<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended MAY 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-14057
MET-COIL SYSTEMS CORPORATION
DELAWARE 42-1027215
(STATE OF INCORPORATION) (I.R.S. ID NO.)
5486 SIXTH STREET SW, CEDAR RAPIDS, IA 52404
Registrant's telephone number, including area code: 319/363-6566
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes ___X___ No _______
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
Yes _________ No ____X____
The aggregate market value of the Common Stock, $.01 par value, held by
non-affiliates of the registrant on August 18, 1995 based upon the average of
the closing bid and asked prices on that date as reported by the Wall Street
Journal was $2,784,556.
Registrant had 2,942,004 shares of Common Stock, $.01 par value, outstanding
as of August 18, 1995.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the definitive proxy statement to be filed with the Commission on
or before September 8, 1995 are incorporated by reference into Part III hereof.
ANNUAL REPORT NOT INCLUDED
THE COMPANY'S 1995 ANNUAL REPORT TO STOCKHOLDERS, PORTIONS OF WHICH ARE
INCORPORATED HEREIN, IS NOT INCLUDED WITH THIS 10-K BUT HAS BEEN SEPARATELY
DISTRIBUTED, ACCOMPANIES THIS REPORT, OR IS AVAILABLE UPON REQUEST.
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
Met-Coil Systems Corporation ("Met-Coil"), a holding company, and its
operating units (collectively referred to as the "Company") design, engineer,
manufacture and market metal forming and fabricating machinery and
computer-controlled fabrication systems which produce a wide variety of
products from metal coils and sheets. The Company also manufactures and
markets high-speed automated material handling and press line automation
equipment and systems. Met-Coil's operating units include four wholly-owned
subsidiaries--Iowa Precision Industries, Inc. ("Iowa Precision"), The
Lockformer Company ("Lockformer"), Rowe Machinery and Automation, Inc.
("Rowe"), Met-Coil Systems-GmbHi.G. (Met-Coil Europe), Lockformer Europe and a
joint venture--Met-Coil Ltd. ("MCL"). See "Description of Operations" below.
The Company's sheet metal machinery and fabrication systems are designed
to process metal coils and blanks in thicknesses up to one-half inch.
Generally, the equipment operates in an automated, computer-controlled
environment and includes high speed roll forming machinery and slitting,
shearing and material handling equipment. Fabrication systems manufactured by
the Company integrate various pieces of equipment which process coils and
blanks into finished metal products.
The Company's manufacturing systems and machinery are used to produce a
broad range of products, including ductwork for heating, ventilation, and
air-conditioning systems; metal cabinetry for home appliances; electronic
components; metal furniture and shelving; and automobile parts. The Company
markets its machinery and systems primarily through a worldwide distributor
network.
Met-Coil was organized under Delaware law in 1973 and its present
operating units were acquired thereafter. Met-Coil's principal assets are the
shares of stock of its subsidiaries and affiliates.
In fiscal 1994 Met-Coil sold a majority of the assets and all of the
operations of Roper Whitney Company ("Roper Whitney") which was previously a
wholly owned subsidiary (as further discussed below).
Although, the Company is currently emphasizing internal growth and plans
to continue to do so in the foreseeable future, from time to time, it may
consider acquisitions of product lines or companies, or investments in joint
ventures with companies that have compatible product lines, that would
complement the Company's existing capabilities to supply fabrication systems
for sheet metal processing applications. However, the Company is not currently
considering any such acquisitions or investments, and it is uncertain whether
such considerations in the future will result in definitive agreements for, or
the consummation of, any such acquisitions or investments. The Company cannot
predict the impact that any such transactions might have on its stockholders.
DESCRIPTION OF OPERATIONS
Iowa Precision Industries, Inc.
Iowa Precision manufactures integrated systems for producing slit, roll
formed, punched, notched and sheared blanks from sheet metal coils. It is a
major manufacturer of heating, ventilation, and air conditioning (HVAC)
manufacturing machinery and automated systems. Iowa Precision's Adjustable
Elbow Machine and it's Fabriduct system combine Lockformer's roll forming
technology with Iowa Precision's equipment to provide unique systems for
converting sheet metal into finished ductwork with improved sealing
characteristics. In addition, Iowa Precision provides a variety of computer
controlled fabrication systems. Iowa Precision is one of the few manufacturers
of coil processing equipment which designs and produces its own microprocessor
computer numerical controls.
2
<PAGE> 3
The Lockformer Company
Lockformer designs and manufactures roll forming and cutting machinery
and systems utilized by HVAC contractors as well as other industries such as
metal furniture, appliance, sign, and glass. Product developments include
enhancements to microprocessor-controlled cutting systems using plasma arc
torch heads for processing sheetmetal ("Vulcan) and other metals ("Precision
Cutting Machine" or "PCM") and a glass cutting machine ("Excalibur"). These
cutting machines offer lower cost alternatives for their respective markets.
The machines have software packages that determine optimal patterns to be cut
to form various materials to maximize yield. In addition, Lockformer markets
its Transverse Duct Connector (TDC) System which connects air-conditioning
ductwork and provides enhanced sealing. Lockformer also manufactures
quick-change reprogrammable products, such as duplex machines with moveable
heads, that fit into flexible fabrication systems.
Rowe Machinery & Automation, Inc.
Rowe specializes in the development and manufacture of heavy duty metal
coil processing systems. It produces a variety of high speed, automated heavy
duty coil stock straightening and feeding systems, press feeding lines,
cut-to-length sheeting lines, blanking lines and coil stock handling systems.
Rowe's products are marketed to numerous industries with emphasis on appliance,
automotive, metal furniture and steel service centers.
Met-Coil Europe
Met-Coil and its subsidiaries have had a presence in Europe for over 30
years. In 1993, Lockformer Europe was formed in Denmark to sell, install and
service Met-Coil products. During 1994 Met-Coil Europe was established in
Germany to replace the Denmark operation.
Roper Whitney Company
Roper Whitney manufactures a complementary line of standard products,
including manually operated metal fabricating tools, punches, dies, and forming
equipment, such as roll benders and bar folders, along with power squaring
shears, power punch presses, notchers and bending brakes. In December, 1993
the Company sold the business operations of Roper Whitney and most of the
assets and liabilities, excluding trade accounts receivable. The Company
received $1,000,000 in cash at closing and a note receivable due over a period
of five years for $875,000. In connection with the sale, the Company
recognized a loss of $454,000 due primarily to termination benefits paid
former employees and the liquidation of inventory.
Met-Coil Ltd.
MCL was formed as a 50% owned joint venture in September 1986 with a
Japanese capital goods manufacturer. MCL sells and services Met-Coil products
in Japan and the Asia-Pacific markets. MCL receives commissions on its sales
of Met-Coil products that are manufactured by the Company's operating units.
MCL also manufactures a group of Company products in Japan for the Japanese and
Asia-Pacific markets. The Company receives royalty payments on these products.
3
<PAGE> 4
MARKETING, CUSTOMERS AND SUPPLIERS
The Company markets its machinery and fabrication systems primarily
through a worldwide distributor network. Each of the Company's operating units
has management personnel responsible for sales and marketing for their
respective organizations. The Company also has an international department
that is responsible for the coordination of overseas sales and for maintaining
and developing the Company's international distributor network. For
information concerning the Company's export sales, see Notes to Consolidated
Financial Statements included in Part IV, Item 14 of this 10-K.
Iowa Precision, Lockformer, and Rowe rely primarily on independent
distributors for their domestic and international sales. Iowa Precision,
Lockformer, and Rowe have approximately 38, 28, and 24 domestic distributors
and 31, 28, and 4 international distributors, respectively. Many of these
distributors represent more than one of the Company's subsidiaries.
The Company's employees provide installation, training and full service
for its machinery and systems. The Company warrants its products for periods
of up to two years. The Company services the computer components of the
machinery and systems that it designs and manufactures.
The Company's customers consist primarily of fabricators of heating,
ventilation and air conditioning (HVAC) ductwork; metal service centers, which
serve as intermediate processors of coils between the mill and the final
manufacturer; as well as a wide range of manufacturers of sheet metal products
in the appliance, metal furniture, automotive, electronics, electrical, and
other industries.
A majority of the Company's revenues are currently generated from
domestic sources, such sales representing 83%, 84% and 81% of consolidated
revenues during fiscal years 1995, 1994, and 1993, respectively. Several of
the Company's principal product lines (including its TDC, Vulcan systems,
tools, bending and punching machinery) are used for the production of heating,
ventilation and air-conditioning (HVAC) ductwork for industrial, commercial and
residential buildings and therefore are subject to economic conditions
affecting the construction industry. Domestic sales of these product lines
represented approximately 44%, 53% and 48% of the Company's sales during fiscal
1995, 1994 and 1993, respectively. No customer represented in excess of 10% of
consolidated revenues during fiscal year 1995.
The Company's principal raw materials are steel and electronic
components, which it can obtain from a variety of sources. The Company has not
experienced, and does not anticipate, any significant difficulties in obtaining
adequate supplies of raw materials.
PRODUCT DEVELOPMENT
The Company's policy is to develop and produce only those products for
which the Company believes it is positioned to obtain and hold a substantial
market share. The Company's product development, which results from individual
subsidiary effort or from the combined effort of its subsidiaries, involves: a)
creation of new products; b) improvements to existing products; and c) design
of specific products or modifications of existing products at the request of a
customer. Such products or modifications are frequently incorporated into the
Company's standard equipment. During fiscal years 1995, 1994 and 1993, the
Company spent approximately $1,362,000, $1,823,000, and $2,714,000,
respectively, in the aggregate for the three categories described above.
PATENTS, TRADEMARKS AND LICENSES
The Company holds a variety of patents and trademarks relating to the
designs, uses and names of its products and to the names of its subsidiaries.
It is the Company's policy to obtain patent protection for as many of its new
and developmental products as possible and to enforce all such patent rights.
The Company does not believe, however, that the loss of any of these patents or
trademarks would have a material adverse effect on the Company's overall
competitive position. As a result of the settlement agreement with
Construction Technology, Inc. (CTI), the Company purchased from CTI a license
to manufacture and sell the Vulcan for $2.5 million (see Notes to Consolidated
Financial Statements included in Part IV, Item 14 of this 10-K).
4
<PAGE> 5
BACKLOG
The Company's backlog of orders at July 31, 1995 was approximately $19.7
million, compared to approximately $14 million at July 31, 1994. The change is
attributable to strong backlogs for both Iowa Precision and Lockformer.
All orders for machinery and systems not shipped at the end of each
period are included in backlog. The Company estimates that all of the present
backlog will be shipped within the balance of the current fiscal year ending
May 31, 1996. (See Management Discussion and Analysis of Financial Condition
and Results of Operations, Part II, Item 7 of this 10-K.)
COMPETITION
The Company's markets are competitive, with the principal competitive
factors being product quality, customer service and price. The Company
competes with a number of manufacturers which produce equipment similar to some
of the Company's products or product lines. Moreover, the Company's policy is
to produce and market only those products for which the Company believes it is
positioned to hold a substantial market share. While the Company's products
are generally in the higher range of quality and price, it believes that it is
a significant competitive force in most of the market segments of its principal
product lines. To date, the Company has not been subject to significant
foreign competition in its domestic markets.
The Company believes that the Iowa Precision, Lockformer, and Rowe names
are well known in the sheet metal processing and fabricating industry and that
the reputation of the Company for quality products and service provides the
Company with a significant competitive advantage. In addition, the Company's
ability to design systems that perform most, if not all, of the sheet metal
processing and fabricating functions for a given application and the Company's
ability to design, build and service most of the computer needs of the
Company's systems provide the Company with additional advantages over its
competition.
5
<PAGE> 6
EMPLOYEES
At May 31, 1995, the Company employed approximately 354 persons, of whom
approximately 204 were production employees, 36 were engineering personnel, 19
were sales personnel and the remainder were management and clerical employees.
There are currently two collective bargaining agreements covering the
production employees at the Lockformer and Iowa Precision plants (totalling
approximately 119 employees). These agreements will expire in January 1998 and
May 1998, respectively. The Company believes its relations with its employees
are satisfactory.
EXECUTIVE OFFICERS OF MET-COIL
<TABLE>
<CAPTION>
Name Age Position with the Company and five-year background (1)
---- ---- --------------------------------------------------
<S> <C> <C>
Raymond H. Blakeman 71 Chairman of the Board of Met-Coil since July 1986 and Chief Executive Officer of
Met-Coil from July 1986 to December 1988, from June 1990 to May 31, 1994 and from May
1, 1995 to present. From November 1989 to October 1991, Chairman of the Board and
Chief Executive Officer of ABW, Inc., which was formed for the specific purpose of
investing in the machine tool and other related capital goods industries.
Harold G. Spriggs 58 Vice Chairman of the Board of Met-Coil since August 1990 and President of Met-Coil
Automation since May 1990. President of Rowe Machinery and Automation, Inc., a
subsidiary of Met-Coil, since 1986.
K. John Del Vecchio 56 Vice President of Met-Coil since May 1994, President of Lockformer since January 1993.
Prior thereto independent consultant from 1988 to 1992.
James D. Heitt 55 Vice President of Met-Coil since August 1990. President of Iowa Precision since July
1986.
John J. Toben 45 Vice President International of Met-Coil since February 1992. International
Marketing Manager June 1988 to February 1992.
Joseph H. Ceryanec 34 Vice President Finance and Chief Financial Officer of Met-Coil since May 31, 1994.
Vice President from December 1993 to May 1994. Senior Manager of Ernst & Young, a
public accounting firm, from October 1992 to December 1993, and Manager with
Ernst & Young from October 1989 to October 1992.
Jack A. Rosa 36 Executive Vice President of Met-Coil since November 1994. From 1991 to 1994
President, EPM Corp., a manufacturer of coil winding equipment and automated systems.
Prior thereto Director of Marketing for Murata Wiedmann, a manufacturer of sheet metal
fabricating equipment and automated systems.
</TABLE>
_______________________________________
(1) Officers of the Company are elected annually by the Board of Directors and
hold office until their successors are elected.
6
<PAGE> 7
ITEM 2. PROPERTIES
The Company maintains facilities with an aggregate of approximately
362,145 square feet of space for its corporate and subsidiary operations. The
Company considers all of its facilities to be in good operating condition and
adequate for its current needs.
The following table summarizes the principal corporate and subsidiary
facilities of the Company, both owned and leased:
<TABLE>
<CAPTION>
Approx. Area Owned/
Location Primary Function in square feet Leased Expiration
-------- ---------------- -------------- ------ ----------
<S> <C> <C> <C> <C>
Lisle, Illinois Lockformer manufacturing, 85,000 Owned --
warehousing and offices
Cedar Rapids, Iowa Iowa Precision manufacturing, 74,000 Owned (1) --
warehousing and offices
Cedar Rapids, Iowa Iowa Precision manufacturing 5,000 Leased (2) --
Gaylord, Michigan Leased to third party 51,000 Owned (3) --
Dallas, Texas Rowe manufacturing, warehousing 72,000 Owned --
and offices
Rockford, Illinois Roper Whitney manufacturing, 126,000 Leased (4) 4/1/98
warehousing and offices
</TABLE>
___________________
(1) Being acquired pursuant to a real estate purchase contract. See Notes
to Consolidated Financial Statements included in Part IV, Item 14 of
this 10-K.
(2) Leased on a month-to-month basis. Ninety (90) day notice of intent to
vacate premises required.
(3) Financed by an Economic Development Limited Obligation Revenue Bond.
Currently being leased to Mark One Acquisition Corporation which
acquired the operations of Mark One Corporation from the Company in
1990. See Notes to Consolidated Financial Statements included in Part
IV, Item 14 of this 10-K.
(4) In connection with the sale of Roper Whitney, the Company entered into
a sublease with the buyer which generally reflects the rents and terms
of the original building lease.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to various legal actions, governmental
investigations, and proceedings relating to various matters incidental to its
business including product liability claims. The Company intends to vigorously
defend these matters. While the outcome of such matters cannot be predicted
with certainty, in the opinion of management, after reviewing such matters and
consulting with the Company's counsel and insurers, any liability which may
ultimately be incurred, is not expected to materially affect the consolidated
financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the security holders of the
Company during the fourth quarter of the fiscal year 1995.
7
<PAGE> 8
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Met-Coil's common stock is quoted on the NASDAQ National Market
System. The range of high and low bid prices for the common stock, as reported
by the Dow Jones Historical Stock Quote Reporter Service are shown below.
Prices reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
BID PRICES
HIGH LOW
---- ---
<S> <C> <C>
FISCAL 1995
Fourth Quarter .......... $ 3.37 $ 2.12
Third Quarter .......... 3.50 2.87
Second Quarter .......... 3.50 2.87
First Quarter .......... 3.25 2.25
FISCAL 1994
Fourth Quarter .......... $ 2.75 $ 2.37
Third Quarter .......... 2.75 2.00
Second Quarter .......... 3.50 2.75
First Quarter .......... 4.12 3.00
</TABLE>
As of August 18, 1995, there were approximately 1,500 stockholders of
record of Met-Coil common stock, par value $.01 per share, excluding
approximately 325 employees with vested rights in the Company's ESOP (some of
whom otherwise hold shares in the Company).
See Notes to the Consolidated Financial Statements included in Part IV,
Item 14 of this 10-K and Management Discussion and Analysis of Financial
Condition and Results of Operations in Part II, Item 7 of this 10-K for
discussions regarding dividend restrictions.
8
<PAGE> 9
ITEM 6. SELECTED FINANCIAL DATA
See "Financial Statements and Financial Statement Schedules" included in
Part IV, Item 14 hereof and herein incorporated by reference thereto.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
See "Financial Statements and Financial Statement Schedules" included in
Part IV, Item 14 hereof and herein incorporated by reference thereto.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See "Financial Statements and Financial Statement Schedules" included in
Part IV, Item 14 hereof and herein incorporated by reference thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
(a) Changes:
None
(b) Disagreements:
None.
9
<PAGE> 10
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item as to executive officers of
Met-Coil is contained in Part I, Item 1 hereof under the caption "Executive
Officers of Met-Coil." The information required by this item as to directors
is included under the caption "Election of Directors" in Met-Coil's definitive
proxy statement for its 1995 Annual Meeting, and is incorporated herein by
reference thereto.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is included under the captions
"Report on Executive Compensation" and "Compensation" in Met-Coil's definitive
proxy statement for its 1995 Annual Meeting, and is incorporated herein by
reference thereto.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is included under the caption
"Security Ownership" in Met-Coil's definitive proxy statement for its 1995
Annual Meeting, and is incorporated herein by reference thereto.
ITEM 13. CERTAIN RELATIONS AND RELATED TRANSACTIONS
The information required by this item is included under the captions
"Compensation" and "Employment Agreements" in Met-Coil's definitive proxy
statement for its 1995 Annual Meeting, and is incorporated herein by reference
thereto.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements and Financial Statement Schedules:
(1)&(2) See the Index to Financial Statements included elsewhere
herein for a list of financial statements and financial
statement schedules included or incorporated herein by
reference.
(3) List of Exhibits required by Item 601 of Regulation S-K:
See Index to Exhibits included elsewhere herein.
(b) Reports on Form 8-K:
(1) Filing on March 10, 1995 regarding private placement of
convertible preferred stock.
(c) Exhibits required by Item 601 of Regulation S-K:
See Index to Exhibits included elsewhere herein.
(d) Financial Statement Schedules: See the Index to Financial
Statements included elsewhere herein for a list of financial
statements and financial statement schedules included or
incorporated herein by reference.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MET-COIL SYSTEMS CORPORATION
By: /s/Joseph H. Ceryanec
----------------------------
Joseph H. Ceryanec
Vice President Finance
and Chief Financial Officer
Date: September 13, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature TITLE DATE
--------- ----- ----
<S> <C> <C>
Raymond H. Blakeman/s/ Director, Chairman of the September 13, 1995
---------------------- Board, and Chief Executive Officer
Raymond H. Blakeman
Harold G. Spriggs/s/ Director, Vice Chairman of the September 13, 1995
---------------------- Board and Vice President
Harold G. Spriggs
Joseph H. Ceryanec/s/ Vice President, Chief Financial Officer September 13, 1995
----------------------
Joseph H. Ceryanec
Frank W. Jones/s/ Director September 13, 1995
----------------------
Frank W. Jones
E. Keith Moore/s/ Director September 13, 1995
----------------------
E. Keith Moore
John F. Logan/s/ Director September 13, 1995
----------------------
John F. Logan
Gary M. Neal/s/ Director September 13, 1995
----------------------
Gary M. Neal
Roy J. Carver Jr./s/ Director September 13, 1995
----------------------
Roy J. Carver Jr.
</TABLE>
11
<PAGE> 12
INDEX TO FINANCIAL STATEMENTS
PART IV, ITEM 14 - (continued)
<TABLE>
<CAPTION>
Financial Statements
Page No.
--------
<S> <C>
Five Year Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Balance Sheets, May 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . F-6
Consolidated Statements of Operations, Three Years Ended May 31, 1995 . . . . . . . . . . . . F-7
Consolidated Statements of Stockholders' Equity, Three Years Ended May 31, 1995 . . . . . . . F-8
Consolidated Statements of Cash Flows, Three Years Ended May 31, 1995 . . . . . . . . . . . . F-9
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . F-10
Financial Statement Schedule
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-21
Schedule VIII - Valuation and Qualifying Accounts and Reserves . . . . . . . . . . . . . F-22
</TABLE>
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
Individual financial statements for equity method investees have been
omitted because they are not significant subsidiaries.
12
<PAGE> 13
FIVE YEAR SUMMARY
(In thousands, except per share data)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
Years Ended May 31, 1995 1994 1993 1992 1991
(Restated)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenues $ 43,775 $ 42,594(b) $ 48,026 $ 48,490 $ 48,534
Cost of goods sold (g) 34,316 33,832 40,406 41,240 37,754
Selling, general, and
administrative expenses 9,495 9,382 9,311 11,821 14,129
Interest expense, net 2,690 2,435 2,595 2,219 1,890
Other non-operating expense, net 336 672(b) 850(c) 4,796(d) 51
--------------------------------------------------------------------------------------------------------------------------
Loss before taxes and effect of
accounting change (3,062) (3,727) (5,136) (11,586) (5,290)
Income tax credits - - - (565) (1,350) (3,351) (1,609)
--------------------------------------------------------------------------------------------------------------------------
Loss before effect
of accounting change (3,062) (3,162) (3,786) (8,235) (3,681)
Effect of accounting change - - - - - - (262)(e) 579(f) - - -
--------------------------------------------------------------------------------------------------------------------------
Net loss $ (3,062) $ (3,162) $ (4,048) $ (7,656) $ (3,681)
==========================================================================================================================
Loss per share before
effect of accounting change $ (1.12) $ (1.16) $ (1.41) $ (3.28) $ (1.50)
Effect of accounting change - - - - - - (0.10) 0.23 - - -
--------------------------------------------------------------------------------------------------------------------------
Net loss per share $ (1.12) $ (1.16) $ (1.51) $ (3.05) $ (1.50)
==========================================================================================================================
Weighted average common shares 2,871 2,719 2,688 2,514 2,456
==========================================================================================================================
FINANCIAL DATA:
Working capital (deficiency) $ (5,270)(a) $ 5,892 $ 8,090 $ 8,141 $ 14,687
Property and equipment, net 7,953 8,751 11,056 12,982 12,301
Total assets 38,735 37,099(b) 41,019 48,673 46,187
==========================================================================================================================
Debt:
Debt Outstanding $ 22,283 $ 23,816 $ 26,266 $ 28,024 $ 22,638
Less: Cash restricted for
debt repayment (986) (1,959) - - - - - - - - -
--------------------------------------------------------------------------------------------------------------------------
Net debt outstanding 21,297 21,857 26,266 28,024 22,638
Stockholders' equity 396 2,841 4,887 8,212 15,506
==========================================================================================================================
SHARE DATA:
Dividend per common share $ - - - $ - - - $ - - - $ - - - $ 0.03
Book value per common share .14 1.02 1.85 3.11 6.29
==========================================================================================================================
</TABLE>
See Notes to Financial Statements
(a) Note 5 - Debt
(b) Note 4 - Sale of Roper Whitney
(c) Note 4 - Affiliates
(d) Note 12 - Settlement Agreement
(e) Note 8 - Postretirement Benefits
(f) Note 6 - Income Taxes
(g) Note 2 - Prior Period Adjustment
F-1
<PAGE> 14
MANAGEMENT'S DISCUSSION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in connection with the Consolidated
Financial Statements and Notes thereto, to which references are made elsewhere
herein - especially as to Note 2 (prior period restatement) and Note 5 (debt).
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentages
which certain items bear to net revenues:
Percentage of Net Revenues
<TABLE>
<CAPTION>
1995 1994 1993
Restated
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Revenues 100% 100% 100%
Cost of goods sold 78 79 84
Operating expenses 22 22 19
Interest expense, net 6 6 6
Other expense items, net 1 2 2
--------------------------------------------------------------------------------------------------------------------
Loss before income taxes (7) (9) (11)
Income tax credits -- 1 3
--------------------------------------------------------------------------------------------------------------------
Net Loss (7) (8) (8)
--------------------------------------------------------------------------------------------------------------------
</TABLE>
The results reflected above have been restated for 1994 due to a
misstatement of inventory at Lockformer at May 31, 1994 as a result of
improperly relieving inventory for the cost of items shipped to customers. See
"Restatement" below.
Fiscal 1995 Compared to Fiscal 1994
Revenues of $43.8 million increased slightly from $42.6 million in 1994.
During fiscal year 1994 the consolidated revenues included almost $6 million of
revenue from Roper Whitney which was sold in December, 1993. Therefore,
revenues on a comparable basis increased $7.2 million or 20% and reflected a
continued strong sales market. All three domestic subsidiaries had increased
revenues with Rowe increasing almost $5 million. International revenues were
$7.2 million and consistent with fiscal 1994.
Fiscal 1995 cost of goods sold as a percentage of revenues were generally
consistent with fiscal 1994 with improvements at Rowe offset by decreased
margins at Lockformer. The restatement of 1994 caused a 1% increase in the
cost of goods sold percentage. Operating expenses also were consistent among
the two years.
Interest expense increased from $2.4 million in fiscal 1994 to $2.7 million
in fiscal 1995 due to the accretion of interest on preferred stock.
F-2
<PAGE> 15
The 1995 pretax loss was primarily attributable to Lockformer and was not
reduced by tax credits as all tax loss carrybacks had been previously utilized
and deferred tax assets have been fully reserved.
Fiscal 1994 Compared to Fiscal 1993
Revenues of $42.6 million were down approximately $5.5 million from fiscal
1993 due entirely to the sale of Roper Whitney in December, 1993 (see Note 4).
Roper Whitney had revenues of $5.6 million for the period from December 1992 to
May 1993. International sales of $7.3 million, or 17% of total sales, were
lower than the prior year due primarily to depressed foreign markets.
The decrease in cost of sales was due primarily to the sale of Roper
Whitney's lower margin business. While operating expenses remained constant
with the prior year, the percentage of sales increased due to certain costs
being fixed, even with the sale of Roper Whitney, and an increase in
promotional expenditures.
Interest expense remained relatively constant with a slight decrease due to
the disposal of certain debt held by Roper Whitney and the continued paydown of
long-term debt. A net loss of $454,000 on the sale of Roper Whitney was
recognized due primarily to termination benefits paid former employees and the
liquidation of inventory.
A pretax loss of $3.7 million, due to losses at Rowe, Lockformer and Roper
Whitney, was reduced by income tax credits of $565,000 which represent income
tax refunds recorded in fiscal 1994, with $176,000 received in fiscal 1995.
Restatement
As noted in the financial statements (see Notes 2 and 15) the financial
results for fiscal 1994 and the first three quarters of the fiscal 1995 have
been restated to reflect adjustments related to the May 31, 1994, inventory
balance at the Lockformer facility. These adjustments were discovered during
Lockformer's 1995 year-end inventory count. The balance of the inventory was
inaccurate due to the undercosting of sales which had taken place during fiscal
years 1995 and 1994.
The primary factor for the misstatement was the installation of a new
inventory accounting system in January 1994 which resulted in incorrect data
being captured on costs related to the manufacture of products being sold. The
situation was further compounded by a new pricing formula for large
distributors.
As a result of this situation the inventory accounting system at
Lockformer is being replaced with a system currently utilized by the other two
US facilities. Additionally, the accounting and management information
personnel at all three domestic subsidiaries are now reporting directly to the
corporate office.
LIQUIDITY AND CAPITAL RESOURCES
Financial Review
The Company's total assets were $38.7 million at the end of fiscal 1995,
reflecting a $1.6 million or 4% increase during fiscal 1995. The increase was
due primarily to accounts receivable growth resulting from strong fourth
quarter revenues as well as inventory growth relative to strong order backlog.
Total debt outstanding decreased $1.5 million during Fiscal 1995, with $750,000
of this decrease related to a corresponding decrease in cash restricted for
debt repayment, which represents escrowed funds held by the lenders.
Additionally, $223,000 of these escrowed funds were released by a lender and
utilized by the Company to purchase plant machinery. Working capital is ($5.3)
million at May 31, 1995 due to the classification of $12 million of senior
notes as current (see "Cash Flows and Commitments" below) that would have been
reflected as long-term had the Company met loan covenants. Current assets
increased $3.8 million due to the aforementioned receivable and inventory
growth and current liabilities, in addition to the classification of the senior
notes as current, increased $3.0 million primarily related to accounts payable
and customer deposit increases.
Backlog was $14.4 million at May 31, 1995 compared to $13.7 million at May
31, 1994. International backlog grew to $3.7 million at May 31, 1995 up from
$2.3 million at May 31, 1994 which reflects rebounding international markets.
F-3
<PAGE> 16
Cash Flows and Commitments
As a result of the net loss for the year, the Company was in violation of
various covenants of the $4 million revolving credit agreements and the $12.75
million senior notes at May 31, 1995. Noncompliance with a loan covenant
permits the lenders to declare the Company in default of its loan agreement and
demand the repayment of the loans in full. While the Company is in active
discussions with the lenders, covenant violation waivers have not been obtained
and therefore the senior notes have been classified as current liabilities in
the accompanying financial statements. Additionally, the revolving credit
agreements expire on September 30, 1995 and while the Company has requested
extensions, there is no assurance that the lenders will extend the credit
agreements. The Company is also engaged in discussions with new working
capital and long-term lenders but does not have formal commitments in place.
Assuming the current revolving credit agreements are either extended or
replaced, cash flows from on hand balances (including cash restricted for debt
repayment) and from operations are expected to meet the Company's operating and
debt service requirements. In the event the revolving credit agreements are
not extended or replaced the Company would need to raise additional capital in
order to continue to meet operating and debt service requirements. There are
no assurances that the Company would be able to raise additional capital. If
the Company is unable to extend or replace the revolving credit agreement or
raise additional capital the Company would not be able to continue as a going
concern without effecting a reorganization or restructuring.
During 1995 the Company issued $2.0 million convertible redeemable preferred
stock under terms identical to the 1994 $1.6 million issuance. The proceeds of
the offering were used to fund the expanded European operations, the
development of a new product introduced in 1995 and for working capital
purposes. Dividends of 6% were paid on the preferred stock during 1995 and are
expected to continue during 1996. The Company continues to omit quarterly
common stock dividends due to loan covenants, which prohibit the payment of
common stock dividends. It is uncertain when, and if, the Company will pay
common stock dividends in the future.
As of May 31, 1995 the Company had no commitments for, or need of,
significant capital expenditures.
MARKETS AND TRENDS
The Company is engaged in highly competitive markets with a significant
portion of its business related to the domestic HVAC and construction
industries. In the early 1990's these industries were depressed, however,
lower interest rates and other factors along with the generally improving U.S.
economy have resulted in continually improved activity during fiscal 1995. It
is expected that this trend will continue.
In addition, the Company continues to expand its market and geographic
diversity, thereby reducing dependencies and enhancing it scope of business
opportunities.
Management believes that the relatively moderate inflation of the past
several years has not had a material effect on the Company's business, and if
this relatively moderate rate continues it is not expected to have a material
effect on operations.
CONTINGENCIES AND OTHER MATTERS
The Company is engaged in various legal and other proceedings incident to
its business (see Note 12).
In fiscal 1992 the Company adopted FAS109 Income Taxes (see Note 6) and in
fiscal 1993 adopted FAS106 Postretirement Benefits (see Note 8).
F-4
<PAGE> 17
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Met-Coil Systems Corporation
Cedar Rapids, Iowa
We have audited the consolidated balance sheets of Met-Coil Systems Corporation
and Subsidiaries as of May 31, 1995 and 1994, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended May 31, 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Met-Coil Systems
Corporation and Subsidiaries at May 31, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended May 31, 1995, in conformity with generally accepted accounting
principles.
As more fully described in Note 5, the Company's recurring operating losses,
working capital deficiency and debt covenant violations raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 5. The 1995
financial statements do not include any adjustment that might result from the
outcome of this uncertainty.
ERNST & YOUNG LLP
Des Moines, Iowa
July 31, 1995
F-5
<PAGE> 18
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
May 31, 1995 1994
(Restated)
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets
Cash 159 $ 1,304
Cash, restricted for debt repayment (Note 5) 750 750
Trade receivables, net (Note 3) 8,436 6,500
Notes and other receivables 968 588
Income tax refund claim (Note 6) - - - 176
Inventories (Note 3) 13,265 10,408
Prepaid expenses 1,413 1,477
----------------------------------------------------------------------------------------------------------------------------
Total current assets 24,991 21,203
Property and equipment (Note 5):
Land 1,983 1,983
Buildings 6,605 6,579
Machinery and equipment 11,344 10,839
Furniture and equipment 3,152 2,921
----------------------------------------------------------------------------------------------------------------------------
23,084 22,322
Less accumulated depreciation 15,131 13,571
----------------------------------------------------------------------------------------------------------------------------
Net 7,953 8,751
Cash, restricted for debt repayment (Note 5) 236 1,209
Investments and other assets (Note 4) 2,471 2,656
License fee (Note 3) 1,731 1,962
Intangibles, net (Note 3) 1,353 1,318
----------------------------------------------------------------------------------------------------------------------------
Total Assets $38,735 $37,099
============================================================================================================================
Current liabilities
Notes payable (Note 5) $ 3,571 $ 3,590
Current maturities of long-term debt (Note 5) 14,874 3,424
Accounts payable 7,063 3,873
Accrued liabilities 2,386 2,866
Customer deposits and progress billings 2,367 1,558
----------------------------------------------------------------------------------------------------------------------------
Total current liabilities 30,261 15,311
Long-term debt (Note 5) 3,838 16,802
Deferred income tax credits, net (Note 6) 440 440
Other (Note 8) 343 233
Commitments and contingencies (Notes 12 and 13)
Preferred stock, convertible and redeemable at $13 (Note 10) 3,457 1,472
Stockholders' Equity (Notes 5 and 9):
Common stock, $.01 par value, authorized 10,000,000,
1995 issued 2,932,573; 1994 issued 2,821,448 29 28
Additional paid-in capital 15,809 15,472
Retained earnings deficit (Note 4) (15,570) (12,378)
Foreign currency translation adjustment 257 33
Cost of common stock reacquired for treasury (129) (147)
Employee Stock Ownership Plan debt guarantee (Note 5) - - - (167)
----------------------------------------------------------------------------------------------------------------------------
Net equity 396 2,841
----------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY $38,735 $37,099
============================================================================================================================
</TABLE>
See Notes to Financial Statements
F-6
<PAGE> 19
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Years Ended May 31, 1995 1994 1993
(Restated)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales (Notes 4 & 11) $ 43,693 $ 42,423 $ 48,013
Equity in affiliates (Note 4) 82 171 13
-------------------------------------------------------------------------------------------------------------------------
Net revenues 43,775 42,594 48,026
Cost of goods sold 34,316 33,832 40,406
Selling, general and administrative expenses 9,495 9,382 9,311
Interest expense, net 2,690 2,435 2,595
Loss on businesses sold, net (Note 4) - - - 454 394
Other expense, net 336 218 456
-------------------------------------------------------------------------------------------------------------------------
Loss before income taxes and
effect of accounting change (3,062) (3,727) (5,136)
Income tax credits (Note 6) - - - 565 1,350
-------------------------------------------------------------------------------------------------------------------------
Loss before effect of accounting change (3,062) (3,162) (3,786)
Effect of accounting change (Note 8) - - - - - - (262)
-------------------------------------------------------------------------------------------------------------------------
Net loss $ (3,062) $ (3,162) $ (4,048)
=========================================================================================================================
Weighted average common
shares (Note 9) 2,871 2,719 2,688
-------------------------------------------------------------------------------------------------------------------------
Loss per common share (Note 9):
Loss before effect of accounting change $ (1.12) $ (1.16) $ (1.41)
Effect of accounting change - - - - - - (0.10)
-------------------------------------------------------------------------------------------------------------------------
Net loss $ (1.12) $ (1.16) $ (1.51)
=========================================================================================================================
</TABLE>
See Notes to Financial Statements
F-7
<PAGE> 20
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except per share data)
<TABLE>
<CAPTION>
Foreign
Additional Retained Currency ESOP
Common Paid-In Earnings Translation Treasury Debt
Stock Capital (Deficit) Adjustment Stock Guarantee Total
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, May 31, 1992 $ 27 $ 15,034 $ (5,168) $ (134) $ (165) $ (1,382) $ 8,212
Net loss - - - - - - (4,048) - - - - - - - - - (4,048)
Reissuance of 4,422 shares - - - (9) - - - - - - 18 - - - 9
Payments on ESOP debt - - - - - - - - - - - - - - - 538 538
Translation adjustment (Note 4) - - - - - - - - - 176 - - - - - - 176
--------------------------------------------------------------------------------------------------------------------------
Balance, May 31, 1993 $ 27 $ 15,025 $ (9,216) $ 42 $ (147) $ (844) $ 4,887
Net loss (Restated) - - - - - - (3,162) - - - - - - - - - (3,162)
Issuance of 142,461 shares
(Note 9) 1 447 - - - - - - - - - - - - 448
Payments on ESOP debt - - - - - - - - - - - - - - - 677 677
Translation adjustment (Note 4) - - - - - - - - - (9) - - - - - - (9)
--------------------------------------------------------------------------------------------------------------------------
Balance, May 31, 1994 (Restated)$ 28 $ 15,472 $(12,378) $ 33 $ (147) $ (167) $ 2,841
Net loss - - - - - - (3,062) - - - - - - - - - (3,062)
Issuance of 111,125
shares (Note 9) 1 337 - - - - - - - - - - - - 338
Reissuance of 10,000 shares - - - - - - - - - - - - 18 - - - 18
Payments on ESOP debt - - - - - - - - - - - - - - - 167 167
Preferred stock dividend - - - - - - (130) - - - - - - - - - (130)
Translation adjustment (Note 4) - - - - - - - - - 224 - - - - - - 224
--------------------------------------------------------------------------------------------------------------------------
Balance, May 31, 1995 $ 29 $ 15,809 $ (15,570) $ 257 $ (129) $ - - - $ 396
</TABLE>
See Notes to Financial Statements
F-8
<PAGE> 21
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Years Ended May 31, 1995 1994 1993
(Restated)
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net loss $ (3,062) $ (3,162) $ (4,048)
Adjustments to reconcile net loss to net cash
provided by (used in) operations:
Depreciation 1,569 1,798 2,103
Amortization 442 344 488
Accretion of discount on debt and preferred stock 623 505 519
Loss on sale of assets and businesses - - - 454 471
Deferred income taxes - - - - - - 140
Undistributed earnings of affiliates (82) (171) (13)
Effect of accounting change - - - - - - 262
----------------------------------------------------------------------------------------------------------------------------
(510) (232) (78)
Changes in assets and liabilities:
Trade receivables (1,936) 1,303 728
Notes and other receivables 115 (59) (376)
Income taxes receivable 176 1,327 (1,201)
Inventories (2,857) (1,910) 2,593
Accounts payable and accrued expenses 2,710 93 (1,360)
Customer deposits and progress billings 809 413 (1,613)
Other, net 133 (486) (127)
----------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (1,360) 449 (1,434)
----------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from the sales of investments and other assets - - - 1,000 4,249
Dividends received from affiliates 34 11 584
Purchases of property and equipment (769) (819) (271)
Other, net (44) 319 (91)
----------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (779) 511 4,471
----------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net borrowings (repayments) under
revolving credit agreements (19) 168 322
Repayments of long-term debt (2,180) (3,814) (3,133)
Proceeds from long-term debt - - - 1,313 414
(Increase) decrease in cash restricted for debt repayment 973 (1,959) - - -
Issuance of preferred stock 1,827 1,472 - - -
Dividends on preferred stock (130) - - - - - -
Issuance of common stock 356 448 9
Reduction of ESOP debt guarantee 167 677 538
----------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 994 (1,695) (1,850)
----------------------------------------------------------------------------------------------------------------------------
CASH
Increase (decrease) (1,145) (735) 1,187
Beginning balance 1,304 2,039 852
----------------------------------------------------------------------------------------------------------------------------
Ending Balance $ 159 $ 1,304 $ 2,039
============================================================================================================================
</TABLE>
See Notes to Financial Statements
F-9
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND
SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS:
The Company designs, engineers and manufactures metal processing machinery
and computer-controlled fabrication systems and sells primarily to customers
that manufacture products from sheet metal coils and blanks.
SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION:
The financial statements include the accounts of Met-Coil Systems
Corporation and its subsidiaries, all of which are wholly-owned. All material
intercompany transactions have been eliminated.
CASH AND CASH EQUIVALENTS:
For purposes of reporting cash flows, the Company considers all cash
accounts, which are not subject to withdrawal restrictions or penalties, and
all highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
INVENTORY VALUATION:
Inventories are valued at the lower of cost or market. Cost is determined
using the last-in, first-out (LIFO) method.
REVENUE RECOGNITION:
Revenues are recorded at the time shipments are made except for long-term
contracts for which the percentage-of-completion method of accounting is
applicable.
Under the percentage-of-completion method of accounting, revenue is
recognized based on engineering and manufacturing costs incurred to date
compared to total estimates for such costs. Changes to total estimated costs
and anticipated losses, if any, are recognized in the period determined.
INVESTMENTS IN AND ADVANCES TO AFFILIATE:
The Company has a 50% equity interest in Met-Coil Limited (Japan) for which
it uses the equity method of accounting. (See Note 4 regarding disposition of
interests in other affiliates)
PROPERTY AND EQUIPMENT:
Property and equipment is carried at cost. Depreciation of property and
equipment is computed primarily by the straight-line method over the following
estimated useful lives.
<TABLE>
<CAPTION>
Years
-------
<S> <C>
Buildings and building improvements 10 - 25
Machinery and equipment 3 - 10
Office furniture and equipment 4 - 10
</TABLE>
INTANGIBLES:
Intangibles, which consist primarily of a license agreement (see Note 12)
and the excess of purchase price over fair market value of net assets acquired,
are being amortized by the straight-line method over periods ranging from 10
to 40 years. The Company evaluates intangibles continually to determine
whether any impairment has occurred. This review takes into consideration the
recoverability of the unamortized amounts based on the estimated undiscounted
cash flows of the related product lines.
PENSION PLANS:
The Company's funding policy is to make the minimum annual contributions
that are required by applicable regulations.
ENVIRONMENTAL:
Expenditures that relate to current operations are expensed or capitalized
as appropriate. Expenditures that relate to an existing condition caused by
past operations, and which do not contribute to current or future revenue
generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable, and the costs can be
reasonably estimated. Generally, the timing of these accruals coincides with
completion of a feasibility study or the Company's commitment to a formal plan
of action.
F-10
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS, CONTINUED
INCOME TAXES:
Deferred income taxes are provided for the difference in the periods in
which certain items of revenue and expense (principally depreciation,
settlement expense and amortization) enter into the determination of income for
financial statement and income tax reporting purposes.
No deferred income taxes have been recognized on the equity in the
undistributed net income of domestic subsidiaries because the Company files a
consolidated income tax return.
TRANSLATION OF FOREIGN CURRENCIES:
Asset and liability accounts of foreign equity-method investees and the
foreign consolidated subsidiary are translated to U.S. dollars using rates of
exchange in effect at the balance sheet date. Income statements are translated
at average exchange rates during the year. Adjustments arising from
translation of the balance sheets to U.S. dollars are included in stockholders'
equity.
LOSS PER SHARE:
Loss per common share during each of the periods presented is based on the
weighted average number of shares outstanding and common stock equivalents of
dilutive stock options using the treasury stock method.
NOTE 2. PRIOR PERIOD ADJUSTMENT
The Company has restated its previously issued fiscal 1994 financial
statements to increase cost of goods sold and decrease work-in-process
inventory at May 31, 1994, as a result of improperly relieving inventory for the
cost of items shipped to customers. This adjustment reduced previously
reported 1994 retained earnings by $578,000 and increased previously reported
1994 loss before income taxes and net loss by $578,000. This adjustment also
increased the net loss per common share to $1.16 from $.95
NOTE 3. SUPPLEMENTAL ASSET DATA
ACCOUNTS RECEIVABLE:
Amounts shown for trade receivables are net of allowances of $222,000 and
$286,000 for 1995 and 1994, respectively.
INVENTORIES:
The composition of the inventories at May 31, using the FIFO method, which
approximates replacement cost, is as follows:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
--------- ----------
<S> <C> <C>
Raw materials and parts $ 9,840 $ 7,498
Work in process 2,507 2,841
Finished goods 827 498
--------- ----------
13,174 10,837
Reduction (increase) to LIFO basis (91) 429
--------- ----------
$ 13,265 $ 10,408
========= ==========
</TABLE>
LICENSE FEE AND INTANGIBLES:
Amounts shown for the license fee are net of accumulated amortization of
$769,000 and $538,000 for 1995 and 1994, respectively and the amounts shown for
intangibles are net of accumulated amortization of $1,502,000 and $1,291,000
for 1995 and 1994, respectively.
NOTE 4. SUBSIDIARIES AND AFFILIATES
WHOLLY-OWNED SUBSIDIARIES:
The Company has four wholly-owned subsidiaries: Iowa Precision Industries,
Rowe Machinery & Automation, The Lockformer Company, and Lockformer Europe,
which also has a branch doing business as Met-Coil Europe.
SALE OF ROPER WHITNEY SUBSIDIARY:
In December, 1993, the Company sold the business operations of Roper Whitney
Company ("Roper Whitney"), a wholly owned subsidiary. The sale included most
assets and liabilities of Roper Whitney, excluding trade accounts receivable.
The Company received $1,000,000 in cash at closing and a note receivable, due
over a period of five years, for $875,000. In connection with the sale, the
Company recognized a loss of $454,000 due primarily to termination benefits
paid former employees and the liquidation of inventory.
F-11
<PAGE> 24
AFFILIATES:
A summary of combined financial information of the affiliates accounted for
by the equity method is set forth below:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Current assets $ 6,755 $ 6,577 $ 3,848
Noncurrent assets 370 324 366
--------- --------- ---------
Total assets $ 7,125 $ 6,901 $ 4,214
--------- --------- ---------
Current liabilities $ 4,758 $ 5,040 $ 2,751
Noncurrent liabilities - - - - - - - - -
--------- --------- ---------
Total liabilities 4,758 5,040 2,751
Stockholders' equity 2,367 1,861 1,463
--------- --------- ---------
$ 7,125 $ 6,901 $ 4,214
--------- --------- ---------
Net sales 9,270 $ 11,416 $ 7,044
Gross profit 3,192 3,602 2,495
Net income 164 289 27
</TABLE>
During 1995 the Company received dividends from Met-Coil Ltd. of $34,000 and
in 1994 $11,000. The Company's retained earnings include approximately
$745,000, $663,000, and $540,000 of equity in net income of Met-Coil Ltd. at
May 31, 1995, 1994, and 1993 respectively.
NOTE 5. DEBT
REVOLVING LINES OF CREDIT:
At May 31, 1995 the Company had revolving credit agreements with two banks
under which it could borrow up to $2,000,000 from each bank in current notes
payable. Borrowings, which can be utilized in the form of a letter of credit
facility, are limited pursuant to a borrowing base formula (primarily a certain
percentage of eligible trade receivables), bear interest at the banks' prime
rate, plus 1.5% (the weighted average interest rate was 10.5% at May 31, 1995
and 8.75% at May 31, 1994), require compensating balances of 5% of the
committed revolving lines of credit, and require the payment of certain fees.
As of May 31, 1995 there was $3,571,000 in borrowings outstanding under these
lines. These credit agreements expire on September 30, 1995. As of May 31,
1995 the Company was not in compliance with various debt covenants. See
"Senior Debt" and "Liquidity and Management Plans" below.
LONG-TERM DEBT:
Long-term debt as of May 31 consisted of the following:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
--------- ---------
<S> <C> <C>
Senior notes (A) $ 12,750 $ 13,500
Litigation Settlement (Note 12) 4,080 4,454
First mortgage on unimproved land (B) 1,300 1,300
ESOP guarantee (Note 7) - - - 167
Industrial revenue bonds (C) 400 466
Real estate contract, installments through May, 1997
with interest rate of 9% 114 181
Equipment notes, contracts payable and other, due in
various installments, including interest at 8% to 12% 68 158
--------- ---------
$ 18,712 $ 20,226
Less current maturities 14,874 3,424
--------- ---------
$ 3,838 $ 16,802
--------- ---------
Cash restricted for payment of debt (D) $ 986 $ 1,959
========= =========
</TABLE>
(A) The Company has $12,750,000 of senior notes with two insurance companies.
Interest is at 11% payable quarterly. The notes are due in annual
payments of $750,000, increasing to $1,000,000 in October, 1996, with the
remaining principal due in October, 2001. As of May 31, 1995 the Company
was not in compliance with various covenants of the senior notes. Since
waivers of these covenants have not been obtained, $12,000,000 of senior
notes have been classified as current. See "Senior Debt" and "Liquidity
and Management Plans" below.
F-12
<PAGE> 25
(B) The Company obtained a first mortgage on unimproved land adjacent to the
Lockformer plant. The mortgage is held by a trust of which the trustee is
a director of the Company. Effective August 28, 1995 the mortgage note
was renegotiated with interest only payments through August 28, 1996 at
prime rate (per Wall Street Journal) plus 5 1/4%, however such rate of
interest shall not be less than 11%, with principal due August 28, 1996.
(C) The Company has obtained an Economic Development Limited Obligation
Revenue Bond with a floating interest rate of 85.02% of the prime rate
(current effective rate is 7.65% at May 31, 1995) with interest payable
quarterly. The bond is due in eleven annual payments of approximately
$67,000 through December 1, 2000. This loan agreement contains various
restrictive covenants, all of which were complied with for the year ended
May 31, 1995. This agreement is collateralized by land and buildings with
a net book value of approximately $575,000 at May 31, 1995.
(D) At May 31, 1995 the Company has $986,000 in funds that have been
restricted by the Company's lenders to be used to pay the maturing
obligations under the senior notes. The funds represent a portion of the
proceeds from the Roper Whitney sale (see note 4) and federal tax refunds.
The aggregate maturities of the long-term debt for years ending May 31 are as
follows:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
1996 14,874
1997 775
1998 615
1999 561
2000 512
Thereafter 1,375
--------
$ 18,712
--------
</TABLE>
SENIOR DEBT (terms and conditions):
The covenants and other provisions of both the senior notes payable
agreements and revolving credit agreements (described above) are substantially
the same.
Borrowings are collateralized by substantially all of the Company's assets.
The agreements contain various restrictive covenants, which among other things,
prohibit the payment of dividends, specify the application of proceeds from
significant asset sales (primarily to the reduction of senior debt), and
require the maintenance of certain financial ratios and amounts. At May 31,
1995 the Company was not in compliance with various financial covenants. See
"Liquidity and Management Plans" below.
LIQUIDITY AND MANAGEMENT PLANS
The Company's viability as a going concern is dependent upon the extension
or restructuring of its obligations and ultimately, a return to profitability.
As of May 31, 1995 the Company had a working capital deficiency of $5,270,000,
resulting from $12,000,000 of the senior notes being classified as current due
to noncompliance with certain financial debt covenants, and negative cash flows
from operating activities of $1,360,000 for 1995.
The Company is currently negotiating with banks party to the revolving
credit agreement, other financial institutions, and the holders of its senior
notes in an effort to restructure the current facilities or refinance the debt.
The Company believes that agreements will be reached in the near future and,
that until the agreements are finalized, existing cash balances and anticipated
cash receipts will be adequate to cover operating requirements including debt
service. In the event the current agreements are not extended or replaced, the
Company would be required to raise additional capital to continue to meet
operating and debt service requirements. There are no assurances that the
Company would be able to raise additional capital.
Additionally, the Company has implemented a cost reduction plan to
centralize certain operations and functions of its three domestic subsidiaries,
and is pursuing the sale of certain assets and product lines, the proceeds of
which will be used to reduce the overall debt of the Company. However, there
are no assurances that the sales of assets can be successfully accomplished on
terms acceptable to the Company.
F-13
<PAGE> 26
NOTE 6. INCOME TAXES
Effective June 1, 1991, the Company adopted Statement of Financial
Accounting Standards No. 109 (FAS 109) "Accounting for Income Taxes." The
adoption of FAS 109 changes the Company's method of accounting for income taxes
from the deferred method (APB 11) to an asset and liability approach.
Previously the Company deferred the past tax effects of timing differences
between financial reporting and taxable income. The asset and liability
approach requires the recognition of deferred tax liabilities and assets for
the expected future tax consequences of temporary differences between the
adjusted carrying amounts and the tax bases of other assets and liabilities.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expense is the tax
payable or refundable for the period plus or minus the change during the period
in deferred tax assets and liabilities.
The principal effect of adopting FAS 109 was to adjust the recorded amounts
of assets acquired in prior business combinations from their net-of-tax amounts
to their pretax amounts and to recognize the effect of the change in the
enacted tax rates. The effect of the change in the enacted tax rates relates
principally to the adjustment applied to the prior business combinations, and
it has been recorded as a cumulative effect of a change in accounting principle
of $579,000 for the year ended May 31, 1992.
In adopting FAS 109, the Company increased the carrying amounts of assets
purchased in prior business combinations by $3,228,000, with an offsetting
credit to deferred tax liabilities of $2,649,000, with the remaining credit of
$579,000 recorded as a cumulative effect of a change in accounting principle.
The provision for income tax credits is made up of the following components
for the years ended May 31:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
---------- ----------- -----------
<S> <C> <C> <C>
Current tax expense (credit):
Federal $ - - - $ (494) $ (1,581)
State - - - (71) - - -
Foreign - - - - - - 91
---------- ----------- -----------
- - - (565) (1,490)
Deferred tax expense (credit): - - - - - - 140
---------- ----------- -----------
$ - - - $ (565) $ (1,350)
---------- ----------- -----------
</TABLE>
Deferred tax expense (credit) results from temporary differences in the
recognition of revenue and expense for income tax and financial statement
purposes. The sources of these differences and the tax effect of each are as
follows for the years ended May 31:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
----------- --------- -------------
<S> <C> <C> <C>
Excess of tax over book depreciation $ (189) $ (523) $ (281)
Change in basis difference of inventory 128 116 (167)
Accruals not currently deductible 72 193 (87)
Investments in affiliates 348 (74) (461)
Settlement expense not deductible until paid 207 512 (27)
Net operating loss carryforwards (1,488) (753) 153
Tax credit carryforwards (320) - - - (81)
Deferred tax asset valuation allowance 1,065 475 1,001
Other 177 54 90
----------- --------- -------------
$ - - - $ - - - $ 140
----------- --------- -------------
</TABLE>
F-14
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Deferred tax (liabilities) assets are composed of the following as of May 31:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
--------- -----------
<S> <C> <C>
Liabilities:
Basis difference of property and equipment $ (1,863) $ (2,052)
Basis difference of inventory (378) (250)
Undistributed earnings of affiliates (326) - - -
Other (69) - - -
--------- -----------
Gross deferred tax liabilities (2,636) (2,302)
--------- -----------
Assets:
Net operating loss carryforwards 3,703 2,215
Settlement loss 873 1,080
Various accruals not presently deductible 400 472
Tax credit carryforwards 724 404
Undistributed losses of affiliates - - - 22
Other - - - 108
--------- -----------
Gross deferred tax assets 5,700 4,301
Deferred tax assets valuation allowance (3,504) (2,439)
--------- -----------
Net deferred tax assets 2,196 1,862
--------- -----------
Net deferred tax liabilities $ (440) $ (440)
--------- -----------
</TABLE>
Total reported income tax (credits) applicable to the Company's operations
varies from the amount that would have resulted by applying the federal income
tax rate of 34% to loss before income tax credits for the following reasons for
the years ended May 31:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
---------- --------- ---------
<S> <C> <C> <C>
Income tax credit at statutory
federal income tax rate $ (1,041) $ (1,267) $ (1,835)
State tax credit, net of federal tax (31) (47) (33)
Deferred tax asset valuation allowance increase 1,065 475 1,001
Nondeductible amortization of intangibles 34 34 34
Rate differential on loss carrybacks - - - 203 (168)
Foreign taxes - - - - - - 91
Reversal of under (over) accruals from prior years - - - 27 (459)
Equity in net income from affiliates - - - - - - - - -
Other (27) 10 19
---------- --------- ---------
$ - - - $ (565) $ (1,350)
---------- --------- ---------
</TABLE>
At May 31, 1995 the Company has tax net operating loss carryforwards of
$10,600,000 available under provisions of the Internal Revenue Code to be
applied against future federal taxable income. These carryforwards expire
through May 31, 2010.
At May 31, 1995 the Company also has approximately $ 76,000 of alternative
minimum tax (AMT) credit carryforwards available to offset regular tax in
future years to the extent that the regular tax exceeds AMT. The credits do
not have expiration dates. The Company also has approximately $648,000 of
general business credit carryovers which expire through May 31, 2000.
NOTE 7. RETIREMENT PLANS
EMPLOYEE STOCK OWNERSHIP PLAN:
The Company has an Employee Stock Ownership Plan (ESOP) for the benefit of
employees who meet the eligibility requirements. The Plan holds 240,410 shares
of common stock. The common stock was acquired by the Plan by using the
proceeds from a note obtained from a commercial lender. The note is
collateralized by the stock which has not been allocated to individual
participant accounts. The Company makes cash payments to the Plan, consisting
of contributions and dividend payments, in amount sufficient for it to satisfy
the debt service requirements. Accordingly, the debt has been recorded in the
accompanying consolidated balance sheets. The debt is reduced as the Plan
makes principal payments.
F-15
<PAGE> 28
The note payable referred to above bears interest at 90% of the lender's
prime rate (current effective rate is 6.97%) payable quarterly. Principal
payments of $295,000 had been due annually. During the year ended May 31, 1995
the Company paid off the balance of the note.
Cash contributions to the Plan were $167,000, $675,000, and $626,000 for the
years ended May 31, 1995, 1994 and 1993, respectively. For financial statement
purposes, expense for the Plan is determined based on the percentage of shares
allocated to participants each period (allocations are based on scheduled
principal and interest payments) times the original amount of the debt plus the
interest incurred. Cash contributions of $349,000 are reflected as prepaid at
May 31, 1995. The components of the amount charged to expense for the years
ended May 31, are as follows:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Compensation $ 295 $ 295 $ 295
Interest 6 29 88
------- ------- -------
$ 301 $ 324 $ 383
------- ------- -------
</TABLE>
PROFIT-SHARING 401(K) PLAN:
The Company has a qualified profit-sharing plan under Internal Revenue Code
Section 401(k) for those employees who meet certain eligibility requirements
set forth in the plan. The Company makes contributions to the plan based upon
predetermined percentages of the employees' compensation. Additional amounts
may be contributed at the option of the Company's Board of Directors. The
retirement expense for the fiscal years ended May 31, 1995, 1994 and 1993 was
$367,000, $377,000 and $353,000, respectively.
DEFINED BENEFIT PLANS:
The Company's Lockformer subsidiary has two defined benefit pension plans
covering substantially all of its employees. The following table includes
aggregate amounts for the plans' funded status and amounts recognized in the
accompanying financial statements as of May 31, 1995 and 1994:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
---------- ----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits 1995 $(2,246); 1994 $(2,232) $ (2,259) $ (2,280)
---------- ----------
Projected benefit obligation $ (2,259) $ (2,280)
Plan assets at fair value (consisting primarily of
fixed income obligations) 2,674 2,681
---------- ----------
Plan assets in excess of projected benefit obligation $ 415 $ 401
Unrecognized net gain (196) (222)
Unrecognized prior service cost 14 15
Unrecognized transition asset (84) (93)
---------- ----------
Prepaid expense included on balance sheet $ 149 $ 101
---------- ----------
</TABLE>
Net pension cost (credit) for 1995 and 1994 includes the following
components:
[CAPTION]
<TABLE>
(in thousands) 1995 1994
---------- ----------
<S> <C> <C>
Service cost $ 155 $ 40
Interest cost on projected benefit obligation 45 43
Actual return on plan assets (119) (98)
Net amortization and deferral (118) (15)
---------- ----------
$ (37) $ (30)
---------- ----------
</TABLE>
During 1993 Lockformer curtailed one of the defined benefit pension plans
and recognized a curtailment loss of $107,000. The plan was frozen on May 31,
1994, and, when finally settled, any additional gains or losses are not
expected to be significant to the Company's operations.
Assumptions used by the Company in the determination of pension plan
information consisted of the following as of May 31:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Discount rate 8.0% 7.5% 7.0%
Expected long-term rate of return 9.0 9.0 9.0
Long-term inflation rate 5.5 5.5 5.5
</TABLE>
F-16
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 8. POSTRETIREMENT BENEFITS
The Company has been providing postretirement health insurance for a limited
group of current retirees. Effective May 31, 1993 the Company provided
benefits pursuant to a fixed payment schedule per participant which is immune
to inflationary pressures.
Also effective June 1, 1992 the Company adopted Statement of Financial
Accounting Standards No. 106 "Employers' Accounting for Postretirement
Benefits" (FAS 106) which requires the cost of providing such postretirement
benefits over the retirees' average remaining life expectancy be accrued,
rather than charged to expense as incurred. In applying FAS 106, the Company
immediately recognized the Accumulated Postretirement Benefit Obligation (APBO)
of $262,000 or $.10 per share, as a change in accounting principle. A discount
rate of 8% was used to determine the APBO. The APBO was $207,000 and $233,000
at May 31, 1995, and 1994 respectively.
NOTE 9. CAPITAL STOCK AND EARNINGS PER SHARE
OPTIONS:
Effective June 4, 1993 the Company adopted the 1993 Employee Stock Option
Plan due to the expiration of the 1983 Incentive Stock Option Plan. Under the
terms of the plan options to purchase 300,000 shares of the Company's common
stock at fair market value at the date of grant may be granted to employees of
the Company. At May 31, 1995, options for 293,000 shares at exercise prices
ranging from $1.625 to $6.75 per share had been granted and were outstanding,
150,375 of which were exercisable. The options become exercisable at the rate
of 25% per year, on a cumulative basis. As of May 31, 1995, 45,782 options
have been exercised.
EMPLOYEE STOCK TRUST:
The Company has a grantor trust, established May 31, 1993, to which it is
authorized to contribute up to 200,000 common shares. In August 1994, the
Company issued an additional 200,000 shares to the Trust. The proceeds from
the market sale of the shares over time, at expected appreciated values, will
be used to fund various employee benefits. During the year ended May 31, 1995,
92,903 common shares were issued to the Company's 401(k) plan and 15,878 common
shares were issued to fund other benefits.
NOTE 10. PREFERRED STOCK - REDEEMABLE, CONVERTIBLE
The Company has authorized 1,000,000 shares of $1 par value preferred stock.
During the years ended May 31, 1995 and 1994 the Company issued 200,000 and
162,000 shares of preferred stock respectively, at $10 per share ($10
liquidation value per share). The preferred stock provides for cumulative
annual dividends of 6% payable semi-annually. The preferred stock is
convertible into three shares of common stock at anytime at the option of the
holder. After December 31, 1998 either the Company or the holder may redeem
the preferred stock at a redemption price of $13 per share, plus accumulated
unpaid dividends.
The Company is increasing the carrying amount of the preferred stock, using
the interest method, so that the carrying amount will equal the redemption
amount of $4,706,000 at December 31, 1998.
NOTE 11. EXPORT SALES
Export sales by geographical area for the years ended May 31 are:
<TABLE>
<CAPTION>
(In Thousands) 1995 1994 1993
------------------- -------------------- -------------------
Amount % * Amount % * Amount % *
--------- ----- ---------- ----- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Canada $ 1,180 3% $ 1,240 3% $ 2,007 4%
Europe 3,592 8 1,525 4 2,833 6
Far East 1,477 3 2,672 6 1,120 2
Australia 319 1 32 - - - 37 - - -
Central/South America 316 1 818 2 1,334 3
Other 347 1 1,033 2 1,585 3
--------- --- -------- --- --------- ---
$ 7,231 17% $ 7,320 17% $ 8,916 18%
========= === ======== === ========= ===
</TABLE>
* Percent to net sales
F-17
<PAGE> 30
NOTE 12. LITIGATION AND CONTINGENT LIABILITIES
SETTLEMENT AGREEMENT:
In January 1992, the Company and its Lockformer subsidiary reached an out of
court settlement, pursuant to a Settlement Agreement, with Construction
Technology Inc. ("CTI") with respect to two lawsuits filed against the Company,
Lockformer and an unrelated supplier, by CTI, alleging patent infringement,
unfair competition and related claims relating to the Company's Vulcan cutting
system. Under the terms of the Settlement Agreement, CTI granted Lockformer a
personal, non-exclusive and non-transferrable, royalty-bearing license, without
the right of sublicense, to manufacture, use and sell HVAC CAM systems
currently sold by Lockformer under the trade name "Vulcan" and new systems
Lockformer designs within the scope of the patents that were the subject of the
litigation. Subject to the timely payment of obligations under the Settlement
Agreement, CTI agreed to cease its efforts to enforce its October 1991
judgment, which was for $24,202,000. In return, Lockformer agreed to pay to
CTI, in addition to royalties due under the license granted to Lockformer
(which royalty amounts per transaction vary depending on domestic or foreign
destination and/or full [new unit] or partial [replacement components] Vulcan
sold), (i) $2,500,000 (plus prime interest on $1,900,000 until paid) by January
27, 1994 ; ( (ii) $600,000 per year for fifteen (15) years beginning January
27, 1992 ($400,000 of the initial payment being credited against royalties due
under the license for the first year), and (iii) $500,000 on January 27, 2007
(see comments below). All of the foregoing scheduled payments, other than that
referred to in item (i), are non-interest bearing. The agreement provides for
prepayments equal to (i) 25% of Lockformer's pre-tax profits exceeding $600,000
up to $1.0 million in any single fiscal year; (ii) 35% of its pre-tax profits
exceeding $1.0 million in any single fiscal year; (iii) 50% of the profits of
any sale of its capital assets other than trade-ins of capital assets for
upgrades or replacements; and (iv) 30% of any non-recurring gains of Lockformer
other than those resulting from trade-ins of capital assets for upgrades or
replacements. To collateralize these obligations, Lockformer has granted CTI a
second lien on all of its assets.
Under the terms of the Settlement Agreement, the unrelated supplier agreed
to pay CTI $100,000 by January 27, 1993 and $50,000 each year for 15 years
beginning January 27, 1993 (which amounts the Company believes the supplier
will be able to pay).
The Company guaranteed Lockformer's and the unrelated supplier's obligations
under the settlement agreement and issued CTI 200,000 unregistered shares of
common stock pursuant to a Shareholders Agreement which restricts CTI's resale
of the shares, grants CTI limited registration and preemptive rights with
respect to newly issued common stock, restricts the Company's payment of cash
dividends or other distributions above $.12 per share per year and restricts
the creation of new liens on the Company's assets without CTI's approval. The
Shareholders Agreement terminates upon the payment of all obligations under the
Settlement Agreement. As a result of the above settlement the Company recorded
the following items in fiscal 1992:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Debt (present value of required payments
at 11% discount rate) $ 7,323
Common shares (200,000 issued) 250
---------
Total settlement 7,573
Prepaid royalty (400)
License fee (2,500)
---------
Settlement expense $ 4,673
---------
</TABLE>
In December 1994, the Company and CTI amended the payment terms which
increased the annual payment amount to $675,000 payable annually beginning on
January 27, 1995 through January 27, 2005 with a final payment of $175,000 due
January 27, 2006.
The cost of the license was determined by CTI in conjunction with the
Settlement Agreement. The Company is amortizing the license fee straight line
over the life of CTI's patent, and believes it is properly reflecting its
value.
GENERAL:
The Company is subject to various legal actions, governmental
investigations, and proceedings relating to various matters incidental to its
business including product liability and environmental claims. The Company
intends to vigorously defend these matters. While the outcome of such matters
cannot be predicted with certainty, in the opinion of management, after
reviewing such matters and consulting with the Company's counsel and insurers,
any liability which may ultimately be incurred, is not expected to materially
affect the consolidated financial position of the Company.
F-18
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 13. LEASES
The Company leases a building under a noncancellable agreement expiring on
April 1, 1998 and requiring annual rentals of $340,000 plus payment of property
taxes, maintenance and insurance. In connection with the sale of Roper Whitney
(see Note 4) the Company entered into a sublease with the buyer which
generally reflects the rents and terms of the original building lease. The
minimum rental commitments for this operating lease are:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
1996 340
1997 340
1998 283
-------
$ 963
-------
Amounts due under sublease $ 963
-------
</TABLE>
The Company also leases automobiles and other facilities and equipment on
short-term leases.
Total net rental expense for fiscal years 1995, 1994, and 1993 is $56,000,
$377,000, and $536,000, respectively.
NOTE 14. SUPPLEMENTAL CASH FLOW DATA
Supplemental data for years ended May 31 are:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
--------- ---------- ----------
<S> <C> <C> <C>
Cash payments (receipts) for:
Interest $ 2,101 $ 2,018 $ 2,062
--------- ---------- ----------
Income tax refunds $ (176) $ (1,850) $ (370)
--------- ---------- ----------
</TABLE>
Supplemental data of noncash operating, investing and financing activities:
During the year ended May 31, 1995 the Company realized a foreign currency
translation adjustment of $224,000.
During the year ended May 31, 1994 the Company sold certain assets and
liabilities of Roper Whitney for cash of $1,000,000, a note receivable of
$875,000 and recognized a loss on the sale of $454,000. The assets sold were:
inventories $2,876,000, plant and equipment, net $1,315,000, and other assets
$133,000. The liabilities assumed by the buyer were: accounts payable
$1,306,000, long-term debt $622,000, and other liabilities $67,000.
During the year ended May 31, 1993 the Company incurred long-term debt of
$120,000 in connection with the purchase of a technology agreement and realized
a deferred foreign currency translation adjustment of $176,000.
F-19
<PAGE> 32
NOTE 15. QUARTERLY DATA (UNAUDITED)
Summarized unaudited quarterly financial information for fiscal years ended
May 31:
<TABLE>
<CAPTION>
Quarters
---------------------------------
(in thousands except per share data) First Second Third Fourth
---------- --------- ----------- ---------
<S> <C> <C> <C> <C>
1995:
Net revenue $ 9,458 $ 11,049 $ 10,863 $ 12,405
Gross profit 2,738 2,539 2,531 1,651
Net loss (91) (463) (438) (2,070)
Net loss Per Share: (0.04) (0.17) (0.17) (0.74)
1994:
Net revenue $ 12,550 $ 12,189 $ 8,563 $ 9,292
Gross profit 3,104 2,525 2,223 1,137
Net income (loss) 69 (664) (776) (1,791)
Net income (loss) Per Share: 0.03 (0.25) (0.28) (0.66)
</TABLE>
FISCAL 1995
Quarterly results for the first three quarters have been restated to reflect an
adjustment related to the misstatement of inventory as a result of improperly
relieving inventory for the cost of items shipped to customers. In addition,
the second quarter reflects an adjustment to increase a reserve for an
environmental matter that had previously been reduced. These items resulted in
charges to operations of $143,000 or $.06 per share in the first quarter,
$778,000 or $.27 per share in the second quarter and $459,000 or $.18 per share
in the third quarter.
FISCAL 1994
The fourth quarter for fiscal 1994 has been restated to reflect the adjustment
related to the misstatement of inventory as described above.
F-20
<PAGE> 33
Report of Independent Auditors on the Financial Statement Schedules
We have audited the accompanying consolidated financial statements of Met-Coil
Systems Corporation as of May 31, 1995 and 1994 and for each of the three years
in the period ended May 31, 1995, and have issued our report thereon dated July
31, 1995 (included elsewhere in this Form 10-K). Our audits also included the
financial statement schedule listed in Item 14(a) of this Form 10-K as of May
31, 1995 and for each of the three years in the period ended May 31, 1995.
This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audit.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
Des Moines, Iowa
July 31, 1995
F-21
<PAGE> 34
MET-COIL SYSTEMS CORPORATION
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In Thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- -------- -------- -------- -------- --------
CHARGED
BALANCE AT TO CHARGED BALANCE
BEGINNING COST AND TO OTHER AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
----------- ---------- -------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts, year ended
May 31, 1995 $ 286 $ 149 $ --- $ 213 $ 222
======== ======== ======= ======== =======
Allowance for doubtful
accounts, year ended
May 31, 1994 $ 355 $ 154 $ --- $ 223 $ 286
======== ======== ========== ======== =======
Allowance for doubtful
accounts, year ended
May 31, 1993 $ 217 $ 388 $ --- $ 243 $ 355
======== ======== ========== ======== =======
</TABLE>
F - 22
<PAGE> 35
INDEX TO EXHIBITS
FORM 10-K FOR YEAR ENDED MAY 31, 1995
Exhibit No. Description
3.1 Restated Certificate of Incorporation of the Registrant,
as amended--incorporated by reference to Exhibit 3.2 of
the Registrant's Quarterly Report on From 10-Q for the
quarter ended Nov. 30, 1987.
3.2 Amended and Restated Bylaws of the
Registrant--incorporated by reference to Exhibit 3.4 of
Registrant's Quarterly Report on Form 10-Q for the quarter
ended November 30, 1987.
4.1 Article IV of the Registrant's Restated Certificate of
Incorporation (included in Exhibit 3.2 above).
4.2 The Registrant's $15 million Senior Notes due 2001, dated
October 1, 1989--incorporated by reference to Exhibit 4.2
of the Registrant's Annual Report on Form 10-K for the
fiscal year ended May 31, 1990.
10.1 The Registrant's 1983 Incentive Stock Option Plan--
incorporated by reference to Exhibit 4.1 of the
Registrant's Registration Statement on Form S-8 filed with
the Commission on January 15, 1988 (Registration No.
33-19651).
10.2 The Registrant's Incentive Compensation Plan--
incorporated by reference to Exhibit 4(a) of the
Registrant's Registration Statement on Form S-8 filed with
the Commission on April 6, 1987 (Registration No.
33-13014).
10.3 The Lockformer Company Employees Retirement Plan (as
amended and restated effective as of August 1, 1989). (6)
10.4 Met-Coil Systems Corporation Employee Stock Ownership Plan
and Trust--incorporated by reference to Exhibit 10.9 of
Amendment No. 1 to the Registrant's Registration Statement
on Form S-1 filed with the Commission on October 21, 1985
(Registration No. 2-99971).
10.7 Agreement, dated January 29, 1995, between The Lockformer
Company and District Lodge No. 8, International
Association of Machinists and Aerospace Workers.
10.8 Agreement, dated June 1, 1995, between Iowa Precision
Industries, Inc. and Local Union 263, Sheet Metal Workers
International Association.
10.9 Building Lease Agreement, dated April 11, 1988, by and
between Roper Whitney Corporation and Industrial
Machinery, Systems and Supply, Inc. (3)
10.10 Met-Coil Systems Corporation Non-Employee Director
Restricted Stock Plan, effective October 15,
1987--incorporated by reference to Exhibit 10.33 of the
Registrant's Annual Report Form 10-K for the fiscal year
ended May 31, 1988.
10.11 Met-Coil Systems Corporation Employee Stock Ownership
Trust Credit Agreement, dated May 31, 1988, by and between
Met-Coil Systems Corporation, The Lockformer Company, Iowa
Precision Industries, Inc., Roper Whitney Company, Mark
One Corporation, Rowe Machinery and Automation, Inc. and
Harris Trust and Savings Bank--incorporated by reference
to Exhibit 10.37 of the Registrant's Annual Report on Form
10-K for the fiscal year ended May 31, 1988.
10.12 Met-Coil Systems Corporation Guaranty and Assurance
Agreement, dated May 31, 1988, by Met-Coil Systems
Corporation, The Lockformer Company, Iowa Precision
Industries, Inc. and Roper Whitney Company--incorporated
by reference to Exhibit 10.38 of the Registrant's Annual
Report on Form 10-K for the fiscal year ended May 31,
1988.
10.13 First Amendment to the 1988 Guaranty and Assurance
Agreement, dated October 25, 1989, between the Registrant,
its operating subsidiaries and Harris Bank--incorporated
by reference to Exhibit 10.36 of the Registrant's Annual
Report on Form 10-K for the fiscal year ended May 31,
1990.
10.14 Second Amendment to the 1988 Guaranty and Assurance
Agreement, dated February 14, 1991, by and between the
Registrant, its operating subsidiaries and Harris Trust
and Savings Bank--incorporated by reference to Exhibit
10.34 of the registrant's Annual Report on Form 10-K for
the fiscal year ended May 31, 1991.
13
<PAGE> 36
10.15 Sixth Amendment to the 1988 Guaranty and Assurance
Agreement Dated September 10, 1993 and accompanying
renewal of revolving line of credit with Harris Bank,
collateral agent for the lenders. (5)
10.16 Stock Purchase Agreement, Dated April 14, 1989, between
the Registrant and Donaghys Limited, New Zealand with
regard to Scott Technology Ltd. (3)
10.18 Third Amendment to the 1985 Guaranty and Assurance
Agreement, dated February 14, 1991, by and between
Registrant, its operating subsidiaries and Harris Trust
and Savings Bank--incorporated by reference to Exhibit
10.35 of the registrant's Form 10-K for the fiscal year
ended May 31, 1991.
10.19 Guaranty and Assurance Agreement, dated December 20, 1985,
by the Registrant and its operating subsidiaries in favor
of Harris Trust and Savings Bank--incorporated by
reference to Exhibit 10.27 of Amendment No. 3 to the
Registrant's Registration Statement on Form S-1 filed with
the Commission on December 13, 1985 (Registration No.
2-99971).
10.20 First Amendment to Guaranty and Assurance Agreement, dated
April 9, 1987, among the Registrant, its operating
subsidiaries and Harris Trust Bank--incorporated by
reference to Exhibit 10.19 to Registrant's Annual Report
on Form 10-K for the fiscal year ended May 31, 1987.
10.21 Second Amendment to the 1985 Guaranty and Assurance
Agreement, dated October 25, 1989, among the Registrant,
its operating subsidiaries and Harris Trust
Bank--incorporated by reference to Exhibit 10.34 of the
Registrant's Annual Report on Form 10-K for the fiscal
year ended May 31, 1990.
10.22 First and Second Amendment to the 1985 Guaranty and
Assurance Agreement, dated October 25, 1989, among the
Registrant, its operating subsidiaries and Harris Trust
Bank--incorporated by reference to Exhibit 10.35 of the
Registrant's Form 10-K for the fiscal year ended May 31,
1990.
10.23 Met-Coil Systems Corporation Employee Stock Ownership
Trust Credit Agreement, dated Dec. 20, 1985, between
Met-Coil Systems Corporation Employee Stock Ownership Plan
and Harris Trust and Savings Bank--incorporated by
reference to Exhibit 10.26 of Amendment No. 3 to
Registrant's Registration Statement on Form S-1 filed on
Dec. 13, 1985 (Registration No. 2-99981).
10.24 Third Amendment to the Guaranty Agreement, dated February
14, 1991, among the Registrant, its operating subsidiaries
and Harris Trust Bank--incorporated by reference to
Exhibit 10.36 of the registrant's Annual Report on Form
10-K for the fiscal year ended May 31, 1991.
10.25 Met-Coil Systems Corporation Credit Agreement, dated
February 14, 1991 by and between the Registrant, its
operating subsidiaries and Firstar Bank Cedar Rapids, N.A.
(f/k/a Merchants National Bank)--incorporated by
reference to Exhibit 10.37 of the registrant's Annual
Report on Form 10-K for the fiscal year ended May 31,
1991.
10.26 First Amendment to the 1991 Credit Agreement, dated
February 14, 1991 by and between Registrant, its operation
subsidiaries and Firstar Bank Cedar Rapids, N.A. (f/k/a
Merchants National Bank)--incorporated by reference to
Exhibit 10.38 of the registrant's Annual Report on Form
10-K for the fiscal year ended May 31, 1991.
10.27 Settlement agreement among Construction Technology, Inc.,
Met-Coil Systems Corporation, The Lockformer Company,
Inc., and Mechanical Data, Inc., dated as of January 27,
1992. (4)
10.30 Release and technical agreements dated April 23, 1993, by
and between Met-Coil Systems Corporation, Donaghy's Ltd.,
and Scott Technology. (5)
10.31 Met-Coil Systems Corporation Retirement Plan as amended
and restated effective Sept. 16, 1992. (5)
10.32 The Registrant's 1993 Employee Stock Option Plan. (6)
10.33 Mortgage note agreement dated Feb.28,1994 between
Registrant and the John A. Carver 1983 Trust. (6)
10.34 Seventh Amendment to the 1988 Guaranty and Assurance
Agreement, dated April 12, 1994 by and between the
Registrant, its operating subsidiaries and Harris Trust &
Savings Bank. (6)
14
<PAGE> 37
10.35 Escrow Security Agreement between Registrant and Principal
Mutual Life Ins. dated May 5th, 1994. (6)
10.36 Escrow Security Agreement between Registrant and Modern
Woodmen of America dated Jul. 27,1994. (6)
10.37 Sixth Amendment to the 1989 Note Agreement by and between
Registrant, its operating units, Principal Life Insurance,
and Modern Woodmen of America dated April 29, 1994. (6)
10.38 First Amendment to Mortgage Note agreement dated Feb. 28,
1994, between registrant and the John A. Carver 1983 Trust.
10.39 The Lockformer Company Employees Pension Plan as amended
and restated effective June 28, 1987.
11 Statement of Computation of Per Share Earnings (Loss)
22 Subsidiaries of the Registrant
_________________________
(1) Exhibit is incorporated by reference to Exhibit 2 of the Registrant's
Current Report on Form 8-K dated Dec. 30, 1986 (as filed with the
Commission and amended on Jan. 14, 1987 and Mar. 13, 1987 respectively).
(2) Exhibit is incorporated by reference to Exhibit 2 of the Registrant's
Current Report on Form 8-K, dated April 27, 1987 (as filed with the
Commission and amended on April 26, 1988 and June 24, 1988).
(3) Exhibit is incorporated by reference to Exhibit 2 of the Registrant's
Current Report of From 8-K, dated May 1, 1989 (as filed with the
Commission on May 16, 1989).
(4) Exhibit is incorporated by reference to similarly numbered exhibit of the
registrant's Annual Report on Form 10-K for the fiscal year ended May 31,
1992.
(5) Exhibit is incorporated by reference to similarly numbered exhibit of the
registrant's Annual Report on Form 10-K for the fiscal year ended May 31,
1993.
(6) Exhibit is incorporated by reference to similarly numbered exhibit of the
registrant's Annual Report on Form 10-K for the fiscal year ended May 31,
1994.
15
<PAGE> 1
EXHIBIT 10.7
A G R E E M E N T
Between
THE LOCKFORMER COMPANY
And
DISTRICT LODGE NO. 8 OF THE
INTERNATIONAL ASSOCIATION OF
MACHINISTS AND AEROSPACE WORKERS,
AFL-CIO
January 29, 1995
<PAGE> 2
EXHIBIT 10.7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 - RECOGNITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 - MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 3 - MODIFIED UNION SHOP AND CHECK-OFF . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3.01 - Modified Union Shop . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3.02 - Check-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 4 - HOURS OF WORK AND OVERTIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 4.01 - Normal Workweek . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 4.02 - Hours of Work; Number of Shifts . . . . . . . . . . . . . . . . . . . . 2
Section 4.03 - Overtime Rates; Exceptions; No Pyramiding . . . . . . . . . . . . . . . 2
Section 4.04 - Division of Overtime . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.05 - Reporting Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.06 - Call Back Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 5 - WAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5.01 - Wage Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5.02 - Shift Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5.03 - Paid Lunch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5.04 - Wage Progression . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5.05 - Credit Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 6 - HOLIDAYS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 6.01 - Holidays Recognized; Eligibility for Holiday Pay . . . . . . . . . . . 5
Section 6.02 - Observance of Holidays during Vacation and
of Floating Holiday . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 6.03 - Worked Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 6.04 - Holiday Observance During Illness Leave . . . . . . . . . . . . . . . . 5
ARTICLE 7 - VACATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 7.01 - Eligibility; Amount . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 7.02 - Vacation Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 7.03 - Laid-off Employees' Vacation Pay . . . . . . . . . . . . . . . . . . . 6
</TABLE>
<PAGE> 3
ii
EXHIBIT 10.7
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 8 - SENIORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.01 - Definition; Ability Requirement . . . . . . . . . . . . . . . . . . . . 7
Section 8.02 - Probationary Period . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.03 - Loss of Seniority . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.04 - Layoffs; Recalls . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.05 - Emergency Layoffs . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.06 - Transfer Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Layoff conditions . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) Other conditions . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.07 - Filling Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8.08 - Shift Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 8.09 - Seniority Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 8.10 - Leaves of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 8.11 - Stewards Seniority . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 9 - GRIEVANCE PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 9.01 - Processing of Grievances . . . . . . . . . . . . . . . . . . . . . . . 10
Section 9.02 - Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Matters subject to arbitration . . . . . . . . . . . . . . . . . . 11
(b) Selection of an arbitrator . . . . . . . . . . . . . . . . . . . . 11
(c) Effect of award; limits upon arbitrator's authority . . . . . . . . 11
Section 9.03 - Time Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 9.04 - Representatives Designated . . . . . . . . . . . . . . . . . . . . . . 12
Section 9.05 - Presentation of Grievances; Discussions . . . . . . . . . . . . . . . . 12
ARTICLE 10 - NO STRIKE - NO LOCKOUT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 11 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 11.01 - Safety and Health . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 11.02 - Bulletin Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 11.03 - Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 11.04 - Jury Duty Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 11.05 - Funeral Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 11.06 - Late Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
<PAGE> 4
iii
EXHIBIT 10.7
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 12 - MEDICAL INDEMNITY PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 12.01 - Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 12.02 - Payment of Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 12.03 - National Health Insurance . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 13 - PENSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 13.01 - Continuation of Plan . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 13.02 - Retiree Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 14 - DURATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SCHEDULE A - Wage Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SCHEDULE B - Medical Indemnity Plan Modifications . . . . . . . . . . . . . . . . . . . . . . . . 17
SCHEDULE C - Monthly Benefits Under Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . 21
SCHEDULE D - 401(K) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ESOP Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
LETTER OF UNDERSTANDING RE: Payroll Deduction for Zenith Federal Credit Union . . . . . . . . . . . . . 23
LETTERS OF UNDERSTANDING RE: Miscellaneous Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
<PAGE> 5
EXHIBIT 10.7
A G R E E M E N T
This Agreement is entered into this 29th day of January, 1995, by and between
THE LOCKFORMER COMPANY of 711 Ogden Avenue, Lisle, Illinois, hereinafter
referred to as the "Company", and District Lodge No. 8 of the INTERNATIONAL
ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, AFL-CIO, hereinafter referred
to as the "Union".
ARTICLE 1: RECOGNITION
The Company recognizes the Union as the sole collective bargaining agent with
respect to wages, hours and working conditions of all production and
maintenance employees, excluding professional employees, guards and supervisors
as defined in the Act.
ARTICLE 2: MANAGEMENT
The Management of the plant and the direction of the working forces, including
the right to hire, promote, demote, transfer, suspend or discharge employees
for proper cause, or to release employees because of lack of work, or for other
legitimate reasons, or the right to introduce new or improved methods or
facilities, or to change existing production methods, and to manage the
properties in the traditional manner, is vested entirely in the Company,
provided that nothing herein shall be used in a manner inconsistent with any
other provisions of this Agreement.
ARTICLE 3: MODIFIED UNION SHOP AND CHECK-OFF
SECTION 3.01. MODIFIED UNION SHOP.
Employees who are members of the Union in good standing as of the date of the
execution of this Agreement, and all employees, who become members after said
date, shall as a condition of continued employment, maintain their membership
in the Union in good standing as to the payment of uniform initiation fees and
dues for the duration of this Agreement.
All new employees hired after the date of this Agreement must, after thirty
(30) days of employment, become and similarly remain members of the Union for
the duration of this Agreement.
SECTION 3.02. CHECK-OFF.
During the life of this Agreement, the Company will deduct from the wages due
any employee who is a member of the Union such initiation fees and dues as may
be uniformly assessed by the Union, provided such employee furnished the
Company with a written assignment authorizing such deductions. The assignment
shall include the following: "This authorization shall be irrevocable for the
period of one (1) year or until the termination of the current collective
bargaining Agreement between The Lockformer Company and the above-mentioned
Union, whichever occurs sooner, and I direct that this authorization shall be
automatically renewed and shall be irrevocable for successive periods of one
(1) year each or for the period of each succeeding collective bargaining
agreement between the said parties,
<PAGE> 6
EXHIBIT 10.7
whichever shall be shorter, unless written notice is given by me to the Company
and the Union within fifteen (15) days prior to the expiration of each period
of one (1) year or of each collective bargaining agreement between said
parties, whichever occurs sooner.
Dated______________________________ Signature______________________
Address_______________________________
_______________________________
Such deductions will be made from the wages due on the first payday of each
month, and will be promptly remitted to the Financial Secretary or other
designated officer of District No. 8, International Association of Machinists
and Aerospace Workers, AFL-CIO.
ARTICLE 4: HOURS OF WORK AND OVERTIME
SECTION 4.01. NORMAL WORKWEEK.
The normal workweek shall consist of forty (40) hours per week, eight (8) hours
per day, five (5) days a week, from Monday through Friday inclusive, provided,
however, that this does not constitute a guarantee by the Company of any hours
of work per day or per week, except as otherwise may be provided in this
Agreement.
SECTION 4.02. HOURS OF WORK; NUMBER OF SHIFTS.
The Company will advise the Union of any intent to change the hours or number
of shifts existing as of the date of this Agreement.
SECTION 4.03. OVERTIME RATES; EXCEPTIONS; NO PYRAMIDING.
Time and one half (1-1/2) will be paid:
(a) for all hours worked in excess of eight (8) hours in any one
working day;
(b) for all hours worked in excess of forty (40) in any calendar
week;
(c) for all hours worked on Saturday;
(d) for all hours worked before or after the regular starting or
quitting time of the scheduled shift;
(e) for all work performed during a lunch period at the Company's
request, unless the employee is permitted a lunch period during
that shift within an hour of the regular lunch period.
(f) The Company agrees to notify employees for Saturday overtime
work by the end of the shift on the previous Thursday. Notice
of daily overtime will be before the end of the shift on the day
before except on Mondays and in cases of emergencies when notice
may be given on the day the overtime is to be scheduled.
Double (2) time will be paid:
(a) for all hours worked on Sunday;
(b) for all hours worked on any paid holiday hereinafter provided
for.
- 2 -
<PAGE> 7
EXHIBIT 10.7
It is understood that service employees, such as heating and ventilating
employees, engineers, and janitors, shall not receive time and one-half (1-1/2)
for Saturday work and double (2) time for Sunday work, as such, but instead
shall receive time and one-half (1-1/2) and double (2) time for hours worked on
the sixth (6th) and seventh (7th) day respectively of their scheduled work
week.
It is agreed that overtime payments provided for in this section shall not be
pyramided.
An employee shall receive a ten-minute paid work break after working ten (10)
hours when scheduled to work twelve (12) continuous hours or more.
SECTION 4.04. DIVISION OF OVERTIME.
Overtime work will be divided as equally as practical among employees in the
same classification within the same department, provided this shall not be
construed to prevent the completion of any job by employees engaged on such
jobs. Employees will work overtime as scheduled and persistent refusal may
result in disciplinary action; provided employees are not obligated to work
more than 48 hours per payroll week, except as necessary to finish a regular
straight-time scheduled shift. The Company is not obligated to offer any
overtime work in a payroll week to employees who have worked 48 hours in that
payroll week. An employee who is under warning in accordance with the
Company's posted rules concerning absenteeism, tardiness, or early leaving,
need not be assigned overtime. (The reasonableness of the Company rules is
subject to the grievance procedure, as such rules may be revised from time to
time.)
An employee may waive the 48-hour limit by notice to his supervisor, given not
later than the end of the Monday shift in each payroll week. An employee who
asks to be excused from working Saturday overtime shall be excused, if a
replacement satisfactory to management is available to work. The employee
seeking to be excused shall be responsible to secure the replacement. In such
cases, the excused employee will be charged with the hours worked, for
overtime distribution purposes.
An employee who works past midnight Friday night on the second shift because of
overtime or delayed start of the second shift will not be assigned day-shift
Saturday overtime work, which he/she would otherwise be assigned, except by
mutual agreement of the supervisor and the employee.
For the purposes of this Section, any employee who fails to work scheduled
overtime shall be considered as having worked such scheduled overtime.
SECTION 4.05. REPORTING PAY.
Any employee who reports for work at the start of his regular shift and who has
not been notified not to so report, will be given four (4) hours of work or pay
thereof at his regular straight-time hourly rate, provided that such employee
shall perform such work as may be assigned to him/her and provided further that
lack of work for such employee is not caused by conditions beyond the control
of the Company.
- 3 -
<PAGE> 8
EXHIBIT 10.7
SECTION 4.06. CALL BACK PAY.
Any employee who, having completed his regular shift and left the Company's
premises, is called back to work, shall receive no less than four (4) hours of
work or pay thereof at the applicable rate of overtime provided for in this
Agreement, provided that if the employee completes the job for which he/she is
called back in less than four (4) hours, he/she may elect to waive the
provisions of this Section, in which event he/she will be paid only for the
time actually worked.
ARTICLE 5: WAGES
SECTION 5.01. WAGE RATES.
Classifications, rate ranges, and rate increases to be provided during the life
of this Agreement, are set forth in Schedule A attached hereto.
SECTION 5.02. SHIFT PREMIUM.
A shift premium of sixty cents (60c.) will be paid for all hours worked on the
second and third shifts, commencing January 29, 1995, it being understood that
such shift premiums shall not apply to overtime hours worked on any shift, even
though such hours fall within the scheduled hours of the succeeding shift. An
employee who regularly works a second or third shift shall continue to receive
his/her shift premium for any hours worked, regardless of the shift on which
such work is performed, and shall receive the shift premium on holiday pay and
vacation pay.
SECTION 5.03. PAID LUNCH.
If a three-shift operation is scheduled, a twenty (20) minute paid lunch period
shall be provided for on each shift, with pay to be calculated at straight-time
hourly rates.
SECTION 5.04. WAGE PROGRESSION.
There shall be a four-step rate progression for each job grade.
The progression shall be:
Start Rate End of Probation Rate Job Rate Merit Rate
Employees shall receive not less than the Start Rate during their probationary
period (defined in Section 8.02), not less than the End of Probation Rate upon
successful completion of the probationary period, and not less than the Job
Rate effective on the first anniversary of employment. The first review for
merit pay consideration shall be made on the new employee's second anniversary
of employment and annually thereafter; provided that, an employee who is
determined not to qualify for a Merit Rate on annual review shall be
re-reviewed six months later.
The Company shall not be prohibited from hiring new employees at greater than
the Start Rate or from advancing any employees within the progression faster
than is provided by the rate of progression outline above. Progression from
the Job Rate to the Merit Rate shall be made on the basis of merit. Employees
shall be advised by their supervisors regarding the results of merit reviews
conducted. Any time that an employee is being interviewed regarding his/her
individual merit review, he/she shall be advised that he/she may or may not
have a steward present, as he/she chooses. An employee who achieves Merit Rate
within a classification may not be reduced below that rate unless transferred
to a job or classification other than the job or classification to which the
Merit Rate applies, but may be subject to disciplinary action for failure to
maintain a Merit-Rate-deserving level of performance.
- 4 -
<PAGE> 9
EXHIBIT 10.7
Nothing herein contained shall prevent the Company from advancing an employee
faster than is provided for above.
SECTION 5.05. CREDIT UNION.
Employees may make deposits to the Zenith Credit Union by written authorization
for payroll deduction, subject to the conditions set forth in the Letter of
Understanding dated January 29, 1983.
ARTICLE 6: HOLIDAYS
SECTION 6.01. HOLIDAYS RECOGNIZED; ELIGIBILITY FOR HOLIDAY PAY.
Employees actually working for the Company at the time will be paid eight (8)
hours pay at their regular straight-time hourly rate plus shift differential if
applicable for any of the following holidays not worked:
New Year's Day Day after Thanksgiving Day
Good Friday Day before Christmas Day
Memorial Day Christmas Day
Independence Day New Year's Eve
Labor Day Floating Holiday
Thanksgiving Day
provided they have completed their probationary period and have worked their
full scheduled shift the workday before and the workday after the holiday,
unless excused from so working by the Company for unavoidable reasons, or
unless excused for tardiness up to one (1) hour on the day before or day after,
provided the employee has a satisfactory excuse for being tardy.
SECTION 6.02. OBSERVANCE OF HOLIDAYS DURING VACATION AND OF FLOATING HOLIDAY.
Holidays falling within a vacation will be observed by the employee either on
the Monday following or the Friday preceding the vacation, as arranged between
the employee and his/her supervisor. The floating holiday will be observed on
a day designated by the Company each year of the contract; provided, the
designated day must be one of the workdays (Monday through Friday) during the
week following Christmas each year.
SECTION 6.03. WORKED HOLIDAYS.
Employees who work on any of the above holidays shall, in addition to their
holiday pay, receive double (2) times for all hours so worked.
SECTION 6.04. HOLIDAY OBSERVANCE DURING ILLNESS LEAVE.
An employee who is off work for thirty (30) days or more due to personal
illness shall receive holiday pay for each holiday falling within the first
thirty (30) days of absence. The Company may deduct from such pay the per diem
value of Sickness & Accident Benefits applicable to such days.
- 5 -
<PAGE> 10
EXHIBIT 10.7
ARTICLE 7: VACATIONS
SECTION 7.01. ELIGIBILITY; AMOUNT.
Employees possessing seniority with the Company on their anniversary date of
each calendar year will receive during such calendar year a vacation with pay
on the following basis:
<TABLE>
<CAPTION>
Vacation Hours of
As of Anniversary Date Days Pay
---------------------- ---------- ---
<S> <C> <C>
1 year but less than 2 years 5 40
2 years but less than 8 years 10 80
8 years but less than 16 years 15 120
16 years but less than 17 years 16 128
17 years but less than 18 years 17 136
18 years but less than 19 years 18 144
19 years but less than 20 years 19 152
20 years but less than 25 years 20 160
25 years or more 25 200
</TABLE>
An employee who has not completed a minimum of one (1) year of active service
shall not accrue a right to any vacation or vacation pay. Vacation pay shall
include shift differential if applicable.
SECTION 7.02. VACATION SCHEDULING.
The Company may in its discretion shut down the entire plant or any department
thereof for vacation purposes, or may prepare a staggered vacation schedule, in
which event senior employees will be given preference as to vacation time
insofar as this is practical with production requirements.
Vacations will be scheduled during the calendar year, and, insofar as
practical, the Company will give ninety (90) days advance notice of vacation
schedules.
Employees who qualify for three weeks or more vacation may be able to schedule
up to three weeks consecutively. If not taken consecutively, it will be taken
subject to Company-employee agreement. Employees eligible for more than three
weeks of vacation who are asked to work during the fourth and/or fifth vacation
week may agree to work, or not, as they choose. If they agree to work, they
will be paid at the rate applicable to the job performed.
SECTION 7.03. LAID-OFF EMPLOYEES' VACATION PAY.
Any employee who is not actually working for the Company on his anniversary by
reason of being on layoff, but who otherwise qualifies for vacation under the
provisions of this Article, shall be paid a pro rata vacation based upon the
relationship that the number of straight-time hours worked during the year
preceding his anniversary date bears to 2080 hours; provided any employee with
five (5) or more years of seniority who is laid off on his anniversary date,
but who has performed active work within the calendar year, shall receive not
less than two (2) weeks' vacation pay (or pay based on the pro rata formula, if
greater in amount).
- 6 -
<PAGE> 11
EXHIBIT 10.7
ARTICLE 8: SENIORITY
SECTION 8.01. DEFINITION; ABILITY REQUIREMENT.
Seniority is defined as length of continuous and unbroken service with the
Company. In all applications of seniority, seniority shall control where the
employee has the ability to satisfactorily perform the work. Ability to
perform the work means that an employee already possesses the knowledge and
skill to perform the work, needing only instruction for a brief period to
familiarize himself/herself with the work to be performed and the equipment, if
any, to be operated.
SECTION 8.02. PROBATIONARY PERIOD.
Seniority (after satisfactory completion of a sixty (60) day probationary
period) will be calculated from the employee's date of hire. During the
probationary period the employee's retention shall be at the sole discretion of
the Company.
SECTION 8.03. LOSS OF SENIORITY.
An employee's seniority shall be broken if:
(a) he/she voluntarily quits;
(b) he/she is discharged for proper cause;
(c) he/she fails to report for work within five (5) working days
after notice of recall (following a layoff), which is sent by
telegram or certified mail to the last known address appearing
on the Company's records, or after personal notification of
recall;
(d) he/she overstays a leave of absence or takes other employment
while on leave of absence, without consent of the Company;
(e) he/she fails to report for work for three (3) consecutive
working days without notifying the Company and without reason
satisfactory to the Company;
(f) he/she has not worked for the Company for a period equal to
one-half (1/2) of his seniority. Responsibility to recall shall
not exceed three (3) years. (Absence by reason of compensable
illness or injury shall not be counted in applying paragraph
"(f)"). Seniority shall continue to accumulate during any
layoff.
SECTION 8.04. LAYOFFS; RECALLS.
Plant-wide seniority shall be applied in accordance with Section 8.01 of this
Article in the event of layoffs, recalls and transfers in lieu of a layoff.
Involuntary shift assignments will be made on the basis of reverse seniority
among employees within the affected classification who have completed their
probationary period in the classification.
An employee scheduled for layoff, pursuant to Section 8.04, shall receive
notice thereof at least five (5) days in advance of the effective date of the
layoff. In cases of layoff where bumping rights will occur, the notice to
affected employees shall be five (5) days prior to the effective date. For
this purpose, the "effective date" shall be the first day on which the employee
does not work because of the layoff. This notice requirement shall not apply
in cases of emergency, Acts of God, power failure or the like where the Company
does not have sufficient advance notice of need for layoff. When notice is
possible and not given, the affected employee shall receive pay in lieu of
notice, equal to eight (8) hours per day.
- 7 -
<PAGE> 12
EXHIBIT 10.7
An employee may not "bump up" (seek or be granted a promotion to a
higher-rated job classification by exercise of seniority) in connection with a
layoff.
SECTION 8.05. EMERGENCY LAYOFFS.
In case of emergency layoffs caused by circumstances beyond the control of the
Company (not layoffs for lack of work), such layoffs may be made in accordance
with Section 8.01 of this Article, but on the basis of classification
seniority. Such layoffs shall not exceed ten (10) working days without
reconsideration of the laid-off employees for transfer under preceding Section
8.04.
SECTION 8.06. TRANSFER RATES.
(a) LAYOFF CONDITIONS. Employees transferred by application of
Sections 8.04 and 8.05 above to a job in a classification for
which the Merit Rate is less than the rate they are receiving on
the job from which they are transferred, will receive a rate
equal to the average of rates paid to current incumbents in the
classification; provided, if the employee has previously held
the classification he/she shall be paid the current rate
applicable to the progression level he/she previously attained
therein. Employees so transferred to a classification for which
the minimum of the range is more than they are receiving on the
job from which they are transferred, will receive the minimum of
the new classification, but will not be subject to the
progression provisions of this Agreement until and unless such
transfer is for a period in excess of seventeen (17) weeks.
Separate periods of transfer may be accumulated to meet the
17-week periods provided that the employee bears responsibility
for advising Management of the periods he/she wishes to have
accumulated. Transfer periods of four (4) hours or more in one
day shall be considered as a day of transfer.
(b) OTHER CONDITIONS. Transfers made for the convenience of the
Company in situations not involving a layoff, lack of work on an
employee's regular job, or shift reassignment may be made
without regard to seniority. An employee so transferred will be
paid his regular hourly rate if transferred to a job in a
classification for which the maximum of the range is less than
he/she is receiving on his regular job. If so transferred to a
job in a classification for which the minimum of the range is
more than he/she is receiving on his regular job, he shall
continue to receive his/her regular hourly rate for a period of
four (4) full pay periods and thereafter shall receive the
minimum of the classification to which so transferred, but will
not become subject to the progression provisions of this
Agreement beyond the minimum until and unless such transfer
becomes permanent in nature, or until and unless such transfer
continues for a period in excess of ten (10) weeks after the
employee reaches the minimum of the range for the job to which
he is transferred. An employee retransferred to the same job
within two (2) pay periods after the end of a temporary transfer
may count time spent during the first transfer toward meeting
the four (4) and ten (10) week pay rules.
SECTION 8.07. FILLING VACANCIES.
When a classification vacancy is to be filled, the Company will post a notice
on the Bulletin Board for two (2) working days, identifying the classification
rate range and expected initial assignment. Note: The Company shall have total
freedom of assignment to jobs within the classifications and need not post
openings for individual jobs therein.
- 8 -
<PAGE> 13
EXHIBIT 10.7
In the event a classification vacancy occurs by reason of the retirement,
death, resignation, discharge, or permanent transfer of a current incumbent in
that classification and the vacancy is not posted for bid within two (2) work
weeks, management will, at the request of the Chief Steward, advise the union
of its intentions respecting the vacancy - i.e., whether the vacancy will be
posted at a later date, filled on a temporary basis, made part of a job
combination or discontinued.
Any employee desiring to be considered for such vacancy shall notify his/her
supervisor in writing within the two (2) working days posting period.
Consideration of applicants for the vacancy will be given in accordance with
Section 1 of this article but also, for purposes of this Section 8.07 only the
term, "ability" shall be defined as in Section 8.01 and also shall mean that
the employee under consideration has demonstrated the ability to work safely
and reliably, with no attendance problems.
Consideration need not be given to applicants with less than 90 days service
with the Company, or to applicants seeking a reduction in grade. In the event
there are two or more applicants whose abilities to perform the work of the
vacant position and qualifications are substantially similar, the senior
applicant will be selected.
Any successful applicant will be considered as a probationary employee in the
new position for four (4) full pay periods and during this period may be
removed from the position at the Company's discretion. If so removed, he/she
will be returned to his/her former position, if it is then in existence, and
vacant, and if not, he/she will, if possible, be assigned to a position within
his/her former classification; otherwise, to such position as may be available.
During the four (4) full pay periods of probation in the new position, he/she
shall receive his/her regular hourly rate on his/her former position, or a rate
within the rate range for his/her new classification commensurate with his/her
ability to satisfactorily perform the new position, and upon satisfactorily
completing the probation in the new position, shall become subject to the
progression provisions of this Agreement (he/she shall receive job rate
effective ten (10) months after the transfer becomes permanent).
Vacancies existing by reason of increasing the work force will be posted. Any
employee who desires to be considered for a vacancy in another department, in
case of an increase in the work force in that department, shall submit a
written request to the plant superintendent. Such requests will be considered
in line with Section 8.01 of this Article plus ability to work safely and
reliably with no attendance problems before new employees are hired. The
vacancy of a successful transferee under this provision need not be posted, but
shall be subject to this transfer request procedure.
Pending the posting period and the selection of the bidder, or in the event
there is no successful bidder for the vacancy, the vacancy may be filled from
any source, or posted as a trainee position. A successful bidder for a trainee
position shall receive a rate no less than his previous rate and be advanced at
a rate of five cents (5 cents) each thirty (30) days until he/she reaches the
minimum for the position for which he/she is being trained, and thereafter
shall be advanced in accordance with the progression schedule set forth in
Article V, Section 5.04. New employees hired as trainees will be similarly
advanced from the hiring rate.
- 9 -
<PAGE> 14
EXHIBIT 10.7
SECTION 8.08. SHIFT TRANSFER.
Upon written request, preference will be given as to permanent vacancies as
between one shift and another on the basis of plant-wide seniority and the
employee's ability to satisfactorily perform the work; it being understood,
however, that in all such cases, the need for senior employees on any second or
third shift shall be given full consideration in the making of any such
transfers.
SECTION 8.09. SENIORITY LISTS.
The Company will prepare and post a seniority list as of the date of this
Agreement, with a copy to the Union. Grievances as to this list must be filed
within five (5) days after posting and thereafter will be considered as
correct. Thereafter the list will be made current every six (6) months.
SECTION 8.10. LEAVES OF ABSENCE.
Upon application, in writing, for reasonable cause, leaves of absence will be
granted, in writing, for periods not to exceed six (6) months. Leaves may be
extended for similar periods upon written application and for reasonable cause.
The Company will advise the Union of any leaves granted or extended.
Seniority will continue to accumulate for a period of not to exceed one (1)
year of any leave of absence.
Upon termination of any leave, the employee will be returned to his former
position, if it is available, otherwise to a position as nearly equivalent as
possible which he is able to satisfactorily perform.
SECTION 8.11. STEWARDS' SENIORITY.
In order to assure continuity of employee representation during periods of
layoff, the shop chairperson and shift stewards, (one shift steward per shift)
during tenure in office, shall have top, plant-wide seniority for purposes of
layoff, provided there is work available which they can perform. They must
have two (2) years of natural seniority in order to qualify for top seniority
and must be in active employment to exercise top seniority. A shift steward's
top seniority will not be applicable other than on the shift for which he/she
is steward.
ARTICLE 9: GRIEVANCE PROCEDURE
SECTION 9.01. PROCESSING OF GRIEVANCES.
Grievances shall be processed in accordance with the following procedure:
Step 1. The grievance shall be presented verbally by the employee
and/or the Union Steward to the employee's supervisor. If
not satisfactorily settled, the grievance shall be reduced
to writing and the supervisor shall note his answer on the
grievance within three (3) working days after presentation;
then,
Step 2. The grievance shall be presented to the Superintendent by
the employee and/or the Union Steward. The Superintendent
shall note his answer on the grievance and the employee
and/or the Union Steward shall note acceptance or rejection
of the answer. If not satisfactorily settled in five (5)
working days after presentation; then
- 10 -
<PAGE> 15
EXHIBIT 10.7
Step 3. The grievance shall be presented to top management or its
designated representative within ten (10) working days
after presentation. This time limitation will be extended
for a reasonable period at the request of either party.
SECTION 9.02. ARBITRATION.
(a) MATTERS SUBJECT TO ARBITRATION. Any grievance arising solely
out of the interpretation or application of the terms of this
Agreement as provided in paragraph 1 of this Article, concerning
which a satisfactory settlement has failed to result following
the above grievance procedure may be referred to an arbitrator
agreed upon by the parties, provided that either party desiring
arbitration notified the other party hereto in writing of such
desire not later than ten (10) working days after the date of
the Company's answer given in Step 3.
(b) SELECTION OF AN ARBITRATOR. The Company and the Union shall
endeavor to select a mutually agreeable impartial arbitrator, by
each submitting to the other a list of not less than five (5)
proposed arbitrators, within ten (10) working days after the
date of notification of intent to arbitrate. In the event the
Company and the Union are unable to agree upon an impartial
arbitrator within fifteen (15) working days after each party has
received the list of arbitrators, then the matter shall be
submitted to the Federal Mediation and Conciliation Service
requesting a list of five (5) arbitrators. The Union shall
strike two (2) names and the Company shall then strike two (2)
names from the list and the remaining arbitrator shall be deemed
mutually agreed upon. Such arbitrator shall be notified by a
joint letter requesting a mutually agreeable hearing date.
(c) EFFECT OF AWARD; LIMITS UPON ARBITRATOR'S AUTHORITY. The award
of the arbitrator shall be final and binding on the Company, the
Union and the employee or employees involved, and shall be
issued within thirty (30) days following the receipt of the
post-hearing briefs of the parties (or the date of the hearing
if no briefs are filed). The fee and expenses of the arbitrator
shall be shared equally. The arbitrator shall have no right to
amend, modify, nullify, ignore or add to the provisions of this
Agreement. The arbitrator shall consider and decide only the
grievance presented to him and his award shall be based solely
upon the meaning or application of the terms or provisions of
this Agreement; if the grievance does not present a question of
interpretation or application of this Agreement, the arbitrator
shall so rule and the matter shall not be further entertained by
the arbitrator.
SECTION 9.03. TIME LIMITS.
Grievances must be presented within five (5) working days after the cause of
the grievances arises.
Any grievance not appealed from one Step of the grievance procedure to the next
Step within five (5) working days after answer is given in the preceding Step
shall be waived.
Notwithstanding the above, grievances relating to discipline or discharge or
application of the seniority provisions of this Agreement must be presented
within three (3) working days after the cause of the grievance arises and must
be appealed from one Step of the grievance procedure to the next Step within
two (2) working days after answer is given in the previous Step, or the
grievance will be deemed waived. Such grievances shall be initially filed in
the second Step of the grievance procedure.
- 11 -
<PAGE> 16
EXHIBIT 10.7
Failure of management's representatives to give answers within the time
limitations set forth in Steps 1 and 2 is to be treated as a denial of the
grievance.
SECTION 9.04. REPRESENTATIVES DESIGNATED.
The Company will designate to the Union the foreman to whom grievances shall be
presented and the Union will designate the Steward who is authorized to settle
grievances with the Company.
SECTION 9.05. PRESENTATION OF GRIEVANCES; DISCUSSIONS.
Grievances may be presented at any time, but prolonged discussions of any
grievance shall be held outside of regular working hours whenever possible.
The Steward shall not lose any unnecessary time in the presentation of
grievances during working hours and shall not leave his/her job for this
purpose without notice to and permission from his/her supervisor, and shall
report to the supervisor upon return to his job. Such permission shall not be
unreasonably withheld.
ARTICLE 10: NO STRIKE - NO LOCKOUT
It is agreed that there shall be no strike or other interference with
production during the life of this Agreement.
Any employee engaging in such activities in violation of this Article shall be
subject to immediate discipline or discharge, and grievances in connection with
the imposition of such penalties shall be confined to the question of
participation or promotion of such activity.
There shall be no lockout during the life of this Agreement.
ARTICLE 11: MISCELLANEOUS
SECTION 11.01. SAFETY AND HEALTH.
The Company will maintain reasonable safety conditions in accord with the local
and state safety regulations. There will be a Safety Committee consisting of
two (2) Union and two (2) Management employees who will meet bimonthly for
review of safety conditions and to make recommendations, if any, to the Plant
Manager or Industrial Relations Director.
The Company will provide reasonable safety and sanitary measures in the plant
for the health and protection of its employees during working hours, and
expects the cooperation of all employees in this respect.
In lieu of the prior glove plan, the Company, effective January 29, 1977, will
provide up to 280 pairs of gloves per contract year for use by unit members on
the job. Distribution will be made on the basis of need, through the
supervisor.
- 12 -
<PAGE> 17
EXHIBIT 10.7
SECTION 11.02. BULLETIN BOARD.
The Company will provide a Bulletin Board for the posting of official notices
of Union activities. It is agreed that nothing of a provocative or
argumentative nature, or derogatory to the Company or any employee, will be
posted.
SECTION 11.03. INCENTIVE PLAN.
It is agreed that nothing herein contained shall limit the Company's right to
make such studies as may be necessary to prepare an incentive plan for
submission to the Union for further negotiations during the life of this
Agreement.
SECTION 11.04. JURY DUTY LEAVE.
Any employee called for Jury Service will be paid the difference between
his/her pay for such service and what he/she would have earned at work except
for such service, limited, however, to eight (8) hours per day and forty (40)
hours per week at his/her straight-time hourly rate. The employee will be
required to present satisfactory evidence of the length of his/her service and
the amount of pay he/she received from such service.
SECTION 11.05. FUNERAL LEAVE.
An employee covered by this Agreement will be granted up to three (3)
consecutive workdays' leave with pay at eight (8) times his straight-time
hourly rate, in the event of death in his/her immediate family (father, mother,
sister, brother, spouse, legal dependent child, or grand-parent) for the
purpose of attending the funeral services. The employee will be granted up to
one (1) workday leave, with pay, to attend the funeral of a mother-in-law,
father-in-law, brother-in-law, sister-in-law, grandchild, step-child,
step-parent or spouse's grandparent on the same basis. Such leaves of absence
shall not include pay for Saturdays, Sundays or holidays. Evidence of the
facts in any case must be furnished upon request of the Company.
In the case of up to three (3) day leaves, the leave will end on the day of the
funeral, unless the funeral is held more than 200 miles from Lisle, in which
case the leave will end on the next day after the funeral.
SECTION 11.06. LATE REPORTING.
Deductions from pay because of late reporting shall be calculated in 1/10's of
an hour.
ARTICLE 12: MEDICAL EXPENSE PLAN
SECTION 12.01. BENEFITS.
The Group Life, Sickness and Accident, Hospital/Surgical and Dental Indemnity
Plans which shall be in effect during the life of this Agreement, are as
indicated in Schedule B, attached hereto.
SECTION 12.02. PAYMENT OF PREMIUMS.
Participation premium for the term of the agreement shall be:
Employee only $20/month
Employee and one dependent $40/month
Family (employee and more than one dependent) $60/month
- 13 -
<PAGE> 18
EXHIBIT 10.7
In the event of the death of an active employee with two (2) or more years of
service, the Company will assume 70% of the charges which otherwise would be
assessed surviving dependents for their continued participation in the Medical
Expense Indemnity Plan under COBRA. The Company's obligation for the 70%
co-payment shall be only in respect to surviving dependents who are eligible
to elect COBRA continuation benefits because of the deceased employee's death
and who duly elect such coverage, and shall expire upon expiration of the
surviving dependents' eligibility for coverage under the Company Plan or after
18 months, whichever occurs first.
SECTION 12.03. NATIONAL HEALTH INSURANCE.
In the event a mandatory national health insurance program is adopted, the
Company Plan shall be adjusted to the extent necessary to integrate benefits
and costs between those required by such national plan and those provided by
the Company Plan. Integration shall be accomplished to avoid duplication of
benefits and cost and shall be on the basis that the Company will assume any
employee cost required by law to maintain benefits currently provided by the
Company Plan, in excess of the present employee contribution; provided the
Company's cost shall not exceed its cost of providing the current benefits.
- 14 -
<PAGE> 19
EXHIBIT 10.7
ARTICLE 13: PENSIONS
SECTION 13.01. CONTINUATION OF PLAN.
The Company and the Union agree to the Pension Agreement executed
simultaneously with this Agreement for the term thereof. Monthly benefits
shall be calculated in accordance with Schedule C.
SECTION 13.02. RETIREE INSURANCE.
Employees who retire on pension paid by the Lockformer Pension Plan prior to
age 65 will be allowed to continue participation in the Health and Welfare Plan
until age 65 or until eligible for Medicare (or equivalent) whichever occurs
first, at a premium contributory rate of 50% (excludes life, AD&D, dental).
The Company may change the insurance carrier, as long as the coverage remains
equal to that applicable to the active employees. Retirees will continue to be
subject to the same deductibles and co-payments as current and future active
employees.
ARTICLE 14: DURATION
This Agreement shall become effective as of 12:01 a.m., January 29, 1995, and
shall remain in full force and effect until 11:59 p.m., January 29, 1998. At
the end of said three (3) years, it shall be automatically renewed from year to
year thereafter, unless either party notifies the other, in writing, not less
than sixty (60) days prior to such termination date, of a desire to amend,
alter, modify or terminate the Agreement.
The party receiving such notice shall have ten (10) days thereafter to
similarly indicate its desire.
DISTRICT LODGE NO 8 OF THE
INTERNATIONAL ASSOCIATION
OF MACHINISTS AND AEROSPACE
WORKERS, AFL-CIO THE LOCKFORMER COMPANY
By: __________________________ By: ______________________
Walter Butts K. John Del Vecchio
__________________________ ______________________
Darryl Lee Bruce Carmen
__________________________ ______________________
Henry Province Roberta Williams
__________________________
Ryan Wilder
- 15 -
<PAGE> 20
EXHIBIT 10.7
SCHEDULE A: WAGE RATES
Each employee's hourly rate shall be increased by 3.5% effective January 29,
1995 and by 3% effective January 29, 1996 and by 3% effective January 29, 1997,
compounded.
Effective on July 29 of 1995, 1996, and 1997, there shall be added to each
employee's regular hourly rate a cost of living differential calculated by
the following formula: one cent (1 cent) per hour for each full 0.4% annual
change in the bureau of Labor Statistics Consumer Price Index (Chicago
Metropolitan Area, All Items, 1967=100 CPI-W Index), over 4%, if any comparing
the index figure for May of the adjustment year with the figure for June of the
preceding year (e.g., May 1992 compared to June 1991 for the July 1992
adjustment). Fractions shall be rounded up.
For purposes of applying these adjustments, "regular hourly rate" shall mean an
individual's regular hourly rate as of the date preceding each respective
adjustment, exclusive of shift and other premiums but inclusive of prior COLA
differentials. All employees on the payroll as of the date immediately
preceding each increase will receive the increase.
Labor grade classification B utility machine operators who demonstrate the
ability to perform all labor grade classification 5 machine operations and
set-ups at the level, skill and efficiency of regular operators shall be paid a
multiple skills differential of thirty cents (30 cents) an hour. A utility
machine operator who can in addition demonstrate the same ability respecting
labor grade classification B machine operations, shall be paid an additional
fifteen cents (15 cents) an hour, for a total differential of forty-five cents
(45 cents) an hour.
SCHEDULE OF RATES/CLASSIFICATIONS.
Revised hourly rates and classifications will commence February 1, 1995, are
herewith attached. No employee shall suffer a rate reduction as a result of
adopting the newly revised scheduled.
- 16 -
<PAGE> 21
EXHIBIT 10.7
SCHEDULE B : MEDICAL EXPENSE INDEMNITY PLAN MODIFICATION
<TABLE>
<CAPTION>
Benefit Effective Date Modification
<S> <C> <C> <C>
1. Life Insurance February 1, 1994 $22,000
2. Sickness and Accident
Weekly Indemnity February 1, 1995 Increased to $ 235
---------------- ---------------- --------------------
Weekly Indemnity February 1, 1996 Increased to $ 240
---------------- ---------------- --------------------
Weekly Indemnity February 1, 1997 Increased to $ 245
---------------- ---------------- --------------------
3. MEDICAL BENEFITS YOU PAY GENERAL PLAN LIMITS
OFFICE VISIT CO-PAY Office visit co-pay does not
apply to deductible or out-of-
-PPO Provider $10 per visit pocket maximum.
-Non-PPO Provider $15 per visit
Medical Deductible to be paid 1995 -1996 1997 Fourth quarter carryover
before the following benefits deductible applies. Common
are paid. accident deductible waiver
applies.
-Per Individual per calendar $200 $250
year
-Per Family per calendar year $400 $500
PPO NON-
PAYS PPO PAYS **
</TABLE>
- 17 -
<PAGE> 22
EXHIBIT 10.7
<TABLE>
<S> <C> <C> <C>
Allergy Test and injections 85% 75%
Ambulance Benefits 85% 75%
Ambulatory/Outpatient Surgery 85% 75%
care
Includes a CRNA.
Anesthesia:
-Inpatient 85% 75% Co-payment based upon the
facility used for surgery.
-Outpatient 85% 75%
Birthing Center Care 85% 75%
Durable Medical Equipment 85% 75%
Emergency Room: Calendar year deductible waived.
-Treatment within 72 hours of 85% 75% $35 co-pay applies to facility
accident or for a life- charge.
threatening condition
-Treatment for a non-life- 85% 75% $70 co-pay applies to facility
threatening condition charge.
Hospice Care 85% 75%
Home Health Care Benefits 85% 75% Limited to 120 days/illness -
must begin within 72 hours of
discharge from inpatient hospital
confinement.
Hospital Benefits:
-Inpatient Limited to semi-private room
-With Preadmission 85% 75% rate.
Certification
-Without Preadmission 75% 65% 10% reduction penalty not applied
Certification to deductible or out-of-pocket
maximum.
-Outpatient 85% 75%
In-Hospital Physician visits 85% 75%
Manual/Mechanical Manipulation 85% 75% $15 office visit-co-pay.
spinal column
(Chiropractic) Limited to $500 paid/CAL YR.
Xrays covered under DXL benefit.
Mental Health and Chemical Limited to $25,000 paid/lifetime.
Dependency
-Inpatient Limited to 30 days/CAL YR.
-With Preadmission 85% 75%
Certification
-Without Preadmission 75% 65% 10% reduction penalty not applied
Certification to deductible or out-of-pocket
maximum.
-Outpatient 50% 50% Limited to $3,000 paid/CAL Yr.
Nursing Care Facility Benefits 85% 75% Must be admitted within 24 hours
of discharge from an inpatient
hospital confinement. Limited to
50% of the prior hospital's semi-
private room rate.
Outpatient Diagnostic Xray & 85% 75% Includes routine pap smears and
Lab Benefits mammograms. Routine mammograms
limited to:
Age 35 to 50 - one/every other
CAL YR.
Age 50+ - one/CAL YR.
MEDICAL BENEFITS (cont'd) PPO NON- GENERAL PLAN LIMITS
PAYS PPO PAYS**
</TABLE>
- 18 -
<PAGE> 23
EXHIBIT 10.7
<TABLE>
<S> <C> <C> <C>
Physician Office Calls
-At PPO Providers 100% $10 office visit co-pay.
-At Non-PPO Providers 100% $15 office visit co-pay.
Physical, Occupational, 85% 75%
Radiation Therapy
and Chemotherapy
Preadmission Testing 85% 75% Covered only on an outpatient
basis.
Physician's second opinion 85% 75%
(voluntary)
Private Duty Nursing 85% 75%
Routine Physical 100% 100% Limited to $75 paid/CAL YR
including all related labs
and Xrays except pap smear
and mammogram. Limited to
participants over age 40.
Surgery:
-Inpatient 85% 75% Hospital precertification
-Outpatient 85% 75% required.
-Oral Surgery 85% 75%
Out-of-Pocket Medical Maximum Excludes calendar deductibles,
You Must Pay: specific co-pays and hospital
admission penalty.
-Per Individual $1,250 $2,000
-Per Family $1,600 $3,000
1995
$1,800
1996
$2,000
1997
Maximum lifetime benefit $1,000,000
</TABLE>
**Plan will pay at 80% (50% for outpatient mental
health/chemical dependency) for covered charges
incurred while traveling outside of the PPO area or
where a PPO provider is not available through the
network.
<TABLE>
<CAPTION>
DENTAL & VISION BENEFITS SUMMARY
PLAN YOU
PAYS PAY
<S> <C> <C> <C>
Dental Deductibles to be paid
before the following benefits
are paid:
-Per Individual Per CAL YR $25
-Per Family Per CAL YR $75
Orthodontic Deductible:
-Per Individual lifetime $25
Dental Benefits: Limited to $1,500/CAL YR for
preventative, basic and major
benefits.
-Preventive Dental Benefits 100% 0% Calendar year deductible waived
-Basic Dental benefits 80% 20%
-Major Dental Benefits 80% 20%
orthodontia Dental Benefits 50% 50% Limited to $1,000 lifetime;
Limited to Dependent children
only. Employee must be on the
plan for one year before
orthodontia benefits will be
payable for dependent children.
</TABLE>
- 19 -
<PAGE> 24
EXHIBIT 10.7
<TABLE>
<S> <C> <C>
Vision Benefits:
-Office call 100% $15 office visit co-pay.
Calendar year deductible waived.
Limited to one visit/CAL YR.
-Eyeglass frames 100% Calendar year deductible waived.
Limited to one frame/24 mos.
Limited to $50 paid/24 mos.
-Contact Lenses/Eyeglass Lenses 100% Calendar year deductible waived.
Limited to one frame/24 mos.
Allow one pair/CAL YR if for
prescription change.
Claim filing limit: One year from the date charges are incurred.
Pre-existing Condition Limitation: 12/6/12
Coordination of Benefits: Maintenance of Benefits (MOB)
Dependant Eligibility: Birth to age 19; full-time student to age 23
Prescription Drugs: Must be Submitted through Express Script.
Prescription drugs are not covered under your medical
plan, except during inpatient hospital confinement.
</TABLE>
THIS BENEFIT SUMMARY IS AN OUTLINE OF THE PLAN'S
BENEFITS AND DOES NOT CONTAIN ALL OF THE CONTRACT
PROVISIONS AND LIMITATIONS. A FINALIZED VERSION OF
THIS BENEFIT SUMMARY, AND A PLAN BOOKLET CONTAINING A
MORE DETAILED DESCRIPTION OF THE PLAN, WILL BE
DISTRIBUTED AT A LATER DATE. IN THE EVENT OF A
CONFLICT BETWEEN THE BENEFIT SUMMARY AND PLAN
DOCUMENT, THE PLAN DOCUMENT GOVERNS.
4. Cafeteria Benefits Plan - During the term of the Contract, the Company
will maintain the cafeteria-type benefit plan, implemented during the
prior contract.
5. Joint Committee - A joint committee will be established, to review
operation of medical indemnity plans, calculation of COBRA rates and to
recommend cost-containment measures.
6. Sick Days - Employees with one (1) year of service or more shall be
eligible for one (l) sick day for every 26 consecutive weeks of perfect
attendance. Any late, left early, non-continuous time or absence would
interrupt the accrual period, except absences for vacation, holiday,
funeral leave, jury duty or earned sick days. After each interruption,
a new 26-week accrual period shall begin.
- 20 -
<PAGE> 25
EXHIBIT 10.7
SCHEDULE C: MONTHLY BENEFITS UNDER PENSION PLAN
The monthly benefits provided by the Pension Plan, subject to all other terms
of the Plan, shall be calculated as follows with respect to retirements which
commence after January 29, 1995 (see prior contract for benefits applicable to
previous retirements):
<TABLE>
<S> <C> <C>
(a) for each year of credited
service accrued prior to
January 29, 1978 . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.00
------
(b) For each year of credited
service accrued
after 01/29/78 but before 01/29/81 8.00
----
" 01/29/81 " " 02/01/83 11.00
-----
" 02/01/83 " " 02/01/84 12.00
-----
" 02/01/84 " " 02/01/85 13.00
-----
" 02/01/85 " " 02/01/86 14.00
-----
" 02/01/86 " " 02/01/88 16.00
-----
" 02/01/88 " " 02/01/89 17.00
-----
" 02/01/89 " " 02/01/90 18.00
-----
" 02/01/90 " " 02/01/91 19.00
-----
" 02/01/91 " " 02/01/92 20.00
-----
" 02/01/92 " " 02/01/95 . . . . . . . . . 23.00
-------- -----
" 02/01/95 . . . . . . . . . . . . . . . . . . . . . . . 25.00
------------------- -----
</TABLE>
to a maximum of 45 years' credited service effective 2/l/95.
- 21 -
<PAGE> 26
EXHIBIT 10.7
SCHEDULE D: MISCELLANEOUS BENEFITS
The Company will administer a non-contributory 401(K) Plan. The salary
deferred contributions made by the employer represent money from the employees'
annual gross pay and will become effective April 1, 1992.
All eligible employees of the Bargaining Unit shall be covered by the Met-Coil
Employees Stock Ownership Plan (ESOP).
- 22 -
<PAGE> 27
EXHIBIT 10.7
District Lodge No. 8 of the
International Association of
Machinists and Aerospace
Workers, AFL-CIO
Re: Payroll Deduction for
Zenith Federal Credit Union
Dear Sirs:
This will confirm our agreement to honor payroll deduction authorizations
submitted by employees who wish to make regular deposits to the Zenith Federal
Credit Union. Effective date is June 3, 1983. The following will apply:
a. each authorization, change or cancellation, must be in
writing, signed and dated by the employee;
b. a whole dollar amount must be specified;
c. deductions of the dollar amount specified will be made from
each weekly pay of the employee and the amount of each
deduction will be indicated on the check stub; the Company
need not render any other accounting to the employee;
d. the sums deducted from the pay of all participants during each
calendar month will be accumulated and forwarded to the Credit
Union by one (1) check mailed within ten (10) business days
following the last day of such month, together with a listing
of participants and the amount deducted on behalf of each;
e. a notice of cancellation or change respecting an existing
authorization, and submission of a new authorization, shall be
in writing and shall be effective with respect to wages paid
on the second pay date following submission of the notice or
authorization;
f. no change in the amount of the deduction authorized and no
re-enrollment following cancellation will be honored during
the six month period following the effective date of the
employee's most recent change or (re)enrollment authorization;
g. refunds will be made only through the Credit Union;
h. the Credit Union and the Company shall each designate to the
other, and to the Union, the name, title, and office of the
individual(s) authorized to receive notices, to receive funds,
and otherwise to act upon matters covered by this agreement;
- 23 -
<PAGE> 28
EXHIBIT 10.7
i. any dispute arising regarding the Company's compliance with
this agreement shall be resolved pursuant to the
grievance-arbitration procedure contained in the Collective
Bargaining Agreement;
j. in the event the Company erroneously deducts more than the
amount authorized, refund shall be made only through the
Credit Union; in the event the Company erroneously deducts
less than the amount authorized, no additional compensating
deduction need be made from future wages unless so agreed by
the Company and the employee.
Very truly yours,
THE LOCKFORMER COMPANY
By______________________________________________________
Bruce Carmen
Confirmed:
IAMAW, District Lodge No. 8
By_________________________________________________
Walter Butts
- 24 -
<PAGE> 29
EXHIBIT 10.7
District Lodge No. 8 of the
International Association of
Machinists and Aerospace Workers, AFL-CIO
Re: Miscellaneous Matters
Gentlemen:
During negotiations for the Agreement dated January 29, 1995, the Company and
Union agreed that resolution of certain issues be recorded by letter of
understanding, as follows:
1. ARTICLE 8, SECTION 8.01. The term "brief period" as used in
this provision shall mean not more than one shift for all
jobs. An employee who feels that he/she was not offered a
fair opportunity to demonstrate his/her ability within the
time period provided herein may appeal for a review by the
Vice-President of Operations or his designee.
2. SAFETY PROTECTIVE CLOTHING. The parties agreed generally that
some jobs may warrant additional safety protective clothing.
Questions regarding the number of such jobs, the type of gear
required, and the means and basis of providing same, will be
resolved by the safety committee as provided by Article 11,
Section 1 (formerly Section 8 of Article 11)
3. PROBATIONARY PERIOD. In the event the Company is unable
completely to evaluate a new employee's suitability for
permanent employment during the normal probationary period,
for example, due to excusable absence or lack of
representative work, the Company may request that the time be
extended and the Union shall give such requests good faith
consideration. Any extension, however, shall not be effective
unless acknowledged in writing by the Company and by the Union
Steward.
4. CROSS-TRAINING. The Company and Union shall meet and confer
regarding possibilities for cross-training of employees to
perform more than one job, to the extent such cross-training
is mutually advantageous. This understanding shall not serve
to limit any rights or obligations which presently exist.
5. MULTIPLE MACHINE OPERATORS. If an employee is working on
multiple machines, he/she will be paid according to the
machine which is in the highest labor grade classification.
6. STARTING TIME. In those cases where first and second shifts
are both working overtime, management will endeavor to
schedule starting and quitting times for affected employees so
as to distribute the burden of any abnormal work schedules as
equally as practical between the two shifts, in an effort to
prevent second shift from working past 2:00 a.m.
7. SEVERANCE PAY. Effective February 1, 1995 through December
31, 1997, employees who are laid off permanently from active
employment by the Company, as a result of a permanent plant
closure, total sale of assets or sale of the plant to a
purchaser unwilling to assume labor agreement substantially
unchanged, shall receive severance payments in line with the
following schedule:
- 25 -
<PAGE> 30
EXHIBIT 10.7
<TABLE>
<CAPTION>
Total Years of Seniority At Time of Separation Severance Payment
<S> <C>
More than 25 Years 200 Hours Pay
More than 20, Less than 25 Years 160 Hours Pay
More than 15, Less than 20 Years 120 Hours Pay
More than 5, Less than 15 Years 80 Hours Pay
</TABLE>
Receipt of severance pay terminates seniority and employment. Severance
pay is conditioned upon working up to the time of release by the
Company. This severance pay right obligation expires effective December
31, 1997 provided the Union has not, by this Agreement, waived its right
to bargain over effects of post - December 31, 1997 plant shutdown,
sale, transfer, etc. To be eligible for severance pay, an employee must
have five years of service on the date of shutdown and must be in active
service on day of shutdown or have been laid off, with recall rights,
within six (6) months preceding shutdown.
Very truly yours,
THE LOCKFORMER COMPANY
By______________________________________________________
Bruce Carmen
Confirmed:
IAMAW, District Lodge No. 8
By__________________________________________________
Walter Butts
- 26 -
<PAGE> 31
EXHIBIT 10.7
CLASSIFICATION & RATE RANGES EFFECTIVE JANUARY 29, 1995
<TABLE>
<CAPTION>
START END OF JOB RATE MERIT RATE CLASS
----- ------ -------- ---------- -----
PROBATION
---------
<S> <C> <C> <C> <C> <C>
ELECTRO-MECHANICAL ASSEMBLER
MACHINE MAINT. NUMERICAL CNTRL.
EXPER. SPEC. MACH. FINAL ANLZR.
ENGINE LATHE ROLL CUTTER...... 12.93 15.13 17.34 17.93 A
------------------------ ----- ----- ----- ----- -
A.S.M. SET-UP & OPERATE
ANY N.C. OR C.N.C. MACH.
SET-UP & OP. (KT'S/10 & 20 VC'S
1SC/TREE/BANDIT/CINCINNATI
GEAR HOBS SET-UP & OPERATE
EXPER. GEN. ASSY. -FINAL
GRINDER - INTERNAL/EXTERNAL
SET-UP & OPERATE
ENGINE LATHE SET-UP & OPERATE
UTILITY MACHINE SET-UP & OPERATE
TOOL CRIB ATTENDANT/TOOL GRINDER
SHEET METAL SET-UP & OPERATE
TURRET LATHE SET-UP & OPERATE... 12.36 14.27 16.20 16.75 B
----------------------------- ----- ----- ----- ----- -
ELECTRO-MECHANICAL SUB-ASSEMBLER
HEAT TREAT OP. & MAINT. INSPECTOR
MILLING MACHINE SET-UP & OPERATE
EXPER. GEN. ASSY. -SUB.
WELDER ARC & ACETYLENE
BUILDING & MACHINE MAINT. (A)
TRACER LATHE SET-UP & OPERATE... 11.44 13.42 15.41 16.00 C
----------------------------- ----- ----- ----- ----- -
FINAL ASSEMBLER
A.S.M. HELPER/OPERATOR
K.T. 180 HELPER/OPERATOR
MATTISON GRINDER
ENGINE LATHE/ SIZING
DRILL PRESS (SING./MULT./RADIAL)
SET-UP & OPERATE
SAW SET-UP & OPERATE
SPRAY PAINTER/DEGREASER
SHIPPING & RECEIVING CLERK...... 10.13 11.72 13.30 13.91 D
-------------------------- ----- ----- ----- ----- -
BROACH & HANDMILL SET-UP & OP.
SUB-ASSEMBLER
STRAIGHTENER & STAMPER.......... 9.53 10.98 12.42 12.96 E
---------------------- ----- ----- ----- ----- -
ROUGH GRINDER/BUFFING
MATERIAL HANDLER
SWEEPER/JANITORIAL
GENERAL SHOP LABOR/UNSKILLED
MACHINE OPERATOR/UNSKILLED...... 6.86 9.44 12.01 12.29 F
-------------------------- ----- ----- ----- ----- -
</TABLE>
- 27 -
<PAGE> 32
EXHIBIT 10.7
CLASSIFICATION & RATE RANGES EFFECTIVE JANUARY 29, 1996
<TABLE>
<CAPTION>
START END OF JOB RATE MERIT RATE CLASS
----- ------ -------- ---------- -----
PROBATION
---------
<S> <C> <C> <C> <C> <C>
ELECTRO-MECHANICAL ASSEMBLER
MACHINE MAINT. NUMERICAL CNTRL.
EXPER. SPEC. MACH. FINAL ANLZR.
ENGINE LATHE ROLL CUTTER...... 13.31 15.59 17.86 18.46 A
------------------------ ----- ----- ----- ----- -
A.S.M. SET-UP & OPERATE
ANY N.C. OR C.N.C. MACH.
SET-UP & OP. (KT'S/10 & 20 VC'S
1SC/TREE/BANDIT/CINCINNATI
GEAR HOBS SET-UP & OPERATE
EXPER. GEN. ASSY. -FINAL
GRINDER - INTERNAL/EXTERNAL
SET-UP & OPERATE
ENGINE LATHE SET-UP & OPERATE
UTILITY MACHINE SET-UP & OPERATE
TOOL CRIB ATTENDANT/TOOL GRINDER
SHEET METAL SET-UP & OPERATE
TURRET LATHE SET-UP & OPERATE... 12.73 14.40 16.68 17.25 B
----------------------------- ----- ----- ----- ----- -
ELECTRO-MECHANICAL SUB-ASSEMBLER
HEAT TREAT OP. & MAINT. INSPECTOR
MILLING MACHINE SET-UP & OPERATE
EXPER. GEN. ASSY. -SUB.
WELDER ARC & ACETYLENE
BUILDING & MACHINE MAINT. (A)
TRACER LATHE SET-UP & OPERATE... 11.78 13.83 15.87 16.48 C
----------------------------- ----- ----- ----- ----- -
FINAL ASSEMBLER
A.S.M. HELPER/OPERATOR
K.T. 180 HELPER/OPERATOR
MATTISON GRINDER
ENGINE LATHE/ SIZING
DRILL PRESS (SING./MULT./RADIAL)
SET-UP & OPERATE
SAW SET-UP & OPERATE
SPRAY PAINTER/DEGREASER
SHIPPING & RECEIVING CLERK...... 10.44 12.07 13.70 14.33 D
-------------------------- ----- ----- ----- ----- -
BROACH & HANDMILL SET-UP & OP.
SUB-ASSEMBLER
STRAIGHTENER & STAMPER.......... 9.82 11.31 12.79 13.35 E
---------------------- ----- ----- ----- ----- -
ROUGH GRINDER/BUFFING
MATERIAL HANDLER
SWEEPER/JANITORIAL
GENERAL SHOP LABOR/UNSKILLED
MACHINE OPERATOR/UNSKILLED...... 7.07 9.72 12.37 12.65 F
-------------------------- ----- ----- ----- ----- -
</TABLE>
- 28 -
<PAGE> 33
EXHIBIT 10.7
CLASSIFICATION & RATE RANGES EFFECTIVE JANUARY 29, 1997
<TABLE>
<CAPTION>
START END OF JOB RATE MERIT RATE CLASS
----- ------ -------- ---------- -----
PROBATION
---------
<S> <C> <C> <C> <C> <C>
ELECTRO-MECHANICAL ASSEMBLER
MACHINE MAINT. NUMERICAL CNTRL.
EXPER. SPEC. MACH. FINAL ANLZR.
ENGINE LATHE ROLL CUTTER...... 13.71 16.05 18.39 19.02 A
------------------------ ----- ----- ----- ----- -
A.S.M. SET-UP & OPERATE
ANY N.C. OR C.N.C. MACH.
SET-UP & OP. (KT'S/10 & 20 VC'S
1SC/TREE/BANDIT/CINCINNATI
GEAR HOBS SET-UP & OPERATE
EXPER. GEN. ASSY. -FINAL
GRINDER - INTERNAL/EXTERNAL
SET-UP & OPERATE
ENGINE LATHE SET-UP & OPERATE
UTILITY MACHINE SET-UP & OPERATE
TOOL CRIB ATTENDANT/TOOL GRINDER
SHEET METAL SET-UP & OPERATE
TURRET LATHE SET-UP & OPERATE... 13.11 15.14 17.18 17.77 B
----------------------------- ----- ----- ----- ----- -
ELECTRO-MECHANICAL SUB-ASSEMBLER
HEAT TREAT OP. & MAINT. INSPECTOR
MILLING MACHINE SET-UP & OPERATE
EXPER. GEN. ASSY. -SUB.
WELDER ARC & ACETYLENE
BUILDING & MACHINE MAINT. (A)
TRACER LATHE SET-UP & OPERATE... 12.13 14.24 16.35 16.98 C
----------------------------- ----- ----- ----- ----- -
FINAL ASSEMBLER
A.S.M. HELPER/OPERATOR
K.T. 180 HELPER/OPERATOR
MATTISON GRINDER
ENGINE LATHE/ SIZING
DRILL PRESS (SING./MULT./RADIAL)
SET-UP & OPERATE
SAW SET-UP & OPERATE
SPRAY PAINTER/DEGREASER
SHIPPING & RECEIVING CLERK...... 10.75 12.43 14.11 14.76 D
-------------------------- ----- ----- ----- ----- -
BROACH & HANDMILL SET-UP & OP.
SUB-ASSEMBLER
STRAIGHTENER & STAMPER.......... 10.11 11.65 13.18 13.75 E
---------------------- ----- ----- ----- ----- -
ROUGH GRINDER/BUFFING
MATERIAL HANDLER
SWEEPER/JANITORIAL
GENERAL SHOP LABOR/UNSKILLED
MACHINE OPERATOR/UNSKILLED...... 7.28 10.01 12.74 13.03 F
-------------------------- ----- ----- ----- ----- -
</TABLE>
- 29 -
<PAGE> 34
EXHIBIT 10.7
February 14, 1995
Walter Butts
Assistant Directing Business Representative
DISTRICT NO. 8
I.A.M.A.W., AFL-CIO, ISFL AND CFL
Letter of Understanding
Re: Special Merit Rate for Employees assigned to set-up, operate and prove
out the KT180 and 10/20 VC machines.
Dear Mr. Butts:
During the recently-concluded labor contract negotiations, the Union proposed
that the jobs, "KT180 set-up, operate & prove out and 10/20 VC set-up, operate
& prove out" be reclassified from Class B to Class A. Management declined to
agree with that proposal. It was agreed, however, that employees assigned to
the above jobs who had advanced to the Class B Merit Rate would be considered
for an additional merit pay differential of $.50/hour in recognition of the
skills needed to perform all aspects of those jobs at top efficiency, without
assistance.
It was agreed that incumbents in the above jobs who currently are at the Merit
Rate for Class B will be considered for the additional merit pay differential
within three months after contract signing.
Please countersign and return the enclosed copy of this letter to indicate the
Union's agreement to this understanding.
Very truly yours,
________________________________
Bruce W. Carmen
Vice President
The Lockformer Company
AGREED and ACCEPTED on behalf of
District 8, I.A.M.A.W.,
________________________________
Walter Butts
Assistant Director Business Representative
District No. 8
I.A.M.A.W., AFL-CIO, ISFL AND CFL
- 30 -
<PAGE> 1
EXHIBIT 10.8
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Page
------- ----
<S> <C> <C>
I Execution and Date of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II Recognition Scope of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
III Union Security - Checkoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
IV Management Rights - Plant Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
V Hours of Work and Overtime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
VI Wages and Job Classifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
VII Union Label . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
VIII Seniority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
IX Shop Stewards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
X Grievance Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
XI Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
XII Erection of Installation of Company's Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
XIII Paid Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
XIV Paid Vacations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
XV Strikes and Lockouts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
XVI Struck Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
XVII Leaves of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
XVIII Personal Leave Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
XIX Safety and Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
XX Plant Visitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
XXI Reporting - In-Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
XXII Call-Back Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
XXIII Funeral Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
XXIV Jury Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
XXV Wash-Up Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
XXVI Bulletin Boards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
XXVII Notification of Layoffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
XXVIII Job Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
XXIX Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
XXX Retirement Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
XXXI Duration of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 2
EXHIBIT 10.8
SHEET METAL WORKERS' INTERNATIONAL ASSOCIATION
Local Union Number 26
ARTICLE I Execution and Date of Agreement
This agreement effective as of the date of execution of this contract by and
between IOWA PRECISION INDUSTRIES, INC., 5480 - 6th St. S.W., Cedar Rapids,
Iowa, its successor or assigns, hereinafter referred to as the "COMPANY", and
LOCAL UNION 263 of the Sheet Metal Workers' International Association
hereinafter referred to as the "UNION".
ARTICLE II Recognition Scope of Agreement
A. The Company recognizes the Union as the sole and exclusive
representative for the purpose of collective bargaining with respect
to wages, hours and other conditions of employment for all production
and maintenance employees of the Company excluding only supervisors,
office clerical help, watchmen, and guards, as defined in the National
Labor Relations Act of 1947 as amended.
B. The Company understands and agrees that the terms of this agreement
shall not apply to any work normally performed by journeymen sheet
metal workers. A list of, or a brochure, or other material describing
all items and/or equipment manufactured by the Company is attached to
this agreement and labeled Addendum __________ and is duly
incorporated as a part of this agreement. Before undertaking the
fabrication of any additional items and/or equipment which require
installation or erection of a nature usually performed by Building
Trades Workers, the Company agrees to send written notice to Union's
Business Agent for the purpose of determining whether such items
belong to work normally performed by journeymen sheet metal workers
and thus not covered under the terms of this agreement. In the event
the Company proceeds to produce any such items or equipment normally
performed by journeymen sheet metal workers, the Union shall have the
right to request the Company to reopen this agreement for the
purposes, only, of negotiating an addendum to this agreement to be
signed with the building and construction trades Local Union
affiliated with Sheet Metal Workers' International Association in the
area in which the Company's plant is located, covering the terms and
conditions under which the Company shall produce the foresaid items
and equipment. If no agreement is reached within fifteen (15) days
from reopening of this agreement, the Union shall have the right to
terminate this agreement.
C. The Company shall assign all production and maintenance work under
this agreement to employees covered by this agreement. Production and
maintenance work shall not be performed by supervisors or by any other
persons excluded from the bargaining unit, except for the purpose of
research and development, or instructing employees, or demonstrating
proper methods and procedures of work operations.
D. The Company agrees that during the life of this agreement it will not
subcontract out any work that has normally been performed by employees
in the bargaining unit if such would result in a reduction of the size
of the bargaining unit or while production bargaining unit employees
are on layoff.
E. No employee covered by this agreement will be permitted to work on
field fabrication, erection or installation work coming within the
jurisdiction of a Building Trades local union affiliated with the
Sheet Metal Workers' International Association.
- 1 -
<PAGE> 3
EXHIBIT 10.8
F. The Company on their part and the Union on their part agree that they
will not, individually or jointly, discriminate against any employee
or group of employees because of age, race, color, religion, sex,
disability or national origin of such employee or group of employees.
Wherever the male gender is used in this agreement, it is used as a
nongeneric term.
ARTICLE III - Union Security - Checkoff
Upon receipt of a signed, individual authorization in proper form which
complies with the state and federal law from any employee covered under this
agreement, the Company shall withhold from such employee's earnings, payment
for the union dues and other obligations under the terms and conditions
specified in the individual's authorization. Deductions shall be made from the
first pay of each month of said employee and promptly remitted to the Financial
Secretary of the Union, together with a list of the names of the employees to
whom said monies are to be credited. Should any employee have no earnings due
him on the first payday of any month, deductions shall be made from the next
succeeding pay of employees.
ARTICLE IV - Management Rights - Plant Rules
A. Nothing in this agreement is intended to limit the Company's right to
supervise and direct its work force, including the right to establish
new jobs, increase or decrease the number of jobs, change materials or
equipment, schedule and assign work to be performed, hire, re-hire,
re-call, transfer, or layoff employees according to production needs,
all subject to limitations imposed in this agreement. The Company
shall have the right to discipline or discharge employees for just
cause, it being understood that the Company shall not discriminate
against any employee under this section. If it is determined that any
employee has been discriminated against under this section, said
employee shall be offered reinstatement to his job with full
compensation for any lost earnings.
B. The Company shall have the right to establish, maintain and enforce
rules and regulations to assure orderly plant operations, it being
understood that such rules and regulations shall not be inconsistent
or in conflict with any provision of this agreement. The Company
shall maintain on its bulletin boards and furnish the Union with a
written or printed copy of all such rules and regulations and all
changes therein. Changes in existing plant rules and regulations, as
well as new rules and regulations promulgated by the Company, shall
not become effective until five (5) regular workdays after copies
thereof have been furnished to the Union and posted on the bulletin
boards. If the Union considers a proposed Company rule or regulation
to be inconsistent or in conflict with any provision of this
agreement, it may request an immediate hearing before the Joint
Adjustment Board. Any plant rule so challenged will not become
effective until the grievance procedure has been exhausted.
ARTICLE V - Hours of Work and Overtime
A. The workweek shall consist of a 40-hour week divided into five (5)
workdays of eight (8) hours each running consecutive from Monday
through Friday. The work hours shall be from 7:00 AM to 3:30 PM
exclusive of a 30-minute lunch period. The workdays and work hours
during the months of June, July, and August, and in times of emergency
energy shortages may be changed by mutual agreement between the
Company and the Union. The Company will notify the Union prior to
Thursday of a change in the subsequent work week. However, the above
shall be subject to approval by a majority vote of the bargaining
unit.
- 2 -
<PAGE> 4
EXHIBIT 10.8
B. Second shift shall start between the hours of 3:30 PM and 5:30 PM and
shall end between the hours of 12:00 midnight and 3:30 AM the
following day. Second shift employees shall receive a twenty-five
cent (.25) per hour premium pay.
C. The foregoing provisions of this section describe the regular workday
and regular workweek and are not intended to be construed as a
guarantee of hours of work per day or per week, or days of work per
week, provided that no employee shall be given time off to make up for
his overtime work in any week.
D. All work performed by an employee beyond eight consecutive hours per
day shall be compensated at a rate of one and one half (1-1/2) times
his regular rate of pay for the first four (4) hours of overtime and
two (2) times his regular rate of pay for all hours worked thereafter.
If an employee is required to work more than ten (10) consecutive
hours, the Company shall give such employee a thirty (30) minute paid
meal time upon completion of the tenth (10th) hour of work.
E. All work performed on Sunday and on holidays specified in this
agreement shall be compensated at a rate of two (2) times the
employee's regular hourly rate of pay.
F. It is understood and agreed that there shall be no duplication of
overtime payments.
G. There shall be no discrimination in the assignment of overtime work
and overtime shall, insofar as is practical, be allocated equitably
among the employees qualified to perform the work operation in
question. For the purpose of this provision, overtime offered and not
worked shall count as overtime worked. Overtime shall be offered by
the end of the shift the day before the day the overtime is to be
worked. Overtime which is offered after the end of the shift of the
day before and not worked shall not count as overtime worked. After
each term of a contract, the overtime chart will start back to zero
hours. If an employee is sick, on vacation, etc., overtime hours
cannot be charged to him if he is not there. Overtime records shall
be posted on the bulletin board. New hires, non permanent and
successful bidders on probation will not be assigned overtime unless
overtime has been offered to all employees in that department. New
hires, transfers or bumped employees will be added to the overtime
schedule with the same amount of overtime as the employee with the
most overtime in that department. The company agrees that overtime
will not be offered on the day of a posted Union meeting. The union
agrees that notice of a Union meeting will be posted five (5) days in
advance of the meeting date.
H. Overtime can be worked while employees in that department are on
layoff as long as the overtime hours worked do not exceed a total of
25 hours per man per calendar month in said department. Employees
will be expected to work overtime as scheduled and persistent refusal
may result in a verbal warning. If overtime is worked while there are
people laid off, the people coming back to work from lay off will
maintain their old overtime hours.
I. Company agrees to one (1) working day notification for change of
working hours for going on and off of overtime.
J. Any transferred employee has the right to work overtime in the
department he has been transferred to. If transferred employee does
not work offered overtime in that department, he will still be charged
the overtime worked. The low overtime employee, if qualified from the
original group of transferred employee, will be offered the overtime.
- 3 -
<PAGE> 5
EXHIBIT 10.8
ARTICLE VI - Wages and Job Classification
A. A list of all job classifications in the bargaining unit and the
schedule of maximum rates of pay for said classification including the
$0.40 across the board increase to the base scale for the period
beginning March 20, 1995, in accordance with the 1995-1998 contract
are as follows:
<TABLE>
<CAPTION>
Base Scale
----------
Classification June 1, 1995
-------------- ------------
<S> <C> <C>
1. Machinists 17.65
2. Assemblers 17.65
3. Welders-Assembler 17.65
4. Electricians 18.00
*5. Utility 16.65
6. Janitor-Odd Job 14.58
*7. Saws 16.65
8. Maintenance 16.65
9. Painter 17.65
10. Leadman .40 over scale listed above
11. Night Shift Premium .25 over scale listed above
12. Eight Year Service Premium .10 over scale listed above
</TABLE>
*These rates will not affect any employee actively employed in these
classifications as of 6/1/82. These rates will be in effect for all
new employees hired after 6/1/83, and/or any employee bidding or
bumping into these classifications after 6/1/83.
B. The economic agreement for the three (3) year contract shall be as
follows:
1. First year period of June 1, 1995 and including May 31, 1996:
a. Cost of living adjustments, either increases or
decreases shall be based on the U.S. consumer price
index at the rate of $0.01 per hour for every .4
change in said index. Adjustments, if any, in the
Cost of Living shall be made quarterly through May
1996 in accordance with the following:
<TABLE>
<CAPTION>
Effective Date Based on Consumer Price
of Adjustment Index for Month of:
------------- ------------------
<S> <C>
August 15, 1995 June, 1995
November 15, 1995 September, 1995
February 15, 1996 December, 1995
May 15, 1996 March, 1996
</TABLE>
b. It is agreed that 100% of the total cost of living
adjustment for the contract year will be frozen into
the base scale as of May 31, 1995 creating a new base
scale as of June 1, 1995.
c. It was further agreed that effective March 20, 1995
there will be a $0.40 cents per hour increase across
the board to the base scale.
2. Second year period of June 1, 1996 and including May 31, 1997:
a. Cost of living adjustments, either increases or
decreases shall be based on the U.S. consumer price
index at the rate of $0.01 per hour for every .4
change in said index. Adjustments, if any, in the
Cost of Living shall be made quarterly through May
1997 in accordance with the following:
- 4 -
<PAGE> 6
EXHIBIT 10.8
<TABLE>
<CAPTION>
Effective Date Based on Consumer Price
of Adjustment Index for Month of:
------------- ------------------
<S> <C>
August 15, 1996 June, 1996
November 15, 1996 September, 1996
February 15, 1997 December, 1996
May 15, 1997 March, 1997
</TABLE>
b. It is agreed that 100% of the total cost of living
adjustment for the contract year will be frozen into
the base scale as of May 31, 1996 creating a new base
scale as of June 1, 1996.
c. It is further agreed that effective June 1, 1996
there will be $0.30 cents per hour increase across
the board to the base scale.
3. Third year period of June 1, 1997 and including May 31, 1998:
a. Cost of living adjustments, either increases or
decreases shall be based on the U.S. consumer price
index at the rate of $0.01 per hour for every .4
change in said index. Adjustments, if any, in the
Cost of Living shall be made quarterly through May
1998 in accordance with the following:
<TABLE>
<CAPTION>
Effective Date Based on Consumer Price
of Adjustment Index for Month of:
------------- ------------------
<S> <C>
August 15, 1997 June, 1997
November 15, 1997 September, 1997
February 15, 1998 December, 1997
May 15, 1998 March, 1998
</TABLE>
b. It is agreed that 100% of the total cost of living
adjustment for the contract year will be frozen into
the base scale as of May 31, 1997 creating a new base
scale as of June 1, 1997.
c. It is further agreed that effective June 1, 1997
there will be $0.25 cents per hour increase across
the board to the base scale.
C. Unskilled
A new employee, unskilled or without experience, will be started at
$4.00 per hour below the base scale listed in Article VI, Paragraph A.
After probationary period, 6 months of satisfactory performance, there
will be a one dollar ($1.00) per hour increase and twenty cents
($0.20) per hour each month thereafter until the employee reaches the
maximum base scale of the classification hired into. Unskilled new
hires have no bidding rights until they have reached maximum base
scale in their classification.
D. Skilled
A new employee with prior experience, if proven qualified, will be
started at $2.00 per hour below the base scale as listed in Article
VI, Paragraph A. After probationary period, 3 months of satisfactory
performance, there will be a fifty cents ($0.50) per hour increase and
ten cents ($0.10) per hour each month thereafter until the employee
reaches the maximum base scale of the classification hired into. New
hires cannot bid another job classification until three (3) months
after probationary period has been completed.
- 5 -
<PAGE> 7
EXHIBIT 10.8
E. All wages and/or all monies due each employee under this agreement
shall be paid (by check) before end of shift on last day of scheduled
work week. When a holiday occurs on the normal payday, employees
shall be paid in full on the last workday preceding the holiday. No
more than one (1) weeks wages shall be withheld by the Company from
the employee's pay. In the event of a layoff or discharge, employees
shall be paid in full at the time of said layoff or discharge if
possible, but never later than the following regularly scheduled
business day.
F. Leadmen for departments can be appointed at the discretion of the
Company. Their duties shall be all inclusive with the exception of
the administration of discipline on bargaining unit employees.
ARTICLE VII - Union Label
During compliance with all of the provisions of this agreement the Company
shall display the appropriate union label of the Sheet Metal Workers'
International Association on all items produced exclusively under the terms of
this agreement. The Company agrees that all union labels shall be the
property of the Union and said permission to display the union label may be
revoked by the Union for causes the Union deems adequate.
ARTICLE VIII - Seniority
A. Seniority shall be based on the length of service with the Company and
shall be computed from the date of employment or reemployment in the
bargaining unit covered by this agreement.
B. The Company shall keep a record of each employee's seniority in the
bargaining unit and shall furnish the Union with an up-to-date copy of
this list upon call.
C. Only permanent employees shall have seniority. Employees shall become
permanent employees once they have successfully completed their
probationary period unless time is extended by mutual agreement
between the Company and the Union. Non-permanent employees shall be
on probation until they become permanent employees and shall have no
seniority rights.
D. In the event of layoff, employees shall be laid off in inverse order
of their seniority. In all cases, probationary employees shall be the
first to be laid off and the last recalled. Other employees shall be
recalled from layoff in order of their seniority provided they are
qualified to perform the work that is available.
E. In cases of bumping, senior employees in individual classifications,
shall be given only five (5) working days to prove themselves in other
classification jobs being held by employees of lesser plant seniority
during layoffs.
F. All new jobs and all new openings for existing jobs and the immediate
vacancy only, created by a successful bidder of the initial new job or
new opening providing there are no employees on layoff in the vacated
position, shall be posted by the company on its bulletin boards for a
period of at least three (3) working days, for the purpose of enabling
employees in the bargaining unit to apply for such job/s if they so
desire. The Company is to act thereon within two (2) working days
after
- 6 -
<PAGE> 8
EXHIBIT 10.8
the third day of posting. In the event that there are employees on
layoff, qualified to fill the vacancy created by a successful bidder,
the laid off employee will be recalled and the posting of that job
will not be required. In the event the job is not filled within
thirty (30) days from the original posting, the job must be reposted
for bid.
G. In cases of bidding, the most senior employees in the bargaining unit
applying for any job under this provision shall be given preference in
filling such job provided he is capable of satisfactorily performing
such job after a probationary period of two (2) months. Subsequent
job/s left vacant by a successful bidder shall be offered for bid for
a period not to exceed three (3) working days, then if no bargaining
unit employee is interested the job may be filled immediately from
outside the present work force, or not filled at the discretion of the
Company.
H. During the first ten (10) days of the new job, the employee may
request to withdraw and return to his previous job, in so doing, the
employee will have no bid rights for three (3) months. Where the
employee has been accepted on the new job, the employee will have no
bid rights for a period of three (3) months. However, if the Company
removes him from the new job during the probation period, the employee
shall have no bid rights for a period of six (6) months counting from
the date of his being returned to his previous job. An employee
removed from his new job by his foreman shall have the right of appeal
to the Production Manager.
I. An employee bidding into a job opening because of another employee
bidding out will not lose his bidding rights if the first employee
goes back to his original job because of dislike for the job or if the
Company should take the first person out of that job.
J. An employee promoted from the Bargaining Unit after June 1, 1989,
shall retain but not accrue plant seniority as of the date of the
promotion. If they fail to return to the Bargaining Unit within 90
calendar days, they shall lose all of their accrued seniority.
Employees returning to the Bargaining Unit within 90 calendar days
shall return to their last regular job classification. If their last
regular job classification has been discontinued, they may bump where
their seniority and qualifications permit.
K. The wages of an experienced employee bidding from one classification
to another of equal pay shall not be reduced more than twenty-five
cents ($0.25) per hour, for a period of thirty (30) days. Permanent
employees (not new hire or unskilled hires) when bidding into
different classifications will receive a reduction of $1.00 per hour
below base scale of new classification. After sixty (60) days of
satisfactory performance in the new classification the employee will
receive a fifty cents ($0.50) per hour increase and shall receive
twenty-five cents ($0.25) per hour each month thereafter until the
employee reaches the base scale of the new classification.
L. Employees bidding into a classification in which the employee has had
no prior experience or skills may, at the company's discretion, be
required to acquire schooling unless, the employee is able to
demonstrate the ability to perform the duties without schooling. The
employee will be subject to review after one (1) month on the new job.
If schooling is required it will be at the employees expense subject
to 100% reimbursement by the Company upon satisfactory completion of
the schooling.
- 7 -
<PAGE> 9
EXHIBIT 10.8
M. Satisfactory passing of a hands on test will be required for all job
classifications when bidding or bumping. An experienced employee when
bidding or bumping need not take the test. The company will attempt
to simplify these requirement tests to a reading of blue prints and
then performing the task. Qualification tests will be drafted jointly
between Management and Bargaining Unit Committee.
N. An experienced employee is one who has successfully passed the
probation period in that classification. Transferred employees will
not be considered experienced employees if they have not passed the
above qualification.
O. In computing the total length of service in determining an employee's
seniority, time lost as a result of any of the following shall be
considered as time served; military leave of absence, any other
authorized leaves of absence where accumulation of seniority is
approved, occupational illness or injury. Employees returning from an
authorized leave of absence in excess of thirty (30) days shall have a
new seniority date established according to Article XVII, Paragraph D.
P. All seniority rights shall be forfeited for any of the following
reasons: voluntary quitting, discharge for cause, failure to report
to work or to communicate with the Company within ten (10) days after
the sending of a certified letter to the employee's last address of
record offering him reinstatement after an involuntary layoff, unless
he gives a satisfactory reason for the failure to report or to
communicate; for reasons stated in Article XVII regarding a leave of
absence or an involuntary layoff in excess of 12 months for employees
who had 12 months or less total service prior to the date of layoff,
or an involuntary layoff in excess of 24 months for employees who had
more than 12 months total service prior to the date of layoff.
Q. The Company shall at its discretion, transfer an employee from one
department to another department for a period of five (5) workdays.
If agreeable with the employee, the Company may request an extension
beyond the five (5) days. The most senior qualified man (men) in the
department shall have the option to be transferred first. An exchange
of shifts between two consenting employees may be made subject to the
approval of the foreman of the department. The time limit of this
exchange to be a minimum of one month.
R. Any out of shop work requiring production employees, in so far as is
practical, will be given to the most senior qualified employee.
ARTICLE IX - Shop Stewards
The Company recognizes the right of the Union to designate a maximum of one (1)
steward in each major classification covered under this agreement. A steward
shall, after notifying his foreman, be permitted reasonable time to leave his
work station for the purpose of handling grievances under the contract when his
presence is requested by a bargaining unit employee or other necessary Union
business and when same will not affect other plant operations. Notification
of where he will be as well as time of return is to be made by the steward to
his foreman.
- 8 -
<PAGE> 10
EXHIBIT 10.8
ARTICLE X - Grievance Procedure
A. There is hereby created a Joint Company-Union Disputes Board
(hereinafter referred to as the "Joint Board") which shall consist of
four (4) members, of whom half shall be selected by the Union from
employees in the bargaining unit. The Company owner, or his
designated representative, and the Local Union's Business Agent, or
his designated representative, shall have the right to participate in
meetings of the Joint Board. The Joint Board shall meet at any time
between regularly scheduled meetings upon call by either party to this
agreement. The Joint Board shall meet at a regular time and place at
least once a month for the purpose of adjusting disputes that have not
been satisfactorily settled in the first two steps of the grievance
procedure. The time spent by Union employees of the Board in
attending such meetings during working hours shall be compensated by
the Company at their regular rate of pay.
B. In the event of dispute, or grievance arising between the Company and
any employee covered by this agreement, said dispute, difference, or
grievance shall be settled in the following manner:
1. The aggrieved employee shall discuss the matter with his
foreman, in the presence of the shop steward, within at least
three (3) working days from the time the grievance is alleged
to have occurred, except that grievances arising from
discharge cases must be presented within three (3) working
days.
2. If the matter is not adjusted in step (1), the employee shall
reduce his grievance to writing and submit same to the foreman
within two (2) working days. The foreman shall submit a
written answer to the grievance within two (2) working days
from receipt of the written grievance.
3. If the matter has not been adjusted in step (2), the Union may
submit the dispute to the next regular scheduled meeting of
the Joint Board.
C. Any grievance involving lost wages or earnings in which the Company
may be called upon to make restitution to the aggrieved employee may,
by mutual consent of both parties thereto, be submitted directly to
the Joint Board at a regular or special meeting called for that
purpose after the preliminary steps in the grievance procedure have
been waived by both parties. Further, it is agreed that in the event
that any grievance or interpretation of this agreement arises which
affects more than one employee in the bargaining unit, either party
may request a meeting of the "Joint Board" within twenty-four (24)
hours.
ARTICLE XI - Arbitration
A. If the grievance has not been satisfactorily settled by the Joint
Board, or otherwise resolved by the parties, either party may submit
the dispute to arbitration after first giving written notification to
the other party of the intention to arbitrate. Such written notice
must be given within three (3) days after the Joint Board meeting in
which the dispute was discussed. Either party may proceed directly to
arbitration without the Joint Board meeting to discuss the grievance
upon mutual consent of the Joint Board members.
- 9 -
<PAGE> 11
EXHIBIT 10.8
B. In the event the parties fail to agree on an arbitrator within a five
(5) days period after notification of intention to arbitrate, a list
of three (3) candidates chosen by the Federal Mediation and
Conciliation Service shall be jointly requested by the Union and the
Company. Each party shall strike one (1) name from said list and the
remaining person shall be the arbitrator. The party that shall
exercise the first strike shall be determined by the flip of a coin.
C. The decision of the arbitrator shall be in writing and shall be final
and binding on both parties thereto. Both parties shall bear equally
the cost of the arbitrator in fee and expense.
D. The question of whether a grievance is arbitrable may be submitted to
arbitration.
E. The arbitrator shall be limited to interpreting the agreement and
applying it to the particular case presented to him, and shall have no
authority to add to, subtract from, or in any way modify the terms of
this agreement or any agreement made supplementary thereto.
ARTICLE XII - Erection of Installation of Company's Products
This is not applicable to this Company at the time of the present agreement;
should any problem arise concerning this Article, same shall be open for
discussion and negotiations.
ARTICLE XIII - Paid Holidays
A. For the purpose of this agreement, the following shall be recognized
as paid holidays: New Year's Day, Good Friday, Memorial Day, July
4th, Labor Day, Thanksgiving Day, Day after Thanksgiving, Christmas
Day, and the four working days between Christmas and New Year's Day.
B. Should any of the foregoing holidays occur on Saturday or Sunday, the
previous Friday or the following Monday, instead of such Saturday or
Sunday, shall be recognized and observed as the holiday in question.
C. Each employee shall receive his regular hourly rate of pay as holiday
pay for each of the above recognized holidays or days observed as
such. All work done on any of the foregoing holidays or days observed
as such shall be compensated at the rate of two (2) times the
employee's regular hourly rate of pay, in addition to the employee's
holiday pay.
D. Employees shall receive holiday pay provided they have been in the
employ of the Company for at least thirty (30) working days and have
worked the full day preceding and the full day following the holiday
unless ill and said illness is covered by a doctor's slip or excused
by one's supervisor.
E. All seniority employees laid off five (5) days prior to a regular paid
holiday except Christmas, in accordance with Article XIII, Paragraph
"A", or recalled from layoff within five (5) days after said holiday,
shall receive holiday pay providing the employee returns when
recalled. All seniority employees laid off thirty (30) days prior to
the Christmas holiday or recalled from layoff within thirty (30) days
after the Christmas holidays, provided the employee returns when
recalled, shall receive holiday pay upon his return to work. However,
if the employee does not remain in the employ of the Company for two
(2) months continuous from the date of his return to work, the
Christmas holiday pay paid will be deducted from his final paycheck.
- 10 -
<PAGE> 12
EXHIBIT 10.8
ARTICLE XIV - Paid Vacations
A. All employees in the bargaining unit who have been in the employ of
the Company for at least twelve (12) months shall be eligible for a
vacation with pay, in accordance with the length of their service as
enumerated below:
1 week or 40 hours after 1 year
2 weeks or 80 hours after 2 years
3 weeks or 120 hours after 7 years
4 weeks or 160 hours after 14 years
5 weeks or 200 hours after 25 years
B. All employees shall be compensated for vacation pay at a rate of eight
(8) times their regular hourly rate of pay in effect at the time the
vacation is taken, times the number of vacation days, but limited to
the appropriate number of hours as set forth in Section A above.
C. Employees laid off by the Company shall be entitled to a prorated
vacation. Employees on layoff may draw all or any part of their
accrued vacation pay while on layoff.
D. Vacation shall be taken during the vacation period from Anniversary
Date to Anniversary Date. Prior to the vacation period, employees
shall have the right to send a written request to the Company
specifying the period in which they prefer to have their vacation.
The Company shall consider the seniority of employees in filling their
request concerning their vacation periods, if at all practicable,
provided that, nothing in this section shall detract from the
Company's right to schedule employee's vacation in accordance with
necessary production needs. Consecutive years' vacation shall not be
taken within three (3) months of each other.
E. 1. Vacation taken prior to Anniversary date shall be paid on
pro-rata basis based upon the accrued vacation earned at the
time the vacation is taken. The balance of the vacation pay
accrued shall be paid when it is fully earned.
2. Vacation shall be accrued at the rate of one-twelfth (1/12)
per month of the vacation hours enumerated above in Section A:
3. An employee who voluntarily quits shall be entitled to be paid
for his accrued vacation in accordance with the above provided
he tenders his resignation at least two (2) weeks prior to his
termination date.
F. The Company shall give notice by mutual agreement to employees
concerning the time their vacation has been scheduled. The Company
shall provide the full amount of employee's vacation pay at least one
(1) day prior to the beginning of employee's scheduled vacation.
G. If a holiday occurs during an employee's vacation period, he shall
receive his holiday pay in addition to his full vacation pay and he
may take an additional day off, at such time as may be satisfactory to
both he and the Company. Holiday pay occurring during an employee's
scheduled vacation is payable at the same time that the employee
receives his vacation pay from the Company.
- 11 -
<PAGE> 13
EXHIBIT 10.8
H. The vacation week shall start at the beginning of the employee's shift
on Monday and end at the beginning of the employee's shift on Monday
that he is due back. However, an employee scheduled to be off on
vacation may turn down any overtime offered him after his last
scheduled shift on Friday preceding such first day of vacation and not
be penalized on the overtime list for such refusal.
I. Employees who were absent more than one work week due to their
sickness or accident, or sickness, accident or death in the family,
may apply full weeks of such absence to their vacation period and
shall be paid at the rate that would have been applicable during the
period when they were absent.
J. After June 1st of any year, an employee who has had his vacation dates
approved by the Company may not be displaced by an older seniority man
requesting the same dates.
ARTICLE XV - Strikes and Lockouts
A. The Company agrees not to cause, permit, or engage in any lockout of
its employees during the term of this agreement, except for refusal of
the Union to submit to arbitration. The Union agrees that during the
course of this agreement it will not sanction or engage in any strike
or other interference with production, except for refusal of the
Company to submit to arbitration.
B. It is expressly understood and agreed that anything in this agreement
to the contrary notwithstanding, it shall not be a violation of any
term of provision of this agreement for any person covered by this
agreement to refuse to cross or work behind a picket line established
at the Company's plant by any bonafide labor union, provided the
strike or picket line is authorized or sanctioned by the International
of the Union.
ARTICLE XVI - Struck Goods
The Company agrees that it will not render noncustomary production assistance
to any other employer who is involved in a strike or lockout against any local
union affiliated with Sheet Metal Workers' International Association.
Accordingly, no employee covered by this agreement will be requested or
required to manufacture, or furnish goods or otherwise do work which normally
would have been done by employees of the employer who is involved in a labor
dispute with a local union affiliated with Sheet Metal Workers' International
Association.
ARTICLE XVII - Leaves of Absence
A. Application for leave of absence must be made in writing, addressed to
the Company and be approved in writing by the Company and a copy
thereof given to the Union. Leaves of absence, without pay, may be
granted at the discretion of the Company for reasonable cause, for a
period of sixty (60) days without prejudice to the employee's
seniority or other rights. Requests for extension of such leave
beyond sixty (60) days shall require joint approval of the Union and
Company for such extension and approval of accumulation of seniority
beyond such time. An employee on leave who works for another employer
or an employee who fails to report for work, without good cause, on
the first scheduled workday after his leave expires, will be
considered a voluntary quit.
- 12 -
<PAGE> 14
EXHIBIT 10.8
B. An employee being paid Workman's Compensation will be considered on a
leave of absence until three (3) workdays after the date the doctor
has released him for work and upon so returning, shall have continuous
seniority for all purposes.
C. An employee elected or appointed as a Union Officer or a delegate to
any labor activity necessitating a leave of absence, shall be granted
such leave without pay for a period of twelve (12) months, subject to
renewal at the end of such period at the option of the Company.
Seniority for all purposes shall accumulate for a maximum of twelve
(12) months and remain static thereafter until the employee returns.
D. An employee returning from an authorized leave of absence in excess of
sixty (60) days where seniority is not accumulated during such
absence, shall be given credit for this accumulated seniority earned
while he was previously employed by the Company. Thereafter, such new
seniority date shall be used for bidding, for determining the length
of completed service for vacation purposes.
E. An employee rehired, regardless of his reason for leaving and without
regard for the length of time between his termination and date of
rehire, may after having been employed a period of time equivalent to
his prior years of service, have his prior seniority reinstated and
added to his present seniority for purposes of determining the length
of completed service for vacation. Seniority shall not be accumulated
during an employees absence. This policy will be effective for one
such period of absence only.
F. Employees returning at the end of such leaves of absence shall be
reemployed by the Company in accordance with their seniority as stated
above.
ARTICLE XVIII - Personal Leave Days
A. New hires must complete probationary period to be eligible for two (2)
Paid Leave Day, must have six (6) months of continuous active service
to become eligible for the third paid leave day. Such employee will
not become eligible for the fourth and fifth paid leave day within the
contract year until he has completed nine (9) months of continuous
active service with the Company.
B. Eligibility for regular employees for the four (4) Paid Personal Leave
Days, requires no limitation for the first two (2) Paid Leave Days,
requires three (3) months for the third day, and six (6) months for
the fourth day and fifth day in each Contract year.
C. Paid Personal Leave days shall be set with regard to the wishes of
employees, however, the foremen reserves the right to schedule such
days to provide the least possible conflict with the efficient
operation of the department. If a foreman has multiple requests for
the same day, seniority will prevail. No reasonable request shall be
refused. It will be permissible to take a Personal Leave Day in two
four hour increments within the same pay period. Notice to the
foreman is required.
D. Paid Personal Leave days will be taken in individual increments of not
less than eight (8) hours except, during special summer hours, it will
be permissible to take two (2) successive four (4) hour Fridays for
one (1) Paid Personal Leave Day.
- 13 -
<PAGE> 15
EXHIBIT 10.8
E. An employee absent from work due to illness or injury who wishes to
use the paid leave days he is eligible for in connection with such
illness or injury may submit such request to his foreman for approval.
F. In no event will paid leave days accrue from contract year to contract
year. However, Personal Leave Days not used in a Contract year from
June 1 through May 31 will receive pay in lieu of the unused Personal
Leave Days the following pay period of December 15th by separate
check.
ARTICLE XIX - Safety and Health
The Company agrees to provide healthy, safe and sanitary conditions in its
plants, including clean restrooms and adequate locker or storage space. Union
to name three (3) to a Safety Committee. The Company further agrees to provide
any additional clothing or equipment which are considered necessary to the
safety of employees. The Company will reimburse each Union employee in the
amount of eighty-five dollars ($85.00) per contract year towards the purchase
of approved Safety shoes upon presentation of proof of purchase.
ARTICLE XX - Plant Visitation
A representative of the Union shall be permitted to visit the office or plant
of the Company for the purpose of investigating any matter arising out of this
agreement, after notifying a representative of the Company of his intention to
do so.
ARTICLE XXI - Reporting-In-Pay
An employee who is scheduled or required to and does report on any day and is
not put to work for at least two (2) hours, shall receive a minimum of three
(3) hours pay from the Company, except where failure to put such employee to
work is caused by a failure of power, major breakdown or equipment, or an Act
of God.
ARTICLE XXII - Call-Back Pay
Whenever an employee who has finished his regularly scheduled shift and left
the Company premises is called back by the Company to work, said employee shall
receive two (2) hours call-back pay at his straight time rate in addition to
whatever pay is due him under the contract for hours worked.
ARTICLE XXIII - Funeral Leave
In the event of death of employee's Father, Mother, Brother, Sister, Spouse,
Child, Stepfather, Stepmother, Father-In-Law, or Mother-In-Law, such employee
shall be entitled up to a maximum of three (3) workdays emergency leave with
pay in the amount of straight time earnings lost by him to make arrangements
for or to attend the funeral. The employee must notify the Personnel Office of
the funeral. The Company may request proof of Death.
ARTICLE XXIV - Jury Duty
A. If an employee is called to Jury Duty, the employee will be paid (2)
two hours his regular scale wages for time spent that day waiting to
be chosen for Jury Duty. If an employee is chosen to serve as a
juror, such employee shall be paid the difference between the pay for
being a juror and his regular scale wages by the Company. Proof of
duty must be provided in both cases.
- 14 -
<PAGE> 16
EXHIBIT 10.8
ARTICLE XXV - Wash-Up Time
Employees shall be entitled to two (2) five (5) minute wash-up times each day
to take place immediately preceding the lunch period, and end of shift, buzzer
to be used to signal wash-up time.
ARTICLE XXVI - Bulletin Boards
Bulletin Boards shall be made available by the Company for the use of the Union
for the posting of Union notices.
ARTICLE XXVII - Notification of Layoffs
A. The Company shall notify affected employees at least five (5) days in
advance of any layoff, provided that this requirement shall not apply
to layoffs that are caused by a breakdown of machinery or other
circumstances not under control by the Company. Layoffs of thirty (30)
days or more the Company shall notify affected employees at least ten
(10) days in advance.
B. In the event of a layoff, the affected employee is to give
notification within two (2) working days of the department he is going
to bump into.
C. Voluntary layoff (i.e., a more senior man in department may volunteer
for layoff if it does not interfere with the normal bumping
procedure). The allowance of voluntary layoff will be at the
company's sole discretion. If allowed, the voluntary period must be
no less or no more than thirty (30) days and no more than once every
six (6) months.
ARTICLE XXVIII - Job Standards
A. It is expressly understood and agreed that the Company will not
request and the Union will not be required during the course of this
agreement to negotiate any other system of wage payments other than
that expressly agreed upon in Article VI. It is understood that the
foregoing shall not bar the Company from establishing and/or
maintaining reasonable standards of production provided that the Union
reserves the right to make its own independent study of such job
standards, if they are used as a basis for discipline or discharge,
and subject such job standards to the grievance procedure.
ARTICLE XXIX - Insurance
A. The Company shall pay the full premium cost of the Life and Loss of
Time insurance of the group plan of Iowa Precision Industries, Inc.
for the benefit of its employees during the term of this contract.
1. The Company paid Group Life & Accidental Death & Dismemberment
Insurance plan provides a Twenty-Five Thousand Dollars
($25,000.00) death benefit.
2. The Company Paid Weekly Loss of Time Benefit provides Three
Hundred Fifty Dollars ($350.00) for a maximum of One Hundred
Four (104) weeks.
B. The Company Group Health Insurance shall include the following
coverage: (1) Hospital, (2) Medical and Surgical, (3) Major Medical,
(4) Prescription Service, (5) Dental Care. Dental maximum coverage is
One Thousand Dollars ($1,000.00). Monthly individual employee
contributions for the health insurance coverage will be Forty Dollars
($40.00) for a family plan or Seventeen Dollars and Fifty Cents
($17.50) for a single plan. In the event of a layoff, the Company
Group Health insurance shall be continued for three (3) months
following the month the layoff occurred.
- 15 -
<PAGE> 17
EXHIBIT 10.8
ARTICLE XXX - Retirement Plan
A. Effective June 1, 1996, the Company agrees to contribute ninety-five
cents ($0.95) per hour worked by each employee covered by the said
collective bargaining agreement.
B. Effective June 1, 1997, the Company agrees to contribute One Dollar
($1.0) per hour worked by each employee covered by the said collective
bargaining agreement.
ARTICLE XXXI - Duration of Agreement
A. It is agreed that during the course of this agreement the parties may
by mutual consent agree to amend or modify any section in this
agreement. Such change must be in writing and signed by all parties.
B. The contract language contained in this agreement and any amendments
thereto as provided above shall continue in full force and effect
until midnight of May 31, 1998, and for successive periods of one year
thereafter unless either party to the agreement notifies the other
party, in writing, at least sixty (60) days prior to the expiration
date of intention to renew or terminate this agreement.
C. The economic agreement as set forth in Article VI of this agreement
shall be for the period of three (3) years commencing on June 1, 1995
and shall continue in full force and effect until midnight of May 31,
1998. Each successive period of one (1) year thereafter commencing on
June 1, 1998, to May 31, 2001 may be re-opened for negotiating by
either party to this agreement by notification in writing, at least
sixty (60) days prior to the expiration date of intention to renew or
terminate the economic agreement.
IN WITNESS WHEREOF, this agreement has been executed by the parties
hereto as of the 1st day of June, 1995, in the City of Cedar Rapids,
State of Iowa.
IOWA PRECISION INDUSTRIES, INC.
BY: ___________________________
TITLE: _________________________
FOR S.M.W.I.A. Local Union No. 263
BY: _____________________________
Business Manager
____________________________
Chief Steward
____________________________
Chief Steward
____________________________
Chief Steward
- 16 -
<PAGE> 1
EXHIBIT 10.38
As of August 28, 1994
Ronald C. Drabik
President
Met-Coil Systems Corporation
5486 6th St., S.W.
Cedar Rapids, IA 52404
Dear Mr. Drabik:
Roy J. Carver, Jr. as Trustee of the John A. Carver 1983 Trust
(the "Lender") is pleased to extend the $1.3 million February 28, 1994 Mortgage
Note (the "Mortgage Note") with Met-Coil Systems Corporation (the "Borrower")
upon the following terms and conditions:
1. Mortgage Note Extension Amount
$1,352,000 (see paragraph 9 below)
2. Interest Rate
1st six months: 11% per annum
2nd six months: a rate equal to the prime rate of
interest as published from time to time by the Wall Street
Journal (Midwest edition), plus 5 1/4% per annum; however,
such rate of interest shall not be lower than 13%.
3. Date of Loan
August 28, 1994
4. Balloon Date
August 28, 1995
5. Terms of Repayment
Interest only payments shall be payable monthly beginning
the 28th day of September, 1994. The loan shall balloon
on August 28, 1995.
6. Late Charges for Overdue Payments
If the Lender has not received the full amount of any
payment within five (5) days after it is due, Borrower
will pay late charges to Lender in
<PAGE> 2
EXHIBIT 10.38
the amount of 5% of Borrower's overdue payment of
interest. This late charge shall apply only once on each
late payment.
7. Default Interest
If the Borrower shall fail to make any payment from or
after the date any such payment was required to be made
(whether at a stated maturity or due date, by acceleration
or otherwise) under the terms of the Replacement Mortgage
Note or the Mortgage, the rate of interest on the balance
due shall be 18% per annum.
8. Extensions
No extensions or renewals.
9. Fees
In lieu of additional interest, Borrower shall pay Lender
an extension fee of $52,000 payable monthly in twelve (12)
equal installments beginning the 28th day of September,
1994.
10. Collateral
The Loan shall be secured by a First Real Estate Mortgage
on the real estate more particularly described in Exhibit
A, which shall be evidenced by a Mortgage and Security
Agreement with Assignment of Rents dated February 28, 1994
and recorded March 4, 1994 as Document R94-054619, made by
Met-Coil Systems Corporation, Inc. to Roy J. Carver, Jr.,
as trustee for the John A. Carver 1983 Trust, as amended,
originally dated September 23, 1983, to secure a Mortgage
Note for $1,300,000 (the "Mortgage").
11. Fees and Expenses
Borrower shall pay all reasonable fees and expenses
incurred by the Lender in connection with the transaction
contemplated herein, including, but not limited to, legal
fees from Lender's legal counsel.
12. Conditions Precedent
The amendments to the existing Mortgage Note and Mortgage
shall be effective retroactive to August 28, 1994 upon
satisfaction of all of the following conditions precedent:
<PAGE> 3
EXHIBIT 10.38
(i) Receipt of Documents
Lender shall have received all of the following, each in
form and substance satisfactory to Lender:
(a) Replacement Note. A Replacement Mortgage
Note and Amendment to Mortgage and Security Agreement with
Assignment of Rents (the "Replacement Mortgage Note") duly
executed by Borrower.
(b) Resolutions, etc. A certificate of the
secretary or an assistant secretary of Borrower dated the
date of the execution of the Replacement Note or such
other date as shall be acceptable to Lender, substantially
in the form of the Consent to Action by Directors of
Met-Coil Systems Corporation dated February 25, 1994.
(c) Opinion. An opinion of counsel to the
Borrower substantially in the form of the opinion of
Shuttleworth & Ingersoll, P.C. to Lender dated February
28, 1994.
(d) Other. Such other documents as Lender
may reasonably request.
ii. Other Conditions.
The following further conditions precedent shall have been
satisfied.
(a) No Default. No default or event of
default or unmatured default or event of default shall
have occurred and be continuing under the terms of the
Mortgage Note or the Mortgage.
(b) Certificate. Lender shall have received a
certificate dated the date of Borrower's execution of the
Replacement Mortgage Note and signed by the President or a
Vice President of Borrower, substantially in the form of
Exhibit B to the Agreement.
All covenants, agreements, representations and warranties made
herein shall survive execution and delivery of this letter and shall continue
in full force and effect so long as the debt is outstanding. All covenants and
agreements by or on behalf of the parties hereto which are contained or
incorporated in this commitment letter shall bind and insure to the benefit of
the successors and assigns of all parties hereto.
<PAGE> 4
EXHIBIT 10.38
Your acknowledgement of this extension letter shall constitute
acceptance of the foregoing terms and conditions.
Sincerely,
Roy J. Carver/s/
Roy J. Carver, Jr.
Trustee
Acknowledged and Accepted:
Met-Coil Systems Corporation
By Joseph H. Ceryanec/s/
-----------------------------
Title Vice-President
---------------------------
RJC/tg
<PAGE> 5
EXHIBIT 10.38
EXHIBIT A
R9 = 54619
SCHEDULE I
THAT PART OF SECTIONS 2 AND 11, TOWNSHIP 38 NORTH, RANGE 10, EAST OF THE THIRD
PRINCIPAL MERIDIAN, BOUNDED AND DESCRIBED AS FOLLOWS; COMMENCING AT THE
SOUTHWEST CORNER OF SAID SECTION 2; THENCE NORTH ON THE WEST LINE OF SAID
SECTION 2, A DISTANCE OF 385.42FEET (384.33 = DEED) TO THE CENTER LINE OF
U.S. ROUTE 34 (ALSO OGDEN AVENUE); THENCE NORTH 84 DEGREES 15 MINUTES 00
SECONDS EAST, BEING AN ASSUMED BEARING ON THE CENTER LINE OF SAID U.S. ROUTE 34
(NORTH 83 DEGREES 15 MINUTES 00 SECONDS EAST = DEED), A DISTANCE OF 1808.40
FEET, TO THE POINT OF BEGINNING ; THENCE NORTH 83 DEGREES 22 MINUTES 28 SECONDS
EAST ON SAID CENTER LINE, A DISTANCE OF 444.09 FEET TO A LINE 50.0 FEET WEST
OF AND PARALLEL WITH THE MOST WESTERLY LINE OF ARTHUR T. MCINTOSH AND CO'S
ADDITION TO LISLE SUBDIVISION, RECORDED AUGUST 18, 1920 AS DOCUMENT 143848;
THENCE SOUTH 00 DEGREES 05 MINUTES 18 SECONDS WEST ON SAID PARALLEL LINE, A
DISTANCE OF 632.90 FEET TO A POINT ON THE WESTERLY EXTENSION OF THE NORTH LINE
AT LOT 7 IN SAID ARTHUR T. MCINTOSH AND CO'S ADDITION, EXTENDED 83.0 FEET WEST
OF THE NORTHWEST CORNER OF SAID LOT 7; THENCE SOUTH 89 DEGREES 46 MINUTES 55
SECONDS EAST ON SAID EXTENSION OF THE NORTH LINE OF LOT 7, A DISTANCE OF 50.0
FEET TO THE MOST WESTERLY LINE OF SAID ARTHUR T. MCINTOSH AND CO'S ADDITION TO
LISLE; THENCE SOUTH 00 DEGREES 05 MINUTES 18 SECONDS WEST ON SAID WEST LINE, A
DISTANCE OF 841.45 FEET (839.52 = DEED) TO THE NORTH RIGHT OF WAY LINE OF THE
BURLINGTON NORTHERN RAILROAD (FORMERLY KNOWN AS CHICAGO, BURLINGTON AND QUINCY
RAILROAD); THENCE NORTH 78 DEGREES 58 MINUTES 00 SECONDS WEST ON SAID NORTH
RIGHT OF WAY LINE, A DISTANCE OF 337.26 FEET; THENCE NORTH 6 DEGREES 37 MINUTES
38 SECONDS WEST A DISTANCE OF 1367.90 FEET TO THE POINT OF BEGINNING,
EXCEPTING THEREFROM ALL THAT PART TAKEN FOR HIGHWAY PURPOSES, ALL IN DUPAGE
COUNTY, ILLINOIS
PERMANENT INDEX NUMBERS: 08 11 103 003; 08 02 315 004
<PAGE> 6
EXHIBIT 10.38
EXHIBIT B
_______________________________________________
Vice President's Certificate
To: Roy J. Carver, Jr., Trustee
The undersigned, Joseph H. Ceryanec/s/, Vice President of
Borrower, hereby certifies on behalf of Borrower, that:
1. The representations and warranties on the part of Borrower
contained in the Mortgage are as true and correct at and as of the date hereof
as though made on and as of the date hereof.
2. As of the date hereof, no default or event of default or
unmatured default or event of default has occurred and is continuing under the
terms of the Mortgage.
IN WITNESS WHEREOF, I have executed this Certificate on the
28th day of August, 1994.
Met-Coil Systems Corporation
By Joseph H. Ceryanec/s/
----------------------------------
Vice President
<PAGE> 1
EXHIBIT 10.39
THE LOCKFORMER COMPANY
EMPLOYEES PENSION PLAN
<PAGE> 2
EXHIBIT 10.39
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Page
---- ----
<S> <C> <C> <C>
ARTICLE I INTRODUCTION . . . . . . . . . . . 1 8.2 DEFINITELY DETERMINABLE
1.1 PLAN; PURPOSE. . . . . . . . . . . 1 BENEFIT. . . . . . . . . . . . . . 17
1.2 QUALIFIED DEFINED BENEFIT PLAN. . . 1 8.3 COMMENCEMENT OF BENEFITS. . . . . . 18
1.3 EFFECTIVE DATE. . . . . . . . . . . 1 8.4 PAYMENT OF SMALL AMOUNTS. . . . . . 20
1.4 APPENDICES. . . . . . . . . . . . . 1 8.5 RESTRICTIONS ON IMMEDIATE
DISTRIBUTIONS. . . . . . . . . . . 20
ARTICLE II DEFINITIONS . . . . . . . . . . . 2 8.6 DISTRIBUTIONS UNDER DOMESTIC
RELATIONS ORDERS. . . . . . . . . 21
ARTICLE III EMPLOYEE PARTICIPANTS . . . . . . 10 8.7 REEMPLOYMENT AFTER
3.1 ELIGIBILITY. . . . . . . . . . . . 10 RETIREMENT. . . . . . . . . . . . 21
3.2 YEAR OF SERVICE - 8.8 DIRECT ROLLOVERS. . . . . . . . . . 23
PARTICIPATION. . . . . . . . . . . 10
3.3 PARTICIPATION UPON ARTICLE IX JOINT & SURVIVOR ANNUITY
RE-EMPLOYMENT. . . . . . . . . . . 10 REQUIREMENTS . . . . . . . . . . . . . . . . 24
3.4 NO MAXIMUM AGE FOR 9.1 FORM OF BENEFIT . . . . . . . . . . 24
PARTICIPATION. . . . . . . . . . . 10 9.2 DEFINITIONS. . . . . . . . . . . . 24
9.3 NOTICE REQUIREMENTS. . . . . . . . 26
ARTICLE IV NORMAL RETIREMENT 9.4 CERTAIN TRANSITIONAL RULES. . . . . 27
BENEFIT . . . . . . . . . . . . . . . . . . . 11 9.5 MARRIAGE REQUIREMENT. . . . . . . . 28
4.1 ELIGIBILITY FOR NORMAL
RETIREMENT BENEFIT. . . . . . . . 11 ARTICLE X MANDATORY DISTRIBUTIONS . . . . . . 29
4.2 AMOUNT OF NORMAL RETIREMENT 10.1 REQUIRED BEGINNING DATE. . . . . . 29
BENEFIT. . . . . . . . . . . . . . 11 10.2 MINIMUM DISTRIBUTION
REQUIREMENTS. . . . . . . . . . . 29
ARTICLE V EARLY RETIREMENT BENEFITS . . . . . 14 10.3 MINIMUM DISTRIBUTION FOR
5.1 ELIGIBILITY FOR EARLY ANNUITY DISTRIBUTION. . . . . . . 29
RETIREMENT BENEFITS. . . . . . . . 14 10.4 NON-ANNUITY DISTRIBUTIONS. . . . . 31
5.2 AMOUNT OF EARLY RETIREMENT 10.5 MINIMUM DISTRIBUTION
BENEFITS. . . . . . . . . . . . . 14 REQUIREMENT FOR
BENEFICIARIES. . . . . . . . . . . 31
ARTICLE VI DISABILITY RETIREMENT
BENEFITS . . . . . . . . . . . . . . . . . . 15 ARTICLE XI LIMITATION ON ANNUAL
6.1 ELIGIBILITY FOR DISABILITY BENEFITS . . . . . . . . . . . . . . . . . . 33
RETIREMENT BENEFITS. . . . . . . . 15 11.1 LIMITATION ON ANNUAL BENEFIT. . . . 33
6.2 AMOUNT OF DISABILITY 11.2 DEFINITIONS. . . . . . . . . . . . 33
RETIREMENT BENEFIT. . . . . . . . 15 11.3 OVERALL LIMITATIONS. . . . . . . . 37
6.3 RECOVERY FROM DISABILITY. . . . . . 15
6.4 CONTINUING EVIDENCE OF ARTICLE XII PLAN FINANCING . . . . . . . . . 38
DISABILITY. . . . . . . . . . . . 15 12.1 FINANCING. . . . . . . . . . . . . 38
12.2 CONTRIBUTIONS. . . . . . . . . . . 38
ARTICLE VII DEFERRED VESTED 12.3 TREATMENT OF INSURANCE
RETIREMENT BENEFITS . . . . . . . . . . . . 16 DIVIDENDS AND OTHER CREDITS. . . . 38
7.1 DEFERRED VESTED RETIREMENT 12.4 CONFLICTS. . . . . . . . . . . . . 39
BENEFIT. . . . . . . . . . . . . . 16
7.2 AMOUNT OF DEFERRED VESTED ARTICLE XIII COMPANY ADMINISTRATIVE
RETIREMENT BENEFIT. . . . . . . . 16 PROVISIONS . . . . . . . . . . . . . . . . . 40
7.3 VESTING SCHEDULE. . . . . . . . . . 16 13.1 INFORMATION TO COMMITTEE. . . . . . 40
7.4 YEAR OF SERVICE - VESTING. . . . . 16 13.2 NO LIABILITY. . . . . . . . . . . . 40
13.3 INDEMNITY OF PLAN
ARTICLE VIII FORM AND COMMENCEMENT ADMINISTRATOR AND COMMITTEE. . . . 40
OF BENEFIT PAYMENTS . . . . . . . . . . . . 17
8.1 FORM OF BENEFIT. . . . . . . . . . 17
</TABLE>
1
<PAGE> 3
EXHIBIT 10.39
<TABLE>
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<S> <C>
ARTICLE XIV MEMBER ADMINISTRATIVE
PROVISIONS . . . . . . . . . . . . . . . . . 41
14.1 BENEFICIARY DESIGNATION. . . . . . 41
14.2 NO BENEFICIARY DESIGNATION/
DEATH OF BENEFICIARY. . . . . . . 41
14.3 PERSONAL DATA TO COMMITTEE. . . . . 41
14.4 NOTICE OF CHANGE IN TERMS. . . . . 42
14.5 LITIGATION AGAINST THE PLAN. . . . 42
14.6 INFORMATION AVAILABLE. . . . . . . 42
14.7 APPEAL PROCEDURE FOR DENIAL
OF BENEFITS. . . . . . . . . . . . 42
ARTICLE XV PLAN ADMINISTRATION . . . . . . . 44
15.1 APPOINTMENT OF COMMITTEE. . . . . . 44
15.2 POWERS AND DUTIES. . . . . . . . . 44
15.3 FUNDING POLICY. . . . . . . . . . . 45
15.4 MANNER OF ACTION. . . . . . . . . . 45
15.5 AUTHORIZED REPRESENTATIVE. . . . . 45
15.6 INTERESTED MEMBER. . . . . . . . . 45
15.7 MEMBER RECORDS. . . . . . . . . . . 45
15.8 UNCLAIMED ACCRUED BENEFIT -
PROCEDURE. . . . . . . . . . . . . 45
ARTICLE XVI MISCELLANEOUS . . . . . . . . . . 47
16.1 EXCLUSIVE BENEFIT. . . . . . . . . 47
16.2 ASSIGNMENT OR ALIENATION. . . . . . 47
16.3 EVIDENCE. . . . . . . . . . . . . . 47
16.4 NO RESPONSIBILITY FOR
EMPLOYER ACTION. . . . . . . . . . 47
16.5 WAIVER OF NOTICE. . . . . . . . . . 47
16.6 SUCCESSORS. . . . . . . . . . . . . 48
16.7 WORD USAGE. . . . . . . . . . . . . 48
16.8 STATE LAW. . . . . . . . . . . . . 48
16.9 EMPLOYMENT NOT GUARANTEED. . . . . 48
ARTICLE XVII MERGER, AMENDMENT,
TERMINATION . . . . . . . . . . . . . . . . 49
17.1 MERGER, CONSOLIDATION, OR
TRANSFER. . . . . . . . . . . . . 49
17.2 AMENDMENT. . . . . . . . . . . . . 49
17.3 PRETERMINATION RESTRICTIONS . . . . 49
17.4 EARLY TERMINATION
RESTRICTIONS. . . . . . . . . . . 50
17.5 TERMINATION. . . . . . . . . . . . 52
17.6 DISTRIBUTION UPON TERMINATION
OF TRUST. . . . . . . . . . . . . 52
17.7 REVERSION. . . . . . . . . . . . . 53
17.8 FULL VESTING ON TERMINATION. . . . 53
17.9 TERMINATION PROCEDURES. . . . . . . 53
ARTICLE XVIII TOP-HEAVY PROVISIONS . . . . . 54
18.1 DETERMINATION OF TOP-HEAVY
STATUS. . . . . . . . . . . . . . 54
18.2 DEFINITIONS. . . . . . . . . . . . 54
18.3 MINIMUM BENEFIT . . . . . . . . . . 55
18.4 MINIMUM VESTING . . . . . . . . . . 55
18.5 CHANGE IN TOP-HEAVY STATUS. . . . . 56
</TABLE>
2
<PAGE> 4
EXHIBIT 10.39
THE LOCKFORMER COMPANY
EMPLOYEES PENSION PLAN
ARTICLE I
INTRODUCTION
1.1 PLAN; PURPOSE.
The Lockformer Company (the "Company"), has adopted The Lockformer Company
Employees Pension Plan (the "Plan") for the exclusive benefit of its eligible
Employees. The purpose of the Plan is to assist Members to attain financial
security for retirement.
1.2 QUALIFIED DEFINED BENEFIT PLAN.
The Plan is a defined benefit plan intended to satisfy all the requirements of
Code section 401(a) and ERISA, and should be interpreted accordingly. The
funding medium for the Plan is Group Annuity Contract No. GA-348 issued by
Lincoln National Insurance Company.
1.3 EFFECTIVE DATE.
The Plan was adopted as of June 28, 1969, but has been amended and restated as
of June 28, 1987 in the form set forth in this document. The rights and
obligations of any person whose employment with the Company and its Affiliates
terminated before the effective date of such amendment and restatement shall be
governed by the terms of the Plan in effect on the date his employment
terminated, except as otherwise provided herein.
1.4 APPENDICES.
The Plan may be amplified or modified from time to time by appendices. Each
Appendix forms a part of the Plan and its provisions shall supersede Plan
provisions as necessary to eliminate any inconsistencies.
<PAGE> 5
EXHIBIT 10.39
ARTICLE II
DEFINITIONS
2.1 "Accounting Date" is the last day of the Plan Year.
2.2 "Accrued Benefit" means the benefit determined under Article IV.
2.3 "Actuarial Equivalent" means a benefit having the same value as the
benefit which it replaces, computed on the basis of the 1971 Group
Annuity Mortality Table, weighted 100 percent male and a 6 1/2 percent
interest rate assumption. For purposes of determining single- sum
cash settlements, the interest rate used shall be the rate which would
be used (as of the date of distribution) by the Pension Benefit
Guaranty Corporation for purposes of determining the present value of
a lump sum distribution on termination of a defined benefit plan,
determined as of each June 28.
2.4 "Actuary" means a person (or firm of which he is a member) who is
qualified through membership in the Society of Actuaries or its
successors, who is an "enrolled actuary" under ERISA, and who is
chosen by, but independent of the Company.
2.5 "Affiliate" means any corporation that is a member of a controlled
group (as defined in Code section 414(b)) that includes the Company;
any trade or business under common control (as defined in Code section
414(c)) with the Company; any organization that is a member of an
affiliated service group (as defined in Code section 414(m)) that
includes the Company; and any entity required to be aggregated with
the Company under Code section 414(o).
For purposes of Article 11, "Affiliate" also includes any organization
that would be described above if the specified section of the Code
were applied as modified by Code section 415(h).
2.6 "Annuity Starting Date" means the first day of the first period for
which an amount is received as a retirement benefit under the Plan.
2.7 "Beneficiary" means a person designated by a Participant or by the
Plan who is or may become entitled to a benefit under the Plan. A
Beneficiary who becomes entitled to a benefit under the Plan remains a
Beneficiary under the Plan until the Insurance Company has fully
distributed his benefit to him. A Beneficiary's right to (and the
Committee's duty to provide to the Beneficiary) information or data
concerning the Plan does not arise until he first becomes entitled to
receive a benefit under the Plan.
2.8 "Benefit Service" means an Employee's period of employment as
determined as follows:
(a) For employment prior to the Effective Date, an Employee will
be credited for one year of Benefit Service for any Plan Year
during which he completed 1,800 hours or more (excluding hours
paid for but not worked); provided, however, Benefit Service
will be computed only from his most recent date of hire by the
Employer to the Effective Date. Such amount will be computed
to the nearest one-tenth of a year.
(b) For employment after the Effective Date, an Employee shall
receive credit for one year of Benefit Service for any Plan
Year during which he has at least 1,800 Hours of Service. If
his Hours of Service during the Plan Year are less than 1,800,
Benefit Service will be
2
<PAGE> 6
EXHIBIT 10.39
computed to the nearest one-tenth of a year in the proportion
that the Employee's Hours of Service bear to 1,800.
(c) Notwithstanding the above, the following periods shall be
disregarded in determining Benefit Service:
(i) periods as an Inactive Participant; or
(ii) periods after June 28, 1978 and before becoming a
Participant; and
(iii) for Members attaining age 65 on or after June 28,
1979 and before January 1, 1988, periods after age
65; provided that Benefit Service earned after age 65
shall not be disregarded for any Participant who
attained age 65 prior to January 1, 1988, but who
remained in the employ of the Employer on January 1,
1988.
2.9 "Board" means the Board of Directors of the Company.
2.10 "Break in Service"
(a) For Benefit Service Purposes. Means a Computation Period
during which a Member does not complete more than 90 Hours of
Service with the Employer or an Affiliate.
(b) For Vesting Purposes. Means a Computation Period during which
a Member does not complete more than 500 Hours of Service with
the Employer or an Affiliate.
2.11 "Code" means the Internal Revenue Code of 1986, as amended.
2.12 "Committee" means the entity which has been designated by the Board to
administer the Plan.
2.13 "Company" means The Lockformer Company which as adopted this Plan for
the benefit of its Employees.
2.14 "Compensation" means the following:
(a) In General. "Compensation" means wages, salaries, and fees
for professional services and other amounts received (without
regard to whether or not an amount is paid in cash) for
personal service actually rendered in the course of employment
with the Employer to the extent that amounts are includible in
gross income (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a
percentage of profits, commissions and insurance premiums,
tips, bonuses, fringe benefits and reimbursements or other
expense allowances under a nonaccoutable plan (as described in
Regulation section 1.62-2(c)), and excluding the following:
(i) Employer contributions to a plan of deferred
compensation which are not includible in the
Employee's gross income for the taxable year in which
contributed, or employer contributions under a
simplified employee pension plan, or any other
distributions from a plan of deferred compensation;
3
<PAGE> 7
EXHIBIT 10.39
(ii) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property)
held by the Employee either becomes freely
transferable or is no longer subject to a substantial
risk of forfeiture;
(iii) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified
stock option; and
(iv) other amounts which received special tax benefits, or
contributions made by the Employer (whether or not
under a salary reduction agreement) towards the
purchase of an annuity contract described in Code
section 403(b) (whether or not the contributions are
actually excludable from the gross income of the
Employee).
(b) Identifying Highly Compensated, Key and Leased Employees. To
identify Highly Compensated Employees, Leased Employees and
Key Employees, Compensation shall include amounts contributed
pursuant to a salary reduction agreement which are excludable
from gross income under Code sections 125, 402(e)(3),
402(h)(1)(B) and 403(b).
(c) Maximum Amount. For years beginning on or after January 1,
1989 and before January 1, 1994, the annual Compensation of
each Member taken into account for determining all benefits
provided under the Plan for any Plan Year shall not exceed
$200,000. This limitation shall be adjusted by the Secretary
at the same time and in the same manner as under Code section
415(d), except that the dollar increase in effect on January 1
of any calendar year is effective for Plan Years beginning in
such calendar year and the first adjustment to the $200,000
limitation is effective on January 1, 1990.
For years beginning on or after January 1, 1994, the annual
Compensation limit of each Member taken into account for
determining all benefits provided under the plan for any
determination period shall not exceed $150,000, as adjusted
for the cost- of-living in accordance with Code section
401(a)(17)(B). The cost-of-living adjustment in effect for a
calendar year applies to any determination period beginning in
such calendar year.
If a determination period consists of fewer that 12 months,
the annual Compensation limit is an amount equal to the
otherwise applicable annual Compensation limit multiplied by a
fraction, the numerator of which is the number of months in
the short determination period, and the denominator of which
is 12.
(d) Family Aggregation. For Plan Years beginning after December
31, 1988, the Compensation dollar limitation applies to the
combined Compensation of the Employee and of any family member
aggregated with the Employee under paragraph (e) and who is
either (i) the Employee's spouse; or (ii) the Employee's
lineal descendant under the age of 19. If, for a Plan Year,
the combined Compensation of the Employee and such family
members who are Members entitled to accrue benefits for that
Plan Year exceeds the Compensation dollar limitation,
"Compensation" for each such Member, for benefit accrual
purposes means his Adjusted Compensation. Adjusted
Compensation is the amount which bears the same ratio to the
Compensation dollar limitation as the affected Member's
Compensation (without regard to the limitation) bears to the
combined Compensation of all the affected Members in the
family unit. The adjustment required by this paragraph (2)
will not apply for any Plan Year in which the family
aggregation rule is not applicable.
4
<PAGE> 8
EXHIBIT 10.39
(e) Family Group means a group consisting of the following
Employees: (i) a Highly Compensated Employee who is either a
5 percent owner or a member of the group consisting of the top
10 Employees when ranked by Compensation received during the
determination year or the preceding 12-month period; (ii) the
spouse of such Highly Compensated Employee, (iii) a lineal
ascendent or descendent of such Highly Compensated Employee,
or (iv) a spouse of such lineal ascendent or descendant;
provided that, an Employee shall be included in the group only
if he is a Participant for the Plan Year.
2.15 "Computation Period" means the following:
(a) Participation Purposes. Computation Period for participation
purposes means the 12-consecutive month period that begins on
an Employee's Employment Commencement Date and ends on the day
preceding the first anniversary thereof, and each Plan Year
beginning with the Plan Year in which falls the first
anniversary of his Employment Commencement Date.
(b) Vesting Purposes. To Compute an Employee's vested interest in
his Accrued Benefit, Computation Period means the Plan Year.
2.16 "Disability" means the Participant, because of a physical or mental
disability, will be unable to perform the duties of his customary
position of employment (or is unable to engage in any substantial
gainful activity) for an indefinite period which the Committee
considers will be of long continued duration. A Participant also is
disabled if he incurs the permanent loss or loss of use of a member or
function of the body, or is permanently disfigured, and incurs a
Separation from Service. The Plan considers a Participant disabled on
the date the Committee determines the Participant satisfies the
definition of disability. The Committee may require a Participant to
submit to a physical examination in order to confirm disability. The
Committee will apply the provisions of this Section in a
nondiscriminatory, consistent and uniform manner.
2.17 "Earliest Retirement Age" means the earliest date on which, under the
Plan, a Member could elect to receive retirement benefits.
2.18 "Effective Date" means June 28, 1969, the effective date of the
original adoption of this Plan.
2.19 "Employment Commencement Date" means the date on which the Employee
first performs an Hour of Service for the Employer.
2.20 "Employee" means any common-law Employee of the Employer, any Leased
Employee, and self-employed individual with respect to the Employer,
and any individual who is required to be treated as an employee of the
Employer under the regulations adopted under Code section 414(o).
2.21 "Employer" means the Company or any Affiliate which elects to become a
party to the Plan with the approval of the Company, by adopting the
Plan for the benefit of its eligible Employees.
2.22 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
2.23 "Highly Compensated Employee" means an Employee who, during the Plan
Year or during the preceding 12-month period:
5
<PAGE> 9
EXHIBIT 10.39
(a) is a more than 5% owner of the Employer (applying the
constructive ownership rules of Code section 318, and applying
the principles of Code section 318, for an unincorporated
entity);
(b) has Compensation in excess of $75,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year);
(c) has Compensation in excess of $50,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year) and is
part of the top-paid 20% group of employees (based on
Compensation for the relevant year);
(d) has Compensation in excess of 50% of the dollar amount
prescribed in Code section 415(b)(1)(A) (relating to defined
benefit plans) and is an officer of the Employer.
If the Employee satisfies the definition in clause (b), (c) or (d) in
the Plan Year but does not satisfy (b), (c) or (d) during the
preceding 12-month period and does not satisfy clause (a) in either
period, the Employee is a Highly Compensated Employee only if he is
one of the 100 most highly compensated Employees for the Plan Year.
The number of officers taken into account under clause (d) will not
exceed the greater of 3 or 10% of the total number (after application
of the Code section 414(q) exclusions) of Employees, but no more than
50 officers. If no Employee satisfies the Compensation requirement in
clause (d) for the relevant year, the Committee will treat the highest
paid officer as satisfying clause (d) for that year.
For purposes of this Section, "Compensation" means the general
definition of Compensation as defined in Section 2.14, increased for
elective contributions. Elective contributions are amounts excludable
from the Employee's gross income under Code sections 125, 402(a)(8),
402(h) or 403(b), and contributed by the Employer, at the Employee's
election to a Code section 401(k) arrangement, a Simplified Employee
Pension, cafeteria plan or tax-sheltered annuity.
The Committee must make the determination of who is a Highly
Compensated Employee, including the determinations of the number and
identity of the top paid 20% group, the top 100 paid Employees, the
number of officers includible in clause (d) and the relevant
Compensation, consistent with Code section 414(q) and regulations
issued under that Code section. The Employer may make a calendar year
election to determine the Highly Compensated Employees for the Plan
Year, as prescribed by Treasury regulations. A calendar year election
must apply to all plans and arrangements of the Employer. For
purposes of applying any nondiscrimination test required under the
Plan or under the Code, in a manner consistent with applicable
Treasury regulations, the Committee will treat a Highly Compensated
Employee and all family members (a spouse, a lineal ascendant or
descendant, or a spouse of a lineal ascendant or descendant) as a
single Highly Compensated Employee, but only if the Highly Compensated
Employee is a more than 5% owner or is one of the 10 Highly
Compensated Employees with the greatest Compensation for the Plan
Year. This aggregation rule applies to a family member even if that
family member is a Highly Compensated Employee without family
aggregation.
The term "Highly Compensated Employee" also includes any former
Employee who separated from service (or has a deemed Separation from
Service, as determined under Treasury regulations) prior to the Plan
Year, performs no Service for the Employer during the Plan Year, and
was a Highly Compensated Employee either for the separation year or
any Plan Year ending on or after his 55th birthday. If the former
Employee's Separation from Service occurred prior to January
6
<PAGE> 10
EXHIBIT 10.39
1, 1987, he is a Highly Compensated Employee only if he satisfied
clause (a) of this Section or received Compensation in excess of
$50,000 during: (1) the year of his Separation from Service (or the
prior year); or (2) any year ending after his 54th birthday.
2.24 "Hour of Service" means the following:
(a) In General. Hour of Service means:
(i) Each Hour of Service for which the Employer, either
directly or indirectly, pays an Employee, or for
which the Employee is entitled to payment, for the
performance of duties. The Hours of Service under
this paragraph (a) will be credited to the Employee
for the computation period in which the Employee
performs the duties, irrespective of when paid;
(ii) Each Hour of Service for back pay, irrespective of
mitigation of damages, to which the Employer has
agreed or for which the Employee has received an
award. The Hours of Service under this paragraph (b)
will be credited to the Employee for the computation
period(s) to which the award or the agreement
pertains rather than for the computation period in
which the award, agreement or payment is made; and
(iii) Each Hour of Service for which the Employer, either
directly or indirectly, pays an Employee, or for
which the Employee is entitled to payment
(irrespective of whether the employment relationship
is terminated), for reasons other than for the
performance of duties during a computation period,
such as leave of absence, vacation, holiday, sick
leave, illness, incapacity (including disability),
layoff, jury duty or military duty. No more than 501
Hours of Service will be credited under this
paragraph (iii) to an Employee on account of any
single continuous period during which the Employee
does not perform any duties (whether or not such
period occurs during a single computation period).
Hours under this paragraph (iii) shall be calculated
and credited in accordance with the rules of
paragraphs (ii) and (iii) of Labor Reg. section
2530.200b-2, which the Plan, by this reference,
specifically incorporates in full within this
paragraph (iii).
The Committee will not credit an Hour of Service under more
than one of the above paragraphs.
(b) Method of Crediting Hours of Service. Hours of Service shall
be credited on the basis of 45 Hours of Service for each week
for which the Employee would be credited with at least one
Hour of Service under paragraph (a). When no time records are
available to determine an Hour of Service required to be
credited under paragraph (a), the Employee shall be credited
with 45 Hours of Service for each week for which the Employee
would be required to be credited with at least on Hour of
Service under paragraph (a).
(c) Maternity/paternity leave. Solely for purposes of determining
whether the Employee incurs a one year Break-in-Service under
any provision of this Plan, Hours of Service during an
Employee's unpaid absence period due to maternity or paternity
leave will be credited. An Employee is considered to be on
maternity or paternity leave if the Employee's absence is due
to the Employee's pregnancy, the birth of the Employee's
7
<PAGE> 11
EXHIBIT 10.39
child, the placement with the Employee of an adopted child, or
the care of the Employee's child immediately following the
child's birth or placement. Hours of Service will be credited
under this paragraph on the basis of the number of Hours of
Service the Employee would receive if he were paid during the
absence period or, if the number of Hours of Service the
Employee would receive cannot be determined, on the basis of 8
hours per day during the absence period. The number of Hours
of Service credited under this paragraph will be only the
number (not exceeding 501) of Hours of Service necessary to
prevent an Employee's Break in Service. All Hours of Service
described in this paragraph will be credited to the
computation period in which the absence period begins or, if
the Employee does not need these Hours of Service to prevent a
Break in Service in the computation period in which his
absence period begins, the Hours of Service will be credited
to the immediately following computation period.
2.25 "Inactive Participant" means an Employee who was a Participant but who
is transferred to and is in a position of employment either: (i) as an
Employee who does not meet the eligibility requirements set forth in
Article III; or (ii) as an Employee of an Affiliate who has not
adopted the Plan.
2.26 "Insurance Company" means the insurance company listed in Appendix C
who is the insurer under the Insurance Contract entered into for the
purpose of providing retirement benefits under the Plan.
2.27 "Insurance Contract" means the group annuity contract listed in
Appendix C entered into with the Insurance Company for the purpose of
providing retirement benefits under the Plan.
2.28 "Leased Employee" means an individual (who otherwise is not an
Employee of the Employer) who, pursuant to a leasing agreement between
the Employer and any other person, has performed services for the
Employer (or for the Employer and any persons related to the Employer
within the meaning of Code section 414(n)(6))) on a substantially full
time basis for at least one year and who performs services
historically performed by employees in the Employer's business field.
2.29 "Member" means a Participant, Inactive Participant, or other former
Employee who is receiving or entitled to receive benefits under the
Plan.
2.30 "Nonforfeitable" means a Member's or Beneficiary's unconditional
claim, legally enforceable against the Plan, to the Member's Accrued
Benefit.
2.31 "Nontransferable Annuity" means an annuity which by its terms provides
that it may not be sold, assigned, discounted, pledged as collateral
for a loan or security for the performance of an obligation or for any
purpose to any person other than the insurance company. If the
Insurance Company distributes an annuity contract, the contract must
be a Nontransferable Annuity.
2.32 "Participant" means any Employee of the Employer who has met and
continues to meet the eligibility requirements of the Plan as set
forth in Article III.
2.33 "Plan" means the retirement plan established and continued by the
Employer as set forth in this document, designated as The Lockformer
Company Employees Pension Plan.
2.34 "Plan Year" means the 12-consecutive month period ending each June 27.
8
<PAGE> 12
EXHIBIT 10.39
2.35 "Present Value" means the single-sum Actuarial Equivalent of the
Member's Accrued Benefit.
2.36 "Separation from Service" means a separation from Service with the
Employer maintaining this Plan.
2.37 "Service" means any period of time the Employee is in the employ of
the Employer, including any period the Employee is on an unpaid leave
of absence authorized by the Employer under a uniform,
nondiscriminatory policy applicable to all Employees.
2.38 "Straight Life Annuity" means an annuity payable in equal installments
for the life of the Member that terminates upon the Member's death.
2.39 "Year of Service" means any Computation Period during which an
Employee completes at least 1,000 Hours of Service.
9
<PAGE> 13
EXHIBIT 10.39
ARTICLE III
EMPLOYEE PARTICIPANTS
3.1 ELIGIBILITY.
Each Employee, other than a Leased Employee, who is expected to complete a Year
of Service during his initial 12 months of employment will become a Participant
in the Plan on the first day of the calendar month (if employed on that date)
coincident with or immediately following the later of (i) his Employment
Commencement Date or (ii) the date on which he is first employed by the
Employer as a member of the bargaining unit at the Company's plant located in
Lisle, Illinois.
Each Employee who is not expected to complete a Year of Service during his
initial 12 months of employment will become a Participant in the Plan on the
first day of the calendar month (if employed on that date) coincident with or
immediately following the completion of one Year of Service; provided that such
Employee is a member of the bargaining unit at the Company's plant located in
Lisle, Illinois on the date he is to enter the Plan.
3.2 YEAR OF SERVICE - PARTICIPATION.
All Years of Service shall count for purpose of determining whether an Employee
has satisfied the participation requirements, including years an Employee is
employed by the Employer but not a member of the bargaining unit at the
Company's plant located in Lisle, Illinois.
3.3 PARTICIPATION UPON RE-EMPLOYMENT.
A Participant whose employment terminates will re-enter the Plan as a
Participant on the date of his reemployment. An Employee who satisfies the
Plan's eligibility conditions but who terminates employment prior to becoming a
Participant becomes a Participant in the Plan on the later of the date on which
he would have entered the Plan under Section 3.1 had he not terminated
employment or the date of his reemployment. Any Employee who terminates
employment prior to satisfying the Plan's eligibility conditions becomes a
Participant in accordance with the provisions of Section 3.1.
3.4 NO MAXIMUM AGE FOR PARTICIPATION.
An Employee's eligibility to participate in the Plan shall be determined
without regard to a maximum age.
10
<PAGE> 14
EXHIBIT 10.39
ARTICLE IV
NORMAL RETIREMENT BENEFIT
4.1 ELIGIBILITY FOR NORMAL RETIREMENT BENEFIT.
A Member who attains the Normal Retirement Age while employed by the Employer
shall be eligible to receive a Normal Retirement Benefit under the Plan.
4.2 AMOUNT OF NORMAL RETIREMENT BENEFIT.
(a) Prior to January 30, 1995. Any Member who retires prior to January
30, 1995, will receive a Normal Retirement Benefit equal to the sum of
the following paragraphs (i) through (xii).
(i) $4.00 multiplied by the number of his years of Benefit Service
prior to January 29, 1978.
(ii) $7.00 multiplied by the number of his years of Benefit Service
on and after January 29, 1978 and prior to January 29, 1981.
(iii) $10.00 multiplied by the number of his years of Benefit
Service on and after January 29, 1981 and prior to
February 1, 1983.
(iv) $11.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1983 and prior to
February 1, 1984.
(v) $12.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1984 and prior to
February 1, 1985.
(vi) $13.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1985 and prior to
February 1, 1986.
(vii) $15.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1986 and prior to
February 1, 1988.
(viii) $16.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1988 and prior to
February 1989.
(ix) $17.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1989 and prior to
February 1, 1990.
(x) $18.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1990 and prior to
February 1, 1991.
(xi) $19.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1991 and prior to
February 1, 1992.
(xii) $22.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1992.
11
<PAGE> 15
EXHIBIT 10.39
(b) On and After January 30, 1995. Any Member who retires on and after
January 29, 1995, will receive a Normal Retirement Benefit equal to
the sum of the following paragraphs (i) through (xii).
(i) $5.00 multiplied by the number of his years of Benefit Service
prior to January 29, 1978.
(ii) $8.00 multiplied by the number of his years of Benefit Service
on and after January 29, 1978 and prior to January 29, 1981.
(iii) $11.00 multiplied by the number of his years of Benefit
Service on and after January 29, 1981 and prior to
February 1, 1983.
(iv) $12.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1983 and prior to
February 1, 1984.
(v) $13.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1984 and prior to
February 1, 1985.
(vi) $14.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1985 and prior to
February 1, 1986.
(vii) $16.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1986 and prior to
February 1, 1988.
(viii) $17.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1988 and prior to
February 1989.
(ix) $18.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1989 and prior to
February 1, 1990.
(x) $19.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1990 and prior to
February 1, 1991.
(xi) $20.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1991 and prior to
February 1, 1992.
(xii) $23.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1992 and prior to
February 1, 1995.
(xiii) $25.00 multiplied by the number of his years of Benefit
Service on and after February 1, 1995.
(c) Maximum Years Credited. Prior to January 29, 1986, if an Employee
completes more than 25 years of Benefit Service, only the last 25
years will be considered. On and after January 29, 1986 and prior to
February 1, 1989, if an Employee completes more than 35 years of
Benefit Service, only the last 35 years will be considered. On and
after February 1, 1989, if an Employee completes more than 45 years of
Benefit Service, only the last 45 years will be considered.
(d) Employment Beyond Normal Retirement Age. If a Member continues in
employment beyond his Normal Retirement Age, his benefit upon
retirement will be calculated using the Plan formula in
12
<PAGE> 16
EXHIBIT 10.39
effect on the date he attained his Normal Retirement; however, the
calculation will be made taking into account any increases in the
dollar multiplier made to the formula between the date the Member
attains his Normal Retirement Date and the date of his cessation of
employment. In addition, subject to the requirements of Section
4.2(c), the Member shall continue to accrue Benefit Service until the
date his employment terminates.
(e) Top-Heavy Minimum Benefit. Notwithstanding the foregoing, if the Plan
is Top-Heavy for any Plan Year, as defined in Article XVIII, a Member
shall receive a minimum Top-Heavy benefit as described in Article
18.3.
13
<PAGE> 17
EXHIBIT 10.39
ARTICLE V
EARLY RETIREMENT BENEFITS
5.1 ELIGIBILITY FOR EARLY RETIREMENT BENEFITS.
A Member who has attained age 55 and who has at least 10 Years of Service may
retire at any time prior to Normal Retirement Age and receive an Early
Retirement Benefit under the Plan.
5.2 AMOUNT OF EARLY RETIREMENT BENEFITS.
A Member's monthly Early Retirement Benefit shall equal the Member's Normal
Retirement Benefit calculated under Section 4.2, based upon the benefit formula
in effect and the years of Benefit Service at his termination of employment,
multiplied by the appropriate factor listed in Table I of Appendix A.
14
<PAGE> 18
EXHIBIT 10.39
ARTICLE VI
DISABILITY RETIREMENT BENEFITS
6.1 ELIGIBILITY FOR DISABILITY RETIREMENT BENEFITS.
A Participant who incurs a Disability prior to attainment of Normal Retirement
Age and after completing at least 10 Years of Service is eligible to receive a
Disability Retirement Benefit, in addition to any other benefit he may be
entitled to under the Plan. If a Participant is eligible for both a Disability
Retirement Benefit and an Early Retirement Benefit, the Participant may select
which benefit he will receive upon his Disability.
6.2 AMOUNT OF DISABILITY RETIREMENT BENEFIT.
A Member's Disability Retirement Benefit shall be $50.00 per month.
6.3 RECOVERY FROM DISABILITY.
If a Member recovers from a Disability and re-enters employment covered under
the Plan, the Participant will begin earning Benefit Service on the date of his
re-entry into employment. The Participant will accrue benefits under the Plan
based upon his Benefit Service credited prior to his Disability and the Benefit
Service credited after his re-employment.
6.4 CONTINUING EVIDENCE OF DISABILITY.
The Committee may require a Member to submit evidence of his continued
eligibility for the Disability Retirement Benefit at any time he is receiving
the Disability Retirement Benefit. The Committee may not require furnishing of
such evidence more frequently than semi-annually. In the event that a disabled
Member refuses or fails to submit evidence of his continued Disability when
requested by the Committee, the Insurance Company, upon written notice from the
Committee, will discontinue the disabled Member's Disability Retirement Benefit
until the Member submits satisfactory evidence of his continued Disability.
15
<PAGE> 19
EXHIBIT 10.39
ARTICLE VII
DEFERRED VESTED RETIREMENT BENEFITS
7.1 DEFERRED VESTED RETIREMENT BENEFIT.
A Participant who has completed ten Years of Service and who, prior to his
Normal Retirement Age, terminates employment for any reason other than death,
eligibility for an Early Retirement Benefit or Disability Retirement Benefit,
will receive a Deferred Vested Retirement Benefit. A Participant who
terminates his employment prior to completion of ten years of service for
reasons other than his Disability, is not eligible to receive a benefit under
this Plan, until he attains his Normal Retirement Age.
7.2 AMOUNT OF DEFERRED VESTED RETIREMENT BENEFIT.
A Member's Deferred Vested Retirement Benefit shall equal the Member's Normal
Retirement Benefit calculated under Section 4.2, based upon the benefit formula
in effect and the Years of Service and Benefit Service at his termination of
employment, multiplied by the appropriate factor listed in Table I of Appendix
A.
7.3 VESTING SCHEDULE.
As of any date of determination, a Member's Nonforfeitable percentage of his
Accrued Benefit shall be determined in accordance with the vesting schedule set
forth below based upon the number of Years of Service credited to him as of
such date:
<TABLE>
<CAPTION>
Percent of
Years of Service Nonforfeitable
With the Employer Accrued Benefit
------------------------------------------------------------------------------------------
<S> <C>
Less than 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
5 or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
</TABLE>
7.4 YEAR OF SERVICE - VESTING.
(a) In General. For purposes of vesting under Section 7.3, a Year of
Service means any Plan Year during which an Employee completes 1,000
or more Hours of Service with the Employer or an Affiliate. A Year of
Service includes any Year of Service earned prior to the Effective
Date of the Plan, except as provided in paragraph (b) below.
(b) Included Years of Service. For purposes of determining Years of
Service under Section 7.3, the Plan takes into account all Years of
Service an Employee completes with the Employer and Affiliates except
if a Member with a 0% Nonforfeitable Accrued Benefit incurs a Break in
Service, the Committee will disregard the Years of Service before the
Break in Service if the number of the Member's consecutive Breaks in
Service equals or exceeds the greater of 5 or the aggregate number of
the Member's Years of Service prior to the Break. The aggregate
number of Years of Service before a Break in Service does not include
any Years of Service not required to be taken into account under this
exception by reason of any prior Break in Service. If the Committee
disregards the Member's Years of Service under this exception, the
Plan forfeits his pre-Break in Service Accrued Benefit.
16
<PAGE> 20
EXHIBIT 10.39
ARTICLE VIII
FORM AND COMMENCEMENT OF BENEFIT PAYMENTS
8.1 FORM OF BENEFIT.
(a) Normal Form. Absent an election by the Member (or in case of death,
his Beneficiary) of an optional form of payment, the normal form in
which a Member (or his Beneficiary) shall be entitled to payment of
his Accrued Benefit, other than a Disability Retirement Benefit, shall
be a life annuity, or if Article IX applies to a Member (or
Beneficiary), the form specified in Article IX.
(b) Optional Forms of Payment. The Committee will direct the Insurance
Company to pay the Member's Nonforfeitable Accrued Benefit other than
a Disability Retirement Benefit, as elected by the Member or, if
applicable, by the Beneficiary, under one of the optional forms of
distribution permitted under this Section, subject to the annuity
distribution requirements of Article IX. The Beneficiary's election,
except as required by Article IX, is subject to any restrictions
designated in writing by the Member and not revoked as of his date of
death. Any form of payment under this Section must satisfy the
mandatory distribution requirements of Article X.
The optional forms of distribution, which must be the Actuarial
Equivalent of the Member's Nonforfeitable Accrued Benefit, are:
(i) Life Annuity With 5 Year Term Certain. A life annuity,
payable no less frequently than annually, with a 5 year term
certain guaranteed. If a Member dies before the Insurance
Company has made the guaranteed number of payments, the
Insurance Company will continue the balance of the payments to
the Member's designated Beneficiary.
(ii) Life Annuity With 10 Year Term Certain. A life annuity,
payable no less frequently than annually, with a 10 year term
certain guaranteed. If a Member dies before the Insurance
Company has made the guaranteed number of payments, the
Insurance Company will continue the balance of the payments to
the Member's designated Beneficiary.
(iii) Joint and Survivor Annuity. A joint life annuity payable for
the life of the Member, with a survivor annuity payable for
the remaining life of a designated Beneficiary which is a
specified percentage (either 66 2/3%, 75% or 100%) of the
annuity payable during the Member's life.
8.2 DEFINITELY DETERMINABLE BENEFIT.
(a) Actuarial Equivalence. Except to the extent that a Member's benefits
are suspended under Section 8.7, the amount of any form of benefit
under this Plan will be the Actuarial Equivalent of the Member's
Accrued Benefit in the normal form beginning at Normal Retirement Age.
(b) Benefit Forms Other than a Non-Decreasing Annuity. Notwithstanding
paragraph (a) above, in determining the amount of a distribution in a
form other than a non-decreasing annuity payable for a period of not
less than the participant's life (or, for a qualified pre-retirement
survivor annuity, the surviving spouse's life), actuarial equivalence
will be determined based on the 1971 Group Annuity Mortality Table and
the Code Section 417 interest rate(s), if it produces a benefit
greater than that determined under the preceding paragraph.
17
<PAGE> 21
EXHIBIT 10.39
(c) Limit on Applicability of Paragraphs (a) and (b). Section 8.2 (a) and
(b) above, will not apply to the extent that they would cause the plan
to fail the requirements of Code Sections 415 or 417.
(d) Special Interest Rate Rules. When determining the amount of a
Member's distribution or the present value of the Member's Accrued
Benefit, the interest rates used to make an Actuarial Equivalent
determination are either the applicable interest rates specified in
Section 2.3 or the applicable PBGC interest rates, whichever result in
a greater benefit. As a general rule, the applicable PBGC interest
rates are the immediate and deferred annuity rates the Pension Benefit
Guaranty Corporation would use for a trusteed single-employer plan to
value a benefit upon termination of an insufficient trusteed
single-employer plan. However, if the present value of the Member's
Nonforfeitable Accrued Benefit (using the applicable PBGC rates)
exceeds $25,000, the applicable PBGC interest rates are 120% of these
PBGC immediate and deferred annuity rates. The use of 120% of the
PBGC immediate and deferred annuity rates may not reduce the present
value determination below $25,000. The Committee will apply this
paragraph by referring to the PBGC immediate and deferred annuity
rates in effect on the first day of the Plan Year in which the
Member's distribution occurs. This paragraph does not apply to the
determination of the amount of a nondecreasing annuity payable for a
period not less than the life of the Member or, the case of a
qualified joint and survivor annuity, the joint lives of the Member
and the Member's spouse.
The special interest rate rules in the preceding paragraph apply to
distributions in Plan Years beginning after December 31, 1984, except
to distributions occurring in Plan Years beginning prior to January 1,
1987, for which the Plan satisfied the interest rate requirement
(including the applicable PBGC immediate annuity rate) of Section
1.417(e)-1T(e) of the Treasury regulations. These special interest
rate rules do not apply to the following annuity contracts: (1) an
annuity contract distributed to or owned by a Member prior to
September 17, 1985, unless the Employer makes additional contributions
under the Plan to that contract; and (2) an annuity contract owned by
the Employer or by the Plan, or distributed to or owned by a Member
prior to the first Plan Year beginning after December 31, 1988, if the
annuity contract satisfied the requirements of Sections 1.401(a)-11T
and 1.417(e)-1T of the Treasury regulations, unless the Employer makes
additional contributions under the Plan with respect to that contract
for any Plan Year beginning after December 31, 1988.
8.3 COMMENCEMENT OF BENEFITS.
(a) Payment of Normal Retirement Benefit.
(i) Commencement. A Member shall start receiving his Normal
Retirement Benefit on the earlier of: (A) the first day of the
month following the Member's retirement or (B) on the first
day of the month following the month that he is employed at a
rate of less than 40 Hours of Service per month.
(ii) Duration. The Normal Retirement Benefit shall be paid on the
first day of each succeeding month until the later of: (A)
the Member's death, or (B) the completion of the 60th monthly
payment to the Member and his Beneficiary.
(b) Payment of Early Retirement Benefit.
18
<PAGE> 22
EXHIBIT 10.39
(i) Commencement. Unless otherwise elected prior to retirement, a
Member shall start receiving his Early Retirement Benefit on
the first day of the month following the Member's retirement.
(ii) Duration. The Early Retirement Benefit shall be paid on the
first day of each succeeding month until the later of: (A)
the Member's death, or (B) the completion of the 60th monthly
payment to the Member and his Beneficiary.
(c) Payment of Disability Retirement Benefit.
(i) Commencement. Monthly Disability Retirement Benefits shall
commence on the first day of the calendar month coincident
with or next following the expiration of a 180 day period
beginning on the date the Participant terminates his
employment with the Employer.
(ii) Duration. Payments shall continue to be paid on the first day
of each succeeding month until the earliest occurrence of one
of the following events: (A) the attainment of age 65; (B) the
attainment of age 55 and the completion of 10 Years of Service
(C) the date the Member's Disability ceases; or (D) the date
of the Member's death.
(d) Payment of Deferred Vested Retirement Benefit.
(i) Commencement. A Member shall start receiving Deferred Vested
Retirement Benefits on the first day of the month coincident
with or next following the Member's 65th birthday, unless he
is eligible to elect, and does in fact elect, earlier
commencement of such benefits. A Member is eligible to elect
early commencement of the Deferred Vested Retirement Benefits
if such Member completed 10 Years of Service prior to his date
of termination. Early commencement shall begin on the first
day of the month coincident with or next following the
Member's 55th birthday.
(ii) Duration. The Deferred Vested Retirement Benefit will be paid
on the first day of each succeeding month until the later of:
(A) the Member's death, or (B) the completion of the 60th
monthly payment to the Member and his Beneficiary.
(e) General Rule. The foregoing notwithstanding, in no case will payment
of benefits under the Plan begin later than the 60th day after the end
of the Plan year in which occurs the later of the following events,
unless the Member consents in writing to a later date and specifies
the date on which payments shall commence:
(i) the Member attains age 65;
(ii) the Member attains the 10th anniversary of the date on which
he commenced participation in the Plan; or
(iii) the Member terminates employment with the Employer and its
Affiliates.
8.4 PAYMENT OF SMALL AMOUNTS.
(a) Cash Out. Any contrary provision of the Plan notwithstanding, if a
Member's Accrued Benefit does not exceed $3,500, then his Benefit
shall be paid to him (or in the case of death, to his
19
<PAGE> 23
EXHIBIT 10.39
Beneficiary) in the form of a single-sum cash payment as soon as
practicable after the date on which his employment terminates, and no
optional time or form of payment shall be available with respect to
such payment. If a Member's Accrued Benefit is $0.00, he shall be
deemed to have received a distribution under this Section for purposes
of the Plan.
(b) Right to Restore. If a Member is deemed to receive a distribution
under this section, and resumes employment covered under this Plan
before he incurs five consecutive one-year Breaks-in-Service, upon the
Employee's reemployment his Employer-provided Accrued Benefit will be
restored to the amount of that benefit on the date of the deemed
distribution.
8.5 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS.
(a) Consent Requirement. If the present value of a Member's vested
accrued benefit derived from Employer contributions exceeds (or at the
time of any prior distribution exceeded) $3,500, and the benefit is
immediately distributable, the Member and his spouse (or where either
the Member or the spouse has died, the survivor) must consent to any
distribution of that benefit. The written consent of the Member and
the Member's spouse must be obtained within the 90-day period ending
on the annuity starting date. The annuity starting date is the first
day of the first period for which an amount is paid as an annuity or
in any other form. The Committee will notify the Member and his
spouse of the right to defer any distribution until the Member's
accrued benefit is no longer immediately distributable. This
notification will include a general description of the material
features, and an explanation of the relative values of, the optional
forms of benefit available under this plan in a manner that would
satisfy the Code section 417(a)(3) notification rules, and will be
provided no less than 30, and no more than 90, days before the annuity
starting date.
(b) Limit on Consent Requirement. Notwithstanding paragraph (a), only the
Member must consent to the commencement of a distribution in the form
of a qualified joint and survivor annuity while the Accrued Benefit is
immediately distributable. Neither the consent of the Member nor that
of his spouse will be required to the extent that a distribution is
required to satisfy Code sections 401(a)(9) or 415.
(c) Determination of Present Value. Present value for purposes of this
section will be determined in accordance with section 2.35.
(d) When Accrued Benefit is Considered Immediately Distributable. An
Accrued Benefit is immediately distributable if any part of it could
be distributed to the Member (or surviving spouse) before the Member
reaches (or would have reached if not deceased) Normal Retirement Age.
8.6 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS.
Nothing contained in this Plan will prevent the Insurance Company, in
accordance with the direction of the Committee, from complying with the
provisions of a qualified domestic relations order (as defined in Code section
414(p)).
For purposes of applying Article IX, the Committee will treat a former spouse
as the Member's spouse or surviving spouse to the extent provided under a
qualified domestic relations order. The survivor annuity requirements and the
joint and survivor annuity requirements of Article IX apply separately to the
portion of the Member's Nonforfeitable Accrued Benefit subject to the qualified
domestic relations order and to the portion of the Member's Nonforfeitable
Accrued Benefit not subject to that order.
20
<PAGE> 24
EXHIBIT 10.39
The Committee must establish reasonable procedures to determine the qualified
status of a domestic relations order. Upon receiving a domestic relations
order, the Committee promptly will notify the Member and any alternate payee
named in the order, in writing, of the receipt of the order and the Plan's
procedures for determining the qualified status of the order. Within a
reasonable period of time after receiving the domestic relations order, the
Committee must determine the qualified status of the order and must notify the
Member and each alternate payee, in writing, of its determination. The
Committee must provide notice under this paragraph by mailing to the
individual's address specified in the domestic relations order, or in a manner
consistent with Department of Labor regulations.
The Insurance Company will make any payments or distributions required under
this Section by separate benefit checks or other separate distribution to the
alternate payee(s).
8.7 REEMPLOYMENT AFTER RETIREMENT.
(a) Reemployment Prior to Age 65. If a Member is reemployed as an
Employee before age 65, his benefit payments shall be discontinued and
shall not be paid during the period of such reemployment, his previous
election of form of payment shall be cancelled, and he shall have the
Years of Service for vesting and Years of Benefit Service he had at
the time of his retirement reinstated. Upon his subsequent
retirement, his eligibility for a benefit and the amount of the
benefit shall be determined, calculated, and paid as if he were then
first retired based upon such reinstated Years of Service for vesting
and Years of Benefit Service, plus Years of Service for vesting and
Years of Benefit Service earned following the date of reemployment,
but such benefit shall be actuarially reduced to account for any
retirement benefit payments he may have received prior to his
reemployment. In no event will a Member's retirement benefit at his
subsequent retirement (prior to reduction for any benefit payments he
may have received prior to his reemployment) be less than his benefit
at his prior retirement.
The foregoing notwithstanding, if a Member reemployed as described
above subsequently reaches his 65th birthday and is employed at a rate
of fewer than 40 Hours of Service per month, he shall be entitled to
receive a normal retirement benefit during such period of
reemployment. Such payments shall continue every month thereafter
until his rate of employment equals at least 40 Hours of Service per
month, at which time his benefits shall be suspended under the terms
and conditions described in section 8.7(b).
(b) Reemployment After Attaining Age 65. If a Member is reemployed as an
Employee after his 65th birthday at a rate of at least 40 Hours of
Service per month, his benefit payments shall be discontinued and
shall not be paid during the period of such reemployment, his previous
election of form of payment shall be cancelled, and he shall have the
Years of Service for vesting and Years of Benefit Service he had at
the time of his retirement reinstated. Such suspension of benefits
shall be done in accordance with Department of Labor regulation
section 2530.203-3 and shall include the notice described in paragraph
(c). Upon his subsequent retirement, his eligibility for a benefit
and the amount of the benefit shall be determined, calculated, and
paid as if he were then first retired based upon such reinstated Years
of Service for vesting and Years of Benefit Service, plus Years of
Service for vesting and Years of Benefit Service earned following the
date of reemployment, but such benefit shall be actuarially reduced to
account for any retirement benefit payments he may have received prior
to his reemployment. In no event will a Member's retirement benefit
at subsequent retirement (prior to reduction for any benefit payments
he may have received prior to his reemployment) be less than his
benefit at his prior retirement.
21
<PAGE> 25
EXHIBIT 10.39
If a Member is reemployed as an Employee after his 65th birthday and
his rate of employment is for less than 40 Hours of Service per month,
he shall receive the same type and amount of benefit payment he was
entitled to receive preceding his reemployment during such period of
reemployment. Such payments shall continue every month thereafter
until his rate of employment equals at least 40 Hours of Service per
month, at which time his benefits shall be suspended as described
above.
(c) Suspension of Benefits Notice and Procedures. If an Member's benefits
are to be suspended after age 65, the Plan shall notify the Member's
by personal delivery or first class mail during the first calendar
month in which the Plan withholds payments, that benefits are
suspended. The notice shall contain:
(i) a general description of the reasons why payments are
suspended;
(ii) a general description of the Plan provisions relating to the
suspension of benefits;
(iii) a copy of such Plan provisions;
(iv) a statement that applicable Department of Labor regulations
may be found in section 2530.203-3 of the Code of Federal
Regulations;
(v) a statement that a review of the suspension may be requested
under the claims procedure found in section 14.8;
(vi) if the Plan requires a benefit resumption notice, the
procedure and forms; and
(vii) if the Plan requires verification by the Member that his
benefits should not be suspended, the procedure and forms for
such verification.
The Plan shall adopt a procedure whereby an individual may request a
determination of whether specific contemplated employment after age 65
will result in a suspension of benefits.
8.8 DIRECT ROLLOVERS.
(a) In General. This Section applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election under
this part, a Distributee may elect, at the time an in the manner
prescribed by the Plan Administrator, to have any portion of an
Eligible Rollover Distribution that is equal to at least $500 paid
directly to an Eligible Rollover Retirement Plan specified by the
Distributee in a direct rollover.
(b) Definitions:
(i) Eligible Rollover Distribution. An Eligible Rollover
Distribution is any distribution of all or any portion of the
balance to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the Distributee or the joint
lives (or joint life expectancies) of the Distributee and the
Distributee's designated Beneficiary, or for a specified
period of ten
22
<PAGE> 26
EXHIBIT 10.39
years or more; any distribution to the extent such
distribution is required under Code section 401(a)(9); the
portion of any other distribution(s) that is not includable in
gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer
securities); and any other distribution(s) that is reasonably
expected to total less than $200 during a year.
(ii) Eligible Retirement Plan. An Eligible Retirement Plan is an
individual retirement account described in Code section
408(a), an individual retirement annuity described in Code
section 408(b), an annuity plan described in Code section
403(a), or a qualified plan described in Code section 401(a),
that accepts the Distributee's eligible rollover distribution.
However, in the case of an Eligible Rollover Distribution to
the surviving spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement
annuity.
(iii) Distributee. A Distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's
spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in Code section
414(p), are Distributees with regard to the interest of the
spouse or former spouse.
(iv) Direct Rollover. A Direct Rollover is a payment by the Plan
to the Eligible Retirement Plan specified by the Distributee.
23
<PAGE> 27
EXHIBIT 10.39
ARTICLE IX
JOINT & SURVIVOR ANNUITY REQUIREMENTS
9.1 FORM OF BENEFIT.
(a) Qualified Joint & Survivor Annuity. If a Member survives to his
Annuity Starting Date, then, unless he has made a Qualified Election
within the election period specified below, his Accrued Benefit shall
be applied toward the purchase of an annuity contract which provides
benefits in the form of a 50% Qualified Joint and Survivor Annuity, if
he has a spouse on the Annuity Starting Date, or a life annuity, if he
does not have a Spouse on the Annuity Starting Date.
For purposes of this Section the election period is the 90-day period
that ends on the Member's Annuity Starting Date.
(b) Qualified Preretirement Survivor Annuity.
(i) In General. If a Member does not survive to his Annuity
Starting Date, then, unless he has made a Qualified Election
within the election period specified below or his Spouse has
elected an optional form of payment under Section 8.1(b), his
Accrued Benefit shall be applied toward the purchase of an
annuity contract which provides benefits in the form of a
Qualified Preretirement Survivor Annuity if he has a spouse on
the date of his death. The spouse may elect that such annuity
be distributed within a reasonable time after the Member's
death.
For purposes of this subsection, the election period is the
period that begins on the first day of the Plan Year in which
the Member attains age 35 (or if the Member's employment
terminates prior thereto, the date of such termination) and
ends on the date of the Member's death.
(ii) Special Pre-Age 35 Waiver. A Member who will not attain age
35 as of the end of any given Plan Year may make a special
Qualified Election to waive the Qualified Preretirement
Survivor Annuity for the period that begins on the date of
such election and ends on the first day of the Plan Year in
which he attains age 35. Such election shall not be valid
unless the Member receives a written explanation of the
Qualified Preretirement Survivor Annuity in such terms as are
comparable to the explanation required under Section 9.3.
Qualified Preretirement Annuity coverage shall be
automatically reinstated as of the first day of the Plan Year
in which the Member attains age 35 and any new waiver on or
after such date shall be subject to the requirements of (b)(i)
above.
(c) Effective Date. This Section applies to any Member with at least one
Hour of Service credited on and after June 28, 1986.
9.2 DEFINITIONS.
For purposes of this Article IX, the following words and phrases shall have the
meanings specified below, unless the context plainly requires a different
meaning:
24
<PAGE> 28
EXHIBIT 10.39
(a) "Earliest Retirement Age" means the earliest date on which the Member
could elect to receive benefits under the Plan.
(b) "Qualified Election" means an election to waive a Qualified Joint and
Survivor Annuity or Qualified Preretirement Survivor Annuity, which
shall be effective only if the Member's spouse consents in writing to
the election, the election designates a specific Beneficiary
(including any class of Beneficiaries or contingent Beneficiaries),
and, in the case of a waiver of a Qualified Joint and Survivor
Annuity, a form of benefit payment, which designation may not be
changed without the consent of the spouse (or the spouse expressly
permits designations by the Member without any further spousal
consent), the spouse's consent acknowledges the effect of the
election, and the spouse's consent is witnessed by a plan
representative or notary public. For this purpose, the following
provisions apply:
(i) If it is established to the satisfaction of a plan
representative that there is no spouse or that the spouse
cannot be located, a waiver shall be deemed a Qualified
Election.
(ii) Any consent by a spouse obtained under this provision (or
establishment that the consent of a spouse may not be
obtained) shall be effective only with respect to such spouse.
(iii) A consent that permits future designations by the Member
without any requirement of consent by the spouse must
acknowledge that the spouse has the right to limit consent to
a specific Beneficiary, and a specific form of benefit, where
applicable, and that the spouse voluntarily elects to
relinquish either or both of such rights.
(iv) A Member may revoke a prior waiver (without the consent of the
spouse) at any time before the commencement of benefits, and
the number of revocations shall not be limited.
(v) No consent obtained under this provision shall be valid unless
the Member has received notice as provided in Section 9.3.
(c) "Qualified Joint and Survivor Annuity" means an immediate annuity for
the life of the Member with a survivor annuity for the life of the
spouse which is 50% of the amount of the annuity which is payable
during the joint lives of the Member and spouse. The amount of such
annuity shall be the Actuarial Equivalent of an annuity for the
lifetime of a Member with sixty monthly payments guaranteed and shall
be provided payments for the lifetime of a Member with a survivor
annuity for the lifetime of the Member's spouse. The Table in
Appendix 2 shows the percentages applicable to benefits commencing at
age 65.
(d) "Qualified Preretirement Survivor Annuity" means an annuity for the
life of the surviving spouse of a Member which is the amount of
benefit which can be purchased with his Accrued Benefit. The amount
of the monthly retirement benefit payable to a Member at his
retirement if he does not die prior to his Annuity Starting Date, and
the amount payable to a spouse under the Preretirement Survivor
Annuity, shall be reduced for each full calendar month the
preretirement death benefit is in effect:
25
<PAGE> 29
EXHIBIT 10.39
<TABLE>
<CAPTION>
AGE Reduction Factor
--- ----------------
<S> <C>
55-65 .04167% per month
45-54 .01667% per month
35-44 .00833% per month
</TABLE>
If, pursuant to Section 9.1(b)(i), a Spouse elects to defer the
commencement of the Preretirement Survivor Annuity, the amount of the
benefit payable thereunder shall be increased (as if the member had
deferred commencement of his benefit) to reflect such deferral.
9.3 NOTICE REQUIREMENTS.
(a) Relating to Qualified Joint and Survivor Annuities. The Committee
shall within the applicable period specified below provide each Member
with a written explanation of (i) the terms and conditions of a
Qualified Joint and Survivor Annuity, (ii) the Member's right to make
and the effect of an election to waive the Qualified Joint and
Survivor Annuity, (iii) the rights of a Member's Spouse, and (iv) the
right to make, and the effect of, a revocation of a previous election
to waive the Qualified Joint and Survivor Annuity.
For purposes of this subsection, the applicable period is the period
that begins 90 days and ends 30 days prior to the Member's Annuity
Starting Date.
(b) Relating to Qualified Preretirement Survivor Annuities. The Committee
shall within the applicable period specified below provide each Member
with a written explanation of the Qualified Preretirement Survivor
Annuity with information comparable to that specified in (a) above.
For purposes of this subsection, the applicable period is whichever of
the following periods ends last:
(i) The period that begins with the first day of the Plan Year in
which the Member attains age 32 and ends with the last day of
the Plan Year preceding the Plan Year in which the Member
attains age 35;
(ii) The period that begins one year prior to the date on which the
individual becomes a Member and ends one year after such date;
(iii) The period that begins one year prior to the date on which
this Article first applies to the Member and ends one year
after such date.
Notwithstanding the above, in the case of a Member whose employment
with the Employer terminates before he attains age 35, notice shall be
provided to such Member within the 2-year period that begins one year
prior to his termination and ends one year after his termination. If
such Member returns to employment with the Employer, the applicable
period for such Member shall be redetermined.
9.4 CERTAIN TRANSITIONAL RULES.
(a) A Member whose employment with the Company terminated before June 28,
1986, and to whom this Article otherwise would not apply, shall be
given the opportunity to elect to have this Article
26
<PAGE> 30
EXHIBIT 10.39
apply if (i) he was credited with at least one Hour of Service in a
Plan Year beginning on or after January 1, 1976, (ii) he was not
receiving benefits under the Plan on June 28, 1986, and (iii) he had
at least 10 Years of Service for vesting purposes when his employment
terminated.
(b) A Member whose employment with the Company terminated before the first
Plan Year beginning on or after January 1, 1976, shall be given the
opportunity to have his Accrued Benefit paid in accordance with
Section 9.4(d) if (i) he was credited with at least one Hour of
Service on or after September 2, 1974, and (ii) he was not receiving
benefits under the Plan on June 28, 1986.
(c) The respective opportunities described in (a) and (b) above shall be
afforded to the appropriate Member during the period that begins on
June 28, 1986, and ends on the date benefits would otherwise commence
to such Member.
(d) A Member who has elected pursuant to (b) above, a Member who is
eligible to but does not elect pursuant to (a) above, and a Member who
meets the requirements of (a) above except that he does not have at
least 10 Years of Service for vesting purposes when his employment
terminated, shall have his Accrued Benefit distributed in accordance
with all of the following if such benefit otherwise would have been
payable in the form of a life annuity:
(i) Automatic Joint and Survivor Annuity. If benefits in the form
of a life annuity become payable to a married Member who (A)
begins to receive payments under the Plan on or after Normal
Retirement Age, or (B) dies on or after Normal Retirement Age
while employed with the Employer, or (C) begins to receive
payments on or after the qualified early retirement age, or
(D) terminates employment with the Employer on or after his
Normal Retirement Age (or qualified early retirement age) and
after satisfying the eligibility requirements for payment of
benefits under the Plan and thereafter dies before beginning
to receive such benefits, then such benefits shall be paid in
the form of a Qualified Joint and Survivor Annuity, unless the
Member has elected otherwise during the election period
specified below. Any election hereunder must be in writing
and may be changed by the Member at any time.
For purposes of this subsection, the election period is the
period that begins at least 6 months before the Member attains
qualified early retirement age and ends 90 days before the
commencement of benefits.
(ii) Election of Early Survivor Annuity. A Member who is employed
with the Employer after his qualified early retirement age may
elect, during the election period specified below, to have a
survivor annuity paid upon death. If the Member elects the
survivor annuity, payments under such annuity shall not be
less than the payments which would have been made to the
spouse under a Qualified Joint and Survivor Annuity if the
Member had retired on the day before his death. Any election
under this provision must be in writing and may be changed by
the Member at any time.
For purposes of this subsection, the election period is the
period that begins on the later of (A) the 90th day before the
Member attains his qualified early retirement age, or (B) the
date on which his participation begins, and ends on the date
the Member employment with the Employer terminates.
27
<PAGE> 31
EXHIBIT 10.39
For purposes of subsection (d), the phrase "qualified early
retirement age" means the latest of (i) the earliest date
under the Plan on which the Member may elect to receive
retirement benefits, (ii) the first day of the 120th month
beginning before the Member reaches Normal Retirement Age, or
(iii) the date the Member begins participation.
9.5 MARRIAGE REQUIREMENT.
Notwithstanding Section 9.1, a Qualified Joint and Survivor Annuity or a
Qualified Preretirement Survivor Annuity shall not be provided unless the
Member and spouse were married throughout the one-year period ending on the
earlier of (i) the Member's Annuity Starting Date or (ii) the date of the
Member's death. For purposes of this Section, the Member and his spouse shall
be treated as having been married throughout the one-year period ending on the
Member's Annuity Starting Date if: (i) the Member is married within one year
before the Annuity Starting Date and (ii) the Member and his spouse in such
marriage were married for at least a one-year period ending on or before the
date of the Member's death.
28
<PAGE> 32
EXHIBIT 10.39
ARTICLE X
MANDATORY DISTRIBUTIONS
10.1 REQUIRED BEGINNING DATE.
(a) In General. If any distribution commencement date described under the
Plan, either by Plan provision or by Member election (or nonelection),
is later than the Member's Required Beginning Date, the Committee
instead must direct the Insurance Company to make distribution to the
Member on the Member's Required Beginning Date. A mandatory
distribution at the Member's Required Beginning Date will be in the
normal annuity form of distribution required under Section 8.1 unless
the Member, pursuant to the provisions of this Article, makes a valid
election to receive an alternative form of payment.
(b) Defined. A Member's Required Beginning Date is the April 1 following
the close of the calendar year in which the Member attains age 70 1/2.
However, if the Member prior to incurring a Separation from Service,
attained age 70 1/2 by January 1, 1988, and, for the 5 Plan Year
period ending in the calendar year in which he attained age 70 1/2 and
for all subsequent years, the Member was not a more than 5% owner, the
Required Beginning Date is the April 1 following the close of the
calendar year in which the Member Separates from Service or, if
earlier, the April 1 following the close of the calendar year in which
the Member becomes a more than 5% owner. Furthermore, if a Member who
was not a more than 5% owner attained age 70 1/2 during 1988 and did
not incur a separation from service prior to January 1, 1989, his
Required Beginning Date is April 1, 1990.
10.2 MINIMUM DISTRIBUTION REQUIREMENTS.
The Committee may not direct the Insurance Company to distribute the Member's
Nonforfeitable Accrued Benefit, nor may the Member elect to have the Insurance
Company distribute his Nonforfeitable Accrued Benefit, under a method of
payment which, as of the Required Beginning Date, does not satisfy the minimum
distribution requirements under Code section 401(a)(9) and the applicable
Treasury regulations.
10.3 MINIMUM DISTRIBUTION FOR ANNUITY DISTRIBUTION.
(a) In General. An annuity distribution made to the Member pursuant to
this Article must satisfy all of the following requirements:
(i) The periodic payment intervals under the annuity may not be
longer than one year.
(ii) The distribution period must not exceed the life (or joint
lives) of the Member and his designated Beneficiary (as
determined under Section 14.1, subject to the requirements of
the Code section 401(a)(9) regulations), or a period certain
not longer than the life expectancy (or joint life expectancy)
or the Member and his designated Beneficiary.
(iii) The annuity does not recalculate life expectancy.
(iv) The Member or Beneficiary may not lengthen the period certain,
if applicable, even if the period certain is shorter than the
maximum period permitted under Code section 401(a)(9).
29
<PAGE> 33
EXHIBIT 10.39
(v) The payments are nonincreasing or increase only under the
following circumstances: (A) with any percentage increase in a
specified and generally recognized cost-of-living index; (B)
to take into account the reduction to the amount of the
participant's payments to provide a survivor benefit, but only
upon the death of the Beneficiary on whose life the annuity
determines the survivor distribution period and if the
payments continue over the life of the Member; (C) to provide
cash refunds of Employee contributions upon the Member's
death; or (D) because of an increase in benefits under the
Plan.
(vi) If the annuity is a life annuity (or a life annuity with a
period certain not exceeding 20 years) the minimum
distribution required by the Member's Required Beginning Date
is one payment interval. Subsequent minimum distributions are
the payment intervals determined under the annuity, even if
the second payment interval occurs in the calendar year
following the year in which the Required Beginning Date
occurs.
(vii) If the annuity provides a period certain without a life
contingency, or if a life annuity with a period certain
exceeding 20 years, the minimum distribution for each calendar
year subject to this Section, is the annual amount, determined
by totalling the periodic payments for a calendar year. The
minimum distribution due by the Member's Required Beginning
Date is the annual amount for the calendar year preceding that
Required Beginning Date. The minimum distribution for the
calendar year which includes the Required Beginning Date and
for all subsequent calendar years is the annual amount for
that calendar year and the annuity must pay that minimum
distribution no later than December 31 of that calendar year.
(b) Minimum Distribution incidental death benefit ("MDIB") If the Member's
spouse is not his designated Beneficiary, an annuity commencing after
December 31, 1988, must satisfy the MDIB requirements of this
paragraph. If the annuity provides a period certain without a life
contingency, the period certain in effect as of the first distribution
calendar year may not exceed the applicable period determined under
the maximum period certain table set forth in Treas. Reg. section
1.401(a)(9)-2. If the annuity with a life contingency includes a
period certain, the period certain at any time on or after the
Member's Required Beginning Date also may not exceed the maximum
period certain determined under the table described in the immediately
preceding sentence. If the annuity is a joint and survivor annuity
payable for the joint lives of the Member and a nonspouse Beneficiary,
the survivor percentage in effect at any time on or after the Member's
Required Beginning Date may not exceed the percentage determined under
the applicable percentage table set forth in Treas. Reg. section
1.401(a)(9)-2. A joint and survivor annuity under which the survivor
percentage does not exceed 52% always satisfies this paragraph. A
life annuity payable to the Member, without any period certain, is not
subject to the MDIB requirements of this paragraph.
(c) Transitional rules. An annuity commencing prior to January 1, 1989,
satisfies the incidental benefits requirement if it satisfies the MDIB
requirements in the preceding paragraph or if the present value of the
retirement benefits payable solely to the Member is greater than 50%
of the present value of the total benefits payable to the Member and
his Beneficiaries. This transitional rule also applies to deferred
annuity contracts distributed to or owned by the Member prior to
January 1, 1989, unless the Employer makes additional contributions
under the Plan with respect to that contract.
30
<PAGE> 34
EXHIBIT 10.39
(d) Additional accruals. Benefits accruing to the Member after his
Required Beginning Date constitute a separate component of an annuity
distribution beginning with the first payment interval ending in the
calendar year immediately following the calendar year in which such
amount accrues. The annuity starting date and form of distribution
commenced by the Required Beginning Date applies to the distribution
of these additional accruals, unless the Member elects otherwise
pursuant to his benefit options under the Plan, and that election
otherwise complies with these minimum distribution requirements. An
additional accrual includes any portion of the Member's Accrued
Benefit which becomes Nonforfeitable during the applicable calendar
year.
10.4 NON-ANNUITY DISTRIBUTIONS.
A lump sum distribution made on or before a Member's Required Beginning Date of
his entire Nonforfeitable Accrued Benefit under the Plan satisfies the minimum
distribution requirements. Furthermore, a lump sum payment of additional
accruals, as described in the immediately preceding paragraph, no later than
the end of the first payment interval ending in the calendar year immediately
following the calendar year in which such amount accrues, satisfies the minimum
distribution requirements.
10.5 MINIMUM DISTRIBUTION REQUIREMENT FOR BENEFICIARIES.
(a) In General. The method of distribution to the Member's Beneficiary
must satisfy Code section 401(a)(9) and the applicable Treasury
regulations.
(b) Death After the Required Beginning Date. If the Member's death occurs
after his Required Beginning Date or, if earlier, the date the Member
commences an irrevocable annuity, the method of payment to the
Beneficiary must provide for completion of payment over a period which
does not exceed the payment period which had commenced for the Member.
(c) Death Before the Required Beginning Date. If the Member's death
occurs prior to his required Beginning Date and the Member has not
commenced an irrevocable annuity, the method of payment to the
Beneficiary must provide for completion of payment over a period not
exceeding:
(i) 5 years after the date of the Member's death (with payments
completed by December 31 of the calendar year in which occurs
the 5th anniversary of the Member's date of death); or
(ii) if the Beneficiary is a designated Beneficiary, over the
designated Beneficiary's life or life expectancy.
The Committee will not direct payment over a period described in
clause (b) unless Insurance Company will commence payment to the
designated Beneficiary no later than the December 31 following the
close of the calendar year in which the Member's death occurred or, if
later, and the designated Beneficiary is the Member's surviving
spouse, the December 31 of the calendar year in which the Member would
have attained age 70 1/2. The Committee must use the unisex life
expectancy multiples under Treas. Reg.section 1.72-9 for purposes of
applying this paragraph. An annuity distribution to the designated
Beneficiary from the Insurance Company, satisfies clause (ii) if the
annuity satisfies the minimum distribution requirements of Section 9.3
but applying paragraphs (v) and (vi) of Section 9.3 as follows: (A)
the distribution calendar years applicable to the designated
Beneficiary are the calendar year in which benefits must commence
under clause (ii) of this Section and all subsequent calendar years;
and (B) the first payment interval under
31
<PAGE> 35
EXHIBIT 10.39
paragraph (v) is due by the December 31 described in this Section. A
lump sum distribution to the Beneficiary made no later than the date
described in clause (i) of this Section satisfies these minimum
distribution requirements.
In the case of a nonannuity distribution to a designated Beneficiary,
the Plan satisfies the requirement of this Section if the distribution
method satisfies the minimum distribution requirements applicable to
individual accounts, as determined under Code section 401(a)(9) and
the applicable regulations, and the first minimum distribution occurs
no later than the December 31 described in clause (b)(ii) of this
Section. The Committee will apply the post- death minimum
distribution rules by treating any amount paid to the Member's child,
which becomes payable to the Member's surviving spouse upon the
child's attaining the age of majority, as paid to the Member's
surviving spouse.
32
<PAGE> 36
EXHIBIT 10.39
ARTICLE XI
LIMITATION ON ANNUAL BENEFITS
11.1 LIMITATION ON ANNUAL BENEFIT.
(a) Applicability of this Section. This Section applies regardless of
whether any Member is or has ever been a Participant in another
qualified plan maintained by the Employer. However, Section 11.3 also
applies to a Member if such Member is or has ever been a participant
in another qualified plan maintained by the Employer or in any of the
following types of plans maintained by the Employer: (i) a welfare
benefit fund within the meaning of Code section 419(e); (ii) an
individual medical account within the meaning of Code section
415(l)(2); or (iii) a simplified employee pension within the meaning
of Code section 408(k), which provides an annual addition within the
meaning of Code section 415(c)(2).
(b) Limitation. The annual benefit otherwise payable to a member at any
time will not exceed the Maximum Permissible Amount. If the benefit
that the Member would otherwise accrue in a Limitation Year would
produce an annual benefit in excess of the Maximum Permissible Amount,
the accrual rate will be reduced so that the annual benefit will equal
the Maximum Permissible Amount.
(c) Deemed Satisfaction of Limit. The limit in paragraph (b) is deemed
met if the annual benefit payable to a Member does not exceed $1,000
multiplied by the Member's number of Years of Service or parts thereof
(not to exceed 10) with the Employer, and the Employer has not at any
time maintained a defined contribution plan, welfare benefit plan, or
individual medical account in which he participated.
(d) Alternate forms of payment. If the Insurance Company pays the
Member's benefit in a form other than an Annual Benefit, the benefit
paid may not exceed the Actuarial Equivalent of the maximum Annual
Benefit payable as a straight life annuity. To determine the
Actuarial Equivalent under this paragraph, the Committee will use an
interest rate assumption equal to the greater of 5% per annum or the
rate specified in Section 2.3.
11.2 DEFINITIONS.
For purposes of this Article, the following words and phrases shall have the
following meanings:
(a) "Annual Addition" means the following amounts allocated on behalf of a
Member for a Limitation Year, under a defined contribution plan
maintained by the Employer: (i) all Employer contributions; (ii) all
forfeitures; and (iii) all Employee contributions. Except to the
extent provided in Treasury regulations, Annual Additions include
excess contributions described in Code section 401(k), excess
aggregate contributions described in Code section 401(m), irrespective
of whether the plan distributes or forfeits such excess amounts.
Excess deferrals described in Code section 402(g) are not Annual
Additions unless distributed after the correction period described in
Code section 402(g). Amounts allocated after March 31, 1984, to an
individual medical account (as defined in Code section 415(l)(2))
included as part of a defined benefit plan maintained by the Employer
also are Annual Additions. Furthermore, Annual Additions include
contributions paid or accrued after December 31, 1985, for taxable
years ending after December 31, 1985, attributable to post-retirement
medical benefits allocated to the separate account of a key employee
(as defined in Code section 419A(d)(3)) under a welfare benefit fund
(Code section 419(e))
33
<PAGE> 37
EXHIBIT 10.39
maintained by the Employer, but only for purposes of the dollar
limitation applicable to the Maximum Permissible Amount.
(b) "Annual Benefit" means the Member's retirement benefit (including any
portion of the Member's retirement benefit payable to an alternate
payee under a qualified domestic relations order satisfying the
requirements of Code section 414(p)) attributable to Employer
contributions payable in the form of a straight life annuity or a
qualified joint and survivor annuity, with no ancillary benefits
(other than the survivor annuity).
(c) "Compensation" means Compensation as determined under the general
definition of Compensation in Section 2.14.
(d) "Defined benefit plan" means a retirement plan which does not provide
for individual accounts for Employer contributions. The Committee
must treat as a single plan all defined benefit plans maintained by
the Employer, whether or not terminated.
(e) "Defined contribution plan" means a retirement plan which provides for
an individual account for each participant and for benefits based
solely on the amount contributed to the participant's account, and any
income, expenses, gains and losses, and any forfeitures of accounts of
other participants which the plan may allocate to such participant's
account. The Committee must treat as a single plan all defined
contribution plans maintained by the Employer, whether or not
terminated. For purposes of the limitations of this Article (except
for the $10,000 minimum benefit limitation in Section 10.1(d)), the
Committee will treat employee contributions made to a defined benefit
plan (including this Plan) maintained by the Employer as a separate
defined contribution plan. The Committee also will treat as a defined
contribution plan an individual medical account (as defined in Code
section 415(l)(2)) included as part of a defined benefit plan
maintained by the Employer and, for taxable years ending after
December 31, 1985, a welfare benefit fund under Code section 419(e)
maintained by the Employer to the extent there are post-retirement
medical benefits allocated to the separate account of a key employee
(as defined in Code section 419A(d)(3)).
(f) "Defined benefit dollar limitation" means $90,000 as adjusted for the
cost of living under Code section 415(d). The adjusted limit will
apply to Limitation Years ending within the calendar year in which the
date of adjustment occurs.
(g) "Defined benefit plan fraction" means a fraction having as its
numerator the sum of the Member's projected annual benefit under all
defined benefit plan (whether or not terminated) maintained by the
Employer, and as its denominator the lesser of: (i) 125% (subject to
the 100% limitation under Code section 415(b) and (d) in accordance
with the rules of this Article, or (ii) 140% of the Member's average
Compensation for his high 3 consecutive Years of Service The
denominator of this fraction assumes the Member has at least 10 Years
of Service or the Committee will have at least 10 Years of Service at
Normal Retirement Age. To determine whether the Member will have at
least 10 Years of Service, the Committee may include the year in which
the Member reaches Normal Retirement Age, but only if it is reasonable
to anticipate he will receive credit for a Year of Service in that
year. If a Member fails to satisfy this 10 Years of Service
requirement, the Committee will reduce the denominator of the Member's
defined benefit fraction in the same manner as described under
paragraph (e)(ii) with respect to reductions for less than 10 Years of
Service.
34
<PAGE> 38
EXHIBIT 10.39
Notwithstanding the above, if the Member was a Participant as of the
first day of the first Limitation Year beginning after 1986 in one or
more defined benefit plans maintained by the Employer which were in
existence on May 6, 1986, the denominator will not be less than 125%
of the sum of the annual benefits under such plans that the
Participant had accrued as of the close of the last Limitation Year
beginning before 1987, disregarding any changes in the plans' terms
after May 5, 1986. The preceding sentence applies only if the defined
benefit plans individually and in the aggregate satisfied Code section
415 for all Limitation Years beginning before 1987.
(h) "Defined contribution plan fraction" means a fraction having as its
numerator the sum of (i) the Annual Additions to the Member's Account
under the defined contribution plan(s) maintained by the Employer for
the current and all prior Limitation Years, and (ii) the annual
additions attributable to all welfare benefit funds or individual
medical accounts and simplified employee pensions maintained by the
Employer and having as its denominator the sum of the maximum
aggregate amount for the Limitation Year and for each prior Year of
Service with the Employer.
The maximum aggregate amount in any Limitation Year is the lesser of:
(i) 125% (subject to the 100% limitation in paragraph (3)) of the
dollar limitation in effect under Code section 415(c)(1)(A) for the
Limitation Year (determined without regard to the special dollar
limitations for employee stock ownership plans), or (ii) 35% of the
Member's Compensation for the Limitation Year.
For purposes of determining the defined contribution plan fraction,
the Committee will not recompute Annual Additions in Limitation Years
beginning prior to January 1, 1987, to treat all Employee
contributions as Annual Additions. If the Plan satisfied Code section
415 for Limitation Years beginning prior to January 1, 1987, the
Committee will redetermine the defined contribution plan fraction and
the defined benefit plan fraction as of the end of the 1986 Limitation
Year in accordance with this Section. If the sum of the redetermined
fractions exceeds 1.0, the Committee will subtract permanently from
the numerator of the defined contribution plan fraction an amount
equal to the product of (1) the excess of the sum of the fractions
over 1.0, times (2) the denominator of the defined contribution plan
fraction. In making the adjustment, the Committee must disregard any
accrued benefit under the defined benefit plan which is in excess of
the Current Accrued Benefit. This Plan continues any transitional
rules applicable to the determination of the defined contribution plan
fraction under the Company's Plan as of the end of the 1986 Limitation
Year.
(i) "Limitation Year" means the Plan Year. If the Company amends the
Limitation Year to a different 12 consecutive month period, the new
Limitation Year must begin on a date within the Limitation Year for
which the Company makes the amendment, creating a short Limitation
Year.
(j) "Maximum Permissible Amount"
(i) Maximum Permissible Amount means the lesser of (A) The defined
benefit dollar limit under Code section 415(b)(1)(A), or (B)
100% of the Member's highest average Compensation.
(ii) Adjustment for Years of Service less than 10. If a Member has
less than 10 Years of Service with the Employer at the time
benefits commence, the Committee will multiply his 100%
average Compensation limitation by a fraction, the numerator
of which is the number of Years of Service (including
fractional years) with the Employer and the
35
<PAGE> 39
EXHIBIT 10.39
denominator of which is 10. If a Member has less than 10
Years of Service in the Plan at the time his benefits
commence, the Committee will multiply his dollar limitation by
a fraction, the numerator of which is the number of Years of
Service (including fractional years) in the Plan and the
denominator of which is 10. The reductions described in this
paragraph will not reduce a Member's maximum Annual Benefit to
less than one-tenth of the maximum Annual Benefit determined
without regard to the reductions. To the extent required by
Treasury regulations or by other published Revenue Service
guidance, the Committee will apply the reductions of this
paragraph separately to each change in the benefit structure
of the Plan.
(iii) Commencement prior to Social Security Retirement Age. If a
Member's Annual Benefit commences prior to his attaining
Social Security Retirement Age, but not earlier than his
attaining age 62, the Committee will adjust the $90,000 (or
the larger adjusted dollar amount) limitation of this Section
by 5/9 of 1% for each of the first 36 months the benefit
commencement date precedes the Member's Social Security
Retirement Age, and by 5/12 of 1% for each additional month
(not exceeding 24 months) the benefit commencement date
precedes the Member's Social Security Retirement Age. If a
Member's Annual Benefit commences prior to his attaining age
62, the Committee will adjust the dollar amount limitation of
this Section to the Actuarial Equivalent of an Annual Benefit
equal to the dollar limitation applicable to an Annual Benefit
commencing to that Member at age 62. To determine the
Actuarial Equivalent under this paragraph, the Committee will
use an interest rate assumption equal to the greater of 5% per
annum or the rate specified in Section 2.3
(iv) Commencement after Social Security Retirement Age. If a
Member's Annual Benefit commences after his Social Security
Retirement Age, the Committee will adjust the $90,000 (or
larger adjusted dollar amount) limitation of this Section to
the Actuarial Equivalent of an Annual Benefit equal to such
dollar limitation commencing at Social Security Retirement
Age. To determine the Actuarial Equivalent under this
paragraph, the Committee will use an interest rate assumption
equal to the lesser of 5% per annum or the rate specified in
Section 2.3.
(k) "Projected annual benefit" means the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if the
plan expresses such benefit in a form other than a straight life
annuity or qualified joint and survivor annuity) of the Member under
the terms of the defined benefit plan on the assumptions he continues
employment until his normal retirement age (or current age, if later)
as stated in the defined benefit plan, his compensation continues at
the same rate as in effect in the Limitation Year under consideration
until the date of his Normal Retirement Age and all other relevant
factors used to determine benefits under the defined benefit plan
remain constant as of the current Limitation Year for all future
Limitation Years.
(l) "Social Security Retirement Age" means the age determined by the
Committee in accordance with the following table:
<TABLE>
<CAPTION>
Calendar Year of Birth Social Security
---------------------- Retirement Age
--------------
<S> <C>
</TABLE>
36
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EXHIBIT 10.39
<TABLE>
<S> <C>
Prior to 1938 65
1938 through 1954 66
After 1954 67
</TABLE>
(m) "Year of Service" means a Plan Year during which an Employee completes
at least 1,000 Hours of Service.
(n) "100% limitation" If the 100% limitation applies, the Committee must
determine the denominator of the defined benefit plan fraction and the
denominator of the defined contribution plan fraction by substituting
100% for 125%. The 100% limitation applies only if: (a) the Plan's
top-heavy ratio exceeds 90%; or (b) the Plan's top-heavy ratio is
greater than 60%, and the Employer does not provide extra minimum
benefits which satisfy Code section 416(h)(2).
11.3 OVERALL LIMITATIONS.
(a) Multiple defined benefit plans. If the Employer maintains, or at one
time maintained, a defined benefit plan in addition to this Plan,
which benefits or could benefit a participant in this Plan, the
Committee will freeze or reduce the rate of accrual under this Plan to
the extent necessary to prevent the aggregate Annual Benefit from
exceeding the limitations of Article.
(b) Defined contribution plan limitation. If the Employer maintains a
defined contribution plan or has ever maintained a defined
contribution plan which the Employer has terminated, then the sum of
the defined benefit plan fraction and the defined contribution plan
fraction for any Member for any Limitation Year must not exceed 1.0.
The Employer will reduce its contribution or allocation on behalf of
the Member to the defined contribution plan under which the Member
participates and then, if necessary, the Member's projected annual
benefit under this Plan to the extent necessary to satisfy this 1.0
limitation.
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<PAGE> 41
EXHIBIT 10.39
ARTICLE XII
PLAN FINANCING
12.1 FINANCING.
All contributions made by the Employer under this Plan shall be paid to the
Insurance Company during the period when the Insurance Contract is the funding
medium for the Plan.
12.2 CONTRIBUTIONS.
No contributions, including rollovers, shall be required or permitted under the
Plan from any Member. The Company shall make contributions in such amounts and
at such times as determined by the Board in accordance with a funding method
and policy to be established by the Board which will be consistent with Plan
objectives. Forfeitures arising under this Plan because of severance of
employment before a Member becomes eligible for a benefit, or for any other
reason, shall be applied to reduce the cost of the Plan, not to increase
benefits otherwise payable to Members.
Notwithstanding any provisions of the Plan to the contrary, if the Internal
Revenue Service issues a determination letter stating that the Plan as
initially established fails to meet the requirements of Code section 401(a),
the Company shall be entitled to a complete refund of all contributions made
prior to the issuance of said determination letter, including any increments
thereon.
All contributions made to the Insurance Company are made contingent on their
deductibility. If the deduction for a contribution is disallowed, the
contribution may be returned to the Company provided this is accomplished
within one year of the date the contribution was disallowed. A contribution
paid to the Insurance Company because of a mistake of fact may be returned to
the Company provided this is accomplished within one year of the date the
contribution was made.
12.3 TREATMENT OF INSURANCE DIVIDENDS AND OTHER CREDITS.
No contract will be purchased under the Plan unless such contract or a separate
definite written agreement between the Employer (or Trustee, if any) and the
Insurance Company provides that:
(a) no value under contracts providing benefits under the Plan or credits
(on account of dividends, earnings or other experience rating credits
or surrender or cancellation credits) with respect to such contracts
may be paid or returned to the Employer or diverted to or used for
other than providing Plan benefits for the exclusive benefit of
Members or their Beneficiaries;
(b) any contribution made by the Employer because of a mistake of fact
must be returned to the Employer within one year of the contribution;
(c) any credits on account of dividends, earnings or other experience
rating credits, or surrender or cancellation credits with respect to
contracts under the Plan shall be applied by the Insurance Company
toward each premium next due for contracts under the Plan before any
further contributions made by the Employer are so applied by the
insurer, and not later than the due date for such premiums;
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<PAGE> 42
EXHIBIT 10.39
(d) any credits on account of dividends, earnings or other experience
rating credits, or surrender or cancellation credits in excess of Plan
benefits with respect to contracts distributed to provide Plan
benefits, will be applied as provided in (c);
(e) if upon the cessation of benefit accruals or upon Plan termination,
all benefits provided under the Plan with respect to service before
cessation of accruals or termination have been purchased, any credits
on account of dividends, earnings or other experience rating credits,
or surrender or cancellation credits with respect to contracts under
the plan will revert to the Employer; and,
(f) where credits are applied by the Insurance Company before Employer
contributions are made that are sufficient in addition to the credits
to pay each premium next due, such credits will be applied
proportionately toward each premium next due so that the same
percentage of each premium next due is paid.
12.4 CONFLICTS.
If there is any conflict between the provisions of this Plan and the terms of
an Insurance Contract, the provisions of the Plan govern.
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<PAGE> 43
EXHIBIT 10.39
ARTICLE XIII
COMPANY ADMINISTRATIVE PROVISIONS
13.1 INFORMATION TO COMMITTEE.
The Company must supply current information to the Committee as to the name,
date of birth, date of employment, annual compensation, leaves of absence,
Years of Service and date of termination of employment of each Employee who is,
or who will be eligible to become, a Member under the Plan, together with any
other information which the Committee considers necessary. The Company's
records as to the current information the Company furnishes to the Committee
are conclusive as to all persons.
13.2 NO LIABILITY.
The Company assumes no obligation or responsibility to any of its Employees,
Members or Beneficiaries for any act of, or failure to act, on the part of its
Committee (unless the Company is the Committee), the Insurance Company or the
Plan Administrator (unless the Employer is the Plan Administrator).
13.3 INDEMNITY OF PLAN ADMINISTRATOR AND COMMITTEE.
The Company indemnifies and saves harmless the Plan Administrator and the
members of the Committee, and each of them, from and against any and all loss
resulting from liability to which the Plan Administrator and the Committee, or
the members of the Committee, may be subjected by reason of any act or conduct
(except willful misconduct or gross negligence) in their official capacities in
the administration of this Plan or both, including all expenses reasonably
incurred in their defense, in case the Company fails to provide such defense.
The indemnification provisions of this Section do not relieve the Plan
Administrator or any Committee member from any liability he may have under
ERISA for breach of a fiduciary duty. Furthermore, the Plan Administrator and
the Committee members and the Company may execute a letter agreement further
delineating the indemnification agreement of this Section, provided the letter
agreement must be consistent with and must not violate ERISA. The
indemnification provisions of this Section extend to the Insurance Company
solely to the extent provided by a letter agreement executed by the Insurance
Company and the Company.
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EXHIBIT 10.39
ARTICLE XIV
MEMBER ADMINISTRATIVE PROVISIONS
14.1 BENEFICIARY DESIGNATION.
(a) In General. Any Member may from time to time designate, in writing,
any person or persons, contingently or successively, to whom the
Insurance Company will pay any applicable death benefit under the Plan
and the Member may designate the form and method of payment. The
Committee will prescribe the form for the written designation of
Beneficiary and, upon the Member's filing the form with the Committee,
the form effectively revokes all designations filed prior to that date
by the same Member.
(b) Coordination with survivor requirements. This Section does not impose
any special spousal consent requirements on the Member's Beneficiary
designation. However, in the absence of spousal consent (as required
by Articles VIII, IX and X) to the Member's Beneficiary designation:
(1) any waiver of the qualified joint and survivor annuity or of the
preretirement survivor annuity is not valid; and (2) if the Member
dies prior to his annuity starting date, the Member's Beneficiary
designation will apply only to the portion of the death benefit which
is not payable as a preretirement survivor annuity. Regarding clause
(2), if the Member's surviving spouse is a primary Beneficiary under
the Member's Beneficiary designation, the Insurance Company will
satisfy the spouse's interest in the Member's death benefit first from
the portion which is payable as a preretirement survivor annuity.
14.2 NO BENEFICIARY DESIGNATION/DEATH OF BENEFICIARY.
If a Member fails to name a Beneficiary in accordance with Section 14.1, or if
the Beneficiary named by a Member predeceases him, then the Insurance Company
will pay any remaining benefit payable under this Plan in the following order
of priority to:
(a) The Member's surviving spouse;
(b) The Member's surviving children, including adopted children, in equal
shares;
(c) The Member's surviving parents, in equal shares; or
(d) The legal representative of the Member's estate.
(e) If the Beneficiary does not predecease the Member, but dies prior to
distribution of his share of the Member's entire death benefit, the
Insurance Company will pay the remaining death benefit to the
Beneficiary's estate unless the Member's Beneficiary designation
provides otherwise. The Committee will direct the Insurance Company
as to the method and to whom the Insurance Company will make payment
under this Section.
14.3 PERSONAL DATA TO COMMITTEE.
Each Member and each Beneficiary of a deceased Member must furnish to the
Committee such evidence, data or information as the Committee considers
necessary or desirable for the purpose of administering the Plan. The
provisions of this Plan are effective for the benefit of each Member upon the
condition precedent that each Member will furnish promptly full, true and
complete evidence, data and information
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<PAGE> 45
EXHIBIT 10.39
when requested by the Committee, provided the Committee advises each Member of
the effect of his failure to comply with its request.
14.4 NOTICE OF CHANGE IN TERMS.
The Committee, within the time prescribed by ERISA and the applicable
regulations, must furnish all Members and Beneficiaries a summary description
of any material amendment to the Plan or notice of discontinuance of the Plan
and all other information required by ERISA to be furnished without charge.
14.5 LITIGATION AGAINST THE PLAN.
A court of competent jurisdiction may authorize any appropriate equitable
relief to redress violations of ERISA or to enforce any provisions of ERISA or
the terms of the Plan. A fiduciary may receive reimbursement of expenses
properly and actually incurred in the performance of his duties with the Plan.
14.6 INFORMATION AVAILABLE.
Any Member in the Plan or any Beneficiary may examine copies of the Plan
description, latest annual report, any bargaining agreement, this Plan,
contract or any other instrument under which the Plan was established or is
operated. The Committee will maintain all of the items listed in this Section
in its office, or in such other place or places as he may designate from time
to time in order to comply with the regulations issued under ERISA, for
examination during reasonable business hours. Upon the written request of a
Member or Beneficiary the Committee must furnish him with a copy of any item
listed in this Section. The Committee may make a reasonable charge to the
requesting person for the copy so furnished.
14.7 APPEAL PROCEDURE FOR DENIAL OF BENEFITS.
A Member or a Beneficiary ("Claimant") may file with the Committee a written
claim for benefits, if the Member or Beneficiary determines the distribution
procedures of the Plan have not provided him his proper Nonforfeitable Accrued
Benefit. The Committee must render a decision on the claim within 60 days of
the Claimant's written claim for benefits. The Plan Administrator must provide
adequate notice in writing to any Member or to any Beneficiary ("Claimant")
whose claim for benefits under the Plan the Committee has denied. The
Committee's notice to the Claimant must set forth:
(a) The specific reason for the denial;
(b) Specific references to pertinent Plan provisions on which the
Committee based its denial;
(c) A description of any additional material and information needed for
the Claimant to perfect his claim and an explanation of why the
material or information is needed; and
(d) That any appeal the Claimant wishes to make of the adverse
determination must be in writing to the Committee within 75 days after
receipt of the Committee's notice of denial of benefits. The Plan
Administrator's notice must further advise the Claimant that his
failure to appeal the action to the Committee in writing within the
75-day period will render the Committee's determination final, binding
and conclusive.
If the Claimant should appeal to the Committee, he, or his duly authorized
representative, may submit, in writing, whatever issues and comments he, or his
duly authorized representative, feels are pertinent. The
42
<PAGE> 46
EXHIBIT 10.39
Claimant, or his duly authorized representative, may review pertinent Plan
documents. The Committee will re-examine all facts related to the appeal and
make a final determination as to whether the denial of benefits is justified
under the circumstances. The Committee must advise the Claimant of its
decision within 60 days of the Claimant's written request for review, unless
special circumstances (such as a hearing) would make the rendering of a
decision within the 60-day limit unfeasible, but in no event may the Committee
render a decision respecting a denial for a claim for benefits later than 120
days after its receipt of a request for review.
The Committee's notice of denial of benefits must identify the name of each
member of the Committee and the name and address of the Committee member to
whom the Claimant may forward his appeal.
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EXHIBIT 10.39
ARTICLE XV
PLAN ADMINISTRATION
15.1 APPOINTMENT OF COMMITTEE.
(a) In General. The Company must appoint a Committee to administer the
Plan, the members of which may or may not be Members in the Plan, or
which may be the Plan Administrator acting alone. In the absence of
a Committee appointment, the Plan Administrator assumes the powers,
duties and responsibilities of the Committee. The members of the
Committee will serve without compensation for services as such, but
the Employer will pay all expenses of the Committee.
(b) Term. Each member of the Committee serves until the appointment of
his successor.
(c) Vacancy. In case of a vacancy in the membership of the Committee, the
remaining members of the Committee may exercise any and all of the
powers, authority, duties and discretion conferred upon the Committee
pending the filling of the vacancy.
15.2 POWERS AND DUTIES.
The Committee has the following powers and duties:
(a) To select a Secretary, who need not be a member of the Committee;
(b) To determine the rights of eligibility of an Employee to participate
in the Plan, the value of a Member's Accrued Benefit and the
Nonforfeitable percentage of each Member's Accrued Benefit;
(c) To adopt rules of procedure and regulations necessary for the proper
and efficient administration of the Plan provided the rules are not
inconsistent with the terms of this Plan;
(d) To construe and enforce the terms of the Plan and the rules and
regulations it adopts including interpretation of the Plan documents
and documents related to the Plan's operation and the discretion to
make factual determinations necessary to the proper administration of
the Plan;
(e) To direct the Insurance Company with respect to the crediting of
contributions to the Plan and distribution of Plan benefits;
(f) To review and render decisions respecting a claim for (or denial of a
claim for) a benefit under the Plan;
(g) To furnish the Company with information which the Company may require
for tax or other purposes;
(h) To engage the service of agents whom it may deem advisable to assist
it with the performance of its duties;
(i) To establish and maintain a funding standard account and to make
credits and charges to the account to the extent required by and in
accordance with the provisions of the Code.
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EXHIBIT 10.39
The Committee will exercise all of its powers, duties and discretion under the
Plan in a uniform and nondiscriminatory manner.
15.3 FUNDING POLICY.
The Committee will review, not less often than annually, all pertinent Employee
information and Plan data in order to establish the funding policy of the Plan
and to determine the appropriate methods of carrying out the Plan's objectives.
The Committee must communicate periodically, as it deems appropriate, to the
Insurance Company the Plan's short-term and long-term financial needs so
investment policy can be coordinated with Plan financial requirements.
15.4 MANNER OF ACTION.
The decision of a majority of the members appointed and qualified controls.
15.5 AUTHORIZED REPRESENTATIVE.
The Committee may authorize any one of its members, or its Secretary, to
sign on its behalf any notices, directions, applications, certificates,
consents, approvals, waivers, letters or other documents. The Committee must
evidence this authority by an instrument signed by all members.
15.6 INTERESTED MEMBER.
No Member of the Committee may decide or determine any matter concerning the
distribution, nature or method of settlement of his own benefits under the
Plan, except in exercising an election available to that Member in his capacity
as a Member, unless the Plan Administrator is acting alone in the capacity of
the Committee.
15.7 MEMBER RECORDS.
The Committee will keep such records and will prepare such reports concerning
Members' Accrued Benefits as ERISA and the Code require. Upon a Member's
written request, the Committee will furnish the Member the information
described in ERISA.
15.8 UNCLAIMED ACCRUED BENEFIT - PROCEDURE.
The Plan does not require either the Insurance Company or the Committee to
search for, or ascertain the whereabouts of, any Member or Beneficiary. At the
time the Member's or Beneficiary's benefit becomes distributable under the
Plan, the Committee, by certified or registered mail addressed to his last
known address of record with the Committee or the Employer, must notify any
Member, or Beneficiary, that he is entitled to a distribution under this Plan.
If the Member, or Beneficiary, fails to claim his distributive share or make
his whereabouts known in writing to the Committee within 6 months from the date
of mailing of the notice, the Committee will treat the Member's or
Beneficiary's unclaimed payable Accrued Benefit as forfeited. Where the
benefit is distributable to the Member, the forfeiture under this paragraph
occurs as of the last day of the notice period, if the Member's Nonforfeitable
Accrued Benefit does not exceed $3,500, or as of the first day the benefit is
distributable without the Member's consent, if the present value of the
Member's Nonforfeitable Accrued Benefit exceeds $3,500. Where the benefit is
distributable to a Beneficiary, the forfeiture occurs on the date the notice
period ends except, if the Beneficiary is the Member's spouse and the
Nonforfeitable Accrued Benefit payable to the spouse exceeds
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<PAGE> 49
EXHIBIT 10.39
$3,500, the forfeiture occurs as of the first day the benefit is distributable
without the spouse's consent. The Company will use the amounts representing
the forfeited Accrued Benefit to reduce its contribution for future Plan Years.
If a Member or Beneficiary who has incurred a forfeiture of his Accrued Benefit
under the provisions of the first paragraph of this Section makes a claim, at
any time, for his forfeited Accrued Benefit, the Committee must restore the
Member's or Beneficiary's forfeited Accrued Benefit. The Committee must direct
the Insurance Company to distribute the Member's or Beneficiary's restored
Accrued Benefit in accordance with Article VIII as if the Member's employment
terminated in the Plan Year in which the Committee restores the forfeited
Accrued Benefit.
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EXHIBIT 10.39
ARTICLE XVI
MISCELLANEOUS
16.1 EXCLUSIVE BENEFIT.
Except as provided under Article XII and Article XVII, the Employer has no
beneficial interest in any asset of the Plan and no part of any asset in the
Plan may ever revert to or be repaid to an Employer, either directly or
indirectly; nor prior to the satisfaction of all liabilities with respect to
the Members and their Beneficiaries under the Plan, may any part of the corpus
or income of the Plan, or any asset of the Plan, be (at any time) used for, or
diverted to, purposes other than the exclusive benefit of the Members or their
Beneficiaries.
16.2 ASSIGNMENT OR ALIENATION.
No benefit or interest available under this Plan will be subject to assignment
or alienation, either voluntarily or involuntarily. The preceding sentence
will also apply to the creation, assignment, or recognition of a right to any
benefit payable with respect to a Member under a domestic relations order,
unless the order is determined to be a qualified domestic relations order, as
defined in Code section 414(p), or any domestic relations order entered before
1985.
16.3 EVIDENCE.
Anyone required to give evidence under the terms of the Plan may do so by
certificate, affidavit, document or other information which the person to act
in reliance may consider pertinent, reliable and genuine, and to have been
signed, made or presented by the proper party or parties. Both the Committee
and the Insurance Company are fully protected in acting and relying upon any
evidence described under the immediately preceding sentence.
16.4 NO RESPONSIBILITY FOR EMPLOYER ACTION.
Neither the Insurance Company nor the Committee has any obligation or
responsibility with respect to any action required by the Plan to be taken by
the Employer, any Member or eligible Employee, or for the failure of any of the
above persons to act or make any payment or contribution, or to otherwise
provide any benefit contemplated under this Plan. Furthermore, the Plan does
not require the Trustee or the Committee to collect any contribution required
under the Plan, or to determine the correctness of the amount of any Employer
contribution. Neither the Insurance Company nor the Committee need inquire
into or be responsible for any action or failure to act on the part of the
others, or on the part of any other person who has any responsibility regarding
the management, administration or operation of the Plan, whether by the express
terms of the Plan or by a separate agreement authorized by the Plan or by the
applicable provisions of ERISA.
16.5 WAIVER OF NOTICE.
Any person entitled to notice under the Plan may waive the notice, unless the
Code or Treasury regulations prescribe the notice or ERISA specifically or
impliedly prohibits such a waiver.
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EXHIBIT 10.39
16.6 SUCCESSORS.
The Plan is binding upon all persons entitled to benefits under the Plan, their
respective heirs and legal representatives, upon the Employer, its successors
and assigns, and upon the Insurance Company, the Committee, the Plan
Administrator and their successors.
16.7 WORD USAGE.
Words used in the masculine also apply to the feminine where applicable, and
wherever the context of the Employer's Plan dictates, the plural includes the
singular and the singular includes the plural.
16.8 STATE LAW.
Illinois law will determine all questions arising with respect to the
provisions of this Agreement except to the extent superseded by Federal
statute.
16.9 EMPLOYMENT NOT GUARANTEED.
Nothing contained in this Plan, or any modification or amendment to the Plan,
or in the creation of any Account, or the payment of any benefit, gives any
Employee, Member or any Beneficiary any right to continue employment, any legal
or equitable right against the Employer, or Employee of the Employer, or the
Committee or its agents or employees, or against the Plan Administrator or the
Insurance Company, except as expressly provided by the Plan, ERISA or by a
separate agreement.
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EXHIBIT 10.39
ARTICLE XVII
MERGER, AMENDMENT, TERMINATION
17.1 MERGER, CONSOLIDATION, OR TRANSFER.
In the case of any merger or consolidation of the Plan with, or in the case of
any transfer of assets or liabilities of the Plan to or from any other plan,
each Member in the Plan shall (if the Plan then terminated) receive a benefit
immediately after the merger, consolidation, or transfer which is equal to or
greater than the benefit he would have been entitled to receive immediately
before the merger, consolidation, or transfer (if the Plan had then
terminated).
17.2 AMENDMENT.
The Company reserves the right to amend the Plan from time to time subject to
the following limitations:
(a) No amendment shall be effective if it results in the return to the
Company or any Affiliate of any part of the Plan assets, or results in
the distribution of assets of the Plan to or for the benefit of anyone
other than a Member or Beneficiary;
(b) No amendment shall be effective if it reduces the amount of a Member's
Nonforfeitable Accrued Benefit, determined as of the effective date or
the adoption date of the amendment, except as permitted under Code
section 412(c)(8); and
(c) No amendment shall be effective if it eliminates an optional form of
distribution or benefit protected under Code section 411(d)(6), to the
extent attributable to service before the amendment, except as
permitted under Code section 411(d)(6).
If the vesting schedule is amended, or if an amendment directly or indirectly
affects the computation of a Member's Nonforfeitable Accrued Benefit, then each
affected Member with at least 3 Years of Service may elect, within a reasonable
period of time after the adoption of the amendment, to have his vested interest
computed without regard to the amendment. The period during which the election
may be made shall commence with the date the amendment is adopted and shall end
on the later of: (i) 60 days after the amendment is adopted, (ii) 60 days after
the amendment becomes effective, or (iii) 60 days after the Member receives
written notice of the amendment from the Committee. In no event will the
change of vesting schedules result in a reduction in the vested portion of an
Accrued Benefit attributable to accruals made before the date of the amendment.
17.3 PRETERMINATION RESTRICTIONS
For Plan Years beginning after June 27, 1994, the Plan limits the benefit
payable to any Highly Compensated active or former Employee upon Plan
termination to a benefit that is nondiscriminatory under Code section
401(a)(4). The Plan restricts the annual payments to the 25 most Highly
Compensated active and Highly Compensated former Employees with the greatest
Compensation in the current or any prior year unless:
(a) After payment of the benefit, the value of Plan assets equals or
exceeds 110% of the value of current liabilities (as defined in Code
section 412(l)); or
(b) the value of the benefit is less than 1% of the value of current
liabilities; or
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EXHIBIT 10.39
(c) the value of the benefit does not exceed $3,500.
The total payments in a Plan Year may not exceed an amount equal to: (1) the
payments the Member would receive under a single life annuity which is the
Actuarial Equivalent of the Member's Accrued Benefit and the Member's other
benefits (other than a social security supplement); plus (2) the amount of the
payment the Member would receive under a social security supplement. "Other
benefits" include loans in excess of the Code section 72(p)(2)(A) limitation,
any periodic income, any withdrawal values payable to a living employee, and
any death benefits not provided by insurance on the Member's life.
17.4 EARLY TERMINATION RESTRICTIONS.
(a) In General. For Plan Years beginning prior to June 28, 1994 and
notwithstanding any other provision of this Plan to the contrary, the
Employer contributions which the Insurance Company may use to provide
benefits for Members who are among the 25 highest paid Employees (the
"original 25 Employees") as of the Effective Date (including any
Employees who are not Members on the Effective Date but who later may
become Members) and whose annual retirement benefit will exceed $1,500
will not exceed the greatest of:
(i) $20,000;
(ii) An amount equal to 20% of the first $50,000 of a Member's
Average Annual Compensation salary multiplied by the number of
years elapsed between the Effective Date and the date the Plan
terminates, the date a Member's retirement benefit becomes
payable, or the date the Company fails to meet the full
current costs of the Plan, whichever first occurs; or
(iii) If the Employee is a substantial owner (as defined in ERISA
section 4022(b)(5)), the present value of his guaranteed
benefit under ERISA section 4022, or the present value of the
benefit he would be guaranteed under ERISA section 4022 if the
Plan terminated on the date benefits commence (determined in
accordance with Pension Benefit Guaranty Corporation
regulations). If the Employee is not a substantial owner, the
present value of his maximum benefit under ERISA section
4022(b)(3)(B) on the earlier of the date the Plan terminated
or the date his benefits commence (determined in accordance
with Pension Benefit Guaranty Corporation regulations)
regardless of any other limitations in ERISA section 4022.
(b) Application of Restrictions. The restrictions of this Section apply
only if:
(i) The Company terminates this Plan within 10 years of the
Effective Date and the Plan assets are insufficient to pay the
present value of all Nonforfeitable Accrued Benefits required
to satisfy the Plan's liabilities;
(ii) Such Member's retirement benefit becomes payable within 10
years of the Effective Date; or
(iii) If Code section 412 (without regard to Code section 412(h)(2))
does not apply to this Plan, the Member's retirement benefit
becomes payable after the Plan is in effect 10 years but
before the Employer satisfies the full current costs of the
Plan for the first 10 years.
50
<PAGE> 54
EXHIBIT 10.39
If paragraph (ii) applies, the Committee will apply the restrictions
until 10 years after the Effective Date.
(c) Amendments Increasing Plan Benefits. If the Company changes the Plan
so as to increase substantially the extent of possible discrimination
as to contributions and as to benefits actually payable in event of
the subsequent termination of the Plan or the subsequent
discontinuance of contributions under the Plan, then the Employer will
apply the provisions of paragraph (a) to the 25 highest paid Employees
(the "new 25 Employees") as of the date of the change (including any
Employees who are not Members on the date of the change but who later
may become Members) and whose annual retirement benefit will exceed
$1,500. The Committee must continue the restrictions described in
paragraph (a) to the original 25 Employees for the period the
restrictions apply to such Employees. The Committee will apply
paragraph (a) to the new 25 Employees as if the Effective Date is the
date of the change. Furthermore, the Committee will apply paragraph
(a) by substituting for paragraph (a)(ii) the greater of the
following:
(i) The Employer contributions (or the funds attributable to
Employer contributions) the Insurance Company would have
applied to provide the Member's retirement benefit if the
Company had not changed the Plan; or
(ii) The sum of (i) the Employer contributions (or the funds
attributable to Employer contributions) the Insurance Company
would have applied to provide the Member's retirement benefit
if the Company had terminated the Plan the day before the date
of the change, and (ii) the product of the number of years the
Company satisfies the full current costs of the Plan after the
date of the change multiplied by the smaller of $10,000 or 20%
of the Member's annual Compensation.
(d) Insurance. The conditions of this Section do not restrict the full
payment of any insurance, death or survivor's benefits on behalf of a
Member who dies while this Plan is in full effect and the Company has
met the full current costs.
(e) Full Current Costs. The conditions of this Section do not restrict
the current payment of full retirement benefits called for by the Plan
for any retired Member while the Plan is in full effect and the
Employer has met full current costs.
(f) Exception for Adequate Security. If a Member to whom the limitations
of this Section apply terminates employment while the limitations are
in effect, the Member may nevertheless receive a lump sum payment of
benefits in excess of such limitations, provided the Member enters
into an agreement with the Committee requiring the Member to repay to
the Company all amounts he has received in excess of such limitations.
The Member's requirement to repay must apply in the event the Plan
terminates within the restricted 10 year period or if within such
period the Company has not met the Plan's full current costs. The
Insurance Company may not pay any benefit to the Member under this
paragraph unless the Member provides adequate security for his
contingent repayment obligation.
(g) Effective Date. For purposes of this Section the term "Effective
Date" means the first day of the Plan Year in which the Company
initially established the Plan.
51
<PAGE> 55
EXHIBIT 10.39
17.5 TERMINATION.
Although the Company intends to maintain the Plan indefinitely, the Plan is
entirely voluntary on the part of the Company and the continuation of the Plan
and the contributions hereunder should not be construed as a contractual
obligation of the Company. Accordingly, the Company reserves the right to
terminate the Plan in this entirely and to suspend or discontinue (in whole or
in part) all contributions under the Plan. In addition, any Affiliate's
participation in the Plan shall automatically terminate if and at such time as
it ceases to be an Affiliate (other than through merger or consolidation with
any other Affiliate.
17.6 DISTRIBUTION UPON TERMINATION OF TRUST.
If the Company terminates the Plan, the Committee will determine the value of
the Plan assets as of the business day next following the date of such
termination. Subject to the provisions of Section 17.9, the Committee will
direct the Insurance Company to allocate assets of the Plan among the Members
and Beneficiaries according to the following priorities:
(a) The Member's benefits payable from his employee contributions, if any.
(b) Benefits payable as an annuity:
(i) In the case of the benefit of a Member or Beneficiary which
was in pay status as of the beginning of the 3-year period
ending on the termination date of the Plan, each such benefit,
based on the provisions of the Plan (as in effect during the
5-year period ending on such date) under which such benefit
would be the least; or
(ii) In the case of a Member's or Beneficiary's benefit (other than
a benefit described in subparagraph (1)) which would have been
in pay status as of the beginning of such 3-year period if the
Member had retired prior to the beginning of the 3-year period
and if his benefits had commenced (in the normal form of
annuity under the Plan) as of the beginning of such period,
each such benefit based on the provisions of the Plan (as in
effect during the 5-year period ending on such date) under
which such benefit would be the least.
For purposes of subparagraph (i), the lowest benefit in pay
status during a 3-year period is the benefit in pay status for
such period.
(c) All other Plan benefits insured by the Pension Benefit Guaranty
Corporation;
(d) All other Nonforfeitable benefits under the Plan; and
(e) Any other benefits under the Plan.
If assets are insufficient to provide all benefits under Plan, the Committee
will direct the Insurance Company to allocate such assets to satisfy
obligations within each category by order of priority. If assets are
insufficient to provide all benefits under a priority category, the Committee
will direct the Insurance Company to allocate assets to Members within that
category in the ratio which each Member's total benefit bears to the total
benefits of all Members within that category. The Committee will direct the
Insurance Company to reallocate assets it is not required to allocate under
ERISA sections 4044(a)(1), (2), (3) and
52
<PAGE> 56
EXHIBIT 10.39
(4)(A) in a manner which will reduce to the extent possible discrimination as
described in Code section 401(a)(4).
17.7 REVERSION.
If the Company has overfunded the Plan at the time it terminates the Plan, the
Trustee must return the amount by which the Company has overfunded the Plan to
the Company, except to the extent the Plan allocates surplus assets to the
Members pursuant to written procedures (including any necessary Plan
amendments) adopted by the Company incident to the Plan's termination. The
Company must state by written request to the Insurance Company the amount of
the overfunding it wishes the Insurance Company to return to it after
satisfying all liabilities under the terminated Plan.
17.8 FULL VESTING ON TERMINATION.
Upon either full or partial termination of the Plan, an affected Member's right
to his Accrued Benefit is 100% Nonforfeitable, irrespective of the
Nonforfeitable percentage which otherwise would apply under Article VII.
17.9 TERMINATION PROCEDURES.
Upon termination of the Plan, the distribution provisions of the Plan remain
operative, with the following exceptions:
(a) if the present value of the Member's Nonforfeitable Accrued Benefit
does not exceed $3,500, the Committee will direct the Trustee to
distribute the Member's Nonforfeitable Accrued Benefit to him in lump
sum as soon as administratively practicable after the Plan terminates;
and
(b) if the present value of the Member's Nonforfeitable Accrued Benefit
exceeds $3,500, the Member or the Beneficiary, in addition to the
distribution events permitted under the Plan, may elect to have the
Insurance Company commence distribution of his Nonforfeitable Accrued
Benefit as soon as administratively practicable after the Plan
terminates.
53
<PAGE> 57
EXHIBIT 10.39
ARTICLE XVIII
TOP-HEAVY PROVISIONS
18.1 DETERMINATION OF TOP-HEAVY STATUS.
If this Plan is the only qualified plan maintained by the Employer, the Plan is
top-heavy for a Plan Year if the top-heavy ratio as of the Determination Date
exceeds 60%. The top-heavy ratio is a fraction, the numerator of which is the
sum of the present value of Accrued Benefits of all Key Employees as of the
Determination Date and the denominator of which is a similar sum determined for
all Employees. The Committee must include in the top-heavy ratio, as part of
the present value of Accrued Benefits, any distributions made within the
Determination Period. The Committee must calculate the top-heavy ratio by
disregarding the Accrued Benefit (and distributions, if any, of the Accrued
Benefit) of any Non-Key Employee who was formerly a Key Employee, and by
disregarding the Accrued Benefit (including distributions, if any, of the
Accrued Benefit) of an individual who has not received credit for at least one
Hour of Service with the Employer during the Determination Period. The
Committee must calculate the top-heavy ratio, including the extent to which it
must take into account distributions, rollovers and transfers, in accordance
with Code section 416 and the regulations under that Code section. The
Committee will determine present value of Accrued Benefits as of the most
recent valuation date for computing minimum funding costs falling within the
twelve-month period ending on the Determination Date, whether or not the
Actuary performs a valuation that year, except as Code section 416 and the
regulations under that Code section require for the first and second Plan Year
of this Plan.
Actuarial Assumptions. The calculation of the actuarial assumptions stated in
Section 2.3 applies to the present value of Accrued Benefits under this Plan
and under any other defined benefit plan included in an Aggregation Group and
the valuation date for determining the present value of Accrued Benefits under
this Plan.
18.2 DEFINITIONS.
For purposes of applying the provisions of this Article the following words and
phrases mean:
(a) "Accrued Benefit" for purposes of applying this Section means the
Accrued Benefit determined under Section IV.
(b) "Compensation" means the general definition of Compensation, increased
for elective contributions (as defined in Section 2.14).
(c) "Determination Date" for any Plan Year is the Accounting Date of the
preceding Plan Year or, in the case of the first Plan Year of the
Plan, the Accounting Date of that Plan Year. The "Determination
Period" is the 5 year period ending on the Determination Date.
(d) "Employer" means the company that adopts this Plan and any related
employers described in Section 2.5.
(e) "Key Employee" means, as of any Determination Date, any Employee or
former Employee (or Beneficiary of such Employee) who, for any Plan
Year in the Determination Period: (i) has Compensation in excess of
50% of the dollar amount prescribed in Code section 415(b)(1)(A)
(relating to defined benefit plans) and is an officer of the Employer;
(ii) has Compensation in excess of the dollar amount prescribed in
Code section 415(c)(1)(A) (relating to defined
54
<PAGE> 58
EXHIBIT 10.39
contribution plans) and is one of the Employees owning the ten largest
interests in the Employer; (iii) is a more than 5% owner of the
Employer; or (iv) is a more than 1% owner of the Employer and has
Compensation of more than $150,000. The constructive ownership rules
of Code section 318 (or the principles of that section, in the case of
an unincorporated Employer,) will apply to determine ownership in the
Employer. The number of officers taken into account under clause (i)
will not exceed the greater of 3 or 10% of the total number (after
application of the Code section 414(q)(8) exclusions) of Employees,
but no more than 50 officers. The Committee will make the
determination of who is a Key Employee in accordance with Code section
416(i)(1) and the regulations under that Code section.
(f) "Non-Key Employee" is an employee who does not meet the definition of
Key Employee.
(g) "Permissive Aggregation Group" is the Required Aggregation Group plus
any other qualified plans maintained by the Employer, but only if such
group would satisfy in the aggregate the requirements of Code sections
401(a)(4) and 410. The Committee will determine the Permissive
Aggregation Group.
(h) "Required Aggregation Group" means: (i) each qualified plan of the
Employer in which at least one Key Employee participates at any time
during the Determination Period; and (ii) any other qualified plan of
the Employer which enables a plan described in clause (1) to meet the
requirements of Code section 401(a)(4) or Code section 410.
18.3 MINIMUM BENEFIT.
The Minimum Normal Retirement Benefit for a Member terminating employment at or
after age 65, and the minimum Accrued Benefit, payable at Normal Retirement
Date for a Member who terminates employment prior thereto with entitlement to a
Retirement Benefit, shall be equal to the product of (i) 2% of his average
monthly compensation, as defined in Regulation section 1.415-2(d), during his
five highest-paid consecutive calendar years of service (during his period of
Service, if less than 5 years) multiplied by (ii) each of the first 10 Years of
his Service after December 31, 1983 in which the Plan is a Top-Heavy Plan.
18.4 MINIMUM VESTING.
Notwithstanding the provisions of Section 7.3, a Participant shall be eligible
for a Deferred Vested Pension if, while the Plan is a Top-Heavy Plan, his
employment is terminated before death or Retirement after he has completed at
least 2 Years of Service. The amount of his Deferred Vested Pension on a
single-life basis, commencing as of his Normal Retirement date, shall be equal
to his vested percentage of his Accrued Benefit, determined in accordance with
the following table:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
------------------------------------------------------------------------------- ------------------------
<S> <C>
2 but less than 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20%
3 but less than 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4 but less than 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
5 or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
</TABLE>
55
<PAGE> 59
EXHIBIT 10.39
A Participant who had at least 10 Years of Service at the date of his
termination of employment may request the Committee to authorize commencement
of his Deferred Vested Pension as of the beginning of any calendar month within
the 10-year period preceding his Normal Retirement Date; and in such case his
Pension shall commence as of the date requested, but the amount thereof shall
be reduced as provided in the second paragraph of Section 5.2.
Upon the death of a Participant whose death occurs prior to the date his
Pension commences hereunder, who has completed less than 10 Years of Service at
the date of his death but who has earned a degree of vesting under the Plan
prior to his death pursuant to the provisions of this subsection (c), a Pension
shall be payable to his Eligible Spouse, if any.
The Pension payable to the Eligible Spouse of such a Participant shall be equal
to the amount the Eligible Spouse would have been entitled to receive had the
Participant commenced to receive a Deferred Vested Pension under the provisions
of this subsection (c) and under the 50% Joint and Survivor provisions of
Section 6.1 as of his Normal Retirement Date, based on his Service and Credited
Service immediately prior to the earlier of his death or termination of
employment, and then died immediately thereafter. The Pension payable to such
an Eligible Spouse shall commence as of the Participant's Normal Retirement
Date and shall continue until the beginning of the month in which the death of
the Eligible Spouse occurs.
18.5 CHANGE IN TOP-HEAVY STATUS.
If the Plan becomes a Top-Heavy Plan and subsequently ceases to be such, the
minimum benefit accrued under Section 18.3 while the Plan was top-heavy shall
continue to apply.
If the Plan becomes a Top-Heavy Plan and subsequently ceases to be such, the
vesting schedule in Section 18.4 shall continue to apply in determining the
Deferred Vested Pension of any Participant who had at least five Years of
Service as of the last day of the last Plan Year of top-heaviness. For other
Participants, said schedule shall apply only to their Accrued Benefits as of
such last day of such Plan Year.
IN WITNESS WHEREOF, the Company has executed this Plan in Lisle,
Illinois this ______ day of __________________, 1995.
THE LOCKFORMER COMPANY
By:_______________________________________
Its_______________________________________
WITNESSED BY:
__________________________________
56
<PAGE> 60
EXHIBIT 10.39
APPENDIX A
Article XVI. Tables
Table I
Reduction Factors for Early
Commencement of Benefits
<TABLE>
<CAPTION>
Number of years* by which first benefit
payment precedes the first day of the
month on or next following the
Member's sixty-fifth birthday Reduction Factor
----------------------------------------------------- ----------------------------------------------------
<S> <C>
10 .50
9 .53
8 .56
7 .60
6 .65
5 .69
4 .74
3 .80
2 .86
1 .93
0 1.00
</TABLE>
__________________________________
* For a period which is not an integral number of years, the
Reduction Factor shall be obtained by arithmetic interpolation
between the appropriate Reduction Factors set out above.
<PAGE> 61
EXHIBIT 10.39
APPENDIX B
Table II
Percentages Applicable under the Joint and Survivor Annuity Form.
This table shows the percentage required to determine the reduced amount of
monthly retirement benefit in the joint and survivor annuity form with respect
to a Member whose benefit payments commence on the first day of the month on or
next following his sixty-fifth birthday.
<TABLE>
<CAPTION>
Proportion of the reduced amount of monthly Age of the Proportion of the reduced amount of monthly
annuity payable to the Member which is to be Contingent annuity payable to the Member which is to be
continued to the contingent annuitant upon Annuitant* continued to the contingent annuitant upon
the death of the Member the death of the Member
--------------------------------------------------------------------------------------------------------------
Full Two-Thirds Half Full Two-Thirds Half
--------------------------------------------------------------------------------------------------------------
Percentages Applicable to Male Member with Percentages Applicable to Female Member with
Female Contingent Annuitant Male Contingent Annuitant
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
60.92 70.44 76.41 45 74.31 81.52 85.68
61.47 70.93 76.84 46 75.00 82.07 86.14
62.05 71.44 77.29 47 75.70 82.63 86.60
62.66 71.98 77.76 48 76.43 83.21 87.07
63.29 72.54 78.25 49 77.16 83.79 87.55
63.95 73.11 78.75 50 77.91 84.38 88.03
64.64 73.70 79.27 51 78.68 84.97 88.51
65.34 74.32 79.80 52 79.45 85.57 89.00
66.08 74.95 80.34 53 80.24 86.18 89.49
66.84 75.60 80.90 54 81.03 86.79 89.99
67.62 76.26 81.47 55 81.84 87.40 90.48
68.43 76.95 82.05 56 82.64 88.01 90.97
69.26 77.65 82.65 57 83.46 88.63 91.46
70.12 78.36 83.26 58 84.27 89.24 91.95
71.00 79.10 83.88 59 85.09 89.85 92.43
71.91 79.84 84.51 60 85.90 90.45 92.91
72.84 80.61 85.15 61 86.71 91.04 93.38
73.80 81.38 85.80 62 87.50 91.62 93.84
74.77 82.17 86.45 63 88.28 92.19 94.24
75.77 82.97 87.12 64 89.05 92.75 94.72
76.79 83.78 87.78 65 89.80 93.29 95.14
77.82 84.60 88.45 66 90.53 93.82 95.55
78.86 85.42 89.12 67 91.23 94.32 95.94
79.91 86.23 89.79 68 91.91 94.80 96.32
80.96 87.05 90.45 69 92.56 95.26 96.67
82.01 87.86 91.10 70 93.18 95.70 97.01
</TABLE>
__________________________________
* The age of the contingent annuitant to be used with reference
to this table will be the age of the contingent annuitant on
his birthday nearest to the benefit commencement date.
<PAGE> 62
EXHIBIT 10.39
APPENDIX C
Insurance Company: Lincoln National Insurance Company
Insurance Contract: Group Annuity Contract No. GA-348.
<PAGE> 1
EXHIBIT 11
MET-COIL SYSTEMS CORPORATION
COMPUTATION OF EARNINGS (LOSS) PER COMMON
AND COMMON EQUIVALENT SHARE
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
-------------------------------
1995 1994 1993
-------- -------- --------
Restated
<S> <C> <C> <C>
Weighted average number of shares outstanding and
common equivalent shares 2,871 2,719 2,688
======= ======= =======
(Loss) before the cumulative effect of a change in
accounting principle $(3,062) $(3,162) $(3,786)
Cumulative effect of a change in accounting principle - - - - - - (262)
------- ------- -------
Net (loss) $(3,062) $(3,162) $(4,048)
Preferred stock dividends $ (141) $ - - - $ - - -
------- ------- -------
Loss applicable to common stock $(3,203) $(3,162) $(4,048)
======= ======= =======
(Loss) per common share and common equivalent share:
(Loss) before the cumulative effect of a change in
accounting principle $ (1.12) $ (1.16) $ (1.41)
Cumulative effect of a change in accounting principle - - - - - - (0.10)
------- ------- -------
Net (loss) $ (1.12) $ (1.16) $ (1.51)
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
-------------------------------
1995 1994 1993
------ ------ --------
<S> <C> <C> <C>
* Computation of weighted average number of common and
common equivalent shares:
Common shares outstanding, beginning of the period 2,821 2,641 2,636
Weighted average of the common shares issued 26 54 3
Weighted average of the common equivalent shares
attributable to warrants, computed under the
treasury stock method (A) - - - - - - - - -
Weighted average of the common equivalent shares
attributable to stock options granted, computed under
the treasury stock method (A) 24 24 49
Weighted average of the common shares purchased
for the treasury - - - - - - - - -
------ ------ ------
Weighted average number of common and
common equivalent shares 2,871 2,719 2,688
====== ====== ======
</TABLE>
(A) Stock options and warrants that have an antidilutive effect have not
been included as common stock equivalents.
16
<PAGE> 1
EXHIBIT 22
SUBSIDIARIES OF MET-COIL SYSTEMS CORPORATION
AS OF MAY 31, 1994
<TABLE>
<CAPTION>
NAME STATE OF INCORPORATION
--------------------------------------------------------------------------------------------
<S> <C>
Flexible Fabrication Systems Division, Inc. (1)
Iowa Precision Industries, Inc. Delaware
The Lockformer Company Illinois
Lockformer-Europe APS (2)
Met-Coil Automation, Inc. (1)
Met-Coil Great Lakes Company (3)
Met-Coil Ltd. (4)
Met-Coil Systems International, Inc. U.S. Virgin Islands
Fenestra, Inc. Illinois (5)
Rowe Machinery & Automation, Inc. Texas
Ruesch Machine Company (1)
Scott Systems, Inc. (6)
Stelcoil Ltd. (7)
</TABLE>
All Subsidiaries do business under their own names or under the Met-Coil name.
(1) Subsidiary inactive. Incorporated in Delaware.
(2) International wholly-owned subsidiary of The Lockformer Company based
in Denmark.
(3) F/K/A Mark One Corporation. Subsidiary inactive, Incorporated in
Michigan
(4) International joint venture, 50% owned by Met-Coil, based in Japan.
(5) F/K/A Roper Whitney Company, F/K/A Met-Coil-RWC, Inc.
(6) Subsidiary inactive. Incorporated in Texas.
(7) A Canadian company, 80% owned by the Lockformer Company. Subsidiary
inactive.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> MAY-31-1995
<EXCHANGE-RATE> 1
<CASH> 1,145
<SECURITIES> 0
<RECEIVABLES> 8,436
<ALLOWANCES> 222
<INVENTORY> 13,265
<CURRENT-ASSETS> 24,991
<PP&E> 23,084
<DEPRECIATION> 15,131
<TOTAL-ASSETS> 38,735
<CURRENT-LIABILITIES> 30,261
<BONDS> 22,283
<COMMON> 15,838
3,457
0
<OTHER-SE> (15,442)
<TOTAL-LIABILITY-AND-EQUITY> 38,735
<SALES> 43,693
<TOTAL-REVENUES> 43,775
<CGS> 34,316
<TOTAL-COSTS> 46,501
<OTHER-EXPENSES> 336
<LOSS-PROVISION> 149
<INTEREST-EXPENSE> 2,690
<INCOME-PRETAX> (3,062)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,062)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,062)
<EPS-PRIMARY> (1.12)
<EPS-DILUTED> 0
</TABLE>
