lexington,
North Carolina. Each party shall pay such Closing costs and expenses as are
customarily paid by a Purchaser, or Seller, as the case may be, under practice
and custom in the Lexington, North Carolina area.
8. TRANSFER OF TITLE. Subject to tender or payment on Closing as required
herein and compliance by Purchaser with the other terms and provisions hereof,
Seller shall execute and deliver a good and sufficient general warranty deed to
Purchaser, on Closing, conveying the Property free and clear of all taxes, liens
and encumbrances except the general taxes for the year of Closing, and free and
clear of all liens for special improvements installed as of the date of the
Closing, whether assessed or not; except those matters reflected by the Title
Documents accepted by Purchaser in accordance with Subsection 6.A; except those
rights, if any, of third parties in the Property not shown by the public records
and accepted by Purchaser in accordance with Subsection 6.B and subject to
building and zoning regulations. Seller shall pay the cost of recording the
general warranty deed.
9. PAYMENT OF ENCUMBRANCES. Any encumbrance required to be paid shall be paid
at or before the time of settlement from the proceeds of this transaction or
from any other source.
10. CLOSING COSTS, DOCUMENTS, AND SERVICES. Purchaser and Seller shall pay
their respective Closing costs at Closing, except as otherwise provided herein.
Purchaser and Seller shall sign and complete all customary or required documents
at or before Closing.
11. PRORATIONS. Taxes, utilities, and other charges or items of income and
expense shall be prorated at the Closing and shall be final (unless expressly
provided otherwise). Such prorations shall be made on the basis of a 366 day
year, as of 12:01 a.m. on the Closing date. If the amount of taxes, assessments
or other prorations are not known at the time of Closing, they shall be
estimated on the basis of the previous year, but the amount owed by Seller and
Purchaser hereunder shall be readjusted as soon as the amounts of such taxes,
assessments or other prorations are known, and thereafter the party receiving
the benefit of any erroneous proration shall, upon receipt of the appropriate
evidence from the other party, promptly remit its pro rata share to such other
party. Any sales, use and transfer tax shall be paid by Seller. The provisions
of this paragraph shall survive the Closing.
12. POSSESSION AND EMPLOYEES. Possession of the Property shall be delivered to
Purchaser as follows:
A. Early Possession. After July 15, 1996, the Purchaser shall be allowed
reasonable access to the Property, in a manner that will not interfere with
the Seller's operations, for purposes of pouring footings in and under the
existing concrete floor in the areas shown on the attached plant lay-out
drawing.
B. Seller's Rights to Possession After Closing. Seller shall be entitled
to possession of the entire Property until September 1, 1996, Seller
intends to notify its employees of its intent to close the Lexington plant
under the Federal Worker Adjustment and Retraining Notification ("WARN")
Act simultaneous with Closing. Seller shall be responsible for any
resulting WARN Act pay. Seller shall pay monthly rent to Purchaser, at the
rate of 17 1/2 cents per square foot per month, for space used by Seller
from and after Closing. Seller agrees, at Purchaser's request, to move its
operations to one-half of the plant property, no later than September 1,
1996, and entirely to vacate the Property by November 1, 1996. After July
15, 1996, Seller may vacate all or any part of the premises at anytime or
times and shall not be liable for rent on any part of the premises that
Seller has vacated. The parties shall cooperate in sharing the facility
after Seller vacates any part thereof, including granting each other
access, until Seller entirely vacates same. At and after Closing,
Purchaser shall insure the Property against fire with extended coverage
over other perils; each party shall bear the risk of loss of its own
personal property, including inventory, stored in or around the Property.
Each party shall, from and after Closing, carry liability insurance and
worker's compensation and other insurance on its operations, personnel and
property, in commercially reasonable amounts and terms. At and after the
Closing, each party shall be responsible for the payment of any utilities
used by such party and the parties shall cooperate in allocating such
utility costs when both parties have costs included on a given invoice.
C. Seller's Employees. The parties understand that Purchaser may employ,
at commencement of Purchaser's operations a significant number of Seller's
work force employed at the Property. Purchaser agrees to interview as many
of Seller's local employees who apply for a job with Purchaser and follow
Purchaser's hiring guidelines. Seller agrees to provide reasonable
assistance to Purchaser by making available, to the extent permitted by
law, and as requested by Purchaser, information relative to the
qualifications and experience of Seller's employees at the Property. In
addition, Seller shall provide after Closing an opportunity for Purchaser
to interview Seller's employees on the Property. Purchaser recognizes
Seller's need for an orderly wind down and Closing of its operations at the
Property, and Purchaser will not contact, solicit or employ any current or
former employee of Seller, without Seller's express written permission, at
any time prior to Seller vacating the Property or, in the event of
termination of this Agreement, for eighteen (18) months following date of
termination. The parties shall cooperate with each other in their
respective goals of minimizing liability under the WARN Act, providing
Purchaser with the maximum number of skilled employees it wishes to employ,
and facilitating the vacation by Seller, and the transition to
manufacturing by Purchaser, of the Property.
13. CONDITION OF AND DAMAGE TO PROPERTY. The Property and inclusions shall be
conveyed in their present condition, ordinary wear and tear excepted. In the
event the Property shall be damaged or another casualty occur prior to time of
Closing, in an amount of not more than ten percent (10%) of the total purchase
price, then Seller shall be obligated to repair the same before the date of
Closing. In the event such damage is not repaired within said time or if the
damages exceed such sum, this contract may be terminated at the option of
Purchaser, and Purchaser shall be entitled to receive any and all Earnest Money
paid by Purchaser. Should Purchaser elect to carry out this Agreement despite
such damage, Purchaser shall be entitled to a credit for all the insurance
proceeds resulting from such damage to the Property and Inclusions.
14. TIME OF ESSENCE/REMEDIES. Time is of the essence hereof. If any note or
check received as Earnest Money hereunder or any other payment due hereunder is
not paid, honored, or tendered when due, or if any other obligation hereunder is
not performed or waived as herein provided, there shall be the following
remedies:
A. If Purchaser is in Default - Liquidated Damages. If Purchaser is in
default, all Earnest Money may at Seller's option be retained by Seller,
not as a penalty but as liquidated damages, without limiting any other
remedies at law or in equity.
B. If Seller is in Default. If Seller is in default, Purchaser may elect
to treat this Agreement as canceled, in which case any and all Earnest
Money shall be returned to Purchaser and Purchaser may recover such damages
as may be proper, or Purchaser may elect to treat this Agreement as being
in full force and effect, and Purchaser shall have the right to specific
performance or damages, or both.
C. Costs and Expenses. Anything to the contrary herein notwithstanding,
in the event of any litigation or arbitration arising out of this
Agreement, the court shall award to the prevailing party all reasonable
costs and expenses, including attorneys' fees.
15. EARNEST MONEY DISPUTE. Notwithstanding any termination of this Agreement,
Purchaser and Seller agree that, in the event of any controversy regarding the
Earnest Money and things of value held by Escrow Agent, unless mutual written
instructions are received by the holder of the Earnest Money and things of
value, Escrow Agent shall not be required to take any action but may await any
proceeding or at Escrow Agent's option and sole discretion, may interplead all
parties and deposit any Earnest Money or things of value into a court of
competent jurisdiction and shall recover court costs and reasonable attorneys'
fees.
16. INSPECTION AND CONTINGENCIES. The obligation of Purchaser to consummate
the purchase shall be subject to the following conditions/contingencies, which
shall occur on or before the time periods set forth below:
A. Approval of Soils Tests, Department of Transportation Plans regarding
the Property, Engineering Reports, and any other Feasibility Studies that
Purchaser deems necessary to ascertain that the Property can be used for
its intended purposes. Seller shall provide copies of all existing soils
and engineering reports in its possession within fourteen (14) days after
the execution of this Agreement by Seller and Purchaser.
B. Approval by Purchaser of a "Survey" of the Property which shall
without limitation include the gross square footage of the Property, any
easements and dedications of right of way to the Property, the location of
all buildings, all utility hookups and lines and roadway accesses. The
Survey shall be provided by Seller, at Purchaser's expense, within thirty
(30) days after the date of acceptance of this Agreement by Seller. Seller
may provide to Purchaser an updated Survey of the survey delivered to
Purchaser on or about March 7, 1996 prepared by Southern Mapping and
Engineering Co., dated January 1994. If Purchaser determines that there
are any survey defects, it shall so notify Seller within the time provided
below.
C. Approval by Purchaser of Evidence that the Property is currently zoned
in a manner adequate and applicable for Purchaser's intended uses on the
Property.
D. Approval by Purchaser of a Phase One Environmental Report on the
Property. Seller has delivered to Purchaser on or about April 9, 1996, a
Phase One Environmental Site Assessment (the "Phase I" report) dated
December 20, 1993, prepared by Geraghty and Miller, Inc.
Purchaser shall have until June 3, 1996 to approve any or all of the above
items however Purchaser shall use its best efforts to approve the foregoing
items by May 15, 1996. In the event Purchaser, in its reasonable
discretion, deems the Property to be unacceptable for its intended
purposes, this Agreement shall be terminated, and any and all Earnest Money
paid by Purchaser shall be refunded to Purchaser. The parties may by
mutual agreement extend said dates. Purchaser shall notify Escrow Agent
and Seller within said time period, and the failure of Purchaser to notify
Escrow Agent in writing of its intention to cancel shall be deemed as
approval, and all monies held on deposit shall become non-refundable.
However, Purchaser may, by written notice received by Seller on or before
June 3, 1996, waive objection to any unsatisfactory condition.
17. RECOMMENDATION OF LEGAL COUNSEL. By signing this document, Purchaser and
Seller acknowledge that it has been recommended that Purchaser and Seller obtain
the advice of their own legal counsel regarding examination of title and this
Agreement.
18. TERMINATION. In the event this Agreement is terminated without default of
Purchaser, all Earnest Money and all other things of value received hereunder
shall be returned, and the parties shall be relieved of all obligations
hereunder, subject to Section 15.
19. BROKER. Purchaser and Seller represent, each to the other, that they have
not dealt with any real estate broker or agent in connection with the
transaction which is the subject matter of this Agreement.
20. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller warrants that it is the
owner of the Property and has good, marketable, and indefeasible fee simple
title to the Property free of restrictions, leases, liens, and other
encumbrances, except as disclosed in the Title Documents.
In addition, Seller covenants, represents and warrants as follows:
A. To the best of Seller's knowledge, there is not presently pending any
special assessment or condemnation action against the Property or any part
thereof, nor has Seller received any notice of any assessments or
condemnation actions being contemplated.
B. There are no existing actions, suits, proceedings, judgments, orders,
decrees, defaults, delinquencies or deficiencies pending or outstanding or,
to the best of Seller's knowledge threatened against the Property which
would affect the Property or Seller's ability to carry out its obligation
under this Agreement and the documents to be executed in conjunction
herewith.
C. To the best of Seller's knowledge, there are no agreements with
governmental authorities, agencies, utilities, or quasi-governmental
entities which affect the Property except those which are included in the
Title Documents.
D. All water, sewer, gas, electric, telephone and drainage facilities and
all of the utilities required for the normal use and operation of
facilities on the Property are available within or at the boundaries of the
Property.
E. All documents executed by Seller that will be delivered to Purchaser
at Closing, are or will be legal, valid, binding obligations of the Seller
and will not violate any agreement to which Seller is a party or to which
it is subject.
F. The Property has full and free access to and from public highways,
streets and roads, and Seller has no actual knowledge of any pending or
threatened governmental proceeding or any other fact or condition which
would limit or result in the termination of such access.
G. The Property is zoned for light industrial use per the City of
Lexington and/or Cotton Grove Township and per Davidson County, North
Carolina. Seller has received no written notice, and has no actual
knowledge, of any judicial, quasi-judicial, administrative or other
proceeding which might adversely affect the validity of the current zoning,
subdivision or platting of the Property and Seller knows of no fact,
threatened action or proceeding which could result in a modification or the
termination of such zoning.
H. Performance of this Agreement will not result in any breach of, or
constitute any default under, or result in the imposition of any lien or
encumbrance upon the Property under any agreement or other instrument to
which Seller is a part or by which Seller or the Property might be bound.
I. No other person, firm, corporation or other entity has any right or
option granted by Seller to acquire the Property or any portion thereof.
J. To best of Seller's knowledge and except as disclosed in the Phase I
report, no Hazardous Substances (as hereinafter defined) have been spilled,
manufactured, treated, recycled or disposed of (intentionally or
unintentionally) on, under or at the Property which would subject Purchaser
or any subsequent owner of the Property to damages, penalties, injunctive
relief or cleanup costs under any Environmental Laws (as hereafter defined)
or common law theory of liability. To the best of Seller's knowledge,
except as disclosed in Schedule 1J and except as disclosed in the Phase I
report, no property adjacent to the Property has ever been used for the
location, manufacture, treatment, recycling or disposal (intentionally or
unintentionally) of Hazardous Substances nor has there been such a release
or threatened release of any Hazardous Substances from such adjacent
property. The term "Environmental Laws" shall mean all federal, state and
local laws including statutes, regulations, ordinances, and other
governmental restrictions and requirements relating to the discharge of air
pollutants, water pollutants or process wastewater or the disposal of solid
or hazardous waste or otherwise relating to the environment or hazardous
substances or employee health and safety including, but not limited to, the
Federal Solid Waste Disposal Act, the Federal Clean Air Act, the Federal
Clean Water Act, the Federal Resource Conservation and Recovery Act of
1976, the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Occupational Safety and Health Act of 1970 (all
as the same may have been amended), regulations of Environmental Protection
Agency, regulations of the Nuclear Regulatory Agency, and regulations of
any state department of natural resources or state environmental protection
agency now or at any time hereafter in effect. The term "Hazardous
Substances" shall mean all hazardous and toxic substances, wastes, and
materials; underground or above ground storage tanks; any pollutants or
contaminants (including, without limitation, petroleum-based products,
asbestos, polychlorinated biphenyls, and raw materials which include
hazardous constituents); any other similar substances or materials which
are regulated under Environmental Laws.
No litigation has been brought or, been threatened, nor have any
settlements been reached by or with any parties alleging the past or
current presence, disposal release, or threatened release, of any Hazardous
Substances, on or from the Property. There are no pending actions and to
the best of Seller's knowledge, no threatened or contemplated actions
against Seller or the Property under any Environmental Law. Seller has
delivered to Purchaser all correspondence, reports, test results, audits,
notification of violation and other documents relating to the existence or
possible existence of Hazardous Substances or noncompliance with
Environmental Laws.
Seller further warrants that all cans, drums, barrels, vats, tanks or other
materials storage vehicles, whether hazardous or not, will be removed from
the property and disposed of in accordance with all above mentioned
environmental laws, and/or cleaned to Purchasers satisfaction, on or before
the date Seller's possession terminates, and Seller shall hold Purchaser
harmless from any contamination that might occur on the Property during, or
as the result of, said removal and disposal.
K. Any mechanic's or other type liens against the Property, except as
expressly allowed shall be removed and satisfied of record by Seller prior
to Closing.
21. SELLER AFFIDAVIT. Seller shall provide, at the Closing, an affidavit of
Seller, stating Seller's United States taxpayer identification number and that
Seller is not a foreign person as defined in Internal Revenue Code Section 1445.
22. NOTICES. All notices or other communications required to be given by
either party or the Escrow Agent shall be in writing and shall be hand-delivered
or sent by U.S. Certified Mail, postage prepaid, and shall be deemed received
when hand-delivered or deposited in the U.S. Mail as aforesaid and addressed; if
to Escrow Agent, to:
Attn: Al Gardner, Resident V.P.
230 N. Elm Street, Suite 1775
Greensboro, NC 27401
Phone (910)379-7879
Fax (910)379-7913
If to Seller:
Attn: Douglas H. MacMillan, V.P.
Chief Financial Officer
Morgan Products Ltd.
469 McLaws Circle
Williamsburg, VA 23185
Phone (804) 564-1700
Fax (804) 564-1714
If to Purchaser:
Attn: Douglas P. Kintzinger, V.P.
JELD-WEN, inc.
3250 Lakeport Blvd.
Klamath Falls, OR 97601
Phone (541) 882-3451
Fax (541) 885-7454
23. NOTICE OF ACCEPTANCE/COUNTERPARTS. If this proposal is accepted by Seller
in writing and Purchaser receives notice of such acceptance on or before April
30, 1996, this document shall become a contract between Seller and Purchaser. A
copy of this document may be executed by each party, separately, and when each
party has executed a copy thereof, such copies taken together shall be deemed to
be a full and complete contract between the parties.
24. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties hereto with respect to the transactions contemplated hereby and
supersedes and is in full substitution for any and all prior agreements and
understandings between any of said parties relating to such transactions.
Seller and Purchaser represent that they have each cooperated in the drafting
and preparation of this Agreement. Hence, no ambiguity in this Agreement shall
be construed against either party.
25. DESCRIPTIVE HEADINGS. The descriptive headings of the several sections of
this Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
26. CONFIDENTIALITY. This Agreement is confidential, and until Closing, and
WARN Act notice by Seller, the parties will use their best efforts to prevent
the substance hereof from being communicated to the public, or to any other
parties except the employees of each party and their attorneys, agents and
representatives, who have a legitimate need to know, and except as may be
required by law.
27. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.
PURCHASER:
JELD-WEN, inc.
AN OREGON CORPORATION
By: /s/ Douglas P. Kintzinger Date: 5/3/96
Douglas P. Kintzinger
Secretary
P.O. Box 1329
3250 Lakeport Boulevard
Klamath Falls, Oregon 97601
28. ACCEPTANCE. Seller accepts the above proposal this 3rd day of May, 1996.
SELLER:
Morgan Products Ltd.
By: /s/ Douglas MacMillan Date: 5/3/96
Its Vice President
Address:
469 McLaws Circle
Williamsburg, VA 23185
SCHEDULE 1J
TO PURCHASE AGREEMENT
FOR 1224 HARGROVE ROAD,
LEXINGTON, NORTH CAROLINA
Seller has knowledge that there was a drill installed for taking a core sample
across the road from the Property, which on information and belief resulted from
discovery of an underground fuel tank approximately 1/2 mile away from the
Property.
[Plot Plan of herin described Property at 1224 Hargrave Road, Lexington, North
Carolina]
Exhibit 10.2
AGREEMENT
between
LOCAL 705, a/w
International Brotherhood of Teamsters,
Chauffeurs, Warehousemen and Helpers of America, AFL-CIO
and
MORGAN DISTRIBUTION
A Business Unit of Morgan Products Ltd.
West Chicago, Illinois
ARTICLE I
SECTION 1. This Agreement made this 13th day of January, 1996 by and
between Morgan Distribution, a Business Unit of Morgan Products Ltd. for its
West Chicago, Illinois facility hereinafter called the "Company" and the local
705, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and
Helpers of America, AFL-CIO, hereinafter called the "Union".
ARTICLE II
RECOGNITION
SECTION 1. The Company hereby recognizes the Union as the sole and
exclusive bargaining representative with respect to wages, hours and conditions
of employment for all full-time and regular part-time truck drivers employed by
the Company at its West Chicago, Illinois facility, but excluding office
clerical employees, shop and warehouse employees, professional employees, guards
and supervisors as defined in the Act.
ARTICLE III
ENTIRETY OF AGREEMENT
SECTION 1. This Agreement is a full and complete agreement with respect to
all matters relative to negotiations. The parties agree that there has been
full opportunity to bring up for negotiations any matter pertaining to wages,
hours, working conditions, and other benefits.
SECTION 2. This does not preclude the parties from mutually agreeing to
supplement or modify any portion of the Agreement during its term. However, any
such supplement or modification which waives or modifies any of the terms of
this Agreement must be made and executed in writing between the parties.
SECTION 3. The waiver of any branch or condition of this Agreement by
either party shall not constitute a precedent in the future enforcement of all
the terms and conditions herein.
ARTICLE IV
MANAGEMENT RIGHTS
SECTION 1. Subject to the limitations imposed by the contract, the Union
recognizes the right of the Company to supervise, manage, and conduct its
business, trucking and other distribution center operations, including but not
limited to the direction of the working force, hiring, rehiring, assignment,
transfer, promotion, laying off, recalling, suspension, discharge and
disciplining of employees for just cause; the determination of the number of
employees in any department, shift or job classification; the determination of
the number and size of departments; the work to be subcontracted provided no
employees qualified to perform the work are on layoff or on temporary assignment
to a non bargaining unit job or provided the equipment to perform the work is
not available; the establishment of working schedules and reasonable levels of
productivity and quality; and the promulgation and modification of reasonable
work rules and safety rules.
SECTION 2. The Company construes and the Union recognizes the specific
provisions of this Agreement as constituting the only limitations upon the
Company's right to manage its business.
SECTION 3. Nothing in this Agreement shall limit rights granted to the
Company, the Union or an employee under state or federal law except where such
rights have been specifically restricted or modified herein.
ARTICLE V
NON-DISCRIMINATION
SECTION 1. The Company and the Union agree not to discriminate against any
individual with respect to his hiring, compensation, terms or conditions of
employment because of such individual's union, race, color, religion, sex, age,
or national origin, nor will they limit, segregate or classify employees in any
way to deprive any individual employee of employment opportunities because of
his race, color, religion, sex, age, or national origin.
ARTICLE VI
HEALTH AND SAFETY
SECTION 1. The Company will continue to comply with its legal obligation
to provide for the safety and health of its employees during hours of their
employment. It shall be the responsibility of each individual employee to
assist in maintaining a safe and healthy environment as well as clean and
sanitary conditions for the well-being of themselves and other employees.
SECTION 2. The Union agrees to cooperate with the Company in promoting and
supporting safety, accident prevention and health education for all employees
covered by the Agreement, but the responsibility for compliance shall be solely
that of the Company.
SECTION 3. General Safety Rules:
1. The Company shall equip all trucks and tractors with workable heaters and
defrosters and furnish necessary aid for protection form weather.
2. The Company shall not require employees to take out on the streets or
highways any vehicle that the Company is aware is not in safe operating
condition.
3. Employees shall immediately, or at the end of their shift, report all
defects of equipment.
4. All Company trailers shall be marked for height.
5. All tractors must be equipped as necessary to allow the employee to safely
enter and exit the cab, hook and unhook the air hoses.
6. Any driver causing a motor vehicle accident, or damaging Company property
or that of others in a chargeable motor vehicle accident may be subject to
disciplinary action including discharge.
ARTICLE VII
UNION SECURITY
SECTION 1. All present employees who are members of the Union on the
effective date of this Agreement shall remain members of the Union in good
standing as a condition of continued employment. All present employees who are
not members of the Union, shall on and after the thirty-first (31st) day
following the effective or execution date of this section whichever is the
later, become and remain members of the Union in good standing as a condition of
employment. An employee hired after the execution of this Agrement shall upon
completion of his probationary period, become and remain a member of the Local
Union in good standing as a condition of employment.
SECTION 2. The Company shall not be required to discharge any employee for
noncompliance with the foregoing until it receives a written request from the
Union specifying the reason for such request, and the Union agrees to indemnify
the Company and hold the Company harmless from any liability or claims by reason
of compliance with the request of the Union.
ARTICLE VIII
AUTHORIZATION FOR CHECK-OFF DUES
SECTION 1. The Company agrees to deduct from the pay of all employees
covered by this Agreement the dues, initiation fees and/or uniform assessments
of the Union, and the Company shall deduct such amount following receipt of the
statement of certification of the member and remit to the Union. Where laws
require written authorization by the employee, the same is to be furnished in
the form required. All monies required to be checked off shall become the
property of the Union at the time such check-off is required to be made. All
sums deducted shall be remitted to the Financial Secretary of the Local Union no
later than the 10th day of the calendar month in which such deductions are made.
SECTION 2. The Company agrees to deduct from the paycheck of all employees
covered by this Agreement voluntary contributions to DRIVE. DRIVE shall notify
the Company of the amounts designated by each contributing employee that are to
be deducted from his/her paycheck on a weekly basis for all weeks worked. The
phrase "weeks worked" excludes any week other than a week in which the employee
earned a wage. The Company shall transmit to DRIVE National headquarters on a
monthly basis, in one check, the total amount deducted along with the name of
each employee on whose behalf a deduction is made, the employee's social
security number and the amount deducted from that employee's paycheck. The
International Brotherhood of Teamsters, shall reimburse the Company annually for
the Company's actual cost for the expenses incurred in administering the weekly
payroll deduction plan.
SECTION 3. The Union shall indemnify, defend and save the Company harmless
against any and all claims, demands, suits or other form of liability that shall
arise out of or by reason of action taken by the Company in reliance upon
instructions submitted by the Union to the Company with respect to Section 1 and
2 of this Article.
ARTICLE IX
UNION REPRESENTATION
SECTION 1. The Company recognizes the right of the Union to appoint one
(1) Shop Steward.
SECTION 2. If the Union appoints a Shop Steward from the bargaining unit
he shall have a full-time truck driver assignment and must comply with all the
requirements of that assignment.
SECTION 3. Stewards have no authority to take strike actions, or any other
action interrupting the Company's business, such as work stoppages, slow downs
or refusal to handle work. The Company recognizes these limitations upon the
authority of stewards and shall not hold the Union liable if the Steward, acting
without authorization from the Union, engages in any of the above conduct. The
Company in so recognizing such limitations shall have the authority to impose
proper discipline, including discharge, in the event the steward has taken
unauthorized strike action, slow down or work stoppage in violation of this
Agreement.
ARTICLE X
NO STRIKE/NO LOCKOUT
SECTION 1. During the term of this Agreement, the Union agrees that it
will not authorize, engage in, sanction, or condone any strike, work stoppage,
slowdown, sitdown, sympathy strike, or any other work interruption or
interference with or against the Company, directly or indirectly, for any
reason, whether in protest of alleged violations of this Agreement or matters or
actions not referable thereto and not within the normal bargaining relationship
between the parties, whether foreseen or unforeseen at the time of the execution
of the Agreement, or for any other purpose whatsoever.
SECTION 2. The Company agrees that during the term of this Agreement there
shall be no lockouts.
SECTION 3. It shall not be a violation of this Agreement, and it shall not
be cause for discharge, disciplinary action or permanent replacement in the
event an employee refuses to enter upon any property involved in a lawful
primary labor dispute, or refuses to go through or work behind any lawful
primary picket line, including the lawful primary picket line of the Union party
to this Agreement, but excluding any and all picket lines at the Company's place
of business.
SECTION 4. It shall not be a violation of this Agreement and it shall not
be cause for discharge, disciplinary action or permanent replacement if any
employee refuses to perform any service which undertakes to perform as an ally
of another Company and whose employees are on strike, and which service, but for
such strikes, would be performed by the employees of the other Company on
strike.
SECTION 5. The Union agrees that in the event of violation of any of the
terms of this Article, the Company may discharge any employee who takes part
therein. However, such disciplinary action taken by the Company shall be
subject to the grievance and arbitration procedure.
SECTION 6. If the Union fulfills its obligations pursuant to this Article,
such fulfillment shall be construed to mean that the Union shall not be held
financially responsible for such unauthorized strike, stoppage, slowdown of
work, picketing or work interference.
ARTICLE XI
GRIEVANCE PROCEDURE
SECTION 1. A "grievance" for all the purposes of this Agreement shall be
defined as a claim by an employee or the Union that the Company has violated or
failed to interpret or correctly apply the provisions of this Agreement.
SECTION 2. In order to provide an orderly method for handling and
disposing of grievances, the following procedure will apply:
Step 1. The employee will discuss his grievance with his immediate
supervisor, within five (5) working days of the date of the event which gave
rise to such grievance was known or should have been known. Where a Shop
Steward has been appointed, he may be present in this discussion. The
employee's supervisor shall give his answer within two (2) working days after
the meeting.
Step 2. If the discussion in Step 1 does not settle the grievance, the
grievance shall be reduced to writing and presented to the Distribution Center
Manager within two (2) working days after the answer is received from the
Supervisor in Step 1. The written grievance will identify the nature of the
problem as well as the contract provisions claimed to have been violated. A
meeting with the Center Manager, or his designee, with a Local 705 Business
Representative, or his designee, will be promptly arranged to discuss the
matter. The employee or Show Steward may be present if it is requested by
either party. This meeting shall take place within ten (10) working days of the
presentation of the written grievance. The Center Manger or his designee will
give the Company's written position within five (5) working days of the meeting.
Step 3. If the grievance is still not settled, the Union may, within five
(5) working days after receipt of the written answer of the Center Manager
and/or his designee, demand in writing to arbitrate the grievance, pursuant to
Article XII.
ARTICLE II
ARBITRATION PROCEDURE
SECTION 1. Where notice to appeal to arbitration is not given within five
(5) working days of the receipt of the decision of the Center Manager or his
designated representative, such decision shall be final and binding on the Union
and all employees. Any notice of appeal to arbitration shall be in writing and
shall state the nature of the grievance as well as the specific provisions of
the Agreement claimed to have been violated.
SECTION 2. The parties shall promptly attempt to select an impartial
arbitrator by mutual agreement within three (3) working days from the date of
notice of appeal to arbitration. In the event the Company and the Union cannot
agree on an arbitrator, the Federal Mediation and Conciliation Service shall
immediately be called upon to submit a panel of seven (7) Chicago area members
of the National Academy of Arbitrators, and the Company and the Union shall each
have the right to reject one (1) such panel from the Federal Mediation and
Conciliation Service. The parties will select an Arbitrator by alternately
striking names from the panel, with the Arbitrator remaining being the
designated Arbitrator. The first strike will be determined by coin toss.
SECTION 3. The sole function of the Arbitrator shall be to determine
whether the Company or the Union is failing to abide by the provisions of this
Agreement, and the Arbitrator shall not have any authority to change, amend,
modify, or revise any of the terms of this Agreement.
Either party shall have the right to have a Court Reporter prepare a
stenographic record of any arbitration proceeding at its own expense.
SECTION 4. The decision and award of the arbitrator shall be in writing
and shall be final and binding upon the parties to this Agreement subject to any
remedies at law.
SECTION 5. It is understood that all fees and expenses incurred by the
Arbitrator and for Hearing facilities shall be borne equally by the parties.
SECTION 6. Each party may be represented in the Arbitration by an
appropriate representative of its choice. Both parties must assume their own
costs incurred. Employees attending arbitration hearings shall do so without
pay.
SECTION 7. Grievances may not be combined or joined in a single
Arbitration proceeding without prior written approval of both parties.
ARTICLE XIII
DISCIPLINE AND DISCHARGE
SECTION 1. The Company may discharge or otherwise discipline an employee
for just cause.
SECTION 2. In all cases of discharge, the Company shall promptly notify
the employee and the Union in writing of the reason for discharge.
SECTION 3. In the event that the Union desires to protest the discharge of
an employee, such protest shall be filed in writing with the Company within
three (3) working days from the date of receipt of notice of discharge. The
matter shall be taken up in accordance with the grievance procedure, commencing
with Step 2.
SECTION 4. Work rules and regulations will be posted by the Company.
Before any new or changed rule is put into effect, the Union will be notified of
the rule and may challenge its reasonableness by filing a grievance at Step 3 of
the grievance procedure within one week of receipt thereof. However, this does
not preclude the Company from taking appropriate disciplinary steps for actions
or circumstances not covered by the work rules and regulations.
ARTICLE XIV
HOURS OF WORK
SECTION 1. The normal work week shall be five (5) consecutive work days
and forty (40) hours per week beginning on Monday and ending on Friday, except
for night shifts that begin on Sunday or end on Saturday.
SECTION 2. The normal workday shall be eight (8) hours per day, exclusive
of unpaid lunch periods, and the normal workweek shall be forty (40) hours per
week.
SECTION 3. The parties recognize that the nature of the Company's
operations may require the working of overtime. In assigning employees to
overtime work, the Company will attempt to notify each employee involved in
advance of such overtime assignment. Where it is not possible or practical to
give such advance notice, the Company will consider individual requests to be
excused from such overtime assignments and such requests will not be
unreasonably withheld. However, employees will be required to perform scheduled
overtime work as requested except where the overtime is so excessive as to
endanger the employee's health. Failure to perform required overtime shall
subject employees to discipline and discharge.
SECTION 4. Time and one-half shall be paid for all hours worked in excess
of eight (8) in one day, or forty (40) hours in any workweek.
SECTION 5. Time and one-half shall be paid for Saturday work and double
time shall be paid for work performed on Sunday.
SECTION 6. there shall be no pyramiding of overtime pay.
SECTION 7. Nothing herein shall be construed as a guarantee of hours of
work per day or per week, or of days of work per week, for any employee.
SECTION 8. The regular starting time for each employee covered by this
Agreement, will be established by the Company in accordance with customer
requirements and other business necessities. However, where business
necessities allow, the normal starting time for the day shift as a whole shall
fall between the hours of 6:00 a.m. and 9:00 a.m. and for the night shift
between the hours of 2:00 p.m. and 12:00 a.m. Once an employee's workweek
begins his regular shift hours for that week will not be changed without his
consent.
SECTION 9. An employee who is required to report to work at a starting
time prior to the existing starting time of his shift, shall be paid for those
hours worked prior to the start of his shift at time and one-half provided he
works all his regular shift hours scheduled for him on that day and provided
further that he was not prevented form working his regular shift hours by a
storm, flood, fire, or other Acts of God.
Equipment breakdown that prevents an employee from working his scheduled
hours shall not preclude such employee from receiving overtime pay under this
provision.
SECTION 10. If an employee reports to work for his scheduled shift and no
work is available, he will receive four (4) hours pay at his regular straight
time hourly rate plus applicable shift premium for the first four (4) hours of
such scheduled work period, unless he was previously instructed not to report.
If an employee reports for work for his scheduled shift and is sent home
after working less than four (4) hours, he will receive four (4) hours pay at
his regular straight time hourly rate plus applicable shift premium, for the
time lost during the first half of his scheduled work period.
The provisions of this Section will not be applicable if work was curtailed
by a storm, flood, fire, or other Acts of God.
ARTICLE XV
SENIORITY
SECTION 1. Seniority is the designation used to describe the relative
status of employees based on length of service. There are two types of
seniority: (a) Distribution Center Seniority which is measured from and
employee's last date of hire. It determines an employee's eligibility for
vacations and other fringe benefits when total length of service is a factor,
and (b) Driver Seniority which is established from the date an employee is
transferred or hired on a permanent basis as a truck driver.
SECTION 2. An employee now or hereafter employed shall be considered a
probationary employee until he has actually worked thirty (30) days for the
Company. The date given the employee for his seniority standing will be his
last date of hire. Probationary employees may be discharged without cause at
the sole discretion of the Company without recourse to the grievance and
arbitration process specified herein, or otherwise.
SECTION 3. In all cases of layoff, transfer in lieu of layoff, recall and
promotion within the bargaining unit, Driver Seniority will prevail provided the
senior employee is qualified to perform the available work. In exercising its
judgment on qualifications, the Company shall evaluate demonstrated skills,
training, experience, attitude, general work record with the Company, and
physical ability to perform the required work.
SECTION 4. An employee shall lose his seniority and employment status:
A. If he resigns or quits or refuses a position on recall.
B. If he is discharged for just cause.
C. By failure to report to work within three (3) work days following the
expiration of an authorized leave of absence.
D. If he has been on layoff, medical leave, or any other inactive status
for more than thirty-six (36) consecutive month period, or his
accumulated seniority at the time the inactive status began, whichever
is less.
E. By failure to notify the Company within three (3) working days after
receipt of a notice of recall by telegram or certified mail to the
employee's last known address of the employee's intent to return to
work, and/or failure to report to work as scheduled. In scheduling a
returning employee, the Company will allow for up to five (5) working
days notice by the recalled employee to its then current Employer. It
shall be the responsibility of each employee to have his correct
address on file with the Company
F. If he has been absent from work and failed to report off work for
three (3) consecutive workdays or more.
SECTION 5. Any employee in the bargaining unit may be temporarily
transferred by the Company to a job outside of the bargaining unit, because of
reduction of work for drivers or because of needs in another area of the
Distribution Center. When such a transfer occurs, the person with the least
amount of Driver Seniority will be transferred to the Distribution Center unless
he is the only employee qualified to perform the work from which he is
transferred. Such employee's Driver Seniority shall continue to accumulate
during the period of temporary transfer.
SECTION 6. The Company may temporarily transfer a non-bargaining unit
employee to a bargaining unit position because of a need to cover vacation and
absences of regular drivers or because of an increase in business of a short-
term duration, but such a temporarily transferred employee will not be deemed to
be covered under this Agreement while performing the Drivers duties. Any such
temporary transfer shall not exceed thirty calendar days. If the parties
mutually agree, this thirty day period may be extended. However, if a non-
bargaining unit employee remains temporarily transferred to a bargaining unit
job beyond the thirty consecutive calendar days and there is no mutual
agreement, such employee shall be deemed to be a bargaining unit employee
provided the Union gives the Company two working days notice that the employee
so assigned has been in the bargaining unit job beyond the thirty consecutive
calendar day limit.
SECTION 7. An employee's rate of pay shall not be affected by a temporary
transfer.
SECTION 8. The Company will recall employees from layoff by seniority in
accordance with Section 3 of this Article, and employees must accept available
and offered work.
SECTION 9. The Company shall assign employees to shifts on the basis of
their Driver Seniority provided they are qualified and available to perform the
work involved, and can be replaced with a qualified employee on the shift from
which they are transferring.
SECTION 10. The Union will be notified of new hires to the bargaining unit
and the Company shall maintain a seniority roster which will be updated each
time an employee successfully completes his probationary period. The roster
will distinguish between Driver seniority and Distribution Center seniority.
ARTICLE XVI
WAGES
SECTION 1. Rates of pay and pay schedules as set in Wage Schedule "A"
attached hereto, shall remain in effect for the life of this Agreement and shall
constitute the basis for determination of Wages for time worked.
SECTION 2. Employees assigned to a regular shift beginning between 3:00
p.m. and 12:00 midnight shall receive an additional twenty-five cents ($.25) per
hour over the day rate.
SECTION 3. In the event an employee is called in to work at a time other
than his regularly scheduled shift, the employee will be paid for the time he
actually works at the applicable premium rate, but shall be granted a minimum of
three (3) hours of straight time pay.
SECTION 4. Employees hired or re-hired may be paid a starting rate above
minimum, commensurate with their previous experience.
SECTION 5. (a) All employees covered by this Agreement shall be paid in
full each week. Not more than five (5) days pay may be held back. Each
employee on pay day shall be provided with an itemized statement of gross
earnings and all deductions for any purpose.
(b) Employees shall be paid in full when laid off or discharged. Upon
discharge the Company shall pay earned wages due to the employee during the
first payroll department working day following the date of discharge. Vacation
pay for which the discharged employee is qualified shall be paid no later than
the first day following final determination of the discharge.
(c) Upon quitting, the Company shall pay all money due to the employee on
the next regular payday for the week in which the resignation occurs.
ARTICLE XVII
HOLIDAYS
SECTION 1. The following days shall be holidays for all the purposes of
this Agreement: New Year's Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day, day after Thanksgiving, December 24th, Christmas Day and
December 31st.
SECTION 2. An employee who has completed the probationary period and who
works the scheduled hours of his last work shift prior to and the scheduled
hours of his first work shift subsequent to a holiday, shall receive as holiday
pay eight (8) hours pay at his regular straight time hourly rate. An employee
shall not be disqualified from receiving holiday pay in accordance with the
provisions of this Section where his absence is due to the death of a member of
his immediate family or to required service on a jury or because he was required
to attend military reserve duty or he provides a valid excuse to the Company
SECTION 3. If a holiday falls with an employee's scheduled vacation,
holiday pay for such day shall be added to the employee's vacation pay.
However, at the time he schedules his vacation, an employee may schedule the day
preceding or the day following such scheduled vacation as an additional day off
without pay provided such scheduling does not exceed established quotas or
displace another employee from a vacation time already awarded.
SECTION 4. If any holiday falls within the thirty (30) day period
following an employee's layoff due to lack of work or because of verified
illness or injury and such employee is also recalled or return to work during
the same thirty (30) day period but did not receive any holiday pay, then in
such case he shall receive an extra day's pay for each holiday, in the week in
which he returned to work. Said extra day's pay shall be equivalent to eight
(8) hours at the straight time hourly rate specified in the Agreement. An
employee who was laid off because of the lack of work or was ill or injured and
is not recalled to or does not return to work within the aforementioned thirty
(30) day period is not entitled to extra pay upon his return. Under no
circumstances shall the extra pay referred to herein be construed to be holiday
pay, nor shall it be considered as hours worked for weekly overtime.
SECTION 5. Holidays that fall on Sunday will be observed on Monday.
SECTION 6. Holiday pay shall be computed on the basis of the employee's
regular straight time hourly rate in effect on the last workday preceding the
holiday being observed.
SECTION 7. The Company shall have the right to assign employees to work on
any holiday. If required to work any holiday specified in this Agreement, an
employee shall be paid at the rate of two (2) times his regular straight time
rate for the hours worked, plus the holiday pay to which he is entitled. If,
however, an employee is scheduled to work and does not report for work, he shall
receive no holiday pay, unless excused by the Company.
ARTICLE XVIII
VACATION
SECTION 1. Each employee earns vacation based on time worked during the
preceding vacation earning year. An employee who has actually been at work at
some time during the current year, shall have vacation entitled in accordance
with the following:
Years of
Continuous Service Vacation
as of January 1 Entitlement
1 year but less 2 weeks
than 8 years
8 years but less 3 weeks
than 15 years
15 years and more 4 weeks
SECTION 2. An employee with less than 1 year of service on January 1 of
the current year but who has actually been at work at some time during the
current vacation period shall be eligible for vacation days as follows:
Number of Paid
Month of Hire Vacation Days
January 5
February 5
March/April 4
May 3
June 3
July 3
August 2
September 2
October 1
November 1
December 0
Vacation entitlement days under this schedule are not earned nor can they be
taken until after January 1 of the calendar year following an employee's date of
hire.
SECTION 3. Casual absences and leaves of absence including layoff of less
than 30 calendar days will not affect vacation earning. Where a leave of
absence or layoff is 30 calendar days or more, the amount of vacation earned to
be taken in the current vacation year will be prorated based on the number of
weeks worked in the vacation earning year, except that an employee who worked
1,250 hours in the vacation earning year shall be eligible for his full vacation
entitlement.
SECTION 4. Upon separation from active employment an employee is eligible
for payment of vacation earned in the preceding year but not yet taken in the
current year, provided such employee has actually worked at some time during the
current vacation year.
SECTION 5. All employees will be asked about their vacation preference
during the last two full weeks in February. Preferences in selecting vacation
dates will be given to employees with greater Driver Seniority, except when such
a request is received by the supervisor after March 1 of the vacation year which
cannot be granted without withdrawing approval already given to an employee with
less seniority.
Vacation pay in lieu of vacation may be granted at the discretion of the
Company in unusual circumstances. The Company reserves the right to grant
vacations to all eligible employees at one time.
SECTION 6. Employees who are laid off due to lack of work will be paid
unused vacation, if any, for which they qualified prior to date laid off.
SECTION 7. Employees who are discharged or quit will be paid for unused
vacation, if any, for which they qualified prior to their termination.
SECTION 8. the rate of vacation pay for each employee shall be his
straight time hourly rate of pay in effect during the week prior to the start of
his vacation. An employee shall receive his vacation pay prior to the start of
his vacation, provided he scheduled his vacation in advance.
ARTICLE XIX
HEALTH & WELFARE
SECTION 1. All bargaining unit employees are covered by the Local 705
International Brotherhood of Teamsters Health and Welfare Fund Plan.
SECTION 2. Commencing with April 1, 1996, the Company will pay the sum of
one hundred ($124.00) per week for each regular bargaining unit employee to
Local 705 International Brotherhood of Teamsters Health and Welfare Fund.
SECTION 3. Commencing with January 6, 1997, the Company will pay the sum
of one hundred and six dollars ($136.00) per week for each regular bargaining
unit employee to Local 705 International Brotherhood of Teamsters Health and
Welfare Fund.
SECTION 4. Commencing with January 5, 1998, the Company will pay the sum
of one hundred and fifty one dollars ($151.00) per week (or the rate in effect
for the Level 2 plan at that time if it is a lessor amount) for each regular
bargaining unit employee to Local 705 International Brotherhood of Teamsters
Health and Welfare Fund.
ARTICLE XX
RETIREMENT
SECTION 1. All active bargaining unit employees are eligible to
participate in the Morgan Products Ltd. Profit Sharing and Savings Retirement
Plan. Such participation shall be in accordance with the terms of that plan.
ARTICLE XXI
LEAVES OF ABSENCE
SECTION 1. A leave of absence may be granted at the discretion of the
Company to an employee without pay for periods up to forty-five (45) days and
extended for good cause shown. Approval for either the initial request for a
leave or an extension shall not be unreasonably withheld.
SECTION 2. The following general rules shall apply to all of the above
leaves of absence:
A. Application shall be made in writing for all leaves of absence,
provided, however, that the Company may waive or defer the written
application when conditions warrant.
B. Evidence satisfactory to the Company shall be promptly furnished to
the Company at the time application is made for leave of absence or
any extension thereof in order to substantiate such application.
C. Any employee who wishes to return to work prior to the authorized
expiration date of a leave of absence must notify the Company at least
five (5) days prior to returning to work unless the five (5) day
requirement is waived by the Company. Failure to report to work at
the time stated in such notice will be considered as such employee's
voluntarily quitting their employment.
D. Any employee who misrepresents any fact or submits false evidence in
connection with a leave of absence, or engages in unauthorized
employment during an authorized leave, shall be subject to
disciplinary action, including discharge.
E. The Company shall have the right to require any employee to submit to
a physical examination by a Doctor of its choice whenever there is
reasonable cause to believe that such employee may be physically
incapable of satisfactorily performing his regularly assigned or last
assigned duties. In such a case, the Company shall not be required to
permit such employee to perform his assigned duties until satisfactory
medical evidence of his physical ability to satisfactorily perform
such duties has been presented to the Company. Any physical
examination shall be promptly complied with by all employees,
provided, however, the Employer shall pay for all such physical
examinations.
SECTION 3. All medical leaves require a timely physicians certification
verifying that the employee is unable to perform the regular duties of his job.
SECTION 4. In order to eliminate the safety risks which result from
alcohol or drugs, the parties have agreed to Uniform Testing Procedures which
shall be applicable to all employees who have completed their probationary
period, and which is set out in a separate pamphlet and incorporated herein by
reference.
ARTICLE XXII
JURY PAY
SECTION 1. When an employee eligible for jury service is called and
reports for such service, he will be reimbursed by the Company for the
difference between the amount paid by the government for such service and the
time lost from the job up to a maximum of eight (8) hours pay per day at his
regular straight time hourly rate for up to fifteen (15) work days.
SECTION 2. The day of jury service for which an employee receives
reimbursement must be a regular workday which the employee would have otherwise
been regularly assigned work by the Company.
SECTION 3. Should an employee be eligible for a paid holiday which falls
on a day he is required to be on jury duty, he shall receive holiday pay, but no
other pay from the Company for that day.
ARTICLE XXIII
FUNERAL PAY
SECTION 1. An employee shall be paid up to three (3) days for compensable
time lost on regular work days, on the basis of eight (8) hours per day at
straight time, on account of death in the immediate family, provided such
employee attend the funeral.
SECTION 2. For the purposes of this Article, "immediate family" shall be
defined to include the employee's spouse, child, parent, brother, sister,
mother-in-law or father-in-law.
SECTION 3. One day off with pay will be granted to attend the funeral of
an employee's or their spouse's grandparent.
ARTICLE XXIV
SEPARABILITY
SECTION 1. Should this Agreement or any part thereof be rendered or
declared invalid by reason of any existing or subsequently enacted legislation
or by decree of a court or governmental agency of competent jurisdiction, such
invalidation of such part or portion of this Agreement shall not invalidate the
remaining portions thereof but they shall remain full force and effect.
SECTION 2. In the event that any Article or Section of this Agreement is
held invalid as above set forth, the parties shall upon the request of either
party enter into negotiations for the purpose of arriving at a mutual
satisfactory replacement for such Article or Section during the period of
invalidity. If the parties do not agree on a mutual satisfactory replacement
within sixty (60) days after such talks commenced, the issue may be submitted to
"final offer selection" arbitration.
In rendering an award under this Section, the arbitrator shall be limited
to selecting in total the position submitted by either the Company or the Union
with respect to such dispute, and is specifically restricted from fashioning an
award in any other manner.
Nothing herein shall restrict either party from seeking legal recourse in
support of its demands provided such actions are not in violation of any of the
provisions of this Agreement
ARTICLE XXV
DURATION
This Agreement shall remain in full force and effect from January 13, 1996
until midnight on January 15, 1999 and year to year thereafter unless sixty (60)
calendar days' notice shall be given in writing by certified mail by either
party to the other party prior to midnight on January 15, 1999 or any annual
renewal date thereafter, of its desire to amend, modify or terminate this
Agreement.
SCHEDULE "A"
1. The maximum wage rate for existing employees during the first year of the
contract shall remain unchanged.
2. Those employed who are being paid at the maximum wage rate shall have their
straight time wage rate adjusted in subsequent contract years to the
following level:
January 13, 1997 - $14.75 per hour
January 12, 1998 - $15.00 per hour
3. The wage scale for new hires and for employees permanently transferred to
the bargaining unit from non-bargaining unit jobs shall be as follows:
Time Worked "C" Drivers "D" Drivers
First six months $9.00 per hr. $10.25 per hr.
From six months to
twelve months $9.50 per hr. $11.00 per hr.
From twelve months to
eighteen months $10.50 per hr. $12.00 per hr.
From eighteen months to
twenty-four months $11.00 per hr. $12.25 per hr.
Twenty-four months to
thirty months $11.50 per hr. $12.75 per hr.
From thirty months to
thirty-six months $11.75 per hr. $13.00 per hr.
Thirty-six months
or more maximum rate maximum rate
4. It is recognized that the Company can hire employees or pay employees
permanently transferred from non-bargaining unit jobs at rates commensurate
with their experience provided such rate is in accordance with one of the
steps in three above, and provided further that no such employee shall be
paid more than any bargaining unit employee on the payroll at the signing
of this Agreement
IN WITNESS WHEREOF, and as ratified by members of the bargaining unit on the
24th day of May 1996, the parties hereto have executed this Agreement on the
24th day of May, 1996 effective as of January 13, 1996.
SIGNED FOR THE UNION: SIGNED FOR THE EMPLOYER:
TRUCK DRIVERS, OIL DRIVERS,
FILLING STATION AND PLATFORM
WORKERS' UNION, LOCAL No. 705, MORGAN DISTRIBUTION
an affiliate of the International 1700 Downs Drive
Brotherhood of Teamsters, West Chicago, IL 60185
Chauffeurs, Warehousemen and
Helpers of America. 708/293-0510
By:
/s/ Gerald Zero /s/ Dennis C. Hood
President Dennis C. Hood
Sr. Vice President of
Human Resources
/s/ John B. McCormick
Secretary/Treasurer
/s/ John E. Biggerstaff
Employee Representative
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Morgan
Products' Form 10-Q as of June 29, 1996 and is qualified in its entirety by
reference to such Form 10-Q filing.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-29-1996
<CASH> 2,105
<SECURITIES> 0
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0
0
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</TABLE>
