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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR FISCAL YEAR ENDED DECEMBER 31, 1997
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 0-21856
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ABT BUILDING PRODUCTS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3684348
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NUMBER)
ONE NEENAH CENTER, NEENAH, WISCONSIN 54956
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
Registrant's telephone number, including area code: (920) 751-8611
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS: NAME OF EACH EXCHANGE ON WHICH
None REGISTERED:
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
(TITLE OF CLASS)
Common Stock, par value $.01 per share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
On March 18, 1998 the aggregate market value of the voting and non-voting
common equity held by non-affiliates of the registrant, using the closing
price of the Registrant's Common Stock on such date, was $89,216,735.
The number of shares of the Registrant's common stock outstanding as of March
18, 1998 was 10,659,160.
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DOCUMENTS INCORPORATED BY REFERENCE
IDENTIFICATION OF DOCUMENTS PART INTO WHICH INCORPORATED
Proxy Statement for Annual Meeting of Part III--Items 10, 11, 12 and 13
Shareholder to be held on May 5, 1998
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ABT BUILDING PRODUCTS CORPORATION
1997 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
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ITEM NO. DESCRIPTION PAGE
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PART I
Item 1. Business..................................................... 1
Item 2. Properties................................................... 12
Item 3. Legal Proceedings............................................ 13
Item 4. Submission of Matters to a Vote of Security Holders.......... 17
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder 18
Matters......................................................
Item 6. Selected Financial Data...................................... 19
Item 7. Management's Discussion and Analysis of Financial Condition 20
and Results of Operation ....................................
Item 7A. Quantitative and Qualitative Disclosures About Market Risk... 25
Item 8. Financial Statements and Supplementary Data.................. 26
Item 9. Changes in and Disagreements with Accountants on Accounting 48
and Financial Disclosure ....................................
PART III
Item 10. Directors and Executive Officers of the Registrant........... 48
Item 11. Executive Compensation....................................... 48
Item 12. Security Ownership of Certain Beneficial Owners and 48
Management ..................................................
Item 13. Certain Relationships and Related Transactions............... 48
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 49
8-K..........................................................
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PART I
ITEM 1. BUSINESS
GENERAL
The Company is the largest manufacturer of exterior hardboard siding in the
United States and a leading manufacturer of plastic resin and fiber cement
specialty building products. The Company believes its products, marketed under
the "ABTco," "ABT Canada Limited" and "Canexel" trade names, provide
distinctive design, performance or cost advantages, as compared to products
made from solid wood, brick, stucco and other natural materials. The Company's
product offering is extensive and is targeted for use in most segments of the
building materials market, including new residential construction, repair and
remodeling and a variety of industrial applications. The Company's products
are sold in North America and certain international markets through four
distribution channels: wholesale distributors, home center retailers,
manufactured housing builders and industrial fabricators.
In implementing its production and distribution strategy, the Company has
targeted certain markets, including the vinyl and fiber cement siding markets
that have historically exhibited relatively higher rates of growth, and
focused on certain higher growth distribution channels, such as the home
center retailers, that desire broad product lines and "one-stop" benefits
provided by suppliers such as the Company. In order to remain responsive to
the changing needs of its target markets and improve overall production
performance, the Company has invested approximately $132 million in its
manufacturing facilities from January 1, 1995 to December 31, 1997. Recent
investments have included the completion of a new $61 million fiber cement
siding manufacturing facility in Roaring River, North Carolina, and
approximately $12 million for the retrofitting of a vinyl siding manufacturing
facility in Holly Springs, Mississippi. As a result of its investments, the
Company's manufacturing processes and facilities incorporate state-of-the-art
technology that provide it with the flexibility to produce a variety of
products, enhance the introduction of new products and adjust its product mix
in response to changing market conditions.
The Company has two principal product groups, Exterior Products and
Specialty Products:
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EXTERIOR PRODUCTS SPECIALTY PRODUCTS
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. Exterior hardboard siding, utility panels . Interior hardboard products, including
and trimboard (collectively, "Exterior tileboard, prefinished paneling,
Hardboard Siding") doorskins and hardboard substrate
(collectively, "Interior Hardboard")
. Exterior vinyl siding and trim . Decorative prefinished mouldings and
accessories, decorative plastic shutters, other plastic products (collectively,
vents and building product accessories "Interior Plastics")
(collectively, "Exterior Plastics")
. Fiber cement siding products ("Fiber
Cement Siding")
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The Company was formed in 1992 by Kohlberg & Co. and George T. Brophy, the
Company's Chairman, President and Chief Executive Officer, in order to acquire
a substantial portion of its current domestic operations from Abitibi-Price
Corporation ("APC") relating to APC's Building Products Division (the
"Acquisition"). In July 1993, the Company consummated an initial public
offering of its shares of common stock. During 1994 and 1995, the Company
completed three acquisitions to improve its market presence and product
diversity. In 1994, the Company acquired a division of Avenor, Inc, a
manufacturer of Exterior Hardboard Siding and Interior Hardboard and in 1995,
the Company acquired the assets of KenTech Plastics Inc., a manufacturer of
shutters and related products, and the vinyl siding operations of EMCO Ltd. In
1995, the Company approved the construction of a $61 million fiber cement
siding manufacturing facility with production commencing in late June 1997. In
1997, the Company invested approximately $12 million in the retrofitting of a
vinyl siding manufacturing facility in Holly Springs, Mississippi.
The Company is a Delaware corporation with principal executive offices
located at One Neenah Center, Suite 600, Neenah, Wisconsin 54956, telephone
number (920) 751-8611.
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INDUSTRY OVERVIEW
The residential building products industry depends primarily on the level of
new home construction and the repair and remodeling of existing homes. The
level of activity is generally a function of interest rates, inflation,
unemployment, demographic trends, gross domestic product growth and consumer
confidence. Demand for the Company's products is affected by residential
housing starts and existing home sales, the age and size of the housing stock,
and overall home improvement expenditures. According to the National
Association of Home Builders, domestic housing starts declined from
approximately 1.8 million in 1986 to approximately 1.0 million in 1991,
improving to approximately 1.5 million in 1997. Domestic housing starts have
fluctuated between 1.3 million and 1.5 million from 1993 to 1997. Also
according to the National Association of Home Builders, residential remodeling
expenditures have increased over the same period, from $91 billion in 1986 to
a high of approximately $114 billion in 1996 and decreased to $110 billion in
1997.
Residential building products are distributed through both wholesale and
retail channels. The wholesale channel of distribution includes a variety of
specialized and broad-line wholesale distributors and dealers focused
primarily on the supply of products for use by professional builders and
contractors. Within the retail distribution channel, one of the most recent
developments is the continuing growth and consolidation among the large, well-
positioned retailers catering to the do-it-yourself and repair and remodeling
markets. Such retailers typically seek to develop and maintain relationships
with building product manufacturers that provide a broad line of products,
high levels of service and the ability to grow with their needs.
BUSINESS STRENGTHS AND STRATEGY
By capitalizing upon senior management's expertise in manufacturing, sales,
marketing and customer service in the specialty building products industry,
the Company has developed a business strategy designed to improve its
competitive position while increasing net sales and operating income. The
Company's business strategy emphasizes the following competitive strengths:
Broad and Diversified Line of Exterior Products.
The Company plans to continue its emphasis on product line breadth and
diversity to take advantage of new sales opportunities, to maximize
flexibility in dealing with shifts in market demand and to expand its ability
to provide "one-stop" service to its customers. The Company's extensive
product offering and development capabilities provide it with what it believes
are competitive advantages, including (i) an ability to access new markets,
such as the fiber cement and vinyl siding product markets, (ii) an ability to
modify existing product lines to respond to changing market conditions such as
its recent emphasis on the utility panels and TrimBoard products within its
traditional Exterior Hardboard Siding products category, and (iii) enhanced
selling opportunities in growing channels of distribution, including home
center retailers.
Leading Market Shares in Selected Specialty Product Categories.
The Company intends to maintain a leading market share position in the
various Specialty Product categories in which it competes in the United
States. The Company believes that it is currently a leading manufacturer in
tileboard, plastic moulding and lightly embossed doorskins in the United
States. The Company believes that Specialty Products represent a niche market
with margins that are relatively higher than those for its Exterior Products.
The Company believes that its flexible manufacturing facilities and its broad
product lines provide it with competitive advantages in this market.
Established, National Distribution Through Multiple Channels.
The Company seeks to maintain a balanced approach to national distribution
through both wholesale and retail channels. The Company's broad network of
wholesale distributors and dealers primarily serves professional customers
while its relationship with well-positioned home center retailers, such as The
Home Depot, Inc.,
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Lowe's Companies, Inc. and Menard, Inc., provides primary distribution to the
professional do-it-yourself repair and remodeling markets. The Company
believes that the expected continuing growth and consolidation of the home
improvement retail distribution channel, combined with the Company's product
and marketing strategies, provide the Company with an opportunity to increase
sales. The Company's sales to domestic home center retailers increased from
$78 million in 1996 to $111 million in 1997, a 42% increase. In addition, the
Company believes that it can leverage its relationship with this established
distribution network to support its new product development and marketing
strategy.
Flexible State-of-the-Art Manufacturing Facilities.
The Company plans to continue to invest in its manufacturing facilities,
incorporating state-of-the-art technology, to provide it with the flexibility
to produce a wide range of products for various applications. This flexibility
enhances the Company's new product development efforts, improves capacity
utilization and allows the Company to adjust its product mix to meet customer
needs and respond to market opportunities. For example, the Company's coating
capabilities allow it to use a variety of substrate materials to produce
specialty products, such as tileboard, which generally command higher prices
than less differentiated products. Similarly, the Company's new fiber cement
production facility was specifically designed to enable the Company to
manufacture a variety of exterior and specialty products in addition to
siding.
New Product Development and Differentiation.
The Company's ongoing product development efforts and focus on product
differentiation emphasize continuous enhancements in quality, performance and
style, all while focusing on pricing products competitively. Through extensive
market research, customer interviews and ongoing product research and
development, the Company has successfully introduced numerous new products
during the last five years. These products have spanned the Company's existing
product categories and include new entries in the Company's (i) Interior
Plastics category, including UltraOak, Affinity and Prime Mould, which
accounted for 28% of sales in this category in 1997, (ii) Exterior Hardboard
Siding category, including TrimBoard, which accounted for 10% of sales in this
category in 1997, (iii) Fiber Cement Siding category, (iv) Exterior Plastics
category, with the introduction of the line of vinyl siding "Northern Star,"
and varieties of color through polypropylene shutters, and (v) Interior
Hardboard category, including a number of newly designed tileboard products.
From time to time, the Company has made, and evaluates acquisitions that
complement its building product lines. The Company will continue to review
acquisition opportunities consistent with its core competencies and business
strategy in specialty building products.
PRODUCTS
Management believes that its products provide distinctive design,
performance or cost advantages as compared to products made from solid wood,
brick, stucco or other natural products. Management also believes that the
market for its principal products is favorably affected by factors which
adversely affect the availability, quality or cost of competing products. Such
factors include the declining availability of old-growth timber, growing
environmental pressures to preserve wildlife habitats and increasing
restrictions on clear cutting of timber.
The Company implements its product development strategy through teams which
focus on different segments of each market including: manufacturing,
marketing, sales forces and the end customer. The teams observe color and
design trends in the marketplace and discuss preferences of the consumer
through direct and continued interaction with home center retailers, wholesale
distributors and other customers. The Company's research and development
departments and product managers review the research and develop products
prototypes in connection with the Company's manufacturing and sales forces.
Such products are subsequently subject to a variety of tests, including
strength and durability, before being fully distributed. Coating, embossing
and other existing manufacturing techniques are among the techniques used by
the Company to develop new
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products. The Company has also developed new technology using paper overlays
and laminates, as well as new coatings in its new product development process.
Management believes that its expertise in new product development and sales
and marketing provides the Company with a competitive advantage.
The Company's Exterior Hardboard Siding products are sold under warranties
which are standard in the industry. Such warranties typically provide 25 years
of limited warranty against defects in material, delamination, checking,
splitting, cracking and chipping. The Company's vinyl siding products are also
sold under warranties which are standard in the vinyl siding industry. Such
warranties typically provide for up to a lifetime warranty against defects in
manufacturing, materials and color fade. Pursuant to the Acquisition of the
Building Products Division of APC, the Company assumed responsibility for a
portion of the liability for warranty claims based on products manufactured by
APC prior to the Acquisition.
Exterior Products
Exterior Products consists of exterior hardboard siding and trimboard,
utility panels, exterior vinyl siding and trim accessories, decorative plastic
shutters, vents and building product accessories and fiber cement siding
products. Sales of Exterior Products accounted for 61% of the Company's net
sales for the year ended December 31, 1997.
Exterior Hardboard Siding. Sales of Exterior Hardboard Siding accounted for
35% of the Company's net sales for the year ended December 31, 1997. The
Company manufactures approximately 100 different Exterior Hardboard Siding
products which fall into two broad categories, lap siding and panel siding.
Lap siding is installed with the bottom edge overlapping the top edge of
adjacent segments, while panel siding is installed flush to adjacent edges.
These products are either primed or prefinished in a wide variety of surfaces,
including stucco, fir, cedar and other simulated woodgrains.
During the past five years, primarily in response to continued demand for
Exterior Hardboard Siding products, the Company increased the annual
production capacity at its Roaring River siding facility from approximately
200 million surface feet to approximately 270 million surface feet as of
December 31, 1997. The increase in capacity was attained through a combination
of improvements in the manufacturing process and a capital investment of
approximately $4.0 million during 1993 and 1994. This increased Exterior
Hardboard Siding production capacity has enabled the Company to broaden its
product distribution and arrange with certain customers to distribute its
Exterior Hardboard Siding products on a national basis. In addition, increased
production capacity has allowed the Company the flexibility to adjust its
strategy in response to increasing price pressures on Exterior Hardboard
Siding products and Fiber Cement Siding products by shifting its Exterior
Hardboard Siding product mix from the 7/16p siding product into trimboard and
utility panels. The introduction in 1995 of the Company's trimboard products,
an alternative to solid wood trim used on the exterior of homes which
accounted for 10% of Exterior Hardboard sales in 1997, is expected to enhance
the Company's long-term utilization of production capacity.
The Company's Exterior Hardboard Siding products are sold under warranties
which are standard in the industry. Such warranties typically provide 25 years
of limited warranty against defects in material, delamination, checking,
splitting, cracking and chipping. Pursuant to the Acquisition, the Company
assumed responsibility for a portion of the liability for warranty claims
based on products manufactured by APC prior to the Acquisition.
Exterior Plastics. Vinyl siding sales represented 19% of the Company's net
sales for the year ended December 31, 1997. The Company manufactures its
woodgrain vinyl (polyvinyl chloride) siding in four different thicknesses
ranging from 37 to 44 millimeters. These products are offered in up to 13
different colors and 9
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different profiles. In addition to vinyl siding the Company produces a
complete line of soffit, fascia and vinyl siding accessories necessary for the
installation of the vinyl siding. The Company's vinyl siding products are also
sold under warranties which are standard in the vinyl siding industry. Such
warranties typically provide for up to a lifetime warranty against defects in
manufacturing, materials and color fade.
Prior to 1995, the Company was a reseller of injection molded shutters
manufactured by outside sources. In April 1995, the Company purchased a
manufacturer of injection molded and thermoformed plastic shutters and other
plastic molded products. Shutter product sales represented 7% of the Company's
net sales for the year ended December 31, 1997. Shutter products are
manufactured from various thermoplastic resins, primarily utilizing an
injection molded process and to a lesser extent a thermoforming process. The
Company's product line consists of raised panel and louvered shutters, which
have a woodgrain texture and are available in a wide variety of colors and
sizes. The product line also includes gable and dryer vents, flush mounted
blocks for use with electrical outlets and lighting and other building
products. These products complement the Company's other exterior siding
product lines and are sold through the same distribution channels.
Fiber Cement Siding. In response to the relatively rapid growth in demand
for fiber cement building products, the Company began construction of a new
Fiber Cement Siding facility in Roaring River, NC during 1995. Production
began in late June 1997, with sales for the six months ended December 31, 1997
totaling $4.8 million. The Company believes that the growth in demand for
fiber cement products has been due to the various properties of the product
that make it superior from an appearance, durability, maintenance, and safety
standpoint, as compared to alternative building products. These properties
include superior resistance to the damaging effects of weather, ultra violet
rays and wood boring insects. The cement substrate used in the manufacture of
this product allows a more durable bond between layers of the product's
construction, resulting in greater surface fidelity, and superior wood grain
and stucco patterns. These products also have a Class 1 fire rating which
means they do not burn, produce virtually no smoke and are thus inherently
safer than building products constructed entirely of wood. The Company's fiber
cement products, as do its exterior hardboard products generally, fall into
two categories, lap siding and panel siding. These products are either primed
or unprimed in a variety of surfaces, including stucco, fir, cedar and other
simulated woodgrains. The Company's fiber cement siding products are sold
under warranties which are standard in the industry. Such warranties typically
provide 50 years of limited warranty against defects in manufacturing and
materials.
Specialty Products
Specialty Products consists of interior hardboard products, including
tileboard, prefinished paneling, doorskins and hardboard substrate, decorative
prefinished mouldings and other plastic products. Sales of Specialty Products
accounted for 39% of the Company's net sales for the year ended December 31,
1997.
Interior Hardboard. Sales of Interior Hardboard accounted for 29% of the
Company's net sales for the year ended December 31, 1997. The Company's
Interior Hardboard product group has three general categories, prefinished
products, doorskins and industrial hardboard.
Prefinished products consists of two basic types: (i) tileboard, including
both embossed and flat melamine surfaces which substitute for ceramic tile in
kitchens, bathrooms and other high-moisture areas; and (ii) paneling,
including embossed woodgrain and stone designs, wet print designs and vinyl
and paper overlays. The Company believes that the main advantages of its
prefinished products as compared to ceramic tile, natural wood panels and
wallpaper are lower installed cost, superior design capabilities and ease of
application.
Doorskin products are manufactured from engineered hardwood fiber and are
50% denser than natural wood. The Company's product line consists of two
brands: Beauport door panels, which are embossed with the texture of oak and
prefinished in numerous natural wood colors, and Newport door panels, which
are embossed to replicate the look and design of a traditional 6-panel
colonial door.
The Company's industrial hardboard is a high quality substrate that has a
smooth surface on both sides. The Company sells industrial hardboard in an
unfinished state to various fabricators who use hardboard for a variety of
applications, such as the production of furniture components, displays and
store fixtures. The Company also sells unfinished hardboard to other companies
who apply finishing techniques to produce interior building products similar
to those of the Company.
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Interior Plastics. Sales of Interior Plastics products represented 10% of
the Company's net sales for the year ended December 31, 1997. The Company's
plastic moulding products consist primarily of prefinished polystyrene
mouldings and trim which are produced in a wide variety of profiles and
lengths and finished in a variety of colors, woodgrain prints and paper
overlays. The Company also produces a line of rigid polyvinyl chloride ("PVC")
mouldings for use with decorative plastic and designer paneling.
The Company's prefinished mouldings and trim are designed in various
patterns and finishes which match or complement the Company's prefinished
Interior Hardboard products, as well as a wide variety of other patterns and
finishes. Plastic moulding products compete against both finished and
unfinished wood mouldings, and are considered to have the advantages of
uniform appearance, consistent quality and ease of installation.
MARKETS AND DISTRIBUTION
The Company's products are sold throughout the United States, Canada and
internationally in the repair and remodeling, new residential construction and
industrial markets. The Company services these markets through four
distribution channels: distributors, home center retailers, manufactured
housing builders and industrial fabricators. The Company's largest customer is
Menard, Inc. with net sales aggregating approximately 11% of the Company's
consolidated revenues. The Company's products are generally sold under the
"ABTco," "ABT Canada Limited" and "Canexel" tradenames.
The Company maintains two separate sales and marketing organizations. The
Exterior Products Division and the Specialty Products Division sales and
marketing organization consists of four functional areas: sales, customer
service, product management and product support. These areas work in close
cooperation with one another in an effort to maximize the Company's net sales
and offer superior customer service. The Company's general sales and marketing
strategy is to distinguish itself from the competition by offering superior
customer service. The major components of the strategy are to offer the
customer superior support through the sales force and customer service forces
as well as providing the customer with innovative products through continued
market research and new product development.
Sales Force
Both the Exterior and Specialty Products divisions maintain a dedicated
sales force to service the Company's channels of distribution. Home center
retailers and wholesale distributors and dealers are serviced by a combination
of regional sales representatives and national account managers who are
responsible for maintaining existing customer relationships and developing new
business. The Company's manufactured housing, industrial and international
customers are covered by specialty sales forces also dedicated to the Exterior
Products and Specialty Products divisions. All of these sales representatives
work closely with customers to develop sales programs, point of sale displays
and new product ideas.
Customer Service
The customer service department is responsible for providing support to the
sales force as well as working directly with the customer. The customer
service department accepts customer orders, advises customers of order status,
handles order changes, returns and promotional programs and provides other
administrative support functions. Each customer service representative works
with a regional sales representative, visits customers, attends trade shows
and maintains relationships with the customers. The Company maintains a
Specialty Products customer service department in Troy, Michigan and an
Exterior Products customer service department in Charlotte, North Carolina.
Product Management
Product managers work closely with each division's sales force and the
manufacturing locations. The product manager is responsible for the
development of new products, the establishment of promotional programs and the
constant review of division product offerings.
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Product Support
The Company's product support includes quality assurance departments at each
manufacturing facility and two research and development departments. Each
manufacturing facility maintains an engineering and quality control staff
responsible for performing a variety of tests including strength and
durability tests in order to ensure the continued quality of the product. The
Company has a dedicated research and development department at each division
which focuses on new product development and continued manufacturing process
improvements.
Exterior Products Market
Exterior Hardboard Siding. The new construction market has accounted for
approximately 70% of the Company's Exterior Hardboard Siding sales with the
repair and remodeling market representing the balance in 1997. Exterior
Hardboard Siding has less appeal to the repair and remodeling market where it
must compete with aluminum, vinyl and other products that can be placed on top
of existing exterior cladding and thus are easier to install. The Company's
primary marketing emphasis remains on the southeastern and central states, the
regions where demand for Exterior Hardboard Siding is the highest and where
new residential construction has exceeded national averages in recent years.
The largest end users of hardboard siding are builders and contractors. To
service these markets, the Company primarily uses three channels of
distribution: (i) wholesale distributors selling to retailers and contractors,
(ii) direct sales to manufactured housing builders, and (iii) home center
retailers specializing in direct sales to builders and contractors. These
channels provide the Company with a broad customer base for its Exterior
Hardboard Siding products, with no single customer accounting for more than
10% of 1997 Exterior Hardboard Siding sales. The top ten customers represented
67% of the Company's 1997 Exterior Hardboard Siding sales.
Exterior Plastics. Vinyl siding sales in the United States are primarily for
use in the repair and remodeling markets. The Company intends to continue to
develop the United States market utilizing its existing distribution channels
which include (i) distributors selling to retailers and contractors, (ii) home
center retailers specializing in direct sales to builders and contractors, and
(iii) direct sales to manufactured housing builders. In Canada, the Company's
primary marketing emphasis will be on maintaining its market share in the new
residential construction market with opportunities to expand the use of vinyl
siding products in the repair and remodeling market. To service these markets,
the Company primarily uses two channels of distribution: (i) wholesale
distributors selling to retailers and contractors and (ii) home center
retailers specializing in direct sales to builders and contractors.
No single customer accounted for more than 36% of 1997 vinyl siding sales
while the top 10 customers represented 68% of the Company's 1997 vinyl siding
sales.
Fiber Cement Siding. The Company recently completed construction of its
Fiber Cement Siding facility. Production began in late June 1997 with sales
for the six months ended December 31, 1997 totaling $4.8 million.
Historically, the new construction market has accounted for a significant
percentage of Fiber Cement Siding sales with the repair and remodeling market
representing the balance. Fiber Cement Siding has less appeal to the repair
and remodeling market where it must compete with aluminum, vinyl and other
products that can be placed on top of existing exterior cladding and thus are
easier to install.
The largest end users of Fiber Cement Siding are builders and contractors.
To service these markets, the Company leverages its existing relationship with
the broad and established network for the distribution of its Exterior
Hardboard Siding products: (i) wholesale distributors selling to retailers and
contractors, (ii) direct sales to manufactured housing builders and (iii) home
center retailers specializing in direct sales to builders and contractors.
This distribution strategy provides the Company with a broad customer base for
its Fiber Cement Siding products.
Specialty Products
Interior Hardboard. Prefinished products are used primarily in the repair
and remodeling market. To a lesser extent, prefinished products are also sold
for various applications in new residential and commercial
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construction. The primary point of sale to the end user of prefinished
paneling products is the home center retailer or retail lumber dealer. The
Company distributes its prefinished products through distributors and directly
to home center retailers. The Company sells its door panel products to
interior door manufacturers in North America and internationally. No single
customer accounted for more than 16% of 1997 Interior Hardboard sales while
the top ten customers represented 54% of the Company's 1997 Interior Hardboard
sales.
Interior Plastics. The major market for the Company's prefinished mouldings
is the repair and remodeling market, where mouldings are used to complement
prefinished interior panels, wallpaper and painted walls. Certain of the
Company's new plastic moulding products are designed to appeal more directly
to the new residential construction market. The Company markets its plastic
moulding products through wholesale distributors for resale to retail lumber
dealers and other outlets, with the balance of sales made directly to home
center retailers. No single customer accounted for more than 21% of 1997
plastic moulding sales while the top ten customers represented 65% of the
Company's 1997 plastic moulding sales.
MANUFACTURING PROCESSES AND OPERATIONS
The Company's manufacturing processes and facilities use state-of-the art
technology which provides the Company with the flexibility to produce a wide
range of products for various applications and adjust its product mix
continuously to meet customer needs and respond to market changes.
Exterior Hardboard Siding. The Company utilizes the smooth one side ("S1S")
wet manufacturing process in the production of Exterior Hardboard Siding at
its Roaring River, North Carolina, and East River, Nova Scotia facilities. The
S1S process begins with wood waste or small logs that are converted to chips
and then reduced to wood fiber through a mechanical pulping process. After
these wood fibers are formed into mats on a continuous forming machine, the
wet fiber mats are loaded into a press and are simultaneously dried and
pressed into hardboard panels through a combination of high pressure and
temperatures ranging from approximately 400 to 415 degrees Fahrenheit. The
hardboard produced through this process is free of knots and other
imperfections of natural wood, has higher density and is less moisture
permeable than many natural woods. The S1S process utilizes embossed press
plates to impart simulated woodgrains and other decorative patterns to the
panels. At the Roaring River facility, the Company's unique "Fusion Finish"
process incorporates a thin paper overlay on the surface of the fiber mats,
and the pressed panels are baked in an oven to increase strength properties
and then rehumidified to a stable moisture condition. The unfinished hardboard
is cut to final dimensions for lap or panel siding products and the surfaces
are either factory primed or prefinished. After the finishing process, the
products are inspected and packaged for shipment to customers.
Exterior Plastics. The Company utilizes a modified extrusion process, known
as co-extrusion, to produce its vinyl siding products at its Acton, Ontario
facility. In the co-extrusion process, two different thermoplastic resin
compound formulations or mixtures are extruded through separate extrusion
machines and then joined as a viscous melt in a co-extrusion die. The die
forms the melt into a continuous profile and is then embossed, cooled and
sized using water and vacuum tools. Further processing equipment notches,
perforates and shears the finished product. The primary ingredient used in the
production of vinyl siding is PVC. The finished products are inspected and
packaged for shipment to customers.
The Company manufactures a majority of its shutter products using an
injection moulding process at its Hopkinsville, Kentucky facility. This
process transforms thermoplastic resin pellets (primarily polystyrene,
polypropylene or polyethylene) through the application of heat into a flowable
state. This melt is then injected under pressure into a steel mold, allowed to
cool and subsequently removed from the mold. This phase or cycle of the
process can last from a few seconds to several minutes to produce a single
part. The desired color of these
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products is achieved by adding a colorant directly into the thermoplastic
resin or by subsequently painting the molded part on a state-of-the-art
paintline. The finished product is inspected and packaged for shipment to
customers.
Fiber Cement Siding. The Company utilizes the Hatschek process which blends
cement, silica sand, clay and cellulose fiber and deposits a thin film of the
mixture onto a moving felt. Upon reaching the desired thickness it is cut into
sheets and transferred to the piling station. The piling station intersperses
the sheets of fiber cement with molds. The product is then transferred to a
press which serves multiple purposes. The pressure on the molds embosses the
decorative wood grain on the surface of the fiber cement and the press
improves bonding between the cement and wood fibers. The pressed substrate is
then sent through a pre-cure process where heat improves the physical strength
and steam aides in curing. The final stage of the manufacturing process is the
autoclave where the sheets are cured under pressure at 350 degrees Fahrenheit.
This process results in a product that offers added durability with less
maintenance, while replicating the sharp detail of natural materials, such as
wood and slate. This combination has particular appeal where siding must
withstand extreme temperatures, wood-eating insects or high humidity.
Interior Hardboard. The Company utilizes the smooth two sides ("S2S")
manufacturing process in the production of Interior Hardboard products at its
Alpena, Michigan facility and the S1S process to produce Interior Hardboard at
its Nova Scotia facility. The S2S process is similar to the S1S process
through the mat forming stage. While the S1S process directly links the
forming step and the pressing operation, the S2S process has an intermediate
step in which the fiber mats are dried prior to pressing. The intermediate
step is required due to the additional production complexities of
manufacturing a panel which is smooth on two sides. The pressing operations
are similar to S1S, as both processes use embossed press plates to impart
simulated woodgrains (including the traditional colonial 6-panel and flat-door
panel designs) and other decorative patterns to the hardboard panel. Finishing
the hardboard panels into decorative tileboard, woodgrain paneling and
doorskin products is accomplished in a coating operation where multiple coats
of paint or decorative printing inks are applied to the panel and cured in
infrared ovens. Following the coating operation, the products are inspected
and packaged for shipment to customers.
Interior Plastics. The Company employs a specialized continuous extrusion
process to produce a substantial portion of its plastic moulding products.
This process involves the blending and melting of polystyrene resin with
various other ingredients under high temperatures. Next, a physical blowing or
foaming agent is introduced into the mixture as it is put through a tandem
extruder and drawn out and forced through various dies which produce the
moulding shapes and profiles. These profiles are then finished using a variety
of woodgrain laminates, paints or prints to achieve the desired colors and
wood-like appearance. Following the finishing operation, the products are
inspected and packaged for shipment to customers. The Company's Interior
Plastics products have the advantages of uniform appearance, consistent
quality and ease of installation.
COMPETITION
The building products industry is highly competitive and the Company
competes against other manufacturers of similar wood substitute products, as
well as numerous producers of natural wood, ceramic tile and other building
products. Some of the Company's competitors are substantially larger and have
greater resources than the Company. The Company believes that it is the
largest manufacturer of exterior hardboard siding and that it is a leading
manufacturer of tileboard, plastic moulding and trimboard in the United
States.
The demand for the Company's Exterior Hardboard Siding products is affected
by the level of new residential construction which is, in turn, affected by
general economic conditions. Although new construction has remained at below
mid-1980s levels, the Company has generally maintained its sales volume as a
result of the continuing reduced availability and increased costs of certain
natural wood products and levels of new construction activity in the Company's
principal geographic markets which exceeded the national average. In the
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exterior siding industry, the Company competes in the new residential
construction market with manufacturers of natural wood siding and other wood
substitute siding products, such as brick, stucco, fiber cement and other non-
wood exterior products. In the home improvement, repair and remodeling market,
the principal competition for exterior siding is provided by manufacturers of
aluminum and other vinyl siding.
In the exterior siding industry, the Company competes in the new residential
construction market with manufacturers of natural wood siding and other wood
substitute siding products, such as brick, stucco, fiber cement and other non-
wood exterior products. In the home improvement, repair and remodeling market,
the principal competition for exterior siding is provided by manufacturers of
aluminum and other vinyl siding.
The Company's principal competitors in the Interior Hardboard market include
large forest products companies and other producers or importers of plywood
and natural wood paneling, as well as other manufacturers of prefinished
hardboard paneling. In the paneling market, the Company competes against
manufacturers of ceramic tile, plastic and other products. The Company's
industrial hardboard operations are subject to competition from other domestic
S2S hardboard manufacturers, as well as a large number of producers and
importers of various substitute materials.
The plastic moldings market has two principal domestic manufacturers, one of
which is the Company, and several smaller producers. Decorative plastic
moulding products are substitutes for and compete against a wide range of
natural wood products produced by numerous manufacturers, including
prefinished and unfinished products. The exterior residential shutter market
is highly fragmented and includes many smaller manufacturers.
The Fiber Cement Siding market is dominated by James Hardie Industries
Limited who currently is aggressively marketing and pricing its product. In
response, among other actions, the Company has lowered its pricing on both the
Exterior Hardboard Siding products and Fiber Cement Siding products to protect
its market share against competition from Fiber Cement Siding products. The
lower prices have impacted earnings to date and could continue to negatively
impact earnings. In addition, other competitors have announced that they are
planning to add new fiber cement lines to expand their product offerings.
ENVIRONMENTAL REGULATION
The Company's operations and properties are subject to extensive federal,
state and local laws, regulations and ordinances which govern activities and
operations that may have adverse environmental effects, such as discharges to
air, soil and water, and establish standards for the handling of hazardous and
toxic substances and the handling and disposal of solid and hazardous wastes
("Environmental Laws"). These Environmental Laws include the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Air Act and the Clean Air Amendments
of 1990, the Occupational Safety and Health Act, the Emergency Planning and
Community Right to Know Act, the Clean Water Act and analogous state statutes.
Pursuant to certain Environmental Laws, a current or previous owner or
operator of real property may be liable for the costs of removal or
remediation of environmental contamination on, under or in such property. In
addition, persons who arrange, or are deemed to have arranged, for the
disposal or treatment of hazardous substances may also be liable for the costs
of removal or remediation of environmental contamination at the disposal or
treatment site, regardless of whether the affected site is owned or operated
by such person. Environmental Laws often impose liability whether or not the
owner or operator or arranger, knew of, or was responsible for, the presence
of such environmental contamination. Also, third parties may make claims
against owners or operators of properties for personal injuries and property
damage associated with releases of hazardous or toxic substances pursuant to
Environmental Laws as well as common law tort theories, including strict
liability. While environmental compliance costs in the future will depend on
regulatory developments that cannot be predicted, the Company believes that
compliance will be achieved with a combination of capital expenditures and
modifications to its production processes. The Company does not anticipate
that costs relating to environmental activities will have a material adverse
impact on its financial condition or results of operations.
On August 30, 1995, the Company completed negotiations with Michigan
environmental authorities regarding a consent judgment providing for an odor
emissions abatement program at its Alpena, Michigan
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facility. The program provides for phased installation of controls to effect a
staged reduction of the facility's emissions of odors into the air. To date,
the Company has expended approximately $8 million in connection with this
program. Additional capital expenditures of up to $4 million may be required
over the next several years in order to attain compliance with the program. In
connection with the Acquisition, the seller has agreed to indemnify the
Company with respect to certain pre-Acquisition environmental matters and has
placed $5.0 million into escrow to fund any required remediation of such
conditions. In connection with the purchase of Canexel, Canadian Pacific
Forest Products Limited is obligated to indemnify the Company against certain
environmental liabilities associated with Canexel's Nova Scotia production
facility.
RAW MATERIALS
The principal raw materials used by the Company in the production of
Exterior Hardboard Siding and Interior Hardboard are pulpwood, sawmill by-
products and other wood waste. The principal raw materials for the Company's
thermoplastic resin products are polystyrene, PVC, polypropylene and
polyethylene. The Company also uses a wide variety of coatings in the Interior
Hardboard and thermoplastics finishing processes. The principal raw materials
used by the Company in the production of Fiber Cement Siding are sand, clay,
cement and cellulose fiber. All of the raw materials required for the
manufacture of the Company's specialized building products are available from
numerous sources and the Company has not experienced any shortages which have
materially affected its operations. However, certain of these commodity raw
materials are subject to fluctuations in price. Each of the Company's Exterior
Hardboard Siding and Interior Hardboard substrate manufacturing facilities is
located within a 100 mile radius of its source of wood supply. In general, the
availability and cost of pulpwood and wood waste required for hardboard
production have not been significantly affected by the continuing shortages of
natural wood building products.
BACKLOG
In general, the Company does not produce against a backlog of firm orders.
Production is geared primarily to the level of incoming orders and to
projections of future demand. Inventories of finished goods, work-in-process
and raw materials are maintained to meet delivery requirements of customers.
EMPLOYEES
As of December 31, 1997, the Company had approximately 1,700 full time
employees. The Company's hourly production employees at its Alpena, Michigan,
East River, Nova Scotia, and Acton, Ontario plants are covered by collective
bargaining agreements with expiration dates of December 15, 2000, December 17,
2002, and October 31, 2001, respectively. As these union contracts expire, the
Company may be required to renegotiate them in an environment of increasing
wage rates. Although the Company has not experienced any work stoppage since
its incorporation, there can be no assurance that the Company will be able to
renegotiate union contracts on terms favorable to the Company without
experiencing a work stoppage. In addition, although the Company believes that
its relations with its employees are satisfactory, there can be no assurance
that the Company's non-union facilities will not become subject to labor union
organizational efforts or that labor costs will not materially increase.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this report, including information set forth under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Certain, but not necessarily all,
of such forward-looking statements can be identified by the use of forward-
looking terminology such as "believes," "expects," "may," "will," "should," or
"anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategies that involve risks and
uncertainties. Such forward-looking statements involve known and unknown
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risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company, or industry results, to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: the outcome of certain pending litigation;
general economic and business conditions, including the level of new housing
starts and activity in the home improvement, repair and remodeling market,
which will, among other things, impact demand for the Company's products and
services; adoption of new environmental laws and regulations and changes in
how they are interpreted and enforced; the ability of the Company to implement
its business strategy; changes in consumer preference; competition; quality of
management; availability of qualified personnel; and other factors referenced
in this report. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." As a result of the foregoing and other
factors, no assurance can be given as to future results, levels of activity
and achievement and neither the Company nor any other person assumes
responsibility for the accuracy and completeness of these statements.
ITEM 2. PROPERTIES
The table below sets forth as of December 31, 1997 the location, products
manufactured, facility size, estimated annual capacity and capacity
utilization of each of the Company's eight production facilities, all of which
are owned by the Company. The Company's production facilities are generally in
good to excellent condition and are considered adequate for their current
uses. The Company's executive offices are located in a 3,300 square foot
leased office facility in Neenah, Wisconsin. The Company's divisional offices
are located in leased office space in Troy, Michigan; Charlotte, North
Carolina; and Neenah, Wisconsin.
<TABLE>
<CAPTION>
ESTIMATED
PRODUCTS ESTIMATED CAPACITY
LOCATION MANUFACTURED FACILITY SIZE ANNUAL CAPACITY UTILIZATION(1)
-------- ------------ --------------- ------------------------ --------------
<S> <C> <C> <C> <C>
Roaring River, NC... Exterior Hardboard Siding; Trimboard 450,000 sq. ft. 270 million surface feet 99%
Fiber Cement Siding 200,000 sq. ft. 72 million surface feet x%(2)
Alpena, MI.......... Interior Hardboard Substrates 473,000 sq. ft. 284 million surface feet 87%
Toledo, OH.......... Tileboard and Prefinished Paneling 230,000 sq. ft. 350 million surface feet 48%
Middlebury, IN...... Plastic Mouldings 233,000 sq. ft. 250 million linear feet 47%
East River, Nova Exterior Hardboard Siding and Interior Hardboard 230,000 sq. ft. 265 million surface feet 79%
Scotia.............
Acton, Ontario...... Vinyl Siding and Trim Accessories 150,000 sq. ft. 2.0 million units 74%
Hopkinsville, KY.... Shutters and Accessories 110,000 sq. ft. 131,000 press hours 54%
Holly Springs, MS... Vinyl Siding and Trim Accessories 250,000 sq. ft. 2.0 million units x%(3)
</TABLE>
- --------
(1) Full capacity utilization denotes the operation of a facility seven days
per week, three shifts per day at budgeted product mix for 1997.
(2) Information with respect to its capacity is not meaningful because the
construction of this facility was only completed in late June 1997.
(3) This facility is currently being retrofitted.
The Company manufactures Exterior Hardboard Siding on two S1S production
lines at its Roaring River, North Carolina facility, the largest single
hardboard-based siding facility in the U.S. The plant was constructed in 1970
with expansions in 1981 and 1984, and is located on 506 acres. The plant is
located near an abundant supply of wood raw materials, and process water is
drawn from the Yadkin River adjacent to the property. Steam for the
manufacturing process is provided by a 180 million BTU per hour boiler fueled
by wood waste, with two standby boilers available. Since all steam is provided
by the wood-fired boiler, the facility does not depend on conventional fossil
fuels as its primary source of energy. The Company manufactures Fiber Cement
Siding products at its Roaring River, North Carolina facility. The Company
completed construction of this facility in June 1997 for an aggregate cost of
$61 million.
The Company manufactures hardboard substrate on a S2S production line at its
Alpena, Michigan facility. The plant, located on 61 acres, was built in 1957
and expanded in 1970 and 1985. Hardboard substrate is finished into tileboard
and paneling at the Company's Toledo, Ohio facility situated on 57 acres. The
Toledo plant uses state-of-the-art printing capabilities to maintain the
quality of its finished products. The principal assets
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of the Toledo facility include one primary coating line and one vinyl
laminating line. The primary coating line is a high quality four-stage print
line with computer-aided capability for precision printing and painting of a
broad range of panels, including embossed tileboard. The Company's Toledo
plant is currently operating at less than full capacity. With the continued
expansion into home center retailers and ongoing new product development and
introduction, the Company expects to increase capacity utilization at this
facility, thereby reducing average overhead cost per unit.
The Company manufactures plastic mouldings at its Middlebury, Indiana
facility situated on 35 acres. The facility was originally built in 1955, with
major expansions in 1978 and 1980. The extrusion operation includes eleven
polystyrene tandem extruders with a combined annual capacity of 212 million
linear feet. In addition, five extruders with an annual capacity of 38 million
linear feet are used for lower volume PVC mouldings. Other equipment used to
finish the mouldings includes five woodgrain printlines, a five deck
paint/topcoat oven, two hot glue paper laminators and five packaging lines.
The plant has a modern machine tool capability for the production of its own
die requirements. The Company's plastic mouldings production facility is
currently operating at less than full capacity. With the continued expansion
into home center retailers and ongoing product development, the Company
expects to further increase capacity utilization at this facility, thereby
reducing average overhead cost per unit.
The Company manufactures Exterior Hardboard Siding and industrial and
prefinished hardboard on two S1S production lines at its East River, Nova
Scotia facility, the largest hardboard manufacturing facility in Canada. The
Canexel plant, located on 1,060 acres, was constructed in 1967 and was
expanded in 1969 to add a second S1S line. The plant is located near an
abundant supply of wood raw materials and process water is drawn from the
Little East River which is located nearby. Other principal assets of the
facility are one interior products finishing line and one exterior siding
prefinishing line.
The Company manufactures vinyl siding and trim accessories at its Acton,
Ontario facility situated on 14 acres. The facility was originally constructed
in 1959 with major expansions completed in 1972, 1983 and 1986. The extrusion
operation includes ten co-extrusion processing lines and one mono-extrusion
line. In 1994, the Company completed the installation of a state-of-the-art,
four-story compounding tower. The computer-controlled compounding and
extrusion process allows the resin formulations to proceed from raw material
to finished goods without touching human hands until the product is packaged.
The Company is currently retrofitting a vinyl siding facility with an
estimated annual capacity of 2 million units in Holly Springs, Mississippi.
The Company expects to complete the retrofitting of the facility in early
1998.
The Company manufactures injection molded shutters at its Hopkinsville,
Kentucky facility located on 14 acres. Originally constructed in 1967, the
facility was expanded several times by previous owners. In 1994, the Company
completed the expansion of the manufacturing facility, which included the
installation of three additional presses. Molded products are manufactured on
one of twenty-seven presses, which range in size from 125 tons to 2,000 tons.
This facility has a state-of-the-art finishing line to paint shutters.
The Company owns a 220,000 square foot warehouse facility located in Milton,
Ontario. In addition, the Company leases a 113,000 square feet warehouse in
Hopkinsville, Kentucky.
ITEM 3. LEGAL PROCEEDINGS
Hardboard Siding Actions
Class Actions and Putative Class Actions. The Company and ABTco, Inc., a
subsidiary of the Company ("ABTco"), have been named as defendants in a
conditionally certified class action and four separate putative class actions
arising from hardboard siding manufactured, distributed, or sold by them or by
Abitibi-Price, Inc. ("API"), APC or Abitibi Consolidated Inc. ("ACI"). APC,
API and ACI have also been named as defendants in these actions and APC has
been named a defendant in another putative class action, which may result in
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liability for the Company as described below. These actions--Fyola et al. v.
ABT Building Products Corporation, ABTco, Inc. and Abitibi-Price Corporation,
Docket No. 95-12854, Court of Common Pleas of Allegheny County, Pennsylvania
(the "Fyola Action"), Foster et al. v. ABTco, Inc., ABT Building Products
Corporation, Abitibi-Price, Inc. and Abitibi-Price Corporation, Docket No. CV-
95-151M, Circuit Court of Choctaw County, Alabama (the "Foster Action"), Dunn
et al. v. ABTco, Inc., ABT Building Products Corporation, Abitibi-Price, Inc.
and Abitibi-Price Corporation, Docket No. 96-CVS7690, Superior Court of
Forsyth County, North Carolina (the "Dunn Action"), Ezzell et al. v. ABTco,
Inc., ABT Building Products Corporation, Abitibi-Price, Inc. and Abitibi-Price
Corporation, No. 97-CVS-167, Superior Court of Onslow County, North Carolina
(the "Ezzell Action"), Fiedler et al. v. ABT Building Products Corporation,
ABTco, Inc., Abitibi-Price Corporation and Abitibi Consolidated, Inc., Case
No. 97-CP-08-1545, Court of Common Pleas of Berkeley County, South Carolina
(the "Fiedler Action"), and Lillis et al. v. Abitibi-Price Corporation and
Sunstate Manufactured Homes of Georgia, Inc. d/b/a Peach State Homes, Inc.,
Case No. 97-1814 CA21, Circuit Court of Dade County, Florida (the "Lillis
Action")--are collectively referred to herein as the "Hardboard Siding Class
Actions."
The representative plaintiffs in the Hardboard Siding Class Actions claim
that the exterior siding on their homes, and on homes owned by members of the
class or putative class, prematurely rotted, warped, buckled, swelled,
cracked, split, absorbed water, bulged, discolored, delaminated or
deteriorated. The representative plaintiffs seek recovery on a variety of
legal theories, including breach of implied warranty of merchantability,
breach of implied warranty of fitness, breach of express warranty, unfair
trade practices, deceit by concealment, fraud, negligence and strict
liability. Each of the Hardboard Siding Class Actions has been brought on
behalf of an unknown number of claimants, but the potential number of class
members is believed to include multiple thousands of claimants.
The Hardboard Siding Class Actions include, as members of the conditionally
certified and putative classes, certain owners of exterior hardboard siding
products manufactured by APC or ABTco that are still within the period of any
applicable express warranty made by API, APC, ACI, the Company or ABTco. To
the best of the Company's knowledge, such warranties covered periods of up to
twenty-five years. The Company is not able to definitively determine how many
persons may be members of the conditionally certified class or the putative
classes in the Hardboard Siding Class Actions.
The Company, ABTco, API, APC and ACI have received to date in excess of
12,000 claims or inquiries respecting alleged problems with exterior hardboard
siding products that, according to the person filing the complaint or inquiry,
were believed to have been manufactured by API, APC, ACI, the Company or
ABTco. Substantially more claims or inquiries may be forthcoming. In
particular, it is possible that in the event of determinations concerning
liability that are adverse to defendants in any of the Hardboard Siding Class
Actions, or in the event of further developments in or publicity concerning
the litigation, materially more than 12,000 homeowners might file claims
asserting that they are members of the relevant plaintiff class and are
entitled to damages. The Company is unable to estimate the number of such
potential claimants.
The representative plaintiffs in the Hardboard Siding Class Actions, on
behalf of themselves and the class or putative class, seek compensatory
damages, attorneys' fees, costs and other expenses. In certain cases, the
damages claimed include economic damages, consequential damages and double or
treble damages under state unfair trade practice and consumer protection laws.
In the Fiedler Action, the damages claimed include punitive damages. In
certain other cases, the representative plaintiffs might seek, or might
attempt to amend their complaints in an effort to seek, punitive damages. The
damages claimed in each of the Hardboard Siding Class Actions is either for
(i) an unspecified amount, or (ii) several thousands of dollars for each class
member, which would allegedly amount to millions of dollars classwide.
Other Hardboard Siding Cases. APC has also been named as defendant in two
consolidated actions, Adams, et al. v. Masonite Corporation, Abitibi-Price
Corporation, MG Building Materials, Inc. and Nu-Air Manufacturing Co., Inc.,
Cause No. 16707, District Court of Duval County, Texas, (the "Adams Action"),
filed in the District Court of Duval County, Texas, and the Arredondo, et al.
v. Masonite Corporation, Abitibi-Price
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Corporation, MG Building Materials, Inc., and Nu-Air Manufacturing Co., Inc.,
Cause No. 4571, District Court of Jim Hogg County, Texas (the "Arredondo
Action"), filed in the District Court of Jim Hogg County, Texas. In the Adams
Action, the owners of approximately 140 homes, and in the Arredondo Action,
the owners of approximately 30 homes, alleged that they had suffered damages
as a result of APC hardboard siding installed on their homes. The complaint in
the Adams Action and the complaint in the Arredondo Action are virtually
identical and were filed by the same attorney. The plaintiffs in these actions
allege that hardboard siding manufactured by APC is defective and failed to
perform to a level reasonably expected for a product of its nature. The
plaintiffs in these actions assert purported claims for negligence and gross
negligence, breach of implied warranty of fitness, breach of implied warranty
of merchantability, breach of express warranty, negligent misrepresentation,
and violation of the Texas deceptive trade practices act. The plaintiffs in
these actions seek actual and exemplary damages, including damages for
economic loss and mental anguish, treble damages, costs and interest.
Following pre-trial motions and rulings, venue has been transferred for a
majority of the plaintiffs to their home county. As a result, there are
currently three actions pending, the Arredondo Action, the Adams Action and an
action in Jim Wells County, Texas.
Indemnity Settlement. On June 16, 1997, APC and Abitibi-Price Sales
Corporation brought suit against the Company and ABTco in the Supreme Court of
New York for the County of Westchester alleging violation of the indemnity and
warranty provisions in the asset sale agreement relating to the Acquisition
(the "Abitibi Action"). Pursuant to a settlement agreement dated as of October
1, 1997 (the "Indemnity Settlement"), the Company and APC agreed to an
allocation of liability with respect to claims relating to ABT Board and APC
Board (each, as defined below).
Under the terms of the Indemnity Settlement, all amounts paid in settlement
or judgment (other than punitive, multiple or exemplary damages) following the
completion of any claims process resolving any claim in a litigation certified
as a class action (or involving claims for more than 125 homes owned by named
plaintiffs) ("Class Action Claims") are defined as "Class Action Damage
Amounts." Class Action Damage Amounts that relate to siding sold by APC prior
to October 22, 1992 or held as finished goods inventory by APC on October 22,
1992 ("APC Board") shall be paid 65% by APC and 35% by the Company. Class
Action Damage Amounts relating to siding sold by the Company after October 22,
1992 ("ABT Board") will be paid 100% by the Company. Total amounts paid for
joint local counsel and other joint expenses, and for plaintiffs' attorneys'
fees and expenses relating to Class Action Claims are to be divided equally
between APC and the Company initially, and are to be adjusted according to the
Company's and APC's proportional share of the ultimate liability if either
party's proportional share exceeds 60%. Any punitive, multiple, or exemplary
damages awarded with respect to any Class Action Claim shall be paid 100% by
the party against which such damages are assessed, or if such damages are
joint or unable to be allocated to a particular party, will be apportioned
according to the Company and APC's proportional share of the ultimate
liability.
Under the terms of the Indemnity Settlement, with respect to Non-Class
Action Claims (all claims other than Class Action Claims) relating to APC
Board, the Company is responsible for the first $100,000 in each calendar year
of all amounts paid for settlements, judgments and associated fees and
expenses of local outside counsel representing the parties in the
jurisdictions where litigation or arbitration involving such claims is pending
(the "APC Board Settlement Amount"). APC and the Company shall each pay 50% of
the APC Board Settlement Amount in excess of $100,000 per year up to $5,000
with respect to each individual claim. APC shall pay 100% of the amount of any
APC Board Settlement Amount in excess of $5,000 with respect to each
individual claim. With respect to Non-Class Action Claims relating to ABT
Board, the Company shall pay 100% of any amounts paid for settlements,
judgments and associated fees and expenses of local outside counsel
representing the parties in the jurisdictions where litigation or arbitration
involving such claims is pending. The Adams Action and the Arredondo Action
are treated as Non- Class Action Claims under the Indemnity Settlement for
which the Company may have potential liability.
The Company believes that its exterior hardboard siding products are free of
defects and, when properly installed and maintained, are suitable for their
intended purposes and meet all applicable legal standards. The
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Company believes that it has substantial defenses to the claims asserted by
the representative plaintiffs on behalf of themselves and the conditionally
certified class and the putative classes in the Hardboard Siding Class
Actions. The Company and ABTco intend to defend vigorously those actions in
which they are named as defendants. Nevertheless, the litigations are in
preliminary stages. Given the uncertainties inherent in litigation, it is
possible that some or all of the Hardboard Siding Class Actions, the Adams
Action or the Arredondo Action could be decided against the Company, ABTco,
APC, API or ACI in whole or in part. It is also possible that additional
actions or class actions could be brought against the Company, ABTco, API, APC
or ACI in connection with hardboard siding manufactured, distributed or sold
by them. Should the Company, ABTco, API, APC or ACI ultimately be found liable
in these actions to individual plaintiffs, members of the conditionally
certified class or the putative classes, or to any future plaintiff, the
damages could materially and adversely affect the Company's business,
financial condition and results of operations. The Company is not able to
estimate or predict the amount of such ultimate liability, if any. Even if the
Company and ABTco are not ultimately found to be liable in any of these
actions, the financial and business burdens of defending prolonged and
expensive litigation or of any settlement could materially and adversely
affect the Company's business, financial condition and results of operation.
Because it is not possible at this time to reasonably estimate the amount of
the potential damages in the Hardboard Siding Class Actions, the Adams Action
and the Arredondo Action, the Company is not required under generally accepted
accounting principles ("GAAP") to make reserve provisions with respect to such
litigation (and has made no such provisions) in its consolidated financial
statements (other than standard warranty accruals). In addition, if the
Company or ABTco, or API, APC or ACI is ultimately found to be liable in any
of these actions, there can be no assurance that any of the Company's ultimate
liability would be covered by insurance, or that the Company's ultimate
liability would not exceed any available insurance. In either case, the
amounts not covered by insurance could be material to the Company's business,
financial condition and results of operation. One of the Company's primary
insurance carriers, Employers Insurance of Wausau, A Mutual Company
("Wausau"), filed a complaint dated February 16, 1998, against the Company and
ABTco in the Circuit Court of Marathon County, Wisconsin. In that action,
which is entitled Employers Insurance of Wausau, A Mutual Company v. ABT
Building Products Corporation and ABTco, Inc., Case No. 98-CV-86, Wausau seeks
a declaratory judgment that it has no obligation to defend or indemnify the
Company or ABTco with respect to certain of the Hardboard Siding Class
Actions. The Company and ABTco have not yet responded to the complaint. In
addition, no assurance can be given that APC will perform its obligations
under the Indemnity Settlement.
In recent years, a number of similar lawsuits have been brought against
other manufacturers of exterior hardboard siding products or engineered
exterior hardboard siding products. Although there may be distinctions between
these other lawsuits and the Hardboard Siding Class Actions, the Adams Action
and the Arredondo Action, such other lawsuits have resulted in at least three
settlements by other manufacturers. One of those settlements was publicly
reported to require a manufacturer of oriented strand board ("OSB") products
to contribute a minimum of $275 million to a settlement fund payable over a
number of years. Another such settlement was publicly reported to require a
manufacturer of hardboard siding products to pay $47.5 million in plaintiff
attorneys' fees and the manufacturer reportedly set aside $150 million in
legal reserves to cover the cost of future individual damages payments under
the settlement. Determinations of liability or adverse rulings against other
manufacturers of exterior hardboard siding products that are defendants in
similar actions, even if the determinations or rulings are not final, or
additional large settlements by other manufacturers, could adversely affect
the litigations against the Company and ABTco and could increase the number of
such claims and litigations against the Company, ABTco, or both.
For additional information concerning the Hardboard Siding Class Actions,
the Adams Action and the Arredondo Action, see Note 11 to the Company's
Consolidated Financial Statements included elsewhere in this Form 10K.
Other Litigation
In addition, the Company is a party to various other legal proceedings
arising in the ordinary course of business, none of which, in management's
opinion, are expected to have a material adverse effect on the Company's
operating results or financial condition.
16
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters have been submitted to a vote of the holders of Common Stock
during the fourth quarter of the Registrant's 1997 fiscal year.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning the executive
officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
George T. Brophy.. 63 Chairman, President and Chief Executive Officer
William J. Adams.. 56 Executive Vice President--Exterior Products Group
Richard E. Park-
er............... 56 Executive Vice President--Specialty Products Group
Donald B. Grimm... 47 Vice President--General Manager of Industrial Products
North America, Chief Environmental Compliance Officer
Joseph P.
O'Neill.......... 39 Vice President and Chief Financial Officer
Dale H. Von
Behren........... 41 Vice President--Corporate Administration and Secretary
</TABLE>
- --------
GEORGE T. BROPHY has been Chairman, President and Chief Executive Officer of
the Company since October 1992. From 1983 to 1988, Mr. Brophy was President,
Chief Executive Officer and a director of Morgan Products Ltd., a building
products company ("Morgan"), and was a private business consultant from 1988
to 1992. From 1966 to 1980, Mr. Brophy served in various positions at Masonite
Corporation ("Masonite"), including Executive Vice President and Chief
Operating Officer. Mr. Brophy is also a director of Banta Corporation, a
printing company. Mr. Brophy has served as a Director since October 1992.
WILLIAM J. ADAMS has been Executive Vice President of the Company's Exterior
Products Group since December 1995. From September 1994 to December 1995, Mr.
Adams was the Executive Vice President of the Siding Division. Mr. Adams was
the Hardboard/Plastics Division's Vice President of Marketing and Sales since
October of 1992. From 1990 to 1992, Mr. Adams was President and Chief
Executive Officer of Vanderpool Electric Company. From 1987 to 1990, Mr. Adams
was President and Chief Executive Officer of Harris-Tarkett, Inc., a
manufacturer of hardwood flooring.
RICHARD E. PARKER has been the Company's Executive Vice President of the
Interior Products Group since December 1995. From October 1992 through
December 1995, Mr. Parker was the Executive Vice President of the
Hardboard/Plastics Division. From 1990 to October 1992, Mr. Parker served as
Vice President and General Manager of the Bend Door & Millwork Company. From
1986 to 1990, Mr. Parker was Executive Vice President of the Manufacturing
Division of Morgan. Earlier in his career, Mr. Parker held sales,
distribution, marketing and general management positions at Masonite for a
period of 13 years.
DONALD B. GRIMM has been the Vice President and General Manager of
Industrial Products North America and the Chief Environmental Compliance
Officer of the Company since October 1997. From October of 1992 through
October 1997, Mr. Grimm was Vice President of Manufacturing.
JOSEPH P. O'NEILL has been Vice President and Chief Financial Officer of the
Company since January of 1998. From 1996 to 1997, Mr. O'Neill was Vice
President Finance-Controller. From 1992, Mr. O'Neill was the Controller.
DALE H. VON BEHREN has been the Vice President of Administration of the
Company since January of 1998. From 1996 to 1997 Mr. Von Behren was Vice
President Finance-Treasurer. From May 1994 to 1996 Mr. Von Behren was
Treasurer. From 1990 to 1994, Mr. Von Behren was Controller and Treasurer of
Morgan.
There are no family relationships among any of the directors or executive
officers of the Company.
17
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded in the NASDAQ National Market under the
symbol "ABTC." The following table sets forth, for the periods indicated, the
high and low sale prices of the Common Stock as reported by NASDAQ.
<TABLE>
<CAPTION>
1997 1996
------------- -------------
HIGH LOW HIGH LOW
------ ------ ------ ------
<S> <C> <C> <C> <C>
Fourth Quarter................................. 20.625 16.500 26.750 19.750
Third Quarter.................................. 26.500 16.750 22.500 19.500
Second Quarter................................. 26.750 21.250 23.000 18.500
First Quarter.................................. 27.250 21.000 19.500 14.250
</TABLE>
ON DECEMBER 31, 1997, THE LAST REPORTED SALE PRICE FOR THE COMPANY'S COMMON
STOCK ON THE NASDAQ NATIONAL MARKET WAS $18.00 PER SHARE. AS OF MARCH 13,
1998, THE COMPANY HAD APPROXIMATELY 5,400 SHAREHOLDERS OF RECORD (INCLUDING
BROKERAGE FIRMS AND OTHER NOMINEES).
The Company has never paid any cash dividends on its Common Stock. The
Company currently intends to retain earnings and does not anticipate paying
dividends on its Common Stock in the foreseeable future. Any future payment of
dividends on the Common Stock is within the discretion of the Board of
Directors and will depend upon various factors, including the then-current
capital requirements, operating results and financial condition of the
Company.
18
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The operating data set forth below is derived from the consolidated
financial statements audited by Arthur Andersen LLP, independent public
accountants, and should be read in conjunction with those financial statements
and notes thereto included elsewhere in this Form 10-K. The data set forth in
the following table should be read in conjunction with, and is qualified in
its entirety by, "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's Consolidated Financial Statements
and the Notes thereto appearing elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Operating Data:
Net sales............... $161,011 $203,264 $240,107 $320,402 $321,813
Cost of sales........... 106,572 139,848 176,119 227,351 225,074
-------- -------- -------- -------- --------
Gross profit............ 54,439 63,416 63,988 93,051 96,739
Selling, general and
administrative
expenses............... 21,253 25,684 30,961 48,609 53,250
Restructuring charge.... -- -- -- -- 10,397(3)
-------- -------- -------- -------- --------
Operating income........ 33,186 37,732 33,027 44,442 33,092
Interest expense........ 3,929 2,063 5,929 6,511 8,344
Other income (expense),
net.................... (201) (80) (4) (269) (263)
-------- -------- -------- -------- --------
Income before income
taxes and extraordinary
item................... 29,056 35,589 27,094 37,662 25,011
Provision for income
taxes.................. 11,572 13,843 10,607 14,510 9,521
-------- -------- -------- -------- --------
Net income before
extraordinary item..... 17,484 21,746 16,487 23,152 15,490
Extraordinary item (net
of tax)................ (1,070)(1) -- -- -- --
-------- -------- -------- -------- --------
Net income ............. $ 16,414 $ 21,746 $ 16,487 $ 23,152 $ 15,490
======== ======== ======== ======== ========
Income per common share:
Before extraordinary
item:
Basic.................. $ 1.65 $ 1.85 $ 1.54 $ 2.22 $ 1.47
-------- -------- -------- -------- --------
Diluted................ $ 1.50 $ 1.70 $ 1.42 $ 2.01 $ 1.34
-------- -------- -------- -------- --------
After extraordinary
item:
Basic.................. $ 1.55 $ 1.85 $ 1.54 $ 2.22 $ 1.47
-------- -------- -------- -------- --------
Diluted................ $ 1.41 $ 1.70 $ 1.42 $ 2.01 $ 1.34
-------- -------- -------- -------- --------
Weighted average common
shares outstanding(2):
Basic.................. 10,617 11,728 10,707 10,433 10,547
Diluted................ 11,667 12,825 11,647 11,519 11,578
Balance Sheet Data (at
end of period):
Working capital......... $ 27,363 $ 42,006 $ 55,762 $ 42,777 $ 55,683
Total assets............ 109,628 143,545 210,767 260,264 309,232
Total debt.............. 12,438 33,278 84,629 100,071 132,911
Stockholders' equity.... 77,210 80,483 88,120 109,941 124,841
</TABLE>
- --------
(1) Represents write-off of deferred financing costs in connection with the
repayment of long-term debt with the proceeds of the Company's initial
public offering.
(2) Includes the effect to the Company's stock split effected in June 1993 in
connection with the Company's initial public offering.
(3) The Company recorded a $10.4 million charge (consisting of a $1.5 million
cash charge and a $8.9 million non-cash charge) during the second quarter
of 1997 in connection with the restructuring of its Exterior Plastics
products group. The restructuring charge consisted of: the write-down of
certain machinery and equipment, $5.8 million; the write-down of inventory
and goodwill to net realizable values, $3.1 million; and severance
payments and lease obligations related to the closing of certain leased
facilities, $1.5 million.
19
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Over the last three years, the Company has increased sales and gross profit
margins through: (i) new product introductions, in the Exterior Products
division and the Specialty Products division such as UltraOak, Diamond Tile
and TrimBoard; (ii) acquisitions of new product lines such as vinyl siding and
exterior plastic accessories (1995); (iii) the construction of new facilities
to produce fiber cement siding (1997) and vinyl siding and accessories (1997);
and (iv) expansion in the retail home center distribution channel. In
addition, the Company has implemented cost reduction programs and selectively
increased selling prices which have further increased the Company's sales and
gross profit margins during such period. The Company's broad product line
allows it to serve many of its customers as a "one-stop" source of products.
Recent vinyl siding industry consolidation and aggressive marketing and
pricing by a major fiber cement siding competitor have resulted in lower sales
volumes and prices for the Company's siding products. The lower prices have
impacted earnings to date and could continue to further negatively impact
earnings. In addition, other competitors have announced that they are planning
to add new fiber cement lines to their product offerings. In an effort to
reduce the impact of the pricing pressures on siding products, the Company has
also implemented a strategy to shift product mix in its Exterior Hardboard
Siding products from the 7/16p siding products into trimboard and utility
panels. See "Significant Business Trends."
RESULTS OF OPERATIONS
The following table sets forth the dollar amount (in thousands) and
percentages of the Company's net sales attributable to each of its principal
product group categories during the last three years:
<TABLE>
<CAPTION>
1995 1996 1997
-------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Exterior Products............... $123,129 51.3% $197,261 61.6% $195,987 60.9%
Specialty Products.............. 116,978 48.7% 123,141 38.4% 125,826 39.1%
-------- ----- -------- ----- -------- -----
$240,107 100.0% $320,402 100.0% $321,813 100.0%
======== ===== ======== ===== ======== =====
</TABLE>
The following table presents, for the periods indicated, the percentage of
net sales of the Company's two principal product groups and the percentage
relationship to net sales of certain items in the Company's consolidated
statements of operations:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Net sales
Exterior Products sales............................. 51.3% 61.6% 60.9%
Specialty Products sales............................ 48.7 38.4 39.1
----- ----- -----
Total net sales................................... 100.0% 100.0% 100.0%
Cost of sales......................................... 73.4 71.0 70.0
----- ----- -----
Gross profit.......................................... 26.6 29.0 30.0
Selling, general and administrative expenses ......... 12.8 15.2 16.5
Restructuring charge.................................. -- -- 3.2
----- ----- -----
Operating income...................................... 13.8 13.8 10.3
Net income............................................ 6.9 7.2 4.8
</TABLE>
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
Net Sales. Net sales increased $1.4 million (0.4%) from $320.4 million in
1996 to $321.8 million in 1997. The increase reflects a $2.7 million (2.2%)
increase in Specialty Products sales, partially offset by a $1.3 million
(0.7%) decrease in Exterior Products sales.
20
<PAGE>
The increase in Specialty Products sales of $2.7 million was attributable to
a $3.1 million increase in Interior Hardboard offset by a $0.4 million
decrease in Interior Plastics. A decrease in volume shipments (0.4%) of
Interior Hardboard products was more than offset by an increase in average
selling price of 3.4%. Strong demand for doorskins and industrial products
offset lower prefinished interior hardboard product sales. Interior Plastics
moulding unit volume shipments were 1.3% greater in 1997 than the prior year.
The average selling price of mouldings decreased by 4.2%. New product
introductions and increased penetration into the home center retailers were
the primary reasons for the increased volume.
The decrease in Exterior Products sales consisted of a $3.2 million increase
in sales of Exterior Plastics and a $4.8 million increase in sales of Fiber
Cement Siding, a product introduced in June 1997, more than offset by a $9.3
million decrease in Exterior Hardboard Siding. The increase in Exterior
Plastics of $3.2 million consists of a $10.6 million increase in vinyl siding
and accessories partially offset by the discontinuation of industrial plastic
product sales as part of the restructuring of the Company's Exterior Plastics
group (see discussion below). Exterior Hardboard Siding was impacted by
aggressive pricing by competition in both hardboard and fiber cement siding
markets, resulting in lower volumes and selling prices.
Gross Profit. Gross profit increased $3.6 million (4.0%) from $93.1 million
in 1996 to $96.7 million in 1997. The increase in gross profit is attributable
to increased demand for Specialty Products and increased sales volume in vinyl
siding, partially offset by lower volume and pricing on Exterior Hardboard
Siding and additional costs incurred during the start up of the fiber cement
facility. Gross profit as a percentage of net sales increased from 29.0% to
30.0% over the period. Exterior Hardboard Siding decline in volume and pricing
was principally due to aggressive pricing by competitors in the fiber cement
and hardboard siding markets. See "Significant Business Trends."
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $4.7 million (9.5%) from $48.6 million in
1996 to $53.3 million in 1997. The increase is primarily attributable to an
increase in Exterior Plastics expenses of $3.7 million over 1996. The Exterior
Plastics increase is due to increases in salaries and facility expenses
related to the development of the Company's Exterior Plastics distribution
center in Milton, Ontario, and additional promotional expenses incurred as a
result of new product introductions. In addition, the Company incurred legal
fee increases over 1996 of $0.5 million as a result of certain litigation (see
"Certain Litigation" below). As a percentage of net sales, selling, general
and administrative expenses increased from 15.2% in 1996 to 16.5% in 1997. The
increase is due to factors discussed above.
Restructuring Charge. On July 7, 1997, the Company announced that it was
restructuring its Plastics products group. The restructuring program was
implemented to phase out the manufacturing facility's plastic industrial
business and to allow the Company to focus on specialty building products.
Accordingly, the Company recorded a $10.4 million charge during the quarter
ended June 30, 1997 (consisting of a $1.5 million cash charge and an $8.9
million non-cash charge). The restructuring charge consisted of the write-down
of certain machinery and equipment, $5.8 million; the write-off of inventory
and goodwill to net realizable values, $3.1 million; and severance payments
and outstanding lease obligations related to the closing of certain leased
facilities, $1.5 million. The impact on earnings per share for 1997 amounted
to $0.61 and $0.56 on a basic and dilutive basis, respectively.
At December 31, 1997, a remaining balance of $1.1 million related to the
restructuring is included in the accrued expenses in the Company's
consolidated balance sheet.
Operating Income. Operating income decreased by $11.3 million (25.5%) from
$44.4 million in 1996 to $33.1 million in 1997. The decrease is primarily the
result of costs incurred due to the restructuring of the Exterior Plastics
products group, additional costs related to the start up of the fiber cement
facility, higher selling, general and administrative expenses, partially
offset by increased demand for the Company's Specialty Products.
Interest Expense. Interest expense increased $1.8 million (28.2%) from $6.5
million (net of $1.0 million of capitalized interest) in 1996 to $8.3 million
(net of $1.9 million) in 1997. The increase is attributable to higher
outstanding indebtedness partially offset by a slight decline in the Company's
weighted average interest rate on outstanding borrowings during 1997 as
compared to 1996.
21
<PAGE>
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Net Sales. Net sales increased $80.3 million (33.4%) from $240.1 million in
1995 to $320.4 million in 1996. This increase reflects of $74.3 million
(60.2%) increase in Exterior Products sales and a $6.2 million (5.3%) increase
in Specialty Products sales.
The increase in Exterior Products sales of $68.7 million in 1996 was
primarily attributable to the impact of two acquisitions in 1995 and strong
demand for Exterior Hardboard Siding. KenTech Plastics, Inc., a manufacturer
of plastic shutters, exterior accessories and industrial products, was
acquired in April of 1995. In June 1995, the Company acquired the Vinyl
Division of EMCO, Ltd., a manufacturer of vinyl siding and accessories. These
two acquisitions accounted for $39.5 million of the increase in net sales for
1996. Unit volume shipments for vinyl siding and shutters in 1996 were
substantially greater than 1995. The increase in Exterior Hardboard Siding
sales of $28.8 million in 1996 was primarily the result of an increase in
demand for the product line (see "Significant Business Trends" below),
continued expansion into the home center retailer market and price increases
implemented during the first quarter of 1996. As a result of these factors,
Exterior Hardboard Siding unit sales volume increased 12.4% for 1996 compared
to 1995 and average selling price increased 10.5%.
The increase in Specialty Products sales of $11.6 million in fiscal 1996 was
primarily attributable to new product introductions and increased export
sales. Sales of Interior Hardboard products increased $7.3 million in 1996.
The increase was primarily due to new product introductions and increases in
sales outside of North America. These factors resulted in an increase of unit
volume shipments of 8.7% compared to 1995. Plastic mouldings sales were
favorably impacted by new product introductions and increased penetration into
the home center retailer market, as sales increased $4.3 million over the same
period last year. Unit volume shipments for mouldings in 1996 was 11.7%
greater than 1995.
Gross Profit. Gross profit increased $29.1 million (45.4%) from $64.0
million in 1995 to $93.1 million in 1996. Exterior Hardboard Siding pricing
and volume increases, as well as volume increases in the Interior Hardboard
and Plastics moulding products contributed to the increase in gross profit. In
addition, the 1995 acquisitions favorably impacted gross profit by $14.4
million. Gross profit as a percentage of net sales increased from 26.6% for
1995 to 29.0% in 1996. The increase is primarily the result of price increases
implemented during 1996, as well as volume increases in Exterior Hardboard
Siding, Interior Hardboard, vinyl siding and plastics moulding product lines.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $17.6 million (57.0%) from $31.0 million in
1995 to $48.6 million in 1996. Selling, general and administrative expenses
increased $10.3 million as a result of the 1995 acquisitions, $1.5 million of
the increase represents legal fees incurred as a result of certain litigation
(see "Certain Litigation" below) with the balance of the increase primarily
due to increases in promotional expenses, allowances and management bonuses,
directly related to the increase in sales over 1995. As a percentage of net
sales, selling, general and administrative expenses increased from 12.8% in
1995 to 15.2% in 1996. The increase is due to higher selling, general and
administrative expenses (as a percentage of net sales for the 1995
acquisitions) as well as, increases in legal fees, management bonuses and
promotional expenses related to new product introductions.
Operating Income. Operating income increased $11.4 million (34.6%) from
$33.0 million in 1995 to $44.4 million in 1996. The improvement is the result
of operating income generated by the 1995 acquisitions, selling price
increases, new product introductions and volume increases in substantially all
product lines.
Interest Expense. Interest expense increased $0.6 million (9.8%) from $5.9
million in 1995 to $6.5 million (net of $1.0 million of capitalized interest)
in 1996. The increase is attributed to higher outstanding indebtedness,
partially offset by a slight decline in the Company's weighted average
interest rate on outstanding borrowings during 1996 as compared to 1995.
SIGNIFICANT BUSINESS TRENDS
Management believes that the level of housing starts has a significant
influence on the Company's ability to generate sales, particularly in relation
to demand for its siding products. The level of housing starts in the United
22
<PAGE>
States increased from 1.3 million in 1995 to 1.5 million in 1997. The level of
housing starts in Canada increased from 0.111 million in 1995 to 0.152 million
in 1997.
The cost of thermoplastic resins (polystyrene and PVC) used in the Company's
Specialty Products and Exterior Products operations increased substantially
during 1995 before declining somewhat during the fourth quarter of 1995 and
remaining at that level during 1997. Management believes that product price
increases, continuing cost reduction programs and increased production
efficiencies will counteract, to some extent, the impact of these raw material
price increases.
The recent consolidation in the vinyl siding industry has resulted in
increased competitive pricing of the Company's Exterior Plastics products. The
Company cannot predict the actions of its competitors, which could further
negatively impact earnings in the future.
The Company has recently introduced Fiber Cement Siding. A major competitor
in the fiber cement siding market is aggressively marketing and pricing its
product. In response, among other actions, the Company has lowered its pricing
on both the Exterior Hardboard Siding and Fiber Cement Siding products to
protect its market share against competition from fiber cement siding
products. The Company has also implemented a strategy to shift product mix in
its Exterior Hardboard Siding products from the 7/16p siding products into
trimboard and utility panels, in an effort to reduce the impact of the pricing
pressures. The lower prices have impacted earnings to date and could continue
to further negatively impact earnings. The Company cannot predict the actions
of this or other competitors, however, there have been recent announcements by
competitors that they are planning to add new fiber cement lines to expand
their product offerings, which could further negatively impact earnings in the
future.
Management also believes that continued penetration into the home center
retailer market will have a significant beneficial influence on the Company's
level of business activity. Sales to these customers have increased
approximately 42% over the prior year. In addition, sales to the Company's top
three home center retailer customers increased 58% over the past year.
Management believes that this market will continue to grow in importance to
the Company.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company derived its cash from funds generated by
operations and from third-party financings, including the Credit Facility. The
Company believes that its operating cash flow, together with borrowings under
the Credit Facility, will be sufficient to meet its operating expenses,
capital requirements and debt service requirements.
Cash Flow From Operating Activities. Net cash provided by the Company's
operating activities was $24.6 million for 1997. Principal working capital
changes included increases of $10.4 million and $4.2 million in inventory and
other assets, respectively, and a decrease of $5.8 million in accounts
payable. Net cash provided by the Company's operating activities was $41.2
million for 1996. Principal working capital changes included an increase in
accounts receivable of $5.3 million and an increase of $8.8 million in
accounts payable. At December 31, 1997, the Company had working capital of
$55.7 million with a current ratio of 2.4 to 1.0 as compared with working
capital of $42.8 million and a current ratio of 2.0 to 1.0 at December 31,
1996. The increase in working capital and the change in the current ratio were
primarily due to the increase in inventory, as a result of the recent
introduction of fiber cement siding, and lower accrued expenses.
Cash Flow From Investing Activities. The Company's cash used in investing
activities for 1997 and 1996 was related principally to capital expenditures.
Capital expenditures during 1997 amounted to approximately $57.7 million and
were incurred primarily for improvements to the Company's manufacturing
facilities and development of new products, including $24.3 million for the
completion of the fiber cement facility and $11.6 million for the retrofitting
of a vinyl siding manufacturing facility and for environmental compliance
projects (See "Environmental Compliance"). Capital expenditures during 1996
amounted to approximately $57.9 million
23
<PAGE>
and were incurred primarily for improvements to the Company's manufacturing
facilities and development of new products, including $36.8 million for the
construction, the fiber cement facility and environmental compliance projects
(See "Environmental Compliance").
Cash Flow From Financing Activities. Net cash provided by financing
activities for 1997 and 1996 was principally from borrowings under the Credit
facility. Debt increased from $100.1 million at December 31, 1996 to $132.9
million (including $12.5 million of current maturities) as of December 31,
1997.
Sources of Liquidity. On April 1, 1997 the Company entered into a loan
agreement with the Mississippi Business Finance Corporation for the issuance
of $1.0 million Variable Rate Demand Revenue Bonds (Series 1997A) and $16.5
million Taxable Variable Rate Demand Revenue Bonds (Series 1997B) (together,
the "Industrial Revenue Bonds") to finance the acquisition and retrofitting of
a vinyl siding manufacturing facility in Holly Springs, Mississippi. The
Industrial Revenue Bonds bear interest rates determined weekly by the
remarketing agent. The Industrial Revenue Bonds mature on April 1, 2022 and
are backed by irrevocable letters of credit issued under the Company's Credit
Facility. The amounts included in total debt reflect only drawings against
proceeds of the issued amounts of the Industrial Revenue Bonds and do not
reflect amounts held in a segregated escrow account pending disbursement.
In March 1997, the Company and its bank group entered into a Third Amended
and Restated Credit Facility, as amended on February 2, 1998 (as amended, the
"Credit Facility") which superseded all prior credit agreements. The Credit
Facility provides a line of credit to the Company totaling $225.0 million
consisting of a $175.0 million continuing revolving credit facility (the
"Revolving Credit Facility") and a term loan facility (the "Term Loan") under
which the Company borrowed $50.0 million on April 3, 1995. The Credit Facility
matures on March 10, 2002, subject to extensions for additional one-year
periods. The Term Loan requires 16 equal quarterly principal payments of
$3.125 million commencing on June 30, 1997 and continuing through March 31,
2001. As of December 31, 1997, approximately $40.6 million was outstanding
under the Term Loan and the interest rate on the Term Loan was 7.99% and
approximately $80.7 million was outstanding under the Revolving Credit
Facility and the weighted average interest rate on the outstanding Revolving
Credit Facility was 6.55%.
ENVIRONMENTAL COMPLIANCE
The Company's operations are subject to federal and state government
regulations pertaining to air emissions, waste water discharge and solid waste
disposal. While environmental compliance costs in the future will depend on
regulatory developments that cannot be predicted, the Company believes that
compliance will be achieved with a combination of capital expenditures and
modifications to its production processes. As discussed more fully in
"Business--Environmental Regulation," the Company entered into a consent
decree with Michigan environmental authorities providing for an odor emissions
abatement program at its Alpena, Michigan, facility. To date, the Company has
expended approximately $8.0 million in connection with this program.
Additional capital expenditures of up to $4.0 million may be required over the
next several years in order to attain compliance with the program. Although no
assurances can be given as to any ultimate recoveries, the prior owners of
certain of the Company's businesses have agreed to indemnify the Company
against certain environmental liabilities. The Company does not anticipate
that costs relating to environmental activities will have a material adverse
impact on its financial condition or operating results. In connection with the
Acquisition, the seller has agreed to indemnify the Company with respect to
certain pre-Acquisition environmental matters and has placed $5.0 million into
escrow to fund any required remediation of such conditions. In connection with
the purchase of Canexel, Canadian Pacific Forest Products Limited is obligated
to indemnify the Company against certain environmental liabilities associated
with Canexel's Nova Scotia production facility.
CERTAIN LITIGATION
In recent years, a number of lawsuits have been brought against
manufacturers of OSB and exterior hardboard siding products alleging various
design and production defects and breach of express or implied warranties.
Such litigation has resulted in substantial settlements by certain competitors
of the Company. The
24
<PAGE>
Company has been named as a defendant in similar litigation (see "Legal
Proceedings"). The Company believes that its exterior hardboard siding
products are free of defects and, when properly installed and maintained, are
suitable for their intended purposes and meet all applicable quality
standards. Nevertheless, no assurance can be given that the Company will not
be required to pay substantial amounts with respect to such litigation or to
expend significant resources to defend against claims of this nature.
SEASONALITY
The Company's quarterly results of operations are moderately seasonal due to
the higher levels of construction activity that typically occur in the second
and third quarters and, to a lesser extent, the first quarter, thereby
increasing sales and gross profits in such periods as compared to the fourth
quarter.
INFLATION
The Company does not believe that inflation had a significant impact on the
Company's results of operations for the periods presented.
YEAR 2000 COMPLIANCE
The Company is currently implementing an upgrade to its existing financial,
sales, production and distribution software that is Year 2000 compliant. It is
also conducting a comprehensive review of the balance of its computer systems
to identify those processes that could be adversely affected by the Year 2000
issue and is developing an implementation plan to resolve any issue that might
arise. In conducting its review, the Company is actively soliciting its
suppliers and customers to assess any Year 2000 issue that might arise from
the interaction of its computer systems with those of its suppliers and
customers. The Year 2000 issue refers to the inability of many computer
programs and systems to process accurately dates later than December 31, 1999.
Unless these programs are modified to handle the century change, they will
likely interpret the Year 2000 as the year 1900. Although final cost estimates
have yet to be determined, it is anticipated that these Year 2000 costs will
result in an increase to the Company's expenses during 1998 and 1999 but are
not expected to have a material impact on its ongoing results of operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
25
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ABT BUILDING PRODUCTS CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company and Subsidiaries:
Report of Independent Public Accountants................................ 27
Consolidated Balance Sheets as of December 31, 1996 and 1997............ 28
Consolidated Statements of Operations for the Years Ended December 31,
1995, 1996 and 1997.................................................... 29
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1994, 1995, 1996 and 1997................................. 30
Consolidated Statements of Cash Flow for the Years Ended December 31,
1995, 1996 and 1997.................................................... 31
Notes to Consolidated Financial Statements.............................. 32
Report of Independent Public Accountants.................................. 54
Schedule II--Valuation and Qualifying Accounts............................ 55
</TABLE>
26
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of ABT Building Products
Corporation:
We have audited the accompanying consolidated balance sheets of ABT BUILDING
PRODUCTS CORPORATION (a Delaware corporation) AND SUBSIDIARIES (the "Company")
as of December 31, 1996 and 1997, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1997. 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 ABT Building
Products Corporation and Subsidiaries as of December 31, 1996 and 1997, and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Chicago, Illinois,
January 20, 1998
27
<PAGE>
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
AS OF DECEMBER
31,
------------------
1996 1997
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash..................................................... $ 24 $ 329
Accounts receivable, less allowances of $5,030 and
$6,303, respectively.................................... 31,278 29,395
Inventories.............................................. 47,237 57,682
Prepaid expenses......................................... 4,468 5,305
Deferred tax assets...................................... 765 1,313
-------- --------
Total current assets................................... 83,772 94,024
PROPERTY, PLANT AND EQUIPMENT:
Land..................................................... 2,968 4,063
Buildings and improvements............................... 28,700 44,153
Machinery and equipment.................................. 108,975 168,071
Furniture and fixtures................................... 3,947 5,227
Construction-in-progress................................. 45,525 18,140
-------- --------
190,115 239,654
Less--accumulated depreciation........................... (25,646) (42,660)
-------- --------
Net property, plant and equipment...................... 164,469 196,994
GOODWILL, Net.............................................. 9,486 8,297
OTHER ASSETS, Net.......................................... 2,537 9,917
-------- --------
Total assets........................................... $260,264 $309,232
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable......................................... $ 15,432 $ 14,467
Current maturities of long-term debt..................... 9,380 12,501
Accrued liabilities...................................... 16,183 11,373
-------- --------
Total current liabilities.............................. 40,995 38,341
LONG-TERM DEBT, less current maturities.................... 90,691 120,410
OTHER LONG-TERM LIABILITIES................................ 6,957 7,279
DEFERRED INCOME TAXES...................................... 11,680 18,361
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 40,000,000 shares
authorized; 10,526,160 and 10,599,160 shares outstanding
at December 31, 1996 and 1997, respectively............. 122 122
Additional paid-in capital............................... 60,511 59,926
Cumulative translation adjustment........................ (364) (1,556)
Retained earnings........................................ 76,637 92,127
Less: 1,685,000 and 1,612,000 common shares in treasury,
at cost, at December 31, 1996 and 1997, respectively.... (26,965) (25,778)
-------- --------
Total stockholders' equity............................. 109,941 124,841
-------- --------
Total liabilities and stockholders' equity............. $260,264 $309,232
======== ========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
28
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
NET SALES........................................ $240,107 $320,402 $321,813
COST OF SALES.................................... 176,119 227,351 225,074
-------- -------- --------
Gross profit................................. 63,988 93,051 96,739
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES..... 30,961 48,609 53,250
RESTRUCTURING CHARGE............................. -- -- 10,397
-------- -------- --------
Operating income............................. 33,027 44,442 33,092
OTHER (EXPENSE):
Interest expense............................... (5,929) (6,511) (8,344)
Other, net..................................... (4) (269) 263
-------- -------- --------
Total other expense.......................... (5,933) (6,780) (8,081)
-------- -------- --------
Income before income taxes................... 27,094 37,662 25,011
PROVISION FOR INCOME TAXES....................... 10,607 14,510 9,521
-------- -------- --------
Net income................................... $ 16,487 $ 23,152 $ 15,490
======== ======== ========
INCOME PER COMMON SHARE
Basic........................................ $ 1.54 $ 2.22 $ 1.47
======== ======== ========
Diluted...................................... $ 1.42 $ 2.01 $ 1.34
======== ======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic........................................ 10,707 10,433 10,547
======== ======== ========
Diluted...................................... 11,647 11,519 11,578
======== ======== ========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
29
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL CUMULATIVE
COMMON PAID-IN TRANSLATION RETAINED TREASURY
STOCK CAPITAL ADJUSTMENT EARNINGS SHARES
------ ---------- ----------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1994.... $122 $62,296 $ (345) $36,998 $(18,588)
Exercise of stock options.... -- (466) -- -- 674
Cumulative translation ad-
justment.................... -- -- 274 -- --
Purchase of treasury shares.. -- -- -- -- (9,332)
Net income................... -- -- -- 16,487 --
---- ------- ------- ------- --------
BALANCE, December 31, 1995.... 122 61,830 (71) 53,485 (27,246)
Exercise of stock options.... -- (1,319) -- -- 1,983
Cumulative translation ad-
justment.................... -- -- (293) -- --
Purchase of treasury shares.. -- -- -- -- (1,702)
Net income................... -- -- -- 23,152 --
---- ------- ------- ------- --------
BALANCE, December 31, 1996.... 122 60,511 (364) 76,637 (26,965)
Exercise of stock options.... -- (585) -- -- 1,187
Cumulative translation ad-
justment.................... -- -- (1,192) -- --
Net income................... -- -- -- 15,490 --
---- ------- ------- ------- --------
BALANCE, December 31, 1997.... $122 $59,926 $(1,556) $92,127 $(25,778)
==== ======= ======= ======= ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
30
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1995 1996 1997
--------- -------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................... $ 16,487 $ 23,152 $ 15,490
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities--
Writedown of assets due to restructuring..... -- -- 8,894
Depreciation and amortization................ 8,628 11,964 15,190
Deferred income taxes........................ 3,017 3,324 6,133
Cumulative translation adjustment............ 274 (293) (1,192)
Changes in certain assets and liabilities--
Accounts receivable......................... 2,875 (5,317) 1,883
Inventories................................. 968 1,480 (12,208)
Other assets................................ 479 (1,875) (4,156)
Accounts payable and accrued liabilities.... (8,966) 8,790 (5,453)
--------- -------- ---------
Net cash provided by operating activities.. 23,762 41,225 24,581
--------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of net assets..................... (47,083) -- --
Capital expenditures.......................... (16,813) (57,922) (57,718)
--------- -------- ---------
Net cash (used in) investing activities.... (63,896) (57,922) (57,718)
--------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt.................... 158,000 112,990 237,504
Payments of long-term debt.................... (106,649) (97,548) (204,664)
Payments for the purchase of treasury shares.. (9,332) (1,702) --
Exercise of stock options..................... 208 664 602
--------- -------- ---------
Net cash provided by financing activities..... 42,227 14,404 33,442
--------- -------- ---------
Net increase (decrease) in cash............... 2,093 (2,293) 305
CASH, beginning of period...................... 224 2,317 24
--------- -------- ---------
CASH, end of period............................ $ 2,317 $ 24 $ 329
========= ======== =========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
31
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION AND NATURE OF BUSINESS
The consolidated balance sheets as of December 31, 1996 and 1997, and the
consolidated statements of operations, stockholders' equity and cash flows for
the years ended December 31, 1995, 1996 and 1997 include the accounts of ABT
Building Products Corporation ("ABT") (a Delaware corporation) and its wholly-
owned subsidiaries ABTco, Inc. ("ABTco"), and ABT Canada, Limited ("ABT
Canada") (collectively referred to as the "Company"). The Company was formed
to acquire substantially all of the net assets of the Building Products
Division ("Predecessor") of Abitibi-Price Corporation ("APC"). On October 20,
1992 ("Inception Date"), the Predecessor was acquired by the Company (the
"Acquisition") pursuant to a purchase agreement dated September 25, 1992 (the
"Purchase Agreement"), for $92 million. The Company was organized by Kohlberg
& Co. and an officer of the Company for the purpose of acquiring the
Predecessor. This transaction was accounted for using the purchase method of
accounting.
In February of 1994, the company acquired Canexel Hardboard, a former
division of Canadian Pacific Forest Products Limited ("CPFP") (now Avenor,
Inc.) located in Nova Scotia, Canada. In addition, during the second quarter
of 1995, the Company acquired KenTech Plastics, Inc. ("KenTech") and the Vinyl
Siding Division of EMCO Limited ("Vinyl Division"). The Company's 1995 results
include the results of KenTech and the Vinyl Division from the date of
acquisition. These transactions were accounted for using the purchase method
of accounting (Note 3).
The Company is a manufacturer or finisher of various building products
including exterior hardboard siding, fiber cement siding, interior hardboard,
including textured paneling, finished tileboard, hardboard substrate and
doorskins and plastics such as siding, prefinished mouldings, trim accessories
and shutters. The Company's products are sold internationally to building
products distributors, home center retailers, manufactured housing builders
and industrial fabricators. The Company's quarterly results of operations are
moderately seasonal due to increases in construction activity that typically
occur in the second and third quarters and, to a lesser extent, the first
quarter, thereby increasing sales and gross profits in such periods as
compared to the fourth quarter.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
Significant transactions and balances between ABT and its subsidiaries have
been eliminated in consolidation.
Cash
Cash includes cash equivalents which consist of highly liquid investments
having maturities of three months or less when acquired.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the weighted average cost method. Inventory costs include material,
labor and manufacturing overhead.
Inventories at December 31, 1996 and 1997 consisted of the following (in
thousands):
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Finished products and work-in-process....................... $30,330 $38,935
Raw materials............................................... 8,954 9,560
Operating parts and supplies................................ 7,953 9,187
------- -------
$47,237 $57,682
======= =======
</TABLE>
32
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is computed
on
a straight-line basis over the estimated useful lives of the assets. The
following useful lives are used for recognizing depreciation expense for
financial reporting purposes:
<TABLE>
<S> <C>
Buildings and improvements........................................ 31.5 years
Machinery and equipment........................................... 5-16 years
Furniture and fixtures............................................ 10 years
</TABLE>
Major renewals and betterments which extend the useful life of an asset are
capitalized; routine maintenance and repairs are expensed as incurred. Total
maintenance and repair expense charged to operations was approximately
$14,754,000, $17,793,000 and $18,493,000 for the years ended December 31,
1995, 1996 and 1997, respectively. Upon sale or retirement of assets, the
asset cost and related accumulated depreciation are removed from the accounts
and any related gain or loss is reflected in results of operations.
Other Assets
Other Assets are stated net of accumulated amortization of $3,893,000 and
$5,843,000 as of December 31, 1996 and 1997, respectively, and consist of
deferred charges related to caul plates and resin molds, deferred financing
costs and other intangible assets. Amortization of these costs is computed
using the straight-line method over the estimated useful lives ranging from 2
to 5 years.
Costs incurred for software are expensed as incurred.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of
the net assets acquired at the acquisition date. Goodwill is being amortized
on a straight-line basis over a period of 20 years. Accumulated amortization
at December 31, 1996 and 1997 was $857,000 and $1,384,000, respectively. In
July 1997 the Company announced a restructuring of its plastics products group
(See Note 10). Accordingly, the Company took a write-down of goodwill in the
amount of $1,246,000 originally recorded at the time of the KenTech
acquisition. The Company utilizes the undiscounted operating cash flow method
to continuously review the realization of goodwill associated with the
acquisitions.
Warranty Reserve
The Company and the Predecessor warrant certain of their products against
defective workmanship for up to 25 years. The estimated cost of warranty
obligations is recognized at the time the related products are sold. The
Purchase Agreement required APC to retain responsibility for a portion of this
liability for products sold prior to the acquisition date as follows:
1. One half of the dollar amount paid pursuant to documented claims for
warranty service in excess of $100,000 during any calendar year, and
2. All liability in excess of $2,500 with respect to each individual claim
in excess of $5,000.
For the years ended December 31, 1995, 1996 and 1997, the Company incurred
warranty expense related to its exterior hardboard siding products amounting
to $679,000, $705,000 and $715,000, respectively. Warranty expense incurred
for the remainder of the Company's product categories is immaterial.
Recognition of Revenue
Revenue is recorded on the date goods are shipped to the customer. Sales
returns and allowances are recorded as a charge against revenue in the period
in which the related sales are recognized.
33
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Income Taxes
Deferred tax assets and liabilities are recorded for all temporary
differences between financial and tax reporting and are the result of
differences in the timing of recognition of certain income and expense items
for financial and tax reporting.
Foreign Currency Transactions
The Canadian dollar is considered the functional currency of ABT Canada. For
reporting purposes, assets and liabilities have been translated to U.S.
dollars at the rate in effect at the end of the year and income and expense
accounts have been translated at average rates in effect during the year.
Foreign currency transaction gains and losses are included in income in the
periods in which they occur.
Research and Development
Costs incurred in connection with the development of new products and
manufacturing methods are charged to operations as incurred. Such costs
amounted to $850,000, $1,127,000 and $1,053,000 for the years ended December
31, 1995, 1996 and 1997, respectively.
Estimates and Assumptions
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.
New Accounting Pronouncements
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
121 on Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of in fiscal year 1996. The Company also adopted SFAS
No. 123 on Accounting for Stock-Based Compensation as described more fully in
Note 9 to the Consolidated Financial Statements. The adoption of SFAS No. 121
and SFAS No. 123 did not have a material impact on the financial position or
the results of operations of the Company.
(3) ACQUISITIONS
On April 3, 1995, the Company acquired KenTech, located in Hopkinsville,
Kentucky. The purchase price of KenTech was $14.1 million, which was funded
from drawings on the Company's revolving line of credit. The transaction was
accounted for under the purchase method of accounting and, accordingly, the
Company's consolidated financial statements reflect the results of operations
of KenTech from the date of acquisition. The allocation of the purchase price
was based on the fair value of the net assets acquired.
On May 31, 1995, the Company acquired through its wholly-owned subsidiary,
ABT Canada, the Vinyl Division of EMCO Limited, located in Acton, Ontario. The
purchase price of the Vinyl Division was $33.0 million, which was funded from
drawings on the Company's revolving line of credit. The transaction was
accounted for under the purchase method of accounting and, accordingly, the
Company's consolidated financial statements reflect the results of operations
of the Vinyl Division from the date of acquisition. The allocation of the
purchase price was based on the fair value of the net assets acquired.
Presented below is the unaudited summarized pro forma statement of
operations for the year ended December 31, 1995. The statement gives effect to
the purchase of KenTech and the Vinyl Division as if such transactions had
taken place on January 1, 1995. These results include certain adjustments,
primarily for
34
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
depreciation, interest and other expenses related to the acquisitions and are
not necessarily indicative of what the results would have been had the
transactions actually occurred on such dates (in thousands, except per share
data).
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
<S> <C>
Net sales....................................................... $263,652
Net income...................................................... 15,844
Earnings per common share
Basic......................................................... $ 1.48
--------
Diluted....................................................... $ 1.36
--------
Average common shares outstanding
Basic......................................................... 10,707
--------
Diluted....................................................... 11,647
--------
</TABLE>
(4) ACCRUED LIABILITIES
Accrued liabilities as of December 31, 1996 and 1997 consisted of the
following (in thousands):
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Accrued payroll and benefits................................ $ 9,145 $ 7,445
Other....................................................... 7,038 3,928
------- -------
$16,183 $11,373
======= =======
</TABLE>
(5) LONG-TERM DEBT
On March 11, 1997 the Company and its bank group executed a Third Amended
and Restated Credit Agreement ("Credit Agreement") which amended and modified
all prior credit agreements. The Credit Agreement provides for a line of
credit to the Company totaling $225 million consisting of (i) a $175 million
continuing revolving credit facility, and (ii) a term loan facility under
which the Company borrowed a term loan in the principal amount of $50 million
on April 3, 1995. Up to $50 million of the total line of credit may be used
for letters of credit. Included in the revolving credit facility is $10
million availability under a Swing Line (the "Swing Line"). The Swing Line
provides an administratively less complex procedure for temporary borrowings.
The Credit Agreement matures on March 10, 2002. However, annually at the
request of the Company and at the discretion of the bank group, the maturity
may be extended for additional one-year periods. The Credit Agreement allows
the Company to choose among interest rate options, which include the agent
bank's base rate of interest in effect from time to time (prime rate) or the
prevailing Eurodollar rate, each plus a specific maximum margin. The maximum
margin is based on the Company's leverage ratio (the "Ratio"). As of December
31, 1996 and 1997, the interest rate on outstanding revolving loans was 6.40%
and 6.55%, respectively. The interest rate on the $50 million term loan
borrowed on April 3, 1995 was 7.99%. In addition, the Credit Agreement
requires the payment of a quarterly commitment fee, based on the Ratio,
ranging from 0.10% to 0.25% per annum of the revolving credit facility.
The Credit Agreement is unsecured (except for a pledge of 65% of the capital
stock of ABT Canada and a pledge of an intercompany note payable by ABT Canada
to the Company) and requires that the Company meet certain covenants which,
among other things, require the maintenance of ratios related to leverage and
net worth. In addition, the Company is permitted to effect acquisitions so
long as, on a pro-forma basis, the Company remains in compliance with the
financial covenants specified in the agreement. As of December 31, 1997, the
Company is in compliance with all loan covenants.
35
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
On April 1, 1997 the Company entered into a loan agreement with the
Mississippi Business Finance Corporation for the issuance of $1 million
Variable Rate Demand Bonds (Series 1997A) and $16.5 million Taxable Variable
Rate Demand Revenue Bonds (Series 1997B) to finance the acquisition and
retrofitting of a vinyl siding manufacturing facility in Holly Springs,
Mississippi. The bonds bear interest rates determined weekly by the
remarketing agent. The interest rates at December 31, 1997 were 4.30% and
6.10%, respectively. The bonds mature on April 1, 2022 and are backed by
Irrevocable Letters of Credit issued under the Company's Credit Agreement. The
Credit Agreement requires the payment of quarterly letter of credit fees,
based on the Ratio, ranging from 0.285% to 0.75% per annum of the letter of
credit amount. The amounts included in total debt reflect drawings against
proceeds of the issued amount of the bonds.
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1997
------- --------
(IN THOUSANDS)
<S> <C> <C>
Revolving line of credit.................................. $50,065 $ 80,675
Term loans................................................ 50,000 40,625
Mississippi Business Finance Corporation Bonds
Series 1997A........................................... -- 1,000
Series 1997B............................................ -- 10,610
Capital lease obligations................................. 6 1
------- --------
100,071 132,911
Less-current maturities................................... (9,380) (12,501)
------- --------
Total long-term debt.................................... $90,691 $120,410
======= ========
</TABLE>
The Company has entered into agreements to lease certain property under
terms which qualify as capital leases. Capital leases consist primarily of
data processing equipment. As of December 31, 1996 and 1997, assets recorded
under capital leases were approximately $373,000, net of accumulated
amortization of approximately $306,000 and $369,000, respectively.
Under existing agreements, maturities of long-term debt as of December 31,
1997, including capital lease obligations, are as follows (in thousands):
<TABLE>
<S> <C>
1998............................................................. $ 12,501
1999............................................................. 12,500
2000............................................................. 12,500
2001............................................................. 3,125
2002............................................................. --
Thereafter....................................................... 92,285
--------
$132,911
========
</TABLE>
36
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(6) INCOME TAXES
The provision for income taxes in the consolidated statements of operations
for the years ended December 31, 1995, 1996 and 1997 consists of the following
(in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
------- ------- ------
<S> <C> <C> <C>
Current
Federal........................................ $ 7,543 $ 9,510 $2,437
State and local................................ 1,333 2,132 193
Foreign........................................ (1,286) 215 249
------- ------- ------
Total Current................................ 7,590 11,857 2,879
------- ------- ------
Deferred
Federal........................................ 1,649 2,324 5,640
State and local................................ 544 426 1,006
Foreign........................................ 824 (97) (4)
------- ------- ------
Total Deferred................................... 3,017 2,653 6,642
------- ------- ------
Total provision for income taxes............. $10,607 $14,510 $9,521
======= ======= ======
The difference between the United States federal statutory income tax rate
and the consolidated effective income tax rate is summarized as follows (in
thousands):
<CAPTION>
1995 1996 1997
------- ------- ------
<S> <C> <C> <C>
Income before income taxes multiplied by statu-
tory rate....................................... $ 9,483 $13,182 $8,754
State income tax (net of federal tax benefit).... 1,220 1,663 779
Foreign income tax (benefit)..................... (462) 118 245
Foreign sales corporation benefit................ (92) (60) (453)
Research and experimental tax credit............. -- -- (493)
Other............................................ 458 (393) 689
------- ------- ------
Total provision for income taxes................. $10,607 $14,510 $9,521
======= ======= ======
</TABLE>
Deferred taxes are determined based on the estimated future tax effects of
temporary differences between the financial reporting and tax basis of assets
and liabilities, given the provisions of the enacted tax laws. Deferred tax
consequences of significant temporary differences existing as of December 31,
1996 and 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1997
--------- --------
<S> <C> <C>
Accrued vacation....................................... $ 563 $ 395
Inventory burden....................................... 151 584
Warranty............................................... (36) 985
Prepaid pension expense................................ 469 888
Restructuring reserve.................................. -- 2,761
Canadian net operating loss and investment tax credit
carryover, net of valuation allowance of $0 and $1,552
at December 31, 1996 and 1997, respectively........... 3,170 2,755
--------- --------
Net deferred tax asset............................... 4,317 8,368
--------- --------
Depreciation........................................... (15,186) (19,236)
Asset capitalization................................... -- (4,487)
Other.................................................. (46) (1,693)
--------- --------
Deferred tax liability............................... (15,232) (25,416)
--------- --------
$(10,915) $(17,048)
========= ========
</TABLE>
37
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Tax benefits arising from the exercise of stock options in the amount of
$176,000, $815,000 and $739,000 are not reflected in the current tax
provisions for the years ended Decmber 31, 1995, 1996 and 1997, respectively.
These amounts were credited directly to additional paid-in capital.
At December 31, 1997, the Company's Canadian operation had available tax net
operating losses and investment tax credits of $6,244,000 and $1,809,000,
respectively, which will begin to expire in 2001 and 2004, resepctively. In
1997, the Company recorded a valuation allowance of $1,552,000 for unrealized
net operating loss carryforwards and investment tax credits that may expire
before the Company is able to utilize such tax assets.
(7) EMPLOYEE BENEFIT PLANS
The Company maintains a noncontributory, defined benefit pension plan
covering substantially all U.S. employees. Pension plan costs are funded in
compliance with the Employee Retirement Income Security Act of 1974 "ERISA"
requirements. The following table sets forth the funded status of the plan at
January 1, 1997 and 1998 (in thousands):
<TABLE>
<CAPTION>
1997 1998
------- -------
<S> <C> <C>
Actuarial present value of benefit obligation--
Vested benefits........................................ $41,318 $44,412
Nonvested benefits..................................... 370 832
------- -------
Accumulated benefit obligation........................... 41,688 45,244
Effect of projected future compensation levels........... 7,012 7,323
------- -------
Projected benefit obligation............................. 48,700 52,567
Plan assets at fair value................................ 46,902 52,884
------- -------
Projected benefit obligation (in excess of) less than
plan assets............................................. (1,798) 317
Unrecognized prior service cost.......................... 770 1,372
Unrecognized net loss (gain)............................. 955 (2,484)
------- -------
Pension asset (liability) recorded in balance sheets..... $ (73) $ 795
======= =======
</TABLE>
The assumptions used to measure the projected benefit obligation and to
compute the expected long-term return on assets for the plan are as follows:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Discount rate.............................................. 7.5% 7.5% 7.5%
Average increase in compensation levels.................... 4.5 4.5 4.5
Expected long-term return on assets........................ 9.0 9.0 10.0
</TABLE>
The plan's assets consist primarily of common stocks, bonds and cash
equivalents.
Net periodic pension cost for the defined benefit pension plan for the years
ended December 31, 1995, 1996 and 1997 include the following components (in
thousands):
<TABLE>
<CAPTION>
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Service cost on benefits
earned during the peri-
od..................... $1,029 $1,432 $1,577
Interest cost on pro-
jected benefit obliga-
tion................... 3,353 3,696 3,626
Expected return on plan
assets................. (3,602) (4,361) (4,584)
Amortization cost....... (70) 54 103
------ ------ ------
Net periodic pension
cost................... $ 710 $ 821 $ 722
====== ====== ======
</TABLE>
Certain employees, whose benefits under the plan have been reduced as the
result of recent formula changes or who are otherwise designated by the
compensation committee, may accrue additional benefits under
38
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
supplemental nonqualified plans which the Company has established. The cost of
these plans was approximately $220,000, $390,000 and $532,000 for the years
ended December 31, 1995, 1996 and 1997, respectively. The accumulated benefit
obligation of these plans was $1,056,000 and $1,825,000 as of December 31,
1996 and 1997, respectively. The projected benefit obligation of the plans was
$1,453,000 and $2,143,000 as of December 31, 1996 and 1997, respectively. The
plans are not funded, thus plan assets at December 31, 1996 and 1997 were $0.
The pension liability recorded in the consolidated balance sheets is $862,399
and $1,393,072 at December 31, 1996 and 1997, respectively. The actuarial
assumptions used for these plans are the same as those used to measure the
defined benefit plan funded in compliance with ERISA requirements.
The Company maintains no post-retirement benefits other than pensions.
The Company is in the process of finalizing the pension asset and liability
transfer with CPFP and EMCO Limited, as it relates to the acquisitions of
Canexel and the Vinyl Division (Note 3). CPFP and EMCO Limited retained the
obligation for all participants retired prior to the acquisition date. These
plans do not have a material effect on the Company's financial condition or
results of operations.
(8) LEASES
The Company is party to numerous leases, principally for vehicles,
administrative and sales offices and warehouses. Rent expense under operating
leases was approximately $2,219,000 $2,967,000 and $3,947,000 for the years
ended December 31, 1995, 1996 and 1997, respectively.
At December 31, 1997, future minimum annual rental commitments were as
follows (in thousands):
<TABLE>
<CAPTION>
OPERATING
LEASES
---------
<S> <C>
1998............................................................... $2,487
1999............................................................... 1,613
2000............................................................... 1,264
2001............................................................... 565
2002 and thereafter................................................ 144
------
Total minimum lease payments..................................... $6,073
======
</TABLE>
(9) STOCKHOLDERS' EQUITY
On February 16, 1994, the major shareholders of the Company completed a
secondary offering of 3,415,000 shares. The costs incurred were charged to
additional paid-in capital and amounted to approximately $600,000.
Commencing the third quarter of 1994, the Board of Directors authorized the
repurchase of up to 2,200,000 shares of the Company's common stock in the open
market. Treasury shares repurchased amounted to 591,000 in 1995 and 115,000 in
1996 and 0 in 1997. At December 31, 1997, the Company had 1,612,000 treasury
shares. Accordingly, the cost to repurchase the treasury shares has been
recorded in stockholders' equity.
The Board of Directors and stockholders of the Company adopted a Stock
Option Plan pursuant to which members of management and other employees of the
Company may be granted options to purchase up to an aggregate of 3,100,000
shares of common stock. At the Inception Date, certain officers of the Company
were granted options to purchase 1,120,000 shares of common stock at an
exercise price of $2.50 per share, the fair market value as of the date of
grant. Options generally become exercisable ratably over a four-year period
and expire ten years after the date of grant. The Company accounts for this
plan under APB Opinion No. 25, under which no compensation cost has been
recognized. Had compensation cost for these plans been determined
39
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
consistent with FASB Statement No. 123, the Company's net income and earnings
per share would have been reduced to the following pro forma amounts for the
years ended December 31, 1995, 1996 and 1997 (in thousands, except for per
share data):
<TABLE>
<CAPTION>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C> <C>
Net Income: As Reported $16,487 $23,152 $15,490
Pro Forma 15,539 21,905 14,109
Earnings per Share:
Basic As Reported $1.54 $2.22 $1.47
Pro Forma 1.45 2.10 1.34
Diluted As Reported $1.42 $2.01 $1.34
Pro Forma 1.33 1.90 1.22
</TABLE>
Because the Statement 123 method of accounting has not been applied to
options granted prior to January 1, 1995, the resulting pro forma compensation
cost may not be representative of that to be expected in future years.
The following table provides summary information regarding stock options
granted under the Stock Option Plan:
<TABLE>
<CAPTION>
1995 1996 1997
------------------- ------------------- -------------------
WEIGHTED WEIGHTED WEIGHTED
AVG. EX. AVG. EX. AVG. EX.
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January
1...................... 1,910,750 $ 9 2,376,360 $11 2,185,657 $12
Granted................. 529,860 19 24,400 20 318,775 18
Exercised............... (31,800) 3 (172,393) 7 (156,857) 12
Cancelled............... (32,450) 17 (42,710) 17 (40,250) 19
--------- --- --------- --- --------- ---
Outstanding at December
31..................... 2,376,360 12 2,185,657 12 2,307,325 13
--------- --- --------- --- --------- ---
Exercisable at December
31..................... 1,022,960 6 1,299,532 7 1,605,975 10
========= === ========= === ========= ===
</TABLE>
The weighted average fair value of options granted for 1995, 1996 and 1997
was $12.44, $12.28 and $12.28, respectively. 902,000 of the 2,307,325 options
outstanding at December 31, 1997 have exercise prices of $2.50 with a weighted
average remaining contractual life of 5 years. All of these options are
exercisable. 1,140,125 options outstanding have exercise prices between $11.80
and $20.65 with a weighted average exercise price of $17.51 and a weighted
average remaining contractual life of 7 years. The remaining 265,200 options
have exercise prices between $20.66 and $29.50 with a weighted average
exercise price of $25.96 and a weighted average remaining contractual life of
6 years.
The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option pricing model with the following weighted
average assumptions used for grants in 1995, 1996 and 1997, respectively:
risk-free interest rates of 7.13%, 6.35% and 5.99%; expected dividend yield of
0%; expected lives of 10 years; expected volatility of 42.00%, 38.04% and
38.76%.
(10) RESTRUCTURING CHARGE
On July 7, 1997, the Company announced that it was restructuring its Plastic
Products Group. The restructuring program was implemented to phase out the
Company's plastics industrial business and to allow the Company to focus on
specialty building products. Accordingly, the Company recognized a $10.4
million charge during the period ended June 30, 1997. $8.9 million of the
restructuring charge consisted of a write-down of certain machinery and
equipment, inventory and goodwill to net realizable values. The remaining $1.5
million
40
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
consisted of severance payments and outstanding lease obligations related to
the closing of certain leased facilities. The impact on earnings per share for
the year ended December 31, 1997, amounted to $0.56.
As of December 31, 1997, the remaining balance of $1.1 million related to
the restructuring charge is included in the accrued expenses in the Company's
consolidated balance sheet.
(11) COMMITMENTS AND CONTINGENCIES
Under the terms of the asset purchase agreements between the Company and
APC, CPFP and EMCO Limited, such entities agreed to indemnify the Company for
certain liabilities or obligations of the Predecessor, Canexel and the Vinyl
Division respectively, arising on or prior to the change in ownership
including liabilities related to environmental, product liability and
litigation matters. In connection with such transactions, as well as the
acquisition of KenTech, the Company assumed various liabilities and
obligations under product warranties with respect to products manufactured
prior to the change in ownership.
Environmental Compliance
On August 30, 1995, the Company completed negotiations with Michigan
environmental authorities regarding a consent judgment providing for an odor
emissions abatement program at its Alpena, Michigan facility. The program
provides for phased installation of controls to effect a staged reduction of
the facility's emissions of odors into the air. It is estimated that capital
expenditures of approximately $8 million to $12 million will be required in
order to attain compliance with the program. On November 27, 1995, the Company
and ABTco commenced an action against Abitibi-Price Corporation ("APC"), as
the prior owner of the Alpena facility, and APC's corporate parent Abitibi-
Price, Inc. ("API") in the Circuit Court for the County of Oakland, Michigan
(ABT Building Products Corporation and ABTco, Inc. v. Abitibi-Price
Corporation and Abitibi-Price, Inc., Case No. 95-508819-CK), seeking to
recover damages incurred in connection with the remediation, correction and
control of odor emissions at the Alpena facility. Although not yet dismissed,
under the Indemnity Settlement (as defined below), the parties have agreed to
dismiss this action with prejudice.
Litigation
The Company and ABTco have been named as defendants in a class action and
four separate putative class actions arising from hardboard siding
manufactured, distributed, or sold by them or by Abitibi-Price Corporation
("APC"), Abitibi-Price, Inc. ("API") or Abitibi-Consolidated, Inc. ("ACI").
APC, API, and ACI have also been named as defendants in these actions, and APC
has been named a defendant in certain other actions, which may result in
liability for the Company under the terms of the Indemnity Settlement as
described below:
(1) Fyola et al. v. ABT Building Products Corporation, ABTco, Inc. and
Abitibi-Price Corporation, Docket No. 95-12854, Court of Common Pleas of
Allegheny County, Pennsylvania (the "Fyola Action").
August 8, 1995, plaintiffs Glenn Fyola, Patricia Fyola, Joyce D'Antonio,
and Kenneth Hyre filed this action in the Court of Common Pleas of
Allegheny County, Pennsylvania against the Company. Plaintiffs alleged that
they were suing on behalf of themselves and a putative class composed of
residential homeowners who reside in Pennsylvania and whose homes have or
had for their exterior siding a hardboard product which was allegedly
manufactured, distributed, or sold by the Company. The original complaint
alleged that the exterior siding on plaintiffs' homes had prematurely
rotted, warped, buckled, and deteriorated. Plaintiffs asserted purported
claims for breach of implied warranty of merchantability, breach of implied
warranty of fitness, breach of express warranty, violation of the
Pennsylvania Unfair Trade Practice and Consumer Protection Law, and deceit
by concealment. Plaintiffs, on behalf of themselves and
41
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
the putative class, sought compensatory and punitive damages in unspecified
amounts, including economic damages, treble damages under the Pennsylvania
Unfair Trade Practice and Consumer Protection Law, and an award of
attorneys' fees.
The Company filed an "Answer and New Matter" on October 31, 1995, that
denied all material allegations of the complaint and asserted affirmative
defenses.
On February 5, 1996, plaintiffs filed an amended complaint adding ABTco
and APC as defendants. The amended complaint was otherwise substantially
similar to the original complaint.
The action was removed to the United States District Court for the
Western District of Pennsylvania. By order dated November 25, 1996, that
Court remanded the action to the Court of Common Pleas for Allegheny
County.
In response to the amended complaint, defendants filed an "Answer and New
Matter" dated December 27, 1996, that denies all material allegations of
the amended complaint and asserts affirmative defenses. On March 25, 1997,
defendants filed a motion seeking a stay of the action or, in the
alternative, an order limiting discovery to certification-related issues
until the court rules upon plaintiffs' motion for class certification. On
May 30, 1997, the Court of Common Pleas of Allegheny County entered an
order staying this action pending a decision by the United States District
Court for the Southern District of Alabama as to whether the conditional
order of certification already entered in the Foster Action (which is
discussed below) should be upheld, or whether the classes and subclasses
already conditionally certified in that action should be decertified. The
Fyola action has not been certified as a class action.
The Company and ABTco intend to defend the action vigorously.
(2) Foster et al. v. ABTco, Inc., ABT Building Products Corporation,
Abitibi-Price, Inc. and Abitibi-Price Corporation, Docket No. CV95-151M,
Circuit Court of Choctaw County of Alabama (the "Foster Action").
On December 21, 1995, plaintiffs Thomas and Linda Foster brought this
action in the Circuit Court of Choctaw County, Alabama, on behalf of
themselves and a class generally composed of all individuals and entities
(i) that own or owned property in the United States on which hardboard
siding manufactured, distributed, or sold by the Company, ABTco, API, or
APC has been installed and (ii) that have already suffered (or will suffer
within the warranty period) alleged damage because, according to
plaintiffs, such siding prematurely rots, buckles, swells, cracks or
otherwise deteriorates. Plaintiffs filed an amended complaint on July 10,
1996. Plaintiffs and the putative class are seeking compensatory damages
and an award of attorneys' fees. The complaint alleges that the "amount in
controversy is in the millions of dollars classwide and is typically
several thousand dollars for each plaintiff and individual class member."
On December 22, 1995, this action was conditionally certified as a class
action by ex parte order.
On January 23, 1996, defendants removed the action to the United States
District Court for the Southern District of Alabama. On October 31, 1996,
defendants filed an answer that denies all material allegations of the
amended complaint and asserts affirmative defenses.
On May 29, 1997, API and APC filed cross-claims against the Company and
ABTco for breach of contract and common-law indemnification.
On May 29, 1997, the Company and ABTco filed cross-claims against API and
APC for indemnification and contribution. On June 18, 1997, the Company and
ABTco filed amended cross-claims against API and APC for indemnification
and contribution. By agreement dated as of October 1, 1997 (the
42
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
"Indemnity Settlement"), the Company and APC agreed to voluntarily dismiss,
with prejudice, these cross-claims. See the description of the Indemnity
Settlement below.
On September 3, 1997, plaintiffs filed a renewed motion they had
previously brought seeking remand of the action to the Circuit Court of
Choctaw County, Alabama. The Court granted this motion and remanded the
action by order dated on November 21, 1997.
The parties are currently conducting certification discovery.
The Company and ABTco intend to defend the action vigorously.
(3) Dunn et al. v. ABTco, Inc., ABT Building Products Corporation,
Abitibi-Price, Inc. and Abitibi-Price Corporation, Docket No. 96-CVS7690,
Superior Court of Forsyth County, North Carolina.
On December 27, 1996, plaintiffs William Dunn and Paul and Teresa
Sullivan brought this action on behalf of themselves and a putative class
generally composed of all individuals and entities (i) that own or owned
property in the United States on which hardboard siding manufactured,
distributed, or sold by the Company, ABTco, API or APC has been installed
and (ii) that have already suffered (or will suffer within the warranty
period) alleged damage because, according to plaintiffs, such siding
prematurely rots, buckles, swells, cracks or otherwise deteriorates.
Plaintiffs and the putative class are seeking compensatory damages and an
award of attorneys' fees. The complaint alleges that the "aggregate amount
in controversy is in the millions of dollars classwide." This action has
not been certified as a class action. On January 28, 1997, all defendants
moved to abate or stay the action. That motion was argued on February 14,
1997. By order signed on February 18, 1997, the court denied the motion to
abate but granted the motion to stay, without prejudice for either party to
move to reconsider upon the loss of jurisdiction over the Foster Action by
the federal and state courts.
The Company and ABTco intend to defend the action vigorously.
(4) Ezzell et al. v. ABTco, Inc., ABT Building Products Corporation,
Abitibi-Price, Inc. and Abitibi-Price Corporation, No. 97-CVS-167, Superior
Court of Onslow County, North Carolina.
On January 21, 1997, plaintiffs John and Rosemary Ezzell filed this
action on behalf of themselves and a putative class generally composed of
all individuals and entities (i) that own or owned property in the United
States on which hardboard siding manufactured, distributed, or sold by the
Company, ABTco, API, or APC has been installed and (ii) that have already
suffered (or will suffer within the warranty period) alleged damage
because, according to plaintiffs, such siding prematurely rots, buckles,
discolors, deteriorates, and otherwise does not perform as expressly
represented or warranted, and/or would not perform in accordance with the
reasonable expectations of class members and other consumers that such
siding is durable, suitable and proper to be used on personal residences or
other properties. The complaint alleges that "the aggregate amount in
controversy is typically several thousand dollars for each plaintiff and
individual class member." On March 27, 1997, the Company and ABTco served
an answer that denies all material allegations of the complaint and asserts
affirmative defenses. The action has not been certified as a class action.
On May 23, 1997, all defendants moved to abate or stay the action. By
order signed on October 2, 1997, the court denied the motion to abate but
granted the motion to stay, provided that in the event the court in the
Foster Action shall enter an order decertifying, in whole or in part, the
classes and subclasses conditionally certified in that action in such a way
that the representative plaintiffs in this action are not represented in
that action, the plaintiffs in this action may move for reconsideration of
the stay.
The Company and ABTco intend to defend the action vigorously.
43
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(5) Fiedler et al. v. ABT Building Products Corporation, ABTco, Inc.,
Abitibi-Price, Corp. and Abitibi-Consolidated, Inc., Civil Action No. 97-
CP-08-1545, Court of Common Pleas of Berkeley County, South Carolina.
On September 25, 1997, plaintiffs Nancy Fiedler and Daniel Gaines brought
this action on behalf of themselves and a putative class composed of all
past and present owners of mobile homes who reside or resided in South
Carolina and whose mobile homes had compressed wood fiber exterior siding
designed, marketed, or manufactured by the Company, ABTco, APC or ACI.
Plaintiffs' complaint alleges that defendants' siding is defective and
fails to perform as warranted by prematurely deteriorating, rotting,
swelling, cracking, splitting, delaminating, absorbing water, warping,
bulging and/or buckling under normal conditions and exposure. Plaintiffs'
complaint asserts purported claims for breach of express warranty, breach
of implied warranty of merchantability, negligence/negligence per se/gross
negligence and strict liability in tort. Plaintiffs, on behalf of
themselves and the putative class, seek actual, consequential and punitive
damages "not to exceed $74,999.00 per class member," and the costs and
expenses of the lawsuit. The action has not been certified as a class
action.
On October 29, 1997, defendants removed the action to the United States
District Court for the District of South Carolina. On November 5, 1997,
defendants served an answer that denies all material allegations of the
complaint and asserts affirmative defenses. With consent of defendants, the
District Court remanded the case back to the Court of Common Pleas of
Berkeley County by order dated December 10, 1997. On February 11, 1998,
defendants moved to stay the action and for a stay of discovery. This
motion has not yet been fully briefed or decided.
The Company and ABTco intend to defend the action vigorously.
(6) Lillis et al. v. Abitibi-Price Corporation and Sunstate Manufactured
Homes of Georgia, Inc. d/b/a Peach State Homes, Inc., Case No. 97-18136
CA21, Circuit Court of Dade County, Florida (the "Lillis Action").
On August 13, 1997, plaintiff Gloria Lillis filed this action in the
Circuit Court of the Eleventh Judicial Circuit in and for Dade County,
Florida against APC and Sunstate Manufactured Homes of Georgia, Inc. The
plaintiff alleged that she was suing APC on behalf of herself and a
putative class composed of all persons who purchased in the State of
Florida a new manufactured home with APC hardboard siding. Plaintiff's
complaint alleges that APC's hardboard siding is defective because under
normal maintenance it deteriorates, delaminates, disintegrates and has
virtually no resistance to moisture. Plaintiff's complaint against APC
asserts purported claims for breach of express warranty and a Florida
statutory claim for failure satisfactorily to resolve a warranty claim.
Plaintiff, on behalf of herself and the putative class, seeks compensatory
damages, attorneys' fees, costs and interest.
On September 17, 1997, defendants removed the action to the United States
District Court for the Southern District of Florida. On September 26, 1997,
defendant APC filed a motion to dismiss the plaintiff's statutory claim. On
October 17, 1997, plaintiff filed a motion to remand the action to the
Circuit Court for Dade County, Florida. These motions have not yet been
decided. This action is not certified as a class action.
The Company may have potential liability for this litigation under the
terms of the Indemnity Settlement described below.
(7) Arredondo, et al. v. Masonite Corporation, Abitibi-Price Corporation,
MG Building Materials, Inc., and Nu-Air Manufacturing Co., Inc., Cause No.
4571, District Court of Jim Hogg County, Texas (the "Arredondo Action");
and Adams, et al. v. Masonite Corporation, Abitibi-Price Corporation, MG
Building Materials, Inc. and Nu-Air Manufacturing Co., Inc., Cause No.
16707, District Court of Duval County, Texas, (the "Adams Action").
On August 30, 1996, two consolidated actions, the Adams Action, filed in
the District Court of Duval County, Texas, and the Arredondo Action, filed
in the District Court of Jim Hogg County, Texas, were
44
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
brought naming APC as a defendant. In the Adams Action, the owners of
approximately 140 homes, and in the Arredondo Action, the owners of
approximately 30 homes, alleged that they had suffered damages as a result
of APC hardboard siding installed on their homes. The complaint in the
Adams Action and the complaint in the Arredondo Action are virtually
identical and were filed by the same attorney. The plaintiffs in the these
actions allege that hardboard siding manufactured by APC is defective and
failed to perform to a level reasonably expected for a product of its
nature. The plaintiffs in the these actions assert purported claims for
negligence and gross negligence, breach of implied warranty of fitness,
breach of implied warranty of merchantability, breach of express warranty,
negligent misrepresentation, and violation of the Texas deceptive trade
practices act. The plaintiffs in the these actions seek actual and
exemplary damages, including damages for economic loss and mental anguish,
treble damages, costs and interest.
In both actions, APC filed a motion to transfer venue with respect to the
majority of the plaintiffs. The trial court granted APC's motion to
transfer, but rather than transfer those plaintiffs to the venue requested
by APC, transferred those plaintiffs to the county of their residence. APC
sought mandamus and review by the Texas Supreme Court on this issue, and
the issue is currently pending before the Texas Supreme Court.
As a result of the trial court's decision, there are currently three
actions pending: the original Arredondo Action, in which the owners of
approximately 15 homes have remaining claims against APC; the original
Adams Action, in which the owners of approximately 40 homes have remaining
claims against APC; and an action in Jim Wells County, Texas, in which it
is currently unclear how many plaintiffs have claims against APC. Discovery
is proceeding in the Arredondo Action and in the Adams Action.
The Adams Action and the Arredondo Action are treated as non-class action
claims under the Indemnity Settlement as described below for which the
Company may have potential liability.
(8) Indemnity Settlement.
On June 16, 1997, APC and Abitibi-Price Sales Corporation brought suit
against the Company and ABTco in the Supreme Court of the State of New York
for the County of Westchester alleging violation of the indemnity and
warranty provisions in the asset sale agreement relating to the Acquisition
(the "Abitibi Action"). On October 1, 1997, the Company and APC agreed to
settle their claims under the Abitibi Action and to dismiss the Abitibi
Action with prejudice. Pursuant to the Indemnity Settlement, the Company
and APC agreed to an allocation of liability with respect to claims
relating to ABT Board (as defined below) and APC Board (as defined below).
The following description of the terms of the Indemnity Settlement is
general, and is subject to restrictions, qualifications, and additional
terms stated in the Indemnity Settlement itself. In general, under the
terms of the Indemnity Settlement all amounts paid in settlement or
judgment (other than punitive damages if they are assessed against either
the Company or APC individually) following the completion of any claims
process resolving any class action claim (including consolidated cases
involving more than 125 homes owned by named plaintiffs) ("Class Action
Damage Amounts") that relate to siding sold by APC prior to October 22,
1992 or held as finished goods inventory by APC on October 22, 1992 ("APC
Board") shall be paid 65% by Abitibi and 35% by the Company. Class Action
Damage Amounts relating to siding sold by the Company after October 22,
1992 ("ABT Board") shall be paid 100% by the Company. Class Action Damage
Amounts that cannot be attributed to either the Company or APC
("Indeterminate Amounts") shall be paid 50% by the Company and 50% by APC.
Total amounts paid for joint local counsel and other joint expenses, for
Class Action Damage Amounts, and for plaintiffs' attorneys' fees and
expenses (collectively "Final Class Action Costs") are to be apportioned
according to the Company's and APC's proportional share of the Class Action
Damage Amounts, including the Indeterminate Amounts (the "Proportional
Share").
All joint costs of defending and disposing of class action claims
incurred prior to the final determination of what portion of claims relate
to APC Board and what portion relate to ABT Board ("Preliminary Class
Action Costs") are to be paid 50% by the Company and 50% by APC, with
provisions for adjustment if either the Company's or APC's Proportional
Share exceeds 60% of the Final Class Action
45
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Costs. In the event any class action claim involves only ABT Board, the
Company shall pay 100% of the Preliminary Class Action Costs. In the event
any class action claim involves only APC Board, APC shall pay 65% and the
Company shall pay 35% of the Preliminary Class Action Costs.
Under the terms of the Indemnity Settlement, with respect to non-class
action claims relating to APC Board, the Company is responsible for the
first $100,000 in each calendar year of all amounts paid for settlements,
judgments and associated fees and expenses of local outside counsel. APC
and the Company are each responsible for 50% of such amounts in excess of
$100,000 per year up to $5,000 with respect to individual claims. APC is
responsible for 100% of amounts in excess of $5,000 with respect to
individual claims. The Adams Action and the Arredondo Action are treated as
Non-Class Action Claims under the Indemnity Settlement. With respect to
Non-Class Action Claims relating to ABT Board, the Company shall pay 100%
of any amounts paid for settlements, judgments and associated fees and
expenses of local outside counsel representing the parties in the
jurisdictions where litigation or arbitration involving such claims is
pending.
The Company believes that its exterior hardboard siding products are free
of defects and, when properly installed and maintained, are suitable for
their intended purposes and meet all applicable legal standards. The
Company believes that it has substantial defenses to the claims asserted by
the representative plaintiffs on behalf of themselves and the conditionally
certified class and the putative classes in the Hardboard Siding Class
Actions. The Company and ABTco intend to defend vigorously those actions in
which they are named as defendants. Nevertheless, the litigations are in
preliminary stages. Given the uncertainties inherent in litigation, it is
possible that some or all of the Hardboard Siding Class Actions, the Adams
Action or the Arredondo Action could be decided against the Company, ABTco,
APC, API or ACI in whole or in part. It is also possible that additional
actions or class actions could be brought against the Company, ABTco, API,
APC or ACI in connection with hardboard siding manufactured, distributed or
sold by them. Should the Company, ABTco, API, APC or ACI ultimately be
found liable in these actions to individual plaintiffs, members of the
conditionally certified class or the putative classes, or to any future
plaintiff, the damages could materially and adversely affect the Company's
business, financial condition and results of operations. The Company is not
able to estimate or predict the amount of such ultimate liability, if any,
and accordingly, the Company has made no reserve provisions in its
consolidated financial statements (other than standard warranty accruals).
Even if the Company and ABTco are not ultimately found to be liable in any
of these actions, the financial and business burdens of defending prolonged
and expensive litigation or of any settlement could materially and
adversely affect the Company's business, financial condition and results of
operation.
In addition, the Company is a party to various other legal proceedings
arising in the ordinary course of business, none of which, in management's
opinion, are expected to have a material adverse effect on the Company's
operating results or financial condition.
(12) RELATED-PARTY TRANSACTIONS
The Company entered into an agreement with Kohlberg & Co. to provide
management services for an annual fee of $95,000, plus out-of-pocket expenses.
Payments under this agreement for the years ended December 31, 1995, 1996 and
1997 were approximately $114,000, $103,000 and $118,000, respectively.
(13) SUPPLEMENTAL CASH FLOW DISCLOSURE
In addition to the information provided in the Statements of Cash Flows, the
following is a supplemental disclosure of cash flow information for the years
ended December 31, 1995, 1996 and 1997 (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
------- ------ ------
<S> <C> <C> <C>
Cash paid during year for--
Interest............................................ $ 4,834 $8,017 $9,303
Income taxes........................................ 10,833 7,124 7,483
</TABLE>
46
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(14) QUARTERLY FINANCIAL DATA (UNAUDITED)
(in thousands, except per share data.)
<TABLE>
<CAPTION>
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
--------------- --------------- --------------- ---------------
1996 1997 1996 1997 1996 1997 1996 1997
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $74,362 $77,023 $82,549 $88,396 $88,435 $87,516 $75,056 $68,879
Gross profit............ 21,062 24,449 24,469 27,387 26,456 24,381 21,064 20,522
Operating income........ 10,880 11,356 12,577 3,805 13,209 11,009 7,776 6,922
Net income.............. 5,481 6,154 6,552 1,149 6,894 5,255 4,225 2,932
Net income per common share
Basic................. .53 .58 .63 .11 .66 .50 .40 .28
Diluted............... .48 .53 .57 .10 .60 .46 .36 .26
</TABLE>
(15) CONCENTRATION OF BUSINESS/GEOGRAPHIC INFORMATION
The Company's operations involve a single industry segment; the design,
manufacture, sale and support of building products. One customer accounts for
11% of net sales for the year ended December 31, 1997.
The following table provides summary information for the years ended
December 31, 1995, 1996 and 1997
(in millions):
<TABLE>
<CAPTION>
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Revenues
U.S. Operations...................................... $192.6 $233.6 $221.6
Canadian Operations.................................. 47.5 86.8 100.2
------ ------ ------
Total Revenues..................................... 240.1 320.4 321.8
====== ====== ======
Operating Income
U.S. Operations...................................... 31.6 38.1 28.0
Canadian Operations.................................. 1.4 6.3 5.1
------ ------ ------
Total Operating Income............................. 33.0 44.4 33.1
====== ====== ======
Assets
U.S. Operations...................................... 156.5 193.4 237.3
Canadian Operations.................................. 54.3 66.9 71.9
------ ------ ------
Total Assets....................................... $210.8 $260.3 $309.2
====== ====== ======
</TABLE>
(16) EARNINGS PER SHARE
Basic earnings per common share were computed by dividing net income by the
weighted average number of shares outstanding during the year. Diluted
earnings per share were calculated by including the effect of all dilutive
securities. For the years ended December 31, 1995, 1996 and 1997, the effect
of potentially dilutive stock options was 940,000, 1,086,000 and 1,031,000,
respectively. The Company had additional outstanding stock options of
1,322,160, 250,604 and 917,823 as of December 31, 1995, 1996 and 1997,
respectively, which were not included in the computation of diluted earnings
per share because the options' exercise price was greater than the average
market price of the common shares.
47
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In 1997, the Company adopted SFAS No. 128, "Earnings per Share", effective
December 15, 1997. As a result, the Company's reported earnings per share for
1995 and 1996 were restated. The effect of this accounting change on
previously reported earnings per share (EPS) data was as follows:
<TABLE>
<CAPTION>
1995 1996
----- -----
<S> <C> <C>
Per Share amounts:
Primary EPS as reported......................................... $1.42 $2.01
Effect of SFAS No. 128.......................................... .12 .21
----- -----
Basic EPS as restated........................................... $1.54 $2.22
===== =====
</TABLE>
48
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is incorporated by reference to the
Company's definitive Proxy Statement prepared with respect to the Annual
Meeting of Shareholders to be held on May 5, 1998.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the
Company's definitive Proxy Statement prepared with respect to the Annual
Meeting of Shareholders to be held on May 5, 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference to the
Company's definitive Proxy Statement prepared with respect to the Annual
Meeting of Shareholders to be held on May 5, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to the
Company's definitive Proxy Statement prepared with respect to the Annual
Meeting of Shareholders to be held on May 5, 1998.
49
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statement, Financial Statement Schedules and Exhibits
1. Financial Statements
Consolidated Balance Sheets as of December 31, 1996 and 1997
Consolidated Statements of Operations for the Years Ended December 31,
1995, 1996 and 1997
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1994, 1995, 1996 and 1997
Consolidated Statements of Cash Flow for the Years Ended December 31,
1995, 1996 and 1997
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
<TABLE>
<CAPTION>
<S> <C>
Schedule II--Valuation and Qualifying Accounts
</TABLE>
3. Exhibits
All Exhibits listed below are filed with this Annual Report on Form 10-K
unless specifically stated to be incorporated by reference to other documents
previously filed with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
3.1 Amended and Restated Certificate of Incorporation of ABT Building
Products Corporation, as amended to date (incorporated by reference to
Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File
No. 33-61676)).
3.2 Amended and Restated By-Laws of ABT Building Products Corporation
(incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (File No. 33-61676)).
4.1 Form of certificate representing shares of the Common Stock of the
Company (incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-1 (File No. 33-61676)).
4.2 Letter from the Company to the Securities and Exchange Commission
agreeing to file certain debt instruments.
10.1 Asset Purchase Agreement, dated September 25, 1992, by and between
Abitibi-Price Corporation ("APC") and the Company (incorporated by
reference to Exhibit 10.1 to the Company's Registration Statement on
Form S-1 (File No. 33-61676)).
10.2 First Amendment to Asset Purchase Agreement, dated as of October 16,
1992, by and between APC and the Company (incorporated by reference to
Exhibit 10.2 to the Company's Registration Statement on Form S-1 (File
No. 33-61676)).
10.3 Amended and Restated Escrow Agreement, dated December 15, 1993, among
APC, the Company and NBD Bank, N.A. (incorporated by reference to
Exhibit 10.3 to the Company's Registration Statement on Form S-1 (File
No. 33-73732)).
10.4 IWA Labor Contract Assumption Agreement, dated as of October 20, 1992,
by and between Local III-260, International Woodworkers of America,
AFL-CIO-CLC and ABT (incorporated by reference to Exhibit 10.4 to the
Company's Registration Statement on Form S-1 (File No. 33-61676)).
10.5 USW Labor Contract Assumption Agreement, dated as of October 20, 1992,
by and between Local 7923 of the United Steelworkers of America, AFL-
CIO and ABT (incorporated by reference to Exhibit 10.5 to the
Company's Registration Statement on Form S-1 (File No. 33-61676)).
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
10.6 Trademark License Agreement, dated as of October 20, 1992, by and
between APC and ABT (incorporated by reference to Exhibit 10.6 to the
Company's Registration Statement on Form S-1 (File No. 33-61676)).
10.7 Stockholders Agreement, among the Company, KABT Acquisition Company,
L.P. and KABT II Acquisition Company, L.P., George T. Brophy, Richard
E. Parker, William J. Adams, and others dated as of October 20, 1992
(incorporated by reference to Exhibit 10.7 to the Company's
Registration Statement on Form S-1 (File No. 33-61676)).
10.8 ABT Building Products Corporation Amended and Restated Stock Option
Plan (adopted April 22, 1993 (incorporated by reference to Exhibit
10.8 to the Company's Registration Statement on Form S-1 (File No. 33-
61676)).
10.9 ABT Building Products Corporation--1994 Director Stock Option Plan
(incorporated by reference to Exhibit 4(c) to the Company's
Registration Statement on Form S-8 (File No. 33-82606)).
10.10 Employment Agreement between the Company and George T. Brophy, dated
as of October 20, 1992 (incorporated by reference to Exhibit 10.9 to
the Company's Registration Statement on Form S-1 (File No. 33-61676)).
10.11 ABT Building Products Corporation--1994 Employee Stock Option Plan
(incorporated by reference to Exhibit 4(c) to the Company's
Registration Statement on Form S-8 (File No. 33-82606)).
10.13 Amended and Restated Revolving and Term Credit Agreement, dated as of
July 13, 1995, between the Company and Coamerica Bank, as agent
(incorporated by reference to Exhibit 10.13 to the Company's Annual
Report Form 10-K for the year ended December 31, 1995 (File No. 0-
21856)).
10.14 Summary of ABT Building Products Corporation Bonus Plan (adopted April
22, 1993) (incorporated by reference to Exhibit 10.14 to the Company's
Registration Statement on Form S-1 (File No. 33-61676)).
10.15 Labor Agreement between ABTco Inc., Alpena Plant and Local III-
26010.15 International Woodworkers of America AFL-CIO-CLC, 1992-1996
Contract (incorporated by reference to Exhibit 10.15 to the Company's
Registration Statement on Form S-1 (File No. 33-61676)).
10.16 Labor Agreement between Abitibi-Price Corporation Building Products
Group, Alpena Plant and United Steelworkers of America Local 7923 AFL-
CIO, 1992-1996 Contract (incorporated by reference to Exhibit to the
Company's Registration Statement on Form S-1 (File No. 33-61676)).
10.17 Settlement Agreement between ABT Building Products Corporation and APC
(incorporated by reference to Exhibit 10.17 to the Company's
Registration Statement on Form S-1(File No. 33-61676)).
10.18 Asset Purchase Agreement, dated as of January 26, 1994, between
Canadian Pacific Forest Products Limited and ABT Building Products
Canada, Limited (incorporated by reference to Exhibit 10.18 to the
Company's Registration Statement on Form S-1 (File No. 33-73732)).
10.19 Asset Purchase Agreement, dated as of May 5, 1995, between EMCO
Limited and ABT Building Products Canada, Limited (incorporated by
reference to Exhibit 1 to the Company's Current Report on Form 8-K
dated June 14, 1995 (File No. 0-21856)).
10.20 Consent Judgement between the Company and the Michigan Department of
Natural Resources (incorporated by reference to Exhibit 10.1 to the
Company's Quarterly Report for the Quarter Ended September 30, 1995
(File No. 0-21856)).
10.21 Equipment Purchase Contract between the Company and J.M. Voith
Aktiengesselschaft. (incorporated by reference to Exhibit 10.21 to the
Company's Annual Report Form 10-K for the year ended December 31, 1995
(File No. 0-21856)).
10.22 Form of Indemnification Agreement Between the Company and its
Directors and Officers. (incorporated by reference to Exhibit 10.22 to
the Company's Annual Report Form 10-K for the year ended December 31,
1995 (File No. 0-21856)).
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
10.23 ABT Building Products Corporation Executive Severance Policy
(incorporated by reference to Exhibit 10.23 to the Company's Annual
Report Form 10-K for the year ended December 31, 1995 (File No.
0-21856)).
10.24 Third Amended and Restated Credit Agreement, dated as of March 11,
1997, among the Company, ABTco, Inc., ABT Canada, Ltd., Kentech
Plastics, Inc., Coamerica Bank as agent, First Union National Bank of
North Carolina as documentation agent, Harris Trust and Savings Bank
as syndication agent and other banks named therein.
10.25 First Amendment to Third Amended and Restated Credit Agreement, dated
as of February 2, 1998, among the Company, ABTco, Inc., ABT Canada,
Ltd., Coamerica Bank as agent, Creditanstalt A.G., First Union
National Bank of North Carolina, Harris Trust and Savings Bank,
National City Bank, Bank One Wisconsin, Firstar Bank Milwaukee, N.A.,
Lasalle National Bank, and U.S. Bank National Association.
10.26 Consulting Agreement, dated December 3, 1997, between the Company and
Michael A. Lupo.
10.27 Consulting Agreement, dated June 30, 1997, between the Company and
George T. Brophy.
10.28 Consulting Agreement, dated October 1, 1997, between the Company and
J. Phillipe Latreille.
10.29 Labor Agreement between ABT's Canexel Hardboard Division and
Communications, Energy and Papermakers Union of Canada, dated December
17, 1997.
10.30 Labor Agreement between ABT's Acton plant and United Steelworkers of
America, dated February 28, 1997.
10.31 Labor Agreement between ABT's Alpen plant and Woodworkers Lodge W260
IAM, dated August
30, 1996.
11.1 Statement re computation of per share earnings.
21.1 List of subsidiaries of the Company.
24.1 Power of Attorney.
27.1 Financial Data Schedule.
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed by the Registrant during the last
quarter of the fiscal year ended December 31, 1997.
As of the date of the filing of this Annual Report on Form 10-K no proxy
materials have been furnished to security holders. Copies of all proxy
materials will be sent to the Commission in compliance with its rules.
52
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN NEENAH,
WISCONSIN, ON THIS 20TH DAY OF MARCH, 1998.
ABT Building Products Corporation
By:
----------------------------------
GEORGE T. BROPHY
(CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER)
WE, THE UNDERSIGNED OFFICERS AND DIRECTORS OF ABT BUILDING PRODUCTS
CORPORATION, HEREBY SEVERALLY CONSTITUTE GEORGE T. BROPHY, AND JOSEPH P.
O'NEILL, AND EACH OF THEM SINGLY, OUR TRUE AND LAWFUL ATTORNEYS WITH FULL
POWER TO THEM, AND EACH OF THEM SINGLY, TO SIGN FOR US AND IN OUR NAMES IN THE
CAPACITIES INDICATED BELOW, ANY AND ALL REPORTS, WITH ALL EXHIBITS THERETO AND
ANY AND ALL DOCUMENTS IN CONNECTION THEREWITH, AND GENERALLY DO ALL SUCH
THINGS IN OUR NAME AND ON OUR BEHALF IN SUCH CAPACITIES TO ENABLE ABT BUILDING
PRODUCTS CORPORATION TO COMPLY WITH THE APPLICABLE PROVISIONS OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND ALL REQUIREMENTS OF THE
SECURITIES EXCHANGE COMMISSION, AND WE HEREBY RATIFY AND CONFIRM OUR
SIGNATURES AS THEY MAY BE SIGNED BY OUR SAID ATTORNEYS, OR EITHER OF THEM, TO
ANY AND ALL SUCH AMENDMENTS.
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON
BEHALF OF THE REGISTRANT IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ George T. Brophy Chairman of the March 20, 1998
- ------------------------------------- Board and Chief
GEORGE T. BROPHY Executive Officer
(Principal
Executive Officer)
/s/ Joseph P. O'Neill Vice President and
- ------------------------------------- Chief
JOSEPH P. O'NEILL Financial Officer (Principal
Financial Officer)
March 20, 1998
/s/ Samuel P. Frieder Director March 20, 1998
- -------------------------------------
SAMUEL P. FRIEDER
/s/ James A. Kohlberg Director March 20, 1998
- -------------------------------------
JAMES A. KOHLBERG
/s/ George W. Peck IV Director March 20, 1998
- -------------------------------------
GEORGE W. PECK IV
/s/ Warner C. Frazier Director March 20, 1998
- -------------------------------------
WARNER C. FRAZIER
/s/ Nelson J. Rohrbach Director March 20, 1998
- -------------------------------------
NELSON J. ROHRBACH
/s/ W. Dexter Paine, III Director March 20, 1998
- -------------------------------------
W. DEXTER PAINE, III
53
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ABT Building Products Corporation:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of ABT Building Products Corporation and
Subsidiaries (the "Company") included in this Form 10-K and have issued our
report thereon dated January 20, 1998. Our audit was made for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
schedule listed on the index on page 26 is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic consolidated
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic consolidated financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic consolidated
financial statements taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Chicago, Illinois, January 20, 1998
54
<PAGE>
ABT BUILDING PRODUCTS CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
ACCOUNTS RECEIVABLE ALLOWANCES
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1996 1997
---------- ---------- -----------
<S> <C> <C> <C>
Balance, beginning of period.............. $ 1,433 $ 2,452 $ 5,030
Provision for discounts and allowances.... 7,948 12,014 16,282
Discounts and allowances taken............ (6,929) (9,436) (15,009)
---------- ---------- -----------
Balance, end of period.................... $ 2,452 $ 5,030 $ 6,303
========== ========== ===========
</TABLE>
55
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
3.1 Amended and Restated Certificate of Incorporation of ABT Building
Products Corporation, as amended to date (incorporated by reference to
Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File
No. 33-61676)).
3.2 Amended and Restated By-Laws of ABT Building Products Corporation
(incorporated by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (File No. 33-61676)).
4.1 Form of certificate representing shares of the Common Stock of the
Company (incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-1 (File No. 33-61676)).
4.2 Letter from the Company to the Securities and Exchange Commission
agreeing to file certain debt instruments.
10.1 Asset Purchase Agreement, dated September 25, 1992, by and between
Abitibi-Price Corporation ("APC") and the Company (incorporated by
reference to Exhibit 10.1 to the Company's Registration Statement on
Form S-1 (File No. 33-61676)).
10.2 First Amendment to Asset Purchase Agreement, dated as of October 16,
1992, by and between APC and the Company (incorporated by reference to
Exhibit 10.2 to the Company's Registration Statement on Form S-1 (File
No. 33-61676)).
10.3 Amended and Restated Escrow Agreement, dated December 15, 1993, among
APC, the Company and NBD Bank, N.A. (incorporated by reference to
Exhibit 10.3 to the Company's Registration Statement on Form S-1 (File
No. 33-73732)).
10.4 IWA Labor Contract Assumption Agreement, dated as of October 20, 1992,
by and between Local III-260, International Woodworkers of America,
AFL-CIO-CLC and ABT (incorporated by reference to Exhibit 10.4 to the
Company's Registration Statement on Form S-1 (File No. 33-61676)).
10.5 USW Labor Contract Assumption Agreement, dated as of October 20, 1992,
by and between Local 7923 of the United Steelworkers of America, AFL-
CIO and ABT (incorporated by reference to Exhibit 10.5 to the
Company's Registration Statement on Form S-1 (File No. 33-61676)).
10.6 Trademark License Agreement, dated as of October 20, 1992, by and
between APC and ABT (incorporated by reference to Exhibit 10.6 to the
Company's Registration Statement on Form S-1 (File No. 33-61676)).
10.7 Stockholders Agreement, among the Company, KABT Acquisition Company,
L.P. and KABT II Acquisition Company, L.P., George T. Brophy, Richard
E. Parker, William J. Adams, and others dated as of October 20, 1992
(incorporated by reference to Exhibit 10.7 to the Company's
Registration Statement on Form S-1 (File No. 33-61676)).
10.8 ABT Building Products Corporation--Amended and Restated Stock Option
Plan (adopted April 22, 1993 (incorporated by reference to Exhibit
10.8 to the Company's Registration Statement on Form S-1 (File No. 33-
61676)).
10.9 ABT Building Products Corporation--1994 Director Stock Option Plan
(incorporated by reference to Exhibit 4(c) to the Company's
Registration Statement on Form S-8 (File No. 33-82606)).
10.10 Employment Agreement between the Company and George T. Brophy, dated
as of October 20, 1992 (incorporated by reference to Exhibit 10.9 to
the Company's Registration Statement on Form S-1 (File No. 33-61676)).
10.11 ABT Building Products Corporation--1994 Employee Stock Option Plan
(incorporated by reference to Exhibit 4(c) to the Company's
Registration Statement on Form S-8 (File No. 33-82606)).
10.13 Amended and Restated Revolving and Term Credit Agreement, dated as of
July 13, 1995, between the Company and Coamerica Bank, as agent
(incorporated by reference to Exhibit 10.13 to the Company's Annual
Report Form 10-K for the year ended December 31, 1995 (File No. 0-
21856)).
10.14 Summary of ABT Building Products Corporation Bonus Plan (adopted April
22, 1993) (incorporated by reference to Exhibit 10.14 to the Company's
Registration Statement on Form S-1 (File No. 33-61676)).
</TABLE>
<PAGE>
EXHIBIT INDEX--CONTINUED
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
10.15 Labor Agreement between ABTco Inc., Alpena Plant and Local III-
26010.15 International Woodworkers of America AFL-CIO-CLC, 1992-1996
Contract (incorporated by reference to Exhibit 10.15 to the Company's
Registration Statement on Form S-1 (File No. 33-61676)).
10.16 Labor Agreement between Abitibi-Price Corporation Building Products
Group, Alpena Plant and United Steelworkers of America Local 7923 AFL-
CIO, 1992-1996 Contract (incorporated by reference to Exhibit to the
Company's Registration Statement on Form S-1 (File No. 33-61676)).
10.17 Settlement Agreement between ABT Building Products Corporation and APC
(incorporated by reference to Exhibit 10.17 to the Company's
Registration Statement on Form S-1(File No. 33-61676)).
10.18 Asset Purchase Agreement, dated as of January 26, 1994, between
Canadian Pacific Forest Products Limited and ABT Building Products
Canada, Limited (incorporated by reference to Exhibit 10.18 to the
Company's Registration Statement on Form S-1 (File No. 33-73732)).
10.19 Asset Purchase Agreement, dated as of May 5, 1995, between EMCO
Limited and ABT Building Products Canada, Limited (incorporated by
reference to Exhibit 1 to the Company's Current Report on Form 8-K
dated June 14, 1995 (File No. 0-21856)).
10.20 Consent Judgement between the Company and the Michigan Department of
Natural Resources (incorporated by reference to Exhibit 10.1 to the
Company's Quarterly Report for the Quarter Ended September 30, 1995
(File No. 0-21856)).
10.21 Equipment Purchase Contract between the Company and J.M. Voith
Aktiengesselschaft. (incorporated by reference to Exhibit 10.21 to the
Company's Annual Report Form 10-K for the year ended December 31, 1995
(File No. 0-21856)).
10.22 Form of Indemnification Agreement Between the Company and its
Directors and Officers. (incorporated by reference to Exhibit 10.22 to
the Company's Annual Report Form 10-K for the year ended December 31,
1995 (File No. 0-21856)).
10.23 ABT Building Products Corporation Executive Severance Policy
(incorporated by reference to Exhibit 10.23 to the Company's Annual
Report Form 10-K for the year ended December 31, 1995 (File No.
0-21856)).
10.24 Third Amended and Restated Credit Agreement, dated as of March 11,
1997, among the Company, ABTco, Inc., ABT Canada, Ltd., Kentech
Plastics, Inc., Coamerica Bank as agent, First Union National Bank of
North Carolina as documentation agent, Harris Trust and Savings Bank
as syndication agent and other banks named therein.
10.25 First Amendment to Third Amended and Restated Credit Agreement, dated
as of February 2, 1998, among the Company, ABTco, Inc., ABT Canada,
Ltd., Coamerica Bank as agent, Creditanstalt A.G., First Union
National Bank of North Carolina, Harris Trust and Savings Bank,
National City Bank, Bank One Wisconsin, Firstar Bank Milwaukee, N.A.,
Lasalle National Bank, and U.S. Bank National Association.
10.26 Consulting Agreement, dated December 3, 1997, between the Company and
Michael A. Lupo.
10.27 Consulting Agreement, dated June 30, 1997, between the Company and
George T. Brophy.
10.28 Consulting Agreement, dated October 1, 1997, between the Company and
J. Phillipe Latreille.
10.29 Labor Agreement between ABT's Canexel Hardboard Division and
Communications, Energy and Paperworkers Union of Canada, dated
December 17, 1997.
10.30 Labor Agreement between ABT's Acton plant and United Steelworkers of
America, dated February 28, 1997.
10.31 Labor Agreement between ABT's Alpina plant and Woodworkers Lodge W260
IAM, dated August 30, 1996.
11.1 Statement re computation of per share earnings.
21.1 List of subsidiaries of the Company.
23.1 Report of Independent Public Accountants.
24.1 Power of Attorney (contained on page 53 of the 10-K).
27.1 Financial Data Schedule.
</TABLE>
<PAGE>
EXHIBIT 4.2
ABT BUILDING PRODUCTS CORPORATION
One Neenah Center
Suite 600
Neenah, WI 54956-3070
March 20, 1998
Securities and Exchange Commission
450 Fifth Avenue, N.W.
Washington, D.C. 20549
ABT Building Products Corporation
Annual Report on Form 10-K
(Commission File No. 0-21856)
-----------------------------
Ladies and Gentlemen:
In accordance with Item 601(b)(4)(iii) of Regulation S-K, ABT Building
Products Corporation (the "Registrant") has not filed herewith any instrument
with respect to long term debt not being registered where the total amount of
securities authorized thereunder does not exceed ten percent (10%) of the total
assets of the Registrant and its subsidiaries on a consolidated basis. The
Registrant hereby agrees to furnish a copy of any such agreement to the
Securities and Exchange Commission upon request.
Very truly yours,
ABT Building Products Corporation
By: /s/ Joseh P. O'Neill
-------------------------
Joseph P. O'Neill
Vice President and Chief Financial Officer
<PAGE>
EXHIBIT 10.24
FIRST AMENDMENT TO
ABT BUILDING PRODUCTS CORPORATION
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------------
This Amendment is dated as of the _____ day of February, 1998 by and
between COMERICA BANK, a Michigan banking corporation, CREDITANSTALT AG (f/k/a
Creditanstalt-Bankverein), a bank organized under the laws of the Republic of
Austria, FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking
association, HARRIS TRUST AND SAVINGS BANK, an Illinois banking corporation,
NATIONAL CITY BANK, a national banking association, BANK ONE-WISCONSIN
(successor in interest hereunder to Bank One Dayton, N.A.), a national banking
association, FIRSTAR BANK MILWAUKEE, N.A., a national banking association,
LASALLE NATIONAL BANK, a national banking association, U.S. BANK NATIONAL
ASSOCIATION f/k/a and d/b/a FIRST BANK NATIONAL ASSOCIATION, a national banking
association (collectively, "Banks"), COMERICA BANK, as agent for the Banks
("Agent") and ABT BUILDING PRODUCTS CORPORATION, a Delaware corporation, ABTCO,
INC., a Delaware corporation, and ABT CANADA, LTD., a Nova Scotia corporation
(collectively, "Company"), in connection with that certain Third Amended and
Restated Revolving Credit and Term Credit Agreement executed by and among them
(and KenTech Plastics, Inc., a Delaware corporation that was subsequently merged
into ABTco, Inc. as of December 31, 1997) as of March 11, 1997. ("Agreement").
WHEREAS, Company has requested Agent and the Banks to amend certain
provisions of the Agreement and Agent and the Banks are willing to do so on the
terms and conditions set forth herein;
NOW, THEREFORE, it is agreed:
A. DEFINITIONS
1. Capitalized terms used herein and not defined to the contrary have the
meanings given them in the Agreement.
B. AMENDMENTS
1. Section 1.39 of the Agreement is hereby amended and restated in its
entirety as follows:
"1.39 `EBITDA' shall mean, as of the last day of any fiscal quarter,
for the four fiscal quarters immediately preceding any calculation thereof,
Net Income (before impact of extraordinary non-cash items) plus the
aggregate amounts deducted in determining Net Income for such period in
respect of: (i) the provision for taxes based on income; (ii) Interest
Expense; (iii) depreciation and amortization; and (iv) the Five Million
Eight Hundred Seventy Nine Thousand Six Hundred One Dollar ($5,879,601)
non-cash fixed asset write-down taken at
-1-
<PAGE>
KenTech as of June 30, 1997 shown on the financial statements for Company
and the Subsidiaries as of such date delivered to Agent and the Banks; all
determined for Company and the Subsidiaries or (where the context so
indicates) the Company and the Restricted Subsidiaries, on a Consolidated
basis in accordance with GAAP."
2. Section 1.95 of the Agreement is hereby amended and restated in its
entirety as follows:
"1.95 `Permitted Borrowers' shall mean ABT and ABT Canada."
3. Section 1.117 of the Agreement is hereby amended and restated in its
entirety as follows:
"1.117 `Revolving Credit Maturity Date' shall mean March 10, 2003, or
such later date as to which it may be extended, at the request of Company,
pursuant to Section 2.10 hereof."
4. Schedule 1.79 of the Agreement is hereby replaced with Schedule 1.79
attached hereto.
5. Schedule 1.96 of the Agreement is hereby replaced with Schedule 1.96
attached hereto.
6. Clauses (a) through (c) of Section 2.10 of the Agreement is hereby
amended and restated in its entirety as follows:
"(a) Extension Request. Notwithstanding anything contained in this
-----------------
Agreement to the contrary, not later than four (4) years and
sixty (60) days prior to the Revolving Credit Maturity Date then
in effect, the Company may, by delivery of a duly completed
Extension Request, irrevocably request that each Bank extend the
then Existing Revolving Credit Maturity Date for additional
periods, (i) in the case of the extension of the Revolving
Credit Maturity Date from March 10, 2003, to a date not later
than fifteen (15) months after such date, and (ii) in the case
of any other extension of the Revolving Credit Maturity Date,
for additional periods not greater than the year. Promptly upon
receipt of an Extension Request, the Agent shall notify each
Bank thereof by delivery to each Bank a copy of the Extension
Request.
(b) Responses to Extension Request. Each Bank shall: (i) in the case
------------------------------
of an Extension Request requesting the extension of the
Revolving Credit Maturity Date from March 10, 2003, within one
hundred twenty (120) days after receipt of the Extension
Request, and (ii) in each other case, within thirty (30) days
after receipt of the
-2-
<PAGE>
Extension Request, notify the Agent whether it consents to the
request of Company set forth in such Extension Request, such
consent to be in the sole discretion of such Bank. If any Bank
does not so notify the Agent within such time period, such Bank
shall be deemed not to have consented to such request.
(c) Notice of Consent. The Agent shall notify Company whether the
-----------------
Banks have consented to the request set forth in an Extension
Request. If the Agent does not notify the Company within five
(5) days after the expiration of the period for Bank responses
set forth in clause (b) above, the Agent shall be deemed to have
notified the Company that the Banks have not consented to the
request."
7. Schedule 11.4 of the Agreement is hereby replaced with Schedule 11.4
attached hereto.
8. Section 11.14 of the Agreement is hereby amended by deleting
therefrom, in each place it appears, the word "KenTech".
9. Section 13.4 of the Agreement is hereby amended and restated in its
entirety as follows:
"13.4 Financial Covenants. Each of them will not permit, with
-------------------
respect to both the Company and the Subsidiaries and (by separate
determination) the Company and the Restricted Subsidiaries:
(a) the Fixed Charge Coverage Ratio, as of the last day of any
fiscal quarter, to be less than:
(i) from the Closing Date until September 29, 1998, 1.1
to 1;
(ii) from and including September 30, 1998 until December
30, 1998, 1.25 to 1; and
(iii) from and including December 31, 1998 and at all times
thereafter, 1.5 to 1;
(b) the Leverage Ratio, as of the last day of any fiscal
quarter, to be more than:
(i) from the Closing Date until September 29, 1998, 3.5
to 1.0; and
(ii) from and including September 30, 1998 and at all time
thereafter, 3.25 to 1.
-3-
<PAGE>
(c) to have a Tangible Net Worth, as of the last day of any
fiscal quarter, of less than the sum of: (i) Eighty Four
Million Seven Hundred Eighty Two Thousand Dollars
($84,782,000), and (ii) fifty percent (50%) of the greater
of the Net Income (if positive) of Company and the
Subsidiaries or Company and the Restricted Subsidiaries
earned (in each case) in each fiscal quarter subsequent to
the fiscal quarter ended December 31, 1996.
C. REPRESENTATIONS
Company hereby represents and warrants that:
1. Execution, delivery and performance of this Amendment and any other
documents and instruments required under this Amendment or the Agreement are
within Company's powers, have been duly authorized, are not in contravention of
law or the terms of Company's Articles of Incorporation or Bylaws, and do not
require the consent or approval of any governmental body, agency or authority.
2. This Amendment, and the Agreement as amended by this Amendment, and
any other documents and instruments required under this Amendment or the
Agreement ("Documents"), when issued and delivered under this Amendment or the
Agreement, will be valid and binding in accordance with their terms.
3. The continuing representations and warranties of Company set forth in
Sections 11.1 through 11.9 and 11.11 through 11.20 of the Agreement are true and
correct on and as of the date hereof with the same force and effect as if made
on and as of the date hereof.
4. The continuing representations and warranties of Company set forth in
Section 11.10 of the Agreement are true and correct as of the date hereof with
respect to the most recent financial statements furnished to the Agent by
Company in accordance with Section 12.1 of the Agreement.
5. No Default or Event of Default has occurred and is continuing as of
the date hereof.
D. MISCELLANEOUS
1. This Amendment may be executed in as many counterparts as Agent, Banks
and Company deem convenient and shall become effective upon: (a) delivery to
Agent of counterparts hereof executed by each of the parties; (b) delivery by
Company to Agent of each of the Documents listed on the Checklist attached as
Exhibit "A" hereto; and (c) payment by Company to Agent of an Amendment Fee
equal to One Hundred Seventy Five Thousand Dollars ($175,000), provided however
that upon such delivery and payment, the restatement of Section 1.39 of the
Agreement set forth in Section B.1 of this Amendment shall be deemed to be
effective
-4-
<PAGE>
as of June 30, 1997.
2. Company, Agent and the Banks acknowledge and agree that, except as
specifically amended by this Amendment, all of the terms and conditions of the
Agreement and the Documents remain in full force and effect in accordance with
their original terms.
3. Company shall pay all of Agent's legal costs and expenses (including
attorneys' fees and expenses) incurred in the negotiation, preparation and
closing hereof.
4. Except as specifically set forth herein, nothing set forth in this
Amendment shall constitute, or be interpreted or construed to constitute, a
waiver of any right or remedy of Agent or the Banks, or of any Default or Event
of Default whether now existing or hereafter arising.
WITNESS the due execution hereof as of the day and year first above
written.
ABT BUILDING PRODUCTS COMERICA BANK,
CORPORATION as Agent
By:_____________________________________ By:_______________________________
Dale H. VonBehren Gregory N. Block
Its: Vice President Finance - Treasurer Its: Vice President
One Neenah Center, Suite 600 One Mid America Plaza
Neenah, WI 54956-3070 Suite 612
Telephone: (414) 751-4984 Oakbrook Terrace, Illinois 60181
Facsimile: (414) 751-0370 Telephone: (630) 575-2160
Facsimile: (630) 575-2164
ABTco, INC ABT CANADA, LTD.
By:_____________________________________ By:_______________________________
Dale H. VonBehren Dale H. VonBehren
Its: Vice President Finance - Treasurer Its: Assistant Secretary
One Neenah Center, Suite 600 One Neenah Center, Suite 600
Neenah, Wisconsin 54956-3070 Neenah, Wisconsin 54956-3070
Telephone: (414) 751-4982 Telephone: (414) 751-4982
Facsimile: (414) 751-0370 Facsimile: (414) 751-0370
-5-
<PAGE>
COMERICA BANK
By:_______________________________
Gregory N. Block
Its: Vice President
One Mid America Plaza
Suite 612
Oakbrook Terrace, Illinois 60181
Telephone: (630) 575-2160
Facsimile: (630) 575-2164
-6-
<PAGE>
-7-
<PAGE>
-8-
<PAGE>
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA,
as Documentation Agent and Bank
By:_______________________________
Its:_______________________________
301 S. College Street
One First Union Center, TW-19
Charlotte, North Carolina 28288-0745
Telephone: (704) 374-4367
Facsimile: (704) 374-2802
-9-
<PAGE>
-10-
<PAGE>
-11-
<PAGE>
HARRIS TRUST AND SAVINGS BANK
as Syndication Agent and Bank
By:_______________________________
Its:_______________________________
111 West Monroe
P.O. Box 755
Chicago, Illinois 60690
Telephone: (312) 461-7788
Facsimile: (312) 461-2591
ABA No. 071-000288
-12-
<PAGE>
-13-
<PAGE>
-14-
<PAGE>
CREDITANSTALT AG
By:_______________________________
Its:_______________________________
-and-
By:_______________________________
Its:_______________________________
Creditanstalt AG
2 Greenwich Plaza
Greenwich, CT 06830
Telephone: (203) 861-1499
Facsimile: (203) 861-1475
-15-
<PAGE>
-16-
<PAGE>
-17-
<PAGE>
NATIONAL CITY BANK
By:__________________________________
Its:__________________________________
National City Center
1900 E. 9th Street
Cleveland, Ohio 44114
Telephone: (810) 644-0502
Facsimile: (810) 644-0432
-18-
<PAGE>
-19-
<PAGE>
-20-
<PAGE>
BANK ONE-WISCONSIN
By:___________________________________
Its:__________________________________
111 East Wisconsin Avenue
Milwaukee, WI 53202-2033
Telephone: (414) 765-3111
Facsimile: (414) 765-2176
-21-
<PAGE>
-22-
<PAGE>
-23-
<PAGE>
FIRSTAR BANK MILWAUKEE, N.A.
By:___________________________________
Its:__________________________________
777 East Wisconsin Avenue
Milwaukee, WI 53201
Telephone: (414) 765-5971
Facsimile: (414) 765-4632
-24-
<PAGE>
-25-
<PAGE>
-26-
<PAGE>
LASALLE NATIONAL BANK
By:___________________________________
Its:__________________________________
135 South LaSalle Street
Chicago, Illinois 60603-3499
Telephone: (312) 904-2868
Facsimile: (312) 904-2340
-27-
<PAGE>
-28-
<PAGE>
-29-
<PAGE>
U.S. BANK NATIONAL ASSOCIATION, f/k/a and
d/b/a First Bank National Association
By:___________________________________
Its:__________________________________
First Bank Place
601 Second Avenue South, MPFP0601
Minneapolis, MN 55402-4302
Telephone: (612) 973-0690
Facsimile: (612) 973-0821
-30-
<PAGE>
-31-
<PAGE>
-32-
<PAGE>
EXHIBIT "A"
-----------
FIRST AMENDMENT TO
ABT BUILDING PRODUCTS CORPORATION
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
CLOSING CHECKLIST
-----------------
1. First Amendment to Credit Agreement
a. Exhibit "A" - Checklist
b. Schedule 1.79 - Margin
c. Schedule 1.96 - Permitted Borrower Maximums
d. Schedule 11.4 - Litigation
2. Recertification and Amendment of Authority Documents (Company)
3. Recertification and Amendment of Authority Documents (ABT)
a. Exhibit "A" - Certificate of Merger with KenTech
4. Recertification and Amendment of Authority Documents (Canada)
-33-
<PAGE>
SCHEDULE 1.79
MARGINS
-------
<TABLE>
<CAPTION>
====================================================================================================================================
Leverage Ratio less than 1.5:1.0 more than 1.5:1.0 more than 2.0:1.0 more than 2.60:1.0 more than 3.0:1.0 more than 3.25:1.0
- - - - -
But But But But
less than 2.0:1.0 less than 2.60:1.0 less than 3.0:1.0 less than 3.25:1.0
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Margin for 10.00 15.00 17.50 20.00 25.00 35.00
Revolving Credit
Facility Fees
- ------------------------------------------------------------------------------------------------------------------------------------
Margin for 28.50 40.00 50.00 62.50 75.00 100.00
Revolving Credit
Eurocurrency-
based Advances
- ------------------------------------------------------------------------------------------------------------------------------------
Margin for 28.50 40.00 50.00 62.50 75.00 100.00
Letters of Credit
- ------------------------------------------------------------------------------------------------------------------------------------
Margin for Line 9.00 11.00 12.50 15.00 20.00 30.00
of Credit Facility
Fees
- ------------------------------------------------------------------------------------------------------------------------------------
Margin for Line 29.50 44.00 55.00 67.50 80.00 105.00
of Credit
Eurocurrency-
based Advances
====================================================================================================================================
</TABLE>
-34-
<PAGE>
SCHEDULE 1.96
-------------
PERMITTED BORROWER MAXIMUMS
---------------------------
ABT $175,000,000
ABT Canada $60,000,000
-35-
<PAGE>
SCHEDULE 11.4
-------------
LITIGATION
----------
[TO BE PROVIDED BY COMPANY]
-36-
<PAGE>
EXHIBIT 10.25
================================================================================
================================================================================
THIRD AMENDED AND RESTATED
ABT BUILDING PRODUCTS CORPORATION
CREDIT AGREEMENT
WITH
COMERICA BANK, AS AGENT
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS DOCUMENTATION AGENT
AND
HARRIS TRUST AND SAVINGS BANK,
AS SYNDICATION AGENT
AND
THE "BANKS" PARTY HERETO
DATED AS OF MARCH 11, 1997
================================================================================
================================================================================
-1-
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. DEFINITIONS................................................................ 1
2. THE INDEBTEDNESS: REVOLVING CREDIT AND BID LOANS........................... 22
2.1 Revolving Credit Commitment.......................................... 22
2.2 Type of Loan and Maturity............................................ 23
2.3 Requests for Revolving Credit Loans.................................. 23
2.4 Disbursement of Loans................................................ 24
2.5 Revolving Credit Facility Fee........................................ 25
2.6 Optional Reduction or Termination of Revolving Credit Commitment..... 25
2.7 Purpose of Revolving Credit Loans.................................... 26
2.8 Bid Rate Loans....................................................... 26
(a) The Bid Rate Option............................................. 26
(b) Bid Quote Request............................................... 27
(c) Bid Invitation.................................................. 27
(d) Submission and Contents of Bid Quotes........................... 27
(e) Notice to and Acceptance........................................ 28
(f) Notice to and Funding by Banks.................................. 29
(g) Allocation by Agent............................................. 29
(h) Bid Loan Records................................................ 29
2.9 Currency Appreciation; Reduction of Indebtedness..................... 30
2.10 Extensions of Revolving Credit Maturity Date......................... 30
(a) Extension Request............................................... 30
(b) Responses to Extension Request.................................. 30
(c) Notice of Consents.............................................. 30
(d) Non-Consenting Banks............................................ 30
(e) Extension Denial................................................ 31
(f) Extension Consent............................................... 31
3. LETTERS OF CREDIT.......................................................... 31
3.1 Letters of Credit.................................................... 31
3.2 Conditions to Issuance............................................... 31
3.3 Participations in Letters of Credit.................................. 33
3.4 Letter of Credit Fees................................................ 33
3.5 Issuance Fees........................................................ 33
3.6 Draws Under Letters of Credit........................................ 34
3.7 Funding of Letter of Credit Payment as Advance....................... 35
3.8 Obligations Irrevocable.............................................. 35
3.9 Risk Under Letters of Credit......................................... 36
3.10 Indemnification...................................................... 38
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
3.11 Right of Reimbursement............................................... 38
4. THE INDEBTEDNESS: SWING LOAN............................................... 38
4.1 Swing Loan........................................................... 38
4.2 Type of Loan and Maturity............................................ 38
4.3 Requests for Swing Loans............................................. 39
4.4 Disbursement of Swing Loans.......................................... 39
4.5 Swing Loan Refunding................................................. 40
5. THE INDEBTEDNESS: LINE OF CREDIT LOANS..................................... 40
5.1 Line of Credit Commitment............................................ 40
5.2 Type of Loan and Maturity............................................ 41
5.3 Requests for Line of Credit Loans.................................... 41
5.4 Disbursement of Loans................................................ 42
5.5 Line of Credit Facility Fee.......................................... 42
5.6 Optional Reduction or Termination of Line of Credit Commitment....... 43
5.7 Purpose of Line Credit Loans......................................... 43
5.8 Extensions of Line of Credit Maturity Date........................... 43
(a) Extension Request............................................... 43
(b) Responses to Extension Request.................................. 44
(c) Notice of Consents.............................................. 44
(d) Non-Consenting Banks............................................ 44
(e) Extension Denial................................................ 44
(f) Extension Consent............................................... 44
6. TERM LOAN
6.1 Term Loan Repayment.................................................. 45
45
7. INTEREST, FEE AND INTEREST CALCULATION, INTEREST PERIODS,
CONVERSIONS, PREPAYMENTS
7.1 Interest............................................................. 45
7.2 Calculations......................................................... 45
7.3 Conversion and Renewal of Loans...................................... 45
7.4 Prepayments.......................................................... 45
46
8. SPECIAL PROVISIONS FOR LOANS.............................
8.1 Reimbursement of Prepayment Costs.................................... 47
8.2 Agent's Eurocurrency Lending Office.................................. 47
8.3 Circumstances Affecting Eurocurrency-based Availability.............. 47
8.4 Laws Affecting Eurocurrency-based Loan Availability.................. 47
8.5 Increased Costs...................................................... 48
48
9. PAYMENTS
9.1 Payment Procedure.................................................... 49
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
9.2 Application of Proceeds............................................. 50
9.3 Pro-rata Recovery................................................... 50
9.4 Deposits and Accounts............................................... 51
9.5 Net Payments........................................................ 51
9.6 Tax Treaty Certificate.............................................. 52
9.7 Defaulting Banks.................................................... 52
9.8 Availability of Alternative Currency................................ 53
9.9 Refunding Advances in Same Currency................................. 54
9.10 Judgment Currency................................................... 54
10. CONDITIONS................................................................. 54
10.1 Conditions Precedent To Initial Loans and Closing Date.............. 54
(a) Execution of Notes and This Agreement.......................... 54
(b) Corporate Authority............................................ 54
(c) Opinion of Counsel............................................. 55
(d) Other Documents................................................ 55
(e) Representations and Warranties - All Parties................... 55
(f) Compliance with Certain Documents and Agreements............... 55
(g) No Default..................................................... 55
(h) Payment of Agent's and Other Fees.............................. 56
(i) Environmental Reports.......................................... 56
(j) Other Documents and Instruments................................ 56
10.2 Conditions Precedent to All Loans................................... 56
(a) Effectiveness.................................................. 56
(b) No Default; Representations and Warranties..................... 56
(c) Adverse Change, etc............................................ 56
(d) Enforceability of Documents.................................... 56
11. REPRESENTATIONS AND WARRANTIES............................................. 57
11.1 Corporate Status.................................................... 57
11.2 Corporate Power and Authority; Business............................. 57
11.3 No Violation........................................................ 57
11.4 Litigation.......................................................... 58
11.5 Use of Proceeds..................................................... 58
11.6 Governmental Approvals, etc......................................... 58
11.7 Investment Company Act.............................................. 58
11.8 Public Utility Holding Company Act.................................. 58
11.9 True and Complete Disclosure........................................ 59
11.10 Financial Statements................................................ 59
11.11 Security Interests.................................................. 59
11.12 Tax Returns and Payments............................................ 59
11.13 ERISA............................................................... 59
11.14 Subsidiaries........................................................ 60
11.15 Patents, etc........................................................ 60
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
11.16 Compliance with Laws, etc............................................ 60
11.17 Properties........................................................... 61
11.18 Collective Bargaining Agreements..................................... 61
11.19 Indebtedness Outstanding............................................. 61
11.20 Environmental Protection............................................. 61
12. AFFIRMATIVE COVENANTS....................................................... 63
12.1 Reporting Requirements Covenants..................................... 63
12.2 Books, Records and Inspections....................................... 65
12.3 Maintenance of Property; Insurance................................... 65
12.4 Payment of Taxes..................................................... 66
12.5 Corporate Franchises................................................. 66
12.6 Compliance with Statutes, etc........................................ 66
12.7 ERISA................................................................ 66
12.8 Performance of Obligations........................................... 67
12.9 End of Fiscal Years; Fiscal Quarters................................. 67
12.10 Environmental Events................................................. 67
12.11 Restricted Subsidiary Documents...................................... 68
13. NEGATIVE COVENANTS.......................................................... 68
13.1 Changes in Business.................................................. 68
13.2 Liens................................................................ 68
13.3 Indebtedness......................................................... 69
13.4 Financial Covenants.................................................. 70
13.5 ERISA................................................................ 70
13.6 Merger and Consolidations............................................ 71
13.7 Sale and Lease-Backs................................................. 71
13.8 Sale or Discount of Receivables...................................... 72
13.9 Acquisitions......................................................... 72
13.10 Indemnification Agreement............................................ 72
13.11 Contingent Obligations............................................... 72
13.12 Non-Restricted Amount................................................ 73
13.13 Changes to Permitted Bond Financing and Permitted Private
Placement Debt....................................................... 73
13.14 Use of Loan Proceeds................................................. 74
14. DEFAULTS.................................................................... 74
14.1 Events of Default.................................................... 74
14.2 Exercise of Remedies................................................. 76
14.3 Waiver of Defaults................................................... 77
15. AGENT....................................................................... 77
15.1 Appointment of Agent and Co-Agents.................................... 77
15.2 Deposit Account with Agent............................................ 77
</TABLE>
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<TABLE>
<CAPTION>
Page
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<S> <C>
15.3 Exculpatory Provisions....................................................... 78
15.4 Successor Agents............................................................. 78
15.5 Right of Agent and Co-Agent as Banks......................................... 78
15.6 Credit Decisions............................................................. 78
15.7 Notices by Agent............................................................. 78
15.8 Agent's Fees................................................................. 78
15.9 Nature of Agency............................................................. 79
15.10 Actions; Confirmation of Agent's Authority to Act in Event of Default........ 79
15.11 Authority of Agent to Enforce Notes And This Agreement....................... 79
15.12 Co-Agents.................................................................... 79
16. MISCELLANEOUS....................................................................... 79
16.1 Law of Michigan; Submission to Jurisdiction.................................. 79
16.2 Agent's Costs and Expenses................................................... 80
16.3 Notices...................................................................... 80
16.4 Further Action............................................................... 80
16.5 Successors and Assigns....................................................... 81
(a) Assignments............................................................. 81
(b) Participations.......................................................... 81
16.6 Indulgence................................................................... 82
16.7 Counterparts................................................................. 82
16.8 Entire Agreement; Amendments; Waivers; Consents.............................. 82
16.9 Confidentiality.............................................................. 84
16.10 Interest..................................................................... 84
16.11 Jury Waiver.................................................................. 85
16.12 Effective Upon Execution..................................................... 85
</TABLE>
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SCHEDULES
---------
1.79 Margins
1.91 Percentages
1.94 Permitted Bond Financing
1.96 Permitted Borrower Maximums
11.4 Litigation
11.16 Compliance with Laws
11.18 Collective Bargaining Agreements
11.20 Environmental Matters
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EXHIBITS
--------
Exhibit "A" - Form of Assignment Agreement
Exhibit "B" - Form of Bid Acknowledgement
Exhibit "C" - Form of Bid Notes
Exhibit "D" - Form of Bid Quote
Exhibit "E" - Form of Bid Quote Request
Exhibit "F" - Form of Extension Request
Exhibit "G" - Form of Letter of Credit Notice
Exhibit "H" - Form of Line of Credit Notes
Exhibit "I" - Form of Request for Line of Credit Loan
Exhibit "J" - Form of Request for Revolving Credit Loan
Exhibit "K" - Form of Request for Swing Loan
Exhibit "L" - Form of Revolving Credit Notes
Exhibit "M" - Form of Swing Loan Note
<PAGE>
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------------
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT, made as of the 11th day
of March, 1997, between ABT BUILDING PRODUCTS CORPORATION, a Delaware
corporation, ABTCO, INC., a Delaware corporation, ABT CANADA, LTD., a Nova
Scotia corporation, and KENTECH PLASTICS, INC., a Delaware corporation, each of
the financial institutions now or hereafter a "Bank" hereunder, COMERICA BANK,
as agent for the Banks and, FIRST UNION NATIONAL BANK OF NORTH CAROLINA, in its
capacity as documentation agent for the Banks hereunder and HARRIS TRUST AND
SAVINGS BANK, in its capacity as syndication agent for the Banks hereunder.
WHEREAS, Company and the Permitted Borrowers have requested Agent and the
Banks to: (a) provide Company and the Permitted Borrowers a credit facility in
the form of a continuing revolving credit facility in the aggregate maximum
amount of One Hundred Seventy Five Million Dollars ($175,000,000), together with
options under the revolving credit facility to: (i) obtain letters of credit
from time to time (as a component of, and not in addition to, the maximum amount
of the requested revolving credit facility) in the aggregate maximum face amount
of Fifty Million Dollars ($50,000,000); and (ii) incur up to Ten Million Dollars
($10,000,000) of indebtedness under a swing loan facility (as a component of,
and not in addition to, the maximum amounts of the requested revolving credit
facility), (b) provide Company with a credit facility in the form of a line of
credit in the aggregate maximum amount of Twenty Five Million Dollars
($25,000,000); and (c) incorporate hereunder the term loan made by certain of
the Banks in the principal amount of Fifty Million Dollars ($50,000,000)
originally borrowed by Company from certain of the Banks under the Prior
Agreement (defined herein).
WHEREAS, Agent and the Banks are willing to do so, but only on the terms
and conditions of this Agreement;
NOW, Therefore, Agent, Banks, Company and Permitted Borrowers agree the
Prior Agreement is hereby amended and restated as follows:
1. DEFINITIONS
-----------
For the purposes of this Agreement the following terms (when capitalized)
will have the following meanings:
1.1 "ABT" shall mean ABTco, Inc., a Delaware corporation and wholly owned
Subsidiary of Company.
1.2 "ABT Canada" shall mean ABT Canada, Ltd., a Nova Scotia corporation
and wholly owned Subsidiary of Company.
1.3 "ABT Export" shall mean ABT Export Company, a United States Virgin
Islands corporation and wholly owned Subsidiary of ABT.
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1.4 "Adjusted Percentage" shall mean, as of any date, with respect to each
Bank, the percentage determined by dividing:
(a) (i) the Percentage of Revolving Credit in effect on such day for
such Bank, minus (ii) the principal amount of any Bid Loans then
owing to such Bank; by
(b) the amount by which: (i) the Revolving Credit Commitment in
effect on such day exceeds; (ii) the aggregate principal amount
of all Bid Loans outstanding on such date.
1.5 "Adjusted Tangible Net Worth" shall mean the Tangible Net Worth of
Company and its Subsidiaries or (where the context so indicates) Company and the
Restricted Subsidiaries plus the lesser of (i) Twenty Nine Million Two Hundred
Forty Two Thousand Dollars ($29,242,000), or (ii) the aggregate purchase price
paid by Company for repurchases of shares of its common capital stock subsequent
to March 31, 1994, to the extent and so long as such shares are held by Company
as treasury shares.
1.6 "Advance" shall mean a borrowing requested by Company or a Permitted
Borrower and made by the Banks under this Agreement (or in the case of the Swing
Loans, made by Agent) (including any refunding or conversion of such borrowings
pursuant to Section 7.3 hereof) and shall include a borrowing pursuant to
Section 3.6 hereof, whether or not requested by Company.
1.7 "Agent" shall mean Comerica Bank in its capacity as Agent hereunder or
any successor appointed in accordance with Section 15.4 hereof.
1.8 "Agent's Fees" shall mean those fees and expenses required to be paid
by Company to Agent under Section 10.1(h) hereof.
1.9 "Alternate Base Rate" shall mean, for any day, a rate per annum equal
to the Federal Funds Effective Rate in effect on such day plus one percent (1%).
1.10 "Alternative Currency" shall mean:
(a) in the case of Advances, Canadian Dollars;
(b) in the case of Letters of Credit, Canadian Dollars and Austrian
Schillings; and
(c) in all cases, any other currency other than Dollars approved in
writing by all of the Banks.
1.11 "Annual Debt Service" shall mean, as of the last day of each fiscal
quarter, for the four quarters immediately preceding the calculation thereof,
the sum of interest charged or
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incurred on Indebtedness plus all amounts required for mandatory repayment of
principal of and premium on Indebtedness (whether by operation of sinking fund
or otherwise and including, without limitation, current maturities of long-term
Indebtedness), for the Company and the Subsidiaries, or (where the context so
indicates) Company and the Restricted Subsidiaries, all determined in accordance
with GAAP on a Consolidated basis.
1.12 "Applicable Interest Rate" shall mean:
(a) with respect to Revolving Credit Loans denominated in Dollars and
Line of Credit Loans, the Eurocurrency-based Rate or the Prime-
based Rate as selected by Company or (if applicable) a Permitted
Borrower from time to time or otherwise determined pursuant to
the terms and conditions of this Agreement;
(b) with respect to Revolving Credit Loans denominated in any
Alternative Currency, the Eurocurrency-based Rate therefor as
selected by Company or (if applicable) a Permitted Borrower, from
time to time;
(c) with respect to any Swing Loan, the Swing Loan Quoted Rate, if
such a rate was quoted by Agent and accepted by Company for the
relevant Advance and, in each other case, the Prime-based Rate;
(d) with respect to any Bid Loan, the Bid Rate therefor; and
(e) with respect to the Term Loan, seven and 99/100ths percent
(7.99%) per annum.
1.13 "Assignment Agreement" shall mean an assignment agreement executed by
a Bank and delivered to Agent pursuant to Section 16.5(a) hereof, in the form
attached as Exhibit "A" hereto.
1.14 "Banks" shall mean each financial institution party hereto and each
financial institution which hereafter becomes party hereto pursuant to Section
16.5(a) and their respective successors and assigns.
1.15 "Base Tangible Net Worth" shall mean:
(a) Ninety Four Million Seven Hundred Fifty Six Thousand Dollars
($94,756,000), plus
(b) fifty percent (50%) of the Net Income (if positive) of the
Company and the Subsidiaries, or (where the context so indicates)
Company and the Restricted Subsidiaries, on a Consolidated basis,
earned in each fiscal quarter subsequent to the fiscal quarter
ending December 31, 1996.
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<PAGE>
1.16 "Bid Acknowledgement" shall mean the acknowledgement and acceptance of
Bid Quotes by Company or (if applicable) a Permitted Borrower in the form
attached as Exhibit "B" hereto.
1.17 "Bid Loan" shall mean any Loan that is made by one or more of the
Banks pursuant to a Bid Quote and any "Bid Loan" made pursuant to the Prior
Agreement which remains outstanding as of the Closing Date.
1.18 "Bid Loan Maximum" shall mean, as of any date, the lesser of: (i) One
Hundred Million Dollars ($100,000,000); or (ii) the Revolving Credit Commitment
in effect on such date.
1.19 "Bid Notes" shall mean the promissory notes of the Company and the
Permitted Borrowers evidencing Bid Loans, in substantially the form annexed
hereto as Exhibit "C" hereto made: (i) in the case of Company's Bid Notes, to
each Bank in an amount equal to each Bank's respective Percentage of the
Revolving Credit Commitment in effect on the Closing Date, and (ii) in the case
of any Permitted Borrower's Bid Notes, to each Bank in an amount equal to the
lesser of: (x) the Percentage of Revolving Credit applicable to such Bank, or
(y) the Permitted Borrower Maximum for the Revolving Credit Commitment
applicable to such Permitted Borrower.
1.20 "Bid Quote" shall mean an offer by a Bank to make a Bid Loan in the
form attached as Exhibit "D" hereto.
1.21 "Bid Quote Request" shall mean any request for Bid Quotes made by the
Company or a Permitted Borrower in the form attached as Exhibit "E" hereto.
1.22 "Bid Rate" shall mean, with respect to any Bid Loan, the rate of
interest (which may be a Eurocurrency-based Rate) offered by a Bank or Banks
with respect thereto and accepted by Company or the applicable Permitted
Borrower pursuant to Section 2.8 hereof.
1.23 "Bond Pledge Agreement" shall mean a pledge agreement executed and
delivered by ABT to the Issuing Bank issuing the Letter of Credit related to the
Permitted Bond Financing, pledging to such Issuing Bank (for itself and on
behalf of the Banks) any bonds purchased under certain circumstances with
proceeds of drawings under such Letter of Credit.
1.24 "Business Day" shall mean any day on which commercial banks are open
for domestic and international business (including dealings in dollar deposits
in the interbank market) in Detroit and London.
1.25 "Capital Expenditures" shall mean, for any period of determination
thereof, the aggregate gross expenditures during that period, in the property,
plant or equipment reflected in the balance sheets of Company and its
Subsidiaries, in conformity with GAAP on a consolidated basis, or (where the
context so indicates) Company and the Restricted Subsidiaries, on a similar
basis of calculation, but excluding expenditures made in connection with the
replacement, substitution or restoration of assets (i) financed from insurance
proceeds paid on account of the
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<PAGE>
loss of or damage to the assets being replaced or restored, (ii) financed with
awards of compensation arising from the taking by eminent domain or condemnation
of the assets being replaced or (iii) to the extent financed with trade-in
credits in connection with acquisitions of equipment or fixed assets purchased
simultaneously with such trade-in; provided that Capital Expenditures shall not
include, (w) the purchase price paid in connection with the acquisition of any
other Person (including through the purchase of all of the capital stock or
other ownership interests of such Person or through merger or consolidation) or
of substantially all of the assets of a business or of a division of a business
as a going concern, (x) expenditures of up to Sixty Million Dollars
($60,000,000) in aggregate amount connected with the North Carolina Initial
Project to the extent expended on or before December 31, 1997, (y) expenditures
of up to Forty Seven Million Dollars ($47,000,000) in aggregate amount connected
with the North Carolina Second Project to the extent expended on or before
eighteen (18) months after commencement of construction of the North Carolina
Second Project, and provided that no expenditures on the North Carolina Second
Project in excess of up to Two Million Dollars ($2,000,000) in engineering costs
may be incurred until after the delivery to the Agent and the Banks of the
report required pursuant to Section 12.1(h) hereof, and (z) expenditures of up
to Twenty Million Dollars ($20,000,000) in aggregate amount connected with the
Mississippi Project to the extent expended on or before December 31, 1998.
1.26 "Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than three (3) years from the date of acquisition, (ii) marketable direct
obligations issued by any State of the United States of America or any local
government or other political subdivision thereof rated (at the time of
acquisition of such security) at least AA by Standard & Poor's Corporation
("S&P") or the equivalent thereof by Moody's Investors Service, Inc. ("Moody's")
having maturities of not more than one (1) year from the date of acquisition,
(iii) U.S. dollar denominated time deposits, certificates of deposit, eurodollar
investments, investment accounts and bankers' acceptances of any bank whose
short-term commercial paper rating (at the time of acquisition of such security)
by S&P is at least A-1 or the equivalent thereof or by Moody's is at least P-1
or the equivalent thereof (any such bank, an "Approved Bank"), with maturities
of not more than six (6) months from the date of acquisition, (iv) commercial
paper and variable or fixed rate notes issued by any Bank or Approved Bank or by
the parent company of any Bank or Approved Bank and commercial paper and
variable rate notes issued by, or guaranteed by, any industrial or financial
company with a short-term commercial paper rating (at the time of acquisition of
such security) of at least A-1 or the equivalent thereof by S&P or at least P-1
or the equivalent thereof by Moody's, or guaranteed by any industrial company
with a long-term unsecured debt rating (at the time of acquisition of such
security) of at least AA or the equivalent thereof by S&P or the equivalent
thereof by Moody's and in each case maturing within one year after the date of
acquisition and (v) repurchase agreements with any Bank or any primary dealer
maturing within one (1) year from the date of acquisition that are fully
collateralized by investment instruments that would otherwise be Cash
Equivalents; provided that the terms of such repurchase agreements comply with
the guidelines set forth in the Federal Financial Institutions Examination
Council Supervisory Policy -- Repurchase Agreements of Depository Institutions
With Securities Dealers and Others, as
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adopted by the Comptroller of the Currency on October 31, 1985.
1.27 "Closing Date" shall mean the date, on or before March 11, 1997, on
which the conditions of Section 10.1 hereof have been satisfied.
1.28 "Commitments" shall mean, collectively, the Line of Credit Commitment
and Revolving Credit Commitment.
1.29 "Company" shall mean ABT Building Products Corporation, a Delaware
corporation (formerly known as ABT Holdings Corporation).
1.30 "Consolidated" shall mean, when used with reference to any financial
information (or when used as a part of any defined term or statement pertaining
to any financial condition) the accounts of Company and the Subsidiaries or
(where the context so indicates) Company and the Restricted Subsidiaries,
determined on a consolidated basis in accordance with GAAP.
1.31 "Co-Agents" shall mean First Union National Bank of North Carolina in
its capacity as documentation agent for the Banks hereunder and Harris Trust and
Savings Bank in its capacity as syndication agent for the Banks hereunder or any
successor to either of them appointed in accordance with Section 15.4 hereof.
1.32 "Default" shall mean an event, occurrence or circumstance which, with
the giving of notice and/or passage of time, would constitute an Event of
Default.
1.33 "Defaulting Bank" shall mean any Bank, which, during any time when the
conditions to an Advance requested pursuant to Section 2.3 or 5.3 have been
satisfied, shall have failed to fund its portion of any duly requested Advance,
or shall have notified Agent that it does not intend to fund its portion of such
an Advance, until such failure to fund is cured or notice withdrawn and (if
applicable) it shall have paid the interest payable with respect to such
failure, as required by Section 2.4 and 5.4 (as applicable).
1.34 "Default Rate" shall mean:
(a) with respect to any Advance which is not a Term Loan (i) from the
date that the Default Rate becomes applicable thereto, until the
last day of the then existing Interest Period therefor, the
Applicable Interest Rate therefor plus three percent (3%) per
annum, and (ii) thereafter, the Prime-based Rate plus three
percent (3%); and
(b) with respect to the Term Loan, ten and 99/100ths percent (10.99%)
per annum.
1.35 "Documents" shall mean collectively, this Agreement, any Notes, the
Guaranties, the Pledge, any Letter of Credit Agreements, and any other
documents, instruments or agreements now or hereafter executed pursuant to or in
connection with any such document or
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instrument.
1.36 "Dollar Amount" shall mean (i) with respect to each Advance made or
carried (or to be carried) in Dollars, or Letter of Credit denominated in
Dollars, the principal amount or (in the case of a Letter of Credit) the face
amount thereof and (ii) with respect to each Advance made or carried (or to be
made or carried) in an Alternative Currency or Letter of Credit to be
denominated in an Alternative Currency, the amount of Dollars which is
equivalent to the principal amount of such Advance or (in the case of a Letter
of Credit) the face amount thereof, at the spot exchange rate determined by the
Agent to be available to it for the sale of Dollars for such Alternative
Currency at approximately 11:00 a.m. (Detroit time) two (2) Business Days before
such Advance is made or Letter of Credit is issued, as such Dollar Amount may be
adjusted from time to time pursuant to Section 2.9 or 9.10 hereof. When used
with respect to any Alternative Currency portion of an Advance being repaid or
Advance or Letter of Credit remaining outstanding at any time, "Dollar Amount"
shall mean the amount of Dollars which is equivalent to the principal amount of
such Advance or face amount of such Letter of Credit at the most favorable spot
exchange rate determined by the Agent to be available to it for the sale of
Dollars for such Alternative Currency at the relevant time.
1.37 "Dollars" and the sign "$" shall mean lawful money of the United
States of America.
1.38 "Earnings Available for Debt Service" shall mean, as of the last day
of each fiscal quarter, for the four fiscal quarters preceding any calculation
thereof, EBITDA minus the Capital Expenditures of Company and the Subsidiaries
or (where the context so indicates) Company and the Restricted Subsidiaries, for
such period.
1.39 "EBITDA" shall mean, as of the last day of any fiscal quarter, for the
four fiscal quarters immediately preceding any calculation thereof, Net Income
(before impact of extraordinary non-cash items) plus the aggregate amounts
deducted in determining Net Income for such period in respect of: (i) the
provision for taxes based on income; (ii) Interest Expense; and (iii)
depreciation and amortization, all determined for the Company and the
Subsidiaries or (where the context so indicates) the Company and the Restricted
Subsidiaries, on a Consolidated basis in accordance with GAAP.
1.40 "Environmental Laws" shall mean the common law and all federal, state,
local and foreign laws or regulations, codes, orders, decrees, judgments or
injunctions issued, promulgated, approved or entered thereunder, now or
hereafter in effect, relating to pollution or protection of public or employee
health and safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
constituent substances or wastes, including, without limitation, petroleum,
including crude oil or any fraction thereof, or any petroleum product
(collectively referred to as "Hazardous Materials"), into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata), (ii) the manufacture, processing, distribution,
use, generation, treatment, storage, disposal, transport or handling of
Hazardous Materials, and (iii) underground storage
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tanks, and related piping, and emissions, discharges, releases or threatened
releases therefrom.
1.41 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, or any successor act or code. Section references to ERISA are
to ERISA as in effect as of the date of this Agreement and any subsequent
amendment, supplement or substitution thereof.
1.42 "ERISA Affiliates" shall mean any entity, whether or not incorporated,
which is under common control or would be considered a single employer with the
Company or a Subsidiary within the meaning of Section 414(b), (c) or (m) of the
Code and regulations promulgated under those sections or within the meaning of
Section 4001(b) of ERISA and regulations promulgated under that section.
1.43 "Eurocurrency-based Loan" shall mean a Loan which is advanced in
Dollars or an Alternative Currency and which bears interest at a rate based on
the Eurocurrency-based Rate.
1.44 "Eurocurrency-based Rate" shall mean, for any Eurocurrency-based Loan,
a per annum interest rate equal to the Eurocurrency Rate, plus the Margin in
effect on the first day of the Interest Period for such Eurocurrency-based Loan.
1.45 "Eurocurrency Lending Office" shall mean Agent's office located at
Grand Cayman or such other branch of Agent, domestic or foreign, as it may
hereafter designate as its Eurocurrency Lending Office by notice to Company.
1.46 "Eurocurrency Rate" shall mean:
(a) the per annum interest rate at which the Eurocurrency Lending
Office offers deposits in the relevant currency to prime banks in
the eurocurrency market in an amount comparable to the relevant
Eurocurrency-based Loan and for a period equal to the relevant
Interest Period at approximately 11:00 a.m. Detroit time two (2)
Business Days prior to the first day of such Interest Period;
divided by,
(b) a percentage (expressed as a decimal) equal to one hundred
percent (100%) minus that percentage which is in effect on the
date for an Advance of a Eurocurrency-based Loan, as prescribed
by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirements for a
member bank of the Federal Reserve System with deposits exceeding
five billion dollars in respect of "Eurocurrency Liabilities" (or
in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Eurocurrency-
based Loans is determined or any category of extensions of credit
or other assets which includes loans by a non-United States
Eurocurrency Lending Office of such a bank to United States
residents).
1.47 "Event of Default" shall mean the Events of Default specified in
Section 14.1
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hereof.
1.48 "Extension Request" shall mean a request for extension of the
Revolving Credit Maturity Date made pursuant to Section 2.10 hereof, or a
request for extension of the Line of Credit Maturity Date made by Company
pursuant to Section 5.8 hereof, on the form attached as Exhibit "F" hereto,
delivered to Agent.
1.49 "Federal Funds Effective Rate" shall mean, for any day, a fluctuating
interest rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by Agent from three Federal funds brokers of recognized standing
selected by it.
1.50 "Fees" shall mean the Revolving Credit Facility Fees, Line of Credit
Facility Fees, Agents Fees and/or Letter of Credit Fees collectively, or any one
or more of these as the context indicates.
1.51 "Fixed Charge Coverage Ratio" shall mean, as of the last day of each
fiscal quarter, a ratio, the numerator of which is Earnings Available for Debt
Service and the denominator of which is Annual Debt Service.
1.52 "GAAP" shall mean generally accepted accounting principles in the
United States of America consistent with those used in preparation of the
financial statements of Company referred to in Section 11.10 hereof.
1.53 "Guaranty" shall mean the guaranty agreements executed and delivered
to the Agent:
(a) by Company, ABT and KenTech, and each other Restricted Subsidiary
hereafter existing which is organized under the laws of a
jurisdiction of the United States, guarantying to Agent and the
Banks the payment and performance of indebtedness and obligations
of Company and each Permitted Borrower; and
(b) by ABT Canada, and by each other Restricted Subsidiary hereafter
existing which is organized under the laws of a jurisdiction
outside of the United States, guarantying to Agent and the Banks
the payment and performance of indebtedness and obligations of
each Permitted Borrower which is organized under the laws of a
jurisdiction outside of the United States.
1.54 "Hereof", "Hereto", "Hereunder" and similar terms shall refer to this
Agreement and not to any particular paragraph or provision of this Agreement.
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1.55 "Highest Lawful Rate" shall mean, with respect to each Bank, the
maximum nonusurious interest rate, if any, that at any time or from time to time
may be contracted for, taken, reserved, charged or received on its Notes or
other indebtedness under laws applicable to such Bank which are in effect as of
the date hereof or, to the extent allowed by law, under such laws applicable to
such Bank which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws allow as of the date hereof.
1.56 "Indebtedness" shall mean, without duplication, (i) all indebtedness
of such Person for borrowed money, (ii) the deferred purchase price of assets or
services which in accordance with GAAP would be shown on the liability side of
the balance sheet of such Person, (iii) the face amount of all letters of credit
issued for the account of such Person and, without duplication, all drafts drawn
thereunder, (iv) all obligations of a second person secured by any Lien on any
property owned by such first Person, whether or not such obligations have been
assumed by such first Person, (v) all capitalized lease obligations of such
Person, (vi) all obligations of such Person under Interest Rate Agreements, and
(vii) all obligations which have the economic effect of a guaranty of
Indebtedness of the types described in clauses (i) through (vi) above,
regardless of characterization; provided that Indebtedness shall not include
trade payables or other accounts payable, accrued expenses, accrued dividends,
accrued income taxes, warranty reserves and deferred income taxes, to the extent
arising in the ordinary course of business.
1.57 "Interest Expense" shall mean interest expense of the Company and the
Subsidiaries or (where the context indicates) Company and the Restricted
Subsidiaries, as determined on its Consolidated statements of income in
accordance with GAAP.
1.58 "Intercompany Note" shall mean that certain demand promissory note
made by ABT Canada to the order of Company as of May 31, 1995 in the principal
amount of Fifty Million Dollars ($50,000,000).
1.59 "Interest Period" shall mean an interest period:
(a) in the case of any Loan which is a Prime-based Loan, an initial
period beginning on the date of the advance thereof and ending on
the next occurring Quarterly Payment Date and thereafter,
successive Interest Periods beginning on the day after each
Quarterly Payment Date and ending on each succeeding Quarterly
Payment Date;
(b) in the case of a Loan which is a Eurocurrency-based Loan one (1),
two (2), three (3) or six (6) months as selected by Company or
the applicable Permitted Borrower;
(c) in the case of the Term Loan, beginning on the day after each
Quarterly Payment Date and ending on each succeeding Quarterly
Payment Date;
(d) in the case of a Bid Loan, beginning on the date of the advance
thereof and ending on a date that is not less than one (1) week
and not greater than
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three (3) months later, as agreed with respect to such Bid Loan
by Company or the applicable Permitted Borrower and the Bank or
Banks making such Bid Loan pursuant to the procedures set forth
in Section 2.8 hereof; and
(e) in the case of a Swing Loan bearing interest at the Swing Loan
Quoted Rate, beginning on the date the advance is made and ending
on a date that is not more than thirty (30) days after the date
of such Advance, as agreed with respect to such Advance by
Company and Agent pursuant to the procedures set forth in Section
4.3 hereto;
provided however, that:
(i) any Interest Period which would otherwise end on a day
which is not a Business Day shall be extended to the next
succeeding Business Day unless the next succeeding Business
Day falls in another calendar month, in which case, such
Interest Period shall end on the immediately preceding
Business Day;
(ii) when an Interest Period for a Eurocurrency-based Loan
begins on a day which has no numerically corresponding day
in another calendar month during which such Interest Period
is to end, it shall end on the last Business Day of such
other calendar month;
(iii) no Interest Period for a Revolving Credit Loan, Swing Loan
or Bid Loan shall extend beyond the Revolving Credit
Maturity Date;
(iv) no Interest Period for a Line of Credit Loan shall extend
beyond the Line of Credit Maturity Date; and
(v) no Interest Period with respect to the Term Loan shall
extend beyond the last day of the Term Loan Maturity Date.
1.60 "Interest Rate Agreements" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate futures contract, interest rate option contract or other similar agreement
or arrangement to which the Company is a party, designed to protect against
fluctuations in interest rates.
1.61 "Issuing Bank" shall mean:
(a) with respect to any Letter of Credit issued in support of the
obligations of ABT related to the Permitted Bond Financing, such
Bank as Company may select which agrees to act as issuer of such
Letter of Credit; and
(b) with respect to all other Letters of Credit, the Agent.
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1.62 "KenTech" shall mean KenTech Plastics, Inc., a Delaware corporation
and a wholly owned subsidiary of the Company.
1.63 "Letter(s) of Credit" shall mean any standby or trade letters of
credit:
(a) issued pursuant to the Prior Agreement and remaining outstanding
and unexpired as of the Closing Date; and
(b) hereafter issued by an Issuing Bank at the request of or for the
account of Company or a Permitted Borrower pursuant to Article 3
hereof.
1.64 "Letter of Credit Agreement" shall mean:
(a) applications of Company pursuant to which the Company requested
Letters of Credit issued by the Agent pursuant to the Prior
Agreement which remain outstanding and unexpired as of the
Closing Date;
(b) with respect of the Letter of Credit to be issued in support of
the Permitted Bond Financing, a reimbursement agreement (if any)
by and between the Issuing Bank and ABT in form and substance
acceptable to such Issuing Bank; and
(c) in respect of each other Letter of Credit hereafter issued
pursuant to this Agreement, the application of Company or a
Permitted Borrower requesting an Issuing Bank to issue such
Letter of Credit (including the terms and conditions on the
reverse side thereof or otherwise provided therein), in the form
and substance acceptable to such Issuing Bank.
1.65 "Letter of Credit Fees" shall mean the fees payable to Agent for the
account of the Banks in connection with Letters of Credit pursuant to Section
3.4 hereof.
1.66 "Letter of Credit Maximum" shall mean, as of any date, the lesser of:
(a) Fifty Million Dollars ($50,000,000); or
(b) the Revolving Credit Commitment minus the sum of the aggregate
principal amount of outstanding Revolving Credit Loans, Swing
Loans and Bid Loans.
1.67 "Letter of Credit Notice" shall mean an Issuing Bank's notice of the
issuance of a Letter of Credit in the form attached hereto as Exhibit "G".
1.68 "Letter of Credit Obligation" shall mean the obligation of Company or
a Permitted Borrower under each Letter of Credit Agreement to reimburse the
Issuing Bank for each payment
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made by the Issuing Bank under the Letter of Credit issued pursuant to such
Letter of Credit Agreement, together with all other sums, fees, charges and
amounts which may be owing under such Letter of Credit Agreement.
1.69 "Letter of Credit Payment" shall mean any amount paid or required to
be paid by an Issuing Bank in its capacity as issuer of a Letter of Credit as a
result of a draw against any Letter of Credit.
1.70 "Leverage Ratio" shall mean, the greater of (a) the ratio of the
Indebtedness to EBITDA, for the Company and the Restricted Subsidiaries on a
Consolidated basis as of the last day of any fiscal quarter of Company, or (b)
the ratio of the Indebtedness to EBITDA, for the Company and the Subsidiaries on
a Consolidated basis as of the last day of any fiscal quarter of Company.
1.71 "Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien, claim, hypothecation, assignment for security or charge of
any kind (including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement or any lease in the nature thereof).
1.72 "Line of Credit Commitment" shall mean:
(a) Twenty Five Million Dollars ($25,000,000) from the date hereof
until the first reduction or termination of the Line of Credit
Commitment pursuant to Section 5.6 or 7.5 hereof; and
(b) thereafter, Twenty Five Million Dollars ($25,000,000) minus the
amount of each reduction pursuant to Section 5.6 or 7.5 hereof.
1.73 "Line of Credit Facility Fee" shall mean the commitment fee payable to
Agent for distribution to the Banks pursuant to Section 5.5 hereof.
1.74 "Line of Credit Loan" shall mean the line of credit loans to be
advanced to the Company by the Banks pursuant to Section 5 hereof.
1.75 "Line of Credit Maturity Date" shall mean March 10, 1998 or such later
date as to which it may be extended, at the request of Company, pursuant to
Section 5.8 hereof.
1.76 "Line of Credit Notes" shall mean the Notes described in Section 5.1
hereof made by Company to each of the Banks in the form attached as Exhibit "H"
hereto in aggregate principal amount equal to Twenty Five Million Dollars
($25,000,000).
1.77 "Loan" shall mean any Revolving Credit Loan, Line of Credit Loan,
Swing Loan, Term Loan, Bid Loan and Letter of Credit Payment.
1.78 "Majority Banks" shall mean:
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(a) so long as the Commitments shall be in effect, the Banks (other
than Defaulting Banks) whose Percentages of Revolving Credit
Commitment, Percentages of Line of Credit Commitment and
outstanding balance of Term Loans in aggregate constitute sixty
five percent (65%) or more of the sum of the Commitments then in
effect plus the principal amount of all Term Loans then
outstanding (other than the Commitments and Term Loans of
Defaulting Banks); and
(b) in the event that the Commitments have been terminated, the Banks
whose Loans and risk participations with respect to outstanding
Letters of Credit constitute sixty five percent (65%) or more of
the aggregate principal amount of all outstanding Loans and
aggregate face amounts of all outstanding Letters of Credit.
1.79 "Margin" shall mean with respect to: (a) Revolving Credit Loans
advanced as or converted as Eurocurrency-based Loans, (b) Letter of Credit Fees
to be paid with respect to trade Letters of Credit outstanding during any fiscal
quarter, (c) Letter of Credit Fees to be paid with respect to standby Letters of
Credit outstanding during any fiscal quarter, (d) Revolving Credit Facility Fees
to be paid as of the end of any fiscal quarter, (e) Line of Credit Loans
advanced as or converted as Eurocurrency-based Loans, and (f) Line of Credit
Facility Fees to be paid as of the end of any fiscal quarter: the percentages
set forth on Schedule 1.79 hereto, based on the Leverage Ratios most recently
determined on the basis of financial statements delivered by Borrower to Bank
pursuant to Section 12.1(a) and 12.1(b) hereof. Any change in the Margin
resulting from any such determination shall be effective immediately following
the date of the delivery of the relevant financial statement; provided, however,
-----------------
that, (i) in the event such financial statements are not delivered as and when
required pursuant to Section 12.1(a) or 12.1(b) (and without prejudice to the
rights of Agent and Majority Banks to declare an Event of Default as a
consequence thereof) any increase in the Margin determined to be applicable upon
the receipt of such financial statements, shall be applicable retroactively to
the date such financial statement was required to be delivered under Section
12.1(a) or 12.1(b) (as applicable), but any decrease in the Margin based thereon
shall be applicable only prospectively, from the date of the actual delivery
thereof, (ii) in the event that on the date for adjustment of the Margin, there
exists an Event of Default hereunder, the Margin shall not be reduced (but may
be increased) until such time as such Event of Default has been cured or waived,
notwithstanding any reduction in the Leverage Ratio on such date, and (iii) with
respect to each Eurocurrency-based Loan, the Margin applicable as of the first
day of its Interest Period shall remain in effect with respect to such Advance
until the last day of such Interest Period.
1.80 "Material Adverse Effect" shall mean:
(a) with respect to the Company and the Restricted Subsidiaries taken
as a whole, or (when used in such context) Company and its
Subsidiaries taken as a whole, any materially adverse effect with
respect to the operations, business, properties, assets, nature
of assets, liabilities (contingent or
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otherwise) or financial condition of Company and the Restricted
Subsidiaries taken as a whole or (if the context indicates)
Company and its Subsidiaries taken as a whole; or
(b) any facts or circumstance as to which singly or in the aggregate
there is a reasonable likelihood of such a materially adverse
change, or a reasonable likelihood that Company and the
Restricted Subsidiaries will be rendered unable to perform their
obligations hereunder or under any of the other Documents in any
material respect, or a reasonable likelihood that Agent or the
Banks will be rendered unable to enforce in any material respect
the rights or remedies purported to be granted them hereunder or
under any of the other Documents.
1.81 "Mississippi Project" shall mean the purchase, development, equipping
and outfitting by ABT of a vinyl siding plant at Holly Springs, Mississippi and
the financing thereof with proceeds of the Permitted Bond Financing.
1.82 "Multiemployer Plans" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA with respect to which Company, any Subsidiary or any
ERISA Affiliate is or has been required to contribute.
1.83 "Net Income" shall mean, for any period of determination thereof, the
net income for such period taken as one accounting period, for Company and the
Subsidiaries or (where the context so indicates) Company and the Restricted
Subsidiaries, on a Consolidated basis, determined in accordance with GAAP.
1.84 "Non-Material Restricted Subsidiary" shall mean any Restricted
Subsidiary or group of Restricted Subsidiaries which:
(a) are wholly-owned Subsidiaries; and
(b) have assets which account for less than one percent (1%) of the
Consolidated total assets of Company and the Restricted
Subsidiaries.
1.85 "Non-Restricted Amount" shall mean, at any time, an amount equal to
the lesser of:
(a) the Adjusted Tangible Net Worth of the Company and Restricted
Subsidiaries as determined from the financial statements most
recently delivered pursuant to subsections (a) or (b) of Section
12.1 hereof, minus the sum of: (i) the aggregate of all amounts
expended by Company and the Restricted Subsidiaries for
dividends, distributions, purchases, redemptions and other
acquisitions or retirements of their own capital stock subsequent
to the date of such financial statement (except to the extent
paid to Company or a Restricted Subsidiary); and (ii) the Base
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Tangible Net Worth for Company and the Restricted Subsidiaries,
as determined from such financial statements; or
(b) the Adjusted Tangible Net Worth of Company and the Subsidiaries
as determined from the financial statements most recently
delivered pursuant to subsections (a) or (b) of Section 12.1
hereof, minus the sum of: (i) the aggregate of all amounts
expended by Company and the Subsidiaries for dividends,
distributions, purchases, redemptions and other acquisitions or
retirements of their own capital stock subsequent to the date of
such financial statement (except to the extent paid to Company or
a Subsidiary); and (ii) the Base Tangible Net Worth for Company
and the Subsidiaries, as determined from such financial
statements.
1.86 "Non-Restricted Subsidiary" shall mean any Subsidiary that may be
formed or acquired by the Company or a Restricted Subsidiary, which at or prior
to the time such Subsidiary becomes a Subsidiary, is designated a Non-Restricted
Subsidiary by an officer of the Company authorized to make such designations (as
evidenced by a resolution of the board of directors of Company filed with the
Agent). Any Non-Restricted Subsidiary may subsequently be designated a
Restricted Subsidiary by any such authorized officer, provided that no Default
or Event of Default will occur as a consequence thereof.
1.87 "North Carolina Initial Project" shall mean the purchase, development
and equipping by ABT of a plant and an initial cement fiber product line at
Roaring River, North Carolina.
1.88 "North Carolina Second Project" shall mean the purchase, development
and equipping by ABT of a second production line for cement fiber product at its
Roaring River, North Carolina plant.
1.89 "Notes" shall mean the Revolving Credit Notes, Bid Notes, Term Notes
and the Swing Loan Note, Line of Credit Notes or any one or more of them, as
the context indicates.
1.90 "Pension Plans" shall mean any pension plan as defined in Section 3(2)
of ERISA (other than a Multiemployer Plan) which is or has been maintained by or
to which contributions are or have been made by Company, any Subsidiary or any
ERISA Affiliate.
1.91 "Percentage" shall mean, with respect to any Bank, the percentage
interest in the Revolving Credit Commitment, Line of Credit Commitment and Term
Loan set forth opposite its name on Schedule 1.91 hereto, as such Percentages
may change from time to time pursuant to Sections 7.5, 8.7 and 16.5 hereto.
1.92 "Percentage of Line of Credit" shall mean, with respect to each Bank,
an amount equal to the Line of Credit Commitment in effect on the date of a
determination thereof, multiplied by such Bank's Percentage in the Line of
Credit Commitment.
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1.93 "Percentage of Revolving Credit" shall mean, with respect to each
Bank, an amount equal to the Revolving Credit Commitment in effect on the date
of a determination thereof, multiplied by such Bank's Percentage in the
Revolving Credit Commitment.
1.94 "Permitted Bond Financing" shall mean the financing of the Mississippi
Project with proceeds of up to Twenty Million Dollars ($20,000,000) of
industrial revenue bonds to be issued by the Mississippi Business Finance
Corporation, which:
(a) are issued pursuant to and governed by an agreement or indenture
which include terms and conditions no more restrictive upon ABT
or Company than the terms and conditions described on Schedule
1.94 hereof.
(b) which does not, by its terms, prohibit or restrict the ability of
the Company or the Restricted Subsidiaries to grant Liens in
favor of Agent on behalf of the Banks;
(c) is secured solely by a Letter of Credit issued in support of the
obligations of ABT related thereto.
1.95 "Permitted Borrowers" shall mean ABT, ABT Canada and KenTech.
1.96 "Permitted Borrower Maximum" shall mean the maximum aggregate amount
of the Usage which may be outstanding at any time under the Revolving Credit
Notes and Bid Notes of a Permitted Borrower and Letters of Credit issued for the
account of such Permitted Borrower and, with respect to each Permitted Borrower,
shall be such Dollar Amounts as are indicated on Schedule 1.96 hereto.
1.97 "Permitted Currencies" shall mean Dollars or an Alternative Currency.
1.98 "Permitted Encumbrances" shall mean, with respect to any Person:
(a) Liens for taxes, assessments or governmental charges or claims
not yet delinquent, or Liens for taxes, assessments or
governmental charges being contested in good faith and by
appropriate proceedings for which adequate reserves (to the
extent required by GAAP) have been established;
(b) Liens in respect of property or assets of Company or a
Subsidiary: (i) which were imposed by law in the ordinary course
of business, such as carriers', warehousemen's and mechanics'
Liens and other similar Liens arising in the ordinary course of
business, which are not delinquent or which are being contested
in good faith by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property
or asset subject to such Lien; or (ii) which do not relate to
material liabilities of Company and the Subsidiaries and do not
in the aggregate materially detract from the value of the
property and assets of
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Company and the Subsidiaries taken as a whole;
(c) Liens securing judgement or appeals bonds connected with
judgements not in excess of One Million Dollars ($1,000,000) in
any single case or Five Million Dollars ($5,000,000) in the
aggregate;
(d) Liens (other than any Lien imposed by ERISA or pursuant to
Environmental Laws the enforcement of which would reasonably be
expected to have a Material Adverse Effect) incurred or deposits
made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other type of
social security, or to secure the performance of tenders,
statutory obligations, surety bonds, bids, leases, governmental
contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business
(exclusive of obligations in respect of the payment for borrowed
money or the equivalent);
(e) Leases (and any related precautionary UCC financing statements
filed in connection therewith) with respect to the assets or
properties of Company and the Subsidiaries leased by Company and
the Subsidiaries, as lessees, entered into in the ordinary
course of business; and
(f) Easements, rights of way, restrictions, minor defects or
irregularities in title not interfering in any material respect
with the business of Company or the Subsidiaries, in each case
incurred in the ordinary course of business and which do not
materially impair for its intended purposes the real property to
which it relates.
1.99 "Permitted Private Placement Debt" shall mean public, unsecured,
long-term senior debt of Company or a Subsidiary, issued without credit
enhancement which:
(a) is issued pursuant to and governed by an agreement or indenture,
(i) which includes negative and financial covenants no more
restrictive than the covenants set forth in this Agreement, and
(ii) which does not by its terms, prohibit or restrict the
ability of the Company and Restricted Subsidiaries to grant
Liens in favor of Agent on behalf of the Banks other than a
provision requiring Liens to be shared pari passu with holders
of Permitted Private Placement Debt; and
(b) at no time exceeds Fifty Million Dollars ($50,000,000) in
outstanding principal amount.
1.100 "Person" shall mean an individual, corporation, partnership, trust,
incorporated or unincorporated organization, joint venture, joint stock company,
or a government or any agent or political subdivision thereof or other entity of
any kind.
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1.101 "Pledge" shall mean a pledge agreement executed and delivered by
Company to Agent and the Banks, pursuant to which Agent and the Banks are
granted a first perfected pledge of and security interest in:
(a) sixty five percent (65%) of the issued and outstanding capital
stock of ABT Canada and any other Restricted Subsidiary
hereafter owned by Company or any Restricted Subsidiary which is
organized under the laws of a jurisdiction outside of the United
States; and
(b) the Intercompany Note.
1.102 "Prepayment Compensation Amount" shall mean, with respect to any
prepayment of the Term Loan, an amount equal to the sum of the discounted net
present values of the interest payments that would otherwise be payable on the
principal amount prepaid (assuming the amortization scheduled in the Term
Notes): (i) after reducing each such interest payment by the amount that would
be yielded on each date for interest payments thereunder, if the amount of
principal prepaid was reinvested at a per annum interest rate equal to one-half
percent (1/2%) per annum above the rate determined by Agent to be in effect two
(2) Business Days prior to the date of such prepayment in the secondary market
for United States Treasury securities of an amount comparable to the principal
amount prepaid and with a term comparable to maturity as the principal amount
prepaid; and (ii) discounting the net present values of the relevant interest
payments at the per annum rate described in clause (i) above.
1.103 "Prime Rate" shall mean the per annum interest rate established by
Agent as its prime rate for its borrowers as such rate may vary from time to
time, which rate is not necessarily the lowest rate on loans made by Agent at
any such time.
1.104 "Prime-based Loan" shall mean a Loan which bears interest at a rate
based on the Prime-based Rate.
1.105 "Prime-based Rate" shall mean, as of any day that rate of interest
which is the greater of: (i) the Prime Rate; or (ii) the Alternate Base Rate.
1.106 "Prior Agreement" shall mean the Second Amended and Restated ABT
Building Products Corporation $175,000,000 Revolving and Term Credit Agreement
dated as of July 13, 1995 between Agent, certain of the Banks, Borrower and the
Permitted Borrowers as amended prior to the date hereof.
1.107 "Purchase Agreement" shall mean the asset purchase agreement dated
as of September 25, 1992 between Company and Abitibi-Price Corporation.
1.108 "Quarterly Payment Date" shall mean the last Business Day of each
March, June, September and December.
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1.109 "Request for Line of Credit Loan" shall mean a request for an
Advance under the Line Credit Notes issued by Company under this Agreement in
the form annexed hereto as Exhibit "I".
1.110 "Request for Revolving Credit Loan" shall mean a request for an
Advance under the Revolving Credit Notes issued by Company or a Permitted
Borrower under this Agreement in the form annexed hereto as Exhibit "J".
1.111 "Request for Swing Loan" shall mean a request for an Advance under
the Swing Loan Note issued by Company under this Agreement in the form annexed
hereto as Exhibit "K".
1.112 "Requested Amounts" shall mean, on any date, an amount equal to the
sum of all Revolving Credit Loans, Bid Loans and Letters of Credit which have
been requested by Company or any Permitted Borrower, but which have not yet been
Advanced or issued.
1.113 "Restricted Subsidiary" shall mean:
(a) ABT, ABT Canada, ABT Export, KenTech; and
(b) each other Subsidiary that is not a Non-Restricted Subsidiary.
1.114 "Revolving Credit Commitment" shall mean:
(a) One Hundred Seventy Five Million Dollars ($175,000,000) from the
date hereof until the first reduction or termination of the
Revolving Credit Commitment pursuant to Section 2.6 or 2.10
hereof; and
(b) thereafter, One Hundred Seventy Five Million Dollars
($175,000,000) minus the amount of each reduction pursuant to
Section 2.6 or 2.10 hereof.
1.115 "Revolving Credit Facility Fee" shall mean the commitment fee
payable to Agent for distribution to the Banks pursuant to Section 2.5 hereof.
1.116 "Revolving Credit Loan" shall mean the revolving credit loans to be
advanced to the Company or a Permitted Borrower by the Banks pursuant to Section
2.1 or Section 3.6 hereof.
1.117 "Revolving Credit Maturity Date" shall mean March 10, 2002, or such
later date as to which it may be extended, at the request of Company, pursuant
to Section 2.10 hereof.
1.118 "Revolving Credit Notes" shall mean the Notes described in Section
2.1 hereof made in the form attached as Exhibit "L" hereto to each of the Banks:
(a) made by Company in aggregate principal amount equal to One
Hundred
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Seventy Five Million Dollars ($175,000,000); and
(b) made by each Permitted Borrower in aggregate principal amount
equal to their respective Permitted Borrower Maximums for the
Revolving Credit Loan.
1.119 "Subsidiaries" shall mean any other corporation, association, joint
stock company, or business trust of which more than fifty percent (50%) of the
outstanding voting stock is owned either directly or indirectly by Company or
one or more of its Subsidiaries or by Company and one or more of its
Subsidiaries.
1.120 "Swing Loan" shall mean the swing loans to be advanced and
readvanced to Company from time to time pursuant to Section 4.1 hereof.
1.121 "Swing Loan Commitment" shall mean, as of any date, the lesser of:
(a) Ten Million Dollars ($10,000,000); and
(b) the principal amount by which the Revolving Credit Commitment
exceeds the Usage.
1.122 "Swing Loan Note" shall mean the Note described in Section 4.1
hereof made in the form attached as Exhibit "M" hereto to Agent.
1.123 "Swing Loan Quoted Rate" shall mean, with respect to any advance of
the Swing Loan, the per annum rate of interest quoted by Agent and accepted by
Company for such Advance.
1.124 "Tangible Net Worth" shall mean the total common shareholder's
equity of Company and the Subsidiaries or (where the context so indicates)
Company and the Restricted Subsidiaries, on a Consolidated basis, together with
the amounts, if any, of preferred stock which is classified as part of
shareholder's equity, as reflected on the most recent regularly prepared monthly
balance sheet of Company, which balance sheet shall be prepared in accordance
with GAAP, less: (i) the amount reflected on such balance sheet of all assets
classified as intangible assets (including, without limitation, goodwill, trade-
marks, trade names, patents, copyrights, franchises and unamortized debt
discount and expenses); and (ii) the aggregate amount expended for all
dividends, distributions, purchases, redemptions, other acquisitions or
retirements of capital stock of Company subsequent to the date of such balance
sheet to the extent not reflected on such balance sheet.
1.125 "Term Installment Amount" shall mean, with respect to the Term Loan,
the amount of principal required pursuant thereto to be paid thereon on each
Quarterly Payment Date.
1.126 "Term Loan" shall mean the term loan originally extended by certain
of the Banks
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pursuant to the Prior Agreement evidenced by the Term Notes.
1.127 "Term Loan Maturity Date" shall mean April 3, 2001.
1.128 "Term Notes" means the term notes made by Borrower as of April 3,
1995 under the Prior Agreement in original principal amount of:
(a) Seventeen Million Dollars ($17,000,000) in the case of the Note
made payable to Comerica Bank; and
(b) Eleven Million Dollars ($11,000,000) in the case of each of the
Notes made payable to Creditanstalt-Bankverein, First Union
National Bank of North Carolina and Harris Trust and Savings
Bank.
1.129 "Termination Event" shall mean, (i) a "reportable event" described
in Section 4043 of ERISA or in the regulations thereunder (excluding events for
which the requirement for notice of such reportable event has been waived by the
PBGC) with respect to a Title IV Plan, or (ii) the withdrawal of Company, any
Subsidiary or any ERISA Affiliate from a Title IV Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA,
or (iii) the filing of a notice of intent to terminate a Title IV Plan or the
treatment of a Title IV Plan amendment as a termination under Section 4041 of
ERISA, or (iv) the institution of proceedings by the PBGC to terminate a Title
IV Plan or to appoint a trustee to administer a Title IV Plan, or (v) any other
event or condition which might constitute reasonable grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Title IV Plan, or (vi) the complete or partial withdrawal (within the
meaning of Section 4203 and 4205, respectively, of ERISA) of Company, any
Subsidiary or any ERISA Affiliate from a Multiemployer Plan, or (vii) the
insolvency or reorganization (within the meaning of Section 4245 and 4241,
respectively, or ERISA) or termination of any Multiemployer Plan, or (viii) the
failure to make any payment or contribution to any Pension Plan or Multiemployer
Plan or the making of any amendment to any Pension Plan which could reasonably
be expected to result in the imposition of a lien or the posting of a bond or
other security.
1.130 "Total Liabilities" shall mean, as of the date of any determination
thereof, all indebtedness and obligations of Company and the Subsidiaries or
(where the context so indicates) Company and the Restricted Subsidiaries,
determined on a Consolidated basis in accordance with GAAP, including (without
limitation) all guaranties.
1.131 "Usage" shall mean, as of any day, an amount equal to the sum of all
Revolving Credit Loans, Swing Loans and Bid Loans outstanding on such day, plus
the aggregate face amount of all unexpired Letters of Credit outstanding on such
day.
2. THE INDEBTEDNESS: REVOLVING CREDIT AND BID LOANS
------------------------------------------------
2.1 Revolving Credit Commitment. Subject to the terms and conditions of
---------------------------
this Agreement, each Bank severally agrees to lend to Company and Permitted
Borrowers, in any one
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or more of the Permitted Currencies, at any time and from time to time from the
Closing Date until the Revolving Credit Maturity Date, and Company and the
Permitted Borrowers may borrow, repay and reborrow sums not to exceed, in
aggregate amount at any time outstanding, (i) such Bank's respective Percentage
of Revolving Credit in effect from time to time, and (ii) in the case of each
Permitted Borrower, the Permitted Borrower Maximum for the Revolving Credit
Loans applicable to such Permitted Borrower. All of the Loans under this Section
2.1 shall be evidenced by Revolving Credit Notes under which advances,
repayments, and readvances may be made, subject to the terms and conditions of
this Agreement.
2.2 Type of Loan and Maturity. The Revolving Credit Notes, and all
-------------------------
principal and interest then outstanding thereunder, shall mature and become due
and payable in full on the Revolving Credit Maturity Date. Each Revolving
Credit Loan from time to time outstanding hereunder shall be either a Prime-
based Loan or a Eurocurrency-based Loan as the Company or the applicable
Permitted Borrower may elect or as otherwise applicable pursuant to the
provisions hereof. The amount and date of each Revolving Credit Loan, its
Applicable Interest Rate, its Interest Period, and the amount and date of any
repayment shall be noted on Agent's records, which records will be presumed
correct absent manifest error.
2.3 Requests for Revolving Credit Loans. Company or any Permitted
-----------------------------------
Borrower may request a Revolving Credit Loan by delivery to Agent of a Request
for Revolving Credit Loan executed by an authorized officer of Company or of a
Permitted Borrower (with the countersignature of Company thereon) and subject to
the following:
(a) each such Request for Revolving Credit Loan shall set forth the
information required on the Request for Revolving Credit Loan
form including, in the case of a Eurocurrency-based Loan, the
Permitted Currency therefor;
(b) each such Request for Revolving Credit Loan shall be delivered to
Agent by 10:00 a.m. (Detroit time) three (3) Business Days prior
to the proposed date of Loan, except in the case of a Prime-based
Loan, for which the Request for Revolving Credit Loan must be
delivered by 10:00 a.m. (Detroit time) on such proposed date;
(c) the principal amount of such Advance, plus the amount of any
outstanding Advance under the Revolving Credit Notes having the
same Applicable Interest Rate and Interest Period shall be at
least: (i) in the case of a Prime-based Loan, Two Million Dollars
($2,000,000), or a greater integral multiple of One Hundred
Thousand Dollars ($100,000); (ii) in the case of a Eurocurrency-
based Loan of Dollars, Five Million Dollars ($5,000,000) or a
greater integral multiple of One Hundred Thousand Dollars
($100,000), and (iii) in the case of a Eurocurrency-based Loan in
an Alternative Currency, a multiple of 100,000 units of such
Alternative Currency in a Dollar Amount equal to or greater than
Five Million Dollars ($5,000,000);
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(d) a Request for Revolving Credit Loan, once delivered to Agent,
shall not be revocable by Company;
(e) the sum of: (i) the Requested Amounts as of the date for the
requested Advance, plus (ii) the Usage as of the date for the
requested Advance, minus (iii) the amount of any Advances to be
refunded or converted with such Advance, shall not exceed the
Revolving Credit Commitment;
(f) in the case of a Request for Revolving Credit Loan by a Permitted
Borrower, the sum of: (i) such Permitted Borrower's Requested
Amounts as of the date for the requested Advance, plus (ii) the
Usage of such Permitted Borrower as of the date of the requested
Advance, minus (iii) the amount of any Advances to such Permitted
Borrower to be refunded or converted with such Advance, shall not
exceed the Permitted Borrower Maximum applicable to Revolving
Credit Loans for such Permitted Borrower;
(g) each Request for Revolving Credit Loan (other than one requesting
only a conversion or refunding of an existing Advance under
Section 7.3 hereof) shall constitute a certification by the
Company and (if applicable) the Permitted Borrower as of the date
thereof that all of the conditions set forth in Section 10.2
hereof are satisfied as of the date of such request and shall be
satisfied as of the date such Advance is requested.
The Agent may advance funds under the Revolving Credit Notes upon
telephone request made by any one of those officers or agents of Company or a
Permitted Borrower authorized by resolution of Company's or such Permitted
Borrower's board of directors to make such requests. Any such telephone request
shall satisfy the time requirements set forth in Section 2.3(b) above. Company
and each Permitted Borrower hereby authorizes Agent and each Bank to disburse
Revolving Credit Loans pursuant to the instructions of any officer or agent so
identified. On the same day as such telephonic request for an Advance is made,
the officer or agent requesting the Advance shall deliver a Request for
Revolving Credit Loan to Agent, executed by an authorized officer or agent of
Company and (if applicable) the Permitted Borrower and, until such Request for
Revolving Credit Loan is received by Agent, the telephone request itself shall
constitute the Company's and (if applicable) the Permitted Borrower's
certification of the matters set forth in Section 2.3(g) above.
2.4 Disbursement of Loans. Upon receiving any Request for Revolving
---------------------
Credit Loan (or telephone request) under Section 2.3 hereof, Agent shall
promptly notify each Bank by wire, telex or by telephone, including facsimile
transmission (confirmed by wire or telex) of the date for such Advance, its
Applicable Interest Rate and the amount and currency of the Advance to be made
by said Bank pursuant to its Adjusted Percentage of the Revolving Credit
Commitment. Unless the conditions for Loans are not then met each Bank shall,
not later than 2:00 p.m. (Detroit time) on the date of such Advance, make
available the amount of its Adjusted Percentage
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of the Advance in immediately available funds in the currency of the Advance to
Agent, at the office of Agent located at 500 Woodward Avenue, Detroit, Michigan.
Subject to submission of an executed Request for Revolving Credit Loan without
exceptions noted in the compliance certification therein, Agent shall make
available to Company or the applicable Permitted Borrower, not later than 4:00
p.m. (Detroit time) on such date, the aggregate of the amounts so received by it
in like funds by credit to an account of Company or the applicable Permitted
Borrower, maintained with Agent or to such other account or third party as
Company or the applicable Permitted Borrower, may direct. Unless Agent shall
have been notified by any Bank prior to the funding of any proposed Advance that
such Bank does not intend to make its Adjusted Percentage of the Advance
available, Agent may assume that such Bank has made such amount available on
such date and may, in reliance upon such assumption, make available to Company
or the applicable Permitted Borrower, a corresponding amount. If such amount is
not in fact made available to Agent by such Bank, Agent shall be entitled to
recover such amount on demand from such Bank. If such Bank does not pay such
amount forthwith upon Agent's demand therefor, the Agent shall promptly notify
Company or the applicable Permitted Borrower, and Company or the applicable
Permitted Borrower shall repay such amount to Agent. Agent shall also be
entitled to recover from such Bank or Company and such Permitted Borrower in the
currency of the Advance, as the case may be, interest on such amount in respect
of each day from the date such amount was made available by Agent to the date
such amount is recovered by Agent, at a rate per annum equal to: (i) in the case
of Company or a Permitted Borrower with respect to an Advance required pursuant
to Section 3.6 hereof, the Default Rate; (ii) in the case of a Bank with respect
to an Advance to be made pursuant to Section 3.7 hereof, the Federal Funds
Effective Rate for two (2) Business Days and thereafter the Default Rate; and
(iii) with respect to all other Advances, the Applicable Interest Rate, in the
case of Company or a Permitted Borrower, and the Federal Funds Effective Rate in
the case of a Bank. The obligation of any Bank to make any Advance shall not be
affected by the failure of any other Bank to make any Advance and no Bank shall
have any liability to Company or any Permitted Borrower, the Agent, or any other
Bank for another Bank's failure to make any Advance hereunder.
2.5 Revolving Credit Facility Fee. On each Quarterly Payment Date during
-----------------------------
the period from the Closing Date to the Revolving Credit Maturity Date, and on
the Revolving Credit Maturity Date, the Company shall pay to the Agent on behalf
of Banks, quarterly in arrears, the Revolving Credit Facility Fee in an amount
equal to the Revolving Credit Commitment, as reduced from time to time,
multiplied by the Margin in effect from time to time during such period. Upon
receipt of such payment Agent shall make prompt payment to each Bank of its
share of the Revolving Credit Facility Fee, based upon its Percentage of the
Revolving Credit Commitment in effect during the applicable period.
2.6 Optional Reduction or Termination of Revolving Credit Commitment.
----------------------------------------------------------------
Upon at least five (5) Business Days' prior written notice to the Agent, the
Company may permanently reduce the Revolving Credit Commitment, in whole or in
part, provided that:
(a) each partial reduction of the Revolving Credit Commitment shall
be in an aggregate amount equal to Five Million Dollars
($5,000,000) or an integral multiple thereof;
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<PAGE>
(b) each reduction or termination shall be accompanied by the payment
of the Revolving Credit Facility Fee accrued on the amount of the
Revolving Credit Commitment so reduced through the date of such
reduction or termination;
(c) the Revolving Credit Commitment, as so reduced, shall not be less
than the sum of undrawn face amount of outstanding Letters of
Credit plus the principal amount of Bid Loans and Swing Loans
then outstanding;
(d) the Company and Permitted Borrowers shall prepay Revolving Credit
Loans in the amount, if any, by which the Usage as of the date of
such reduction exceeds the amount of the Revolving Credit
Commitment as so reduced, together with interest thereon to the
date of prepayment and any additional amounts required thereon
pursuant to Section 8.1 hereof; and
(e) to the extent such reduction in the Revolving Credit Commitment
results from a reduction in the Revolving Credit Commitment
pursuant to Section 2.10, such reduction shall be applied on a
non-pro rata basis to reduce or terminate (as applicable) the
portion of the Revolving Credit Commitment held by the Bank or
Banks whose Percentage of Revolving Credit is being terminated.
2.7 Purpose of Revolving Credit Loans. As of the Closing Date an initial
---------------------------------
Revolving Credit Loan shall be made, and is deemed to be requested hereby, in
the amount necessary to discharge in full all revolving credit advances
outstanding as of the Closing Date under and in connection with the Prior
Agreement other than revolving credit advances outstanding thereunder as of the
Closing Date with respect to which the "Eurodollar-based Rate" (as defined in
the Prior Agreement) is applicable. Such revolving credit advances and any bid
loans outstanding under the Prior Agreement as of the Closing Date shall
continue to be held by the Banks which are party to the Prior Agreement in
accordance with their existing interests therein, and with principal and
interest payable thereon as and when provided in the Prior Agreement, until the
expiration of the then existing "Interest Periods" provided for such advances
under the Prior Agreement, whereupon they shall be paid by Company or, if
applicable, the relevant Permitted Borrower, or renewed as Advances hereunder.
Notwithstanding the foregoing sentence, however, such advances shall in all
other respects be subject to the terms of this Agreement and may be accelerated
in accordance with the terms hereof and shall constitute Usage hereunder.
Revolving Credit Loans shall be available to and used by Company and the
Permitted Borrowers for their general corporate purposes, to fund intercompany
loans and advances to Subsidiaries for the general corporate purposes of such
Subsidiaries and, subject to the requirements of Section 13.9 hereof, to finance
acquisitions by Company or its Restricted Subsidiaries of business assets for
themselves or additional Subsidiaries.
2.8 Bid Rate Loans.
--------------
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<PAGE>
(a) The Bid Rate Option. From the Closing Date to but excluding the
-------------------
Revolving Credit Maturity Date, the Company or any Permitted
Borrower may request the Banks to make offers to make Bid Loans;
provided, however; (i) that the Banks may, but shall have no
obligation to, make such offers and the Company or any Permitted
Borrower may, but shall have no obligation to, accept any such
offers; (ii) no Bid Quote Request shall be submitted within ten
(10) Business Days of the submission of any other Bid Quote
Request or the making of any Bid Loan; (iii) neither Company nor
any Permitted Borrower shall be entitled to request or receive
any Bid Loan which, when added to the aggregate principal amount
of all other Bid Loans to be outstanding on the date for which
the Advance of such Bid Loan is requested, would exceed the Bid
Loan Maximum; (iv) neither Company nor any Permitted Borrower
shall be entitled to request any Bid Loan if, upon such request,
the sum of the Requested Amounts and the Usage would exceed the
Revolving Credit Commitment, and (v) no Permitted Borrower shall
be entitled to request any Bid Loan if, upon such request, the
sum of such Permitted Borrower's Requested Amounts and its Usage
would exceed its Permitted Borrower Maximum.
(b) Bid Quote Request. When the Company or a Permitted Borrower
-----------------
wishes to request offers to make Bid Loans under this Section
2.8, it shall transmit to the Agent by telex or telecopy a Bid
Quote Request hereto no later than 10:00 a.m. (Detroit time) at
least four (4) Business Days prior to the date of the Bid Loan
request therein, specifying:
(i) the proposed date of the Bid Loan, which shall be a
Business Day;
(ii) the aggregate amount of such Bid Loan, which shall be in a
Dollar Amount of Five Million Dollars ($5,000,000) or a
larger multiple of One Million Dollars ($1,000,000);
(iii) the duration of not more than three (3) Interest Periods
for which Bid Quotes are requested; and
(iv) in the case of a Bid Quote Request for a Bid Loan bearing
interest at the Eurocurrency-based Rate, the Permitted
Currency therefor.
(c) Bid Invitation. Upon receipt of a Bid Quote Request, the Agent
--------------
shall by 3:00 p.m. (Detroit time), on the same day of Agent's
receipt of such Bid Quote Request, notify each Bank by telephone
promptly confirmed by telex or telecopy of such Bid Quote
Request, which shall constitute an invitation by the Company or
the applicable Permitted Borrower to each Bank to submit Bid
Quotes.
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<PAGE>
(d) Submission and Contents of Bid Quotes. Each Bank may submit a
-------------------------------------
Bid Quote containing an offer or offers to make Bid Loans in
response to any Bid Quote Request. Each Bid Quote (i) must be
submitted to the Agent by telex or telecopy not later than 11:30
a.m. (Detroit time) three (3) Business Days prior to the proposed
date of the Bid Loan; provided that any Bid Quote submitted by
the Agent (or any Affiliate of the Agent) in its capacity as a
Bank, shall be delivered to the Company or (if applicable) the
Permitted Borrower which issued the Bid Quote Request no later
than fifteen (15) minutes prior to the time by which the Banks
generally are required to submit Bid Quotes to Agent; and (ii)
each Bid Quote shall specify:
(A) the proposed date of the Bid Loan;
(B) the principal amount of the Bid Loan for which each
such Bid Quote is being made, which principal amount
(1) in the case of a Bid Quote for an Advance in
Dollars, must be in a minimum of Five Million Dollars
($5,000,000) or a larger multiple of One Million
Dollars ($1,000,000), (2) in the case of a Bid Quote
for an Advance in an Alternative Currency, must be in a
Dollar Amount equal to or greater than Five Million
Dollars ($5,000,000), (3) may not exceed the principal
amount of the Bid Loans for which offers were
requested, (4) may not exceed the difference between
Revolving Credit Commitment and the Usage as of such
date multiplied by such Bank's Adjusted Percentage
calculated as of the date for the Advance of the Bid
Loan, and (5) with respect to any Bid Quote made in
response to a Bid Quote Request by a Permitted
Borrower, together with all other Bid Loans outstanding
from such Permitted Borrower to such Bank, shall not
exceed the face amount of the Bid Note made by such
Permitted Borrower to such Bank;
(C) the Interest Period or Interest Periods for which each
such Bid Quote is being made;
(D) the margin above or below the Eurocurrency Rate offered
by such Bank for each such Bid Loan; and
(E) the identity of the quoting Bank.
Any Bid Quote shall be disregarded if it does not comply
with the requirements of this subsection (d), contains
qualifying, conditional or similar language, or proposes
terms other than or in addition to
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<PAGE>
those set forth in the applicable Bid Quote Request.
(e) Notice to and Acceptance. The Agent shall, by 12:30 p.m.
------------------------
(Detroit time) three (3) Business Days prior to the date of the
proposed Bid Loan, notify the Company and (if applicable) the
Permitted Borrower of the terms of any Bid Quote submitted by a
Bank in accordance with subsection (d) above and, in such notice,
shall specify (i) the aggregate principal amount of Bid Loans for
which Bid Quotes have been received, and (ii) the respective
principal amounts and Margins so offered. Not later than 1:00
p.m. (Detroit time) three (3) Business Days prior to the proposed
date for such Bid Loan, the Company or the applicable Permitted
Borrower (with the countersignature of Company) shall irrevocably
notify the Agent of its acceptance or non-acceptance of the
offers so delivered to it, by delivering to Agent a Bid
Acknowledgement provided that:
(i) the aggregate principal amount of the Bid Loans accepted
may not exceed the applicable amount set forth in the
related Bid Quote Request;
(ii) the principal amount of each Bid Loan: (a) if in Dollars,
must be Five Million Dollars ($5,000,000) or the Dollar
Amount thereof, or a larger multiple of One Million Dollars
($1,000,000), and (b) if in an Alternative Currency, must
be in a Dollar Amount equal to or greater than Five Million
Dollars ($5,000,000);
(iii) acceptance of offers may only be made on the basis of
ascending interest rates.
(f) Notice to and Funding by Banks. Agent shall: (i) by 2:00 p.m.
------------------------------
(Detroit time) three (3) Business Days prior to the date of the
proposed Bid Loan notify each Bank whose Bid Quote has been
accepted of the aggregate principal amount of offers that have
been accepted, and such Bank's share thereof, by delivering to
each such Bank a copy of the related Bid Acknowledgement; and
(ii) by 1:00 p.m. (Detroit time) two (2) Business Days prior to
the date of the proposed Bid Loan, notify Company and (if
applicable) the Permitted Borrower and each such Bank of the
Eurocurrency Rate for the Interest Period applicable to such Bid
Loan. Each such Bank shall by noon (Detroit time) on the date
for such Bid Loan, make such Bid Loan available by depositing the
proceeds thereof, in immediately available funds, in an account
maintained and designated by the Company or the applicable
Permitted Borrower at the principal office of the Agent.
(g) Allocation by Agent. If offers are made by two or more Banks
-------------------
with the same Bid Rate, for a greater aggregate principal amount
than the amount
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<PAGE>
in respect of which offers are accepted, the principal amount of
Bid Loans with respect to which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as possible (in
such multiples of One Hundred Thousand Dollars ($100,000), as the
Agent may deem appropriate) in proportion to the aggregate
principal amount of such offers. Determinations by the Agent of
the amounts of Bid Loans shall be conclusive in the absence of
manifest error.
(h) Bid Loan Records. Each Bank shall record in its records, or on a
----------------
schedule attached to its Bid Notes, the date and amount of each
Bid Loan made by such Bank, the Applicable Interest Rate with
respect thereto, each repayment thereof and the dates on which
each Interest Period for such Bid Loans shall begin and end. The
aggregate unpaid principal amount so recorded shall be conclusive
evidence of the principal amount owing and unpaid on such Bid
Notes, absent manifest error. The failure to so record any such
amount or any error in so recording any such amount shall not,
however, limit or otherwise affect the obligations of the Company
or any Permitted Borrower hereunder or under any such Bid Note.
2.9 Currency Appreciation; Reduction of Indebtedness. If at any time the
------------------------------------------------
Dollar Amount of Usage is at any time greater than one hundred five percent
(105%) of the Revolving Credit Commitment, the Company and the Permitted
Borrowers shall, immediately on demand by Agent, repay Swing Loans, Revolving
Credit Loans or Bid Loans, by an amount equal to the amount by which the Dollar
Amount of Usage exceeds the Revolving Credit Commitment.
2.10 Extensions of Revolving Credit Maturity Date.
--------------------------------------------
(a) Extension Request. Notwithstanding anything contained in this
-----------------
Agreement to the contrary, not later than four (4) years and
sixty (60) days prior to the Revolving Credit Maturity Date then
in effect, the Company may, by delivery of a duly completed
Extension Request, irrevocably request that each Bank extend the
then existing Revolving Credit Maturity Date for additional
periods of not greater than one year. Promptly upon receipt of
an Extension Request the Agent shall notify each Bank thereof, by
delivering to each Bank a copy of the Extension Request.
(b) Responses to Extension Request. Each Bank shall, within thirty
------------------------------
(30) days of receipt of an Extension Notice, notify the Agent
whether it consents to the request of the Company set forth in
such Extension Request, such consent to be in the sole discretion
of such Bank. If any Bank does not so notify the Agent of its
decision within such thirty (30) day period, such Bank shall be
deemed not to have consented to such request of the Company.
(c) Notice of Consents. The Agent shall promptly notify the Company
------------------
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<PAGE>
whether the Banks have consented to such request. If the Agent
does not so notify the Company within thirty five (35) days of
such Extension Request, the Agent shall be deemed to have
notified the Company that the Banks have not consented to the
Company's request.
(d) Non-Consenting Banks. In the event that any Bank elects not to
--------------------
extend the Revolving Credit Maturity Date, or fails to so notify
the Agent of such consent, (i) if any other Bank which agrees to
the requested extension, or any other financial institution
acceptable to the Company and the Agent offers to purchase such
non-consenting Bank's Loans, Notes and rights and obligations
hereunder, such non-consenting Bank will promptly assign, sell
and transfer all of its right, title, interest and obligations
with respect to the foregoing to such other Bank or financial
institution pursuant to Section 16.5(a) hereof, or (ii) Company
may, in accordance with the provisions of Sections 2.6 and 5.6
hereof reduce the Revolving Credit Commitment by an amount equal
to such Bank's Percentage of Revolving Credit whereupon such
nonconsenting Bank's rights and obligations to make Revolving
Credit Loans, Bid Loans, and to participate in Letter of Credit
shall be terminated.
(e) Extension Denial. In the event that any Bank fails to grant an
----------------
Extension Request requesting an extension of the Revolving Credit
Maturity Date and, on or before ten (10) days prior to the
Revolving Credit Maturity Date then in effect, (i) no Bank or
financial institution acquires the Loans, Notes and other rights
and obligations of such non-consenting Bank, and (ii) the Company
has not elected to reduce the Revolving Credit Commitment
pursuant to subsection (d)(ii) above; the Extension Request shall
be deemed to be denied.
(f) Extension Consent. In the event that either: (i) all of the
-----------------
Banks consent to the Extension Request; (ii) each Bank that did
not consent to the Extension Request is replaced pursuant to
subsection (d)(i) above, or (iii) the Revolving Credit Commitment
is reduced by an amount equal to the Percentage of Revolving
Credit of such nonconsenting Bank or Banks; the Revolving Credit
Maturity Date shall be extended to the date designated on the
Extension Request.
3. LETTERS OF CREDIT
-----------------
3.1 Letters of Credit. Subject to the terms and conditions of this
-----------------
Agreement, Issuing Banks may, at the request of Company or of a Permitted
Borrower (with the countersignature of Company) which request shall not
unreasonably be denied, at any time and from time to time from the Closing Date
until the third (3rd) Business Day prior to the Revolving Credit Maturity Date,
issue Letters of Credit for the account of Company or any Permitted Borrower, in
an aggregate amount at any one time outstanding not to exceed the Letter of
Credit Maximum. The
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Letter of Credit or Letters of Credit to be issued in support of the Permitted
Bond Financing shall provide an initial expiration date not later than three (3)
years from the date of its issuance (subject to renewals) and each other Letter
of Credit shall provide an initial expiration date not later than one (1) year
from its date of issuance (subject to renewals), and each Letter of Credit shall
provide that it is available by drafts drawn at sight and presentation of
documents, provided, that each Letter of Credit which is a standby letter of
credit shall expire not less than three (3) Business Days and each Letter of
Credit which is a trade letter of credit shall expire not less than thirty (30)
Business Days prior to the Revolving Credit Maturity Date.
3.2 Conditions to Issuance. No Letter of Credit shall be issued pursuant
----------------------
to Section 3.1 hereof unless, as of the date the issuance of such Letter of
Credit is requested:
(a) the face amount of the Letter of Credit requested, plus the
undrawn face amount of all other outstanding Letters of Credit
will not exceed the Letter of Credit Maximum;
(b) (i) the Requested Amounts, plus the Usage as of the date for the
requested issuance, will not exceed the Revolving Credit
Commitment, and (ii) with respect to any Letter of Credit
requested by a Permitted Borrower, such Permitted Borrower's
Requested Amounts, plus its Usage as of the date for the
requested issuance, shall not exceed its Permitted Borrower
Maximum;
(c) the execution of the Letter of Credit Agreement (if any) with
respect to the Letter of Credit requested will not violate the
terms and conditions of any contract, agreement or other
borrowing of Company or the applicable Permitted Borrower;
(d) Company or the applicable Permitted Borrower shall have delivered
to the relevant Issuing Bank, not less than five (5) Business
Days prior to the requested date for issuance, the Letter of
Credit Agreement related thereto (if any), together with such
other documents and materials as may be required pursuant to the
terms thereof, and the terms of the proposed Letter of Credit
shall be satisfactory to the relevant Issuing Bank;
(e) prior to the issuance of the Letter of Credit or Letters of
Credit in support of the Permitted Bond Financing, the applicable
Permitted Borrower shall have executed and delivered the Bond
Pledge Agreement to the Issuing Bank;
(f) no order, judgment or decree of any court, arbitrator or
governmental authority shall purport by its terms to enjoin or
restrain the applicable Issuing Bank from issuing the Letter of
Credit, or any Bank from taking an assignment of its interest
pursuant to Section 3.3 hereof, and no law, rule, regulation,
request or directive (whether or not having the force of law) of
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or from any governmental authority shall prohibit or request that
the applicable Issuing Bank refrain from issuing, or any Bank
refrain from taking an assignment of its interest in the Letter
of Credit requested or letters of credit generally;
(g) the relevant Issuing Bank shall have received the issuance fee
required in connection with the issuance of such Letter of Credit
pursuant to Section 3.5 hereof;
(h) all of the conditions set forth in Section 10.2 hereof are
satisfied as of the date of such request and shall be satisfied
as of the date requested for issuance of such Letter of Credit;
and
(i) in the case of a Letter of Credit issued in support of the
obligations of Company and/or ABT in connection with Permitted
Bond Financing, the Issuing Bank shall have confirmed to Agent
and the Banks that the conditions to effectiveness of the
documents and agreements governing the Permitted Bond Financing
shall be satisfied upon the issuance of such Letter of Credit.
Each Letter of Credit Agreement submitted to Agent pursuant hereto shall
constitute the certification by Company and (if applicable) the relevant
Permitted Borrower of the matters set forth in this Section 3.2(a) through (i).
3.3 Participations in Letters of Credit. Immediately upon the issuance of
-----------------------------------
any Letter of Credit, each Bank shall be deemed to have, without further action
on the part of the relevant Issuing Bank, Agent or any Bank, irrevocably and
unconditionally purchased and received, without recourse or warranty, a
participation in and assignment of the Issuing Bank's engagement under such
Letter of Credit in an amount equal to each such Bank's then Adjusted Percentage
of the face amount of such Letter of Credit, and Banks hereby absolutely and
unconditionally assume, as primary obligors and not sureties, and
unconditionally agree to pay and discharge when due in accordance with the terms
hereof, their respective Adjusted Percentages of the Letter of Credit Payments
under such Letters of Credit. Each Issuing Bank shall within one month of
issuance of any Letter of Credit deliver to each Bank a Letter of Credit Notice
with respect to the issuance of each Letter of Credit issued by it, specifying
the amount thereof and each Bank's Adjusted Percentage thereof as of the date of
such issuance.
3.4 Letter of Credit Fees. Company and each Permitted Borrower agrees to
---------------------
pay to Agent, for the accounts of the Banks, Letter of Credit Fees with respect
to the undrawn face amount of their respective Letters of Credit issued pursuant
hereto at a per annum rate equal to the Margin applicable for Letters of Credit.
Such fees shall be payable on each Quarterly Payment Date and shall be assessed
for the actual number of days elapsed from the date of issuance of the Letter of
Credit until its expiration and shall be payable (i) quarterly in advance in the
case of fees payable with respect to the Letter of Credit issued in support of
the Permitted Bond Financing and (ii) quarterly in arrears in each other case.
Upon receipt of such payment,
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Agent shall make prompt payment to each Bank of its share of the Letter of
Credit Fees, based upon the Adjusted Percentage interests of each such Bank in
the Letters of Credit to which such Letters of Credit Fees relate.
For the purpose of calculation of such Letter of Credit Fees, Agent
shall, as of each Quarterly Payment Date, calculate the Dollar Amount equivalent
to the face amounts of Letters of Credit denominated in Alternative Currencies
and, until the next succeeding quarterly calculation of such Dollar Amount, such
Letter of Credit Fees shall be assessed on the basis of such calculation.
3.5 Issuance Fees. In connection with the Letters of Credit, the Company
-------------
and applicable Permitted Borrowers will pay, for the sole accounts of the
relevant Issuing Bank, letter of credit issuance fees and standard
administration, payment and cancellation charges assessed by such Issuing Bank,
at the times, in the amounts and on the terms separately agreed upon (or to be
separately agreed upon from time to time) between such Issuing Bank and Company
or the applicable Permitted Borrower.
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3.6 Draws Under Letters of Credit.
-----------------------------
(a) Upon receipt of any draw (or, in the case of the Letter of Credit
related to the Permitted Bond Financing, receipt of notice of a
draw from the trustee for the bondholders under the Permitted
Bond Financing) against a Letter of Credit, the relevant Issuing
Bank shall promptly notify Company and (if applicable) the
relevant Permitted Borrower of the amount of such draw and the
date for payment of such draw; provided, however, that in the
case of the Letter of Credit or Letters of Credit issued in
support of the Permitted Bond Financing, any notice of drawing
delivered to Company or ABT by the trustee for the bondholders
thereunder shall constitute the Issuing Bank's notice of such
drawing. The Company and each Permitted Borrower hereby agree to
deposit with the relevant Issuing Bank, on the first Business Day
subsequent to such notice, funds sufficient to pay all Letter of
Credit Obligations with respect to such draws. So long as all of
the conditions set forth in Sections 2.3 and 10.2 hereof are
complied with, Company and the Permitted Borrowers shall be
entitled to fund such deposit with proceeds of an Advance
requested in accordance with Section 2.3 hereof. In the event
that sufficient funds are not so deposited on or before the date
for payment of a draw, the relevant Issuing Bank shall so notify
Agent and Agent shall so notify Banks and, immediately upon the
Issuing Bank's payment under any Letter of Credit and for all
purposes of this Agreement and the Documents, the amount paid as
a result of such draw: (i) notwithstanding anything to the
contrary set forth in or required under Section 2.3 hereof, shall
constitute an advance of a Revolving Credit Loan made by Banks in
accordance with the Adjusted Percentages in effect on such date,
whether or not the Company or the relevant Permitted Borrower is
then entitled to request Advances under this Agreement or is in
default hereunder or otherwise (and the Company and the Permitted
Borrowers shall not be entitled to refuse any such Advance); (ii)
shall be evidenced by the Revolving Credit Notes of Company or
the Permitted Borrower to whom such Letter of Credit relates;
(iii) shall bear interest at the Default Rate until repaid; and
(iv) shall be due and payable on demand.
(b) Any amounts so paid by an Issuing Bank pursuant to a draft
against any Letter of Credit (regardless of whether it is
considered to be an Advance), with interest thereon as aforesaid,
shall be considered to be a Revolving Credit Loan for all
purposes of this Agreement and the Documents, and shall be
covered thereby to the full extent thereof.
(c) In the event that Company or any Permitted Borrower fails to
deposit with an Issuing Bank funds sufficient to pay Letter of
Credit Obligations with respect to any draw (whether through an
Advance requested pursuant to Section 2.3 or otherwise) on a
timely basis, from the date of the Issuing Bank's notice to Agent
of its payment on such draw until such Letter of
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Credit Obligations resulting from such draw shall have been paid,
neither Company nor any Permitted Borrower shall be entitled to
request or receive any direct Advance under Revolving Credit
Notes or to request or receive any other Loans or the issuance of
Letters of Credit hereunder.
3.7 Funding of Letter of Credit Payment as Advance. By or before 11:30
----------------------------------------------
a.m. (Detroit Time) on the date for payment of any draw on any Letter of Credit,
the relevant Issuing Bank shall notify Agent and Agent shall promptly notify
each Bank by wire, telex or by telephone (confirmed by wire, telecopy or telex)
of the amount of such draw (providing each Bank with a copy of the draft and
accompanying certificate), and, if applicable, the amount of resulting Advances
to be made pursuant to Section 3.6(a) hereof. If such an Advance is required
pursuant to Section 3.6(a) hereof, each Bank hereby irrevocably and
unconditionally agrees to make available the amount of its Adjusted Percentage
of such Advance in immediately available funds in Dollars to Agent, at the
office of Agent located at 500 Woodward Avenue, Detroit, Michigan, no later than
2:00 p.m. (Detroit time) on the date the Letter of Credit Payments are to be
made in connection with such draw and Agent shall promptly deliver to the
relevant Issuing Bank in like funds, all amounts so made available to it. In
the event such draw is not considered to be or is subsequently determined not to
constitute an Advance hereunder, each Bank shall nevertheless be obligated to
purchase from the Issuing Bank a participation interest in its Adjusted
Percentage of the draw, for an amount equal to its Adjusted Percentage thereof.
If such amount is not in fact made available by such Bank, as aforesaid, the
Issuing Bank shall be entitled to recover such amount on demand from such Bank.
If such Bank does not pay such amount forthwith upon the Issuing Bank's demand
therefor, the Issuing Bank shall promptly notify Company or the relevant
Permitted Borrower and Company or such Permitted Borrower shall immediately
repay such amount. The Issuing Bank shall also be entitled to recover from such
Bank, Company or the relevant Permitted Borrower, as the case may be, interest
on such amount in respect of each day from the date such amount was paid by the
Issuing Bank pursuant to the draft related thereto, at a rate per annum equal
to: (i) in the case of Company or a Permitted Borrower, the Default Rate; and
(ii) in the case of a Bank, the Federal Funds Effective Rate until two (2)
Business Days after such amount was paid by the Issuing Bank and thereafter, the
Default Rate determined in accordance with clause (a)(ii) of the definition
thereof. The obligation of any Bank to make any Advance hereunder shall not be
affected by the failure of any other Bank to make any Advance hereunder, or to
fund its Adjusted Percentage of any Letter of Credit Payment, as the case may
be, and no Bank shall have any liability to Company, any Permitted Borrower, the
Agent, the Issuing Bank or any other Bank for another Bank's failure to make any
such Advance hereunder, or to fund the Adjusted Percentage of any other Bank.
3.8 Obligations Irrevocable. The obligations of Company and the Permitted
-----------------------
Borrowers to make payments to Issuing Banks with respect to Letter of Credit
Obligations under Section 3.6 hereof, and the obligations of Banks to make
Advances with respect to and purchase interests in, Letter of Credit Payments
pursuant to Section 3.7 hereof, shall be irrevocable and not subject to any
qualification or exception whatsoever, including:
(a) invalidity or unenforceability of this Agreement or any other
Documents or any portions hereof or thereof;
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(b) the existence of any claim, set-off, defense or other right which
Company or any Permitted Borrower or any Bank may have against a
beneficiary named in a Letter of Credit, Agent, the Issuing Bank,
any Bank or any other Person;
(c) any draft, certificate or any other document presented in
connection with a Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(d) the occurrence of any Default or Event of Default;
(e) payment by the Issuing Bank (other than as a result of its gross
negligence or willful misconduct) under any Letter of Credit
against presentation of a draft or accompanying certificate which
does not comply with the terms of the Letter of Credit;
(f) any failure, omission, delay or lack on the part of Agent, the
Issuing Bank or any party to this Agreement or any of the
Documents to enforce, assert or exercise any right, power or
remedy conferred upon Agent, the Issuing Bank or any such party
under this Agreement or any Documents, or any other acts or
omissions on the part of the Agent, the Issuing Bank or any such
party;
(g) the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all the assets of the
Company, any Permitted Borrower and/or the Subsidiaries; the
receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangements, composition with
creditors or readjustment or other similar proceedings affecting
the Company and/or the Subsidiaries, or any of their respective
assets, or any allegation or contest of the validity of this
Agreement or any of the Documents, in any such proceedings; and
(h) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, and any other event or action
that would, in the absence of this clause, result in the release
or discharge by operation of law of the Company or any Permitted
Borrower from the performance or observance of any obligation,
covenant or agreement contained in this Agreement or any of the
Documents.
3.9 Risk Under Letters of Credit.
----------------------------
(a) In assigning and handling of Letters of Credit and any security
therefor, or any documents or instruments given in connection
therewith, the Issuing
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Banks shall (as among the Issuing Banks and the Banks) have the
sole right to take or refrain from taking any and all actions
under or upon their respective Letters of Credit; provided,
however, that without the prior written concurrence of the Banks,
the Issuing Banks shall not: (i) amend, modify, terminate or
release any of the obligations of Company or any Permitted
Borrower respecting Letters of Credit or under any of said
documents or instruments or any security interest, mortgage or
guaranty given with respect thereto except releases of bonds
which are remarketed pursuant to and as provided in the Bond
Pledge Agreement; (ii) compromise any claim or waive any right or
privilege against Company or any Permitted Borrower; or (iii)
settle any litigation respecting any Letter of Credit or any of
said documents and instruments.
(b) Subject to other terms and conditions of this Agreement, each
Issuing Bank shall hold the Letter of Credit Agreements and the
documents related thereto in its own name and shall make all
collections thereunder and otherwise administer the Letters of
Credit in accordance with its regularly established practices and
procedures and the Issuing Banks will have no further obligation
with respect thereto. In the administration of Letters of
Credit, the Issuing Banks shall not be liable (except for the
consequences solely resulting from its own willful misconduct or
gross negligence) for any action taken or omitted, and shall be
entitled at all times to rely upon on the advice of counsel,
accountants, appraisers and other experts selected by them and
may rely upon any notice, communication, certificate or other
statement from Company or any Permitted Borrower, beneficiaries
of Letters of Credit, or any other Person which such Issuing Bank
believes to be authentic. Each Issuing Bank will, upon request,
furnish the Banks with copies of their respective Letter of
Credit Agreements, Letters of Credit and documents related
thereto.
(c) In connection with the issuance and administration of Letters of
Credit and the assignments hereunder, the Issuing Banks make no
representation and shall have no responsibilities with respect
to: (i) the obligations of Company or any Permitted Borrower or,
the validity, sufficiency or enforceability of any document or
instrument given in connection therewith, or the taking of any
action with respect to same; (ii) the financial condition of, any
representations made by, or any act or omission of Company or any
Permitted Borrower or any other Person; or (iii) any failure or
delay in exercising any rights or powers possessed by the Issuing
Bank in its capacity as issuer of Letters of Credit.
(d) If at any time Agent or an Issuing Bank shall recover any part of
any unreimbursed amount for any Letter of Credit Obligation, or
any interest thereon, they shall receive same for the pro rata
benefit of the Banks in accordance with their respective Adjusted
Percentage interests therein and
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shall promptly deliver to each Bank its share thereof, less
Bank's pro rata share of the costs of such recovery, including
court costs and reasonable attorney's fees. If at any time any
Bank shall receive from any source whatsoever any payment on any
such unreimbursed amount or interest thereon in excess of such
Bank's share of such payment, such Bank will promptly pay over
such excess to Agent for redistribution in accordance with this
Agreement.
3.10 Indemnification. The Company and each Permitted Borrower hereby
---------------
indemnifies and holds Agent, each Issuing Bank and each of the Banks harmless
from and against any and all claims, damages, losses, liabilities, costs or
expenses whatsoever which any such party may incur (or which may be claimed
against any such party by any person) by reason of or in connection with the
execution and delivery or transfer of, or payment or failure to pay under, any
Letter of Credit; provided, however, that the Company and the Permitted
Borrowers shall not be required to indemnify Agent, the Issuing Banks or the
Banks pursuant to this Section 3.10 for claims, damages, losses, liabilities,
costs or expenses to the extent, but only to the extent, caused by the willful
and wrongful failure or willful and wrongful misconduct or gross negligence of
the Agent the relevant Issuing Bank or such Bank. Nothing in this Section 3.10
is intended nor shall be deemed to limit, reduce or otherwise affect in any
manner whatsoever the reimbursement obligation of Company or any Permitted
Borrower contained in Section 3.6 hereof.
3.11 Right of Reimbursement. Each Bank agrees to reimburse the Agent and
----------------------
the Issuing Banks on demand, pro rata in accordance their Percentages, for: (i)
the out-of-pocket costs and expenses of the Agent or the Issuing Bank to be
reimbursed by Company or a Permitted Borrower pursuant to any Letter of Credit
Agreement or any Letter of Credit, to the extent not reimbursed by Company or a
Permitted Borrower; and (ii) any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, fees, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against an Issuing Bank in its capacity as issuer of any
Letter of Credit in any way relating to or arising out of this Agreement, any
Letter of Credit, any Letter of Credit Agreement, except to the extent that such
liabilities, losses, costs or expenses were incurred by the Issuing Bank as a
result of its gross negligence or willful misconduct.
4. THE INDEBTEDNESS: SWING LOAN
----------------------------
4.1 Swing Loan. Subject to the terms and conditions of this Agreement,
----------
Agent agrees to lend to Company, in Dollars, at any time from the Closing until
the Revolving Credit Maturity Date, Swing Loans in aggregate principal amount
outstanding from time to time not to exceed the Swing Loan Commitment. All of
the Loans under this Section 4.1 shall be evidenced by the Swing Loan Note under
which advances, repayments and readvances may be made, subject to the terms of
this Agreement.
4.2 Type of Loan and Maturity. The Swing Loan Note, and all principal and
-------------------------
interest outstanding thereunder, shall mature and become due and payable on the
Revolving Credit Maturity Date. Each Swing Loan from time-to-time outstanding
hereunder shall bear interest
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<PAGE>
either at its Swing Loan Quoted Rate (if offered by Agent and accepted by
Company) or the Prime-based Rate. The amount and date of each Swing Loan, its
Applicable Interest Rate, and the date and amount of any repayment shall be
noted on Agent's records, which records shall be presumed correct absent
manifest error.
4.3 Requests for Swing Loans. Company may request Swing Loans by delivery
------------------------
to Agent of a Request for Swing Loan executed by an authorized officer of
Company and subject to the following:
(a) each such Request for Swing Loan shall set forth all other
information required on the Request for Swing Loan form
including, in the case of any Advance at a Swing Loan Quoted
Rate, the interest rate and Interest Period quoted by Agent to
Company with respect thereto;
(b) each such Request for Swing Loan shall be delivered to Agent by
10:00 a.m. (Detroit time) on such proposed date;
(c) the principal amount of such Advance shall be at least Two
Hundred Fifty Thousand Dollars ($250,000), or a greater integral
multiple of Fifty Thousand Dollars ($50,000);
(d) a Request for Swing Loan, once delivered to Agent, shall not be
revocable by Company;
(e) the sum of: (i) the Requested Amounts as of the date for the
requested Advance, plus (ii) the Usage as of the date for the
requested Advance, minus (iii) the amount of any Advances to be
refunded or converted with such Advance, shall not exceed the
Revolving Credit Commitment;
(f) the sum of: (i) the Advance requested, and (ii) the principal
amount of all other Swing Loans then outstanding, shall not
exceed the Swing Loan Commitment then in effect;
(g) each Request for Swing Loan shall constitute a certification by
the Company as of the date thereof that all of the conditions set
forth in Section 10.2 hereof are satisfied as of the date of such
request and shall be satisfied as of the date such Advance is
requested;
4.4 Disbursement of Swing Loans. The Agent may advance funds under the
---------------------------
Swing Notes upon telephone request made by any one of those officers or agents
of Company authorized by resolution of Company's board of directors to make such
requests. Any such telephone request shall satisfy the time requirements set
forth in Section 4.2 above. Company hereby authorizes Agent to disburse Swing
Loans pursuant to the instructions of any officer or agent so identified. On the
same day as such telephonic request for an Advance is made, the officer or agent
requesting the Advance shall deliver a Request for Swing Loan to Agent, executed
by an
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<PAGE>
authorized officer or agent of Company and, until such Request for Swing Loan is
received by Agent, the telephone request itself shall constitute the Company's
certification of the matters set forth in Section 4.2(g).
4.5 Swing Loan Refunding.
--------------------
(i) The Agent may at any time in its sole and absolute discretion
and shall, in the case of any Swing Loan that is outstanding in excess of thirty
(30) days, require that any Swing Loan be refunded by a Revolving Credit Loan
which is a Prime-based Loan, and upon notice thereof by the Agent to the Company
and the Banks, the Company shall be deemed to have requested a Revolving Credit
Loan bearing interest at the Prime-based Rate in an amount equal to the amount
of any such Swing Loan, and such Revolving Credit Loan shall be made to refund
such Swing Loan. Such Revolving Credit Loan shall be disbursed, and each Bank
shall make its Adjusted Percentage thereof available, notwithstanding any
failure to satisfy any conditions for disbursement of any Loan set forth in
Section 10.2 hereof or any other condition; provided, however, that such
-----------------
disbursement: (A) shall not be deemed to be a waiver of any Event of Default or
Default, if any, and (B) shall be made by each Bank on the Business Day after
such notice is made to the Bank. If for any reason (including without
limitation as a result of the occurrence of a bankruptcy filing), Revolving
Credit Loans may not be made and the Agent is then requiring that any Swing Loan
be refunded by a Revolving Credit Loan, effective on the date each Revolving
Credit Loan would otherwise have been made under this Section 4.4, each Bank
severally agrees that it shall unconditionally and irrevocably, without regard
to the occurrence of any Default or Event of Default, in lieu of a disbursement
of any Revolving Credit Loan, to the extent of such Bank's Adjusted Percentage
interest in the Revolving Credit Commitment, purchase a participation interest
in such Swing Loan. Upon any receipt of payments of principal and interest on
the Swing Loan subsequent to the Banks' purchase of participating interests
pursuant to the foregoing sentence, Agent shall make prompt payment to each Bank
of its share thereof, based upon the prorated participating interests purchased
in such Swing Loans.
(ii) Each Bank's obligation to comply with the terms of this Section
4.4, shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any set-off, counterclaim,
recoupment, defense or other right which such Bank or the Borrower may have
against the Agent, the Borrower or any other Person for any reason whatsoever;
(ii) the occurrence or continuance of a Default or an Event of Default; (iii)
any adverse change in the condition (financial or otherwise) of Company; (iv)
any breach of this Agreement by Company, any Permitted Borrower or any other
Bank; or (v) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing.
5. THE INDEBTEDNESS: LINE OF CREDIT LOANS
--------------------------------------
5.1 Line of Credit Commitment. Subject to the terms and conditions of
-------------------------
this Agreement, each Bank severally agrees to lend to Company in Dollars, at any
time and from time to time from the Closing Date until the Line of Credit
Maturity Date, and Company may borrow, repay and reborrow sums not to exceed, in
aggregate amount at any time outstanding, such Bank's respective Percentage of
Line of Credit Commitment in effect from time to time. All of
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the Loans under this Section 5 shall be evidenced by Line of Credit Notes
under which advances, repayments, and readvances may be made, subject to the
terms and conditions of this Agreement.
5.2 Type of Loan and Maturity. The Line of Credit Notes, and all
-------------------------
principal and interest then outstanding thereunder, shall mature and become due
and payable in full on the Line of Credit Maturity Date. Each Line of Credit
Loan from time to time outstanding hereunder shall be either a Prime-based Loan
or a Eurocurrency-based Loan as the Company may elect or as otherwise applicable
pursuant to the provisions hereof. The amount and date of each Line of Credit
Loan, its Applicable Interest Rate, its Interest Period, and the amount and date
of any repayment shall be noted on Agent's records, which records will be
presumed correct absent manifest error.
5.3 Requests for Line of Credit Loans. Company may request a Line of
---------------------------------
Credit Loan by delivery to Agent of a Request for Line of Credit Loan executed
by an authorized officer of Company and subject to the following:
(a) each such Request for Line of Credit Loan shall set forth the
information required on the Request for Line of Credit Loan form;
(b) each such Request for Line of Credit Loan shall be delivered to
Agent by 10:00 a.m. (Detroit time) three (3) Business Days prior
to the proposed date of Loan, except in the case of a Prime-based
Loan, for which the Request for Line of Credit Loan must be
delivered by 10:00 a.m. (Detroit time) on such proposed date;
(c) the principal amount of such Advance, plus the amount of any
outstanding Advance under the Line of Credit Notes having the
same Applicable Interest Rate and Interest Period shall be at
least: (i) in the case of a Prime-based Loan, Two Million Dollars
($2,000,000), or a greater integral multiple of One Hundred
Thousand Dollars ($100,000); (ii) in the case of a Eurocurrency-
based Loan, Five Million Dollars ($5,000,000) or a greater
integral multiple of One Hundred Thousand Dollars ($100,000);
(d) a Request for Line of Credit Loan, once delivered to Agent, shall
not be revocable by Company;
(e) the sum of: (i) the principal amount of the requested Advance,
plus (ii) the Line of Credit Loans outstanding as of the date for
the requested Advance, minus (iii) the amount of any Advances to
be refunded or converted with such Advance, shall not exceed the
Line of Credit Commitment;
(f) each Request for Line of Credit Loan shall constitute a
certification by the Company as of the date thereof that all of
the conditions set forth in Section 10.2 hereof are satisfied as
of the date of such request and shall be satisfied as of the date
such Advance is requested.
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The Agent may advance funds under the Line of Credit Notes upon telephone
request made by any one of those officers or agents of Company authorized by
resolution of Company's board of directors to make such requests. Any such
telephone request shall satisfy the time requirements set forth in Section
5.3(b) above. Company hereby authorizes Agent and each Bank to disburse Line of
Credit Loans pursuant to the instructions of any officer or agent so identified.
On the same day as such telephonic request for an Advance is made, the officer
or agent requesting the Advance shall deliver a Request for Line of Credit Loan
to Agent, executed by an authorized officer or agent of Company and, until such
Request for Line of Credit Loan is received by Agent, the telephone request
itself shall constitute the Company's certification of the matters set forth in
Section 5.3(f) above.
5.4 Disbursement of Loans. Upon receiving any Request for Line of Credit
---------------------
Loan (or telephone request) under Section 5.3 hereof, Agent shall promptly
notify each Bank by wire, telex or by telephone, including facsimile
transmission (confirmed by wire or telex) of the date for such Advance, its
Applicable Interest Rate and the amount and currency of the Advance to be made
by said Bank pursuant to its Percentage of the Line of Credit Commitment.
Unless the conditions for Loans are not then met each Bank shall, not later than
2:00 p.m. (Detroit time) on the date of such Advance, make available the amount
of its Percentage of the Advance in immediately available funds in the currency
of the Advance to Agent, at the office of Agent located at 500 Woodward Avenue,
Detroit, Michigan. Subject to submission of an executed Request for Line of
Credit Loan without exceptions noted in the compliance certification therein,
Agent shall make available to Company not later than 4:00 p.m. (Detroit time) on
such date, the aggregate of the amounts so received by it in like funds by
credit to an account of Company, maintained with Agent or to such other account
or third party as Company may direct. Unless Agent shall have been notified by
any Bank prior to the funding of any proposed Advance that such Bank does not
intend to make its Percentage of the Advance available, Agent may assume that
such Bank has made such amount available on such date and may, in reliance upon
such assumption, make available to Company a corresponding amount. If such
amount is not in fact made available to Agent by such Bank, Agent shall be
entitled to recover such amount on demand from such Bank. If such Bank does not
pay such amount forthwith upon Agent's demand therefor, the Agent shall promptly
notify Company, and Company shall repay such amount to Agent. Agent shall also
be entitled to recover from such Bank or Company, in Dollars interest on such
amount in respect of each day from the date such amount was made available by
Agent to the date such amount is recovered by Agent, at a rate per annum equal
to the Applicable Interest Rate, in the case of Company, and the Federal Funds
Effective Rate in the case of a Bank. The obligation of any Bank to make any
Advance shall not be affected by the failure of any other Bank to make any
Advance and no Bank shall have any liability to Company, the Agent, or any other
Bank for another Bank's failure to make any Advance hereunder.
5.5 Line of Credit Facility Fee. On each Quarterly Payment Date during
---------------------------
the period from the Closing Date to the Line of Credit Maturity Date, and on the
Line of Credit Maturity Date, the Company shall pay to the Agent on behalf of
Banks, quarterly in arrears, the Line of Credit Facility Fee in an amount equal
to Line of Credit Commitment multiplied by the Margin in effect from time to
time during such period. Upon receipt of such payment Agent shall make
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prompt payment to each Bank of its share of the Line of Credit Facility Fee,
based upon its Percentage of the Line of Credit Commitment in effect during the
applicable period.
5.6 Optional Reduction or Termination of Line of Credit Commitment. Upon
--------------------------------------------------------------
at least five (5) Business Days' prior written notice to the Agent, the Company
may permanently reduce the Line of Credit Commitment, in whole or in part,
provided that:
(a) each partial reduction of the Line of Credit Commitment shall be
in an aggregate amount equal to Five Million Dollars ($5,000,000)
or an integral multiple thereof.
(b) each reduction or termination shall be accompanied by the payment
of the Line of Credit Facility Fee accrued on the amount of the
Line of Credit Commitment so reduced through the date of such
reduction or termination;
(c) the Company shall prepay Line of Credit Loans in the amount, if
any, by which the Line of Credit Loans as of the date of such
reduction exceed the amount of the Line of Credit Commitment as
so reduced, together with interest thereon to the date of
prepayment and any additional amounts required thereon pursuant
to Section 8.1 hereof;
(d) the Line of Credit Commitment, as so reduced, shall not be less
than the sum of Line of Credit Loans then outstanding; and
(e) to the extent such reduction in the Line of Credit Commitment
results from a reduction in the Line of Credit Commitment
pursuant to Section 5.8 hereof, such reduction shall be applied
on non-prorata basis to reduce or terminate (as applicable) the
portion of the Line of Credit Commitment held by the Bank or
Banks whose Percentage of Line of Credit is being terminated.
5.7 Purpose of Line Credit Loans. Line of Credit Loans shall be available
----------------------------
to and used by Company for its general corporate purposes, and to fund
intercompany loans and advances to Subsidiaries for the general corporate
purposes of such Subsidiaries.
5.8 Extensions of Line of Credit Maturity Date.
-------------------------------------------
(a) Extension Request. Notwithstanding anything contained in this
-----------------
Agreement to the contrary, not later than sixty (60) days prior
to the Line of Credit Maturity Date then in effect, the Company
may, by delivery of a duly completed Extension Request,
irrevocably request that each Bank extend the then existing Line
of Credit Maturity Date for additional periods of not greater
than three hundred sixty four (364) days. Promptly upon receipt
of an Extension Request the Agent shall notify each Bank thereof,
by delivering to each Bank a copy of the Extension Request.
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(b) Responses to Extension Request. Each Bank shall, within thirty
------------------------------
(30) days of receipt of an Extension Notice, notify the Agent
whether it consents to the request of the Company set forth in
such Extension Request, such consent to be in the sole discretion
of such Bank. If any Bank does not so notify the Agent of its
decision within such thirty (30) day period, such Bank shall be
deemed not to have consented to such request of the Company.
(c) Notice of Consents. The Agent shall promptly notify the Company
------------------
whether the Banks have consented to such request. If the Agent
does not so notify the Company within thirty five (35) days of
such Extension Request, the Agent shall be deemed to have
notified the Company that the Banks have not consented to the
Company's request.
(d) Non-Consenting Banks. In the event that any Bank elects not to
--------------------
extend the Line of Credit Maturity Date or fails to so notify the
Agent of such consent, (i) if any other Bank which agrees to the
requested extension, or any other financial institution
acceptable to the Company and the Agent offers to purchase such
non-consenting Bank's Loans, Notes and rights and obligations
hereunder, such non-consenting Bank will promptly assign, sell
and transfer all of its right, title, interest and obligations
with respect to the foregoing to such other Bank or financial
institution pursuant to Section 16.5(a) hereof, or (ii) Company
may, in accordance with the provisions of Sections 2.6 and 5.6
hereof reduce the Line of Credit Commitment by an amount equal to
such nonconsenting Bank's Percentage of Line of Credit whereupon
such nonconsenting Bank's rights and obligations to make Line of
Credit Loans shall be terminated.
(e) Extension Denial. In the event that any Bank fails to grant an
----------------
Extension Request and, on or before ten (10) days prior to the
Line of Credit Maturity Date (i) no Bank or financial institution
acquires the Loans, Notes and other rights and obligations of
such non-consenting Bank, and (ii) the Company has not elected to
reduce the Line of Credit Commitment pursuant to subsection
(d)(ii) above; the Extension Request shall be deemed to be
denied.
(f) Extension Consent. In the event that: (a) either (i) all of the
-----------------
Banks consent to the Extension Request; (ii) each Bank that did
not consent to the Extension Request is replaced pursuant to
subsection (d)(i) above, or (iii) the Line of Credit Commitment
is reduced by amounts equal to the Percentage of Line of Credit
of such nonconsenting Bank or Banks; and (b) none of the Banks
which have consented to the extension or the Line of Credit
Maturity Date withdraw their consent prior to the Line of Credit
Maturity Date then in effect, the Line of Credit Maturity Date
shall be
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<PAGE>
extended effective upon the Line of Credit Maturity Date then in
effect to the date designated on the Extension Request.
6. TERM LOAN
---------
6.1 Term Loan Repayment. The Term Loan shall be repaid in accordance with
-------------------
the terms of the Term Notes in quarterly principal installments equal to the
Term Installment Amount commencing June 30, 1997 and continuing on each
Quarterly Payment Date thereafter until the Term Loan Maturity Date, when the
entire unpaid principal balance of the Term Loan, and all accrued and unpaid
interest thereon, shall be due and payable in full. Interest on the Term Loan
shall accrue at the Applicable Interest Rate for the Term Loan and shall be
payable on each Quarterly Payment Date hereafter until the Term Loan is paid in
full. Amounts paid or prepaid on the Term Loan shall not be available for
readvance hereunder.
7. INTEREST, FEE AND INTEREST CALCULATION, INTEREST PERIODS, CONVERSIONS,
PREPAYMENTS
----------------------------------------------------------------------
7.1 Interest. The Notes and the Loans hereunder shall bear interest from
--------
the date thereof on the unpaid principal balance thereof from time to time
outstanding, at the Applicable Interest Rates, as selected by Company or (as
applicable) the Permitted Borrowers or as otherwise applicable pursuant to the
provisions of this Agreement from time to time, provided, however, that in no
event shall any Bank's Notes or Loans bear interest at a rate greater than its
Highest Lawful Rate. Interest with respect to each type of Loan shall be
payable on the last day of each Interest Period applicable thereto, provided
however, that if such Interest Period is longer than three (3) months, interest
shall also be payable three (3) months following the first day of such Interest
Period. Notwithstanding the foregoing, in the event and so long as an Event of
Default of the type described in Section 14.1(a) or (b) hereof shall exist, or
in the event that indebtedness hereunder shall be accelerated as the result of
an Event of Default, all principal outstanding under the Notes shall bear
interest, payable on demand, from the date of such Event of Default or
acceleration at a rate per annum equal to the Default Rate, provided, however,
that in no event shall any Bank's Notes, Loans or other Indebtedness bear
interest at a rate greater than the Highest Lawful Rate applicable to such Bank.
7.2 Calculations. Fees and interest on all Loans shall be calculated on
------------
the basis of a 360 day year for the actual number of days elapsed in the period
for determination thereof. The rates at which Fees accrue shall change on the
effective date of any adjustment of the relevant Margins. Additionally, the
interest rate with respect to any Prime-based Loan shall change on the effective
date of any change in the Prime Rate or Alternate Base Rate (as applicable).
7.3 Conversion and Renewal of Loans. Providing that no Event of Default
-------------------------------
shall have occurred and be continuing, each outstanding Advance (other than of
the Term Loan) will be either paid or renewed or converted into another Advance,
in each case as of the last day of its Interest Period for the Advance being
paid, renewed or converted; provided that any conversion of a Eurocurrency-based
Loan, Bid Loan or Swing Loan bearing interest at a Swing Loan Quoted Rate shall
be made only on the last Business Day of the Interest Period applicable thereto
or (if
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<PAGE>
made on other than the last day thereof) together with the payment of any
additional amounts required under Section 8.1 hereof, and each conversion of an
Advance made in an Alternative Currency shall be made with a new advance in the
same Alternative Currency. Eurocurrency-based Rates may be selected only for
portions of Loans which are in amounts which meet the requirements of Section
2.3(c), in the case of Revolving Credit Loans, and Section 5.3(c), in the case
of Line of Credit Loans. The Company and the applicable Permitted Borrowers may
select the Applicable Interest Rate and Interest Periods for such renewals and
conversions by giving the Agent not less than three (3) Business Days' prior
notice in the manner provided in Section 2.3 hereof (in the case of a renewal or
conversion of a Revolving Credit Loan) or Section 5.3 hereof (in the case of a
renewal or conversion of a Line of Credit Loan), specifying the date of such
renewal or conversion, the Advances to be converted, the type of Advance elected
and, the duration of the Interest Period therefor. For each renewal or
conversion of a Revolving Credit Loan or Line of Credit Loan, the Agent shall
promptly notify each Bank of each such request by wire, telex or telephone
(including facsimile transmission, confirmed by wire or telex) specifying the
date of such renewal or conversion, the Advance to be converted, the type of
Advance elected, the Applicable Interest Rate, the duration of the Interest
Period therefor and each Bank's Adjusted Percentage (if the notice is related to
a Revolving Credit Loan) or Percentage (if the notice is related to a Line of
Credit Loan) thereof. If with respect to any Advance outstanding at any time,
the Agent does not receive notice of the election three (3) or more Business
Days prior to the last day of the Interest Period therefor if such Advance is a
Revolving Credit Loan, Line of Credit Loan or Swing Loan, Company and (if
applicable) the relevant Permitted Borrower shall be deemed to have elected to
convert such Advance to a Prime-based Loan at the end of the then current
Interest Period.
7.4 Prepayments.
-----------
(a) Upon not less than two (2) Business Days' prior written or
telephonic notice to the Agent (or three (3) Business Days prior
written notice in the case of prepayment of an Advance
denominated in an Alternative Currency), the Company and the
Permitted Borrowers may prepay Revolving Credit Loans, Line of
Credit Loans, Swing Loans and Bid Loans in whole at any time or
in part from time to time, without premium or penalty but with
accrued interest on the principal being prepaid to the date of
such prepayment, provided that: (i) each partial prepayment shall
be in an amount not less than Five Hundred Thousand Dollars
($500,000) or greater integral multiple of One Hundred Thousand
Dollars ($100,000), (ii) in the case of any Advance bearing
interest at a Eurodollar-based Rate, any Bid Loan or any Advance
bearing interest at Swing Loan Quoted Rate, such prepayment may
only be on the last Business Day of the Interest Period with
respect thereto or (if made on other than the last day thereof)
together with the payment of any additional amounts required
thereon under Section 8.1 hereof;
(b) Upon not less than three (3) Business Days' prior written notice
to Agent, the Company may, at any time and from time to time make
payments on
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<PAGE>
the Term Loans in addition to the scheduled payments of principal,
with accrued interest on the principal being prepaid to the date of
prepayment, provided that, (i) such prepayment shall be accompanied by
payment of the Prepayment Compensation Amount; and (ii) partial
prepayments of each Term Loan shall be applied to the pro rata
reduction of the Term Installment Amount for installments under the
related Term Notes falling due subsequent to such prepayment; and (iv)
Company shall have no right to reborrow any amount so prepaid.
Each prepayment under this Section 7.4 shall be made to the Agent, and promptly
upon receipt thereof, the Agent shall remit to each Bank its share thereof in
accordance with its Adjusted Percentage (if such prepayment is on a Revolving
Credit Loan) or other pro rata share (if such prepayment is on a Line of Credit
Loan, Bid Loan or Term Loan). In each notice of prepayment under this Section
7.4, the Company shall specify the date of prepayment, the amount of the
prepayment and the Advances to be prepaid.
8. SPECIAL PROVISIONS FOR LOANS
----------------------------
8.1 Reimbursement of Prepayment Costs. As to any Eurocurrency-based Loan,
---------------------------------
Bid Loan or Swing Loan bearing interest at a Swing Loan Quoted Rate, if any
prepayment thereof shall occur on any day other than the last day of an Interest
Period (whether pursuant to this Article, or by acceleration, or otherwise), or
if an Applicable Interest Rate shall be changed (other than as a result of a
change in the Margin occurring pursuant to the terms hereof) during any Interest
Period pursuant to this Article, or if Company or any Permitted Borrower shall
fail to borrow any such Advance on the date requested therefor, Company and each
Permitted Borrower hereby agrees to reimburse Banks on demand for any costs
incurred by Banks as a result of the timing thereof, including but not limited
to any net costs incurred in liquidating or employing deposits from third
parties, to each Bank which shall have delivered to Company a certificate
setting forth in reasonable detail the basis for determining such costs, which
certificate shall be presumed correct in the absence of manifest error.
8.2 Agent's Eurocurrency Lending Office. For any Loan for which the
-----------------------------------
Applicable Interest Rate is the Eurocurrency-based Rate, if Agent shall
designate a Eurocurrency Lending Office which maintains books separate from
those of the rest of Agent or if any Bank shall designate as its eurocurrency
lending office an office which maintains books separate from those of the rest
of such Bank, Agent or such Bank shall have the option of maintaining and
carrying the relevant Loan on the books of such office, provided, however, that
Company and the Permitted Borrowers shall not be obligated to reimburse Agent
and the Banks pursuant to Section 8.5 hereof with respect to increased costs
described thereunder to the extent that (a) such increased costs result solely
from Agent's change in its designation of the Eurocurrency Lending Office or
from a Bank's designation of a eurocurrency lending office, and (b) such
increased costs exceed the amount that would otherwise have been payable
pursuant to Section 8.5 in the absence of such redesignation by Agent or
designation by a Bank.
8.3 Circumstances Affecting Eurocurrency-based Availability. If with
-------------------------------------------------------
respect to any
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<PAGE>
Interest Period for a Eurocurrency-based Loan, Agent or any Bank determines
that, by reason of circumstances affecting the foreign exchange and interbank
markets generally, deposits in eurodollars in the applicable amounts are not
being offered to any Bank for such Interest Period, then Agent shall forthwith
give notice thereof to the Company. Thereafter, the obligations of Banks to make
Eurocurrency-based Loans for such Interest Periods, and the right of Company and
the Permitted Borrowers to convert an Advance to or refund an Advance as a
Eurocurrency-based Loan for such Interest Period shall be suspended until the
Agent notifies Company that such circumstance no longer exists.
8.4 Laws Affecting Eurocurrency-based Loan Availability. If, after the
---------------------------------------------------
date hereof, the introduction of, or any change in, any applicable law, rule or
regulation or in the interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by any of the Banks (or any of their respective
eurodollar lending offices) with any request or directive (whether or not having
the force of law) of any such authority, shall make it unlawful or impossible
for any of the Banks (or any of their respective eurodollar lending offices) to
honor its obligations hereunder to make or maintain any Loan or Advance with
interest at the Eurocurrency-based Rate, such Bank shall forthwith give notice
thereof to Company and to Agent. Thereafter: (a) the obligations of Banks to
make Eurocurrency-based Loans and the right of Company and the Permitted
Borrowers to convert an Advance or refund an Advance as a Eurocurrency-based
Loan shall be suspended; and (b) if any of the Banks may not lawfully continue
to maintain a Eurocurrency-based Loan to the end of the then current Interest
Period, the Prime-based Rate shall be the Applicable Interest Rate for such
Bank's Eurocurrency-based Loans for the remainder of such Interest Period.
Each Bank agrees that, as promptly as practicable after it becomes
aware of the occurrence of any event or the existence of a condition that would
make it unlawful or impossible to maintain any Loan or Advance with interest at
the Eurocurrency-based Rate, it will, to the extent not inconsistent with such
Bank's internal policies, use reasonable efforts to make, fund or maintain the
affected Eurocurrency-based Loans of such Bank through another lending office of
such Bank if, as a result thereof, such illegality or impossibility would cease
to exist, and if, as determined by such Bank, in its reasonable discretion, the
making, funding or maintaining of such Loans through such other lending office
would not otherwise materially adversely affect such Loans or such Bank.
Company and each Permitted Borrower hereby agrees to pay all reasonable expenses
incurred by any Bank in utilizing such other lending office of such Bank
pursuant to this Section 8.4.
8.5 Increased Costs. In the event that any change after the date hereof
---------------
in applicable law, treaty or governmental regulation, or in the interpretation
or application thereof, or compliance by Agent or any Bank with any request or
directive (whether or not having the force of law) from any central bank or
other financial, monetary or other authority:
(a) shall subject any of the Banks or Agent (or any of their
respective holding companies or eurocurrency lending offices) to
any tax, duty or other charge with respect to any Loan or any
Note or shall change the basis of taxation of payments to any of
the Banks (or any of their respective
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<PAGE>
holding companies or eurocurrency lending offices) of the
principal of or interest on any Loan or any Note or any other
amounts due under this Agreement (except for changes in the rate
of tax on the overall net income or gross receipts of any of the
Banks or Agent or any of their respective holding companies or
eurocurrency lending offices imposed by the
jurisdiction in which Agent's or such Bank's principal executive
office or eurodollar lending office is located); or
(b) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the
Federal Reserve System but excluding with respect to any
Eurocurrency-based Loan any such requirement included in an
applicable Eurodollar Reserve Requirement), risk-based capital
requirement, liquidity ratio or special deposit, or similar
requirement against assets of, deposits with or for the account
of, or credit extended by any of the Banks or Agent (or any of
their respective holding companies or eurocurrency lending
offices) or shall impose on any of the Banks or Agent (or any of
their respective holding companies or eurodollar lending offices)
or the foreign exchange and interbank markets or other condition
affecting any Loan or any of the Notes or any commitment of Agent
or any Bank under this Agreement;
and the result of any of the foregoing is to increase the costs to any of the
Banks or Agent of making, renewing or maintaining any part of the Loans or its
commitments hereunder or to reduce the amount or rate of return on any sum
received or receivable by Agent or any of the Banks under this Agreement, or
under the Notes, or under any Letter of Credit Agreement, then such Bank (if
applicable) shall promptly notify Agent, and Agent shall promptly notify Company
and (if applicable) such Bank or Banks of such fact and demand compensation
therefor and, Company and each Permitted Borrower hereby agrees to pay to Agent
or such Bank such additional amount or amounts as will compensate such Agent or
Bank or Banks for such increased costs or reduced return within thirty (30) days
of such notice, with respect to all such increased costs or reduced returns
attributable to the period commencing not earlier than sixty (60) days prior to
such notice. In the event that such tax, duty, other charge, or imposition or
modification of reserve requirement is subsequently reversed, Agent shall
promptly notify Company and such Bank or Banks of such fact and Agent or such
Bank or Banks (as applicable) will within thirty (30) days of such notice, pay
Agent for distribution to Company or the applicable Permitted Borrower the
amount, if any, necessary to compensate Company or the applicable Permitted
Borrower therefor. A certificate of the Bank demanding such compensation
setting forth in reasonable detail the basis for determining such additional
amount or amounts necessary to compensate shall be presumed to be correct in the
absence of manifest error.
9. PAYMENTS
--------
9.1 Payment Procedure.
-----------------
(a) All payments by Company and the Permitted Borrowers of principal
of, or
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<PAGE>
interest on, the Notes or of Fees, or of Letter of Credit
Obligations shall be made without setoff, deduction or
counterclaim on the date specified for payment under this
Agreement not later than 11:00 a.m. (Detroit time) in immediately
available funds to Agent. Upon receipt of each such payment, the
Agent shall make payment to each Bank in like funds on the same
day of all amounts received by it to the extent received for the
account of such Bank. Issuance fees and charges related to
Letters of Credit which are payable for the sole account of any
Issuing Bank pursuant to Section 3.5 hereof shall be paid as and
when separately agreed upon by Company and such Issuing Bank.
(b) Unless the Agent shall have been notified by Company or a
Permitted Borrower prior to the date on which any payment to be
made by Company or such Permitted Borrower is due, that Company
or such Permitted Borrower does not intend to remit such payment,
the Agent may, in its discretion, assume such payment has been
remitted when so due and the Agent may, in reliance upon such
assumption, make available to each Bank on such payment date an
amount equal to such Bank's share of such assumed payment. If
such payment has not in fact been remitted to the Agent, each
Bank shall forthwith on demand, repay to the Agent the amount of
such assumed payment made available to such Bank, together with
the interest thereon, in respect of each day from and including
the date such amount was made available by the Agent to such Bank
to the date such amount is repaid to the Agent at a rate equal to
the Federal Funds Effective Rate, as the same may vary from time
to time.
(c) Whenever any payment to be made shall otherwise be due on a day
which is not a Business Day, such payment shall be made (except
as specifically indicated to the contrary herein) on the next
succeeding Business Day and such extension of time shall be
included in computing interest, if any, in connection with such
payment.
(d) All payments of principal and interest on each Advance shall be
payable by Company and the Permitted Borrowers in the Permitted
Currency in which such Advance was originally made. All other
payments of fees and reimbursements by Company or any Permitted
Borrower to Agent and/or the Banks shall be made in Dollars.
9.2 Application of Proceeds. Notwithstanding anything to the contrary in
-----------------------
this Agreement, during the continuation of any Event of Default, the proceeds of
any offsets, voluntary payments by Company, any Permitted Borrower or others and
any other sums received or collected in respect of the indebtedness hereunder
shall be applied first to the costs and expenses of Agent in enforcement and
collection and, second, to the indebtedness and obligations of Company and the
Permitted Borrowers hereunder in accordance with the respective aggregate
principal amounts of each Bank's Loans and risk participations in Letters of
Credit outstanding,
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<PAGE>
and then, if there is any excess, to Company.
9.3 Pro-rata Recovery. If any Bank shall obtain any payment or other
-----------------
recovery (whether voluntary, involuntary, by application of offset or otherwise)
on account of principal of, or interest on, any of the indebtedness and
obligations of Company or any Permitted Borrower hereunder (exclusive, however,
of any payment or recovery received by Agent on Swing Loans) in excess of its
pro rata share of payments then or thereafter obtained by all Banks upon all
such indebtedness and obligations, such Bank shall purchase from the other Banks
such participations in the Notes and/or Letter of Credit Obligations held by
them as shall be necessary to cause such purchasing Bank to share the excess
payment or other recovery ratably in accordance with the respective aggregate
principal amounts of each Bank's Loans and risk participations in Letters of
Credit outstanding as of the date of the Event of Default; provided, however,
that (i) if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing holder, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest; and (ii) this Section 9.3 shall not require any Bank to share
payments received by such Bank while no Event of Default shall have existed
either, (x) on any Revolving Credit Loan with respect to which each of the Banks
received payment in accordance with their Adjusted Percentages, (y) on any Term
Loan payment received by a Bank in accordance with such Bank's pro rata share of
such Term Loan, or (z) on any Bid Loan which was paid at the end of its Interest
Period.
9.4 Deposits and Accounts. In addition to and not in limitation of any
---------------------
rights of any Bank or other holder of any Note or assignee of Letter of Credit
Agreements and Letter of Credit Obligations under applicable law, each Bank and
each other such holder shall, in the event and so long as an Event of Default of
the types described in Section 14.1(a) or (b) hereof shall exist, or in the
event that indebtedness hereunder shall be accelerated as the result of an Event
of Default, and without notice or demand of any kind, have the right to
liquidate and collect all property or assets of Company and the Permitted
Borrowers (including deposits and other credits), whether presently owned or
hereafter acquired, in possession or control of (or owing by) such Bank or other
holder for any purpose, and to apply the proceeds of any such liquidations and
collections, and offset any amounts owing to Company and the Permitted
Borrowers, against obligations hereunder and under the Notes and the Documents,
provided, however, that any such amount so applied by any Bank or other holder
on any of the Notes shall be subject to the provisions of Section 9.2 and 9.3.
9.5 Net Payments. All payments by Company and the Permitted Borrowers
------------
under this Agreement or any Document shall be made in such amounts as may be
necessary in order that all such payments (after deduction or withholding for or
on account of any present or future taxes, levies, imposts, duties or other
charges of whatsoever nature imposed by any government or any political
subdivision or taxing authority thereof, other than any tax on or measured by
the net income of a Bank pursuant to the income tax laws of the United States or
of the jurisdiction in which it is incorporated or the jurisdiction where such
Bank's lending office is located or in which it has any other contacts or
connection that would subject it to taxation therein (collectively, "Taxes")),
shall not be less than the amounts otherwise specified to be paid under this
Agreement and/or the Documents. A certificate as to the calculation of any
additional
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<PAGE>
amounts payable to a Bank under this Section 9.5 submitted to the Company by
such Bank shall, absent manifest error, be presumed correct for all purposes.
With respect to each deduction or withholding for or on account of any Taxes,
Company or the relevant Permitted Borrower shall promptly furnish to each Bank
such certificates, receipts and other documents as may be required (in the
judgment of such Bank) to establish any tax credit to which such Bank may be
entitled. Company and the Permitted Borrowers agree to reimburse each Bank, upon
the written request of such Bank, for taxes imposed on or measured by the net
income of such Bank pursuant to the laws of the United States of America, any
State or political subdivision thereof, or the jurisdiction in which such Bank
is incorporated, or a jurisdiction in which the principal office or lending
office of such Bank is located, or under the laws of any political subdivision
or taxing authority of any such jurisdiction, as such Bank shall determine are
or were payable by such Bank in respect of amounts payable to such Bank pursuant
to this Section 9.5.
9.6 Tax Treaty Certificate. Each Bank (and each Person who becomes a Bank
----------------------
pursuant to Section 16.5 hereof) that is not incorporated under the laws of the
United States of America or a state thereof, or which is lending from a lending
office that is not incorporated under the laws of the United States of America
or a state thereof agrees that, on or prior to the date it becomes a Bank
hereunder, it will deliver to Company and the Agent duly completed copies of
United States Internal Revenue Service Form 1001 or 4224, or any successor
applicable form (a "Form 1001 or 4224"), certifying that such Bank is entitled
to receive payments hereunder payable to it without deduction or withholding of
any United States Federal taxes. Each Bank that delivers a Form 1001 or 4224
pursuant to the immediately preceding sentence further agrees to deliver to
Company and Agent further copies of such Form 1001 or 4224 or other manner of
certification, as the case may be, on or before the date that any such form or
certification expires or becomes obsolete or upon the occurrence of any event
requiring a change in the most recent form or certification previously delivered
by it, unless in any such case there has occurred, on or prior to the date on
which any such delivery would otherwise be required, any change in law, rule,
regulation, treaty, convention or directive, or any change in the interpretation
or application of any thereof, that renders all such forms inapplicable or which
would prevent such Bank from duly completing and delivering any such form or
certification with respect to it. Notwithstanding any provision of Section 9.5
to the contrary, Company and the Permitted Borrowers shall not have any
obligation to pay any Taxes (except to the extent required by law) pursuant to
Section 9.5 to the extent that such Taxes result from: (i) the failure of any
Bank to comply with its obligations pursuant to this Section 9.6; or (ii) any
representation made on Form 1001 or 4224 by such Bank proving to have been
incorrect, false or misleading in any material respect when made or deemed to be
made.
9.7 Defaulting Banks. In the event and so long as any Bank shall be a
----------------
Defaulting Bank:
(a) such Bank shall not be entitled to payment of Revolving Credit
Facility Fees or Line of Credit Facility Fee accruing for any day
during which it is a Defaulting Bank and, immediately after
Company's payment of such Revolving Credit Facility Fees or Line
of Credit Facility Fee, Agent shall refund to Company that
portion of such payment that otherwise would
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<PAGE>
have been paid to such Defaulting Bank attributable to the period
that it was a Defaulting Bank;
(b) Company may, by written notice to the Agent and such Defaulting
Bank:
(i) require non-pro rata reductions of the Commitments in
amounts equal to the Defaulting Bank's Percentages thereof,
whereupon: (w) such Defaulting Bank's Percentage shall be
immediately terminated with respect to each Advance and
Letter of Credit to be made or issued (as applicable)
subsequent to the date of such notice; (x) the Revolving
Credit Commitment shall immediately be reduced by amounts
equal to such Defaulting Bank's Percentage of Revolving
Credit (immediately prior to its termination), (y) the Line
of Credit Commitment shall immediately be reduced by amounts
equal to such Defaulting Bank's Percentage of Line of Credit
Commitment (immediately prior to its termination), and (z)
notwithstanding anything to the contrary herein, the Loans
and interests in Letters of Credit of such Defaulting Bank,
which were outstanding as of the date it became a Defaulting
Bank, shall not be required to be paid or prepaid as a
result of the termination of such Defaulting Bank's
Percentage of Revolving Credit and Percentage of Line of
Credit Commitment or as a result of the corresponding
reductions in the Commitments, but (1) in the case of
Revolving Credit Loans, Line of Credit Loans and Bid Loans
by such Defaulting Bank, shall be repaid on the last day of
the then existing Interest Periods therefor, (2) in the case
of any Term Loan held by such Defaulting Bank, shall be paid
in accordance with such Defaulting Bank's Term Note, and (3)
such Defaulting Bank's participating interests in Letters of
Credit issued and outstanding at the time it became a
Defaulting Bank shall continue until the expiry or surrender
of each such Letters of Credit; or
(ii) require such Defaulting Bank to sell and assign all of its
interests hereunder to another Bank or Banks or to another
bank or financial institution reasonably acceptable to
Agent, in accordance with the procedures set forth in
Section 16.5(a) hereof and subject to the terms and
conditions of an Assignment Agreement; and
(c) No election made by Company pursuant to subsection (b) above
shall constitute a waiver, release or relinquishment of any claim
or cause of action which may have arisen out of the failure or
notice by the Defaulting Bank out of which its status as a
Defaulting Bank arose.
9.8 Availability of Alternative Currency. The Agent and the Banks shall
------------------------------------
not be required to make any Advance requested to be made in an Alternative
Currency and the Issuing
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<PAGE>
Banks shall not be required to Issue any Letter of Credit requested to be
denominated in an Alternative Currency if, at any time prior to making such
Advance or issuance of such Letter of Credit, the Agent (or the relevant Issuing
Bank, as the case may be) shall determine, in its sole discretion, that (i)
deposits in the applicable Alternative Currency in the amounts and maturities
required to fund such Advance, or Letter of Credit will not be available to the
Agent (or the relevant Issuing Bank, as the case may be) and the Banks; (ii) a
fundamental change has occurred in the foreign exchange or interbank markets
with respect to the applicable Alternative Currency (including, without
limitation, changes in national or international financial, political or
economic conditions or currency exchange rates or exchange controls); or (iii)
it has become otherwise materially impractical for the Agent or the Banks to
make such Advance, or for such Issuing Bank to issue such Letter of Credit in
the applicable Alternative Currency. The Agent shall promptly notify the Company
and Banks of any such determination.
9.9 Refunding Advances in Same Currency. If pursuant to any provisions of
-----------------------------------
this Agreement, the Company or any Permitted Borrower repays one or more
Advances and on the same day borrows an amount in the same currency, the Agent
shall apply the proceeds of such new borrowing to repay the principal of the
Advance or Advances being repaid and only an amount equal to the difference (if
any) between the amount being borrowed and the amount being repaid shall be
remitted by the Agent to the Company or the applicable Permitted Borrower, or by
the Company or the applicable Permitted Borrower to the Agent, as the case may
be.
9.10 Judgment Currency. The obligation of the Company and of the Permitted
-----------------
Borrowers to make payments of the principal of and interest on the Notes and any
other amounts payable hereunder in the currency specified for such payment
herein or in the Notes shall not be discharged or satisfied by any tender, or
any recovery pursuant to any judgment, which is expressed in or converted into
any other currency, except to the extent that such tender or recovery shall
result in the actual receipt by the Bank of the full amount of the particular
Permitted Currency expressed to be payable herein or in the Notes. The Agent
shall, using all amounts obtained or received from the Company and from
Permitted Borrowers pursuant to any such tender or recovery in payment of
principal of and interest on the Notes, promptly purchase the applicable
Permitted Currency at the most favorable spot exchange rate determined by the
Agent to be available to it. The obligation of the Company and of the Permitted
Borrowers to make payments in the applicable Permitted Currency shall be
enforceable as an alternative or additional cause of action solely for the
purpose of recovering in the applicable Permitted Currency the amount, if any,
by which such actual receipt shall fall short of the full amount of the
Permitted Currency expressed to be payable herein or in the Notes.
10. CONDITIONS
----------
10.1 Conditions Precedent To Initial Loans and Closing Date.
------------------------------------------------------
The right of Company or any Permitted Borrower to request the initial
Loans and Letters of Credit pursuant to this Agreement is subject to, and the
Closing Date of this Agreement shall be the date of, satisfaction of the
following conditions:
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(a) Execution of Notes and This Agreement. Company and each
-------------------------------------
Permitted Borrower shall have executed and delivered to Agent for
the account of each Bank, the Notes and this Agreement (including
all schedules, exhibits, certificates, opinions, financial
statements and other documents to be delivered pursuant hereto)
and the Notes, Documents and this Agreement shall be in full
force and effect.
(b) Corporate Authority. Agent shall have received, with a
-------------------
counterpart thereof for each Bank: (i) certified copies of
resolutions of the Board of Directors of Company and each
Permitted Borrower evidencing approval of the borrowing hereunder
and execution and delivery of the Documents to which they are
party: (ii) certified copies of the Certificates of Incorporation
and Bylaws for Company and each Permitted Borrower; (iii)
certificates of good standing from the state of Company's
incorporation, and from the states of incorporation of each
Permitted Borrower and from every state in which either the
Company or any Permitted Borrower is qualified to do business;
and (iv) incumbency certificates for Company and each Permitted
Borrower.
(c) Opinion of Counsel. Company shall furnish Agent, with signed
------------------
copies for each Bank, opinion of counsel to the Company and each
of the Permitted Borrowers dated as of the Closing Date, and
covering such matters as required by and otherwise satisfactory
in form and substance to the Agent and each of the Banks.
(d) Other Documents. As support for all indebtedness of Company
---------------
hereunder: (i) Company, ABT and KenTech shall have each executed
and delivered to Agent, in form to be satisfactory to Agent and
the Banks and supported by appropriate corporate resolutions in
certified form authorizing same, a Guaranty; and (ii) Company
shall have executed and delivered to Agent, in form satisfactory
to Agent and the Banks, the Pledge, together with certificates
evidencing the shares of ABT Canada stock to be pledged to Agent
on behalf of the Banks thereunder and assignments separate from
such certificates executed in blank for transfer and the original
Intercompany Note duly endorsed to Agent, or with a duly endorsed
assignment separate from such note.
(e) Representations and Warranties - All Parties. The
--------------------------------------------
representations and warranties made by Company and the Permitted
Borrowers under this Agreement or any of the Documents, and the
representations and warranties of any of the foregoing which are
contained in any certificate, document or financial or other
statement hereunder or thereunder or in connection herewith or
therewith shall be true and correct in all material respects.
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<PAGE>
(f) Compliance with Certain Documents and Agreements. Company, ABT,
------------------------------------------------
KenTech and ABT Canada shall have each performed and complied
with all agreements and conditions contained in this Agreement,
the Documents and any agreement or other document executed
hereunder or thereunder and required to be performed or complied
with by each of them and none of them shall be in default in the
performance or compliance with any of the terms or provisions
hereof or thereof.
(g) No Default. No Default or Event of Default shall have occurred
----------
and be continuing.
(h) Payment of Agent's and Other Fees. Company shall have paid to
---------------------------------
the Agent all costs and expenses required to be paid on or prior
to the Closing Date hereunder.
(i) Environmental Reports. Company shall have delivered to Agent
---------------------
(with copies for each Bank) reports and updates, in form and
content satisfactory to Banks, regarding the current status of
environmental matters described in the environmental
investigation reports delivered to Agent and the Banks pursuant
to the Prior Agreement.
(j) Other Documents and Instruments. The Agent shall have received,
-------------------------------
with a photocopy for each Bank, such other instruments and
documents as the Majority Banks may reasonably request in
connection with the making of the Loans hereunder, and all such
instruments and documents shall be satisfactory in form and
substance to the Majority Banks.
10.2 Conditions Precedent to All Loans. The obligation of the Banks to
---------------------------------
make all Advances and Loans (other than conversions or continuations of
outstanding Loans pursuant to Section 7.3 hereof and Advances required pursuant
to Sections 3.6 and 3.7 hereof) and the obligation of the applicable Issuing
Bank to issue any Letter of Credit shall be subject to the satisfaction of the
following conditions:
(a) Effectiveness. This Agreement shall have become effective as
-------------
provided in Section 10.1.
(b) No Default; Representations and Warranties. At the time of the
------------------------------------------
making of such Loan or Advance, or the issuance of such Letter of
Credit, and after giving effect thereto: (i) there shall exist no
Default or Event of Default; and (ii) all representations and
warranties contained herein or in the other Documents shall be
true and correct in all material respects, unless such
representation and warranty expressly indicates that it is being
made as of any other specific date.
(c) Adverse Change, etc. Since December 31, 1996, nothing shall have
-------------------
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occurred or become known which the Majority Banks or the Agent
shall have determined has a Materially Adverse Effect.
(d) Enforceability of Documents. Both before and after such Advance,
---------------------------
the obligations of Company, the Permitted Borrowers and the
Restricted Subsidiaries in the Documents shall be valid, binding
and enforceable.
(e) Limitation on Eurocurrency Interest Periods. In the case of any
-------------------------------------------
Advance to be made at a Eurocurrency-based Rate, upon the making
of such Advance there shall be no more than: (i) until six months
after the Closing Date ten (10) and, at all times thereafter,
seven (7) Interest Periods in effect for Eurocurrency-based Loans
denominated in Dollars, and (ii) at all times, three (3) Interest
Periods in effect for Eurocurrency-based Loans denominated in
Alternative Currencies.
11. REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Banks to enter into this Agreement and to make Loans
and Advances hereunder, the Company and the Permitted Borrowers represent and
warrant to the Agent and the Banks.
11.1 Corporate Status. Company, each Permitted Borrower and each other
----------------
Restricted Subsidiary:
(a) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization;
(b) has the corporate or other organizational power and authority and
has obtained all requisite governmental licenses, authorizations,
consents and approvals necessary to own and operate its property
and assets and to transact the business in which it is engaged
and presently proposes to engage, including, without limitation,
those required by the Environmental Laws, except for those
governmental licenses, authorizations, consents or approvals the
failure of which to be so obtained would not have a Material
Adverse Effect; and
(c) is duly qualified and is authorized to do business in, and is in
good standing in, all jurisdictions where by virtue of the nature
of its activities or extent of its properties it is required to
be so qualified and where the failure to be so qualified would
have a Material Adverse Effect.
11.2 Corporate Power and Authority; Business. Company, each Permitted
---------------------------------------
Borrower and each other Restricted Subsidiary has the corporate power and
authority to execute, deliver and carry out the terms and provisions of the
Documents to which they are parties and have taken all necessary corporate
action to authorize the execution, delivery and performance of the
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Documents to which they are parties. Each of them has duly executed and
delivered each Document to which it is a party and each such Document
constitutes the legal, valid and binding obligation of such Person enforceable
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability, good faith and fair dealing.
11.3 No Violation. Neither the execution, delivery or performance by
------------
Company or by any Permitted Borrower or by any other Restricted Subsidiary of
the Documents to which it is party, nor compliance with the terms and provisions
thereof, nor the consummation of the transactions contemplated therein:
(a) will result in a contravention of any applicable provision of any
law, statute, rule, regulation, order, writ, injunction or decree
of any court or governmental instrumentality which would have a
Material Adverse Effect; or
(b) will conflict or be inconsistent with or result in any breach of
any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or
imposition of any Lien upon any of the property or assets of any
of them pursuant to the terms of, any indenture, mortgage, deed
of trust, material agreement or other instruments to which any of
them are parties; except where such contravention, conflict,
inconsistency, breach, default, creation, imposition, obligation
or violation would not have a Material Adverse Effect.
11.4 Litigation. Except as set forth on Schedule 11.4, there are no
----------
actions, judgments, suits or proceedings pending or, to the Company's or any
Permitted Borrower's knowledge, threatened with respect to Company or any of its
Subsidiaries that are likely to have a Material Adverse Effect on the businesses
or financial condition of Company and the Subsidiaries (taken as a whole).
11.5 Use of Proceeds. Neither the making of any Advance hereunder, nor the
---------------
use of the proceeds thereof, will violate or be inconsistent with the provisions
of Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System.
11.6 Governmental Approvals, etc. No order, consent, approval, license,
---------------------------
authorization, or validation of, or filing, recording or registration with, or
exemption by, any third party or any foreign or domestic governmental or public
body or authority, or by any subdivision thereof, is required to authorize or is
required in connection with:
(a) the execution, delivery and performance of any Document by
Company or any Restricted Subsidiary or the transactions
contemplated therein; or
(b) the legality, validity, binding effect or enforceability of any
Document
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<PAGE>
with respect to Company or any Restricted Subsidiary.
11.7 Investment Company Act. Neither the Company nor any Subsidiary is, or
----------------------
will be after giving effect to the transactions contemplated hereby, an
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
11.8 Public Utility Holding Company Act. Neither Company nor any
----------------------------------
Subsidiary is, or will be after giving effect to the transactions contemplated
hereby, a "holding company", or a "subsidiary company" of a "holding company",
or an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company", within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
11.9 True and Complete Disclosure. All factual information (taken as a
----------------------------
whole) heretofore or contemporaneously furnished by or on behalf of Company or
any Permitted Borrower in writing to any Bank for purposes of or in connection
with this Agreement or any transaction contemplated herein is, and all other
such factual information (taken as a whole) hereafter furnished to any Bank will
be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information not misleading. There is no
fact known to Company or any Permitted Borrower which affects the business,
operations, property, assets, nature of assets, liabilities or condition
(financial or otherwise) of Company or its Subsidiaries, which could have a
Material Adverse Effect and which has not been disclosed herein or in such other
documents, certificates and written statements furnished to the Banks for use in
connection with the transactions contemplated hereby.
11.10 Financial Statements. The Company has heretofore delivered to the
--------------------
Banks the Consolidated balance sheet of Company and Consolidated statements of
operations, stockholders' equity and cash flow for the fiscal year ended
December 31, 1996. All the financial statements referred to in the preceding
sentence were prepared in accordance with GAAP, and fairly present in all
material respects the consolidated financial position of the Company and the
results of its operations and cash flows for the periods covered thereby.
11.11 Security Interests. There exist no Liens on the property or assets
------------------
of Company or the Restricted Subsidiaries, except to the extent specifically
permitted under Section 13.2 hereof.
11.12 Tax Returns and Payments. Company and the Subsidiaries have each
------------------------
filed all tax returns required to be filed by them and have paid all material
taxes and assessments payable by it which have become due, other than those not
yet delinquent and except for those contested in good faith and for which
adequate reserves have been established to the extent required by GAAP.
11.13 ERISA.
-----
(a) Each of the Company, the Subsidiaries and the ERISA Affiliates is
in
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<PAGE>
compliance in all material respects with all applicable
provisions of ERISA and the regulations and published
interpretations thereunder with respect to all employee benefit
plans, Pension Plans and Multiemployer Plans other than those the
noncompliance with which would not have a Material Adverse
Effect.
(b) No termination event has occurred or is reasonably expected to
occur with respect to any Pension Plan which resulted or would
result in a liability to the Company, the Subsidiaries or any
ERISA Affiliate which would reasonably be expected to have a
Material Adverse Effect.
(c) The sum of the amount of unfunded benefit liabilities (determined
in accordance with Statement of Financial Accounting Standards
No. 35) under all Title IV Plans (excluding each Title IV Plan
with an amount of unfunded benefit liabilities of zero or less)
is not more than One Million Dollars ($1,000,000).
(d) As of the Closing Date, neither the Company, the Subsidiaries nor
any ERISA Affiliate has any obligation to contribute to any
Multiemployer Plan or any employee benefit plan of the type
described in Sections 4063 and 4064 of ERISA or in Section 413(c)
of the Code. Neither the Company, the Subsidiaries nor any ERISA
Affiliate has incurred or reasonably expects to incur any
withdrawal liability under Section 4201 et seq. of ERISA to any
Multiemployer Plan or any employee benefit plan of the type
described in Sections 4063 and 4064 of ERISA or in Section 413(c)
of the Code which would reasonably be expected to have a Material
Adverse Effect.
(e) Neither the Company, the Subsidiaries nor any ERISA Affiliate has
incurred any accumulated funding deficiency (whether or not
waived) with respect to any Pension Plan which would reasonably
be expected to have a Material Adverse Effect.
(f) Neither the Company, the Subsidiaries nor any ERISA Affiliate has
or reasonably expects to become subject to a Lien in favor of any
Pension Plan under Section 302(f) or 307 of ERISA or Section
401(a)(29) or 412(n) of the Code.
(g) The execution, performance and delivery of the Documents by
Company and the Subsidiaries will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code for which an exemption therefrom is not
available.
11.14 Subsidiaries. The Company's only Subsidiaries as of the Closing
------------
Date are ABT, ABT Canada, KenTech and ABT Export, and all of the outstanding
capital stock of ABT, ABT
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<PAGE>
Canada, KenTech and ABT Export is validly issued, fully paid and nonassessable
and owned beneficially and of record (either directly or indirectly through a
wholly-owned Subsidiary) by Company. There are no preemptive rights on the part
of any holder of any class of securities of ABT, ABT Canada, KenTech or ABT
Export.
11.15 Patents, etc. Company and the Restricted Subsidiaries each have all
------------
material patents, trademarks, servicemarks, trade names, copyrights, licenses
and other rights, free from burdensome restrictions, that are necessary for the
operation of their respective businesses as presently conducted and as proposed
to be conducted.
11.16 Compliance with Laws, etc. Except as set forth in Schedule 11.16
-------------------------
hereto: (i) Company and the Subsidiaries are each in compliance with all laws
and regulations, including without limitation those relating to pollution and
environmental control, equal employment opportunity and employee safety, in all
jurisdictions in which it is presently doing business, and (ii) each of them
will comply with all such laws and regulations which may be imposed in the
future in jurisdictions in which any of them may then be doing business; except
to the extent (in either case) that such non-compliance would not have a
Material Adverse Effect.
11.17 Properties. Company and the Restricted Subsidiaries have good and
----------
marketable title to and beneficial ownership of all their respective material
properties owned by them, as reflected in the balance sheet for Company for the
fiscal year ended December 31, 1996 (except as sold or otherwise disposed of
since the date of such balance sheet in the ordinary course of business), and
hold all material licenses, certificates of occupancy or operation and similar
certificates and clearances of municipal and other authorities necessary to own
and operate their respective properties in the manner and for the purposes
currently operated by such party.
11.18 Collective Bargaining Agreements. Set forth on Schedule 11.18
--------------------------------
hereto is a list and description (including dates of termination) of all
collective bargaining or similar agreements between or applicable to Company and
each Restricted Subsidiary as of the date hereof and any union, labor
organization or other bargaining agent in respect of the employees of Company
and its Restricted Subsidiaries on the date indicated in Schedule 11.18 hereto.
11.19 Indebtedness Outstanding. Set forth on Schedule 11.19 hereto is a
------------------------
list and description of all Indebtedness of Company and each Subsidiary (other
than the Loans) that are outstanding immediately as of the Closing Date.
11.20 Environmental Protection. Except as set forth on Schedule 11.20
------------------------
hereto and except to the extent such failure or circumstance would not have a
Material Adverse Effect:
(a) Company and its Subsidiaries have all permits, licenses and
other authorizations which are required with respect to the
operation of their businesses under any Environmental Law and
each such authorization is in full force and effect.
(b) Company and its Subsidiaries are in compliance with all terms
and
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<PAGE>
conditions of the permits, licenses and authorizations specified
in Subsection 11.20(a) above, and are also in compliance with all
other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in any Environmental Law applicable to it and its
business, assets, operations and properties (including, without
limitation, compliance with standards, schedules and timetables
therein), including without limitation those arising under the
Resource Conservation and Recovery Act of 1976, as amended, the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("CERCLA"), the Federal Water
Pollution Control Act, the Federal Clean Air Act, and the Toxic
Substances Control Act.
(c) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation,
proceeding, notice or demand letter or request for information
pending or, to the knowledge of Company or any Subsidiary,
threatened against Company or any Subsidiary under any
Environmental Law.
(d) Neither Company nor any Subsidiary has received notice that it
has been identified as a potentially responsible party under
CERCLA or any comparable state law nor has Company or any
Subsidiary received any notification that any hazardous
substances or any pollutant or contaminant, as defined in CERCLA
and its implementing regulations, or any toxic substance,
hazardous waste, hazardous constituents, hazardous materials,
asbestos or asbestos containing materials, petroleum, including
crude oil and any fractions thereof, or other wastes, chemicals,
substances or materials regulated by any Environmental Laws
(collectively "Hazardous Materials") that it or any of their
respective predecessors in interest has used, generated, stored,
tested, handled, transported or disposed of, has been found at
any site at which any governmental agency or private party is
conducting a remedial investigation or other action pursuant to
any Environmental Law.
(e) To the best knowledge of Company there have been no releases
(i.e., any past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping) of Hazardous Materials by Company
or any Subsidiary on, upon, into or from any of the real
properties owned or operated by them at any time. To the best
knowledge of Company there has been no such releases on, upon,
under or into any such real property or in the vicinity of any of
such real property that, through soil, surface water or
groundwater migration or contamination, may be located on, in or
under such real properties.
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<PAGE>
(f) To the best knowledge of Company, there is no friable asbestos
in, on, or at the respective real properties or any facility or
equipment of Company or any Subsidiary.
(g) To the best knowledge of Company, no real properties owned or
operated by the Company or any Subsidiary is: (i) listed or
proposed for listing on the National Priorities List under
CERCLA; or (ii) listed in the Comprehensive Environmental
Response, Compensation, Liability Information System List
promulgated pursuant to CERCLA, or on any comparable list
maintained by any governmental authority.
(h) To the best of Company's knowledge, there are no past or present
events, conditions, circumstances, activities, practices,
incidents, actions or plans which may interfere with or prevent
compliance by Company or any Subsidiary with any Environmental
Law, or which may give rise to any common law or legal liability,
including, without limitation, liability under CERCLA or similar
state, local or foreign laws, or otherwise form the basis of any
claim, action, demand, suit, proceeding, hearing or notice of
violation, study or investigation, based on or related to the
manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport, shipping or handling, or
the emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant, chemical or
industrial, toxic or hazardous substance or waste.
12. AFFIRMATIVE COVENANTS
---------------------
Company and each Permitted Borrower covenants and agrees that for so long
as this Agreement is in effect and until the Commitments are fully terminated,
the Letters of Credit have expired or been surrendered, and the Loans together
with interest, fees and all other obligations incurred hereunder or under the
Documents are paid in full:
12.1 Reporting Requirements Covenants. Company will furnish or cause to be
--------------------------------
furnished to each Bank:
(a) as soon as available and in any event within ninety (90) days
after the close of each fiscal year of Company, the Consolidated
balance sheets of Company and the Subsidiaries as at the end of
such fiscal year and the related Consolidated statements of
operations, stockholders equity and cash flows for such fiscal
year, setting forth comparative figures for the preceding fiscal
year, and a report on such balance sheets and financial
statements by independent certified public accountants of
recognized national standing, which report shall not be qualified
as to the scope of audit or as to the status of Company and the
Subsidiaries as a going concern, and shall state that such
Consolidated financial statements fairly present the Consolidated
financial position of Company and the
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<PAGE>
Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, in
conformity with GAAP;
(b) as soon as available and in any event within sixty (60) days
after the end of each of the first three (3) quarterly accounting
periods in each fiscal year of Company, the Consolidated balance
sheet of Company and the Subsidiaries as at the end of such
quarterly period and the related Consolidated statements of
operations, of stockholders' equity and of cash flows for such
quarterly period and for the elapsed portion of the fiscal year
ended with the last day of such quarterly period, and in each
case setting forth comparative figures for the related periods in
the prior fiscal year, subject to normal year-end audit
adjustments;
(c) prior to the commencement of each fiscal year, a Consolidated
annual operating plan of Company and the Subsidiaries in
reasonable detail for the succeeding fiscal year, and a
Consolidated strategic plan for the next succeeding five (5)
fiscal years, in each case, in the form customarily prepared by
management for its internal use, setting forth, with appropriate
discussion, the principal assumptions upon which such budgets are
based;
(d) at the time of the delivery of the financial statements provided
for in Subsections 12.1(a) and (b), a certificate of the chief
financial officer, controller, treasurer, chief accounting
officer or other authorized officer of Company to the effect that
no Default or Event of Default exists, or, if any Default or
Event of Default does exist, specifying the nature and extent
thereof, which certificate shall be accompanied by a compliance
certificate in a form reasonably acceptable to the Agent setting
forth: (i) the calculations required to establish whether Company
and the Subsidiaries were in compliance with the covenants in
this Agreement as at the end of such fiscal period or year, as
the case may be; and (ii) a statement of the outstanding balance
of principal and interest owing to Company (as of the date of
such financial statements) under the Intercompany Note;
(e) promptly upon receipt thereof, a copy of each annual "management
letter" submitted to Company by its independent accountants in
connection with any annual audit made by them of the books of
Company or any Subsidiary;
(f) promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made
available generally by Company or any Subsidiary to its security
holders, of all regular and periodic reports and all registration
statements and prospectuses, if any, filed by Company or any
Subsidiary with any securities exchange or with the Securities
Exchange Commission and of all press releases and other
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<PAGE>
statements made available generally by Company or any Subsidiary
to the public concerning material developments in the business of
Company and its Subsidiaries;
(g) promptly upon any officer of Company obtaining knowledge of any
condition or event which constitutes a Default or Event of
Default, or becoming aware that any Bank has given any notice or
taken any other action with respect to a claimed Default or Event
of Default under this Agreement, an officers' certificate
specifying the nature and period of existence of any such
condition or event, or specifying the nature of such claimed
Default or Event of Default, and explaining the action Company
has taken or proposes to take with respect thereto; and
(h) upon substantial completion of the North Carolina Initial
Project, but not later than December 31, 1997, a certificate of
the chief financial officer, controller, treasurer, chief
accounting officer or other authorized officer of Company: (i)
certifying that the North Carolina Initial Project is completed
and that the cement fiber production line included therein is
operational and satisfactorily producing inventory of
merchantable quality, and (ii) identifying purchase orders
received by Company for such inventory and amounts of such
inventory ordered pursuant to such purchase orders, and (iii)
identifying, by grade, the inventory produced at the North
Carolina Initial Project in the immediately preceeding four (4)
week period.
(i) with reasonable promptness, such other material information and
data with respect to Company or any Subsidiary, as from time to
time may be reasonably requested by any Bank.
12.2 Books, Records and Inspections. Company and the Permitted Borrowers
------------------------------
will, and will cause each Subsidiary to, keep true books of records and accounts
of all their business transactions in accordance with GAAP or (with respect to
activities and transactions in foreign jurisdictions) such other accounting
principals as may be required in such foreign jurisdiction. Company and the
Permitted Borrowers will, and will cause each Subsidiary to, permit, upon
reasonable prior notice by Agent to any authorized officer of Company, officers
and designated representatives of the Agent and/or any Banks to visit and
inspect properties or assets of Company, the Permitted Borrowers and any other
Subsidiary, and to examine the books of account of Company, the Permitted
Borrowers and any other Subsidiary, and to discuss the affairs, finances and
accounts of Company, the Permitted Borrowers and any other Subsidiary with its
and their officers and independent accountants (in the presence of such
officers), all at such times and intervals as the Agent may reasonably request.
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12.3 Maintenance of Property; Insurance.
----------------------------------
(a) Company, the Permitted Borrowers and each other Restricted
Subsidiary will exercise commercially reasonable efforts to
maintain or cause to be maintained in good repair, working order
and condition (subject to normal wear and tear) all material
properties used in its businesses and from time to time will make
or cause to be made all appropriate repairs, renewals and
replacements thereof and will maintain and renew as necessary all
material licenses, permits and other clearances necessary to use
and occupy such properties of Company, the Permitted Borrowers
and each other Restricted Subsidiary.
(b) Company, the Permitted Borrowers and each other Restricted
Subsidiary will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect
to its properties, business and activities against liabilities,
loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or
similar businesses and similarly situated, of such types and in
such amounts as are customarily carried under similar
circumstances by such other corporations to the extent that such
types and such amounts of insurance are available at commercially
reasonable rates. Company, the Permitted Borrower or each other
Restricted Subsidiary, as applicable, will furnish to each Bank,
upon reasonable request, information as to the insurance carried.
12.4 Payment of Taxes. Company and each Permitted Borrower will pay and
----------------
discharge, and will cause each Subsidiary to pay and discharge, all material
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits, or upon any properties belonging to it, prior to the date
on which material penalties attach thereto, and all lawful claims which, if
unpaid, might become a Lien or charge upon any properties of Company, any
Permitted Borrower or any Subsidiary or cause a failure or forfeiture of title
thereto; provided that neither Company, any Permitted Borrower nor any
Subsidiary shall be required to pay any such tax, assessment, charge, levy or
claim that is being contested in good faith and by proper proceedings promptly
instituted and diligently conducted if it has maintained adequate reserves with
respect thereto in accordance with GAAP.
12.5 Corporate Franchises. Company and each Permitted Borrower will do,
--------------------
and will cause each Restricted Subsidiary to do, or cause to be done, all things
necessary to preserve and keep in full force and effect its existence, rights
and authority, except where such failure to keep in full force and effect such
rights and authority would not have a Material Adverse Effect.
12.6 Compliance with Statutes, etc. Company and each Permitted Borrower
-----------------------------
will, and will cause each Restricted Subsidiary to, comply with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property other than non-
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compliance which would not reasonably be expected to have a Material Adverse
Effect.
12.7 ERISA. Company will furnish to each of the Banks:
-----
(a) promptly upon Company knowing or having reason to know of the
occurrence of any: (i) Termination Event; or (ii) "prohibited
transaction," within the meaning of Section 406 of ERISA or
Section 4975 of the Code, in connection with any Pension Plan or
any trust created thereunder, which in the case of all such
events described in clause (i) or (ii) results or could
reasonably be expected to result in a liability of Company, any
Subsidiary or ERISA Affiliates in the aggregate in excess of Five
Hundred Thousand Dollars ($500,000), a written notice specifying
the nature thereof, what action Company, such Subsidiary or ERISA
Affiliates have taken, are taking or propose to take with respect
thereto, and, when known, any action taken or threatened by the
Internal Revenue Service, Department of Labor, PBGC or
Multiemployer Plan sponsor with respect thereto; and
(b) with reasonable promptness copies of: (i) all notices received by
Company, its Subsidiaries or ERISA Affiliates of PBGC's intent to
terminate any Title IV Plan or to have a trustee appointed to
administer any Title IV Plan, the notice of which event is
required pursuant to the preceding paragraph (a); (ii) upon the
request of the Agent each Schedule B (Actuarial Information) to
the annual report (Form 5500 Series) filed by Company or any of
its ERISA Affiliates with the Internal Revenue Service with
respect to each Pension Plan; (iii) upon the request of the
Agent, the most recent actuarial valuation report for each Title
IV Plan; and (iv) all notices received by Company, its
Subsidiaries or any ERISA Affiliates from a Multiemployer Plan
sponsor concerning the imposition or amount of withdrawal
liability pursuant to Section 4202 of ERISA, the notice of which
event is required pursuant to the preceding paragraph (a).
12.8 Performance of Obligations. Company and each Permitted Borrower will,
--------------------------
and will cause each Restricted Subsidiary to, perform in all material respects
all of its obligations under the terms of each mortgage, indenture, security
agreement, other debt instrument, their respective trade obligations and
material contracts by which they are bound or to which they are parties, except
where such nonperformance would not have a Material Adverse Effect.
12.9 End of Fiscal Years; Fiscal Quarters. Company will have its fiscal
------------------------------------
years end on December 31 and fiscal quarters end on or about March 31, June 30,
September 30 and December 31.
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12.10 Environmental Events.
--------------------
(a) The Company will promptly give notice to the Agent upon becoming
aware of any of the following which could reasonably be expected
to result in liability under any Environmental law which would
have a Material Adverse Effect: (i) of any violation by Company
or any Subsidiary of any Environmental Law; (ii) of any inquiry,
proceeding, investigation or other action, including a request
for information or a notice of potential environmental liability
from any foreign, federal, state or local environmental agency or
board; or (iii) of the discovery of the release of any Hazardous
Material at, on, under or from any of the real properties owned
or operated by Company or any Subsidiary or any facility or
equipment thereat in excess of reportable or allowable standards
or levels under any Environmental Law.
(b) In the event of the presence of any Hazardous Material on any of
the real properties owned or operated by Company or any
Subsidiary which is in violation of, or which could reasonably be
expected to result in liability under, any Environmental law, in
each case which would have a Material Adverse Effect, upon
discovery thereof and the determination of its materiality, shall
take all necessary steps to initiate and expeditiously complete
all remedial, corrective and other action to mitigate and
eliminate any such adverse effect, and shall keep the Agent
informed of their actions and the results.
12.11 Restricted Subsidiary Documents. Upon the creation, acquisition or
-------------------------------
designation of any Restricted Subsidiary which is not a Non-Material Restricted
Subsidiary, Company and the Permitted Borrowers will:
(a) cause such Restricted Subsidiary, to execute and deliver to the
Agent on behalf of the Banks a Guaranty; and
(b) if such Restricted Subsidiary is organized under a jurisdiction
outside of the United States, pledge to Agent on behalf of Banks
not less than sixty five percent (65%) of the capital stock of
such Restricted Subsidiary and all indebtedness then or
thereafter owing by such Restricted Subsidiary to Company or any
of its Subsidiaries;
together (in each case) with such documents, instruments, certificates and legal
opinions as Agent and the Banks, in their sole discretion, shall require
regarding the authorization for such execution and delivery and the
enforceability and effectiveness of such Documents.
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13. NEGATIVE COVENANTS
------------------
Company and the Permitted Borrowers hereby covenant and agree that so long
as this Agreement is in effect and until the Revolving Credit Commitment is
fully terminated, and the Loans together with interest, fees and all other
obligations incurred hereunder or under the Documents are paid in full:
13.1 Changes in Business. Each of them will not, and will not permit any
-------------------
Subsidiary to, materially alter the character of its primary businesses from, or
enter into or acquire businesses primarily different from, the business of the
manufacture, distribution and sale of building products and materials.
13.2 Liens. Each of them will not, and will not permit any Subsidiary to,
-----
create, incur, assume or suffer to exist any Lien upon or with respect to any
property or assets of the Company or any Subsidiary, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets or assign any right to receive income, or file or permit the filing of
any financing statement under the UCC or any other similar notice of Lien under
any similar recording or notice statute, except:
(a) to Agent on behalf of the Banks;
(b) Permitted Encumbrances;
(c) Liens upon real or personal property acquired (either directly or
indirectly as a result of an acquisition pursuant to Section 13.9
hereof) by Company or Restricted Subsidiaries after November 24,
1993; provided that: (i) any such Lien either encumbers such
property prior to the acquisition thereof or is created solely
for the purpose of securing indebtedness incurred to finance the
acquisition thereof; (ii) the principal amount of the
indebtedness secured by such Lien does not exceed the fair value
of the property at the time such Lien was created; (iii) such
Lien does not extend to or cover any other property other than
the assets so acquired; and (iv) the incurrence of the
indebtedness secured by such Lien is permitted by Section 13.3(b)
or (e); and
(d) Liens upon property and assets of Non-Restricted Subsidiaries to
secure indebtedness permitted under Section 13.3(g) hereof,
except to the extent such assets constitute obligations of
Company or any Restricted Subsidiary to such Non-Restricted
Subsidiary.
13.3 Indebtedness. Each of them will not, and will not permit any
------------
Subsidiary to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) pursuant to this Agreement and the Documents;
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(b) existing Indebtedness of Company and ABT described on Schedule
11.19 hereto and any refinancings thereof, provided that any such
refinancing shall be on terms which are no less favorable to the
Banks than the correlative terms of the existing indebtedness;
(c) obligations under Interest Rate Agreements;
(d) unsecured Indebtedness of Company and Restricted Subsidiaries not
exceeding Two Million Dollars ($2,000,000) in the aggregate at
any time outstanding;
(e) obligations of Company and Restricted Subsidiaries with respect
to capitalized leases of real and personal property and lease
obligations of the type described in Section 13.7 hereof to the
extent that the portion of the obligations thereunder which would
be included as Indebtedness in accordance with GAAP do not exceed
Seven Million Five Hundred Thousand Dollars ($7,500,000) in
aggregate amount at any time outstanding;
(f) intercompany Indebtedness: (i) of Company or any Restricted
Subsidiary owing to Company or a Restricted Subsidiary, provided
that, all such indebtedness at any time owing by any Restricted
Subsidiary which is organized under the laws of a jurisdiction
outside of the United States, shall be evidenced by, and limited
to the principal amount of, a note (in form and content similar
to the Intercompany Note) pledged to Agent and the Banks; or (ii)
of a Non-Restricted Subsidiary to Company or a Restricted
Subsidiary to the extent permitted by Section 13.12 hereof;
(g) Indebtedness and obligations of Non-Restricted Subsidiaries to
Persons other than Company or a Restricted Subsidiary to the
extent that, after the incurrence thereof, at least one dollar
($1) of additional Indebtedness could be incurred by Company and
its Subsidiaries without causing a violation of Section 13.4
hereof as if determination of such covenants were made on the
date of the incurrence of such Indebtedness or obligation;
(h) Permitted Bond Financing; and
(i) Permitted Private Placement Debt.
13.4 Financial Covenants. Each of them will not permit, with respect to
-------------------
both the Company and the Subsidiaries and (by separate determination) the
Company and the Restricted Subsidiaries:
(a) the Fixed Charge Coverage Ratio, as of the last day of any fiscal
quarter,
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to be less than:
(i) from the Closing Date until December 30, 1998, 1.5 to 1;
(ii) from and including December 31, 1998 until December 30,
1999, 2.1 to 1; and
(iii) from and including December 31, 1999 and at all times
thereafter, 2.5 to 1;
(b) the Leverage Ratio, as of the last day of any fiscal quarter, to
be more than 3.25 to 1.0; or
(c) to have a Tangible Net Worth, as of the last day of any fiscal
quarter, of less than the sum of: (i) Eighty Four Million Seven
Hundred Eighty Two Thousand Dollars ($84,782,000), and (ii) fifty
percent (50%) of the greater of the Net Income (if positive) of
Company and the Subsidiaries or Company and the Restricted
Subsidiaries earned (in each case) in each fiscal quarter
subsequent to the fiscal quarter ended December 31, 1996.
13.5 ERISA. Each of them will not, and will not permit any Subsidiary or
-----
ERISA Affiliates to:
(a) engage in any transaction in connection with which any of them
could be subject to either a tax imposed by Section 4975(a) of
the Code or the corresponding civil penalty assessed pursuant to
Section 502(i) of ERISA, which penalties and taxes for all such
transactions could reasonably be expected to be in an aggregate
amount in excess of Five Hundred Thousand Dollars ($500,000);
(b) permit to exist any accumulated funding deficiency, for which a
waiver has not been obtained from the Internal Revenue Service,
with respect to any Pension Plan;
(c) permit to exist any failure to make contributions or any unfunded
benefits liability which creates, or with the passage of time
would create, a statutory lien or requirement to provide security
under ERISA or the Code in favor of the PBGC or any Pension Plan,
Multiemployer Plan or other entity;
(d) permit the sum of the amount of unfunded benefit liabilities
(determined in accordance with Statement of Financial Accounting
Standards No. 35) under all Title IV Plans (excluding each Title
IV Plan with an amount of unfunded benefit liabilities of zero or
less) to exceed One Million Dollars ($1,000,000); and
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(e) fail to make any payment to any Multiemployer Plan that any of
them may be required to make under such Multiemployer Plan, any
agreement relating to such Multiemployer Plan, or any law
pertaining thereto.
13.6 Merger and Consolidations. None of them will merge or consolidate
-------------------------
with any Person, or permit any Restricted Subsidiary to merge or consolidate
with any Person unless:
(a) in each such consolidation or merger: (i) involving Company,
Company is the surviving entity; and (ii) involving one or more
Restricted Subsidiaries (but not Company), a Restricted
Subsidiary is the surviving entity; provided, further, that if a
Restricted Subsidiary organized under the laws of a jurisdiction
within the United States is a party to such consolidation or
merger, such Restricted Subsidiary shall be the survivor thereof;
and
(b) immediately after giving effect thereto, no Default or Event of
Default shall exist hereunder, including any Default under
Section 13.4 hereof as if determinations of such covenants were
made as of the date of and after giving effect to such merger or
consolidation.
13.7 Sale and Lease-Backs. Each of them will not, and will not permit any
--------------------
Restricted Subsidiary to, directly or indirectly, become or remain liable as
lessee or as guarantor or other surety with respect to the lessee's obligations
under any lease, whether an operating lease or a capital lease, of any property
(whether real or personal or mixed) whether now owned or hereafter acquired; (i)
which Company or such Restricted Subsidiary has sold or transferred or is to
sell or transfer to any other Person; or (ii) which Company or such Restricted
Subsidiary intends to use for substantially the same purpose as any other
property which has been or is to be sold or transferred in connection with such
lease, if such sale and such lease are part of the same transaction or a series
of transactions, except to the extent such liability is permitted under Section
13.3(e) or (h) hereof.
13.8 Sale or Discount of Receivables. Each of them will not, and will not
-------------------------------
permit any Restricted Subsidiary to, sell or discount (other than in connection
with trade discounts in the ordinary course of business consistent with past
practice), notes or accounts receivables which exceed, in aggregate face value
at any time, Five Hundred Thousand Dollars ($500,000).
13.9 Acquisitions. Each of them will not acquire or become obligated to
------------
acquire, or permit any Subsidiary to acquire or become obligated to acquire, any
Person or all or substantially all of the assets of any other Person, in any
transaction or series of transactions which, in any twelve (12) month period,
involves aggregate purchase prices (including in the determination of such
purchase price all indebtedness to be assumed by the acquiring entity and the
amount of any indebtedness secured by any Lien on such acquired assets) in
excess of Five Million Dollars ($5,000,000) unless, not less than fifteen (15)
Business Days before becoming obligated to make such acquisition, Company shall
have delivered to Agent and each of the Banks:
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(a) pro forma financial statements for Company and the Subsidiaries
and for Company and the Restricted Subsidiaries, for each year
during which Loans may be Advanced under this Agreement, and each
prepared on a Consolidated basis giving effect to such
contemplated acquisition;
(b) a certificate of the chief financial officer, controller, chief
accounting officer or other authorized officer of Company to the
effect that, as of the date thereof, and after giving effect to
the contemplated acquisition, no Default or Event of Default does
or shall exist, accompanied by a compliance certificate in form
similar to that required under Section 12.1(d) hereof setting
forth calculations required to establish whether any Default or
Event of Default will exist under Section 13.4 hereof, as if
determinations of such covenants were to be made as of the date
of and after giving effect to such acquisition; and
(c) such documents, instruments, agreements, appraisals and analysis
related to the assets to which the contemplated acquisition
relates, or the assets and liabilities of the Person to which
such contemplated acquisition relates, as Agent and the Banks may
reasonably request to enable Agent and the Banks to independently
analyze and confirm the information contained and presented
pursuant to subsections (a) and (b) above.
13.10 Indemnification Agreement. Company will not release, forgive or
-------------------------
waive (either in whole or part) the indemnification obligations of Abitibi-Price
Corporation under the Purchase Agreement with respect to the "Excluded
Liabilities" as defined in the Purchase Agreement and the escrow agreement
related thereto except with respect to Excluded Liabilities which Company has
obtained adequate insurance.
13.11 Contingent Obligations. Each of them will not, and will not permit
----------------------
any Restricted Subsidiary to, directly or indirectly, create or become liable
with respect to any obligation of another Person except:
(a) guaranties resulting from endorsement of negotiable instruments
for collection in the ordinary course of business;
(b) guaranties, assurances or assumptions of liabilities entered by
Company or a Restricted Subsidiary in support of indebtedness or
obligations of Company or a Restricted Subsidiary to the extent
(i) such indebtedness is permitted under Section 13.3(a) through
(f) hereof or (ii) such obligations are not obligations for
borrowed money and are existing obligations of a Restricted
Subsidiary acquired in accordance with the procedures set forth
in Section 13.9 hereof;
(c) guaranties, assurances or assumptions of liabilities by Company
or a
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Restricted Subsidiary in support of indebtedness or obligations
of a Non-Restricted Subsidiary to the extent permitted pursuant
to Section 13.12 hereof; and
(d) other contingent obligations the liability under which does not
exceed Five Million Dollars ($5,000,000) in aggregate amount
outstanding at any time.
13.12 Non-Restricted Amount. Each of them will not, and will not permit
---------------------
any Restricted Subsidiary to:
(a) make investments (other than in Cash Equivalents) in any Person
other than a Restricted Subsidiary, or make any loan or advance
to any Person other than a Restricted Subsidiary and other than
loans and advances to vendors and employees in the ordinary
course of business, or guaranty or assume obligations of a Person
other than a Restricted Subsidiary to the extent that the
aggregate amount of all such investments, loans and advances and
the amount of all indebtedness or obligations so assumed and/or
guarantied would exceed, as of the date of such investment, loan
or advance, assumption or guaranty the Non-Restricted Amount; or
(b) declare or pay any dividends or distributions on or for
purchases, redemptions or other acquisitions or retirements of
capital stock to the extent that, after giving effect to such
declaration or payment, their investments, loans and advances,
assumptions of obligations and guaranties of indebtedness, of the
types described in subsection (a) above would exceed the Non-
Restricted Amount as calculated after giving effect to such
declaration or payment.
13.13 Changes to Permitted Bond Financing and Permitted Private Placement
-------------------------------------------------------------------
Debt.
- ----
In the event of the incurrence of the Permitted Bond Financing and/or
Permitted Private Placement Debt, Company shall not, without the consent of
Agent and the Majority Banks:
(a) amend, modify or change any of the terms or provisions of the
documents or instruments governing or evidencing such Permitted
Bond Financing or Permitted Private Placement Debt in a manner
which adversely affects the interests of Agent or the Banks or
which would result in negative or financial covenants applicable
to the Permitted Bond Financing or Permitted Private Placement
Debt being more restrictive than the covenants set forth in this
Agreement, or
(b) prepay, purchase, redeem or retire Permitted Private Placement
Debt, other than by payment of scheduled installments thereon
required pursuant to the terms of the indenture or agreement
governing such Permitted
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Private Placement Debt.
13.14 Use of Loan Proceeds. Each of them will not use, or permit the use
--------------------
of, the proceeds of Loans for purposes other than those permitted under this
Agreement and will not use or permit the use of any such Loan proceeds in
violation of Regulation U or G of the Federal Reserve Board as now or hereafter
in effect, or for any other purpose which violates provisions of regulations of
the Federal Reserve Board.
14. DEFAULTS
--------
14.1 Events of Default. Any of the following events is an "Event of
-----------------
Default":
(a) non-payment, when due, of the principal under any of the Notes,
or of any Letter of Credit Obligation to be paid hereunder or
under any Letter of Credit Agreement in accordance with the terms
hereof and thereof;
(b) default in the payment of interest under this Agreement or any of
the Notes or of any Fees or of any amount due and payable by
Company or any Permitted Borrower under this Agreement or any
other Document, other than as set forth in subsection (a) above,
and continuation of such default for three (3) Business Days
after the date the same became due and payable;
(c) default is made in the due observance or performance of any
terms, covenant or agreement contained in Sections 12.1(a),
(b),(d), and (g) (and continuation of such a default under any
such Section for five (5) Business Days) or contained in Section
12.9 or Sections 13.1 through 13.14 of this Agreement;
(d) default is made in the due observance or performance of any other
term, covenant or agreement contained in this Agreement or any
other Document and such default continues unremedied for a period
of thirty (30) days after written notice of such default to
Company by Agent, or the repudiation or purported revocation by
Company or any Subsidiary of any of their respective covenants or
obligations under any Document to which they are party;
(e) any representation or warranty made by Company, any Permitted
Borrower herein, or by Company, any Permitted Borrower or any
Subsidiary in any instrument submitted pursuant hereto or by any
other party to the Documents, proves to have been untrue in any
material respect when made or deemed made;
(f) default in the payment of obligations with respect to Permitted
Bond Financing or Permitted Private Placement Debt or of any
other obligation
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of Company or any Subsidiary for borrowed money having a
principal amount in excess of Five Million Dollars ($5,000,000)
in aggregate, or in the observance or performance of any term,
covenant or condition in any agreement or instrument evidencing,
securing or relating to Permitted Bond Financing or Permitted
Private Placement Debt or such other indebtedness and such
default shall be continued for a period sufficient to permit
acceleration of the indebtedness prior to its expressed maturity;
(g) the rendering of any judgments for the payment of money in excess
of One Million Dollars ($1,000,000) in the case of any one
judgment or the sum of Five Million Dollars ($5,000,000) in the
aggregate against Company or its Subsidiaries, and such judgments
shall remain unpaid, unvacated, or unstayed by appeal or
otherwise on or before three (3) Business Days prior to the
earliest date on which proceedings for the enforcement thereof
may be instituted under the applicable rules or statutes of the
jurisdiction in which said judgments are rendered;
(h) the occurrence of any "reportable event", as defined in ERISA,
which is determined by the Pension Benefit Guaranty Corporation
in a written notice to Company or any Subsidiary or ERISA
Affiliate to constitute grounds for termination of any Pension
Plan maintained by or on behalf of such Person for the benefit of
any of its employees or for the appointment by the appropriate
United States District Court of a trustee to administer such
Pension Plan and such reportable event is not corrected and such
determination is not revoked within thirty (30) days after notice
thereof has been given to the plan administrator or such Person;
or the institution of proceedings by the Pension Benefit Guaranty
Corporation to terminate any such Pension Plan or to appoint a
trustee to administer such Pension Plan; or the appointment of a
trustee by the appropriate United States District Court to
administer any such Pension Plan or Company or any Subsidiary or
any ERISA Affiliate shall become liable to the PBGC or any other
party under Section 4062, 4063 or 4064 of ERISA with respect to
any Pension Plan or to any Multiemployer Plan under Section 4021
et seq. of ERISA which, in the case of any of the foregoing,
could reasonably be expected to result in a Material Adverse
Effect;
(i) if a creditors' committee shall have been appointed for the
business of Company or any Subsidiary, or if any of them shall
have made a general assignment for the benefit of creditors or
shall have been adjudicated bankrupt, or shall have filed a
voluntary petition in bankruptcy or for reorganization or to
effect a plan or arrangement with creditors or shall fail to pay
its debts generally as such debts become due in the ordinary
course of business; or shall file an answer to a creditor's
petition or other petition filed against it, admitting the
material allegations thereof for an adjudication in bankruptcy or
for reorganization; or shall have a creditor's
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petition or other petition filed against it and such petition is
not dismissed within thirty (30) days of such filing; or shall
have applied for or permitted the appointment of a receiver or
trustee or custodian for any of its property or assets; or such
receiver, trustee or custodian shall have been appointed for any
of its property or assets or if an order shall be entered
approving any petition for reorganization of Company or any
Subsidiary;
(j) if the Person holding the majority of the capital stock of
Company as of the date hereof, together with Persons controlled
by or under common control with such Person ("Current
Management") shall by reason of any sale of capital stock, cease
to own at least the largest block of the issued and outstanding
shares of capital stock of Company and of the shareholder votes
entitled to vote for the elections of Company's board of
directors.
14.2 Exercise of Remedies. If an Event of Default has occurred and is
--------------------
continuing hereunder:
(a) Banks' commitment to make Advances (other than the irrevocable
obligation to make Advances pursuant to Section 3.7 hereof), and
the commitment to issue Letters of Credit hereunder, shall
immediately and automatically terminate;
(b) the Agent may with the consent of the Majority Banks, (i) declare
the entire unpaid balance of the Loans and other indebtedness
hereunder, including the Notes, immediately due and payable,
without presentment, notice or demand, all of which are hereby
expressly waived by Company and each Permitted Borrower and/or
(ii) require the payment by Company and the Permitted Borrowers,
into a restricted demand deposit account with Agent, of an amount
equal to the undrawn face amount of any outstanding Letters of
Credit;
(c) immediately and automatically upon the occurrence of any Event of
Default specified in Subsection 14.1(i) above, and
notwithstanding the lack of any declaration by Agent under
preceding clause (b), the entire unpaid principal of the Loans
and other indebtedness hereunder, including the Notes, shall
become automatically due and payable (subject only to Banks'
irrevocable obligation to make Advances required pursuant to
Section 3.7 hereof) and Company and the Permitted Borrowers shall
immediately and automatically be required to pay an amount equal
to the undrawn face amount of any outstanding Letters of Credit
into a restricted demand deposit account with Agent;
(d) upon direction of the Majority Banks, Agent may, on behalf of all
of the Banks, exercise any remedy permitted by this Agreement,
the Documents or law.
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14.3 Waiver of Defaults. No Event of Default shall be waived by the Banks
------------------
except in a writing made in accordance with Section 16.8 hereof. No single or
partial exercise of any right, power or privilege hereunder, nor any delay in
the exercise thereof, shall preclude other or further exercise of Agent's rights
or of Banks' rights by Agent. No waiver of any Event of Default shall extend to
any other or future Event of Default. No forbearance on the part of the Agent
in enforcing Agent's or any of Banks' rights shall constitute a waiver of any of
their respective rights. Company and the Permitted Borrowers expressly agree
that this Section may not be waived or modified by Banks or Agent by course of
performance, estoppel or otherwise.
15. AGENT
-----
15.1 Appointment of Agent and Co-Agents. Each Bank, each Issuing Bank,
----------------------------------
each holder of each Note and each assignee of an interest in Letter of Credit
Agreements and Letter of Credit Obligations appoints and authorizes Agent and
the Co-Agents to act on behalf of such Bank or holder under the Documents and to
exercise the respective powers hereunder and thereunder as are specifically
delegated to or required of them by the terms hereof and thereof, together with
such powers as may be reasonably incidental thereto, including, in the case of
Agent, the power to execute financing or similar statements or notices and other
documents. Each Bank agrees (which agreement shall survive any termination of
this Agreement) to reimburse Agent (to the extent Agent is not reimbursed by
Company and except to the extent arising or incurred as a consequence of Agent's
gross negligence or willful misconduct), for all reasonable out-of-pocket
expenses (including house and outside attorneys' fees) incurred by Agent
hereunder or in connection herewith or with an Event of Default or in enforcing
the obligations of Company or any Permitted Borrower under this Agreement or the
Documents or any other instrument executed pursuant hereto, pro rata according
to such Bank's Percentage thereof. Neither Agent or either Co-Agent shall be
required to take any action under the Documents, or to prosecute or defend any
suit in respect of the Documents, unless indemnified to its satisfaction by the
Banks against loss, costs, liability and expense. If any indemnity furnished
pursuant hereto shall become impaired, it may call for additional indemnity and
cease to do the acts indemnified against until such additional indemnity is
given.
15.2 Deposit Account with Agent. Company and each Permitted Borrower
--------------------------
hereby authorizes Agent to charge its general deposit account, if any,
maintained with Agent for the amount of any principal, interest or other payment
due under this Agreement, the Notes, or any Letter of Credit Agreement or other
Document when the same becomes due and payable under the terms of this
Agreement, the Notes, any Letter of Credit Agreement or other Documents.
15.3 Exculpatory Provisions. Agent agrees to exercise its rights and
----------------------
powers, and to perform its duties as Agent hereunder and under the Documents in
accordance with its usual customs and practices in bank-agency transactions, but
only upon and subject to the express terms and conditions of this Section 15.3
(and no implied covenants or other obligations shall be read into this Agreement
against the Agent). Neither Agent or either Co-Agent shall be liable to any
Bank for any action taken or omitted to be taken by it under this Agreement or
any document executed pursuant hereto, or in connection herewith or therewith,
except for its own willful
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<PAGE>
misconduct or gross negligence, nor be responsible for any recitals or
warranties herein or therein, nor for the effectiveness, enforceability,
validity or due execution of this Agreement or any document executed pursuant
hereto, or any security thereunder, nor to make any inquiry respecting the
performance by Company, any Permitted Borrower or any Subsidiaries of their
respective obligations hereunder or thereunder, and each of them shall be
entitled to rely upon advice of counsel concerning legal matters and upon any
notice, consent, certificate, statement or writing which is believes to be
genuine and to have been presented by a proper person.
15.4 Successor Agents. Agent or any Co-Agent may resign as such at any
----------------
time upon at least thirty (30) days prior notice to Company and all Banks. If
Agent or any Co-Agent at any time shall resign, Majority Banks may appoint a
successor Agent or Co-Agent which shall thereupon become Agent or Co-Agent (as
applicable) hereunder and shall be entitled to receive from the prior Agent such
documents of transfer and assignment as such successor Agent may reasonably
request.
15.5 Right of Agent and Co-Agent as Banks. Agent and each Co-Agent, in its
------------------------------------
capacity as a Bank, shall have the same rights and powers with respect to the
credit extended by it, and the Notes held by it, and with respect to
participation interests in Letters of Credit issued and Letter of Credit
Agreements entered pursuant hereto, as any Bank, and the term "Bank" and, when
appropriate, "holder" shall include Agent and each Co-Agent in their respective
individual capacities.
15.6 Credit Decisions. Each Bank acknowledges that it has and shall,
----------------
independently of Agent and each other Bank and based on the financial statements
of Company and such other documents, information and investigations as it has
deemed appropriate, made its own credit decision to extend credit hereunder from
time to time. Each Bank also acknowledges that it will, independently of Agent,
each Co-Agent and each other Bank and based on such other documents, information
and investigations as it shall deem appropriate at any time, continue to make
its own credit decisions as to exercising or not exercising from time to time
any rights and privileges available to it under this Agreement or any document
executed pursuant hereto.
15.7 Notices by Agent. Agent shall give prompt notice to each Bank of each
----------------
notice or request required or permitted to be given to Agent by Company or any
Permitted Borrower pursuant to the terms of this Agreement and of any litigation
commenced by or against Agent with respect to this Agreement.
15.8 Agent's Fees. The Company shall pay to Agent the Agent's Fees at the
------------
times and in the amount set forth (or to be set forth from time to time) in a
letter agreement between Agent and Company. The Agent's Fees described in this
Section are not refundable under any circumstances.
15.9 Nature of Agency. The appointment of Agent as agent is for the
----------------
convenience of Banks, the Company and the Permitted Borrowers in making Loans,
administering Letters of Credit, collecting fees and principal and interest on
the Loans and dealing with Company and the Subsidiaries. Except as set forth in
Article 3 hereof, no Bank is purchasing Loans from Agent
-80-
<PAGE>
and this Agreement is not intended to be a purchase or participation agreement.
15.10 Actions; Confirmation of Agent's Authority to Act in Event of
-------------------------------------------------------------
Default. Subject to Sections 14.2(b) and (d) and 15.11 hereof, Agent is hereby
- -------
expressly authorized to act in all litigation and in all other respects as the
representative of Banks where Agent considers it to be necessary or desirable in
order to carry out the purposes of this Agreement or any of the Documents. In
conducting such litigation hereunder on behalf of Banks, Agent shall at all
times be indemnified by Banks as provided in Section 15.1 hereof. Agent shall
undertake to give each Bank prompt notice of any litigation commenced against
Agent and/or Banks with respect to this Agreement the Documents or any matter
referred to herein or therein.
15.11 Authority of Agent to Enforce Notes And This Agreement. Each Bank,
------------------------------------------------------
subject to the terms and conditions of this Agreement, authorizes the Agent with
full power and authority as attorney-in-fact to institute and maintain actions,
suits or proceedings for the collection and enforcement of the Notes, this
Agreement and the Documents (or any of them) and to file such proofs of debt or
other documents as may be necessary to have the claims of the Banks allowed in
any proceeding relative to the Company, any Permitted Borrower or any
Subsidiaries or their respective creditors or affecting their respective
properties, and to take such other actions which Agent considers to be necessary
or desirable for the protection, collection and enforcement of the Notes, this
Agreement or the Documents (or any of them).
15.12 Co-Agents. The Co-Agents, in such capacity, shall have no duties or
---------
responsibilities, and shall incur no liabilities under, this Agreement or the
other Documents.
16. MISCELLANEOUS
-------------
16.1 Law of Michigan; Submission to Jurisdiction. This Agreement, the
-------------------------------------------
Notes and Documents have been delivered at Detroit, Michigan, and shall be
governed by and construed and enforced in accordance with the laws of the State
of Michigan. Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
Any legal action or proceeding with respect to this Agreement or any other
Document may be brought in the courts of the State of Michigan or of the United
States District Court for the Eastern District of Michigan, and, by execution
and delivery of this Agreement, each party hereto hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally, the non-
exclusive jurisdiction of the aforesaid courts. Company and each Permitted
Borrower further irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to its address
for notices pursuant to Section 16.3 hereof, such service to become effective
three (3) Business Days after such mailing. Nothing herein shall affect the
rights of the Agent or any Bank to serve process in any other manner
-81-
<PAGE>
permitted by law.
Company and each Permitted Borrower hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any proceedings
arising out of or in connection with this Agreement or any Document brought in
the courts referred to above and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
16.2 Agent's Costs and Expenses. Company shall pay all reasonable costs
--------------------------
and expenses, including, by way of description and not limitation, outside
attorney fees and out-of-pocket expenses and lien and title search fees incurred
by Agent in connection with the commitment, consummation, and closing of the
loans contemplated hereby and in the exercise and enforcement of its rights and
prerogatives hereunder and under the Documents. All costs, including attorney
fees, incurred by Agent in revising, protecting, exercising or enforcing any of
its rights hereunder and under the Documents, or otherwise incurred by Agent in
connection with an Event of Default or incurred by Agent or any of the Banks in
connection with the enforcement hereof, including by way of description and not
limitation, such charges in any court or bankruptcy proceedings or arising out
of any claim or action by any person against Agent or any Bank which would not
have been asserted were it not for Agent's or such Bank's relationship with
Company hereunder or under the Documents, shall also be paid by Company.
16.3 Notices. Except as otherwise provided herein, all notices hereunder
-------
shall be sufficient if made in writing and delivered to the mailing and delivery
address of the respective parties indicated on the signature pages to this
Agreement, or transmitted to the facsimile or telex numbers set forth on their
respective signature pages to this Agreement. All such notices shall be deemed
received (i) two (2) Business Days after deposit thereof in the mails, if given
by mail, (ii) one (1) Business Day after deposit with express courier service,
or (iii) if by facsimile or telex transmission, the Business Day of transmission
if transmitted during customary business hours of the addressee and, if not
transmitted during such business hours, the following Business Day, provided,
however, that notices to the Agent shall not be effective until actual receipt
thereof.
16.4 Further Action. Company and the Permitted Borrowers, from time to
--------------
time, upon written request of Agent will make, execute, acknowledge and deliver
or cause to be made, executed, acknowledged and delivered, all such further and
additional instruments, and take all such further action as may be required to
carry out the intent and purpose of this Agreement and the Documents, and to
provide for Loans under and payment of the Notes and Letter of Credit
Obligations, according to the intent and purpose herein and therein expressed.
16.5 Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of Company, the Permitted Borrowers and Banks and
their respective successors and assigns, provided that the foregoing shall not
authorize any assignment by Company or any Permitted Borrower of its rights or
duties hereunder. Any Bank may sell, assign, grant participations in, or
otherwise transfer to any other Person all or part of the interests of such Bank
under this Agreement and the Notes and the Documents (including its
participation interests in Letters of Credit), and Loans made and to be made by
such Bank, subject to the following
-82-
<PAGE>
terms and conditions:
(a) Assignments. Each Bank, with the written consent of the Agent
-----------
(which consent shall not be unreasonably withheld) may assign all
or any portion of its Loans, Notes and other interests and
obligations under this Agreement and the Documents pursuant to an
Assignment Agreement to another Bank or (with the consent of
Company, which consent shall not unreasonably be withheld, it
being acknowledged however that, with respect to any assignment
which would have the effect of increasing the obligations of
Company or the Permitted Borrowers under Section 8.5 or Section
9.5 hereof, such consent may be so withheld) to other commercial
banks or financial institutions, provided that (i) the aggregate
amount of the Commitments and (if then applicable) the Term Loans
so assigned, and the portion thereof retained by such assigning
Bank (if any), shall in each case be not less than Ten Million
Dollars ($10,000,000) or, if less, the entire remaining portion
of such assigning Bank's Commitments and Term Loans, and (ii)
interests in the Line of Credit Commitment and Revolving Credit
Commitment shall be assigned in amounts necessary to give the
assignee the same Percentage in each Commitment. Any such
assignment will become effective five (5) Business Days after the
Agent's receipt of a copy of the Assignment Agreement executed by
the assigning Bank and the assignee Bank, payment to Agent of a
processing and recordation fee in the amount of Three Thousand
Five Hundred Dollars ($3,500) for Agent's sole account, and
delivery to Agent (in escrow, pending issuance of Notes pursuant
to the following sentence) of the assigning Bank's then effective
Note. On or before such effective date (x) Agent shall provide
Company with written notice of such assignment, (y) Company and
the Permitted Borrowers shall execute and deliver to Agent new
Notes made payable to the assignee and assignor, and (z) Agent
shall prepare and deliver to Company and the Banks a new Schedule
1.91 to this Agreement (which new Schedule 1.91 shall
automatically and without further action or consent be deemed to
amend and restate the prior Schedule 1.91) setting forth the
Percentages in effect as a result of such assignment, whereupon
the assignee will become a "Bank" for all purposes of this
Agreement and the other Documents, to the extent of such
assignment.
(b) Participations. Each Bank may transfer or grant participating
--------------
interests in its Loans, Notes and other interests and obligations
hereunder to any Person ("Participants") provided that, as
between such transferring Bank and its Participant, such Bank
shall retain all of its power, authority and discretion to grant
or participate in the granting of any waiver, consent or other
approval hereunder and to participate in the approval of any
amendment to this Agreement, such Bank's Notes, the Documents or
any other instrument or agreement delivered hereunder or in
connection herewith, except that such Bank may agree with any
Participant that during
-83-
<PAGE>
the existence of the Participant's interest, such Bank will not,
without consent of such Participant, agree to any amendment,
modification, waiver, release or consent which pursuant to the
terms hereof, requires the consent of all Banks. All amounts
payable by Company and the Permitted Borrowers hereunder shall be
determined as if the Bank had not sold such participation.
16.6 Indulgence. No delay or failure of Agent and Banks in exercising any
----------
right, power or privilege hereunder shall affect such right, power or privilege
nor shall any single or partial exercise thereof preclude any further exercise
thereof, nor the exercise of any other right, power or privilege. The rights of
Agent and Banks hereunder are cumulative and are not exclusive of any rights or
remedies which Agent and Banks would otherwise have.
16.7 Counterparts. This Agreement may be executed in several counterparts,
------------
and each executed copy shall constitute an original instrument, but such
counterparts shall together constitute but one and the same instrument.
16.8 Entire Agreement; Amendments; Waivers; Consents. This Agreement, the
-----------------------------------------------
Notes, the Letter of Credit Agreements and Letters of Credit, the Documents, and
any agreements certificates, or other documents given pursuant to the foregoing,
contain and will contain the entire agreement of the parties hereto, and none of
the parties shall be bound by anything not expressed in writing, except that
Company and the Permitted Borrowers shall be bound by telephonic requests for
Loans made hereunder. No amendment or waiver of any provision of this Agreement
or any Document, nor consent to any departure by Company or any Permitted
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Majority Banks, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no amendment, waiver or consent shall:
(a) unless in writing and signed by all Banks;
(i) subject Banks to any additional obligations, increase the
aggregate amount of principal indebtedness which may be
incurred under the Notes and in connection with Letters of
Credit, or (except as specifically set forth in Sections
2.6, 9.7 and 16.5(a) hereof) change the Percentages;
(ii) release any Guaranty, the Pledge or any collateral for any
of Company's obligations and indebtedness to Agent and the
Bank;
(iii) change the definition of Majority Banks or take any action
which requires the consent of all Banks pursuant to the
terms of this Agreement or any Documents; or
(iv) change this Section 16.8 or the definition of "Alternative
-84-
<PAGE>
Currency" or "Permitted Borrower";
(b) unless in writing and signed by all of the Banks holding
Revolving Credit Loans and Percentage interests in the Revolving
Credit Commitment:
(i) postpone the Revolving Credit Maturity Date (except in
accordance with Section 2.10 hereof) or any other date
fixed for any payment of principal of, or interest on, any
Revolving Credit Loans, Letter of Credit Obligation, Swing
Loans or any Revolving Credit Facility Fees;
(ii) reduce the principal of, or interest on, any Revolving
Credit Note, Swing Loans or any Letter of Credit
Obligations or any Revolving Credit Facility Fees or other
amounts payable thereon;
(c) unless in writing and signed by each Bank having an interest in
any Bid Loan:
(i) postpone the due date fixed for any payment of principal
of, or interest on such Bid Loan, or
(ii) reduce the principal of or interest on the Bid Notes
evidencing such Bid Loan;
(d) unless in writing signed by each Bank having an interest in the
Term Loan:
(i) postpone the due date for any payment of principal of, or
interest on such Term Loan, or
(ii) reduce the principal of any Term Note or any installment
thereon or the interest on such Term Note;
(e) unless in writing signed by each Bank holding Line of Credit
Loans or Percentage interests in the Line of Credit Commitment:
(i) postpone the Line of Credit Maturity Date (except in
accordance with Section 5.8 hereof) or any other date
fixed for payment of principal of or interest on any Line
of Credit Loans or Line of Credit Facility Fees payable
thereon;
(ii) reduce the principal of, or interest on, any Line of
Credit Note or any Line of Credit Facility Fees or other
amounts payable thereon;
(f) unless in writing and signed by the Agent:
-85-
<PAGE>
(i) affect the rights of Agent,
(ii) postpone the due date for payment of, or interest on Swing
Loans or of Agents Fees, or
(iii) reduce the principal of or interest on Swing Loans or the
amounts of Agent's Fees; and
(g) unless in writing and signed by the affected Issuing Bank:
(i) increase or affect the obligations of such Issuing Bank
with respect to Letters of Credit issued or to be issued
by it, or
(ii) postpone the due date for payment of, or reduce the amount
of, fees and charges related payable with respect to its
Letters of Credit pursuant to Section 3.5 hereof.
16.9 Confidentiality. Each Bank agrees that all documentation and other
---------------
information made available by Company to such Bank under the terms of this
Agreement shall (except to the extent required or requested by regulatory
authority or legal or governmental process or otherwise by governmental
authority or law, or if such documentation and other information is publicly
available or hereafter becomes publicly available other than by action of such
Bank, or was theretofore known or hereafter becomes known to such Bank
independent of any disclosure thereto by Company) be held in the strictest
confidence by such Bank and used solely in administration and enforcement of
Loans from time to time outstanding from such Bank to Company or a Permitted
Borrower and in the prosecution or defense of legal proceedings arising in
connection herewith; provided that: (i) such Bank may disclose such
documentation and information to the Agent and/or to any other Bank which is a
party to this Agreement; and (ii) such Bank may disclose such documentation and
other information to any other bank or other Person to which such Bank sells or
proposes to sell a participation in its Loans hereunder if such other bank or
Person, prior to such disclosure, agrees for the benefit of Company to comply
with the provisions of this Section 16.9.
16.10 Interest. It is the intention of the parties hereto that each Bank
--------
and the Agent shall conform to usury laws applicable to them, if any.
Accordingly, if the transactions with any Bank or Agent contemplated hereby
would be usurious under such applicable laws, then, notwithstanding anything to
the contrary in the Notes or Documents payable to such Bank, this Agreement or
any other agreement entered into in connection with or as security for or
guaranteeing this Agreement or the Indebtedness, it is agreed as follows: (i)
the aggregate of all consideration which constitutes interest under applicable
law that is contracted for, taken, reserved, charged or received by such Bank
under the Notes payable to such Bank, this Agreement, the Documents or under any
other agreement entered into in connection with or as security for or
guaranteeing this Agreement or such Notes or Documents shall under no
circumstances exceed the Highest Lawful Rate and any excess shall be credited
automatically, if theretofore paid, on the principal amount of Loans owed to
such Bank or, if Loans from such
-86-
<PAGE>
Bank is outstanding, shall be refunded to Company (if paid by Company) or to the
relevant Permitted Borrower (if paid by a Permitted Borrower) by such Bank; and
(ii) in the event that the maturity of any such Note or other Indebtedness
hereunder is accelerated or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under law
applicable to such Bank may never include more than the Highest Lawful Rate and
excess interest, if any, to such Bank shall be canceled automatically as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Bank on the principal amount of the Indebtedness owed to such
Bank by the Company (if paid by Company) or to the relevant Permitted Borrower
(if paid by a Permitted Borrower) or, if no Indebtedness to such Bank is then
outstanding, shall be refunded by such Bank to the Company or such Permitted
Borrower.
16.11 Jury Waiver. Each of the parties to this agreement hereby
-----------
irrevocably waives all right to a trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Agreement, the Documents or the
transactions contemplated hereby or thereby.
16.12 Effective Upon Execution. This Agreement shall become effective
------------------------
upon the later of the execution hereof by Banks, Agent, Company and the
Permitted Borrowers and the Closing Date, and shall remain effective until all
Loans and obligations hereunder have been repaid and discharged in full and no
commitment to fund any Loan hereunder remains outstanding.
-87-
<PAGE>
WITNESS the due execution hereof as of the day and year first above
written.
ABT BUILDING PRODUCTS COMERICA BANK,
CORPORATION as Agent
By:_______________________________ By:______________________________
Dale H. VonBehren David L. Morrison
Its: Vice President Finance - Its: Vice President
Treasurer
One Neenah Center, Suite 600 500 Woodward Avenue
Neenah, WI 54956-3070 Detroit, Michigan 48226
Telephone: (414) 751-4984 Telephone: (313) 222-3606
Facsimile: (414) 751-0370 Facsimile: (313) 222-9516
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<PAGE>
PERMITTED BORROWERS:
ABT CANADA, LTD.
By:__________________________________
Dale H. VonBehren
Its: Assistant Secretary
One Neenah Center, Suite 600
Neenah, Wisconsin 54956-3070
Telephone: (414) 751-4982
Facsimile: (414) 751-0370
ABTco, INC.
By:__________________________________
Dale H. VonBehren
Its: Vice President Finance - Treasurer
One Neenah Center, Suite 600
Neenah, Wisconsin 54956-3070
Telephone: (414) 751-4982
Facsimile: (414) 751-0370
KENTECH PLASTICS, INC.
By:__________________________________
Dale H. VonBehren
Its: Vice President and Secretary
One Neenah Center, Suite 600
Neenah, Wisconsin 54956-3070
Telephone: (414) 751-4982
Facsimile: (414) 751-0370
-89-
<PAGE>
COMERICA BANK
By:_______________________________
David L. Morrison
Its: Vice President
500 Woodward Avenue
Detroit, Michigan 48226
Telephone: (313) 222-3808
Facsimile: (313) 222-9516
-90-
<PAGE>
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA,
as Documentation Agent and Bank
-------------------
By:_______________________________
Its:_______________________________
One First Union Center
TW-19
Charlotte, North Carolina 28288
Telephone: (204) 374-4795
Facsimile: (204) 374-2802
-91-
<PAGE>
HARRIS TRUST AND SAVINGS BANK
as Syndication Agent and Bank
-----------------
By:_______________________________
Its:_______________________________
111 West Monroe
P.O. Box 755
Chicago, Illinois 60690
Telephone: (312) 461-7788
Facsimile: (312) 461-2591
ABA No. 071-000288
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<PAGE>
CREDITANSTALT-BANKVEREIN
By:_______________________________
Its:_______________________________
-and-
By:_______________________________
Its:_______________________________
245 Park Avenue
New York, New York 10167
Telephone: (212) 856-1216
Facsimile: (212) 856-1234
-93-
<PAGE>
NATIONAL CITY BANK
By:__________________________________
Its:_________________________________
National City Center
P.O. Box 5756
Cleveland, Ohio 44101-0756
Telephone: (810) 644-0502
Facsimile: (810) 644-0432
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<PAGE>
BANK ONE, DAYTON, N.A.
By:___________________________________
Its:__________________________________
Kettering Tower
P.O. Box 1003
Dayton, Ohio 45401-1103
Telephone: (513) 449-8721
Facsimile: (513) 449-4885
-95-
<PAGE>
FIRSTAR BANK MILWAUKEE, N.A.
By:__________________________________
Caroline V. Krider
Its: Vice President
777 East Wisconsin Avenue
Milwaukee, WI 53201
Telephone: (414) 765-5971
Facsimile: (414) 765-4632
-96-
<PAGE>
LASALLE NATIONAL BANK
By:___________________________________
Its:__________________________________
135 South LaSalle Street
Chicago, Illinois 60603-3499
Telephone: (312) 904-6742
Facsimile: (312) 904-6242
-97-
<PAGE>
UNITED STATES NATIONAL BANK
OF OREGON
By:___________________________________
Its:__________________________________
555 S.W. Oak Street, Suite 400
Portland, Oregon 97204
Telephone: (503) 275-6381
Facsimile: (503) 275-4267
-98-
<PAGE>
FIRST BANK NATIONAL ASSOCIATION
By:__________________________________
Its:__________________________________
601 Second Avenue South, MPFP0601
Minneapolis, MN 55402-4302
Telephone: (612) 973-0690
Facsimile: (612) 973-0821
-99-
<PAGE>
SCHEDULE 1.79
MARGINS
-------
<TABLE>
<CAPTION>
==============================================================================================================
Less than Greater than or Greater than or Greater than or Greater than or
Leverage Ratio 1.5:1.0 Equal to 1.5:1.0 Equal to 2.0:1.0 Equal to 2.60:1.0 Equal to 3.0:1.0
But But But
Less than 2.0:1.0 Less than 2.60:1.0 Less than 3.0:1.0
==============================================================================================================
<S> <C> <C> <C> <C> <C>
Margin for 10.00 15.00 17.50 20.00 25.00
Revolving Credit
Facility Fees
- --------------------------------------------------------------------------------------------------------------
Margin for 28.50 40.00 50.00 62.50 75.00
Revolving Credit
Eurocurrency-
based Advances
- --------------------------------------------------------------------------------------------------------------
Margin for 28.50 40.00 50.00 62.50 75.00
Letters of Credit
- --------------------------------------------------------------------------------------------------------------
Margin for Line 9.00 11.00 12.50 15.00 20.00
of Credit Facility
Fees
- --------------------------------------------------------------------------------------------------------------
Margin for Line 29.50 44.00 55.00 67.50 80.00
of Credit
Eurocurrency-
based Advances
==============================================================================================================
</TABLE>
-100-
<PAGE>
SCHEDULE 1.91
-------------
PERCENTAGES
<TABLE>
<CAPTION>
PERCENTAGE
Revolving Line of Credit Term
Credit Credit Loan
------ ------ ----
<S> <C> <C> <C>
COMERICA BANK 15.125% 15.125% 34%
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA 11.625% 11.625% 22%
HARRIS TRUST AND SAVINGS BANK 11.625% 11.625% 22%
CREDITANSTALT-BANKVEREIN 11.625% 11.625% 22%
NATIONAL CITY BANK 10% 10% 0%
BANK ONE, DAYTON, N.A. 10% 10% 0%
FIRSTAR BANK OF MILWAUKEE, N.A. 7.5% 7.5% 0%
LASALLE NATIONAL BANK 7.5% 7.5% 0%
UNITED STATES BANK OF OREGON 7.5% 7.5% 0%
FIRST BANK NATIONAL ASSOCIATION 7.5% 7.5% 0%
TOTAL 100% 100% 100%
</TABLE>
-101-
<PAGE>
SCHEDULE 1.94
PERMITTED BOND FINANCING TERMS
------------------------------
-102-
<PAGE>
SCHEDULE 1.96
PERMITTED BORROWER MAXIMUMS
---------------------------
ABT $175,000,000
KenTech $ 20,000,000
ABT Canada $ 60,000,000
-103-
<PAGE>
SCHEDULE 11.4
LITIGATION
----------
-104-
<PAGE>
SCHEDULE 11.16
COMPLIANCE WITH LAWS
--------------------
-105-
<PAGE>
SCHEDULE 11.18
COLLECTIVE BARGAINING AGREEMENTS
--------------------------------
-106-
<PAGE>
SCHEDULE 11.19
EXISTING INDEBTEDNESS
---------------------
-107-
<PAGE>
SCHEDULE 11.20
ENVIRONMENTAL DISCLOSURE
------------------------
-108-
<PAGE>
GEORGE T. BROPHY EXHIBIT 10.26
CHAIRMAN, PRESIDENT & CEO
December 3, 1997
Mr. Michael A. Lupo
8348 Twin Lake Drive
Boca Raton, FL 33496
Dear Mike:
The following summarizes our discussions:
. Effective February 1, 1998, your status will change to a
"Consultant" for the Company. We envision using you when needed
on a mutually agreeable basis. This status will be subject to
annual renewal by the Chairman.
. Annual compensation for your Consultant services will be $50,000
per year payable monthly.
. Your title will remain "Assistant to the Chairman," an honorary
title of ABT Building Products Corporation. This title can be
displayed on business cards or correspondence pertaining to work
only for ABT.
. You will be responsible to the Chairman, President & CEO, and
required to coordinate your activities with other executives and
officers of the Company.
. The Company will reimburse you for appropriate documented
company-related expenses during this consulting period.
Reimbursement will require specific detailed receipts attached to
"Expense Report Forms" submitted on a timely basis, and subject
to approval of the Chairman.
<PAGE>
Mr. Michael A. Lupo
December 3, 1997
Page 2
. LIFE INSURANCE - The amount of your base group life insurance
coverage ($500,000) in effect at the time of change in status
will be continued through February 1, 1998. At that time the
amount of coverage will be converted to the amount provided all
retirees of the Company ($2,500).
. FINANCIAL - As a participant in the Executive Bonus Plan,
"Executive A", you will receive any eligible payment for
participation in 1997, to be paid by January 31, 1998. No further
eligibility will accrue.
. QUALIFIED RETIREMENT PLAN - As a vested participant in the ABTco,
Inc. Employees Retirement Plan, your deferred vested benefit will
be calculated utilizing a January 31, 1998, termination date.
Your retirement will be effective February 1, 1998 from this
plan.
. NON-QUALIFIED SERP #2 RETIREMENT PLAN - As a participant in this
Plan, your retirement benefit will be calculated utilizing a
January 31, 1998, termination date, and will provide you a total
of 4.8 years of credited service, and a retirement date of
February 1, 1998. No further service will accrue subsequent to
the date stated in this section.
. BUSINESS EQUIPMENT - The various items of business equipment in
your possession will be transferred to you effective February 1,
1998. These items are defined as: Two laptop computers (one IBM,
one Compaq) complete with docking stations, monitors, keyboards,
and modems, etc. Portable cell phone, installed vehicle cell
phone, fax machine, will no longer be company paid units and the
service providers will be advised to transfer them to your
personal address and account. Access to the Company main frame
and various networks will cease and all company direct credit
cards are to be returned as they will be canceled with
implementation of this summary document.
. STOCK OPTIONS - The following Stock Options to purchase shares of
common stock of ABT (the "Options") have been issued to you:
<PAGE>
Mr. Michael A. Lupo
December 3, 1997
Page 3
75,000 shares @ $15.00(US) per share on June 29, 1993
25,000 shares @ $27.50(US) per share on February 1, 1994
50,000 shares @ $20,00(US) per share on February 17, 1995
Our records document that you have exercised and sold 35,000 shares of
the $15.00 grant as of November 30, 1997.
This document amends your Options Agreement set forth above to provide
that (i) the Options will continue to vest as provided in Section 2(b)
of the Options Agreement notwithstanding termination of your active
employment with the Company, and (ii) the Options issued on June 29,
1993, February 1, 1994, and February 17, 1995, will terminate in their
entirety on January 1, 2001. All other provisions of the Options
Agreement will prevail.
. LEASED COMPANY VEHICLE - The current vehicle assigned to you,
1996 Buick Park Avenue Ultra Sedan will be transferred from the
leasing company to you effective March 1, 1998. The company will
pay the remaining balance due at that time including license,
title and taxes.
It is acknowledged that the above sets forth payments to be made and other
actions to be taken by the Employer in consideration for the promises made by
the employee in the attached Non-Compete Agreement and Release, and that the
above is an integral part of that Agreement. The consideration provided in this
document replaces any other in effect prior to the effective date of this
Agreement. Tom Kelly will provide you with the standard Release and Non-Compete
contract to sign.
ABT BUILDING PRODUCTS CORPORATION
______________________ _________________________
George T. Brophy Date
Chairman, President & CEO
______________________ _________________________
Employee Signature Witness
______________________ _________________________
Date Date
<PAGE>
EXHIBIT 10.27
June 30, 1997
Mr. George T. Brophy
173 North Park Avenue
Neenah, WI 54956
Dear Mr. Brophy:
SUBJECT: CONSULTING AGREEMENT
--------------------
This letter sets forth the terms and conditions of your Consulting Agreement
with ABT Building Products Corporation (the "Company"), which agreement shall be
effective as of the date of your normal retirement from active employment with
the Company and its subsidiaries at age 65 (the "Effective Date") and shall
continue until the fifth anniversary of the Effective Date (the "Consulting
Period").
During the Consulting Period, you shall make yourself reasonably available
to consult with the Board of Directors and senior management of the Company
regarding the Company's operations and strategic direction, including possible
acquisitions and new product introductions. To the maximum extent practicable,
such services shall be rendered by you from your personal residence, and you
shall not be required to devote more than 32 hours per month to providing such
services.
In exchange for your services hereunder and in consideration of your non-
compete covenant set forth in the following paragraph, you shall be paid a fee
of $150,000 per annum, payable in monthly installments on the first business day
of each calendar month. You shall also be entitled to reimbursement by the
Company of your reasonable out-of-pocket expenses incurred in connection with
the provision of your services hereunder. In the event of your death or
permanent disability during the Consulting Period, you or your estate shall be
entitled to continue to receive the annual fee through the expiration of the
Consulting Period. In addition, in the event of your death prior to age 65 or
at age 65 when your company insurance program ceases, ABTco shall allow your
surviving spouse to pay the applicable COBRA premium required to maintain ABTco
health insurance until she reaches age 65.
<PAGE>
Mr. George T. Brophy
June 30, 1997
Page 2
During the Consulting Period, you shall not directly or indirectly own,
manage, control, participate in, consult with, render services for, or in any
manner engage in Hardboard Siding, Hardboard Paneling, Fibre Cement Siding or
Vinyl Siding. Notwithstanding the foregoing, you shall not be prohibited from
owning less than 2% of any class of publicly-traded securities of an entity
engaged in a competing business solely for investment purposes.
Please evidence your agreement with the foregoing by executing this
Agreement in the space provided below.
Very truly yours,
ABT BUILDING PRODUCTS CORPORATION
By:_________________________________
Samuel P. Frieder
Member, Executive Committee
Accepted and Agreed to:
______________________
George T. Brophy
<PAGE>
June 24, 1997
TO THE BOARD OF DIRECTORS OF ABT BUILDING PRODUCTS CORPORATION:
Enclosed is a Board Resolution for which we would appreciate your approval.
The Executive Committee, in discussion with George, would like to set in
place a Consulting Agreement. George's projected pension ($100,000 annually) is
low for his current salary and bonus and, for that matter, for CEO's in general.
In addition, we feel it important that the Company continue to receive his
advice and that he not compete with us in the marketplace.
Please indicate your approval by signing the document and forwarding it in
the courier packaging provided. Should you have any questions, please let me
know.
Very truly yours,
ABT BUILDING PRODUCTS CORPORATION
By:_________________________________
Samuel P. Frieder
Member, Executive Committee
Enclosure
<PAGE>
ABT BUILDING PRODUCTS CORPORATION
ACTION BY UNANIMOUS WRITTEN CONSENT
OF BOARD OF DIRECTORS
The undersigned, constituting all of the members of the Board of Directors
of ABT BUILDING PRODUCTS CORPORATION, a Delaware corporation (the "Company"),
hereby adopt the following resolutions by unanimous written consent pursuant to
Section 228(a) of the Delaware General Corporation Law in lieu of a meeting of
the Board of Directors:
BROPHY CONSULTING AGREEMENT
---------------------------
WHEREAS, the Board of Directors deems it advisable and in the
Company's best interests to secure the services of George T. Brophy, the
Company's chief executive officer, as a consultant following Mr. Brophy's
retirement from the Company at age 65 and to obtain a non-compete covenant
from Mr. Brophy.
NOW, THEREFORE, BE IT:
RESOLVED, that the letter agreement between the Company and George T.
Brophy dated June 30, 1997, in the form attached hereto is hereby adopted
and approved by the Board of Directors; and
FURTHER RESOLVED, that any executive officer or member of the
Company's executive committee is hereby authorized and directed to execute
and deliver the letter agreement by and on behalf of the Company and to
take such further actions as may be necessary to carry out the intent of
these resolutions.
The action taken by this consent shall be effective June 30, 1997, and
shall have the same force and effect as if taken at a meeting of the Board of
Directors duly called and constituted pursuant to the Company's by-laws and the
Delaware General Corporation Law. This consent may be executed in any number of
counterparts, all or which taken together shall constitute the same instrument.
___________________________ ___________________________
George T. Brophy Warner C. Frazier
___________________________ ___________________________
James A. Kohlberg Nelson J. Rohrbach
___________________________ ___________________________
Samuel P. Frieder W. Dexter Paine, III
___________________________
George W. Peck IV
<PAGE>
EXHIBIT 10.28
GEORGE T. BROPHY
CHAIRMAN, PRESIDENT & CEO
October 1, 1997
Mr. J. Phillipe Latreille
360 Park
Menasha, WI 54952
Dear Phil:
The following summarizes our discussions at our recent meeting:
. Effective January 1, 1998, to January 1, 2000, your status will
change from that of an active officer to a Consultant for the
Company. We envision using you when needed on a mutually
agreeable basis.
. Annual compensation for your Consultant services will be $100,000
per year payable monthly.
. You will be elected "President Emeritus," an honorary title of
ABT Canada Limited. This title can be displayed on business cards
or correspondence pertaining to work for ABT.
. You will be responsible to the Chairman, President & CEO, and
required to coordinate your activities with other executives and
officers of the Company.
. Your consulting expertise will be used in all areas of the
Company, not just Canada and internationally.
. The Company will provide you an office, secretarial assistance,
and reimburse you for appropriate company-related expenses for as
long as an ABT offices exists in Neenah, WI.
<PAGE>
Mr. J. Phillipe Latreille
October 1, 1997
Page 2
. LIFE INSURANCE - The amount of your base group life insurance
coverage ($495,000) in effect at the time of change in status
will be continued through December 31, 1999.
. MEDICAL/DENTAL INSURANCE - Full medical insurance for you and
your eligible dependents will be available (salaried plan in
effect at Neenah on the date of this qualifying event, subject to
annual revisions by the Company, and our receipt of participant
contributions). The Company will pay its share of the coverage
costs through December 31, 1999. Thereafter, you will be eligible
for continued coverage through COBRA to your age 65, provided you
continue to make the required monthly premium payments to the
designated Human Resources Office. Prior to reaching age 65 you
should apply for Medicare benefits. No medical supplement is
provided beyond age 65 by the Company. Your spouse's coverage
will be eligible for continuation through COBRA to her age 65,
provided the required premium payments are made to the designated
Human Resources Office of the Company.
. FINANCIAL - As a participant in the Executive Bonus Plan,
"Executive A", you will receive any eligible payment for
participation in 1997, to be paid by January 31, 1998.
. QUALIFIED RETIREMENT PLAN - As a vested participant in the ABTco,
Inc. Employees Retirement Plan, your deferred vested benefit will
be calculated utilizing a December 31, 1997, resignation date.
Notification of plan status will be provided in writing to you
within 30 days of this event.
. NON-QUALIFIED SERP #2 RETIREMENT PLAN - As a participant in this
Plan, your deferred vested benefit will be calculated utilizing a
December 31, 1997, resignation date, and by providing you a total
of 8.3 years of credited service. Details of future benefits and
options will be provided in writing within 30 days of this event.
No further service will accrue subsequent to the date stated in
this section.
. STOCK OPTIONS - The following Stock Options to purchase shares of
common stock of ABT (the "Options") have been issued to you:
<PAGE>
EXHIBIT 10.29a
COLLECTIVE AGREEMENT
BY AND BETWEEN
ABT CANADA LIMITED
EAST RIVER PLANT
CHESTER, N.S.,
HEREINAFTER CALLED THE "COMPANY"
AND
COMMUNICATIONS, ENERGY AND PAPERWORKERS
UNION OF CANADA
AND
ITS AFFILIATED LOCAL NO. 434,
HEREINAFTER CALLED "THE UNION"
1997-2002
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
TITLE PAGE
TABLE OF CONTENTS
TEXT OF AGREEMENT
ARTICLE
1 Purpose of the Agreement 1
2 Recognition, Union Security and Check-Off 1
3 Management Rights 2
4 Seniority 3
5 Promotion, Lay-Off and Recall 4
6 Automation and Technological Changes 11
7 Contracting Out 12
8 Classification and Wage Rates 12
9 Plant Rules and Safety 13
10 Continuance of Operations 14
11 Vacations, Holidays and Leaves of Absence 14
12 Adjustment of Complaints 15
13 Entire Agreement Clause 17
14 Duration of Agreement 17
15 Amendment of the Agreement 17
16 Validity 17
APPENDIX A - HOURS OF WORK AND WAGE RATE SCHEDULE
A1 Hours of work and overtime 19
A2 Job classification and hourly rate scale 28
APPENDIX B - VACATION PLAN, STATUTORY HOLIDAYS AND LEAVES OF
ABSENCE
B1 Vacation Plan 34
B2 Plant Holidays 37
B3 Non-Scheduled Holidays 39
B4 Bereavement Leave 40
B5 Jury Duty 40
APPENDIX C - DISCIPLINE AND DISCHARGE 42
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
APPENDIX D - INSURANCE PLANS 43
AND RETIREMENT PLAN
LETTERS OF INTENT AND
ADMINISTRATIVE STATEMENTS 62
LETTER OF INTENT 70
</TABLE>
ii
<PAGE>
The parties agree all positions in the Plant are gender neutral. Whenever used,
the term "he" will be interpreted to designate male or female employees.
ARTICLE 1
PURPOSE OF THE AGREEMENT
IT IS THE PURPOSE OF THIS AGREEMENT TO SET forth the complete agreement on all
matters negotiated and agreed to by both parties to this agreement and to
peacefully adjust all disputes so that the operation of the plant will continue
uninterrupted.
ARTICLE 2
RECOGNITION, UNION SECURITY AND CHECK-OFF
2.01 The Company recognizes the Communications, Energy and Paperworkers Union
of Canada Local 434, as the sole Bargaining Agent for those employees of
the Company who come within the bargaining unit as certified by the Labour
Relations Board (Nova Scotia) by Order L.R.B. 1099, dated the 21/st/ day of
June 1967 as long as the said Order remains in full force and effect.
2.02 All employees eligible for Union membership will become members of the
Union upon completion of their probationary period and will maintain such
membership as a condition of continued employment.
2.03 The Company will deduct from each employee within the Union's jurisdiction
from wages owing and payable to each employee such amount as may be
designated in a written assignment of wages to the Union as provided for in
Section 59,Sub-Sections 1 and 2 of the Act, which means a weekly proportion
of the regular monthly membership dues and initiation fees of such
employee. The monthly remittance of Union dues shall be made, by the
Company to the designated Union official, on or about the 15/th/ of the
month immediately following the deduction of such dues.
2.04 If any action arises from the compulsory check-off of dues or the deduction
from wages in accordance with Sub-Section 2.03, the Union guarantees to
hold the Company harmless from all liability and to reimburse all expenses
incurred by the Company in defending such
1
<PAGE>
action.
2.05 The Union shall advise the Company in writing of the amount to be deducted
from the wages of each employee within its jurisdiction, any change in the
amount of deduction to be given by the Union to the Company in writing at
least two (2) weeks prior to its effective date.
2.06 With the monthly remittance of Union dues, the Company shall furnish the
Union with a duplicate statement showing the total amount deducted and the
names of the employees for whom no deduction was made because their
earnings were insufficient during the said monthly period.
2.07 The Company shall not be responsible for collecting any past or future
arrears in Union dues, but shall be obliged only to check-off weekly a
fixed amount as long as the wages owing and payable to the employee are
sufficient to cover this deduction.
2.08 It is understood and agreed that all employees must complete a probationary
period of ninety (90) sequential days of work without a defined break, and
may be released by the Company during the first ninety (90) sequential days
of work in the Company's sole discretion. If before completion of the
probationary period, there is a defined break in the probationary
employee's sequence of working days, which is sixty (60) days or longer,
the probationary period for that probationary employee shall begin again
upon the probationary employee's return to work. Following successful
completion of the employee's probationary period, the employee's seniority
will be backdated to the employee's date of hire, and the employee will
become eligible for benefits.
2.09 The Union will provide the Company with a current listing of their
stewards, and officers.
ARTICLE 3
MANAGEMENT RIGHTS
3.01 The Company retains its right to manage the plant in all respects except as
specifically limited by this Agreement.
2
<PAGE>
3.02 The Company retains its right to establish from time to time rules and
regulations governing employees covered by this Agreement providing that
such rules and regulations are not inconsistent with the provisions of this
Agreement.
ARTICLE 4
SENIORITY
4.01 Seniority is defined as follows:
a) Plant Seniority: All time an employee has been employed at the East
---------------
River Plant without a break as defined below.
b) Job Seniority: All time an employee has been classified on a job in
--------------
the plant without a break as defined below.
c) Department Seniority (Maintenance): All time an employee has been
-----------------------------------
classified in the Maintenance Department.
4.02 An employee will lose all service he has to his credit if he:
a) voluntarily leaves the service of the Company;
b) is discharged and is not reinstated;
c) is laid-off in excess of twelve (12) consecutive months for employees
with one (1) year of service or less;
d) is laid-off in excess of twenty-four (24) consecutive months for
employees with more than one (1) year of service;
e) refuses an offer of recall as stipulated in Section 5.08.
4.03 Seniority rights shall only be recognized after acceptance of the employees
by the Company on completion of the training periods set out in 5.01.
Subject to satisfactory performance throughout the training period or
periods, seniority shall date from the commencement of the training
periods.
4.04 Temporary personnel hired for work between April 15 and September 15 and
between
3
<PAGE>
November 1 and November 15 shall not acquire seniority rights.
4.05 A seniority list showing job and plant seniority as mentioned above and the
order of the line of progression shall be placed on the bulletin boards,
and will be revised every six (6) months (January and July). The Local
Union will be supplied twelve (12) copies of the revised seniority list.
4.06 a) An employee re-entering the bargaining unit after an absence of more
than 259 cumulative working days but less than 259 days plus one (1)
fiscal year will return to the labour pool, with the plant service he
had acquired while he was in the bargaining unit for the purpose of
bumping and job posting.
b) An employee re-entering the bargaining unit, from a non-bargaining
unit position after an absence of 259 cumulative working days plus one
(1) fiscal year or more will return to the bargaining unit as a new
employee, but will maintain seniority for the purposes of vacation
only.
c) Those employees who have previously left the bargaining unit will
return under the language existing in the Labour Agreement at the time
of leaving the bargaining unit.
4.07 Whenever an employee is granted a leave of absence by the Company he will
generally continue to accumulate plant, job and department service.
However, in certain special circumstances it may be decided, by mutual
agreement between the Company and Local Union, that such service does not
accumulate during the leave of absence.
ARTICLE 5
PROMOTION, LAY-OFF AND RECALL
5.01 Lines of progression have been established in the plant. Promotions from
the first step to the last within a line of progression shall be based on
job seniority subject only to the senior employee being able to fulfill the
normal requirements of a job following a trial and/or training period
unless the Company and the Union agree that irrespective of a trial and/or
training period such employee cannot fulfill the normal requirements of the
job. Duration and nature of trial periods and training periods referred to
in the sub-paragraph shall be determined by mutual agreement by the Company
and the Union shall not in any case exceed a period of thirty (30) working
days.
4
<PAGE>
5
<PAGE>
5.02 If an employee fails to prove himself or herself capable of performing the
duties of the new job or if the employee should decide not to accept the
new job, the employee may, after the trial period of not more than fifteen
(15) working days, return to his former job without loss of seniority. In
the case of trade apprentices the fifteen (15) working days should read
sixty (60) working days.
5.03 a) An employee re-entering the bargaining unit, from a non-bargaining
unit position, after an absence of less than 260 cumulative working
days will return to his former classification in the bargaining unit
and will maintain all seniority rights.
b) An employee may be temporarily assigned to a non-bargaining unit
position, i.e., not replacing a regular non-bargaining unit employee
(ex. as an extra supervisor) and which does not include replacing for
the purposes of absences such as vacation or sickness. In such
circumstances, the employee may accumulate 259 working days in the
assigned position. During the 259 working days, he may be returned to
the bargaining unit as many times as is necessary without loss of
seniority rights.
c) i) If at any time within these 259 working days he is returned to
the bargaining unit for a period of 12 full consecutive months,
he will again be eligible to be temporarily assigned to a non-
bargaining unit position and begin again to accumulate 259
working days in the assigned position.
ii) If the employee exceeds 259 cumulative days and is subsequently
returned to the bargaining unit, he shall return by one of the
following:
*Within one fiscal year of the day he exceeds 259 cumulative working days he
will return as per paragraph 4.06 a). If he remains in the bargaining unit for
a period of 12 full consecutive months, he will again be eligible to be
temporarily assigned to a non bargaining unit position and begin again to
accumulate 259 working days in the assigned position.
If again removed from the bargaining unit within one fiscal year of the day he
exceeded 259 cumulative days, he will then return as per paragraph 4.06 b).
**An employee who remains out of the bargaining unit for one fiscal year after
having exceeded 259 cumulative days will then be returned to the bargaining unit
as per 4.06 b).
d) Those employees who have previously left the bargaining unit will
return under the language existing in the Labour Agreement at the time
of leaving the bargaining unit.
e) When an employee is appointed on temporary assignment to a supervisory
position not subject to this Agreement, the Company will notify the
Department Steward of such assignment, giving the name of the employee
and the expected duration of the
6
<PAGE>
assignment.
5.04 When a temporary vacancy of less than fourteen (14) days occurs and there
is an employee in the same line of progression, fully qualified and capable
of filling the vacancy, promotion will be made from the employees in the
same line of progression in which the vacancy occurs, by the following
method:
FIRST
-----
The employee will move up the Line of Progression, and the bottom job shall
be filled at straight time rates.
SECOND
------
Where a qualified and capable employee is not available to perform the
duties of the vacancy, it will be filled by the employees in the job from
which the vacancy occurred, by the following method:
The employee performing the job on the preceding shift may remain at work
on overtime rates.
THIRD
-----
The vacancy will be offered, at overtime rates, by job seniority to the
employees classified in that job.
FOURTH
------
The vacancy will be offered, at overtime rates, by job seniority to
employees classified in that line of progression that are qualified and
capable of performing the job. The vacancy will be offered to the most
senior employees by job seniority in the top job in the line of progression
then down the line of progression in the same manner.
FIFTH
-----
Should all other methods fail, the employee performing the job on the
preceding shift shall perform the job at overtime rates.
7
<PAGE>
5.05 All temporary vacancies expected to last fourteen (14) days or more shall
be filled as follows:
a) The most senior employee in the plant classified in the job will be
scheduled to fill the job vacancy.
b) Those employees trained in spare jobs shall, as assigned by
management, fill a temporary vacancy.
c) If nobody meeting the requirements of a) and b) above is available,
the line will move up and the entry job will be filled from among
qualified employees in the labour pool based on plant seniority.
d) If the job cannot be filled through a) b) and c) above, it will be
posted as a temporary vacancy.
e) "Spare" jobs are not open to skilled trades.
5.06 If as a result of an error in the application of Articles 5.04 and/or 5.05,
an employee loses an opportunity for overtime, the sole remedy that an
adversely affected employee will be given is the next overtime work
opportunity for which the adversely affected employee is qualified to make
up the overtime lost. Such remedial overtime work opportunity assigned
shall not be grievable.
5.07 a) In the case of a reduction in the work force, regular classified
employees will be demoted step by step down their line of progression
in the reverse order of the steps of their progression.
b) An employee who is laid-off from the bottom job in an established line
of progression may displace an employee in the bottom-rated job of
another established line of progression within the operating
departments, if he has longer plant seniority than the latter and if
he is capable of performing the duties of the job to which he seeks
appointment. However, in the event this layoff is for fourteen (14)
days or more, a ten (10) working day training/trial period will be
provided for the job to which the employee seeks appointment.
8
<PAGE>
c) If an employee is laid-off from the bottom job of an established line
of progression and he does not have the Plant Seniority necessary to
claim a bottom-rated job in another line of progression as per 5.07 b)
above, while there are more junior employees in point of plant service
on jobs classified in Class 2, 3 or 4, the Company will allow the most
senior employee in point of job seniority on a bottom-rated job who is
capable of performing the duties of the job held by the most junior
employees classified in Class 2, 3 or 4 to displace that junior
employee. This will create a job vacancy on a bottom job which may be
claimed under the provisions of paragraph 5.07 b) above. In the event
the above cannot be done due to an employee being frozen on a bottom-
rated job, the displacement will take place at the level above the
bottom-rated job providing the job falls in a Class 2, 3 or 4.
d) After the application of paragraph a) b) c) above, if there is still a
senior employee in point of plant seniority who is unemployed while
junior employees are scheduled to work in Class 5, then the most
junior Class 5 in point of plant seniority will be laid off and
employees will move up the line of progression. This will create a
vacancy on the bottom job which may be claimed under the provisions of
5.07 b) above. If this procedure still does not provide employment for
a senior employee in point of plant seniority while junior employees
are working, the procedure will then be repeated with Class 6 and
eventually with Class 7, if necessary. If employees in the line of
progression are not qualified and capable of filling the vacancy in
Class 5, 6 or 7, the job will be filled as follows:
i) if the lay-off is expected to exceed fourteen (14) days, the
Company will provide the training to the senior employee in the
line of progression so he can move up the line.
ii) if the lay-off is for fourteen (14) days or less, the vacancy
will be filled by a senior employee in the plant who is qualified
and capable of performing the job without training.
e) The Company will post a weekly schedule thereby giving notice to
employees who are affected by a temporary reduction in the work force
by noon on Wednesday. Employees so affected must give notice to the
Company of their intention to exercise their bumping rights before 9
A.M. Friday following the posting of the first schedule showing the
reduction.
The Company will attempt to notify those employees who are absent from
work for a justifiable cause at the time of the announcement.
9
<PAGE>
f) In the case of a temporary reduction in the work force, employees who
have exercised their bumping rights will not be able to progress in
that line of progression on a permanent classified basis until all the
employees who are displaced in that line of progression have returned
to the occupation they would have held had they not been displaced.
g) In the case of a temporary reduction in the work force, employees who
have exercised their bumping rights will return to their regular
classification following the completion of the temporary reduction of
the work force or as per dispositions of 5.05 above.
h) In the case of a reduction of the work force in the maintenance
department, the employees displaced will be the ones having the least
departmental seniority in the trade in which the reduction occurs.
i) The employees to be laid-off from the labour pool will be the most
junior in plant service.
j) Notwithstanding anything else to the contrary in this Collective
Agreement, the position of Water Treatment Plant Operator is not
---
subject to the bumping provision of Article 5.
-------
5.08 When recalling employees in Class 7 and below, plant seniority will apply.
When recalling employees on jobs in Class 8 and above the jobs will be
filled by the employee with the most plant seniority who held the
classification according to the seniority list at time of lay-off.
a) The employee must return to the service of the Company within ten (10)
days of notice of recall. Failure to return within ten (10) days of
recall will result in loss of recall rights.
b) The lay-off will be a termination of employment and recall rights will
lapse if:
i) the lay-off lasts more than twelve (12) consecutive months
without re-employment for employees with one (1) year of service
or less;
ii) the lay-off lasts more than twenty-four (24) consecutive months
without re-employment for employees with more than one (1) year
of service.
10
<PAGE>
5.09 Should an employee who has been laid off not be re-employed as stated
above, the Union will be advised of the reason therefore in writing.
5.10 When a vacancy occurs in the bottom job in any line of progression the
Company shall post on the bulletin board a notice concerning the job
vacancy; such posting shall be for a period of fourteen (14) calendar days
and the Company shall have the right to make a temporary appointment
without grievance. Such notice shall indicate the qualifications essential
for the job and will also state the qualifications necessary for promotion
within the line of progression.
5.11 In selecting the employee to fill the vacancy from the applicants, the
Company shall be guided by the factors set out in paragraph 5.01 of this
Article. The successful applicant shall be in the new position within
fifty (50) days of the job posting expiry date.
5.12 If none of the applicants qualify for the job posted, the Company will
select from the qualified applicants outside of the bargaining unit.
5.13 Successful applicants for job posting will be limited to one job posting
for twelve (12) months providing it does not involve an increase in pay.
5.14 A regular employee being awarded a job posting shall not accumulate any
seniority rights on the new job for the first fifteen (15) working days.
Subject to satisfactory service on the new job, the employee's job
seniority shall date from the commencement date of the fifteen (15) working
day period. If during this fifteen (15) working day period, the employee
is, in the Company's opinion, not capable of satisfactory performance or
should the employee request to revert to the employee's former job, the
employee shall immediately return to the employee's former job without loss
of seniority. In the case of trade apprentices, the fifteen (15) working
days should read sixty (60) working days.
5.15 It is agreed that an employee's service will be terminated on the first day
of the month following his 65/th/ birthday.
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ARTICLE 6
AUTOMATION AND TECHNOLOGICAL CHANGES
6.01 The Company undertakes to advise the Union in advance as far as is
possible, of any technological or operational changes or installation of
new equipment which the Company has decided to introduce which will result
in significant changes in the employment status of employees or
significantly alter the job content of one or more employees.
When the above results in a reduction of the workforce, it will be carried
out in the same manner as a lay-off and the terms of Article 5 will apply.
6.02 The Company agrees to discuss with the Union the effect of such
technological or major operational changes on the employment status of
employees and to consider practical ways and means of minimizing the
adverse effect on employees displaced by such changes. Such measures as
early retirement, retraining and transfers to other existing jobs will be
considered.
6.03 If a permanent employee with one year's continuous employment is set back
to a lower paid job due to the elimination of his job under conditions set
forth above, he shall retain the the rate of the permanent payroll position
for a period of six (6) months. At the end of the six (6) month period, the
rate for the job to which he is assigned will apply. Seasonal or temporary
employees are not covered by this clause.
6.04 A permanent employee with one (1) year's continuous service who will be
laid off due to job elimination under conditions set forth above will be
given notice of the impending change in employment status at the earliest
possible time.
6.05 Whenever a major change is made at the Mill which creates a new job
classification or major changes in the duties and/or responsibilities of
the existing classifications, the Company will establish new rates of pay.
If the rates of pay are not acceptable to the Union after discussion, the
normal grievance procedure will be followed.
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ARTICLE 7
CONTRACTING OUT
7.01 a) The Company will not contract out repair and maintenance work which is
regularly performed by the repair crew for which the Plant is equipped
and for which crews are available and which employees are capable of
doing.
b) Whenever possible all new equipment being installed shall be done by
the repair and maintenance crew.
ARTICLE 8
CLASSIFICATION AND WAGE RATES
8.01 The wage rates as shown in Appendix A are effective during the term of this
Agreement. There shall be no change in these schedules except insofar as
new jobs are created and old jobs disappear, which decisions shall be the
responsibility of the Company.
8.02 a) The Company agrees to pay all employees every week. The pay period
shall begin and end twelve (12) midnight each Saturday and pay day
shall be each Thursday beginning at 3:00 p.m. if possible.
b) The present system of paying will be replaced by a pay deposit system
for all employees. Pay will be deposited each week to a chartered bank
of the employee's choice. Under this system, an employee's pay can be
available to him not later than the end of the banking day on Thursday
of each week. An earnings and deductions statement will be available
by Friday noon of each week. This pay deposit system will be put in
place for interested employees hired on or before December 15, 1997
providing 60% or more of the employees wish to participate. Employees
hired after December 15, 1997 shall be paid by direct deposit.
13
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8.03 SHIFT DIFFERENTIALS
-------------------
a) A shift differential of thirty cents (30) per hour on the 4:00 p.m. to
twelve midnight shift and sixty-five cents (65) per hour on the twelve
midnight to 8:00 a.m. shift, will be paid to employees:
i) who are working during these shifts on jobs on a rotating shift
basis and
ii) for work previously scheduled and performed between the hours of
4:00 p.m. and 8:00 a.m. with the exception that no shift
differential will be paid to day workers for work which normally
ends at 4:30 p.m.
b) The shift differentials shall not enter into the calculation of
holiday pay, vacation pay, nor shall they enter into the calculation
of overtime.
8.04 When an employee temporarily replaces an employee in the same line of
progression, who is doing a job which commands higher pay for two (2) hours
or more the employee shall be paid at the higher rate so long as he
continues at that job, except normal relief practices where such higher
rate does not apply.
8.05 An employee who replaces a salaried foreman for a period of at least one
(1) plant day, receives a rate which is 10 percent (10%) higher than the
rate paid the highest occupation supervised.
ARTICLE 9
PLANT RULES AND SAFETY
9.01 Plant rules will be posted in a prominent place in the plant. The
employees and local Union representatives will be notified in advance of
any changes in these rules.
9.02 A Joint Health and Safety Committee shall be established at the Plant, and
will consist of three representatives from the Company and three
representatives from the Union. The function of the committee shall be
advisory to management in all matters pertaining to the safety of
employees.
14
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9.03 Any employee or group of employees who believe that he is, or they are
requested to work under dangerous or unhealthy conditions incompatible
with the normal risk inherent to the occupation concerned, will have the
right to report these conditions to his Supervisor or his accredited
representative and to refuse to perform such work without penalty. An
employee who violates safety rules or regulations will be subject to
disciplinary action.
9.04 Accidents must be reported at once by the injured employee or, if he is
physically unable to do so, by all witnesses to the foreman or supervisor
who in turn shall advise the Joint Health and Safety Committee.
9.05 In the case of an employee suffering a disabling lost time accident on the
job he will be paid as if he had worked his full normal day or shift.
9.06 The Company will contribute up to $60.00 per calendar year toward the cost
of one pair of CSA approved safety shoes purchased by an employee. The
employee will be required to show proof of purchase. Effective 12/17/99,
the Company contribution will increase to $75.00 per calendar year. The
wearing of safety shoes is mandatory.
ARTICLE 10
CONTINUANCE OF OPERATIONS
10.01 There shall be no strikes, walkouts, lockouts, or other similar
interruptions of work during the life of this Agreement.
ARTICLE 11
VACATIONS, HOLIDAYS AND LEAVES OF ABSENCE
11.01 Vacations, holidays and leaves of absence will be granted by the
Company in accordance with the provisions of Appendix B which is attached
hereto and which forms part of this Agreement.
15
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ARTICLE 12
ADJUSTMENT OF COMPLAINTS
12.01 GRIEVANCE PROCEDURE
-------------------
Complaints must be submitted within seven (7) calendar days of the event
giving rise to the grievance. A grievance is defined as a dispute over the
meaning of application of the express provisions of the Agreement. It is
the mutual desire of both parties that grievances of any employee shall be
adjusted quickly, and it is understood and agreed that no grievance exists
until the appropriate immediate supervisor to whom the employee is
responsible has had the opportunity at the first step to adjust the
complaint with the employee, with or without the shop Steward.
a) If any such grievance with or without the Shop Steward being present
has not been settled at Step 1, the grievance may be dropped, or,
within seven (7) calendar days of the event giving rise to the
grievance must be submitted in writing to the Superintendent
containing as a condition of its arbitrability a statement of the
facts relied upon, including events, dates, and persons, specification
of the article(s) of the Collective Agreement allegedly violated and
the specific remedy sought. The designated management representatives
will meet at Step 2 with the Chief Shop Steward and the aggrieved
employee to study the merits of the case. A grievance which pertains
to Company conduct affecting employees in more than one (1) department
may be timely initiated by the Union at Step 2, bypassing Step 1, with
agreement of the Company's designated management representatives.
b) Upon failure to satisfactorily settle the grievance at Step 2, the
matter may be dropped or, within ninety-six (96) hours following the
Step 2 meeting, the grievance must be submitted to the Plant Manager
or the Plant Manager's designate. The designated management
representatives will meet at Step 3 with not more than three (3) local
Union representatives, one (1) National Representative, and the
aggrieved employee to study the merits of the case.
c) If the grievance is not resolved at Step 3, it may be dropped or,
within ten (10) days following the Step 3 meeting, the grievance must
be processed in writing to arbitration as provided in Section 12.02.
The parties may mutually agree in writing to have the grievance heard
at the Voluntary Planning Process. If management, at any step, fails
to respond to the grievance, the grievance shall be treated as having
been denied, and may be advanced to the next step, up to Step 3 but
not including arbitration, upon ten (10) days written notice from the
Union following the last step meeting between the parties on the
grievance.
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12.02 ARBITRATION PROCEDURE
---------------------
a) When the Union requests that a grievance, as defined in Section 12.01
as to the violation of this Agreement be submitted to arbitration, it
shall make such request in writing addressed to the Company.
b) A single arbitrator will be selected in rotation from a list,
acceptable to both parties, within the thirty (30) days of
notification of intent to arbitrate. If the arbitrator so selected
cannot hear the case within ninety (90) days time following
selection, the parties may select the next arbitrator on the list and
so on until an arbitrator is available. In the event none of the
arbitrators on the list can serve, the parties will endeavour to
reach agreement on an arbitrator to hear the case. If agreement
cannot be reached, the Minister of Labour of the Province of Nova
Scotia shall be requested to appoint an impartial individual to act
as arbitrator. The following list of Arbitrators is accepted by the
parties for hearings:
Bruce Outhouse
--------------
Innis Christie
--------------
Milton Veinot
-------------
John MacPherson
---------------
c) No matter may be submitted to arbitration which has not been timely
carried through all previous steps of the grievance procedure.
d) i) The Arbitrator shall not have the authority to alter or change
any of the provisions of this Agreement or to substitute new
provisions in lieu thereof, nor to give any decision
inconsistent with the terms and provisions of this Agreement.
ii) The Arbitrator's decision shall be final and binding on both
parties to this Agreement.
e) The fees and expenses of the Arbitrator, and any other hearing costs,
shall be paid by the losing party in arbitration after decision by the
arbitrator, or by the Local Union when grievances are withdrawn from
arbitration before decision by the arbitrator.
12.03 The time limits specified herein shall be deemed to be exclusive of
Saturdays, Sundays, and Plant Holidays, and may be extended by mutual
written consent of the parties.
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ARTICLE 13
ENTIRE AGREEMENT CLAUSE
13.01 This Collective Agreement constitutes the entire agreement between the
parties and supersedes and replaces all previous agreements and practices
both written and oral.
ARTICLE 14
DURATION OF THE AGREEMENT
14.01 Except as otherwise provided in Section 15.01, this Collective
Agreement shall be in effect from date of signing up to and including
December 15, 2002.
ARTICLE 15
AMENDMENT OF THE AGREEMENT
15.01 a) Either party shall have the option of terminating the Collective
Agreement early, either at midnight on December 15, 1999, or at
midnight on December 15, 2001, by giving the other party not less than
sixty (60) days notice in writing prior to December 15, 1999 or
December 15, 2001; otherwise, the provisions of this Collective
Agreement shall remain in full force and effect up to and including
December 15, 2002, and shall automatically terminate thereafter.
b) All amendments negotiated during the renewal of the present Collective
Agreement shall become effective on the date of signing, unless
indicated otherwise.
ARTICLE 16
VALIDITY
16.01 Any provisions of this Agreement which shall be contrary to the laws of
the Province of Nova Scotia or of the Dominion of Canada shall be
considered null and void without affecting the validity of the remaining
provisions of the Agreement. The undersigned Company and Union
representatives agree to the foregoing amendments as a basis for
18
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renewal of the Agreement to which the aforementioned parties are
signatory.
IN WITNESS WHEREOF, the parties have signed these presents as of the
______ day of February 1998.
COMMUNICATIONS, ENERGY AND ABT CANADA LIMITED
PAPERWORKERS UNION EAST RIVER PLANT
By: ____________________________ By: _____________________________
Dennis Grant Steven J. Fishman
COMMUNICATIONS, ENERGY AND By: _____________________________
PAPERWORKERS UNION LOCAL 434 Donald Grimm
By: ____________________________ By: _____________________________
David Countway Phil J. Ellwood
President
By: ____________________________
Roger Collicutt
Vice President-Production
By: ____________________________
Barry Bunch
Vice President-Trades
By: ____________________________
David Broome, Alternate
By: ____________________________
Philip Cooke, Trades
By: ____________________________
Mike Gillis, Production
DATE OF RATIFICATION:
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APPENDIX A
HOURS OF WORK AND WAGE RATE SCHEDULE
A1 - HOURS OF WORK AND OVERTIME
--------------------------
A1.01 OPERATIONS
----------
a) The normal operation of the plant will be seven (7) days per week.
b) Regular continuous operation means a seven (7) day a week operation,
week in and week out, with crews adequate in size for employees to
maintain a normal work week.
c) Notwithstanding the above, the plant or any portion of the plant may
operate less than seven (7) days.
A1.02 The Work Day is defined as the period of 24 consecutive hours beginning at
the starting time of the employees scheduled work day or shift.
A1.03 The Plant Week is defined as the seven (7) day period beginning at 00:01
hours on Sunday either Atlantic Standard Time or Atlantic Daylight Saving
Time, whichever is in effect.
A1.04 HOURS FOR DAY WORKERS
---------------------
a) The regular schedule of hours for day workers will be from 8:00 a.m.
to 4:30 p.m., Monday to Friday, with a 1/2 hour lunch scheduled
between 12:00 noon and 1:00 p.m. at the Company's discretion.
However, when scheduled to work on one (1) or two (2) shifts, the
Utility employee on days will normally be scheduled from 6:00 a.m. to
2:00 p.m.
b) Whenever a change in an employee's weekly posted work schedule
becomes a necessity the Company will give such employee or employees
twenty-four (24) hours notice prior to the beginning of the new
scheduled hours. Failing such notice the employee affected will be
paid time and one-half for all hours worked on the first day of his
new schedule.
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c) When tradesmen are temporarily scheduled to work on shift, such shift
assignments shall be shared among tradesmen in the same
classification. Employees skilled and assigned as heavy equipment
mechanics shall not work shifts unless assigned by the Company.
d) When it is necessary to maintain a crew of day workers outside of the
established hours, shifts if possible will be structured to give
employees an opportunity to rotate on a weekly or other convenient
basis.
A1.05 HOURS FOR SHIFT WORKERS
-----------------------
a) The shifts shall be arranged to suit the running schedule of the
Plant and to avoid any interruption in normal operation. The Union
shall be advised of any change in cases of re-scheduling shifts;
b) The regular hours of work for shift employees in a plant day shall be
on a three shift basis as follows:
8:00 a.m. to 4:00 p.m.
4:00 p.m. to 12 midnight
12 midnight to 8:00 a.m.
Shifts will rotate in regular sequence.
c) At the end of a shift, no shift worker may leave his place until his
mate has reported to him to take on the responsibility of the job. If
a shift worker does not report for his regular shift, his mate on
duty shall notify his foreman or department superintendent. The mate
shall then remain at his post until a substitute satisfactory to
management has been secured and has taken over the job, or if
necessary, he shall work an extra shift.
d) Whenever a change in an employee's work schedule becomes a necessity
the Company will give such employee or employees twenty-four (24)
hours notice prior to the beginning of the new scheduled hours, if
such change was not contained in the posted weekly work schedule.
Failing such notice the employee affected will be paid time and one-
half for all hours worked on the first day of his new schedule.
A1.06 EMPLOYEES REPORTING FOR WORK AND NO WORK AVAILABLE
--------------------------------------------------
Employees who report for work and find that no work is available because
of a change in plans other than an emergency situation shall be paid three
(3) hours minimum. If an
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employee starts his work and is sent home because of a change other than
an emergency situation, he shall receive a minimum of four (4) hours pay
regardless of time worked less than four (4) hours.
A1.07 SCHEDULED DAYS OFF - SHIFT WORKERS
----------------------------------
a) The work schedules will be posted in the departments no later than
1:30 p.m. on the Thursday preceding the work week and will show the
employee's scheduled day or days off.
b) An employee may change his scheduled day or days off with the consent
of his supervisor provided such an arrangement is made at least
twenty-four (24) hours before such change.
c) In the case of emergency or by mutual consent an employee's scheduled
day or days off may be changed by the employee's supervisor on not
less than twenty-four (24) hours' notice with the assignment of some
other day or days off during the same week.
d) It is the employee's responsibility to check the Weekly Work Schedule
as it is posted on the Thursday, preceding the work week. Should
changes occur subsequent to the Thursday posting time, the Company
will notify all employees concerned.
A1.08 a) CALL-IN DAY WORKERS
-------------------
For Day Workers, call-ins will be paid for at the rate of time and
one-half with a minimum of four (4) hours pay at straight time for the
work performed on each call based on the employee's regular rate of
pay. Whenever an employee is called to the Plant on emergency work
the employee will be paid time and one-half for the employee's time on
such work until the employee completes the work called in for or until
the employee's next scheduled working period, whichever comes first.
An employee shall not work more than sixteen (16) hours in any twenty-
four (24) hour period except in cases of emergency which shall mean
loss of life or property. Loss of production shall not mean loss of
property. Only employees qualified to perform the work will be called
in for emergency work.
b) CALL-IN TOUR
------------
When a tour employee is notified before finishing his shift that he
must return later the same plant day, this shall constitute a call or
if the tour employee is
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called to the plant on his scheduled day or days off or after his
regular working hours and required to go on duty prior to the
scheduled starting time of a regular shift, this shall also constitute
a call and all calls will be paid for at the rate of time and one-half
with a minimum of four (4) hours pay at straight time based on the
employee's regular rate of pay for the work performed on each call.
c) A call-in is for a breakdown. An employee called in may be used on an
unrelated breakdown without being paid another call premium.
d) When an employee is called on Sunday or a statutory holiday between
the hours of twelve midnight and 4:00 a.m., he shall be paid a minimum
of six (6) hours at straight time based on his regular rate of pay.
e) Those employees who live within a twenty (20) road mile distance of
the plant shall be the first eligible for a call-in, in order of their
job seniority.
f) If as a result of an error in the application of A1.08, an employee
loses a call-in opportunity, the sole remedy that an adversely
affected employee will be given is the next call-in opportunity for
which the adversely affected employee is qualified to make up for the
call-in opportunity lost. Such remedial next call-in opportunity
assigned shall not be grievable.
A1.09 OVERTIME
--------
a) All employees will be paid at the rate of time and one-half for all
hours worked on Sunday or on a statutory holiday.
b) When an employee is required to work on his scheduled day or days off,
he will be paid at the rate of time and one-half for all hours worked.
c) When an employee is required to work more than eight (8) hours on
Sunday or a statutory holiday, he will be paid an extra half time
premium for those hours worked in excess of eight (8) hours.
d) All employees will be paid at the rate of time and one half for all
hours worked in excess of eight (8) hours in one (1) working day,
except that time and one-half will not be paid under this provision
when the work is caused by:
i) Overtime work by special arrangements between a shift worker and
his mate to exchange shifts with the approval of his supervisor.
ii) Where a vacancy is known to exist while preparing the work
schedule
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for the next week, labour pool employees will be scheduled to
follow a regular shift where at all possible. Labour pool
employees not scheduled for 40 hours on the weekly work schedule,
will be paid at straight time until they have worked five (5)
non-consecutive eight (8) hour shifts in a work week.
e) Whenever an employee is required to report for work prior to the
beginning of his regular scheduled hours he will be paid time and one-
half for such hours. Hours, once used to determine overtime pay
entitlement, shall not enter into any other calculation made for
purposes of determining overtime payment due under the provisions of
this Agreement.
f) The Company will make every effort to provide transportation to
employees who have worked overtime and have no available
transportation.
A1.10 MEAL ALLOWANCE
--------------
a) Unless given twelve (12) hours' previous notice, a shift worker
required to work more than one and one-half (1 1/2) hours beyond his
regular shift, or called in more than one hour before his shift
begins, will receive a meal allowance.
b) Unless given twelve (12) hours' previous notice, a day worker required
to work more than one and one-half (1 1/2) hours beyond 4:30 p.m. or
called in earlier than 7:00 a.m. will receive a meal allowance.
c) In the case of extended overtime, a meal allowance will be provided
every four (4) hours after the first meal allowance.
d) The meal allowance will be five ($5.00) dollars.
A1.11 EMERGENCY SHUTDOWNS
-------------------
During an emergency shutdown of twenty-four (24) hours or less, including
the shift in which the shutdown occurred and the two shifts following such
emergency shutdown, the Company need not provide work for those persons
affected by the emergency shutdown and there shall be no obligation to
compensate those persons for any loss associated with the emergency
shutdown. However, if such emergency shutdown extends beyond twenty-four
hours those affected employees may exercise their layoff rights.
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A1.12 Employees excluded from the Bargaining Unit will not perform the work of
any job covered by this Agreement except in the probability of danger to
life or property, or for the purpose of instruction, or to facilitate
production.
A1.13 12 HOUR SHIFTS
--------------
When Management decides to schedule 12 hour shifts, the following shall
apply:
a) All mention of days of work in the Collective Agreement e.g. Articles
2:08, 4:06, 5:01, 5:02, 5:03, 5:14 etc., shall be converted to hours
of work for the employees.
b) 1) The regular hours of work for shift workers under A1.05,
while working the Compressed Work Week shall be on a two (2)
shift basis, which are:
8:00 A.M. to 8:00 P.M. (Days)
8:00 P.M. to 8:00 A.M. (Nights)
Shifts shall rotate in regular sequence.
2) These employees will not be scheduled for less than 12 hours of
work, however the Company cannot guarantee hours for anyone.
3) Weekly hours of work shall average 42 hours per week, with the
exception of the Production Department on a 5 day shift cycle
which shall average 40 hours per week.
4) At the end of the shift, no shift worker may leave his or her
place until his or her mate has reported to him or her to take on
the responsibility of the job. If a shift worker does not report
for his or her regular shift, his or her mate on duty shall
notify his or her supervisor or department superintendent. The
mate shall then remain at his or her post until a substitute
satisfactory to management has been secured and has taken over
the job. AN EMPLOYEE SHALL NOT WORK MORE THAN SIXTEEN (16) HOURS
IN ANY TWENTY-FOUR (24) HOUR PERIOD EXCEPT IN CASES OF EMERGENCY
WHICH SHALL MEAN LOSS OF LIFE OR PROPERTY.
5) Hours of work for LABOUR POOL employees shall not exceed forty-
four (44) hours weekly while any part of the employee's schedule
is on the Compressed Work Week. All hours in excess of 44 shall
be at the rate of time and one half, except when following a
shift rotation, where all hours in excess of 48 shall be at time
and one half.
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6) All employees scheduled to work a 12 hour shift shall be
scheduled so that they receive 12 hours off prior to and
subsequent to working his scheduled 12 hour shift.
7) When a Day Worker is required to replace a 12 hour shift
tradesman, he or she will be given the option, upon his or her
return to day work, to work straight time rates to make up his or
her regular 40 hour work week by working 4 hours extra (with the
option to remain for the entire 8-hour day at straight time
rates), or he or she may opt to take the shorter work week.
c) Time and one half under Section 1.09 will be paid for all hours worked
before and after the regularly scheduled daily hours and for all
regularly scheduled hours worked on Sunday or Statutory Holidays and
for hours worked on scheduled days off. An additional half-time
premium will be paid for hours worked in excess of 12 hours on Sunday
or on a Statutory Holiday.
d) When a temporary vacancy of less than fourteen (14) days occurs under
Section 5.04, and there is an employee in the same line of
progression, fully qualified and capable of filling the vacancy,
promotion will be made from employees in the same line of progression
in which the vacancy occurs, by the following method:
FIRST
-----
The employee will move up the Line of Progression and the bottom job
shall be filled at straight time rates.
SECOND
------
Where a qualified and capable employee is not available, to perform
the duties of the vacancy, it will be filled by the employees in the
job from which the vacancy occurred by the following method:
The vacancy will be offered, at overtime rates, by job seniority, to
the employees on their days off that are classified in that job.
(No employee will be offered the opportunity to fill the vacancy if
the vacancy occurs on the shift preceding their own scheduled shift.)
THIRD
-----
Failing to fill the vacancy by the previous methods, the Company shall
have the
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right to offer the overtime shift to any employee who is
qualified and capable of performing the duties of the vacancy.
FOURTH
------
As a last resort, the most junior classified employee, by job
seniority on his or her days off shall be required to report for work.
At this step only, the employee required to report for work on his or
her days off shall have the option to one of his or her regular
scheduled shifts off on his or her next work cycle, if such
arrangements can be made at straight time rates.
NOTE: Employees must let their supervisor know, IF REQUESTED, where
----
they can be contacted during their scheduled days off, in advance.
e) For the purpose of shift differential under Section 8:8.03 it will be
paid as follows:-
During the 8:00 A.M. to 8:00 P.M. shift
- 4 hours shift differential from
4:00 P.M. to 8:00 P.M. ($0.30)
During the 8:00 P.M. to 8:00 A.M. shift
- 4 hours shift differential from
8:00 P.M. to 12:00 P.M. ($0.30)
8 hours shift differential from
12:00 P.M. to 8:00 A.M. ($0.65)
f) VACATION PAY
------------
Employees will be scheduled according to their 12-hour shift during
one (1) shift cycle and pay for vacation purposes will be spelled out
in the Collective Agreement. An employee shall have the option of
either working the first or last day of his or her four (4) day shift
cycle.
g) NON SCHEDULED HOLIDAYS
----------------------
Each employee will be entitled to forty (40) hours of non-scheduled
holiday pay to be taken in the following method:
4 holidays with 10 hours pay for each day taken.
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h) BEREAVEMENT LEAVE
-----------------
40 hours maximum (3 days - 2 paid 12 and one paid 16 hours) for
spouse, child, adopted child or step-child.
24 hours maximum (2 working days) for mother, father, brother, sister,
mother-in-law, father-in-law, step-mother, step-father, foster
parents, grandparents, daughter-in-law, son-in-law, step-brother,
step-sister.
8 hours maximum for brother-in-law or sister-in-law.
i) JURY DUTY
---------
An employee who is prevented from working his or her scheduled shift
due to being on jury duty; or as a subpoenaed witness shall be paid
the difference between the pay received for such duties and his or her
normal straight time hourly earnings which he or she otherwise would
have received.
29
<PAGE>
A2 - JOB CLASSIFICATION AND HOURLY RATE SCALE
----------------------------------------
Payable in the payroll period immediately following:
Date of Dec. 17 Dec. 17 Dec. 17 Dec. 17
Signing 1998 1999 2000 2001
A2.01
<TABLE>
<CAPTION>
CLASS I
- -------
<S> <C> <C> <C> <C> <C>
Cleaner $14.38 $14.60 $14.89 $15.15 $15.45
Labourer
Strapper/Labourer
CLASS II
- --------
#2 Plate Washer $14.54 $14.76 $15.06 $15.32 $15.63
Grader-Helper - Mohog
Warehouseman
Finishing Machine Helper
CLASS III
- ---------
Grader-Mohog $14.68 $14.90 $15.19 $15.46 $15.77
Groover Op.-Print Line
</TABLE>
Coating Plant Helper -
Siding Line
Finishing Machine Op.
Fire Watch (temporary
Occupation)
CLASS IV
- --------
#1 Plate Washer $14.86 $15.08 $15.38 $15.65 $15.97
Spline Operator
Strapper Feeder Print Line
30
<PAGE>
A2 - JOB CLASSIFICATION AND HOURLY RATE SCALE (CONT'D)
----------------------------------------
Payable in the payroll period immediately following:
<TABLE>
<CAPTION>
Date of Dec. 17 Dec. 17 Dec. 17 Dec. 17
Signing 1998 1999 2000 2001
<S> <C> <C> <C> <C> <C>
CLASS V
- -------
Chipper Operator $15.04 $15.27 $15.57 $15.85 $16.16
Volvo Operator
Grader - Print Line
Grader - Siding Line
Outward Lift Op.
*Island Sander/
Inward Lift Operator
CLASS VI
- --------
Wrapper Operator $15.26 $15.48 $15.79 $16.07 $16.39
Chip Handler
Assistant Sawyer
Paint Man (DRC)
CLASS VII
- ---------
Carry Lift Op. $15.45 $15.68 $15.99 $16.27 $16.60
Lab Tester
Shaper Operator -
Siding Line
Utility Man - Print Line
Utility Man - Siding Line
CLASS VIII
- ----------
General Utility -
Production $15.68 $15.92 $16.24 $16.52 $16.85
Assistant Press Op.
</TABLE>
*Class VI will apply when both Sander and Square Tile are being run.
31
<PAGE>
A2 - JOB CLASSIFICATION AND HOURLY RATE SCALE (CONT'D)
----------------------------------------
Payable in the payroll period immediately following:
<TABLE>
<CAPTION>
Date of Dec. 17 Dec. 17 Dec. 17 Dec. 17
Signing 1998 1999 2000 2001
<S> <C> <C> <C> <C> <C>
CLASS IX
- --------
Coating Plant Op.
-Siding Line $15.94 $16.17 $16.50 $16.79 $17.12
Rehumidifier Shaper
Operator
Fire Marshal
Woodyard Chargehand
Plate Repairman
Scaler
Stores Attendant
CLASS X $16.36 $16.61 $16.94 $17.24 $17.58
- -------
CLASS XI
- --------
Press Op. $16.98 $17.24 $17.58 $17.89 $18.25
Forming Machine Op.
Head Op. Print Line
Coordinator - Siding Line
No. 1 Lab Technician
Sr. Stores Clerk
CLASS XII
- ---------
Defibrator Operator $17.10 $17.36 $17.71 $18.02 $18.38
Head Sawyer
</TABLE>
32
<PAGE>
A2 - JOB CLASSIFICATION AND HOURLY RATE SCALE (CONT'D)
----------------------------------------
Payable in the payroll period immediately following:
<TABLE>
<CAPTION>
Date of Dec. 17 Dec. 17 Dec. 17 Dec. 17
Signing 1998 1999 2000 2001
<S> <C> <C> <C> <C> <C>
CLASS XIII
- ----------
General Operator $17.32 $17.58 $17.93 $18.24 $18.61
A2.02
MAINTENANCE DEPARTMENT
Knife Grinder &
Saw Repair $15.94 $16.17 $16.50 $16.79 $17.12
Grinderman $15.45 $15.68 $15.99 $16.27 $16.60
Painter-Insulator $15.45 $15.68 $15.99 $16.27 $16.60
Oiler $15.45 $15.68 $15.99 $16.27 $16.60
Tradesmen, Class A $18.92 $19.20 $19.59 $19.93 $20.33
Tradesmen, Class B $16.50 $16.75 $17.09 $17.39 $17.73
Tradesmen, Class C $15.38 $15.61 $15.92 $16.20 $16.52
Tradesmen, Helper A $14.81 $15.03 $15.33 $15.60 $15.91
Tradesmen, Helper B $14.60 $14.81 $15.11 $15.38 $15.68
Tradesmen, Helper 2 $14.60 $14.81 $15.11 $15.38 $15.68
*Water Treatment Plant Operator
Level 1 N.S. Environmental Certificate equivalent to Class XI
Level 2 N.S. Environmental Certificate equivalent to 2/nd/ Class Stationary
Engineer
Level 3 N.S. Environmental Certificate equivalent to 1/st/ Class Stationary
Engineer
1/st/ Class Stationary Engineer,
Boiler & Compressor
Plant $18.92 $19.20 $19.59 $19.93 $20.33
</TABLE>
2/nd/ Class Stationary Engineer,
33
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Boiler & Compressor Plant $17.79 $18.06 $18.42 $18.74 $19.12
</TABLE>
A2 - JOB CLASSIFICATION AND HOURLY RATE SCALE (CONT'D)
----------------------------------------
Payable in the payroll period immediately following:
<TABLE>
<CAPTION>
Date of Dec. 17 Dec. 17 Dec. 17 Dec.17
Signing 1998 1999 2000 2001
<S> <C> <C> <C> <C> <C>
3/rd/ Class Stationary Engineer,
Boiler & Compressor Plant $16.41 $16.66 $16.99 $17.29 $17.64
</TABLE>
NOTE 1: Tradesmen are: Mechanics, Welders, Instrument Men, Machinists,
Electricians (Motormen), and Carpenters.
NOTE 2: Tradesmen-Helper 2 who are not enrolled in an apprenticeship program
will be the only employees bumpable in the Maintenance Department.
NOTE 3: a) The Knife Grinder and Saw Repair Classification rate will
continue to be paid equivalent to a Class IX.
b) The classification rate of Grinderman, Painter-insulator and
Oiler will continue to be paid equivalent to a Class VII.
NOTE 4: A qualified Tradesman Class A, assigned to profile embossed plates
will be paid a premium of $0.50/hour for all hours worked in
performing these duties.
Senior Welders (Class A) will be offered, in the future, by job
seniority to move to Plate Profiler Trainee*. It is understood and
agreed that upon successful completion of the necessary training, the
Plate Profiler Trainee will automatically replace the permanent Plate
Profiler, in the case of temporary or permanent vacancy.
34
<PAGE>
* This move will be made in accordance with clause 5.14 (Article 5) exclusive
of the last sentence application.
A2 - JOB CLASSIFICATION AND HOURLY RATE SCALE (CONT'D)
----------------------------------------
NOTE 5: a) A maintenance employee may at any time submit to the Maintenance
Supervisor a Company form requesting re-classification.
b) If a maintenance employee requests reclassification and is not
reclassified he shall be given a written notification which will
include the reason(s) for the refusal.
A2.03. Permanent or temporary employees other than Journeymen hired after
January 1, 1994 who have plant seniority with the Company which is
less than four (4) years, shall receive the following percentage of
the job rates set forth in the Collective Agreement:
Plant Seniority % of Job Rate Entitlement
Under 1 Year 68%
1 but less than 2 years 76%
2 but less than 3 years 84%
3 but less than 4 years 92%
4 years or more 100%
A 2.04. Employees of the Company working or with recall rights as of the
signing of this Collective Agreement, who continue working for the
Company or have recall rights as of the payroll period immediately
following December 17, 1999, and through the payroll period
immediately following December 17, 2001, shall receive a $250
continuation bonus payable in the payroll period immediately following
December 17, 1999, and another $250 continuation bonus payable in the
payroll period immediately following December 17, 2001, provided the
Collective Agreement has not be earlier terminated pursuant to Section
15.01(a).
35
<PAGE>
APPENDIX B
VACATION PLAN, STATUTORY HOLIDAYS AND
LEAVES OF ABSENCE
B1- VACATION PLAN
-------------
B1.01 VACATION PLAN ADMINISTRATION
----------------------------
The Vacation Plan will be administered on a calendar year basis.
--------------------
B1.02 CONTINUOUS EMPLOYMENT
---------------------
a) For purposes of the vacation plan only, all continuous service with
ABT Canada Limited, East River Plant, and previous owners, will count
to qualify for vacation entitlement.
b) Continuous employment is broken by discharge for cause, voluntary
resignation, or lay-off in excess of twelve (12) months.
c) Periods of disability because of sickness or accident and lay-offs of
less than twelve (12) months duration, shall not break continuous
employment.
B1.03 a) Employees who as of December 31/st/ of any year have completed less
than one (1) year of continuous employment will be entitled to receive
a vacation pay equal to 4% of their earnings during that year.
b) Employees who complete one (1) but less than four (4) years of
continuous employment will be entitled to receive in the vacation
scheduling period, May 1 to April 30, a vacation of two (2) weeks.
c) Employees who have four (4) but less than nine (9) years continuous
employment, will be entitled to receive in the vacation scheduling
period, May 1 to April 30, and in each subsequent vacation scheduling
period, a vacation period of three (3) weeks.
36
<PAGE>
d) Employees who have nine (9) or more years of continuous employment,
will be entitled to receive in the vacation scheduling period, May 1
to April 30, and in each subsequent vacation scheduling period, a
vacation period of four (4) weeks.
e) Employees who have completed twenty (20) or more years of continuous
employment on or before April 30, 1999, will be entitled to receive in
the vacation scheduling period, May 1 to April 30, and in each
subsequent vacation scheduling period, a vacation period of five (5)
weeks.
B1.04 VACATION PAY
------------
a) The amount of vacation pay for each employee, except those covered by
paragraph B1.03 a) above, will be 2% of his gross earnings of the
previous calendar year for each week of vacation entitlement or forty
(40) times his regular hourly rate, whichever is greater. However, in
order to qualify for full vacation pay, an employee must have worked
at least 1,000 hours in the previous calendar year.
For those employees who do not meet the qualifying 1,000 hours,
vacation pay will be 2% of the previous year's gross earnings times
the number of weeks of vacation earned by his service.
Time lost due to an illness or accident covered under the Weekly
Indemnity Plan, and/or time lost due to an occupational illness or
accident, will be counted as time worked when calculating the
qualifying hours required to be eligible for vacation with regular
hourly rate applied if the employee has been at work sometime during
the calendar year to which the qualifying hours apply.
If an employee returns to work following an absence due to an illness
or accident (i.e., from L.T.D. or W.C.B.) in excess of one calendar
year, he will receive a normal vacation with pay in the calendar year
in which he returns to work. In such a case the qualifying hours
requirement will be waived.
b) An employee may draw his vacation pay at the beginning of his vacation
period if desired.
c) Vacation pay will not be allowed for vacation not taken.
d) Employees have the option, upon sixty (60) days advance notice to the
Company, of cashing in vacation time exceeding two (2) weeks.
37
<PAGE>
e) An employee who leaves the service of the Company will be entitled to
receive for the calendar year during which he leaves the employ of the
Company vacation pay calculated on the following basis:
i) Four percent (4%) of his earnings in that calendar year, for an
employee with less than four (4) years continuous employment;
ii) Six percent (6%) of his earnings in that calendar year, for an
employee with four (4) but less than nine (9) years continuous
employment;
iii) Eight percent (8%) of his earnings in that calendar year, for an
employee with nine (9) but less than twenty (20) years continuous
employment;
iv) Ten percent (10%) of his earnings in that calendar year, for an
employee with twenty (20) or more years continuous employment;
less any vacation pay he has received in the calendar year in
which he leaves.
f) An employee who leaves the service of the Company due to retirement
will receive at time of retirement, pay in lieu of the vacation he
would have received in that calendar year had he remained in the
service of the Company less any vacation pay he may have already
received in the calendar year in which he retires.
B1.05 GENERAL
-------
a) Vacations will be taken at least one complete week at a time.
b) Vacations are compulsory for all eligible employees and cannot be
accumulated from calendar year to calendar year.
c) If possible, vacations should be arranged so that no employee will be
called on to work additional hours.
d) Vacations shall be scheduled by each Department supervisor in such a
way that there shall be no loss of production or no interruption in or
reduction of the efficiency of the operations. Supervisory
replacements shall not be determined as a reduction of the efficiency
of the operation.
e) Should there be a conflict between two or more employees as to date of
vacation, plant seniority will be the determining factor.
38
<PAGE>
f) Employees' lists for the purposes of selection of vacation dates will
be posted in each department by January 1st of the current year.
Employees' selection dates will be completed by April 15th of the
current year and an approved vacation schedule will be posted in each
department by May 1st of the year in which the vacation is scheduled,
which vacation schedule shall utilize twelve (12) months, from May 1
to April 30, for vacations.
g) Employees who wish to take more than two (2) weeks consecutively will
be entitled to do so only between January 1 and May 15/th/, and
between September 16/th/ to December 31/st/.
h) After the approved vacation schedule is posted on May 1st, such
schedule may not be changed except by mutual consent of the employee
and the Company.
i) Labour pool and non-classified employees shall take their vacations on
a pay week basis (Saturday midnight to Saturday midnight).
B2- PLANT HOLIDAYS
--------------
B2.01 PLANT HOLIDAYS
--------------
a) Plant holiday pay will be at the rate of eight times the straight time
hourly rate of the employee's job classification.
b) The parties hereto recognize four (4) statutory holidays as set out in
Clause c) hereof including the hours of plant shutdown and the hours
to be paid.
c) The statutory holidays recognized during the term of this Agreement
are as follows:
CHRISTMAS DAY - 48 hours shutdown commencing 4:00 p.m. the 24/th/ of
December, until 4:00 p.m. the 26/th/, with 16 hours' pay. "Day Workers"
will not work the day after Christmas and if asked to do so or are called
in, they shall receive time and one-half in addition to the Holiday pay.
NEW YEAR'S DAY - 48 hours shutdown commencing 4:00 p.m. the 31/st/ of
December until 4:00 p.m. on the 2/nd/ of January with 16 hours pay. Day
workers will not work the day after New Year's Day and if asked to do so
or are called in, they shall receive time and one-half in addition to the
holiday pay.
39
<PAGE>
CANADA DAY - 24 hours shutdown commencing 8:00 a.m. of the declared
holiday until 8:00 a.m. on the day following, with 8 hours pay.
LABOUR DAY - 24 hours shutdown commencing 8:00 a.m. of the declared
holiday until 8:00 a.m. of the day following, with 8 hours pay.
d) Any of the above days may be changed to a more suitable day when such
change is mutually agreeable to employees and management.
e) The total allowable shutdown time for plant holidays shall be one
hundred and forty-four (144) hours.
f) If any of the statutory holidays set out above are worked, the
employees working the said statutory holiday shall be paid at time and
one-half, plus regular holiday pay.
g) To be eligible for holiday pay an employee must:
i) have been engaged as an employee not less than thirty (30) days
previous to the plant holiday;
ii) have worked the last scheduled day prior to and the first
scheduled day after the holiday unless absent due to illness,
accident or vacation; however, any such permitted absences must
not have commenced more than twelve (12) months prior to the
holiday.
h) Should an employee be on vacation during the week in which one of the
holidays occur, an extra day will be scheduled if requested by the
employee and will be added either at the beginning or at the end of
that vacation period.
i) On a statutory holiday shutdown all "Shutdown" and cleaning procedures
will be completed by 8:00 a.m. or 4:00 p.m. as the case may be, and
all employees will be out of the plant by these times. It is
understood that as soon as the Foreman sees that the necessary work is
completed by an employee or a group of employees, such employees will
be allowed to leave the plant and will only be paid for the hours
worked.
j) The Company expects and the Union agrees that the employee required to
assure that the plant will start up at 8:00 a.m. or at 4:00 p.m. as
the case may be, will report for work two (2) hours before the
scheduled start up time. An employee will not be penalized if he does
not report on the pre-startup time, however, he must give the Company
notice in order that a replacement may be found.
40
<PAGE>
k) In respect to the shutdown periods specified above, essential services
required to protect plant property will be performed on the Statutory
Holidays.
B3.01 FLOATING HOLIDAYS
-----------------
a) Each permanent hourly-paid employee is entitled to five (5) floating
holidays, except as specified in B3.01 (d) below. These floating
holidays must be taken in the calendar year in which they are due.
b) Employees may request a floating holiday before the preparation of the
weekly work schedule of the week in question to his supervisor and the
request is subject to the latter's approval so that the holiday will
not interfere with the efficiency of the operation.
c) Pay for the floating holiday will be at the rate of eight (8) times
the straight time rate of pay of the job the employee would have
performed had he worked on that day.
d) Permanent employees hired after January 1, 1994 who have plant
seniority with the Company which is less than four (4) years shall
receive the following number of floating holidays, subject to
restrictions contained in Section B3.01;
Less than 2 years = 2
2 but less than 3 years = 3
3 but less than 4 years = 4
4 years or more as per Article B3.01 a) above.
e) If after the definite approval of a floating holiday, as posted on the
board via the weekly work schedule, an employee is required to work
the holiday, he shall be paid at the rate of time and one-half for all
hours worked on that day in addition to his holiday pay or he may
request another floating holiday in lieu of holiday pay.
In the case of employees who are removed from the payroll for any
reason other than retirement and in the case of employees who are
recalled to the payroll, their floating holiday entitlement during
that calendar year will be on the basis of one (1) floating holiday
for every fifth or portion thereof of a calendar year that he is on
the payroll.
41
<PAGE>
B4.01 BEREAVEMENT LEAVE
-----------------
a) When death occurs to the spouse, child, adopted child or step-child,
the employee will be granted leave of absence and will be paid eight
hours at his regular straight time rate for up to five (5) consecutive
scheduled working days lost in the seven (7) day period beginning with
the date of death .
b) When death occurs to the employee's mother, father, brothers, sisters,
mother-in-law, father-in-law, step-mother, step-father, foster parents
and grandparents, daughter-in-law, son-in-law, step-brother and step-
sister, the employee will be granted leave of absence and will be paid
eight (8) hours at his regular straight time rate for up to three (3)
consecutive scheduled working days lost in the six (6) day period
beginning with the date of death.
c) When death occurs to an employee's brother-in-law or sister-in-law, he
will be granted a leave of absence and will be paid eight (8) hours at
his regular straight time rate for one (1) scheduled working day lost
in the six (6) day period beginning with the date of death.
d) The regular straight time means the straight time rate of the job at
which the employee would have worked had he not been on bereavement
leave.
e) Any reference to father-in-law, mother-in-law, brother-in-law, sister-
in-law in this Article, apply only to the current legally recognized
spouse of the employee.
B5.01 JURY DUTY
---------
a) An employee who is prevented from working his regular scheduled day or
tour because he is on jury duty or has reported for jury roll call
will be reimbursed by the Company for the difference between the pay
received for jury duty and eight (8) times the straight time hourly
rate he would otherwise have received. It is understood that such
reimbursement shall not be for hours in excess of eight (8) per day or
forty (40) per week, less pay received for jury duty. The employee
will be required to furnish proof of jury service and jury duty pay
received.
42
<PAGE>
b) An employee who is prevented from working his regularly scheduled day
or tour because he has been subpoenaed to appear in a civil or
criminal court as a witness will be reimbursed by the Company for the
difference between the amount paid him pursuant to the court tariff
and eight (8) times the straight time hourly rate he would otherwise
have received. It is understood that such reimbursement shall not be
for hours in excess of eight (8) per day or forty (40) per week, less
the amount paid pursuant to the court tariff. The employee will be
required to furnish proof of service as a witness.
c) Hours paid for jury duty will be counted as hours worked for the
purpose of qualifying for vacations and for recognized paid holidays
but will not be counted as hours worked for the purpose of computing
overtime.
43
<PAGE>
APPENDIX C
DISCIPLINE AND DISCHARGE
C1.01 DISCIPLINE OF PLANT EMPLOYEES
-----------------------------
When it is necessary to discipline an employee, and when a disciplinary
penalty is imposed, said employee will have union representation.
C1.02 APPLICATION OF DISCIPLINE
-------------------------
It is the right of the Company to impose discipline up to and including
discharge, which right shall also include progressive discipline where
appropriate. Discipline, beyond reprimand, shall be subject to the
grievance procedure.
C1.03 RECORD OF DISCIPLINE
--------------------
a) A complete record of each case of discipline administered including
suspensions and dismissals from the Company's service, shall be kept
in a separate file at the plant.
b) Where feasible the employee shall sign this record of discipline as an
acknowledgment of the employee's awareness of its contents. A copy of
this record shall be sent to the employee and to the local Union of
which the employee is a member.
c) When the employee concerned has previous breaches of discipline
recorded against the employee, the dates of such records shall be
included in the file provided, however, that each discipline report
shall be retained for three (3) years following the employee's last
offense recorded and no record of such offense or cancelled report
shall be included in any subsequent file.
44
<PAGE>
APPENDIX D
INSURANCE PLANS
1. EXTENDED HEALTH BENEFITS
------------------------
a) The Company agrees to contribute toward the premium cost of an active
employee's membership in the Extended Health Benefits (Maritime
Medical Plan) Plan once he has completed his probationary service as
indicated below:
<TABLE>
<CAPTION>
Family Individual
Effective Coverage Coverage
<S> <C> <C>
January 1, 1997 $31.00 $21.00
April 1, 1998 $55.00 $22.00
</TABLE>
b) The Company agrees to carry out the administration of the Plan as is
now being done and will forward the cheque direct to the insurance
company. The Contract, however, remains in the name of the Union which
has full control over it and negotiations with the insurance company
relating to it. However, the Company reserves the right to audit the
Extended Health Benefits Plan.
c) Benefit Coverages - Employees on Lay-Off
Employee deductions cover the month following that in which the
deductions are made. The Company contribution is made at the end of
the month for time worked during the month. The employee who is laid-
off after the premium is paid to the insurer for the month in which
the lay-off occurs will be covered to the end of that month.
The employee who does not wish to keep his coverage in force during
lay-off will be reimbursed for any contributions he had made during
the month in which the lay-off occurs.
The employee who wishes to keep the benefit in force for up to 3
months following lay-off may do so on a month by month basis by paying
the full premium before the end of the month less any premium deducted
from earnings in the month the lay-off occurs and the applicable
portion of the employer's contribution, prorated over the time worked
that month. An employee who is recalled during a month will be
expected to make up the difference, if any, between the full cost of
the premium and the amount deducted from earnings
46
<PAGE>
before the end of the month in which he returns to work and the
employer's contribution applicable to the time worked that month to
cover the premium for coverage in the following month.
2. BASIC LIFE, OPTIONAL LIFE, ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE
-----------------------------------------------------------------------
AND WEEKLY INDEMNITY PLANS
--------------------------
a) Membership
i) All active employees under age 65, who have completed six (6)
months of continuous service (three months in the case of Weekly
Indemnity) are eligible for membership upon submission of the
required application form.
ii) If the employee elects to be insured, the full amount must be
taken. If cancellation is later requested, then the full amount
is cancelled.
iii) An employee who waives participation, upon becoming eligible for
membership may apply later, with medical evidence satisfactory to
the insurer, and provided the applicant is then under age 50.
3. BASIC LIFE, OPTIONAL LIFE, AND AD&D INSURANCE BENEFITS
------------------------------------------------------
a) Basic Life Insurance - Prior to the earlier of retirement or
------------------------------------------------------------
attainment of age 65
--------------------
Prior to the earlier of retirement or attainment of age 65, an active
employee, who is a member of the Plan is covered for Life Insurance
according to the following schedule. This insurance will be fully
paid for by the Company.
<TABLE>
<CAPTION>
Basic Life
Years of Service Insurance Amount
---------------- ----------------
<S> <C>
less than one year and more than $15,000
six months
less than two years and more than one year $17,000
less than three years and more than two $20,000
years
less than four years but more than three $25,000
years
more than four years of service $30,000
</TABLE>
46
<PAGE>
b) An insured employee who has completed one (1) year of continuous
service at time of lay-off may keep his basic life insurance in force
for a period up to three (3) months provided he pays the full monthly
premium in advance unless his service is broken as provided in Article
5, paragraph 5.07 b). The Life Insurance continued during lay-off will
be the amount in effect at the time of lay-off.
c) Optional Life Insurance
-----------------------
All employees who are eligible for Basic Life Insurance can purchase
additional amounts of Optional Life Insurance at the employee's cost.
This will be available in units of $10,000 up to 10 units, smoker/non-
smoker rates are set by the insurance company. This optional
insurance is employee paid.
All provisions of the Optional Life plan will be governed by the
insurance company's master policy.
d) Voluntary Accidental Death & Dismemberment (AD&D) Insurance
-----------------------------------------------------------
All employees who are eligible for Basic Life Insurance can purchase
amounts of AD&D Insurance at the employee's cost. This insurance will
be available in units of $10,000 up to 25 units, in single or family
coverage.
All provisions of the AD&D plan will be governed by the insurance
company's master policy.
e) Retiree Life Insurance - After the earlier of Retirement or attainment
----------------------------------------------------------------------
of age 65
---------
For active employees who meet the service requirements prior to April
1, 1998, the amount of Life Insurance to be kept in force at Company
expense after the earlier of retirement or attainment of age 65 will
be in accordance with the following schedule:
<TABLE>
<CAPTION>
Service Amount of Life Insurance
------- ------------------------
February 5, 1994 to March 31, 1998
<S> <C>
15 years or more $3,500
13, but less than 15 years 3,000
12, but less than 13 years 2,500
</TABLE>
47
<PAGE>
<TABLE>
<S> <C>
11 but less than 12 years 2,000
10 but less than 11 years 1,500
</TABLE>
Active employees who retire on or after April 1, 1998 and who have at
least attained the age of 55, will have $2,000 of Life Insurance
provided by the Company at no cost to the retirees. The retiree is
responsible for all provincial and federal taxes associated with the
cost of the life insurance premium.
f) Benefit Coverages - Employees on Lay-off
----------------------------------------
i) Optional Life Insurance coverage may be kept in force up to three
months following lay-off provided the employee pays the premium
in advance. The plan provides a 31 day conversion privilege (no
medical examination required) from date of cancellation.
ii) Voluntary Accidental Death and Dismemberment coverage is
cancelled on the date of lay-off. Coverage is automatically
reinstated on the date of return to work.
4. WEEKLY INDEMNITY
----------------
a)(i) FOR DISABILITY COMMENCING BEFORE APRIL 1, 1998:
The Company will pay the cost of a Weekly Indemnity Plan providing a
benefit of between 60% and 70% of an eligible employee's normal
weekly straight time rate with the percentage to be established as
set forth in Subsection (e) below.
Such benefits will be payable from the first day lost due to a non-
occupational accident (or non-occupational illness requiring
hospitalization) and the fourth day of non-occupational illness for
the duration of the disability or 52 weeks, whichever is less,
subject to Plan requirements.
a)(ii) FOR DISABILITY COMMENCING AFTER MARCH 31, 1998:
The Company will pay the cost of a Weekly Indemnity Plan providing
benefit of 66-2/3% of the employee's normal weekly straight time
rate.
Such benefits will be payable from the first day lost due to a non-
occupational accident (or non-occupational illness requiring
hospitalization or out-patient surgery) and the fourth day of non-
occupational illness for the duration of the disability or 26 weeks,
whichever is less, subject to Plan requirements.
48
<PAGE>
An employee's normal weekly straight time rate for purposes of
calculating the weekly indemnity benefit due shall be 40 times the
straight time rate for the job which he is scheduled to perform at the
time his non-occupational accident or illness occurs.
To be eligible to submit a claim for Weekly Indemnity benefits an
employee must:
i) have completed three (3) months of continuous service since the
last break, and
ii) have submitted the required application for membership in the
plan, and
iii) have returned to active employment with the Company following a
lay-off, termination for any reason, or a strike, and
iv) not have retired or attained age 65, and
v) submit the claim for benefits within the twenty (20) day period
immediately following the first day of disability due to the
illness or accident and be under the treatment of a physician.
The Plan will be registered with Human Resources Canada and the
full Employment Insurance premium reduction resulting from such
registration will be retained by the Company.
Employees must apply for sickness and/or disability benefits
available to them under the terms of Canada Pension Plan
Legislation or any other government sponsored disability Plan.
Should an employee's application for government benefits be
accepted, benefits otherwise payable under the Company Weekly
Indemnity Plan will be reduced by the amount payable under the
provisions of the government plan(s). Should payments made by
the government plan cover a period for which benefits have
already been paid by the Company, employees shall endorse their
government benefit cheques in favour of the insurance company.
Such reimbursements will be taken into consideration when
calculating claims costs.
b) The per diem Weekly Indemnity benefits payable will be reduced by any
disability or sickness benefits paid or payable under the provisions
of any government legislation or any Company Benefit Plans except
payments made from the employee's sick leave pay bank where these are
being used to "top-up" the per diem Weekly Indemnity benefit due for
purposes of maintaining 100%
49
<PAGE>
of the employee's straight time rate per scheduled working day lost by
reason of a non-occupational disability.
c) Weekly Indemnity and Long Term Disability Insurances are cancelled
date of lay-off. Coverage's are reinstated automatically the first day
employee returns to work. Regularly classified employees who are laid
off when they are receiving weekly indemnity benefits will continue to
receive such benefits based on the work schedule applicable to their
occupation immediately preceding their lay-off, (i.e. 5 day schedule,
4-5-6 day schedule etc. . .). In the case of an employee in the labour
pool who is laid off while in receipt of Weekly Indemnity Benefits,
such benefits will be paid based on the average number of days per
week on which work was available to him in the four (4) calendar week
period preceding the lay-off.
Persons on lay-off will receive Weekly Indemnity benefits for as long
as they quality however, other benefits will be treated as in the case
of other laid-off employees. LTD benefit payments to an employee who
otherwise qualifies will not commence at a time when the employee
would be on lay-off.
d) Benefit payment shall cease on the effective date of retirement under
the provisions of Company Retirement Plans.
e) FOR DISABILITIES COMMENCING BEFORE APRIL 1, 1998:
PROPOSED ALL STEPS "NO MAXIMUM"
-------------------------------
U.I.C. MAXIMUM AS A MINIMUM WHERE RATES
---------------------------------------
AND PERCENTAGES WARRANT
-----------------------
Raw experience index entitlement
<TABLE>
---------------------------------------------------------
<S> <C> <C> <C>
190 or less 191 to 205 206 to 220 221 to 235
70% 69% 68% 67%
---------------------------------------------------------
236 to 250 251 to 265 266 to 280 281 to 295
66% 65% 64% 63%
---------------------------------------------------------
296 to 310 311 to 325 326 or more
62% 61% 60%
=========================================================
</TABLE>
By using the current 18-month formula (recent 6 mos. x 2, earlier 12 mos. x 1) a
representative average index is arrived at. Cash pay-out per month is divided
by actual amounts of weekly indemnity in force to develop average. Adjustments
would be made Jan. 1 and July 1 each year as currently done.
50
<PAGE>
51
<PAGE>
5. LONG TERM DISABILITY BENEFIT PLAN
---------------------------------
The Company will pay the cost of the Long Term Disability Benefit Plan
providing benefits as summarized below.
ELIGIBILITY
-----------
Long Term Disability ("LTD") coverage will apply to all employees covered
by the Weekly Indemnity Plan.
QUALIFYING PERIOD
-----------------
An insured employee will be eligible to receive Long Term Disability
Benefits after twenty-six (26) weeks of benefit entitlement for the same
disability, under the provisions of the Weekly Indemnity Plan.
Benefit payment shall not commence during a lay-off or strike until the
termination of the lay-off or strike.
DEFINITION OF DISABILITY
------------------------
Disability shall mean an insured employee who has received twenty-six (26)
weeks of benefits under the Weekly Indemnity Plan and who for up to the
next ensuing eighteen (18) months is unable, because of a non-occupational
illness or accident, to work at his regular occupation, and thereafter is
unable to perform any and every duty of any occupation in the ABT Canada
Limited, East River Plant for which he is reasonably fitted by education,
training or experience.
AMOUNT OF BENEFIT
-----------------
a) 50% of regular straight-time hourly rate, multiplied by 2080 divided
by 12, up to a maximum monthly payment of $1,800.
The regular straight-time hourly rate shall be the classified rate of
the employee on the date the non-occupational illness or accident
commenced.
For the employee in receipt of Long Term Disability Benefit, the
initial hourly rate used will be adjusted on January 1 of each year by
the percentage or amount (cts/hour) of the negotiated general wage
increase until the benefit reaches the maximum monthly payment
specified in the Labour Agreement in force when the non-occupational
illness or accident commenced. The maximum monthly payment remains
unchanged for the entire disability period.
52
<PAGE>
b) The amount of benefit shall be reduced by any payments on behalf of
the employee made under any Government disability plan (except
increases in such amounts occurring 12 months or more after
disablement), or any other non-private disability income plan by
reason of the same non-occupational illness or accident.
c)(i) FOR DISABILITY COMMENCING ON OR AFTER FEBRUARY 5, 1994, BUT PRIOR
TO APRIL 1, 1998:
While receiving benefits under this Plan, an employee will continue
to accrue pension benefits at no cost to him. The pension benefit
accrued will be in the same amount as though he were contributing to
the Retirement Plan on earnings of twice of the benefit in paragraph
a) above.
Death benefits will not accrue during this period, except with
respect to interest on the employee's contributions made prior to
commencement of LTD Benefits in the former plan.
c)(ii) FOR DISABILITY COMMENCING AFTER MARCH 31, 1998:
While receiving benefits under this Plan, an employee will continue
membership in the new pension plan.
The employee may continue to contribute at any level up to the
maximum 5% of the LTD benefit payment amount allowed in the DC plan.
The employee will, in accordance with the terms and conditions of
the Defined Benefit Pension Plan, continue to accrue credited
service as described in the new defined benefit pension plan.
If the employee should die before reaching normal retirement date,
the surviving spouse will receive a refund of the current market
value of the contributions made by the employee to the Defined
Contribution Plan and any special discretionary contributions made
by the Company. If there is no surviving spouse, the designated
beneficiary (or the estate if no beneficiary is named) will receive
the refund.
BENEFIT PERIOD
--------------
a) FOR DISABILITY COMMENCING BEFORE APRIL 1, 1998:
Benefits will be paid for one month, for each completed month of
service prior to the onset of disability, while the employee is
disabled, but in no event beyond attainment of the age required to
qualify for voluntary Early Retirement. Upon
53
<PAGE>
attainment of the age requirement for Voluntary Early retirement, the
service requirement of 20 years with respect to unreduced early
retirement, under the provisions of the Employees' Retirement Plan of
ABT Canada Limited, Canexel Hardboard Division - Hourly Personnel will
be waived for employees eligible to receive Long Term Disability
payments.
Until March 31, 1998 only, the provisions of the above paragraph will
be applied as follows:
i) For those employees whose disability commenced after ratification
of the 1995-1997 Collective Agreement, they will be deemed to
have attained the age required to qualify for Voluntary Early
Retirement at the later of age 58 or April 1, 1998, but in no
event will disability payments be made after attainment of age 65
or death.
b) FOR DISABILITIES COMMENCING AFTER MARCH 31, 1998:
Benefits will be paid while the employee is disabled but in no event
beyond the month during which the employee attains age 62. Upon
attainment of age 62 the employee will retire under the provisions of
the ABT Canada Limited East River Hourly Pension Plan.
DURATION OF BENEFITS
--------------------
Benefits shall cease:
a) On the date the employee ceases to be disabled as defined in the Plan,
or
(Note: If there is a recurrence of the same disability within six (6)
months of return to work, a new qualifying period will not be
required, and the disabled employee will be eligible for any balance
of Long Term Disability benefit payments. This provision shall take
precedence over any recurrent disability provision under the Weekly
Indemnity Plan.)
b) Upon attainment of the age requirement for Voluntary Early Retirement,
c) At death, or Retirement, whichever is earlier.
PARTICIPATION IN GROUP INSURANCE
--------------------------------
FOR DISABILITY COMMENCING BEFORE APRIL 1, 1998:
An insured employee in receipt of Long Term Disability Plan Benefits, who
was a
54
<PAGE>
participant in the Company Group Life Insurance Plan at the commencement of
his disability, will continue to enjoy Group Life Insurance coverage in the
amount of $25,000 at no premium cost to him.
FOR DISABILITY COMMENCING AFTER MARCH 31, 1998:
An insured employee in receipt of Long Term Disability Plan Benefits, who
was a participant in the Company Group Life Insurance Plan at the
commencement of his disability, will continue to enjoy Group Life Insurance
coverage in the amount in force as of the date of disability at no premium
cost to him, until age 62. At this time the employee will deem to retire
and is eligible for the retiree life benefit in force at that date.
SERVICE ACCUMULATION
--------------------
An insured employee who is eligible to receive Long Term Disability Benefit
payments shall not accumulate service for any purpose, except in the event
of his return to work where the employee will be reintegrated in the job he
would have held had he not been absent, providing he meets the requirements
of the job. In such a case, he will accumulate job, department and plant
service for promotion and lay-off purposes only.
EXCLUSIONS
----------
Benefits under the Long Term Disability Plan will not be payable for claims
resulting from illnesses or accidents such as:
a) Any injury arising out of or sustained while doing an act or thing
pertaining to any occupation or employment for remuneration or profit,
or
b) Any injury or illness entitling the employee to compensation under any
Workmen's Compensation or similar Legislation, or
c) Self-destruction or any self-inflicted injury, while sane or insane,
or
d) Disability for which the employee is not under the treatment of a
physician, or
e) Alcoholism or drug addiction, unless the employee is confined in a
hospital or institution licensed to provide care and treatment
incident thereto, or unless the employee is undergoing regular
rehabilitative treatment approved by the insurer and a physician.
REHABILITATION
--------------
55
<PAGE>
An employee receiving an amount of Weekly Indemnity or Long Term Disability
Benefit may be asked to undergo reasonable rehabilitation measures which
have been the subject of prior consultation with the employee's doctor, at
no cost to the employee. If such employee refused to undertake such
rehabilitation, he may be declared not eligible for an amount of disability
benefits.
OTHER
-----
a) Company contributions to the Hospital Medical Plan in effect shall
cease when an employee becomes eligible to receive payments under the
Long Term Disability Plan. The employee may keep his hospitalization-
medical care insurance, in force during that period, provided that he
pays in advance each month, the full amount of the appropriate
premium.
b) Upon becoming eligible to receive payment under the Long Term
Disability Plan, employees will be paid the vacation due them, if any,
for time worked prior to the commencement of their disability, based
on the vacation provisions applicable to a termination of employment.
c) Long Term Disability Insurance is cancelled on the date of lay-off.
Coverage is reinstated automatically the first day employee returns to
work.
Persons on lay-off will receive Weekly Indemnity benefits for as long
as they quality however, other benefits will be treated as in the case
of other laid-off employees. LTD benefit payments to an employee who
otherwise qualifies will not commence at a time when the employee
would be on lay-off.
6. CONTRIBUTIONS
-------------
The Basic Life Insurance, Retiree Life Insurance, Weekly Indemnity
Insurance and the Long Term Disability Insurance Plans are non-
contributory.
7. Insurance benefits will continue in force when an employee is granted a
leave of absence to attend Negotiations or Union Conventions or to attend
to other local union business.
8. DENTAL PLAN
-----------
ELIGIBILITY
-----------
All active employees (and their dependents) who have completed six (6)
months of continuous service on the effective date of the plan will be
covered from the effective date of the plan upon submission of the
appropriate application form.
56
<PAGE>
Employees who have not completed six (6) months continuous service and all
new employees will be eligible to participate on the first of the month
coinciding with, or first following completion of six (6) months continuous
service.
DEPENDENTS
----------
A dependent is the employees:
a) spouse and/or
b) unmarried child, step-child, legally adopted child or foster child
under 21 years of age, or any such child age 21 but under 25 years of
age who is in regular full-time attendance at an accredited institute
of learning, and who is dependent on the employee for support, and/or
c) wholly dependent and mentally retarded or physically handicapped child
who was covered up to the maximum age shall remain covered as a
dependent without limit as to age provided the child is incapable of
self-sustaining employment.
MEMBERSHIP
----------
All eligible employees will complete an application card indicating whether
or not they wish to participate. Dependents not specified on application
card will not be covered. Covered employees acquiring a dependent must
revise coverage within 31 days of marriage or acquiring other dependent(s)
otherwise coverage will commence six (6) months after receipt of such
application.
COST
----
The Company will contribute as indicated below toward the cost of the
Dental Plan.
Married Individual
Coverage Coverage
-------- ----------
Up to $24.00/month Up to $10.50/month
BENEFIT COVERAGE
----------------
After an individual deductible of $25.00 each calendar year with a maximum
deductible of $50.00 in the same period.
A. ROUTINE PREVENTATIVE, DIAGNOSTIC AND RESTORATIVE TREATMENTS
-----------------------------------------------------------
57
<PAGE>
100% reimbursement for the following procedures:
a) Oral examination, bite-wing X-rays, prophylaxis (cleaning and
scaling of teeth), once every six (6) months.
b) Full mouth series of X-rays, once every 24 months.
c) Topical application of anti-cariogenic agent (fluoride type),
once every six (6) months.
d) Diagnostic X-rays and laboratory procedures required in relation
to dental surgery.
e) Provisions of space maintainers for missing primary teeth.
f) Amalgam, silicate, acrylic and composite fillings.
g) Extractions and simple alveolectomy (socket treatment) at time of
tooth extraction.
h) Surgical extraction of impacted teeth and other surgery required
for removal of tumors, cysts, neoplasms, plus the incision and
drainage of abscesses.
i) Root canal diagnosis and treatment.
j) Periodontal services covering the treatment of gums and bones
supporting the teeth, including the surgical removal of
infections in these areas.
k) Prosthodontics - relining, rebasing or repairing of an existing
appliance (fixed bridgework, removable partial or complete
dentures).
l) General anesthetic required in relation to dental surgery.
m) Consultation required by the attending Dentist.
B. MAJOR RESTORATIVE TREATMENTS
----------------------------
50% reimbursement for the following:
a) Crowns, inlays and onlays including gold and porcelain veneer
fillings where other material is not suitable.
58
<PAGE>
b) The creation of an appliance (fixed bridgework, removable partial
or complete dentures.)
c) The replacement of an existing appliance if necessitated by the
extraction of additional natural teeth while insured or if the
existing appliance is at least 5 years old and cannot be repaired
or if the existing appliance is temporary and is replaced by a
permanent bridge or denture within 12 months of when temporary
appliance was installed.
d) Services of a licensed Denturist when practicing within the scope
of his license.
e) Other necessary oral surgical procedures not specifically listed
under routine surgery.
EXPENSES NOT COVERED
--------------------
The following expenses are not covered under the Group Dental Plan:
---
- expenses for orthodontic treatment or appliances (including habit
breaking devices).
- expenses incurred for cosmetic purposes.
- services not listed under benefit coverage.
- services not performed by a licensed dentist unless specified
under Benefit Coverage.
- treatment for dental injury covered by Workmen's Compensation or
Automobile Insurance Plans.
- all services available under a government plan.
- treatments made before the employee's coverage effective date, or
performed during his layoff or after his termination of
employment.
- any dental services provided at no cost to the employee.
- fee charges for completion of dental forms required nor expenses
incurred traveling to treatment center.
- expenses resulting from an act of war or hostility of any kind.
59
<PAGE>
- any expenses provided for under another group insurance plan,
such as damage to natural teeth as a result of an accident, which
is covered under the Group Hospital/Medical Plan except that the
portion of expenses not covered by another plan, up to the limit
prescribed in the appropriate Provincial Dental Association
Schedule of Fees, will constitute an eligible expense under the
Group Dental Plan.
REIMBURSEMENT
-------------
1. SCHEDULE OF FEES
----------------
After the annual deductible has been met, you will be reimbursed for
100% of the cost of routine preventative, diagnostic and restorative
treatments and for 50% of the cost of major restorative treatments,
provided the treatments are reasonable and necessary as defined by the
insurance company and the costs do not exceed the amounts prescribed
in the annual current year Provincial Dental Association Schedule of
Fees.
2. PREDETERMINATION SERVICE
------------------------
If the employee or an eligible dependent is to undergo restorative
treatments costing $300 or more, the notice of claim should be
submitted prior to the commencement of treatment to determine in
advance, what portion of the total bill will be reimbursed under the
Dental plan and what portion will be the employee's responsibility.
3. ALTERNATE TREATMENT
-------------------
The insurance company reserves the right to make a determination of
benefits payable taking into account alternate procedures, services or
course of treatment which may be performed for the dental condition
concerned in order to accomplish the desired result based on accepted
standards of dental practice. For this reason it is important for the
employee to submit a notice of claim, completed by his dentist, as
indicated in paragraph 2 of this section.
MAXIMUM PAYABLE
---------------
The maximum reimbursement from the Dental Plan is $2,000 per insured per
year.
FILING CLAIMS
-------------
Expenses incurred for eligible services performed after the effective date
of the Plan will be reimbursed after completion of the insurance company's
claim form which must
60
<PAGE>
be submitted to the Personnel Office as soon as completed by the dentist.
Claims for eligible dental expenses in one year must be filed before the
end of the next year in order to be considered.
TERMINATION OR SUSPENSION OF COVERAGE
-------------------------------------
Coverage terminates on the date an employee ceases to be actively at work
with the Company except that employees in receipt of:
a) Workmen's Compensation benefits, or
b) Weekly Indemnity benefits will be covered by the Dental Plan for up to
26 weeks from their disability date.
Coverage will be suspended during lay-off and will be restored as soon as
the employee resumes active full-time employment.
9. GENERAL
-------
a) The Company undertakes under the provisions of this Article to under-
write the cost of the Plans summarized above to the maximum amount, if
any, stipulated in the Agreement, however, the plan administrator(s)
and not the Company is solely responsible for determining eligibility
for the benefits and the payment of such benefits under these Plans.
b) The Plans summarized in this Article will be administered by an
Insurance Carrier or Carriers selected by the Company. All provisions
of the Plans are contained in the Master Policies issued by the
Insurance Carrier or Carriers and the Master Policies shall govern
administration of the Plans.
c) Income tax will be deducted at source in the case of Weekly Indemnity
payments.
10. An employee who is otherwise eligible, but who is not actively at work at
the time of implementation of the revised plans, will become eligible for
membership, and or coverage in the revised plans upon return to active full
time employment.
11. RETIREMENT PLAN
---------------
The terms and conditions of the retirement plan for service prior to April
1, 1998 shall be governed by the official plan document ("Pension Plan for
Hourly Personnel of ABT Building Products Limited Canexel Hardboard
Division") as adopted by the Company and subsequently amended from time to
time. No amendment to the retirement plan
61
<PAGE>
which affects members' benefits for service prior to April 1, 1998 shall be
made during the period of this Collective Agreement without the written
agreement of the Union unless required by the applicable government
authorities.
For greater clarity, it is agreed that service with the Company on and
after April 1, 1998 shall be included for purposes of satisfying
eligibility requirements for early retirement, vesting, and bridging in
respect of benefits earned prior to April 1, 1998.
MEMBERSHIP
----------
Membership in the plan shall be compulsory for all new employees who have
attained age 21 and who have completed one (1) year's service subsequent to
any break. It is understood that an employee must be on the payroll to be
enrolled.
An employee who is presently on the payroll and who has not met the present
three (3) year service requirement may join immediately provided he has
completed one (1) year's service and attained age 21 or he must join upon
completion of three (3) years' service.
PLAN AMENDMENT, APRIL 1, 1998
-----------------------------
The retirement plan shall be amended effective April 1, 1998 to provide
benefits under the following terms and conditions.
PENSION BENEFITS
----------------
Effective April 1, 1998, a member who retires on his normal retirement date
(age 65) shall be entitled to receive an annual pension commencing on his
normal retirement date in an amount equal to the sum of:
a) $25 per month per year of Credited Service on and after April 1, 1998;
plus
b) the amount of pension which may be provided by the member account.
c) the amount of pension which may be earned by the member under the
provisions of the old plan prior to April 1, 1998, if any.
VESTING
-------
In respect of benefits earned for service on and after April 1, 1998, any
member, upon ceasing to be an employee for any cause other than death or
retirement under the Plan, who at the time of so ceasing to be an employee,
shall have completed a period of plan membership of two (2) or more years
shall be entitled to receive at age 65 should he
62
<PAGE>
then survive, the normal retirement allowance.
MEMBER CONTRIBUTIONS
--------------------
Effective April 1, 1998, each plan member on payroll may contribute, by
regular payroll deduction, until his retirement, termination of employment,
layoff, or death, a percentage of earnings between 0% and 5% at the
member's option. The percentage of earnings must be a multiple of .5%
between 1% and 5%. Members may select a contribution rate prior to April
1, 1998 to apply for the period April 1 to December 31, 1998. Members will
be given an opportunity to change their contribution rate annually to take
effect on January 1 of the following year. A member's election of
contribution will stay in effect until such time as the member makes
another election. In the event that a member does not make a new election
with respect to contribution rate, the member shall be deemed to have
elected to contribute at the same percentage rate as elected in the prior
year.
If no election is made for contribution to this optional plan, they will be
considered a member if they have prior contribution remaining in the plan.
Employee contributions shall be allocated to an individual member account
for the benefit of each member. Members will direct the investment of
their own account. A number of investment choices will be made available
including the following funds:
. Fixed Income
. Canadian Equity
. U.S. Equity
. International Equity
The accumulated value of the member account shall be available upon the
member's retirement, termination of employment or death to provide benefits
to the member or beneficiary as applicable. No portion of the member
account shall be used to fund the fixed rate pension and bridge supplement
provided by the Company.
VOLUNTARY EARLY RETIREMENT
--------------------------
A member in service may retire as early as the first of the month
coincident or next following the attainment of age 55. Upon a member's
early retirement, benefits shall be reduced as follows:
1. If a member retires on or after attainment of age 62 (but before age
--
65), the fixed rate pension earned for Credited Service on and after
April 1, 1998 shall be reduced by 0.2% for each complete month by
which early retirement precedes the normal retirement date.
63
<PAGE>
2. If a member retires on or after attainment of age 55 (but before age
--
62), the fixed rate pension earned for Credited Service on and after
April 1, 1998 shall be reduced by 7.2% (representing the reduction
applicable from age 62 to age 65) and further reduced on an actuarial
equivalent basis from age 62 to the member's actual early retirement
date.
BRIDGING SUPPLEMENT
-------------------
Effective April 1, 1998, a member in service who retires on or after the
attainment of age 62 but before attainment of age 65, shall be entitled to
receive an annual bridging supplement in respect of service on and after
April 1, 1998 commencing on his early retirement date in an amount equal
to:
. $15 per month per year of Credited Service on and after April 1, 1998
CREDITED SERVICE
----------------
One year of credited service will be granted for each calendar year during
which a member of the Plan receives pay for hours (total hours paid)
equivalent to the number of hours in the annualized normal straight time
schedule as specified in the Labour Agreement applicable to the occupation
on which he is classified.
Example: 5-2 schedule: 2080 hours paid equals one year credited service.
Any employee who does not receive pay for hours (total hours paid)
equivalent to the number of hours in the annualized normal straight time
schedule applicable to the occupation on which he is classified or who is
classified on other than a year round occupation will receive a
proportionate credit equal to the time he is paid for divided by the total
number of normal straight time hours in the year (i.e., 52 weeks X the
normal weekly schedule year) and then converted into months.
In no case will an employee receive more than one year of credited service
per calendar year.
ADMINISTRATION
--------------
The Company will show on the Individual Pension Benefit Statement issued
annually to each employee, the status of his credited service to December
31 of the preceding year.
64
<PAGE>
LETTERS OF INTENT
AND
ADMINISTRATIVE STATEMENT
1983-1984
1. LETTER OF INTENT
----------------
An employee classified under the job classification and hourly rate scale
as Tradesman A, B, or C who is being laid off will have the right to refuse
to bump into an operating department. This decision will remain in effect
for the duration of the lay-off or until his recall rights expire,
whichever of the two is earliest.
It is clearly understood that such an employee who has forfeited his right
to bump into an operating department has also forfeited his right to recall
into an operating department for the duration of the lay-off or until his
recall rights expire, whichever of the two is the earliest.
Such an employee who does not have enough seniority to bump into an
operating department, will have the right to refuse recall into an
operating department under the terms cited above.
2. LETTER OF INTENT:
-----------------
RE: - DAY WORKERS IN THE MAINTENANCE DEPARTMENT
-----------------------------------------------
It is not the Company's intention that employees classified under the job
classification and hourly rate scale as Tradesmen A, B or C be penalized by
being temporarily assigned to work on shift.
The Company will make available to these employees the number of regular
scheduled weekly hours the employees would have worked, had they remained
on days providing such work is available.
65
<PAGE>
3. LETTER OF INTENT:
-----------------
WITH REGARDS TO APPENDIX #B VACATION PLAN B1.05 GENERAL
-------------------------------------------------------
The rules as stated in labour agreement will apply. The following is
intended for clarification and simplification.
1. Day workers' vacation will be scheduled Monday to Sunday inclusive.
2. Tour workers and Shift Maintenance employees will be scheduled
according to their shift. One week of vacation is normally 5 working
days, but the employee may, if he wishes, take the extra 2 days that
make up his 7 day work cycle. These 2 days will be without pay.
3. Persons may, if they wish, take the 2 days as noted above as floaters.
4. Within each shift or trade group it will only be possible to allow a
certain number of persons off at the same time, and also within these
groups only certain combinations of skills (or jobs) can be allowed
off at the same time.These will be defined by the Department
Superintendent.
5. Vacation relief will be within a shift.
66
<PAGE>
ADMINISTRATIVE STATEMENT
------------------------
SICK LEAVE PAY
--------------
Employees who have Sick Leave Pay to their credit at January 1, 1984:
- ---------------------------------------------------------------------
a) The hours of sick leave an employee has to his credit December 31, 1983
will be multiplied by the employees classified hourly rate December 31,
1983 to establish the dollar value of his sick leave pay bank. The sick
leave pay entitlement thus determined will be paid upon request to the
employee as provided in paragraphs b), c) or d) below until exhaustion of
his entitlement.
b) Active employees who are confined to home or hospital for one day but less
than the qualifying period for weekly indemnity due to a non-occupational
illness and who have sick pay entitlement will be paid upon request from
their sick leave bank. Such claim must be supported by a doctor's
certificate. Payment will be made at the rate of eight (8) hours pay at
the employee's classified rate at the time the non-occupational illness or
accident occurred, for each scheduled working day the employee loses due to
the non-occupational illness or accident. Payment will continue until the
earlier of exhaustion of the employee's sick leave pay entitlement or his
return to work.
c) The employee's sick pay entitlement if any will be used if requested to pay
employee's classified rate for each scheduled working day he loses during
the waiting period for Weekly Indemnity benefits and will also be used if
requested to "top-up" the per diem Weekly Indemnity benefit payments due
for scheduled working time lost so that the total of the Weekly Indemnity
Benefit and the sick leave payment equals 100% of the employee's classified
rate at the time the non-occupational disability occurred until exhaustion
of his sick pay entitlement. Weekly Indemnity payments made during a
period of lay-off will not be "topped up".
d) Sick leave pay entitlement may be used for Dental, Eye and other
appointments with a medically recognized professional, upon presentation of
an appointment certificate. Such a leave will be considered of a duration
of four (4) or eight (8) hours each time.
e) The amount of sick leave pay paid to an employee will be deducted from his
sick leave bank. Should the employee be absent again due to a recurrence
or due to another non-occupational accident or illness he will have to his
credit the amount remaining in his sick leave bank, if any.
67
<PAGE>
ADMINISTRATIVE STATEMENTS
1985
1. SHIFT WORK - TRADESMEN (amended D.O.A. - 1992)
-----------------------
The Company does not intend to unduly penalize its senior qualified
Tradesmen by assigning them steadily to shift work. For this reason the
following policy will be implemented:
Every six (6) months (January and July), one mechanic and one electrician
(Class A or B) who is senior in point of department service will on each of
those dates be given the option of transferring to shift or day work as the
case may be. If he refuses this option, the next senior man will be given
the option and so on. If a senior tradesman who is working shift opts for
day work, the Company will allow the tradesmen by seniority to transfer to
shift and if no tradesman volunteers, the junior tradesmen Class A or B on
days will be forced to shift.
If a senior tradesman who is working days opts for shift, the Company will
allow the tradesman by seniority to transfer to day work and if no
tradesman volunteers, the junior tradesman on shift will be forced to day
work.
By doing so, the senior tradesmen who are qualified and capable will by
choice be able to work days or shift.
After a tradesman elects to use this option and then reconsiders the option
at a later date, and uses his seniority to return to his original shift
work or day work, he shall not be considered for this option for another
two (2) years.
No Electrician or Mechanic (Class A or B) with less than one year of
service in his trade will be assigned to regular shift work.
The above does not apply in cases of relief assignments.
2. Overtime - Day Workers (amended D.O.A. - 1992)
----------------------
a) Senior Tradesmen in point of department seniority will be given the
first opportunity to perform Sunday or overtime work. If no senior
tradesmen volunteer, the junior tradesmen who are qualified and
capable of performing the work, will be assigned to work.
68
<PAGE>
b) The above does not apply to overtime required for completion of
previously started repairs and maintenance by a specific tradesmen.
c) In order to carry out short term overtime prior to the start of the
normal shift for *mechanical day workers, the following procedure will
apply:
Qualified *mechanical tradesmen will be canvassed by seniority who
will be working in the "area" during the time of the available
overtime. If no qualified employee in the area volunteers, the
qualified tradesmen in the mill will be canvassed by seniority. If no
tradesmen volunteer, the junior tradesmen who are qualified and
capable of performing the work, will be assigned to work.
The above will apply only to work which will commence no earlier than
6:00 a.m.
*Mechanical refers to mechanics, welders and mechanical helpers.
d) Day workers in point of job seniority, other than Maintenance day
workers, will be given the first opportunity to perform overtime or
Sunday work in their respective department. If no employee volunteers
the junior employee qualified and capable of performing the overtime
or Sunday work, shall be required to perform the work.
e) If, as a result of an error in the application of Section 2 above, an
employee loses an opportunity for overtime, the sole remedey that an
adversely affected employee will be given is the next overtime work
opportunity for which the adversely affected employee is qualified.
Such remedial next overtime opportunity assigned shall not be
grievable.
3. SCHEDULING OF 6 DAY OPERATIONS:
-------------------------------
The following applies when the Company crews-up for a 6 day operation
in a department which means that employees would then be scheduled to
work five (5) days and have two (2) staggered days off in that week.
At the establishment of the rotating schedule, employees who, when
they are on the 12-8 shift, would otherwise be scheduled a day off
other than at the beginning or the end of the weekly schedule, may opt
to work on that day-off at straight time rates. Once the employee has
decided on an option, it will remain in force until he advises his
supervisor otherwise, prior to the posting of the next weekly
schedule.
The above supersedes any scheduling and/or overtime provisions of the
Labour Agreement.
69
<PAGE>
4. HIGH PRESSURE WELDING TEST
--------------------------
Welders who are required, on a yearly basis, to undergo Provincial
Government welding tests permitting them to carry out welding on high
pressure vessels and piping in the plant, will be given up to a total
of 8 hours practice time, paid at the employee's straight time rate,
scheduled by the Company on a single day within seven (7) working days
prior to test day.
5. Should an employee who is receiving full benefits from the Workmen's
Compensation Board continue to be disabled because of a totally
unrelated non occupational illness or accident which has the effect of
prolonging his absence from work beyond the specified date of return
to work, such employee will be eligible to submit a weekly indemnity
claim as of the date he would have otherwise returned to work
providing he would not have otherwise been laid-off. In such case the
claim can still be submitted but the benefits if accepted, would
commence on the date he would have otherwise returned to active
employment.
1988
1. During the life of this labour agreement, the Company will prepare and
issue to each employee a retirement booklet summarizing the main provisions
of the ABT Building Products Corporation/Canexel Hardboard Division
retirement plan as it applies to employees covered by this agreement.
2. LEAVES OF ABSENCE
-----------------
Leaves of Absence without pay to seek or hold elective provincial, federal
or municipal government office for one term may be granted. Such leave
will not be renewable.
Leaves of Absence without pay to work for the National Union may be
granted. Such leave will be subject to renewal every six (6) months, up to
a maximum leave of four (4) years.
Leaves of Absence without pay to attend Union educational courses may be
granted.
70
<PAGE>
Requests for Leaves of Absence should be submitted on the form provided for
that purpose, to the employee's supervisor, at least two (2) weeks in
advance of the requested leave.
Any employee on the payroll is eligible provided his request is justified
and the granting of the leave of absence will not interfere with plant
operating requirements.
Company insurance coverage will be as follows:
a) GROUP LIFE INSURANCE
--------------------
Full coverage will be continued, at no cost to the employee, to the
end of the calendar month during which the Leave of Absence begins.
Coverage will be cancelled at that time unless the employee pays in
advance the premiums applicable for the balance of the leave.
b) WEEKLY INDEMNITY
----------------
This insurance will be cancelled effective the day the Leave of
Absence begins.
c) EXTENDED HEALTH BENEFITS
------------------------
Company contributions, where applicable, will cease first of the month
following the effective date of the leave.
The employee shall retain his rights to the job he held at the time
the leave was granted.
3. LETTER OF INTENT
----------------
Union Executive Activities
--------------------------
After receiving prior authorization from management, members of the Union
Executive or Negotiating Committee or Union Stewards scheduled off by the
Company to attend Union Business, will be maintained on the payroll at the
straight time rate of the job they would have otherwise performed (maximum
8 hours per day), and Sunday (maximum 12 hours per day). At the end of
each month, the Company will invoice the Union for the amount so maintained
plus the percentage costs to the Company to maintain these employees on the
payroll.
71
<PAGE>
The Union will reimburse the total amount to the Company each month. The
Company will advise the Union each January of the revised percentage cost
that will apply for the current year.
The applicable percentage for the year 1988 will be 5.3%.
Union President
Mill Manager
72
<PAGE>
LETTER OF INTENT
PROCEDURE FOR REPLACING UNION EXECUTIVE
MEMBERS AND JOINT HEALTH & SAFETY MEMBERS
WHO ATTEND UNION/MANAGEMENT MEETINGS
For meetings of a short duration of 2 1/2 hours or less, employees who attend
these meetings will be replaced as follows:
i) Vacancy may be filled at straight time by a qualified and capable employee
within the shift.
ii) a) If the meeting is held within 2 1/2 hours before the incoming shift
relief is scheduled to report, he will be asked to report early at
overtime rates.
b) If the meeting is held prior to the attendee's shift commences, and
the meeting continues into the attendee's shift, the employee working
the preceding shift will be asked to remain at overtime rates.
iii) Employees who are working that day in the Line of Progression on the
affected shift will be asked by job seniority, then down the Line of
Progression starting with the job vacancy itself.
iv) Anyone qualified and capable from the affected shift at overtime rates.
Meetings expected to last MORE THAN 2 1/2 HOURS shall be covered by Article
----------------------
5:04 of the Labour Agreement.
73
<PAGE>
EXHIBIT 10.30
February 17, 1997
Mr. Sid Barens
President, Local Union 603
United Steel Workers of America
[finish address]
Dear Sid:
During the recently concluded negotiations for a new Collective Labour
Agreement, the parties discussed conducting, on the Acton plant premises, local
elections among those employees of the Company who are covered by the Collective
Labour Agreement. As discussed, every three (3) years the Union may conduct
local elections on the Acton plant premises provided: 1) the Union obtains
written permission from the Company's General Manager not less than two weeks in
advance of the desired election date and time; 2) the use of the plant premises
is for the sole purpose of actual voting by Company employees; and 3) the use of
the plant premises does not, in any way, interfere with Company operations.
Sincerely,
Gary Ball
Vice President of Operations
<PAGE>
COLLECTIVE
LABOUR
AGREEMENT
1996 - 2001
- --------------------------------------------------------------------------------
between
ABTCO CANADA LIMITED
ACTON PLANT
and
UNITED STEELWORKERS
OF AMERICA
Local 603, A.F.L. - C.I.O - C.L.C.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 DEFINITIONS.................................................... 1
ARTICLE 2 VALIDITY OF CLAUSES............................................ 2
ARTICLE 3 COMPANY RECOGNITION............................................ 2
ARTICLE 4 UNION RECOGNITION OF JURISDICTION.............................. 2
ARTICLE 5 PROBATIONARY PERIOD............................................ 3
ARTICLE 6 CONTRACTS...................................................... 4
ARTICLE 7 OBLIGATIONS.................................................... 4
ARTICLE 8 HOURS OF WORK.................................................. 6
ARTICLE 9 OVERTIME RATES & PREMIUM COMPENSATION.......................... 7
ARTICLE 10 VACATIONS..................................................... 10
ARTICLE 11 RECOGNIZED HOLIDAYS........................................... 13
ARTICLE 12 CLASSIFICATIONS AND RATES..................................... 14
ARTICLE 13 SENIORITY..................................................... 14
ARTICLE 14 TRANSFERS..................................................... 15
ARTICLE 15 PROMOTIONS.................................................... 16
ARTICLE 16 DEMOTIONS..................................................... 17
ARTICLE 17 LATERAL MOVES................................................. 18
ARTICLE 18 LAY-OFFS...................................................... 18
ARTICLE 19 JOB POSTING................................................... 19
ARTICLE 20 GRIEVANCE PROCEDURE........................................... 20
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE 21 UNION COMMITTEE............................................... 23
ARTICLE 22 HEALTH AND SAFETY............................................. 24
ARTICLE 23 NOTICE BOARDS................................................. 25
ARTICLE 24 LEAVE OF ABSENCE.............................................. 25
ARTICLE 25 DURATION OF AGREEMENT......................................... 26
"APPENDIX A" STANDARD HOURLY WAGE RATES.................................. 28
APPENDIX "B" 12 HOUR SHIFT SCHEDULE...................................... 31
APPENDIX "C" SUMMARY of BENEFITS*........................................ 33
</TABLE>
<PAGE>
ARTICLE 1
---------
DEFINITIONS
-----------
1.01 COMPANY - ABTCO Canada Limited with respect only to its plants located at
-------
Halton Hills (Acton), Ontario.
1.02 UNION - United Steelworkers of America, Local 603, A.F.L. - C.I.O. -
-----
C.L.C.
1.03 EMPLOYEE(S) - Any person who is actively at work for the Company whose job
-----------
places him within the bargaining unit as defined (See Section 4.02) and who
has completed the probationary period (See Section 5.01). Status as an
employee shall be lost for any one of the following reasons:
a) If an employee quits.
b) If an employee is discharged for just cause.
c) If an employee is laid off (See article 18).
d) If an employee fails to report to work following termination of
authorized leave of absence unless granted further leave of absence by
the Company or unless employee can give a valid and acceptable reason
for not reporting on the specified day. If a former employee is
rehired within 12 months of his loss of status, he will be reinstated
as an employee immediately without probationary period.
1.04 ABILITY - The word "ability" wherever used in this Agreement means
-------
training, and efficiency.
1.05 PLANT SENIORITY - The period of time during which the employee has been
---------------
actively employed in the plant without any of the interruptions which cause
loss of seniority as specified in Section 13.04, less any time spent on lay
off during this period in excess of ninety (90) consecutive working days.
Plant seniority is accumulated during periods of lay off for up to one year
or for a period of time equivalent to the length of his service, whichever
is shorter.
1.06 DEPARTMENT SENIORITY - That part of the employee's plant seniority which
--------------------
has been spent in any one department (See Section 13.06 and 14.02).
1.07 JOB SENIORITY - That part of the employee's department seniority which has
-------------
been spent on any job in that department.
1.08 "ABILITY AND SENIORITY" and/or "SENIORITY AND ABILITY" have the same
--------------------- ---------------------
meaning when used in this Agreement.
<PAGE>
ARTICLE 2
---------
VALIDITY OF CLAUSES
-------------------
2.01 Any provision of this Agreement which may be or may become in conflict with
present or future provisions of Federal or Provincial laws, or orders-in
Council by same, becomes by that fact null and void without affecting the
validity of the remainder of the present Agreement.
ARTICLE 3
---------
COMPANY RECOGNITION
-------------------
3.01 The Union recognizes that the Company retains all the customary and
normal functions of Management except as they are expressly restricted by
the terms of the Agreement.
ARTICLE 4
---------
UNION RECOGNITION & JURISDICTION
--------------------------------
4.01 (a) The Company recognizes the Union for the purposes of collective
bargaining as the sole bargaining agency, with respect to all articles
included in this Agreement, for all of its employees except those
excluded from the bargaining unit (Section 4.02) during the currency
of this Agreement.
(b) Where the masculine pronoun is used herein, it shall mean and include
the feminine pronoun where the context so applies.
4.02 The present Agreement applies to all persons with employee status except:
(a) Foreman and persons above the rank of foreman.
(b) Office staff.
(c) Sales staff.
(d) Technology department.
4.03 Employees outside the bargaining unit will not perform work that is
normally done by employees within the bargaining unit. However, this
Agreement cannot be construed to prohibit them from doing work for purposes
of instruction, experimentation or research or in the case of an emergency,
provided a lay-off of bargaining unit employees does not result.
2
<PAGE>
4.04 Any employee who is a member of the Union in good standing shall, as a
condition of employment, maintain his membership to the extent of paying
membership dues. Any person hired as a new employee and any employee who is
hereafter transferred into the Bargaining Unit, shall make application for
membership in the Union on the date of employment or transfer and shall, as
a condition of employment, maintain his membership in the Union to the
extent of paying membership dues.
4.05 a) The Company shall deduct from the pay of each member of the bargaining
unit, weekly, such union dues, fees and assessments as authorized by
the Constitution of the Union.
b) The Company shall remit the amounts so deducted, prior to the
fifteenth (15th) day of the month following, by cheque, as directed by
the Union, payable to the International Treasurer.
c) The monthly remittance shall be accompanied by a statement showing the
name of each employee from whose pay deductions have been made and the
total amount deducted for the month. Such statements shall also list
the names of the employees for whom no deductions have been made and
the reasons why, along with any forms required by the International
Union.
d) The Union shall indemnify and save the Company harmless from any
claims, suits, judgments, attachments and from any other form of
liability as a result of the Company making any deductions in
accordance with the foregoing authorizations and assignments and the
Union shall refund direct to all employees from whom a wrongful
deduction was made.
4.06 If any employee works less than 40 hours in any one month he shall not be
required to pay Union dues for that month unless this policy is changed by
the constitution of the United Steelworkers of America.
ARTICLE 5
PROBATIONARY PERIOD
-------------------
5.01 All employees will be on probation for the first 480 normal working hours
of their employment accumulated during a nine (9) month period. The
exception to the above being maintenance department personnel who will be
on probation for the first 720 normal working hours of their employment
accumulated during a nine (9) month period.
5.02 The Company has the right to terminate an employee on probation without
recourse on the part of the Union and any such termination cannot
constitute a grievance provided
3
<PAGE>
that this right shall not be used for the purpose of discrimination against
said employee under the Ontario Human Rights Code or for Union activity.
ARTICLE 6
---------
CONTRACTS
---------
6.01 The Union recognizes that this Agreement cannot be construed to affect
contracts or sub-contracts that the Company may award to have work done,
nor limit the Company's right to make such contracts or sub-contracts. The
Company will recall all laid off Bargaining Unit employees who have the
proven skills to perform the proposed contract work prior to using outside
sources.
ARTICLE 7
---------
OBLIGATIONS
-----------
7.01 The Union will not engage in Union activities during working hours or hold
meetings at any time on the premises of the Company without the permission
of the Plant Manager or his representative.
7.02 The Union and the Company agree that there shall be no strikes, slowdowns
or lockouts during the currency of this Agreement.
7.03 Should operations cease due to any cause whatsoever, the property of the
Company will be maintained in operating condition by the continuance at
work of up to seven (7) employees as required. It is also agreed that at no
time will the Union exercise either directly or indirectly interference or
coercion with a view to preventing employees of the Company who are not
covered by this Labour Agreement from entering Company property.
7.04 (a) When a shift begins, each employee is required to be at his place. At
the end of a shift, no employee is to leave his place until his
replacement has reported to take on the responsibility of the job
unless said employee can provide an acceptable reason prior to leaving
as to why he cannot remain on the job until his replacement arrives.
In this event, all machines will be maintained on a productive basis
by the crew on hand. If an employee is required to remain at his
place, the foreman will obtain a relief as soon as possible.
(b) The Company will pay, upon submission of a receipt, for
transportation, when necessary, for employees who are required to
remain on duty, pending the arrival of their replacements, to a
maximum of $15.00 for employees living outside the municipality of
Acton and $5.00 for employees living in the municipality of Acton.
4
<PAGE>
7.05 Employees covered by this Agreement shall be entitled to life,
disability, and medical benefits as summarized in Appendix "C".
7.06 Written warning notices and suspensions which are to become part of the
employee's record shall be presented to the employee in the presence of
the steward or chief steward whenever possible. In the event neither of
the above are available a member of the bargaining unit shall be present.
It is agreed that written notices not repeated within a one year period
will be canceled. Disciplinary notices and suspensions relating to acts
of insubordination that are not repeated within a three year period will
be canceled.
7.07 When an employee is discharged the Company agrees to notify him that he
may see his Union Steward or an officer of the Union prior to his leaving
the premises if he so requests. It is understood that once the employee
leaves the premises he may not return without permission from the
Company.
7.08 It is agreed that Part XI, Pregnancy and Parental Leave, of the
Employment Standards Act, 1990, forms part of this Agreement.
7.09 Should an employee become incapacitated either by age, sickness or
injury, and is no longer capable of performing his regular job, as
certified by a doctor approved by the Company, the Company shall endeavor
to place such employee in another job which he is capable of performing,
the job not being higher than his existing classified rate and in
accordance with Articles 14, 16 and 17. If no such job is available, the
employee will be laid off or if eligible, retired.
7.10 Only the operator shall change the running condition of any production
line, but, Maintenance personnel may be required from time to time, in
conjunction with the Operator, to change the settings and/or running
condition of any production extruder.
7.11 Employees will have the option of contributing to the Union Humanity
Fund.
7.12 COMPANY SAFETY SHOE POLICY: The Company may pay for Safety Shoe purchase
according to the following schedule:
Maintenance Personnel - Two (2) pair per year on an as needed basis.
All Other Personnel - One (1) pair per year
Upon Signing of the New Labour Contract $80.00/pair
November 1, 1998 $85.00/pair
November 1, 2000 $90.00/pair
7.13 The Company will provide pension benefits as set forth in the ABT CANADA
LIMITED PENSION PLAN, JANUARY 1, 1996, which is fully incorporated herein
by reference. The plan, which will include employee and Company
contributions, is
5
<PAGE>
effective January 1, 1997. Company contributions may be invested in the
same investment options as the employee contributions.
ARTICLE 8
---------
HOURS OF WORK
-------------
8.01 (a) Nothing contained in this Agreement in general or in this Article in
particular, can be construed to indicate that the Company guarantees
hours of work per day or days of work per week.
(b) The normal hours of work for all employees either on a rotating or
non rotating basis as per established schedule shall be 8 hours per
day, 40 hours per calendar week.
8.02 The standard starting time for day shift employees shall not be before
7:00 a.m. and the standard quitting time shall not be later than 5:30
p.m. Not over one hour, without pay will be allowed for lunch.
8.03 The standard starting and quitting time for rotating shift employees will
be:
12:00 midnight to 8:00 a.m.
8:00 a.m. to 4:00 p.m.
4:00 p.m. to 12:00 midnight
8.04 The Company will advise the President or Vice-President of the Union of
changes in hours of work and shifts when possible 72 hours but not less
than 48 hours before making them effective.
8.05 All rotating shift employees will be allowed a lunch period not in excess
of 20 minutes which will be scheduled so as to maintain production and at
a time mutually convenient to the employee and the Company. No employee
will be required to work longer than 5 consecutive hours without an
eating period.
8.06 When possible, employees from distribution or maintenance who are
scheduled to work on weekends or vacation shutdown will be allowed a
lunch period not in excess of twenty (20) minutes which will be scheduled
at a time mutually convenient to the employee and the Company. No
employee will be required to work longer than five (5) consecutive hours
without an eating period.
6
<PAGE>
ARTICLE 9
---------
OVERTIME RATES & PREMIUM COMPENSATION
-------------------------------------
9.01 (a) overtime rates shall be paid only to employees who are working
additional hours at the request of the Company and shall not be paid
for such extra hours which have been exchanged at the request of
employees for their own convenience.
(b) Overtime work shall be divided as equitably as possible among all
employees capable of performing the work at the rate the job
entails.
(c) An employee may be excused from working overtime provided another
qualified employee is available to do the work required.
(d) There will be no pyramiding of overtime pay, or any other add-on or
premium rate of pay.
9.02 (a) Employees will be paid overtime compensation for all work performed
in excess of eight (8) consecutive hours on the basis of one and
one-half times their classified rate of pay.
(b) Employees working a seven (7) day schedule will be paid overtime
compensation for all work performed on their scheduled first and
second days of rest on the basis of one and one-half times their
classified rate of pay. Work performed on their scheduled third day
of rest will be compensated on the basis of two times their
classified rate of pay.
(c) Employees working on a five (5) day schedule or on non-rotating
shifts will be paid overtime compensation for all work performed on
Saturday on the basis of one and one-half times their classified
rate of pay.
(d) Employees working on a five (5) day schedule or on non-rotating
shifts will be paid overtime compensation at two (2) times their
classified rate of pay when they are requested to work between
midnight Saturday and midnight Sunday.
(e) An employee who is required to work weekend overtime and who returns
to work after eight (8) hours off will receive two (2) hours of
additional pay at their classified rate provided the employee
completes both shifts.
7
<PAGE>
9.03 It is agreed that when the Company requires a rotating shift employee to
change his shift at other than the scheduled rotation time, with less
than 16 hours elapsed time between his normal quitting time, and the
beginning of his new schedule he will be paid time and one-half his
classified rate for all hours worked on the first shift of the new
schedule.
9.04 Compensation at double time the employee's classified rate shall be paid
to all employees requested to work during the twenty-four (24) hour
period from midnight of the day before and midnight of the day celebrated
as a holiday recognized by this Agreement in addition to the holiday pay.
9.05 (a) Compensation at one and one-half times the employee's classified
rate shall be paid to all employees who are required to return to
do other than scheduled overtime work at other than their regular
hours provided such non-scheduled work involves an extra trip to
the plant. Subject to his proviso they still receive no less than
two hours pay at one and one-half times their classified rate.
(b) It is agreed that an allowance of $10.00 will be given to each
employee, when called in to work for non scheduled overtime, and who
lives over ten (10) miles from the plant.
(c) Employees who are called in to work prior to the start of their
scheduled shift will be paid one and one-half times their classified
rate for time worked prior to the start of their scheduled shift.
9.06 Employees working on the 4:00 p.m. to midnight shift will be paid the
following shift premium effective with the first payroll period on or
after:
Upon Signing New Contract $0.32/hour
November 1, 1997 $0.34/hour
November 1, 1998 $0.36/hour
November 1, 1999 $0.38/hour
November 1, 2000 $0.40/hour
9.07 Employees working on the midnight to 8:00 a.m. shift will be paid the
following shift premium effective with the first payroll period on or
after:
Upon Signing New Contract $0.57/hour
November 1, 1997 $0.58/hour
November 1, 1998 $0.59/hour
November 1, 1999 $0.60/hour
November 1, 2000 $0.61/hour
8
<PAGE>
9.08 All employees reporting for scheduled work unless a contrary order from
the foreman has been given, will receive five (5) hours pay at his
classified rate, provided that the causes for no work being available are
within the Company's control. It is understood that the employee may be
supplied with alternate work provided the employee has no job related
limitations and is qualified to perform the work that is provided.
9.09 It is agreed that when an employee is assigned to work in a job paying a
higher rate than his own, he shall be paid the higher rate while
occupying the said higher rated job.
9.10 It is agreed that when an employee is assigned at the convenience of the
Company, to work in a lower rated job, he will be paid his normal
classified rate except when transferred due to reduction of the work
force or inability to perform the work.
9.11 In the event an employee is displaced from his regular job as a result of
automation, he will be transferred in accordance with Article 16, 17 or
18.
9.12 In the event of a death of a member of an employee's family, the Company
will grant, upon request a leave of absence for a reasonable time for the
purpose of making funeral arrangements or attending the funeral and will
pay for such lost time as follows:
(a) Spouse, common-law spouse, child or step-child, up to a maximum of
four (4) days. Father, mother, parent-in-law, brother, sister,
grandchild or grandparent, up to a maximum of three (3) days. Should
the death occur in a place so distant that the bereaved employee
cannot make funeral arrangements or attend the funeral, the Company
will grant one day with pay to mourn the death.
(b) Brothers and sisters of the spouse or common-law spouse, the day of
the funeral.
(c) These allowances will only be granted where circumstances require
the employee's absence from work.
9.13 An employee who is required to serve on a jury, or who is subpoenaed as a
witness, shall be paid for difference between the amount paid for such
service and his current hourly rate for the time lost from his regularly
scheduled work shift by reason of such service subject to the following
provisions:
(a) Employees must notify their supervisor within twenty-four (24) hours
after receipt of notice of selection for jury duty or when
subpoenaed as a witness.
(b) Any employee called for jury duty or, subpoenaed as a witness, and
who is temporarily excused from attendance at court must report for
work if four (4) hours or more of time remains to be worked in his
shift.
9
<PAGE>
(c) Employees selected for jury duty who are on other than the day shift
shall be assigned to the day shift for those days they are required
to serve as jurors.
(d) In order to be eligible for such payments, the employees must
furnish a written statement from the appropriate public official
showing the date and time serviced and the amount of pay received.
9.14 The Company agrees to give a meal allowance of $6.00 to employees who are
required to work two hours past their normal quitting time, and to
employees called in at least two hours prior to their normal starting
time, unless they are given time off to go home for a meal, or were
notified on the previous day that such overtime or call in was scheduled.
9.15 When a paid holiday recognized by this Agreement occurs in the work week
it shall be considered as a normal work day for purposes of computing
overtime on a weekly basis.
9.16 When an employee on a 7 day schedule is assigned at the Company's
convenience onto a job in the 5 day operation paying overtime to 5 day
employees performing the same job, he shall be paid the applicable
overtime premium pertaining to the said 5 day schedule employees. His
classified rate as shown in Appendix A will apply.
ARTICLE 10
----------
VACATIONS
---------
10.01 The vacation period is from January 1st through December 31st.
10.02 Employees are required to have vacation requests submitted by May 1st.
Any unscheduled vacation requests submitted thereafter will be taken from
the weeks available.
10.03 Vacation earned during the current vacation period must be taken during
the vacation period immediately following that in which they are earned.
Vacation periods cannot be accumulated.
10.04 After the posting of the vacation schedule no change will be considered
unless the request by the employee is made twenty-one (21) days in
advance of the proposed new dates and then only if arrangements can be
made with the other employees.
10.05 Additional time off will be granted only if satisfactory arrangements can
be made with his immediate foreman and if granted will be without pay.
All such requests will be submitted and replied to on the form provided.
10
<PAGE>
10.06 Employees with the most plant seniority in the department concerned will
be given first consideration in the allotment of time for vacations. The
Department Head will arrange the times of vacation as is most convenient
for the employees and the Company; the Company will endeavor to grant as
many employees as possible two weeks of their vacation during the months
of July or August. Eligible employees who request more than two
consecutive weeks vacation will be granted their requests provided the
production will not be unduly affected.
10.07 When a paid recognized holiday falls within an employee's vacation it
will be paid for in accordance with section 11.02, in addition to his
vacation pay but extra time off will be allowed only if requested prior
to employees proceeding on vacation and will be without pay. Permission
will not be unreasonably withheld.
10.08 Employees will receive payment for all accrued vacation which shall be
payable in the first payroll period after February 1. Payment of wages in
lieu of vacation is not permitted, except that, if the vacation benefits
for which an employee is eligible exceed 3 weeks, the employee, by mutual
agreement with the Company, may work such time that exceeds 3 weeks in
lieu of vacation time off.
10.09 Length of vacation is established by the plant seniority of the employee
concerned as at his anniversary date of the current year and will be
granted as follows:
a) Less than five Two weeks
years plant seniority
b) Five years or more Three weeks
plant seniority
c) Ten years or more Four weeks
plant seniority
d) Twenty years or more Five weeks*
plant seniority
*Employees who, as of the effective date of this Agreement, are receiving
more than 5 weeks vacation benefit will be red circled, and will not receive a
reduction in vacation benefits.
10.10 Vacation pay will be calculated as a percentage of the gross wages earned
during the preceding calendar year as follows:
Two weeks 4%
Three weeks 6%
Four weeks 8%
Five weeks 10%*
11
<PAGE>
*Employees who, as of the effective date of this Agreement, are receiving
vacation pay calculated on a percentage greater than 10% will be red circled,
and will not receive a reduction in the percentage used to calculate vacation
pay under this section.
10.11 Vacation pay for employees on separation from employment will be
calculated on a percentage basis and will include pay for vacation not
received and for vacation earned from January 1 of the current year to
date of separation as follows:
Less than five years plant 4%
seniority
*Five years or more plant 6%
seniority
Ten years or more plant 8%
seniority
Twenty years or more plant 10%**
seniority
*Provided reason for separation is a
result of resignation, lay-off,
retirement or death.
**Employees who, as of the effective date of this Agreement would be
eligible for vacation pay to be calculated at a higher percentage
rate, will be red circled, and will not suffer a reduction in the
percentage rate used to calculate vacation pay under this section.
10.12 (a) In the event of a shutdown of the plant or a department for vacation
purposes, all employees, unless otherwise notified, must take their
vacations during this period. Notices of shutdown, which must be
scheduled during the period June 15th to September 15th, will be
given not later than May 1st of the vacation year.
(b) The Company will post the employees vacation schedule not later then
May 1st of the vacation year.
(c) In the event of a planned shutdown of one (1) week or more occurring
in mid-rotation, for rotating shifts on either a five (5) day or
seven (7) day schedule, the rotation schedule will freeze in place
at the beginning of such planned shutdown and continue in place upon
start-up at the end of the shutdown, except
12
<PAGE>
that such schedule freeze during shutdowns shall not apply to
changeovers between a five (5) day and a seven (7) day schedule.
ARTICLE 11
----------
RECOGNIZED HOLIDAYS
-------------------
11.01 When a recognized holiday falls on a Saturday or Sunday, the day declared
by the Provincial or Federal Authorities will be the legal holiday.
11.02 The Company recognizes the following Holidays as holidays with pay and
each employee shall receive eight hours at his classified rate subject to
the conditions outlined in Section 11.03:
New Year's Day
Good Friday
Victoria Day
Canada Day
Civic Day
Labour Day
Thanksgiving Day
December 24
Christmas Day
Boxing Day
Heritage Lieu - Christmas Floater
December 31
11.03 To be eligible for holiday pay as authorized in Section 11.02 above, the
employee:
(a) Must have completed his probationary period, provided no person will
be deprived of more than one paid holiday during his probationary
period.
(b) Each employee will receive a regular day's pay provided he has
worked on the last scheduled working day prior to the holiday and
the first scheduled working day after the holiday. This requirement
shall not operate to deprive the employee of payment for the holiday
if he is absent because of illness, the illness being certified by a
doctor.
11.04 Employees who have worked on a recognized holiday may request an
alternate day off without pay. Employees shall be entitled to postpone
the taking of this day off with other such days which the employee may
then take off together without pay, at a time mutually convenient to the
employee and the Company. Such requests will not unreasonably be denied.
All accumulated days must be taken in the year of occurrence.
13
<PAGE>
11.05 For rotating shift employees, recognized holidays with the exception of
December 24th, Christmas Day, Boxing Day, Heritage Lieu, December 31st,
and New Year's Day, may at the discretion of the Company, be observed on
the nearest Monday to the legal holiday. The regular holiday will be
worked at straight time and all persons required to work on the day
observed will be paid in accordance with Section 9.04 of this Agreement.
This will not prevent, however, the Company for requesting employees of
the Maintenance and Distribution Departments to do work of an emergency
nature on these recognized holidays.
11.06 Employees on leave of absence due to a certified illness will be paid in
accordance with the Benefits provided by the Temporary Disability Plan.
ARTICLE 12
----------
CLASSIFICATIONS AND RATES
-------------------------
12.01 A list of job classifications and rates is attached as Appendix "A" and
forms part of this Agreement.
12.02 Probationary employees in classifications 11 and 12 with necessary
qualifications will be paid up to $0.20 per hour less than the rates
established by Appendix "A" for the jobs they are performing. All other
probationary employees will be paid up to $0.55 per hour less than the
rates established by Appendix "A" for the jobs they are performing.
12.03 If a job is substantially changed or a new job created the evaluation of
such jobs will be made jointly by the Company and the Union within three
months of the job being filled. The rate of pay negotiated shall be
retroactive to the date of establishment of the changed or new job, will
be incorporated in this Agreement, and will be binding upon both parties.
12.04 Learner - is any employee who is being trained for any position who has
-------
not had pertinent experience in the particular job involved. In such
cases, for Classifications 1 to 4, he will be paid $0.15 per hour less
for three (3) months and for classifications 5 and above he will be paid
$0.15 per hour less for the first three (3) months and $0.10 per hour
less for the second three (3) months, than the job rate for which he is
being trained for.
ARTICLE 13
----------
SENIORITY
---------
13.01 A person will not acquire seniority until he has completed his
probationary period.
14
<PAGE>
13.02 Upon completion of the probationary period, a person's seniority shall be
accumulated from his date of hiring.
13.03 Seniority shall be accumulated on a job, department and plant basis.
13.04 Seniority shall be lost for any one of the following reasons:
a) If an employee voluntarily quits or is discharged for just cause.
b) If an employee fails to report to work following the termination of
an authorized leave of absence, unless granted further leave of
absence by the Company, or unless the employee can give a valid
reason for not reporting for work on the specified day.
c) If an employee on lay-off fails to report for recall within five
days of being notified by courier or registered mail to report.
d) If an employee with five or less years of service is laid off for
twelve months or if an employee with more than five years of service
is laid off for twenty-four months.
e) When an employee attains sixty-five years of age or retirement date
granted by the Company.
13.05 Any person whose seniority has been broken shall upon being rehired be
considered a new employee.
13.06 For the purposes of this article and articles 14, 15, 16 and 17 the plant
will be considered as having five departments:
Compounding
Maintenance
Siding
Distribution
Services
ARTICLE 14
----------
TRANSFERS
---------
14.01 An employee may be transferred from one department to another for a
period not exceeding three months without losing his seniority in his old
department. If at any time before the expiration of the three month
period such transfer may prove unsatisfactory
15
<PAGE>
to either the employee transferred or the Company he may return or be
returned to his former job without loss of seniority provided the return
to his original department is made within the three month period.
14.02 When an employee's transfer becomes permanent, (after three months) his
previous plant seniority will be transferred to the new department for
lay off purposes.
14.03 An employee who transfers from one department to another as a result of a
promotion may return or be returned to his originating department and job
in accordance with 19.06 (a).
14.04 Transfers may or may not involve a change from one department to another.
ARTICLE 15
----------
PROMOTIONS
----------
15.01 a) Appointments to staff positions are not subject to this Agreement
and an employee so appointed shall be excluded from the coverage of
this Agreement but will retain his seniority for nine (9) months
after such appointment.
b) A person returned by management to the bargaining unit within this
nine (9) month period will be returned to his former job without
loss of seniority.
c) With respect to temporary assignments to staff positions outside the
bargaining unit, made at the discretion of the Company, the employee
shall continue to accumulate seniority. An employee so assigned will
be paid $1.00 per hour minimum above his classified rate. The
Company will inform the Union of the rate of pay. Upon termination
of the temporary assignment the employee shall be returned to his
former position.
15.02 Promotion means a transfer to a job classification which carries a higher
rate of pay.
15.03 Ability and seniority shall be the factors considered in determining all
cases of promotions. Seniority shall be the determining factor in
promotions if the ability of two or more employees is reasonably equal.
Seniority to be considered in determining promotions shall be:
a) Job seniority in the job to be filled.
b) Job seniority in the next lower job classification.
16
<PAGE>
If the job seniority of two or more employees is equal, department
seniority shall determine the selection. If department seniority of two
or more employees is equal, plant seniority shall determine the
selection.
15.04 An employee may return or be returned to his former job according to
Section 19.06 (a).
ARTICLE 16
----------
DEMOTIONS
---------
16.01 Demotions means a transfer to a job classification which carries a lower
rate of pay.
16.02 Ability and seniority shall be the factors considered in determining all
cases of demotions. If the ability of two or more employees is reasonably
equal, demotions will occur as follows:
a) Employees shall be demoted to a lower job classification in their
department in the reverse order to their job seniority plus any job
seniority in higher classifications in that department.
b) The displaced employee with the least department seniority in the
lowest job classification may displace any probationary employee in
the plant except probationary employees in the maintenance
department.
c) Should an employee who has completed his probationary period be
demoted but does not have the ability to fill the next lower
classification in this department or any position in the lowest
applicable job classification in any department the Company will
endeavor to train him for a period not exceeding the probationary
period specified in Section 5.01. If after the period of training he
still has not the required ability he will remain in whatever
position he has the ability to fill or be laid off.
d) Plant seniority will be used in effecting demotions only in cases
where other seniority is equal.
16.03 In the event that demotions result through the permanent closure of any
section of the plant, the employees affected may elect to displace any
employee in the two lowest paid classifications in the plant, who has
less plant seniority.
16.04 Employees demoted for less than five months, due to reduction in the work
force will revert to their former positions if conditions so demand.
17
<PAGE>
ARTICLE 17
----------
LATERAL MOVES
-------------
17.01 A lateral move means a transfer to a job classification which carries the
same rate of pay.
17.02 Ability and seniority shall be the factors considered in determining all
cases of lateral transfers exception being considered when medical or
compassionate reasons exist.
ARTICLE 18
----------
LAY-OFFS
--------
18.01 Lay-off means separation due to lack of work.
18.02 When it becomes necessary to reduce the number of employees, probationary
employee will be laid off and then after considering ability and
applicable seniority the following procedure shall be followed:
a) Employees will be demoted in accordance with Section 16.02 (a).
b) The employee with the least department seniority in the lowest job
classification in the department affected will be laid off, however
the employee may exercise his plant seniority and displace the
lowest grade of operator in Appendix "A" or the employee who has the
least plant seniority in classification 2 or 1 in the plant, or the
employee who has the least plant seniority in classification "A",
General Labourer, in the plant.
18.03 In the case of individual lay-offs the company will give a minimum of
five working days' notice which includes the day of notification, in
advance of the effective date, except when the lay-off is due to fire,
storm, floods, power or major mechanical failures.
18.04 In the event that a lay-off affects employees in receipt of Worker's
Compensation or on leave of absence, such employees will be notified by
courier or registered mail that they have been laid off.
18
<PAGE>
18.05 Following a lay-off, the hiring of former employees who still retain
their seniority will be in the reverse order of their having been laid
off, subject to their ability to do the work required.
18.06 Any Bargaining Committee member is not to be excluded from performing his
or her duties pertaining to the Union by reason of lay-off, if the lay-
off is less than ninety (90) consecutive working days and provided the
person is not working elsewhere. The President of the Local Union shall
have one (1) day more seniority than the most junior employee to be laid-
off.
ARTICLE 19
----------
JOB POSTING
-----------
19.01 a) Job vacancies or newly created jobs that are within the bargaining
unit and that will be of more than three month's duration, will be
posted immediately for seven (7) calendar days on the notice board.
Employees on vacation or on sick leave will be notified for any job
posting immediately after the posting appears on the board by
registered mail.
b) This section shall not be applied for more than three subsequent
moves required as a result of the selection of an applicant.
c) Temporary vacancies occurring due to customer demand and/or vacation
replacement of absent employees will not be posted during the period
of April 1st to September 10th of each year. During this period of
time, the Company may hire relief employees, who shall not acquire
seniority under this contract. No relief employee will remain as a
relief employee after September 10th.
Should any of the relief employees be hired as a regular employee on
a full time basis, the actual time worked as a relief employee shall
be credited, if necessary, towards the completion of their
probationary period. Relief employees will be laid off prior to
probationary employees.
19.02 All applicants for the posted jobs, provided their applications are
received by the Company within the stipulated seven (7) calendar days,
will be interviewed by the Plant Manager or his designated
representative, at which time the successful applicant, if any, will be
advised and the unsuccessful applicants informed why their applications
were not accepted.
19.03 The Company has the right to fill any such vacancy temporarily for 21
calendar days, and permanently thereafter if no applications are received
from qualified employees.
19
<PAGE>
19.04 All jobs posted will state the job to be filled, a brief description of
the job, the qualifications required and the rate of pay.
19.05 Seniority shall be the determining factor in selecting the most suitable
applicant, if the ability of the respective applicants is relatively
equal.
19.06 a) If the job proves unsatisfactory to the selected applicant within
one month, or if the applicant proves unsatisfactory to the Company
within three (3) months, he may return or be returned to his
original job without loss of any seniority. The employee may not
apply to the same position during the next 18 months.
b) Anyone else affected by (a) will be returned to his original job.
c) Should applicant return to his previous job, within thirty (30) days
of posting, other applicants from the same posting may be considered
and appointed.
ARTICLE 20
----------
GRIEVANCE PROCEDURE
-------------------
20.01 Nothing in this Agreement shall be deemed to take away the right of any
employee to discuss any of his personal grievances with a representative
of the Company.
20.02 If any differences concerning the interpretation, application, operation
or any alleged violation of this Agreement arises or any questions as to
whether any difference is arbitrable arises between the parties or
persons bound by this Agreement or on whose behalf it was entered into,
the representatives of the Company and of the Union shall meet and
endeavour to resolve the difference in the following manner and sequence.
Union grievance committee members will be paid straight time wages while
in attendance at scheduled grievance meetings.
Step 1 Discussion shall take place between the grievor, who shall be
- ------
accompanied by his steward and his immediate supervisor, within seven
(7) calendar days of the date of the occurrence which gave rise to the
grievance, exclusive of plant shutdown periods.
Step 2 Discussions between the grievor, his Union Steward, Chief Steward, his
- ------
immediate supervisor, Department Supervisor, or equivalent, within
four (4) calendar days, excluding statutory holidays and the weekend
days of Saturday and Sunday, of Step 1. The grievance at this stage
shall be submitted in writing, signed by the grievor, and an executive
of the Union and must state the matter at issue and precisely in what
respect the Agreement has allegedly been violated or misinterpreted by
reference to the specific clause or clauses relied upon. The
20
<PAGE>
notice shall also state the nature of relief or remedy sought. The
Company shall issue a written reply at this step.
Step 3 Discussion between the Union Grievance Committee, the Department
- ------
Supervisor, or equivalent, and the Plant Manager shall be held within
four (4) calendar days, excluding statutory holidays and the weekend
days of Saturday and Sunday, of the step 2 written reply.
The grievor may attend on the invitation of either party.
Should a grievance be initiated by either the Company or the Union
with respect to the application or interpretation of this Agreement,
the procedure will start at this step.
The Plant Manager shall issue to the President of the Union a written
reply to the formal written grievance within forty-eight (48) hours of
the discussion held in Step 3.
For any of the above Steps, after the grievance has been initiated,
the time element may be waived by mutual agreement of both parties.
Agreement to waive must be in writing and signed by both parties.
Step 4 If the grievance is not settled at a meeting held in accordance with
- ------
Step 3, a further meeting with the same people in attendance will be
held within four (4) calendar days, excluding statutory holidays and
the weekend days of Saturday and Sunday, of receipt of the Company's
Step 3 reply. A representative of the United Steelworkers of America,
and the Manager, Human Resources, or his representative, may attend.
20.03 a) The authority of a Board of Arbitration is limited to the
interpretation of this Agreement and they cannot amend, delete, or add
any clause to the Agreement as signed.
b) Where a difference arises between the parties relating to the
interpretation, application or administration of this Agreement
including any question as to whether a matter is arbitrable, or where
an allegation is made that this Agreement has been violated, either of
the parties may, within 45 days from the date of the Step 4 written
reply, notify the other party in writing of its desire to submit the
difference or allegation to arbitration and the notice shall contain
the name of the first party's, appointee to an Arbitration Board. The
recipient of the notice shall within five days inform the other party
of the name of its appointee to the Arbitration Board. The two
appointees so selected shall within five days of the appointment of
the second of them appoint a third person who shall be the chairman.
If the recipient of the notice fails to appoint an arbitrator or if
the two appointees fail to agree upon a chairman within the time
limit, the appointment
21
<PAGE>
shall be made by the Minister of Labour for Ontario upon the request
of either party.
The Arbitration Board shall hear and determine the difference or
allegation and shall issue a decision and the decision shall be final
and binding upon the parties and upon all employees affected by it.
The decision of the majority shall be the decision of the Arbitration
Board, but if there is no majority the decision of the chairman shall
govern.
c) No person shall be selected as an arbitrator who has been directly
involved in attempts to negotiate or settle the grievance.
d) In determining any grievance arising out of a claim of discharge or
suspension, the Board of Arbitration may, notwithstanding anything to
the contrary herein contained, dispose of the grievance by affirming
the Company's actions and dismissing the grievance, by setting aside
the disciplinary action imposed and restoring the grievor to his
former position with or without compensation, by substituting a lesser
penalty for the discharge or suspension, or by any other arrangement
deemed equitable under the circumstances by the Board of Arbitration.
e) Either party may employ the option to Arbitrate as per Section 49, by
giving notice in writing to the other party at any stage of the
arbitration procedure. If notice is given, then the option to
arbitrate as per Section 49, of the Labour Relations Act, comes into
force notwithstanding that the other party may have commenced the
procedure as set out in 20.03 (b).
20.04 The Union and the Company shall, when a Board of Arbitration is formed,
each pay one half of the remuneration and expenses of the Chairman of the
Board, and any other expenses that have been mutually agreed may be
incurred by the Board to assist in arriving at a decision. Each party
shall pay the remuneration and expenses of its own nominee. Any other
expenses shall be borne by the Party which incurs them.
20.05 The Grievance procedure may be invoked if a person believes he has been
unjustly disciplined, discharged, or suspended. Should settlement of such
grievance be arrived at by mutual agreement or arbitration on the basis
of reinstating the individual concerned, he will be paid for time lost,
if any, less any money earned from other employment or by any other
arrangement that may be deemed equitable.
20.06 The manner in which any grievance is settled will never be construed as
establishing a policy for either the Company or the Union.
20.07 It is understood that the Company's representatives may call a special
meeting of the Union Grievance Committee to present any complaint or
grievance with respect to the conduct of the Union, its officers,
committee-men, or with respect to the conduct of the
22
<PAGE>
employees generally or individually and that if such complaint or
grievance is not settled to the mutual satisfaction of the conferring
parties, it may be referred to arbitration in the same way as a grievance
by any employee. It is understood that the Company will give the Union
three working days notice of such a meeting.
20.08 Any grievance not processed in conformity with this Article 20 shall be
deemed to be abandoned and all rights of recourse shall be at an end.
However, changes may be made in Section 20.02 by mutual agreement between
the parties.
ARTICLE 21
----------
UNION COMMITTEE
---------------
21.01 a) The company will recognize a Union Grievance Committee of not more
than three (3) employees who will be known as Union Officers or
Stewards elected or appointed by the Union. It is understood that
all employees serving on this Committee will, as far as is
practical, have one or more years plant seniority.
b) It is understood the Union Stewards and other Union Officers will
not absent themselves from their regular duties unreasonably in
order to deal with the grievances of employees or with other Union
business, and will at all times obtain permission from their
immediate supervisors before leaving their place of work.
Permission will not be unreasonably withheld.
21.02 The Company will recognize a Union Negotiating Committee composed of not
more than five employees. The Committee will meet with representatives of
the Company during the third week of each month.
21.03 The Union will advise the Company in writing of the names of all Union
Officers and Stewards.
21.04 Employees elected or appointed by the Union to serve on those Committees
with the exception of the Union President, shall where possible work in a
different section or shift of the plant.
In the event two or more employees are elected while on the same shift in
the same section then such employees will be assigned to different
shifts, wherever practical.
For purpose of this Article, Sections of the Plant are as follows:
Compounding Distribution
Maintenance Services
Siding
23
<PAGE>
ARTICLE 22
----------
HEALTH AND SAFETY
-----------------
22.01 The Company and the Union agree to set up a Health and Safety Committee
of not less than 6 and not more than 10 members including the Plant
Manager and a member of the Union Executive. Each party will select a
minimum of 3 members whose term of office will expire every 6 months on
rotational basis, if possible. The meetings shall be held at a time most
convenient for the Plant Manager to attend but, in any case, not later
than the third week of each month. An inspection of the plant will be
made prior to each meeting by members of the Health and Safety Committee,
selected at the previous month's Safety Meeting.
It is agreed that a Health and Safety Committee member from both
Management and the Union will be included in the investigating team for
all incidents or accidents requiring a report to the Workers'
Compensation Board.
22.02 Employees will immediately report any unsafe conditions to their foreman
in the presence of a witness. If a safety hazard cannot be immediately
corrected, the foreman will submit the necessary work order. The Plant
Safety Committee will review any outstanding work orders at its next
monthly meeting and recommend their disposition to management.
22.03 Any situation or conditions reported to be unsafe shall be dealt with by
the Safety Committee at the Safety Committee meetings if not rectified
before that date.
22.04 It is agreed that the Union may make recommendations through their
representatives on the Safety Committee regarding the health and safety
of the employees.
22.05 In accordance with prevailing plant policy and at no cost to the
employee, the Company shall provide safety devices and other equipment
necessary to protect the employees' health and safety while at work.
22.06 A representative of the Union of the Safety Committee shall be permitted
to accompany the government factory inspector on all his tours of the
Plant.
24
<PAGE>
ARTICLE 23
----------
NOTICE BOARDS
-------------
23.01 The Company will provide for a bulletin board in the maintenance
department, siding department and the employee entrance.
The Union will not post any notice or circular on these boards until it
has been approved by the Plant Manager or his authorized representative.
ARTICLE 24
----------
LEAVE OF ABSENCE
----------------
24.01 Seniority shall accumulate when an employee is absent by reason of
illness, occupational or non-occupational accident for 12 months if he
has less than 3 years of plant seniority, for 18 months if he has 3 but
less than 8 years plant seniority and for 24 months if he has 8 or more
years of plant seniority.
24.02 a) An employee with less than one year plant seniority may request a
leave of absence without pay, for personal reasons acceptable to the
Company for a maximum period of six months, and an employee with one
or more years of plant seniority for a maximum period of 12 months.
Seniority will be preserved during such absence.
b) If an employee requests and is granted a leave of absence for up to
three (3) months, on his return he will be reinstated in his former
position.
c) If an employee requests and is granted a leave of absence of three
months or more, on his return he will displace the person with the
least plant seniority in the lowest classification in the plant,
provided he has more plant seniority.
24.03 Employees will have the right to request leave of absence without pay to
attend to Union business. Up to five employees, but not more than one
from a department, and no more than one per shift and one per
classification in the Siding department with the exception of the Union
President, may make such request for each function and such absence will
not exceed two weeks duration. Not more than three of such requests need
be granted during an agreement year. Seniority shall accumulate during
such absence.
24.04 Approval of applications received in accordance with Section 24.02 and
24.03 above will not be unreasonably withheld.
25
<PAGE>
ARTICLE 25
----------
DURATION OF AGREEMENT
---------------------
25.01 a) This agreement is effective from date of signing until the 31st
October, 2001, and thereafter from year to year unless written
notice is given by either party not more than 90 days prior to the
31st October, 2001, if they desire to negotiate a new agreement.
b) In the event that no agreement is reached by the expiry date of this
Agreement it shall remain in effect until a new agreement is reached
or until the procedures specified in the Labour Relations Act have
been completed.
c) Rates and wages, as shown in Appendix "A" attached hereto, become
effective on the dates indicated.
d) Appendix "B" Twelve (12) Hour Shift Schedule, attached hereto, forms
part of this agreement.
26
<PAGE>
Signed this ____________ day of _______________________, 1997.
ON BEHALF OF:
ABTCO CANADA, LIMITED UNITED STEELWORKERS
OF AMERICA Local 603
_________________________ _________________________
Steve Fishman Jim Harvey
Chief Negotiator U.S.W.A. Staff
Representative
_________________________ _________________________
Gary Ball S. Barens
Vice President Operations President
_________________________ _________________________
Terry Campbell S. Hoffman
Human Resource Manager Vice President
_________________________
G. Maltby
Treasurer
_________________________
J. Roach
Secretary
M. Phelan
Member, Negotiating Committee
27
<PAGE>
"APPENDIX A"
STANDARD HOURLY WAGE RATES
---------------------------
A.
<TABLE>
<CAPTION>
RATE IN EFFECT AT AND
---------------------
CLASSIFICATION JOB TITLE END OF PRIOR CONTRACT
- -------------- --------- ---------------------
NOV., 1 95
----------
Maintenance
- -----------
<S> <C> <C>
12 Machinist 6 Die
Maker IV,
Electrician 20.07
11 Tradesman III 18.98
9 Tradesman II 15.16
7 Tradesman I 14.58
Distribution
- ------------
4 Chief
Warehouseman 14.01
2 Yard
Warehouseman 13.51
Services
- --------
10 Chemical Laboratory
Technician 15.67
8 Laboratory
Technician 14.69
8 Inspector 14.69
6 On-Line Inspector 14.24
3 Material
Handler 13.84
Compounding
- -----------
8 Compounder 14.69
1 Helper 13.44
</TABLE>
28
<PAGE>
B.
1. Upon the signing of this Agreement, all seniority employees actively
employed by the Company as of the date of signing shall receive a
Signing Bonus in the gross amount of $200.00.
2. Upon the signing of this Agreement, the Company will provide wage
increases, effective with the first payroll period after each of the
following dates, as provided below:
November 1, 1996 2.00%
November 1, 1997 2.00%
November 1, 1998 2.25%
November 1, 1999 2.50%
November 1, 2000 2.75%
C.
1. Employees working on the seven day schedule will be paid the following
premium for all hours worked:
$0.88 per hour for the term of the agreement
2. Employees appointed by the Company to the position of Lead Hand shall
be paid a minimum premium, based on the following schedule, effective
with the first payroll period on or after:
Signing New Contract $0.80/hour
November 1, 1997 $0.85/hour
November 1, 1998 $0.90/hour
November 1, 1999 $0.95/hour
November 1, 2000 $1.00/hour
29
<PAGE>
3. Multi-Skill Maintenance Personnel:
The Company will pay an additional $1.00 per hour for the second
Provincial Approved License beyond the primary certification required
for the department. The Company will pay an additional $0.50 per hour
for the third certification license. The three identified certified
trades are Millwright, Electrician, and Machinist & Die Maker IV.
4. Employees hired as "Relief Employees" may be hired at a rate which is
not less than 75% of the applicable job rate and the relief employees
shall be advanced to a rate which is not less than 85% of the
applicable job rate in the second year of their return employment, and
to the applicable job rate not later than the third year of their
return employment , and to provide further that relief employees shall
not be entitled to receive any of the fringe benefits available to
employees under the terms of this Agreement.
30
<PAGE>
APPENDIX "B"
12 HOUR SHIFT SCHEDULE
----------------------
The following provisions shall apply to employees on the twelve (12) hour shift
in place of the relevant provisions in the main body of the Collective
Agreement.
5.01 All persons will be on probation for the first four hundred and eighty
(480) normal working hours of their employment accumulated during a nine
(9) month period. The exception to the above being maintenance department
personnel who will be on probation for the first seven hundred and twenty
(720) normal working hours of their employment accumulated during a nine
(9) month period.
8.01 (b) Regular hours worked during a regularly scheduled week will be paid at
the classified rate.
All hours in excess of forty-four (44) hours will be paid at one and
one-half times the classified rate.
8.03 Standard starting and quitting time for 12 hour shift employees will be:
8:00 a.m. - 8:00 p.m.
8:00 p.m. - 8:00 a.m.
8.05 All 12 hour shift employees will be allowed 2 meal periods not in excess of
20 minutes each.
9.02 (a) Overtime in excess of 12 consecutive hours will be paid on the basis
of one and one-half time classified rate of pay.
(b) Employees will be paid overtime compensation for all work performed on
their first and second scheduled days of rest on the basis of one and
one-half (1-1/2) times their classified rate of pay. Work performed on
the third day of rest will be paid at double time.
9.04 Recognized Holidays: 24 hours are from 8:00 a.m. of day set to 8:00 a.m. of
the following day.
9.07 Employees working on the 8:00 p.m. to 8:00 a.m. shift will be paid the
following shift premium:
Effective November 1, 1996 - $0.57 per hour
November 1, 1997 - $0.58 per hour
November 1, 1998 - $0.59 per hour
November 1, 1999 - $0.60 per hour
November 1, 2000 - $0.61 per hour
31
<PAGE>
9.12 Where it reads maximum 4 days, change to maximum 3 days with 36 hours pay.
Where it reads maximum 3 days, change to maximum 3 days with 36 hours pay.
Where it reads maximum 1 day, change to maximum 1 day with 12 hours pay.
9.13 (b) Where it reads four (4), change to six (6).
Recognized Holidays
- -------------------
Overtime compensation for working a holiday will be paid between the hours of
8:00 a.m. of the holiday and 8:00 a.m. of the following day.
(a) Employees working on a recognized holiday will receive 12 hours at
double time plus 8 hours holiday pay at their classified rate.
(b) Employees not scheduled to work on the holiday will receive 8 hours
holiday pay.
(c) If the plant shuts down for a recognized holiday employees normally
scheduled to work (2 shifts) shall be paid 12 hours at their
classified rate. Those employees not scheduled to work (2 shifts)
shall receive 8 hours at their classified rate.
(d) 12 hour schedule would stop at start of a shutdown period (e.g.
Christmas) and start up after completion of period.
Recognized holidays occurring in shutdown period would be paid at 8
hours classified rate.
Vacation
- --------
One week = 40 hours of vacation entitlement, to start following days of rest.
32
<PAGE>
APPENDIX "C"
------------
SUMMARY OF BENEFITS*
--------------------
<TABLE>
<CAPTION>
=======================================================================================================
ANNUAL ANNUAL
PROGRAM BENEFIT COST SHARING COST SHARING
COMPANY EMPLOYEE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic Life $15,000 Less than 1 year 100% None
Insurance $20,000 1 to 2 years
$25,000 2 to 3 years
$30,000 3 to 4 years
$35,000 over 4 years
- --------------------------------------------------------------------------------------------------------
"Optional" Units of $10,000 None Employee Paid
Life Smoker Rates per thousand
Insurance Non-Smoker Rates per thousand
Including Retail Tax
- --------------------------------------------------------------------------------------------------------
AD&D EMPLOYEE: units of $10,000 to a maximum of 25 None Employee Paid
units;
SPOUSE: 50% of Employee's coverage [60% if no
children]
CHILDREN: 10% of Employee's coverage [15% if
no spouse]
- --------------------------------------------------------------------------------------------------------
Weekly 70% of regular straight time earnings 100% None
Indemnity Waiting period:
- --------------------------------------------------------------------------------------------------------
0 working days for accident, hospitalization
or out patient surgery
3 (8 hour) working days or 2 (12 hour) working
days for sickness and other conditions
Benefit duration 52 weeks
See Note**
- --------------------------------------------------------------------------------------------------------
LTD 60% of the first $1,000 of basic monthly None Employee Paid
earnings, and 40% of remaining basic monthly
earnings with earnings maximum, for benefit
purposes, of $5,000 per month.
- --------------------------------------------------------------------------------------------------------
Health Care As reflected in the Summary Plan Document 80% Company 20% Employee
Insurance
- --------------------------------------------------------------------------------------------------------
Dental Care 100% Preventive Services; 50% Major Services 80% Company 20% Employee
Insurance to $1,500/person/year; 50%
========================================================================================================
</TABLE>
33
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------
<S> <C>
orthodontics services age 6-18 $1,500
lifetime; benefits are provided in
compliance with the ODA schedule as
updated annually.
========================================================================================================
</TABLE>
* Appendix "C" is a summary of benefits available under the various benefit
documents. Such documents shall control the provision of benefits. The Company
retains the right to select the carrier that will provide the benefits.
** Note: The minimum benefit shall be the Employment
Insurance Sickness minimum. Any resulting E.I. premium
reduction shall be utilized towards the cost of the
Company's share of Health and Dental Insurance.
+ Rates subject to annual change by the carrier.
34
<PAGE>
At the recent set of negotiations, both parties are in agreement that the
Quality Assurance Department may start at 7:00 a.m. and 7:00 p.m.
___________________________ ___________________________
Gary Ball Sid Barens
V.P. of Operations Union President
35
<PAGE>
EXHIBIT 10.31
- --------------------------------------------------------------------------------
LABOR AGREEMENT
BETWEEN
ABTCO, INCORPORATED
ALPENA PLANT
AND
UNITED STEELWORKERS OF AMERICA
LOCAL 7923
AFL-CIO
EFFECTIVE
9/30/96
TO
2/15/99
- --------------------------------------------------------------------------------
<PAGE>
ABTCO, INCORPORATED / LOCAL 7923, UNITED STEELWORKERS OF AMERICA
1996 - 1999 LABOR AGREEMENT
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C>
AN AGREEMENT............................................................ 1
ARTICLE I. PURPOSE................................................ 1
ARTICLE II. RECOGNITION............................................ 1
ARTICLE III. SENIORITY.............................................. 2
ARTICLE IV. PROMOTIONS, DEMOTIONS, TRANSFERS
AND WAGES.............................................. 4
ARTICLE V. HOURS OF WORK AND OVERTIME............................. 7
ARTICLE VI. VACATIONS.............................................. 10
ARTICLE VII. SAFETY AND HEALTH...................................... 13
ARTICLE VIII. GRIEVANCES............................................. 13
ARTICLE IX. STRIKES AND VIOLATIONS................................. 16
ARTICLE X. OTHER CONDITIONS OF EMPLOYMENT......................... 16
ARTICLE XI. INSURANCE AND PENSION.................................. 19
ARTICLE XII. LIMITATION............................................. 23
ARTICLE XIII. DURATION AND RENEWAL................................... 23
ADDENDUM I. BASE WAGE RATE SCHEDULE................................ 24
EXHIBIT "A: DRUG & ALCOHOL POLICY.................................. 25
EXHIBIT "B" RECALL RIGHT........................................... 28
</TABLE>
<PAGE>
AN AGREEMENT
------------
An Agreement made and entered into this 30th day of September, 1996, by an
between ABTCO, INCORPORATED, Alpena Plant, Alpena, Michigan, hereinafter
referred to as the "COMPANY," and UNITED STEELWORKERS OF AMERICA INTERNATIONAL
UNION, AFL-CIO-CLC, hereinafter called the "UNION."
ARTICLE I. PURPOSE
-------------------
A. The Purpose of this Agreement is to establish wage rates, hours of
employment and other conditions of employment and for the purpose of
promoting a harmonious relationship between the Company and its employees.
The management of the Company and the direction of the working forces,
including, for example, the right to plan, direct and control Company
operations, to hire, suspend, discipline or discharge for cause, promote,
demote or transfer, to relieve employees from duty because of lack of work
or for other legitimate reasons, and the right to introduce new or improved
work methods or facilities, are vested exclusively in the Company; provided
that, in the exercise of these prerogatives, the Company shall not violate
the provisions of this Agreement. The Company has the complete right to
subcontract work covered by this Agreement.
ARTICLE II. RECOGNITION
------------------------
A. The Company recognizes the Union as the exclusive collective bargaining
agency for all of its employees in the Office Clerical Department in the
Alpena, Michigan, Plant with the exception of the categories listed in
Section B below.
B. The following employees shall not be subject to the terms of this
Agreement:
Confidential employees, janitorial employees, operating engineers,
production scheduler, cost accountant, traffic supervisor, woods
accountant, payroll accountant and general accountants, guards and
supervisors as defined in the Act, and all other employees, including
those currently covered by existing collective bargaining agreements.
C. If any part of this Agreement should be invalidated or modified by
government laws or regulations, all remaining provisions of same shall
remain in full force and effect.
D. All present employees shall, on or by the 31st day from the date hereof, as
a condition of continued employment, become and remain members in the Union
during the life of this Agreement by paying their current dues and
initiation fees. All new employees shall, as a condition of continued
employment, forty-five (45) days after the date hereof or the date of their
employment, whichever is the later, become and remain members of the Union
in good standing during the life of this Agreement by paying their current
dues and initiation fees.
<PAGE>
II. RECOGNITION ... PAGE 2.
E. The Company will check off monthly dues, initiation fees and assessments,
each as designated by the International Treasurer of the Union, as
membership dues in the Union for every employee who has agreed to it in
writing. Such designation also includes the procedures to be followed.
The Union will not hold the Company liable for any claim made by reason of
the Company's deductions provided for herein and will indemnify, hold
harmless, intervene and defend the Company against any and all Company loss
or expense occasioned by any claims against the Company arising out of or
because of Article II.
F. The Company will conduct a review with the Union Committee prior to
combining jobs within the Unit or reducing the Bargaining Unit workforce.
This review will provide for open, two-way communications in a problem-
solving mode and, hopefully, will result in a better understanding between
the parties.
ARTICLE III. SENIORITY
-----------------------
A. In general, seniority means the length of continuous service in the
employer's plant or departments in Alpena, Michigan. The principle of
seniority shall be observed in accordance with conditions listed below.
B. Probationary Period
1. The seniority of new employees shall be established after ninety (90)
days of continuous employment and shall begin as of the original date
hired. All employees shall be considered on a probationary or trial
basis for the first ninety (90) days of their employment, and no
controversy concerning their tenure of employment shall be deemed a
grievance hereunder; provided, however, that probationary employees
shall be subject to all terms of this Agreement not inconsistent with
this provision.
C. Unit Seniority
1. Unit seniority is defined as the length of continuous service of an
employee in the bargaining unit with respect to all other employees
who have seniority in the same bargaining unit.
2. The unit seniority date for all bargaining unit employees shall be
their date of hire in the unit.
D. Termination of Seniority
Seniority is terminated by one of the following events:
1. When an employee is discharged for just cause.
2. When an employee quits.
<PAGE>
III. SENIORITY ... PAGE 3.
3. When an employee fails to report for work or fails to give a
satisfactory reason for such delay, after a layoff, when properly
notified by registered mail within ten (10) days from mailing date of
such notice.
4. When an employee is laid off for a period of two (2) years or the
length of seniority, whichever is greater. An employee hired after
June 17, 1983, will terminate seniority when laid off for a period of
two (2) years or the length of seniority, whichever is less.
5. Any current or future bargaining unit member will have one (1) year
seniority protection upon accepting a full-time position with the
Union. After one (1) year, the employee's seniority will terminate.
6. When an employee is absent for reasons of illness, injury or poor
health, except for absence due to injury or disease for which Workers'
Compensation is payable; two (2) years or the length of seniority,
whichever is greater. When an employee hired after June 17, 1983, is
absent for reasons of illness, injury or poor health, except for
absence due to injury or disease for which Workers' Compensation is
payable; two (2) years or the length of seniority, whichever is less.
7. The Chairperson of the Grievance Committee will be notified in writing
by the Company of any termination or layoff of a Local 7923 member
employee.
E. An employee whose seniority has terminated and who later may be re-employed
shall be considered in every respect as a new employee, and a new seniority
date shall be established, based on the date of hiring.
F. Layoff and Rehiring
1. When a layoff in the working force is necessary, employees shall be
laid off in accordance with their unit seniority; that is, the
employee with the least unit seniority shall be laid off first, etc.,
provided that in the selection of employees for layoff, due
consideration shall be given to the retention of employees who have
the ability and qualifications and are physically able to perform the
available work, subject to F-3 below.
2. Laid off employees shall be rehired in accordance with their unit
seniority; that is, the employee with the greatest unit seniority
shall be rehired first, etc., provided that the employee has the
ability and qualifications and is physically able to perform the
duties of the job which is open.
3. Whenever there is a layoff, the Company will discuss the layoff with
the Union Committee one (1) week in advance if possible. For short-
term layoffs (two weeks or less), those employees who have completed
training as provided for by the temporary vacancy procedure and are
qualified to perform the job will be assigned by the Company. For
indefinite layoffs, such training as may be necessary to enable a
senior employee to exercise unit seniority to maintain a job will be
implemented in accordance with Paragraph F-1 above. The Company will
notify the employees involved by letter of
<PAGE>
III. SENIORITY ... PAGE 4.
the pending layoff. There shall not be any payment of wages made or
required in lieu of such notification. In the event an individual is
not notified as specified herein, they will be offered work for an
additional week to properly follow the above procedure.
G. An up-to-date seniority list with the job rate groupings is attached hereto
and forms a part of this Agreement. An up-to-date seniority list shall be
posted on the bulletin board and maintained up-to-date by the Company.
H. When two (2) or more persons are hired and report for work on the same day,
their seniority shall be governed by their birthdates, with the oldest
employee being the most senior.
I. Notwithstanding any of the seniority rules contained here, the President,
the Chairperson and members of the Grievance Committee shall, during their
terms of office, be placed at the head of the unit seniority list;
provided, however, that this preferential seniority shall only be for the
purpose of determining layoffs and rehires.
ARTICLE IV. PROMOTIONS, DEMOTIONS, TRANSFERS AND WAGES
-------------------------------------------------------
A. PROMOTIONS AND DEMOTIONS
1. Promotions to higher paid jobs or more desirable jobs, where a vacancy
exists, shall be based on the Company's decision as to the most
qualified person.
2. When a permanent job opening occurs, the following procedure will be
followed:
The job will be posted on the bulletin board for three (3) normal
working days, describing the vacancy and advising that applications
will be accepted from employees in the unit.
If more than one employee signs for a job opening, the Company will
select the most qualified applicant. Every attempt will be made to
fill vacancies within fifteen (15) days from removal of the job
posting.
An employee who fills a vacancy under the provisions of this Paragraph
2 will, within the first five (5) days of training and orientation,
decide whether or not to accept the job. If the employee declines the
position, reinstatement to the employee's former job will be made
without loss of seniority.
The above procedure shall apply to any vacancy, whether it represents
a promotion or demotion. When a job opening is posted as set forth
above, the Chairperson of the Grievance & Negotiating Committee will
be given a copy after the posting period is completed.
3. When a job is eliminated, the employee(s) affected will be allowed to
select, within three working days, a job that is held by a person with
less seniority at an identical or lower wage rate. An employee making
a selection by this provision will be subject to Article IV, Paragraph
A-1, and must meet the requirements and be qualified to perform the
work of such position.
<PAGE>
IV. PROMOTIONS, ETC. ... PAGE 5.
4. a. A job will be considered vacant when the employee holding the job
has quit, is discharged, demoted, promoted, transferred or when
it is a newly-created job, or when the job itself is relocated on
the promotion schedule; such relocation to be as determined
mutually by the Company and Union. Notwithstanding any of the
above, the Company reserves the right to determine whether the
need to fill a vacancy exists. All other vacancies will be
considered temporary.
b. The Company reserves the right to fill temporary vacancies
whenever it deems it necessary.
c. It is the practice of the Company to hire temporary employees for
the purpose of filling temporary vacancies.
d. An employee hired on a temporary basis shall have no re-
employment rights. In the event the Company transfers a
temporary employee to permanent status, seniority will date back
to the date consecutive employment prior to such transfer began.
e. Temporary employees shall have no bidding rights and shall only
be eligible for straight-time pay, overtime and holiday pay, but
shall not be entitled to any other benefits as provided in this
Agreement.
f. Temporary employees hired after June 17, 1986, shall receive 68%
of the lowest job rate listed in Addendum I.
g. Temporary employees are those engaged for a specific project or
limited period. Occasions may occur when such personnel will not
be subject to the provisions of this Labor Agreement.
5. If in the opinion of both the Company and the Union a job which has
been considered temporarily filled for sixty (60) days or more should
no longer be considered temporary, it will be treated as a permanent
vacancy.
6. An employee promoted or transferred to a new job under provisions of
Article IV, Paragraph A2, shall be subject to a probationary period of
thirty (30) days, which may be extended by mutual agreement of both
parties. During the probationary period provided herein, the employee
will be evaluated on a weekly basis by the immediate supervisor, the
trainer and the employee. They will determine the progress of the
employee being trained and further training requirements by consensus.
If the employee does not meet the requirements of the job or is not
capable of performing the job properly during the probationary period,
the employee shall be reinstated to the former job. A copy of the
evaluation will be forwarded top the Human Resources Office and to the
Chairperson of the Grievance Committee, or in the Chairperson's
absence, to another member of the Union Committee.
7. An employee appointed to a position not subject to this Agreement who
at a later date is relieved or wishes to be relieved from such
position shall be reinstated in the bargaining unit and shall assume
the job to which seniority entitles the employee; provided,
<PAGE>
IV. PROMOTIONS, ETC. ... PAGE 6.
however, that the job will not be higher on the promotion schedule
than the one left to assume the position not subject to this
Agreement. After six (6) months, or one (1) such transfer, all unit
seniority shall be lost.
8. An employee hired into this bargaining unit directly from within the
plant unit shall be considered a new employee in every respect, with
the exception that length of service for purposes of determining
fringe benefits and vacation eligibility will be retroactive to the
original employment date with the Company.
B. WAGE RATES
1. The base wage rates in effect on the Effective Date of this Agreement
will be those listed in Addendum I.
2. It is recognized that changing conditions and circumstances may from
time to time require the adjustment of existing wage rates because of
significant changes in the duties of the jobs. Such changes in
existing jobs shall be subject to the Grievance Procedure by the
Union, and any grievance thereunder shall be introduced in Step 2.
The Company will not make any changes in the pay rate of any job
without first notifying the Chairperson of the Grievance & Negotiating
Committee in writing and discussing it with the Union Committee.
When a new job is established, the Company shall set a rate for same
and put it into effect; such rate being subject to review by the
Union, who has access to the Grievance Procedure if no mutual
agreement is reached, and the grievance shall be introduced in Step 2.
3. Employees hired after June 17, 1986, who have unit seniority which is
less than five (5) years shall receive the following percentage of the
job rates as set forth in this Agreement:
Percent of Job Rate
Plant Seniority To Which Employee is Entitled
--------------- -----------------------------
Less than 1 year 68%
1 - 2 years 74%
2 - 3 years 80%
3 - 4 years 86%
4 - 5 years 92%
Over 5 years 100%
If an employee is temporarily or permanently upgraded to a higher
paying job, the percent of the job rate to which that employee is
entitled shall be applied to the job rate of the higher paying job
during the period of time the employee works such a job.
The Company may, after discussion with the Union, pay a higher
percentage than the seniority calls for, provided that such percentage
shall not exceed 100%.
<PAGE>
IV. PROMOTIONS, ETC. ... PAGE 7.
4. To encourage the development of multiple skills, the Company will pay
an annual bonus of $200 for each mastered skill in excess of the
employee's regularly-assigned job. Employees must commit to those
positions for which they are fully trained and must be capable of
filling the position(s) on a temporary basis. The supervisor of the
position will evaluate the skill level of the employee and validate
that the employee is fully trained and has mastered the skills and
knowledge required. The employee and the supervisor are expected to
ensure that the necessary skills are maintained on an ongoing basis.
C. PAYMENT OF WAGES
.1 Payment of wages shall be made weekly, starting on Thursday and
continuing through the following day, to cover the pay period ending
the previous Monday at 12:01 AM. Wage payments shall be made by check.
When holidays or other circumstances make it impractical to distribute
checks during the normal pay period, the checks will be made available
as soon as practical thereafter.
2. An employee permanently assigned to a higher-rated job shall receive
the job rate. An employee temporarily assigned to a higher-rated job
shall receive the rate of the higher job for the hours worked on the
job when such an assignment is for less than four (4) hours, or for
the day when such assignment is for four (4) hours or more. An
employee temporarily assigned to a lower-rated job will receive the
employee's regular rate of pay for all hours worked. Where such
assignment is due to layoff or reduction in force, the employee so
assigned will receive the regular rate for the first week of such
reduction, and thereafter shall receive the rate of the job worked at.
D. MILITARY SERVICE
1. Employees entering the Military Service of the United States shall
retain all seniority rights and all other rights and privileges
granted them under the provisions of the pertinent laws enacted by the
United States Congress, provided said employees comply with all the
requirements of said laws.
ARTICLE V. HOURS OF WORK AND OVERTIME
--------------------------------------
A. HOURS
1. The workweek is defined as a period beginning and ending at 12:01 AM
on Monday and shall consist of five (5) eight (8) hour days, Monday
through Friday, except as set forth in Paragraphs 2 and 3 herein.
2. Normal working hours for employees shall be determined by the Company.
3. Should the Company require a second and/or third shift, a shift
differential of $0.13/hour and $0.24/hour respectively will be paid to
all employees working the shift(s). Other non-economic specifics
related to this change will be discussed with the appropriate members
of the Bargaining Unit prior to their being implemented.
<PAGE>
V. HOURS OF WORK & OVERTIME ... PAGE 8.
B. OVERTIME
1. For the purpose of computing overtime, eight (8) hours shall
constitute a day's work. All time worked over eight (8) hours in any
twenty-four (24) hour period and all time worked over forty (40) in
any one workweek shall be paid at the rate of time and one-half (1-
1/2), provided that overtime rates shall not be paid when more than
eight (8) hours in twenty-four (24) are worked as a result of regular
shift changes or as a result of employees trading shifts, with Company
approval, for their own convenience. Overtime earned on a daily basis
shall not be duplicated on a weekly basis.
2. It is agreed that the Company will make every effort to avoid
assigning employees for periods of work in excess of twelve (12) hours
in any twenty-four (24) hour period. An employee who has worked
through a normal shift shall be entitled to one eight (8) consecutive
hour off-duty period between the end of one regularly-scheduled shift
and the beginning of the next regularly-scheduled shift.
3. For all time worked on a Sunday, an employee will be paid at the rate
of time and one-half (1-1/2).
4. There shall be no pyramiding of overtime.
C. HOLIDAYS
1. The Company will pay each employee eight (8) hours at the regular rate
of pay for the following days, subject to the requirements listed
elsewhere in this Article:
New Year's Day Thanksgiving Day
Memorial Day Day After Thanksgiving
July 4 Day Before Christmas
Labor Day Christmas Day
When an employee works on a holiday at a rate higher than the regular
rate of pay, the holiday pay shall be computed at the higher rate.
When an employee is required to work on a holiday, such work will be
the responsibility of the person permanently assigned to the job.
2. All work performed on holidays will be paid at two (2) times the
employee's hourly rate. This is in addition to and not in lieu of
holiday pay. However, there shall be no pyramiding of this overtime.
3. If one of the above listed holidays falls on Saturday, it will be
observed on the preceding Friday. If one of the above listed holidays
falls on Sunday, it will be observed the following Monday. If two
consecutive holidays fall on a Friday and Saturday, they will be
observed Thursday and Friday; or, in the case where two consecutive
holidays fall on a Sunday-Monday, they will be observed Monday and
Tuesday. For the purpose of this Agreement, the above listed holidays
are considered to commence at 12:01 AM and end at 12:01 AM.
<PAGE>
V. HOURS OF WORK & OVERTIME ... PAGE 9.
4. Employees are qualified for holiday pay if their last hiring date was
at least thirty (30) calendar days prior to the paid holiday, if they
work the last scheduled day before the paid holiday, and if they work
the first scheduled day after the paid holiday, unless excused by the
Company. If employees are laid off thirty (30) days or less before a
holiday, they will receive holiday. If laid-off employees are
recalled thirty (30) days or less after a holiday, they will receive
holiday pay.
5. Employees who are on a regularly-scheduled approved vacation will
receive the holiday pay, provided they work the last regularly-
scheduled day prior to the vacation and work the first regularly-
scheduled day after the vacation, unless excused by the Company.
6. Employees on an approved leave of absence of thirty (30) days'
duration or less will receive holiday pay, provided they work the last
scheduled day before the leave is effective and provided they work the
first scheduled day after the leave expires, unless excused by the
Company.
7. Employees who are absent from work as a result of an industrial injury
arising out of and in the course of employment that is recognized by
Workers' Compensation, or who are on approved sick leave under terms
of the Sickness and Accident Weekly Indemnity Plan, will receive
holiday pay for the paid holidays which occur during the first twelve
(12) months of absence following the date of disability resulting from
such accident.
8. Employees scheduled to report for work on a holiday but who fail to
report for work will not be entitled to any holiday pay, unless
excused by the Company.
9. The hours worked on a holiday or the hours paid for but not worked
(not to exceed a total of eight (8) hours for both) shall be
considered as hours worked for the purpose of computing weekly
overtime.
10. Employees who work on a higher-rated job during the week in which a
holiday falls will receive the higher rate for the holiday, providing
they work the majority of hours during the week on the higher-rated
job.
11. Each permanent employee hired after June 17, 1986, who has the
following seniority will be entitled to the floating holidays outlined
below during the current year:
More than six (6) months but less than
one (1) full year of service - 1
More than one full year of service - 2
These additional floating holidays may be taken at a time of the
employee's choice, subject to the following restrictions:
a. All rules governing payment and qualification for non-floating
holidays apply to floating holidays. To provide reasonable
accommodation for employee requests and retain sufficient
personnel to accomplish the necessary work, employees must notify
their supervisor of the day of their choice not later than
Wednesday of the week preceding the workweek in which they want
to take the floating holiday. The supervisor will approve such
requests unless there are more employees already scheduled off
than can reasonably be allowed. A master schedule for each
department will be maintained listing the dates scheduled.
<PAGE>
V. HOURS OF WORK & OVERTIME ... PAGE 10.
12. An employee who was laid off for more than twenty-six (26) weeks in
the previous calendar year will not be entitled to floating holidays
described in Paragraph 11 above, but will be entitled to one (1)
floating holiday for each two (2) months of employment in the current
calendar year, the total not to exceed those listed in Paragraph 11
above.
D. CALL-IN AND REPORT-IN PAY
1. Employees called in at times other than their regular shift will be
given at least four (4) hours' work or four (4) hours' straight-time
pay.
2. Employees reporting for work on their regular shifts without having
been properly notified that there will be no work shall receive a
minimum of four (4) hours' pay. In the case of a shutdown, a radio
broadcast shall be considered as proper notification that there will
be no work.
E. DISTRIBUTION OF OVERTIME
1. The Company will notify employees of overtime by noon the day in which
the overtime is required whenever possible. Notification for Saturday
and/or Sunday overtime will be given as soon as overtime is
contemplated or by noon on Friday, whichever is earliest. It is the
intent of the Company to notify employees of pending overtime as soon
as any overtime requirements are known to the supervisor.
2. The Company shall have no obligation to equalize overtime. Overtime
will be assigned to the employee holding the position in which the
need for overtime occurs. The Company shall not be responsible for
compensating an employee for a lost overtime opportunity under any
circumstances. The only remedy for an employee who has lost overtime
is to make up such overtime at the next most convenient opportunity,
with due consideration for efficiency of operations.
ARTICLE VI. VACATIONS
----------------------
A. WEEK OF EMPLOYMENT
For the purpose of this article, a "week of employment" is defined to
include the following:
1. Any week in which the employee performed work for the Company
2. Any week in which the employee is on vacation with pay.
3. Any week in which the employee is absent on account of injury or
illness for which the Company is required to pay Workers'
Compensation.
4. Whenever a week of employment falls in two (2) calendar years, the
week will be considered to be in the year in which the most days of
the week fall.
<PAGE>
VI. VACATIONS ... PAGE 11.
B. WEEK OF VACATION
1. Vacation pay will be made at a rate equal to the highest straight-time
rate employees have received for a period of fifty percent (50%) or
more of their work time during the thirty (30) day period immediately
preceding the vacation or the rate of their permanent job
classification, whichever is higher. One week's vacation pay shall
consist of forty (40) hours.
2. If a vacation has been properly scheduled two (2) weeks prior to the
date of starting the first week of vacation, the vacation check will
be given on the last workday preceding the vacation, covering the
amount of vacation currently being taken.
C. ELIGIBILITY AND AMOUNT OF VACATION
Vacation as provided in this Paragraph C shall vest to each individual
employee as of December 31 of the calendar year immediately preceding the
year in which the vacation is to be taken, if the employee had at least
twenty-three (23) weeks of employment (as defined above) in the preceding
calendar year. An employee who accumulates less than twenty-three (23)
weeks of employment in a calendar year shall be pro-rated.
SERVICE
An employee with one (1) year of continuous service shall be entitled to
one (1) week of vacation on the anniversary of the date of hire.
Additional weeks of entitlement shall be as follows:
3 years 2 weeks
7 years 3 weeks
12 years 4 weeks
D. VACATION LIMITATIONS
1. For purposes of taking vacation time off, the vacation year shall run
from January 1 to December 31 of the same year.
2. No vacation shall be permitted prior to the end of the calendar year
in which the eligibility was accumulated, provided that when an
employee is laid off and has accumulated the twenty-three (23) weeks
of employment in the current calendar year, or is laid off during the
following year before taking a vacation, the employee shall be given
the choice at the time of layoff or anytime after layoff within that
calendar year, of taking cash in lieu of any unscheduled vacation.
3. Vacations may be taken in day or days at a time, provided satisfactory
arrangements can be made between an employee and the Company.
E. When an employee quits, retires or dies, the employee shall be paid for
unused vacation vested as well as pro-rata vacation allowance accumulated
during the current year.
<PAGE>
VI. VACATIONS ... PAGE 12.
F. Should an employee become disabled prior to or during scheduled vacation
time, the employee will be permitted to change said vacation to a
subsequent date, provided it will not conflict with another employee's
vacation. Consideration of such requests is contingent upon prompt notice
and evidence satisfactory to the employee's immediate supervisor.
G. When an employee is discharged for cause, any unused vested vacation will
be paid. The employee will not receive a vacation allowance for the
current year unless a minimum of twenty-three (23) weeks have been worked
in the current year, after which the employee would be entitled to the full
vacation allowance.
H. When an employee returns to work under the provisions of Article IV,
Section D, the total time in military service shall be counted in
determining whether the employee's next vacation shall be one, two, three
or four weeks.
I. If a holiday falls during the vacation period, then the employee shall
receive the holiday pay in addition to vacation pay, but not an additional
day off.
J. An employee must take time off to receive vacation pay. However, should an
employee be sick or disabled and it is impossible to reschedule an eligible
vacation during the vacation year, the employee shall receive vested
vacation pay in lieu of time off.
K. Vacation periods will be arranged by the employees in the vacation groups,
subject to the rules contained herein and approval by the supervisor and/or
department head. Employees must indicate the priority of each full week of
vacation requested. Preference for vacation will be granted on the basis
of unit seniority.
Preference by unit seniority may be exercised for only one (1) segment of a
split vacation, but must consist of a minimum of one full week or full
weeks at a time. During the following high peak vacation demand periods,
the restrictions shown will be in effect: May 15 through September 15,
only two (2) weeks of continuous vacation per employee; November 15 through
November 30, only one (1) week of continuous vacation per employee; and
December 15 through December 31, only one (1) week of continuous vacation
per employee.
An approved vacation schedule will be posted by April 1 of each year and
will be updated on a weekly basis. No preference by seniority will be
given an employee who fails to return the authorization form by March 1.
Vacation time thereafter will be granted on a first come-first served
basis. In any event, all vacations must be scheduled in and approved not
later than September 1.
L. In the event of any facility shutdown resulting in a layoff or cutback, any
employee who may be laid off as a result of such layoff or cutback shall
not be allowed to reschedule any approved scheduled vacation that would
occur during such layoff period.
M. In the event of a total plant shutdown, and with one week's notice, the
Company may require employees to take up to a maximum of one week of
vacation in a calendar year. In the scheduling of vacations during this
time period, the first group to be considered would be those
<PAGE>
VI. VACATIONS ... PAGE 13.
individuals with unscheduled vacations. If this list does not provide for
a sufficient number of vacations, then those individuals remaining who
would be temporarily laid off could be required to take vacations in
accordance with the following schedule:
Eligible Vacation Remaining* Vacation Weeks Required to Take
--------------------------- -------------------------------
(1) week or less None
More than (1) week 1
*Rounded to nearest whole week.
In the event an individual is required to take a vacation and, as a result,
would not have vacation time remaining to satisfy a previously planned
vacation, the Company will grant a leave of absence for the additional time
off requested. A voluntary layoff will be granted in the event there
was/were individual(s) on temporary layoff who could be brought back to
work.
This would apply to the time period of Memorial Day through Labor Day.
ARTICLE VII. SAFETY AND HEALTH
-------------------------------
A. The appropriate members of Management and the Union Grievance Committee
will meet the third Thursday of each month for a Union/Management Meeting.
Said meeting will be for the purpose of reviewing the administration of
this contract, as well as any other pertinent business that may arise.
These meetings are not intended to by-pass the regular grievance procedure.
B. A member of the Unit will participate in the Plant Safety Committee. This
employee will participate in the monthly safety inspection on a rotation
scheduled by the Plant Safety Committee. A written report will be prepared
and reviewed at the monthly meeting referred to above. Copies of the
Safety & Housekeeping Inspection Report will be given to each member of the
Union Committee and Staff Representative.
C. The Company will pay for time spent, up to a maximum of eight (8) hours per
day, for the Union Safety Representative to accompany a MIOSHA Inspector on
scheduled inspections of areas where Unit employee regularly perform work.
ARTICLE VIII. GRIEVANCES
-------------------------
A. The Company recognizes a Grievance and Negotiating Committee consisting of
three (3) members. The Chairperson of the Grievance and Negotiating
Committee will function as the Steward.
B. Meetings of the Grievance and Negotiating Committee may be called at any
time, at reasonable intervals, by the Chairperson of the Grievance and
Negotiating Committee or the Human Resources Manager.
<PAGE>
VIII. GRIEVANCES ... PAGE 14.
C. It is the intent of the parties that the first three steps of this
procedure be carried out during normal working hours where applicable,
without loss of pay; and such time will be considered as time worked for
the purpose of computing overtime. In the event the first three steps
cannot be carried out during normal working hours, the Company will pay
each employee and Union representative for the time spent in meeting with
the Company beyond normal working hours during the first three steps of
this procedure; such pay will be at the respective individual's straight
time rate, and time involved in such meetings will not be treated as hours
worked in the computation of overtime or for any other purpose.
D. A grievance is defined as any controversy between the parties hereto or
between the Company and any employee covered by this Agreement which
relates to interpretation or violation of any provisions of this Agreement.
E. The following procedure will be followed in the Settlement of a grievance:
Step 1
------
Any employee having a complaint or grievance shall take the matter up
with the person's supervisor and, if so requested, the Chairperson of
the Grievance and Negotiating Committee in attendance. The
supervisor, when advised that the complaint is a grievance, shall
respond to the employee and the Chairperson orally within two (2)
working days.
Step 2
------
If Step 1 does not effect settlement, the grievance shall be reduced
to writing and presented to the Human Resources Manager within three
(3) working days. The Human Resources Manager, with appropriate
members of Management, the Chairperson of the Grievance and
Negotiating Committee and the employee having the grievance shall meet
within five (5) working days upon receipt of the written grievance and
try to resolve the matter. The Company will provide the Union with a
signed and dated answer in writing within five (5) working days from
the date of the meeting.
Step 3
------
If Step 2 does not effect settlement, then within ten (10) working
days after receiving the Company answer, the Union shall notify the
Plant Manager and Union Representative in writing. They, together
with appropriate members of Management and the Union Grievance
Committee shall meet within ten (10) working days after notification.
The party against which the grievance was brought shall, within ten
(10) working days of such meeting, give the grieving party a written
answer stating their position on such grievance. As part of the
request for a 3rd Step Meeting, the grieving party shall present in
writing a general statement of the issues and shall specifically cite
the provision(s) of this Agreement deemed to have been violated. On
this basis, both parties may present final arguments to try to arrive
at a settlement without carrying the matter to arbitration.
<PAGE>
VIII. GRIEVANCES ... PAGE 15.
Step 4
------
If a grievance cannot be satisfactorily resolved in Step 3, the Union
shall, within thirty (30) days after receipt of the Company's Step 3
answer, file a Request for Arbitration Panel with the Federal
Mediation & Conciliation Service Office of Arbitration Services
(hereinafter referred to as "FMCS-OAS"), notifying FMCS-OAS of their
desire to obtain a panel of seven (7) arbitrators. Either party shall
have the option of requesting a second and final panel of seven (7)
arbitrators from FMCS-OAS. The FMCS-OAS panels shall consist of seven
(7) arbitrators from across the Mid-West. The arbitrator shall be
selected from said panel or panels by an alternate striking of names.
The parties shall alternate which party opens with the first strike of
a panel name, the Union striking first on the first panel, the Company
striking first on the second panel, and the parties continuing to
alternate as additional panels are requested on additional
arbitrations. After the opening panel strike, the parties shall
thereafter alternate in the striking of the remaining names until a
single name remains on the list, and that remaining name shall be
designated the arbitrator. Upon acceptance of the commission by the
arbitrator, the arbitrator shall, after hearings consistent with fair
play and the law, render an award which shall be final and binding
upon the parties. Each party shall bear its own expenses in
connection with the arbitration and shall share equally the expense of
the arbitrator. Where one party arranges for transcription of the
arbitration hearing by a court reporter, and the other party orders a
copy of the record made, the parties shall share equally the total
costs of obtaining the transcript and a copy thereof. The arbitrator
shall not, in any way, provide said party with the original or copy of
the transcript unless the party shares equally in the total costs of
obtaining the transcript and a copy thereof. The arbitrator shall be
responsible in the first instance for determining the accuracy of the
arbitration hearing transcript.
F. In all steps of procedure outlined above, failure of either party to abide
by the time elements constitutes acceptance of the grieving party's
position, unless extended by mutual written agreement.
G. Any arbitrator selected or appointed under this paragraph shall have
jurisdiction and authority to interpret and apply the provisions of this
Agreement insofar as it shall be necessary to the determination of the
grievance, but the arbitrator shall have no jurisdiction or authority to
alter or amend in any way the provisions of this Agreement.
H. The decision of the arbitrator shall be final and binding on both parties.
I. A sincere and earnest effort will be made by both parties to effect a
reasonable and adequate settlement of all grievances in each step of the
grievance procedure.
J. In all steps of the grievance procedure described above, either the Company
or the Union shall have the right to specify that the aggrieved employee,
the employee's supervisor, or both, be called in to discuss the details of
the grievance in the presence of the proper representatives of both the
Company and the Union.
<PAGE>
VIII. GRIEVANCES ... PAGE 16.
K. To promote maximum harmony of relationship, it is essential that sources of
grievances be detected promptly. Therefore, an employee, the Union or the
Company must initiate a grievance within seven (7) working days after
occurrence of the event which forms the basis for such grievance. After
expiration of this seven (7) day period, all rights under the grievance
procedure shall be forfeited, unless the employee submits adequate proof
that illness or other compelling personal reasons prevented filing the
grievance within the seven (7) day period.
ARTICLE IX. STRIKES AND VIOLATIONS
-----------------------------------
A. Adequate procedure having been provided for the equitable settlement of any
grievance arising under this Agreement, the parties hereto agree that there
shall be no suspension of work through strikes, sympathy strikes,
slowdowns, lockouts or otherwise during the life of this Agreement.
B. The Company shall have the right to discharge or discipline any employee
participating in any strike, sympathy strike, slowdown or other suspension
of work; and the Union agrees not to oppose such action. However, it is
understood that the Union shall have recourse to the grievance procedure as
to matters of fact in the alleged action of such employee.
C. During the life of this Agreement, should a strike, work stoppage or
slowdown occur, in whole or in part, the International Staff
Representatives and Local Union Officers will take appropriate, immediate
action to immediately terminate such strike, slowdown or work stoppage.
ARTICLE X. OTHER CONDITIONS OF EMPLOYMENT
------------------------------------------
A. When an employee is discharged or suspended, the Company shall immediately,
in writing, notify the Chairman of the Negotiating and Grievance Committee,
with a copy of same to the President of the Union. If the Union wishes to
protest the discharge or suspension, it shall notify, in writing, the Human
Resources Manager within seven (7) days. Failure to file such notification
within seven (7) days shall constitute acceptance by the Union that the
discharge or suspension was made for proper cause. If notification of
protest is given by the Union within seven (7) days, it shall become a
grievance and subject to the grievance procedure specified in Article VIII,
Section E (except that Step No. 1 shall be eliminated).
B. Leave of Absence
1. Upon written application to the Human Resources Manager, an employee
with one or more years' service may, for good and sufficient cause, be
granted a leave of absence without pay, but with accumulative
seniority, for a limited period (not exceeding 30 days). Leaves may
be extended for like cause or longer leaves may be granted in special
cases. Each application will be judged on its individual merit, and
final approval will be at the discretion of the Human Resources
Manager. An employee on leave of absence who engages in other
employment or who fails to report for work on or before expiration of
the leave will be considered as having quit. (Reasonable and
necessary Union activity, when certified by the proper Union
officials, shall be considered a proper basis for requesting a leave
of absence.)
<PAGE>
X. OTHER CONDITIONS OF EMPLOYMENT ... PAGE 17.
2. Family & Medical Leave - This Agreement shall be construed in a manner
that complies with the Family & Medical Leave Act of 1993, giving to
the Company whatever options are available to employers under the act.
3. In the event an employee is selected by a labor organization with
which the Union is affiliated to perform any task which necessitates a
leave of absence, such leave shall be granted without pay, but with
accumulative seniority, for a period not to exceed one (1) year. Not
more than one (1) employee shall be on leave of absence simultaneously
under the provisions of this clause.
C. The authorized staff representatives of the Union may visit the Office and
Engineering Departments at reasonable times during the working hours, with
permission of the Human Resources Manager, but shall not hinder or
interfere with the progress of the work.
D. The Company will provide a reasonable and adequate bulletin board to be
used by the Union; location to be agreed upon by the Human Resources
Manager and the President of the Local Union.
E. It is the intention of the Company that work now performed by bargaining
unit personnel, including increases in such work during the term of this
Agreement, shall not be assigned to non-union employees, but rather shall
be assigned to bargaining unit personnel. It is recognized that
supervisors may at times be required to do work performed by bargaining
unit personnel for developmental or experimental purposes to facilitate
production or for the purpose of training employees. The Company agrees
that it will specifically instruct these employees as to the meaning of
this paragraph. The Union shall have the right to employ the grievance
procedure herein provided if it feels that the Company has abused the
provisions of this paragraph.
F. A permanent employee who is called for jury duty shall be excused from work
for the days on which jury service occurs and shall receive for each such
day of jury service on which otherwise scheduled to work the difference
between eight (8) times the regular straight-time hourly rate and the
payment received for jury service. The employee will promptly notify the
Company when summoned for jury service and will present proof of service
and the amount of pay received therefor. Time lost because of jury service
will not be considered time worked for the purpose of computing overtime.
G. If death occurs within the immediate family of a permanent employee, the
following applies:
Mother, father, current spouse or child Up to four (4) days
Brother, sister, current in-laws (i.e., mother,
father, brother, sister, son, daughter),
grandparent, grandchild, spouse's grandparents Up to three (3) days
Such employee, on prior request, will be excused for consecutive,
regularly-scheduled working days, one day being the date of the funeral.
In addition, such employee will receive eight (8) hours' pay with respect
to each such regularly-scheduled shift not worked, such pay to be at the
employee's regular straight-time hourly rate, exclusive of overtime. Time
thus paid will not be counted as hours worked for purposes of overtime.
Each employee's rights to both the excused absence and the funeral pay are
conditioned upon prompt notice to the Company of the death involved and
attendance at the deceased's funeral.
<PAGE>
X. OTHER CONDITIONS OF EMPLOYMENT ... PAGE 18.
As used herein, brother-in-law is defined to mean: 1) the brother of one's
husband or wife, 2) the husband of one's sister, 3) the husband of the
sister of one's spouse; and sister-in-law is defined to mean: 1) the sister
of one's husband or wife, 2) the wife of one's brother, 3) the wife of the
brother of one's spouse.
1. In the event a death occurs within the immediate family of a permanent
employee, i.e., mother, father, current spouse or child, and the
deceased person is cremated, the employee, upon prior request, will be
excused for up to two (2) consecutive regularly-scheduled workdays at
the time of death and for one (1) regularly-scheduled workday at the
time of the Memorial Service. The employee will receive eight (8)
hours' pay at the straight time hourly rate, exclusive of overtime.
The employee's right to the excused absence and payment is based on
prompt notice to the Company of the death involved and attendance at
the deceased's Memorial Service.
H. 1. Non-Discrimination
------------------
The Company and the Union shall not discriminate against any employee
based on race, color, religion, national origin, age or handicap,
height, weight, veteran, marital status, where applicable. The
Company and the Union shall not permit any form of harassment, joking
remarks or other abusive conduct directed at employees because of
their race, color, sex, religion, national origin, age or handicap,
height, weight, veteran or marital status.
2. Sexual Harassment
-----------------
The Company and the Union shall not permit sexual harassment because
it is intimidating, an abuse of power and unlawful. Sexual harassment
is defined as unwelcome sexual advances, requests for sexual favors
and other verbal or physical conduct of a sexual nature. Sexual
harassment can take the forms of:
a. Sexual conduct that interferes with another person's work
performance or creates an intimidating, hostile or offensive work
environment.
b. Personnel decisions (e.g., promotions, raises, scheduling) made
by a supervisor or boss based on the employee's submission to or
rejecting of sexual advances.
c. Submission to a sexual advance used as a condition of keeping or
getting a job, whether expressed in explicit or implicit terms.
Any employee who feels subject to discrimination or harassment should
immediately report it to any of the following individuals: the
immediate supervisor, the Plant Manager or an officer of the Company,
or the Plant Human Resources Manager. The employee may also report
any alleged discrimination or harassment to their Union
representative. Such reports will be investigated promptly. If the
report has merit, disciplinary action will be taken against the
offender. Depending on the severity of the misconduct, the
disciplinary action could range from a warning to termination.
<PAGE>
X. OTHER CONDITIONS OF EMPLOYMENT ... PAGE 19.
I. When an employee is required to work twelve (12) or more continuous hours,
the supervisor shall make the necessary arrangements to provide a $3.50
chit. The Company will continue to maintain a supply of TV dinners and
sandwiches at the prevailing rates for employee purchase.
ARTICLE XI. INSURANCE AND PENSION
----------------------------------
A. The Company shall, during the term of this Agreement, provide the program
of group insurance benefits agreed to by the Company and the Union herein
and to be implemented by the Company on the effective date of this
Agreement, comprised of the following:
1. Life Insurance Plan provides benefits which afford protection in the
-------------------
event of death.
2. Retirement Income Plan provided by and paid for by the Company for
----------------------
employees subject to this Agreement. Said plan and its provisions are
set forth in the Pension Plan Booklet.
3. Hospital/Medical Plans for employees and their dependents, which
----------------------
assist in defraying the cost of hospital and medical care.
4. Accident and Sickness Weekly Indemnity Plan (Metropolitan Life) which
-------------------------------------------
policy provides a source of income otherwise cut off because of injury
or illness.
5. Dental Assistance Plan - The Company will provide for active employees
----------------------
a Dental Assistance Program. The Company reserves the right to choose
the insurance carrier who will furnish the program benefits and to
change such carrier upon notice to the Union.
B. Life Insurance - Permanent employees hired after June 17, 1986, will
--------------
receive the following sliding scale of benefits based upon length of
service as indicated below:
<TABLE>
<S> <C>
First day of month following date of hire until two (2) years $ 7,500
Two (2) years but less than three (3) $10,000
Three (3) years but less than four (4) $12,500
Four (4) years but less than five (5) $15,000
Over five (5) years $30,000
</TABLE>
After completion of three (3) years of service for employees hired before
June 18, 1986, and five (5) years for employees hired after June 17, 1986,
the employee will share the cost of benefits with the Company for insurance
in excess of $30,000. The employee will pay the prevailing rate per $1,000
for insurance coverage in excess of $30,000. It is understood that
insurance protection beyond $30,000 is optional with the employee. For
employees retiring at or after age 62, the Company will provide a $2,500
life insurance policy.
The Company will provide a disability feature as part of the Life Insurance
Program.
An employee who becomes disabled with a non-occupational disability may be
eligible for a one-time lump sum payment in the amount of $20,000. Such
payment shall be subject to Social Security certification of permanent and
non-occupational disability. Should the employee return to active work
following such disability, the payment amount will be deducted from any
amount of life insurance provided by the Company.
<PAGE>
An employee who receives the lump sum payment for such disability who
subsequently applies for and receives Workers' Compensation for the same
disability will be liable to the Company for the full amount of such
payment already made.
Employees who receive this disability payment shall not be eligible for the
$2,500 life insurance policy provided for employees retiring at or after
age 62.
C. Retirement Income Plan
----------------------
Retirement Income Plan provided by and paid for by the Company for
employees subject to this Agreement provided for employees retiring or
otherwise terminating on or after the following dates for all years of
service:
Current: $22.00
Effective: 01/01/97 $23.00
01/01/99 $24.00
Said plan and its provisions are contained in a separate document that
conforms to the applicable provisions of the ERISA Law and the Internal
Revenue Code. The Company will continue its policy of treating the normal
retirement date as the first day of the month coincident with or next
following an employee's 65th birthday. This shall not be interpreted as a
mandatory retirement date.
D. Health Care/Prescription Drug Plans
-----------------------------------
The Company will pay only the amounts indicated below for the following
coverages to be provided by the current carrier, or some other carrier,
that may be changed at any time by mutual consent of the parties. One (1)
person from the USW Union will continue as a member of the Insurance Cost
Study Committee formed with members from each Union and the Company. This
committee will be responsible for developing and implementing plans to
educate employees and retirees on insurance experience, publishing
information on program costs, and shopping for alternative carriers for the
agreed coverage level.
Before the thirty-first (31st) day of employment, an employee may select
one of the following health care plans:
Plan A
------
Plan A is a Comprehensive Major Medical Plan with a $100 deductible
per person or $200 deductible per family, a 90%/10% co-pay following
satisfaction of the deductible with a maximum co-pay of $500 per
calendar year.
Plan C
------
Plan C is a Comprehensive Major Medical Plan with a $500 deductible
per person or $1,000 deductible per family, an 80%/20% co-pay
following satisfaction of the deductible with a maximum co-pay of $500
per calendar year plus Outpatient Service Rider.
<PAGE>
XI. INSURANCE AND PENSION ... PAGE 21.
Plan D
------
Plan D is a Comprehensive Major Medical Preferred Provider
Organization Plan with a $100 deductible per person or $200 deductible
per family, an 80%/20% co-pay with a maximum co-pay (in panel) of
$500/$1,000 per calendar year. A $250 maximum per person Wellness
Plan is included in Plan D.
Plan E
------
Plan E is a Comprehensive Major Medical Preferred Provider
Organization Plan with a $250 deductible per person or $500 deductible
per family, an 80%/20% co-pay with a maximum co-pay (in panel) of
$1,000/$2,000 per calendar year. A $250 maximum per person Wellness
Plan is included in Plan E.
Before the thirty-first (31st) day of employment, an employee may select
one of the following prescription drug plans as a medical plan rider:
Plan 1
------
Plan 1 is a prescription drug program which requires a $5 payment by
the employee for each prescription filled for the employee and each
eligible dependent.
Plan 2
------
Plan 2 is a prescription drug program which requires a $10 payment by
the employee for each prescription filled for the employee and each
eligible dependent.
Plan 3
------
Plan 3 is a prescription drug program which requires a $15 payment by
the employee for each prescription filled for the employee and each
eligible dependent.
If a new employee does not make a selection by the expiration of the
thirty-first (31st) day of employment, the employee will be enrolled in the
plan that represents the least cost to the Company.
Annually, or at times during the calendar year designated by the insurance
carrier, the employee will be provided with the opportunity to elect to
move from one medical and prescription drug plan to another medical or
prescription drug plan. Any change of medical and prescription drug plans
by the employee is valid only if approved by the insurance carrier. Under
federal regulation at the time of ratification of this Agreement, this
selection also authorizes the Company to deduct the employee's portion of
the premium, if any, on a pre-tax basis. If an employee fails to make a
selection during this election period, the Company will maintain the
employee in the most recently selected medical and prescription drug plans
and deduct the employee's portion of the premium, if any, on an after-tax
basis.
Notwithstanding any of the foregoing, the maximum amount of monthly premium
to be paid by the Company for medical and prescription drug insurance
coverage shall be as follows:
Family Coverage $250.00 per month
Two-Person Coverage $233.08 per month
Single Person Coverage $105.92 per month
All premiums above these amounts (including any increases in premiums
during the term of this Agreement) shall be paid by the employee through
payroll deduction.
<PAGE>
XI. INSURANCE AND PENSION ... PAGE 22.
E. Accident and Sickness Weekly Indemnity Plan
-------------------------------------------
A Sickness and Accident Weekly Indemnity Plan which provides a source of
income in the event of injury or illness for 52 weeks maximum payment with
a Social Security carve-out for permanent employees. The following
Sickness and Accident weekly benefits apply:
Service of:
Less than 1 year $150
1 but less than 2 years $160
2 but less than 3 years $170
3 but less than 4 years $185
4 years or more $255
F. The Company will pay its share of the Hospital/Medical Plan, in the manner
and amounts indicated above, and the Life Insurance Plan for a laid off
employee with the following seniority during the time periods indicated or
until the employee accepts full time employment elsewhere, whichever occurs
first:
6 months but less than 1 year = 1 month
1 year but less than 18 months = 2 months
18 months but less than 2 years = 3 months
2 years but less than 30 months = 4 months
30 months but less than 3 years = 5 months
3 years or more = 6 months
If a laid off employee accepts full time employment elsewhere, the Company
must be notified at once, and failure to do so shall be considered cause
for dismissal. The Company will notify (in writing) the employee who is
being laid off concerning the content of this provision at the time of
separation. When the Company-paid insurance continuation time has run out,
the laid off person will be allowed to continue the above coverages for an
additional twelve (12) months, at the employee's own expense, by making
payments to the Payroll Office by the twenty-eighth (28th) of each month.
If the employee returns to work before the beginning of the month such
premium payment was to apply to, the full premium shall be returned to the
employee. If the employee returns to work during the month such premium
payment was applied to, a pro rata share of the premium shall be returned
to the employee.
1. Effective June 18, 1983, when an employee is recalled from layoff and
subsequently laid off, the Company will continue to pay for the
Hospital/Medical Plan, in the manner and amounts indicated above, and
Life Insurance Plan in accordance with the following:
a. If such Company-paid insurance continuation had been exhausted
prior to recall, the employee will be entitled to one month of
Company-paid insurance continuation for each partial or full
month of employment following recall, not to exceed the periods
listed in Paragraph F above.
b. If such Company-paid insurance continuation had not been
exhausted prior to recall, the employee will be entitled to the
unused portion plus, for each partial or full month of employment
following recall, one month of Company-paid insurance
continuation, the total not to exceed the periods listed in
Paragraph F above.
<PAGE>
XI. INSURANCE AND PENSION ... PAGE 23.
c. Company-paid as used in this paragraph is subject to the same
limits contained in Paragraph D above.
G. The Company will pay its share of the cost of the Hospital/Medical Plan in
the manner and amounts indicated above, and the total cost of the Life
Insurance Plan and Sickness and Accident Weekly Indemnity Plan, for a
maximum of twelve (12) months, or until the benefits are exhausted,
whichever occurs first. This shall be applicable to any employee unable to
work because of sickness or accident, providing the sickness or accident
causing the incapacity began when the employee was full-time regularly
employed by the Company.
ARTICLE XII. LIMITATION
------------------------
This instrument shall constitute the entire Agreement between the Company and
the Union duly authorized to represent the employees in the appropriate unit as
a result of collective bargaining negotiations. This Agreement supersedes and
cancels all prior agreements, understandings and practices, whether verbal or
written, expressed or implied, between the Company and the Union and constitutes
the entire agreement between the parties. Any amendment or agreement
supplemental hereto shall not be binding upon either party unless executed in
writing by the parties hereto. Any agreements and/or settlements made by the
Union Steward and Plant Supervision shall not be binding upon the parties unless
approved in writing and signed mutually by the Union Committee and Plant
Management.
<PAGE>
24.
ARTICLE XIII. DURATION AND RENEWAL
-----------------------------------
A. The Effective Date of this Agreement shall be the Ratification Date, and
this Agreement shall continue until 12:01 AM February 15, 1999. This
Agreement shall then be automatically renewed for additional periods of one
(1) year unless either party shall notify the other party at least sixty
(60) days before the expiration date of its desire to change or terminate
the Agreement. Both parties pledge themselves to meet within a reasonable
period of time from the time of such notice for the purpose of negotiating
any changes or renewal.
B. IN WITNESS WHEREOF, the fully authorized representatives of both parties
affix their signature at Alpena, Michigan, this 27th day of September,
1996:
<TABLE>
<CAPTION>
UNITED STEELWORKERS OF AMERICA
LOCAL 7923
<S> <C>
___________________________________ ______________________________________
George Becke, International President Robert D. Daleski
___________________________________ _______________________________________
Leo Gerard, International Secretary/Treasurer Richard Burton
___________________________________ _______________________________________
Richard Davis, International Vice President Dennis Burns
___________________________________ ________________________________________
Leon Lynch, International Vice President Richard Gouin
___________________________________
Harry Lester, District Director
ABTCO, INCORPORATED
ALPENA PLANT
___________________________________
Kenneth C. Nielsen Plant Manager
</TABLE>
<PAGE>
PAGE 25.
ADDENDUM I
BASE WAGE RATE SCHEDULE
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------------
Effective 1.5% 1.5% 1.5% 1.5% 1.5%
Date Eff. Eff. Eff. Eff. Eff.
Base Rate 10/15/96 03/31/97 09/30/97 03/31/98 09/30/98
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OFFICE-CLERICAL
General Accounting Clerk 13.67 13.88 14.08 14.29 14.51 14.73
Storekeeper 13.67 13.88 14.08 14.29 14.51 14.73
Scaler 13.20 *10.40 *10.40 *10.40 *10.40 *10.40
Traffic Clerk 11.01 11.18 11.35 11.52 11.69
Senior Clerk - Accounting 12.81 13.00 13.20 13.40 13.60 13.80
.Sr.Clerk-Production Reporting 13.00 13.20 13.40 13.60 13.80
Data Processing Operator 12.81 13.00 13.20 13.40 13.60 13.80
Engineering Clerk 11.01 11.18 11.35 11.52 11.69
Purchasing Clerk 11.01 11.18 11.35 11.52 11.69
Receptionist 10.40 *10.40 *10.40 *10.40 *10.40 *10.40
*Denotes frozen rate for the
duration of this Agreement.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Compensation Adjustments
- ------------------------
a. Active employees on the date of ratification will not be subject to
rate decreases or rate freezing in their current permanent position.
b. Employees who permanently transfer to a frozen position or are hired
after September 30, 1996, into a frozen position shall receive lump
sum payments calculated as follows:
NUMBER OF ACTUAL HOURS PAID TO EMPLOYEE IN THE PERIOD:
1) between September 30, 1996, and the effective date of the first
adjustment of October 15, 1996, and
2) between the effective dates of each subsequent adjustment, with
the last such period between the effective date of March 31, 1998,
adjustment and September 30, 1998 (hereafter each period is
referred to as "MEASUREMENT PERIOD").
multiplied by the FROZEN JOB RATE AT STRAIGHT TIME multiplied by the
ADJUSTMENT (1.5%),
which payments shall be made to the employee in the payroll period ending
immediately after the close of each MEASUREMENT PERIOD in lieu of increases in
their hourly rate. Lump sum payments to employees shall not be included in their
straight time rate for purposes of calculating overtime.
<PAGE>
PAGE 26.
EXHIBIT "A"
SAFE DRUG- AND ALCOHOL-FREE WORK ENVIRONMENT POLICY
STATEMENT OF COMMITMENT AND BELIEFS
ABTco, Inc., and Local 7923, United Steelworkers of America, are committed to a
safe, drug and alcohol work environment. The parties jointly support and
advocate the voluntary use of the Employee Assistance Program for those
employees who wish to seek confidential assistance in the areas of alcohol and
drug dependency. The parties believe that the abuse of alcohol and/or
dependency on drugs are illnesses requiring rehabilitative treatment.
Therefore, the parties believe that the cornerstone to a Drug and Alcohol
Policy is rehabilitation. Both parties believe that in the event that
rehabilitative efforts fail, an employee's employment will be in jeopardy.
ABTco, Inc., and Local 7923, USW, consider the manufacture, sale, distribution,
handling, possession or use of alcohol, illegal drugs or the misuse of
prescription drugs on Company property to be a termination offense. The parties
believe that the recreational use of alcohol while not on Company property is of
no concern to the parties unless the employee reports to work under the
influence of alcohol and/or drugs. The parties believe that an individual
employee's safe performance of work is the criteria that will be judged when
making referrals for rehabilitative treatment, except in those cases when an
employee voluntarily seeks confidential rehabilitative treatment. ABTco, Inc.,
and Local 7923 strongly support the use of the Employee Assistance Program and
available health insurance coverage if rehabilitative treatment is required or
desired.
ADMINISTRATIVE PROCEDURES
To provide a guide to employees, ABTco, Inc., and Local 7923, USW, have
established the following administrative procedure. This procedure may be
changed by mutual agreement of the parties. All steps of the procedure and all
records regarding the procedure are confidential.
STEP 1
- ------
If there is reasonable cause to believe that an employee is working under
the influence of alcohol and/or drugs, the employee will not be allowed to
continue to work and will be safely transported home. The employee will
meet the next business day with at least two representatives of management
and two representatives of the Bargaining Committee to discuss the
incident, with the focus toward assisting the employee to seek
rehabilitative treatment through the Employee Assistance Program. The
Company and the Union may choose to monitor the employee's progress.
STEP 2
- ------
If there is a second incident involving the same employee where there is
reasonable cause to believe that an employee is working under the influence
of alcohol and/or drugs, the employee will not be allowed to continue to
work, a drug and alcohol screening test will be administered at Alpena
General Hospital to confirm or refute the determination of reasonable
cause. If not under the influence of alcohol and/or drugs, the employee
will return to work without loss in pay. If the employee is found to be
under the influence of alcohol and/or drugs, the employee will be safely
transported home. If the employee refuses to take the screening test, the
employee will be presumed under the influence of alcohol and/or drugs. The
employee will
<PAGE>
EXHIBIT "A" ... PAGE 27.
meet the next business day with at least two representatives of management
and two members of the Bargaining Committee. The focus of the meeting will
be the requirement to attend an evaluation session with the Employee
Assistance Program counselor. The counselor will make an evaluation and
determine the appropriate course of treatment. The employee will be
required to successfully follow the prescribed course of treatment. The
employee's progress will be monitored by ABTco, Inc., and the Local 7923,
USW, committee.
STEP 3
- ------
In the event there is a third incident involving the same employee where
there is reasonable cause to believe that the employee is working under the
influence of alcohol and/or drugs, the employee will not be allowed to
work, a drug and alcohol screening test will be administered at Alpena
General Hospital to confirm or refute the determination of reasonable
cause. If not under the influence of alcohol and/or drugs, the employee
will return to work without loss in pay. If the employee is found to be
under the influence of alcohol and/or drugs, the employee will be safely
transported home. If the employee refuses to take the screening test, the
employee will be presumed under the influence of alcohol and/or drugs. The
employee will meet the next business day with at least two representatives
of management and two members of the Bargaining Committee. The joint
committee will mutually determine the course of action to be taken with the
employee. As a general guide, the employee will be placed on a 30 day
suspension, required to seek inpatient rehabilitative treatment, and
successfully complete rehabilitative treatment. The joint committee will
receive specific professional advise from the rehabilitation counselor
regarding specific treatment needed. The employee's progress will be
monitored. Additional requirements may be imposed, depending on the
specific situation and the advice of the professional rehabilitation
counselor.
STEP 4
- ------
In the event there is a fourth incident involving the same employee where
there is reasonable cause to believe that the employee is working under the
influence of alcohol and/or drugs, the employee will not be allowed to
continue to work, a drug and alcohol screening test will be administered at
Alpena General Hospital to confirm or refute the determination of
reasonable cause. If the employee is not under the influence of alcohol
and/or drugs, the employee will return to work with no loss in pay. If the
employee is under the influence of alcohol and/or drugs, the employee will
be safely transported home. If the employee refuses to take the screening
test, the employee will be presumed under the influence of alcohol and/or
drugs. The employee will meet the next business day with at least two
members of management and two members of the bargaining committee. It will
be determined, with advice from a professional rehabilitation counselor, if
the employee would benefit from further treatment or if employment should
be terminated. If further treatment is required the employee will be
placed on 30-day suspension to undergo in-patient rehabilitation. The
employee will be placed on conditional employment status upon return to
work. The employee will be required to remain alcohol- and/or drug-free on
Company premises or employment will be terminated.
STEP 5
- ------
In the event there is a fifth incident involving the same employee where
there is reasonable cause to believe that the employee is working under the
influence of alcohol and/or drugs, the employee will not be allowed to
continue to work, a drug and alcohol screening test will be performed at
Alpena General Hospital to confirm or refute the determination of
reasonable
<PAGE>
EXHIBIT "A" ... PAGE 28.
cause. If the employee is not under the influence of alcohol and/or drugs,
the employee will return to work with no loss in pay. If the employee is
under the influence of alcohol and/or drugs, the employee will transported
safely home. If the employee refuses the screening test, the employee will
be presumed to be under the influence of alcohol and/or drugs. If the
employee is under the influence of alcohol and/or drugs, employment will be
terminated.
<PAGE>
PAGE 29.
EXHIBIT "B"
The parties agree that Robert Daleski will be granted recall rights to active
employment with ABTco, Incorporated, in the event that he is no longer a full-
time employee with the United Steelworkers of America. This agreement is not in
effect in the event Mr. Daleski retires from active employment with the United
Steelworkers of America. The parties agree that Mr. Daleski shall have
seniority equal to the amount of active employment with the Company. The
parties agree that this Exhibit only applies to Mr. Daleski and that it expires
with his re-entry to active employment with ABTco, Incorporated, his retirement
from active employment with the United Steelworkers of America, or the
expiration of this labor agreement.
<PAGE>
EXHIBIT 11.1
ABT BUILDING PRODUCTS CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1996 1997
------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net income............................. $16,487 $23,152 $15,490
======= ======= =======
Basic weighted average number of shares
outstanding........................... 10,707 10,433 10,547
Weighted average common equivalent
shares................................ 940 1,086 1,031
------- ------- -------
Diluted weighted average number of
common shares outstanding............. 11,647 11,519 11,578
======= ======= =======
Net Income Per Common Share
Basic................................ $ 1.54 $ 2.22 $ 1.47
======= ======= =======
Diluted.............................. $ 1.42 $ 2.01 $ 1.34
======= ======= =======
</TABLE>
<PAGE>
EXHIBIT 21.1
ABT BUILDING PRODUCTS CORPORATION AND SUBSIDIARIES
SUBSIDIARIES OF THE COMPANY
1. ABTco, Inc., a Delaware corporation.
2. ABT Building Products Canada Limited, a Canadian corporation.
3. ABT Export Company, a foreign sales corporation.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 329
<SECURITIES> 0
<RECEIVABLES> 29,395
<ALLOWANCES> 6,303
<INVENTORY> 57,682
<CURRENT-ASSETS> 94,024
<PP&E> 239,654
<DEPRECIATION> 42,660
<TOTAL-ASSETS> 309,232
<CURRENT-LIABILITIES> 38,341
<BONDS> 0
0
0
<COMMON> 122
<OTHER-SE> 124,719
<TOTAL-LIABILITY-AND-EQUITY> 309,232
<SALES> 321,813
<TOTAL-REVENUES> 321,813
<CGS> 225,074
<TOTAL-COSTS> 53,250
<OTHER-EXPENSES> 10,134
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,344
<INCOME-PRETAX> 25,011
<INCOME-TAX> 9,521
<INCOME-CONTINUING> 15,490
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,490
<EPS-PRIMARY> 1.47
<EPS-DILUTED> 1.34
</TABLE>
