UNITED STATES
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 September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ..............to ...........
Commission file number 0-14061
STEEL TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
Kentucky 61-0712014
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15415 Shelbyville Road, Louisville, KY 40245
(Address of principal executive offices)
Registrant's telephone number, including area code 502-245-2110
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO 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, 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 amendments to
this Form 10-K. [X]
Aggregate market value of the voting stock (which consists solely of shares of
Common Stock) held by non-affiliates of the registrant as of November 29,
1996, computed by reference to the closing price of the registrant's Common
Stock, as quoted in the NASDAQ National Market System on such date:
$118,811,788.
Number of shares of the registrant's Common Stock outstanding at November 29,
1996: 11,967,238.
Portions of the registrant's annual report to shareholders for the fiscal year
ended September 30, 1996 are incorporated by reference into Part II.
Portions of the definitive proxy statement furnished to shareholders of
the registrant in connection with the annual meeting of shareholders to be
held on January 23, 1997 are incorporated by reference into Part III.
PART I
ITEM 1. BUSINESS
GENERAL
Steel Technologies Inc. ("the Company") was incorporated under the laws of
the state of Kentucky in 1971 as Southern Strip Steel, Inc. In June 1985, the
name of the corporation was changed to Steel Technologies Inc.
The Company is an intermediate steel processor engaged in the business of
processing flat rolled steel to specified close tolerances in response to
orders from industrial customers who require steel of precise thickness,
width, temper and finish for their manufacturing purposes. The business of
the Company consists of purchasing commercial tolerance steel in coils
up to 72 inches in width from major steel mills, processing it to the precise
thickness, width, temper and finish specified by its customers and
distributing the processed steel from its Kentucky, Indiana, Michigan,
Maryland and Mexico plants to locations in 36 states primarily in the East,
Midwest and South, as well as into Mexico and Canada. The Company's principal
processed products include cold-rolled strip and sheet, cold-rolled one-pass
strip, high carbon and alloy strip and sheet, hot-rolled strip and sheet,
high strength low alloy strip and sheet, hot-rolled pickle and oil and
coated strip and sheet and pickling of hot-rolled black coils.
Intermediate steel processors occupy a niche between the primary steel
producers and industrial customers who need processed steel for their end-
product manufacturing purposes. The primary producers have historically
emphasized the sale of commercial tolerance steel to large volume purchasers
and have generally viewed the intermediate steel processor as an integral
part of this customer base. Furthermore, end-product manufacturers have
increasingly sought to purchase steel with closer tolerances, on shorter lead
times, and with more reliable and more frequent delivery than the primary
producers can efficiently provide. Additionally, most manufacturers are not
willing to commit to the investment in technology, equipment and inventory
required to further process the steel for use in their manufacturing
operations. These industry forces have created a market in which the
strength of the Company's business is based upon its capability to process
steel to more precise specifications and to service the steel purchasing and
delivery requirements of its customers more expeditiously than the primary
producers.
STEEL PROCESSING
The Company maintains a substantial inventory of coiled steel purchased from
the primary producers and mini-mills. This steel, purchased as a continuous
sheet, typically 36 to 72 inches wide, between .015 and .625 inches thick, and
rolled into a 10 to 25-ton coil--is known as "commercial tolerance" because its
ranges of thickness, width and temper are established by general industry
standards which may not be of sufficient quality for the manufacturing purposes
of the Company's customers. By purchasing various kinds of steel in large
quantities and at predetermined intervals, the Company attempts to purchase
its raw materials at the lowest competitive prices for the quality purchased.
Customer orders are entered in a computerized order entry system, and
appropriate inventory is then selected and scheduled for processing in
accordance with the customer's specified delivery date. The Company attempts
to maximize yield from its inventory by scheduling customer orders to use to
the fullest extent practicable the purchased widths of its coils. One of the
first processing functions involves the pickling of hot rolled black coil
steel. This process is a cleaning process that improves the quality of hot
rolled steel by removing the scale on the surface of the steel and prepares
the hot rolled steel for further processing. Pickling is performed on both
a toll basis as well as on hot rolled steel which is owned by the Company
and will be further processed. The next processing function typically involves
slitting coils to specified widths subject to close tolerances. After
slitting, the processed product is ready for either delivery to the customer
or additional processing.
Many of the Company's orders involve an additional process known as "cold
reduction." Cold reduction reduces the thickness of the steel to a customer's
specification by passing the steel through a set of rolls under pressure. This
process significantly increases the value added by the Company to the product.
During the rolling process the edges of the steel may also be conditioned into
square, full round or partially round shapes. After cold reduction, it is
sometimes necessary to subject the rolled steel to high temperatures for long
periods of time in order to "anneal" or soften the steel. This annealing
capability is accomplished in the Company's own furnaces and is particularly
suitable for high carbon and alloy strip orders. After annealing, orders are
then ready for additional slitting and cold reduction and subsequent shipment
to the customer.
The Company has achieved high quality and productivity levels through its
commitment to state-of-the-art equipment used to perform the pickling,
slitting, cold reduction and annealing processes. The Company's pickling
facility is capable of high volume pickling, leveling, coating and slitting
of hot rolled steel to greater than industry standards. The Company's slitting
lines are capable of maintaining width tolerances of +/-.002 inches. The
Company has computerized all of its rolling equipment, which has improved its
capability to deliver flat rolled steel products processed to closer than
standard tolerances. The Company's computerized rolling mills are capable of
maintaining thickness tolerances of +/-.0003 inches. Computers monitor
thickness during the cold reduction process, rapidly adjusting roll position to
maintain the proper tolerance as the steel passes through the rolling mill.
The computers also provide both visual displays and documented records of
the thickness maintained throughout the entire coil. Annealing is accomplished
in high convection bell furnaces. These furnaces feature extraordinary thermal
consistency, rapid water cooling and advanced atmosphere controls for good
surface cleanliness of the rolled steel product.
QUALITY CONTROL
The ability to obtain high quality steel from its suppliers on a consistent
basis is critical to the Company's business. Historically, about 3% of the
Company's raw material has failed to conform to the requirements for which it
was purchased, and most of this nonconforming raw material is diverted to less
critical applications. The Company, through its technical services department,
has instituted strict quality control measures to assure that the quality of
purchased raw materials will allow the Company to meet the specifications of
its customers and to reduce the costs of production interruptions resulting
from poor quality steel. Physical, chemical, and metallographic analyses are
performed on selected raw materials to verify that their mechanical and
dimensional properties, cleanliness, surface characteristics, and chemical
content are acceptable. Similar analyses are conducted on processed steel on
a selected basis before delivery to the customer. The Company also uses
statistical process control techniques to monitor its slitting and cold
reduction processes so management can document to customers that required
tolerances have been continuously maintained throughout processing. This close
attention to product quality has enabled the Company to limit the amount of
customer returns and allowances on average over the last three years to
approximately 1.1% of its sales. The Company's technical services department
and its metallurgical laboratory are located in the research and
development engineering and technology center in Shelbyville, Kentucky.
MARKETING
The Company's marketing staff consists of salesmen located in Michigan,
Indiana, Kentucky, Tennessee, Illinois, Missouri, Ohio, Pennsylvania, Maryland,
Wisconsin and Mexico. In addition to cultivating additional business from
existing customers and developing new accounts, these salesmen are responsible
for identifying market trends in their assigned areas. The marketing staff is
supported by an Executive Vice President, three regional Vice Presidents-Sales,
and by the Company's technical services department which develops application
engineering ideas. The Company is frequently requested to recommend the type
of steel which can best serve a customer's specific needs.
CUSTOMERS AND DISTRIBUTION
The Company produces to customer order rather than for inventory. Although
some blanket orders are taken for periods of up to one year, such blanket
orders represent a projection of anticipated customer requirements and do not
become firm orders until the customer calls for delivery of specified
quantities of particular products at specified times. The Company is therefore
required to maintain a substantial inventory of raw materials to meet the short
lead times and just-in-time delivery requirements of many of its customers.
Customers typically place firm orders for delivery within two to three weeks.
The Company's backlog of firm orders at October 31, 1996 was $31,768,000,
approximately 7% higher than the $29,573,000 at October 31, 1995.
The Company processes steel for sale to a variety of industrial customers,
including those in the automotive, automotive supply, appliance, lawn and
garden, machinery and office equipment industries. In fiscal 1996, 1995,and
1994 sales to the automotive industry accounted for 16% of the Company's
sales; sales to the automotive supply industry accounted for 58%, 58% and
59%, respectively. The Company believes its long-term relationships with
its major customers are a significant factor in its business.
The Company supplies processed steel to approximately 650 active accounts.
These customers are generally located within 300 miles of one of the
Company's plants. The location of Company facilities near a great number of
customers permits the efficient distribution of the Company's products by
truck. Independent trucking companies afford a convenient and expeditious
means for shipping approximately two-thirds of the Company's products to its
customers. The Company also maintains a small number of heavy-duty trucks
to provide flexible delivery service to those customers who do not arrange for
their own shipping needs.
SUPPLIERS
The Company obtains steel for processing from a number of primary producers and
mini-mills including AK Steel Corporation, Weirton Steel Corporation, LTV
Steel Company, Gallatin Steel Company, and Rouge Steel Company. The Company
obtains its raw material requirements by ordering steel possessing specified
physical qualities and alloy content. By purchasing in large quantities at
predetermined intervals, the Company attempts to purchase its raw materials at
the lowest competitive prices for the quality purchased. The Company believes
that it is not dependent on any one of its suppliers for raw materials and that
its relationships with its suppliers are good.
JOINT VENTURES
In April 1987, the Company formed Mi-Tech Steel, Inc., a 50% owned corporate
joint venture with Mitsui Steel Development Co., Inc. Mi-Tech Steel, Inc. was
established to own and operate high-volume steel slitting facilities to serve
Japanese and domestic automotive and appliance parts manufacturers located in
the United States. The initial processing facility was opened in December
1987 in Murfreesboro, Tennessee. In January 1990, a second Mi-Tech Steel
processing facility opened in Greensburg, Indiana. Steel Technologies is
providing management services for the Mi-Tech Steel operations.
In October 1990, the Company established Processing Technology, Inc., a
corporate joint venture with LTV Steel Company and Mitsui Steel Development
Co., Inc. Processing Technology operates facilities in Perrysburg, Ohio and
Burns Harbor, Indiana, which process flat rolled steel and provide steel
storage principally for LTV Steel Company. Both facilities began operations
in fiscal 1992.
COMPETITION
Steel processing is highly competitive. The Company primarily competes with a
small number of other intermediate steel processors who are capable of process-
ing steel to closer than standard tolerances, none of whom could be considered
dominant in the industry. The primary characteristics of competition
encountered by the Company are quality of product, reliability of delivery and
price.
ENVIRONMENTAL MATTERS
The Company's manufacturing facilities are subject to many existing and
proposed federal, state and foreign regulations designed to protect the
environment. Presently, the Company has no knowledge of any pending or
threatened litigation or administrative proceeding against the Company
involving environmental matters. Management believes the Company's manu-
facturing facilities are in compliance with applicable federal, state and
foreign environmental regulations, and is not presently aware of any fact or
circumstance which would require the expenditure of material amounts for
environmental compliance in the future.
EMPLOYEES
As of October 31, 1996, the Company employed 686 people, including 122 at its
Eminence plant, 142 at its Portage plant, 100 at its Canton plant, 29 at its
Elkton plant, 12 at its Peru plant, 62 at its Mexico plant, 81 at its Ghent
plant, 122 at its Louisville/Shelbyville locations and 16 salesmen located in
their respective market areas. The hourly employees in the Company's
Canton, Michigan facility are represented by the United Auto Workers under
a collective bargaining agreement. In 1995 the Portage, Indiana hourly
employees voted to be represented by the United Steel Workers. The Company
is currently negotiating a collective bargaining agreement with the union.
The Company has never experienced a significant work stoppage and considers
its employee relations to be good.
ITEM 2. PROPERTIES
The Company's principal processing plants are as follows:
<TABLE>
Production Plant Date Production
Plant Location Capacity Size Opened Capabilities
<S> <C> <C> <C> <C>
Eminence, Kentucky 150,000 tons 140,000 sq.ft. 1971 S,R,A
Portage, Indiana 210,000 tons 220,000 sq.ft. 1987 S,R,A
Elkton, Maryland 60,000 tons 60,000 sq.ft. 1989 S,R
Canton, Michigan 210,000 tons 190,000 sq.ft. 1991 S,R,A
Peru, Indiana 40,000 tons 40,000 sq.ft. 1992 S
Monterrey, Mexico 60,000 tons 26,000 sq.ft. 1994 S,R
Ghent, Kentucky 500,000 tons 205,000 sq.ft. 1995 S,P
</TABLE>
S=Slitting
R=Cold Reduction
A=Annealing
P=Pickling and Leveling
All of the processing plants are majority-owned by the Company. During 1996,
the Company sold approximately 501,000 tons of processed steel from its
manufacturing plants. In addition, the Ghent pickling facility processed
114,000 tons of material owned by others.
The Company's engineering division, technical services and metallurgical lab
are located in Shelbyville, Kentucky in a 35,000 square foot building owned by
the Company.
The Company's executive offices are located in Louisville, Kentucky in a 30,000
square foot building owned by the Company.
Mi-Tech Steel operates two high volume steel slitting operations. The
Murfreesboro, Tennessee plant, was expanded to 230,000 square feet in 1993.
The Greensburg, Indiana plant currently consists of 160,000 square feet of
manufacturing and storage space.
All operating properties are in good repair and in suitable condition for
the purposes for which they are used. The Company's Elkton, Maryland
processing plant and the executive office building are subject to outstanding
mortgages covering certain long-term financing arrangements.
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table lists the names, positions held and ages of all the
executive officers of the Company:
Name Age Title
Merwin J. Ray 67 Chairman of the Board and Chief
Executive Officer
Bradford T. Ray 38 President and Chief Operating Officer
Michael J. Carroll 39 Executive Vice President
Howard F. Bates, Jr. 50 Vice President-Technical Services
Kenneth R. Bates 37 Vice President-Finance, Chief Financial
Officer, Secretary and Treasurer
Officers are elected annually by and serve at the discretion of the Board of
Directors. Messrs. Merwin Ray, Bradford Ray, Howard Bates and Carroll are
members of the Company's Board of Directors.
Mr. Merwin J. Ray has served as Chairman of the Board of the Company since its
incorporation in 1971, and as Chief Executive Officer since May 1985. He
previously held the position of President of the Company from 1971 until May
1985. Mr. Merwin J. Ray is the father of Bradford T. Ray, President and Chief
Operating Officer of the Company and father-in-law of Michael J. Carroll,
Executive Vice President of the Company.
Mr. Bradford T. Ray has served as President and Chief Operating Officer since
November 1994. He previously held the positions of Executive Vice President
from April 1993 to November 1994 and Vice President-Manufacturing of the
Company from January 1987 to April 1993.
Mr. Michael J. Carroll has served as Executive Vice President since January
1995. He previously held the positions of Senior Vice President-Sales from
April 1993 to January 1995 and Vice President-Sales from July 1987 to
April 1993.
Mr. Howard F. Bates, Jr. has served as Vice President-Technical Services since
November 1981. From August 1977 to November 1981, he held the position of
Manager of Technical Services.
Mr. Kenneth R. Bates has served as Vice President-Finance, Chief Financial
Officer, Secretary and Treasurer of the Company since March 1990. He
previously held the position of Corporate Controller from March 1986 to March
1990.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The information required for Item 5 is incorporated by reference herein,
pursuant to General Instruction G(2), from the information provided under the
section entitled "Market Price and Dividend Information" on page 11 of the
Company's annual report to shareholders for the year ended September 30, 1996.
ITEM 6. SELECTED FINANCIAL DATA
The information required for Item 6 is incorporated by reference herein,
pursuant to General Instruction G(2), from the information provided under the
section entitled "Selected Financial Data" on page 10 of the Company's annual
report to shareholders for the year ended September 30, 1996.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required for Item 7 is incorporated by reference herein,
pursuant to General Instruction G(2), from the information provided under the
section entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations" on pages 12 through 15 of the Company's annual
report to shareholders for the year ended September 30, 1996.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of Steel Technologies Inc. and
Subsidiaries and Report of Independent Accountants, included in the Company's
annual report to shareholders for the year ended September 30, 1996, on pages
16 through 24 and the section entitled "Selected Quarterly Financial Data" on
page 11 thereof are incorporated herein by reference.
Consolidated Balance Sheets-September 30, 1996 and 1995
Consolidated Statements of Income-Years ended September 30, 1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity-Years ended September 30,
1996, 1995 and 1994
Consolidated Statements of Cash Flows-Years ended September 30, 1996, 1995 and
1994
Notes to Consolidated Financial Statements
Report of Independent Accountants
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G(3), the information required by Item 10 is
incorporated by reference herein from the material under the section entitled
"Election of Directors" contained on pages 3 through 7 in the Company's
definitive proxy statement filed with the Securities and Exchange Commission
related to the annual meeting of shareholders of Steel Technologies Inc. to be
held on January 23, 1997. The information regarding Executive Officers
required by Item 401 of Regulation S-K is included in Part I hereof under the
section entitled "Executive Officers of the Registrant". No disclosure is
required to be made under Item 405 of Regulation S-K.
ITEM 11. EXECUTIVE COMPENSATION
Pursuant to General Instruction G(3), the information required by Item 11 is
incorporated by reference herein from the material under the sections entitled
"Election of Directors - Compensation of Directors" contained on page 7 and
"Executive Compensation" contained on pages 8 and 9 in the Company's
definitive proxy statement filed with the Securities and Exchange Commission
related to the Company's annual meeting of shareholders to be held on January
23, 1997.
Information appearing in the sections entitled "Compensation Committee Report
on Executive Compensation" and "Performance Graph" contained on pages 10
through 14 in the Company's definitive proxy statement filed with the
Securities and Exchange Commission related to the Company's annual meeting of
shareholders to be held on January 23, 1997 shall not be deemed to be incor-
porated by reference in this report, notwithstanding any general statement
contained herein incorporating portions of such proxy statement by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Pursuant to General Instruction G(3), the information required by Item 12 is
incorporated by reference herein from the material under the sections entitled
"Voting Securities" contained on pages 2 and 3 and "Election of Directors"
contained on pages 3 through 7 in the Company's definitive proxy statement
filed with the Securities and Exchange Commission related to the Company's
annual meeting of shareholders to be held on January 23, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to General Instruction G(3), the information required by Item 13 is
incorporated by reference herein from the material under the sections entitled
"Certain Transactions" contained on pages 9 and 10 and "Election of Directors"
contained on pages 3 through 7 in the Company's definitive proxy statement
filed with the Securities and Exchange Commission related to the Company's
annual meeting of shareholders to be held on January 23, 1997.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) The response to this portion of Item 14 is submitted as a
separate section of this report--See List of Financial
Statements under Item 8.
(a) (2) The following consolidated financial statement schedule of
Steel Technologies Inc. and Subsidiaries is included in a
separate section of this report, following the index to
exhibits on page E-1:
Valuation and Qualifying Accounts - Schedule II
Report of Independent Accountants
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission
are not required under the related instructions or are inapplicable,
and therefore have been omitted.
(3) Listing of Exhibits--See Index to Exhibits contained herein on
page E-1 of this report. The index to exhibits specifically
identifies each management contract or compensatory plan
required to be filed as an Exhibit to this Form 10-K.
(b) No report on Form 8-K was filed for the quarter ended September 30, 1996.
(c) Exhibits filed with this report are attached hereto.
<PAGE>
STEEL TECHNOLOGIES INC. AND SUBSIDIARIES Page E-1
INDEX TO EXHIBITS
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30, 1996
Ref. Exhibit
# # Description
- --- ------ ------------------------------------------------
(a) 3.1 Restated Articles of Incorporation
of the Registrant
(a) 3.2 First Articles of Amendment to Restated
Articles of Incorporation of the Registrant
(d) 3.3 Second Articles of Amendment to Restated
Articles of Incorporation of the Registrant
(e) 3.4 Third Articles of Amendment to Restated
Articles of Incorporation of the Registrant
(e) 3.5 Amended By-Laws of the Registrant
(f) 10.1 Loan Agreement dated October 15, 1994,
between the Registrant and PNC Bank, Kentucky,
Inc., National City Bank, Kentucky, NBD Bank,
N.A. and Third National Bank, Nashville, Tennessee
(g) 10.1(a) First Amendment dated January 17, 1995 between
the Registrant and PNC Bank, Kentucky, Inc.,
National City Bank, Kentucky, NBD Bank, N.A.
and Third National Bank, Nashville, Tennessee
(h) 10.1(b) Second Amendment dated April 6, 1995 between
the Registrant and PNC Bank, Kentucky, Inc.,
National City Bank, Kentucky, NBD Bank, N.A.
and Third National Bank, Nashville, Tennessee
(i) 10.1(c) Third Amendment dated October 14, 1995 between
the Registrant and PNC Bank, Kentucky, Inc.,
National City Bank, Kentucky, NBD Bank, N.A.
and Third National Bank, Nashville, Tennessee
10.1(d) Fourth Amendment dated October 11, 1996 between
the Registrant and PNC Bank, Kentucky, Inc.,
National City Bank, Kentucky, NBD Bank, N.A.
and Third National Bank, Nashville, Tennessee
(h) 10.2 Note Agreement dated as of March 1, 1995, between
the Registrant and Principal Mutual Life
Insurance Company, Lincoln National Investment
Management Company, Jefferson-Pilot Life
Insurance Company and Northern Life Insurance
Company
(c) 10.3 (a) Incentive Stock Option Plan of the Registrant *
(b) 10.3 (b) Amendment #1, dated April 7, 1987 to the Incentive
Stock Option Plan of the Registrant *
(h) 10.3 (c) Registrant's 1995 Stock Option Plan *
(d) 10.5 Revised Employee Bonus Plan of the Registrant *
(b) 10.6 (a) Joint Venture Agreement dated March 30, 1987
between Mitsui & Co., LTD., Mitsui & Co.
(U.S.A.), Inc., Mitsui Steel Development Co.,
Inc., and the Registrant
(d) 10.6 (b) Amendment #1, dated February 28, 1989 to the Joint
Venture Agreement dated March 30, 1987 between
Mitsui & Co., LTD., Mitsui & Co. (U.S.A.), Inc.,
Mitsui Steel Development Co., Inc., and the
Registrant
(d) 10.7 (a) Loan Agreement dated as of November 1, 1989 between
the County Commissioners of Cecil County, Maryland
and the Registrant relating to Economic Development
Revenue Bonds
(d) 10.7 (b) Reimbursement, Credit and Security Agreement dated
as of November 1, 1989 between Citizens Fidelity
Bank and Trust Company and the Registrant relating
to Economic Development Revenue Bonds
(e) 10.8 Joint Venture Agreement dated October 16, 1990 among
Mitsui Steel Development Co., Inc. and LTV Steel
Company, Inc. and the Registrant
(e) 10.9 Form of Indemnification Agreement Between the
Registrant and its Directors *
(i) 10.10 Steel Technologies Inc. Restated Retirement Savings Plan
10.11 Collective Bargaining Agreement Between the United Auto
Workers and Steel Technologies Inc.
10.12 Nonemployee Directors Stock Option Plan *
11 Statement Re: Computation of Per Share Earnings
13 1996 Annual Report to Shareholders, filed herewith. The
annual report shall not be deemed to be filed with the
Commission except to the extent that information
is specifically incorporated by reference herein
21.1 Subsidiaries of the Registrant
23.1 Consent of Independent Accountants
27 Financial Data Schedule
Alphabetic filed exhibit reference:
(a) Incorporated herein by reference to exhibits filed with the Company's Form
S-2 Registration Statement under the Securities Act of 1933
(No. 33-24209), which became effective September 28, 1988.
(b) Incorporated herein by reference to exhibits filed with the Company's
Annual Report on Form 10-K (file # 0-14061) for the fiscal year ended
September 30, 1987.
(c) Incorporated herein by reference to exhibits filed with the Company's Form
S-1 Registration Statement under the Securities Act of 1933 (No. 2-98617),
which became effective August 27, 1985.
(d) Incorporated herein by reference to exhibits filed with the Company's
Annual Report on Form 10-K (file # 0-14061) for the fiscal year ended
September 30, 1989.
(e) Incorporated herein by reference to exhibits filed with the Company's
Annual Report on Form 10-K (file # 0-14061) for the fiscal year ended
September 30, 1990.
(f) Incorporated herein by reference to exhibits filed with the Company's
Annual Report on Form 10-K (file # 0-14061) for the fiscal year ended
September 30, 1994.
(g) Incorporated herein by reference to exhibits filed with the Company's
Quarterly Report on Form 10-Q (file # 0-14061) for the quarter ended
December 31, 1994.
(h) Incorporated herein by reference to exhibits filed with the Company's
Quarterly Report on Form 10-Q (file # 0-14061) for the quarter ended
March 31, 1995.
(i) Incorporated herein by reference to exhibits filed with the Company's
Quarterly Report on Form 10-Q (file # 0-14061) for the fiscal year ended
September 30, 1995.
* Indicates management contract or compensatory plan and arrangement
<PAGE>
STEEL TECHNOLOGIES INC. SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
Column A Column B Column C Column E Column F
Additions
- ---------------------------------------------------------------------------------------------------------------
Balance at Charged to Charged to
Beginning Costs and Other Deductions- Balance at
Description of Period Expenses Accounts- Describe End of Period
Describe
<S> <C> <C> <C> <C> <C>
Year Ended September 30, 1996:
Allowance for doubtful accounts $855,000 $269,300 - $249,528(A) $874,772
===================================================================
Year Ended September 30, 1995:
Allowance for doubtful accounts $910,000 $27,729 - $82,729(A) $855,000
===================================================================
Year Ended September 30, 1994:
Allowance for doubtful accounts $800,000 $133,099 - $23,099(A) $910,000
===================================================================
(A) Uncollectible accounts charged off, less recoveries.
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Steel Technologies Inc.
Our report on the consolidated financial statements of Steel Technologies Inc.
and subsidiaries dated November 7, 1996 has been incorporated by reference in
this Form 10-K from page 24 of the 1996 Annual Report to Shareholders of Steel
Technologies Inc. and subsidiaries. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedule listed in the index in Item 14(a)(2) of this Form 10-K.
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 required to be
included therein.
/s/ COOPERS & LYBRAND L.L.P.
------------------------
Coopers & Lybrand L.L.P.
Louisville, Kentucky
November 7, 1996
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 behalf
by the undersigned thereunto duly authorized.
STEEL TECHNOLOGIES INC.
Dated: 12/20/96 By: /s/ KENNETH R. BATES
----------------
Kenneth R. Bates
Vice President - Finance,
Chief Financial Officer,
Secretary and Treasurer
(Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Date Title
/s/ MERWIN J. RAY 12/20/96 Chairman of the Board of Directors
------------- Chief Executive Officer
Merwin J. Ray (Principal Executive Officer)
/s/ BRADFORD T. RAY 12/20/96
--------------- Director, President and Chief
Bradford T. Ray Operating Officer
/s/ HOWARD R. BATES, JR. 12/20/96
-------------------- Director and Vice President-Technical
Howard F. Bates, Jr. Services
/s/ MICHAEL J. CARROLL 12/20/96
------------------
Michael J. Carroll Director and Executive Vice President
/s/ RALPH W. MCINTYRE 12/20/96
-----------------
Ralph W. McIntyre Director
/s/ CHARLES A. MAYS 12/20/96
---------------
Charles A. Mays Director
/s/ WILLIAM E. HELLMANN 12/20/96
-------------------
William E. Hellmann Director
/s/ DALE L. ARMSTRONG 12/20/96
----------------- Director
Dale L. Armstrong
/s/ JIMMY DAN CONNER 12/20/96
---------------- Director
Jimmy Dan Conner
EXHIBIT 13
Management's Discussion and Analysis of Financial
Condition and Results of Operations
When used in the following discussion, the word "expects" and other similar
expressions are intended to identify forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those projected. Specific risks and uncertainties include, but are not
limited to, general business and econmic conditions; cyclicality of demand in
the steel industry, specifically in the automotive market; work stoppages or
other business interruptions affecting automotive manufacturers; competitive
factors such as the pricing and availability of steel; reliance on key
customers; and potential equipment malfunctions. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as
of the date hereof. The Company undertakes no obligation to republish revised
forward-looking statements to reflect the occurrence of unanticipated events
or circumstances after the date hereof.
Results of Operations
Fiscal 1996 Compared to Fiscal 1995
The Company posted record sales of $294,161,000 in fiscal 1996, an increase of
16% from 1995 sales of $252,730,000. The Company continues to focus
significant resources on the automotive industry and to generate an major
portion of business from selling to industrial customers manufacturing
component parts for use in the automotive industry. Demand in the automotive
markets improved throughout the fiscal year, yet automotive production remained
slightly below the levels of the prior fiscal year. The Company continues to
increase its market share and be successful in developing a substantial amount
of new business with both existing customers and new accounts. As a result,
tons shipped in 1996 increased by 24% while average selling prices declined by
8% a year ago. The sales outlook for 1997 continues to improve as automotive
production is expected to increase from the 1996 levels. The capital
investments completed in fiscal 1995 have added new capacity and increased
the products and services offered by the Company. The additional product
offerings are allowing the Company to pursue significant new business
opportunities and to further enhance its market share.
Cost of goods sold decreased as a percentage of sales to 86.3% in 1996 compared
to 87.9% a year ago. As a result, the gross profit margin increased to 13.7%
in 1996 compared to 12.1% in 1995. The gross profit margin in 1996 benefited
from reductions in the purchase price of raw materials as a reult of a decline
in the prevailing market price for flat rolled steel. The Company has
generated additional raw material cost reductions from the savings associated
with pickling steel for internal use. In addition, the gross margin was
positively impacted by toll processing revenues from the Company's pickling
facility which partially offset production cost increases associated with the
new production capacity added in 1995. Raw material costs are expected to
increase in the near term as the Company's steel suppliers raised prices in
July 1996 and have announced further price increases for fiscal 1997. Over
the longer term the Company expects this trend to reverse itself as new
steelmaking capacity and increased steel imports enter the market.
Additionally, a number of steel mills have experienced temporary production
problems which have negatively affected the raw material supply. Should
these raw material price increases persist, margins could be negatively
impacted until corresponding selling price increases are passed along to
customers.
The Company continues to actively manage the level at which selling, general
and administrative expenses are added to the cost structure. As a result,
selling, general and adminstrative expenses remained at 6.4% of sales in 1996
and 1995. Selling, general and adminstrative expenses in 1996 increased
16%, a rate comparable to the growth in sales but substantially lower than
the 24% gain in tons shipped. A significant portion of the cost increase
in 1996 is related to expenses associated with the new production capacity
added in 1995.
The Company's equity in the net income of its unconsolidated corporate joint
venture increased to $1,672,000 in 1996 from $1,414,000 in 1995. The equity
income increase is principally the result of higher sales levels achieved by
the 50% owned corporate joint venture, Mi-Tech Steel, Inc.
The Company recorded a charge of $601,000 in the prior year to account for the
impact of the Mexican peso devaluation on dollar denominated borrowings
provided to the Company's 80% owned Mexican subsidiary. These borrowings
were capitalized as an additional equity contribution to the Mexican subsidiary
in fiscal 1996 and are considered a part of the Company's long-term investment
in the subsidiary. The impact of currency fluctuations relating to the equity
contribution will generally be reflected as a component of shareholders'
equity.
Interest expense increased to $5,008,000 in 1996 from $3,939,000 in 1995. The
increase is the result of higher average borrowings used to finance the capital
additiona and working capital needs of the Company in 1996. Higher interest
rates also contributed to the increase in the interest expense as well as lower
levels of capitalized interest in 1996.
The Company's effective income tax rate was 35.7% in 1996 compared to 34.3% in
1995. The Company's earnings in 1996 were subject to higher statutory federal
and state income tax rates than in the prior year. In addition a smaller
percentage of the Company's overall earnings were generated by the Mi-Tech
Steel joint venture which are not fully taxable to the Company.
Fiscal 1995 Compared to Fiscal 1994
For the fiscal year ended September 30, 1995, the Company posted sales of
$252,730,000 compared to 1994 sales of $241,160,000, an increase of 5%.
Results for 1995 reflected a slowing of economic activity in the second half of
the fiscal year causing tons shipped to only approximate the 1994 levels.
Demand in automotive and other steel consuming markets softened in the second
half of 1995. As demand softened, customers reduced their inventory levels in
anticipation of lower demand and lower steel prices. Average selling price
increases of approximately 5% were realized during 1995.
Cost of goods sold increased as a percentage of sales to 87.9% in 1995 from
87.1% in 1994, decreasing the gross profit margin to 12.1% in 1995 compared to
12.9% in 1994. The gross profit margin decreased as a result of production
cost increases associated with new production capacity added in 1995 as well
as startup costs of the new pickling operation. Additionally, the lower unit
sales volume, especially in the second half of 1995, resulted in higher
production costs as a percentage of sales. These production cost increases
offset the benefits of lower raw material costs associated with steel purchased
in the latter part of 1995.
Selling, general and administrative expenses increased to 6.4% of sales in 1995
from 6.0% in 1994. Generally selling, general and administrative expenses
increased at a rate comparable to the growth in sales. The increase in 1995
is directly related to lower unit sales volume associated with a slowing in
overall economic activity in the second half of 1995.
The Company's equity in net income of its unconsolidated corporate joint
venture in 1995 was comparable to the level achieved by Mi-Tech Steel,
Inc. a year ago. Operating profits in 1995 increased as a result
of significantly higher sales achieved by the 50% owned corporate joint
venture. However, the joint venture incurred higher interest costs in 1995
as debt levels were increased to finance an expansion of the Greensburg
facility.
The Company recorded a charge of $601,000 in fiscal 1995 for the impact of the
Mexican peso devaluation on dollar denominated borrowings by the Company's
Mexican subsidiary. In 1996 these borrowings were converted to an equity
contribution in the Mexican subsidiary.
Interest expense increased to $3,939,000 for 1995 from $1,316,000 in 1994.
This increase was the result of significantly higher average borrowings used to
finance the capital addition and working capital needs of the Company in 1995.
Higher interest rates also contributed to the increase in interest expense.
The Company's effective income tax rate was 34.3% in 1995 compared to 36.7% in
1994. In 1995 the Company's lower earnings were not subject to the maximum
federal corporate income tax rate. In addition a higher percentage of the
Company's overall earnings were generated by the Mi-Tech Steel joint venture
which are not fully taxable to the Company.
Liquidity and Capital Resources
At September 30, 1996, the Company had $65,265,000 of working capital,
maintained a current ratio of 2.6:1 and had total long-term debt at 40% of
total capitalization. The Company continues to manage the levels of
accounts receivable, inventories and other working capital items in relation
to the trends in sales and the overall market. As a result, the Company
was able to generate cash flows from operating activities that approximated
1996 net income. The Company expects the sales trend to remain strong during
the 1997 fiscal year based on the current backlog and order activity. The
working capital needs associated with the higher sales levels are anticipated
to be funded with a combination of cash flows from operations and available
borrowing capabilities.
The Company's capital expenditures for 1996 totaled $6,473,000 which were
significantly reduced from the levels of the prior year. The Company has
expanded its production and processing capacity and added new processing
capabilities over the last few years and expects capital additions and
investments in corporate joint ventures to approximate $15,000,000 for 1997.
Other significant cash flows used in financing activities during 1996 included
the repurchase of 164,000 shares of common stock in the open market. The
capital expenditures and the share repurchases were primarily funded with cash
flows from operations.
Pursuant to a joint venture agreement, Steel Technologies has guaranteed
$6,250,000 of the bank financing required for the working capital purposes
of Mi-Tech Steel, Inc. Mi-Tech Steel is anticipating significant capital
additions in 1997 to construct a pickling, slitting and cut-to-length facility
in Decatur, Alabama. In order to finance this project, Steel Technologies
expects to provide an additional equity contribution of $5,000,000 to the
joint venture. Additional debt guarantees may be required in the future.
The Company believes that it has sufficient liquidity and available capital
resources to meet its existing needs. In October 1996, the Company increased
the limit on its unsecured bank line of credit to $55,000,000 from $40,000,000,
as well as extended the term on a $30,000,000 portion of the line until 1999.
This additional availability along with funds generated from operations are
expected to be sufficient to finance the capital expenditure plans as well as
the working capital requirements of the next twelve months. At this time the
Company has no known material obligations, commitments or demands which must be
met beyond the next twelve months other than the ten year notes and the line
of credit. The ten year notes do not require any principal payments until
fiscal 1999 and the line of credit is expected to be renewed at the end of
the term. However, the Company may seek, from time to time, additional funds
to finance the opening of new plants or significant improvements in its
production and processing capabilities. The form of such financing may vary
depending upone the prevailing market and related conditions, and may include
short or long-term borrowings or the issuance of debt or equity securities.
At September 30, 1996, the Company had $67,260,000 in long-term debt
outstanding. Under its various debt agreements, the Company has agreed to
maintain specified levels of working capital and net worth, maintain certain
ratios and limit the addition of substantial debt. The Company is in
compliance with all of its loan covenants, and none of these covenants would
restrict the Company from completing currently planned capital expenditures.
The Company maintains an investment, principally in the preferred stock of
Processing Technology, Inc., a corporate joint venture. The Company
periodically evaluates the possible conversion of its preferred stock investment
into common stock of Processing Technology, Inc. The Company's decision to
convert its investment to common stock will be based upon the joint venture
attaining certain financial criteria established by Steel Technologies.
Upon conversion, the Company would be obligated to guarantee a proportionate
share, currently approximating $9,500,000 of the joint venture's loan and
lease commitments. The conversion is not expected to occur in the near term.
The Company believes its manufacturing facilties are in compliance with
applicable federal and state environmental regulations. The Company is not
presently aware of any fact or circumstance which would require the
expenditure of material amounts for environmental compliance in the future.
STEEL TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
September 30 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,218 $ 2,698
Trade accounts receivable, less allowance for
doubtful accounts; 1996, $875; 1995, $855 39,732 31,460
Inventories 59,374 43,705
Deferred income taxes 1,631 1,005
Prepaid expenses and other assets 369 1,414
---------- ----------
Total current assets 105,324 80,282
---------- ----------
Property, plant and equipment, at cost:
Land and improvements 5,233 4,679
Buildings and improvements 41,284 40,899
Machinery and equipment 89,472 83,872
Construction in progress 1,984 3,761
---------- ----------
137,973 133,211
Less accumulated depreciation and
amortization 37,956 29,365
---------- ----------
100,017 103,846
---------- ----------
Investments in corporate joint ventures 11,016 9,344
---------- ----------
Other assets 784 1,258
---------- ----------
$ 217,141 $ 194,730
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 34,528 $ 23,596
Accrued liabilities 5,146 2,916
Long-term debt due within one year 385 385
---------- ----------
Total current liabilities 40,059 26,897
---------- ----------
Long-term debt 67,260 68,645
---------- ----------
Deferred income taxes 8,461 6,191
---------- ----------
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value; authorized - -
shares: 500,000; none outstanding
Common stock, no par value; authorized shares:
20,000,000; issued and outstanding shares:
11,962,238 in 1996 and 12,117,365 in 1995 16,662 18,214
Additional paid-in capital 4,909 4,909
Retained earnings 81,161 70,554
Foreign currency translation adjustment (1,371) (680)
---------- ----------
101,361 92,997
---------- ----------
$ 217,141 $ 194,730
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
[CAPTION]
STEEL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share)
<TABLE>
For the Years Ended September 30 1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $ 294,161 $ 252,730 $ 241,160
Cost of goods sold 253,845 222,121 210,131
---------- ---------- --------
Gross profit 40,316 30,609 31,029
Selling, general and administrative
expenses 18,811 16,185 14,544
Equity in net income of unconsolidated
corporate joint venture 1,672 1,414 1,437
---------- ---------- --------
Operating income 23,177 15,838 17,922
Interest expense 5,008 3,939 1,316
Foreign currency exchange loss - 601 -
---------- ---------- --------
Income before income taxes 18,169 11,298 16,606
Provision for income taxes 6,483 3,875 6,094
---------- ---------- --------
Net income $ 11,686 $ 7,423 $ 10,512
========== ========== ========
Weighted average number of common
shares outstanding 11,980 12,147 12,150
========== ========== ========
Earnings per common share $ 0.98 $ 0.61 $ 0.87
========== ========== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
[CAPTION]
STEEL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Amounts in thousands, except per share)
For the Years Ended September 30, 1996, 1995 and 1994
<TABLE>
Foreign
Additional Currency
Common Stock Paid-In Retained Translation
Shares Amount Capital Earnings Adjustment Total
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances, October 1, 1993 12,137 $ 18,613 $ 4,909 $ 54,442 $ 77,964
Net income 10,512 10,512
Net issuance of common stock under incentive
stock option plan 20 12 12
Cash dividends on common stock ($.07 per share) (850) (850)
---------- ---------- -------- ------- ------- ------
Balances, September 30, 1994 12,157 18,625 4,909 64,104 87,638
Net income 7,423 7,423
Net issuance of common stock under incentive
stock option plan 1 7 7
Cash dividends on common stock ($.08 per share) (973) (973)
Purchase and retirement of common stock (41) (418) (418)
Foreign currency translation adjustment $ (680) (680)
---------- ---------- -------- ------- ------- ------
Balances, September 30, 1995 12,117 18,214 4,909 70,554 (680) 92,997
Net income 11,686 11,686
Net issuance of common stock under incentive
stock option plan 9 18 18
Cash dividends on common stock ($.09 per share) (1,079) (1,079)
Purchase and retirement of common stock (164) (1,570) (1,570)
Foreign currency translation adjustment $ (691) (691)
---------- ---------- -------- ------- ------- --------
Balances, September 30, 1996 11,962 $ 16,662 $ 4,909 $ 81,161 $(1,371) $101,361
========== ========== ======== ======= ====== =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
[CAPTION]
STEEL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
For the Years Ended September 30 1996 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 11,686 $ 7,423 $ 10,512
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 9,484 7,108 4,994
Deferred income taxes 1,644 2,002 788
Equity in net income of unconsolidated corporate
joint venture (1,672) (1,414) (1,437)
Gain on sale of assets (475) (293) (415)
Increase (decrease) in cash resulting from changes in:
Trade accounts receivable (8,499) 3,016 (6,657)
Inventories (15,770) 36,652 (27,846)
Prepaid expenses and other assets 1,471 (1,284) 86
Accounts payable 11,018 (19,836) 16,245
Accrued liabilities 2,440 (178) (1,276)
---------- ------- -------
Net cash provided by (used in) operating activities 11,327 33,216 (5,006)
---------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (6,473) (37,914) (24,480)
Proceeds from sale of property, plant and equipment 737 582 790
Other assets - - (817)
---------- ------- -------
Net cash used in investing activities (5,736) (37,332) (24,507)
---------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 6,014 71,005 32,204
Principal payments on long-term debt (7,399) (63,590) (985)
Repurchase of common stock (1,570) (418) -
Cash dividends on common stock (1,079) (973) (850)
Net issuance of common stock under incentive
stock option plan 18 7 12
---------- ------- --------
Net cash (used in) provided by financing activities (4,016) 6,031 30,381
---------- ------- -------
Effect of exchange rate changes on cash (55) (225) -
---------- ------- -------
Net increase in cash and cash equivalents 1,520 1,690 868
Cash and cash equivalents, beginning of year 2,698 1,008 140
---------- ------- -------
Cash and cash equivalents, end of year $ 4,218 $ 2,698 $ 1,008
========== ======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash payments for interest $ 5,143 $ 5,038 $ 1,891
========== ======= =======
Cash payments for income taxes $ 3,245 $ 2,471 $ 5,895
========== ======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies:
Description of the Business: Steel Technologies Inc. is an intermediate steel
processor engaged in the business of processing flat rolled steel to specified
thickness, width, temper and finish requirements for customers' manufacturing
processes. A majority of its sales are to industrial customers in North
America, manufacturing component parts for use in the automotive industry.
Principles of Consolidation: The consolidated financial statements include the
accounts of Steel Technologies Inc. and its majority-owned subsidiaries (the
Company). The Company's investments in corporate joint ventures are
accounted for by the cost or equity method based on the percentage of common
ownership and control. All significant intercompany transactions have been
eliminated.
Cash and Cash Equivalents: Cash and cash equivalents includes highly liquid
investments with an original maturity of three months or less.
Inventories: Inventories are valued at the lower of cost or market. Cost is
determined using the specific identification method for all inventories.
Depreciation and Amortization: Depreciation is computed by the straight-line
method with the following estimated useful lives:
Buildings and improvements 20-45 years
Machinery and equipment 3-12 years
When properties are retired or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts with any resulting gain
or loss reflected in income. Maintenance and repairs are expensed in the year
incurred. The Company capitalizes interest costs as part of the cost of
constructing major facilities. Interest costs of $122,000, $1,293,000 and
$746,000 were capitalized in 1996, 1995 and 1994, respectively.
Earnings Per Common Share: Earnings per common share are based on the weighted
average number of common shares outstanding during each period. Common stock
options are not included in earnings per share computations since their effect
is not significant.
Foreign Currency Translation: The assets and liabilities of the Company's
Mexican subsidiary are translated into U.S. dollars at the year-end rate of
exchange and revenues and expenses are translated at average rates of exchange
in effect during the period. Resulting translation adjustments are
accumulated in a separate component of shareholders' equity. Foreign currency
transaction gains and losses are included in net income when incurred.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. Inventories:
Inventories at September 30 consist of 1996 1994
(in thousands):
------------------------------
Raw materials $ 49,617 $ 34,703
Finished goods and work in process 9,757 9,002
---------- ----------
$ 59,374 $ 43,705
========== ==========
3. Investments in Unconsolidated Corporate Joint Ventures:
Mi-Tech Steel, Inc. owns and operates high-volume steel slitting facilities to
serve Japanese and domestic automotive and appliance parts manufacturers in the
United States. Summarized condensed financial information of Mi-Tech Steel,
Inc., a fifty percent owned corporate joint venture accounted for by the equity
method follows (in thousands):
<TABLE>
Balance Sheet: September 30 1996 1995
Assets: ----------------------------------------------------
<S> <C> <C>
Current assets $ 36,943 $ 28,803
Other assets 18,460 19,868
Liabilities:
Current liabilities $ 26,035 $ 10,071
Non current liabilities 9,442 22,019
</TABLE>
<TABLE>
Income Statement: Fiscal Years Ended September 30 1996 1995 1994
-------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 94,992 $ 88,204 $ 68,319
Net income $ 3,345 $ 2,828 $ 2,874
</TABLE>
The Company has various transactions with Mi-Tech Steel, Inc. Included in
operating income of the Company are management and other fees and equity
from the joint venture earnings totaling $2,248,000, $2,273,000 and
$2,118,000 in 1996, 1995 and 1994, respectively. The Company is a guarantor
on $6,250,000 of Mi-Tech bank borrowings. The Company's equity in
undistributed net income of Mi-Tech Steel, Inc. was $5,963,000 at September
30,1996.
The Company maintains an investment of approximately $1,000,000, principally in
preferred stock, of Processing Technology, Inc., a corporate joint venture
accounted for by the cost method. The Company periodically evaluates the
possible conversion of its preferred stock investment into common stock of
Processing Technology, Inc. The Company's decision to convert its investment
to common stock will be based upon the joint venture attaining certain
financial criteria established by Steel Technologies. Upon conversion,
the Company would be obligated to guarantee a proportionate share, currently
approximating $9,500,000, of the joint venture's loan and lease commitments.
The conversion is not expected to occur in the near term.
4. Long-Term Debt:
Long-term debt at September 30 consists of the
following (in thousands): 1996 1995
- ------------------------------------------------------------------------------
Notes payable, unsecured, interest due
semiannually at 8.52% $ 40,000 $40,000
Notes payable to bank, unsecured under current
line of credit; interest rate at September
30, 1996 was 6.84% 21,500 $ 22,500
Variable rate industrial revenue development
bonds payable in annual installments through
November 1, 2014; interest rate at September
30, 1996, was 4.10% 4,500 4,600
Mortgage notes payable in installments through
2003; interest rates averaging 8.15% 1,600 1,900
All other debt 45 30
---------- ----------
67,645 69,030
Less amounts due within one year 385 385
---------- ----------
$ 67,260 $ 68,645
========== ==========
In April 1995, the Company entered into a $40,000,000 private note placement.
Annual principal payments of $5,720,000 begin March 1, 1999 and continue through
March 1, 2005.
In October 1996, the Company increased its unsecured bank line of credit to
$55,000,000 from $40,000,000. The term on a $30,000,000 portion of the bank
line of credit was extended through October 11, 1999. The remaining $25,000,000
portion of the bank line of credit is due in October 1997. Various options
are available on the interest rate, none of which are greater than the bank's
prime rate.
The aggregate amounts of all long-term debt to be repaid for the five years
following September 30, 1996, are: 1997, $385,000; 1998, $370,000;
1999, $6,091,000; 2000, $27,591,000; and 2001, $6,091,000. Provisions
contained in the Company's various debt agreements require the Company to
maintain specified levels of net worth, maintain certain financial ratios
and limit the addition of substantial debt. The Company estimates that the
fair value of long-term debt approximates its carrying value.
5. Retirement Plan:
The Company maintains a 401(k) defined contribution pension plan. Annual
expense provisions are based upon the level of employee participation as the
plan requires the Company to match a certain portion of the employees'
contribution. Total retirement plan expense was $470,000 in 1996, $482,000 in
1995 and $516,000 in 1994. The Company follows the policy of funding
retirement plan contributions as accrued.
6. Income Taxes:
<TABLE>
Provision for income taxes consists of the following (in thousands):
1996 1995 1994
---------- ---------- --------
<S> <C> <C> <C>
Current:
Federal $ 3,974 $ 1,586 $ 4,361
State and local 865 287 945
---------- ---------- --------
4,839 1,873 5,306
---------- ---------- --------
Deferred:
Federal 1,433 1,688 707
State and local 211 314 81
---------- ---------- --------
1,644 2,002 788
---------- ---------- --------
$ 6,483 $ 3,875 $ 6,094
========== ========== ========
</TABLE>
Deferred income taxes are recorded at currently enacted rates and result from
temporary differences in the recognition of revenues and expenses for tax and
financial statement purposes. The primary temporary differences giving rise to
the Company's deferred tax assets and liabilities are as follows (in thousands):
<TABLE>
1996 1995
Assets Liabilities Assets Liabilities
--------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
Income tax effects at September 30:
Accelerated depreciation $ $ 7,997 $ 5,861
Inventory capitalization 1,088 $ 676
Provision for doubtful accounts 340 328
Non deductible liabilities 203 1
Other, net 464 330
--------- --------- -------- -------
$ 1,631 $ 8,461 $ 1,005 $ 6,191
========= ========= ======== =======
</TABLE>
A reconciliation of the provision for income taxes with amounts computed by
applying the federal statutory income tax rate before income taxes follows:
<TABLE>
1996 1995 1994
---------- ---------- -------
<S> <C> <C> <C>
Provision at federal statutory rate 35.0 % 34.0 % 35.0 %
Increases (decreases) resulting from:
State and local income taxes, net
of federal income tax benefit 4.1 3.5 4.1
Equity in net income of unconsolidated
corporate joint venture (2.6) (3.4) (2.4)
Other (0.8) 0.2 -
---------- --------- --------
35.7 % 34.3 % 36.7 %
========== ========= ========
</TABLE>
7. Stock Option Plans:
Under its employee stock option plans, the Company may grant employees
incentive stock options to purchase shares at not less than 100% of market
value at date of grant or non-qualified stock options at a price determined by
the Compensation Committee. Generally, options are exerciseable at the rate of
20% a year beginning one year from date of grant and expire ten years from the
date of grant.
The following table summarizes the option plans:
<TABLE>
Price Range Number of Options
Per Share 1996 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Exercised $ 6.67-$ 6.87 8,973 1,000 20,610
Granted $ 11.63-$12.79 110,000 61,500 -
At September 30,
Outstanding $ 6.67-$12.79 627,625 535,325 498,825
Exerciseable $ 6.67-$11.73 384,763 324,050 255,188
</TABLE>
During October 1995, the Financial Accounting Standards Board issued SFAS
No.123, "Accounting for Stock-Based Compensation". The Company will adopt
this standard during 1997, electing the disclosure method of adoption.
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders
Steel Technologies Inc.
We have audited the accompanying consolidated balance sheets of Steel
Technologies Inc. and subsidiaries as of September 30, 1996 and 1995 and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended September 30, 1996. 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 Steel
Technologies Inc. and subsidiaries as of September 30, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended September 30, 1996 in conformity with generally
accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
------------------------
Coopers & Lybrand L.L.P.
Louisville, Kentucky
November 7, 1996
[CAPTION]
SELECTED FINANCIAL DATA
(Amounts in thousands, except per share data)
<TABLE>
Years Ended September 30 1996 1995 1994 1993 1992
Income Statement Data ---------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Sales $ 294,161 $ 252,730 $ 241,160 $ 198,157 $ 154,417
Cost of goods sold 253,845 222,121 210,131 168,295 131,711
Gross profit 40,316 30,609 31,029 29,862 22,706
Selling, general and administrative expenses 18,811 16,185 14,544 14,044 12,630
Equity in net income (loss) of unconsolidated
corporate joint venture 1,672 1,414 1,437 934 306
Operating income 23,177 15,838 17,922 16,752 10,382
Income before income taxes 18,169 11,298 16,606 15,849 9,512
Net income 11,686 7,423 10,512 9,946 6,012
Earnings per common share $ .98 $ .61 $ .87 $ .83 $ .50
Cash dividends per common share $ .09 $ .08 $ .07 $ .053 $ .04
Weighted average number of common
shares outstanding 11,980 12,147 12,150 12,055 12,045
September 30 1996 1995 1994 1993 1992
Balance Sheet Data ---------- ---------- -------- ------- -------
Working capital $ 65,265 $ 53,385 $ 70,511 $ 50,134 $ 32,275
Total assets 217,141 194,730 200,413 143,821 107,418
Long-term debt 67,260 68,645 60,805 30,006 15,626
Shareholders' equity 101,361 92,997 87,638 77,964 67,793
</TABLE>
SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
(Amounts in thousands, except per share data)
<TABLE>
Fiscal Year 1996 First Second Third Fourth
<S> <C> <C> <C> <C>
Sales $ 65,708 $ 76,630 $ 76,623 $ 75,200
Gross profit 8,466 11,026 10,820 10,004
Net income 2,111 3,366 3,333 2,876
Earnings per common share $ .18 $ .28 $ .28 $ .24
Fiscal Year 1995 First Second Third Fourth
Sales $ 64,245 $ 71,496 $ 60,153 $ 56,836
Gross profit 7,822 9,686 7,464 5,637
Net income 2,024 2,663 2,062 674
Earnings per common share $ .17 $ .22 $ .17 $ .06
</TABLE>
MARKET PRICE AND DIVIDEND INFORMATION
The Company's common stock trades on The Nasdaq Stock Market under the
symbol STTX. At October 31, 1996, there were approximately 635 shareholders
of record. The Company's current dividend policy provides for semiannual
payments of cash dividends. The following table shows cash dividends and high
and low prices for the common stock for each quarter of fiscal 1996 and 1995.
Nasdaq National Market System quotations are based on actual transactions.
<TABLE>
Stock Price
Fiscal Year 1996 High Low Dividends
<S> <C> <C> <C>
First Quarter $ 10.500 $ 6.250 $ 0.04
Second Quarter $ 12.500 $ 8.625
Third Quarter $ 15.875 $ 11.500 $ 0.05
Fourth Quarter $ 15.500 $ 10.250
Fiscal Year 1995 High Low Dividends
First Quarter $ 18.250 $ 10.188 $ 0.04
Second Quarter $ 13.750 $ 10.500
Third Quarter $ 13.250 $ 9.500 $ 0.04
Fourth Quarter $ 12.250 $ 9.500
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheet at September 30, 1996 and condensed
consolidated statement of income for the fiscal year ended September 30,
1996 and related footnotes and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<CIK> 0000771790
<NAME> STEEL TECHNOLOGIES INC.
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 4,218
<SECURITIES> 0
<RECEIVABLES> 40,607
<ALLOWANCES> (875)
<INVENTORY> 59,374
<CURRENT-ASSETS> 105,324
<PP&E> 137,973
<DEPRECIATION> (37,956)
<TOTAL-ASSETS> 217,141
<CURRENT-LIABILITIES> 40,059
<BONDS> 67,260
<COMMON> 16,662
0
0
<OTHER-SE> 84,699
<TOTAL-LIABILITY-AND-EQUITY> 217,141
<SALES> 294,161
<TOTAL-REVENUES> 294,161
<CGS> 253,845
<TOTAL-COSTS> 253,845
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 269,300
<INTEREST-EXPENSE> 5,008
<INCOME-PRETAX> 18,169
<INCOME-TAX> 6,483
<INCOME-CONTINUING> 11,686
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,686
<EPS-PRIMARY> $.98
<EPS-DILUTED> $.98
</TABLE>
[CAPTION]
EXHIBIT 11
STEEL TECHNOLOGIES INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
In thousands, except per share data
Fiscal Years Ended September 30 1996 1995 1994
- -------------------------------------------------------------------------------
ACTUAL
<S> <C> <C> <C>
Weighted average shares
outstanding 11,980 12,147 12,150
==============================
Net income $11,686 $ 7,423 $10,512
==============================
Earnings per share $ 0.98 $ 0.61 $ 0.87
==============================
PRIMARY
Weighted average shares
outstanding 11,980 12,147 12,150
Dilutive effect of stock options 74 81 236
------------------------------
12,054 12,228 12,386
==============================
Net income $11,686 $ 7,423 $10,512
==============================
Earnings per share $ 0.97 $ 0.61 $ 0.85
==============================
FULLY DILUTED
Weighted average shares
outstanding 11,980 12,147 12,150
Dilutive effect of stock options 107 81 236
------------------------------
12,087 12,228 12,386
==============================
Net income $11,686 $ 7,423 $10,512
==============================
Earnings per share $ 0.97 $ 0.61 $ 0.85
==============================
</TABLE>
EXHIBIT 23.1
STEEL TECHNOLOGIES INC.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Steel Technologies Inc. and subsidiaries on Form S-8 (File No. 33-66318) of our
reports dated November 7, 1996, on our audits of the consolidated financial
statements and financial statement schedule of Steel Technologies Inc. and
subsidiaries as of September 30, 1996 and 1995 and for the years ended
September 30, 1996, 1995 and 1994, which reports are incorporated by reference
and included in this Annual Report on Form 10-K.
/s/ COOPERS & LYBRAND
-----------------
Coopers & Lybrand
Louisville, Kentucky
December 20, 1996
EXHIBIT 21.1
STEEL TECHNOLOGIES INC.
SUBSIDIARIES
<TABLE>
Percentage of
Names Under Voting Secur-
Jurisdiction of Which Business ities Owned by
Name Incorporation Transacted Registrant
<S> <C> <C> <C>
Wabash Steel Indiana Wabash Steel Corporation 100%
Corporation (Formerly
Southern Strip Steel-
Peru, Inc.)
Southern Strip Steel- Ohio (Inactive Corporation) 100%
Columbus, Inc.
Steel Technologies de Mexico Mexico Steel Technologies de Mexico 80%
(formerly Transformadora y
Commercializadora de
Metales, S.A. de C.V.)
Mi-Tech Steel, Inc. Delaware Mi-Tech Steel, Inc. 50%
Processing Technology, Inc. * Delaware Processing Technology, Inc. 5%
</TABLE>
* Steel Technologies Inc. also owns shares of Processing Technology, Inc.,
non-voting preferred stock. The Company continues to evaluate the possible
conversion of its preferred shares into common shares of Processing Technology,
Inc. If converted, Steel Technologies Inc., including the 5% interest
currently held, would own 33% of the outstanding common shares of Processing
Technology, Inc.
FOURTH AMENDMENT TO LOAN AGREEMENT
THIS FOURTH AMENDMENT TO LOAN AGREEMENT (the "Fourth
Amendment"), is made and entered into as of the 11th day of
October, 1996, by and among (i) STEEL TECHNOLOGIES INC., a Kentucky
corporation with principal office and place of business in
Louisville, Kentucky (the "Borrower"), (ii)(a) PNC BANK, KENTUCKY,
INC., a Kentucky banking corporation with principal office and
place of business in Louisville, Kentucky ("PNC"), (b) NATIONAL
CITY BANK OF KENTUCKY, f/k/a NATIONAL CITY BANK, KENTUCKY, a
national banking association with principal office and place of
business in Louisville, Kentucky ("National City"), (c) NBD BANK,
N.A., a national banking association with principal office and
place of business in Detroit, Michigan ("NBD"), and (d) SUNTRUST
BANK, NASHVILLE, N.A., f/k/a THIRD NATIONAL BANK IN NASHVILLE, a
national banking association with principal office and place of
business in Nashville, Tennessee ("SunTrust") (PNC, National City,
NBD and SunTrust is each hereinafter individually referred to as a
"Bank," and all of the same are hereinafter collectively referred
to as the "Banks"), and (iii) PNC BANK, KENTUCKY, INC., in its
capacity as agent for the Banks (in such capacity, the "Agent").
P R E L I M I N A R Y S T A T E M E N T S:
A. Pursuant to that certain Loan Agreement dated as of
October 15, 1994, among the Borrower, the Banks and the Agent, as
amended pursuant to (i) that certain First Amendment to Loan
Agreement dated as of January 17, 1995, among the Borrower, the
Banks and the Agent, (ii) that certain Second Amendment to Loan
Agreement dated as of April 6, 1995, among the Borrower, the Banks
and the Agent, and (iii) that certain Third Amendment to Loan
Agreement dated as of October 14, 1995, among the Borrower, the
Banks and the Agent (collectively, the "Loan Agreement"), the Banks
have established a revolving credit facility in the current
principal amount of Forty Million Dollars ($40,000,000.00) in favor
of the Borrower (the "Revolver") for the purposes set forth in
Section 2.5 of the Loan Agreement.
B. The current stated maturity date of the Revolver is
October 14, 1996.
C. The Borrower has requested that the Banks extend the
stated maturity date of the Revolver from October 14, 1996 to
October 11, 1999 and reduce the principal amount of the Revolver
from Forty Million Dollars ($40,000,000.00) to Thirty Million
Dollars ($30,000,000.00).
D. The Banks are willing to and desire to extend the stated
maturity date of the Revolver from October 14, 1996 to October 11,
1999 and to reduce the principal amount of the Revolver from Forty
Million Dollars ($40,000,000.00) to Thirty Million Dollars
($30,000,000.00) upon the terms and conditions set forth herein.
E. The Borrower has also requested that the Banks establish
a 364-day revolving credit facility in favor of the Borrower in the
principal amount of Twenty-Five Million Dollars ($25,000,000.00)
(the "Line of Credit").
F. The obligation of the Borrower to repay advances under
the Line of Credit together with accrued interest thereon is
evidenced by (i) that certain Line of Credit Promissory Note dated
October 11, 1996, made by the Borrower, payable to the order of
PNC, and in the face principal amount of Nine Million Three Hundred
Seventy-Five Thousand Dollars ($9,375,000.00) (together with all
amendments, modifications, renewals, extensions, restatements and
replacements thereof, the "PNC Line of Credit Note"), (ii) that
certain Line of Credit Promissory Note dated October 11, 1996, made
by the Borrower, payable to the order of NBD, and in the face
principal amount of Six Million Two Hundred Fifty Thousand Dollars
($6,250,000.00) (together with all amendments, modifications,
renewals, extensions, restatements and replacements thereof, the
"NBD Line of Credit Note"), (iii) that certain Line of Credit
Promissory Note dated October 11, 1996, made by the Borrower,
payable to the order of SunTrust, and in the face principal amount
of Six Million Two Hundred Fifty Thousand Dollars ($6,250,000.00)
(together with all amendments, modifications, renewals, extensions,
restatements and replacements thereof, the "SunTrust Line of Credit
Note"), and (iv) that certain Line of Credit Promissory Note dated
October 11, 1996, made by the Borrower, payable to the order of
National City, and in the face principal amount of Three Million
One Hundred Twenty-Five Thousand Dollars ($3,125,000.00) (together
with all amendments, modifications, renewals, extensions,
restatements and replacements thereof, the "National City Line of
Credit Note") (the PNC Line of Credit Note, the NBD Line of Credit
Note, the SunTrust Line of Credit Note and the National City Line
of Credit Note are hereinafter collectively referred to as the
"Line of Credit Notes").
G. The Banks are willing to establish the Line of Credit in
favor of the Borrower pursuant to the terms and conditions set
forth in this Fourth Amendment (the term "Loan Agreement", as
hereinafter used, includes the Fourth Amendment and all future
amendments and modifications to the Loan Agreement).
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth in the Loan Agreement and
herein, and for other good and valuable consideration, the
mutuality, receipt and sufficiency of which are hereby acknowl-
edged, the parties hereto hereby agree as follows:
1. Each capitalized term used herein, unless otherwise
expressly defined herein, shall have the meaning set forth in the
Loan Agreement.
2. The term "Base Rate", as defined in Section 1.11 of the
Loan Agreement, is hereby redefined to mean, at the time of its
selection, the higher of (i) the Prime Rate, or (ii) the Federal
Funds Rate plus one percent (1%); provided, in the event that, and
during the periods that, the Federal Funds Rate cannot be deter-
mined by the Agent under the circumstances specified in Section 2.2
hereof, the Base Rate shall be the Prime Rate.
3. The term "Base Rate Loans", as defined in Section 1.12
of the Loan Agreement, is hereby redefined to mean Revolving Loans,
Swing Line Loans or Line of Credit Advances made to the Borrower
and bearing interest at rates determined by reference to the Base
Rate as provided in Sections 2.2(a) and 2.2(g) hereof.
4. The term "Consolidated Interest Expense", as defined in
Section 1.23 of the Loan Agreement, is hereby redefined to mean for
any period, total interest expense (including that attributable to
Capital Leases in conformity with GAAP) of the Borrower and its
Consolidated Subsidiaries on a consolidated basis with respect to
all outstanding Indebtedness of the Borrower and its Consolidated
Subsidiaries on a consolidated basis, including, without limitation
all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and
net costs and benefits under interest rate agreements, whether
payable in cash or accrued (including amortization of discount),
all as determined on a consolidated basis in conformity with GAAP.
5. The term "Default Rate", as defined in Section 1.36 of
the Loan Agreement, is hereby redefined to mean, upon the occur-
rence and during the continuation of the Events of Default referred
to in Section 7 of the Loan Agreement, as well as upon the
acceleration of the maturity of the Obligations due to the
occurrence of any other Event of Default (i) with respect to Line
of Credit Advances, Revolving Loans and Swing Line Loans, a
variable rate per annum equal to the sum of (a) two percent (2%)
per annum, plus (b) the Base Rate, and (ii) with respect to Letters
of Credit outstanding on the date of the occurrence of such Event
of Default or thereafter issued by PNC during the continuation of
such Event of Default (it being understood that PNC has no
obligation to issue any Letter of Credit upon the occurrence and
during the continuation of any Event of Default), a Letter of
Credit Fee equal to the sum of (a) two percent (2%) per annum, plus
(b) the Letter of Credit Fee Percentage.
6. The term "Funding Date", as defined in Section 1.46 of
the Loan Agreement, is hereby redefined to mean the date of funding
of a Revolving Loan, a Swing Line Loan or a Line of Credit Advance.
7. The term "Guaranty Agreement", as defined in Section
1.48 of the Loan Agreement, is hereby redefined to mean that
certain Guaranty Agreement dated as of March 1, 1995, executed and
delivered by Wabash Steel Corporation in favor of the Agent for the
benefit of the Banks, (i) that certain Ratification and
Reaffirmation Agreement dated as of October 15, 1995, executed and
delivered by Wabash Steel Corporation in favor of the Agent for the
benefit of the Banks, and (ii) that certain Second Ratification and
Reaffirmation Agreement dated as of October 11, 1996, executed and
delivered by Wabash Steel Corporation in favor of the Agent for the
benefit of the Banks.
8. The term "Letter of Credit Fee Percentage", as defined
in Section 1.57 of the Loan Agreement, is hereby redefined to mean
the Applicable LIBOR Rate Margin in effect during a particular
Pricing Period in which a Letter of Credit is issued by PNC for the
account of the Borrower.
9. The term "LIBOR Rate", as defined in Section 1.59 of the
Loan Agreement, is hereby redefined to mean the Adjusted LIBOR Rate
plus the Applicable LIBOR Rate Margin in effect for the particular
Interest Period.
10. The term "LIBOR Rate Loans", as defined in Section 1.60
of the Loan Agreement, is hereby redefined to mean Revolving Loans
and Line of Credit Advances made to the Borrower bearing interest
at the LIBOR Rate.
11. The term "Loan Instruments", as defined in Section 1.63
of the Loan Agreement, is hereby redefined to mean the Revolving
Notes, the Line of Credit Notes, the Guaranty Agreement, each
Application and Agreement for Letter of Credit and all other
applications, reimbursement agreements and other documents or
certificates executed in favor of PNC relating to the Letters of
Credit, each Request for Revolving Loan, each Request for Line of
Credit Advance, each Request for Swing Line Loan, each Compliance
Certificate and all other agreements, documents and instruments
delivered by the Borrower pursuant to this Loan Agreement.
12. The term "Notice of Conversion/Continuation", as defined
in Section 1.66 of the Loan Agreement, is hereby redefined to mean
a Notice in the form of Exhibit A annexed hereto (formerly Exhibit
G to the Loan Agreement) with respect to a proposed conversion or
continuation of a Revolving Loan or a Line of Credit Advance.
13. The term "Obligations", as defined in Section 1.67 of
the Loan Agreement, is hereby redefined to mean (i) the entire
unpaid principal balance of and all interest accrued on the
Revolving Notes, (ii) the entire unpaid principal balance of and
all interest accrued on the Line of Credit Notes, and (iii) all
other liabilities owing by the Borrower to the Banks arising under
or pursuant to this Loan Agreement or the other Loan Instruments of
any kind or nature, present or future, and whether or not evidenced
by any note, guaranty or other instrument. The term "Obligations"
includes, without limitation, all interest, charges, expenses,
reasonable attorneys' fees and any other sums chargeable to the
Borrower under this Loan Agreement or any other Loan Instrument.
14. The term "Pro Rata Share", as defined in Section 1.72 of
the Loan Agreement, is hereby redefined to mean, (i) with respect
to each Revolving Loan Commitment of each Bank, the percentage set
forth opposite that Bank's name on Schedule 2.1 annexed hereto, and
(ii) with respect to each Line of Credit Commitment of each Bank,
the percentage set forth opposite that Bank's name on Schedule 2.1
annexed hereto; provided that Schedule 2.1 shall be amended and
each Bank's Pro Rata Share shall be adjusted from time to time to
give effect to the addition or removal of any Banks as provided
herein or by assignment pursuant to Section 10 of the Loan
Agreement.
15. The term "Requisite Banks", as defined in Section 1.76
of the Loan Agreement, is hereby redefined to mean Banks holding at
least sixty percent (60%) of the sum of the Total Utilization of
Revolving Loan Commitments and Total Utilization of Line of Credit
Commitments as of the date of determination of the Requisite Banks;
provided, if there are no Revolving Loans, Line of Credit Advances
or Letters of Credit outstanding as of the date of determination of
the Requisite Banks, the term "Requisite Banks" shall mean Banks
holding at least sixty percent (60%) of the sum of the Revolving
Loan Commitments and the Line of Credit Commitments as of the date
of determination of the Requisite Banks. It is expressly under-
stood that the Total Utilization of Revolving Loan Commitments for
purposes of determination of the Requisite Banks includes each
Bank's obligation to make Revolving Loans in an amount equal to its
Pro Rata Share of all drawings under Letters of Credit issued by
PNC pursuant to the Loan Agreement.
16. The term "Revolver", as defined in Section 1.78 of the
Loan Agreement, is hereby redefined to mean the revolving credit
facility established by the Banks in favor of the Borrower in the
principal amount of Thirty Million Dollars ($30,000,000.00)
pursuant to the Loan Agreement, pursuant to which the Borrower may
obtain Revolving Loans and Letters of Credit during the term of the
Revolver upon the terms and conditions set forth in the Loan
Agreement. All references to the "aggregate principal balance of
the Revolving Loans outstanding" or similar phrases in this Loan
Agreement shall mean, as of the date of determination thereof, the
sum of (i) the entire aggregate outstanding principal balance of
all Revolving Loans made by the Banks pursuant to the Loan
Agreement and (ii) the then existing Letter of Credit Usage.
17. The term "Revolving Notes", as defined in Section 1.82
of the Loan Agreement, is hereby redefined to mean, collectively,
(i) that certain Amended and Restated Revolving Promissory Note
dated October 11, 1996, made by the Borrower, payable to the order
of PNC, and in the face principal amount of Eleven Million Two
Hundred Fifty Thousand Dollars ($11,250,000.00), together with all
amendments, modifications, renewals, extensions, restatements and
replacements thereof, (ii) that certain Amended and Restated
Revolving Promissory Note dated October 11, 1996, made by the
Borrower, payable to the order of NBD, and in the face principal
amount of Seven Million Five Hundred Thousand Dollars
($7,500,000.00), together with all amendments, modifications,
renewals, extensions, restatements and replacements thereof, (iii)
that certain Amended and Restated Revolving Promissory Note dated
October 11, 1996, made by the Borrower, payable to the order of
SunTrust, and in the face principal amount of Seven Million Five
Hundred Thousand Dollars ($7,500,000.00), together with all
amendments, modifications, renewals, extensions, restatements and
replacements thereof, and (iv) that certain Amended and Restated
Revolving Promissory Note dated October 11, 1996, made by the
Borrower, payable to the order of National City, and in the face
principal amount of Three Million Seven Hundred Fifty Thousand
Dollars ($3,750,000.00), together with all amendments, modifica-
tions, renewals, extensions, restatements and replacements thereof.
18. Section 1 of the Loan Agreement is hereby amended to add
certain additional definitions to the Loan Agreement as follows:
1.94 "Applicable Letter of Credit Fee" means
each per annum percentage set forth in the
table appearing in Section 2.7F(ii) of this
Loan Agreement.
1.95 "Applicable LIBOR Rate Margin" means
each per annum percentage set forth in the
table appearing in Section 2.2(a)(ii) of this
Loan Agreement.
1.96 "Applicable Revolver Commitment Fee"
means each per annum percentage set forth in
the table appearing in Section 2.3A(i) of this
Loan Agreement.
1.97 "Date of Determination" means, for
purposes of determining the applicable Pricing
Level on any Pricing Level Calculation Date,
the forty-fifth (45th) day following the most
recent Fiscal Quarter of the Borrower.
1.98 "Leverage Ratio" means, as of each Date
of Determination, (a) the Borrower's Consoli-
dated Total Debt as of the particular Date of
Determination, divided by (b) the Borrower's
Consolidated Total Capitalization as of the
particular Date of Determination, in each case
determined for the Borrower on a consolidated
basis in accordance with GAAP.
1.99 "Line of Credit" means the revolving
line of credit in the original principal
amount of Twenty-Five Million Dollars
($25,000,000.00) established by the Banks in
favor of the Borrower pursuant to this Loan
Agreement.
1.100 "Line of Credit Advances" means the
advances under the Line of Credit made from
time to time by the Banks to the Borrower
pursuant to, and subject to the terms and
conditions set forth in, this Loan Agreement.
1.101 "Line of Credit Commitment" means the
commitment of each Bank to maintain or make
Line of Credit Advances as set forth in this
Loan Agreement.
1.102 "Line of Credit Commitment Fee" or "Line
of Credit Commitment Fees" has the meaning
specified in Section 2.3A(ii) of this Loan
Agreement.
1.103 "Line of Credit Commitment Fee Pro Rata
Shares" means, with respect to each Bank's
share of each Line of Credit Commitment Fee
paid by the Borrower, the percentage deter-
mined by dividing (i) the average daily amount
of the unused portion of such Bank's Line of
Credit Commitment during the period for which
the Line of Credit Commitment Fee is payable,
by (ii) the aggregate average daily amount of
the unused portions of all of the Banks' Line
of Credit Commitments during the period for
which the Line of Credit Commitment Fee is
payable.
1.104 "Line of Credit Notes" means, collec-
tively, (i) that certain Line of Credit Prom-
issory Note dated October 11, 1996, made by
the Borrower, payable to the order of PNC, and
in the face principal amount of Nine Million
Three Hundred Seventy-Five Thousand Dollars
($9,375,000.00) (together with all amendments,
modifications, renewals, extensions, restate-
ments and replacements thereof, the "PNC Line
of Credit Note"), (ii) that certain Line of
Credit Promissory Note dated October 11, 1996,
made by the Borrower, payable to the order of
NBD, and in the face principal amount of Six
Million Two Hundred Fifty Thousand Dollars
($6,250,000.00) (together with all amendments,
modifications, renewals, extensions, restate-
ments and replacements thereof, the "NBD Line
of Credit Note"), (iii) that certain Line of
Credit Promissory Note dated October 11, 1996,
made by the Borrower, payable to the order of
SunTrust, and in the face principal amount of
Six Million Two Hundred Fifty Thousand Dollars
($6,250,000.00) (together with all amendments,
modifications, renewals, extensions, restate-
ments and replacements thereof, the "SunTrust
Line of Credit Note"), and (iv) that certain
Line of Credit Promissory Note dated October
11, 1996, made by the Borrower, payable to the
order of National City, and in the face prin-
cipal amount of Three Million One Hundred
Twenty-Five Thousand Dollars ($3,125,000.00)
(together with all amendments, modifications,
renewals, extensions, restatements and re-
placements thereof, the "National City Line of
Credit Note").
1.105 "Line of Credit Commitment Termination
Date" means the Line of Credit Commitment
Termination Date then in effect, which shall
originally be October 10, 1997, subject to
extension thereof pursuant to Section 20 of
the Fourth Amendment, or, if sooner, (i) the
date as of which the Obligations shall have
become immediately due and payable pursuant to
Section 7 of this Loan Agreement, or (ii) the
date on which all of the Obligations are paid
in full and all Line of Credit Commitments are
reduced to zero.
1.106 "Offered Rate" means the interest rate
quoted from time to time by PNC to the Bor-
rower as applicable to Swing Line Loans. The
Offered Rate shall constitute, on each Funding
Date of a Swing Line Loan, the offer quoted by
an officer of PNC to the Borrower on each such
Funding Date of a Swing Line Loan.
1.107 "Pricing Level" means, for any Pricing
Period, Pricing Level I, Pricing Level II or
Pricing Level III, as may be in effect for
such Pricing Period; provided that the Default
Rate shall be in effect upon the occurrence
and during the continuation of any Event of
Default.
1.108 "Pricing Level I" means the Pricing
Level that will be in effect for the applica-
ble Pricing Period if, as of the relevant Date
of Determination, the Leverage Ratio of the
Borrower is equal to or less than .30 to 1.0.
1.109 "Pricing Level II" means the Pricing
Level that will be in effect for the applica-
ble Pricing Period if, as of the relevant Date
of Determination, the Leverage Ratio of the
Borrower is greater than .30 to 1.0 but is
less than .40 to 1.0.
1.110 "Pricing Level III" means the Pricing
Level that will be in effect for the applica-
ble Pricing Period if, as of the relevant Date
of Determination, the Leverage Ratio of the
Borrower is equal to or greater than .40 to
1.0.
1.111 "Pricing Level Calculation Date" means
the date of delivery to the Banks of the
Compliance Certificate for the preceding
Fiscal Quarter of the Borrower pursuant to
Section 5.3(c) of this Loan Agreement.
1.112 "Pricing Period" means, with respect to
any Date of Determination, the period commenc-
ing on such Date of Determination and ending
on the day immediately preceding the next Date
of Determination.
1.113 "Request for Line of Credit Advance"
means the request in the form of Exhibit C
annexed to the Fourth Amendment with respect
to a proposed Line of Credit Advance to be
delivered by the Borrower to the Agent pursu-
ant to Section 2.1C of this Loan Agreement.
1.114 "Request for Swing Line Loan" means the
request in the form of Exhibit M annexed to
the Fourth Amendment with respect to a pro-
posed Swing Line Loan to be delivered by the
Borrower to PNC pursuant to Section 2.11B of
this Loan Agreement.
1.115 "Swing Line Loan Commitment" means the
commitment of PNC to maintain or make Swing
Line Loans as set forth in Section 2.11A of
this Loan Agreement.
1.116 "Swing Line Loan Commitment Termination
Date" means the Swing Line Loan Commitment
Termination Date then in effect, which shall
originally be October 10, 1997, subject to
extension thereof pursuant to Section 2.11C of
this Loan Agreement, or if sooner (i) the date
as of which the Obligations shall have become
immediately due and payable pursuant to Sec-
tion 7 of this Loan Agreement, or (ii) the
date on which all of the Obligations are paid
in full (including, without limitation, the
repayment, expiration, termination or cash
collateralization of Letters of Credit pursu-
ant to this Loan Agreement) and the Swing Line
Loan Commitment is reduced to zero.
1.117 "Swing Line Loans" means the Swing Line
Loans which PNC has agreed to maintain or make
pursuant to Section 2.11A of this Loan Agree-
ment.
1.118 "Swing Line Note" means the Swing Line
Loan Promissory Note issued by the Borrower to
PNC to evidence the obligation of the Borrower
to repay all Swing Line Loans made by PNC
together with accrued interest thereon and
substantially in the form of Exhibit N annexed
to the Fourth Amendment.
1.119 "Total Utilization of Line of Credit
Commitments" means, as at any day of determi-
nation thereof, the sum of the aggregate
principal amount of all outstanding Line of
Credit Advances.
19. The Banks hereby extend the stated maturity date of the
Revolver from October 14, 1996 to October 11, 1999. In furtherance
thereof, the term "Revolving Loan Commitment Termination Date", as
defined in Section 1.80 of the Loan Agreement, is hereby redefined
to mean the Revolving Loan Commitment Termination Date then in
effect, which is currently October 11, 1999, subject to extension
thereof pursuant to Section 2.1B of the Loan Agreement, or, if
sooner, (i) the date as of which the Obligations shall have become
immediately due and payable pursuant to Section 7 of the Loan
Agreement, or (ii) the date on which all of the Obligations are
paid in full (including, without limitation, the repayment,
expiration, termination or cash collateralization of Letters of
Credit pursuant to the Loan Agreement) and all Revolving Loan
Commitments are reduced to zero.
20. The Banks hereby establish a revolving line of credit in
favor of the Borrower in the original principal amount of Twenty-
Five Million Dollars ($25,000,000.00) (the "Line of Credit"). The
Line of Credit shall be evidenced by the Line of Credit Notes.
Pursuant to the Line of Credit, the Borrower may obtain Line of
Credit Advances pursuant to, and subject to the terms and condi-
tions set forth in, the Loan Agreement and this Fourth Amendment.
The Line of Credit shall be subject to the following terms and
conditions:
(a) Term of Line of Credit. The Line of Credit shall
become effective immediately as of the date of this Fourth
Amendment, and as of the date hereof, the Borrower may obtain Line
of Credit Advances, in each case subject to the terms and condi-
tions contained herein and in the Loan Agreement. The Line of
Credit shall terminate on the Line of Credit Commitment Termination
Date, unless sooner terminated (a) by the Banks upon the occurrence
and during the continuation of an Event of Default, or (b) by the
Borrower at any time in its sole and absolute discretion. The
Borrower may request in writing, not less than sixty (60) days
prior to the current Line of Credit Commitment Termination Date or
any subsequent Line of Credit Commitment Termination Date (which
shall be 364 days from the immediately preceding Line of Credit
Commitment Termination Date), that the Line of Credit Commitment
Termination Date be extended for a period selected by the Borrower
and acceptable to the Banks. The Agent shall notify the Borrower
in writing, within thirty (30) days of receipt of such request,
whether the Banks have elected to so extend the Line of Credit
Commitment Termination Date. In the event the Borrower fails to
receive such written notice from the Agent, such failure shall
constitute an affirmative election by the Banks not to so extend
the Line of Credit Commitment Termination Date. The Line of Credit
Commitment Termination Date may only be extended by the unanimous
written consent of all of the Banks in their sole and absolute
discretion as communicated in writing to the Agent. If any Bank
elects not to extend the Line of Credit Commitment Termination
Date, the Agent shall notify the Borrower thereof and such Bank
shall constitute an "Affected Bank" for purposes of Section 10.E of
the Loan Agreement. In the event the Banks elect not to extend the
Line of Credit Commitment Termination Date, the Line of Credit
Commitments shall terminate, and the entire unpaid principal
balance of and all accrued and unpaid interest on the Line of
Credit Advances and the other Obligations shall be respectively due
and payable in full to the Banks on the then Line of Credit
Commitment Termination Date, subject at all times to the Banks'
absolute right to terminate the Line of Credit Commitments upon the
occurrence and during the continuation of an Event of Default.
Upon termination of the Line of Credit Commitments by the Banks
upon the occurrence and during the continuation of an Event of
Default, or by the Borrower at any time in its sole and absolute
discretion, the entire unpaid principal balance of and all accrued
and unpaid interest on the Line of Credit Advances and all other
Obligations shall be respectively due and payable in full to the
Banks. The termination of the Line of Credit Commitments, for
whatever reason, shall not in any way release or relieve the
Borrower from its obligations incurred hereunder or in connection
herewith or under the Line of Credit Notes or the other Loan
Instruments and the provisions hereof and of the Line of Credit
Notes and the other Loan Instruments shall continue in full force
and effect until the Line of Credit Notes and all other Obligations
have been respectively paid in full to the Banks. In the event the
Borrower terminates the Line of Credit Commitments, which the
Borrower has the right to do at any time in its sole and absolute
discretion, the Borrower shall be obligated to pay the Line of
Credit Notes and all other Obligations in full to the Banks,
respectively.
(b) Purpose. The Borrower agrees that the proceeds of
the Line of Credit and each Line of Credit Advance obtained
thereunder shall be used to support working capital and the general
corporate purposes of the Borrower. The Borrower further agrees
that no portion of the proceeds of the Line of Credit or any Line
of Credit Advance obtained thereunder shall be used to purchase or
carry any margin stock, to extend credit to others for the purpose
of purchasing or carrying margin stock or for any purpose pro-
scribed by Regulation G, Regulation T, Regulation U or Regulation X
of the Board of Governors of the Federal Reserve System.
(c) Payments. All payments on the Line of Credit Notes
shall be in legal tender of the United States of America. If the
date any payment due under the Line of Credit Notes shall not be a
Business Day, the payment otherwise then due shall be due and
payable on the next succeeding Business Day (provided, interest
shall continue to accrue on each such non-Business Day).
21. Section 2.1C of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
2.1C Borrowing Mechanics. The obtaining
by the Borrower of each Revolving Loan and
each Line of Credit Advance shall be subject
to the following terms and conditions:
(a) Base Rate Loans shall be in the
minimum amount of One Million Dollars
($1,000,000.00) and integral multiples of One
Hundred Thousand Dollars ($100,000.00) in
excess of that amount or, if less, the amount
available to be borrowed under either the
Revolver or the Line of Credit at the time the
Base Rate Loan is requested by the Borrower.
Subject to there being sufficient availability
under the Revolver and the Line of Credit, as
applicable, LIBOR Rate Loans shall be in the
minimum amount of Five Million Dollars
($5,000,000.00) and integral multiples of One
Million Dollars ($1,000,000.00) in excess of
that amount. Whenever the Borrower desires
that the Banks make a Revolving Loan and/or a
Line of Credit Advance to the Borrower, the
Borrower shall deliver to the Banks a Request
for Revolving Loan or a Request for Line of
Credit Advance no later than 10:30 A.M.
(Louisville, Kentucky time) at least three (3)
Business Days in advance of the proposed
Funding Date in the case of a LIBOR Rate Loan
and on the day of the proposed Funding Date in
the case of a Base Rate Loan. The Request for
Revolving Loan and the Request for Line of
Credit Advance shall be in the form of Ex-
hibits B (formerly Exhibit B to the Loan
Agreement) and C, respectively, attached
hereto and made a part of the Fourth Amend-
ment. Revolving Loans and Line of Credit
Advances may be continued as or converted into
Base Rate Loans and LIBOR Rate Loans in the
manner provided in Section 2.2(d) hereof. In
lieu of delivering the above described Request
for Revolving Loan and the Request for Line of
Credit Advance, the Borrower may give the
Agent telephonic notice by the required time
of the requested Revolving Loan and/or Line of
Credit Advance under this Section 2.1C; pro-
vided that such notice shall be promptly
confirmed in writing by delivery of a Request
for Revolving Loan and the Request for Line of
Credit Advance to the Agent on or before the
applicable Funding Date.
(b) Neither the Agent nor the Banks
shall incur any liability to the Borrower in
acting upon any telephonic notice referred to
above which the Agent and/or the Banks believe
in good faith to have been given by an Autho-
rized Officer or other person authorized to
borrow on behalf of the Borrower or for other-
wise acting in good faith under this Section
2.1C, and, upon funding of any Revolving Loans
or any Line of Credit Advances by the Banks in
accordance with this Loan Agreement pursuant
to any telephonic notice, the Borrower shall
have effected such Revolving Loans or such
Line of Credit Advances hereunder.
(c) Except as provided in Sections
2.6(b), 2.6(c) or 2.6(f) hereof, a Request for
Revolving Loan or a Request for Line of Credit
Advance for a LIBOR Rate Loan (or telephonic
notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Deter-
mination Date, and the Borrower shall be bound
to borrow the particular LIBOR Rate Loan in
accordance therewith.
(d) The Agent shall make the pro-
ceeds of each Revolving Loan and each Line of
Credit Advance requested by the Borrower
available to the Borrower on the Funding Date
by causing an amount of same day funds equal
to the proceeds of such Revolving Loan and
such Line of Credit Advance to be credited to
the account of the Borrower maintained with
the Banks.
(e) The Borrower shall have no
right to obtain, and the Banks shall have no
obligation to make, any Revolving Loan or any
Line of Credit Advance if a Potential Event of
Default or an Event of Default has occurred
and is continuing.
(f) Each request by the Borrower
for a Revolving Loan, a Line of Credit Advance
or a Swing Line Loan shall, in and of itself,
constitute a continuing representation and
warranty by the Borrower to the Banks (i) that
the Borrower then is, and at the time the
Revolving Loan, Line of Credit Advance or
Swing Line Loan is actually made will be,
entitled under this Loan Agreement to obtain
the particular Revolving Loan, Line of Credit
Advance or Swing Line Loan, and (ii) that all
of the covenants, agreements, representations
and warranties made by the Borrower herein and
in the other Loan Instruments are true and
correct, and have been fully complied with, as
of such date.
(g) The Borrower shall have no
right to obtain any Revolving Loan, Line of
Credit Advance or Swing Line Loan unless all
of the terms and conditions set forth in this
Section 2.1C have been fully satisfied with
regard to that Revolving Loan, that Line of
Credit Advance or that Swing Line Loan.
22. Section 2.2 of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
2.2 Interest on the Revolving Loans and
the Line of Credit Advances.
(a) Rates of Interest. Subject to
the provisions of Sections 2.2(g) and 2.6
hereof, each Revolving Loan and each Line of
Credit Advance made to the Borrower shall bear
interest on the unpaid principal amount
thereof from the date made through maturity
(whether by acceleration or otherwise) at
either the Base Rate or the LIBOR Rate as
provided below, as the case may be. The
applicable basis for determining the rate of
interest with respect to Revolving Loans
and/or Line of Credit Advances made to the
Borrower shall be selected by the Borrower
initially at the time a Request for Revolving
Loan or a Request for Line of Credit Advance
is delivered to the Agent pursuant to Section
2.1(a) hereof. The basis for determining the
interest rate with respect to any Revolving
Loan or any Line of Credit Advance made to the
Borrower may be changed from time to time
pursuant to Section 2.2(d) hereof. If on any
day a Revolving Loan or a Line of Credit
Advance is outstanding to the Borrower with
respect to which notice has not been delivered
to the Banks in accordance with the terms of
this Loan Agreement specifying the applicable
basis for determining the rate of interest to
apply to such Revolving Loan or such Line of
Credit Advance then, for that day, that Re-
volving Loan or that Line of Credit Advance
shall be deemed a Base Rate Loan and shall
bear interest at the Base Rate.
Subject to the provisions of Sections
2.6(b) and 2.6(c) hereof, Revolving Loans
and/or Line of Credit Advances shall bear
interest through maturity as follows:
(i) If a Base Rate Loan, then
at a rate per annum equal to the Base Rate;
(ii) If a LIBOR Rate Loan,
then at a rate per annum equal to the Adjusted
LIBOR Rate plus the Applicable LIBOR Rate
Margin; provided that, on each Date of Deter-
mination, commencing with the first such date
to occur after October 11, 1996, the Applica-
ble LIBOR Rate Margin in effect for the Pric-
ing Period commencing on such Date of Determi-
nation and continuing for the term of the
Pricing Period that begins on such Date of
Determination shall be the Applicable LIBOR
Rate Margin corresponding to the Pricing Level
in effect for such Pricing Period, as applica-
ble:
Applicable
Pricing Level LIBOR Rate Margin
Pricing Level I .500%
Pricing Level II .575%
Pricing Level III .625%
Notwithstanding anything in the foregoing to
the contrary, if any Compliance Certificate
delivered by the Borrower demonstrating the
appropriate Pricing Level shall prove to be
incorrect (as determined by reference to the
Borrower's financial statements or otherwise),
such Compliance Certificate shall no longer be
in effect, and the Banks shall notify the
Borrower of such incorrectness and shall
calculate the difference between the amount of
interest actually paid by the Borrower on the
basis of such incorrect Compliance Certificate
and the amount of interest which would have
been due had such incorrect Compliance Certif-
icate not been delivered. The Agent shall
notify the Borrower of the amount of such
difference, if any, in a statement setting
forth the method of calculation of such amount
(which calculation, in the absence of demon-
strable error, shall be deemed correct) and
the Borrower shall pay such amount to the
Agent, for the benefit of the Banks, within
three (3) Business Days of such notice.
(b) LIBOR Interest Periods. In
connection with each LIBOR Rate Loan made to
the Borrower, the Borrower may, pursuant to
the Request for Revolving Loan, Request for
Line of Credit Advance or Notice of Conver-
sion/Continuation, as the case may be, select
an interest period (each an "Interest Period")
to be applicable to such LIBOR Rate Loan,
which Interest Period shall be at the
Borrower's option either a one, two, three or
six month period, provided that:
(i) the initial Interest
Period for any LIBOR Rate Loan made to the
Borrower shall commence on the Funding Date of
such LIBOR Rate Loan, in the case of a Revolv-
ing Loan or a Line of Credit Advance initially
made as a LIBOR Rate Loan, or on the date
specified in the applicable Notice of Conver-
sion/Continuation, in the case of a Base Rate
Loan converted to a LIBOR Rate Loan;
(ii) in the case of
immediately successive Interest Periods
applicable to a LIBOR Rate Loan made to the
Borrower continued as such pursuant to a
Notice of Conversion/Continuation, each
successive Interest Period shall commence on
the day on which the next preceding Interest
Period expires;
(iii) if an Interest Period
would otherwise expire on a day that is not a
Business Day, such Interest Period shall
expire on the next succeeding Business Day;
provided that, if any Interest Period would
otherwise expire on a day that is not a Busi-
ness Day but is a day of the month after which
no further Business Day occurs in such month,
such Interest Period shall expire on the next
preceding Business Day;
(iv) any Interest Period that
begins on the last Business Day of a calendar
month (or on a day for which there is no
numerically corresponding day in the calendar
month at the end of such Interest Period)
shall, subject to clause (iii) of this Section
2.2(b), end on the last Business Day of a
calendar month;
(v) there shall be no more
than seven (7) Interest Periods relating to
the LIBOR Rate Loans made to the Borrower
outstanding at any time, unless there are Base
Rate Loans outstanding, in which event there
shall be no more than six (6) Interest Periods
relating to LIBOR Rate Loans outstanding at
such time;
(vi) in the event the Borrower
fails to specify an Interest Period in the
particular Request for Revolving Loan, Request
for Line of Credit Advance and/or Notice of
Conversion/Continuation, the Borrower shall be
deemed to have selected an Interest Period of
one month; and
(vii) no Interest Period shall
extend beyond the then stated maturity date of
the Revolver or the Line of Credit, as appli-
cable.
(c) Interest Payments. Subject to
the provisions of Section 2.2(e) hereof,
interest shall be payable on the Revolving
Loans and the Line of Credit Advances made to
the Borrower as follows:
(i) interest on each Base
Rate Loan shall be payable in arrears on the
last day of each Fiscal Quarter, upon any
prepayment or repayment of any such Revolving
Loan or Line of Credit Advance (to the extent
accrued on the amount being prepaid or repaid)
and at maturity (including final maturity);
all the interest on the Base Rate Loans shall
be computed based upon the actual number of
days elapsed over an assumed year of three
hundred sixty-five (365) or three hundred
sixty-six (366) days; and
(ii) interest on each LIBOR
Rate Loan shall be payable in arrears on the
last day of an Interest Period, if the Inter-
est Period is one, two or three months, or
shall be payable in arrears on the ninetieth
(90th) day of each Interest Period and on the
last day of the Interest Period if the Inter-
est Period is six months, upon the date of any
prepayment or repayment of such LIBOR Rate
Loan (to the extent accrued on the amount
being prepaid or repaid) and at maturity
(including final maturity); all the interest
on the LIBOR Rate Loans shall be computed
based upon the actual number of days elapsed
over an assumed year of three hundred sixty
(360) days.
(d) Conversion or Continuation.
Subject to the provisions of Section 2.6
hereof, the Borrower shall have the option (i)
to convert at any time all or any part of
outstanding Revolving Loans made to the Bor-
rower from Revolving Loans bearing interest at
a rate determined by reference to one basis to
Revolving Loans bearing interest at a rate
determined by reference to an alternative
basis, (ii) to convert at any time all or any
part of outstanding Line of Credit Advances
made to the Borrower from Line of Credit
Advances bearing interest at a rate determined
by reference to one basis to Line of Credit
Advances bearing interest at a rate determined
by reference to an alternative basis, or (iii)
upon the expiration of any Interest Period
applicable to a LIBOR Rate Loan made to the
Borrower, to continue all or any portion of
such LIBOR Rate Loan as a LIBOR Rate Loan, and
the succeeding Interest Period of such contin-
ued LIBOR Rate Loan shall commence on the last
day of the current Interest Period with re-
spect thereto; provided however that a LIBOR
Rate Loan may only be converted into a Base
Rate Loan on the expiration date of the Inter-
est Period applicable thereto.
The Borrower shall deliver a Notice of
Conversion/Continuation to the Agent no later
than 10:30 A.M. (Louisville, Kentucky time) on
the same Business Day in advance of the pro-
posed conversion/continuation date (in the
case of a conversion to a Base Rate Loan) and
at least three (3) Business Days in advance of
the proposed conversion/continuation date (in
the case of a conversion to, or a continuation
of, a LIBOR Rate Loan). A Notice of Conver-
sion/Continuation shall specify (i) the pro-
posed conversion/continuation date (which
shall be a Business Day), (ii) the amount of
the Revolving Loan or the Line of Credit
Advance to be converted/continued, (iii) the
nature of the proposed
conversion/continuation, (iv) in the case of a
conversion to, or continuation of, a LIBOR
Rate Loan, the requested Interest Period, and
(v) in the case of a conversion to, or a
continuation of, a LIBOR Rate Loan, that no
Event of Default has occurred and is
continuing. In lieu of delivering the above-
described Notice of Conversion/Continuation,
the Borrower may give the Banks telephonic
notice by the required time of any proposed
conversion/continuation under this Section
2.2(d); provided that such notice shall be
promptly confirmed in writing by delivery of a
Notice of Conversion/Continuation to the Agent
on or before the proposed conver-
sion/continuation date.
Neither the Agent nor the Bank shall
incur any liability to the Borrower in acting
upon any telephonic notice referred to above
that the Agent believes in good faith to have
been given by an Authorized Officer of the
Borrower or for otherwise acting in good faith
under this Section 2.2(d), and upon conversion
or continuation of the applicable basis for
determining the interest rate with respect to
any Revolving Loans or any Line of Credit
Advances made to the Borrower in accordance
with this Loan Agreement pursuant to any such
telephonic notice, the Borrower shall have
effected a conversion or continuation, as the
case may be, hereunder.
Except as otherwise provided in Sections
2.6(b), 2.6(c) and 2.6(g) hereof, a Notice of
Conversion/Continuation for conversion to, or
continuation of, a LIBOR Rate Loan (or tele-
phonic notice in lieu thereof) shall be irre-
vocable on and after the related Interest Rate
Determination Date and the Borrower shall be
bound to effect the conversion or continuation
in accordance therewith.
(e) Post-Maturity Interest. All
installments of accrued interest on and all
unpaid principal of the Revolving Notes and/or
the Line of Credit Notes not paid to the Banks
when due or within fifteen (15) days thereaf-
ter shall bear interest (including post-peti-
tion interest in any proceeding under the
Bankruptcy Code or other applicable Bankruptcy
laws) at the Default Rate until such overdue
installments of accrued interest and unpaid
principal have been paid in full to the Banks.
Payment or acceptance of the increased rates
of interest provided for in this Section
2.2(e) is not a permitted alternative to
timely payment and shall not constitute a
waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of
the Agent or any Bank.
(f) Computation of Interest. In
computing interest on any Revolving Loan or
any Line of Credit Advance made to the Borrow-
er, the date of the making of such Revolving
Loan or such Line of Credit Advance or the
first day of an Interest Period applicable to
such Revolving Loan or such Line of Credit
Advance or, with respect to a Base Rate Loan
being converted from a LIBOR Rate Loan, the
date of conversion of such LIBOR Rate Loan to
such Base Rate Loan, as the case may be, shall
be included, and the date of payment of such
Revolving Loan or such Line of Credit Advance
or the expiration date of an Interest Period
applicable to such Revolving Loan or such Line
of Credit Advance or, with respect to a Base
Rate Loan being converted to a LIBOR Rate
Loan, the date of conversion of such Base Rate
Loan to such LIBOR Rate Loan shall be exclud-
ed; provided that if a Revolving Loan or a
Line of Credit Advance is repaid on the same
day on which it is made, one day's interest
shall be paid on that Revolving Loan or that
Line of Credit Advance.
(g) Special Provisions Governing
Federal Funds Rate.
(i) Federal Funds Rate Unas-
certainable. In the event that, on any date
on which a Federal Funds Rate would otherwise
be set, the Agent shall have determined (which
determination shall be final and conclusive)
that, by reason of circumstances affecting the
reporting of the average national federal
funds rate by the Federal Reserve Bank of New
York or such other agency then reporting such
rate, reasonable means do not exist for ascer-
taining the Federal Funds Rate, the Agent
shall give prompt notice of such determination
to the Borrower and to the Banks and, until
the Agent notifies the Borrower and the Banks
that the circumstances giving rise to such
determination no longer exist, all Base Rate
Loans then or thereafter outstanding shall
bear interest at the Prime Rate.
(ii) Impracticability of Offering
Federal Funds Rate by Any Bank. In the event
that any Bank shall determine, in good faith,
that it is impracticable or impossible for
such Bank to offer funds to the Borrower at
the Federal Funds Rate because changes in
market conditions and/or in such Bank's cost
of funds occurring after the Closing Date have
made it not feasible for such Bank to realize
the anticipated and bargained-for-yield here-
under, then such Bank shall be an "Affected
Bank" hereunder and shall promptly notify the
Agent of such impracticability. The Agent
upon receipt of such notice shall notify the
Borrower that all Base Rate Loans from the
Affected Bank shall thereafter bear interest
at the Prime Rate. Nothing in this Section
2.2(g)(ii) shall affect the obligation of any
Bank other than an Affected Bank to make or
maintain Revolving Loans and/or Line of Credit
Advances as, or to convert Revolving Loans
and/or Line of Credit Advances to, Base Rate
Loans in accordance with the other terms of
this Loan Agreement.
23. The provisions of Sections 2.4, 2.6, 2.8, 2.9, 2.10, 9
and 10 of the Loan Agreement shall apply to Line of Credit Advances
with the same force and effect as such provisions apply to
Revolving Loans.
24. Section 2.3A of the Loan Agreement is hereby amended and
restated as follows:
2.3A Commitment Fees.
(i) Revolver Commitment Fee. The
Borrower agrees to pay the Agent, for the
benefit of the Banks in proportion to their
respective Commitment Fee Pro Rata Shares,
commitment fees (the "Commitment Fees") for
the period from and including October 11, 1996
to and excluding the Revolving Loan Commitment
Termination Date, equal to the average of the
daily excess of the Revolving Loan Commitments
(as reduced pursuant to Section 2.4C hereof)
over the aggregate principal amount of Revolv-
ing Loans plus the Letter of Credit Usage
multiplied by the Applicable Revolver Commit-
ment Fee per annum. The Commitment Fees shall
be calculated on the basis of a 360-day year
and the actual number of days elapsed and
shall be payable quarterly in arrears on the
last day of each Fiscal Quarter, commencing on
the first such day to occur after October 11,
1996, and on the Revolving Loan Commitment
Termination Date. The Borrower shall have no
liability to any Banks for any Commitments
Fees paid to the Agent which the Agent does
not properly remit to such Banks, and any such
Bank's sole remedy in respect thereof shall be
against the Agent. The Applicable Revolver
Commitment Fee in effect for the Pricing
Period commencing on the first day of each
Fiscal Quarter and continuing for the term of
the Fiscal Quarter that begins on such first
day of the Fiscal Quarter shall be the Appli-
cable Revolver Commitment Fee corresponding to
the Pricing Level in effect for such period,
as applicable:
Applicable Revolver
Pricing Level Commitment Fee
Pricing Level I .175%
Pricing Level II .200%
Pricing Level III .225%
(ii) Line of Credit Commitment Fee.
Borrower agrees to pay to the Agent, for the
benefit of the Banks in proportion to their
respective Line of Credit Commitment Fee Pro
Rata Shares, commitment fees ("the Line of
Credit Commitment Fees") for the period from
and including October 11, 1996 to and exclud-
ing the Line of Credit Termination Date, equal
to the average of the daily excess of the Line
of Credit Commitments (as reduced pursuant to
Section 2.4C hereof) over the aggregate prin-
cipal amount of Line of Credit Advances multi-
plied by one eighth of one percent (0.125%)
per annum. The Line of Credit Commitment Fees
shall be calculated on the basis of a 360-day
year and the actual number of days elapsed and
shall be payable quarterly in arrears on the
last day of each Fiscal Quarter, commencing on
the first such date to occur after October 11,
1996, and on the Line of Credit Commitment
Termination Date. The Borrower shall have no
liability to any Bank for any Line of Credit
Commitment Fees paid to the Agent which the
Agent does not properly remit to such Bank,
and any such Bank's sole remedy and respect
thereof shall be against the Agent.
25. Section 2.7A(i) of the Loan Agreement is hereby amended
and restated in its entirety to read as follows:
2.7A Letters of Credit.
(i) The Borrower may not request
that PNC issue any Letter of Credit if, after
giving effect to such issuance, (y) the total
Letter of Credit Usage would exceed Ten
Million Dollars ($10,000,000), or (z) the
Total Utilization of Revolving Loan Commit-
ments would exceed the Revolving Loan Commit-
ments as the amount available under such
Revolving Loan Commitments may be limited from
time to time pursuant to the second paragraph
of Section 2.1A hereof or shall be reduced
from time to time pursuant to Section 2.4C
hereof.
26. Section 2.7F of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
2.7F Compensation. The Borrower agrees
to pay, without duplication, the following
amounts to PNC with respect to each Letter of
Credit issued by PNC for the account of the
Borrower:
(i) With respect to each Letter of
Credit a letter of credit issuance fee payable
to PNC equal to 1/8th of 1% per annum of the
maximum amount available from time to time to
be drawn under such Letter of Credit, calcu-
lated on the basis of a 360-day year and the
actual number of days elapsed and payable in
immediately available funds quarterly in
advance to PNC until the expiration of such
Letter of Credit;
(ii) With respect to each Letter of
Credit a letter of credit fee (the "Letter of
Credit Fee") payable to PNC for the account of
the Banks (and to be shared by the Banks as
provided in Section 2.7E hereof) equal to the
per annum Applicable Letter of Credit Fee
multiplied by the maximum amount available
from the time to time to be drawn under such
Letter of Credit, calculated on the basis of a
360-day year and the actual number of days
elapsed and payable in immediately available
funds quarterly in advance on the first Busi-
ness Day immediately succeeding the last day
of each Fiscal Quarter and upon expiration of
such Letter of Credit; provided, however, upon
the occurrence and during the continuation of
any Event of Default, the Letter of Credit Fee
shall equal two percent (2%) per annum plus
the Applicable Letter of Credit Fee in effect
on the date of the occurrence of such Event of
Default;
On each Date of Determination, commencing
with the first such date to occur after
October 11, 1996, the Applicable Letter of
Credit Fee in effect for the Pricing Period
commencing on such Date of Determination and
continuing for the term of the Pricing Period
that begins on such Date of Determination
shall be the Applicable Letter of Credit Fee
corresponding to the Pricing Level in effect
for such Pricing Period, as follows:
Applicable Letter
Pricing Level of Credit Fee
Pricing Level I .500%
Pricing Level II .575%
Pricing Level III .625%
(iii) With respect to drawings made
under any Letter of Credit, interest, payable
in immediately available funds to PNC on
demand, on the amount paid by PNC in respect
of each drawing from the date of the drawing
through the date such amount is reimbursed by
the Borrower at a variable rate equal to the
Base Rate then in effect for Base Rate Loans
made or available to be made to the Borrower;
(iv) With respect to the issuance,
amendment or transfer of each Letter of Credit
and each drawing made thereunder, documentary
and processing charges payable to PNC in
accordance with PNC's standard schedule for
such charges in effect at the time of such
issuance, amendment, transfer or drawing, as
the case may be; and
(v) Promptly upon receipt by PNC of
the amount described in subsections (ii) and
(iii) of this Section 2.7F, PNC shall distrib-
ute to each Bank its pro rata share of such
amount.
27. Section 2 of the Loan Agreement is hereby amended by
adding Subsection 2.11 as follows:
2.11 Swing Line Loans.
A. Swing Line Loan Commitment.
Subject to the terms and conditions of this
Loan Agreement and in reliance upon the repre-
sentations and warranties of the Borrower set
forth herein, PNC hereby agrees, subject to
the limitations set forth below with respect
to the maximum amount of Swing Line Loans per-
mitted to be outstanding from time to time, to
make a portion of its Revolving Loan Commit-
ment and a portion of its Line of Credit
Commitment available to the Borrower from time
to time during the period up to but not in-
cluding the Revolving Loan Commitment Termina-
tion Date and the Line of Credit Commitment
Termination Date, respectively, in an aggre-
gate principal amount of up to Five Million
Dollars ($5,000,000.00), by making Swing Line
Loans to the Borrower, notwithstanding the
fact that such Swing Line Loans, when aggre-
gated with PNC's outstanding Revolving Loans
and Line of Credit Advances, may exceed PNC's
Revolving Loan Commitment or its Line of
Credit Commitment. PNC's commitment to make
Swing Line Loans to the Borrower pursuant to
this Section 2.11 is herein called its "Swing
Line Loan Commitment." In no event shall (a)
the aggregate principal amount of Swing Line
Loans outstanding at any time exceed the Swing
Line Loan Commitment, or (b) the aggregate
principal amount of Revolving Loans, Line of
Credit Advances and Swing Line Loans outstand-
ing at any time exceed the sum of the aggre-
gate Revolving Loan Commitments reduced by the
aggregate Letter of Credit Usage at such time
plus the aggregate Line of Credit Commitments.
Any reduction of the Revolving Loan Commit-
ments or the Line of Credit Commitments made
pursuant to Section 2.4 hereof which reduces
the Revolving Loan Commitments and the Line of
Credit Commitments below the then current
amount of the Swing Line Loan Commitment shall
result in an automatic corresponding reduction
of the Swing Line Loan Commitment to the
amount of the Revolving Loan Commitments and
Line of Credit Commitments, as so reduced,
without any further action on the part of PNC.
PNC's Swing Line Loan Commitment shall
constitute a 364-day facility and shall be
renewable from time to time at the sole option
of PNC upon not less than thirty (30) days'
prior written notice to the Borrower; provid-
ed, that all outstanding Swing Line Loans on
the date of cancellation of the Swing Line
Loan Commitment, if such date is earlier than
the Revolving Loan Commitment Termination Date
or the Line of Credit Commitment Termination
Date shall be paid in full to PNC with Revolv-
ing Loans and/or Line of Credit Advances made
by the Banks in accordance with their respec-
tive Pro Rata Shares in the manner set forth
in Section 2.1D herein; provided further, the
Swing Line Commitment shall expire on either
the Revolving Loan Commitment Termination Date
or the Line of Credit Termination Date and all
Swing Line Loans shall be paid in full to PNC
no later than such date.
All Swing Line Loans shall bear interest
on the unpaid principal amount thereof from
the date made through maturity (whether by
acceleration or otherwise) at a rate per annum
equal to the Offered Rate, shall be payable
monthly in arrears and shall not be entitled
to be converted into LIBOR Rate Loans unless
and until such Swing Line Loans are converted
to Revolving Loans or Line of Credit Advances
in accordance with Section 2.11C hereof.
Swing Line Loans made on any Funding Date may
be in any amount up to Five Million Dollars
($5,000,000.00), or, if less, the positive
difference between Five Million Dollars
($5,000,000.00) and the aggregate principal
amount of all Swing Line Loans then outstand-
ing. All Swing Line Loans together with
accrued interest thereon shall be evidenced by
the Swing Line Note. All Swing Line Loans
shall be paid in full to PNC on the Swing Line
Loan Commitment Termination Date.
B. Request For Swing Line Loans.
Whenever the Borrower desires to obtain a
Swing Line Loan pursuant to Section 2.11A
hereof, it shall deliver to PNC a Request For
Swing Line Loan no later than 1:00 P.M.
(Louisville, Kentucky time) on the proposed
Funding Date. The Request For Swing Line Loan
shall specify (i) the proposed Funding Date
(which shall be a Business Day), and (ii) the
amount of the proposed Swing Line Loan. In
lieu of delivering the above-described Request
For Swing Line Loan, the Borrower may give PNC
telephonic notice by the required time of any
proposed borrowing under this Section 2.11B;
provided that such notice shall be promptly
confirmed in writing by delivery of a Request
For Swing Line Loan to PNC prior to or prompt-
ly after the Funding Date of the requested
Swing Line Loan.
Neither the Agent nor any Bank shall
incur any liability to the Borrower in acting
upon any telephonic notice referred to above
which PNC believes in good faith to have been
given by a duly Authorized Officer or other
Person authorized to borrow on behalf of the
Borrower or for otherwise acting in good faith
under this Section 2.11B and, upon funding of
Swing Line Loans by PNC in accordance with
this Loan Agreement pursuant to any telephonic
notice, the Borrower shall have effected such
Swing Line Loans hereunder.
C. Reimbursement to PNC for Swing
Line Loans. PNC shall notify each Bank on
Tuesday of each week of any Swing Line Loans
that are outstanding, and, within one (1)
Business Day after receipt of such notice,
each Bank, including PNC, shall make a Revolv-
ing Loan (which shall initially be funded as a
Base Rate Loan) or a Line of Credit Advance
(which shall initially be funded as a Base
Rate Loan), in each case as directed by PNC,
in an amount equal to such Bank's Pro Rata
Share of the amount of the Swing Line Loans
outstanding on the date notice is given to the
Banks to fund their Pro Rata Shares of the
Swing Line Loans; provided, however, the
obligation of each Bank to make any such Re-
volving Loan or Line of Credit Advance is sub-
ject to the condition that (i) PNC believed in
good faith that all conditions under Section
2.1C(f) hereof to the making of such Swing
Line Loan were satisfied at the time such
Swing Line Loan was made, or (ii) the satis-
faction of any such condition not satisfied
had been waived by the Requisite Banks prior
to or at the time such Swing Line Loan was
made. In the case of Revolving Loans or Line
of Credit Advances made by Banks other than
PNC under the immediately preceding sentence,
each such Bank shall make the amount of its
Revolving Loan or Line of Credit Advance
available to the Agent, in same day funds, at
the office of the Agent located at 500 West
Jefferson Street, Louisville, Kentucky 40202,
not later than 1:00 P.M. (Louisville, Kentucky
time) on the required Business Day. The
proceeds of such Revolving Loans or Line of
Credit Advances shall be immediately delivered
to PNC (and not to the Borrower) and applied
to repay the outstanding Swing Line Loans. On
the day such Revolving Loans or Line of Credit
Advances are made, PNC's Pro Rata Share of the
outstanding Swing Line Loans shall be deemed
to be paid with the proceeds of a Revolving
Loan or Line of Credit Advance made by PNC and
such portion of the Swing Line Loans deemed to
be so paid shall no longer be outstanding as
Swing Line Loans, shall no longer be due under
the Swing Line Note and shall be due under the
Revolving Note issued by the Borrower to PNC
or the PNC Line of Credit Note. The Borrower
authorizes the Agent to charge the Borrower's
accounts with the Agent (up to the amount
available in each such account) in order to
immediately pay PNC the amount of such out-
standing Swing Line Loans to the extent
amounts received from the Banks, including
amounts deemed to be received from PNC, are
not sufficient to repay in full such outstand-
ing Swing Line Loans. If any portion of any
such amount paid (or deemed to be paid) to PNC
should be recovered by or on behalf of the
Borrower from PNC in bankruptcy, by assignment
for the benefit of creditors or otherwise, the
loss of the amount so recovered shall be
ratably shared among all of the Banks that
have made Revolving Loans or Line of Credit
Advances pursuant to this Section 2.11C in the
manner contemplated by Section 10 hereof.
Subject to the proviso contained in the first
sentence of this paragraph, each Bank's obli-
gation to make the Revolving Loans referred to
in this Section 2.11C and each Bank's obliga-
tion to make Line of Credit Advances shall be
absolute and unconditional and shall not be
affected by any circumstance, including,
without limitation, (i) any set-off, counter-
claim, recoupment, defense or other right
which such Bank may have against PNC, the
Borrower or anyone else for any reason whatso-
ever; (ii) the occurrence or continuance of an
Event of Default or a Potential Event of
Default; (iii) any adverse change in the con-
dition (financial or otherwise) of the Bor-
rower; (iv) the acceleration or maturity of
any Revolving Loans or the termination of the
Revolving Loan Commitments after the making of
any Swing Line Loan; (v) the acceleration or
maturity of any Line of Credit Advances or the
termination of the Line of Credit Commitments
after the making of any Swing Line Loan; (vi)
any breach of this Loan Agreement by the
Borrower or any other Bank; or (vii) any other
circumstance, happening or event whatsoever,
whether or not similar to any of the forego-
ing. All Swing Line Loans outstanding on the
Revolving Loan Commitment Termination Date or
on the Line of Credit Commitment Termination
Date shall be paid in full to PNC on such
date.
In the event that the Borrower has filed
for protection under the Bankruptcy Code or
any other bankruptcy laws, each Bank shall
upon request by PNC acquire without recourse
or warranty an undivided participation inter-
est equal to such Bank's Pro Rata Share of any
Swing Line Loan otherwise required to be
repaid by such Bank pursuant to the preceding
paragraph by paying to PNC on the date on
which such Bank would otherwise have been
required to make a Revolving Loan or Line of
Credit Advance in respect of such Swing Line
Loan pursuant to the preceding paragraph, in
immediately available funds, an amount equal
to such Bank's Pro Rata Share of such Swing
Line Loan, and no Revolving Loans and no Line
of Credit Advances shall be made by such Bank
pursuant to the preceding paragraph. If such
amount is not in fact made available to PNC by
that Bank on the date when Revolving Loans or
Line of Credit Advances would otherwise be re-
quired to be made pursuant to the preceding
paragraph, PNC shall be entitled to recover
such amount on demand from that Bank together
with interest accrued from such date at the
customary rate set by PNC for the correction
of errors among banks for three Business Days
and thereafter at the Base Rate. From and
after the date on which any Bank purchases an
undivided participation interest in a Swing
Line Loan pursuant to this paragraph, PNC
shall promptly distribute to such Bank such
Bank's Pro Rata Share of all payments of
principal and interest in respect of such
Swing Line Loan.
A copy of each notice given by PNC to the
Banks pursuant to the second preceding para-
graph shall be promptly delivered by PNC to
the Borrower. Upon the making of a Revolving
Loan or a Line of Credit Advance by a Bank
pursuant to this Section 2.11C, the amount so
funded shall become due under the Revolving
Note or the Line of Credit Note issued by the
Borrower to such Bank and shall no longer be
owed under the Swing Line Note.
Notwithstanding anything herein to the
contrary, PNC shall not be obligated to make
any Swing Line Loans if it has elected after
the occurrence of a Potential Event of Default
or Event of Default not to make Swing Line
Loans and has notified the Borrower in writing
or by telephone of such election. PNC shall
promptly give notice to the Banks of such
election not to make Swing Line Loans.
28. Section 4.19 of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
4.19 Employee Retirement Income Security
Act of 1974. The Borrower (a) has not in-
curred any material accumulated funding defi-
ciency within the meaning of ERISA, (b) has
not incurred any material liability to the
Pension Benefit Guaranty Corporation estab-
lished under ERISA (or any successor thereto
under ERISA) in connection with any employee
benefit plan established or maintained by the
Borrower, nor has the Borrower had any tax
assessed against it by the Internal Revenue
Service for any alleged violation under Sec-
tion 4975 of the Internal Revenue Code, and
(c) has not and does not participate in any
Multi-Employer Pension Plan within the meaning
of Section 3(37) of ERISA except as approved
by the Banks and set forth on Schedule 4.19
attached hereto. Further, to the Borrower's
knowledge, each employee benefit plan estab-
lished or maintained by the Borrower is in
compliance in all material respects with ERISA
and all other applicable laws, and no pro-
hibited transaction within the meaning of
Section 4975 of the Internal Revenue Code has
occurred with respect to any such employee
benefit plan established or maintained by the
Borrower.
29. Section 6.2 of the Loan Agreement is hereby amended to
add Subsections (f) and (g) thereto as follows:
(f) the Line of Credit Notes.
(g) the Swing Line Note.
30. Section 6.5(vi) of the Loan Agreement is hereby amended
and restated in its entirety and Section 6.5 of the Loan Agreement
is hereby amended to add subsection (ix) thereto as follows:
(vi) The Borrower may extend, renew
and/or reissue from time to time, any guaran-
ties of payment up to an aggregate amount of
Six Million Two Hundred fifty Thousand Dollars
($6,250,000.00) of the unpaid principal of
and/or unpaid interest on each and every
promissory note now or hereafter issued by Mi-
Tech Steel, Inc;
(ix) So long as no Event of Default
or Potential Event of Default has occurred and
is continuing or would result therefrom, the
Borrower (A) may contribute capital and/or
make loans to Mi-Tech Steel, Inc. or guaranty
the obligations of Mi-Tech Steel, Inc. in an
aggregate amount not to exceed Ten Million
Dollars ($10,000,000.00) during the term of
the Loan Agreement, and (B) may increase its
existing investment in and/or make loans to
its other Consolidated Subsidiaries.
31. Section 6.9 of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
6.9 Consolidated Total Debt to Consoli-
dated to Total Capitalization. The Borrower
will not permit the ratio of its Consolidated
Total Debt to its Consolidated Total Capital-
ization to exceed .55 to 1 as of any Fiscal
Quarter end.
32. Section 6.11 of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
6.11 Minimum Consolidated Tangible Net Worth.
The Borrower will not permit its Consolidated
Tangible Net Worth:
(i) As of September 30, 1996 to be
less than Eighty-Five Million Dollars
($85,000,000.00); and
(ii) As of each subsequent Fiscal
Quarter end of the Borrower after September
30, 1996, to be less than the sum of the
Minimum Consolidated Tangible Net Worth re-
quired of the Borrower as of the immediately
preceding Fiscal Quarter end plus fifty per-
cent (50%) of the Borrower's Consolidated Net
Income for its Fiscal Quarter then ended plus
one hundred percent (100%) of the net proceeds
from any equity offering completed after
October 11, 1996.
For purposes of this Section 6.11, any net
losses hereinafter incurred by the Borrower
will not reduce the amount of the Minimum
Consolidated Tangible Net Worth required to be
maintained by the Borrower pursuant to this
Section 6.11.
33. The Borrower represents and warrants that no Event of
Default has occurred to date under the Loan Agreement.
34. This Fourth Amendment may be executed in one or more
counterparts, each of which shall constitute an original and all of
the same shall constitute one and the same instrument.
35. This Fourth Amendment shall be effective as of the later
of (a) October 14, 1996, or (b) the date of delivery of the
following documents to the Banks and/or the Agent:
(a) This Fourth Amendment, duly executed by the
Borrower; and
(b) An Amended and Restated Revolving Promissory Note
in the face principal amount of Eleven Million Two Hundred Fifty
Thousand Dollars ($11,250,000.00) made payable to the order of PNC,
duly executed by the Borrower, in the form of Exhibit D attached
hereto and made a part hereof;
(c) An Amended and Restated Revolving Promissory Note
in the face principal amount of Three Million Seven Hundred Fifty
Thousand Dollars ($3,750,000.00) made payable to the order of
National City, duly executed by the Borrower, in the form of
Exhibit E attached hereto and made a part hereof;
(d) An Amended and Restated Revolving Promissory Note
in the face principal amount of Seven Million Five Hundred Thousand
Dollars ($7,500,000.00) made payable to the order of NBD, duly
executed by the Borrower, in the form of Exhibit F attached hereto
and made a part hereof;
(e) An Amended and Restated Revolving Promissory Note
in the face principal amount of Seven Million Five Hundred Thousand
Dollars ($7,500,000.00) made payable to the order of SunTrust, duly
executed by the Borrower, in the form of Exhibit G attached hereto
and made a part hereof;
(f) The Line of Credit Promissory Note in the face
principal amount of Nine Million Three Hundred Seventy-Five
Thousand Dollars ($9,375,000.00) made payable to the order of PNC,
duly executed by the Borrower, in the form of Exhibit H attached
hereto and made a part hereof;
(g) The Line of Credit Promissory Note in the face
principal amount of Three Million One Hundred Twenty-Five Thousand
Dollars ($3,125,000.00) made payable to the order of National City,
duly executed by the Borrower, in the form of Exhibit I attached
hereto and made a part hereof;
(h) The Line of Credit Promissory Note in the face
principal amount of Six Million Two Hundred Fifty Thousand Dollars
($6,250,000.00) made payable to the order of NBD, duly executed by
the Borrower, in the form of Exhibit J attached hereto and made a
part hereof;
(i) The Line of Credit Promissory Note in the face
principal amount of Six Million Two Hundred Fifty Thousand Dollars
($6,250,000.00) made payable to the order of SunTrust, duly
executed by the Borrower, in the form of Exhibit K attached hereto
and made a part hereof;
(j) The Second Ratification and Reaffirmation
Agreement, duly executed by Wabash Steel Corporation;
(k) Certified Resolutions of the Board of Directors of
the Borrower, authorizing the Borrower's execution and delivery of
the Loan Instruments;
(l) Certified Resolutions of the Board of Directors of
Wabash Steel Corporation, authorizing its execution and delivery of
the Second Ratification and Reaffirmation Agreement; and
(m) A supplemental written opinion of counsel on behalf
of the Borrower and Wabash Steel Corporation, substantially in the
form of Exhibit L attached hereto and made a part hereof.
(n) The Promissory Note in the face principal amount of
Five Million Dollars ($5,000,000.00) made payable to the order of
PNC, duly executed by the Borrower, in the form of Exhibit N
attached hereto and made a part hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to Loan Agreement to be duly executed as of the day and
year first above written.
STEEL TECHNOLOGIES INC.
By: /s/ Kenneth R. Bates
Its: Chief Financial Officer
(the "Borrower")
PNC BANK, KENTUCKY, INC.
By: /s/ Ralph A. Phillips
Title: Vice President
Address: PNC Bank, Kentucky, Inc.
Citizens Plaza
500 West Jefferson Street
Louisville, KY 40202
Attn: Ralph A. Phillips,
Vice President
Telephone: (502) 581-4543
Telecopy: (502) 581-2302
("PNC")
NATIONAL CITY BANK OF KENTUCKY
By: /s/ Deroy Scott
Title: Vice President
Address: 101 South Fifth Street
Louisville, KY 40202
Attn: Deroy Scott,
Vice President
Telephone: (502) 581-7821
Telecopy: (502) 581-4424
("National City")
NBD BANK, N.A.
By: /s/ Randall K. Stephens
Title: Vice President
Address: One Indiana Square
Suite 302
Indianapolis, IN 46266
Attn: Randall K. Stephens,
Vice President
Telephone: (317) 266-6704
Telecopy: (317) 266-6042
("NBD")
SUNTRUST BANK, NASHVILLE, N.A.
By: /s/ Jeffrey L. Howard
Title: Group Vice President
Address: 201 Fourth Avenue North
Nashville, TN 37219
Attn: Jeffrey L. Howard,
Group Vice
President
Telephone: (615) 748-5579
Telecopy: (615) 259-4119
("SunTrust")
(collectively, the "Banks")
PNC BANK, KENTUCKY, INC., in its
capacity as Agent
By: /s/ Ralph A. Phillips
Title: Vice President
(the "Agent")
B:\4AM-LA.D-5
- 26 -
- 32 -
STEEL TECHNOLOGIES INC.
NONEMPLOYEE DIRECTORS STOCK PLAN
1. Purpose. The Steel Technologies Inc. Nonemployee Directors
Stock Plan (the "Plan") is intended to increase the proprietary
interest of nonemployee members of the Board of Directors (the
"Board") of Steel Technologies Inc. (the "Company") by providing
further opportunity for ownership of the Company's common stock
(the "Stock"), and to increase their incentive to contribute to
the success of the Company's business.
2. Shares of Stock.
(a) Shares Reserved for Issuance. Shares of Stock which
may be issued under the Plan may either be authorized but
unissued shares or issued shares which have been reacquired by
the Company, provided that the total number of shares of Stock
which shall be reserved and available for issuance under the Plan
shall not exceed 25,000 shares, subject to adjustment pursuant to
paragraph (b) below.
(b) Capital Adjustments. In the event of a change in the
number or class of shares of Stock as a result of any
reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation or other similar
change in capitalization, the maximum number or class of shares
available for issuance under the Plan, and the number or class of
shares of Stock to be delivered hereunder shall be
proportionately adjusted to reflect any such change.
3. Stock in Lieu of Directors Fees.
(a) Mandatory Portion. For each calendar year commencing
with the calendar year beginning January 1, 1997, each member of
the Board who is not an employee of the Company or any of its
subsidiaries (an "Eligible Director") and has not attained, as of
the first day of any such year, the age of 60, shall receive a
whole number of shares of Stock equal in value to 50% of the
annual retainer fee (the "Fee") to be earned by the Eligible
Director during each such calendar year. Such shares of Stock
shall be received in lieu of the payment of cash in respect of
50% of such Fee. Such shares shall be issued to each Eligible
Director, in substantially equal installments, on the last
business day of each calendar quarter of each such calendar year
(the "Normal Stock Payment Date"), except to the extent that a
Deferral Election (as defined in Section 4 hereof) shall be in
effect with respect to such shares or to the extent that Section
6 hereof applies.
The number of shares of Stock which each Eligible Director
shall be entitled to receive pursuant to this paragraph (a) shall
be equal to 50% of the amount of the Fee which otherwise would
have been payable to such Eligible Director during the calendar
quarter divided by the Fair Market Value (as hereinafter defined)
on the last trading day immediately preceding each Normal Stock
Payment Date. "Fair Market Value" shall mean, as of any
specified date, the average of the high and low trading price of
a share of Stock as reported on the National Association of
Securities Dealers Automated Quotation System or, if the Stock is
admitted to trade on a national securities exchange, on such
exchange. The value of fractional shares shall be paid to the
Eligible Director in cash.
(b) Elective Portion. In addition to the shares of Stock
received pursuant to Section 3(a) hereof, for each calendar year
commencing with the calendar year beginning January 1, 1997, (i)
each Eligible Director subject to Section 3(a) hereof may elect
to receive a whole number of shares of Stock equal in value
(determined in accordance with paragraph (a) above) to not more
than 50% of his or her Fee to be earned by the Eligible Director
during each such calendar year, and (ii) each Eligible Director
not subject to Section 3(a) hereof may elect to receive a whole
number of shares of Stock equal in value (determined in
accordance with paragraph (a) above) to not more than 100% of his
or her Fee to be earned by the Eligible Director during each such
calendar year. Such shares of Stock shall be received in lieu of
the payment of cash in respect of the specified percentage (which
shall be in increments of 10%) of such Fee. Such shares shall be
issued to each such Eligible Director, in substantially equal
installments, on the Normal Stock Payment Dates, except to the
extent that a Deferral Election (as defined in Section 4 hereof)
shall be in effect with respect to such shares or to the extent
that Section 6 hereof applies. The value of fractional shares
shall be paid to the Eligible Director in cash.
4. Deferral Election.
(a) Participant Account. Each Eligible Director may elect
to defer the receipt (a "Deferral Election") of all or a portion
of the shares of Stock otherwise issuable on a Normal Stock
Payment Date pursuant to Sections 3(a) or 3(b) hereof. In such
event, there shall be credited to an account established and
maintained on behalf of such Eligible Director, as of the date on
which shares of Stock would otherwise be issued hereunder, a
number of shares ("Deferred Shares") equal to the number of
shares otherwise issuable on such date.
(b) Distribution of Shares. The Eligible Director shall
elect that Deferred Shares be distributed in a lump sum or in
equal annual installments (not exceeding ten), with the lump sum
or first installment to be distributed on the tenth day of the
calendar month immediately following either (i) the month in
which the director ceases to be a director of the Company or (ii)
the earlier of the month in which the director ceases to be a
director of the Company or a date designated by the director;
provided, however, that the foregoing shall be subject to Section
6 hereof. Installments subsequent to the first installment shall
be distributed on each successive anniversary date of the first
installment until all of the Eligible Director's Deferred Shares
shall have been distributed.
In the event the Eligible Director should die before all of
the director's Deferred Shares have been distributed, the balance
of the Deferred Shares shall be distributed in a lump sum to the
beneficiary or beneficiaries designated in writing by the
Eligible Director, or if no designation has been made, to the
estate of the Eligible Director as soon as reasonably practicable
following the death of the Eligible Director.
(c) Dividend Equivalents. Deferred Shares shall be
credited with an amount equivalent to the dividends which would
have been paid on an equal number of outstanding shares of Stock
("Dividend Equivalents"). Dividend Equivalents shall be credited
(i) as of the payment date of such dividends, and (ii) only with
respect to Deferred Shares which were otherwise issuable as of a
Normal Stock Payment Date, or into which Dividend Equivalents
were converted pursuant to the second paragraph of this Section
4(c), prior to the record date of the dividend. Deferred Shares
held pending distribution shall continue to be credited with
Dividend Equivalents.
Dividend Equivalents so credited shall be converted into an
additional whole number of Deferred Shares as of the payment date
of the dividend (based on the Fair Market Value of the Stock on
such payment date). Such Deferred Shares shall thereafter be
treated in the same manner as any other Deferred Shares under the
Plan. Dividend Equivalents resulting in fractional shares shall
be held and accumulated for the credit of the Eligible Director
until the next dividend payment date and until the amount of such
Dividend Equivalents representing fractional shares is sufficient
in amount to be converted into a whole number of Deferred Shares.
Any Dividend Equivalents not converted into Deferred Shares
shall be paid in cash upon the final distribution of the Eligible
Director's Deferred Shares.
5. Timing and Form of Elections. Any election described in
Sections 3(b) and 4 hereof:
(a) shall be in the form of a document executed by the
director and filed with the Secretary of the Company;
(b) shall be made before the first day of the calendar year
in which the Fee is to be earned or, in the case of a new
Eligible Director, before the date he or she is first elected or
appointed to the Board (any such election or appointment by a new
Eligible Director shall become effective on the date he or she is
first elected or appointed to the Board); and
(c) shall continue until a director ceases to be a director
of the Company or until he or she terminates or modifies such
election by written notice to the Secretary of the Company, as
described below.
An effective election may not be revoked or modified (except
as to changes in the designation of a beneficiary or
beneficiaries) with respect to Fees payable for a calendar year
or portion of a calendar year for which such election is
effective. Such election, unless terminated or modified as
described below, shall apply to Fees payable with respect to each
subsequent calendar year. An effective election may be
terminated or modified for any subsequent calendar year by the
filing of an election, on or before December 31 of the preceding
calendar year for which such modification or termination is to be
effective. If a Deferral Election is terminated, shares of Stock
the receipt of which has previously been deferred shall be
distributed only in accordance with the provisions of Section
4(b) hereof.
6. Effect of Certain Events. Notwithstanding an election
pursuant to Section 3(b) or Section 4 hereof:
(a) If, as determined by the Board in its sole discretion,
the director (during or following his or her membership on the
Board) engaged in any activity or association in competition with
or adverse or detrimental to the interest of the Company (i) all
of such director's Deferred Shares shall be distributed
immediately in the form of shares of Stock, (ii) all of such
director's Dividend Equivalents not yet converted into Deferred
Shares shall be distributed immediately in cash, and (iii) all of
such director's cash compensation earned and not yet converted
into shares of Stock or Deferred Shares under the terms of this
Plan shall be distributed in the form of shares of Stock as soon
as practicable after the next Normal Stock Payment Date.
(b) Upon the occurrence of a Change in Control (as defined
below), (i) all Deferred Shares to the extent credited prior to
the Change in Control shall be distributed immediately in the
form of shares of Stock or their cash equivalent value, and (ii)
all Dividend Equivalents not yet converted into Deferred Shares
and all cash compensation earned and not yet converted into
shares of Stock or Deferred Shares under the terms of this Plan
shall be distributed immediately in cash.
(c) For purposes of the Plan, "Change in Control" shall
mean a change in control of the Company which shall be deemed to
have occurred if:
(i) any Person (as defined in this Section 6) is or
becomes the Beneficial Owner (as defined in this Section 6) of
securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding
securities (unless (A) such Person is the Beneficial Owner of 25%
or more of such securities as of the date of adoption of this
Plan by the Board or (B) the event causing the 25% threshold to
be crossed is an acquisition of securities directly from the
Company);
(ii) during any period of two consecutive years
beginning after the date of adoption of this Plan by the Board,
individuals who at the beginning of such period constitute the
Board and any new director (other than a director designated by a
person who has entered into an agreement with the Company to
effect a transaction described in clause (i), (iii) or (iv) of
this Change in Control definition) whose election or nomination
for election was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved cease for any reason to
constitute a majority of the Board;
(iii) the shareholders of the Company approve a merger
or consolidation of the Company with any other corporation (other
than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the entity surviving
such merger or consolidation), in combination with voting
securities of the Company or such surviving entity held by a
trustee or other fiduciary pursuant to any employee benefit plan
of the Company or such surviving entity or of any Subsidiary of
the Company or such surviving entity, at least 75% of the
combined voting power of the securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation); or
(iv) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(d) For purposes of the definition of Change in Control,
"Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as supplemented by Section 13(d)(3) of the
Exchange Act; provided, however, that "Person" shall not include
(i) the Company, any subsidiary of the Company or any other
Person controlled by the Company, (ii) any trustee or other
fiduciary holding securities under any employee benefit plan of
the Company or of any subsidiary of the Company, or (iii) a
corporation owned, directly or indirectly, by the shareholders of
the Company in substantially the same proportions as their
ownership of securities of the Company.
(e) For purposes of the definition of Change in Control, a
Person shall be deemed the "Beneficial Owner" of any securities
which such Person, directly or indirectly, has the right to vote
or dispose of or has "beneficial ownership" (within the meaning
of Rule 13d-3 under the Exchange Act) of, including pursuant to
any agreement, arrangement or understanding (whether or not in
writing); provided, however, that: (i) a Person shall not be
deemed the Beneficial Owner of any security as a result of an
agreement, arrangement or understanding to vote such security (x)
arising solely from a revocable proxy or consent given in
response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the Exchange Act and the applicable
rules and regulations thereunder or (y) made in connection with,
or to otherwise participate in, a proxy or consent solicitation
made, or to be made, pursuant to, and in accordance with, the
applicable provisions of the Exchange Act and the applicable
rules and regulations thereunder; in either case described in
clause (x) or clause (y) above, whether or not such agreement,
arrangement or understanding is also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable
or successor report); and (ii) a Person engaged in business as an
underwriter of securities shall not be deemed to be the
Beneficial Owner of any securities acquired through such Person's
participation in good faith in a firm commitment underwriting
until the expiration of forty days after the date of such
acquisition.
The provisions of this Section 6 shall not apply to the
extent inconsistent with the requirements of Rule 16b-3 under the
Exchange Act, as the same may be interpreted from time to time.
7. Unfunded Promise to Pay. Nothing in this Plan shall require
the segregation of any assets of the Company or any type of
funding by the Company of the deferred amounts payable hereunder,
it being the intention of the parties that the Plan be an
unfunded arrangement for federal income tax purposes.
8. Nonassignability. No amount due or payable under Section 4
of the Plan or any interest in the Plan, shall be subject in any
manner to alienation, sale, transfer, assignment, pledge,
attachment, garnishment, lien, levy or like encumbrance. No such
amount shall in any manner be liable for or subject to the debts
or obligations of any Eligible Director. Prior to delivery of
Deferred Shares by the Company pursuant to Section 4, no director
shall have any right to transfer or assign any Deferred Shares,
or any right to receive any Deferred Shares, credited to him
pursuant to Section 4 of this Plan. Any purported assignment
shall be null and void.
9. Director's Rights Unsecured. The right of an Eligible
Director to receive any shares of Stock hereunder shall rank as a
general unsecured claim against the Company. Assets that may be
set aside for the Company's convenience with respect to the Plan
shall not in any way be held in trust for, or be subject to any
prior claim by, an Eligible Director or beneficiary.
10. Term of Plan. The Plan shall become effective upon its
approval by the Board and shall apply to all Fees earned by
Eligible Directors for services rendered to the Company on and
after January 1, 1997. The Plan shall remain in effect until all
shares of Stock reserved for issuance hereunder have been issued,
unless sooner terminated by the Board.
11. Administration of the Plan. This Plan shall be administered
by the Secretary of the Company, who shall have the authority to
adopt rules and regulations for carrying out the Plan and to
interpret, construe and implement the provisions thereof.
12. Amendment and Termination. The Board may at any time and
from time to time alter, amend, suspend or terminate the Plan in
whole or in part; provided, however, that the provisions of
Section 3(a) hereof shall not be amended more than once every six
months, other than to conform with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act or the
rules thereunder. No amendment, modification or termination of
the Plan shall in any manner adversely affect the rights of any
Eligible Director with respect to shares of Stock to which he or
she became entitled prior to such amendment, modification or
termination or with respect to Deferred Shares that have been
credited to his or her account pursuant to Section 4(a) hereof.
Except as provided in Section 6 hereof, in the event the
Plan is terminated, Deferred Shares and Dividend Equivalents
shall be distributed at such time and in such manner as the Board
shall determine, no later than they would have been distributed
pursuant to the election applicable thereto.
13. Compliance with Securities Laws. The Company may require
any Eligible Director to whom Stock is issued, as a condition of
receiving such Stock, to give written assurances in substance and
form satisfactory to the Company and its counsel to the effect
that such person is acquiring the Stock for his or her own
account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other
effects as the Company deems necessary or appropriate in order to
comply with Federal and applicable state securities laws.
14. Right to Continue as Director. Nothing in this Plan shall
be construed as conferring any right upon any director to
continuance as a member of the Board.
15. No Shareholder Rights Conferred. Nothing in this Plan shall
be deemed to confer on an Eligible Director any rights of a
shareholder with regard to shares of Stock (including Deferred
Shares) until such shares are issued and delivered pursuant to
the terms of the Plan.
16. Compliance with Rule 16b-3. This Plan is intended to comply
with the applicable provisions of Rule 16b-3, as amended from
time to time, under the Exchange Act, and shall be construed to
so comply.
17. Governing Law. This Plan and all rights hereunder shall be
construed in accordance with and governed by the laws of the
Commonwealth of Kentucky.
COLLECTIVE BARGAINING
AGREEMENT
STEEL TECHNOLOGIES, INC.
and the
INTERNATIONAL UNION,
UNITED AUTOMOBILE, AEROSPACE,
AND AGRICULTURAL IMPLEMENT WORKERS
OF AMERICA (UAW)
EFFECTIVE APRIL 15, 1996
INDEX
ARTICLES PAGE
I RECOGNITION 1
II PURPOSE & INTENT 3
III RIGHTS OF MANAGEMENT 5
IV UNION MEMBERSHIP 8
V DUES CHECK-OFF 10
VI V-CAP VOLUNTARY CHECK-OFF 13
VII NO STRIKES/NO LOCK-OUTS 14
VIII GRIEVANCE & ARBITRATION PROCEDURE 19
IX REPRESENTATION 27
X EMPLOYEE ASSISTANCE & CORRECTIVE ACTION 34
XI ATTENDANCE CONTROL 39
XII SENIORITY 43
XIII HOURS & OVERTIME 50
XIV JOB VACANCIES 55
XV VACATION 58
XVI HOLIDAYS 62
XVII FUNERAL LEAVE 64
XVIII JURY DUTY 65
XIX LEAVES OF ABSENCE 66
XX HEALTH & SAFETY 74
XXI NON-DISCRIMINATION 75
XXII UNIFORMS 76
XXIII UNION BULLETIN BOARD 77
XXIV WAGES & BENEFITS 78
XXV MISCELLANEOUS 79
XXVI CONTRACT TERM 86
ATTACHMENTS PAGE
APPENDIX "A" (WAGE RATES) 89
APPENDIX "B" (INSURANCE & RETIREMENT BENEFITS) 93
APPENDIX "C" (AETNA OPEN CHOICE PPO PLAN) 95
APPENDIX "D" (DELTA DENTAL PLAN OF MICHIGAN) 98
APPENDIX "E" (GROUP POLICY 35468) 100
LETTER 96-1 103
COLLECTIVE BARGAINING AGREEMENT
This collective bargaining agreement is entered into between Steel
Technologies, Inc., (the "Company") and the International Union, United
Automobile, Aerospace, and Agricultural Implement Workers of America (UAW) (the
"Union").
ARTICLE I
RECOGNITION
Section 1.
The Company recognizes the Union as the exclusive representative of all
production and maintenance employees employed by the Company at its facility
located at 5501 Belleville Road, Canton, Michigan.
Section 2.
Should the Company relocate the plant to a new facility within a 50-mile
radius of 5501 Belleville Road, Canton, Michigan, all displaced bargaining unit
employees will be afforded the opportunity to transfer to the new plant. Such
transfer rights will apply to any phased or partial relocation as well as a
full-scale relocation. If a majority of the employees hired to staff the
new plant are UAW members from the Canton plant, the Company shall recognize
the Union at the new facility. The Company shall not hire excess employees
for the purpose of denying the UAW recognition at the new plant.
Section 3.
It is understood that the term "Union" refers to the International Union,
United Automobile, Aerospace, and Agricultural Implement Workers of America.
The term "Company" refers to Steel Technologies, Inc.
Section 4.
For the purposes of applying this Article, it is understood that the Union
is the sole and exclusive collective bargaining representative for wages,
hours, terms, and conditions of employment.
Section 5.
In the event that a new classification or department is created that
duplicates or expands production processes currently performed by bargaining
unit employees, such new classification or department shall become part of the
contract unit. The Company agrees to meet and confer with the Union on the
question of whether any new production jobs or processes should be included in
the bargaining unit.
ARTICLE II
PURPOSE AND INTENT
It shall be the general purpose of this Agreement to promote the mutual
interest of the Company, the Union, and all bargaining unit employees.
Therefore, it is agreed that the following shall constitute our mutual goals:
We recognize that there is only one truly unbeatable
combination in any business--a team of managers and employees
working in harmony to produce quality products.
We recognize that producing quality products provides for the
long-term success of the Company and job satisfaction and
security for all employees.
We are committed to enhance to the fullest extent possible the
efficiency and quality of production operations.
We seek to create and maintain an environment that encourages
regular attendance, a safe and healthy workplace, elimination
of strikes, boycotts, and lockouts, and to secure the
advancement and profitability of all parties.
We recognize the need to work closely with customers, to
constantly improve the product, narrow our tolerances, make
service more responsive, and solve production and quality
problems.
We seek a work environment which allows each worker to
contribute fully and to maximize each individual's personal
growth and enhancement.
We seek to provide opportunities for the enhancement of
personal skills and for employees to contribute to the quality
of the Company's products and services.
We recognize the necessity to practice and express our mutual
respect for the separate interests of each organization.
While recognizing the separate interests of each organization,
the Union agrees not to disparage the Company, its products or
services, and the Company agrees not to discourage the
development of a positive relationship with the UAW among the
Company's suppliers.
The purpose of this Article is to express the parties' goals, not to create
contractual obligations. Nothing in this Article shall be referred to or
relied upon in arbitration.
ARTICLE III
RIGHTS OF MANAGEMENT
Section 1.
Except as expressly restricted by a written provision of this Agreement,
the Company retains all prerogatives previously exercised by Management,
including (without limiting the generality of the foregoing) complete
discretion to:
Manage the operations, control the premises, direct the
working forces, and maintain the efficiency of operations.
Determine the scope of production operations and the size of the
work force, including the expansion or retrenchment thereof.
Inaugurate, discontinue, re-organize, or relocate (in whole or in
part) any work operations, equipment, processes, or facilities.
Allocate or from time-to-time re-distribute customer jobs or orders
among its various plants.
Purchase, sub-contract, or out-source production or maintenance
work.
Establish and enforce product quality, work quantity, and job safety
standards.
Determine all equipment, methods, and processes and introduce new,
improved, or automated technology.
Adopt and from time-to-time revise any policy or program not
expressly proscribed or controlled by this Agreement; provided,
however, that any new or revised policies shall be posted for one
week before they take effect.
Create, modify, consolidate, or abolish job classifications and
determine the duties of each job.
Determine or revise the manning of work operations, the number of
employees needed on each work operation or machine, and whether to
flex the work force through the use of temporary and/or seasonal
employees.
Determine whether to fill vacancies.
Determine the number of shifts and the number and classification of
employees needed on each shift.
Determine all physical security and property protection measures.
Determine the physical fitness and skills needed for each job and
the need for physical, medical, or psychological examinations.
The foregoing rights of management shall be exercised only for good faith
business purposes (as opposed to a purpose to undermine the bargaining unit).
So long as the Company acts for good faith business purposes, the only
limitations on management's authority are those expressly set forth in the
other Articles of this Agreement. Nothing in this Article shall authorize the
Company to violate any limitation specified in any other Article of this
Agreement. The Union shall receive at least 30 days advance notice of any
discontinuance, relocation, subcontracting or out-sourcing of any production or
maintenance operations. The Company shall explain the reasons for its intended
action and provide the Union an opportunity to suggest alternatives; provided,
however, that the Company shall not be required to obtain the Union's assent.
Section 2.
The failure of the Company to exercise any right reserved to or retained by
it shall not be deemed a waiver of such right and the exercise of any right in
a particular manner shall not be deemed to preclude the Company from exercising
such right in some other manner.
ARTICLE IV
UNION MEMBERSHIP
Section 1.
All bargaining unit employees shall, as a condition of continued
employment, become and remain members of the Union in good standing. Any
employee who is not a member of the Union on the effective date of this
Agreement shall, within thirty (30) days after such date, or on the thirty-
first (31st) day following the beginning of employment, become a member and
thereafter maintain membership in the Union.
Section 2.
The Union shall accept into membership each employee who pays to the Union
the dues and initiation fees uniformly required of all members pursuant to the
UAW Constitution.
Section 3.
Any employee whose membership is properly terminated by the Union by reason
of his/her failure to pay the required dues and/or initiation fees shall not be
retained as an employee of the Company. No employee will be terminated unless
the Union demonstrates that the employee was notified of any delinquency by
certified or registered letter, addressed to the employee's last known address,
advising such employee of the amount of the delinquency, the procedure to
correct the delinquency, and warning the employee that unless such dues are
paid within seven (7) days following receipt of the letter, they are subject
to being terminated.
ARTICLE V
DUES CHECK-OFF
Section 1.
The Company agrees to deduct monthly dues and/or initiation fees uniformly
required of members in accordance with the Constitution and By-Laws of the
International or Local Union, from the pay of each employee who, following the
effective date of this agreement, voluntarily executes the following
authorization for check-off of dues:
AUTHORIZATION FOR CHECK-OFF OF DUES
TO THE ___________________ COMPANY DATE __________
I hereby assign to Local Union No. _____, International Union,
United Automobile, Aerospace and Agricultural implement Workers of
America (UAW), from any wages earned or to be earned by me or a
regular supplemental unemployment benefit payable under its
supplemental unemployment benefit plan as your employee (in my
present or in any future employment by you), such sums as the
Financial Officer of said Local Union No. _____ may certify as due
and owing from me as membership dues, including an initiation or
reinstatement fee and monthly dues in such sum as may be established
from time to time as union dues in accordance with the Constitution
of the International Union, UAW, I authorize and direct you to
deduct such amounts from my pay and to remit same to the Union at
such times and in such manner as may be agreed upon between you and
the Union at any time while this authorization is in effect.
This assignment, authorization, and direction shall be
irrevocable for the period of one (1) year from the date of delivery
hereof to you, or until the termination of the collective agreement
between the Company and the Union which is in force at the time of
delivery of this authorization, whichever occurs sooner; and I agree
and direct that this assignment, authorization, and direction shall
be automatically renewed and shall be irrevocable for successive
periods of one (1) year each or for the period of each succeeding
applicable collective agreement between the Company and the Union,
whichever shall be shorter, unless written notice is given by me to
the Company and the Union, not more than twenty (20) days and not
less than (10) days prior to the expiration of each period of one
(1) year, or of each applicable collective agreement between the
Company and the Union, whichever occurs sooner.
This authorization is made pursuant to the provisions of
Section 302(c) of the Labor Management Relations Act of 1947 and
otherwise.
Such deduction shall be made during the second pay period of each calendar
month. The Company will afford the Union an opportunity to explain dues
deductions to and obtain authorization card signatures from new employees.
Section 2.
A copy of signed check-off authorization forms will be supplied to the
Union as they are received by the Company. All such written authorizations
shall continue in effect and deductions will continue to be made at the rate
therein specified until revoked as provided in the authorization. Unless
properly revoked, the authorization cards of employees on layoff or leave of
absence shall remain in effect. The Company will notify the Union, in writing,
of any employee who has revoked an existing check-off authorization.
Section 3.
The Company shall remit to the designated financial officer of Local 985
any dues that have been deducted from the pay of an employee. Such remittance
shall take place within seven (7) days of the deduction. The Company shall
furnish the designated financial officer of Local 985 with a complete list
identifying the name, address, social security number, job classification,
seniority date, rate of pay, and the current amount of such deduction for all
employees for whom deductions have been made in that calendar month.
Section 4.
If for any reason deductions are not made during the second pay period of
any calendar month, the delinquent deduction shall be made from the next
available pay period and will be remitted to the designated financial officer
of Local 985 immediately.
Section 5.
Any deduction improperly made from the pay of an employee will be refunded
by Local Union 985.
ARTICLE VI
V-CAP VOLUNTARY CHECK-OFF
Section 1.
The Company shall deduct the amount checked off from each employee who has
voluntarily completed a form authorizing contributions to UAW V-CAP. The
amount shall be deducted each month such authorization remains in effect.
The Company and the Union agree that the signing of this authorization and the
authorization of payments to UAW V-CAP are voluntary and are not conditions
of membership in the Union or continued employment with the Company.
Section 2.
The Company shall remit the sums collected at the same time the regular
monthly Union dues are remitted. At the time of remittance of such deductions
to the Local Union Financial Secretary, the Company will also submit a list of
members from whom V-CAP deductions have been made together with the amounts.
ARTICLE VII
NO STRIKES/NO LOCK-OUTS
Section 1.
For the duration of this Agreement, neither the Union nor the members of
the bargaining unit will authorize, instigate, aid, encourage, condone, or take
part in any strike, work stoppage, sympathy strike, safety strike, slowdown,
sit-down, walkout, picketing (including "informational" picketing), concerted
abuse of restroom or other privileges, sick-out, overtime ban, in-plant job
action, or any other form of concerted interference with normal operations
or withholding of normal cooperation.
Section 2.
Any employee who instigates, aids, encourages, or participates in any act
prohibited in Section 1 shall be subject to immediate discharge. Any employee
so discharged shall be entitled to invoke the grievance/arbitration
procedure solely on the question of whether they actually engaged in the
proscribed behavior; provided, however, that the arbitrator shall have no
authority to change the penalty for the violation. The Union recognizes that
it may be impractical to discharge all persons who engage in a violation of
this section and that the Company has the right to engage in selective
discharges.
Section 3.
Neither the alleged violation of this Agreement by the Company nor the
alleged commission of any act which would be unlawful under state or federal
law shall constitute grounds to violate Section 1. Specifically, the Union
agrees that the National Labor Relations Board has jurisdiction to remedy
any alleged unfair labor practices and that it will not engage in any action
proscribed in Section 1 to protest the alleged commission of unfair labor
practices.
Section 4.
No employee(s) may withhold his or her services from the Company in
connection with any labor dispute, which affects the Company or its premises,
including cases where the employee(s) may be required to cross and work behind
picket lines established by the UAW or other labor organizations at the
Company's place of business. Nor shall there be any refusal to work on,
handle, or produce any materials because of a labor dispute involving or
affecting a vendor, purchaser, supplier, or carrier of materials or equipment.
Section 5.
If an employee fails to report to work during any strike and claims that
their absence was due to illness, they must notify the Company by telephone
each day they are absent, produce a written physician's certification, and
fully cooperate with any request of the Company to be examined by any physician
or facility designated by the Company. Any employee who claims that they were
physically prevented from entering the plant must promptly call the plant and
request instructions regarding alternate arrangements for being safely
transported into the plant. Any employee who fails to fully comply with this
section shall be conclusively presumed to be participating in the strike.
Section 6.
Any employee who in good faith contends that the performance of their job
or assigned task will subject them to a clear and present danger of illness or
injury must promptly report the situation to their supervisor and perform any
other work assigned by the supervisor. Any failure to perform the work
assigned by the supervisor or any protest activity by employees not directly
affected shall be deemed a violation of Section 1; provided, however, that any
employee who is personally traumatized by observing a serious injury shall not
be required to resume work.
Section 7.
The Company has neither the right nor the obligation to utilize the
grievance/arbitration procedure to remedy any violation of this article by the
Union. In the event of any violation of Section 1 by the Union, the Company's
obligation to check-off dues shall be suspended for the balance of the term of
the agreement (in addition to any other remedies provided under state and
federal law). Provided that the Union has not directly or indirectly
instigated, authorized, aided, condoned, or participate in any violation of
Section 1, the Union shall be held harmless from monetary liability if it in
good faith takes each of the following affirmative actions:
(a) The Union shall promptly notify each bargaining unit
employee that the strike or other misconduct constitutes a violation
of the contract punishable by discharge and is not in any way
sanctioned or approved by the Union.
(b) The Union shall promptly order each bargaining unit
employee to return to work (or cease any violative conduct) at once
and use all means at their disposal to bring an immediate end to the
violation, including the imposition of discipline upon recalcitrant
members.
(c) The Union shall not contest or oppose any effort by the
Company to obtain an injunction restraining all picketing or other
violative acts.
Section 8.
In consideration of the foregoing, the Company shall not lock-out the
employees during the term of this Agreement.
ARTICLE VIII
GRIEVANCE & ARBITRATION PROCEDURE
Section 1. Definition of a Grievance.
A "grievance" is a claim by a named employee or the Union that the Company
has violated an express requirement or prohibition of this Agreement. The
grievance must specify the Article and Section of the Agreement which the
Company is claimed to have violated and recite the facts giving rise to the
grievance with reasonable specificity.
Neither the Company nor the Union shall have any obligation to process any
complaint which: (a) does not fully qualify as a grievance as defined above;
or (b) arises following the expiration of this Agreement, unless the parties
have mutually agreed in writing to extend the provisions of this Agreement.
Section 2. Grievance Procedure.
Grievances shall be processed only in the following manner:
Employees are encouraged to discuss any problem which could result in a
formal grievance with their immediate supervisor; provided, however, that such
discussions shall not serve to extend the five (5) day time limit set forth in
Step One.
The parties commit to making a sincere effort to keep the procedure free of
unmeritorious grievances and to resolve grievances at the earliest step
possible.
A. Step One. Grievances shall be initiated only in the following
manner:
A Union representative shall sign and file a
grievance on UAW Form F-1 ("Employee Grievance")
within five (5) working days following the
occurrence of the facts giving rise to a
grievance. In the case of individual grievances,
the aggrieved employee must sign the grievance.
The Company shall have no obligation to process an
untimely grievance.
After receiving a timely grievance, the Company
will arrange a meeting between the Steward and the
Foreman. At this meeting, the Steward and Foreman
shall make a good faith effort to resolve the
matter.
If the grievance is not resolved as a result of
this meeting, the Foreman shall provide a written
response stating the Company's position to the
Steward within five (5) working days following the
meeting.
B. Step Two. If the grievance has not been resolved at Step One
and the Union wishes to pursue the matter, the grievance may
be appealed to the second step in the following manner:
The Union shall present a written appeal to the
Company's first step answer to the Plant Manager
within five (5) working days following receipt of
the Company's first step response.
If the appeal is timely, the Company will arrange
a meeting between the Unit Chairperson and the
Plant Manager at a mutually convenient time.
The Plant Manager and Unit Chairperson shall have
the full power and authority to grant, deny,
withdraw, or adjust any grievance that is
discussed.
The Plant Manager will provide a written response
to the Unit Chairperson within five (5) work days
of the conclusion of their second step meeting.
C. Step Three. If the grievance is not resolved at Step Two, and
the Union wishes to pursue the matter, it may appeal to Step
Three by presenting a written appeal to the Plant Manager
within five (5) working days after receiving the Company's
second step answer.
If the appeal is timely, the Company will arrange
a meeting at a mutually convenient time between a
Corporate Representative and a Representative of
either Region 1-A or Local 985 of the UAW.
Attending the third step meeting shall be the
Plant Manager, Corporate Representative, Unit
Chairperson, and a designated representative of
UAW Local 985, or an International UAW
Representative.
In preparation for the third step meeting, the UAW
Representative will be granted access to the plant
to meet with the Unit Chairperson and the
grievant. Where appropriate, the UAW
Representative may view any work operation so long
as there is no disruption of production or
productivity.
The Company will provide a written response to the
Chairperson within five (5) working days following
the conclusion of the Step Three meeting.
The representatives attending such third step
meeting shall have the full power and authority to
grant, deny, withdraw, or adjust any grievance
that has been discussed.
Section 3. Arbitration.
If the grievance is not resolved at the third step, it may be appealed to
an arbitrator for final and binding resolution.
The Union shall have twenty (20 calendar days following receipt of the
Company's third step disposition to appeal such grievance to arbitration.
All arbitrations shall be heard by Theodore High of
Cincinnati, Ohio.
If Mr. High is not available, the parties will request a list
of seven (7) candidates from the Federal Mediation and
Conciliation Service (FMCS). The Union will strike one name
from the FMCS list. The parties shall then alternate striking
names until only one name remains. The remaining name shall
be the Arbitrator. Each party reserves the right to reject
one complete panel of names provided by FMCS. Each party
reserves the right to have the hearing transcribed and to
submit a post-hearing brief.
All fees and expenses of arbitration, including the
arbitrator's fees and the cost of transcription, shall be
shared equally by the Company and the Union.
The arbitrator shall have no authority to vary the procedures
(including any time limit prescribed herein) or otherwise to
add to, subtract from, or modify the terms of the contract.
The parties do not intend to be bound by any past practices or
implied restrictions not expressly stated herein.
The Company shall have no obligation to arbitrate and no
arbitrator shall have jurisdiction to adjudicate any grievance
which directly challenges any action taken by the Company
pursuant to those rights of management expressly delineated in
Article III.
Under no circumstances shall the arbitrator award back pay to
a grievant retroactive to a date earlier than five (5) working
days prior to the filing of the written grievance. Any back
pay award shall be offset by any interim compensation
(including unemployment compensation) that the employee may
have received.
Any arbitration decision shall be final and binding upon both
parties.
Section 7. Miscellaneous.
A. All timely grievances challenging disciplinary action taken by the
Company will start at the second stage of the grievance procedure.
B. Any settlement or adjustment mutually agreed upon between the
Company and representatives of the Union in any step of this
procedure shall be final and binding on all parties.
C. If back pay or adjustment in an employee's pay has been agreed upon,
the Union will be provided with written verification that the
payment or adjustment was made within ten (10) days following the
settlement.
D. If the Company fails to comply with any of the applicable time
limits, the grievance shall be advanced automatically to the next
step of the procedure immediately.
E. Time limits set forth in this Article may be extended only by
written mutual agreement.
F. It shall be within the exclusive discretion of the Company whether
to retain probationary employees. The Company's decision regarding
the retention of probationary employees shall not be subject to the
grievance-arbitration procedure.
G. First step meetings shall be scheduled for the last 15 minutes of
the day shift. Any grievant or steward who is required to attend a
first step meeting shall be paid for the first 15 minutes of such
meeting. Second and third step meetings shall be scheduled at the
mutual convenience of the parties and the unit chairperson shall
suffer no loss of earnings for attending such meetings.
ARTICLE IX
REPRESENTATION
Section 1. Union Representatives.
The Company agrees to provide for union representation as follows:
A. Stewards. The Company agrees to recognize one (1) Steward on
each shift as a representative of the employees on such shift.
The Union will notify the Company, in writing, of
all designated stewards and any changes as
appropriate. Upon receiving written notice, the
Company will recognize the designated steward.
Stewards may utilize the last fifteen (15) minutes
of their shift to discuss potential grievances
with employees, to investigate health or safety
concerns, or to represent employees in
investigatory interviews or first step grievance
meetings. In addition, each steward's lunch
period will be extended by 30 minutes to enable
the steward to confer with employees during their
lunch period.
Employees wishing to discuss a potential grievance
with their steward must obtain advance permission
from their immediate supervisor (who will make the
necessary arrangements with the steward and the
steward's supervisor).
Employees who abuse or over-utilize the
opportunity to meet with their steward will be
required to meet with their steward on their own
time.
There shall be no group meetings with stewards on
company time.
Stewards shall be subject to the same rules of
conduct and company policies that apply to all
bargaining unit employees. Stewards have no
authority to stop work, interfere with normal
operations or interrupt the work of any other
bargaining unit employee.
Stewards shall remain on their jobs and work in
the same manner as all other bargaining unit
employees except when permitted to attend meetings
scheduled under the grievance procedure or during
periods expressly permitted in this Section.
Stewards shall be accorded superseniority for
purposes of avoiding layoff provided that there is
work available in any job they have previously
held and they are fully qualified to perform the
available work.
All stewards will be paid the rate of pay for
their assigned classification and shift.
All stewards will be eligible for all wage
increases, job bids and benefits to which they
would otherwise be entitled and will suffer no
loss of pay for performing their representation
duties in accordance with this Section.
It is anticipated that the vast bulk of employee
problems will be handled during lunch period or
the last 15 minutes of the shift. However, it is
recognized that bona fide emergencies can arise
such as a safety problem which presents an
imminent threat of serious injury. When the unit
chairperson and plant manager agree that a
situation qualifies as a bona fide emergency, the
steward shall be released to meet with the
affected employee as soon as possible. It is
anticipated that such emergencies will be the
exception, not the rule.
B. Unit Chairperson. The Company agrees to recognize one (1)
Unit Chairperson designated by the Union as the ranking
representative of all employees within the bargaining unit.
The Chairperson shall participate in Second and
Third Step grievance meetings without loss of pay.
It is agreed that such second and third step
meetings will be scheduled as needed during
mutually convenient times.
Every other Wednesday, the plant manager shall
meet with the unit chairperson to confer about
matters of mutual concern. Such "good and
welfare" meetings shall occur during the last 30
minutes of the day shift unless mutually agreed
otherwise.
It is understood that individual employee concerns
are to be handled by stewards and that there will
be no "doubling up" of Union representatives.
There shall be no group meetings with the unit
chairperson on company time.
The Chairperson shall be subject to the same rules
of conduct and company policy that apply to all
bargaining unit employees. The Chairperson has no
authority to stop work, interfere with normal
operations or interrupt the work of any other
bargaining unit employee.
The Chairperson shall remain on the job and work
in the same manner as all other bargaining unit
employees except when permitted to attend meetings
scheduled under the grievance procedure or during
the time periods expressly permitted in this
Section.
The Chairperson shall be accorded superseniority
for purposes of avoiding layoff provided that
there is work available in any job they have
previously held and he/she is fully qualified to
perform.
The Chairperson will be paid the rate of pay for
their assigned classification and shift.
The Chairperson will be eligible for all wage
increases, job bids and benefits to which he/she
would otherwise be entitled and will suffer no
loss of pay for performing union business in
accordance with this Section.
It is understood that it may be mutually desirable
to have the Chairperson participate in discussions
with management that are not specifically
described within this Section. In no case will
the Chairperson be allowed any additional time to
confer with management or handle union business
other than what has been described within this
Section or what has been mutually agreed upon.
Section 2. Alternates.
The Company will recognize an Alternate Unit Chairperson, and Alternate
Stewards as designated in writing by the Unit Chairperson.
Section 3. Union Leaves.
The Company agrees to grant two (2) unpaid leaves of absence of up to one
week's duration for employees to participate in Union activities during each
calendar year. The Union must notify the Company in writing two (2) weeks in
advance of the leave. The Company will consider any additional request by the
Union for excused unpaid leaves of absence to participate in Union activities.
ARTICLE X
EMPLOYEE ASSISTANCE & CORRECTIVE ACTION
Section 1.
The Company may publish, amend, and enforce reasonable rules of conduct for
the purpose of maintaining order, safety and productivity. A current copy
of all rules of conduct shall be provided to the Union and posted on the
bulletin board. The Union shall have five (5) work days following receipt of
any rule (or amended rule) to contest its reasonableness in the grievance
procedure. The Company may discipline, suspend, or discharge an employee
for violating any rule or other just cause.
Section 2.
The Company may privately interview any employee but shall, upon request,
provide Union representation to any employee who is suspected of misconduct
which could result in disciplinary action.
Section 3.
The parties recognize that substance abuse and violence have reached
epidemic proportions in the American workplace. In order to assist employees
and protect their co-workers, the Company shall contract with the
Occupational Health Centers of America ("OHCA"), to train stewards and
supervisors and counsel employees regarding substance abuse and other
personal problems which can negatively impact the workplace. Substance
abuse and violence will be dealt with as follows:
a. Substance Abuse. Employees are encouraged to self-refer
themselves to the employee assistance program (EAP) for counseling
before violations of the Company's rules of conduct occur. The fact
that an employee has self-referred for substance abuse problems
shall never be held against them in any way or referred to in
arbitration. However, any possession or being under the influence
of alcohol or illegal drugs in the workplace will result in a
disciplinary suspension of up to 20 work days. The suspended
employee must participate in EAP counseling and complete any
rehabilitation program recommended by the EAP. Any subsequent
offense shall automatically result in discharge. Whenever the
Company has reasonable cause to believe that an employee has caused
a serious accident or to suspect that an employee may be under the
influence of alcohol or drugs, the Company has the right to have the
employee tested by a licensed testing facility. Any employee who
refuses to be tested shall be conclusively presumed to have been
under the influence. If the test reveals a concentration of .08%
alcohol or the following levels for drugs, the employee shall be
conclusively presumed to have been under the influence:
Tested Drug EMIT Screen GC/MS Test*
Amphetamines 1000 ng/ml 500 ng/ml
Barbiturates 200 ng/ml 200 ng/ml
Cocaine 300 ng/ml 150 ng/ml
Marijuana THC 100 ng/ml 15 ng/ml
Narcotics-Opiates 300 ng/ml 300 ng/ml
PCP 25 ng/ml 25 ng/ml
b. Violence. Threats, menacing, and violence will not be
tolerated. The Union and the Company will establish a Threat
Response Team consisting of three persons, two of whom shall be
members of the bargaining unit. The purpose of the Threat Response
Team shall be to work with the EAP to:
Publicize the parties' mutual commitment to a
workplace free of threats and violence.
Encourage the reporting to the Threat Response
Team of all threats or menacing conduct.
Develop a procedure for dealing with threats or
violence, including criteria for involving law
enforcement officials.
Investigate and assess all threats and initiate
EAP assessment of all offenders.
Warn any employee who becomes a target of threats.
Develop contingency plans in the event of a
serious incident of violence.
It is anticipated that most threats and minor personal friction can be
dealt with by EAP counseling or referrals. However, the Company may impose
discipline for any assaultive behavior or aggravated threatening/menacing,
including off-premises stalking if the victim is an employee of the Company.
In any instance when the Company believes that an employee represents a
potential for serious violence, the Company shall have the right to suspend
the employee pending psychological/psychiatric testing and evaluation by
a provider of the Company's choice. Any testing will be at the Company's
expense. The Company may condition return to work upon the employee's
cooperation with the testing and the execution of any releases required by
law to authorize the Company to obtain a full report from the provider.
Section 4.
The Company shall pay the monthly fee charged by the EAP but the employee
shall be responsible for the fees of any providers to whom the EAP refers the
employee to the extent that such fees are not covered by the Company's
insurance plan.
Section 5.
The Union will be promptly copied on any disciplinary action that has been
included in the employee's personnel record.
ARTICLE XI
ATTENDANCE CONTROL
Section 1. Purpose.
The parties recognize that absenteeism is costly to both employers and
employees and that an effective attendance policy must be reasonable,
predictable, and free from both favoritism and disputes. To that end, the
parties have designed the following procedure to improve attendance.
Section 2. Point System.
Attendance "points" will be assessed on the following basis:
(a) Tardiness or leaving early:
The fourth and any subsequent
occurrence of being 15 minutes or
less late in any calendar year .5 point(s)
16 minutes to 2 hours 1.0 point(s)
More than 2 hours to 4 hours 1.5 point(s)
More than 4 hours 2.0 point(s)
(b) Absence 2.0 point(s)
An illness which causes absence for 2 or more consecutive days will be
counted as one absence (i.e., 2 points) if the employee: (a) provides a
physician's written verification of illness; and (b) cooperates with any
request by the Company to be examined by a physician or provider of the
Company's choosing. (Any falsification or abuse of this system will be
grounds for disciplinary action.) The only absences for which points will
not be assessed are:
(a) Scheduled vacation;
(b) Approved leave of absence, including Union leave
as defined in Article VII, Section 3, "parenting
leave," "family medical leave," and "employee
medical leave" as those terms are defined in
Article XIX, Section 2;
(c) Funeral leave;
(d) Jury duty or being subpoenaed to court as a
witness (not a party);
(e) In-patient hospital treatment or out-patient
surgery for the employee, their spouse, or child;
(f) Mandatory military service;
(g) On-the-job injury or being sent home after
reporting for work due to observable or measurable
illness (e.g., vomiting or fever);
(h) Layoff or being sent home for lack of work or
disciplinary suspensions.
Points will accumulate on a rolling 12-month basis. An employee's point
status will be determined by adding all points accumulated during the most
recent 12 months preceding the day in question. At the start of each month,
all points accumulated during the corresponding month in the previous
calendar year disappear. For every 50 hours of overtime, one credit will
be earned which can be used within 12 months following the last day of the
overtime to eliminate 1.0 points. The credit point will eliminate the
attendance point immediately preceding the credit or, where there are no
preceding attendance points, the point immediately following the credit.
Section 3. Corrective Action.
The following action will be taken to deter and/or discipline excessive
absenteeism:
8 points written warning
10 points written warning
12 points one week suspension
16 points discharge
The corrective action set forth above shall not be subject to challenge and
the only issue in any arbitration challenging a discharge based upon
absenteeism shall be whether the points were properly assessed.
Section 4. Attendance Bonus.
Employees who work all scheduled hours of all scheduled work days in a
calendar quarter will be paid an attendance bonus equal to 26 times their base
hourly rate. Employees who miss no more than one day during the quarter will
be paid a sum equal to 16 times their base hourly pay. Employees who miss
no more than two (2) days during the quarter will be paid a sum equal to
eight (8) times their base hourly rate. The only exceptions shall be
absences due to vacations, holidays, funeral leave, jury duty, mandatory
military service, being sent home due to lack of work, and leave which
qualifies as Union leave under Article VII, Section 3, or "parenting leave,"
"family medical leave," or "employee medical leave" under Article XIX, Section
2. The calendar quarters shall be January through March, April through June,
July through September, and October through December. Employees who earn
an attendance bonus shall have the option to trade all or some of the pay
for the elimination of absenteeism points at the rate of eight (8) hours
pay for 2.0 points. Such option must be exercised before the bonus is paid.
ARTICLE XII
SENIORITY
Section 1. Probationary Period.
New hires shall serve a 120-day probationary period during which the
Company shall have complete discretion regarding their retention. Time served
as a "temporary" employee shall count towards the 120 days. The Company
shall make its decision whether to hire a temporary employee no later than
90 days after the temporary employee's start date. Once an employee transfers
to the Company's payroll, the grievance procedure shall be available to the
probationary employee for any alleged violation of the agreement other than
discharge. Benefits shall commence the first full month after a
probationary employee transfers from the payroll of a temporary service to
the Company's payroll.
Section 2.
Seniority shall be computed from the employee's most recent date of hire.
In the event two or more employees have the same seniority date, the employee
with the highest last four digits of his/her social security number shall be
deemed to have greater seniority.
Section 3. Layoff and Recall.
The following seniority groups shall be recognized for purpose of layoff
and recall:
Minimum
Proficiency
Period*
GROUP I: 30" & 60" slitters 100
GROUP II: 48" & 72" slitters 100
GROUP III: 12", 22" & 24" mills 100
GROUP IV: 44" mill 200
GROUP V: Annealing 200
GROUP VI: Crane operators 40
GROUP VII: Fork lift & truck loaders 40
GROUP VIII: Receiving 100
GROUP IX: Shipping 100
GROUP X: Scale operator 60
GROUP XI: Maintenance (general) 400
GROUP XII: Maintenance (electrical) 400
GROUP XIII: Roll grinders 200
GROUP XIV: RTS 60
GROUP XV: Material Handlers 20
Layoffs within each group will proceed as follows:
The first employees to be laid off shall be those who
have not completed their proficiency period. Layoffs
shall be in inverse order of the number of days actually
worked within the group as of the date of layoff. That
is, the employees with the greater number of days worked
within their classification shall have priority over
employees with fewer days worked regardless of
seniority.
After all employees who have not yet completed their
proficiency period have been laid off, layoffs among
those employees who have completed their proficiency
period shall be in inverse order of seniority.
The company will give good faith consideration to any requests for
voluntary layoff but retains the discretion to deny such requests if the
absence of the employee would leave the company with an insufficient number
of employees who had completed their proficiency period in the affected
classification and shift. Anyone who is granted a voluntary layoff must
remain on layoff for 30 days or until recalled, whichever is sooner. In
order to avoid layoff, any employee who would otherwise be laid off may
displace (i.e., "bump") any employee with less plant seniority in:
(a) Group XV; or (b) any other group if (but only if) the employee seeking
to exercise bumping rights held the job classification into which he/she
seeks to bump within the 36-month period prior to the commencement of the
layoff. Employees who have not completed their proficiency period cannot
bump those who have. To the extent that cross-training is provided, the
employees are responsible to learn all jobs within their seniority group.
In addition, truck loaders must learn the operation of cranes and fork lifts.
Recalls from layoff shall be in inverse order of layoff within each group.
The Company shall consider laid-off probationary employees for recall but
shall not be compelled to recall them. Laid-off employees who leave town
shall be responsible to keep the Company closely advised of their whereabouts.
Notification of recall shall be directed to the employee's last known
telephone number or any telephone number specified by an employee who plans
to be out of
town. If there is no answer at the employee's telephone number, a written
notice of recall shall be sent by registered mail. Notification of recall
shall give the employee 72 hours to report for work.
Section 4. Shift Selection.
The Company shall afford an opportunity for shift selection during the
months of May and November each year to all employees who have completed their
proficiency period. Shift selection shall be by seniority. Employees changing
shifts must stay within the same job classification. If the Company adds a
third shift or implements a continuous work operation, all employees who
have completed their proficiency period shall be afforded shift selection on
the basis of seniority. If the shift selection process fails to produce a
sufficient number of fully proficient employees on any shift, the Company
may complete the staffing of that shift by assigning the least senior
employees who have completed their proficiency period. Any employee who
misses the semi-annual opportunity for shift selection because they have
not completed their proficiency period shall be given the right to bump
when they complete their proficiency period.
Section 5. Work Assignments & Transfers.
No employee has any vested claim to be assigned to any task or equipment
within their job classification and the Company may assign employees to, or
transfer employees between, any tasks or equipment within their classification
regardless of their seniority. Employees may be temporarily transferred to
other job classifications or tasks regardless of seniority so long as they
suffer no reduction of their regular wage. Employees temporarily
transferred to a higher rated job for more than four hours shall be paid the
wage rate of the higher rated job. After having served in a job for a total
of 160 hours in any calendar year, an employee may decline any further
temporary transfers to such job for the balance of the calendar year. Time
spent in temporary transfers shall be counted as time worked in the
employee's regular job for the purpose of completing his proficiency period.
The grievance procedure shall be available regarding claims that transfers
are being abused for punitive purposes.
Section 6. Seniority List.
The Union will be furnished an updated seniority list on a monthly basis
that includes each employee's address, telephone number, social security
number, job classification, seniority group, rate of pay, shift, and seniority
date. A copy of each updated list shall be posted on the bulletin board.
Section 7. Loss of Seniority.
Seniority shall be broken (i.e., employment shall cease) for any of the
following reasons:
Voluntary quit.
Failure to report for work for three consecutive
days without complying with the Company's
notification requirements.
Discharge (unless reversed through the grievance
procedure).
Retirement or disability settlement.
Failure for any reason to perform any production
or maintenance work for 12 consecutive months or a
period equivalent to the employee's seniority,
whichever is longer.
Failure to return on time from an approved leave
of absence or recall from layoff.
Section 8. Machine Operators.
Separate classifications for machine operators and helpers are eliminated.
Employees who enter any machine operator classification will be subject to the
pay progression set forth in Appendix A and, in order to retain the position,
must demonstrate adequate progress toward full proficiency by the end of the
designated proficiency period (i.e., entering the machine operator job
entails an "up-or-out" commitment).
ARTICLE XIII
HOURS & OVERTIME
Section 1.
The current 40-hour work week (consisting of five consecutive eight-hour
days beginning with the third shift on Sunday) shall remain in effect unless
changed in accordance with this section; provided, however, that nothing herein
shall be construed as a guarantee of any particular number of hours of work.
The normal shift starting times shall be:
First Shift: 7:00 a.m.
Second Shift: 3:00 p.m. or 3:30 p.m.
Third Shift: 11:00 p.m. or 11:30 p.m.
Management shall have the right to change the work day, the work week, and/or
shift times; provided, however, that any continuous work schedule must be
mutually agreed between the Company and the Union. Any such change may affect
less than all employees (e.g., staggered work days or shift times). The
Company will meet and confer with the Union at least twenty (20) work days
prior to any permanent change of work days, work weeks, or shift times;
provided, however, that the Company may proceed with the implementation of the
change when the 20-day meet and confer period has expired.
Section 2.
On those operations where the Company is operating two shifts, the
employees will receive a 30-minute unpaid lunch break. On those operations
where the Company is operating three shifts, the employees will receive a
20-minute paid lunch break but may not leave the premises. The Company shall
continue its current practice of unscheduled rest breaks; provided, however,
that any abusers may be limited to two scheduled 10-minute rest breaks after
having received two written warnings during any 12-month period, copies of
which shall be provided to the Union. Rest breaks shall be taken in a
manner which does not interfere with machine operation.
Section 3.
Employees working any shift which begins after 12:00 noon will be paid an
hourly premium of $.45 and employees working any shift which begins after 8:00
p.m. shall be paid a shift premium of $.45.
Section 4.
Employees will be paid time and one half their regular hourly rate
(including any shift premium) for all hours actually worked in excess of forty
(40) hours per week. Time paid for but not worked due to scheduled vacations,
holidays, jury duty, or funeral leave and time spent on Union leave under
Article VII 3 up to eight hours per day shall be treated as time actually
worked for purposes of eligibility for overtime pay. Time missed due to
machine break-down shall also be treated as time worked unless the employee
elects to go home. Scheduled work time (of up to eight hours per day) which
is missed due to illness shall be treated as time worked for purposes of
eligibility for overtime pay if the employee presents a physician's
certification of illness. (Example: Employee "A" works 10 hours Monday
through Wednesday but misses Thursday and Friday due to certified illness.
For purposes of overtime pay calculation, "A" has 46 hours (30 actually
worked and 16 credited) and will be paid six (6) hours at time and one
half.)
Section 5.
The Company will keep track of all overtime hours offered or worked. When
overtime is needed the Company will give as much advance notice as possible and
will (if time permits) solicit volunteers from among those in the affected
classification(s) who are qualified to perform the available work. If overtime
hours are equal, the highest seniority employee will first be offered the
overtime. Otherwise, the overtime will be offered to the employee with the
lowest balance of hours. Employees who decline overtime will be charged with
the time they could have worked for equalization purposes. If time does not
permit the solicitation of volunteers or if there are insufficient volunteers,
the Company may assign overtime in inverse order of plant seniority among those
employees in the affected classification(s) who are qualified to perform the
available work. Once the Union notifies the Company of a disparity of more
than 16 hours of charged or worked overtime between similarly-situated
employees, the low hours employee shall be offered the next available
overtime opportunities until the imbalance is eliminated. The Company shall
not mandate more than two hours of daily overtime (except to cover for an
unforeseen absence, in which case the Company may assign up to four hours of
daily overtime). The Company shall not mandate Saturday work unless the
affected employees have been notified by the end of their shift on the prior
Thursday and no more than three consecutive Saturdays shall be mandated.
Sundays and Holidays shall be voluntary; provided, however, that the Company
may assign one shift of maintenance and/or annealing employees on Sunday.
No employee shall be assigned to consecutive Sundays. All hours worked by
such maintenance or annealing employees on Sunday shall be paid at time and
one half unless it is the employee's seventh consecutive day actually
worked, in which case it shall be paid at double time. (Days paid but not
actually worked shall not count toward the seven consecutive days actually
worked.) All time actually worked on Holidays shall be at double time. The
unit chairperson shall be provided with a compilation of overtime worked
each week.
Section 6.
If an employee reports to work as scheduled or is called in outside of his
normal schedule and there is less than four (4) hours of work available in the
employee's regular job classification, the employee will be given the option
to: (a) leave after all available work within his regular classification is
finished; or (b) work out-of-classification at his normal rate for the
balance of the four-hour period. When an employee works outside of his
classification to fulfill the four-hour guarantee, the Company shall not
release a regular bargaining unit employee but may release persons on the
payroll of a temporary service agency.
ARTICLE XIV
JOB VACANCIES
Section 1.
Vacancies in production jobs (including new jobs) shall be posted for bids
for five (5) work days. The posting shall specify the classification, wage
rate, shift, and proficiency period. Employees will be given an opportunity
to sign the bid sheet. The selection among bidders shall be controlled by:
(a) relevant experience, skills, and job knowledge; (b) the bidder's overall
employment record (including attendance); and (c) seniority. In evaluating a
bidder's "relevant experience, skills, and job knowledge," the Company will
not consider experience gained via temporary transfers. When the job is not
awarded to the senior bidder, the Union will receive an explanation of the
criteria upon which the Company based its selection. The Company may fill
vacancies in maintenance jobs by hiring from the street but shall post for
all production jobs unless the Company's capacity to train replacements is
compromised by a multiple loss of trained personnel in one classification.
Section 2.
The Company may temporarily fill any vacant position which has been posted.
If there is no successful bidder for the posted job classification, the
employer shall be entitled to fill that job opening by assigning a temporary
employee or (if there are no temporary employees) the lowest seniority
employee or by hiring a new employee. If no one is hired during the sixty
(60) day period following the posting and the employer still desires to fill
the job, it shall be posted in accordance with this article before the
employer shall again be entitled to fill the job by hiring a new employee.
Section 3.
Any successful bidder who: (a) elects to return to his prior job within
the first five work days on the new job; or (b) fails to demonstrate adequate
progress during the proficiency period shall be returned to their prior job.
Any employee who voluntarily withdraws within the five-day period shall
forfeit his/her bidding rights for a period of 90 days from the date of
withdrawal. Successful bidders who complete the proficiency period shall be
barred from lateral or down bids for one year.
Section 4.
If a successful bidder cannot be transferred to the new job within 20 work
days following the award of the job, he/she will be paid the rate of the new
job beginning the 21st day if the rate of the new job is higher. If a
successful bidder cannot be transferred within 20 work days, the Company
will meet and confer with the Unit Chairperson and any further delay shall
be credited towards completion of the proficiency period for the new job.
ARTICLE XV
VACATION
Section 1. Vacation Entitlement.
Full-time employees who have completed one full year of continuous service
are eligible for paid vacation according to the following schedule:
Full Years of Service Vacation
One One Week
Two Two Weeks
Ten Three Weeks
Vacation will be taken in the anniversary year following the year in which
it is earned. (Example: Employee Jones completes two full years of service
on July 1, 1997. Jones is entitled to two weeks of vacation during his/her
following anniversary year, July 1, 1997 through June 30, 1998.) Eligible
employees will be paid a sum equal to 40 times their straight time hourly wage
for each week of vacation entitlement. To receive full vacation pay, the
employee must have worked 1500 hours during the previous anniversary year. If
the employee worked less than 1500 hours, their vacation will be pro-rated.
(Example: Employee Smith's full vacation entitlement would be two weeks but
Smith worked only 1300 hours. Smith will be entitled to 13/15ths of 80 hours
pay or 69.5 hours). Vacation pay will be paid prior to the commencement of
the employee's vacation if the employee makes a request for advance payment
ten (10) work days before their vacation begins.
Section 2.
A. The Company recognizes the importance of providing the employees the
opportunity to take their full vacation entitlement, and the Union
recognizes that having an excessive number of employees on vacation
can disrupt operations.
B. Accordingly, employees will make their vacation preference known, in
writing, on a form to be provided by the Company not later than
December 1st of each calendar year. Such request shall be for the
scheduling of vacation time for the following calendar year.
Vacation requests shall include an employee's first, second, and
third choice for the following calendar year.
C. The Company will allow up to four (4) employees per shift but no
more than two (2) employees per job classification per shift to be
on vacation in the same week. It is recognized that during the
calendar year, there may be periods of time when production needs
are significantly less than normal levels (i.e., auto company
vacation shutdowns, etc.). Management agrees to notify the Union of
such periods and to discuss the feasibility of expanding the minimum
numbers of employees that will be allowed on vacation at the same
time.
D. Available vacation slots will be filled in plant seniority order
(most senior employee having preference) among all employees who
timely submit their vacation preference form.
E. Management will post the completed vacation schedule by December
31st of each calendar year.
F. Any vacation slots not filled by the timely submission of vacation
preference forms shall be filled on a first come, first served basis
regardless of seniority.
Section 3.
Vacations shall normally be taken in full-week increments, although the
Company will attempt to accommodate requests for less than full-week (but not
less than full-day) increments submitted with advance notice. Employees who
cancel their vacations shall give as much advance notice as possible. An
employee who cancels their vacation may select a new vacation period from
whatever unused slots remain available. The Company shall not cancel scheduled
vacations unless unforeseeable events beyond the Company's control create a
shortfall of qualified personnel which cannot be overcome by overtime or
temporary transfers.
Section 4. Unused Vacation.
The parties strongly encourage all employees to use all of their vacation
time. Employees eligible for one or more weeks of vacation must schedule at
least one week of their vacation entitlement. In those situations where an
employee does not utilize their full vacation entitlement, they will be paid
their unused vacation entitlement on December 31 of each year, except for the
one week they are required to use. When the employee's scheduled vacation is
canceled and all remaining vacation slots are filled, the employee will be
excused from the requirement to use one week's vacation.
ARTICLE XVI
HOLIDAYS
Section 1.
Employees who have completed their probationary period and who work all
scheduled hours on the last work day preceding and the first work day following
a holiday shall be paid a sum equal to eight hours times the employee's base
hourly rate for each of the following holidays:
New Year's Day Day After Thanksgiving
Good Friday Christmas Eve
Memorial Day Christmas
Independence Day New Year's Eve
Labor Day Three Floating Holidays*
Thanksgiving Day
The only exceptions to the requirement to work all scheduled hours before
and after the holiday shall be: (a) tardiness of 15 minutes or less; (b) Union
leave under Act VII 3; (c) hospital admission; (d) pre-scheduled vacation;
(e) jury duty; (f) funeral leave; and (g) lack of work. The Company shall have
the discretion to pay the holiday in any situation where penalizing the
absence would not further the goal of deterring absenteeism. One week's
advance notice will be required for floating holidays. The maximum number
of employees who can be absent on floating holidays are four (4) employees
per shift but no more than two (2) per job classification. Floating
holidays will be scheduled as a first come, first served basis.
Section 2.
Holidays which fall on Saturday shall be observed on the preceding Friday
and holidays which fall on Sunday shall be observed on the following Monday.
Section 3.
Employees who are on approved vacation on the day a holiday is observed
will receive an additional day off with pay to be scheduled by the employee and
their supervisor.
Section 4.
Holiday and vacation hours paid for but not worked will be counted as hours
worked for purposes of computing weekly overtime pay.
ARTICLE XVII
FUNERAL LEAVE
Any employee who has completed their probationary period is eligible for:
(a) up to three (3) days of paid leave in the event of the death of the
employee's current spouse, child, parent, brother, sister, grandparent,
grandchild, mother-in-law, or father-in-law; and (b) one day's paid leave in
the event of the death of a brother-in-law, sister-in-law, son-in-law,
daughter-in-law, or stepparent. Funeral leave pay shall be calculated on
the basis of eight times the employee's base hourly rate for each scheduled
day missed. Funeral leave must be taken during the period beginning with
the date of death and ending with the date of the funeral or memorial
service. In order to be eligible, the employee must submit verification
of having attended the funeral or memorial service.
ARTICLE XVIII
JURY DUTY
Any employee who has completed their probationary period and is compelled
to serve on a jury on a day the employee is scheduled to work shall be paid a
sum equal to the difference between their jury duty pay and eight times their
base hourly wage rate. In order to receive jury duty pay, the employee must
provide the Company with a copy of the jury summons within two work days
after receiving it and must submit written confirmation from the court
regarding their dates of service and amounts received. Employees must
report for work on any day when their services as a juror are not required or
when they are excused from jury duty with more than four hours remaining on
their scheduled working day.
ARTICLE XIX
LEAVES OF ABSENCE
Section 1. Personal Leave.
The Company may grant unpaid personal leaves of up to nine (9) months'
duration to employees who demonstrate a compelling personal need. The
grievance procedure shall be available if the Union believes that the
refusal of a leave constitutes an abuse of discretion. The Company may
impose reasonable terms upon the granting of personal leaves (e.g., periodic
status reports). The Company shall continue the employee's group health
coverage for up to twelve (12) weeks, whereupon the employee may exercise
COBRA purchase rights.
Section 2. Family & Medical Leave.
The following provisions shall apply to all family or medically-related
leaves, including leaves occasioned by occupational injuries or illnesses
compensated by workers' compensation:
1. An employee with at least 12 months of service who
actually worked at least 1,250 hours during the 12-month period
preceding a leave request (excluding vacations, holidays, leaves,
etc.) will be granted up to 12 weeks of unpaid leave during any
rolling 12-month period:
(a) Parenting Leave. To care for a newborn son
or daughter or a child placed with the employee for
adoption or foster care.
(b) Family Medical Leave. To care for a
spouse, child, or parent of the employee who has a
serious health condition.
(c) Employee Medical Leave. Because of a
serious health condition (including pregnancy) that
renders the employee unable to perform the functions of
his job. The period of leave shall not exceed the
period of disability.
All parenting leave shall be taken on consecutive full days
and must be utilized before the newborn is 12 months old or within
12 months following the adoptive or foster placement. Husbands and
wives shall not be required to aggregate family medical or parenting
leave. During the first year of the contract, the Company shall not
exercise its statutory right to require employees to first utilize
vacation in substitution for leave. If, during the first year of
the contract, the frequency of family and medical leave increases
significantly, the Company may require the utilization of up to one
week of vacation.
2. In the case of employee medical leave, the term "serious
medical condition" means an illness, injury, or condition that: (a)
renders the employer unable to perform the functions of their job;
and (b) requires in-patient care in a hospital or residential care
facility; or (c) requires continuing treatment by a physician or
other health care provider. The following conditions do not
normally constitute serious medical conditions: colds, flu, ear
ache, upset stomach, minor ulcers, headaches, and routine dental
problems. Any period of incapacity due to pregnancy will be
considered a serious medical condition. Absence because of
substance abuse (as opposed to treatment therefor) does not qualify.
3. Where the need for leave is foreseeable (e.g., normal
childbirth, elective surgery), the employee shall give at least 30
days' written advance notice. The leave shall not commence until
proper notice has been given.
4. The employee must provide specific information as to the
need for the leave and its expected duration. In the case of
employee medical leave, the employee must notify the Company as soon
as possible of the nature of the medical problem and whether it will
require in-patient treatment or continuing treatment by a physician.
Unless physically incapacitated to do so, employees granted family
or medical leave shall telephonically report on their status and
expected date of return on a weekly basis.
5. If the leave is for a serious health condition of the
employee or a family member, such condition must be supported by a
written certification from the treating physician or health care
provider. In the case of employee medical leave, the certification
must recite the provider's opinion regarding the impact of the
illness or injury upon the employee's ability to perform the
specific functions of their job. The Company will provide a list of
the essential functions of the employee's job on the request of the
provider. If the certification is incomplete or the Company has
reason to doubt its validity, the employee must obtain the opinion
of a second health care provider designated by the Company. The
cost of the second opinion shall be borne by the Company. Should
the second opinion differ from the original certification regarding
the need for, or anticipated duration of the leave, the Company and
the Union shall select a third medical provider whose opinion shall
be binding and conclusive on all parties. The cost of obtaining the
third opinion shall be borne by the Company. If the serious health
condition requires more than one month's leave, the employee must
submit monthly recertification of disability from his/her provider.
6. Family medical leave or employee medical leave may be
taken intermittently to the extent permitted by the Family & Medical
Leave Act (FMLA). The employee shall utilize intermittent leave
only when medically necessary. In any situation where the need for
leave is foreseeable based upon planned medical treatment (including
recurring visits to a health care provider), the employee shall
schedule the treatment in accordance with minimal disruption of the
employer's operations (i.e., to miss as little scheduled work time
as possible). In order to minimize the disruptive effect of the
employee's absence, the Company may transfer the employee to other
duties (without loss of pay) for the duration of the leave.
7. Before being restored to duty, any employee whose leave
is based upon their own serious health condition must submit written
verification from their treating physician or provider evidencing
the provider's understanding of the essential functions of the
employee's job and the employee's ability to fully perform such
functions. If the Company has reason to believe that the
restoration of the employee would pose a significant risk to the
health or safety of the employee or others which cannot be
eliminated by reasonable accommodation, the employee shall be
examined by a provider selected by the Company as a condition to
restoration. If the opinions of the treating provider and the
Company-selected provider differ, the question of the employee's
entitlement to restoration shall be resolved by arbitration under
Article VIII. Any employee denied restoration may utilize any
remaining balance of the 12-week maximum leave.
8. An employee on family or medical leave shall not be
entitled to any pay or benefits other than group health plan and
sickness & accident insurance coverage. Employees on family or
medical leave shall be subject to the same financial obligations
(e.g., co-payments, deductibles) as active employees regarding group
health coverage. If the employee cannot return to work after
exhausting 12 weeks of family or medical leave, the employee may
exercise COBRA purchase rights.
9. Upon completion of any family or medical leave, the
employee shall be restored to an equivalent position with equivalent
pay and benefits. The Company shall continue its current practice
of providing medical coverage for up to 26 weeks for employees who
are collecting sickness & accident insurance benefits.
10. If an employee remains disabled due to a serious health
condition after exhausting 12 weeks of FMLA leave, the employee will
continue to collect the remainder of sickness & accident insurance
benefits.
11. Attendance points will not be assessed against any
absence which qualifies as a parenting leave, family medical leave,
or employee medical leave under this section. Moreover, all such
qualifying leave time shall be counted as time worked for the
perfect attendance bonus.
Section 3.
Obtaining any leave under false pretenses, seeking or taking any employment
during a personal leave, failure to cooperate with any examination called for
in this article, failure to immediately report for work upon the expiration of
any period of leave, or any violation of the stated purpose or terms of any
leave shall be grounds for termination.
Section 4.
Seniority shall continue to accrue during any approved leave of absence.
If a layoff is in effect when an employee seeks to return from a leave of
absence, the employee will be placed in the same position they would have
occupied had they been on the active payroll at the time the layoff commenced.
ARTICLE XX
HEALTH & SAFETY
It is agreed that the Company, the Union, and the Employees share a common
responsibility to achieve a safe and healthy workplace. The Union will
designate a Safety Chairperson who may also be the Unit Chairperson. The
Safety Chairperson shall be provided with a copy of all MSD sheets and all
reports mandated by OSHA. A safety committee comprised of two managers, the
Safety Chairperson, and one representative from each of the four operational
areas (slitters, mills, material handling, and maintenance) shall meet
monthly and conduct an inspection of the plant. The Company shall provide
and the employees shall utilize all personal protective equipment required
by OSHA. Employees who fail to follow safe practices or fail to utilize any
personal protective equipment designated by the Company shall be subject to
corrective action. All supervisors shall be certified in standard first aid
and cardio-pulmonary resuscitation and the Union shall be provided a copy of
their certification and periodic renewals. The Company shall meet and confer
with the Safety Chairperson regarding the adequacy of any arrangements with
outpatient clinics and/or hospitals. Any injured employee who is sent home
by the clinic or hospital shall be paid for the balance of their scheduled
shift.
ARTICLE XXI
NON-DISCRIMINATION
The Company will not discriminate against any employee for any reason
prohibited by any federal or state statute, including employment discrimination
based upon race, color, religion, sex, nationality, age, disability, or union
membership.
ARTICLE XXII
UNIFORMS
The Company shall continue to provide uniforms (and laundering services
therefor) for all bargaining unit employees. Employees shall be responsible
for the proper cycling of their uniforms and to verify the number of uniforms
returned by the laundering service. In the event that the temperature
reaches 85 degrees Fahrenheit inside the plant, employees will be permitted
to wear the following in lieu of uniform shirts:
Plain white t-shirt.
Steel Tech logo t-shirt.
UAW logo t-shirt.
No additional words, messages, or symbols are permitted on shirts worn in
lieu of uniforms. Uniforms shall be worn Monday through Friday but Saturday
shall be considered a "casual day."
ARTICLE XXIII
UNION BULLETIN BOARD
The Company shall make available to the Union a bulletin board for the
posting of notices and other union business.
ARTICLE XXIV
WAGES & BENEFITS
Bargaining unit employees shall be paid the wages set forth in Appendix A
and the insurance and retirement benefits set forth in Appendix B.
ARTICLE XXV
MISCELLANEOUS
Section 1.
Pay checks shall be distributed on Thursday for hours worked the prior
week. Pay checks shall not be withheld as a form of corrective action.
Section 2.
The Company will continue its current policies regarding smoking and
parking assignments unless and until mutually agreed otherwise.
Section 3.
If the Company's modification of any existing job classification
substantially changes the essential nature of the job's duties, the parties
will meet and confer regarding any wage issues. Temporary transfers, machine
modifications, or the assignment of fill-in responsibilities shall not be
considered as substantial changes. The existing rate shall remain in effect
until the parties reach agreement; provided, however, that any change shall be
retroactive to the date when the changes took effect.
Section 4.
Within 60 days following the effective date of this Agreement, the Company
shall provide the Union with a written description of each job. The fact that
a particular task is omitted from a job description shall not be grounds for
an employee to refuse to perform that task.
Section 5.
Within 30 days following the effective date of this Agreement, the Company
shall vacate the room which currently houses the computer that handles the
set-up for the large slitters and convert the space to a Union office. The
Union shall keep the office locked and shall not knowingly permit loitering
in such office.
Section 6.
Supervisors shall not routinely perform bargaining unit work; provided,
however, that supervisors may perform production or maintenance work on a
"spot" basis:
To assist bargaining unit employees as needed in order to
maintain the flow of production, meet delivery commitments, or
catch up when production falls behind.
To train employees or test equipment.
To respond to unforeseen emergencies.
To cover for absenteeism or a shortage of qualified personnel;
provided, however, that the Company shall, where possible, use
overtime, temporary transfers, and/or the procedures for
filling job vacancies to avoid excessive production work by
supervisors.
Section 7.
Any payroll deductions currently offered shall continue to be offered.
Section 8.
The Company shall provide each employee a copy of this Agreement. If the
document is printed by a commercial printer, the Company shall utilize a union
printer.
Section 9.
If the Company permits any supervisor to return to the bargaining unit,
he/she shall be treated as a new hire.
Section 10.
The Company shall enforce a policy against sexual harassment.
Section 11.
Employees who quit, retire, die, or are discharged shall receive one
twelfth of their earned but unused vacation pay for each full calendar month
completed during the anniversary year during which the death, retirement, quit,
or discharge occurs.
Section 12.
Payroll errors of four (4) or more hours shall be rectified within two full
work days following verification of the error.
Section 13.
The Company shall engage an architect or space planner to study the
feasibility of expanding the women's locker room.
Section 14.
Leaders may give routine assignment and direction but shall not recommend
or impose discipline.
Section 15.
The Company shall continue to reimburse employees who have completed their
probationary period up to $100.00 annually toward the cost of steel-toe safety
shoes.
Section 16.
The Company shall continue to reimburse employees who have completed their
probationary period for prescription safety glasses on the following basis:
50% of the cost of regular eye exam once every two years, to a
maximum of $50.00, provided that the purchase of prescription
safety glasses occurs as a result of the exam;
100% of the cost of lenses once each calendar year
(accessories, such as tinting, scratch guard, etc., are not
covered);
Up to $50.00 toward the cost of frames, once each calendar
year.
Replacement costs for lost or damaged frames and lenses will
be reimbursed once per calendar year according to this same
schedule.
Section 17.
The Company shall reimburse employees who have completed one full year of
service and are pursuing an undergraduate degree for their actual out-of-pocket
cost for tuition and books and shall reimburse non-degree course work on the
same basis if (but only if) the course is strongly job related and approved
in advance by the plant manager. Disputes over the job-relatedness of a
course are subject to the grievance arbitration procedure. Tuition
reimbursement shall be on the basis of 90% for an "A" grade, 85% for a "B"
grade, and 80% for a "C" grade.
Section 18.
Each calendar year, the employee who submits the best written safety
suggestion which is adopted shall receive a $100.00 cash award. The Safety
Committee shall make the selection from those suggestions adopted by the
Company.
Section 19.
The Company will not deduct from an employee's pay amounts of less than
$20.00 which have been previously overpaid. Any deductions for amounts in
excess of $20.00 must be made by the second pay following the error.
Section 20.
The current contractual relationship with the food service vendor will be
terminated effective May 4, 1996. Thereafter, Local 985 will assume total
responsibility for the selection and all arrangements with food service
vendors. The Company shall not enter into (or guarantee) any further contracts
with food service vendors. All funds received by Local 985 from food
service vendors shall be deposited into an account for the use of the Steel
Tech bargaining unit to cover the purchase of office supplies and other
reasonable and necessary expenses.
Section 21.
Up to a maximum of ten (10) attendance points assessed prior to the
effective date of this agreement will be carried over for purposes of the 16-
point limit in Article XI. For those employees who have more than ten (10)
points, the oldest points will be eliminated until the employee's point status
is reduced to ten (10). However, all prior discipline not pertaining to
attendance shall be considered expunged as of the effective date of the
agreement.
ARTICLE XXVI
CONTRACT TERM
Section 1.
If applicable Federal or state law renders invalid or unenforceable any of
the provisions of this Agreement, all unaffected provisions shall remain in
force and the parties will negotiate in good faith regarding a replacement
for the invalid provision. Such replacement provision shall become effective
immediately upon agreement by the parties without the need for further
ratification by the Union membership and shall remain in effect for the
duration of this Agreement.
Section 2.
This Agreement shall become effective on the first Monday after receipt by
the Company of written notice from the Union that a written agreement approved
by the respective bargaining committees has been properly ratified by the
members of the bargaining unit pursuant to the provisions of the UAW
International Constitution.
Section 3.
If either party gives notice of its desire to modify or terminate this
agreement by February 1, 1999, the agreement shall expire March 31, 1999. If
the parties have not concluded a new agreement by the expiration date, all
provisions of the Agreement shall remain in effect unless and until:
The parties execute a new agreement; or
The parties mutually agree to terminate this Agreement; or
The Company exercises any right under federal law to implement
its offer following a bargaining impasse; or
The Union exercises its right under federal law to strike or
the Company exercises its right to lockout.
If timely notice to modify or terminate is not given, the agreement shall
continue in effect for successive yearly periods until notice is given by
February 1 of any year.
Section 4.
Notices of intent to modify or terminate this Agreement shall be in writing
and sent by registered mail or overnight delivery to: UAW Region 1-A, 9650
South Telegraph Road, Taylor, MI 48180; Steel Technologies, Inc., 5501
Belleville Road, Canton, MI 48188.
Section 5.
Both parties have been afforded adequate opportunity to bargain over any
subject and neither party shall have the right during the term of this
Agreement to demand bargaining over any subject which is contained in (or
which could have been contained in) in this Agreement; provided, however,
that if, during the term of this contract, the Company contemplates taking
some action which is not expressly authorized by a provision of this Agreement,
nothing herein shall be deemed as a waiver by the Union of any bargaining
opportunity required by federal law.
INTERNATIONAL UNION, UNITED
AUTOMOBILE, AEROSPACE, AND
AGRICULTURAL IMPLEMENT
STEEL TECHNOLOGIES, INC. WORKERS OF AMERICA (UAW)
By ____________________________ By ____________________________
J. C. Thomas Bob King, Regional Director
Vice President - Manufacturing
____________________________
____________________________ Don Jividen
James Krinock International Representative
General Manager
____________________________
Al Przydzial, Vice President
UAW Local 985
____________________________
Glenn Davis, Committeeperson
____________________________
Christa Morrelli,
Committeeperson
____________________________
Leonard Craig, Committeeperson
APPENDIX A
<TABLE>
WAGE RATES
GRADE JOB RATE
<S> <C> <C>
1 MATERIAL HANDLER 9.00
2 CRANE OPERATOR 10.00
FORKLIFT OPERATOR
TRUCK LOADER
3 RTS COORDINATOR 10.25
BL LEADER
4 SLITTER OPERATOR 11.00
MILL OPERATOR
RECEIVING
SHIPPING
SCALE OPERATOR
5 44-INCH MILL OPERATOR 12.00
ROLL GRINDER
ANNEALING OPERATOR
6 MAINTENANCE 14.50
</TABLE>
A. WAGE PROGRESSION.
Section 1. Any employee whose wage rate as of the effective date of the
contract is below the contract rate for their classification shall receive an
increase equal to one third of the difference between their current rate and
the contract rate for their classification on: (a) the effective date of the
agreement; and (b) the first and second anniversary dates of the contract.
Example: Employee Jones' rate is $9.25 on March 31, 1996. The
contract rate for Jones' "Grade II" job is $10.00.
Jones will receive the $.75 difference in the following
three installments: $.25 increases on the effective
date of the agreement and $.25 increases on the first
anniversary date and the second anniversary date.
Section 2. Any employee whose wage rate as of the effective date of the
contract is at or above the contract rate for their classification shall have
their rate red-circled and receive lump sum payments equal to 2.5% of their
prior calendar year's gross earnings on: (a) the effective date of the
contract; and (b) the first and second anniversary dates.
Example: Employee Smith's wage rate is $11.20 and the contract
rate for his "Grade IV" job is $11.00. Smith's $11.20
rate shall be red-circled and he will receive lump sum
payments equal to 2.5% of his prior year's gross
earnings on the effective date and each anniversary date
of the agreement.
Section 3. Any employee who would receive less than a $.30 per hour
average annual increase under the formula set forth in Section 1 shall be
increased to the contract rate on the effective date of this Agreement and
shall receive lump sum payments equal to 2.5% of their prior year's gross
earnings on the first and second anniversary dates of the contract.
B. JOB BIDS.
Employees who successfully bid to a higher rated job will begin their new
job at their then-current rate or 90% of the then-current wage rate of the
lowest paid employee in the bid classification, whichever is higher. After
completing their proficiency period or 200 work days, whichever is shorter,
the successful bidder will receive the then-current wage rate of the lowest
paid employee in the classification. If the lowest paid employee's wage
rate is below the contract rate for the classification when the bidder
completes his proficiency period, the bidder will "piggyback" the progress
of the lowest paid employee in achieving the full contract rate.
Example: Employee Miller's wage rate is $8.00 when he
successfully bids to a Grade IV job as a slitter operator. The
lowest paid slitter operator at the time of the bid is Employee
O'Reilly who earns $10.00. Miller's starting rate will be $9.00
(90% of $10.00) and he will move to a wage identical to O'Reilly's
when he completes the 100-day proficiency period. When O'Reilly
moves to the full contract rate ($11.00), so does Miller.
Employees who bid laterally or to a lower rated job during the first two years
of the contract shall receive the average wage of the employees who hold that
classification. Employees who bid laterally or to a lower rated job during the
third year of the contract shall receive the full contract rate for the bid
job. If the bidder has never before held the bid job, he shall start $.50
below the rate set forth in the preceding sentence and shall be increased by
$.50 when he completes the proficiency period for the job.
C. NEW HIRES.
New hires will start $1.00 per hour below the rate for their classification
and will receive $.50 increases on their first and second anniversary dates.
D. RATIFICATION BONUS.
As an inducement to ratify the contract, each employee who is employed as a
full-time, regular employee of Steel Tech on April 13, 1996 shall be eligible
for a cash bonus of $4,500.00 if (but only if): (a) the UAW notifies the
Company no later than midnight April 13, 1996 that acceptance of this offer
has been ratified by the membership and that the agreement will take effect
on April 15, 1996; and (b) there has been no strike, slowdown, inside games,
or other conduct described in the "no strike clause" prior to the effective
date. The ratification bonus will be paid as follows: $2,000.00 on April
19, 1996; $1,500.00 on April 1, 1997; and $1,000.00 on April 1, 1998.
In order to be eligible for any payment, an employee must have been on the
active payroll: (a) on April 13, 1996; and (b) on the date when any
subsequent payment is due. Eligibility for, and the amount of, the payment
are not tied to the number of hours worked or the nature or amount of
services rendered by otherwise eligible employees. The ratification bonus
is separate from, and will not be included in, an employee's wage rate for
purposes of calculating overtime pay, vacation pay, holiday pay, workers'
compensation premiums, or any form of compensation, benefit, payroll tax,
r "roll up" which is calculated based on wage rates.
APPENDIX B
INSURANCE & RETIREMENT BENEFITS
Section 1. Medical Insurance. Effective May 1, 1996, the Company shall
provide bargaining unit employees with the benefits enumerated in Aetna Health
Plans' "Open Choice PPO" plan. A summary of benefits for the "Open Choice PPO"
is attached as Appendix "C."
Section 2. Dental Insurance. Effective May 1, 1996, the Company shall
provide bargaining unit employees with the dental benefits enumerated in the
"Delta Premier" plan attached as Appendix "D."
Section 3. Other Insurance. The accidental death/dismemberment and life
insurance benefits currently in effect shall be maintained for the life of this
agreement at no cost to the employees. The sickness and accident insurance
maximum benefit shall be increased to $325.00 per month effective May 1, 1996
and to $350.00 per month effective April 1, 1998. Attached as Appendix "E" are
summaries of the benefits for life, accidental death, and sickness and accident
insurance. The Company may change medical, dental, or other insurance carriers
or self-insure all or any portion of any coverage so long as there is no
material change of benefits.
Section 4. Pension. Effective May 1, 1996, the Company shall contribute
$.10 for each hour worked or paid to the National Industrial Group Pension Plan
for Labor-Management Groups ("NIGPP"). The Company's hourly rate of
contribution shall be increased to $.15 on April 1, 1997 and to $.20 on
April 1, 1998. The Union acknowledges that the Company's responsibility is
limited to providing the defined contribution and that the Company has no
role or responsibility regarding the extent of the benefits provided by NIGPP.
Section 5. 401K & Profit Sharing Plans. The Company's 401K plan will be
amended to suspend any further matching contributions by the Company on behalf
of bargaining unit employees following the pay period ending April 13, 1996.
The employees' right to contribute shall be maintained. The Company's
profit-sharing plan will be amended to terminate the participation of
bargaining unit employees effective April 13, 1996. This shall not affect
the employees' entitlement to receive their lump sum distribution for the
period ending March 31, 1996.
APPENDIX E
[STEEL TECH LETTERHEAD]
Don Jividen
UAW Region 1A
9650 Telegraph Road
Taylor, MI 48180
Letter #96-1
Dear Mr. Jividen:
During the negotiation of our 1996 agreement, the UAW expressed concern
about the prospect of a sale of the plant. The purpose of this letter is to
address that concern. Steel Technologies hereby warrants and represents that:
Its Belleville Road plant is essential to servicing the
Company's Detroit area customers on a cost-effective basis.
We have no current intention to sell our Belleville Road plant
and have never considered selling the plant.
We have never had any discussions with a potential purchaser
and are not seeking a purchaser.
In the unlikely event that we should ever consider selling the plant, the
following procedures shall apply:
Before signing a contract of sale, the Company will deliver a
copy of the UAW collective bargaining agreement to any
prospective purchaser.
At least 30 days prior to any transfer of assets, the Company
shall deliver a copy of any contract for the sale of the plant
to the UAW and bargain in good faith concerning the effects of
any sale upon bargaining unit employees.**
The UAW shall have the right to strike if, at the time the
assets are transferred, the purchaser has neither adopted the
terms of the Company's collective bargaining agreement nor
negotiated a substitute agreement acceptable to the UAW.
STEEL TECHNOLOGIES, INC.
By ____________________________
J. C. THOMAS, V.P.
AGREED:
UAW
By ____________________________
*Any employee who has taken one or more paid sick days during the period
January 1 through April 14, 1996 shall be entitled to two (2) floating holidays
in 1996.
**The sales price and any proprietary financial data may be expunged from
the UAW's copy of the contract.
________________
*Gas chromatography/mass spectrometry testing.
____________________
*Actual work days (not calendar days).
Don Jividen
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